Proposed Delisting on AIM

RNS Number : 3541Y

Kenetics Group Limited

22 December 2010

 



22 December 2010

Kenetics Group Limited

("Kenetics" or "the Company")

Proposed Cancellation of Admission to Trading on AIM

Kenetics, the Radio Frequency Identification ("RFID") group focussed on security and RFID systems and products, today announces that it is seeking Shareholder approval for the cancellation of admission to trading on AIM of its Ordinary Shares.

Introduction

Kenetics' ordinary shares were admitted to trading on AIM on 18 August 2006 and for some time now the Board has been concerned that trading in the Company's shares has become progressively more limited. The reasons for the limited trading in Kenetics' shares, and those of many other small cap companies, have been widely discussed in the press and elsewhere.

The Board believes that the Company's share price does not reflect the value of the underlying business and that the Company is prevented from raising the funds required to develop its current and planned activities. As a result, the Board now announces its intention to seek the authority of Shareholders to obtain a cancellation of the Company's Ordinary Shares from trading on AIM.

A General Meeting has been convened at the offices of Stephenson Harwood, One St. Paul's Churchyard, London, EC4M 8SH for 8.30 a.m. on 18 January 2011, at which Shareholders will be asked to consider, and if thought fit, to approve a Resolution in order to implement the Delisting. 

Rationale for the Delisting

The Directors have concluded that a resolution should be put to Shareholders to approve a Delisting for the following reasons:

·     there is a clear lack of liquidity in the Ordinary Shares of the Company which, in the Directors' view, has contributed to the Company being undervalued on AIM;

·     the bid/offer spread at which a market is made in the Company's Ordinary Shares has perpetuated the lack of liquidity and the Directors believe this is unlikely to be resolved, given the size of the Company and its lack of appeal to institutional investors;

·     the ability to secure new equity participation at levels which fairly reflect the existing equity value is significantly undermined by the low share price at a time when the Company has a pressing need to raise funds; and

·     the costs associated with maintaining a listing on AIM are now disproportionate to value provided by the listing, and management expects savings arising from the Delisting will amount to approximately £125,000 per annum.

Progress since admission to AIM

The Company has made significant progress since being admitted to trading on AIM in August 2006. A new range of GEN2 products have been developed and improvements have been made to its existing industrial product range, including the Ultra High Frequency (UHF) RFID readers. These products are currently being sold in the USA, Europe and Japan.

In addition to continuing to enhance its UHF technology platform and developing a new generation of RFID products, in early 2008 the Company began investing in the development of Advanced Fare Collection (AFC) technologies. Strategically, Kenetics has identified a growing market towards automation in the public mass transport sector, particularly through the use of AFC in rail and bus systems. Since 2009, Kenetics has focused mainly on developing Contactless Smart Card (CSC) readers and On Board Bus Equipment (OBE), which form the backbone for entry into the AFC systems market. Since it first began to invest in the development of AFC technologies, the Company has made significant progress in its R&D efforts and has developed what the Directors believe to be some technologically advanced innovations for the rail and bus systems.

The development work for the CSC readers and the OBE systems is now completed and both are currently undergoing commercial trials in both the rail and bus systems under two contracts for the Singapore Land Transport Authority (LTA).

Board deliberations

Against this background, the Board, some of whom are also major Shareholders, has spent significant time evaluating different strategic alternatives for the Company. These deliberations have taken into account the current financial position of the Company, the Company's growth strategy, the current financial climate and the relative benefits compared to the ongoing costs of maintaining a listing on AIM. The Board has also taken into account the views of the Company's large shareholders, as well as assessing the position of the Company's shareholders as a whole.

Following careful consideration of these factors with its advisers, the Board has decided that the disadvantages and the ongoing costs of maintaining a listing on AIM far outweigh the benefits that the listing on AIM provides to the Company

Irrevocable Undertakings

Each Director who holds Ordinary Shares and certain other significant Shareholders have confirmed to the Company that they will be voting in favour of the Resolution in respect of the Ordinary Shares held by them.  The total number of Ordinary Shares covered by these irrevocable undertakings is 32,215,480 Ordinary Shares representing 78.86 per cent. of the Company's issued share capital.

Future Opportunity

The Board's objective is to realise an exit for Shareholders within a three to five year period following cancellation of it Ordinary Shares from trading on AIM. The Board will consider all forms of exit for its Shareholders, including a trade sale, private equity buyout or public market listing with the aim to maximize Shareholder value.

Share dealing following the Delisting

Whilst the Board believes that the Delisting is in the interests of Shareholders as a whole, it recognises that Delisting will make it more difficult for Shareholders to buy and sell Ordinary Shares should they so wish. Accordingly, the Board intends to set up a matched bargain arrangement, provided by SVS Securities, to enable Shareholders to trade the Ordinary Shares. Under this facility, it is intended that Shareholders or persons wishing to trade Ordinary Shares will be able to leave an indication with SVS Securities that they are prepared to buy or sell at an agreed price. In the event that the matched bargain settlement facility is able to match that indication with an opposite sell or buy instruction, SVS Securities will contact both parties to effect the bargain. Shareholders who do not have their own broker may need to register with SVS Securities as a new client. This can take some time to process and therefore Shareholders who consider they are likely to use this facility are encouraged to commence it at the earliest opportunity. Once the facility has been arranged, details will be made available to Shareholders on the Company's website at www.kenetics-group.com.

Recommendation

The Directors believe that the cancellation from admission to AIM is in the best interests of Shareholders as a whole. The Directors therefore unanimously recommend that Shareholders vote in favour of the Resolution as they intend to do in respect of their own interests in 27,410,575 Ordinary Shares in aggregate, representing approximately 67.10 per cent. of the Ordinary Shares currently in issue.

Circular

A circular is today being posted to Shareholders with a Notice of General Meeting to approve the Delisting and is available on the Company's website www.kenetics-group.com.

For further information, please contact:
Ken Wong, Chairman and CEO		Dominique Doussot
Kenetics Group Limited		ZAI Corporate Finance
Tel: [phone]		(Nominated Advisor)
Website:www.kenetics-group.com		Tel: [phone]

Alex Mattey / Ian Callaway	Jeremy Carey / Andrew Dunn
SVS Securities	Tavistock Communications
(Broker)
Tel: [phone]	Tel: [phone]

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Announcement of cancellation of admission to AIM	22 December 2011
Latest time and date for receipt of Forms of Proxy for the General Meeting	8.30 a.m. on 17 January 2011
General Meeting of Kenetics Group Ltd	8.30 a.m. on 18 January 2011
Cancellation of the admission to trading on AIM of the Ordinary Shares	28 January 2011

DEFINITIONS

The following definitions apply throughout the document unless the context requires otherwise:

"1985 Act"	the Companies Act 1985 (as amended)
"2006 Act"	the Companies Act 2006
"Act"	the 1985 Act and the 2006 Act
"Admission"	the admission of the Ordinary Shares to trading on AIM in accordance with the AIM Rules
"AIM"	the market of that name, operated by the London Stock Exchange plc
"AIM Rules"	the AIM Rules for Companies published by the London Stock Exchange plc from time to time
"Board" or "Directors"	the directors of the Company, whose names appear on page 3 of this document
"Business Day"	any day, other than a Saturday, Sunday or UK Bank Holiday
"Company" or "Kenetics"	Kenetics Group Ltd
"CREST"	the computer based system for the transfer of uncertificated securities operated by Euroclear
"Delisting"	the proposed cancellation of Admission
"Euroclear"	Euroclear UK and Ireland Limited
"Form of Proxy"	the form of proxy accompanying this document for use by Shareholders at the General Meeting
"General Meeting"	the general meeting of the Company to be held at the offices of Stephenson Harwood, One St. Paul's Churchyard, London, EC4M 8SH  at 10.00 a.m. on [18] January 2011 (notice of which is set out at the end of this document)
"Notice"	the notice of the General Meeting which is set out at the end of this document
"Ordinary Shares"	the ordinary shares of 1p each in the share capital of the Company
"Registrars"	Computershare Investor Services (Jersey) Limited of Queensway House, Hilgrove Street, St Helier, Jersey JE1 1ES
"Resolution"	the resolution to be proposed at the General Meeting, as set out in the Notice
"Restricted Jurisdictions"	the United States, Canada, Australia, New Zealand, South Africa or Japan or any other jurisdiction where the mailing of this document into such jurisdiction would constitute a violation of the laws of such jurisdiction
"Shareholders"	holders of Ordinary Shares and the term "Shareholder" shall mean any one of them
"United Kingdom" or "UK"	the United Kingdom of Great Britain and Northern Ireland

 

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