LBB.L Regulatory News (LBB)

23 Dec 2009 07:30



23 December 2009

Molectra Group Ltd

("Molectra" or "the Company")

Disposal of Molectra Australia and Discussions Regarding a Potential Reverse Takeover

Molectra today announces that it has conditionally agreed to dispose of the business and assets of its operating subsidiary, Molectra Australia Pty Ltd. ("Molectra Australia"), ("the Disposal").

The business of Molectra Australia is to sell crumb rubber, manufacture value added products made of rebonded crumb rubber and to seek to license its technology to third parties. In the nine months to 30 September 2009, Molectra Australia made an unaudited loss before tax of A$8.6 million.

The strategic review of the Company's options by management and the Company's advisers that was announced on 29 September 2009 has now been completed, with the conclusion that, given current resources and commercial prospects, Molectra Australia's business did not have sufficient prospects of success to warrant the Company's continuing investment. 

The Directors of Molectra have conditionally agreed to sell the business and assets of Molectra Australia back to parties related to Mr John Dobozy, the original owner of the Molectra Australia business, in return for 26,924,213 Molectra ordinary shares of no par value ("the Ordinary Shares"), which will be immediately cancelled. Based on yesterday's mid market closing share price of 0.625p per share, the proposed Disposal values the Molectra Australia business at £168,276. Of the c.27 million Ordinary Shares above, approximately 16 million Ordinary Shares will be acquired from Molectra Holdings Ltd and approximately 11 million Ordinary Shares will be acquired from Molectra Technologies Pty Ltd. 

It is proposed that the corporate entity of Molectra Australia itself will be retained and the Company will attempt to sell Molectra Australia to a third party for the potential tax losses in that company. If this does not prove possible, it is intended that Molectra Australia will be liquidated.

The Disposal will require shareholder consent, in accordance with the AIM Rules and Jersey law, to be given in a general meeting. If the Disposal is approved by shareholders, Molectra will become an investing company as defined in the AIM Rules. 

It is intended that the Company's investing policy going forward will be to acquire a company or business in the consumer retail and/or manufacturing sector. The Company is currently in discussions, which may or may not lead to an acquisition in accordance with this policy. Any such transaction is likely to require the approval of shareholders and to be considered a reverse takeover under the AIM Rules. A further announcement will be made in due course.

As agreed with the London Stock Exchange and in accordance with the AIM rules, trading in the Molectra Ordinary Shares will be suspended from 7.30 a.m. this morning.

It is expected that a circular, seeking shareholder approval for the Disposal and for the proposed investing policy will be posted to shareholders shortly. A further announcement will be made in due course.

Related Party Transaction

The Disposal, being a transaction with companies connected to Mr John Dobozy, who was a director of the Company in the last 12 month and indirectly is interested in approximately 15.4 per cent. of Molectra's existing share capital, is classified as a transaction with related parties for the purposes of the AIM Rules. In accordance, therefore, with the AIM Rules, the Directors of the Company, having consulted with the Company's nominated adviser, Arbuthnot Securities Limited, consider that the terms of the transaction are fair and reasonable insofar as the shareholders are concerned.

Rodger Sargent, Chief Financial Officer of Molectra, said:

"Our thorough strategic review clearly indicated that continuing to focus on the Australian business would not be in the best interests of our shareholders. We believe the Company, with its cash resources and AIM quote, retains considerable value which the Directors will seek to maximise."

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