Castleton Technology PLC Proposed Reduction of Capital and Notice of GM (0553A)

TIDMCTP

RNS Number : 0553A

Castleton Technology PLC

07 September 2018

Castleton Technology PLC

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

Proposed Reduction of Capital

Notice of General Meeting

 
 Castleton Technology plc (AIM: CTP), the software and managed services provider to the public 
  and not-for-profit sectors, announces that the Company will later today post a circular (the 
  "Circular") to shareholders of the Company (the "Shareholders") detailing: 
   *    a proposed cancellation of the Company's share 
        premium account (the "Reduction of Capital"); 
 
 
   *    a proposed disapplication of pre-emption rights in 
        the Company; and 
 
 
   *    a general meeting of the Company (the "General 
        Meeting"), the purpose of which is to enable 
        Shareholders to approve the Resolutions. 
 
 
  A copy of the Circular will shortly be available on the Company's website at www.castletonplc.com/investors/. 
  Below are extracts from the Circular which should be read in conjunction with the full text. 
  Defined terms used in this announcement have the meaning ascribed to them in the Circular. 
  Background to and reasons for the Reduction of Capital 
  The Companies Act 2006 (the "Act") only permits a company to make distributions to its Shareholders 
  out of its profits available for that purpose. In addition, a public company may fund a purchase 
  of its own shares out of distributable profits. Such profits are, broadly, a company's accumulated 
  realised profits so far as not previously utilised by distribution or capitalisation, less 
  its accumulated realised losses. 
  As at 31 March 2018, the Company had an accumulated deficit on its profit and loss account 
  of GBP9,775,000. Accordingly, as matters currently stand, the Company does not have distributable 
  profits and is therefore unable to make any distributions to its Shareholders or fund a purchase 
  of its own Ordinary Shares out of distributable profits. However, at the same time, there 
  was GBP17,006,000 standing to the credit of the Company's share premium account. 
  Since 31 March 2018, the Company has allotted 1,432,706 Ordinary Shares at a price of GBP0.8275 
  per Ordinary Share, 738,896 Ordinary Shares at a price of GBP0.856 per Ordinary Share and 
  271,000 Ordinary Shares at a price of GBP0.22 per Ordinary Share. As at the date of the Circular, 
  there is GBP18,835,000 standing to the credit of the Company's share premium account. 
  The Directors therefore feel it is appropriate to seek Shareholder approval to effect the 
  Reduction of Capital and, subject to the approval of the Shareholders and of the Court, to 
  cancel the Company's share premium account. 
  The Directors then propose to apply the reserve arising on the Reduction of Capital to eliminate 
  the Company's accumulated deficit on its profit and loss account and, as to the balance, to 
  create distributable profits on the balance sheet of the Company. The Directors believe that, 
  subject to the future performance of the Company, this should give the Company the ability 
  to make distributions to Shareholders and/or buy back its own Ordinary Shares in the future 
  if and when the Directors may consider that it is appropriate to do so. However, the Directors 
  cannot give any guarantee either that the Company will make any distributions or purchases 
  of its own Ordinary Shares or as to the size of any distributions or purchases of its own 
  Ordinary Shares which may be made. 
  The cancellation of the Company's share premium account will only become effective if (in 
  the following order): 
  (i) Resolution 1 as set out in the Notice of General Meeting is approved by Shareholders at 
  the General Meeting; 
  (ii) confirmation is given by the Court; and 
  (iii) the Court order and a statement of capital are delivered to and registered by Companies 
  House. 
  As noted above, the cancellation of the Company's share premium account should enable the 
  Directors to eliminate the current deficit on the Company's profit and loss account and create 
  distributable profits. 
  Effect of the Reduction of Capital 
  Subject to approval by the Shareholders and obtaining the Court's consent, the amounts resulting 
  from the cancellation of the Company's share premium account will be credited to the Company's 
  profit and loss account to create (subject to the Court's confirmation) distributable profits 
  that the Company will be able to use when making any future distributions to Shareholders 
  or purchases of its own Ordinary Shares. 
  The Reduction of Capital does not involve any distribution or repayment of capital or share 
  premium by the Company and will not reduce the underlying net assets of the Company. 
  Authority to Disapply Pre-Emption Rights 
  As stated in the announcement made by the Company on 24 July 2018, resolution 9 as set out 
  in the notice of annual general meeting dated 29 June 2018 (being the resolution to approve 
  a general disapplication of pre-emption rights in respect of the issue of up to 15 per cent. 
  of the Company's issued ordinary share capital on an unrestricted basis) was withdrawn prior 
  to the start of the annual general meeting and not put to Shareholders. The Directors are 
  therefore proposing at the forthcoming General Meeting a general disapplication of pre-emption 
  rights resolution in respect of the issue of up to 5 per cent. of the Company's issued ordinary 
  share capital on an unrestricted basis and a specific disapplication of pre-emption rights 
  resolution in respect of the issue of up to an additional 5 per cent. of the Company's issued 
  ordinary share capital in connection with an acquisition or specified capital investment. 
  Having consulted with Shareholders of the Company, the Board believes this smaller authority 
  is more appropriate given the future plans of the Company. 
  General Meeting 
  A notice convening a General Meeting of the Company, to be held at the offices of DAC Beachcroft 
  LLP at 100 Fetter Lane, London EC4A 1BN on 24 September 2018 at 11.00 a.m. and at which the 
  Resolutions will be proposed, is set out at the end of the Circular. 
  Resolution 1 to approve the Reduction of Capital and Resolutions 2 and 3 to approve the disapplication 
  of pre-emption rights will be proposed as special Resolutions requiring a majority of not 
  less than 75 per cent. of the votes cast. 
  Directors' recommendation 
  The Directors consider that the Resolutions are in the best interests of the Company and would 
  promote the success of the Company for the benefit of its Shareholders as a whole. Accordingly, 
  the Directors unanimously recommend that Shareholders vote in favour of the Resolutions to 
  be proposed at the General Meeting as they and their immediate families and connected persons 
  (within the meaning of section 252 of the Act) intend to do in respect of their aggregate 
  holdings of 390,399 Ordinary Shares representing approximately 0.48 per cent. of the existing 
  share capital of the Company. 
  Expected Timetable of Principal Events                                                          2018 
   Date of the Circular                              7 September 
   Latest time and date for receipt of Forms    11.00 a.m. on 20 
    of Proxy                                           September 
   General Meeting                              11.00 a.m. on 24 
                                                       September 
   Court hearing of application to confirm            23 October 
    the Reduction of Capital 
   Effective Date of the Reduction of Capital         23 October 
 
 
  The dates and times given in the Circular are based on the Company's current expectations 
  and may be subject to change. If any of the details contained in the timetable above should 
  change, the revised times and dates will be notified to Shareholders by means of an announcement 
  through a Regulatory Information Service. All references to time and dates in the Circular 
  are to time and dates in London. 
 
  Enquiries: Castleton Technology plc                         Tel. +44 (0)845 
    Dean Dickinson, Chief Executive Officer          241 0220 
    Haywood Chapman, Chief Financial Officer 
   finnCap Ltd                                      Tel. +44 (0)20 
    Jonny Franklin-Adams / Simon Hicks (Corporate    7220 0500 
    Finance) 
    Andrew Burdis (ECM) 
   MXC Capital Markets LLP                          Tel. [phone] 
    Charlotte Stranner                               1849 
   Alma PR                                          Tel. [phone] 
    Rebecca Sanders-Hewett / Helena Bogle            901979 
 

About Castleton Technology plc

Castleton Technology plc is a leading supplier of complementary software and managed services to the public and not-for-profit sectors. The Group is a 'one stop shop', providing integrated housing systems via the Cloud, working in partnership with its customers and resellers to help drive efficiencies whilst improving controls and customer service. www.castletonplc.com

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

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 [e-mail] or visit www.rns.com.

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September 07, 2018 02:00 ET (06:00 GMT)