K3 Business Technology Group Regulatory News (KBT)

AIM: KBT

K3 BUSINESS TECHNOLOGY GROUP PLC

("K3" or "the Group" or "the Company")

· Publication of Circular relating to

Proposed Share Capital Reduction, Proposed Cancellation of the Share Premium Account

and Notice of General Meeting

· Update regarding possible return of value to Shareholders and future plans, including possible de-listing

K3, which provides business-critical software solutions focused on fashion and apparel brands, is pleased to announce that following the sale of NexSys Solutions Limited ("NexSys"), completed in January 2025 for a gross cash consideration of £36.0 million, the K3 Board believes that up to approximately £29 million of the net proceeds, which amounted to £34.3 million, can be returned to Shareholders. This is after considering the Group's current cash balances and the Board's expectations of the Group's future cash requirements.

The mechanism of any return of net proceeds would be by way of a Tender Offer and is, inter alia, subject to the completion of a share capital reduction (so as to create the necessary distributable reserves) and approval by Shareholders at a general meeting.

A circular explaining the details of and reasons for the proposed Share Capital Reduction and why the Board considers the Share Capital Reduction to be in the best interests of the Company and its Shareholders as a whole, has been published today and will be sent to Shareholders. The proposed Share Capital Reduction would result in, amongst other things, a reduction in the nominal value of the Existing Ordinary Shares, from 25p to 5p, though the number of shares in issue would not change.

The Circular contains a Notice of General Meeting, convened for 11.00 a.m. on 24 April 2025 at the offices of Cavendish Capital Markets at One Bartholomew Close, London, WC1A 7BL. Part IV of the Circular sets out the Special Resolution, which is being proposed to Shareholders in order to facilitate the Share Capital Reduction. The Share Capital Reduction is also subject to an appropriate Order of His Majesty's High Court of Justice in England. The Directors unanimously recommend that Shareholders vote in favour of the Special Resolution to be proposed at the General Meeting as they intend to do so in respect of their beneficial holdings, which in aggregate amount to 61,701 Existing Ordinary Shares, representing approximately 0.14 per cent. of the Company's existing issued Ordinary Share Capital. Kestrel Partners LLP has given an irrevocable undertaking to vote in favour of the Special Resolution in respect of an aggregate 12,990,869 Existing Ordinary Shares, representing approximately 28.33 per cent. of the Company's existing ordinary share capital.

The expected timetable of principal events is set out below. The Circular will be made available on the Company's corporate website at https://www.k3btg.com/investor-centre/.

Current Trading and Future Prospects

Following the NexSys Sale, the Group's continuing operations comprise:

The Board is pleased to reconfirm its expectation set out in K3's Final Results for 30 November 2024, announced on 27 February 2025, that the Group's continuing operations will trade on a cash breakeven basis from March 2025 onwards.

Group pro forma cash balances at 28 February 2025, assuming £29 million of capital is returned to shareholders, would be £6.1 million (including £3.3 million of restricted cash, which is restricted until July 2026).

The Board's focus remains on delivering value to Shareholders. It is expected that this will be achieved by maintaining strong financial discipline, continuing to simplify the Group as appropriate through the sale of non-core businesses and to invest judiciously in profitable growth opportunities. As further cash is realised in the Group, the Board intends to return it to Shareholders in a timely manner.

Future Plans for the Group and Possible De-listing from AIM

Following the NexSys Sale and in line with the Board's ongoing strategy to reduce costs and simplify the Group, the Board and certain Shareholders have raised the question as to whether the Company's and Shareholders' best interests are served by its continued admission to AIM following the planned return of value to Shareholders. Accordingly, the Board will consult further with Shareholders on this subject before recommending any course of action. Where the Board concludes that a de-listing from AIM is the appropriate course of action, a separate general meeting will be convened for a later date in order that Shareholders can consider and vote on a special resolution proposing a de-listing from AIM. Should such a de-listing be agreed, it would be organised to become effective as soon as practicable after the planned return of value to Shareholders. 

Unless otherwise indicated all defined terms in this announcement shall have the same meaning as described in the Circular.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Notes

The expected dates for the confirmation of the Share Capital Reduction by the Court and the Share Capital reduction becoming effective are based on provisional dates that have been obtained for the required Court hearings of the Company's application. These provisional hearing dates are subject to change and dependent on the Court's timetable. If the expected dates of the Court hearings are changed (and consequently the expected effective date for the Share Capital Reduction), the Company will make further notifications via a Regulatory Information Service.

The timetable assumes that there is no adjournment of the General Meeting. If there is an adjournment, all subsequent dates are likely to be later than those shown.

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the company's obligations under Article 17 of MAR.

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