LSE updates inop now I see13 Aug 2016 09:25
News Leed Likely To Have Shares Cancelled As Takeover Deadline Looms LONDON (Alliance News) - Leed Resources PLC Friday said its shares are likely to be cancelled ...
Alliance News1 July, 2016 | 9:53AM Email Form
LONDON (Alliance News) - Leed Resources PLC Friday said its shares are likely to be cancelled from trading in London next month as it will not have enough time to complete the takeover of Battalion International Ltd, but believes it will still acquire a large stake in the business.
Leed said this does "not necessarily represent a negative development" for the company in the longer term.
Leed shares were up 18% to 0.0265 pence per share on Friday morning.
Currently, Leed owns AUD1.7 million worth of convertible loan notes that were issued by Battalion, which in turn invested in convertible loan notes issued by its subsidiary, High Mannor Pty Ltd.
High Mannor is a Western Australian quarry and building materials business, trading as Cultural Limestone, focused on the production, delivery and installation of reconstituted limestone blocks for use in retaining walls - and is the main target for Leed.
If all the existing loan notes were converted, Leed would only obtain an 18.4% interest in Battalion, which in turn would give it an effective 14% stake in the High Mannor subsidiary.
However, Leed and the other existing loan note holders are trying to renegotiate the terms of the loans and that is expected to result in Leed holding a "substantially larger position" in the underlying business.
Leed only has until August 15 to complete its previously agreed acquisition of Battalion, but the progress has been hampered after a number of issues were discovered by the London-listed company during the due diligence process.
"As previously notified, Leed has the right to exercise an option to acquire Battalion... although it is now very unlikely that the company will be able to make a definitive decision whether or not to proceed with or have sufficient time to complete the reverse takeover in the requisite timeframe to prevent cancellation of the company’s shares from trading on AIM," said Leed.
The main issue that was discovered during the due diligence process involved fraudulent activity which had cost High Mannor in excess of AUD50,000. Leed said the total cost of the fraud is likely to be "substantially higher than this" and said police have been informed.
Once the matter has been progressed by the police, High Mannor will consider launching civil action against the individual for damages. In addition, poor management controls, inadequate internal communication and accountability, and lack of focus on delivery of wall panels to the market have all been identified as issues by Leed.
To alleviate the numerous concerns, investors in Battalion have established a steering committee which will be headed up Tony Cammarano, an experienced businessman from Western Australia with an interest in
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