Last checked at 30 Mar 2015 07:01
30 March 2015
CENTRAL ASIA METALS PLC
("CAML" or the "Company")
Proposed Share Premium Cancellation and Notice of Extraordinary General Meeting
Central Asia Metals plc (AIM: CAML), a copper producing company focused on base metals in Central Asia, today announces a proposed Share Premium Cancellation in order to restructure the Company's balance sheet so as to, subject to the protection of creditors, increase the amount of distributable reserves. The Share Premium Cancellation will permit the Company to continue to pay dividends and to repurchase its Ordinary Shares as and when the Directors decide this is appropriate.
The Company is today posting to Shareholders a circular (the "Circular") containing details of a proposed Share Premium Cancellation together with formal notice of the Extraordinary General Meeting, to be held at 10.00 a.m. on 15 April 2015 at the offices of Field Fisher Waterhouse LLP, Room 9.22, Riverbank House, 2 Swan Lane, London EC4R 3TT to consider and vote on the Resolution. The Circular will also shortly be available for inspection at http://www.centralasiametals.com/company information/reports presentations/
For further information contact:
Central Asia Metals plc |
Tel: +44 (0) 20 7898 9001 |
Nick Clarke, CEO Nigel Robinson, CFO |
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Peel Hunt LLP (Nominated Adviser & Joint Broker) |
Tel: +44 (0) 20 7418 8900 |
Matthew Armitt Ross Allister |
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Mirabaud Securities LLP (Joint Broker) | Tel: +44 (0) 20 7878 3362 |
Peter Krens |
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Bell Pottinger | Tel: +44 (0) 20 3772 2500 |
Lorna Cobbett |
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Background to and reasons for the Share Premium Cancellation
The Company was incorporated in 2005 and is the parent company of the Group. The Group has developed and brought into production the Kounrad Project. Construction of the plant at the Kounrad Project was completed in early 2012 and the harvesting of copper cathodes commenced on 29 April 2012. The plant has produced over 30,000 tonnes of copper in the 35 months since operations started.
The successful commencement of production has enabled the Board to return significant funds to Shareholders through the combination of a share buy back programme and dividend payments. On 13 December 2012, the Board announced a dividend policy based on the Company's annual dividend being calculated as a percentage of the attributable revenues earned from the Kounrad Project at a minimum level of 20 per cent. of such revenues, subject to the Company's cash reserves providing a dividend cover of three times or greater. A total of $40.8 million has been returned to shareholders since 2012 (including dividends and share buy-backs), equating to 68% of funds raised at the Company's IPO.
The Act governs and provides certain restrictions on the circumstances in which a company may pay dividends or return funds to its shareholders. In particular, it provides that a public company may only purchase its own shares out of distributable reserves or out of the proceeds of a fresh issue of shares. Furthermore, a public company may only pay a dividend on its shares out of its accumulated distributable reserves. It also imposes limitations on the use of a company's capital reserves including its share premium account.
As at 31 December 2013 (being the latest audited accounts of the Company available as at the date of this document) the Company had an accumulated positive balance on its profit and loss account of $36,752,283 while the balance on the Company's share premium account at that date was $nil (following the Company's previous cancellation of its share premium account which took effect on 1 August 2013). The current amount standing to the credit of the share premium account is $67,078,630.
In order to create further distributable reserves (subject to the protection of creditors), the Company is proposing to cancel the whole of its share premium account. If confirmed by the Court in the manner anticipated, this will create a reserve of $67,078,630, which, once all Relevant Creditor Amounts have been paid or the creditors owed such amounts have consented to the Share Premium Cancellation or they have otherwise been provided for (as more particularly described below), will be credited to the profit and loss account of the Company thereby increasing available distributable reserves by such amount. This will help the Company to continue with its dividend policy for as long as it is prudent to do so.
Under the Act, a public company may reduce or cancel its share premium account if so authorised by its articles of association, providing that it obtains the approval of its shareholders by special resolution in general meeting and that the Court confirms the reduction or cancellation. The Company is therefore seeking the approval of Shareholders at the EGM to cancel the Company's share premium account.
If approved by Shareholders the Company will, as soon as practicable, apply to the Court for an appropriate Court Order. It is expected the Court Order confirming the Share Premium Cancellation will be made on or around 13 May 2015. The Share Premium Cancellation will become effective on the Effective Date soon thereafter.
The Court will be concerned to ensure that the interests of the Company's creditors as at the Effective Date are not prejudiced. The Court may require the Company to give an undertaking, amongst other matters, to transfer the Cancellation Amount to a non-distributable reserve until such time as all creditors of the Company on the Effective Date have either consented to the Share Premium Cancellation, have been satisfied or have otherwise been provided for. On the basis that the Company does not trade of its own account and has relatively few creditors who are of a short-term nature, it is anticipated that the non-consenting creditors will be protected by the establishment of a blocked trust bank account to cover sums owing to them so as to ensure that the reserve arising on the Share Premium Cancellation can be treated as distributable very shortly after the Effective Date. The Company will offer such form of creditor protection as it may be advised is appropriate in the circumstances.
Following the Share Premium Cancellation, and subject to any undertaking given to the Court, the distributable reserves of the Company will be increased as a result of the distributable reserve resulting from the Share Premium Cancellation. This, together with future distributable profits generated after the Effective Date, will help the Directors to continue the Company's dividend policy. It should be noted that the Share Premium Cancellation will not, in itself, involve any distribution or repayment of capital by the Company to any Shareholder or other person, and will not reduce the Company's underlying assets.
APPENDIX 1
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Date circular posted | 30 March 2015 |
Latest time and date for receipt of Form of Proxy to be valid at the Extraordinary General Meeting | 10.00 a.m. 13 April 2015 |
Extraordinary General Meeting | 10.00 a.m. on 15 April 2015 |
Court hearing to confirm the Share Premium Cancellation | 13 May 2015 1 |
Effective Date | the date on which the Court Order confirms the Share Premium Cancellation (and certain accompanying documents are registered by Companies House) which is expected to be on or around 13 May 2015 2 |
If any of the above times or dates should change, the revised times and/or dates will be notified to Shareholders by an announcement to a Regulatory Information Service.
Notes:
1 This date is subject to any changes which may be imposed by the Court.2 This date will depend on, amongst other things, the date on which the Court confirms the Share Premium Cancellation.
APPENDIX 2
DEFINITIONS
"Act" | the Companies Act 2006, as amended |
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"AIM" | the market of that name operated by London Stock Exchange plc |
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"Extraordinary General Meeting" or "EGM" | the extraordinary general meeting of the Company convened for 10.00 a.m. on 15 April 2015, notice of which is set out in the Circular, or any adjournment of it |
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"Board" or "Directors" | the directors of the Company |
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"Cancellation Amount" | the balance standing to the credit of the share premium account of the Company as at the Effective Date |
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"Circular" | the circular posted to Shareholders today, containing the notice of EGM |
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"Company" or "CAML" | Central Asia Metals plc |
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"Court" | the High Court of Justice of England and Wales |
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"Court Order" | the order to be sought by the Company from the Court confirming the Share Premium Cancellation |
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"Effective Date" | the date that the Court Order confirming the Share Premium Cancellation is registered with the Registrar of Companies |
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"Form of Proxy" | the form of proxy for use by Shareholders at the Extraordinary General Meeting |
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"Group" | the Company and its subsidiaries |
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"Kounrad Project" | the solvent extraction-electrowinning (SX-EW) copper plant at the Kounrad mine site in central Kazakhstan, of which the Group is the operator and owner |
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"Ordinary Shares" | ordinary shares of $0.01 each in the capital of the Company |
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"Relevant Creditor Amounts" | all amounts that would be owing to persons entitled to prove as creditors of the Company in a notional winding up of the Company as at the Effective Date |
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"Resolution" | the resolution set out in the notice of the EGM |
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"Shareholders" | the holders of Ordinary Shares |
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"Share Premium Cancellation" | the proposed cancellation of the Company's share premium account as set out in the Resolution |
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"£" | Pounds sterling, the lawful currency the United Kingdom | ||
"$" | US dollars, the lawful currency of the United States of America |
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Note to editors:
Central Asia Metals, an AIM-listed UK company based in London, owns 100% of the Kounrad SX-EW copper facility in Kazakhstan. The Company also has a 52% equity interest in Copper Bay Ltd, which is a private company conducting a pre-feasibility study of the Chañaral Bay Copper Project in Chile. At the 2014 UK Stock Market Awards, the Company was named Best Basic Resources Plc. For further information, please visit www.centralasiametals.com.