Rainbow Rare Earths Phalaborwa project shaping up to be one of the lowest cost producers globally. Watch the video here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
21st Nov 2023 2:43 pm RNS Proposed disposal of PPL and notice of GM
"Proposed disposal of Parity Professionals Limited and notice of GM
Parity Group plc (AIM: PTY), the data and technology-focussed recruitment and professional services company, announces the proposed disposal of 100% of Parity Professionals Limited ("PPL"), the Company's primary operating subsidiary, to Network Ventures Limited (the "Purchaser") for cash consideration of up to £3 million (the "Disposal").
Overview of the Disposal:
• Under the terms of the SPA, on completion of the Disposal:
- 100% of the issued share capital of PPL will be acquired by the Purchaser;
- cash consideration of £2 million will be payable immediately; and
- a further £1 million will be retained by the Purchaser for adjustments based primarily on the working capital position of PPL at completion.
• The Disposal constitutes a fundamental change of business of the Company under Rule 15 of the AIM Rules and accordingly requires shareholder approval. If approved, the Company would become an AIM Rule 15 Cash Shell on completion.
• On completion, the proceeds of the Disposal will be utilised to remove the pension liability from the Company's balance sheet and in seeking to identify and execute a potential acquisition.
• It is also the intention of the Directors to change the name of the Company to Partway Group plc following shareholder approval and the relevant paperwork being filed with Companies House.
Further information regarding the proposed Disposal can be found below and in a Circular which will shortly be posted to shareholders and made available on the Company's website at www.parity.net (the "Circular").
The proposed Disposal is subject to shareholder approval at General Meeting of the Company to be held on 7 December 2023 at 1:00 p.m. Notice of the General Meeting and further information regarding voting and attendance is provided within the Circular. ...
The Board feels that the Group's core business is sound and Parity's position in the public sector is attractive but that it is subscale and would benefit from being a part of a larger group. The Board has exhausted a number of initiatives to source additional funding to invest in further growth, none of which it believed were in the best interests of shareholders.
For the year ended 31 December 2022, Parity Professionals Limited contributed £378,000 of profit before taxation to the Group's consolidated set of accounts. ... "
https://www.lse.co.uk/rns/PTY/proposed-disposal-of-ppl-and-notice-of-gm-eccz5a1vycic7x8.html
21st Nov 2023 2:43 pm RNS Proposed disposal of PPL and notice of GM
" ... 5. Strategy for the Company following the Disposal
The Company's proposed strategy, following completion of the Disposal, will be to acquire one or more companies and/or projects which are either cash flow generative or show significant potential for growth and a profitable exit.
Leveraging their knowledge and contacts, the Directors will seek to identify suitable investment and/or acquisition opportunities. At this stage, the Directors would not seek to exclude any particular sector or jurisdiction. ...
6. Use of proceeds
The Initial Consideration will be used to pay the settlement fee and agreed costs to the Pension Scheme totalling £639k, cover the costs associated with the Disposal, expected to total approximately £240k, and to provide the Company with working capital whilst it progresses with its strategy. ...
... 9. Related party transaction
The Purchaser is a wholly owned subsidiary of Pertemps Network Group Limited, a company in which Timothy Watts has a direct and indirect interest of 33.1%. Mr. Timothy Watts is a 22.8% shareholder in Parity and is therefore deemed a related party pursuant to the AIM Rules. As a result, the Disposal constitutes a related party transaction for the purposes of AIM Rule 13.
During the last 12-18 months the Directors have evaluated a number of potential opportunities to create long-term value in the business, including the acquisition and/or merger of other businesses in order to create a business of greater scale and value for shareholders.
During this period, the Directors have had exposure to the value ascribed to Parity's business by other interested parties, for example, the vendors of potential acquisitions considering Parity's equity as part of a structured deal, and the appetite amongst Shareholders to support a fundraise.
The Directors have also had three separate approaches to acquire the Company's recruitment business assets from medium to large independent businesses with verified access to funding.
Whilst comparing the potential relative values from these activities with the offer made by the Purchaser, the offer from Network Ventures represents the best available proposition for shareholders amongst those evaluated by the Directors.
The Directors have also considered the speed, certainty and relative cost-efficiency with which this deal can be executed compared to the alternative of initiating a full sale process.
Recognising the risk and the near-term funding requirements of the business, the Directors believe this deal represents the best available value for Shareholders.
The Directors consider, having consulted with the Company's Nominated Adviser, that the terms of the Disposal are fair and reasonable insofar as the Shareholders are concerned. ... "
https://www.lse.co.uk/rns/PTY/proposed-disposal-of-ppl-and-notice-of-gm-eccz5a1vycic7x8.html
I was certainly hoping for a lot more (not that the share price was really factoring in anything more), and the buyer looks to be getting the business very much on the cheap.
But unless this deal quickly flushes out a fairly definite bid at a significantly higher price, this deal will very likely go through.
But a rival bidder would have to move quickly, as this deal looks to be being rushed through:-
"The proposed Disposal is subject to shareholder approval at General Meeting of the Company to be held on 7 December 2023 at 1:00 p.m."
https://www.lse.co.uk/rns/PTY/proposed-disposal-of-ppl-and-notice-of-gm-eccz5a1vycic7x8.html
Presumably this is a situation that only requires 14 days' notice:-
"If the directors of a listed public company call a general meeting, they should give at least 21 days’ notice except in certain situations."
https://www.rocketlawyer.com/gb/en/business/run-a-private-limited-company/legal-guide/general-meetings#:~:text=When%20can%20directors%20call%20a,21%20days'%20notice%20is%20required.
The positive aspects are that this business sale removes the perceived risk of PTY going bust, and creates a very attractive cash shell: with a low market cap., good cash balance, and capable directors ... and at an ideal time.
Poor stock market conditions tend to make it harder to IPO, increasing the attractions of the RTO (reverse takeover) route, and increasing the bargaining power of listed shells.
And meanwhile, the valuations of RTO targets for shells tend to be depressed.
So in summary, listed shells are in effect becoming more valuable: more capable of cutting a cracking RTO deal on great terms - i.e. a better shell valuation and lower target valuation, and great quality targets.
Moreover, listed shells are a great place to 'park funds' at the moment.
Many investors may wish to reduce their exposure to shares in companies with trading businesses, but holding cash for months doesn't give any real direct upside - certainly in the short term.
A PTY shell though will have both cash underpinning, and great potential upside - it could easily double or more from this level on a good deal.
And you don't have to worry about funds being tied up here for a while if you won't be using them anyway.
Note that the RTO route may have attractions to the IPO route that may give it additional 'value' to a company wishing to float:-
• A requirement to give away less equity than in an IPO.
• Potentially more speed and certainty - an aborted IPO due to market conditions could be very expensive, and time is money.
• The 'shellmeisters' may also have attractive business acumen, contacts, and 'clout', that may be attractive to the floating company.
Remember that if the company floating is valued at hundreds of millions, then a shell value of a few £millions may be just 1% of the expanded equity, which is comparatively insignificant.
There have been some shell-RTO deals signed relatively recently where the shell has been valued at multiple times its cash balance, and multiple times the value of its original market cap. at the time it came to the market.