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Pan PacificAggregate (MXO)

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Tuesday 10 January, 2012

Pan PacificAggregate

Director Change and Share Consolidation

RNS Number : 3199V
Pan Pacific Aggregates PLC
10 January 2012
 



PAN PACIFIC AGGREGATES PLC

Board Changes

Share Capital Reorganisation

and

Notice of General Meeting

Further to the announcement of 6 January 2012, Pan Pacific Aggregates plc (the "Company"), the British Columbia based aggregates business, announces the following:

·     Board Changes - Lynda Chase-Gardener has become Executive Chairman of the Company with immediate effect and Euan McAlpine will remain on the Board as an Executive Director. William Voaden and David Shaw have resigned from the Board with immediate effect. Mr Voaden will continue to provide consultancy services to the Company's subsidiaries with a specific focus on operations in Canada;

·     Share Capital Reorganisation - the Company is proposing to implement a share consolidation and subdivision pursuant to which every 100 Existing Ordinary Shares of 0.1p each will be consolidated and subdivided into 1 Ordinary Share of 0.1p each and 99 Deferred Shares of 0.1p each. The value of the Deferred Shares will effectively be zero; and

·     SEDA Heads of Terms - the Company has entered into non legally binding heads of terms with a third party financial institution ("Financial Institution") in respect of a Standby Equity Distribution Agreement ("SEDA") for up to £2 million.

The Share Capital Reorganisation is conditional upon Shareholders' approval, thus requiring the publication of a Circular. A general meeting of the Company will be held on 26 January 2012 to consider the Resolutions.

 

For further information please see the Company's web site, www.panagg.com or contact:

 

Pan Pacific Aggregates plc

Tel:  +44 182 925 0576

Euan McAlpine

Zeus Capital Limited

Tel:  +44 161 831 1512

Ross Andrews / Tom Rowley

Alexander David Securities Limited

Tel:  +44 20 7448 9820

David Scott / Bill Sharp

XCAP Securities plc

Tel: +44 207 101 7070

John Grant / Karen Kelly

 

Below are extracts from the Circular which is being sent to shareholders. The full Circular is available on the Company's website: http://www.panagg.com/. The definitions in this announcement have the same meaning as those in the Circular.

 

KEY STATISTICS

Existing Share Capital

Total number of Existing Ordinary Shares at the date of this announcement 1                    3,904,536,792

 

Share Capital Reorganisation

Maximum number of Ordinary Shares in issue immediately following                                    39,045,367

the Share Capital Reorganisation 2

Minimum number of Deferred Shares in issue following the Share Capital Reorganisation 3,865,491,425

 

ISIN Number following Admission                                                                               GB00B6ZFXS05

SEDOL following Admission                                                                                                B6ZFXS0

 

Notes:

1.     That is, prior to the Share Capital Reorganisation.

2.     This is the maximum number of Ordinary Shares in issue immediately after the Share Capital Reorganisation. Pursuant to the share capital consolidation referred to in paragraph 4 below, to the extent that the number of shares held by an existing shareholder is not a multiple of 100, such shares will not be consolidated and will be redesignated as Deferred Shares (the maximum potential loss by each shareholder as a result of the Share Capital Reorganisation is up to 99 Existing Ordinary Shares). The actual number of Ordinary Shares in issue immediately after the Share Capital Reorganisation will be adjusted accordingly.

3.     This is the minimum number of Deferred Shares in issue immediately following the Share Capital Reorganisation. The actual number of Deferred Shares in issue immediately after the Share Capital Reorganisation will be higher for the reasons stated in note 2 above.

 

 

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

 

                                                                                                                                                     
Publication date of the Circular                                                                                                                  10 January 2012

Latest time and date for receipt of completed Forms of Proxy for the GM               10.00 a.m. on 24 January 2012

General Meeting                                                                                                                  10.00 a.m. on 26 January 2012

Record Date and time for implementation of the Share Capital Reorganisation    5.30 p.m. on 26 January 2012

Effective date for the Share Capital Reorganisation and commencement                                       27 January 2012

of trading in Ordinary Shares                                                                                                                                                   

CREST accounts credited with Ordinary Shares                                                                                    27 January 2012

Share certificates in respect of Ordinary Shares despatched by first class post                           10 February 2012

 

Notes

1.     References to time in this announcement are to London time.

2.     If any of the above times or dates should change, the revised times and/or dates will be notified to Shareholders by an announcement on an RIS.

 

 

1.  INTRODUCTION

Further to the announcement on 6 January, the Company is pleased to report changes to the Board, a proposed Share Capital Reorganisation and that it has entered into non legally binding heads of terms with a Financial Institution in respect of a SEDA for up to £2 million.

Pursuant to the Board changes, Lynda Chase-Gardener has become Executive Chairman of the Company and Euan McAlpine will remain on the Board as an Executive Director. William Voaden and David Shaw have resigned from the Board with immediate effect.

In the interim results announcement on 29 September 2011, the Company reported that, despite revenues increasing in the six month period ended 30 June 2011, the Company was still experiencing operational cash outflows. As announced on 19 July 2011, the Company raised net proceeds of £1.22 million pursuant to a placing and the Company's shares were subsequently restored to trading on AIM, however operational cash outflows have continued in the period since 30 June 2011. 

In order to assist in funding the development of the Group's business, ongoing working capital requirements and the £250,000 still outstanding and to be paid to the Supervisor of the CVA, the Company has entered into the SEDA Heads of Terms with the Financial Institution. The heads of terms are non-legally binding and are subject to conditions including the completion of legal and financial due diligence. It is the Board's intention to enter into a legally binding agreement in the near future and a further announcement will be made at that time. Under the proposed SEDA, the Financial Institution would subscribe in tranches for up to a maximum of £2 million of the Company's Ordinary Shares over a period of up to 36 months. 

The middle market price of the Company's ordinary shares is, as at the close of business on 9 January 2012 (being the latest practicable date prior to the date of this announcement), below the nominal value of an Existing Ordinary Share of 0.1p. In addition the Company currently has over 3.9 billion Existing Ordinary Shares in issue.

Under English law, the Company is unable to issue ordinary shares at a price below their nominal value, therefore the Share Capital Reorganisation has been proposed to enable the Company to issue new Ordinary Shares pursuant to the SEDA.  The Company would not be able to utilise the SEDA until the Share Capital Reorganisation has been implemented. The Share Capital Reorganisation will also reduce the total number of ordinary shares in issue.

Pursuant to the Share Capital Reorganisation every 100 Existing Ordinary Shares of 0.1p each will be consolidated into 1 ordinary share of 10p each, following which, such ordinary shares of 10p each in the capital of the Company will be sub-divided into 1 Ordinary Share of 0.1p each and 99 Deferred Shares of 0.1p each. The value of the Deferred Shares will effectively be zero.  To the extent that the number of Existing Ordinary Shares held by a Shareholder is not a multiple of 100, such Existing Ordinary Shares will not be consolidated as set out above, but will instead each be redesignated as a new Deferred Share.  The maximum potential loss by each Shareholder as a result of the Share Capital Reorganisation is up to 99 Existing Ordinary Shares.

Three examples are set out below to demonstrate the effect on a Shareholder's holding of Existing Ordinary Shares in the Company if the Share Capital Reorganisation is implemented:

  


Number of Existing Ordinary Shares held prior to the Share Capital Reorganisation

Number of Ordinary Shares held immediately after the Share Capital Reorganisation

Number of Deferred Shares held immediately after the Share Capital Reorganisation

Example 1

100 ordinary shares of 0.1p each

1 ordinary share of 0.1p

Nil

Example 2

199 ordinary shares of 0.1p each

1 ordinary share of 0.1p

198 deferred shares of 0.1p each

Example 3

250 ordinary shares of 0.1p each

2 ordinary shares of 0.1p each

248 deferred shares of 0.1p each

Note: Shareholders can still buy or sell Existing Ordinary Shares up to the close of trading on 26 January 2012 in order to minimise any potential losses due to the share capital reorganisation.

 

As such, the Directors have convened a General Meeting for 10.00 a.m. on 26 January 2012 in order to allow Shareholders to consider, and, if thought fit, approve the Resolutions.

The purpose of the Circular is to provide Shareholders with information regarding the Board Changes, the SEDA and the Share Capital Reorganisation and to explain why the Directors consider the Share Capital Reorganisation to be in the best interests of the Company and its Shareholders as a whole and to seek Shareholders' approval of the Resolutions in order that the Share Capital Reorganisation can be effected.

2.  Board Changes

Pursuant to the Board changes, Lynda Chase-Gardener has become Executive Chairman of the Company and Euan McAlpine will remain on the Board as an Executive Director. William Voaden and David Shaw have resigned from the Board with immediate effect.

Ms Chase-Gardener has more than 20 years of experience in quarrying and landfill operations and has an in depth knowledge of the dynamics of the aggregates market, having previously been managing director of Chaselet Limited (formerly Bucbricks Company Limited) for 16 years until its sale in 2007. During the last 10 years Lynda has been a member and Chairman of the Quarry Products Association, overseeing its merger with the British Cement Association and the Concrete Centre in 2009.  She was also the founding chairman of the Mineral Products Association, the representative body for the UK aggregates, asphalt, cement, concrete, lime, mortar and silica sand industries until she stepped down in September 2009.  Lynda is also a member of the representative body to promote health and safety in all sectors of the quarrying and associated industries, the Quarries National Joint Advisory Committee.

Ms Chase-Gardener was appointed to the Board on 1 September 2011 and, together with the other Directors, will seek to continue to drive the further development of the business and build shareholder value.

Mr Voaden is stepping down from the plc Board for personal reasons. The Company has entered into a compromise agreement with Mr Voaden pursuant to which Mr Voaden will step down from the Board but he will continue to provide consultancy services to the Company's subsidiaries with a specific focus on operations in Canada.

The Company has also agreed to extend the exercise period relating to warrants over 23,194,444 Ordinary Shares that are held by Serata Holdings Limited, a company owned by Mr Voaden, which have an exercise price of 0.35p per Ordinary Share. The exercise period for these warrants will therefore be extended by three years to 31 July 2015.  Following the change to the exercise period noted above, Serata Holdings Limited will hold warrants over a total of 53,881,729 Existing Ordinary Shares on the following terms:

 

Number of Existing Ordinary Shares under warrant

Date of Issue

Exercise Price

Expiry Date

23,194,444

31 July 2009

0.35p

31 July 2015

4,462,285

9 October 2009

0.28p

9 October 2012

15,650,000

9 October 2009

0.5p

9 October 2012

10,575,000

24 November 2009

0.5p

24 November 2012

 

In addition the Company has an existing obligation, which relates to a placing conducted in July 2010, to grant further warrants over 22,500,000 Ordinary Shares with an exercise price of 0.2p per share. These warrants will have an exercise period of 3 years from the date of grant. The Company intends to grant these further warrants shortly. All of the figures noted above are stated prior to the proposed implementation of the Share Capital Reorganisation.

The Board would like to thank both Mr Voaden and Mr Shaw for their contributions to the Company during their tenure as directors of the Company.

3.   SEDA HEADS OF TERMS

On 19 July 2011, the Company announced that it had entered into non legally binding heads of terms with a third party financial institution in respect of an equity backed revolving finance facility to raise US$500,000 which might be increased to up to US$2,000,000, subject to certain conditions, and a standby equity distribution agreement to raise up to a further £3,000,000. However, after further consideration, the Company decided not to progress with either of those funding options at that time.

Instead, the Company has today entered into the SEDA Heads of Terms with a Financial Institution. The SEDA Heads of Terms are non-legally binding and are subject to conditions including the completion of legal and financial due diligence. It is the Board's intention to enter into a legally binding agreement shortly and a further announcement will be made at that time. Under the proposed SEDA, the Financial Institution would agree to subscribe in tranches ("Advances") for up to a maximum of £2 million of the Company's Ordinary Shares over a period of up to 36 months.  As noted above, since the current share price of the Existing Ordinary Shares is below their nominal value the Company would not be able to utilise the SEDA until the Share Capital Reorganisation has been implemented.

4.  SHARE CAPITAL REORGANISATION

Resolutions 1 and 2 contained in the Notice set out the proposed Share Capital Reorganisation as detailed above. The rights attaching to the Ordinary Shares, following the Share Capital Reorganisation, including voting and dividend rights will be the same as those attaching to the Existing Ordinary Shares. The Deferred Shares created pursuant to the Share Capital Reorganisation will have no voting rights or rights to receive a dividend and will only have a very limited right to any distribution on a return of capital. Shareholders will not be issued with a share certificate in respect of the Deferred Shares and should consider them worthless. The Company will also have the right to acquire the Deferred Shares for a nominal sum from all Shareholders. No application will be made for the Deferred Shares to be admitted to trading on AIM or any other stock exchange. There are no immediate plans to purchase or cancel the Deferred Shares.

New share certificates representing the Ordinary Shares will be issued following the Share Capital Reorganisation.

5.   General Meeting

The General Meeting will be held at 10.00 a.m. on 26 January 2012 at the offices of Memery Crystal, 44 Southampton Buildings, London WC2A 1AP at which the Resolutions will be proposed:

(i)   to approve the Share Capital Reorganisation; and

(ii)  to amend the articles of association of the Company.

 

6.   Recommendation

The Directors believe that the Share Capital Reorganisation is in the best of interests of Shareholders as a whole and recommend that Shareholders vote in favour of the Resolutions, as they intend to do in respect of their own shareholdings, amounting in aggregate to 170,730,550 Existing Ordinary Shares (representing approximately 4.37 per cent. of the Existing Share Capital).

 

DEFINITIONS

The following definitions shall apply throughout this announcement unless the context otherwise requires:

 

"AIM"

the AIM market operated by the London Stock Exchange;

"AIM Rules"

means the rules and guidance notes for AIM companies and their nominated advisers issued by the London Stock Exchange from time to time relating to AIM traded securities and the operation of AIM;

"Business Day"

means any day, other than a Saturday or Sunday or public holiday in England, on which banks are open for normal business in the City of London;

"CA 2006"

the Companies Act 2006;

 "Company" or "PPA"

Pan Pacific Aggregates plc (registered in England and Wales under number 05311866);

"Circular"

the circular document, including the notice of GM, to be sent to the Shareholders;

"Completion"

completion of the Share Capital Reorganisation;

"CREST"

the relevant system (as defined in the Uncertificated Securities Regulations 2001 (the "Regulations")) in respect of which Euroclear is the Operator (as defined in the Regulations) and in accordance with which securities may be held and transferred in uncertificated form;

"Deferred Shares"

the deferred shares of 0.1p each of the Company to be created pursuant to the Share Capital Reorganisation;

"Directors" or "Board"

the directors of the Company;

"Group"

the Company and its subsidiaries;

"Enlarged Share Capital"

the entire issued share capital of the Company following the implementation of the Share Capital Reorganisation;                                              

"Euroclear"

means Euroclear UK & Ireland Limited;

"Existing Ordinary Shares"

the 3,904,536,792 ordinary shares of 0.1p each in issue as at the date of this announcement prior to implementation of the Share Capital Reorganisation;

"Existing Share Capital"

the entire issued share capital of the Company as at the date of this announcement prior to implementation of the Share Capital Reorganisation;

"Form of Proxy"

the form of proxy for use by Shareholders enclosed with the Circular, to enable Shareholders to appoint one or more proxies to attend the GM and, on a poll, to vote instead of that Shareholder;         

"FSA"

the Financial Services Authority;

"GM" or "General Meeting"

the general meeting of the Company convened for 26 January 2012 at 10.00 a.m., or any adjournment thereof;

"Group"

the Company and its subsidiaries;

"London Stock Exchange"

London Stock Exchange plc;

"Notice"

the notice of GM;

"Ordinary Shares"

ordinary shares of 0.1p each in the capital of the Company following the implementation of the Share Capital Reorganisation;

"Resolutions"

the resolutions to be proposed at the General Meeting;

"RIS"

Regulatory Information Service;

"SEDA Heads of Terms"

the non legally binding heads of terms in respect of a Standby Equity Distribution Agreement for up to £2 million dated 10 January 2012 between the Company and a third party financial institution;

"Shareholders"

the persons who are registered as holders of Existing Ordinary Shares as at the date of this announcement;

"Share Capital Reorganisation"

the proposed consolidation of every 100 Existing Ordinary Shares into 1 ordinary share of 10p, followed by the proposed sub-division and redesignation of each ordinary share of 10p into 1 Ordinary Share of 0.1p and 99 Deferred Shares of 0.1p each to be effected by Resolutions 1 and 2 set out in the Notice;

"Subsidiaries"

has the meaning ascribed thereto by the CA 2006;

"United Kingdom" or "UK"

United Kingdom of Great Britain and Northern Ireland; and

"Zeus Capital"

Zeus Capital Limited (registered in England and Wales under number 4417845).

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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