Circular re proposed Investing Policy
18 February 2011
CSS Stellar plc
("CSS" or the "Company")
PROPOSED ADOPTION OF INVESTING POLICY
SUB-DIVISION OF SHARE CAPITAL
RENEWAL OF AUTHORITY TO ALLOT SHARES AND DISAPPLICATION OF PRE-EMPTION RIGHTS
NOTICE OF GENERAL MEETING
CSS Stellar plc, the entertainment and sports management company, announced on 17 December 2010 that it had entered into arrangements with GP Sports Holdings Limited ("GPSH"), a company wholly-owned by Julian Jakobi, the Company's Chairman, and Adrian Sussmann, a consultant to the Company, whereby the Company would cease to undertake its Motorsports client business (the "Arrangements").
Following completion of the Arrangements, the Company effectively ceased to own, control or conduct any trading business and, as a result, is deemed under Rule 15 of the AIM Rules to be an investing company. The Company has today sent a circular to shareholders with details of the proposed investing policy of the Company. The circular will also be made available on the Company's website www.css-stellar.com.
As the issue of new shares by a public company at a price below their nominal value is prohibited by UK company law, the Company is currently unable to issue new shares as the ordinary shares of the Company are currently trading on AIM at a price below their nominal value of 5p per share. Although the Board has no current plans to issue new shares in the Company, the Directors believe that having the ability to issue new shares may be advantageous in the future and accordingly are seeking (i) shareholders' authority to a sub-division of the existing ordinary shares and (ii) a renewal of shareholders' authority to allot new ordinary shares and to disapply pre-emption rights.
The circular therefore contains details of a proposed sub-division of the existing ordinary shares of 5p each into new ordinary shares of 1p each and deferred shares of 4p each. The rights attaching to the new ordinary shares will in all material respects be the same as the rights attaching to the existing ordinary shares and there will be the same number of such shares as there are existing ordinary shares presently in issue. Existing share certificates will remain valid.
Enclosed with the circular is a notice convening a General Meeting, which is proposed to be held at 10.00 am on 15 March 2011. Extracts from the Chairman's letter as set out in the circular are in the appendix to this announcement.
For further information please contact:
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CSS Stellar plc |
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Julian Jakobi |
Tel: 07785 317202 |
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Northland Capital Partners Limited, Nominated Adviser and Broker
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Luke Cairns / Edward Hutton |
Tel: 020 7492 4750 |
APPENDIX
PROPOSED ADOPTION OF INVESTING POLICY, SUB-DIVISION OF SHARE CAPITAL, RENEWAL OF AUTHORITY TO ALLOT SHARES AND DISAPPLICATION OF PRE-EMPTION RIGHTS
1. BACKGROUND
Investing policy
On 17 December 2010, CSS Stellar plc (the "Company") announced that it had entered into arrangements with GP Sports Holdings Limited, a company wholly-owned by myself, the Company's Chairman, and Adrian Sussmann, a consultant to the Company, whereby the Company has ceased to undertake its motorsports client business (the "Arrangements").
As announced, following completion of the Arrangements, I have ceased to act as executive Chairman and now act as non-executive Chairman alongside the other non-executive directors, reducing the Company's ongoing costs.
Following completion of the Arrangements, the Company has effectively ceased to own, control or conduct any trading business and, as a result, is deemed under Rule 15 of the AIM Rules for Companies to be an investing company.
The purpose of this document is to provide you with details of the proposed investing policy of the Company, to explain why the Board considers this investing policy to be in the best interests of the Company and its shareholders and to seek your approval of the policy at the general meeting of the Company referred to below (the "General Meeting").
Details of the proposed investing policy are set out in paragraph 2 below. If no investing policy is adopted by the Company with shareholder approval (either as described in paragraph 2 below or otherwise), London Stock Exchange plc (the "Exchange") will suspend the trading of the Company's shares on AIM and may ultimately cancel the admission of its shares to trading on AIM.
If, within 12 months of its cessation of business, the Company has not made an acquisition or acquisitions which constitute a reverse takeover under Rule 14 of the AIM Rules for Companies (the "AIM Rules") or has not otherwise substantially implemented its investing policy to the satisfaction of the Exchange, trading in its shares on AIM will be suspended under Rule 15 of the AIM Rules.
Sub-division of shares, renewal of authority to allot shares and disapplication of pre-emption rights
The ordinary shares of the Company are currently trading on AIM at a price below their nominal value of 5p per share. The mid-market price of the shares as at the close of business on 16 February 2011 was 3.375p. The issue of new shares by a public company at a price below their nominal value is prohibited by UK company law. Accordingly, without a capital reorganisation, the Company is currently unable to issue new shares.
Although the Board has no current plans to issue new shares in the Company, the Directors believe that having the ability to issue new shares may be advantageous in the future and accordingly are seeking shareholders' authority to allot new ordinary shares, to disapply pre-emption rights and to implement a reorganisation of the Company's share capital to facilitate such an issue.
To give effect to the reorganisation of the Company's share capital, the current articles of association (the "Articles") of the Company will need to be amended to make consequential changes. This amendment will also require shareholders' approval at the General Meeting.
Details of the proposed sub-division of the Company's ordinary share capital and consequential proposed amendments to the Articles are set out in paragraphs 3 and 5 below.
Enclosed with this document is a notice convening the General Meeting, which is proposed to be held at 10.00 am on 15 March 2011 at the offices of Berwin Leighton Paisner LLP, at which the resolutions to adopt the proposed investing policy, sub-divide the Company's ordinary share capital, amend the Articles, authorise the allotment of new ordinary shares and disapply pre-emption rights (the "Resolutions")will be proposed.
2. NEW INVESTING POLICY AND CASH RESOURCES
The Directors' proposed investing policy is to focus on making an acquisition or acquisitions of unquoted businesses or companies which would constitute a reverse takeover under Rule 14 of the AIM Rules for Companies, creating a platform for further acquisitions. The Directors retain the flexibility to make investments which do not constitute a reverse takeover under Rule 14 of the AIM Rules for Companies where shareholder value can be enhanced; in such cases, however, any investments will be significant minority stakes in companies which are actively managed and which serve as a platform for a future reverse takeover.
The strategy of the Directors is to pursue acquisition(s) in the leisure, corporate services, consultancy and brand licensing sectors which will allow the Board to leverage its knowledge, experience and contacts. Suitable acquisitions outside these sectors will also be considered.
In conjunction with following the investing policy, the Directors will proactively consider raising additional funds, either in the form of equity or debt, to help implement the proposed investing policy.
The Directors will focus primarily on acquisition opportunities within the European Union and the United States. It is anticipated that returns to shareholders will be delivered primarily through an appreciation in the Company's share price.
The Board is aware that the Company's cash resources, currently standing at approximately £270,000, are limited and this may restrict the extent to which the investing policy can be implemented.
3. SUB-DIVISION OF SHARES
The nominal value of each existing ordinary share of 5 pence each (each an "Existing Ordinary Share") is above the current market price. As a matter of company law, a public company is not permitted to issue shares at a discount to their nominal value. For the reasons stated in paragraph 1 above, the Board therefore proposes to sub-divide and convert each issued Existing Ordinary Share into one new ordinary share of 1 penny each (each a "New Ordinary Share") and one deferred share of 4 pence each (each an "A Deferred Share").
New Ordinary Shares
Immediately following the sub-division, each shareholder will hold one New Ordinary Share and one A Deferred Share in place of every one Existing Ordinary Share previously held in the capital of the Company. The rights attaching to the New Ordinary Shares will in all material respects be the same as the rights attaching to the Existing Ordinary Shares and there will be the same number of such shares as there are Existing Ordinary Shares presently in issue. Accordingly, holders of New Ordinary Shares will have the right to participate in dividends and other distributions made by the Company, and to receive notice of, attend and vote at every general meeting of the Company. On liquidation, holders of New Ordinary Shares will continue to be entitled to participate in the assets available for distribution pro-rata to the amount credited as paid up on such shares (excluding any premium).
A Deferred Shares
The A Deferred Shares will not carry voting rights or a right to receive a dividend. The holders of A Deferred Shares will not have the right to receive notice of any general meeting of the Company, nor have any right to attend, speak or vote at any such meeting. The A Deferred Shares will also be incapable of transfer (other than to the Company). In addition, holders of A Deferred Shares will only be entitled to a payment on a return of capital or on a winding up of the Company after each of the holders of New Ordinary Shares has received a payment of £1,000,000 in respect of each New Ordinary Share. Accordingly, the A Deferred Shares will have no economic value. No application will be made for the A Deferred Shares to admitted to trading on AIM.
The Company does not intend to issue new share certificates to the holders of the New Ordinary Shares and A Deferred Shares following the sub-division. Existing share certificates will remain valid.
4. AUTHORITY TO ALLOT SHARES AND DISAPPLICATION OF PRE-EMPTION RIGHTS
In order to provide the Company with flexibility when undertaking any future fundraising, it is proposed to replace the existing authority to allot shares (the "Existing Authority") granted at the Company's annual general meeting held on 30 June 2010 which was calculated on the basis of the nominal value of an Existing Ordinary Share. The extent of the proposed revised authority, which would authorise the Directors to allot relevant securities up to an aggregate nominal amount of £500,000 (representing approximately 172.55 per cent. of the total issued ordinary share capital of the Company on and from the sub-division), has been calculated on the basis of the nominal value of a New Ordinary Share and taking account of the fact that the Company may wish to raise further funds in the coming months. This authority, if approved, will become effective on and from the sub-division and will terminate at the conclusion of the Company's next annual general meeting or 18 months from the date of this document, whichever is the earlier unless and to the extent that such authority is revoked, varied, renewed or extended prior to such date.
In addition, it is proposed to disapply the statutory pre-emption rights contained in section 561 of the Companies Act 2006 so that the Directors have the power to allot equity securities for cash on a non pre-emptive basis up to an aggregate nominal amount of £500,000. It is proposed to replace the existing power (the "Existing Power") granted at the Company's annual general meeting held on 30 June 2010. This power, if approved, will terminate at the conclusion of the Company's next annual general meeting or 18 months from the date of this document, whichever is the earlier unless and to the extent that such authority is revoked, varied, renewed or extended prior to such date.
Resolutions 2 and 4 are conditional on the passing of Resolution 3. If Resolution 3 is not passed, the Existing Authority and the Existing Power will remain in place until the conclusion of the next annual general meeting of the Company unless and to the extent that they are revoked, varied, renewed or extended prior to such date.
As mentioned above, the Company may wish to undertake a fundraising in the coming months, and these proposals are intended to give the Company sufficient flexibility to do so without the need for a further circular and general meeting at the time of any such fundraising.
5. NEW ARTICLES OF ASSOCIATION
In connection with the sub-division, the Company also proposes to amend its current Articles to include the rights and restrictions attaching to the New Ordinary Shares and the A Deferred Shares, as set out above.
6. ACTION TO BE TAKEN
The adoption of the proposed investing policy, the sub-division of the share capital, the consequential amendment of the Articles, the authority to allot shares and the disapplication of pre-emption rights are subject to the passing of the Resolutions at the General Meeting convened for 10.00 am on 15 March 2011 to be held at the offices of Berwin Leighton Paisner LLP, Adelaide House, London Bridge, London EC4R 9HA.
A Form of Proxy is enclosed for use at the General Meeting. Whether or not you intend to be present at the General Meeting you are requested to complete, sign and return the Form of Proxy to the Company's registrar, Capita Registrars, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU as soon as possible but in any event so as to arrive not later than 10.00 am on 11 March 2011. The completion and return of a Form of Proxy will not preclude you from attending the meeting, or speaking and voting in person should you subsequently wish to do so.
7. RECOMMENDATION
The Directors consider that the adoption of the proposed investing policy, the sub-division, the consequential amendment of the Articles, the authority to allot shares and the disapplication of pre-emption rights are in the best interests of the Company and are most likely to promote the success of the Company for the benefit of its members as a whole. Accordingly, the Directors unanimously recommend shareholders to vote in favour of the Resolutions, as they intend to do in respect of their own beneficial shareholdings, which in aggregate amount to 8,354,414 Existing Ordinary Shares, representing approximately 28.84 per cent. of the issued share capital of the Company at the date of this document.
Yours faithfully
Julian Jakobi
Non-executive Chairman
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