Notice of EGM

    RNS Number : 1294J
  Dietbrown PLC
  27 November 2008
   

    DietBrown PLC
    Proposed Cancellation of Admission to AIM and Notice of Extraordinary General Meeting


    DietBrown plc ("DietBrown" or the "Company") today announces that the Company is seeking Shareholder approval to cancel the admission of
the Ordinary Shares to trading on AIM.

    Introduction

    The Company is seeking Shareholder approval to cancel the admission of the Ordinary Shares to trading on AIM at an Extraordinary General
Meeting which will be held on 22 December 2008. A circular and notice of the Extraordinary General Meeting will today be posted to
Shareholders.

    Recent events
    The Board announced on 4 June 2008 that the Company had completed the sale of the business and certain assets, comprising substantially
all the assets underlying the Company's trading operations, to Tortel USA, LLC ("Tortel") for US$2,600,000 (the "Disposal") and received a
payment of US$1,850,000, less a US$50,000 deposit received on signing the letter of intent. The remaining amount of US$750,000 was due to be
received on 30 September 2008. The Company received a notice from Tortel on the due date indicating their intention to exercise their right
to file a claim against the balance owed. The Board believes that the claim is baseless and is pursuing Tortel for the full amount owed. The
purchase agreement provides for dispute resolution through arbitration and the Board is currently pursuing this avenue.

    As announced on 25 June 2008 the Company received a complaint from the Chapter 7 Trustee for the Estate of Entrata Communications
Corporation ("Entrata") alleging that a fraudulent conveyance occurred when the Company purchased assets from Verso Technologies ("Verso")
and its subsidiary MCK Communications on 21 January 2005. Entrata is seeking an unpaid debt of $750,000 plus 12% interest from 1 February
2002. The Company maintains that the claim is without merit. The Company's legal counsel and the Directors are in the process of seeking a
resolution either through the courts or, if deemed in the best interests of Shareholders, with Entrata.

    The Company intends to use the proceeds from the Disposal to satisfy obligations to creditors and employees and to then seek to return
residual cash (if any) to Shareholders. Residual proceeds (if any) and timing will be a function of collectability from debtors of the
Company (notably from Tortel with regard to payment of the final tranche of consideration from the Disposal), the successful negotiation of
outstanding obligations, the outcome of outstanding legal cases (including the Entrata legal case) as well as the extent of legal fees
incurred. Whilst these variables make forecasting imprecise, the Company expects to have a cash balance of up to approximately £100,000 at
31 January 2009. This analysis assumes that the outcome of the claims and receipt of monies from debtors discussed above is broadly
favourable to the Company. The Directors acknowledge that should the amount owed to the Company by Tortel not be forthcoming then it is
highly probable that Shareholders would receive nothing on a winding up of the Company.

    Background to the De-Listing and Re-registration

    At the time of the Disposal, the Directors' stated strategy was to use the proceeds of the sale to settle obligations and return any
residual value to Shareholders. The intention was to then seek approval from Shareholders to de-list from AIM and undertake a Members'
Voluntary Liquidation. In terms of timing, it was initially envisaged that any de-listing would occur soon after 30 September 2008, the date
on which the final tranche of consideration from Tortel fell due. In light of the ongoing discussions with Tortel, together with other
outstanding legal cases (in particular the Entrata case covered above), the intended date for de-listing has passed.

    Given the uncertainty in the timetable for settling outstanding cases and recovering monies from debtors of the Company, the Directors
believe it would be more beneficial for Shareholders if the Company were to de-list from AIM prior to all debtor and creditor issues being
finalised. The principle reasons for De-Listing are as follows:
    *     the key reasons for being listed no longer apply to the Company given the sale of its operating business via the Disposal. These
include the need to raise funds, the need to incentivise staff and the marketing benefits of being a listed entity;
    *     the Company is incurring costs associated with being listed, including NOMAD, AIM, accounting and legal fees. As matters stand the
costs and regulatory requirements associated with maintaining admission to AIM are a material burden on the Company's financial resources
and outweigh the benefits gained from Admission;
    *     the Company has seen limited trading volume in the Company's Ordinary Shares; and
    *     effecting a potential distribution of residual value in the Company to Shareholders will be simpler and more cost effective as a
private company, rather than as a public quoted company.

    After careful consideration, the Board have therefore concluded that it is in the best interests of the Company and Shareholders if the
Company's admission to trading on AIM is cancelled and the Company is re-registered as a private company.

    Going forward the strategy of the business remains to continue to seek the payment of monies owed by debtors and to use such proceeds to
settle all obligations with creditors and employees. At that point the Company envisages distributing to Shareholders residual proceeds, if
any, and to then initiate a Members Voluntary Liquidation. 

    The De-Listing

    In accordance with Rule 41 of the AIM Rules, the Company has today notified the London Stock Exchange of the proposed De-Listing. This
notice is conditional upon the consent of not less than 75 per cent. of votes cast by Shareholders at the Extraordinary General Meeting. The
Notice of Extraordinary General Meeting contains a resolution which proposes that the admission to trading on AIM of the Company's Ordinary
Shares is cancelled. Subject to the requisite Shareholder approval, the De-Listing is expected to be effective from 7.00 a.m. on 2 January
2009.

    The Re-registration

    In accordance with section 53 of the Companies Act 1985, the Company proposes to re-register as a private company with the name of
"DietBrown Limited" with effect from the date that approval is received from the Registrar of Companies and that the memorandum of
association of the Company be altered for this purpose. The Notice of Extraordinary General Meeting contains a resolution which proposes
that the Company be re-registered as a private company.


    Transactions in the Ordinary Shares following the De-Listing and Re-registration

    Following the De-Listing, there will be no market facility for dealing in the Ordinary Shares. However, while there can be no guarantee
of any Shareholders being able to purchase or sell any Ordinary Shares, any Shareholder wishing to do so should contact the Company
Secretary in writing at the Company's registered office at Unit 4, Wheatcroft Business Park, Landmere Lane, Nottingham, NG12 4DG. The
Company Secretary will keep a record of all interested potential purchasers and sellers and will seek to match them where possible.


    Recommendation

    The Directors are of the opinion that the De-Listing and the Re-registration are in the best interests of the Company and its
Shareholders as a whole, and unanimously recommend that Shareholders vote in favour of the Resolutions, as they intend so to do in respect
of their own shareholding and any shares in which they are beneficially interested representing in aggregate approximately 0.2 per cent. of
the issued Ordinary Shares of the Company as at the date of this document.

 EXPECTED TIMETABLE OF PRINCIPAL EVENTS
 Latest time and date for receipt of Forms of Proxy for the       4.00pm on 
 Extraordinary General Meeting                                    20 December 2008
 Extraordinary General Meeting of DietBrown plc                   4.00pm on 
                                                                  22 December 2008
 Cancellation of admission to trading on AIM of the Ordinary      2 January 2009
 Shares expected to be effective
 Re-registration of the Company as a private company expected to  19 January 2009
 become effective

    Enquiries

    
 DietBrown Plc                                   
 Jose David, CEO                 001 206 419 3083
                                                 
 Panmure Gordon (UK) Limited                     
 Dominic Morley               [phone]
 Giles Stewart                                   



    Definitions
    The following definitions apply throughout this document, unless otherwise stated unless the context requires otherwise:

 "Act"                           where applicable and in force, the Companies Act 1985 (as amended) and/or
                                 the Companies Act 2006;
 "Admission"                     admission of the Ordinary Shares to trading on AIM, effective from 7 July
                                 2006;
 "AIM"                           the market of that name operated by the London Stock Exchange;
 "AIM Rules"                     means the AIM Rules for Companies of the London Stock Exchange governing
                                 admission to trading on and the operation of AIM;
 "Board" or "Directors"          the directors of DietBrown;
 "DietBrown" or the "Company"    DietBrown plc, a company incorporated and registered in England and Wales
                                 under the Companies Act 1985, with registered number 5690534;
 "Capita Registrars"             Capita Registrars, the Company's registrars; 
 "De-Listing"                    the proposed cancellation of admission to trading on AIM of the Ordinary
                                 Shares;
 "Extraordinary General          means the extraordinary general meeting of the Company to be held on 22
 Meeting"                        December 2008 at 4.00pm at the offices of DLA Piper UK LLP, Victoria
                                 Square House, Victoria Square, Birmingham B2 4DL or any adjournment
                                 thereof;
 "Form of Proxy"                 the form of proxy for use at the Extraordinary General Meeting;
 "London Stock Exchange"         the London Stock Exchange plc;
 "Notice"                        the notice of the Extraordinary General Meeting;
 "Ordinary Shares"               the ordinary shares of 3.8 pence each in the capital of the Company;
 "Re-registration"               the re-registration of the Company as a private company pursuant to
                                 section 53 of the Companies Act 1985;
 "Resolutions"                   the resolutions numbered 1, 2 and 3 to be proposed to Shareholders at the
                                 Extraordinary General Meeting which are set out in the Notice; and
 "Shareholder"                   a holder of Ordinary Shares of the Company from time to time.


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