29 Sep 2021 07:00
This announcement contains inside information as stipulated under the UK version of the Market Abuse Regulation No 596/2014 which is part of English Law by virtue of the European (Withdrawal) Act 2018, as amended. On publication of this announcement via a Regulatory Information Service, this information is considered to be in the public domain.
29 September 2021
Northbridge Industrial Services Plc.
("Northbridge", the "Company" or the "Group")
Proposed Capital Reduction
and
Notice of General Meeting
Northbridge, the industrial services and rental company, announces that a circular ("Circular") to shareholders in connection with a proposed capital reduction by the Company ("Capital Reduction"), which contains a notice convening a general meeting of the Company ("General Meeting"), will be posted to shareholders later today. Extracts from the Circular are set out below:
Background to, and reasons for, the Capital Reduction
In the Company's Strategic and Trading Update announcement issued on 11 August 2021, the Board confirmed that the performance of the business has led to an increase in management's expectations for the Group's performance for the full year.
In light of the Group's improved performance, the Board believes that it will be considered desirable in the future to commence paying dividends to Shareholders. However, the Company currently has negative distributable reserves and is, therefore, prohibited under the Act from making distributions to its Shareholders, including the payment of dividends.
In addition, as previously announced on 10 June 2021, it is the intention of the Board to satisfy future issuances of Ordinary Shares pursuant to the Company's LTIP from Ordinary Shares acquired in the market and held in treasury, for example pursuant to a share buyback, if it is deemed to be in the best interest of shareholders at the time. In order to be in a position to carry out such share buybacks, assuming the Company has the appropriate shareholder authorities, the Company must first have distributable reserves.
The Board, therefore, believes it is an appropriate time to undertake the Capital Reduction and create distributable reserves which would enable the payment of dividends and buybacks in the future. In addition, the Board believes the Capital Reduction will have the effect of further strengthening the balance sheet and improving the Group's access to capital.
The Capital Reduction
At 31 December 2020, the Company had a profit and loss account accumulated deficit of £10,166,000. At the same date, the balance standing to the credit of the Share Premium Account amounted to £29,950,000.
As the Group is now profitable at an operating level, the Board has decided to propose that the capital reserves of the Company are restructured by means of the Capital Reduction. Under this process, the Share Premium Account would be eliminated, with the Profit and Loss Account being credited with an equivalent sum in order to eliminate the accumulated losses on the Profit and Loss Account, and to create a positive distributable reserve.
Reducing the balance of £29,950,000 of the Share Premium Account will, subject to the discharge of any undertakings required by the Court as explained further below, be sufficient to eliminate the deficit on the profit and loss account. As a result, any positive distributable reserves generated by the Company after the date on which the Capital Reduction takes effect would be available for the Board to use for the purposes of paying dividends (should circumstances in the future make it desirable to do so).
It is therefore proposed that the amount of £29,950,000 standing to the credit of the Share Premium Account is cancelled.
In addition to the approval by Shareholders of the Resolution, the Capital Reduction requires the approval of the Court. Accordingly, following the General Meeting, an application will be made to the Court in order to confirm and approve the Capital Reduction.
In providing its approval of the Capital Reduction, the Court may require measures to be put in place for the protection of creditors (including contingent creditors) of the Company whose debts remain outstanding on the relevant date, except in the case of creditors which have consented to the Capital Reduction. Such creditor protection measures may include seeking the consent of the Company's creditors to the Capital Reduction or the provision by the Company to the Court of an undertaking to deposit a sum of money into a blocked account created for the purpose of discharging the non-consenting creditors of the Company or an undertaking to treat as undistributable for the time being certain sums representing the realisation of "hidden value" in the balance sheet as at the Effective Date.
It is anticipated that the initial directions hearing in relation to the Capital Reduction will take place on 3 November 2021, with the final Court Hearing taking place on 16 November 2021 and the Capital Reduction becoming effective on the following day, following the necessary registration of the Court Order at Companies House.
There will be no change in the number of Ordinary Shares in issue (or their nominal value) following the implementation of the Capital Reduction and no new share certificates will be issued as a result of the Capital Reduction. The Capital Reduction itself will not involve any distribution or repayment of capital or share premium by the Company and will not reduce the underlying net assets of the Company. The distributable reserves arising on the Capital Reduction will, subject to the discharge of any undertakings required by the Court as explained above, support the Company's ability to pay dividends and/or carry out market purchases of Ordinary Shares, should circumstances in the future make it desirable to do so.
The Board reserves the right to abandon or to discontinue (in whole or in part) the application to the Court in the event that the Board considers that the terms on which the Capital Reduction would be (or would be likely to be) confirmed by the Court would not be in the best interests of the Company and/or its Shareholders as a whole. The Board has undertaken a thorough and extensive review of the Company's liabilities (including contingent liabilities) and considers that the Company will be able to satisfy the Court that there is no real likelihood that any creditor of the Company would be prejudiced by the Capital Reduction.
General Meeting
The General Meeting will take place at 11.00 a.m. on 18 October 2021 at Company's offices at Second Avenue, Centrum 100, Burton-on Trent DE14 2WF.
The Resolution will be passed if 75 per cent. or more of the votes cast (in person or by proxy) at the General Meeting are in favour of it.
Recommendation
The Directors consider that the Capital Reduction will be beneficial for the Company and its Shareholders as a whole. Accordingly, the Directors unanimously recommend that you vote in favour of the Resolution to be proposed at the General Meeting, as they intend to do in respect of their aggregate shareholdings, of 1,684,440 Ordinary Shares representing approximately 5.8% of the Ordinary Shares in issue.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Publication of the Circular | 29 September 2021 |
Latest time and date for receipt of Forms of Proxy for the General Meeting | 11.00 a.m. on 14 October 2021 |
General Meeting | 11.00 a.m. on 18 October 2021 |
Expected date of initial directions hearing of the Court | 3 November 2021 |
Expected date of Court Hearing to confirm the Capital Reduction | 16 November 2021 |
Expected effective date for the Capital Reduction | 19 November 2021 |
Notes
1. The expected dates for the confirmation of the Capital Reduction by the Court and the Capital Reduction becoming effective are based on provisional dates that have been obtained for the required Court hearings of the Company's application. These provisional hearing dates are subject to change and dependent on the Court's timetable.
2. The timetable assumes that there is no adjournment of the General Meeting. If there is an adjournment, all subsequent dates are likely to be later than those shown.
3. References in this announcement are to London times unless otherwise stated.
DEFINITIONS
The following definitions apply throughout this announcement unless the context otherwise requires:
"Act" | Companies Act 2006; | ||
"Board" or "Directors" | the directors of the Company or any duly appointed committee thereof; | ||
"Capital Reduction" | the proposed cancellation of the Company's Share Premium Account pursuant to the Resolution as set out in the Notice of General Meeting; | ||
"Capital Reduction Record Time" | 6.00 p.m. on the date immediately preceding the date of the Court Hearing; | ||
"Circular" | the circular to shareholders in connection with a proposed capital reduction by the Company, which contains a notice convening a general meeting of the Company; | ||
"Company" or "Northbridge" | Northbridge Industrial Services plc, a company incorporated in England and Wales with registered number 05326580 and having its registered office at Second Avenue, Centrum 100, Burton-on-Trent DE14 2WF; | ||
"Court" | the High Court of Justice in England and Wales; | ||
"Court Hearing" | the hearing by the Court to confirm the Capital Reduction; | ||
"Court Order" | the order of the Court confirming the Capital Reduction; | ||
"CREST" | the relevant system (as defined in the CREST Regulations) in respect of which Euroclear is the Operator (as defined in the CREST Regulations); | ||
"CREST Regulations" | the Uncertificated Securities Regulations 2001 (as amended); | ||
"Effective Date" | the date of the Court Order; | ||
"Form of Proxy" | the form of proxy accompanying the Circular relating to the General Meeting; | ||
"General Meeting" | the general meeting of the Company, notice of which is set out in the Circular and including any adjournment(s) thereof; | ||
"Group" | the Company and its subsidiaries and subsidiary undertakings (in each case as defined in the Act); |
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"LTIP" | the long term incentive plan adopted by the Company, as more particularly described in its announcement dated 10 June 2021; |
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"Notice of General Meeting" | the notice of General Meeting, set out in the Circular; |
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"Profit and Loss Account" | the profit and loss account in the books of account of the Company from time to time; |
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"Ordinary Shares" | ordinary shares of 10 pence each in the capital of the Company; |
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"Registrars" | Link Group, PXS 1, Central Square, 29 Wellington Street, Leeds, LS1 4DL; |
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"Resolution" | the resolution to be proposed at the General Meeting which is set out in full in the Notice of General Meeting; |
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"Shareholders" | holders of Ordinary Shares; |
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"Share Premium Account" | the share premium account of the Company; and |
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"UK" | the United Kingdom of Great Britain and Northern Ireland. |
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-Ends-
For further information
Northbridge Industrial Services Plc 01283 531645
Peter Harris, Executive Chairman
Iwan Phillips, Finance Director
Shore Capital (Nominated Adviser and Broker) 020 7408 4050
Robert Finlay / David Coaten / Henry Willcocks
Buchanan Communications 020 7466 5000
Charles Ryland / Stephanie Whitmore
About Northbridge:
Northbridge Industrial Services plc hires and sells specialist industrial equipment. With offices or agents in the UK, USA, The Middle East, Belgium, Germany, France, Australia, New Zealand, Singapore, China and South Korea, Northbridge has a global customer base. This includes utility companies, renewables, the oil and gas sector, data centres, shipping, banking, mining, construction and the public sector. The product range includes loadbanks, transformers, and drilling tools. Northbridge was admitted to AIM in 2006 since when it has grown by providing a high level of service, responsiveness and flexibility to customers.