Primorus Inv. Regulatory News (PRIM)

25 Jun 2007 07:03

CSS Stellar PLC25 June 2007 Immediate Release 25 June 2007 CSS Stellar Letter to Shareholders ("CSS Stellar" or "the Company") In response to the requisition for an extraordinary general meeting ("EGM") fromDuncan Soukup, a non-executive director of CSS Stellar plc ("CSS Stellar" or the"Company"), which is due to take place on 3 July 2007, I am writing to you onbehalf of the board of the Company (excluding Mr Soukup) (the "Board") torecommend that all shareholders vote against the resolutions proposed by MrSoukup to remove the existing Board members of CSS Stellar and replace them withhis nominees. Duncan Soukup The Board considers that shareholders should be aware of the following: •Mr Soukup has not, since delivering his requisition notice on 22 May 2007, considered it appropriate to write to shareholders explaining his actions or disclosing any strategic plan for the Group should he be successful in gaining control of the board of CSS Stellar; •Mr Soukup's proposals amount, in the opinion of the Board, to an opportunistic attempt to wrest control of CSS Stellar without any attempt to make a formal bid for the Company; •Since his appointment to the Board in October 2006, the Board has experienced difficulties in establishing a working relationship with Mr Soukup, notwithstanding an improvement in the Company's performance over this period. Consequently, the Board has serious reservations that Mr Soukup will be able to maintain harmonious relationships with the constituent parts of the business so as to enhance the future prospects of the Group; •The new Board proposed by Mr Soukup does not have, from the information available to the Board, relevant experience in the sports or entertainment sectors; •Mr Soukup's track record as an activist shareholder is questionable. Mr Soukup was appointed as interim chief executive officer of Baltimore Capital plc (then Baltimore Technologies plc) on 6th July 2004 following a similar shareholder requisition process to take control of the board of that company. During the period following his appointment as chief executive officer, the share price of Baltimore more than halved in value and fell from £55 per share to £24 per share by 14 February 2005 (adjusted for a share consolidation), when the shares were delisted from trading on the AIM market of the London Stock Exchange plc. The Board's strategy The Board of CSS Stellar believes that the stabilisation strategy embarked uponby the Company in 2004, of first closing down loss-making businesses and thendisposing of non-core assets and restructuring the business has been successfulso far, resulting in a strong growth in operating profits which have risen froma loss of £273,000 in 2004 to a profit of £1,479,000 in 2006. Coupled with this,over the last 12 months (to 22 June 2007) there has been a rise in the Company'sshare price of over 39% following a return to positive cash generation andprofitability, as announced in the accounts for the year to 31 December 2006. CSS Stellar intends to continue with its stated strategy of optimisingshareholder value through: •Focusing on its core strengths of developing its sports businesses including: •CSS Stellar Sports, which continues to prosper in talent management in international sports including, motorsport, golf and sailing; •Icon Display, one of Europe's leading event signage and branding solutions companies, which has contractual relationships with UEFA, Wimbledon, the R&A, The European Tour and the ECB; and •Gem's promotional marketing for clients involved with the Olympics namely GE and NBC; •Disposing of non-core assets as and when attractive valuations can be achieved; •In order to focus on growing its sports related businesses, CSS Stellar will seek to bring in a new Chief Executive with considerable experience in the sports business. Sean Kelly, currently the Group Chief Executive, has decided to resign prior to the EGM in order to pursue other opportunities, but will remain as an adviser to the Company until a suitable candidate is selected for the role. The Board believes that the strategy currently in place for CSS Stellar willprovide substantial equity value as well as cash returns for all existingshareholders. AGM resolutions The Company announced to shareholders on 23 May 2007 that it had conducted areview of the circumstances and legal effects of certain transactions (inconjunction with its advisers) and has determined a course of action to rectifythese various issues. The proposed course of action (which involves puttingresolutions to the Company's shareholders at the forthcoming AGM) has thesupport of Bridgewell Limited, in its capacity as Nominated Adviser to theCompany. The Company's auditors have confirmed that this impact is not materialand no restatement of the Company's 2005 annual reports and accounts will berequired nor is there any impact on the Company's 2006 annual report andaccounts. Mr Soukup has indicated that he would not approve the proposed course of action(including the resolutions required to implement it) and consequently, given thesize of Mr Soukup's shareholding in the Company, the Company has not, pendingthe outcome of the EGM requisitioned by Mr Soukup, expended time or incurredcosts in preparing the required circular. Action to be taken Whether or not you plan to attend the EGM, please complete the proxy formincluded with the notice of EGM as soon as possible and, in any event, so as toreach the Company's registrars no later than 48 hours before the meeting. For further information please contact: CSS Stellar Tel: +44 (0)20 7078 1400 Peter Owen (Chairman) Julian Jakobi (Deputy Chairman) Sean Kelly (Chief Executive) Buchanan Communications Tel: +44 (0)20 7466 5000 Bobby Morse / Rebecca Skye Dietrich This information is provided by RNS The company news service from the London Stock Exchange