Assetco Regulatory News (ASTO)

10 June 2020

AssetCo plc

("AssetCo" or the "Company")

Proposed Capital Reduction and Notice of General Meeting

AssetCo announces that the Company will today be posting a circular to shareholders (the "Circular") incorporating a notice of a general meeting, to seek the approval of Shareholders for the proposals to reduce the Company's capital.

The Capital Reduction is conditional, inter alia, on the approval of Shareholders. A notice of General Meeting is set out at the end of the Circular, which convenes the General Meeting for 11am. on 10 July 2020, at Singleton Court Business Park, Wonastow Road, Monmouth, NP25 5JA.

Given social distancing rules and guidance that are currently in force, you are strongly recommended to appoint a proxy rather than attend the meeting in person. If, however, you wish to attend in person, we request that you give at least 48 hours' advance notice to Computershare Investor Services, the Registrar, in order that we can make arrangements for the meeting to be conducted safely and in accordance with such rules and guidance.

The Board of Directors considers that the Resolution is in the best interests of the Company and its Shareholders as a whole and unanimously recommends that Shareholders vote in favour of the Resolution to be proposed at the General Meeting.

Unless the context requires otherwise, defined terms used in this announcement shall have the meanings given to them in the Circular dated 10 June 2020.

A copy of the Circular will shortly be available on the Company's website at www.assetco.com.

Timetable of principal events

If any of the above times and/or dates change, the revised times and/or dates will be notified to Shareholders by an announcement through the Regulatory Information Service of the London Stock Exchange. All references in this announcement and the Circular are to London time unless otherwise stated.

Introduction

As announced in the Company's interim results for the six months ended 31 March 2020 (the Interim Statement), the Company's focus has continued to be on regaining and developing new business in the Middle East and realising the cash in receivables and bonds from the previous contract and completing the action for negligence against Grant Thornton. The results for the six months to 31 March 2020 are a loss of £0.7m, reflecting the costs of operating in Abu Dhabi dealing with business development, and the costs associated with the Court of Appeal hearing during January 2020.

The Circular sets out details of a proposed Capital Reduction as described below.

The Capital Reduction is conditional, inter alia, on the approval of Shareholders at the General Meeting and to confirmation by the court. You will find set out at the end of this document a Notice of General Meeting which has been convened for 11 a.m. on 10 July 2020, at Singleton Court Business Park, Wonastow Road, Monmouth, NP25 5JA.

Given social distancing rules and guidance that are currently in force, you are strongly recommended to appoint a proxy rather than attend the meeting in person. If, however, you wish to attend in person, we request that you give at least 48 hours' advance notice to Computershare Investor Services, the Registrar, in order that we can make arrangements for the meeting to be conducted safely and in accordance with such rules and guidance.

The purpose of the Circular is to provide you with details of, and the reasons for, the Capital Reduction and the Resolution to be proposed at the General Meeting. The Board considers that the Resolution is in the best interests of the Company and its Shareholders as a whole and unanimously recommends that you vote in favour of the Resolution to be proposed at the General Meeting.

You are advised to read the whole of the Circular, including the Notice, and not to rely solely on the information contained in this letter.

Background to the Capital Reduction

As announced on 10 June 2020 in our Interim Results to 31 March 2020, AssetCo has £28.4 m of net assets represented by £26.1 m of unrestricted cash balances, and is continuing to pursue new business in the Middle East as well as awaiting the Court of Appeal's decision in respect of its legal action against Grant Thornton. The Company had a deficit of £62,045,076 on its profit and loss account. The existence of that deficit currently prevents the Company from making distributions to shareholders.

The Board considers that a large proportion of the cash balances are surplus to current requirement, and although future investment opportunities may arise, it may also be appropriate to return surplus cash to shareholders. Whilst there has been no formal decision made, the Board would like to have the flexibility to make distributions to shareholders in future.

It is against this background that the Board proposes the Capital Reduction as a means of eliminating the deficit on the Company's profit and loss account and achieving a surplus on that account. That will enable the Company lawfully to make distributions if the Board considers them appropriate. The Board estimates that the effect of the Capital Reduction will be to generate a surplus of £27,149,361.35 on the Company's profit and loss account.

If approved by Shareholders at the General Meeting and subsequently confirmed by the Court, upon the Court's confirmation order being registered with the Registrar of Companies, the effect of the Capital Reduction will be to (i) cancel the entire amount standing to the credit of the Share Premium Account (being approximately £64,941,326 in total as at the date of this announcement), and (ii) cancel the Company's Deferred Shares.

The implementation of the Capital Reduction is subject to a number of criteria and legal processes which are explained further below.

Procedure to effect the Capital Reduction

Share premium forms part of the capital of the Company and arises on the issue by the Company of Ordinary Shares at a premium to their nominal value. The premium element is credited to the Share Premium Account. Under the 2006 Act, the Company is precluded from paying any dividends or making other distributions in the absence of sufficient distributable reserves, and the Share Premium Account, being a non-distributable reserve, can be applied by the Company only for limited purposes. However, provided the Company obtains the approval of Shareholders by way of a special resolution and subsequent confirmation by the Court, it may cancel all or part of the balance standing to the credit of its Share Premium Account with the result that (subject to any order made by the Court to the contrary), such balance will be credited to the Company's profit and loss account.

The Deferred Shares were created by the Company as part of a previous scheme of arrangement and have no economic value. The Board does not consider there to be any commercial purpose in the Deferred Shares and is therefore taking the opportunity to cancel the Deferred Shares as part of the Capital Reduction. Pursuant to articles 3.2.4 and 3.3.6 of the Articles, the cancellation of the Deferred Shares pursuant to a reduction of capital for no consideration will not constitute a variation of the rights attaching to the Deferred Shares. Consequently, the Capital Reduction can be approved without the approval of the holders of the Deferred Shares.

In order to effect the Capital Reduction, the Company first requires Shareholders to approve it by special resolution.

Secondly, the Capital Reduction must be confirmed by the Court. If the special resolution is approved by Shareholders in general meeting, the Company will then apply to Court for a confirmation order.

The Capital Reduction will take effect when the order of the Court confirming it and a statement of capital approved by the Court have been registered with the Registrar of Companies. The Effective Date of the Capital Reduction is currently expected to be the next working day following the hearing at which the Capital Reduction is to be confirmed by the Court, which is currently expected to be on or around 4 August 2020.

In order to approve the Capital Reduction, the Court will need to be satisfied that the interests of the Company's creditors will not be prejudiced by the Capital Reduction. It is possible (although the Board considers it unlikely) that the Court will require the Company to give a suitable undertaking for the purpose of protecting creditors, such as to create a special reserve in the Company's books of account for so long as any creditors of the Company, who do not consent to the Capital Reduction, remain unpaid.

The Board reserves the right (where necessary by application to the Court) to abandon, discontinue or adjourn any application to the Court for confirmation of the Capital Reduction, and hence the Capital Reduction itself, if the Board believes that the terms required to obtain confirmation are unsatisfactory to the Company or if the Board considers that to continue with the Capital Reduction is inappropriate or not advisable and would not be in the best interests of the Company and its Shareholders.

The Capital Reduction does not affect the voting or dividend rights of any Shareholder, or the rights of any Shareholder on a return of capital.

Procedure to effect the Capital Reduction

You will find a notice convening the General Meeting at the end of the Circular. The General Meeting will be held at 11 a.m. on 10 July 2020 at Singleton Court Business Park, Wonastow Road, Monmouth, NP25 5JA to consider and, if thought appropriate, pass the Resolution which is summarised below.

Resolution: Capital Reduction

The Resolution will be proposed as a special resolution of the Company. The Directors will be seeking approval of Shareholders to (i) cancel the balance standing to the credit of the Company's share premium account, and (ii) cancel all issued Deferred Shares.

Action to be taken

A Form of Proxy for use in connection with the General Meeting is enclosed with the Circular. Whether or not you intend to be present at the General Meeting, you are requested to complete, sign and return a Form of Proxy in accordance with the instructions printed thereon so as to be received by the Registrar, Computershare Investor Services PLC of The Pavilions, Bridgwater Road, Bristol, BS99 6ZY not later than 11 a.m. on 8 July 2020. Completion and return of a Form of Proxy will not preclude you from attending and voting in person at the General Meeting, if you wish to do so.

Recommendation

The Board considers the Capital Reduction to be in the best interests of the Company and its Shareholders as a whole. Accordingly, the Board unanimously recommends that Shareholders vote in favour of the Resolution, as all of the Directors intend to do in respect of their beneficial holdings amounting, in aggregate, to 5,893,582 Ordinary Shares representing approximately 48.3 per cent. of the existing issued share capital of the Company.

Forward-looking statements

Certain statements contained in this announcement are or may constitute "forward-looking statements". These statements may be identified by words such as "expects", "looks forward to", "anticipates", "targets", "aims", "may", "would", "could", "intends", "plans", "believes", "seeks", "estimates", "will", "project" or words of similar meaning. They include all matters that are not historical facts. Such statements are based on the current expectations and certain assumptions of the Directors and are, therefore, subject to certain risks and uncertainties. Forward-looking statements are not guarantees of future performance and a number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward-looking statements. The forward-looking statements in this announcement speak only as of the date of this announcement. Except as required by law, the Company disclaims any obligation to update any such forward-looking statements to reflect future events or developments.

Notice to overseas persons

The distribution of this announcement, the Circular and/or the accompanying Form of Proxy outside the UK may be restricted by law. Persons outside the UK who come into possession of these documents should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.