Issue of Equity
Glen Group PLC
02 February 2007
Glen Group PLC
2 February 2007
Glen Group plc
Proposed Capital Reorganisation and Placing of new Ordinary Shares
As outlined in the AIM Admission document issued early last year when Glen Group
plc ('Glen' or 'the Company') undertook the reverse takeover of Eclectic
Holdings Limited, it is the stated strategy of the Board to grow the Company
both organically and by acquisition. The Board has been reviewing potential
opportunities for acquisitions but has been unable to proceed with any that
require the issue of shares, because the market price of the Company's shares
has fallen below their nominal value. Under the terms of the Companies Act 1985,
the Company is prohibited from issuing shares at a discount to the nominal value
and, accordingly, the Board has been unable to pursue any acquisition
opportunities of this nature. The Company has also been unable to raise further
equity for expansion, by the issue of new shares for cash, while the market
price remains below the nominal value.
In the circumstances, the Board has determined that it is in the best interests
of the shareholders as a whole to remove this barrier to acquisition-led growth
by the reorganisation of the share capital structure. This will allow the Board
to proceed with their stated acquisition strategy. The Board has also determined
that it is appropriate to raise a modest amount of further equity capital which
would allow the Company to fund minor acquisitions or the costs of
acquisition-related due diligence, as well as provide additional working
capital. Accordingly, the Company's brokers, Ellis Stockbrokers Limited, have
placed 100,000,000 shares at a price of 0.50p per share to raise £500,000 before
issue costs ('the Placing') conditional on the Company's share capital being
reorganised as outlined below ('the Capital Reorganisation').
Capital Reorganisation
The Capital Reorganisation is being proposed because the current market value of
the Company's ordinary shares is below their nominal value of 1.00p per share.
Under the Companies Act 1985, it is unlawful to issue shares at a price below
their nominal value and, as a result, the Company has been unable to issue
shares below 1.00p per share.
It is proposed therefore to sub-divide and reclassify each of the Company's
issued ordinary shares of 1.00p into one ordinary share of 0.10p and one
deferred share of 0.90p ('a Deferred Share') and to sub-divide each of the
Company's authorised but unissued ordinary shares of 1.00p into ten ordinary
shares of 0.10p each.
The Deferred Shares will have no voting rights and will have negligible rights
as to dividends and on a return of capital. They will not be listed on any stock
exchange and will not be freely transferable. One of the provisions attaching to
the Deferred Shares will allow the directors to effect the transfer of all of
the Deferred Shares to a custodian for no consideration. In due course, the
directors may arrange for the Company to cancel all the Deferred Shares or
effect a re-purchase of the Deferred Shares (for a consideration of 1.00p for
all of the Deferred Shares in issue) subject, in each case, to due compliance
with relevant legislation.
No new share certificates will be issued in respect of the ordinary shares of
0.10p and existing share certificates will remain valid. The ordinary shares of
0.10p each will trade on AIM and, without taking account of the shares to be
issued under the Placing, will be identical in number to the existing ordinary
shares of 1.00p each in issue as at the date of this circular, which are as
follows:
Class Nominal Value per share Number in issue Voting rights attached
Ordinary 1.00p 401,508,895 401,508,895
No share certificates will be issued in respect of the Deferred Shares.
Admission to AIM
The Company will apply for the 100,000,000 new ordinary shares to be issued
pursuant to the Placing to be admitted to trading on AIM and dealings are
expected to commence on 27 February 2007. Admission of the 100,000,000 new
ordinary shares to trading on AIM is conditional on shareholder approval of the
Capital Reorganisation.
Strategy
As well as continuing to pursue organic growth, the Directors intend to identify
potential acquisition targets and investments for the Company from a combination
of their own research, market knowledge and network of contacts. The Directors'
strategy is for the Company to acquire or invest in businesses with one or more
of the following characteristics:
• IT and communications services businesses with sustainable growth
prospects;
• a strong position in an established market or an early mover position in
a potentially fast growing market;
• under exploited assets; or
• an established management team, requiring working capital and/or
strategic advice to achieve its potential.
In their investment and acquisition considerations, the Directors will focus
primarily on businesses based in the United Kingdom or Ireland operating in the
IT and communications space.
Although the Directors believe there are significant numbers of investment
prospects which potentially fall within these categories, changing market
conditions and valuation issues may require the Company to broaden or alter its
investment criteria.
Timetable
Set out below is a timetable outlining the principal events relating to the
Capital Reorganisation:
Latest time and date for receipt of forms of proxy 2.30pm on 24 February 2007
Extraordinary General Meeting 2.30pm on 26 February 2007
Record Date (being the latest date on which dealings
in the existing ordinary shares of 1.00p will be
registered) 2.30pm on 24 February 2007
Dealings in new ordinary shares of 0.10p commence
and up to 100,000,000 new ordinary shares admitted
to trading on 27 February 2007
ENQUIRIES:
Glen Group plc
Graham J Duncan
Chief Executive 0845 119 2100
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