27 Feb 2009 15:48
Molectra Group Limited
(the "Company")
Purchase of own securities
The Company has today published a circular convening an extraordinary general meeting to seek the consent of shareholders to repurchase 30,000,000 Shares in the Company. These Shares are currently registered in the name of Oakwood Nominees Limited and the Company has been informed that they are beneficially owned by Andrew Dickson and Peter Dickson (the Vendors) (the Share Repurchase).
The Company is also seeking shareholder consent for a general authority to buy back shares in the market up to 14.99 per cent. of the Company's issued share capital following the Share Repurchase (the General Authority). If granted, the General Authority will expire at the end of the Company's annual general meeting later this year.
Details of the Share Repurchase
On 5 February 2009 Oakwood informed the Company that it had acquired 39,000,000 Shares, which increased its total shareholding in the Company to 42,500,000, 20.9 per cent. of the Company's issued share capital. 30,000,000 of the Shares were acquired from Hydrodec Group plc, which announced on 5 February 2009 that it had disposed of its entire shareholding in the Company.
The Company has been informed that Andrew Dickson and Peter Dickson each beneficially own 19,500,000 of the Shares registered in Oakwood's name. The remaining 3,500,000 Shares are held by Oakwood on behalf of another client.
Oakwood, the Vendors and the Company have today entered into the Share Repurchase Agreement under which the Vendors have irrevocably agreed to sell, subject to the passing of the relevant resolution by the requisite majority, 30,000,000 Shares to the Company. The aggregate purchase price to be paid to Oakwood is £300,000, representing a price of 1p per Share. The closing middle market price on 26 February 2009 (being the last practicable date before publication of this announcement) was 1.25 pence per Share.
The Company will fund the Share Repurchase from its existing cash resources. Under Jersey law the Company is permitted to fund the payment of the purchase price from its stated capital account, notwithstanding that the Company's most recent accounts do not show sufficient distributable reserves.
Assuming the resolution to approve the Share Repurchase is passed by the requisite majority and the Share Repurchase is completed, the Company will have 173,225,000 Shares in issue each carrying the right to one vote per Share. Shareholders should use this number when calculating the percentage of voting rights that they are interested in for the purposes of the disclosure of significant interests.
If the Share Repurchase is completed, Oakwood's shareholding would fall to 12,500,000 Shares (approximately 7.2 per cent. of the Company's reduced issued share capital), of which, the Company understands, 9,000,000 (approximately 5.2 per cent. of the reduced issued share capital) would be beneficially owned by the Vendors. The Vendors have confirmed to the Company that they have no present intention of disposing of their remaining Shares.
Reasons for the Share Repurchase
The prevailing economic climate has contributed to a substantial fall in the price of the Company's shares in recent months. Given the current historically low share price, the Share Repurchase is, in the opinion of the Directors, a good opportunity to acquire a substantial block of shares on attractive terms. In addition:
i) if not acquired, the market may perceive this block of Shares to be an 'overhang', thus potentially stifling any upward share price movement in the future; and
ii) the £300,000 purchase price can be met by the Company without prejudice to the Company's ability to fund the development of the business.
Related party transaction
As Oakwood currently holds 20.9 per cent. of the Company's voting rights, the Share Repurchase is classified as a related party transaction for the purposes of the AIM Rules. Oakwood's interest is limited to being the registered holder of the 30,000,000 Shares to be sold pursuant to the Share Repurchase Agreement.
If the resolution to approve the Share Repurchase is passed the consideration of £300,000 payable by the Company under the Share Repurchase Agreement will be satisfied by the Company in cash on the Effective Date.
Under Jersey law Oakwood and the Vendors are prohibited from exercising any right to vote on the resolution relating to the Share Repurchase in respect of the 30,000,000 Shares that are the subject of the Share Repurchase Agreement. Oakwood is entitled to vote all of the Shares registered in its name in relation to the resolution relating to the General Authority.
The Directors of the Company consider, having consulted with Matrix, the Company's nominated adviser, that the terms of the transaction are fair and reasonable insofar as the Company's shareholders are concerned.
The General Authority
The Company is proposing to take the General Authority to give the Company the ability to take advantage of opportunities to buy back Shares at favourable prices in the future. There is no guarantee that any such opportunities will arise but the Directors consider that it would be beneficial to have such flexibility in the future. The General Authority will cover up to 25,966,427 Shares, representing approximately 14.99 per cent. of the Company's reduced issued share capital assuming the Share Repurchase is completed.
The price at which any Shares bought back under the General Authority are purchased will not exceed the higher of (i) 5 per cent. above the average of the middle market quotations for the 5 consecutive dealing days ending on the dealing day immediately preceding the date on which the purchase is made and (ii) the higher of the price quoted for (a) the last independent trade of, or (b) the highest current independent bid for, any number of Shares on the trading venue where the purchase is carried out.
The General Authority may not be exercised at any time when the Company is in a close period, as required by the AIM Rules. The Company will be in a close period at any time during which it or any of the Directors possess unpublished price sensitive information as well as for the period of two months prior to the publication of its annual or interim accounts.
The General Authority will expire at the conclusion of the Company's annual general meeting later in 2009 unless it is renewed or replaced prior to that time.
Extraordinary General Meeting
Both the implementation of the Share Repurchase and the granting of the General Authority require the approval of the Company's shareholders. The Board has therefore convened an Extraordinary General Meeting to be held at 12 noon on Wednesday 18 March 2009 at which special resolutions will be proposed to (i) approve the Share Repurchase on the terms of the Share Repurchase Agreement; and (ii) grant the General Authority. To be effective, each resolution must be approved by at least two-thirds of the votes cast at that meeting.
Availability of Circular
The circular convening the extraordinary general meeting will be available on the Company's website at www.molectragroup.co.uk.
For further information please contact:
| Molectra Group Limited |
|
| Paul Gazzard | 01725 510 383 |
| Rodger Sargent | 020 7355 7660 |
| Matrix Corporate Capital LLP | |
| Stephen Mischler | 020 3206 7203 |
| Tim Graham | 020 3206 7206 |
| Threadneedle Communications Ltd | |
| Graham Herring | 020 7653 9850 |