Sportech PLC Publication of Circular and Notice of GM (8343M)

TIDMSPO

RNS Number : 8343M

Sportech PLC

19 September 2023

19 September 2023

SPORTECH PLC

('Sportech' or the 'Group')

Publication of Circular and Notice of General Meeting

Further to the announcement on 11 September 2023, Sportech, an international betting and technology business, announces that a circular (the "Circular") and notice of general meeting will be posted to shareholders today.

The Circular is in relation to the proposed cancellation of admission of Sportech's ordinary shares of 10p each to trading on AIM (the "Cancellation"), re-registration as a private limited company (the "Re-registration") and adoption of new articles of association (the "New Articles") announced on 11 September 2023. The Circular also contains a notice convening a general meeting (the "General Meeting") at which Shareholders are invited to consider and, if thought fit, approve the proposed Cancellation, Re-registration and associated adoption of the New Articles.

To be passed, the Cancellation Resolution requires, pursuant to Rule 41 of the AIM Rules, the approval of not less than 75 per cent. of the votes cast by Shareholders at the General Meeting. The Re-registration Resolution (which includes the adoption of the New Articles) also requires the approval of not less than 75 per cent. of the votes cast by Shareholders at the General Meeting.

A copy of the Circular and the New Articles will be made available on the Company's website at www.sportechplc.com later today.

The General Meeting will be held on 5 October 2023 at 9.00 a.m. at the offices of Dickson Minto, 16 Charlotte Square, Edinburgh, EH2 4DF.

Certain extracts of the Circular, providing further details of the proposals, are set out in the Appendix. Capitalised terms used in this announcement and the Appendix have the meanings set out in the Circular unless otherwise defined.

 
                   EXPECTED TIMETABLE OF PROPOSED DE-LISTING 
 Event                                             Time and/or date 
 Notice provided to the London                    14 September 2023 
  Stock Exchange to notify it 
  of the proposed Cancellation 
 Publication and posting of the                   19 September 2023 
  Circular 
 Latest time for receipt of proxy       9.00 a.m. on 3 October 2023 
  appointments in respect of the 
  General Meeting 
 General Meeting                        9.00 a.m. on 5 October 2023 
 Last day of dealings in Ordinary                   16 October 2023 
  Shares on AIM 
 Cancellation                          7.00 a.m. on 17 October 2023 
 Re-registration                    week commencing 23 October 2023 
 

For further information, please contact:

 
Sportech PLC                            [e-mail] 
 
 Richard McGuire, Executive Chairman 
 Clive Whiley, Senior Independent 
 Director 
 
  Peel Hunt (Nominated Adviser          Tel: [phone] 
  & Broker) 
 
  George Sellar 
  Andrew Clark 
  Lalit Bose 
 

APPIX

 
 Background to and reasons for the Cancellation and Re-registration 
 As Shareholders will be aware, the Company undertook a share 
  consolidation and subdivision and capital distribution in 
  July 2023 (the "Share Capital Reorganisation"). Following 
  the Share Capital Reorganisation becoming effective, the Board 
  undertook a thorough review of the corporate costs being borne 
  by the Company as a result of its status as a publicly traded 
  company. 
 Following that review, the Board has concluded that the Company's 
  continued status as a publicly traded company is not appropriate 
  given the scale of i ts business and, accordingly, the Cancellation 
  and Re-registration are in the best interests of the Company 
  and its Shareholders as a whole for reasons including those 
  set out below. 
 
   *    Costs and regulatory burden : The considerable cost 
        and management time and the legal and regulatory 
        burden associated with maintaining the Company's 
        admission to trading on AIM is, in the Board's 
        opinion, disproportionate to the benefits of the 
        Company's continued admission to trading on AIM. 
        These costs: (a) amounted to approximately GBP450,000 
        in the year ended 31 December 2022; (b) contributed 
        to the Group's pre-tax loss of GBP934,000 in that 
        period to a material extent; and (c) represented 
        approximately 28 per cent. of the Group' s adjusted 
        EBITDA of GBP1.6 million in that period. Given the 
        lower costs associated with private limited company 
        status, it is estimated that the Cancellation and 
        Re-registration will materially reduce the Company's 
        recurring administrative and adviser costs by 
        approximately GBP450,000 per annum, which the Board 
        believes can be better spent supporting and investing 
        in the Group's business. 
 
   *    Lack of liquidity : Notwithstanding the Share Capital 
        Reorganisation, there continues to be limited 
        liquidity in the Ordinary Shares. As a result, the 
        Board believes that Shareholders are not provided 
        with the opportunities to trade in meaningful volumes 
        or with frequency in an active market in Ordinary 
        Shares. 
 
   *    Market volatility : As a result of the limited 
        liquidity in Ordinary Shares described above, small 
        trades in Ordinary Shares can have a significant 
        impact on price and, therefore, market valuation, 
        which, the Board believes, in turn has a materially 
        adverse impact on: (a) the Company's status within 
        its industry; (b) the perception of the Company 
        amongst its customers, suppliers and other partners; 
        (c) staff morale; and (d) the Company's ability to 
        seek appropriate financing or realise an appropriate 
        value for any material future disposal(s). 
 
   *    Challenges related to the Company's position as a 
        micro-cap stock : Growing the Company, a UK micro-cap 
        stock, comes with a range of challenges, which, in 
        the Board's view, stem from the Company's small 
        market valuation, limited resources, and the dynamic 
        nature of the market. These challenges include, but 
        are not limited to: (a) access to capital; (b) a lack 
        of visibility among analysts, media and potential 
        investors; (c) increased volatility in Company 
        valuation unrelated to company performance leading to 
        higher risk perception; and (d) an aversion from 
        potential investors, seeking stability and a 
        valuation that aligns with Company performance. 
 
   *    Strategic flexibility : The Board believes that a 
        private limited company can take and implement 
        strategic decisions more quickly than a company which 
        is publicly traded as a result of the more flexible 
        regulatory regime that is applicable to a private 
        company. 
 Therefore, following careful consideration, the Board believes 
  that it is in the best interests of the Company and Shareholders 
  to seek the proposed Cancellation, Re-registration and associated 
  adoption of the New Articles. 
 

PROCESS FOR, AND PRINCIPAL EFFECTS OF, THE CANCELLATION

 
 Under the AIM Rules, the Company is required to give at least 
  20 Business Days' notice of the Cancellation. Additionally, 
  the Cancellation will not take effect until at least five 
  Business Days have passed following the passing of the Cancellation 
  Resolution. If the Cancellation Resolution is passed at the 
  General Meeting, it is proposed that the last day of trading 
  in Ordinary Shares on AIM will be 1 6 October 2023 and that 
  the Cancellation will take effect at 7.00 a.m. on 1 7 October 
  2023. 
 The Directors are aware that certain Shareholders may be unable 
  or unwilling to hold Ordinary Shares in the event that the 
  Cancellation is approved and becomes effective. Such Shareholders 
  should consider selling their interests in the market prior 
  to the Cancellation becoming effective. 
 The principal effects of the Cancellation will include the 
  following: 
 
   *    there will cease to be a formal market mechanism 
        enabling Shareholders to trade Ordinary Shares (other 
        than any limited off-market mechanism provided by the 
        Matched Bargain Facility); 
 
   *    it is possible that, following the publication of the 
        Circular, the liquidity and marketability of the 
        Ordinary Shares is reduced and their value adversely 
        affected (however, as set out above, the Directors 
        believe that the existing liquidity in the Ordinary 
        Shares is, in any event, limited); 
 
   *    the Ordinary Shares may be more difficult to sell 
        compared to shares of companies traded on AIM (or any 
        other recognised market or trading exchange); 
 
   *    in the absence of a formal market and quoted price, 
        it may be difficult for Shareholders to determine the 
        market value of their investment in the Company at 
        any given time; 
 
   *    the regulatory and financial reporting regime 
        applicable to companies whose shares are admitted to 
        trading on AIM will no longer apply; 
 
   *    Shareholders will no longer be afforded the 
        protections given by the AIM Rules, such as the 
        requirement to be notified of price sensitive 
        information or certain events and the requirement 
        that the Company seek shareholder approval for 
        certain corporate actions, where applicable, 
        including substantial transactions, reverse takeovers, 
        related party transactions and fundamental changes in 
        the Company's business, including certain 
        acquisitions and disposals; 
 
   *    the levels of disclosure and corporate governance 
        within the Company may not be as stringent as for a 
        company quoted on AIM; 
 
   *    the Company will no longer be subject to UK MAR 
        regulating inside information and other matters; 
 

   *    the Company will no longer be required to disclose 
        publicly any change in its major shareholdings under 
        the Disclosure Guidance and Transparency Rules; 
 
   *    Peel Hunt LLP will cease to be nominated adviser and 
        broker to the Company; 
 
   *    whilst the Company's CREST facility will remain in 
        place immediately following the Cancellation, the 
        Company's CREST facility may be cancelled in the 
        future and, although the Ordinary Shares will remain 
        transferable, they may cease to be transferable 
        through CREST (in which case, Shareholders who hold 
        Ordinary Shares in CREST will receive share 
        certificates); 
 
   *    stamp duty will be due on transfers of shares and 
        agreements to transfer shares unless a relevant 
        exemption or relief applies to a particular transfer; 
        and 
 
   *    the Cancellation and Re-registration may have 
        taxation consequences for Shareholders. Shareholders 
        who are in any doubt about their tax position should 
        consult their own professional independent tax 
        adviser. 
 The above considerations are not exhaustive, and Shareholders 
  should seek their own independent advice when assessing the 
  likely impact of the Cancellation on them. 
 For the avoidance of doubt, the Company will remain registered 
  with the Registrar of Companies in Scotland in accordance 
  with, and subject to, the Companies Act, notwithstanding the 
  Cancellation and Re-registration. 
  The Resolutions to be proposed at the General Meeting include 
  the adoption of the New Articles, which reflect the change 
  in the Company's status to a private limited company with 
  effect from the Re-registration. A summary of the principal 
  differences between the Current Articles and the proposed 
  New Articles is included in Part 2 of the Circular. A copy 
  of the New Articles can be viewed at https://www.sportechplc.com. 
 
 
 Board composition and provision of information, SERVICES 
  AND FACILITATES following the Cancellation 
 Board composition 
 There will be no change to the composition of the Board immediately 
  following the Cancellation and Re-registration although the 
  Board intends to keep its composition under review following 
  the Cancellation and Re-registration. In particular, the Company 
  is mindful of the need for its Board to be representative 
  of its operating divisions and geographic operating areas 
  and for the Company to take advantage of the flexibility which 
  its status as a private limited company will allow. 
 As described in the Circular (and, in particular, paragraph 
  8 of Part 1 of the Circular and Part 3 of the Circular), the 
  Takeover Code will continue to apply to the Company for a 
  period of at least 10 years from the date of Cancellation 
  if the Company is considered by the Panel to have its place 
  of central management and control in the United Kingdom, the 
  Channel Islands or the Isle of Man. This is known as the "residency 
  test". In determining whether the residency test is satisfied, 
  the Panel has regard primarily to whether a majority of a 
  company's directors are resident in these jurisdictions. If, 
  following any changes to the Board's composition, the residency 
  test is no longer considered by the Company to be met, the 
  Company will seek a determination from the Panel on the continued 
  applicability of the Takeover Code to the Company. In the 
  event that the Panel advises the Company that the "residency 
  test" is no longer met, the Company will seek to inform Shareholders 
  of this outcome. 
 Provision of information, services and facilities following 
  the Cancellation 
 The Company currently intends to continue to provide certain 
  information, services and facilities to Shareholders following 
  the Cancellation. The Company will: 
 
   *    continue to communicate information about the Company 
        (including annual accounts) to its Shareholders, as 
        required by the Companies Act; 
 
   *    continue, for at least 12 months following the 
        Cancellation, to maintain its website, 
        https://www.sportechplc.com (albeit the domain name 
        may be altered as a result of changes to the 
        Company's name in connection with the Cancellation 
        and Re-registration) and to post updates on the 
        website from time to time, although Shareholders 
        should be aware that there will be no obligation on 
        the Company to include all of the information 
        required under the Disclosure Guidance and 
        Transparency Rules, AIM Rule 26 or to update the 
        website as required by the AIM Rules; and 
 
   *    make available to Shareholders, through JP Jenkins, 
        the Matched Bargain Facility (as further described in 
        paragraph 5.2 of Part 1 of the Circular) which will 
        allow Shareholders to buy and sell Ordinary Shares on 
        a matched bargain basis following the Cancellation. 
 Transactions in the Ordinary Shares prior to and FOLLOWING 
  the Cancellation 
 Transactions prior to the Cancellation 
 Shareholders should note that they are able to continue trading 
  in the Ordinary Shares on AIM prior to the Cancellation. 
 If Shareholders wish to buy or sell Ordinary Shares on AIM 
  they must do so prior to the Cancellation becoming effective. 
  As noted above, in the event that Shareholders approve the 
  Cancellation, it is anticipated that the last day of dealings 
  in the Ordinary Shares on AIM will be 16 October 2023 and 
  that the effective date of the Cancellation will be on 17 
  October 2023. 
 Transactions following the Cancellation 
 
 The Directors are aware that Shareholders may wish to acquire 
  or dispose of Ordinary Shares in the Company following the 
  Cancellation. Should the Cancellation be approved by Shareholders 
  at the General Meeting, the Company will implement a matched 
  bargain facility with JP Jenkins which will allow Shareholders 
  to buy and sell Ordinary Shares on a matched bargain basis 
  following the Cancellation (the "Matched Bargain Facility"). 
 Under the Matched Bargain Facility, Shareholders (or persons 
  wishing to acquire Ordinary Shares) will be able to provide 
  an indication to JP Jenkins, through their stockbroker (JP 
  Jenkins is unable to deal directly with individuals), of the 
  number of Ordinary Shares that they are willing to buy or 
  sell and the price at which they are willing to do so. In 
  the event that JP Jenkins is able to match that buy or sell 
  order with an opposite sell or buy instruction, JP Jenkins 
  would contact both parties and carry out the trade. 
 Should the Cancellation become effective, details of the Matched 
  Bargain Facility will be made available on the Company's website. 
 The Matched Bargain Facility is expected to operate for a 
  minimum period of twelve months from the Cancellation. The 
  Directors' current intention is that it will continue beyond 
  that time but Shareholders should note that it could be withdrawn 
  and, therefore, inhibit the ability to trade the Ordinary 
  Shares. Further details will be communicated to Shareholders 
  via the Company's website at the relevant time. 
 Current Trading 
 On 11 September 2023, the Company released a trading update 
  for the six months ended 30 June 2023 which contained the 
  following information. 
 "The Group has continued to deliver solid operational performance, 
  marked by stable revenue growth and a renewed emphasis on 
  margin enhancement. This strategic approach has led to a 7.2% 
  increase in gross profit and a notably improved Adjusted EBITDA 
  performance, in comparison to the same period of the previous 
  year. 
  The Group's Adjusted EBITDA demonstrated positive momentum, 
  reaching GBP0.9 million (GBP0.4 million in H1 2022). This 
  improvement was fuelled by several key factors, most notably 
  growth in contributions from US gaming and a sustained focus 
  on optimizing operational and corporate costs." 
 Re-registration 
 As set out above, following the Cancellation, the Directors 
  believe that the requirements and associated costs of the 
  Company maintaining its public company status will be difficult 
  to justify and that the Company will benefit from the more 
  flexible requirements and lower costs associated with private 
  limited company status. It is, therefore, proposed to re-register 
  the Company as a private limited company. In connection with 
  the Re-registration, it is proposed that the New Articles 
  be adopted to reflect the change in the Company's status to 
  a private limited company. The principal effects of the Re-registration 
  and the adoption of the New Articles on the rights and obligations 
  of Shareholders and the Company are summarised in Part 2 of 
  the Circular. 
 An application will be made to the Registrar of Companies 
  for the Company to be re-registered as a private limited company. 
  Re-registration will take effect when the Registrar of Companies 
  issues a Certificate of Incorporation on Re-registration. 
  The Registrar of Companies will issue the Certificate of Incorporation 
  on Re-registration when it is satisfied that no valid application 
  can be made to cancel the resolution to re-register as a private 
  limited company or that any such application to cancel the 
  resolution to re-register as a private limited company has 
  been determined and confirmed by a court of competent jurisdiction. 
 Takeover Code 
 Notwithstanding the Cancellation and Re-registration, the 
  Company will continue to be subject to the terms of the Takeover 
  Code for a period of at least 10 years following the Cancellation 
  (subject to the Re-registration occurring). However, the Takeover 
  Code may cease to apply earlier, if a majority of the directors 
  of the Company cease to be resident in the United Kingdom, 
  the Channel Islands or the Isle of Man. 
  The Takeover Code applies to all offers for companies which 

  have their registered offices in the United Kingdom, the Channel 
  Islands or the Isle of Man if any of their equity share capital 
  or other transferable securities carrying voting rights are 
  admitted to trading on a regulated market or a multilateral 
  trading facility in the United Kingdom or on any stock exchange 
  in the Channel Islands or the Isle of Man. 
 The Takeover Code also applies to all offers for companies 
  (both public and private) which have their registered offices 
  in the United Kingdom, the Channel Islands or the Isle of 
  Man and which are considered by the Panel to have their place 
  of central management and control in the United Kingdom, the 
  Channel Islands or the Isle of Man, but in relation to private 
  companies only if one of a number of conditions are met, including 
  that any of the company's equity share capital or other transferable 
  securities carrying voting rights have been admitted to trading 
  on a regulated market or a multilateral trading facility in 
  the United Kingdom or on any stock exchange in the Channel 
  Islands or the Isle of Man at any time in the preceding 10 
  years. 
 If the Cancellation and Re-registration are approved by Shareholders 
  at the General Meeting, the Company will be re-registered 
  as a private company and its securities will no longer be 
  admitted to trading on a regulated market or a multilateral 
  trading facility in the United Kingdom. In these circumstances, 
  the Takeover Code will only apply to the Company if it is 
  considered by the Panel to have its place of central management 
  and control in the United Kingdom, the Channel Islands or 
  the Isle of Man. This is known as the "residency test". In 
  determining whether the residency test is satisfied, the Panel 
  has regard primarily to whether a majority of a company's 
  directors are resident in these jurisdictions. 
  On the basis of the current residency of the Directors, the 
  Company will have its place of central management and control 
  in the United Kingdom following the Cancellation. In light 
  of the Re-registration, and provided that the Company's place 
  of central management and control continues to be considered 
  by the Panel to be in the United Kingdom, the Takeover Code 
  will continue to apply to the Company for the period of 10 
  years following the Cancellation, including the requirement 
  for a mandatory cash offer to be made if either: 
   *    a person acquires an interest in shares which, when 
        taken together with the shares in which persons 
        acting in concert with it are interested, increases 
        the percentage of shares carrying voting rights in 
        which it is interested to 30 per cent. or more; or 
 
 
   *    a person, together with persons acting in concert 
        with it, is interested in shares which in the 
        aggregate carry not less than 30 per cent. of the 
        voting rights of a company but does not hold shares 
        carrying more than 50 per cent. of such voting rights 
        and such person, or any person acting in concert with 
        it, acquires an interest in any other shares which 
        increases the percentage of shares carrying voting 
        rights in which it is interested. 
 In particular, under Rule 9 of the Takeover Code, when any 
  person or group of persons acting in concert, individually 
  or collectively, are interested in shares which in aggregate 
  carry not less than 30 per cent. of the voting rights of a 
  company but do not hold shares carrying more than 50 per cent. 
  of the voting rights of a company and such person or any person 
  acting in concert with him acquires an interest in any other 
  shares, which increases the percentage of the shares carrying 
  voting rights in which he is interested, then that person 
  or group of persons is normally required by the Panel to make 
  a general offer in cash to all shareholders of that company 
  at the highest price paid by them for any interest in shares 
  in that company during the previous 12 months. Rule 9 of the 
  Takeover Code further provides that where any person, together 
  with persons acting in concert with him, holds over 50 per 
  cent. of the voting rights of a company to which the Takeover 
  Code applies and acquires additional shares which carry voting 
  rights, then that person will not generally be required to 
  make a general offer to the other shareholders to acquire 
  the balance of the shares not held by that person or his concert 
  parties. 
  Following the expiry of the 10 year period from the date of 
  the Cancellation (subject to the Re-registration occurring), 
  or such other date on which the Takeover Code ceases to apply 
  to the Company, the Company will no longer be subject to the 
  provisions of the Takeover Code. 
  Brief details of the Panel, and of the protections afforded 
  to Shareholders by the Takeover Code are set out in Part 3 
  of the Circular. 
 Process for Cancellation 
 Under the AIM Rules, it is a requirement that the Cancellation 
  must be approved by Shareholders holding not less than 75 
  per cent. of votes cast by Shareholders at the General Meeting. 
  Accordingly, the Notice of General Meeting set out in Part 
  4 of the Circular contains a special resolution to approve 
  the Cancellation. 
 Furthermore, Rule 41 of the AIM Rules requires any AIM company 
  that wishes the London Stock Exchange to cancel the admission 
  of its shares to trading on AIM to notify shareholders and 
  to separately inform the London Stock Exchange of its preferred 
  cancellation date at least 20 Business Days prior to such 
  date. In accordance with AIM Rule 41, the Directors have notified 
  the London Stock Exchange of the Company's intention, subject 
  to the Cancellation Resolution being passed at the General 
  Meeting, to cancel the Company's admission of the Ordinary 
  Shares to trading on AIM on 17 October 2023. Accordingly, 
  if the Cancellation Resolution is passed, the Cancellation 
  will become effective at 7.00 a.m. on 17 October 2023. If 
  the Cancellation becomes effective, Peel Hunt LLP will cease 
  to be nominated adviser and broker to the Company and the 
  Company will no longer be required to comply with the AIM 
  Rules. 
  ACTION TO BE TAKEN IN RELATION TO THE GENERAL MEETING 
  In line with the Company's approach at annual general meetings, 
  hard copy proxy forms are not being sent to Shareholders in 
  connection with the General Meeting. The Company would like 
  to encourage shareholders to vote electronically or appoint 
  a proxy electronically, which can be done via www.signalshares.com, 
  via the LinkVote+ app or, where Ordinary Shares are held in 
  CREST, via CREST. Certain shareholders may also be able to 
  appoint a proxy electronically via the Proximity platform. 
  Shareholders may also request a hard copy form of proxy directly 
  from the Company's registrar, Link Group, by calling 0371 
  664 0300 or by emailing [e-mail]. 
  Notwithstanding the method of appointment, proxy appointments 
  must be received by Link Group by 9.00 a.m. on 3 October 2023, 
  being 48 hours before the time fixed for the General Meeting. 
  Further details of the proxy appointment methods are set out 
  in the Notice of General Meeting in Part 4 of the Circular. 
  Shareholders are encouraged to appoint the chair of the General 
  Meeting as their proxy with directions as to how to cast their 
  vote on the Resolutions proposed. For further details on how 
  to submit a proxy vote, see the notes to the Notice of General 
  Meeting at Part 4 of the Circular. 
  The appointment of a proxy will not preclude Shareholders 
  from attending and voting at the General Meeting in person 
  should they so wish. All Shareholders planning to attend the 
  General Meeting in person are, however, requested to confirm 
  their attendance by emailing [e-mail] (marked for 
  the attention of the Company Secretary) by no later than 9.00 
  a.m. on 3 October 2023. 
  RECOMMENDATION 
  The Directors consider that each of the Cancellation Resolution 
  and the Re-registration Resolution is in the best interests 
  of the Company and its shareholders as a whole. Accordingly, 
  the Directors unanimously recommend that Shareholders vote 
  in favour of the resolutions at the General Meeting as Richard 
  McGuire and Clive Whiley (being the only Directors who are 
  interested in Ordinary Shares) intend to do in respect of 
  their own beneficial holdings, insofar as they are able to 
  control or direct the exercise of the voting rights attaching 
  to the relevant Ordinary Shares. 
 

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September 19, 2023 02:00 ET (06:00 GMT)