30 Mar 2010 09:50
30 March 2010
ASG Media plc (in Administration)
("ASG" or the "Company")
Details of proposed Company Voluntary Arrangement, Fundamental Change of Investing Strategy, share capital reorganisation and change of name
Introduction
The Company has today announced that it has posted details of the Proposals to Shareholders and given notice of a General Meeting to be held on 1 April 2010. The Proposals incorporate:
·; Details of a Company Voluntary Arrangement,
·; Fundamental Change of Investing Strategy
·; Share capital reorganisation
·; Subscription for new Ordinary Shares
·; Change of name
ASG announced on 20 October 2009 that it was in discussions with potential investors to secure the funding required to meet the Company's immediate and longer term finance commitments. However, due to the uncertainty as to the timing and final outcome of those discussions, the Directors had requested the suspension of dealings in the Ordinary Shares on AIM, pending the outcome of the Company's discussions with potential investors.
Having determined subsequently that the prospects of obtaining additional funding were remote, it was announced that the Company had been placed in administration. The Administrators were appointed on 2 November 2009 as administrators in accordance with the Insolvency Act 1986.
It was further announced on 4 November 2009 that the Administrators had sold certain of assets of the Company and the Former Subsidiaries, as a result of which the Administrators have settled all of the secured indebtedness of the Company and the Former Subsidiaries. On 4 November 2009, the business and assets of the Former Subsidiaries were sold to Trainfx Limited, a subsidiary of RAM Investment Group Plc for £155,000 excluding receivables and on 9 November 2009 certain other assets of ASG were sold to the same purchaser for £20,000.
The proceeds of the realisation of the businesses of the Former Subsidiaries are expected to provide for a distribution to the Company in respect of the indebtedness owing by the Former Subsidiaries to the Company which is expected to be not more than £100,000. This distribution is to be assigned by the Administrators to a newly incorporated company, ASG Distribution Limited, which has been formed by the Administrators to conduct the hive down of the residual assets and rights of the Company and to assume liability to its Creditors on the basis summarised in the CVA Proposal circulated by the Administrators. The Creditors will be able to recover the amount of the distribution to which they are entitled, which arises from the amount recovered by the Company from the realisation of the assets of the Former Subsidiaries, once ASG Distribution has been liquidated, which is to take place once the CVA has been approved. It is not considered that these arrangements will cause any additional delay in enabling the Creditors to receive the distribution.
Apart from the distribution mentioned above, there were no other proceeds of the realisation of the Company's assets that would allow any distribution to the Creditors. The Company's investment in the Former Subsidiaries, which are also to be transferred to ASG Distribution, has no economic value.
The Administrators have taken account of the outcome of the realisation of assets by the Company to reassess the financial position of the Company and the objectives of the administration.
Proposals
The Board and the Administrators have considered the position of the Company and of its Creditors and Shareholders with regard to the outcome of the administration.
The Company has entered into an agreement with ADM under which ADM will subscribe for a total of 625,000 New Ordinary Shares to raise £6,250 and will advance £50,000 to subscribe for Convertible Notes. The subscription is conditional upon completion of the Proposals. The funds raised will enable the Company to conduct a CVA and to seek re-admission to AIM. Following the CVA, if approved by Creditors and Shareholders, the Company would become an investing company listed on AIM. The Creditors are to be offered New Ordinary Shares in satisfaction of amounts owed to them by the Company (to the extent that such indebtedness is not the subject of the distribution by ASG Distribution referred to above) in order to eliminate the Company's indebtedness and liabilities details of which are set out in the CVA Proposal. Subject to the CVA being approved, ADM will invest as shown in this document to provide the Company with the requisite funding to conduct the CVA, to seek a return to listing on AIM and to provide the Company with working capital. The Directors objective in proposing this course is to enable Creditors and Shareholders to recover some value by holding shares in an AIM quoted investing company.
Under the terms of the CVA, the Creditors will, in aggregate, be offered a total of 1,000,000 New Ordinary Shares, to be divided among Creditors who make a claim within three months of the date of the CVA being approved. The New Ordinary Shares to be held by Creditors will represent approximately 47.64 per cent of the New Ordinary Shares in issue immediately following the CVA including the New Ordinary Shares to be issued to ADM and Antony Batty in his capacity as the supervisor of the CVA, referred to below. This proportion will be heavily diluted by New Ordinary Shares that are capable of being issued under the Warrants and the Convertible Loan Notes to be issued once the CVA has been implemented.
The Board believes that the implementation of the Proposals would enable the Company to be re-admitted to AIM with the prospect of being able to realise some value for Creditors and Shareholders as a result. By implementing the Proposals, there is a prospect that the New Ordinary Shares, once returned to trading on AIM, may achieve a value that could provide a better return than would otherwise be available to Creditors and Shareholders.
Subscription for New Ordinary Shares
The Company has entered into an agreement with ADM under which, subject to implementation of the Proposals, 625,000 New Ordinary Shares will be issued to ADM at £0.001 per share for a total subscription price of £6,250. These New Ordinary Shares issued to ADM will represent 29.78 per cent. of the Enlarged Ordinary Share Capital. ADM is not connected with any of the Directors of the Company.
The Company will, conditional on the implementation of the Proposals, issue 182,585 New Ordinary Shares to Antony Batty at an issue price of £0.001 per share. These New Ordinary Shares that are to be issued to Antony Batty will represent 8.69 per cent. of the Enlarged Ordinary Share Capital.
Convertible Loan
The Company would also require funding to be made available to enable it to ensure that it has sufficient working capital for its present requirements. Accordingly, subject to the implementation of the Proposals, ADM has irrevocably undertaken that it will subscribe for £50,000 of Convertible Notes. The Convertible Notes are to be interest free, unsecured and repayable on 31 December 2012. ADM shall have the right to convert the principal amount of the Convertible Notes at any time into an aggregate amount of 50,000,000 New Ordinary Shares at the exercise price of £0.001 per share. The New Ordinary Shares to be issued on conversion of the Convertible Notes (assuming full conversion) would amount to approximately 90.25 per cent of the Enlarged Ordinary Share Capital of the Company, as increased by the issue thereof. The Convertible Notes are freely transferable and may be transferred by ADM to new noteholders who will then be able to exercise the conversion rights attaching to the Convertible Notes.
Warrants
The Company has granted to ADM, conditional on the implementation of the Proposals, warrants for 51,265,000 New Ordinary Shares. These Warrants carry the right to subscribe for New Ordinary Shares at an exercise price of £0.001 for each New Ordinary Share exercisable at any time until 31 December 2012. The Warrants are freely transferable and may be transferred by the holders to new holders who will then be able to exercise the Warrants to subscribe for New Ordinary Shares.
The Company has also agreed to issue Warrants to Antony Batty, as supervisor of the CVA, and to Charles Stanley in partial settlement of fees due for their services. In addition, Warrants have been granted to Germiston Investments Limited, a company registered in Panama, for its assistance in formulating the Proposals. The beneficial owner of Germiston Investments Limited is La Rochevillars, a company registered in Switzerland.
These Warrants carry the same terms as the Warrants described above and are allocated as follows:
| Name | Number of Warrants |
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| Antony Batty | 365,170 |
| Charles Stanley | 900,000 |
| Germiston Investments Limited | 8,170,779 |
The Takeover Code
The Takeover Code is issued and administered by the Panel on Takeovers and Mergers. The Takeover Code applies to all takeovers and merger transactions, however effected, where the offeree company is, inter alia a public company with its registered office in the UK and whose place of central management and control is in the UK. The Company is such a company and its shareholders are entitled to the protections afforded by the Takeover Code.
Under Rule 9 of the Takeover Code ("Rule 9"), when any person, or group of persons acting in concert, acquires an interest in shares which, when taken together with shares in which he, or persons acting in concert with him, are interested, carry 30% or more of the voting rights of a company which is subject to the Takeover Code, that person is normally required to make a general offer in cash to all shareholders at the highest price paid by him, or any person acting in concert with him, within the 12 months preceding the date of the announcement of the offer.
If ADM were to exercise the Warrants and/or the conversion rights attached to the Convertible Notes and as a result cause its holding of New Ordinary Shares (together with the New Ordinary Shares held by any persons acting in concert with ADM) to represent 30 per cent or more of the issued New Ordinary Shares as enlarged by the exercise of the Warrants or the Conversion Rights the requirements of Rule 9 would be invoked and ADM would be required to make a mandatory cash offer for all of the remaining New Ordinary Shares in issue.
ADM has indicated that it is not its current intention to exercise Warrants and the conversion rights attached to the Convertible Notes if, by so doing ADM will be required to make a mandatory offer under Rule 9. The Warrants and the Convertible Notes are freely transferable and ADM might elect to transfer all or part of its holding to a third party, deemed to be not acting in concert with ADM, and those persons may exercise the Warrants and convert the Convertible Notes acquired by them without invoking Rule 9.
Proposed Capital Reorganisation
It is proposed that the issued share capital of the Company will be restructured, prior to the implementation of the CVA, in order to reduce the nominal value of the Ordinary Shares. At the outset all of the Ordinary Shares of 1p each will be consolidated into Ordinary Shares of £5.50 each on the basis of one New Ordinary Share for each 550 existing Ordinary Shares in issue. The Ordinary Shares of £5.50 each will then be subdivided into one New Ordinary Share of £0.00001 and one deferred share of £5.49999.
Following the capital reorganisation the issued share capital of the Company will consist of 291,466 Ordinary Shares of £0.00001 each and 291,466 Deferred Shares of £5.49999 each credited as fully paid up. The Deferred Shares shall have the special rights, and shall be subject to the restrictions, set out in the Articles of Association of the Company which, it is proposed, will be amended accordingly pursuant to the Resolutions. The Deferred Shares will carry negligible value and will not be admitted to trading on AIM.
The Resolutions to carry out the proposed Capital Reorganisation are to be put to Shareholders at the General Meeting convened by the enclosed Notice. If the Proposals are not approved by Shareholders it is likely that the Company will be subject to insolvent liquidation as there are insufficient assets to repay the Creditors. In this situation it is likely that there will be no return to Shareholders.
Significant shareholdings
Set out below is a table which illustrates the shareholdings of existing and new shareholders upon implementation of the Proposals as set out above:
| Shareholder | Ordinary shares | % of issued share capital | Warrants | Convertible Notes | Fully diluted holdings upon exercise of Warrants and Convertible Notes | % of fully diluted share capital |
| Existing Ordinary Shares | 294,116 | 13.99% | - | - | 294,116 | 0.26% |
| ADM | 625,000 | 29.74% | 51,265,000 | 50,000,000 | 101,890,000 | 90.33% |
| Germiston Investments Ltd | - | - | 8,170,779 | - | 8,170,887 | 7.24% |
| Charles Stanley | - | - | 900,000 | - | 900,000 | 0.80% |
| Creditors through CVA | 1,000,000 | 47.58% | - | - | 1,000,000 | 0.89% |
| Antony Batty | 182,585 | 8.69% | 365,170 | - | 547,555 | 0.49% |
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| TOTAL | 2,101,701 | 100.00% | 60,800,949 | 50,000,000 | 112,802,650 | 100.00% |
Business strategy of the Company following the Proposals
If the Resolutions are approved, following the GM, the Company would become an investing company under the AIM Rules. The Company's proposed Investing Policy, which is subject to shareholder approval, is set out below:
·; The Company's proposed strategy is to participate in business that specialises in the fields of financial products. In particular the Company will focus on the life insurance settlement market, which involves the acquisition of life insurance policies covering the life of one or more individuals with an "ascertainable and limited" life expectancy. The policy owner is paid a lump sum in cash in exchange for transferring the rights of ownership of the policy to the buyer. The amount paid to the seller is calculated based on the specific life expectancy of the underlying insured and may be stated as a percentage of the policy's face amount. It intends to either acquire or invest in a company or a business that owns or operates the trading platform or systems for the life insurance markets and the Directors believe that such a transaction has the potential to create value for Shareholders through the capital appreciation of the investment over time and/or where appropriate through dividends. Such investment will be actively managed and it is anticipated will be held for the long term.
·; The funds of the Company for the time being, including any additional funding raised by the Company will be invested by means of the acquisition of shares and other equity investment instruments or debt securities of the Company and other corporate entities or directly by acquiring assets, licences or other rights.
·; The Company will seek targets whose growth prospects, if achieved, will be earnings enhancing for Shareholders. The Company will appoint a director or directors with the relevant knowledge experience and scope to add value to the area in which the company intends to operate.
·; The focus of its acquisition strategy will be in a number of areas including the United Kingdom, Europe, United States of America and other territories that have established exploration potential. However, given the nature of the sectors which the Company will focus on, the Directors will consider opportunities in other geographic locations should any such opportunities arise.
·; The Company may elect to raise further capital following the acquisition either by way of equity or debt subject to the cash requirements appropriate for growing the business the Proposed Directors would expect to offer the issue shares in the Company in exchange for the acquisition of business and assets, but would need to satisfy any requirement for cash consideration or future funding of the resulting group by raising additional funding by means of placing of shares in the Company and if required, by issuing debt securities or incurring borrowings.
·; The Company would consider cross holdings of shares and other equity securities in circumstances that would benefit the broader strategy of the investing policy.
·; The Company would not contemplate investments or acquisitions that carried a high degree of contingent risk or liability that is capable of imposing financial obligations upon the Company that it could not reasonably expect to meet. The Company would also not entertain investments or acquisitions that would cause the Company to cease to be admitted to AIM or listed on any comparable securities exchange.
·; The Directors will adopt a strategy of seeking suitable acquisition and investment opportunities by means of their connections and their expertise in identifying and conducting such acquisitions. They may also engage advisers and intermediaries to source suitable opportunities. The Directors have experience in the conduct of comparable business and the Company is considered to have sufficient available working capital to conduct the due diligence and other preparatory work needed to conduct transactions of this kind. Acquisition targets will be subject to the scrutiny of the Directors, some of whom have experience in those sectors and in raising capital for companies.
If no substantial inroads have been made into the Company fulfilling its investment strategy within 12 months of the date on which the trading assets of the Group were sold, namely 4 November 2009, in accordance with the AIM Rules for Companies, trading in the Company's Shares will be suspended and if the Company's Investing Strategy is not implemented in the following six months, cancelled.
Directors
The Directors expect to announce the appointment of at least one new director with the appropriate standing and experience to support the implementation of the Investing Strategy described above. Upon the appointment of a new Director, Jamieson Ball and Christian Vaglio-Giors are expected to resign from office without compensation for loss of office. Gary Truman will continue in office as a Director, but he will cease to be an employee of the Company, without compensation, and has agreed terms as a non-executive Director with effect from the completion of the Proposals.
Change of Name
It is proposed that the name of the Company is to be changed to 'Insetco Plc'.
General Meeting
A General Meeting of the Company is to be held at 11.00 a.m. on 1 April 2010 at which the Resolutions will be proposed to approve the CVA, to approve the investing strategy, to give the Directors authority to issue the New Ordinary Shares, to restructure the share capital and to change the name of the Company.
For further information please contact
ASG Media Plc 020 7831 1234
Gary Truman, Director
Charles Stanley Securities 020 7149 6000
Nominated Adviser
Russell Cook
Antony Batty & Company LLP 020 7831 1234 ●
CVA Nominees
Antony Batty
DEFINITIONS
The following definitions apply throughout this announcement unless the context requires otherwise:
| "ADM" | ADM Investor Services International Limited, a company registered in England and Wales under Company No. 02547805, 4th Floor, Millennium Bridge House, 2 Lambeth Hill, London EC4V 3TT;
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| "Administrators" | Antony Batty and Stephen John Evans of Antony Batty & Company LLP, in their capacity as the administrators of the Company appointed on 2 November 2009;
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| "AIM" | AIM, a market operated by the London Stock Exchange Plc;
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| "ASG Distribution" | ASG Distribution Limited, which has been formed by the Administrators to conduct the hive down of the residual assets and rights of the Company and to assume liability to its Creditors on the basis summarised in the CVA Proposal;
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| "Articles of Association" | the articles of association of the Company;
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| "Board" or "Directors" | the directors of the Company;
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| "Business Strategy" | the investing strategy of the Company described in this announcement in the paragraph headed "Business Strategy of the Company following the Proposals";
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| "Capital Reorganisation" | the proposed consolidation and subdivision of the Existing Ordinary Shares, pursuant to the Resolutions as described in this announcement; |
| "Charles Stanley" | Charles Stanley Securities a division of Charles Stanley & Company Limited, the Nominated Adviser of the Company;
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| "Circular" | the circular sent to shareholders on 16 March 2010 setting out details of the Proposals;
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| "Convertible Notes" | the £50,000 convertible unsecured loan notes 2012 of the Company to be issued to ADM as described in this announcement;
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| "Creditors" | existing creditors of the Company under the terms of the CVA;
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| "CVA" | the proposed company voluntary arrangement of the Company as further described in this announcement and in the CVA Proposal;
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| "CVA Proposal" | the proposal by the Administrators contained in the document dated 12 March 2010 issued by the Administrators to Creditors and Shareholders;
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| "Deferred Shares" | deferred shares of £5.49999 each in the capital of the Company to be created pursuant to the Capital Reorganisation;
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| "Enlarged Ordinary Share Capital" | the entire issued ordinary share capital of the Company consisting of the New Ordinary Shares in issue following the Capital Reorganisation, the New Ordinary Shares to be issued to Creditors under the CVA and the New Ordinary Shares to be issued to ADM and Antony Batty, as described in this announcement;
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| "Existing Ordinary Shares" | the Ordinary Shares of £0.01 each in issue at the date of the GM;
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| "General Meeting" or "GM" | the General Meeting of the Company convened for 11.00 a.m. on 1 April 2010 to approve the Resolutions, or any adjournment of the GM;
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| "Former Subsidiaries" | ASL Media Limited, ADL Media Limited and Freelance Media Limited, wholly-owned subsidiaries of the Company that are to be divested as described in this announcement;
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| "New Ordinary Shares" | ordinary shares of £0.00001 each in the capital of the Company following the Capital Reorganisation;
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| "Notice" | the notice convening the GM issued by the Company on 16 March 2010;
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| "Proposals" | the CVA, the Capital Reorganisation, the Resolutions and other proposals set out in this announcement;
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| "Resolutions" | the ordinary and special resolutions to be proposed at the GM set out in the Notice;
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| "Shareholders" | the holders of ordinary shares in the capital of the Company whether Existing Ordinary Shares or New Ordinary Shares;
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| "Warrants" | the warrants in respect of up to 60,700,949 New Ordinary Shares exercisable at £0.001 per share to be issued as described in this announcement. |