Last checked at 24 Dec 2009 10:33
24 December 2009
IQ Holdings plc ("IQ Holdings", "IQH" or the "Company")
(AIM: IQH)
Proposed disposal of Viewpoint Field Services Limited & Rosslyn Research Limited,
Proposed cancellation of Share Premium Account,
cancellation of Capital Redemption Reserve and reduction of Share Capital, Change in Investing Policy
Notice of General Meeting
IQ Holdings is pleased to announce that, subject inter alia to Shareholders' approval, it has entered into a conditional agreement to dispose of Viewpoint Field Services Limited ("Viewpoint" or "Viewpoint Field Services") and Rosslyn Research Limited ("Rosslyn") to Rivington Street Holdings plc ("RSH"), for a consideration of approximately 5,200,000 shares in RSH and the assignment from IQH to RSH, Viewpoint or Rosslyn of liabilities to the value of approximately £1.8million.
Following the Disposal, the Company will have no remaining trading business and its principal asset will be its holding of RSH shares. It is intended that the majority of the RSH shares shall be distributed to IQ shareholders pro rata in relation to their existing holdings. The Company will retain approximately £50,000 of RSH Shares.
IQ will then become an Investing Company under the AIM rules, with the proposed strategy to acquire or take an interest in a company or asset involved primarily in the real estate, manufacturing or marketing sectors. RSH is to make a loan of £50,000 to IQH to give it sufficient working capital to remain as an Investing Company on AIM for the next 12 months.
A circular will be sent to shareholders today convening a general meeting of the Company for the purpose of seeking Shareholders' approval to the proposed disposal.
For further information, please contact:
| IQ Holdings plc | |
| Julian Green | Tel: +44 (0)20 8099 0560 |
| Nominated Adviser: Grant Thornton Corporate Finance | |
| Gerry Beaney | Tel: +44 (0) 20 7383 5100 |
| Nominated Broker: Rivington Street Corporate Finance | |
| Monisha Varadan | Tel: +44 (0)20 7562 3389 |
| Financial PR: Bishopsgate Communications | |
| Gemma O'Hara | Tel: +44 (0) 20 7562 3355 |
Introduction
It was announced on 20 November 2009 that, as a result of continuing difficult trading conditions, the Board had commenced a strategic review of the Company's operations. The Company has today announced that, subject amongst other things to Shareholders' approval, IQH has entered into a conditional agreement to dispose of Viewpoint Field Services and Rosslyn Research to PLUS quoted RSH.
This is deemed to be a disposal resulting in a fundamental change of business for the purpose of AIM Rule 15 and therefore is subject to Shareholder approval.
Background
IQH reported unaudited interim figures for the six months to March 2009 showing turnover of £980,000 and a loss before tax of £298,000. As announced on 20th November 2009, continuing difficult trading conditions and the postponement of certain contracts means that the results for IQH for the year ended 30 September 2009 will be significantly below market expectations.
RSH currently owns 20,000,000 shares in IQ Holdings representing 1.58% of the equity. The SF t1ps Smaller Companies Growth Fund currently owns 110,000,000 shares in IQ Holdings representing 8.70% of the equity and in September 2009 the SF t1ps Smaller Companies Growth Fund participated in a fundraise and acquired £75,000 convertible loan notes in IQ Holdings paying a coupon of 10%. Tom Winnifrith, CEO of RSH holds 250,000 shares in IQH representing 0.02% of the issued share capital. As the SF t1ps Smaller Companies Growth Fund is managed by T1M, a wholly owned subsidiary of RSH, even though the fund is a separate legal entity, the combined holdings of the fund, Tom Winnifrith and RSH are treated as a joint holding, therefore classifying the Disposal as a related party transaction under the AIM Rules.
In order to grow the business, IQH would need to make acquisitions and at this current point in time, it does not have the cash resources to do.
Accordingly the Independent Directors are recommending the Disposal to be in the best interests of the Company and the Shareholders as a whole.
If approved, following the Disposal, the Company would become an Investing Company under the AIM Rules, with the proposed strategy to acquire or take a controlling interest in an asset or a company involved primarily in the real estate,manufacturing or marketing sectors as detailed in the Investing Policy section below. Under the AIM Rules the Investing Policy is subject to Shareholder approval.
Consideration for the Disposal
The consideration for the Disposal is 5,200,000 ordinary shares in RSH ("Consideration Shares") (subject to possible variation as detailed in the paragraph titled "Principal Terms of the Disposal" below). At the closing market price of 29.50 pence per share as at 23 December 2009, being the latest practicable date prior to the posting of this document, the consideration is valued at £1,534,000.
In addition, liabilities of approximately £1.8 million are to be assigned from IQH to RSH, Viewpoint or Rosslyn (including loans from and monies due to Bibby, HSBC and Media Square as further explained below) and RSH is to make a loan of £50,000 to IQH to give it sufficient working capital to remain as an Investing Company on AIM for the next 12 months. The loan is unsecured and will carry an interest of 4% above base rate on default. Further information regarding this loan can be found in the 'IQH Position following the Disposal'section below.
Proposed distribution of RSH shares to Shareholders
Following completion of the Disposal, the Company will have no remaining trading business and its principal asset will be its holding of RSH Shares. It is intended that the majority of the RSH Shares shall be distributed to Shareholders pro rata to their holdings (the Company will retain approximately £50,000 worth of RSH Shares). The result of this distribution is that Shareholders will themselves become shareholders in RSH.
It is proposed that this distribution takes place in part by way of a distribution in specie to Shareholders and in part by way of a return of capital.
RSH has agreed to waive its right to receive RSH Shares following the Reduction.
In order to be able to make the proposed distribution of the RSH Shares to Shareholders, the Company needs to have distributable reserves. As explained below, the Company currently has a deficit on its profit and loss account. In order to create the necessary distributable reserves, the Company proposes to cancel its share premium account and its capital redemption reserve. It also proposes to reduce its share capital and to return part of the capital paid up on the Ordinary Shares to the Shareholders. The necessary Resolutions to effect the Reduction are to be proposed at the General Meeting, and are thereafter subject to the consent of the Court.
Shareholders should note that share prices can go up or down and that the current share price of the RSH Shares may not be the price at which a Shareholder may eventually realise any RSH Shares they receive.
A General Meeting has been convened for 10 am on 12 January 2010 for Shareholders to consider the Proposals.
Principal Terms of the Disposal
On 23 December 2009 IQH entered into a Sale and Purchase Agreement with RSH for the sale of the entire issued share capital of Rosslyn and Viewpoint Field Services, both wholly owned subsidiaries of IQH.
The initial consideration for the purchase of the shares is 5,200,000 ordinary 1p shares in RSH. At the closing market price of 29.5pence per RSH Share as at 23 December 2009, being the latest practicable date prior to the posting of this document, the consideration is valued at £1,534,000. The final consideration payable is dependent on a creditors' statement to be produced 20 business days from the date of completion. The consideration payable will be adjusted as follows:
1) If the specified creditors are more than £1,830,800 - the consideration shares shall reduce by 2 ordinary shares of 1p each for every pound that the specified creditors exceed £1,830,800 or 2) If the specified creditors are less than £1,830,800 - the consideration shares shall increase by 2 ordinary shares of 1p each for every pound that the specified creditors are less than £1,830,800
The sale and purchase of Rosslyn and Viewpoint Field Services is conditional on a number of conditions being fulfilled including: 1) the release of IQH from certain creditors including guarantees to Bibby and HSBC, the 2009 convertible loan note holders and entry into the Media Square Settlement Agreement; 2) cancellation of the 2007 warrants granted by the Company 3) cancellation of the 2008 warrants granted by the Company; and 4) Shareholder approval.
IQH has also agreed for a period of two years following completion, not to compete with Rosslyn and Viewpoint Field Services in relation to the two businesses as carried on at completion and in relation to the brands represented by the two companies as at the date of such completion.
Furthermore, in accordance with the terms of the SPA, IQH has undertaken, as soon as reasonably practicable, to apply to the Court for a confirmation of the Reduction to enable IQH to distribute the majority of the RSH Shares to Shareholders by way of a return of capital and/or dividend in specie. No later than 2 business days following confirmation by the Court, IQH will hold a board meeting at which it will declare the dividend in specie and effect the return of capital to Shareholders.
Rationale for the disposal
IQ Holding has been loss making since being admitted to trading on AIM and the expected benefits of a public listing have not been forthcoming. The economic downturn and difficult trading conditions have exacerbated the position. IQ Holdings does not have the critical mass to justify the cost of an AIM listing. Moreover, it does not have the cash to take advantage of the acquisition opportunities which exist in a fragmented market and with current market conditions, the Company is unable to raise sufficient funds to allow it to grow as it would wish. Therefore the directors have concluded that as an independent company it cannot generate meaningful returns for Shareholders.
The consideration for the Disposal is to be RSH Shares but, as RSH is a quoted entity, Shareholders may be able to realise the RSH Shares they are to receive should they wish to do so. Shareholders will also be keeping a stake in IQH as an Investing Company with potential future upside if a suitable acquisition is identified and completed.
RSH is believed to be an attractive acquirer. t1ps.com, the forerunner of RSH was established in April 2000 and has since then grown from a company employing one person to one employing 53. RSH has a consistent track record of profitability, cash generation and of adding value for shareholders. It also has a track record of buying smaller businesses and helping them grow. As part of a larger media group, it is expected that there will be cost savings and synergies following completion. Moreover RSH has cash which will allow the Rosslyn and Viewpoint operations to be expanded via acquisition thereby delivering further economies of scale and reaching critical mass. Further details of RSH are provided below.
Based on an independent valuation report, the Independent Directors believe the consideration offered by RSH for Viewpoint and Rosslyn to be fair. The Directors believe Shareholder value can now best be delivered through the investment policy as set out in this document.
Information about Rosslyn, Viewpoint and RSH is set out below.
Rosslyn Research
Rosslyn was acquired by IQH on 29th November 2007. Rosslyn was founded in 1979 as a specialist agency for market research, opinion polling and business and management consultancy. Whilst Rosslyn has remained a relatively small and independent research agency, operating through an international call centre covering the major business languages of the world and via a network of partner agencies, it has been able to conduct research in countries in North America, South America, Europe and Asia. A proportion of Rosslyn's revenue is derived from traditional quantitative and qualitative research of an international nature.
For the 12 month audited period to 30 September 2008, Rosslyn delivered turnover of £517,385 (2007: £497,000) and a loss before tax of £116,807 (2007:£296,032). Unaudited management figures for the year to September 2009 show turnover of £508,240 and a profit before tax of £45,388.
Viewpoint Field Services
Viewpoint Field Services comprises two divisions: Viewpoint Field and Viewpoint Studios.
Viewpoint Field Services Limited was acquired by IQH on 29 January 2009. Viewpoint Field was established in 1990. It is a field force recruitment company which specialises in sourcing and recruiting respondents, who go on to attend a focus group, or another type of market researching session, such as a depth interview. Viewpoint Field can also provide suitable freelance moderators, whose role is to oversee focus groups, facilitate discussion and steer the structured conversation away from distracting themes. Viewpoint Field aims to offer a quality service, which involves monitoring respondent lists to ensure that respondents are not overly familiar with the market research process. Viewpoint Field has access to over 1,000 interviewers nationwide, including 50 medical interviewers and an in-house telephone unit. Viewpoint Field also provides quantitative face-to-face data collection services. Viewpoint Field operates from a large house in East Molesey, which also houses studios which are used for conducting focus groups as part of Viewpoint Studios' 'Studio' business.
Viewpoint Studios was established in 1989. The business is based in two locations - East Molesey and Sunbury - both of which are conveniently located near to excellent transport links to central London, major motorways and Heathrow and Gatwick airports. The East Molesey complex includes three air conditioned studios, demonstration kitchens, flexible meeting spaces and access to a large garden. Sunbury has three air conditioned studios and two demonstration kitchens.Both sets of studios are equipped with what the Directors consider to be leading edge technology including wireless broadband, video conferencing, web streaming and facilities where the respondents can evaluate the 'usability' of internet sites.
Unaudited figures provided in IQH's admission document in January 2009, show Viewpoint Division (the business of Viewpoint Field Services) achieving turnover for 12 months to 29 February 2008 of £3,450,000 and profit before tax of £393,000. Unaudited management figures for the 8 months to September 2009, the period under ownership of IQH, show turnover of £1,663,398 and profit before tax of £41,311.
Rivington Street Holdings Plc
RSH is a media and financial services group founded in 2004 and quoted on PLUS since November 2008. RSH provides a range of services to over 100 companies quoted on AIM and PLUS. It operates and generates revenues through 6 subsidiaries.
T1ps.com Limited
T1ps.com, a company authorised by the Financial Services Authority is the oldest subsidiary and was set up in 2000 as a single tipsheet providing investment ideas to private investors. t1ps.com has grown both organically and through acquisition over the last 5 years. It currently owns 14 subscription websites and newsletters which provide investment ideas and research on various areas of the market. It also owns an independent research brand, Growth Equities and Company Research, which provides research on AIM and PLUS quoted companies. In addition, t1ps.com generates revenue through whitelabel sites, conferences and advertising.
Bishopsgate Communications Limited
Bishopsgate Communications Limited is a financial PR advisor to both AIM and PLUS quoted companies. It advises clients on PR strategy, drafts press releases and seeks to manage press coverage for its clients.
Rivington Street Corporate Finance Limited
Acquired in July 2007 as Lion Capital Corporation Limited, FSA authorised RSCF currently advises a number of companies quoted on AIM and PLUS. It provides broking services to its AIM clients, advisory services to its PLUS clients and acts as corporate finance advisor on one-off M&A and corporate restructuring projects. RSCF currently acts as AIM broker to the Company. In March this year RSCF acquired JP Jenkins Limited which provides an execution only share dealing service to its private clients and owns a match bargain trading facility for unquoted companies. The downturn in the market has resulted in an increase in the number of companies moving away from AIM and PLUS towards JP Jenkins Limited as a trading facility.
T1ps Investment Management Limited
T1ps Investment Management is an FSA authorised subsidiary providing investment management services to a range of funds. T1M manages 2 unit trusts focused on smaller quoted companies and gold exploration and production companies, a PLUS quoted investment vehicle investing in PLUS quoted companies and on 13 November 2009 it launched its first EIS fund. The SF T1ps Smaller Companies Growth Fund was launched on 19 November 2007 and for the period up to 21 December 2009, the fund increased in value by 80.3% outperforming the UK Smaller Companies Index significantly, the benchmark index rose by 49.7%. (source: trustnet.com)
Sharecrazy.com
Sharecrazy.com is an internet portal that provides data and information on companies quoted on the London Stock Exchange and AIM. It provides an online 'execution-only' share dealing service to its clients. Sharecrazy hosts a popular internet TV platform that showcases a range of shows. Sharecrazy.com is an authorised representative of Rivington Street Corporate Finance Limited.
Commodity Watch and Oil Barrel
In November 2008, Rivington Street Holdings Limited completed its IPO through a reverse into Commodity Watch Plc ("Commodity Watch"), then a PLUS quoted company. Commodity Watch is the owner of resources focused investor relations websites like Minesite.com. Minesite.com has successfully run investor conferences in London, Paris, Geneva and Zurich. It also hosts a website which provides news, information and independent commentary on mining companies across the world. In November 2008 RSH acquired Oilbarrel.com, a similar oil and gas focused website providing news and independent commentary on quoted and unquoted oil stocks across the world. Like Minesite.com, Oilbarrel.com runs successful investor focused conferences in London every month.
Current Trading and Prospects
For the 12 months to 31 August 2008, prior to the acquisition of Commodity Watch, RSH delivered group turnover of £3,774,343 (2007: £2,532,013) and EBITDA of £1,103,574 (2007: £337,459).
Subsequently in the interim financial statement to 28 February 2009 published in April, RSH recorded net cash of £1,050,178. For the six months to 28 February 2009 RSH posted group turnover of £1,899,519 (2008: £1,953,454). At the EBITDA level, RSH reported earnings of £236,581 (2008: £522,553). At the half year, RSH had a strong balance sheet reflecting its cash position, debtors of £1,209,437 and investments of £314, 578. The interim statement included a contribution of just three months from the newly acquired subsidiaries Commodity Watch and Oilbarrel.com and no contribution at all from the acquisition of JP Jenkins Limited which was announced on 10 March 2009.
The directors of RSH are confident about the prospects for the company going forward and intend to publish the year end results of RSH to August 2009 shortly.
Agreement with main IQH creditors - HSBC, Bibby, Media Square
Bibby
Bibby Factors Slough Limited, an invoice factoring supplier to IQH, has provided both IQH and RSH an indicative term sheet, outlining the terms on which it will deal with Viewpoint and Rosslyn after completion. The terms are acceptable by both parties and at the time of completion, once approval has been sought from Shareholders, both IQH and RSH intend to enter into legally binding agreements with Bibby. The term sheet confirms that IQH will be released of all its obligations and guarantees as per the terms of the transfer to RSH.
HSBC
IQH has an outstanding loan facility with HSBC. HSBC has provided an indicative term sheet which outlines the terms on which HSBC is willing to transfer the loan facility to Viewpoint Field Services and Rosslyn. The terms are indicative and both IQH and RSH intend to enter into legally binding agreements with HSBC at the time of completion. The term sheet confirms that IQH will be released from all its obligations and guarantees as per the terms of the transfer to RSH.
Media Square
RSH, IQH, Viewpoint, Illuminas, Media Square and Turnbegin Limited intend to enter into the MSQ Settlement Agreement. The deed will deal primarily with the transfer of obligations of the Deferred Consideration to RSH following the acquisition of Viewpoint and Rosslyn. RSH will also agree to take on a number of liabilities in respect of the acquisition agreements signed at the time of the acquisition of Viewpoint and Wire in December 2008, including but not limited to rent on properties occupied by Viewpoint and unpaid creditors.
RSH will also agree with Media Square that following the distribution of the Consideration Shares and in the event of a share buy back by RSH, RSH will be allowed to reduce the Deferred Consideration payable in accordance with the level of buy back. The terms, payment schedule and conditions of this agreement will be detailed in the MSQ Settlement Agreement. RSH, Illuminas and Viewpoint will also sign a Supply Agreement which outlines the terms upon which Viewpoint will provide its services to Media Square following the Disposal by IQH.
Since Media Square is a substantial shareholder in IQH, the MSQ Settlement Agreement is deemed to be a related party transaction under AIM Rule 13. The directors, having consulted Grant Thornton Corporate Finance, consider the terms of the MSQ Settlement Agreement to be fair and reasonable in so far as the Shareholders are concerned.
Proposed change of IQH Directors
The following directors will remain on the board of IQH following completion of the proposed Disposal
Timothy Michael Hearley (Non-Executive Chairman)
John Mitchel (Director)
Upon completion Julian Green, Neil McGowan, Joe Seydel and Gale Blears will resign as directors of IQH. The directors of Rosslyn and Viewpoint will keep their positions.
IQH position following the Disposal
Following the Disposal, IQH will have no remaining business and its principal asset will be its holding of RSH Shares.
In order to allow the Company to meet its liabilities associated with maintaining its AIM trading facility and otherwise as they fall due, conditional upon the Disposal, RSH has agreed to make a loan of £50,000 to the Company which will be repayable upon the Company completing an acquisition. The loan is unsecured and interest is payable at 4% above base rate from default. The loan will be made available in two equal tranches of £25,000, one on completion of the Disposal and the second on demand. The loan will be repayable on completion of a reverse transaction by IQH. As this loan is being provided by RSH, it is a related party transaction for the purposes of the AIM rules. The Independent Directors having consulted with Grant Thornton Corporate Finance, consider that the terms of the transaction are fair and reasonable insofar as Shareholders are concerned.
Proposed Investing Policy
Following the Disposal, the Company will be classified under the AIM Rules as an Investing Company. Accordingly, the Company's new Investing Policy, details of which are set out below, is subject to the approval of Shareholders at the General Meeting. The Company will be required to make an acquisition or acquisitions which constitute a reverse takeover under the AIM Rules or otherwise implement its Investing Policy within 12 months of the General Meeting, failing which, the Company's Ordinary Shares would then be suspended from trading on AIM. If the Investing Policy is still not implemented within a further six months, the admission of the Ordinary Shares to AIM would be cancelled.
IQH's proposed strategy is to seek acquisition opportunities in the real estate, manufacturing or marketing sectors. It will seek to make investments directly in real estate or acquire controlling interests in property, manufacturing or marketing companies. In particular, the Independent Directors believe that the Indian property market may offer attractive opportunities. They also consider that there may be attractive opportunities in the manufacturing or marketing sectors in the UK.
These investments will be actively managed and it is anticipated will be held for the long term.
The Company will seek to raise further capital to deliver on its business plan either by way of equity or debt subject to the cash requirements appropriate for growing the business.
Capital Reduction
Introduction
The Company's statutory accounts for the year ended 30 September 2008 show an accumulated deficit of £511,000 on its profit and loss account. Further difficult trading conditions mean that since the year end, the deficit on the Company's profit and loss account has continued to increase.
At the same time, the Company's accounts showed a sum of £984,000 standing to the credit of the Company's share premium account. Since the year end, as a result of further allotment of shares, the Company's Share Premium Account has risen to £1,813,915.52.
Following the capital reorganisation in January 2009, the Company also had 3,370,643,640 Deferred Shares in issue. The rights attaching to the Deferred Shares on issue included, as set out in the Company's Articles of Association as Article 6.1.3 thereof, a right for the Company to appoint any person to execute on behalf of the holders of such Deferred Shares, a transfer of such shares to the Company without any payment therefore and without the sanction of the holders of the Deferred Shares.
The Company proposes now to exercise its right under Article 6.1.3 to appoint a person to execute a transfer of the Deferred Shares to the Company. The Deferred Shares so transferred will be cancelled and the value of the share capital cancelled carried to a capital reserve in the Company's books called the Capital Redemption Reserve. This will result in a credit to the capital redemption reserve of £337,064.364.
.
Both the share premium account and the capital redemption reserve are undistributable reserves. Accordingly, the purposes for which a company can use any sums credited to those reserves are very limited. However, with the approval of Shareholders and the consent of the Court, a company may reduce or cancel its share premium account and capital redemption reserve. The reserves arising on such a reduction of capital may be used, inter alia, in diminishing or extinguishing a deficit on the Company's profit and loss account and, to the extent that they exceed such a deficit, in creating a distributable reserve which, subject to the protection of creditors, the Company may apply for the purpose of paying dividends to Shareholders and for other corporate purposes.
The Company therefore proposes to cancel both of its share premium account and its capital redemption reserve and to apply the reserve arising on such cancellation first in eliminating the deficit on its profit and loss account and then in creating a substantial distributable reserve.
At the same time, the Company also proposes to reduce its share capital by returning part of the capital paid up on the ordinary shares to the holders thereof. The proposed return of capital will be satisfied by the distribution to the holders of the Ordinary Shares (other than RSH which has agreed to waive its entitlement to receive RSH shares on return of capital) RSH shares currently held by the Company save for the £50,000 worth of RSH shares which the Company is obliged to retain in order to maintain sufficient net assets on its balance sheet.
It is proposed that the Company's share capital be reduced to £50,559.47 (such sum representing an amount required to maintain the Company's status as a public company and to ensure that the Company can satisfy its liabilities for the following 12 months. As with the cancellation of the share premium account and of the Capital Redemption Reserve, the reduction of capital requires the sanction of a special resolution of shareholders and the confirmation of the Court.
The Court application
The cancellation of the Company's share premium account, the cancellation of the Capital Redemption Reserve and the reduction of the Company's share capital will only take effect if sanctioned by the Shareholders at the GM and confirmed by the Court and upon the appropriate documents being lodged with the Registrar of Companies.
If Shareholders approve the Resolutions approving the reduction, at the GM, the Company intends to present an application to confirm the Reduction promptly thereafter.
The Directors have been advised that, having regard to the circumstances at the date of this document the Court should confirm the Reduction. The Directors are not, however, able to guarantee the Court's confirmation of the Reduction. It is important to note that the Reduction will not take effect unless it is confirmed by the Court.
The Directors have also been advised that the Court is likely to require that the Company give undertakings for the protection of the Company's creditors at the date that the reduction of capital becomes effective. The Company will give such undertakings to the Court for the protection of creditors as it may be advised are appropriate to be given.
The application to the Court will be made as soon as practicable after the passing of the Resolutions and the procedure is expected to be completed within six to eight weeks. The Court order confirming the Reduction will then need to be registered at Companies House, which it is anticipated will be done immediately upon the Court Order being made.
Summary of proposed changes to the Articles of Association
Under the provisions of the Companies Act 2006, the concept of an authorised share capital is no longer recognised and, in particular, a company can increase its share capital simply by allotting shares. Further, the provisions of what was the Memorandum of Association have automatically become provisions of the Articles of Association as the position of the Memorandum of Association as a constitutional document has also been effectively abolished by that Act.
The existence of an "authorised capital" clause of the sort which currently appears in clause 6 of the Company's Memorandum of Association consequently acts only as a limit or "cap" on the amount of capital which the Company is able to allot. Accordingly, the Company intends to remove the authorised capital provision which appeared in its Memorandum of Association and now forms part of its Articles so as to remove that limit.
Recommendation
Your Independent Directors believe that the Disposal is in the best interests of the Company and, having consulted with Grant Thornton Corporate Finance, consider that the terms of the proposed Disposal are fair and reasonable in so far as the Shareholders are concerned.
The Directors believe that the Disposal, the proposed Capital Reduction and the approval of the Resolutions set out in the notice of the GM to be in the best interests of the Company and Shareholders as a whole.
Accordingly the Independent Directors unanimously recommend that you vote in favour of Resolutions 1 to 7 to be proposed at the General Meeting as they intend to do so in respect of their own aggregate holdings of 8,854,167 Ordinary Shares in which they are interested representing approximately 0.7%% of the existing issued ordinary share capital of the Company.
DEFINITIONS
The following definitions apply throughout this announcement unless the context requires otherwise:
| "2007 Warrants" | the warrants issued by the Company on 28 October 2007 to subscribe for shares in the capital of the Company pursuant to the 2007 warrant instrument; |
| "2008 Warrants" | the warrants issued by the Company on 5 December2008 to subscribe for shares in the capital of the Company pursuant to the 2008 warrant instrument; |
| "Act" | the Companies Act 2006; |
| "AIM" | AIM, a market operated by the London Stock Exchange; |
| "AIM Rules" | the rules governing the admission to, and operation of AIM contained in the document entitled the "AIM Rules for Companies" published by the London Stock Exchange; |
| "Articles" | the Company's articles of association; |
| "Bibby" | Bibby Factors Slough Limited; |
| "Capital Redemption Reserve" | the Company's capital redemption reserve of £337,064.364 which will arise on the purchase by the Company of the Deferred Shares as more particularly described in this announcement; |
| "Circular" | this GM circular dated 23rd December 2009 |
| "Company" or "IQ Holdings" or "IQH" or "Group" | IQ Holdings plc and its relevant subsidiaries as the context requires; |
| "Court" | the High Court of Justice in England and Wales; |
| "Deferred Consideration" | the total sum of £600,000 payable to Media Square under the terms of the acquisition agreement signed at the time of the acquisition by the Company of Viewpoint and The Wire in December 2008, payable as per the schedule in the MSQ Settlement Agreement |
| "Deferred Shares" | 3,370,643,640 deferred shares of 0.01p each in the capital of the Company in issue at the time of this announcement; |
| "Directors" or the "Board" | the directors of the Company, whose names appear in the Circular posted today; |
| "Disposal" | the proposed sale of Viewpoint and Rosslyn as explained in this announcement; |
| "EBITDA" | earnings before interest, tax, depreciation and amortisation; |
| "Form of Proxy" | the form of proxy enclosed with this document for use at the General Meeting; |
| "GM" or "General Meeting" | the general meeting of the Company convened for 10 a.m. on 12th January 2010 by the Notice of GM and any adjournment thereof; |
| "Grant Thornton Corporate Finance" or "Nominated Adviser" | the corporate finance division of Grant Thornton UK LLP which is authorised by the FSA to carry on investment business; |
| "Grant Thornton UK LLP" | A limited liability partnership registered in England and Wales whose principal place of business is Grant Thornton House, Melton Street, Euston Square, London, NW1 2EP and which is the UK member firm of Grant Thornton International; |
| "HMRC" | Her Majesty's Revenue and Customs; |
| "HSBC" | HSBC Bank Plc; |
| "Illuminas" | Illuminas Limited, a wholly owned subsidiary of Media Square, incorporated in England and Wales with registered number 4273580; |
| "IQ Research" | IQ Research Limited, a wholly owned subsidiary of the Company; |
| "Independent Directors" | Timothy Michael Hearley, Neil Grant McGowan and Joachim (Joe) Eberhard Seydel; |
| "Investing Company" | any AIM company, which has as its primary business or objective, the investing of its funds in securities, business or assets of any description; |
| "Investing Policy" | The investing policy proposed to be followed by the Company following the Disposal as explained in this announcement; |
| "London Stock Exchange" | London Stock Exchange plc; |
| "Media Square" | Media Square Plc incorporated in England and Wales with registered number 4006884; |
| "MSQ Settlement Agreement" | The agreement to be entered into by Media Square, Illuminas, Viewpoint, Wire, RSH, IQH and TurnBegin Limited detailing the proposed plan with regards to the repayment of the deferred consideration and assumption of certain liabilities by RSH; |
| "Notice of GM" | the notice of GM set out at the end of this document; |
| "Ordinary Shares" | ordinary shares of 0.01pence each in the capital of the Company; |
| "PLUS" or "PLUS Markets" | the PLUS-quoted market operated by PLUS Markets Group PLC which allows trading of shares in unquoted companies |
| "Proposals" | the Disposal, the Reduction and the change in Investing Policy; |
| "Prospectus Rules" | the prospectus rules made by the Financial Services Authority pursuant to section 73A of the Financial Services and Markets Act 2000, as amended; |
| "Reduction" | together, the cancellation of the Company's share premium account, the cancellation of the Capital Redemption Reserve the reduction of share capital; |
| "Resolutions" | the resolutions set out in the Notice of GM; |
| "Rosslyn" or "Rosslyn Research" | Rosslyn Research Limited, a wholly owned subsidiary of the Company; |
| "RSCF" | Rivington Street Corporate Finance Limited, a wholly owned subsidiary of Rivington Street Holdings Plc; |
| "RSH" | Rivington Street Holdings Plc; |
| "RSH Shares" or "Consideration Shares" | Approximately 5.2 million shares of 1p each in RSH to be issued to the Company pursuant to the SPA |
| "Shareholders" | holders of Ordinary Shares; |
| "SPA" or "Sale and Purchase Agreement" | the conditional agreement dated 23rd December 2009 relating to the Disposal, further details of which are set out in this announcement; |
| "The Wire Services" or "The Wire" | The Wire Services (UK) Limited incorporated in England and Wales with registered number 6518386, formerly a wholly owned subsidiary of the Company; |
| "T1M" or "T1ps Investment Management Limited" | T1ps Investment Management Limited, a wholly owned subsidiary of RSH; |
| "Turnbegin Limited" | A company incorporated in England and Wales (company number 3346228), the sole director of which is John Green; and |
| "Viewpoint" or "Viewpoint Field Services" | Viewpoint Field Services Limited, a wholly owned subsidiary of the Company |