Last checked at 1 Jun 2009 07:00
KleenAir Systems International Plc (the "Company")
Company Voluntary Arrangement and creation of B Ordinary Shares
1 June 2009
The Board announces that it has posted to Shareholders a circular details of the Proposals described below, a notice convening a General Meeting and a statement of affairs relating to the proposed Company Voluntary Arrangement and the creation of a new class of shares, B Ordinary Shares, upon which Shareholders are being asked to vote.
On 9 February 2009 the Directors became aware that Mayor Boris Johnson had cancelled the next phase of the London Low Emission Zone programme for which the Company had been gearing up and in preparation for which it had made considerable investment. The Directors immediately requested the suspension of trading in the Ordinary Shares on AIM pending clarification of the Company's financial position and the Board resolved to appoint an insolvency practitioner to advise the Group as the Company no longer had the prospect of meeting its liabilities.
On 2 March 2009 the Company announced that, on the advice of the insolvency practitioner appointed in February, the Board had resolved to appoint a liquidator to the Company's operating subsidiary, KleenAir Systems. The Board also resolved that the Company enter into a CVA and appointed Mark Reynolds of Valentine and Co. to prepare a CVA proposal.
Subsequently, on 12 May 2009, the Directors appointed Antony Batty of Antony Batty & Company LLP to complete the CVA proposal, act as Nominee of the Proposal and if the CVA is approved, act as Supervisor of the CVA.
Proposals
The Board has considered the position of the Company and of its Creditors and Shareholders.
The Creditors are to be offered New Ordinary Shares and in certain cases, B Ordinary Shares, in satisfaction of amounts owed to them by the Company in order to eliminate the Company's indebtedness and liabilities and provide it with the requisite solvency to conduct a CVA, to seek a restoration of trading on AIM (following completion of a post-CVA audit) and to fund the associated working capital requirements. The objective would be to enable Creditors and Shareholders to recover some value by meeting the above requirements to ensure a lifting of the suspension and restoration to trading of the Company's Ordinary Shares on AIM.
Under the CVA, the Creditors and the Nominee/Supervisor will, in aggregate, be offered 40,615,000 New Ordinary Shares and 12,212,000 B Ordinary Shares, which will (as more particularly set out below) 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 59.30 per cent. of the Enlarged Share Capital of the Company or 50.32 per cent. assuming conversion of all of the B Ordinary Shares into Ordinary Shares.
The Board believes that the implementation of the Proposals together with a post-CVA audit would enable the suspension of the Company's Ordinary Shares on AIM to be lifted and for trading to be restored with the prospect of being able to realise value for Creditors and Shareholders as a result.
By implementing the Proposals, there is a prospect that the 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.
The Proposals are conditional on the approval of the Resolutions by Shareholders at the GM, to be held at 12 noon on 24 June 2009 at the offices of Antony Batty & Company LLP, 3 Field Court, Grays Inn, London, WC1R 5E, notice of which has been posted to Shareholders.
SHAREHOLDERS SHOULD NOTE THAT THE COMPANY IS INSOLVENT. IF THE RESOLUTIONS PROPOSED AT THE GENERAL MEETING ARE NOT PASSED THEN THE COMPANY WOULD BE THE SUBJECT OF AN INSOLVENT WINDING UP. SHAREHOLDERS WOULD IN THOSE CIRCUMSTANCES BE UNLIKELY TO SEE ANY RETURN ON THEIR INVESTMENT.
City Code on Takeovers and Mergers
The provisions of the City Code on Takeovers and Mergers apply to the Company. One of these provisions requires that except with the consent of the Panel, any person who acquires an interest in shares which carry 30 per cent. or more of the voting rights of the Company must make a bid for the remaining shares which they do not own. The consent of the Panel has not been sought due to the additional cost and delay which would be incurred by the Company as a result.
Under the terms of the CVA, as set out above under the heading "Proposals", New Ordinary Shares and in certain cases, B Ordinary Shares, are to be offered to Creditors and the Nominee/Supervisor. Given the level of the interests in Ordinary Shares of Mr Lionel Simon's, the Company's Chairman and Chief Executive, and the number of Ordinary Shares in which he would become interested following completion of the CVA, it is proposed that a proportion of the outstanding debt due to Mr Simons by the Company be satisfied by way of the issue of a different class of Ordinary Shares, being B Ordinary Shares, to avoid the requirement under rule 9 of the City Code for him or his interests to make a bid for the Ordinary Shares which he or his interests do not own. The details of Mr Simons's interests in Ordinary Shares, proposed interests in B Ordinary Shares and the limited rights attaching to the B Ordinary Shares are set out in more detail below.
B Ordinary Shares
The Company will need to create a new class of shares - the B Ordinary Shares - in order for them to be allotted and issued to Mr Simon's and his interests to enable the CVA to be implemented on the terms proposed. The creation of the B Ordinary Shares will be effected by the redesignation of 12,212,000 Ordinary Shares into 12,212,000 new B Ordinary Shares, and the rights attaching to them will be set out in a new Article 3 of the Company's Existing Articles of Association, each to be implemented by Resolution 2.
The B Ordinary Shares shall, upon their issue, be credited as fully paid and shall rank pari passu in all respects with the Ordinary Shares save that the holder or holders of B Ordinary Shares shall not have the right to attend and vote at general meetings of the Company (save in respect of resolutions to vary the rights attaching to the B Ordinary Shares) and shall have the option to convert their interests in B Ordinary Shares at any time, and from time to time, into Ordinary Shares on a 1 for 1 basis.
The B Ordinary Shares will not be admitted to trading on AIM following completion of the CVA and neither is it anticipated that an application for such admission will be made at any point in the future.
New Ordinary Shares following the Proposals
Mr Simons is already the beneficial holder of 4,408,196 Ordinary Shares representing 15.81 per cent. of the issued share capital of the Company and if he were to accept New Ordinary Shares in respect of the total amount owed to him, this percentage interest would increase to 40.32 per cent. In order to restrict Mr Simons's interest in the voting rights of the capital to less than 30 per cent., Mr Simons proposes to take 15,922,804 Ordinary Shares to take his interest to 20,331,000 Ordinary Shares representing 29.68 per cent. of the Enlarged Share Capital and to also take in the form of B Ordinary Shares 12,212,000 of the shares to which he would otherwise be entitled under the CVA. The limited rights of the B Ordinary Shares are summarised above.
The share capital of the Company before, and after implementation of the Proposals, is shown below.
In addition, 12,212,000 new B Ordinary Shares will be created, allotted and issued to Mr Simon's and his interests to enable the CVA to be implemented on the terms proposed:
| Shareholder | Number of Existing Ordinary Shares | Percentage of Existing Ordinary Shares | Number Ordinary Shares following completion of the Proposals | Percentage of Enlarged Share Capital |
| Existing Shareholders | 27,881,238 | 100 | 27,881,238 | 40.70 |
| Creditors | - | - | 40,115,500 | 58.57 |
| Nominee | - | - | 500,000 | 0.73 |
| TOTAL | 27,881,2381 | 100 | 68,496,7382 | 100
|
1 The beneficial interest of Lionel Simons in the Existing Ordinary Shares and as at the date of this document is 4,408,196 Ordinary Shares representing 15.81 per cent. of the current issued share capital of the Company.
2 The beneficial interest of Lionel Simons in the Enlarged Share Capital following completion of the Proposals is 20,331,000 Ordinary Shares representing 29.68 per cent. of the Enlarged Share Capital.
Business strategy of the Company following completion of the Proposals
Assuming the Proposals are implemented, the strategy of the Directors will be to seek suitable acquisition opportunities in the environmental and energy sectors in the United Kingdom. The Board believes that the Directors have relevant experience in identifying and conducting such acquisitions. The Directors believe that their broad collective experience in the proposed sector, in acquisitions, accounting, corporate and financial management together with their wide industry contacts will enable the Company to achieve its objectives.
Opportunities will be evaluated when the Directors consider that enhanced values may be achieved. A particular consideration will be to identify opportunities where the Directors believe that their expertise and experience can be deployed to facilitate growth or unlock value which as a result would provide a satisfactory return to Shareholders.
General Meeting
A notice convening a General Meeting of the Company to be held on 24 June 2009 at 12 noon at the offices of Antony Batty & Company LLP, 3 Field Court, Grays Inn, London, WC1R 5E, at which the Resolutions will be proposed as set out in the Circular.
The Resolutions to be proposed at the GM are as follows:
Resolution 1 - To approve the CVA
This resolution is to be proposed at the GM as an ordinary resolution for the Shareholders to approve the CVA.
Resolution 2 - To approve the creation of the B Ordinary Shares
This resolution is to be proposed at the GM as a special resolution, conditional on the passing of Resolution 1 above, to approve the creation of the B Ordinary Shares and amend the Company's Existing Articles of Association accordingly.
IT IS EMPHASISED THAT IF THE RESOLUTIONS ARE NOT PASSED AT THE GENERAL MEETING THEN THE COMPANY WOULD NOT ENTER INTO THE CVA, WOULD HAVE INSUFFICIENT ASSETS TO MEET ITS LIABILITIES AND WOULD BE WOUND UP ON AN INSOLVENT BASIS.
Your Directors consider that the Proposals outlined in the Circular are in the interests of Shareholders and recommend that Shareholders vote in favour of the Resolutions as the Directors who hold Ordinary Shares propose to do in respect of their aggregate holdings of 5,311,000 Ordinary Shares representing 19.05 per cent. of the Existing Ordinary Shares.
All definitions in this announcement bear the same meaning as those set out in the Circular, unless otherwise stated. The Circular has been posted to Shareholders and is available on the Company's website, www.kleenairsystems.co.uk.
Further enquiries:
KleenAir Systems International Plc
Lionel Simons, Chairman and Chief Executive
07799 690 785
www.kleenairsystems.co.uk
W.H. Ireland Limited
Tim Cofman-Nicoresti/Katy Birkin
0121 265 6330