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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Neville Porter | LSE:NEV | London | Ordinary Share | GB00B1KKFP62 | ORD 0.0444P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.10 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
30 January 2008 Neville Porter plc (the "Company") 1 Introduction The Company announces that it has entered into various agreements with two of its directors, Mr Porter and Mr Morton, concerning a proposed refinancing and restructuring of the Company and its subsidiaries' (together "Group's") businesses. Under the AIM Rules the arrangements are regarded as related-party transactions (under AIM Rule 13). In addition, certain of the arrangements with Mr Porter require shareholder approval as they amount to substantial property transactions between the Company and a director pursuant to section 190 to 196 of the Companies Act 2006 and may result in a fundamental change of business under AIM Rule 15. The requisite resolution will be proposed at an Extraordinary General Meeting ("EGM") which is expected to be convened within the next few days and held by mid February 2008. 2 Background to Refinancing The Group operates in a sector where results can vary from favourable to unfavourable in a short space of time, and where bets on one sport can be positive at the same time as losses are incurred on another sport. With this in mind, the directors take steps to limit the Group's liabilities by hedging bets with other bookmakers where appropriate, and by broadening the spread of bets between different sports. Furthermore, the Group's traditional operations, on-course betting at UK (and now Irish) racecourses - which have been the successful core of the predecessor business for nearly 30 years - have been supplemented since flotation by off-course betting at the newly-formed Birtley telephone call centre and via internet betting. The significant stakes taken by phone and on the internet have generated far poorer returns than had been projected, partly as a result of the generous odds offered to attract a new clientele and build up client loyalty while these operations were in their infancy, and partly because of the generally greater level of success for clients that the industry as a whole has witnessed. There have been various recent announcements by well-known national bookmaking firms setting out details of significant losses, which seem to have affected the industry as a whole. With the continued run of poor results that affected the 30th June 2007 accounts, as announced on 27th December 2007, having continued into 2008, the Group has taken steps to reduce its cost base, and has taken steps to limit its potential exposure on certain races, and the board is hopeful of better performance as 2008 progresses. To raise funds, the board has agreed to sell its UK pitches and the independent directors accepted an offer from Mr Neville Porter after obtaining an independent valuation from an industry expert. Approximately £5,763,000 of bets were taken at the UK pitches in the financial period ended 30th June 2007, resulting in a gross profit of £173,000. After deducting on-course expenses, the Company made a net profit of £25,000 in relation to the UK pitches. In addition Brian Morton is advancing the Company £80,000. These overall arrangements replace Mr Morton's commitment to the Company to provide funding of up to £300,000 (previously stated in the report and accounts for the period ended 30th June 2007) which will be released upon the resolution being passed at the EGM. In the period prior to the EGM, and after the EGM in the event that the resolution is not passed, Mr Morton's commitment is agreed to be reduced by the aggregate amount of the funds advanced by Mr Morton and Mr Porter pursuant to their respective facilities. 3 Details of Refinancing Financing to be provided by Mr David Neville Porter. Mr Porter has agreed to make available to the Company a facility of up to £270,000. Of this sum, notice has been given to draw down the initial £50,000 and of the balance: (i) £170,000 may be drawn down by the Company conditional upon the passing of the resolution to be proposed at the EGM; and (ii) (subject to earlier exercise of the option as detailed below) £50,000 may be drawn down by the Company one month following the EGM, conditional upon the passing of the resolution approving the option. Mr Porter has previously advanced £79,197 by way of loan to D. N. Porter Racing Limited ("DNPR"). On the assumption that the full amount of Mr Porter's new facility is drawn down, the aggregate principal amount due to Mr Porter from the Group will be £349,197. None of the loans will carry interest. The amounts owed to Mr Porter by DNPR have been guaranteed by the Company. The amounts owed to Mr Porter by DNPR and the Company have also been guaranteed by Neville Porter Racing Limited ("NPR"). Whilst the loans due to be repaid to Mr Porter are expressed to be repayable on demand, Mr Porter has agreed not to demand repayment of any amount due to him by the Company or DNPR until the earlier of the date upon which the Company has sufficient cash reserves to make this repayment and the date upon which notice is served to exercise the Option Agreement detailed below (save in the case of certain standard events of default). The Company guarantee is also secured by way of a first fixed charge over the entire issued share capital from time to time of NPR ("DNP Share Charge"). The Option Agreement has been entered into by the Company, NPR and Mr Porter and is conditional upon the passing of the resolution to be proposed at the EGM. Under the terms of the Option Agreement NPR and Mr Porter have entered into put and call options whereby Mr Porter has the right to acquire from NPR its entire interest in the UK Pitches for a total consideration of £350,000 and NPR has the right to compel Mr Porter to acquire the UK Pitches for £350,000. Details of the UK Pitches are set out below. The put and call options contained in the Option Agreement will lapse 12 months after the resolution to be proposed at the EGM is approved. If the Option is exercised by either Mr Porter or NPR, the £350,000 consideration payable to NPR will be set off against the sums owing to Mr Porter under the facilities made to the Group. The net effect will be that the UK pitches will be acquired by Mr Porter and the principal amount of the loans due to be repaid to Mr Porter will be cleared. In the event that the Option is exercised within one month of the EGM, Mr Porter will not have loaned the final £50,000 under Mr Porter's loan facility. Accordingly this amount will be payable as a cash sum on completion of the option exercise, but payment may be deferred by Mr Porter until the date one month after the EGM (being the date on which draw down of this amount would otherwise have occurred). The Company is currently reviewing its activities and, as part of this review, is in discussions with Mr Porter about a possible lease-back to the Company of the UK pitches and/or a partial release of Mr Porter's service agreement, to trade from the pitches on his own account. Discussions are at a preliminary stage and no agreement has been reached with Mr Porter. Any such agreement will be conditional upon further shareholder approval at a further general meeting and an announcement will be made as soon as reasonably practicable before the latest time for receipt of signed and completed Forms of Proxy and in any event prior to the Extraordinary General Meeting. A summary of the principal terms of Mr Porter's facility, the Company guarantee, the NPR guarantee and the Option Agreement are set out below. Facility from Mr Brian Morton Under Mr Morton's facility, Mr Morton has agreed to advance up to £80,000 to the Company. This amount is guaranteed by NPR and secured by way of a first fixed charge over the Irish pitches held by NPR, details of which are set out below. Full details of Mr Morton's facility and a deed of guarantee and charge pursuant to which NPR will guarantee the repayments under both Mr Morton's facility and his existing loans to DNPR secured by a first fixed charge over those betting pitches held in the Republic of Ireland (the "BM Security") are set out below. Mr Morton has agreed not to demand repayment of any amount due to him until the earliest of the date upon which the Company has sufficient cash reserves to make this repayment, the six month anniversary of the making of the loan or any sale of the Irish pitches (save in the case of certain standard events of default). 4 Working Capital Shareholders should be aware that the Company requires additional working capital and the Directors believe that the proposals described are the best way of achieving this. All the funds received by the Company will be used for general working capital purposes. 5 Extraordinary General Meeting The Option Agreement and the Share Charge in favour of Mr Porter are conditional upon the passing of a resolution to be proposed at the EGM expected to be held mid February and further information will be set out in the circular which it is anticipated will be sent to shareholders within the next week. Mr Porter has undertaken to abstain from voting at the EGM and, accordingly, the resolution will require a simple majority of votes cast in favour by the independent shareholders at the EGM. 6 Board Approval The Directors, excluding Mr Porter and Mr Morton who did not take part in your Board's deliberations because of their respective interests in the arrangements outlined above, concluded that the arrangements, having consulted with its nominated adviser, Blomfield Corporate Finance Limited, were fair and reasonable insofar as its shareholders were concerned. Further information: David Soley Chairman Neville Porter plc Tel: 08000 223388 Nick Harriss Nominated Adviser Blomfield Corporate Finance Limited Tel: +44 20 7512 0191 Appendix 1 Arrangements with Mr Porter (a) Mr Porter's Loan Facility Mr Porter's Loan Facility is created by a Loan Facility Agreement dated 29th January 2008. This provides for drawdown of the following amounts: (i) Tranche A, being £50,000 in respect of which notice to draw down was served by the Company on 29th January 2008; (ii) Tranche B, being £170,000 to be drawn by the Company at any time after the passing of the Resolution; and (iii) Tranche C, being £50,000 which may be drawn by the Company at any time on or after the date falling one calendar month from the date upon which the Resolution is passed. Tranche C will not be drawn if before the date upon which it is properly requested either Mr Porter or the Company have served notice to exercise the Option, as detailed below. Subject to the terms of the undertaking (see below) the entire loan created by the this facility is repayable upon written demand by Mr Porter. It may be repaid in full or part at any time by the Company, but is not available for redrawing following repayment. Payments due under the loan must be made in full without set-off (provided that any set-off or reduction required by law must be compensated by an increase in the amount being paid so that the net payment equals the full amount which Mr Porter would otherwise have received). The Loan is secured by the guarantee and share charge summarised below. The facility contains standard events of default including a default in repayment of any indebtedness owed by the Company to any other person, the Company being deemed insolvent or subject to any insolvency proceeding or analogous proceedings in any jurisdiction. The Company has indemnified Mr Porter for any loss caused by the Company's failure to repay sums when due or arising out of an event of default. (b) Company Guarantee A deed of guarantee and indemnity was entered into on 29th January 2008 between Mr Porter and the Company (as guarantor). Under this guarantee the Company irrevocably and unconditionally guarantees the repayment of sums due to Mr Porter by DNPR (to include the £79,197 previously advanced to DNPR). The Company further irrevocably and unconditionally agrees to indemnify Mr Porter in relation to costs, expenses, damages and losses incurred arising out of or in connection with DNPR's failure to perform or discharge its obligations to Mr Porter. Each of these obligations are given separately by the Company as primary obligor. No interest is payable by the Company in respect of any late payment, before or after judgment. (c) DNP NPR Guarantee A deed of guarantee and indemnity was entered into on 28 January 2008 between Mr Porter and NPR (as guarantor). Under this guarantee NPR irrevocably and unconditionally guarantees the repayment of sums due to Mr Porter by the Company (to include amounts advanced or due under the Company Guarantee and Mr Porter's loan facility). NPR further irrevocably and unconditionally agrees to indemnify Mr Porter in relation to costs, expenses, damages and losses incurred arising out of or in connection with the Company's failure to perform or discharge its obligations to Mr Porter. Each of these obligations are given separately by NPR as primary obligor. No interest is payable by NPR in respect of any late payment, before or after judgment. The DNP NPR Guarantee contains provisions normal to a document of this nature as to interpretation and enforcement. (d) DNP Share Charge A share charge was entered into on 29th January 2008 between Mr Porter and the Company, conditional upon the passing of the resolution to be proposed at the EGM. This share charge provides security to Mr Porter in relation to all amounts outstanding to him from the Company from time to time (and will therefore include any amounts due under the above facility and the above guarantee). The Company covenants to pay all amounts when due to Mr Porter with interest only at the rates provided by the underlying agreements and with no deduction or set-off save as provided by the underlying agreement. Upon the occurrence of an enforcement event Mr Porter shall have the right to sell the shares (pursuant to Section 101 of the Law of Property Act 1925) and shall be under no further commitment to the Company regarding the shares. The security shall remain in place notwithstanding any insolvency of the Company or repayment of the secured liabilities until they are discharged in full. (e) Option Agreement An option agreement was entered into between Mr Porter, the Company and NPR on 29th January 2008. The agreement grants a put and call option over the Pitches held by NPR in the United Kingdom (details of which are set out below). NPR has irrevocably agreed to sell to Mr Porter and Mr Porter has irrevocably agreed to buy these Pitches for consideration of a total of £350,000, conditional upon the passing of the Resolution and the exercise of the Option within the option period upon the terms of the Option Agreement. The Option must be exercised by either party within the period of 12 months following the passing of the resolution to be proposed at the EGM. It may be exercised by either NPR or Mr Porter giving to the other an exercise notice stating the date on which it is given, that the Option is being exercised, a date (within 2 to 10 business days after the notice date) on which completion of the Option exercise is to take place and which must be signed. Once given an Option exercise notice is irrevocable without the consent of the other party. Completion will then take place subject only to the National Joint Pitch Council or its successor body confirming by the transfer date the mechanics for transfer of the Pitches and upon Mr Porter complying with any requirements or restrictions which they may place on transfer. The completion may be deferred in the event that these requirements cannot immediately be satisfied. A party in default of their completion obligations may also be required to complete on such later date as a non-defaulting party shall specify. The consideration payable shall be made up of first, such amount up to £350,000 as shall be outstanding from the Company to Mr Porter and secondly, (as to any shortfall) in cash. It is the intention that the entire amount outstanding from DNPR, the Company and NPRL will be called under DNP NPR Guarantee and therefore that £350,000 will be owing and set-off against the Option price. In the event that the Option is exercised within one month of the passing of the resolution to be proposed at the EGM then Mr Porter would not have advanced the final £50,000 of his loan (see above). In this case the £50,000 cash balance will be satisfied on the day being one calendar month following the passing of the resolution (the date upon which he would have been obliged to lend this amount to the Company in any event). In any other circumstances any cash balance would be required to be paid in cleared funds on completion of the Option exercise. NPR has undertaken that it will not dispose of any of these Pitches and will transfer them with full title guarantee and free from any fees due to the National Joint Pitch Council or any successor body. The Company has agreed to guarantee, as primary obligor, all liabilities of NPR pursuant to the Option Agreement as if it were NPR and irrespective of any legal limitation incapacity or disability on behalf of NPR. 2 Arrangements with Mr Morton (a) BM Facility Agreement Mr Morton's loan facility is created by a Loan Facility Agreement dated 29th January 2008. This provides for drawdown of £80,000 on two business days' notice. Subject to the terms of the undertaking (see below) the entire loan created by the BM Loan Facility is repayable upon written demand by Mr Morton. It may be repaid in full or part at any time by the Company, but is not available for redrawing following repayment. Payments due under the loan must be made in full without set-off (provided that any set-off or reduction required by law must be compensated by an increase in the amount being paid so that the net payment equals the full amount which Mr Morton would otherwise have received). The Loan is secured by the guarantee and the charge, summarise below. Mr Morton's facility contain standard events of default including a default in repayment of any indebtedness owed by the Company to any other person, the Company being deemed insolvent or subject to any insolvency proceeding and analogous proceedings in any jurisdiction. (b) BM Security Mr Morton's security consists of a guarantee provided by NPR in respect of sums due from the Company (the "BM NPR Company Guarantee"), a guarantee provided by NPR in respect of sums due from DNRP (the "BM NPR DNRP Guarantee") and a charge over Irish Pitches securing each of the BM NPR Company Guarantee and BM NPR DNRP Guarantee (the "BM Charge"). (i) BM NPR Company Guarantee The BM NPR Company Guarantee, a deed of guarantee and indemnity was entered into on 29th January 2008 between Mr Morton and NPR (as guarantor). Under the BM NPR Company Guarantee NPR irrevocably and unconditionally guarantees the repayment of sums due to Mr Morton by the Company (to include amounts advanced under the BM Loan Facility). No interest is payable by NPR in respect of any late payment, before or after judgment. (ii) BM NPR DNRP Guarantee The BM NPR DNRP Guarantee, a deed of guarantee and indemnity was entered into on 28 January 2008 between Mr Morton and NPR (as guarantor). Under the BM NPR DNRP Guarantee NPR irrevocably and unconditionally guarantees the repayment of sums due to Mr Morton by DNRP (to include the £50,000 previously advanced by Mr Morton to DNRP). No interest is payable by NPR in respect of any late payment, before or after judgment. (iii) BM Charge NPR has by a Charge dated 29th January 2008 between Mr Morton and NPR agreed to charge its entire interest in the Pitches held by it in the Republic of Ireland to Mr Morton as continuing security pursuant to BM NPR Company Guarantee and the BM NPR DNRP Guarantee. Under the BM Charge NRP undertakes to Mr Morton to remain owner of the Irish Pitches, not to sell those Pitches, and to satisfy all costs and liabilities outstanding in relation to them from time to time, and to procure that the provisions of the BM Charge remain enforceable against NRP, having regard to its capacity, power, rights of pre-emption and transfer and conflicts with other agreements. Upon the occurrence of an enforcement event Mr Morton shall have both the right to sell the Pitches (pursuant to Section 101 of the Law of Property Act 1925) (and then shall be under no further commitment to NRP regarding the Pitches) or to appoint a Receiver, which provisions are noted below. The enforcement events are standard for an agreement of this type including failure to pay liabilities when due, breach of a material term of the BM Charge or illegality or unenforceability of the BM Charge. The security shall remain in place notwithstanding any insolvency of NRP or repayment of the secured liabilities until they are discharged in full. The BM Charge is expressed to survive any insolvency event or bankruptcy or similar insolvency legislation in any jurisdiction and other than England and Wales which could otherwise lead to it being avoided or adjusted. The security shall also endure for 25 months following payment in full of the secured liabilities or their release, at Mr Morton's discretion. Pitches Part 1 - UK Pitches Racecourse Ring List Position Ascot Royal Rails 12 Ascot Royal Tattersalls 13 Ayr Flat Tattersalls 1 Ayr Flat Tattersalls 5 Beverley Course 18 Carlisle Flat Tattersalls 2 Catterick Flat Rails 16 Catterick NH Rails 6 Cheltenham Festival Rails 31 Cheltenham Festival Lower Tattersalls 3 Cheltenham Off Lower Tattersalls 1 Cheltenham Off Lower Tattersalls 2 Chepstow NW Tatterstalls 78 Chepstow Flat Tatterstalls 67 Doncaster Flat Tattersalls 18 Epsom Derby Lower Tatterstalls 55 Exeter Tattersalls 57 Fontwell Lower Tattersalls 28 Hamilton Rails 15 Hamilton Rails 4 Haydock Flat Rails 9 Haydock NH Rails 8 Haydock NH Rails 13 Kelso Rails 3 Kempton NH Tattersalls 48 Kempton AW Tattersalls 67 Kempton AW Tattersalls 109 Kempton AW Silver 43 Kempton AW Silver 17 Leicester Flat Rails 5 Leicester NH Rails 5 Leicester NH Rails 18 Leicester NH Rails 3 Ludlow Tattersalls 42 Musselburgh Flat Tattersalls 1 Newcastle NH Rails 18 Newcastle NH Tattersalls 5 Newcastle Flat Rails 6 Newcastle Flat Tattersalls 5 Newcastle Flat Tattersalls 11 Newmarket Rowley Rails 10 Newmarket Rowley Rails 22 Ripon Rails 6 York Rails 15 York Tattersalls 120 Part 2 - Irish Pitches Racecourse Ring List Position Leopardstown Tattersalls 7 Galway Tote Line 27
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