Macromac PLC Proposed Cancellation of Trading on AIM (7805E)

TIDMMACC

RNS Number : 7805E

Macromac PLC

06 November 2015

6 November 2015

Macromac PLC

("Macromac", "the Company" or "the Group")

Proposed cancellation of admission of the Company's Shares to trading on AIM

and

Notice of Extraordinary General Meeting

Macromac announces that an Extraordinary General Meeting of the Company has been convened for 30 November 2015, at 3.30 p.m. Malaysia time (7.30 a.m. UK time), at 43-45, Jalan PJS 1/48, Taman Petaling Utama, 46150 Petaling Jaya, Selangor Darul Ehsan, Malaysia. At this meeting, inter alia, a special resolution will be proposed to approve the cancellation of trading on AIM of all of the Ordinary Shares of the Company pursuant to Rule 41 of the AIM Rules for Companies.

The Notice of EGM will today be posted to Shareholders and edited extracts of Part I of the Company's circular to Shareholders is copied below. Electronic copies of the circular will shortly be available to view on the Company's website: www.macromacgroup.com.

If the special resolutions are passed at the EGM the Company's Shares are expected to cease to be admitted to trading on AIM on 7 December 2015 and the Cancellation will become effective at 7.00 a.m. (London time) on 8 December 2015.

The Company intends to put in place a matched bargain settlement facility with JP Jenkins Limited to serve as a limited platform for shareholders and other persons who seek to buy or sell shares following Cancellation.

For further information please visit www.macromacgroup.com or contact:

Macromac PLC [phone]

Michael Lew, Chief Executive Officer

Andrew Khoo, Chief Operating Officer

   Allenby Capital Limited (Nominated Adviser and Broker)                    [phone] 

Nick Athanas / James Reeve

Leander (Financial PR) [phone]

Christian Taylor-Wilkinson

Proposed cancellation of admission of the Company's Ordinary Shares to trading on AIM

Proposed re-registration of the Company as a private company under the Companies (Jersey) Law 1991

Proposed change of name to Macromac Limited

Proposed amendments to the Company's memorandum and articles of association

and

Notice of Extraordinary General Meeting

EXPECTED TIMETABLE OF EVENTS

 
 Dispatch of this document                06 November 2015 
 Latest time for receipt of           7.30 a.m. UK time on 
  Form of Proxy                           28 November 2015 
 Extraordinary General Meeting          3.30 p.m. Malaysia 
  to be held                               time (7.30 a.m. 
                                   UK time) on 30 November 
                                                      2015 
 Expected last day for dealings           07 December 2015 
  in Ordinary Shares on AIM 
 Expected time and date that      7.00 a.m. on 08 December 
  admission of Ordinary Shares                        2015 
  to trading on AIM will be 
  cancelled with effect from 
 

Each of the times and dates above is subject to change. Dates set after the Extraordinary General Meeting assume that the Extraordinary General Meeting is not adjourned and that the Special Resolutions are passed. Any such change will be notified by an announcement on a Regulatory Information Service.

Dear Shareholder,

Introduction

The Company announced today that it intends to seek Shareholders approval to cancel the admission of the Company's Shares to trading on AIM.

This letter sets out the background and reasons for the proposed Cancellation.

The Directors have recently undertaken a review of the benefit of the Shares continuing to be traded on AIM. Having completed this review, which included consultation with the Company's advisers and its major shareholders, the Directors have agreed that it is in the best interests of the Company and its Shareholders as a whole if the admission of the Shares to trading on AIM is cancelled. Pursuant to Rule 41 of the AIM Rules, the Directors have notified the London Stock Exchange of the date of the proposed Cancellation.

The Company intends to put in place a matched bargain settlement facility with J P Jenkins Limited to serve as a limited platform for shareholders and other persons who seek to buy or sell shares following Cancellation.

The AIM Rules provide that Cancellation be conditional upon the approval of the Special Resolution set out as special resolution 1 in the notice convening the EGM, enclosed with this document, by not less than 75 per cent. of the votes cast, whether in person or by proxy, by Shareholders in a general meeting. Lew Shau Kong (Chief Executive Officer), Khoo Tiong Keat (Chief Operating Officer), Ho Wei Lih, Oh Hong Lian, Linkway Consultants Limited and Ezy-Gain International Limited, whose shareholdings represent 77.1 per cent. of the issued share capital of the Company, have given irrevocable undertakings to vote in favour of the Special Resolutions.

The purpose of this document is to explain why the Directors consider the proposal to be in the best interests of the Company and its Shareholders as a whole and to recommend that you vote for the Special Resolutions required to implement the proposal at the EGM scheduled to take place at 3.30 p.m. Malaysia time (7.30 a.m. UK time) on 30 November 2015, notice of which is enclosed at the end of this document.

Reasons for the proposed Cancellation

The Directors' rationale for seeking the original admission of the Company's Ordinary Shares to trading on AIM included access to equity capital markets to fund business opportunities, an enhanced corporate profile, to use its Ordinary Shares as consideration for acquisitions and as a mechanism to provide a market in the Company's Ordinary Shares. The Board has reached the view that the Company is not receiving all of these benefits, nor is there any possible chance of the situation changing in the foreseeable future.

There are significant costs associated with maintaining a listing on AIM, including fees payable to the London Stock Exchange, nominated adviser fees, shareholder communication time and costs, and other professional fees. Cancellation will, accordingly, reduce the recurring administrative costs, in which such expenses can be better spent in running the business in a private capacity.

After careful consideration, the Directors have therefore concluded that the commercial disadvantages and costs of maintaining a listing at this time in the Company's development outweigh the potential benefits and that it is therefore no longer in the Company's or its Shareholders' best interests to maintain its listing. Particular consideration has been given by the Directors to the very low liquidity in the Company's shares. With trading volume at a minimal level, the Company's share price is very volatile and can move up or down significantly following small numbers of trades of its Ordinary Shares. As at 4 November 2015, the last practicable date prior to the publication of this document, the mid-market price of the Ordinary Shares was 7.25 pence compared to the IPO price of 10 pence in September 2013.

The Directors believe that it would be better for the Company to operate as a private company as further capital can be raised with better ease within South East Asia when funding is considered necessary thus enabling the Company to succeed in its long term objective of expanding into new markets outside of Malaysia and Thailand.

Pursuant to AIM Rule 41, the Cancellation can only be effected by the Company after securing a resolution of Shareholders passed by a requisite majority being not less than 75 per cent. of the votes cast by Shareholders (in person or by proxy) at a general meeting. Under the AIM Rules the Cancellation can only take place after the expiration of a period of twenty Business Days from the date on which notice of the Cancellation is given. In addition, a period of at least five Business Days following the Shareholder approval of the Cancellation is required before the Cancellation may be put into effect.

The Company, through its nominated adviser, has notified the London Stock Exchange of the proposed Cancellation and it is expected that trading in the Shares on AIM will cease at the close of business on 07 December 2015, with Cancellation taking effect at 7.00 a.m. on 08 December 2015.

Current trading

On 7 September 2015, the Company announced its half year results, announcing a net loss due to an increased marketing spend in the first half of the year, causing a drop in gross profit. Since the announcement of the Company's interim results, the Company has continued to remain loss-making with efforts being made to minimise marketing spend and unnecessary expenses as well as maximise revenue generated by its business. The Company remains hopeful that the benefits of the increased marketing spend in the first half of the year will lead to an improved performance in the second half of the year.

Future strategy of the Company

The Company will be continuing with the strategy which has been put in place and top-line growth is expected to continue while expanding the scope of services being delivered to customers in all markets. The Company is continuing its search for opportunities to expand beyond Malaysia and Thailand, to bring benefits to all the stakeholders of the Company.

Effect of Cancellation

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The principal effect of the proposed Cancellation is that there would no longer be a formal market mechanism enabling Shareholders to trade their Ordinary Shares on AIM or any other recognised market or trading exchange. The underlying liquidity in the Ordinary Shares is low and, in the opinion of the Directors, is likely to remain that way for the foreseeable future. As described below, the Company intends to, shortly following Cancellation, put in place a matched bargain settlement facility to serve as a limited platform for Shareholders and other persons to seek to buy or sell shares. However such a facility is likely to offer a substantially lesser degree of liquidity and potentially less attractive share prices than are currently available via the Company's AIM listing.

The Company intends to maintain its existing CREST facility following Cancellation. Shareholders will continue to be able to hold their Ordinary Shares in dematerialised form (or alternatively to be issued share certificates in respect of their Shares), and the Ordinary Shares will continue to be transferable through CREST in accordance with the applicable procedures.

Shareholders should also be aware that the Company will no longer be bound by the AIM Rules or be subject to the Takeover Code and that, as a consequence, certain previously prescribed corporate governance procedures may not be adhered to in the future and the Company will no longer be required to announce material events or transactions including releasing interim results or final results. As the Company will no longer be subject to the AIM Rules, Shareholders will no longer be required to vote on certain matters as provided in the AIM Rules. However, following Cancellation, the Company will continue to maintain a website at www.macromacgroup.com for the foreseeable future, providing information on any significant events or developments of the Company.

Upon Cancellation the Company will cease to have a nominated adviser. The Company is currently required under the AIM Rules to consult with its nominated adviser on, for example, transactions constituting "related party transactions" under those rules, and to inform the nominated adviser of key decisions such as any proposed changes to the Board. Following Cancellation, the Shareholders will no longer benefit from the protection afforded by the nominated adviser.

Accordingly, as a result of the Cancellation, the protections available to Shareholders are likely to be limited to those available under Jersey law and the Company's New Articles.

Takeover Code

The Takeover Code currently applies to the Company and as such the Shareholders currently benefit from a number of protections contained in the Takeover Code. Following Cancellation, the Company's place of central management and control will not be (and is not expected to be) in the United Kingdom, the Channel Islands or the Isle of Man and, pursuant to paragraph 3(a)(ii) to the Introduction to the Takeover Code, the Company will no longer be subject to the Takeover Code.

Shareholders should note that, if the Special Resolutions become effective, 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 Code and the protections given by the Takeover Code are described below. Before giving your consent to the Cancellation, you may want to take independent professional advice from an appropriate financial adviser.

The Takeover Code

The Takeover Code is issued and administered by the Takeover Panel ("Panel"). The Company is presently a company to which the Takeover Code applies and its Shareholders are accordingly entitled to the protections afforded by the Takeover Code.

The Takeover Code and the Panel operate principally to ensure that shareholders are treated fairly and are not denied an opportunity to decide on the merits of a takeover and that shareholders of the same class are afforded equivalent treatment by an offeror. The Takeover Code also provides an orderly framework within which takeovers are conducted. In addition, it is designed to promote, in conjunction with other regulatory regimes, the integrity of the financial markets.

The General Principles and Rules of the Takeover Code

The Takeover Code is based upon a number of General Principles which are essentially statements of standards of commercial behaviour. The General Principles apply to all transactions with which the Takeover Code is concerned. They are expressed in broad general terms and the Takeover Code does not define the precise extent of, or the limitations on, their application. They are applied by the Panel in accordance with their spirit to achieve their underlying purpose.

In addition to the General Principles, the Takeover Code contains a series of Rules, of which some are effectively expansions of the General Principles and examples of their application and others are provisions governing specific aspects of takeover procedure. Although most of the Rules are expressed in more detailed language than the General Principles, they are not framed in technical language and, like the General Principles, are to be interpreted to achieve their underlying purpose. Therefore, their spirit must be observed as well as their letter. The Panel may derogate or grant a waiver to a person from the application of a Rule in certain circumstances.

Giving up the protection of the Takeover Code

Shareholders will be giving up certain important protections upon the Cancellation. Your attention is drawn in particular to the following protections under the Takeover Code: (i) all holders of Shares must be afforded equivalent treatment and, moreover, if a person acquires 30 per cent. or more of the Shares in the Company (other than in the context of a voluntary offer to all Shareholders) such person would be required to make a mandatory offer to all of the other Shareholders; (ii) the holders of Shares must have sufficient time and information to enable them to reach a properly informed decision on any bid; where it advises the holders of Shares, the Board must give its views on the effects of implementation of the bid on employment, conditions of employment and the locations of the Company's place of business; and (iii) the Board would be required to act in the interests of the Company as a whole and must not deny any holders of Shares the opportunity to decide on the merits of a bid for the Company.

Trading in the Ordinary Shares after Cancellation

Whilst the Board believes that the Cancellation is in the interest of the Shareholders as a whole, it recognises that the Cancellation will make it more difficult for Shareholders to buy and sell Ordinary Shares should they wish to do so. Following the Cancellation, although the Ordinary Shares will remain transferable they will no longer be tradable on AIM. Accordingly, the Board will, following the Cancellation, set up a matched bargain settlement facility with JP Jenkins (the "Facility") to enable Shareholders to trade their Ordinary Shares, and further notifications will be made to shareholders once it is implemented. JP Jenkins is a trading division of Peterhouse Corporate Finance Limited, which is authorised and regulated by the Financial Conduct Authority, a Member of the London Stock Exchange and an ISDX Growth Market Corporate Adviser.

Under the Facility, it is intended that Shareholders or persons wishing to trade will be able to leave an indication with JP Jenkins that they are prepared to buy or sell at an agreed price. In the event that the matched bargain settlement facility provider is able to match that indication with an opposite buy or sell instruction, JP Jenkins will contact both parties to effect the bargain. Shareholders who wish to buy or sell ordinary shares in the Company through JP Jenkins must do so via a stockbroker. JP Jenkins is unable to deal directly with members of the public. Once the Facility has been arranged, details will be made available to shareholders on the Company's website. Alternatively, JP Jenkins can be contacted by phone on [phone], or by email at [e-mail].

The Board intends to monitor the popularity of this arrangement amongst Shareholders and will review it at regular intervals to consider whether it remains cost effective. Information relating to the Facility will be put on the Company's website.

Registration of the Company as a private limited company

The Company is presently a public limited company under the Companies Law. Following the Cancellation, the directors propose that the Company change its status to become a private limited company pursuant to Article 16 (Change of status of public company) of the Companies Law.

Article 16 (Change of status of public company) of the Companies Law allows public limited companies to change their status to private limited companies provided that: i) the public limited company at the time of its change of status has not more than 30 members; and ii) the public limited company adopts a new memorandum to refer to the company as a private limited company, or 'Ltd', rather than a public limited company, or 'Plc'. As of the date of this circular, discounting those shareholders who are directors or employees of the Company, or members of its group, and counting joint shareholders as one shareholder, each in accordance with Article 17A (Calculation of number of members) of the Companies Law, the Company presently has 24 members for the purposes of Article 16 (Change of status of public company) of the Companies Law.

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