GTS Chemical Holdings PLC Proposed Cancellation of Admission (7036C)

TIDMGTS

RNS Number : 7036C

GTS Chemical Holdings PLC

29 June 2016

29 June 2016

GTS Chemical Holdings plc

("GTS" or the "Company" or the "Group")

Proposed Cancellation of Admission

GTS Chemical Holdings plc (AIM: GTS), the specialty chemicals and lubricating oil producer, and China's largest producer of ammonium sulfite, announces proposals to cancel the Admission of the Company's shares to trading on AIM.

The Annual General Meeting to consider the proposals will be held at 11.00 a.m. (UK time) on 25 July 2016 at 4th Floor, Prince Frederick House, 35-39 Maddox Street, London, W1S 2PP.

Further details, including definitions, are set out below.

Enquiries:

 
 GTS Chemical Holdings plc 
  Mr Roy Su, CFO                    Tel: [phone] 
  Website                           www.gtschemical.com 
 SP Angel Corporate Finance       Tel: [phone] 
  LLP 
  Nominated Adviser and Broker 
  David Facey / Stuart Gledhill 
 

Introduction

The Company announces it is proposing to seek Shareholders' consent to cancel the admission of the Company's Ordinary Shares to trading on AIM.

In addition to the Delisting, the Notice of AGM will include the ordinary business to be dealt with at the Company's annual general meeting.

The Delisting

Reasons for the Delisting

The Directors have undertaken a review of the merits or otherwise of the Company continuing to be admitted to trading on AIM. The Directors have concluded that a proposal to cancel the Admission should be made to Shareholders at the Annual General Meeting. In reaching the decision to propose this to Shareholders, the Directors have taken the following factors into account: -

-- The primary purpose of the Company's Admission was the opportunity it provided to raise capital in support of the Company's growth prospects. Given current market conditions, and in particular the lack of investors for businesses operating in the PRC, the Directors are of the opinion that it is difficult for the Company to attract any or meaningful equity investment through its listing on AIM and accordingly the Directors will be assessing potential alternatives to raise growth capital.

-- There are significant professional fees and other costs associated with the maintaining of the Company's AIM listing.

In the Board's opinion the costs of Admission outweigh any benefits that currently accrue to the Company or its Shareholders and the Admission should therefore be cancelled as it is no longer in the best interests of the Shareholders as a whole.

Effects of Delisting

The principal effects of the Delisting would be that: -

-- there would no longer be a formal market mechanism enabling Shareholders to trade their shares on AIM or any other market or trading exchange;

-- the Company would not be bound to announce material events, such as interim or final results, material transactions or administrative changes;

-- the Company would no longer be bound to comply with the corporate governance requirements for companies with shares admitted to trading on AIM;

-- the Company would no longer be required to comply with the AIM Rules (or to have a nominated advisor), and Shareholders would no longer be required to vote on certain matters prescribed by the AIM Rules; and

-- interim reports will not be sent to Shareholders and, as a result, Shareholders will only receive the annual report once a year;.

It is intended that the Company will not withdraw from CREST so that Ordinary Shares can still be held or transferred in Uncertified Form until SinoEuro Runtai's proposed offer to the Investors as set out below completes.

Following the Delisting, although the Ordinary Shares will remain transferable, they will no longer be tradable on AIM. Consequently, it is likely to be more difficult for a Shareholder to purchase or sell any Ordinary Shares following the Delisting. Following the Delisting, transfers of Ordinary Shares may be effected in accordance with those provisions of the Articles concerning off-market transfers of shares.

SinoEuro Runtai, the majority shareholder of the Company, proposes to make an offer to all Investors to purchase their Ordinary Shares at the Offer Price following the Delisting. Further details are set out below.

Delisting procedure

The Board has accordingly concluded that it is in the best interests of Shareholders as a whole that the Delisting be approved.

Under the AIM Rules, the Delisting can only be effected by the Company after securing a special resolution of Shareholders in a general meeting, whereby at least 75 per cent. of votes cast are in favour of such a resolution. A period of at least five Business Days following the Shareholder approval of the Delisting is required before the Delisting may be put into effect.

Resolution 7 contained in the Notice of AGM seeks Shareholder approval for the Delisting. The Company has received irrevocable undertakings from Shareholders holding 90,777,778 Ordinary Shares, representing approximately 88.73 per cent. of the current voting rights in the Company, to vote in favour of the Delisting. Assuming that Shareholders approve this resolution, it is proposed that the Delisting will take place by 2 August 2016 at the earliest.

Takeover Code

The Takeover Code is issued and administered by the Takeover Panel. The Takeover Code currently applies to the Company and will continue to apply to the Company notwithstanding the Delisting. The Takeover Code will cease only to apply to the Company on the expiry of the 10-year period from the date of the Delisting or, if earlier, the date on which the Company is dissolved.

The Takeover Code and the Takeover 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 Takeover Code is based upon a number of General Principles which are essentially statements of standards of commercial behaviour. General Principle One states that all holders of securities of an offeree company of the same class must be afforded equivalent treatment and if a person acquires control of a company, the other holders of securities must be protected. This is reinforced by Rule 9 of the Takeover Code which requires a person, together with persons acting in concert with him, who acquires shares carrying voting rights which amount to 30 per cent. or more of the voting rights to make a general offer. A general offer will also be required where a person who, together with persons acting in concert with him, holds not less than 30 per cent. but not more than 50 per cent. of the voting rights, acquires additional shares which increase his percentage of the voting rights. Unless the Takeover Panel consents, the offer must be made to all other shareholders, be in cash (or have a cash alternative) and cannot be conditional on anything other than the securing of acceptances which will result in the offeror and persons acting in concert with him holding shares carrying more than 50 per cent. of the voting rights.

Proposed Offer to the Investors after the Delisting

At the Record Date, SinoEuro Runtai which is beneficially owned by Mr Cheng Liu held 78,057,556 Ordinary Shares representing 76.29 per cent. of the entire issued share capital of the Company. SinoEuro Runtai proposes to offer to purchase the Ordinary Shares from the Investors at the Offer Price following the Delisting. SinoEuro Runtai is expected to send an offer letter to the Investors within a period of 30 days after the Delisting.

As SinoEuro Runtai holds more than 50 per cent. of the entire issued share capital of the Company, the increase of its percentage of voting rights in the Company by purchasing the Ordinary Shares from the Investors in the proposed offer will not trigger the requirement for SinoEuro Runtai to make a mandatory offer in accordance with Rule 9 of the City Code.

In addition, assuming all Investors accept the offer and sell all of the Ordinary Shares held by them to SinoEuro Runtai, SinoEuro Runtai would hold 83,157,275 Ordinary Shares representing 81.28 per cent. of the entire issued share capital of the Company after such purchases. It would not trigger the squeeze-out and sell-out rules relating to the Ordinary Shares under the City Code nor would it constitute a "takeover offer" under the Jersey Companies Law.

For the avoidance of doubt, this proposed offer is not an offer made by the Company to purchase the Ordinary Shares. It is an offer made by SinoEuro Runtai, an existing Shareholder. In addition, nothing in this announcement is a recommendation made by the Company or the Board to accept any such proposed offer.

The Board following Delisting and Corporate Governance

It is intended that Mr Andrew Harding, Mr David Weir, Mr Derek Welch and Mr Zhi (George) Zeng will resign as Directors of the Company on the date of Delisting and hence the Board will comprise Mr Cheng Liu, Mr Xinlin (Roy) Su and Ms Xueying Zhang immediately following Delisting.

However, the Directors intend to continue to operate the Company for the benefit of all Shareholders. They also intend to continue to keep Shareholders informed of progress and remain committed to high standards of corporate governance. As such, the Directors will:-

   -     post items of news on the Company's website (www.gtschemical.com); 

- hold annual general meetings and general meetings in accordance with statutory requirements and the Articles; and

   -     continue to send to Shareholders copies of the Company's audited accounts each year. 

Annual General Meeting

Set out at the end of the Circular is a notice convening the AGM of the Company to be held at 11.00 a.m. (UK time) on 25 July 2016 at 4(th) Floor, Prince Frederick House, 35-39 Maddox Street, London, W1S 2PP. At this AGM, the Resolutions will be proposed.

Irrevocable Undertakings

The Company has received irrevocable undertakings from SinoEuro Runtai, Earnest Faith, Yu Peng, Cosmic Dawn and Vantage Link to vote in favour of the Resolutions. These undertakings represent 88.73 per cent. of the voting rights in the Company.

Recommendation

The Directors consider that all the Resolutions to be considered at the AGM, including the Delisting, are fair and reasonable and are in the best interests of the Company and the Shareholders as a whole. The Directors therefore unanimously recommend that shareholders vote in favour of the Resolutions.

Full Year Account and Dividend

Given the proposed Delisting, the Directors no longer intend to propose a dividend for the year ended 31 December 2015. The full year accounts are due to be published today.

Resolution

The full text of the Resolution is set out in the Notice of AGM.

Expected Timetable of Principal Events

 
 
 Publication of the Circular        29 June 2016 
 
 Latest time and date for receipt   11.00 a.m. on 23 
  of Form of Proxy                   July 2016 
 
 Annual General Meeting             11.00 a.m. on 25 
                                     July 2016 
 
 Announcements of results of        25 July 2016 
  AGM 
 
 Expected last day of dealings      1 August 2016 
  in Ordinary Shares on AIM 
 
 Expected time and date that         with effect from 
  the admission to trading of         7.00 a.m. 
  the Ordinary Shares on AIM          on 2 August 2016 
  will be cancelled 
 
 
 

If any of the above times and/or dates change, the revised times and/or dates will be notified to Shareholders by announcement through a Regulatory Information Service of the London Stock Exchange.

Definitions

The following definitions apply throughout this announcement, unless the context requires otherwise:

 
 "Admission"               the admission of the Ordinary 
                            Shares to trading on AIM; 
 "AIM"                     the market of that name 
                            operated by the London Stock 
                            Exchange; 
 
 "AIM Rules"               the AIM Rules for Companies 
                            published by the London 
                            Stock Exchange from time 
                            to time; 
 
 "Annual General           the annual general meeting 
  Meeting" or "AGM"         of the Company convened 
                            for 11.00 a.m. (UK time) 
                            on 25 July 2016 and any 
                            adjournment thereof; 
 "Articles"                the memorandum and articles 
                            of association of the Company 
                            as at the date of this document; 
 "Business Day"            a day (excluding Saturday, 
                            Sunday and public holidays 
                            in England and Wales) on 
                            which banks are generally 
                            open for business in London 
                            for the transaction of normal 
                            banking business; 
 "BVI"                     the British Virgin Islands; 
 
 
 "City Code"               the City Code on Takeovers 
                            and Mergers (as published 
                            by the Panel); 
 
 "Company"                 GTS Chemical Holdings plc, 
                            a company incorporated in 
                            Jersey under the Jersey 
                            Companies Law with registered 
                            number 114810; 
 "Cosmic Dawn"             Cosmic Dawn Limited, a company 
                            incorporated in the BVI 
                            with registered number 1823019; 
 
 "CREST"                   the relevant system (as 
                            defined in the CREST Regulations) 
                            in accordance with which 
                            securities may be held or 
                            transferred in uncertificated 
                            form, and in respect of 
                            which Euroclear UK and Ireland 
                            is the Operator (as defined 
                            in the CREST Regulations); 
 
 "CREST Regulations"       the UK Uncertificated Securities 
                            Regulations 2001 (SI 2001/3755) 
                            and the Companies Uncertificated 
                            Securities, (Jersey) Order 
                            1999 as amended from time 
                            to time, and any applicable 
                            rules made under those regulations; 
 "Delisting"               the cancellation of admission 
                            to trading on AIM of the 
                            Ordinary Shares; 
 "Directors" or "Board"    the board of directors of 
                            the Company; 
 "Earnest Faith"           Earnest Faith Group Limited, 
                            a company incorporated in 
                            the BVI with registered 
                            number 1817431; 
 
 "Form of Proxy"           the form of proxy enclosed 
                            with the circular for use 
                            at the Annual General Meeting 
                            or at any adjournment thereof; 
 "Investors"               all Shareholders who held 
                            Ordinary Shares at the Record 
                            Date save for Substantial 
                            Holders; 
 
 "Jersey"                  Bailiwick of Jersey, a British 
                            Crown Dependency; 
 
 "Jersey Companies         the Companies (Jersey) Law 
  Law"                      1991, as amended 
 
 "London Stock Exchange"   London Stock Exchange plc; 
 
 "Notice of AGM"           the notice of Annual General 
                            Meeting which is set out 
                            in the circular to be published 
                            on 29 June 2016; 
 "Offer Price"             49.5 pence per Ordinary 
                            Share, the closing mid price 
                            on 28 June 2016, being the 
                            last practicable Business 
                            Day prior to the publication 
                            of the Circular; 
 
 "Ordinary Shares"         the ordinary shares of GBP0.01 
                            each in the capital of the 
                            Company, and "Ordinary Share" 
                            means any one of them; 
 "Panel" or "Takeover      the UK Panel on Takeovers 
  Panel"                    and Mergers; 
 
 "Record Date"             28 June 2016 being the last 
                            practicable Business Day 
                            prior to the publication 
                            of the Circular; 
 
 "Resolutions"             the resolutions to be proposed 
                            at the Annual General Meeting 
                            in the form set out in the 
                            Notice of Annual General 
                            Meeting; 
 "Shareholders"            holders of Ordinary Shares 
                            from time to time and "Shareholder" 
                            means any one of them; 
 "SinoEuro Runtai"         SinoEuro Runtai Environmental 
                            Protection Resource Co., 
                            Ltd., a company incorporated 
                            in the BVI with registered 
                            number 1760994; 
 "SP Angel"                SP Angel Corporate Finance 
                            LLP, nominated adviser and 
                            broker to the Company; 
 
 "Substantial Holders"     any Shareholders who held 
                            (whether legally or beneficially) 
                            Ordinary Shares at the Record 
                            Date that constitute in 
                            aggregate more than 2% of 
                            the entire issued share 
                            capital of the Company at 
                            the Record Date; 
 
 "UK" or "United           the United Kingdom of Great 
  Kingdom"                  Britain and Northern Ireland; 
 "Uncertificated"          a share or other security 
  or                        recorded on the relevant 
  "in Uncertificated        register of the relevant 
  Form"                     company concerned as being 
                            held in uncertificated form 
                            in CREST and title to which, 
                            by virtue of CREST Regulations, 
                            may be transferred by means 
                            of CREST; 
 "Vantage Link"            Vantage Link Investments 
                            Limited, a company incorporated 
                            in the BVI with registered 
                            number 1812635; and 
 "Yu Peng"                 Yu Peng Trading Limited, 
                            a company incorporated in 
                            the BVI with registered 
                            number 1817433. 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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June 29, 2016 11:47 ET (15:47 GMT)