Richoux Group Regulatory News (RIC)

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement via Regulatory Information Service, this inside information is now considered to be in the public domain.

18 January 2019

Richoux Group plc

("Richoux" or the "Group")

Proposed cancellation of admission of Ordinary Shares to trading on AIM

Notice of General Meeting

Re-registration as a private limited company

and

Adoption of New Articles

Richoux Group plc (AIM:RIC), the owner and operator of Richoux, Friendly Phil's, Villagio and The Broadwick restaurants, announces the proposed cancellation of admission of its Ordinary Shares to trading on AIM and re-registration as a private limited company, conditional on approval by Shareholders.

Introduction

The Company announces that it is seeking Shareholder approval for the cancellation of the admission of its Ordinary Shares to trading on AIM. The Board is proposing a resolution to approve the Cancellation at a General Meeting to be held at 10.00 a.m. on 6 February 2019.

In conjunction with this announcement, a circular will shortly be posted to Shareholders (the "Circular") setting out the reasons for the proposed Cancellation, Re-registration and the adoption of the New Articles and explain why the Directors unanimously consider that the proposed Cancellation, Re-registration and the adoption of the New Articles to be in the best interests of the Company and its Shareholders as a whole, and are recommending that Shareholders should vote in favour of the proposed Cancellation at the General Meeting. A notice convening the General Meeting is set out at the end of the Circular. The Circular will be made available on the Company's website at www.Richoux.co.uk.

The Cancellation is conditional, pursuant to Rule 41 of the AIM Rules, upon the approval of not less than 75 per cent. of the votes cast by Shareholders (whether present in person or by proxy) at the General Meeting, notice of which is set out in Part II of the Circular.

In accordance with Rule 41 of the AIM Rules, the Company has notified the London Stock Exchange of the date of the proposed Cancellation.

Expected timetable of principal events (1) (2)

Notes:

(1) All of the times referred to in this announcement refer to London time, unless otherwise stated.

(2) Each of the times and dates in the above timetable is subject to change. If any of the above times and/or dates change, the revised times and dates will be notified to Shareholders by an announcement through a Regulatory Information Service.

(3) The Cancellation requires the approval of not less than 75 per cent. of the votes cast by Shareholders at the General Meeting.

Background to, and reasons for, the Cancellation

The Directors have conducted a review of the benefits and drawbacks to the Company and its Shareholders in retaining its quotation on AIM, and believe that the Cancellation is in the best interests of the Company and its Shareholders as a whole. In reaching this conclusion, the Directors have considered the following key factors, amongst others:

• Whilst trading for the Group remains in line with market expectations, the Board has concluded that material growth in revenue is unlikely to be achieved in the longer term under its current business model, and may require additional funding in future, whether from existing Shareholders or externally, to achieve material growth. Following consultation, the Board expects that the Company is unlikely to receive material support from potential providers of capital or additional financing to support the Company as it is currently structured. In order to put the Company in a position whereby providers of finance may be more inclined to advance funds, the Board believes that a material reduction in central overhead is required.

• Given the Board's view that the Company is unlikely to attract material investment from third party investors (i.e. investors with no current connection to the Company) over the foreseeable future, the considerable cost, management time and the legal and regulatory burden associated with maintaining the Company's admission to trading on AIM are, in the Directors' opinion, materially disproportionate to the benefits to the Company.

• The shareholding structure of the Company is such that it has a limited free float and liquidity in the Ordinary Shares, with the consequence that the AIM quotation does not offer investors the opportunity to trade in meaningful volumes or with frequency within an active market. By way of example of this, only approximately 1.5% of total current shares in issue were traded on AIM over the 12 months to 31 December 2018.

• The Directors have concluded that the Cancellation will enable the Company to reduce significantly administrative costs, enabling Richoux to continue trading as a private company, possibly without the requirement for external funding whilst the Company focusses on improving its estate.

Following careful consideration, and having consulted with the Company's nominated adviser, the Directors have concluded that it is in the best interests of the Company and Shareholders to seek the proposed Cancellation at the earliest opportunity.

Process for, and principal effects of, the Cancellation

The Directors are aware that certain Shareholders may be unable or unwilling to hold Ordinary Shares in the event that the Cancellation is approved and becomes effective. Such Shareholders should consider selling their interests in the market prior to the Cancellation becoming effective.

Under the AIM Rules, the Company is required to give at least 20 clear Business Days' notice of Cancellation. Additionally, Cancellation will not take effect until at least five clear Business Days have passed following the passing of the Resolution for the Cancellation. If the Resolution for the Cancellation is passed at the General Meeting, it is proposed that the last day of trading in Ordinary Shares on AIM will be 14 February 2019 and that the Cancellation will take effect at 7.00 a.m. on 15 February 2019.

The principal effects that the Cancellation will have on Shareholders include the following:

· There will no longer be a formal market mechanism enabling Shareholders to trade their Ordinary Shares on AIM (or any other recognised market or trading exchange).

· While the Ordinary Shares will remain freely transferable and a matched bargain facility is intended to be set up through JP Jenkins following Cancellation (see below for further detail), the Ordinary Shares may be more difficult to sell compared to shares of companies traded on AIM (or any other recognised market or trading exchange).

· It may be more difficult for Shareholders to determine the market value of their investment in the Company at any given time.

· The Company will no longer be subject to the AIM Rules and, accordingly, Shareholders will no longer be afforded the protections given by the AIM Rules - in particular, the Company will not be bound to:

· make any public announcements of material events, or to announce interim or final results; comply with any of the corporate governance practices applicable to AIM companies; announce substantial transactions and related party transactions; or comply with the requirement to obtain shareholder approval for reverse takeovers and fundamental changes in the Company's business;

· the Company will cease to retain a nominated adviser and broker; and

· the Cancellation might have either positive or negative taxation consequences for Shareholders (Shareholders who are in any doubt about their tax position should consult their own professional independent adviser immediately).

The Company confirms that there is currently no intention to change the existing Directors following the Cancellation.

The Board intends to continue to maintain the Company's website (www.Richoux.co.uk) and to post updates on that website from time to time, although Shareholders should be aware that there will be no obligation on the Company to include the information required under AIM Rule 26 or to update the website as required by the AIM Rules.

The Company will remain registered with the Registrar of Companies in England & Wales in accordance with and subject to the Companies Act 2006, notwithstanding the Cancellation. Shareholders should also note that the Takeover Code will continue to apply to the Company following the Cancellation for the period of 10 years from the date of Cancellation (subject to the Re‑registration occurring).

Shareholders should note that, if the Cancellation becomes effective (and subject to the Re-registration occurring), after the expiry of 10 years from the date of the Cancellation they will not receive the protections afforded by the Takeover Code in the event that there is a subsequent offer to acquire their Ordinary Shares. Brief details of the Takeover Panel (the "Panel"), the Takeover Code and the protections given by the Takeover Code are described in Part III of the Circular.

Before giving consent to the re-registration of the Company as a private company, Shareholders may want to take independent professional advice from an appropriate independent financial adviser.

Following the Cancellation it will still be possible to hold Ordinary Shares in uncertificated form in CREST.

The Resolutions to be proposed at the General Meeting include the adoption of the New Articles with effect from completion of the Cancellation. A summary of the principal changes being made by the adoption of the New Articles is included in Part II of the Circular.

The above considerations are not exhaustive and Shareholders should seek their own independent advice when assessing the likely impact of the Cancellation on them.

Transactions in Ordinary Shares

Shareholders should note that they are able to trade in the Ordinary Shares on AIM prior to the Cancellation.

The Board is aware that the proposed Cancellation, should it be approved by Shareholders at the General Meeting, would make it more difficult for Shareholders to buy and sell Ordinary Shares should they wish to do so. Therefore, the Company has made arrangements for a Matched Bargain Facility to assist Shareholders to trade in the Ordinary Shares to be put in place from the day of Cancellation.

The Matched Bargain Facility will be provided by JP Jenkins Limited ("JP Jenkins") and will be reviewed on an annual basis. JP Jenkins is part of Peterhouse Corporate Finance Limited, which is authorised and regulated by the Financial Conduct Authority, a member of the London Stock Exchange and a NEX Exchange Corporate Adviser. Under the Matched Bargain Facility, Shareholders or persons wishing to acquire or dispose of Ordinary Shares will be able to leave an indication with JP Jenkins, through their stockbroker (JP Jenkins is unable to deal directly with members of the public), of the number of Ordinary Shares that they are prepared to buy or sell at an agreed price. In the event that JP Jenkins is able to match that order with an opposite sell or buy instruction, they would contact both parties and then effect the bargain. Should the Cancellation become effective and the Company put in place the Matched Bargain Facility, details will be made available to Shareholders on the Company's website at http://www.richouxgroup.co.uk/ and directly by letter or e-mail (where appropriate). 

Further information about the Matched Bargain Facility, including indicated prices and a history of transactions, will be available on the JP Jenkins website which is located at www.jpjenkins.com. 

Should Cancellation proceed, Shareholders may contact JP Jenkins in relation to any queries regarding trading via the Matched Bargain Facility by phone on +44 20 7469 0938.

Shareholders should note that there can be no guarantee that the Matched Bargain Facility will be available on a continuous basis or at all.

Re-registration

Following the Cancellation, the Board believes that the requirements and associated costs of the Company maintaining its public company status will be difficult to justify and that the Company will benefit from the more flexible requirements and lower costs associated with private limited company status. It is therefore proposed to re-register the Company as a private limited company. In connection with the Re-registration, it is proposed that the New Articles be adopted to reflect the change in the Company's status to a private limited company. The principal effects of the Re-registration and the adoption of the new articles of association on the rights and obligations of Shareholders and the Company are summarised in Part II of the Circular.

Application will be made to the Registrar of Companies for the Company to be re-registered as a private limited company. Re-registration will take effect when the Registrar of Companies issues a certificate of incorporation on Re-registration. The Registrar of Companies will not issue the certificate of incorporation on Re-registration until the Register of Companies is satisfied that no valid application can be made to cancel the resolution to re-register as a private limited company.

Takeover Code

Notwithstanding the Cancellation and Re‑registration, under the Takeover Code the Company will continue to be subject to its terms for a period of 10 years following the Cancellation (subject to the Re‑registration occurring).

Under Rule 9 of the Takeover Code, when any person or group of persons acting in concert, individually or collectively, are interested in shares which in aggregate carry not less than 30 per cent. of the voting rights of a company but do not hold shares carrying more than 50 per cent. of the voting rights of a company and such person or any person acting in concert with him acquires an interest in any other shares, which increases the percentage of the shares carrying voting rights in which he is interested, then that person or group of persons is normally required by the Panel to make a general offer in cash to all shareholders of that company at the highest price paid by them for any interest in shares in that company during the previous 12 months. Rule 9 of the Takeover Code further provides that where any person, together with persons acting in concert with him, holds over 50 per cent. of the voting rights of a company to which the Takeover Code applies and acquires additional shares which carry voting rights, then that person will not generally be required to make a general offer to the other shareholders to acquire the balance of the shares not held by that person or his concert parties.

Following the expiry of the 10-year period from the date of the Cancellation (subject to the Re‑registration occurring), the Company will no longer be subject to the provisions of the Takeover Code. A summary of the protections afforded to Shareholders by the Takeover Code which will be lost is set out in Part III of the Circular document.

Current trading

The Company announced its unaudited interim results for the 26-week period to 1 July 2018 on 28 September 2018. A copy of the interim results is available on the Company's website at: http://www.richouxgroup.co.uk/. The Directors can confirm that trading, whilst continuing to be challenging, has remained in line with management's expectations. The Directors consider that a new strategy is required to provide revenue growth in the longer term, which in turn requires the Cancellation, as set out above.

General Meeting

Shareholders will find set out at the end of the Circular a notice convening a general meeting of the Company to be held at 10.00 a.m. on 6 February 2019 at the offices of Dechert LLP, 160 Victoria Street, London EC4V 4QQ, at which the Resolutions will be proposed.

Each Resolution will be proposed as a special resolution. Resolution 1 with respect to the Cancellation is not conditional upon Resolution 2 with respect to the Re-registration and the adoption of the New Articles being passed. However, Resolution 2 is conditional upon the passing of Resolution 1.

Process for Cancellation

Under the AIM Rules, it is a requirement that the Cancellation must be approved by not less than 75 per cent. of votes cast by Shareholders at a General Meeting. Accordingly, the Notice of General Meeting set out in Part II of the Circular contains a special resolution to approve the Cancellation.

Furthermore, Rule 41 of the AIM Rules requires any AIM company that wishes the London Stock Exchange to cancel the admission of its shares to trading on AIM to notify shareholders and to separately inform the London Stock Exchange of its preferred cancellation date at least 20 Business Days prior to such date. In accordance with AIM Rule 41, the Directors have notified the London Stock Exchange of the Company's intention, subject to the Resolution being passed at the General Meeting, to cancel the Company's admission of the Ordinary Shares to trading on AIM on 15 February 2019. Accordingly, if the Resolution is passed the Cancellation will become effective at 7.00 a.m. on 15 February 2019. If the Resolutions become effective, Cenkos will cease to be nominated adviser of the Company and the Company will no longer be required to comply with the AIM Rules.

Action to be taken

A Form of Proxy is enclosed with the Circular for use at the General Meeting. Whether or not Shareholders intend to be present at the meeting they are requested to complete, sign and return the Form of Proxy to the Company's registrars, Link Asset Services, at PXS1, 34 Beckenham Road, Beckenham, Kent BR3 4ZF by no later than 10.00 a.m. on 4 February 2019 (or, in the case of an adjourned meeting, no later than 48 hours before the time of such meeting, excluding any part of a day that is not a working day). The completion and return of a Form of Proxy will not preclude Shareholders from attending the meeting and voting in person should Shareholders wish to do so.

Recommendation

The Directors, having consulted with Cenkos, consider that the Cancellation, the Re‑registration and the adoption of the New Articles are in the best interests of the Company and its Shareholders as a whole and therefore unanimously recommend that Shareholders vote in favour of the Resolutions, as they have undertaken to do in respect of their own beneficial holdings, representing approximately 49.5 per cent. in aggregate of the issued share capital of the Company.

Definitions

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