24 May 2022 16:30
24 May 2022
DCD Media Plc
("DCD Media", the "Company" or the "Group")
Proposed Cancellation of Admission of Ordinary Shares to trading on AIM,
Re-Registration as a Private Limited Company,
Adoption of New Articles of Association
and
Notice of General Meeting
DCD Media today announces its proposed cancellation of admission of its ordinary shares to trading on AIM (the "Cancellation"), re-registration as a private limited company and adoption of new articles of association (together, the "De-listing").
A circular will be published and posted to Shareholders shortly setting out the background to and the reasons for the De-listing and the implications for the Company's Shareholders ("Circular"). The Circular will also contain a notice convening a general meeting of the Company ("General Meeting") at which Shareholders are invited to consider and, if thought fit, approve the proposed Cancellation, re-registration as a private limited company ("Re-registration") and adoption of new articles of association ("New Articles").
As announced on 16 November 2021, the Company reached agreement to sell substantially all of the Company's existing business, assets and trade liabilities by way of the sale of the entire issued share capital of NBD, one of the Company's subsidiaries, to 108 Media (the "Sale"), which was subsequently approved by Shareholders at general meeting on 2 December 2021. On completion of the Sale, the Company became classified under AIM Rule 15 as a cash shell. As such the Company is required to make an acquisition or acquisitions which constitute(s) a reverse takeover under AIM Rule 14 (including seeking re-admission as an investing company (as defined under the AIM Rules)) on or before the date falling six months after completion of the Sale.
The Directors have conducted a review of the benefits and drawbacks to the Company and its Shareholders in retaining its listing on AIM, and believe that Cancellation is in the best interests of the Company and its Shareholders as a whole. In reaching the conclusion, the Directors considered, amongst other factors, the significant time and cost of identifying a suitable acquisition or acquisitions which constitute(s) a reverse takeover under AIM Rule 14, the requirements and associated costs of maintaining trading in the Ordinary Shares on AIM and the limited ability of the Company to access capital on AIM.
To be passed, the Cancellation Resolution requires, pursuant to Rule 41 of the AIM Rules, the approval of not less than 75 per cent. of the votes cast by Shareholders (whether present in person or by proxy) at the General Meeting. The resolution to approve the Re-registration and the adoption of New Articles also requires the approval of not less than 75 per cent. of the votes cast by Shareholders (whether present in person or by proxy) at the General Meeting.
Should Cancellation be approved by Shareholders at the General Meeting, the Company will consider implementing a Matched Bargain Facility which would facilitate Shareholders buying and selling Ordinary Shares on a matched bargain basis following Cancellation. For further details please see the paragraph titled "Principal effects of the Cancellation" in the appendix to this announcement.
The General Meeting of the Company will be convened for 11 a.m. on 14 June 2022 at the offices of finnCap Ltd at 1 Bartholomew Close, London EC1A 7BL.
The Principal Shareholders have each confirmed their intention to vote in favour of the Resolutions in respect of their own beneficial shareholdings in the Company being, in aggregate, 2,482,705 Ordinary Shares representing 97.69 per cent. of the total voting rights of the Company.
The notice convening the General Meeting and setting out the Resolutions to be considered at it will be set out in a circular which is expected to be posted to Shareholders shortly, extracts of which can be found in the appendix to this announcement.
Capitalised terms in this announcement, unless otherwise defined, have the same meaning as will be set out in the Circular to be posted to Shareholders shortly.
A copy of the Circular and the New Articles will shortly be available on the Company's website at www.dcdmedia.co.uk.
For further information please contact:
Lisa Hale
David Craven, Executive Chairman
Investor Relations/ Media Relations
DCD Media plc
Tel: +44 (0)20 3869 0190
ir@dcdmedia.co.uk
Carl Holmes and George Dollemore
finnCap - Nominated Adviser & Broker
Tel: +44 (0)20 7220 050
The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014 as applied in the UK.
APPENDIX I - EXTRACTS FROM THE CIRCULAR TO SHAREHOLDERS
TO BE POSTED SHORTLY
Background to and reasons for the Cancellation
The Directors have conducted a review of the benefits and drawbacks to the Company and its Shareholders in retaining its listing on AIM, and believe that Cancellation is in the best interests of the Company and its Shareholders as a whole. In reaching the conclusion, the Directors have considered the following key factors, amongst others:
· the significant time and cost of identifying a suitable acquisition or acquisitions which constitute(s) a reverse takeover under AIM Rule 14 and the appetite of the existing management and Principal Shareholders of doing so. In addition, during the six month period since completion of the Sale, no viable opportunity has been identified or presented itself to the Board or Principal Shareholders;
· the recurring costs per annum of around £50k (in respect of, amongst other things, management time and the legal and regulatory costs) associated with maintaining the Company's listing on AIM which, in the Directors' opinion, are disproportionate to the prevailing or expected benefits to the Company of remaining listed;
· the AIM listing of the Ordinary Shares does not necessarily offer investors the opportunity to trade in meaningful volumes per se or with frequency within an active market. With low trading volumes, the Company's Share price can move up or down significantly following trades of small volumes of Ordinary Shares; and
· the limited ability of the Company to access capital on AIM.
Following the Cancellation, the Board believes that the ongoing requirements and associated costs will outweigh the limited benefits of the Company maintaining its public company status and that the Company will benefit from the more flexible requirements and lower costs associated with private limited company status. It is therefore proposed to re-register the Company as a private limited company. In connection with the Re-registration, it is proposed that the New Articles be adopted to reflect the change in the Company's status to a private limited company. The principal effects of the Re-registration and the adoption of the New Articles on the rights and obligations of Shareholders and the Company are summarised in Part II of the Circular.
Return of Capital & Future Liquidation
A number of deferred consideration payments are due to be received by the Company from 108 Media in relation to the Sale, which the Company intends to return to the Shareholders. The timing and method of any distribution or other return of capital remains to be confirmed and will be notified to Shareholders in due course.
Once all of the consideration payments have been received, it is the intention of the Board to seek Shareholder approval for liquidation of the Company. Subject to the relevant authority being granted, the Shareholders are expected to receive interim and final liquidation distributions in due course thereafter.
Cancellation process
Under the AIM Rules it is a requirement that, unless the London Stock Exchange otherwise agrees, the Cancellation must be conditional upon the consent of not less than 75 per cent. of votes cast by the Shareholders at a general meeting. Accordingly, the Company is proposing the Cancellation Resolution at the General Meeting. In addition, the Company is required to give a notice period of not less than 20 Business Days from the date on which notice of the intended Cancellation is notified via a Regulatory Information Service and is given to the London Stock Exchange. Accordingly, on 24 May 2022, the Company (through finnCap) notified the London Stock Exchange of the Company's intention, subject to the Cancellation Resolution being passed at the General Meeting, to cancel the admission of the Ordinary Shares to trading on AIM with effect from 7.00 a.m. on 24 June 2022.
Upon the Cancellation becoming effective finnCap will cease to act as nominated adviser and broker to the Company and the Company will no longer be required to comply with the AIM Rules.
Principal effects of the Cancellation
The Board considers the principal effects of the Cancellation will be:
· there will no longer be a public market mechanism for Shareholders to trade in the Ordinary Shares and no price will be publicly quoted for the Ordinary Shares;
· the Ordinary Shares will remain freely transferable subject to there being a willing buyer and the Company will consider implementing a Matched Bargain Facility which would facilitate Shareholders buying and selling Ordinary Shares on a matched bargain basis following Cancellation. In determining whether to put a Matched Bargain Facility in place, the Company shall consider expected (and communicated) Shareholder demand for such a facility as well as the makeup of the share register once it has been analysed following Cancellation. In anticipation of providing a Matched Bargaining Facility, the Company has sought quotes from Matched Bargain Facility providers. Shareholders should be aware that the implementation of a Matched Bargain Facility is only under consideration at this stage and there can be no guarantee that the Company will conclude that putting such a Matched Bargain Facility in place is beneficial for Shareholders. Further details will be communicated to the Company's shareholders at the relevant time;
· subject to the Company being made aware of sufficient Shareholder interest and relevant Shareholder approval being obtained at the time, it is the intention of the Directors to commence a Buyback Programme of Ordinary Shares for a limited time to provide minority Shareholders with the option of selling their Ordinary Shares to the Company given the anticipated limited liquidity of the Ordinary Shares following the Cancellation and Re-registration. The Company will communicate the terms of any Buyback Programme to Shareholders if the decision is taken to proceed with one. However, Shareholders are encouraged to contact the Company now (by email to ir@dcdmedia.co.uk) to indicate their interest in participating in the Buyback Programme. Shareholders should also be aware that the commencement of the Buyback Programme is an intention only and there can be no guarantee that the Company will implement it and the Company reserves the right to change its intended plans at any time if there is not sufficient interest expressed by Shareholders;
· it is possible that, following publication of the Circular, the liquidity and marketability of the Ordinary Shares may be reduced and the value of the Shares may be adversely affected, although, as previously stated, the Directors believe that the existing liquidity in the Ordinary Shares on AIM is in any event very limited;
· in the absence of a formal market, it may be difficult for Shareholders to determine the market value of their investment in the Company at any given time;
· whilst the Company's CREST facility will remain in place following the Cancellation, the Company's CREST facility may be cancelled in the future and, although the Ordinary Shares will remain transferable, they may cease to be transferable through CREST. In the event the Ordinary Shares are no longer transferable in CREST, Shareholders who hold Ordinary Shares in CREST at such time will receive share certificates;
· the AIM Rules will no longer apply to the Company and, accordingly, Shareholders will no longer be afforded the protections given by the AIM Rules. In particular, the Company will not be bound to:
- make any public announcements of material events, or to announce interim or final results;
- comply with any of the corporate governance practices applicable to AIM companies;
- comply with the requirement to obtain Shareholder approval for certain corporate actions, where applicable, including., substantial transactions, related party transactions, reverse takeovers and fundamental changes in the Company's business; or
- comply with AIM Rule 26, obliging the Company to publish prescribed information on its website;
· the Company will cease to retain an AIM nominated adviser and a broker;
· as an unlisted and non-traded company, the Company will be subject to less stringent accounting disclosure requirements;
· the Company would no longer be subject to UK MAR regulating inside information and other matters;
· the Company will no longer publicly disclose any change in major shareholdings in the Company under the DTRs;
· as from the date of the Cancellation, stamp duty will be due on transfers of shares and agreements to transfer shares unless a relevant exemption or relief applies to a particular transfer as a result of prevailing Shareholder circumstances and
· the Cancellation and Re-registration might have personal taxation consequences for Shareholders. Shareholders who are in any doubt about their tax position should consult their own professional independent adviser immediately.
The Company will remain registered with the Registrar of Companies in England & Wales in accordance with and subject to the Companies Act, notwithstanding the Cancellation. Subject to the Re-registration occurring, Shareholders should also note that the Takeover Code will continue to apply to the Company following the Cancellation for the period of at least 10 years from the date of Cancellation. However, the Takeover Code may cease to apply earlier, if a majority of the Directors cease to be resident in the UK, Channel Islands or Isle of Man.
The considerations set out above are not exhaustive, and Shareholders should seek their own independent advice when assessing the likely impact of the Cancellation on them.
The Company currently intends to continue to provide certain facilities and services to Shareholders that they currently enjoy as shareholders of an AIM company. The Company will:
· continue to communicate information about the Company (including annual accounts) to its Shareholders, as required by the Companies Act;
· subject to the outcome of consultations with the Principal Shareholders following Re-registration and the nature of the matters which would be considered at any meeting, the Company will cease to hold general meetings and annual general meetings; and
· continue, for at least 12 months following the Cancellation, to maintain its website, http://www.dcdmedia.co.uk/ and to post updates on the website from time to time, although Shareholders should be aware that there will be no obligation on the Company to include all of the information required under the Disclosure Guidance and Transparency Rules, AIM Rule 26 or to update the website as required by the AIM Rules.
In addition, the Company confirms that there is currently no intention to change the existing Directors following the Cancellation.
The Resolutions to be proposed at the General Meeting include the adoption of the New Articles with effect from the Re-registration. A summary of the principal changes being made by the adoption of the New Articles is included in Part II of the Circular. A copy of the New Articles can be viewed at http://www.dcdmedia.co.uk/investors/.
Transactions in the Ordinary Shares prior to and post the suspension and proposed Cancellation
If Shareholders wish to buy or sell Ordinary Shares on AIM they must do so prior to the Company's Ordinary Shares being suspended on the 6 June 2022, with the last day of dealing in Ordinary Shares on AIM expected to be 1 June 2022. As noted above, in the event that Shareholders approve the Cancellation, it is anticipated that Cancellation will become effective on 24 June 2022.
The Directors are aware that Shareholders may wish to acquire or dispose of Ordinary Shares following suspension and the Cancellation. Should Cancellation be approved by Shareholders at the General Meeting, the Company will consider implementing a Matched Bargain Facility which would facilitate Shareholders buying and selling Ordinary Shares on a matched bargain basis following Cancellation. In determining whether to put a Matched Bargain Facility in place, the Company shall consider expected (and communicated) Shareholder demand for such a facility as well as the makeup of the share register once it has been analysed following Cancellation. In anticipation of providing a Matched Bargaining Facility, the Company has sought quotes from Matched Bargain Facility providers. Shareholders should be aware that the implementation of a Matched Bargain Facility is only under consideration at this stage and there can be no guarantee that the Company will conclude that putting such a Matched Bargain Facility in place is beneficial for Shareholders. Further details will be communicated to the Company's shareholders at the relevant time.
In addition, following the General Meeting and subject to the Company being made aware of sufficient Shareholder interest and relevant Shareholder approval being obtained at the time, it is the intention of the Directors to commence a Buyback Programme of Ordinary Shares for a limited time to provide minority Shareholders with the option of selling their Ordinary Shares to the Company given the anticipated limited liquidity of the Ordinary Shares following the Cancellation and Re-registration. The Company will communicate the terms of any Buyback Programme to Shareholders if the decision is taken to proceed with one. However, Shareholders are encouraged to contact the Company now (by email to ir@dcdmedia.co.uk) to indicate their interest in participating in the Buyback Programme. Shareholders should also be aware that the commencement of the Buyback Programme is an intention only and there can be no guarantee that the Company will implement it and the Company reserves the right to change its intended plans at any time.
In the event that there is not sufficient Shareholder interest expressed for the Matched Bargaining Facility and/or the Buyback Programme such that one or both of them is not implemented by the Company or Shareholders decide not to participate in them, Shareholders are expected to receive one or more liquidation distributions (representing the then value of their Shareholding) in due course.
Recent financial performance
On 24 December 2021, the Company released its interim results for the six months ended 30 September 2021 which contained an outlook statement reflecting the recent financial performance of the Group which is reproduced below:
"During the period, the Group's trading performance was in line with management forecasts with revenue for the first six months of the trading period at £5,613k (2020: £5,790k), adjusted EBITDA was some 28% ahead at £415k (2020: £324k) and the Group reports an adjusted profit before tax in the period of £402k (2020: £240k) which was a 67% increase."
Since the Sale was completed, the Company has continued to pay its limited overheads as well as advisory and listing fees. The Board expect to receive the first tranche of the deferred consideration from the Sale from 108 Media in early June 2022.
Re-registration
Following Cancellation, the Directors believe that the Company will benefit from the more flexible requirements and lower costs associated with private limited company status. It is therefore proposed, subject to Shareholder approval, to re-register the Company as a private limited company. In connection with the Re-registration, it is proposed that the New Articles be adopted to reflect the change in the Company's status to a private limited company. The principial effects of the Re-registration and the adoption of the new articles of association on the rights and obligations of Shareholders and the Company are summarised in Part II of the Circular.
Subject to Shareholder approval, application will be made to the Registrar of Companies for the Company to be re-registered as a private limited company. Re-registration will take effect when the Registrar of Companies issues a certificate of incorporation on Re-registration. The Registrar of Companies will issue the certificate of incorporation on Re-registration when it is satisfied that no valid application can be made to cancel the resolution to re-register as a private limited company or that any such application to cancel the resolution to re-register as a private limited company has been determined and confirmed by the Court.
Takeover Code
Notwithstanding the Cancellation and Re-registration, under the Takeover Code the Company will continue to be subject to its terms for a period of 10 years following the Cancellation (subject to the Re-registration occurring). However, the Takeover Code may cease to apply earlier, if a majority of the Directors cease to be resident in the UK, Channel Island or Isle or Man.
In addition, the Takeover Code may apply for longer than a period of 10 years following Cancellation if the Company elects to implement a Matched Bargain Facility, subject to it falling within the definition set out in the introduction to Takeover Code part 3 (a)(ii)(B), in which the Matched Bargain Facility provides details of dealings and prices that Shareholders are willing to deal at and that this information has been published on a regular basis for a continuous period of at least six months in a newspaper or electronic price quotation system or otherwise. The Takeover Code would, in this event, cease to apply 10 years after the Matched Bargain Facility has been terminated by the Company.
The Takeover Code applies to all offers for companies which have their registered offices in the United Kingdom, the Channel Islands or the Isle of Man if any of their equity share capital or other transferable securities carrying voting rights are admitted to trading on a regulated market or a multilateral trading facility in the United Kingdom or on any stock exchange in the Channel Islands or the Isle of Man.
The Takeover Code also applies to all offers for companies (both public and private) which have their registered offices in the United Kingdom, the Channel Islands or the Isle of Man which are considered by the Takeover Panel to have their place of central management and control in the United Kingdom, the Channel Islands or the Isle of Man, but in relation to private companies only if one of a number of conditions are met, including that any of the company's equity share capital or other transferable securities carrying voting rights have been admitted to trading on a regulated market or a multilateral trading facility in the United Kingdom or on any stock exchange in the Channel Islands or the Isle of Man at any time in the preceding ten years.
If the Re-registration and the Cancellation are approved by Shareholders at the General Meeting and become effective, the Company will be re-registered as a private company and its securities will no longer be admitted to trading on a regulated market or a multilateral trading facility in the United Kingdom. In these circumstances, the Takeover Code will only apply to the Company if it is considered by the Panel to have its place of central management and control in the United Kingdom, the Channel Islands or the Isle of Man. This is known as the "residency test". In determining whether the residency test is satisfied, the Takeover Panel has regard primarily to whether a majority of a company's directors are resident in these jurisdictions.
The Takeover Panel has confirmed to the Company that, on the basis of the current residency of the Directors, the Company will have its place of central management and control in the United Kingdom following the Cancellation. In view of the Re-registration, and provided that the Company's place of central management and control continues to be considered by the Takeover Panel to be in the United Kingdom, the Takeover Code will apply to the Company for ten years following the Cancellation, including the requirement for a mandatory cash offer to be made if either:
(i) a person acquires an interest in shares which, when taken together with the shares in which persons acting in concert with it are interested, increases the percentage of shares carrying voting rights in which it is interested to 30% or more; or
(ii) a person, together with persons acting in concert with it, is interested in shares which in the aggregate carry not less than 30% of the voting rights of a company but does not hold shares carrying more than 50% of such voting rights and such person, or any person acting in concert with it, acquires an interest in any other shares which increases the percentage of shares carrying voting rights in which it is interested.
Under Rule 9 of the Takeover Code, when any person or group of persons acting in concert, individually or collectively, are interested in shares which in aggregate carry not less than 30 per cent. of the voting rights of a company but do not hold shares carrying more than 50 per cent. of the voting rights of a company and such person or any person acting in concert with him acquires an interest in any other shares, which increases the percentage of the shares carrying voting rights in which he is interested, then that person or group of persons is normally required by the Panel to make a general offer in cash to all shareholders of that company at the highest price paid by them for any interest in shares in that company during the previous 12 months. Rule 9 of the Takeover Code further provides that where any person, together with persons acting in concert with him, holds over 50 per cent. of the voting rights of a company to which the Takeover Code applies and acquires additional shares which carry voting rights, then that person will not generally be required to make a general offer to the other shareholders to acquire the balance of the shares not held by that person or his concert parties.
Following the expiry of the 10 year period from the date of the Cancellation (subject to the Re-registration occurring), or such other date on which the Takeover Code ceases to apply to the Company, the Company will no longer be subject to the provisions of the Takeover Code. A summary of the protections afforded to Shareholders by the Takeover Code which will be lost is set out in Part III of the Circular.
Recommendation
The Directors consider that the Resolutions to be put to the General Meeting are in the best interests of the Company and the Shareholders as a whole and are most likely to promote the success of the Company for the benefit of its Shareholders as a whole. Accordingly, the Directors unanimously recommend that Shareholders vote in favour of all the proposed Resolutions.
APPENDIX II
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Notice provided to the London Stock Exchange to the proposed Cancellation
| 24 May 2022 |
Publication and posting of the Circular
| 25 May 2022
|
Expected last day of dealings in Ordinary Shares on AIM
| 1 June 2022 |
Expected time and date of suspension(1)
| 7 a.m. on 6 June 2022 |
Latest time and date for receipt of proxy appointments in respect of the General Meeting
| 11 a.m. on 12 June 2022 |
Time and date of the General Meeting
| 11 a.m. on 14 June 2022 |
Expected time and date of Cancellation(2)
| 7 a.m. on 24 June 2022 |
Expected Re-registration as a private limited company | No later than w/c 27 June 2022 |
Notes:
All of the times referred to in the Circular refer to London time, unless otherwise stated.
Each of the times and dates in the above timetable is subject to change. If any of the above times and/or dates change, the revised times and dates will be notified to Shareholders by an announcement through a Regulatory Information Service.
(1) The Suspension is automatic and deemed by AIM.
(2) The Cancellation requires the approval of not less than 75 per cent. of the votes cast (in person or by proxy) by Shareholders at the General Meeting.