Posting of Circular to Shareholders


 

TIDMCSC 
 
RNS Number : 1722X 
cScape Group PLC 
01 December 2010 
 

1 December 2010 
                                cScape Group PLC 
                            ("Company" or "cScape") 
 
Posting of Shareholder Circular and Notice of General Meeting 
 
The board of directors ("Board") of cScape announces that a notice convening a 
General Meeting forming part of a circular (the "Circular") was posted to 
shareholders today.  The General Meeting will be held at 10.00 a.m. on Thursday, 
23 December 2010 at the offices of Smith & Williamson Corporate Finance Limited, 
25 Moorgate, London EC2R 6AY, for the purpose of considering the following 
resolutions: 
 
1.         a special resolution to effect the Sub-division, as defined in the 
Circular; 
2.         a special resolution to effect the Consolidation, as defined in the 
Circular; 
3.         an ordinary resolution authorising the Board to allot ordinary shares 
in the Company; and 
4.         a special resolution giving the Board the power to disapply statutory 
pre-emption rights in respect of allotments of ordinary shares for cash. 
A copy of the Circular and the form of proxy are available on the Company's 
website at www.cscapegroup.com and selected information extracted from the 
Circular is set out below. 
 
For further information, please contact: 
 
Smith & Williamson Corporate Finance Limited 
Tel: 020 7131 4000 
Azhic Basirov / Siobhan Sergeant 
 
The following information has been extracted without material adjustment from 
the Circular. 
 
 
The board of directors ("Board") of cScape Group PLC ("Company" or "cScape") is 
proposing to make the change to the Company's capital structure, explained below 
("Capital Reorganisation").  In addition, the Board is seeking the authority of 
shareholders at a General Meeting, (notice of which is set out at the end of the 
Circular), to allot new ordinary shares in the Company for cash pursuant to a 
placing (the "Placing") to raise approximately GBP230,000 (net of expenses). 
Set out below are further details of and reasons for the proposals. 
 
Capital Reorganisation 
 
The Company's ordinary shares of 10p each ("Ordinary Shares") are currently 
trading at or below the nominal value.  It is unlawful for the Company to allot 
Ordinary Shares at a discount to their nominal value and this, therefore, 
restricts the Company's ability to issue new Ordinary Shares, either for cash or 
non-cash consideration, at or near to the current market price of an Ordinary 
Share.  Therefore, in order to undertake an equity fundraising or take advantage 
of any future opportunities, the Board proposes a sub-division and redesignation 
of the Ordinary Shares. 
 
In addition, the Board believes that the Company's ability to attract new, 
particularly institutional, investors would be enhanced and so the liquidity of 
the Company's shares improved if, following a sub-division and redesignation of 
the Ordinary Shares, there was a consolidation of the shares then comprised in 
the Company's ordinary share capital into shares of a higher nominal amount. 
 
It is not expected that the Capital Reorganisation will affect the continued 
admission of the Company's shares to trading on the AIM market of the London 
Stock Exchange. 
 
Sub-division of Ordinary Shares 
 
It is proposed that each of the 11,311,558 issued Ordinary Shares and the 
6,688,442 unissued Ordinary Shares of 10p each be sub-divided into one share of 
9p and one share of 1p. The redesignation of these shares will result in each 
share of 9p becoming a deferred share ("Deferred Share") and each share of 1p 
becoming a new ordinary share ("New Ordinary Share"), (together, the 
"Sub-division"). 
 
Immediately following the Sub-division, every cScape shareholder ("Shareholder") 
will hold one New Ordinary Share and one Deferred Share in place of every 
Ordinary Share previously held. 
 
The voting and other rights (including the rights to dividends) conferred on the 
New Ordinary Shares will be identical to those currently attaching to the 
existing Ordinary Shares as set out in the articles of association of the 
Company. 
 
The Deferred Shares will carry minimal rights and will have little or no 
economic value.  The Deferred Shares will have no rights to vote or to 
participate in dividends and will carry limited deferred rights on any return of 
capital (whether on a liquidation or otherwise).  No application will be made 
for the Deferred Shares to be admitted to trading on AIM.  Further details of 
the rights attached to the Deferred Shares are set out in Resolution 1 contained 
in the notice of General Meeting. 
 
Consolidation 
 
Immediately following the Sub-division, it is proposed that there is a 
reconsolidation of the Company's New Ordinary Shares (the "Consolidation").  The 
Board believes that the Consolidation will increase liquidity of the Company's 
shares. 
 
The Consolidation would be on the basis that every 10 New Ordinary Shares 
(whether issued or unissued) shall become one consolidated ordinary share of 10p 
in the Company ("Consolidation Share"). Fractions of a Consolidation Share will 
not be issued and accordingly individual Shareholders' entitlements will be 
rounded down to the nearest whole number of Consolidated Shares. Fractional 
entitlements will instead be aggregated and sold in the market for the benefit 
of the Company. 
 
The voting and other rights (including the rights to dividends) conferred on the 
Consolidation Shares will be identical to those currently attaching to the 
Ordinary Shares as set out in the articles of association of the Company. 
Application will be made for the Consolidation Shares to be admitted to trading 
on AIM following the approval of certain resolutions which will be put to the 
Company's shareholders at a General Meeting to be held on 23 December 2010. 
 
Subject to approval of the Capital Reorganisation at the General Meeting, 
definitive share certificates in respect of the Consolidation Shares arising 
from the Capital Reorganisation are expected to be despatched on or before 11 
January 2011. For the avoidance of doubt, the Company will not issue share 
certificates in relation to the New Ordinary Shares of 1p each.  Definitive 
share certificates for Consolidation Shares will not be despatched to those 
shareholders who have previously elected to have their Ordinary Shares held in 
uncertificated form. Instead the Consolidation Shares will be credited to such 
Shareholders in uncertificated form through CREST.  The new ISIN for the 
Consolidation Shares will be GB00B4LFNL36, the new Sedol number will be B4LFNL3 
and the ticker, CSC, remains unchanged. 
 
Immediately following the passing of the resolutions to approve the Capital 
Reorganisation at the General Meeting, share certificates in respect of existing 
Ordinary Shares will cease to be valid for any purpose other than evidencing the 
title of Shareholders to Deferred Shares. Prior to the despatch of definitive 
share certificates, transfers of Consolidation Shares arising from the Capital 
Reorganisation will be certified against the register. 
 
The Placing 
 
Subject to the approval by Shareholders of the resolutions to implement the 
Capital Reorganisation and the Placing, the Board intends to place 357,143 
Consolidation Shares (the "Placing Shares") with Keith Young, the Executive 
Chairman of the Company, at a price of 70p per Placing Share (equivalent to the 
closing mid-market price of an existing Ordinary Share as at 29 November 2010 of 
7p).  Following the issue of the Placing Shares, it is expected that Mr Young 
will have a beneficial interest in 66.84% of the revised enlarged issued share 
capital of the Company. Subject to the passing of each of the resolutions to be 
proposed at the General Meeting, the Placing Shares are expected to be issued on 
24 December 2010. 
 
The Company has seen a significant shrinkage of new business opportunities in 
the last few years, however the core of long established clients have continued 
to hold up.  The Board believes that the Company is now well positioned to take 
advantage of the expected economic upturn.  The Board acknowledges that the 
business environment has been challenging and the containment of costs remains a 
priority.  Given the current situation, the Board believes that the Placing will 
provide further stability to the Company.  It is intended the proceeds of the 
Placing will be used to fund the current working capital requirements of the 
Company and potential future growth.  The Placing will also give the Company the 
flexibility to move quickly with regard to any future fundraising, should the 
opportunity arise, following the Capital Reorganisation. 
 
Authority to allot shares and power to disapply statutory pre-emption rights 
 
In order to implement the Placing, the Company is seeking to renew the general 
authority for the Board to allot shares and also to disapply the statutory 
pre-emption rights in respect of allotments of shares for cash so that such 
shares may be issued without first offering them to existing Shareholders on a 
pro rata basis.  These authorities will be valid until 23 March 2012 being the 
date 15 months from the date of the relevant resolution. 
 
The authority sought, other than with respect to rights issues and the Placing, 
is limited to the issue of up to 74,415 Consolidation Shares, representing 
approximately 5% of the revised issued share capital of the Company following 
completion of the Capital Reorganisation. 
 
Related Party Transaction 
 
The Placing constitutes a related party transaction for the purposes of the AIM 
Rules for Companies. 
 
Robert Killick, the independent director of the Company, having consulted with 
Smith & Williamson Corporate Finance Limited, in its capacity as nominated 
adviser to the Company, considers the Placing to be fair and reasonable and in 
the best interests of the Shareholders as a whole.  In providing such advice 
Smith & Williamson Corporate Finance Limited has taken into account the Mr 
Killick's commercial consideration in respect of the Placing. 
 
Share Options 
 
It is not anticipated that the Capital Reorganisation will have any adverse 
economic impact on the overall value which could be derived from the existing 
options over the Company's shares. 
 
Taxation 
 
Shareholders are advised to consult an appropriate professional tax adviser in 
relation to their tax position. 
 
General Meeting 
 
The proposed Capital Reorganisation and the authority to allot shares in the 
Company will require the passing of certain resolutions by the Shareholders in 
general meeting. A notice convening a General Meeting of the Company to be held 
at the offices of Smith & Williamson Corporate Finance Limited, 25 Moorgate, 
London EC2R 6AY at 10.00 a.m. on 23 December 2010, is set out at the end of the 
Circular. 
 
Recommendation 
 
Your Board believes that the proposals described in this document are in the 
best interests of the Company and its Shareholders and therefore the Directors 
unanimously recommend you to vote in favour of the resolutions to be proposed at 
the General Meeting, as they intend to do in respect of their own beneficial and 
non-beneficial holdings, amounting in aggregate to 6,375,826 existing Ordinary 
Shares, representing approximately 56.4 per cent of the Company's issued 
ordinary share capital. 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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