Financial Restructuring

 

TIDMNDP 
 
RNS Number : 2660S 
Nipson Digital Printing Systems PLC 
14 May 2009 
 

For Immediate Release 
14 May 2009 
 
 
NIPSON DIGITAL PRINTING SYSTEMS PLC 
Financial restructuring 
Background 
On 14 October 2008, Nipson Digital Printing Systems Plc ("Nipson" or the 
"Company"), announced that Polar Investments Ltd ("Polar"), which at the time 
was the parent company of the Nipson group, had assigned to Creacorp NV, a 
Belgian incorporated company ("Creacorp") a number of loans owed by Nipson SAS, 
the main operating company of the Nipson group, to Polar and Creacorp took a 
call option over all but 10% of the shares in Nipson held by Polar.  In 
addition, new directors who were connected with Creacorp were appointed to the 
board of Nipson on that date. 
On 28 October 2008, Nipson announced that its main operating subsidiary, Nipson 
SAS, had filed for the French "Redressement Judiciaire" in the light of the 
financial difficulties which it had been experiencing, pending the agreement 
with the French Courts for a restructuring plan. 
The French Administrator and the Court overseeing the "Redressement Judiciaire" 
procedure now require a commitment from Nipson and Creacorp to restructure the 
capital and debt position, as part of the overall reorganisation plan and in 
order to continue the procedure with a view to returning the restructured 
business back to the control of Nipson. 
On 7 April 2009, Nipson announced that the reorganisation plan would necessitate 
the forgiveness/conversion of debt and that this was likely to be a Related 
Party Transaction under the AIM Rules. 
As part of the reorganisation the French Court has required additional financial 
commitments from Creacorp to Nipson SAS, and Creacorp has committed to provide 
those funds.  In addition, Creacorp has agreed to provide additional funding in 
the form of an interest-free, unsecured loan with no fixed repayment date to 
Nipson of EUR275,000, of which EUR75,000 has been paid. 
In addition, a wholly-owned subsidiary of Creacorp (Nipson International NV) has 
invested in a production facility in Germany, in order to secure the continuity 
of Nipson SAS and to provide a production facility for the future production of 
Nipson equipment. In order to allow Nipson SAS to create additional cash and to 
support its operations, this subsidiary has committed to buy stock from Nipson 
SAS for EUR800,000 cash, which represents the book value of the work in process 
stock.  As a result of this transaction all other principal activities of the 
Nipson Group will stay with Nipson SAS. Nipson International NV will undertake 
production as a sub-contractor of Nipson SAS. The arrangements for the 
manufacturing agreement with Nipson SAS are yet to be formally agreed but will 
be on normal commercial terms and when finalised the agreement will be treated 
as appropriate as a Related Party Transaction in accordance with the AIM Rules. 
The Board is now pleased to be able to announce that Nipson has agreed a 
restructuring plan with Creacorp, which the French Court will present to the 
creditors of Nipson SAS.  Accordingly, Nipson anticipates that the Redressement 
Judiciaire procedure relating to Nipson SAS could be concluded within the 
timetable set by the Court, being at or shortly after the next scheduled meeting 
with the French Court on 23 June 2009, and that the Group could thereafter be 
able to resume its operations under the full control of the Board. 
Certain other proposals, which may constitute Related Party Transactions under 
AIM Rule 13, have yet to be formalised, approved or decided upon.  These include 
the possible sale of the French Service business and the transfer of 
subsidiaries of Nipson SAS to Creacorp for a consideration.  Any such 
transactions will be reviewed by the Independent Directors in consultation with 
the Company's Nominated Adviser. 
Details of the transaction 
Nipson has today entered into an agreement (the "Debt Restructuring Agreement") 
with its main operating subsidiary, Nipson SAS, a company incorporated in 
France, and Creacorp, the beneficial owner of 22,992,709 ordinary shares in the 
capital of Nipson ("Ordinary Shares"), representing 43.96% of the current issued 
and outstanding Ordinary Shares, pursuant to which: 
  *  of the total amount owed by Nipson SAS to Nipson of EUR7,613,606, Nipson has 
  agreed to capitalise 6% (EUR456,816) and waive the remaining 94% (EUR7,156,790); and 
 
  *  of the total amount owed by Nipson SAS to Creacorp of EUR14,551,065, Creacorp has agreed to capitalise 6% (EUR873,064) and waive the remaining 94% (EUR13,678,001).
 
As a result of the capitalisation of debt set out in the Debt Restructuring 
Agreement, Nipson's percentage holding of shares in the capital of Nipson SAS 
will be reduced from 100% to 52.3%, with Creacorp holding the remaining 47.7%. 
The Debt Restructuring Agreement has been entered into as part of a proposal 
placed before the French court at Belfort by the management of Nipson SAS as 
part of the French administration ("Redressement Judiciaire") procedures which 
are ongoing in relation to Nipson SAS. The main other measures contained in the 
proposal include: 
  *  a commitment letter to Nipson SAS from Creacorp, and a commitment in the Debt 
  Restructuring Agreement, stating it is willing to supply a loan of EUR1 million to 
  Nipson SAS in 2009 when requested by the board of Nipson SAS, subject to leaving 
  the procedure of Redressement Judiciaire and subject to any insolvency of Nipson 
  SAS or Nipson; 
  *  a commitment letter to Nipson SAS from Nipson International NV, a 100% 
  subsidiary of Creacorp, stating it is willing to supply a loan of EUR1 million to 
  Nipson SAS in 2010 and EUR0.5 million in 2011, when requested by Nipson SAS, 
  subject to leaving the procedure of Redressement Judiciaire and subject to any 
  insolvency of Nipson SAS or Nipson; 
 
No other alternatives were available for the Board to restructure the capital 
and debt position than the proposed restructuring set out above. 
As a result of this transaction, Nipson retains its majority position in Nipson 
SAS, which secures management fees to flow from Nipson SAS to Nipson.  The board 
of directors and management structures of Nipson SAS will not be changed. 
As set out above, a wholly-owned subsidiary of Creacorp has invested in a 
production facility in Germany, to host the future production of Nipson 
equipment.  In order to allow Nipson SAS to create additional cash and to 
support its operations, this subsidiary has committed to buy the work in process 
stock at its book value from Nipson SAS for EUR800,000 cash (the "Stock 
Acquisition"). 
Related party transactions 
The Debt Restructuring Agreement (to which the Company is a party), the 
commitment letters from Creacorp and Nipson International NV, the Stock 
Acquisition and the loan from Creacorp to Nipson are Related Party Transactions 
under AIM Rule 13 as Creacorp currently has beneficial entitlement to 43.96% of 
the Company's issued and outstanding Ordinary Shares. 
In the light of the present financial position of the Company and Nipson SAS and 
taking into account the severe market conditions which has made it impossible 
for the business to raise any new equity or debt finance from external sources, 
the Board considers that the transactions as set out above represent the only 
realistic way of avoiding an insolvent liquidation of the Group. 
Messrs. Marc Maes, Chairman of Nipson, Guillaume Dumarey and Ghislain Segard, 
both executive directors of Nipson, are connected with Creacorp and accordingly 
are treated as being involved in the Debt Restructuring Agreement, the 
commitment letters from Creacorp and Nipson International NV, the Stock 
Acquisition and the EUR275,000 interest free loan from Creacorp to Nipson for the 
purposes of AIM Rule 13. 
Therefore, the remaining Directors, not being interested in these transactions 
consider, having consulted the Company's Nominated Adviser, that the terms of 
the Debt Restructuring Agreement, the commitment letters from Creacorp and 
Nipson International NV, the Stock Acquisition and the EUR275,000 interest free 
loan from Creacorp to Nipson are fair and reasonable insofar as Shareholders are 
concerned. 
Buyback arrangement for outside shareholders 
In order to provide some certainty for the shareholders of the Company, Creacorp 
NV has agreed to make an offer to acquire all of the actually existing 
pre-dilution shares, excluding any such shares not in public hands under the AIM 
Rules as at 1 April 2009 (i.e. excluding any shares held by Creacorp or over 
which Creacorp holds the voting rights, or held by any director of the Company). 
Also to be excluded are any shares that will be created in future capital 
increases or conversion transactions.  The purchase price will be 1.25 pence per 
share, to be purchased at the date of 18 months after the next AGM, subject to 
the fact that the Company or Nipson SAS will not go bankrupt. 
Board 
Mr Robert Cahill as previously announced will step down as Group Finance 
Director.  However he will remain on the Board as an independent non-executive 
director.  The directors of Nipson Plc are in the process of appointing a new 
Finance Director, and an announcement will be made in due course once that 
appointment is finalised.  Any changes to the Board will be announced in 
accordance with the AIM Rules. 
Strategy for the Group and ongoing financing 
The present intention of the Directors is to finalise the reorganisation of the 
Nipson Group, at which point the future strategy for Nipson will be determined 
in more detail.  The aim of the transactions set out above is to enable the 
Nipson Group to continue its existing business on a refinanced and sound 
financial footing, and to build the Group in the future. 
Takeover Code 
Although the Company is incorporated in England, the place of central management 
of the Company is currently located outside of the UK, the Channel Islands and 
the Isle of Man because the main place of business is in France.  Accordingly, 
the Company is one to which paragraph 3(a)(ii) of the Takeover Code does not 
apply, and the Panel has confirmed that the Company is not subject to the 
Takeover Code and shareholders will not be afforded any protection under the 
Code. 
If circumstances change, including if changes to the Board are made, the Company 
will consult with the Panel to ascertain whether this will affect the central 
place of management of the Company.  If the Panel determines that, as a result 
of such changes, the Takeover Code becomes applicable to the Company, 
an announcement will be made. 
For further information please contact: 
Robert Cahill 
Independent Director on behalf of the Board of Nipson DPS plc 
Tel. : [phone] 
 
 
Roland Cornish/Rosalind Hill Abrahams 
Beaumont Cornish Limited 
Tel. : [phone] 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 MSCSFSFELSUSELI