Disposal


 

TIDMFSS 
 
RNS Number : 9477Q 
Forest Support Services PLC 
12 August 2010 
 

                          FOREST SUPPORT SERVICES PLC 
                                   (AIM: FSS) 
 
Proposed disposal of the issued share capital of Forest Traffic Signals Limited 
                                  ("Disposal"), 
              Proposed cancellation of admission to trading on AIM 
                    Proposed members' voluntary liquidation 
                                      and 
                            Notice of General Meeting 
 
Introduction 
 
Forest Support Services plc ("Forest" or "the Company") announces that it has 
entered into a conditional agreement to dispose of its only trading subsidiary, 
Forest Traffic Signals Limited ("FTS"), to Caswell Support Services Limited 
("Caswell") for a consideration which will leave the Company holding cash of 
GBP1.97 million. 
 
Caswell is a newly incorporated company acquired by Mr Ross Williams, Managing 
Director of Forest, for the purpose of use as a vehicle to acquire FTS. 
Accordingly, the Disposal is a transaction with a related party for the purposes 
of the AIM Rules.  Mr Ross Williams has taken no part in the deliberations of 
the Board relating to the Disposal. 
 
The Independent Directors, being all the directors of the Company 
(the"Directors") other than Mr Ross Williams, having consulted with WH Ireland, 
consider that the terms of the Disposal are fair and reasonable and in the best 
interests of the shareholders as a whole.  In providing advice to the Directors, 
WH Ireland has relied upon information supplied by the Directors and their 
commercial assessments. 
 
In view of the size and the fundamental nature of FTS (being the only trading 
subsidiary of the Group) to the Company, it is a requirement of the AIM Rules 
that the Disposal be approved by shareholders at a general meeting of the 
Company. The Disposal is therefore conditional on, inter alia, the passing of 
the appropriate resolution at a general meeting to be held at 10 a.m. on 10 
September 2010 ("the General Meeting"). 
 
The Company also announces that, subject to shareholders' approval to the 
Disposal, it is seeking shareholders' approval for the cancellation of admission 
of the shares to trading on AIM ("Cancellation") and to a members' voluntary 
liquidation ("MVL") of the Company pursuant to which the net proceeds of the 
Disposal can be returned to shareholders.  The Directors' anticipate that the 
total return to shareholders should be approximately 9.5 pence per share and 
that the liquidator will be in a position to make an interim distribution of 
approximately 9 pence per share shortly after commencement of the MVL. 
 
Subject to the resolutions being passed at the General Meeting, it is 
anticipated that trading in the Company's shares on AIM will be suspended from 7 
a.m. on 10 September 2010 with Cancellation taking effect at 7.00 am on 13 
September 2010. 
 
The Company has received irrevocable undertakings from the Directors and certain 
other shareholders to vote in favour of all the resolutions to be proposed at 
the General Meeting over an aggregate of 10,151,916 shares, representing 54.3 
per cent. of the Company's issued shares. 
 
Current trading and prospects 
 
In its interim results for the six months ended 30 September 2009 announced on 
17 December 2009, the Company reported a profit after tax of GBP0.13 million on 
a turnover of GBP4.34 million. 
 
Revenues in the second half of the year ended 31 March 2010 were not as strong 
as in the first half principally due to the close down during the Christmas 
period, the poor weather conditions in January and February and delays in 
certain key projects.  As a result, margins have also suffered as certain costs, 
in particular sub-contract labour costs, were higher than budgeted.  As a 
consequence the profits for the year ended 31 March 2010  are likely to be 
slightly below market expectations and those of last year. 
 
The current financial year has commenced satisfactorily although there is some 
uncertainty as to whether certain major projects from which the Company expects 
significant work will be affected by  constraints on public spending. 
 
Background to and reasons for the Disposal 
 
The Company was admitted to trading on AIM on 31 January 2001 at a price per 
share of 25p and with a market capitalisation of GBP2.45 million.  Its strategy 
was to grow the Group's business through a combination of organic growth and 
acquisition. 
 
The Group has increased its turnover from GBP1.00 million for the year ended 31 
March 2001 to GBP6.75 million for the year ended 31 March 2009.  This growth, 
however, has not been reflected in the reported profits, which have varied 
considerably, or in the Company's share price and market capitalisation.  As at 
the close of business on 11 August 2010 the Company's share price was 6.25 pence 
and its market capitalisation was GBP1.17 million. 
 
The Directors consider that the interests of shareholders as a whole will be 
best served by the Company realising value for FTS and returning the cash to 
shareholders in a tax efficient manner by way of a members' voluntary 
liquidation. 
 
The Directors also believe that, given the continuing uncertain economic 
climate, the interests of the FTS business will be best served by being carried 
on outside the public arena and without the burden, as the Group's only trading 
subsidiary, of funding the significant costs associated with the Company being 
AIM listed. 
 
The cash to be received in respect of the Disposal is equivalent to 
approximately 10.5 pence per share in the Company. After taking account of the 
costs of the Disposal and costs associated with the MVL, the Directors  estimate 
that the liquidator will be in a position to distribute approximately 9.5 pence 
per share to shareholders and anticipate the liquidator will make an interim 
distribution of approximately 9 pence per share.  A distribution of 9.5 pence 
per share would represent a premium of 52 per cent. to the closing middle market 
price of the Company's shares as at 11 August 2010 and a premium of 
approximately 41 per cent. to the average share price of the Company over the 
three year period to 11 August 2010.  Over that three year period the Company's 
shares have traded in the range 4 pence to 9.5 pence. 
 
The Company will shortly be posting to shareholders a circular attaching a 
notice convening the General Meeting, which will also be available on the 
Company's website www.forestsupportservices.co.uk.  All capitalised words used 
in this announcement are as defined in the Circular. 
 
+-----------------------------------+-----------------------------------+ 
| Contacts:                         |                                   | 
+-----------------------------------+-----------------------------------+ 
|                                   |                                   | 
+-----------------------------------+-----------------------------------+ 
| Forest Support Services Plc       |   www.forestsupportservices.co.uk | 
+-----------------------------------+-----------------------------------+ 
| Ross Williams, Managing Director  |              +44 (0) 1633 284 701 | 
+-----------------------------------+-----------------------------------+ 
| Christopher Powell, Chairman      |              +44 (0) 7768 043 261 | 
+-----------------------------------+-----------------------------------+ 
|                                   |                                   | 
+-----------------------------------+-----------------------------------+ 
| WH Ireland Limited                |              www.wh-ireland.co.uk | 
+-----------------------------------+-----------------------------------+ 
| Mike Coe / Marc Davies            |              +44 (0) 117 945 3470 | 
+-----------------------------------+-----------------------------------+ 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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