Bigblu Broadb. Regulatory News (BBB)

6 Mar 2006 17:24

Berkeley Berry Birch PLC06 March 2006 Sale of group businesses Further to the announcement made on 28 February 2006, Berkeley Berry Birch plc('BBB') announces that it has completed the sale of the businesses of BerkeleyIndependent Advisers Limited ("BIA") and Berry Birch & Noble Financial PlanningLimited ('BBN FP') to Tenet Group Limited ('Tenet'). The United Kingdom ListingAuthority has granted a waiver under Listing Rule 10.8 in respect of therequirement to issue a circular and obtain shareholder approval for thisdisposal. The total maximum consideration for the disposal is £2,350,000, comprising£1,150,000 in respect of BIA and £1,200,000 in respect of BBN FP. The initialconsideration, payable on completion, is £900,000, of which £700,000 is inrespect of BIA and £200,000 is in respect of BBN FP. Deferred consideration ofup to a maximum of £1,450,000 is payable, of which £450,000 is in respect of BIAand £1,000,000 is in respect of BBN FP. The deferred consideration is payable intwo stages, with up to £200,000 payable after six months in respect of BIA,contingent upon the number of BIA advisers retained by Tenet, and up to£1,250,000 payable after a year, of which £250,000 is payable in respect of BIAand £1,000,000 is in respect of BBN FP, contingent upon the turnover in respectof the businesses in the year following completion. In addition, Tenet hasassumed estimated net liabilities of £700,000 in respect of BIA and estimatedliabilities of £700,000 in respect of BBN FP. All of the staff working for these businesses have transferred to Tenet,including those staff working for Berkeley Berry Birch Group Support ServicesLimited ('GSS'), who provide administrative support services to the businesses. BIA BIA is a service supplier and network for Independent Financial Advisers('IFAs'). Approximately 300 IFAs, previously Appointed Representatives of BIA,are now Appointed Representatives of Tenet's Interdependence network, including5 IFAs employed by MacRobins plc ('MacRobins'), a BBB subsidiary which is beingretained by BBB. BIA also provided support services to approximately 60 firmswho are directly authorised and who will now receive these services from TenetSupport Services Limited. On 14 February 2006, a fellow BBB subsidiary, Berry Birch & Noble FinancialPlanning (Weston) Limited ('Weston'), which was previously directly authorised,became an Appointed Representative of BIA as part of the BBB Group's overallrefinancing plans. Weston will not become an Appointed Representative ofInterdependence following completion of the transaction. The position regardingWeston is discussed below under the heading 'Businesses excluded from the saleto Tenet'. For the year ended 31 March 2005, BIA reported turnover of £39,970,000 and aloss before tax of £370,000. The gross assets being sold are approximately£4,000,000. As explained in the announcement on 28 February 2006, BIA is subject to aDecision Notice issued by the Financial Services Authority ('FSA') on 29 July2005 as a result of a regulatory capital deficit. Following the sale of itsbusiness, the FSA has cancelled the permission granted to BIA pursuant to PartIV of the Financial Services and Markets Act 2000. Following the sale of its business, BIA has changed its name to BBB NetworkLimited. BBN FP BBN FP was previously a national IFA supplying financial planning advice toindividual clients via its employed IFAs. BBN FP ceased undertaking regulatedactivities on 19 December 2005 and certain of it IFAs transferred to Weston asself-employed advisers or to MacRobins as employed advisers. Although BBN FP hasceased trading, it has continued to receive renewal commissions. The right toreceive these renewal commissions going forward has been sold to Tenet. For the year ended 31 March 2005, BBN FP reported turnover of £8,036,000 and aloss before tax of £2,456,000. Renewal commissions included in the turnoveramounted to approximately £1,698,000. Costs associated with the collection ofthe renewal commissions are minimal. No assets are being sold as part of thedisposal of the BBN FP business. BBN FP is also subject to a Decision Notice issued by the Financial ServicesAuthority ('FSA') on 29 July 2005 as a result of a regulatory capital deficit.Following the sale of its business, the FSA has cancelled the permission grantedto BBN FP pursuant to Part IV of the Financial Services and Markets Act 2000. GSS GSS provides support services exclusively to the BBB group. These servicesinclude compliance, commission processing and training as well as operational,HR, finance and IT support. For the year ended 31 March 2005, GSS reported turnover of £4,633,000, all fromfellow BBB Group companies, and received contributions amounting to £1,137,000from various financial services companies as part of the BBB Group StrategicPartner Programme. Profit before tax for the year ended 31 March 2005 was£327,000. The business sold to Tenet contributed approximately £2.5 million to GSS'sturnover. The balance was largely earned from Weston, discontinued activities ofBBN FP and Direct Protect Limited, which have both ceased trading, and BerryBirch & Noble Insurance Brokers Limited, which sold its business and relatedassets and liabilities on 28 February 2006. Following the sale of the BIA and BBN FP businesses, GSS has changed its name toBBB Support Services Limited. Businesses excluded from the sale to Tenet As indicated above, despite having entered into exclusive negotiations for thesale of the businesses of Weston, MacRobins and Berry Birch & Noble EstatePlanning Limited ('BBN EP'), BBB has been unable to reach agreement with Tenetfor their sale. Weston had previously been authorised in its own right by the FSA and was alsosubject to a Decision Notice dated 29 July 2005 relating to a regulatory capitaldeficit. The firm subsequently became an Appointed Representative of BIA, a steptaken in connection with the BBB Group's overall refinancing plans. Since BIA'spermission has been cancelled, Weston is no longer able to conduct business asan Appointed Representative of BIA and its representatives have been instructedto cease conducting business. The Board of Weston is seeking a buyer for thebusiness who can complete a purchase at short notice. MacRobins and BBN EP remain solvent and will continue to trade while the Boardof BBB, in conjunction with the Boards of the companies concerned, seeks buyersfor these businesses. Further announcements will be made on reaching any agreement for the sale ofthese remaining businesses. Working capital and application of proceeds The working capital position of the BBB Group and the application of theproceeds from the above disposals were set out in the announcement made on 28February 2006. Future of the BBB Group The Directors are now assessing the financial position of the BBB Group toascertain the situation for each individual company following the disposals andfurther announcements will be made following the completion of this assessment. Conclusion The directors of BBB confirm that in respect of the disposal of the BIA and BBNFP businesses: (a) negotiation does not allow time for shareholder approval; (b) all alternative methods of financing have been exhausted and the only option remaining is to dispose of its remaining businesses; and (c) by taking the decision to dispose of these businesses to raise cash, the directors believe that they are acting in the best interests of the Company and shareholders as a whole. If these disposals had not been completed today, administrators would have been appointed tomorrow. Arden Partners Limited, which is acting as the Company's sponsor, confirms that,in its opinion and on the basis of information available to it, BBB is in severefinancial difficulty and it will not be in a position to meet its obligations asthey fall due without this disposal taking place today. Enquiries: Andrew ShortisGroup Managing DirectorBerkeley Berry Birch plc 024 7623 2010 This information is provided by RNS The company news service from the London Stock Exchange