Norman Broadb Regulatory News (NBB)

1 Jun 2006 12:16

Constellation Corporation plc ("Constellation" or the "Company") Share Capital Reorganisation and Placing Constellation Corporation plc, the AIM traded holding company for the humanresources consulting business Garner International Limited, today announces aproposed share capital reorganisation for the purposes of effecting a placingof new ordinary shares and debt capitalisation issue. The share capitalreorganisation will also have the effect of reducing the number of shareholdersto a more manageable level.In connection with the placing the Company has agreed to place 3,785,714 newordinary shares with Richard Robinson (a director of the Company) and SueO'Brien (an employee of the Company) to raise in aggregate ‚£132,500. TheCompany has also agreed to convert certain debts owed to third parties(including certain amounts owed to Andrew Garner, Roger Hingley and AndersonBarowcliff, a firm of chartered accounts of which Richard Robinson is apartner) into new ordinary shares by way of a debt capitalisation issue.The Company is proposing to change its name to Garner plc and has today, byseparate announcement, announced its preliminary results for the year ended 31December 2005.An expected timetable of events is contained at the end of this announcement.A circular, providing full details of these proposals and containing notice ofan Extraordinary General Meeting to be held on 27 June 2006 will today beposted to shareholders, together with the report and accounts for the yearended 31 December 2005. Copies of the circular will be available from theCompany's registered office and at the offices of Capita Registrars, TheRegistry, 34 Beckenham Road, Beckenham, Kent BR3 4TU during normal businesshours on any week day (Saturday, Sunday and public holiday excepted) until 1July 2006.Share ReorganisationThe Company has a substantial number of shareholders (approximately 6,000),many of whom hold fewer than 5,000 ordinary shares. During the last 12 monthsthe ordinary shares have traded at predominately below nominal value and on 31May 2006 (the last practicable date prior to this announcement) the middlemarket price per ordinary share was 0.06p. The Board has become increasinglyconcerned at the cost of servicing a share register containing such a largenumber of shareholders with small shareholdings and is also conscious that theimpact of transaction costs may make it uneconomic for shareholders with smallshareholdings to dispose of their shares should they wish to do so. The Boardbelieves that the costs to the Company will be significantly reduced by theproposed share capital reorganisation.It is proposed that every 5,000 existing ordinary shares are consolidated into1 ordinary share of 500p. Any fractional entitlements will be sold in themarket on behalf of shareholders and where the amount of the proceeds is ‚£3.00or more, the proceeds will be returned to shareholders. Proceeds under ‚£3.00will be retained for the benefit of the Company.The Directors believe that that there will be more active trading in theCompany's ordinary shares if immediately after the share consolidation theordinary share capital of the Company is reorganised further by subdividingeach newly created share of 500p into 100 ordinary shares of 5p each.In addition, it is proposed that each of the ordinary shares of 5p each createdpursuant to the sub-division is divided into 1 new ordinary share of 1p ("NewOrdinary Shares") (which effectively represents 50 existing ordinary shares of0.1p each) and one Deferred A Share of 4p each. The Deferred A Shares will haveno value or voting rights.The record date for the share capital reorganisation is 5.30pm on 27 June 2006.PlacingThe Company has for some time required additional financing so, in order toprovide working capital, the Company has conditionally placed 3,785,714 NewOrdinary Shares at 3.5p per New Ordinary Share (equivalent to 0.07p per currentordinary share prior to the share capital reorganisation) to raise ‚£132,500. Ofthese New Ordinary Shares, 2,857,143 New Ordinary Shares have been placed withRichard Robinson (a director of the Company) and Sue O'Brien (an employee ofthe Company).Debt Capitalisation IssueAs disclosed in the Company's report and accounts for the year ended 31December 2005 (which has today been posted to shareholders) the Company has anumber of creditors which it has been unable to settle due to its financialposition. The Company has reached agreement with most of these creditors andproposes to capitalise ‚£349,428.82 owing by the Company through the issue of9,983,680 New Ordinary Shares at 3.5p per share (equivalent to a price of 0.07pper current ordinary share). Of these amounts a total of ‚£175,000 which is owedto Andrew Garner and a total of ‚£12,500 which is owed to Roger Hingley, both ofwhich are in respect of loans to the Company will be capitalised resulting inthe issue of 5,000,000 New Ordinary Shares and 357,142 New Ordinary Sharesrespectively.Following these proposals Andrew Garner will be interested in 11,027,000 NewOrdinary Shares representing 29.71 per cent. of the issued share capital asenlarged, Roger Hingley will be interested in 397,142 New Ordinary Sharesrepresenting 2.73 per cent. of the issued share capital as enlarged and RichardRobinson will be interested in 3,869,372 New Ordinary Shares representing 10.43per cent. of the issued share capital as enlarged (which includes the 1,012,229New Ordinary Shares being issued to Anderson Barrowcliff, a firm in whichRichard Robinson is a partner).Related Party TransactionsThe issue of New Ordinary Shares to Andrew Garner, Richard Robinson, RogerHingley and Anderson Barrowcliff, a firm in which Richard Robinson has aninterest, each represents a related party transaction under the AIM Rules. JohnBartle and Bruce Lakefield, the independent directors, having consulted withthe Company's nominated adviser, City Financial Associates Limited believe thatthe related party transactions are fair and reasonable in so far asshareholders are concerned.Application will be made to the London Stock Exchange for the New OrdinaryShares proposed to be created pursuant to the share capital reorganisation tobe re admitted to AIM and the New Ordinary Shares to be issued pursuant to theplacing and debt capitalisation issue to be admitted to AIM. It is expectedthat dealings in the enlarged issued share capital will commence on 28 June2006.Change of NameThe Group's strategy remains focused on executive search and with the return toprofitability for the year ended 31 December 2005 the Board believe that thename of the Company should be changed to reflect that of its tradingsubsidiary, Garner International Limited. It is therefore proposed to change tochange the name of the Company to Garner plc.New share certificates will be issued to shareholders following the sharecapital reorganisation and change of name. Existing ordinary share certificateswill no longer remain valid.Expected Timetable of Events2006Annual General Meeting 10.00am 27 JuneExtraordinary General Meeting 10.15am 27 JuneRecord date for the share capital reorganisation 5.30pm 27 JuneAdmission and dealings in the enlarged 8.00am 28 Juneissued share capital to commenceCREST accounts credited 28 JuneDespatch of definitive share certificates 4 JulyIn respect of New Ordinary SharesContact:Andrew Garner Tel: 020 7692 8822Chief ExecutiveRoss AndrewsDirector, City Financial Associates Limited Tel: 020 7090 7800ENDCONSTELLATION CORPORATION PLC