8PG Eight Peaks Group Plc

TIDM8PG

RNS Number : 5575X

Eight Peaks Group PLC

30 April 2019

30 April 2019

Eight Peaks Group PLC

Proposed cancellation of admission to trading on AIM,

Re-registration as a Private Limited Company, Adoption of new Articles of Association,

and

Notice of General Meeting

Eight Peaks Group PLC ("8PG" or the "Company") is today posting a circular to shareholders ("Circular") convening a general meeting of the Company ("General Meeting") at which shareholders are being invited to consider the proposed cancellation of the Company's ordinary shares of 0.1p each ("Ordinary Shares") from trading on AIM ("Cancellation"), re-registration as a private limited company and adoption of new articles of association.

The General Meeting will be held at 2.00 p.m. on 16 May 2019 at the offices of One Advisory Group Limited, 201 Temple Chambers, 3-7 Temple Avenue, London EC4Y 0DT.

The Directors consider these proposals to be in the best interest of Shareholders after considering, amongst other things, the costs of maintaining trading in the Ordinary Shares on AIM and the limited free float and liquidity in the Ordinary Shares and intend to vote in favour of the Resolutions at the General Meeting.

The Ordinary Shares will continue to be admitted to trading on AIM, prior to the Cancellation which is anticipated will become effective at 7.00 a.m. on 31 May 2019.

A copy of the expected timetable and letter from the board of 8PG is set out below.

Defined terms used in this announcement have the meaning set out at the end of this announcement and as in the Circular.

 
                                                               0207 583 
 Eight Peaks Group PLC         Zafar Karim / Thomas Reuner      8304 
 Nominated Adviser 
 Grant Thornton UK LLP         Colin Aaronson / Harrison       020 7383 
  Broker                        Clarke/ Seamus Fricker          5100 
 Alexander David Securities                                    020 7448 
  Limited                      David Scott / James Dewhurst     9820 
 

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

About Eight Peaks Group PLC

Eight Peaks Group PLC focuses on assisting companies and making investments which exhibit the potential to generate returns of many multiples through capital appreciation. Typically, Eight Peaks takes stakes in small companies where there are clear catalysts for value appreciation and the companies are operating in sectors exhibiting long term growth. Examples of such sectors include technology, energy and natural resources.

www.8pg.co

The following has been extracted without amendment from, and should be read in conjunction with, the Circular which will also be available on the Company's website:

www.8pg.co

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

 
 Notice provided to the London Stock Exchange      30 April 2019 
  to notify it of the proposed Cancellation 
 Publication and posting of this Document          30 April 2019 
  and Form of Proxy to Shareholders 
 Latest time and date for receipt of completed   2:00 p.m. on 14 
  Forms of Proxy in respect of the General               May2019 
  Meeting 
 Time and date of the General Meeting            2:00 p.m. on 16 
                                                        May 2019 
 Expected last day of dealings in Ordinary           30 May 2019 
  Shares on AIM 
 Expected time and date of Cancellation          7:00 a.m. on 31 
                                                        May 2019 
 

LETTER FROM THE BOARD OF EIGHT PEAKS GROUP PLC

(Incorporated in England and Wales with registered no. 03920241)

 
 Directors:                                          Registered Office: 
 Zafarullah Karim (Executive Chairman)               201 Temple Chambers 
                                                      3-7 Temple Avenue 
                                                      London EC4Y 0DT 
 Dr Thomas Reuner (Executive Director) 
 The Hon. Nicholas Monson (Non-Executive Director) 
 

30 April 2019

To the Shareholders of Eight Peaks Group PLC and, for information only to warrant holders

Dear Shareholder,

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 of Association

1. Introduction

As announced by the Company today, the Directors have concluded that it is in the best interests of the Company and its Shareholders to cancel the admission of the Ordinary Shares to trading on AIM, seek approval for the Company to be re-registered as a private limited company and adopt the New Articles. In accordance with Rule 41 of the AIM Rules, the Company has notified the London Stock Exchange of the date of the proposed Cancellation.

The Cancellation Resolution 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 IV of this Document.

The Company is seeking Shareholders' approval for the Cancellation, Re-registration and adoption of the New Articles at the General Meeting, which has been convened for 2 p.m. on 16 May 2019 at the offices of One Advisory Group Limited, 201 Temple Chambers, 3-7 Temple Avenue, London EC4Y 0DT. If the Cancellation Resolution is passed at the General Meeting, it is anticipated that the Cancellation will become effective at 7.00 a.m. on 31 May 2019.

The purpose of this Document is to seek Shareholders' approval for the Resolutions, to provide information on the background and reasons for Cancellation, the Re-registration and adoption of the New Articles, and to explain the consequences of the Cancellation, the Re-registration and adoption of the New Articles and provide reasons why the Directors unanimously consider the Cancellation, Re-registration and adoption of the New Articles to be in the best interests of the Company and its Shareholders as a whole.

The Notice of the General Meeting is set out in Part IV of this Document.

2. Background and reasons for 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 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:

-- the Directors believe that the performance of the Company's share price has been disappointing for a considerable period of time:

o the share price reached a peak of approximately 200% of net assets on 29 April 2016 although the market capitalisation of the Company has been below its net assets since March 2017;

o the Company's interim statement for 30 September 2018, published on 4 December 2018 provided that the net assets of the Company were approximately GBP6.3 million, although from 30 September 2018, to close of business on 26 April 2019, the market capitalisation of the Company peaked at approximately GBP3 million or 50% of net assets on 8 October 2018;

o since the placings of December 2018 in which the Company raised in aggregate GBP780,000 by the issue of Ordinary Shares at a premium to the share price, the market capitalisation peaked on 1 April 2019 at approximately GBP2.1 million. The peak was approximately 1/3(rd) of the historic net assets at 30 September 2018, excluding the further fundraising; and

o the market capitalisation of the Company on close of business on 26 April 2019 was approximately GBP1.7 million or approximately 24% of net assets at 30 September 2018, excluding the further fundraising;

-- legal title for approximately 75 per cent. of the Company's current issued share capital is held by 12 different Shareholders, resulting in a limited free float and liquidity in the Ordinary Shares with the consequence that the AIM listing of the Ordinary Shares does not, in itself, offer investors the opportunity to trade in meaningful volumes or with frequency within an active market:

o since 30 September 2018, the median and average daily volume of shares traded has been approximately 26,000 and approximately 48,000, respectively; and

o since 2 January 2019, the median and average daily volume of shares traded has fallen to approximately 8,000 and 35,000, respectively; and

-- 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, disproportionate to the benefits to the Company. It is estimated that Cancellation will reduce the Company's recurring administrative costs by GBP80,000 per annum, and these sums can be better spent growing the business.

Following careful consideration, the Directors believe that it is in the best interests of the Company and Shareholders to seek the proposed Cancellation at the earliest opportunity.

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 on the rights and obligations of Shareholders and the Company are summarised in Part II of this Document.

3. 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 5 clear Business Days have passed following the passing of the Cancellation Resolution. If the Cancellation Resolution is passed at the General Meeting, it is proposed that the last day of trading in Ordinary Shares on AIM will be 30 May 2019 and that the Cancellation will take effect at 7.00 a.m. on 31 May 2019.

The principal effects of the Cancellation will be that:

-- there will be no formal market mechanism enabling the Shareholders to trade Ordinary Shares and while the Directors are exploring the possibility of putting a trading facility in place, there is no certainty that such a trading facility will be put in place to facilitate the trading of the Ordinary Shares;

-- while the Ordinary Shares will remain freely transferrable, it is possible that the liquidity and marketability of the Ordinary Shares will, in the future, be even more constrained than at present and the value of such shares may be adversely affected as a consequence;

-- in the absence of a formal market and quote, it may be more difficult for Shareholders to determine the market value of their investment in the Company at any given time;

-- the regulatory and financial reporting regime applicable to companies whose shares are admitted to trading on AIM will no longer apply;

-- Shareholders will no longer be afforded the protections given by the AIM Rules, such as the requirement to be notified of price sensitive information or certain events and the requirement that the Company seek shareholder approval for certain corporate actions, where applicable, including substantial transactions, reverse takeovers, related party transactions and fundamental changes in the Company's business, including certain acquisitions and disposals;

-- the levels of disclosure and corporate governance within the Company may not be as stringent as for a company quoted on AIM;

   --      Grant Thornton will cease to be nominated adviser to the Company; 

-- whilst the Company's CREST facility will remain in place immediately post the Cancellation, the Company's CREST facility may be cancelled in the future and, although the Ordinary Shares will remain transferable, they may cease to be transferable through CREST. In this instance, Shareholders who hold Ordinary Shares in CREST will receive share certificates; and

-- the Cancellation and Re-registration may have personal taxation consequences for Shareholders. Shareholders who are in any doubt about their tax position should consult their own professional independent tax adviser.

The Company will remain registered with the Registrar of Companies in England & Wales in accordance with and subject to the Companies Act 2006 (the "Law"), 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 at least 10 years from the date of Cancellation subject to the Re-registration occurring. However, the Takeover Code may cease to apply earlier, if a majority of the Directors cease to be resident in the UK, Channel Islands or Isle of Man.

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

The Company currently intends to continue to provide certain facilities and services to Shareholders that they currently enjoy as shareholders of an AIM company. The Company will:

-- continue to communicate information about the Company (including annual accounts) to its Shareholders, as required by the Law;

-- continue to hold general meetings for at least 1 year following the Cancellation and Re-registration where shareholder resolutions are proposed, although the company does not propose to continue to hold annual general meetings following Cancellation and Re-registration; and

-- continue, for at least 12 months following the Cancellation, to maintain its website, https://8pg.co and to post updates on the website from time to time, although Shareholders should be aware that there will be no obligation on the Company to include all of the information required under the Disclosure Guidance and Transparency Rules, AIM Rule 26 or to update the website as required by the AIM Rules.

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

The Resolutions to be proposed at the General Meeting include the adoption of the New Articles with effect from the Re-registration. A summary of the principal changes being made by the adoption of the New Articles is included in Part II of this Document. A copy of the New Articles can be viewed at http://8pg.co/corporate-documents/.

4. Transactions in the Ordinary Shares prior to and post the proposed Cancellation

4.1 Prior to Cancellation

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

4.2 Dealing and settlement arrangements

The Directors are aware that Shareholders may wish to acquire or dispose of Ordinary Shares in the Company following the Cancellation. Accordingly, the Board intends to put in place an internal process that will allow Shareholders or persons wishing to acquire or sell Ordinary Shares to leave an indication that they are prepared to buy or sell at an agreed price. The Company will then use its reasonable endeavours to contact those parties that are willing to buy and sell in order that they may discuss effecting the bargain.

Once such a procedure has been put in place details will be made available to Shareholders on the Company's website (.https://www.8pg.co). It is expected that this will take place after the Cancellation.

Transfers of interests in Ordinary Shares in certificated form should be sent to the Company Secretary, Temple Company Secretarial Limited, 201 Temple Chambers, 3-7 Temple Avenue, London EC4Y 0DT. Existing share certificates remain valid.

If Shareholders wish to buy or sell Ordinary Shares on AIM they must do so prior to the Cancellation becoming effective. As noted above, in the event that Shareholders approve the Cancellation, it is anticipated that the last day of dealings in the Ordinary Shares on AIM will be 30 May 2019 and that the effective date of the Cancellation will be 31 May 2019.

5. Current Trading, Strategy and Prospects

Since the interim results for the six months ended 30 September were published on 4 December 2018, it was announced on 20 December 2018 and 24 December 2018 that the Company had raised GBP780,000 by way of placings of 7.8 million Ordinary Shares in aggregate at a price of 10 pence per share. Zafar Karim and the Rt. Hon. Nicholas Monson participated in the placing and subscribed for GBP100,000 and GBP70,000 of Ordinary Shares, respectively. The funds were intended to make further investments and for general working capital purposes.

Subsequent to the placing, on 28 December 2019, it was announced that the Company had invested GBP300,000 into a convertible loan note issued by Virtual Stock Holdings Limited. The convertible loan note came with warrants over Virtual Stock Holdings Limited shares, exercisable at GBP5 per share.

On 23 January 2019, the Company announced that it had acquired a 25% stake in a software development, integration and distribution company that operates in the Cyber Security space, SOARX Limited for GBP125,000 in cash, and that as part of the acquisition, Zafar Karim will be joining the board of SOARX as a non-executive director.

The Company continues to pursue its strategy of seeking out and investing in near start up and small companies that are in sectors exhibiting long term growth. Once invested, the Company assists the companies to realise their potential. Returns are expected to be generated on exits, which may be IPOs or trade sales.

The Company is also exploring various initiatives to increase the resources it has available to make further investments. The Company has sufficient working capital for the foreseeable future, and expects realisations in the medium to long term.

6. Re-registration

Following the Cancellation, the Directors believe 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 this Document.

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 issue the certificate of incorporation on Re-registration when it is satisfied that no valid application can be made to cancel the resolution to re-register as a private limited company or that any such application to cancel the resolution to re-register as a private limited company has been determined and confirmed by the Court.

7. 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). However, the Takeover Code may cease to apply earlier, if a majority of the Directors cease to be resident in the UK, Channel Islands or Isle of Man.

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), or such other date on which the Takeover Code ceases to apply to the Company, 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 this document.

8. 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 the General Meeting. Accordingly, the Notice of General Meeting set out in Part IV of this Document 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 Cancellation Resolution being passed at the General Meeting, to cancel the Company's admission of the Ordinary Shares to trading on AIM on 31 May 2019. Accordingly, if the Cancellation Resolution is passed the Cancellation will become effective at 7.00 a.m. on 31 May 2019. If the Cancellation becomes effective, Grant Thornton will cease to be nominated adviser of the Company and the Company will no longer be required to comply with the AIM Rules.

9. General Meeting

The General Meeting will be held at the offices of One Advisory Group Limited, 201 Temple Chambers, 3-7 Temple Avenue, London EC4Y 0DT commencing at 2 p.m. on 16 May 2018.

Each Resolution other than Resolutions 3 and 4 will be proposed as a special resolution. Resolution 1 with respect to the cancellation is not conditional on any of the other Resolutions although the other Resolutions are conditional on the Cancellation, set out in Resolution 1 being passed, the adoption of the New Articles pursuant to Resolution 2 is also effectively conditional on the Re-registration, Resolution 3 is also conditional on the Re-registration and adoption of the New Articles and Resolution 5 is also conditional on the passing of Resolution 4.

10. Action to be taken

You will find enclosed with this Document a Form of Proxy for use at the General Meeting. Whether or not you propose to attend the General Meeting in person, you are requested to complete and return the Form of Proxy to the Company Secretary, Temple Company Secretarial Limited, 201 Temple Chambers, 3-7 Temple Avenue, London EC4Y 0DT, in accordance with the instructions printed thereon as soon as possible but, in any event, to be received no later than 2 p.m. on 14 May 2019. Completion and return of a Form of Proxy will not preclude you from attending and voting at the General Meeting in person if you so wish.

11. Recommendation

The Directors consider that the Cancellation, Re-registration and adoption of the New Articles are in the best interests of the Company and its Shareholders as a whole and therefore unanimously recommend that you vote in favour of the Resolutions at the General Meeting.

Yours faithfully,

The Board

DEFINITIONS

The following definitions apply throughout this Document, unless the context requires otherwise:

 
 "AIM"                       AIM, the market operated by the London Stock 
                              Exchange; 
 "AIM Rules"                 the rules and guidance for companies whose 
                              shares are admitted to trading on AIM entitled 
                              "AIM Rules for Companies" published by the 
                              London Stock Exchange, as amended from time 
                              to time; 
 "Business Day"              a day (excluding Saturday, Sunday and public 
                              holidays in England and Wales) on which banks 
                              are generally open for business in London 
                              for the transaction of normal banking business; 
 "Cancellation"              the cancellation of admission of the Ordinary 
                              Shares to trading on AIM in accordance with 
                              Rule 41 of the AIM Rules, subject to passing 
                              of the Cancellation Resolution; 
 "Cancellation Resolution"   Resolution 1 to be proposed at the General 
                              Meeting; 
 "Company" or "8PG"          Eight Peaks Group PLC, a company incorporated 
                              in England and Wales with registered number 
                              03920241; 
 "CREST"                     the relevant system (as defined in the CREST 
                              Regulations) in respect of which Euroclear 
                              is the operator (as defined in those regulations); 
 "CREST Regulations"         the Uncertificated Securities Regulations 
                              2001 (SI2001/3755), as amended; 
 "Current Articles"          the articles of association of the Company 
                              at the date of this Document; 
 "Deferred Shares"           deferred shares of GBP7.90 each in the capital 
                              of the Company, and "Deferred Share" means 
                              any one of them; 
 "Directors" or              the directors of the Company, whose names 
  "Board"                     are set out in Part 1 of this Document and 
                              otherwise the directors from time to time. 
                              The Board comprises the directors at any 
                              time or the directors present at a duly convened 
                              meeting at which a quorum is present or, 
                              as the case may be, the directors assembled 
                              as a committee of such Board; 
 "Disclosure Guidance        the disclosure rules and transparency rules 
  and Transparency            made by the UK Financial Conduct Authority 
  Rules"                      pursuant to section 73A of FSMA; 
 Document                    this document, containing information about 
                              the Cancellation, the Re-registration, the 
                              adoption of the New Articles, and the General 
                              Meeting; 
 "Form of Proxy"             the form of proxy enclosed with this Document 
                              for use at the General Meeting or at any 
                              adjournment thereof; 
 "FSMA"                      the Financial Services and Markets Act 2000 
                              as amended; 
 "General Meeting"           the General Meeting of the Company convened 
                              for 2 p.m. on 16 May 2019 and any adjournment 
                              thereof, notice of which is set out at Part 
                              IV of this Document; 
 "Grant Thornton"            Grant Thornton UK LLP; 
 "London Stock Exchange"     London Stock Exchange plc; 
 "New Articles"              the new articles of association of the Company 
                              to be adopted pursuant to Resolution 2 with 
                              such principal changes as summarised at Part 
                              II of this Document, a copy of which can 
                              be viewed at: http://8pg.co/corporate-documents/; 
 "Notice of General          the notice of General Meeting which is set 
  Meeting" or "Notice"        out in Part IV of this Document; 
 "Ordinary Shares"           the ordinary shares in the capital of the 
                              Company of 0.1p each and "Ordinary Share" 
                              means any one of them; 
 "Panel"                     the Panel on Takeovers and Mergers; 
 "Registrars"                Share Registrars Limited, The Courtyard, 
                              17 West St, Farnham GU9 7DR, United Kingdom; 
 "Regulatory Information     has the meaning given to it in the AIM Rules 
  Service"                    for any of the services approved by the London 
                              Stock Exchange for the distribution of AIM 
                              announcements and included within the list 

                              maintained on the website of the London Stock 
                              Exchange; 
 "Re-registration"           the proposed re-registration of the Company 
                              as a private limited company; 
 "Resolutions"               the resolutions to be proposed at the General 
                              Meeting in the form set out in the Notice 
                              of General Meeting; 
 "Shareholders"              holders of Ordinary Shares from time to time 
                              and "Shareholder" means any one of them; 
                              and 
 "United Kingdom"            the United Kingdom of Great Britain and Northern 
  or "UK"                     Ireland. 
 A reference to "GBP" is to pounds sterling, being the lawful 
  currency of the UK. 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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April 30, 2019 07:50 ET (11:50 GMT)