Kellan Group Regulatory News (KLN)

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014.

9 November 2018

The Kellan Group PLC

("Kellan" or the "Company")

Proposed cancellation of admission to trading on AIM

Notice of General Meeting

Further to its announcement on 18 September 2018, the Company announces that, following discussions with the Company's major shareholders, the Directors consider that it is in the best interests of shareholders of Kellan ("Shareholders"), for the Company to seek cancellation of admission of its ordinary shares from trading on AIM ("Cancellation"), conditional, pursuant to Rule 41 of the AIM Rules for Companies, upon the consent of not less than 75 per cent. of votes cast by Shareholders at a general meeting of the Company.

The Directors consider the Cancellation to be in the best interest of Shareholders, after considering, amongst other things, the costs of maintaining trading in the Company's ordinary shares ("Ordinary Shares") on AIM and the limited free float and liquidity in the Ordinary Shares. The Company will post to Shareholders a circular (the "Circular") later today in connection with Cancellation containing a notice convening a general meeting of the Company (the "General Meeting") to be held 10.00 a.m. on 3 December 2018 at the Company's offices at 27 Mortimer Street, London W1T 3BL.

The Ordinary Shares will continue to be admitted to trading on AIM, prior to the Cancellation. BMN Commercial Limited, a shareholder of the Company, has agreed with the Company that with effect from 12 November 2018, it will offer to purchase off market up to 67,929,012 Ordinary Shares offered for sale at a price of £0.004 (four-tenths of a penny) per Ordinary Share (the "BMN Commercial Offer Facility"). BMN Commercial Limited intends that the BMN Commercial Offer Facility will remain open until the earlier of the date on which a total of 67,929,012 Ordinary Shares are acquired and the day 21 business days after the last trading day on AIM, expected to be 14 January 2019. If Shareholders wish to sell their Ordinary Shares to BMN Commercial under the BMN Commercial Offer Facility, they should consult with their own independent financial adviser and/or broker. The BMN Commercial Offer Facility will be fulfilled on a first come, first served basis. Further details on the BMN Commercial Offer Facility are contained within the Circular and in the extracts from the Circular below.

The Company's has received irrevocable undertakings to vote or to procure votes in favour of the resolutions at the General Meeting in respect of 238,851,217 Ordinary Shares, representing approximately 70.32 per cent. of the issued share capital of the Company.

Extracts from the Circular, which sets out the reasons for seeking Cancellation, are set out below and a copy of the Circular will shortly be available on the Company's website, http://www.kellangroup.co.uk/ 

For further information contact:

ENQUIRIES:

EXTRACTS FROM THE CIRCULAR

The following has been extracted without amendment from, and should be read in conjunction with, the Circular to Shareholders dated 9 November 2018, available from the Company's website, http://www.kellangroup.co.uk/.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS(1)(2)

Publication and posting of this Document and Form of 9 November 2018

Proxy to Shareholders

Commencement of purchase of Ordinary Shares 12 November 2018

by BMN Commercial pursuant to the BMN Commercial Order Facility(3)

Latest time and date for receipt of completed Forms of Proxy 10.00 a.m. on 29 November 2018

respect of the General Meeting

Time and date of the General Meeting 10.00 a.m. on 3 December 2018

Expected last day of dealings in Ordinary Shares on AIM 10 December 2018

Expected time and date of Cancellation (4) 7.00 a.m. on 11 December 2018

Notes:

(1) All of the times referred to in this Document refer to London time, unless otherwise stated.

(2) 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.

(3) See paragraph 4.1 of Part I of this Document for further information.

(4) The Cancellation requires the approval of not less than 75 per cent. of the votes cast by Shareholders at the General Meeting.

LETTER FROM THE CHAIRMAN OF

THE KELLAN GROUP PLC

1. Introduction

As announced by the Company today, the Directors have concluded that it is in the best interests of the Company and its Shareholders to cancel the admission of the Ordinary Shares to trading on AIM. In accordance with Rule 41 of the AIM Rules, the Company has notified the London Stock Exchange of the date of the proposed Cancellation.

The Cancellation Resolution is conditional, pursuant to Rule 41 of the AIM Rules, upon 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, notice of which is set out at the end of this Document. The Company has received irrevocable undertakings to vote in favour of the Cancellation Resolution in respect of 70.32 per cent. of the issued share capital of the Company.

The Company is seeking Shareholders' approval of the Resolutions, including the Cancellation Resolution, at the General Meeting, which has been convened for 10.00 a.m. on 3 December 2018 at the Company's offices at 27 Mortimer Street, London W1T 3BL. If the Cancellation Resolution is passed at the General Meeting, it is anticipated that the Cancellation will become effective at 7.00 a.m. on 11 December 2018.

The purpose of this Document is to seek Shareholders' approval for the Resolutions, to provide information on the background and reasons for, and consequences of, the Cancellation, Re-registration and the adoption of the New Articles and why the Directors unanimously consider the Cancellation, Re-registration and adoption of the New Articles to be in the best interests of the Company and its Shareholders as a whole.

Shareholders should note that BMN Commercial has agreed with the Company that it will offer to purchase, off market, up to 67,929,012 Ordinary Shares offered for sale at a price of £0.004 (four-tenths of a penny) per Ordinary Share. Further details of the BMN Commercial Offer Facility are set out in paragraph 4.1 of this Document.

The Notice of the General Meeting is set out at the end of this Document.

2. Background and reasons for Cancellation

The Directors have conducted a review of the benefits and drawbacks to the Company and its Shareholders in retaining its quotation on AIM and maintaining its existing corporate structure. The Board believes that the Cancellation is in the best interests of the Company and its Shareholders as a whole. In reaching this conclusion, the Directors have considered the following key factors, amongst others:

l the ten largest Shareholders hold, in aggregate, approximately 88 per cent. of the Company's current issued share capital, resulting in limited free float and liquidity in the Ordinary Shares with the consequence that the Company's admission to trading on AIM does not, in itself, offer investors the opportunity to trade in meaningful volumes or with frequency within an active market;

l the Board believes, as a result of the liquidity issues outlined above and other historic factors, the current share price of the Ordinary Shares, and therefore the market capitalisation of the Company, does not accurately reflect the Company's value and adversely affects the ability of the Board to pursue certain strategic objectives;

l in light of the limited trading in the Ordinary Shares, with an average daily volume of 0.36 per cent. of the issued share capital of the Company traded, the considerable cost associated with maintaining the Company's admission to trading on AIM (such as nominated adviser and broker fees, London Stock Exchange fees and the costs associated with being a quoted company in having higher level corporate governance and audit scope) are, in the Directors' opinion, disproportionately high, when compared to the benefits, and the Board believes that funds could be better utilised; and

l the management time and the legal and regulatory burden associated with maintaining the Company's admission to trading on AIM is, in the Directors' opinion, disproportionate to the benefits to the Company.

Following careful consideration, the Directors believe that it is in the best interests of the Company and Shareholders to seek the proposed Cancellation at the earliest opportunity.

3. Principal effects of the Cancellation

The Directors are aware that certain Shareholders may be unable or unwilling to hold Ordinary Shares in the event that the Cancellation is approved and becomes effective. Such Shareholders should consider selling their Ordinary Shares to BMN Commercial under the BMN Commercial Offer Facility (details of which are set out in paragraph 4.1 below) or in the market prior to the Cancellation becoming effective.

Under the AIM Rules, the Company is required to give at least 20 clear Business Days' notice of Cancellation. Additionally, Cancellation will not take effect until at least 5 clear Business Days have passed following the passing of the Cancellation Resolution. If the Cancellation Resolution is passed at the General Meeting, it is proposed that the last day of trading in Ordinary Shares on AIM will be 10 December 2018 and that the Cancellation will take effect at 7.00 a.m. on 11 December 2018.

The principal effects of the Cancellation will be that:

l there will be no formal market mechanism enabling Shareholders to trade their Ordinary Shares on AIM or any other recognised market or trading facility;

l whilst the Ordinary Shares will remain freely transferrable, it is possible that the liquidity and marketability of the Ordinary Shares will, in the future, be even more constrained than at present and the value of such shares may be adversely affected as a consequence;

l in the absence of a formal market and quote, it may be more difficult for Shareholders to determine the market value of their investment in the Company at any given time;

l the regulatory and financial reporting regime applicable to companies whose shares are admitted to trading on AIM will no longer apply;

l Shareholders will no longer be afforded the protections given by the AIM Rules, such as the requirement to be notified of certain events and the requirement that the Company seek shareholder approval for certain corporate actions, where applicable, including substantial transactions, financing transactions, reverse takeovers, related party transactions and fundamental changes in the Company's business, including certain acquisitions and disposals;

l the Company will cease to have an independent nominated adviser and broker;

l whilst the Company's CREST facility will remain in place post 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 this instance, Shareholders who hold Ordinary Shares in CREST will receive share certificates; and

l the Cancellation may have personal taxation consequences for Shareholders. Shareholders who are in any doubt about their tax position should consult their own professional independent tax adviser.

The Company will remain registered with the Registrar of Companies in England & Wales in accordance with and subject to the Companies Act 2006, notwithstanding the Cancellation. Shareholders should also note that the Takeover Code will continue to apply to the Company following the Cancellation for the period of 10 years from the date of Cancellation (although it should also be noted that, as the Major Shareholder owns in excess of 50 per cent. of the existing Ordinary Shares, he is free to acquire further Ordinary Shares without incurring any obligation under Rule 9 of the Takeover Code). 

The Resolutions to be proposed at the General Meeting include the adoption of the New Articles with effect from completion of the Cancellation. A summary of the principal changes being made by the adoption of the New Articles is included in Part II of this Document.

The above considerations are not exhaustive, and Shareholders should seek their own independent advice when assessing the likely impact of the Cancellation on them.

4. Transaction in the Ordinary Shares prior to and post the proposed Cancellation

4.1 Prior to Cancellation

Shareholders should note that they are able to trade in the Ordinary Shares on AIM prior to Cancellation. In addition, BMN Commercial has agreed with the Company that with effect from 12 November 2018 it will offer to purchase off market up to 67,929,012 Ordinary Shares offered for sale at a price of £0.004 (four-tenths of a penny) per Ordinary Share. BMN Commercial intends that the BMN Commercial Offer Facility will remain open until the earlier of the date on which a total of 67,929,012 Ordinary Shares are acquired and the day 21 business days after the last trading day on AIM, expected to be 14 January 2019. BMN Commercial has lodged the necessary funds with the Company, which will administer the process on BMN Commercial's behalf, to complete the BMN Commercial Offer Facility in full.

If Shareholders wish to sell their Ordinary Shares to BMN Commercial under the BMN Commercial Offer Facility, they should consult with their own independent financial adviser and/or broker. The BMN Commercial Offer Facility will be fulfilled on a first come, first served basis.

If Shareholders wish to sell their Ordinary Shares pursuant to the BMN Commercial Offer Facility, it will be necessary to follow the procedures set out below:

4.1.1 If you hold your Ordinary Shares in certificated form

Please complete the enclosed stock transfer form by filling in your name and address, the number of shares you hold and signing (if shares held in joint names then all shareholders should sign the form). Return the original ink signed form and your valid share certificate(s) to: Martin Kumar, Company Secretary, at the offices of the Company at 4th Floor, 27 Mortimer Street, London, W1T 3BL (martin.kumar@kellangroup.co.uk - 020 7268 6294) as soon as possible.

If your share certificate(s) are lost, stolen or destroyed, you should contact our registrar, Link Asset Services, on Tel: 0871 664 0300 (calls cost 12p per minute plus your phone company's access charge. Lines are open between 9.00am - 5.30 pm, Monday to Friday, excluding public holidays in England and Wales). Link Asset Services will arrange for you to complete an indemnity covering the company for any loss arising from a dispute over who owns the shares and you may be charged for this if the value of the shares is over a certain limit. Once this is done, Link Asset Services will send you a duplicate certificate.

In order to receive your proceeds from the sale to BMN Commercial, please provide your bank details on the form provided on the reverse of the stock transfer form.

Proceeds will be paid within 14 days from the transfer of your shares to BMN Commercial.

4.1.2 If you hold your Ordinary Shares in CREST (uncertificated form)

You should contact your independent financial adviser and/or Nominee manager to withdraw your shares into certificated form. You will then be able to sell your Ordinary Shares under the BMN Commercial Offer Facility in accordance with the procedures set out in 4.1.1 above, using the stock transfer form.

4.2 Following Cancellation

The Board is aware that the proposed Cancellation, should it be approved by Shareholders at the General Meeting, would make it more difficult for Shareholders to buy and sell Ordinary Shares should they wish to do so.

Following Cancellation, the Company intends to use reasonable endeavours to facilitate introductions and communication among Shareholders who wish to sell their Ordinary Shares and those persons who wish to purchase Ordinary Shares. To do this, Shareholders or persons wishing to acquire or sell Ordinary Shares will be able to leave an indication with the Company that they are prepared to buy/sell Ordinary Shares at a specified price. In carrying out such introductions, the Company will not arrange transactions and will take no responsibility to match up Shareholders wishing to sell and purchase Ordinary Shares, and no responsibility in respect of the time frame and manner in which introductions or communications (if any) are made or as to the price at which any trades might take place. Shareholders wishing to make such an indication to the Company should do so by writing to Martin Kumar, Company Secretary, at the offices of the Company at 4th Floor, 27 Mortimer Street, London, W1T 3BL (martin.kumar@kellangroup.co.uk - 020 7268 6294).

5. Re-registration

Following the Cancellation, the Board believes that the requirements and associated costs of the Company maintaining its public company status will be difficult to justify 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 this Document.

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 not issue the certificate of incorporation on Re-registration until the Register of Companies is satisfied that no valid application can be made to cancel the resolution to re-register as a private limited company.

6. Irrevocable Undertakings

The Company has received irrevocable undertakings from the directors who hold Ordinary Shares, the Major Shareholder and BMN Commercial to vote or procure votes in favour of the Resolutions in respect of, in aggregate, 238,851,217 Ordinary Shares, representing approximately 70.32 per cent. of the issued share capital of the Company.

Accordingly, the Directors believe it is likely that the Resolutions will be passed at the General Meeting.

7. General Meeting and process of Cancellation

Under the AIM Rules, it is a requirement that the Cancellation must be approved by not less than 75 per cent. of votes cast by Shareholders at a General Meeting. Accordingly, the Notice of General Meeting set out at the end of this Document contains a special resolution to approve the Cancellation.

Furthermore, Rule 41 of the AIM Rules requires any AIM company that wishes the London Stock Exchange to cancel the admission of its shares to trading on AIM to notify shareholders and to separately inform the London Stock Exchange of its preferred cancellation date at least 20 Business Days prior to such date. In accordance with AIM Rule 41, the Directors have notified the London Stock Exchange of the Company's intention, subject to the Cancellation Resolution being passed at the General Meeting, to cancel the Company's admission of the Ordinary Shares to trading on AIM. Accordingly, if the Cancellation Resolution is passed the Cancellation will become effective at 7.00 a.m. on 11 December 2018. If the Cancellation becomes effective, Allenby Capital Limited will cease to be nominated adviser and broker to the Company and the Company will no longer be required to comply with the AIM Rules.

The General Meeting will be held at the Company's offices at 27 Mortimer Street, London W1T 3BL commencing at 10.00 a.m. on 3 December 2018.

8. Action to be taken

You will find enclosed with this Document a Form of Proxy for use at the General Meeting. Whether or not you propose to attend the General Meeting in person, you are requested to complete and return the Form of Proxy to the Company's registrars Link Asset Services, PXS1, 34 Beckenham Road, Beckenham, Kent BR3 4ZF, in accordance with the instructions printed thereon as soon as possible but, in any event, to be received no later than 10.00 a.m. on 29 November 2018. Completion and return of a Form of Proxy will not preclude you from attending and voting at the General Meeting in person if you so wish.

9. Recommendation

The Directors consider that the Cancellation, the adoption of the New Articles and the Re-registration are in the best interests of the Company and its Shareholders as a whole and therefore unanimously recommend that you vote in favour of the Resolutions at the General Meeting as those Directors who hold Ordinary Shares intend to do in respect of their own beneficial holdings amounting to, in aggregate 15,599,511 Ordinary Shares representing 4.59 per cent. of the total voting rights in the Company.

Yours faithfully,

Richard WardChairman of the Company

DEFINITIONS

The following definitions apply throughout this Document, unless the context requires otherwise: