Taihua Plc Proposed cancellation of Admission & Notice of AGM (5784B)

TIDMTAIH

RNS Number : 5784B

Taihua Plc

05 April 2017

Taihua plc

("Taihua" or the "Company")

Proposed cancellation of Admission to AIM

Notice of General Meeting

The Company announces that it will, today, be sending a Circular to Shareholders together with a notice convening a General Meeting to seek Shareholder's approval to cancel the admission of the Company's Ordinary Shares to trading on AIM and re-register the Company as a private limited company.

   1.         Introduction 

This Circular sets out the background to and reasons for the Delisting, additional information on the implications of the Delisting for the Company and its Shareholders, and why your Board believes the Delisting to be in the best interests of Shareholders as a whole. Having disclosed their interests in the Company and their intentions with regard to their individual holdings, the Directors also unanimously recommend the Delisting.

In addition to the Delisting, the Notice of GM will include the resolution in respect of the proposed re-registration of the Company as a private limited company ("Re-Registration").

   2.         The Delisting and Re-Registration 
   2.1        Reasons for the Delisting and Re-Registration 

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 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 the Company's businesses, the Directors are of the opinion that it is difficult for the Company to attract any or meaningful equity investment through its status as a quoted company on AIM and accordingly the Directors will be assessing potential alternatives to raise growth capital.

   --           There are significant professional fees associated with the Admission. 

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.

Once the Company has ceased to be listed on AIM, it would be easier to operate as a private limited company than as a public limited company and it is therefore also proposed that the Company should re-register as a private limited company. This will save a small amount of money on annual running costs and will also allow future corporate actions to be undertaken in a more straight forward and cost effective manner due to the more flexible regime which applies to private companies under the Companies Act.

   2.2        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.

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.

It is the Company's intention to cancel the CREST facility following the passing of the resolutions at the GM and arrangements will be made to send share certificates to those Shareholders (at their risk) currently using CREST.

   2.3        Delisting procedure 

Your 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 1 contained in the Notice of GM ("Resolution 1") seeks Shareholder approval for the Delisting. The Company has received irrevocable undertakings from Shareholders holding 68,380,262 Ordinary Shares, representing approximately 70.38 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 8 May 2017 at the earliest.

   2.4        Effect of the Re-registration 

Re-registration as a private limited company will not affect the way in which the Company is managed.

In order to achieve Re-registration, in accordance with section 97 of the Companies Act, it is necessary for Shareholders to pass a special resolution in a general meeting. Resolution 2 in the notice of the GM ("Resolution 2") deals with this and the making of consequential amendments to the Articles and such resolution is conditional upon Resolution 1 being passed and the Delisting taking place.

If both Resolution 1 and Resolution 2 are passed, the Re-registration of the Company will become effective upon the Registrar of Companies issuing a certificate of incorporation on re-registration which will be issued once the registrar is satisfied that no valid application can be made to cancel Resolution 2.

If Resolution1 to approve the Delisting is passed but Resolution 2 to approve the Re-registration is not passed, the Company will still proceed with the Delisting.

Shareholders should note that, even if the Delisting and Re-registration are approved and become effective, the Company will remain subject to the provisions of the City Code for a period of 10 years. The City Code provides an orderly framework within which takeovers and mergers are conducted and operates principally to ensure that shareholders are treated fairly and not denied an opportunity to decide on the merits of a takeover and that shareholders of the same class are afforded equivalent treatment. The City Code will however cease to apply to the Company 10 years after the Delisting becomes effective. However, the regulatory regime imposed through the AIM Rules, which applies solely to companies with shares admitted to trading on AIM, will no longer apply. Upon the Delisting becoming effective, WH Ireland will therefore cease to be nominated adviser and broker to the Company.

   3.         City Code 

The City Code is issued and administered by the Takeover Panel. The City Code currently applies to the Company and will continue to apply to the Company notwithstanding the Delisting. The City 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 City 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 City 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 City 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 City 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.

   4.         Intention to purchase Ordinary Shares from other Shareholders after the Delisting 

Mr Yunwu Liu and Mr Mingjian Yin, the Directors of the Company, and Mr Tao Ji, the major Shareholder of the Company, have signified their intent to purchase Ordinary Shares from other Shareholders after the Delisting.

Mr Yunwu Liu, Mr Mingjian Yin and Mr Tao Ji will approach other Shareholders separately to discuss such transactions after the Delisting.

   5.         The Board following Delisting and Corporate Governance 

It is intended that Mr Nicholas Lyth and Mr Chong Cao will resign as Directors of the Company on the date of Delisting and hence the Board will comprise Mr Yunwu Liu, Mr Mingjian Yin, Mr Chun Chai and Mr Zhaoyang Ma 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. As such, the Directors will:-

-- 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 annual accounts each year. 
   6.         General Meeting 

Set out at the end of the Circular is a notice convening the GM of the Company to be held at 11.00 a.m. (UK time) on 21 April 2017 at the offices of Athena Law, Gregs Building, 1 Booth Street, Manchester, M2 4DU. At this GM, the Resolutions will be proposed.

   7.         Irrevocable Undertakings 

The Company has received irrevocable undertakings from Yunwu Liu, Mingjian Yin, Tao Ji and Chun Chai to vote in favour of the Resolutions. These undertakings represent 70.38 per cent. of the voting rights in the Company.

   8.         Actions to be taken - GM 

Enclosed with the Circular is a Form of Proxy for use at the GM. Whether or not you propose to attend the GM in person, you are requested to complete and return the Form of Proxy to the office of the Company's Registrars Capita Asset Services, at PXS, 34 Beckenham Road, Beckenham, BR3 4TU in accordance with the instructions printed thereon as soon as possible and, in any event, so as to be received no later than11am on 19 April 2017. Completion and return of a Form of Proxy will not preclude you from attending the AGM and voting in person if you wish.

   9.         Recommendation 

The Directors consider that all the Resolutions to be considered at the GM, 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 you vote in favour of the Resolutions.

A copy of the AGM notice will be made available on the Company's website at www.taihuaplc.com.

Capitalised terms used but not otherwise defined in this announcement bear the meanings ascribed to them in the Circular.

Enquiries:

   Nicholas Lyth, Taihua plc                                                        07769 906 686 
   Katy Mitchell, WH Ireland Limited                                           [phone] 

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

 
 Notice given to London Stock         5 April 2017 
  Exchange notifying it of proposed 
  Delisting 
 
 Publication of the Circular          5 April 2017 
 
 Latest time and date for receipt     11.00 a.m. on 19 
  of Form of Proxy                     April 2017 
 
 General Meeting                      11.00 a.m. on 21 
                                       April 2017 
 
 Announcements of results of          21 April 2017 
  AGM 
 
 Expected last day of dealings        5 May 2017 
  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 8 May 2017 
  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.

This information is provided by RNS

The company news service from the London Stock Exchange

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April 05, 2017 02:00 ET (06:00 GMT)