Last checked at 27 Apr 2009 11:44
Medsea Estates Group plc
('Medsea' or 'the Company')
Issue of Addendum to Circular and Appointment of Independent Director
Background to the Addendum
A circular ("Circular") was sent to Shareholders on 7 April 2009. A summary is set out in Appendix I.
However, the Company has now posted an Addendum to the Circular on 25 April 2009. A summary is set out in Appendix I1.
The purpose of the Addendum is to inform Shareholders of material changes to the information contained in the Circular. All resolutions proposed in the Circular remain unchanged and the Addendum seeks to remedy the unforeseen resignation of the Independent Director and to provide further information where relevant.
The Extraordinary General Meeting will continue to take place at 32 Percy Street, London W1T 2DE on 30 April at 10.30am.
Copies of the Circular and Addendum can be found at www.medseaestates-ir.com
Appointment of Director
The Company is pleased to announce the appointment of John Frankland as a non-executive director with immediate effect.
John Frankland, aged 40, most recently was a certified financial planner specializing in alternative and unregulated areas of the investment market, including property-based investments. He spent 11 years (1989-2000) with Prudential UK, in a variety of roles including advisory, business-to-business, sales management and compliance management. Since 2000, he has been operating as an Independent Financial Advisor ("IFA") and has built up an extensive private and corporate client base. Since 2007, he has been working on creating an asset allocation model focused on alternative investments for use by the IFA market, and has set up an alternative investment research company and consulted on the development of a new wealth management service to this end.
Mr. Frankland holds no shares in the Company.
Current Directorships
CPC Wealth Management Ltd
Professional Wealth Management Services Ltd
Corporate and Private Client Consulting Ltd
Sa Torre Development Ltd
Argos Sol Ltd
Past Directorships
PWMS (Carlisle) Ltd (resigned 28/02/09)
John Frankland was a director at the time, or within twelve months, of the following companies going into receivership, compulsory liquidation, creditors' voluntary liquidation, administration, company voluntary arrangement or composition with creditors generally or any class of its creditors:
Pension Rescue Ltd (dissolved 16/12/2008)
No other information falls to be disclosed under schedule 2(g) of the AIM rules with regard to John Frankland.
Summary of material changes made in the Addendum posted on 25 April 2009
Resignation of Independent Director and implications
The Circular detailed the intention of the Company to enter into a related party transaction in order to complete the disposal ("Disposal") of Medsea UK Limited, a material operating subsidiary, to the current executive directors of the Company.
The Disposal will constitute a fundamental change of business as defined by the AIM Rules. Furthermore, as the Disposal is to the current executive directors of the Company, it would be recognised as a related party transaction under the AIM Rules. Moreover, related party transactions require that an independent director of the Company provide to all shareholders a "fair and reasonable" opinion with regard to the terms of the transactions. The Circular posted on 7 April 2009 included a letter from Neil Craven, the independent director of the Company, confirming that the terms of the Disposal were "fair and reasonable" insofar as its Shareholders are concerned.
On 7 April 2009, the Executive Directors became aware that Neil Craven wished to withdraw his "fair and reasonable" opinion provided in the Circular. However, the Circular had been released for posting on the morning of 7 April 2009 which led to a failure to withdraw the Circular in advance of its posting. Furthermore, on 8 April 2009, Neil Craven tendered his resignation from the Company with immediate effect.
In order for the Company to satisfy the AIM Rule with regard to the provision of a "fair and reasonable" opinion from an independent director for the completion of the Disposal to the related parties being the current Executive Directors, the letter of recommendation from the Independent Director (Part 1) set out on pages 3 to 4 of the Circular must be disregarded.
Instead, the Board of the Company has appointed a new independent director to review the terms of the Disposal and where appropriate provide a "fair and reasonable" opinion.
2. Board Appointment of John Frankland
The Company is pleased to announce the appointment of John Frankland as a non-executive director with immediate effect. Further details are noted within this announcement.
3. Independent Director review of the Disposal
Mr. Frankland, in his capacity as independent director of the Company, has reviewed the terms of the Disposal and concluded that the transaction is "fair and reasonable" insofar as Shareholders are concerned.
Mr. Frankland has been unable to consult with the Company's Nominated Adviser ("NOMAD") following the recent resignation of HB Corporate. In his position as the Independent Director of Medsea, he recommends that Shareholders vote in favour of the Resolutions contained in the Circular. His letter of recommendation to the Company is set out below (SEE APPENDIX II: LETTER TO SHAREHOLDERS FROM THE INDEPENDENT DIRECTOR) and is intended to replace the letter from Mr Craven set out in Part l of the Circular (SEE APPENDIX I: CIRCULAR DATED 7 APRIL 2009).
For avoidance of doubt, in the event that the Resolutions are not passed at the General Meeting, the Company will seek advice regarding insolvency procedures.
4. Deferred Consideration mechanics and security provided
It is the intention that the benefit of the Deferred Consideration to which the Company is entitled for the Disposal will be secured so far as practicable for the benefit of the Minority Shareholders in the following way (or in such other way as the Company may be advised in order to secure a similar result):
4.1 the Company will establish a new company ("newco") to take the benefit of the Deferred Consideration and newco will issue 13,740,472 shares to the Minority Medsea Shareholders.
4.2 Medsea UK Limited will grant a debenture over its assets and pledge over the shares in Medsea Group SL to secure newco's interest in the Deferred Consideration.
4.3 Other steps including security by Medsea Group SL will be sought.
5. Takeover Code
The Company has consulted the Panel regarding the Company's status for the purposes of the City Code on Takeovers and Mergers. The Company understands that the Transactions are not subject to the provisions of the Code but upon the passing of the Resolutions and the appointment of the New Directors the Company will become subject to the Code.
The Company will inform shareholders of the result of the EGM on 30 April 2009.
For further information:
Medsea Estates Group plc
www.medseaestates-ir.com
Tony Gatehouse, Chairman Tel: +34 6 570 40 02
Juan Carlos Rodriguez Martinez, Chief Executive
Media enquiries:
Threadneedle Communications
Alex White/Josh Royston Tel: +44 (0) 20 7653 9850
APPENDIX I: CIRCULAR DATED 7 APRIL 2009
PART 1
Note: This letter has been superseded by new letter set out in the Addendum and Appendix II of this announcement.
Dear Shareholder,
Medsea Estates Group Plc (the 'Company' or 'Medsea')
Disposal of Medsea UK Limited, Share Acquisition, Board Changes, New Business Plan and Notice of Extraordinary General Meeting
Background to and Reasons for the Proposals
Following an earlier announcement on 10 November 2008, the Company announced on 19 March 2009 that it was continuing to discuss with various third parties potential transactions which could increase shareholder value but noted that if these discussions failed to bear fruit the Company would proceed with its original plan to delist from AIM.
The Board of Medsea has now considered these approaches and been in contact with the initiators. The Board has consulted with its former Nominated Adviser and Broker, HB Corporate, a trading division of Hoodless Brennan PLC, on the approaches. However, as announced on 6 April 2009, HB Corporate has resigned with immediate effect and trading in the Company's shares has been suspended.
Although the decision has been a difficult one, the only one out of two proposals which the Board feels able to put to shareholders is that explained in this Circular. . Other than the two proposals, the Board was left with the option either of proceeding with the previous intention to seek shareholders' approval to the cancellation of the Company's AIM admission. The Board feels that given the proposals received, such a course would not be fair and reasonable in the interests of the Company's shareholders or creditors.
In view of the loss of the trading facility which would follow the cancellation of the AIM admission, the Board has decided that the Proposals described in this Circular offer a better prospect for Medsea shareholders. For the avoidance of doubt, the former Nominated Adviser has not approved the terms of this Circular. It must also be emphasised that there is no guarantee that the Company will be successful in appointing a new Nominated Adviser or that trading in the shares on AIM will be restored.
Related Party Transactions and Disposals resulting in a fundamental change of business
The Transactions are proposed to take place between the Company and the Executive Directors and fall within the definition of "substantial property transactions" under section 190 of the Companies Act 2006 and under the definitions of "substantial transactions and "related party transactions" under rules 12 and 13 of the AIM Rules. The Transactions and the New Business Plan also amount to a "disposal resulting in a fundamental change of business" under rule 15 of the AIM Rules.
The combined effect of the above statutory and AIM Rule requirements is that the Proposals be explained in the Circular and that the necessary resolutions for their approval be submitted to the approval of Medsea Shareholders at a General Meeting.
The Investing Strategy and New Business Plan
AIM Rule 15 states that where the effect of a proposed disposal is to divest the AIM company of all, or substantially all, of its trading business activities, the company will be treated as an investing company. The Company's investing strategy to be implemented following the Disposal is set out in the New Business Plan which is summarised in Part II and Appendix III. The New Business Plan is subject to the approval of shareholders at the General Meeting. The Company will then have to make an acquisition or acquisitions which may constitute a reverse takeover under Rule 14 or otherwise implement the investing strategy within twelve months of having received such consent from Shareholders, failing which the Company's shares will be suspended from trading on AIM.
In order to provide adequate headroom for further share issues and facilitate fund raising, it is proposed to include resolutions to empower the Directors to allot additional ordinary shares at the General Meeting and providing for a further reorganisation and subdivision of the share capital.
The Proposals
Part II of this document describes the Proposals. The New Directors believe that their broad collective experience in corporate finance and corporate broking together with their extensive network of contacts will assist them in the identification, evaluation and funding of acquisition targets. When necessary, other external professionals will be engaged to assist in the due diligence of prospective targets. The New Directors would also consider bringing on board additional directors with relevant experience.
Directors and Management
The current Board, including me as the Independent Director, will resign from office upon the Transactions becoming or being declared unconditional in all respects. The New Directors will join the Board at the same time. Further information about the terms of appointment of the New Directors is set out in Appendix IV.
Financial information and Pro Forma Balance Sheet
Unaudited financial information regarding Medsea and its subsidiaries is contained in Appendix I. The Company announced its interim results for the six month period to 30 June 2008. For the year ended 31 December 2008 unaudited sales were in the region of £10.8 million and unaudited losses were in the region of £147,000. Administrative overheads have been reduced. Trading continues to be very depressed in the current adverse market conditions.
The financial effect of the proposed Disposal is shown below in Appendix II.
Further Information
Your attention is drawn to Part II of this document, the Appendices to this document and the accompanying Form of Proxy.
Action to be taken
One of the conditions of the Proposals is the passing of the Resolutions by the requisite majority at the General Meeting. In order to vote at the General Meeting, you must return a Form of Proxy duly completed and signed by post or by hand to Blue Harbour Financial Limited, 1 Aurora Avenue, Queens Quay, Clydebank G81 1BF by no later than 10.30 am on 28 April 2009 (or 48 hours before any adjournment of the General Meeting). A reply-paid envelope (for use in the UK only) is enclosed for your convenience.
Recommendation
The Independent Director, who has consulted with the Company's nominated adviser prior to to their resignation as nominated adviser, considers the terms of the Transactions to be fair and reasonable so far as Medsea Shareholders are concerned. The Independent Director recommends that shareholders vote in favour of the Resolutions as he intends to do in respect of his holding of Medsea Shares, representing approximately 2 per cent of the issued ordinary share capital of Medsea.
Yours sincerely,
Neil Craven, Independent Director
PART II
Description of the Proposals
Proposed disposal of Medsea trading subsidiaries
The Executive Directors will purchase in their name, or through a Special Purpose Vehicle (SPV), the whole of the issued share capital of Medsea UK Limited. This company represents substantially the entire assets and undertaking of Medsea including all trading subsidiaries and other residual assets, on the following principal terms;
the price of €1 (one euro) and the deferred consideration specified below ("the Deferred Consideration")
each of the Executive Directors will resign on terms acknowledging that they have no claims against the Company for accrued remuneration, expenses or any other matter
each of the Executive Directors will so far as each is reasonably able to do so provide information and answer queries raised by the Company without charge in the period of 12 months following the Disposal
completion of the disposal is conditional upon fulfillment of the Conditions and completion of the Share Acquisition specified below
Medsea will have audit access to the Medsea Group and in the event of any dispute as to the calculation of the Deferred Consideration, the parties will be bound by the decision of an Independent Accountant
the interest of Medsea in the assets of the Medsea Group will be protected by a legal charge, debenture or other form of security reasonably approved by Medsea.
The Deferred Consideration
The terms of the Deferred Consideration are as follows:
The Executive Directors will procure that an amount equal to 15% of capital and income distributions derived by any of the Medsea Group attributable to the Development Properties ("Property Distributions") which arise during the Deferred Period will be paid to Medsea Estates Group plc. In addition during each successive year following the Deferred Period, the Executive Directors will procure that an amount equal to 15% of the Property Distributions less 3% in each successive year will be paid to Medsea Estates Group plc (eg: 12% in year 6, 9% in year 7 etc.).
The benefit of the Deferred Consideration will be secured so far as practicable for the benefit of the Minority Shareholders, that is, the holders of 13,740,472 Existing Ordinary Shares (the amount of Existing Ordinary Shares not held by the Executive Directors and Catherine Gatehouse).
This value of the Deferred Consideration is estimated by the directors to be €1.3million. On the assumption that this amount will be secured for the benefit of the Minority Shareholders, this value would equate to 0.09 cents per share. Further information regarding the valuations is set out in Appendix II. It should be noted that there is no guarantee that this value will in fact be achieved.
For the purposes of the Deferred Consideration, the following definitions apply:
"Medsea Group" Medsea Group SL and all subsidiary undertakings
"Development Properties" the following properties situated in Spain which are partially owned
directly or indirectly by Associate companies of Medsea Group SL:
Torre del Obispo (Owner: Promilorci SL)
Medsea Group has a 13% interest in Promilorci SL. Euromed Investments SL (Medsea's 95% subsidiary) has a joint venture arrangement with Promilorci SL for the 4.5 million sq ft Nuevo Torre Guil development in Murcia. The project, known as the Torre del Obispo development, is within a large forested area six miles from the city of Murcia, one of the most important Spanish destinations for national and international tourism. The Murcia region has experienced significant growth and ranks fifth for foreign investment in Spain with Madrid and Barcelona taking the first two places.
Aguilas (Owner: Urbanilor SL)
Medsea Group has a 50% interest in Bishop Properties SL which itself has a 10% interest in Urbanilor SL. Urbanilor has bought development rights to a 693,159 sq m - approximately 7.5 million sq ft - plot of land in Aguilas, Murcia, Spain . Urbanilor intends to develop up to 578 residential properties on the site. Medsea will supervise everything related to the sales and marketing of the properties on behalf Urbanilor, and Medsea's subsidiary, Euromed, acting as principle agent, is marketing the development in the UK and Ireland through its links with some 150 independent property agents.
Argos Sol (Owner: Residental Argos Sol SL)
Medsea Group has a 30% interest in Eurobond Investments SL which has a 80% interest in Nuevas Inversiones del Mediterraneo which itself owns 100% of Residental Argos Sol SL. Eurobond has a four year contract with Residencial Argos Sol, S.I to market all the properties on a new Euro120million development in Murcia, Spain. which also owns ten percent of the developer, has sole selling rights for all units. The Residencial Argos Sol development, in the lakeside area of Cehegin, covers 325.083 sq m and comprises 830 units - ranging from apartments, town-houses,semi-detached villas and an aparthotel/spa. Cehegin is approximately 62km from the City of Murcia and linked directly to it by a new motorway. The international airports of Alicante and Murcia are just over an hour's drive away, as are a choice of beaches. As well as its large lake (venue for the National Fishing Championship), the area is renowned for its health-giving hot springs.
"Deferred Period" the period of five years starting on the date of Completion of the
Transactions
The Board of Medsea intends that the benefit of the Deferred Consideration will be secured so far as practicable for the benefit of the Minority Shareholders. The present proposed means of giving effect to this intention is that arrangements will be made to dispose of the benefit of the Deferred Consideration at current market value to a special purpose vehicle or trust which will hold the benefit of the deferred Consideration for the Minority Shareholders. The Company will make a further announcement on this matter as soon as practicable.
2. Share Acquisition
Andrew Meikle or a vehicle introduced by Mr Meikle will purchase all the Existing Ordinary Shares held by the Executive Directors and by Catherine Gatehouse amounting to 64,238,940 ordinary shares (the "Sale Shares) representing 82.38% of the current issued share capital of the Company on the following principal terms:
the Sale Shares will be sold with good title and free of any encumbrances
the price of the Sale Shares will be 0.18p per share payable by issue of a deferred loan note redeemable after 1 year without interest
completion of the sale of the Sale Shares is conditional upon the fulfillment of the Conditions specified below.
3. Maji advance
Maji will advance to Medsea £120,000 to settle liabilities to creditors conditionally upon their acceptance of settlement at 60p in £. Further details of the advance are set out in Appendix IV.
4. Board Changes
It is the intention that, conditional on the approval of the Proposals, all the current Directors will resign from the Board of the Company.
Andrew Meikle, Alexandra Eavis and Alberto Gil have agreed to join the Board, subject to the approval of the Proposals. Brief summaries of their experience are set out below. Further information regarding their proposed remuneration, and current and past directorships is set out in Appendix IV.
Andrew Meikle - Chairman and Executive Director
Andrew has 15 years' experience in the private equity market. He jointly founded Catalyst Investment Group Limited and more recently ARC Fund Management Limited, which have between them invested in over 35 small companies over the last 8 years. ARC is now listed on the AIM market in London. Whilst with these organisations, he set up the first retail EIS Enterprise Investment Scheme fund and the first FSA-authorised European residential property fund. Andrew set up a new financial services group structure in 2006, Maji Capital Partners Group plc, which includes a corporate finance arm (Infinity Corporate Finance Limited) and a stockbroking arm (M Squared Equities Limited). This public limited company and its subsidiaries specialise in delivering bespoke financial products to retail investors. Andrew is also a director of the Infinity Asia to AIM Fund.
Alexandra Eavis - Executive Director
Alexandra Eavis has been acting as the Director of Corporate Finance at Infinity Corporate Finance Ltd since May 2006. In addition, she has recently completed the project management of a £3.5million residential conversion of a Grade 1 listed building in Central London for Topshore Ltd. Since graduating from Oxford University with a degree in experimental psychology, she has been responsible for setting up award winning public sector projects and establishing her own consultancy firm (Leone Services Ltd) within the small company sector. Her analytical and insightful thinking are key to the Infinity small company investment model, and her presence on the Group's management committee has been instrumental in diversifying the Group's business model. She also sits on the board of Maji Capital Partners Group Plc.
Alberto Gil - Non - Executive Director
Alberto has 15 years' experience in the private equity market. He jointly founded The Investment Trading Company aimed at raising funds for the SME market both here and abroad, especially in China. Prior to this he worked at Catalyst investment group as head of Corporate Finance and the companys Financial Controller helping to raise funds for the SME market .He has a good knowledge of the retail sector and the residential property services.Alberto is a qualified Chartered Management Accountant
4. New Business Plan
Medsea will adopt a new business plan (the Business Plan) describing the intent for the new Medsea Group to develop and/or acquire a new fund management business whereby the new Medsea Group will seek to raise funds in order to offer profitable companies(and their shareholders) based in Brazil, Russia, India, China and other developing economies the opportunity to have the expenses of obtaining admission to the AIM market met by the new Medsea Group in exchange for the grant of an agreed proportion of shares in the company seeking admission.
The New Directors intend to arrange an entitlement offer to Medsea shareholders with a view to raising sufficient funds to meet any additional working capital needs for the forthcoming 12 months. In order to assist in this, they intend to use the resources of Maji Capital Partners Group plc in which they are directors and Andrew Meikle has a controlling interest. There is no guarantee that sufficient funds will be raised but the New Directors are confident that this objective can be met.
More information about the New Business Plan is set out in Appendix III.
5. Conditions of the Proposals
The Proposals are subject to the following conditions:
The confirmation of the Takeover Panel in terms reasonably satisfactory to the Board that Medsea is not governed by the terms of the Code on the grounds that it is not resident in the United Kingdom.
The passing of the Resolutions by the requisite majority.
The acceptance by Medsea's creditors of settlement of the amounts owed to them on terms satisfactory to Maji.
The receipt of funds advanced by Maji to satisfy Medsea's creditors.
The conditions must be fulfilled by 30 April 2009 otherwise the Proposals will lapse unless extended by agreement between the Company, the Executive Directors and Maji.
6. General Meeting
The Company has convened a General Meeting to be held on 30 April 2009 for the purpose of considering and if thought fit passing the following resolutions:
To approve the Disposal on the basis of the terms described in the Circular
To approve the Share Acquisition on the basis of the terms described in the Circular
To approve the adoption of the New Business Plan as described in the Circular
To change the name of the Company to "AIM Investments plc"
To subdivide the Ordinary shares of 1p each into shares of 0.1p each
To cancel the Deferred shares and the Share Premium Account
To empower the Directors to allot ordinary shares to a nominal value of £2,202,058
The Notice convening the General Meeting is to be found on page 32 and a Form of Proxy accompanies this document.
7. Irrevocable undertakings to vote in favour of the Transactions
The Executive Directors and Catherine Gatehouse have irrevocably undertaken to vote in favour of the Resolutions in respect of their shares in the Company amounting in aggregate to 64,238,940 Medsea Shares, representing 82.38% of the issued ordinary share capital of Medsea.
While the effect of such irrevocable undertakings is to ensure that the Resolutions will be carried, nevertheless the Directors wish to ascertain the level of support for the Proposals by the Minority shareholders and to give the Minority Shareholders a voice.
APPENDIX II: LETTER FROM THE INDEPENDENT DIRECTOR IN THE ADDENDUM POSTED ON 24 APRIL 2009
Dear Shareholders,
Before my appointment to the Board of Medsea ("the Board"), the incumbent Board considered two separate third party transactions that may have created shareholder value. On 18 March 2009 the Company accepted the letter proposing certain transactions from Maji Capital Partners Group Plc ("Maji") which it considered to be the most favourable for its shareholders and creditors. The Maji proposals have been agreed between the Company and Maji to be legally binding.
As announced on 6 April 2009, the Company's Nominated Advisor, HB Corporate, resigned with immediate effect and trading in the Company's shares was suspended. In addition, as announced on 22 April 2009, the executive directors became aware on 7 April that Neil Craven wished to withdraw his "fair and reasonable" opinion provided in the Circular and on 8 April 2009 Mr Craven resigned as a director with immediate effect. This left the Company in a position where it was unable to satisfy the AIM Rule with regard to the provision of a "fair and reasonable" opinion from an independent director for the completion of the Disposal to the related parties being the current Executive Directors.
For the avoidance of doubt, the former Nominated Adviser has not approved the terms of the Circular or this Addendum. It must also be emphasised that there is no guarantee that the Company will be successful in appointing a new Nominated Adviser or that trading in the Shares on AIM will be restored.
Related Party Transactions and Disposals resulting in a fundamental change of business
The Transactions are proposed to take place between the Company and the Executive Directors and fall within the definition of "substantial property transactions" under section 190 of the Companies Act 2006 and under the definitions of "substantial transactions and "related party transactions" under Rules 12 and 13 of the AIM Rules. The Transactions and the New Business Plan also amount to a "disposal resulting in a fundamental change of business" under Rule 15 of the AIM Rules.
The combined effect of the above statutory and AIM Rule requirements is that the Proposals be explained in the Circular and that the necessary resolutions for their approval be submitted to the approval of Medsea Shareholders at an Extraordinary General Meeting. All the details contained in the Circular are accurate except those in Part I and Part II (4). Part I should be disregarded in its entirety and Shareholders should instead refer to this replacement Part I section. Part II (4) refers to Board Changes and should read:
"It is the intention that, conditional on the approval of the Proposals, all the current Executive Directors will resign from the Board of the Company.
I intend to retain my Non-Executive role and remain on the Board. In addition, Andrew Meikle, Alexandra Eavis and Alberto Gil have agreed to join the Board, subject to the approval of the Proposals. Brief summaries of their experience are set out in the Circular. A brief summary of my experience is contained in this Addendum. Further information regarding their proposed remuneration, and current and past directorships is set out in Appendix IV of the Circular."
The Investing Strategy and New Business Plan
AIM Rule 15 states that where the effect of a proposed disposal is to divest the AIM company of all, or substantially all, of its trading business activities, the company will be treated as an investing company. The Company's investing strategy to be implemented following the Disposal is set out in the New Business Plan which is summarised in Part II and Appendix III of the Circular. The New Business Plan is subject to the approval of Shareholders at the General Meeting. The Company will then have to make an acquisition or acquisitions which may constitute a reverse takeover under Rule 14 or otherwise implement the investing strategy within twelve months of having received such consent from Shareholders, failing which the Company's shares will be suspended from trading on AIM.
In order to provide adequate headroom for further share issues and facilitate fund raising, it is proposed to include resolutions to empower the Directors to allot additional ordinary shares at the General Meeting and providing for a further reorganisation and subdivision of the share capital.
The Proposals
Part II of the Circular describes the Proposals. The New Directors believe that their broad collective experience in corporate finance and corporate broking together with their extensive network of contacts will assist them in the identification, evaluation and funding of acquisition targets. When necessary, other external professionals will be engaged to assist in the due diligence of prospective targets. The New Directors would also consider bringing on board additional directors with relevant experience.
Directors and Management
The current Executive Directors will resign from office upon the Transactions becoming or being declared unconditional in all respects. The New Executive Directors will join the Board at the same time. I will remain on the Board assuming the Proposals are approved. Further information about the terms of appointment of the New Directors is set out in Appendix IV of the Circular. Further information about the terms of my appointment is contained in this Addendum.
Financial information and Pro Forma Balance Sheet
Unaudited financial information regarding Medsea and its subsidiaries is contained in Appendix I of the Circular. The Company announced its interim results for the six-month period to 30 June 2008. For the year ended 31 December 2008 unaudited sales were in the region of £10.8 million and unaudited losses were in the region of £147,000. Administrative overheads have been reduced. Trading continues to be very depressed in the current adverse market conditions.
The financial effect of the proposed Disposal is shown in Appendix II of the Circular.
Further Information
Your attention is drawn to Part II of the Circular, the Appendices to the Circular and the accompanying Form of Proxy.
Action to be taken
One of the conditions of the Proposals is the passing of the Resolutions by the requisite majority at the General Meeting. In order to vote at the General Meeting, you must return the Form of Proxy included with the Circular duly completed and signed by post or by hand to Blue Harbour Financial Limited, 1 Aurora Avenue, Queens Quay, Clydebank G81 1BF by no later than 10.30 am on 28 April 2009 (or 48 hours before any adjournment of the General Meeting). A reply-paid envelope (for use in the UK only) was previously enclosed for your convenience.
Recommendation
I have reviewed the Circular and supporting material provided to me by Medsea and Maji. I have been unable to consult with the Company's Nominated Adviser ("NOMAD") because the Company is not currently retaining one but I conclude, based on the information provided to me, that the terms of the Transactions outlined in the Circular are fair and reasonable so far as Shareholders are concerned. In my position as the Independent Director of Medsea, I recommend that Shareholders vote in favour of the Resolutions contained therein.
Yours Sincerely,
John Frankland