PLUS Markets, the operator of the junior stock market which bears the group's name, has made another attempt to head off a shareholder revolt over the sale of the stock market to inter-dealer broker ICAP.
"Further to the company's recent announcements and in response to recent media and reported shareholder comments, the company wishes to provide shareholders with as comprehensive an understanding of the items in question as possible," the company said in a long announcement on the London Stock Exchange's regulatory news service, as it tried to set the record straight on recent company developments.
Among the things irking the company is the focus on the sale of PLUS-SX - the junior stock market which counts Arsenal Football Club among its clients - for a nominal £1 to ICAP.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Get 6 issues free
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The board of PLUS Markets noted that although ICAP is only paying a quid for the bourse, it is also taking on all of the stock market's liabilities from the point of the acquisition, including ongoing trading losses and the requirement to immediately recapitalise the entity in accordance with the Financial Service Authority's requirements. These costs would otherwise need to be settled by the PLUS Markets Group.
"The liabilities and the cash released for the company are meaningful, remove on-going liabilities for the company and potentially allow for the release of cash to shareholders post the disposal," the company statement said.
The company reminded shareholders the sale will allow the company to retain in the region of £0.64m of cash balances. Additionally, PLUS Trading Solutions Limited (PLUS-TS) has provisionally agreed to provide support services to ICAP following the proposed disposal. Should this be finalised, the board anticipate that this may further increase the amount of residual cash available to the company.
Separately, the company notes that accumulated tax losses within PLUS-SX as at 31st December 2011 are £8.5m, not £35m as has been stated by third parties. The potential benefit of such tax losses were specifically highlighted to all interested parties during the formal sale process (FSP).
Tackling the issue of whether an alternative offer to the one from ICAP was in the offing, the board noted the comments by Spencer Wilson, a director of PLUS shareholder Amara Dhari Investments (AD), that AD held talks with PLUS about providing an offer of equity capital through a private placement of shares. PLUS's board said it is not aware of receiving such an offer from AD, though it did receive a "Draft Term Sheet" from Markab Capital, a company unknown to the board but believed to be run by Spencer Wilson and others and based in the Middle East. Talks held with Markab did not lead to a "viable proposal capable of consideration by the board."
Another bone of contention for dissident shareholders are the large payments due to certain directors should the sale to ICAP go through. Press reports indicate that Chief Executive Officer Cyril Thret and Finance Director Nemone Wynn-Evans will pocket £423,000 in "settlement costs" if the ICAP deal is voted through. The statement from PLUS notes that the payments are contractual liabilities, and also points out that the loss-making company has not paid any executive bonuses for at least four years.
The board has noted that some shareholders believe that a vote against the proposed disposal will allow a further revised and improved offer to acquire PLUS-SX. As indicated in the company's announcement on Thursday, this is unlikely as the Financial Services Authority (FSA) would begin the process of revoking PLUS recognised investment exchange (RIE) as soon as possible after the rejection of proposed disposal.
"Once the RIE de-recognition order has been made it is irreversible, and PLUS-SX, although obliged to continue the orderly wind-down of its business, will effectively cease to be a going concern," the company statement said.
JH
Six investment funds for beginners
Farming isn't for the faint-hearted – and isn't profitable
