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Armour Trust PLC (AMR)

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Thursday 13 December, 2001

Armour Trust PLC

Tender Offer

Armour Trust PLC
13 December 2001


                               ARMOUR TRUST plc

                                Lonsdale House

              7/9 Lonsdale Gardens, Tunbridge Wells, Kent TN1 NU


                     Tel: 01892 502700     Fax: 01892 502707

13 December 2001

                            FOR IMMEDIATE RELEASE

 Not for release in or into the US, Canada, Australia, Japan or South Africa

                     CAPITAL REDUCTIONS AND TENDER OFFER

Armour Trust plc ('Armour' or the 'Company') announces that it proposes to
return up to £3.15 million to shareholders by way of a Tender Offer.
Successfully tendered shares shall be purchased at 17.5 pence per share. The
proposal requires shareholder approval, which will be sought by way of special
resolutions at an Extraordinary General Meeting to be held at the offices of
Beeson Gregory Limited, The Registry, Royal Mint Court, London EC2N 4LB at
11.00 a.m. on Monday, 7 January 2002 ('EGM'). A circular containing details of
the Capital Reductions, the Tender Offer and the notice of the EGM will be
posted to Shareholders today.

For further details please contact:

Roger Pinnington, Chairman of Armour Trust plc    Telephone Number 07624 430299

Rob Collins, Beeson Gregory Limited               Telephone Number 020 7488 4040


Background and reasons for the proposals

In September of this year, the Board announced that it was conducting a review
of the Group's strategic options, which focused on returning some of the value
created over the past three years to Shareholders. As a result of this review,
the Board decided to close the head office and initiate the Capital Reductions
and Tender Offer to return surplus cash to Shareholders.

Having considered a number of methods of returning capital, the Directors have
decided to implement the Tender Offer to return up to £3.15 million. This is
expected to enable Armour to return funds to Shareholders whilst permitting
Shareholders a degree of choice as to whether or not to participate in the
return of capital.

As a consequence of the decisions to return, rather than reinvest, surplus
cash to Shareholders and to close the head office, it was amicably agreed both
with George Dexter, the Chief Executive, and John Harris, the Finance
Director, that they would leave the Company to pursue other interests in the
new year and they agreed to step down as Directors of the Company by 31
January 2002.


Tender Offer

Shareholders will be able to decide whether to continue their investment in
Armour or to tender some or all of their Shares within the overall limit of
the Tender Offer. The key points of the Tender Offer are as follows:

  * Shareholders will be entitled to have a percentage of their holdings
    representing 44.52% of their registered shareholding as at the Record Date
    (the 'Basic Entitlement') repurchased under the Tender Offer. Shareholders
    will also be able to request the repurchase of additional Shares, but such
    requests will only be satisfied, on a pro rata basis, to the extent other
    Shareholders do not tender for their full Basic Entitlement.

  * Shares will be acquired at the Tender Price amounting to 17.5 pence per
    Share, giving a potential total reduction of 18 million Shares, which
    represents approximately 44.52% of Armour's issued share capital as at the
    Record Date.

The Tender Offer is conditional upon the passing of the resolutions at the
EGM. It is only available to Shareholders on the register of members on the
Record Date and in respect of their Shares held on the Record Date. It is also
conditional upon cancellation of the Share Premium Account of Armour being
confirmed by the Court.

The principal features of the Tender Offer are as follows:


  * Beeson Gregory Limited will purchase up to 18 million Shares for
    consideration of up to £3.15 million at 17.5 pence per Share. This
    represents approximately 44.52% of Armour's issued ordinary share capital
    as at Tuesday, 11 December 2001, the latest practical date before the
    publication of this document. Beeson Gregory Limited will then sell the
    Shares it acquires to Armour at 17.5 pence per Share for cancellation.

  * All Shares will be purchased at the same price, the Tender Price. This
    will be the price that will allow Beeson Gregory Limited to purchase such
    number of validly tendered Shares (up to a maximum of 18 million Shares)
    as would result in consideration not exceeding £3.15 million being paid to
    Shareholders.

  * Tenders of Shares, over and above the Basic Entitlement, will be scaled
    back pro rata to ensure that the consideration paid to Shareholders does
    not exceed £3.15 million.

  * Tenders above or below the Tender Price will be rejected.

  * Shares will be purchased free of commissions and dealing charges.

  * Successfully tendered Shares will be cancelled and will not rank for any
    future dividends.


Capital Reductions

As a public company, Armour may only make repurchases of its shares from
distributable reserves. In the audited accounts for the year ended 31 August
2001 the Company had a deficit on its profit and loss account of £628,000.
Unless and until the deficit is eliminated, Armour is unable to make
repurchases of its shares (and accordingly to carry out the Tender Offer).

In order to eliminate the deficit on the profit and loss account and to create
sufficient distributable reserves to enable the Tender Offer to proceed, it is
proposed to cancel the balance standing to the credit of the Share Premium
Account of the Company. This will require the approval of members by special
resolution (an appropriate resolution is to be proposed at the EGM) and the
subsequent confirmation of the High Court. Upon registration of the order of
the Court approving the cancellation of the Share Premium Account, the Company
would be in a position to draw up relevant accounts evidencing sufficient
distributable reserves to enable the Tender Offer to proceed.

Prior to confirming the proposed cancellation of the Share Premium Account,
the Court will need to be satisfied that the interests of Armour's creditors
are not adversely affected thereby. Armour will put into place such form of
creditor protection as the Court may require.

Upon completion of the Tender Offer, Armour will be required to create a
Capital Redemption Reserve equal to the nominal value of the shares purchased
under the Tender Offer. The Company does not consider it to be in the best
interests of the Company to maintain such reserve. Accordingly, it is proposed
to make a second application to the Court (subject to approval of shareholders
by special resolution at the EGM) for the cancellation of the Capital
Redemption Reserve. Upon registration of the Court's order, the sums standing
to the Capital Redemption Reserve would be available, subject to creditor
protection, as distributable reserves. As with the cancellation of the Share
Premium Account the interests of creditors will be relevant and again Armour
will put into place such form of creditor protection as the Court may require.


Current Trading and Prospects

The only operating business of the Group, the Audio Electronics Division,
performed to its budget for the year ended 31 August 2001, with the
traditionally busier second six months fulfilling the expectations set out in
the last interim report. Since the year end this trend has continued with no
significant downturn experienced in trading. It is recognised that, given the
exposure that the Audio Electronics Division has to retail markets, any
downturn in consumer spending is likely to have a negative effect on the
future performance of the business in the current financial year. Whilst the
impact of any such downturn and its effects on the financial performance and
prospects of the Group, is difficult to quantify, every effort will be made to
minimise this effect and the Board is confident that the Division's management
is capable of responding to the challenges ahead.


During the strategic review referred to above, the Board received a
conditional offer to acquire the business of the Audio Electronics Division
from a company in which the Chief Executive, George Dexter, together with
divisional management, had an interest. After careful consideration of the
offer it was felt that it did not fully value the Audio Electronics business;
consequently the offer was rejected and the Audio Electronics business will be
retained by Armour.


Whilst the Audio Electronics Division is performing satisfactorily as stated
above, there will be significant Group costs including termination payments in
particular payments to the departing executive Directors under their
compromise agreements, legal and professional fees incurred as a result of the
closure of the head office and the Tender Offer which will impact on the
results of Armour in the current financial year.


The Continuing directors believe that the Group has available sufficient
resources to enable the Audio Electronics Division to grow both organically
and by acquisition. The Group will also be able to continue to seek, consider
and negotiate other acquisition opportunities as and when necessary and
appropriate.


The final part of the Board's strategic review is the consideration of the
continuance of the Company's listing on the Official List after the departure
of the executive Directors. Having regard to the reduced size of the Group,
the ongoing reporting and other costs the Board believes it is appropriate for
Armour to move to AIM. Accordingly a resolution in relation to this will be
proposed at the EGM.

Expected Timetable


EGM                                                           Monday, 7 January
                                                                           2002

File petition and application notice seeking confirmation    Friday, 11 January
of cancellation of Share Premium Account                                   2002

Hearing of the petition seeking confirmation of           Wednesday, 30 January
cancellation of Share Premium Account                                      2002

Final date for receipt of completed Tender Form by        Wednesday, 6 February
Company's Receiving Agent (by hand or by post)                    2002 (5.00pm)

Record Date                                               Wednesday, 6 February
                                                                   2002(5.00pm)

Cheques posted to shareholders or CREST accounts credited   Monday, 18 February
                                                                           2002

If any of the above times and/or dates should change, the revised times and/or
dates will be notified to Shareholders by an announcement through the Company
Announcements Office of the London Stock Exchange. The expected dates for the
hearing of the petitions are subject to the availability of the Court.

DEFINITIONS

'AIM'          the Alternative Investment Market of the London Stock Exchange

'Capital       the proposed cancellation of the Share Premium Account and the
Reductions'    proposed cancellation of the Capital Redemption Reserve of the
               Company

'Group'        Armour Trust plc and its subsidiaries

'Record Date'  5.00 p.m. on Wednesday, 6 February 2002

'Shareholders' holders of Shares

'Share(s)'     ordinary shares of 10 pence each in the capital of the Company

'Tender Offer' the tender offer to Shareholders on the register of members on
               the Record Date being made by Beeson Gregory Limited subject to
               the terms and conditions of the tender offer document and the
               tender form to be issued to Shareholders on 13 December 2001

The Directors of Armour accept responsibility for the information contained in
this announcement. To the best knowledge and belief of the Directors (who have
taken all reasonable care to ensure that such is the case), the information
contained in this announcement is in accordance with the facts and does not
omit anything likely to affect the import of such information.

Beeson Gregory, which is regulated in the UK by the Financial Services
Authority, is acting for Armour and for no-one else in connection with the
Tender Offer and will not be responsible to anyone other than Armour for
providing the protections afforded to its customers or for providing advice in
relation to the Tender Offer.