DNK.L Regulatory News (DNK)

20 Jan 2009 16:47



20 January 2009

Danka Business Systems PLC

("Danka" or the "Company")

Members' Voluntary Liquidation to be proposed at Extraordinary General Meeting

The Board of Danka (the "Board") announces that a notice convening an Extraordinary General Meeting of the Company ("EGM") to consider and, if thought fit, approve a resolution for the Company to enter members' voluntary liquidation and certain related resolutions, together with an explanatory circular (the "Circular"), has today been posted to Danka's shareholders. In addition, a US proxy statement has been posted to Danka shareholders in the United States.

Since the completion of the sale of Danka's operating business to Konica Minolta Business Solutions U.S.A., Inc on 27 June 2008 (the "Disposal"), the Company has ceased to have any trading operations and the Board has assessed the alternatives available to distribute the Company's net cash among Danka's shareholders. In assessing the available alternatives, the Board has been mindful of the fact that there is no guarantee that the holders of the 6.50 per cent. senior convertible participating shares of US$1.00 each in the capital of the Company (the "Participating Shares") will not take action(s) that may be available to them under applicable law, for example seeking an involuntary liquidation of the Company, to recover amounts to which they are entitled pursuant to the Company's Articles of Association, and, in fact, the Company has been advised by certain of its Participating Shareholders that they intend to file an application in the near future seeking the involuntary winding up of the Company under the provisions of the Insolvency Act 1986. Such amounts exceed the amount of the Company's net cash, including the net proceeds of the Disposal. Consequently, the Board believes that in the context of an involuntary liquidation of the Company, the holders of the Company's ordinary shares of £0.0125 each ("Ordinary Shares") and of American Depositary Shares representing Ordinary Shares ("ADSs") would not likely receive any distribution.

However, as previously announced, the Board has procured the agreement of the holders of the Participating Shares to the holders of Ordinary Shares and ADSs receiving, in the context of a members' voluntary liquidation of the Company, an aggregate amount in cash equal to approximately US$6.5 million, on the basis of a payment in cash of US$0.025 per Ordinary Share and a payment in cash of US$0.10 per ADS, prior to any distribution to the holders of Participating Shares. Following this payment, any additional proceeds of a members' voluntary liquidation would be paid to the holders of Participating Shares in accordance with the Company's Articles of Association and holders of Ordinary Shares and ADSs would not receive any further distribution.

The Board believes that, in light of the provisions of the Company's Articles of Association, the amount of the net cash held by the Company and the actions that certain Participating Shareholders intend to take under applicable law, these undertakings which the Board has procured from the holders of the Participating Shares which only apply in the context of a members' voluntary liquidation, represent the only realistic prospect of holders of Ordinary Shares obtaining a return from the Company's net cash. In view of these factors, and of the fact that the Company has ceased to have any trading operations, the Board believes that the entry into members' voluntary liquidation is in the best interests of Danka and Danka's shareholders as a whole. Accordingly, the Board intends to propose a resolution at the EGM, which is scheduled to be held at the offices of Skadden, Arps, Slate, Meagher & Flom (UK) LLP, 40 Bank Street, Canary Wharf, London E14 5DS at 2:00 p.m. on 19 February 2009, to approve the entry into by the Company of members' voluntary liquidation, as well as certain related resolutions, and recommends that Danka shareholders vote in favour of those resolutions, as all of the Directors of the Company intend to do in respect of their own beneficial shareholdings in the Company.

The resolution to approve the members' voluntary liquidation will be a special resolution, which means that it will require the approval of not less than 75 per cent. of the votes cast in person or by proxy at the EGM by holders of Ordinary Shares and Participating Shares voting as a single class.

Assuming that the requisite shareholder approval for the members' voluntary liquidation is obtained at the EGM, the members' voluntary liquidation will commence immediately following the EGM.

It is expected that the listing of the Ordinary Shares will be suspended on the day of the EGM, which will be at least 20 business days following the posting of the Circular. Subject to the approval of the resolutions relating to the proposed members' voluntary liquidation at the EGM, application will be made to cancel the listing of the Ordinary Shares on the Official List maintained by the UK Listing Authority and the admission to trading of Ordinary Shares on the London Stock Exchange's market for listed securities. The register of the Company will be closed on 17 February 2009.

Danka shareholders should carefully consider all of the information set out in the Circular before making any decision whether or not to vote in favour of the resolutions to be proposed at the EGM. A copy of the Circular will shortly be available for viewing at the Document Viewing Facility of the FSA (25 North Colonnade, Canary Wharf, London E14 5HS) and will shortly be available for inspection at Danka's registered office (Masters House, 107 Hammersmith Road, London W14 0QH) as well as at the offices of Skadden, Arps, Slate, Meagher & Flom (UK) LLP (40 Bank Street, Canary Wharf, London E14 5DS) during normal business hours on any weekday (Saturdays, Sundays and public holidays excepted) until the EGM.

The expected timetable of principal events (stated in London time) is as follows:

This announcement is not intended to, and does not constitute, or form any part of, an offer to sell or an invitation to purchase any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the transactions referred to herein or otherwise. Persons who are not resident in the United Kingdom, or who are subject to the laws of any jurisdiction other than the United Kingdom, should inform themselves about, and observe any applicable legal and regulatory requirements. 

Enquiries

Danka: Jean Johnson, General Counsel, 00 1 727-456-4460

Weber Shandwick Financial (London)

James White/Laura Vaughan, 020 7067 0700

Evolution Securities Limited (London)

Stuart Andrews / Bobbie Hilliam, 020 7071 4300