24 Jun 2009 07:00
24 June 2009
Mission Capital PLC
Proposed Disposal of Karspace Management Limited
and
Proposed adoption of Investing Policy
Mission Capital PLC ("Mission Capital") is pleased to announce that it has exchanged contracts for the proposed disposal of Karspace Management Limited, the Company's main trading subsidiary, to VINCI Park Services UK Ltd ("VPSUK"), the specialist car parking operator and subsidiary of VINCI SA, the world's leading construction and concessionaire group.
The Disposal is subject to Shareholder approval which will be sought at a General Meeting which is being convened for 10 July 2009, as this disposal would result in a fundamental change of business by the Group pursuant to Rule 15 of the AIM Rules. In addition, at the General Meeting, Shareholders will be asked to approve the Company's proposed investing policy following Completion in accordance with AIM Rule 15. Shareholders owning an aggregate of 63,475,069 Ordinary Shares, representing approximately 58.7% of the Company's issued share capital, have undertaken to vote in favour of the Resolutions.
Commenting, Philip Goldenberg, Chairman of Mission Capital, said: -
"We are very pleased to have found a home for KML with VPSUK, a UK subsidiary of a leading global car parking operator with operations in 12 countries, which has been present in the UK since the 1990s, providing parking solutions to the local authority, healthcare, airport, retail and property development sectors. We wish KML every success.
The Board also expresses its very real gratitude to Mr Godfrey Thorpe, the Chairman of KML, for all his hard work in bringing the Disposal to fruition. He will be retiring as a director of both the Company and KML upon Completion, and he has our very warm good wishes for the future."
Commenting on the deal, Mark Evans, Chief Executive of VPSUK, said:
"This acquisition is an important part of our growth plan increasing our presence in the hospitals and local authority sectors and we are delighted to have the opportunity to work with KML's clients."
Enquiries:
Mission Capital plc 020 7291 8807 / 01483 765 377
Philip Goldenberg
Arbuthnot Securities Limited 020 7012 2000
Tom Griffiths
Mark Evans 01908 223 500
Chief Executive of VPSUK
Proposed Disposal of Karspace Management Limited
and
Proposed adoption of Investing Policy
Mission Capital PLC is pleased to announce that it has exchanged contracts for the proposed disposal of Karspace Management Limited, the Company's main trading subsidiary, to VPSUK. The Disposal is subject to Shareholder approval which will be sought at a General Meeting which is being convened for 10 July 2009, as this disposal would result in a fundamental change of business by the Group pursuant to Rule 15 of the AIM Rules. In addition, at the General Meeting, Shareholders will be asked to approve the Company's proposed investing policy following Completion in accordance with AIM Rule 15. Shareholders owning an aggregate of 63,475,069 Ordinary Shares, representing approximately 58.7% of the Company's issued share capital, have undertaken to vote in favour of the Resolutions.
Information on Karspace Management Limited
KML manages, consults, finances and advises on car parks throughout the UK with clients ranging from NHS and Primary Care Trusts to large corporations to owners of sites awaiting development that can generate income as short term car parks. In addition, KML also offers cash collection services, car park consultancy and advice and finance for car parking equipment.
In the year ended 30 September 2008, the latest period for which audited accounts have been published, KML reported gross revenues of £3.282 million and a profit after tax of £0.148 million and as at 30 September 2008, had net assets of £0.732 million. The unaudited figures for the six months ended 31 March 2009 report gross revenues of £1.83 million and a profit after tax of £0.127 million. Net assets at that date were reported to be £0.822 million.
Background to and reasons for the Disposal
As was stated in the Chairman's statement accompanying the audited accounts for the year ended 30 September 2008, the Company's ability to invest in and grow KML has been constrained by external factors. The Board believes that the Disposal is in the best interests of KML and its stakeholders, and also, within those constraints, maximises Shareholder value.
Principal terms and conditions of the Disposal
Under the terms of the Disposal Agreement, the Company has agreed to sell the entire issued share capital of KML to VPSUK for cash.
The sale and purchase of the shares in KML is conditional on the passing of the Disposal Resolution by a majority vote of the Shareholders.
Completion will take place on the last business day in the month on which the last of such conditions is satisfied or at such other place, date and/or time as the Company and VPSUK may agree.
The initial consideration receivable by the Company for the Disposal is £900,000 (the "Initial Consideration"). However, the Initial Consideration is calculated on the basis of KML being debt-free and cash-free at Completion and subject to KML not needing more than £171,000 of working capital at Completion. Accordingly, the Initial Consideration will be adjusted following Completion, as follows:
if the Completion Statement shows that KML has cash at Completion, the Initial Consideration will be increased by the amount of such cash, subject to a maximum increase of £500,000;
if the Completion Statement shows that KML has any structural debt at Completion, the Initial Consideration will be reduced by the amount of such debt;
if the Completion Statement shows that KML has a need for working capital at Completion of more than £171,000, the Initial Consideration will be reduced by the amount of such additional need; and
if the Completion Balance Sheet shows that Shareholders' Funds (being that line item, bearing the same name, set out in the Completion Balance Sheet) is a negative amount, then the Initial Consideration shall be reduced by an amount equal to the amount required to bring that negative amount back to zero.
On the basis of the balance sheet of KML appearing in its unaudited management accounts as at 31 May 2009, the Initial Consideration would have been £1,378,000; and the Company would, on this basis, have received £1,290,000 (net of expenses related to the Disposal of approximately £58,000 and a payment by KML to Mr Godfrey Thorpe, following his retirement, of £30,000).
VPSUK will also pay an amount of "Deferred Consideration" calculated in accordance with Schedule 5 to the Disposal Agreement if a specified contract (the "Material Contract") is extended or renewed prior to 31 December 2009. Such extension or renewal must be for a minimum period of 12 months from 30 November 2009. For example, if the Material Contract is extended by one year and the gross profit is £50,000, the Deferred Consideration will be £36,000. If the Material Contract is extended by five years and the gross profit is £120,000, the Deferred Consideration will be £250,000.
Whether or not the Material Contract is so extended or renewed, VPSUK will also pay to Mission Capital an amount equal to the amount (if any) of KML's existing performance bond of £100,000 which is returned to KML by the counterparty to the Material Contract.
The Disposal Agreement contains warranties and a tax indemnity standard to a transaction of this type by the Company in favour of VPSUK. The warranties are supported by a qualified covenant in favour of VPSUK not to return capital to the Shareholders for two years. The Disposal Agreement also contains restrictive covenants by the Company in favour of VPSUK under which, for a period of three years following Completion, the Company must not develop any business in the United Kingdom which does or is likely to compete with KML's business.
Between exchange of the Disposal Agreement and Completion, the Company must continue the business of KML in the ordinary course.
Investing policy
Following the Disposal of KML the Company's sole trading subsidiary will be Mission Capital (Gloucester) Limited, a company whose only asset is the freehold of a building in Gloucester which is held for investment purposes. As a result, the Company will be treated as an investing company in accordance with AIM Rule 15.
The Company confirms that, following Completion, its investing policy will essentially remain the same as it was when the Company's Ordinary Shares were first admitted to trading on AIM, in that it will continue to seek to invest in real estate investments through the acquisition of, or investment in, both asset-backed and non-asset backed operating businesses and companies substantially, but not necessarily exclusively within the United Kingdom. As a result of the Disposal and in accordance with AIM Rule 15, the investing policy must now be approved by Shareholders in general meeting and the Company must implement the investing policy within 12 months of Completion, otherwise trading in the Company's Ordinary Shares on AIM will be suspended in accordance with AIM Rule 40. If following suspension of the Ordinary Shares in accordance with AIM Rule 40, the Ordinary Shares have not been re-admitted to trading on AIM within six months, the admission of the Ordinary Shares to trading on AIM will be cancelled.
Use of proceeds
The net cash proceeds of the Disposal will be used to reduce the Continuing Group's borrowings as well as to invest in opportunities as they arise in line with its investing policy as set out above.
Related party transaction
The payment to Mr Thorpe, a non-executive director of the Company, referred to above is classified as a transaction with a related party for the purposes of the AIM Rules. In accordance, therefore, with the AIM Rules, the directors of the Company, with the exclusion of Mr Thorpe, 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.
Interim Results for the six months ended 31 March 2009
The Company will also announce today its unaudited interim results for the six months ended 31 March 2009. A copy of the announcement will be available on the Company's website at www.missioncapitalplc.co.uk.
General Meeting
The Disposal constitutes a transaction by the Company resulting in a fundamental change of business for the purpose of Rule 15 of the AIM Rules, and accordingly completion of the Disposal and the adoption of the investing policy following Completion requires the consent of the Shareholders in a general meeting.
A circular convening the General Meeting will be despatched later today. It is intended that the General Meeting will be convened for 1000 hours on 10 July 2009 to be held at the offices of Speechly Bircham LLP, 6 New Street Square, London EC4A 3LX.
Undertakings to vote in favour of the Resolutions
Shareholders owning an aggregate of 63,475,069 Ordinary Shares, representing approximately 58.7% of the Company's issued share capital, have undertaken to vote in favour of the Resolutions.
Definitions
Unless the context otherwise requires, the following meanings apply throughout this announcement:
| "AIM" | a market operated by London Stock Exchange plc |
| "AIM Rules" | the AIM Rules for Companies published by the London Stock Exchange from time to time (including, without limitation, any guidance notes or statements of practice) which govern the rules and responsibilities of companies whose shares are admitted to trading on AIM |
| "Articles" | the articles of association of the Company |
| "Board" or "Directors" | the board of directors of the Company at the date of this announcement |
| "Company" or "Mission Capital" | Mission Capital PLC |
| "Completion" | completion of the Disposal, expected to be on 31 July 2009 |
| "Completion Balance Sheet" | means the balance sheet of KML as at completion of the Disposal Agreement to be prepared and finalised in accordance with Schedule 4 to the Disposal Agreement |
| "Completion Statement" | means the statement showing the amount of cash, debt and working capital to be prepared, based on the financial information contained in the Completion Balance Sheet, and finalised in accordance with, and in the form, set out in, Schedule 4 to the Disposal Agreement |
| "Continuing Group" | the Company and its subsidiary, Mission Capital (Gloucester) Limited |
| "Disposal" | the proposed disposal of KML, pursuant to the terms and conditions of the Disposal Agreement, further details of which are set out in this announcement |
| "Disposal Agreement" | the conditional share sale and purchase agreement dated 23 June 2009 between the Company and VPSUK relating to the Disposal |
| "Disposal Resolution" | the resolution to be proposed at the General Meeting to approve the Disposal |
| "General Meeting" | the general meeting of the Company, notice of which will be set out in the circular to Shareholders, convened for 1000 hours on 10 July 2009, and any adjournment thereof |
| "Group" | the Company and its subsidiaries as at the date of this announcement |
| "KML" | Karspace Management Limited |
| "Ordinary Shares" or "Shares" | ordinary shares of 1p each in the capital of the Company |
| "Resolutions" | the resolutions before Shareholders at the General Meeting |
| "Shareholders" | holders of Ordinary Shares |
| "VPSUK" | VINCI Park Services UK Ltd. |