Publication of Circular & Notice of GM (9162C)

TIDMMSS

RNS Number : 9162C

Managed Support Services PLC

08 May 2012

Managed Support Services plc

("MSS" or the "Company")

Publication of Circular & Notice of General Meeting

Managed Support Services plc announces today that it proposes to enter into a Company Voluntary Arrangement ("CVA"), undertake a capital reorganisation, adopt new articles, implement placing of new ordinary shares to raise GBP500,000 and adopt an investing policy pursuant to Rule 15 of the AIM Rules. The Company is also proposing to change its name to Kennedy Ventures Plc.

Consequently, a notice convening a General Meeting for 11:00 a.m. on 25 May 2012 at the offices of Morrison & Foerster (UK) LLP, Citypoint, One Ropemaker Street, London EC2Y 9AW, was sent to shareholders.

The company would also like to announce the appointment of Rivington Street Corporate Finance Limited as Joint Broker to the Company. Cenkos Securities plc will continue to act as Nominated Adviser and Joint Broker.

Rivington Street Corporate Finance Limited has conditionally raised GBP500,000 before expenses by way of a subscription for 2,500,000,000 New Ordinary Shares at a price of GBP0.0002 per share. The Placing is conditional on admission of the Placing Shares to trading on AIM.

The proceeds of the Placing will be used to fund approximately GBP121,707 payment due to creditors pursuant to the CVA and to provide the Company with working capital to allow it to fulfil its investing policy, further details of which are set out below.

It is proposed that following the conclusion of the General Meeting, Rodney Mann, Simon Beart and Piers Wilson will resign as directors with immediate effect and new directors will join the Board.

The following resolutions will be proposed at the Company's General Meeting:

Ordinary Resolutions

Resolution 1, which will be proposed as an ordinary resolution, seeks approval for the proposed Investing Policy.

Resolution 2, which will be proposed as an ordinary resolution, seeks approval for the subdivision of each Existing Ordinary Share into 1 New Ordinary Share and 1 New Deferred Share.

Resolution 3, which will be proposed as an ordinary resolution, seeks to grant the directors of the Company authority to allot New Ordinary Shares in the capital of the Company up to the nominal amount of GBP1,000,000.

Resolution 4, which will be proposed as an ordinary resolution, seeks approval for the Disposal.

Resolution 5, which will be proposed as an ordinary resolution, seeks approval of the Warrant Instrument.

Special Resolutions

Resolution 6, which will be proposed as a special resolution, seeks approval to change the name of the Company to Kennedy Ventures Plc.

Resolution 7, which will be proposed as a special resolution, seeks approval for the adoption of the New Articles and the creation of the New Deferred Shares.

Resolution 8, which will be proposed as a special resolution, seeks to dis-apply the statutory pre-emption rights over New Ordinary Shares authorised for allotment pursuant to Resolution 3.

Resolution 9, which will be proposed as a special resolution, seeks approval for the acquisition by the Company of all the New Deferred Shares for an aggregate consideration of GBP0.01.

Each of the Resolutions is conditional on each of the other Resolutions being passed.

A copy of the notice and form of proxy are available on the Company's website:

http://www.managedsupportservicesplc.com/

The letter from Rodney Mann, Non Executive Chairman, which is included in the notice of the General Meeting is set out below. Save where capitalised terms are expressly defined in this announcement, all words and phrases defined in the Circular shall have the same meaning when used in this announcement, except where the context otherwise requires.

The Directors of the issuer accept responsibility for this announcement.

--ENDS--

 
 FOR FURTHER INFORMATION, PLEASE CONTACT: 
 
  Managed Support Services plc: 
 Simon Beart, Chief Executive       07710 444 370 
  Piers Wilson, Finance Director     020 7280 0953 
 
  Cenkos Securities plc: 
 Nick Wells / Stephen Keys          020 7397 1949 
 
  Rivington Street Corporate Finance Limited: 
  Jon Levinson / Tom Stockton 020 7562 3365 
 
 

To Shareholders and, for information only, holders of Existing Warrants and the Existing Options

Proposals for:

Company Voluntary Arrangement

Disposal of Assets

Capital Reorganisation

Purchase of the Company's Deferred Shares for GBP0.01

Approval of Warrant Instrument

Adoption of New Articles of Association

Approval of Investing Policy

Change of Name

Placing of New Ordinary Shares by Rivington Street Corporate Finance

Introduction

MSS announced earlier today that it proposes to enter into a CVA, undertake the Capital Reorganisation and the Disposal, adopt the New Articles, purchase the New Deferred Shares, approve the Warrant Instrument, implement the placing of the Placing Shares and adopt an investing policy pursuant to Rule 15 of the AIM Rules. The Company is also proposing to change its name to Kennedy Ventures Plc.

Consequently, the Company is issuing this Circular to Shareholders setting out the background to and the reasons for the Proposals and where appropriate seeking Shareholders' approval. A notice convening a General Meeting for 11:00 a.m. on 25 May 2012 at the offices of Morrison & Foerster (UK) LLP, Citypoint, One Ropemaker Street, London EC2Y 9AW, to consider the Resolutions is accordingly set out at the end of this Circular.

Rivington Street Corporate Finance Limited has been appointed as Joint Broker to the Company while Cenkos Securities plc will continue to act as Nominated Adviser and Joint Broker.

Rivington Street Corporate Finance Limited has conditionally raised GBP500,000 before expenses by way of a subscription by Placees for 2,500,000,000 New Ordinary Shares at a price of GBP0.0002 per share. The Placing is conditional on admission of the Placing Shares to trading on AIM.

The proceeds of the Placing will be used to fund approximately GBP121,707 payment due to creditors pursuant to the CVA and to provide the Company with working capital to allow it to fulfil its investing policy, further details of which are set out below.

It is proposed that, should the Proposals be approved, Rodney Mann, Simon Beart and Piers Wilson will resign as directors with immediate effect following the conclusion of the General Meeting and the Proposed Directors will join the Board.

For the purposes of section 656 of the Act, the Company has suffered a serious loss of capital. This Circular contains the proposals of the Directors to deal with the serious loss of capital and the consequences for the Company.

Background to and Reasons for the CVA

Managed Support Services plc, formerly Worthington Nicholls Group plc floated on AIM in June 2006 at a share price of 50p and was primarily an installer of air conditioning systems in hotels and commercial premises. Over the next 12 months the company issued several positive press releases, the share price rose to a peak of c.170p and additional funds were raised.

In the last quarter of 2007 the share price fell, following adverse trading announcements which ultimately led to the appointment of a new management team. Thereafter, the Group undertook a significant restructuring and a reduction in operations. The commercial activities remaining, following these management actions, were in the building services markets. It was therefore decided to expand these residual activities by acquisition in order to create a nationwide supplier of building services, ideally with sufficient market scale to appeal to larger customers than the Group enjoyed at the time.

In pursuit of this policy, the Group undertook two principal acquisitions to increase the Group's building services activities, for a total net cost of GBP6.1m. The businesses acquired by the Group and the small existing operations were consolidated into two primary trading units, MSS Facilities Management, the building services activities of the Group and the Compliance Division which offered the consultancy based provision of health and safety advice and the provision of water treatment monitoring and legislative compliance with water related legislation.

In August 2011 the Board decided to dispose of the Compliance Division because the Group was not of sufficient scale to fund the development of two divisions by acquisition and therefore elected to concentrate the Group's management and financial resources on the growth of the MSS Facilities Management division. The disposal of the Compliance Division to Capita Symonds, a trading division of The Capita Group Plc, was completed and announced on 26 August 2011 for a total consideration of GBP3.85 million.

On 18 November 2011, the Company announced the intention to dispose of MSS Facilities Management. Whilst MSS Facilities Management had been profitable on a stand-alone basis, before Group costs, the Board believed that MSS Facilities Management had made insufficient progress particularly given the impact of the recession on its current markets, in creating a building services division of scale. The Board therefore decided that the prospects for MSS Facilities Management would be realised more rapidly if the division became part of a larger trading group.

Accordingly, the Board agreed terms for the sale of MSS Facilities Management with Rentokil Initial plc for a consideration of up to GBP6.5 million. However, the final, adjusted consideration was agreed at GBP4.1 million, an amount materially below the Board's expectations.

As a result, the Board decided that the Group would not be able to meet its long term liabilities, principally a long term lease entered into by the previous management. The Directors therefore reluctantly concluded that the best course of action was to call a meeting of the creditors and a meeting of the Shareholders for the purpose of considering and voting on a proposal for a CVA.

A CVA, if agreed, will allow the Company to avoid liquidation and to remain in existence. This will provide the Proposed Directors an opportunity to reposition the Company into an investing company, pursuant to the AIM Rules with an investing policy focused on the natural resources and energy sectors.

The Directors estimate that 3(rd) party creditors shortfall is GBP1,352,297, the majority of which is made up of a long term lease and a disputed legal claim, these two creditors amount to GBP1,033,334.

If the CVA is not approved, the Directors believe that the only alternative would be for the Company to be placed into liquidation.

Company Voluntary Arrangement

In order to facilitate the proposed future activity of the Company and allow it to raise the required capital, approximately 75 per cent of unsecured creditors have agreed to take 9 pence in the pound in cash. It is expected that the CVA will be approved at meetings to be held at 10:00 a.m. and 10:15 a.m. on 25 May 2012.

For the avoidance of doubt, the CVA would not result in any distribution being made to the Shareholders of the Company.

The Directors have requested that Paul Howard Finn of Finn Associates, Central Administration, Tong Hall, Tong, West Yorkshire, BD4 0RR act as Nominee in respect of the proposal of the directors for a Company Voluntary Arrangement. Mr Finn has provided his consent to Act and his Nominee's Report will be filed at Court as required.

A copy of the Directors' proposal incorporating the Nominee's Report will be available for download from the following website as of 8 May 2012:

www.thecreditorgateway.co.uk, password: ms78jd76fw

Should any Shareholder wish to receive a paper copy of the proposal please contact Finn Associates on 0870 330 1900, or email [e-mail], or in writing to the above noted address.

Notices of the Creditors' Meeting and Shareholder CVA Meeting, to be held on 25 May 2012, and a Form of Proxy enabling you to vote at the meetings may be found in the proposal document. Following completion these should be detached and returned to Rivington Street Corporate Finance, 3rd Floor, 3 London Wall Buildings, London Wall, London, EC2M 5SY.

The Disposal

Under the terms of the CVA, it is proposed that forthwith upon approval of the CVA steps will be taken to dispose of any remaining assets of the Subsidiaries which will be placed into Creditors' Voluntary Liquidation. The proceeds of the Disposal will be applied, at independent valuations, towards satisfying the indebtedness secured on the Disposable Assets. Those Subsidiaries which can be dissolved will be the subject of applications under section 1003 of the Act to the extent applications have not already been so made. It is expected that MSS Building Services Limited, MSS Health & Safety Limited and MSS Interiors Limited will need to enter a formal liquidation process given that they have third party liabilities which may prevent an application for voluntary dissolution.

The Disposal is considered a fundamental change in the business and therefore, pursuant to the AIM Rules, requires the consent of Shareholders. Resolution 7 seeks such an authority.

The Placing and Appointment of Broker and Issue of Warrants

RCSF has been appointed Joint Broker to the Company.

RSCF has conditionally raised GBP500,000 before expenses through the subscription of 2,500,000,000 New Ordinary Shares at a price of GBP0.0002 per share. The Placing is conditional on approval of the Resolutions and the approval of the CVA at meetings of the unsecured creditors and Shareholders. The net proceeds of the Placing are estimated at GBP307,000.

Conditional on the Proposals being approved by Shareholders at the General Meeting, the Company has agreed to issue Peterhouse Capital Limited a warrant which is exercisable over 3% of the Company's issued share capital from time to time. This warrant will be exercisable at the Placing Price until 20 March 2015.A summary of the principal terms of the Warrant Instrument is set out in Appendix II.

The proceeds of the Placing will be used to fund approximately GBP121,700 payment due to creditors pursuant to the CVA and provide the Company with working capital to allow it to fulfil its Investing Policy, further details of which are set out below.

Following completion of the CVA, Placing and the Capital Reorganisation, the Placees will, in aggregate, hold approximately 92.26% of the Enlarged Share Capital.

Shareholders should be aware that the Placing is conditional upon the passing of all of the Resolutions and the approval of the CVA. If the CVA is not approved or any of the Resolutions are not passed then the Placing will not proceed and the Company will have to consider commencing liquidation proceedings.

Change of Name

Subject to Shareholders' approval, it is proposed that the name of the Company be changed to Kennedy Ventures Plc, to reflect the new Investing Policy. Resolution 2 is proposed for the purposes of obtaining Shareholders' approval for the proposed name change.

Proposed Directors

Immediately following completion and subject to all the Resolutions being passed, the Directors intend to resign from the Board and waive all claims against the Company under their employment contracts.

It is proposed that immediately following the General Meeting, Mr Peter Redmond will join the Board as Executive Director. The Company expects to announce, prior to the General Meeting, a proposed Non-Executive Director who will join the Board following completion and subject to all the Resolutions being passed. The Company will make an announcement to the market accordingly.

Peter Redmond - Executive Director

Peter is an experienced corporate financier and has some 30 years' experience in corporate finance and venture capital. He has gained particular experience in the field of reverse takeovers and mergers. He became director of corporate finance at Durlacher Limited in 2003, then joined Merchant House Group PLC where he later became Chief Executive. He has been active in reconstructing a number of AIM companies which have subsequently acquired or established operating businesses.

Reverse transactions on which he has acted include Weatherly International PLC and IGas Resources PLC, in both cases acting as a director both before and after the reverse. Currently, Peter is Chairman of Leed Resources PLC, which is an investment company on AIM and a director of Black Eagle Capital PLC, which is an investment company on PLUS.

Capital Reorganisation

The Act prohibits the Company from issuing ordinary shares at a price below their nominal value. The price at which the Company has been able to raise additional capital in the Placing is less than the current nominal value of its Existing Ordinary Shares. Accordingly, it will be necessary to undertake a Capital Reorganisation to enable the Placing to proceed.

The existing ordinary share capital comprises 209,802,191 ordinary shares of GBP0.01 in issue. Resolution 3 to be proposed at the General Meeting proposes that each of the Existing Ordinary Shares of the Company be split into one New Ordinary Share and one New Deferred Share.

The New Ordinary Shares will continue to carry the same rights as attached to the Existing Ordinary Shares (save for the reduction in nominal value).

The New Deferred Shares will not entitle the holder thereof to receive notice of or attend and vote at any general meeting of the Company or to receive a dividend or other distribution or to participate in any return on capital on a winding up other than the nominal amount paid on such shares following a substantial distribution to holders of ordinary shares in the Company. Subject to the passing of the Resolutions, the Company will have the right to purchase all the issued New Deferred Shares from all Shareholders for an aggregate consideration of one penny. As such, the New Deferred Shares effectively have no value. Share certificates will not be issued in respect of the New Deferred Shares.

It is proposed that new Articles of Association of the Company be adopted to reflect the rights attaching to the New Deferred Shares. A copy of the new Articles of Association will be available for inspection at the General Meeting and will be made available on the Company's website at, www.managedsupportservicesplc.com. A summary of the New Articles is set out in Appendix I. The practical effect of this change, if implemented, will be that each Shareholder will receive the same number of New Ordinary Shares as they hold Existing Ordinary Shares, without diminution in rights pertaining to each share held. It is intended that GBP0.01 of the proceeds raised from the Placing will be applied to redeeming all of the New Deferred Shares.

Application for admission to trading on AIM of the Placing Shares to be issued in connection with the Proposals will be made to AIM. Admission is expected to occur on or around 28 May 2012. On Admission, trading of the Company's New Ordinary Shares as reorganised pursuant to the Capital Reorganisation will be restored on AIM.

Share capital

The Company is seeking authorisation to allot additional equity securities on a non pre-emptive basis up to the nominal amount of GBP1,000,000 (representing 10,000,000,000 New Ordinary Shares) to enable the Proposals to be implemented (including to allow the Proposed Directors the ability to issue further New Ordinary Shares pursuant to the Warrant Instrument).

Existing Options and Existing Warrants

At the date of this document there are 8,500,000 Existing Warrants of which Simon Beart, Chief Executive Officer and Piers Wilson, Group Finance Director hold 6,800,000 warrants. The Existing Warrants are exercisable until 2018 with an exercise price of 7.5p - 10p. As part of this transaction, Simon Beart and Piers Wilson have agreed to cancel their 6,800,000 warrants.

The Company also operated a share option scheme and Long Term Incentive Plan ("LTIP") that granted options over its ordinary shares on a discretionary basis to its Directors and employees. At the date of this document there are 18,687,500 Existing Options exercisable until 2016 with an exercise price of 12p - 30p. Simon Beart and Piers Wilson hold 14,831,250 options which they have agreed to cancel as part of this transaction.

Investing Policy

Resolution 1 to be proposed at the General Meeting proposes the adoption of the new Investing Policy.

It is proposed by the New Directors that the Company's Investing Policy will be to invest principally, but not exclusively in the resources and energy sectors. The Company will initially focus on projects located in Asia but will also consider investments in other geographical regions. The Company may be either an active investor and acquire control of a single company or it may acquire non-controlling shareholdings. Once a target has been identified, additional funds may need to be raised by the Company to complete a transaction.

The proposed investments to be made by the Company may be in either quoted or unquoted securities; made by direct acquisition; may be in companies, partnerships, joint ventures; or direct interests in projects and can be at any stage of development. The Company's equity interest in a proposed investment may range from a minority position to 100 per cent. ownership.

The Company will identify and assess potential investment targets and where it believes further investigation is required, intends to appoint appropriately qualified advisers to assist.

The Company proposes to carry out a comprehensive and thorough project review process in which all material aspects of any potential investment will be subject to rigorous due diligence, as appropriate. It is likely that the Company's financial resources will be invested in a small number of projects or investments or potentially in just one investment which may be deemed to be a reverse takeover under the AIM Rules.

Where this is the case, it is intended to mitigate risk by undertaking an appropriate due diligence process. Any transaction constituting a reverse takeover under the AIM Rules will require shareholder approval. The possibility of building a broader portfolio of investment assets has not, however, been excluded.

The Company intends to deliver shareholder returns principally through capital growth rather than capital distribution via dividends. Given the nature of the Company's Investing Policy, the Company does not intend to make regular periodic disclosures or calculations of net asset value.

The proceeds of the Placing will enable the Company to take initial steps to implement this new strategy and it is likely that the Company will undertake a further fundraising in the future to provide additional capital for the Company.

The Proposed Directors believe that their broad collective experience together with their extensive network of contacts will assist them in the identification, evaluation and funding of suitable investment opportunities. When necessary, other external professionals will be engaged to assist in the due diligence of prospective opportunities. The Proposed Directors will also consider appointing additional directors with relevant experience if the need arises.

The objective of the Proposed Directors is to generate capital appreciation and any income generated by the Company will be applied to cover costs or will be added to the funds available to further implement the Investment Policy. In view of this, it is unlikely that the Proposed Directors will recommend a dividend in the early years. However, they may recommend or declare dividends at some future date depending on the financial position of the Company.

The Proposed Directors confirm that, as required by the AIM Rules, they will at each annual general meeting of the Company seek shareholder approval of its Investing Policy.

Certificates

No new share or warrant certificates will be issued as a result of the Company's name change or the change in nominal value.

General Meeting

If any of the Resolutions are not passed, the General Meeting will be adjourned and the Board will consider the Company's future position in respect of its current trading and working capital position. The Board will seek immediate advice regarding insolvency proceedings in relation to its assets including its Subsidiaries.

The Notice convening the General Meeting at which the Resolutions will be proposed is set out at the back of this Circular. A summary of the Resolutions is set out below. Please note that unless all of the Resolutions are passed the proposals outlined in this circular will not proceed and the Directors will be forced to implement proposals to put the Company into liquidation.

Ordinary Resolutions

Resolution 1, which will be proposed as an ordinary resolution, seeks approval for the proposed Investing Policy.

Resolution 2, which will be proposed as an ordinary resolution, seeks approval for the subdivision of each Existing Ordinary Share into 1 New Ordinary Share and 1 New Deferred Share.

Resolution 3, which will be proposed as an ordinary resolution, seeks to grant the directors of the Company authority to allot New Ordinary Shares in the capital of the Company up to the nominal amount of GBP1,000,000.

Resolution 4, which will be proposed as an ordinary resolution, seeks approval for the Disposal.

Resolution 5, which will be proposed as an ordinary resolution, seeks approval of the Warrant Instrument.

Special Resolutions

Resolution 6, which will be proposed as a special resolution, seeks approval to change the name of the Company to Kennedy Ventures Plc.

Resolution 7, which will be proposed as a special resolution, seeks approval for the adoption of the New Articles and the creation of the New Deferred Shares.

Resolution 8, which will be proposed as a special resolution, seeks to dis-apply the statutory pre-emption rights over New Ordinary Shares authorised for allotment pursuant to Resolution 3.

Resolution 9, which will be proposed as a special resolution, seeks approval for the acquisition by the Company of all the New Deferred Shares for an aggregate consideration of GBP0.01.

Each of the Resolutions is conditional on each of the other Resolutions being passed.

Action to be taken

Shareholders will find a Form of Proxy enclosed for use at the General Meeting. Whether or not you intend to be present at the General Meeting, you are requested to complete and return the Form of Proxy in accordance with the instructions printed thereon as soon as possible. To be valid, completed Forms of Proxy must be received at the Company's registrars, Capita Registrars at PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU not later than 11:00 a.m. on 23 May 2012, being 48 hours before the time appointed for holding the General Meeting. Completion of the Form of Proxy will not preclude you from attending and voting at the General Meeting in person if you so wish.

Recommendation

The Directors consider the Proposals to be in the best interests of the Company, its creditors and the Shareholders as a whole as the only alternative may be liquidation which the Directors believe would deliver very little or no value to its creditors or Shareholders. The Directors therefore recommend that you vote in favour of the Resolutions as they intend to do themselves in respect of their shareholdings totalling 3,618,218 shares representing approximately 1.72 per cent of the existing share capital.

Yours faithfully,

Rodney Mann

Non Executive Chairman

for and on behalf of the Board

This information is provided by RNS

The company news service from the London Stock Exchange

END

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