Pci-pal Regulatory News (PCIP)

25 May 2007 07:01

County Contact Centres PLC25 May 2007 25 May 2007County Contact Centres PLC County Contact Centres PLC (the "Company") Notice of EGM The Company announces that it has today posted a circular to shareholderssetting out the details of a recommended proposed cancellation of the Company'sshare premium account. The full text of the Chairman's letter contained within the circular is set outbelow. Definitions in the announcement shall bear the same meaning as thosecontained in the circular to Shareholders. Dear Shareholder Cancellation of share premium account Introduction I am writing to you today with details of your Board's proposal to seekShareholder approval to a cancellation of the Company's share premium account(the "Cancellation") at an Extraordinary General Meeting. This will eliminateor substantially reduce the deficit on the Company's profit and loss account.Subject to the Court's requirements for the protection of the interests of theCompany's creditors, any surplus arising on the proposed Cancellation will becredited to the Company's profit and loss account. The Cancellation will enablethe Company to distribute profits generated after the proposed Cancellationtakes effect (and any surplus reserve arising on the Cancellation which is notrequired by the Court to be non-distributable) by way of dividend should theBoard consider it appropriate to do so in the future. Background to the proposal The Act prevents a company from purchasing its own shares or paying dividendswhere the company does not have sufficient distributable profits to do so. The audited balance sheet of the Company reveals a retained loss of £6,134,827as at 30 June 2006, arising from an inter company bad debt provision taken onthe operating subsidiary losses incurred during the Group's 7 year life. However£5 million of these Group losses were incurred in periods prior to June 2002,when the company's principal activities related to the operation of an Internetbased business directory. Your Board considers these losses to be permanent innature and that the deficit does not reflect the reality of the Group's currenttrading position. The deficit has the potential to impact upon the ability ofthe Group to expand and strengthen its business going forward. As at 31December 2006, the accumulated deficit had been reduced to £5,855,830. Whilstthe Group continues to trade profitably, without the proposed Cancellation it isanticipated that it would take a considerable period of time before the Companywas in a position to declare and pay dividends. Share Premium Account When a company issues shares at a value that represents a premium over theirnominal value, it is required to transfer the premium to a share premiumaccount. The amount standing to the credit of a share premium account may onlybe used for certain purposes. In order to eliminate the deficit in the Company's profit and loss account theBoard has decided to seek Shareholders' authority to cancel the whole of theCompany's share premium account, which stood at £6,045,563 as at 30 June 2006.The reserve arising on the Cancellation can be utilised in reducing oreliminating (depending on the Company's trading) the accumulated deficit on theCompany's profit and loss account as at the date the proposed Cancellation takeseffect. Subject to protecting the interests of the Company's creditors, anysurplus arising may be utilised in creating distributable reserves. The Boardwill recommend the payment of dividends in the future as and when they considersuch dividends to be appropriate. The most recent reported results show a significant improvement with the Grouprealising a net profit for the last eighteen months. However, whilst thebalance on the Company's profit and loss account remains in deficit, the Companyis prohibited by the Act from paying dividends. The proposed Cancellation willeliminate the entire deficit on the profit and loss account. It is anticipated that the Court Order confirming the Cancellation (if approvedby the Court) will be made on 18 July 2007. The Cancellation will only take effect on the date that an office copy of theCourt Order is duly registered by the Registrar of Companies (the "EffectiveDate"). It is expected that the Court Order will have been registered by 28 July2007. In order to obtain the Court's approval to the reduction, the Court will requireprotection for the creditors of the Company whose debts and claims remainoutstanding at the Effective Date. The Company proposes to seek the consent ofcertain of its long term creditors to the Cancellation. Appropriate arrangementswill be made, with the approval of the Court, for the protection of anycreditors of the Company who have not consented to the reduction. The terms ofsuch protection are for the Court to determine and the Company will give to theCourt such undertakings as it is advised are appropriate. Procedure for Reduction The Cancellation requires the sanction of a special resolution of theShareholders and the approval of the High Court. Following the passing of the special resolution by Shareholders at the EGM anapplication will be made to the High Court to confirm the Cancellation. Effects of the cancellation of the Share Premium Account The Cancellation will leave the Company's total capital, reserves and net assetsunchanged and the underlying value of the Company and the net asset value ofyour shares will be unaffected. The respective positions of the capital of theCompany as affected by the proposed cancellation of the Share Premium Account(excluding the effect of any liabilities or after tax profits after 30 June2006) and subject to any creditor protection required, are illustrated below asat 30 June 2006: Before After £ £ Called up Share Capital 297,908 297,908 Share Premium Account 6,045,563 - Profit and Loss Account (6,134,827) (89,264) -------------- -------------- Total Capital and Reserves 208,644 208,644 -------------- -------------- Extraordinary General Meeting Notice of an Extraordinary General Meeting to be held on 21 June 2007, at whicha special resolution to approve the Cancellation will be proposed, is set out atthe end of this document. Action to be taken You will find herewith a Form of Proxy for use at the Extraordinary GeneralMeeting. Whether or not you intend to be present at the meeting, you are requested to complete theForm of Proxy and return it in accordance with the instructions printed thereonso that it is received as soon as possible and in any event not later than 48hours before the time fixed for the meeting. Completion and return of a Form ofProxy will not prevent you from attending the meeting and voting should you wishto do so. Directors' recommendation and intentions The Directors believe that the proposal described in this document is in thebest interests of the Shareholders as a whole. Accordingly, the Directorsunanimously recommend you to vote in favour of the resolution to be proposed atthe Company's Extraordinary General Meeting, which will authorise thecancellation of the Company's share premium account, as they intend to do inrespect of their aggregate beneficial holdings of 4,951,994 Shares representing16.6 per cent. of the issued ordinary share capital of the Company. Yours faithfully, Philip DayerChairman This information is provided by RNS The company news service from the London Stock Exchange