LBP Lb-Shell

TIDMLBP

RNS Number : 2574Q

Lb-shell plc

05 June 2018

LB-shell plc

("LBS" or "the Company")

Conversion of Convertible Securities

Sub-division of Share Capital

and

Notice of General Meeting

LBS announces that it has posted to shareholders a Notice of General Meeting to be held at the offices of Shakespeare Martineau, 6(th) Floor, 60 Gracechurch Street, London, EC3V 0HR at 11.30 a.m. on 19 June 2018. The purpose of the General Meeting is to enable inter alia the conversion of the convertible loan notes, which were announced on 4(th) May 2018 and a sub-division of the Company's existing share capital.

A copy of the AGM Notice has been uploaded to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM. The Circular is also available on the Company's website at www.lb-shell.com.

The letter from the new Chairman of LB-Shell is contained within the Circular and is copied below. References within it have the same meanings as defined in the Circular.

Enquiries:

LB-Shell PLC

   Melissa Sturgess                                Tel:  +44 7787 942 777 

Email: ir@lb-shell.com

Peterhouse Capital Limited

   Heena Karani and Lucy Williams       Tel: +44 207 469 0933 

APPIX I

Circular to Shareholders

LETTER FROM THE CHAIRMAN OF LB-SHELL PLC

   1.         Introduction 

On 3rd May 2018, Melissa Sturgess, Charles Morgan and Michael Langoulant were appointed to the Board of the Company and Paul Heiden (Chairman), Martin Bloom, Caroline Brown, Zed Cama, Flavio Guidotti, John Maguire and Mike Muller stood down as directors. The new Board was appointed to pursue an alternate path for the Company rather than proceeding to an orderly winding-up or dissolution following the acquisition of the Company's business and assets by MEL on 25th October 2017.

On 4th May 2018, the Company announced the creation of GBP300,000 unsecured convertible loan notes by way of deed poll, with the aggregate principal amount being convertible into New Ordinary Shares at a price of GBP0.00025. In addition, a further GBP135,000 unsecured convertible loan notes have been created by deed poll, also with the aggregate principal amount being convertible into New Ordinary Shares at a price of GBP0.00025, in settlement of fees and associated obligations relating to the refinancing of the Company; GBP25,000 of the GBP135,000 CLNs have been issued to Peterhouse Capital in satisfaction of its fees incurred by the Company to date.

The purpose of this letter is to provide you with a background to the creation and terms of the CLNs and for calling the General Meeting. In addition, the letter explains why the Directors consider the Resolutions to be in the best interests of the Company and its Shareholders as a whole and why they recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting.

The ability of the CLNs to be converted into New Ordinary Shares is conditional on the passing of the Resolutions. The maximum number of New Ordinary Shares that can be issued pursuant to conversion of the CLNs is 1,740,000,000 New Ordinary Shares which, in aggregate, would represent 89.4 per cent. of the Fully Enlarged Issued Capital.

The Board believes that creating and the issuing the CLNs to raise funds for working capital purposes and settlement of fees and associated obligations owed by the Company offers the greatest prospect for the creation of additional value for Shareholders.

The Directors hold the following interests in the CLNs:

   Director           Amount of CLNs 
   Melissa Sturgess        GBP150,000 
   Charles Morgan          GBP100,000 
   Michael Langoulant     GBP40,000 

If the Resolutions are not approved, the Directors believe that the only alternative is for the GBP300,000 CLNs to be redeemed and the Company to be placed into liquidation. Having taken appropriate professional advice the Directors believe it highly unlikely that Shareholders would be able to recover any value for their shares or that creditors would be able to recover the amounts owed to them by the Company on a liquidation.

   2.         Background to the CLNs 

On 25th October 2017, the Company completed the sale of its business and assets to MEL and it was envisaged by the Previous Directors that the Company would then proceed to an orderly winding-up or dissolution.

Following an approach by Peterhouse Capital, the Previous Directors announced that they had identified a viable continuation option for the Company, which may provide a better return to Shareholders than a winding-up of the Company (which was expected to provide no return for Shareholders). This option would involve the Company, under the leadership of a new board of directors and subject to the requisite shareholder approvals, acquiring or investing in a business (which is at this point unidentified), using the proceeds of an initial GBP300,000 in convertible loan funds and potential future additional funding.

On 3rd May 2018, the Previous Directors resolved to implement this continuation option rather than proceed to a winding up of the Company. In accordance with this resolution the Previous Directors agreed to amend the October 2017 sale agreement with MEL to enable the continuation option to proceed. This amendment provided for any residual cash remaining in the Company ahead of the commencement of any refinancing to be paid to MEL, which reflected the original commercial terms of the October 2017 sale agreement. In addition, MEL, which holds 20.36 per cent. of the Existing Ordinary Shares, committed to voting in favour of some of the Resolutions necessary to enable the continuation option to proceed.

In addition, the New Directors (who are being advised by Peterhouse Capital) were appointed with a view to taking the Company in a new direction in 2018.

The initial priority of the New Directors was to recapitalise the Company and, with the assistance of Peterhouse Capital, raise GBP300,000 before expenses through the issue of CLNs. The New Directors will utilise the proceeds received from the GBP300,000 CLNs to maintain the Company's listing on the standard segment of the main market of the London Stock Exchange plc, while seeking to acquire or invest in a business. The New Directors are agnostic as to which sector the Company will invest in but will focus on an acquisition or investment that the New Directors believe will create significant value for Shareholders in the form of capital growth and/or dividends.

   3.         Principal Terms of the CLNs 

Each CLN is convertible into New Ordinary Shares at a price of GBP0.00025 per New Ordinary Share. Conversion of the CLNs into New Ordinary Shares is conditional on approval of the Resolutions.

The CLNs are non-interest bearing, unsecured and rank pari passu with all other unsecured liabilities of the Company.

The GBP300,000 CLNs are freely transferrable, while the GBP135,000 CLN are only transferable with the prior consent of the Company.

Unless converted, the GBP300,000 CLNs will be redeemed in full on the date which is 3 years from the execution of the instrument (the "Maturity Date") creating the GBP300,000 CLNs, or upon an event of insolvency of the Company (as defined in section 123 of the UK Insolvency Act 1986), or at any time at the election of the holder of the GBP300,000 CLNs.

Unless converted, the GBP135,000 CLNs will be redeemed in full on the Maturity Date or, in the event of insolvency of the Company (as defined in section 123 of the UK Insolvency Act 1986) only, at the election of the holder of the GBP135,000 CLNs.

Each GBP300,000 CLN will be convertible at the election of the holder at any time upon 10 business days' notice prior to the Maturity Date, into New Ordinary Shares at the Conversion Price, provided that any such conversion is effected in respect of not less than GBP1,000 worth of New Ordinary Shares.

Each GBP135,000 CLN will be convertible at the election of the Company and the holder at any time upon 10 Business Days' notice before the Maturity Date into New Ordinary Shares at the Conversion Price, provided that any such conversion is effected in respect of not less than GBP1,000 worth of New Ordinary Shares.

The CLNs are convertible into New Ordinary Shares at the Conversion Price, only to the extent that, immediately following such conversion, the New Ordinary Shares to be issued to the holder would not together with persons "acting in concert" (as defined in the Takeover Code) with the holder, carry 30% or more of the voting rights of the Company, unless such conversion is effected as part of a sale of the entire issued ordinary share capital of the Company, is with Takeover Panel approval; or is part of a mandatory offer for the remaining units in the Company, under Rule 9 of the Takeover Code. In addition, the Company has the right to refuse to act upon a Conversion Notice should such conversion be in breach of any Listing Rules and in such circumstances whereby a Prospectus is required to lawfully issue the relevant shares.

   4.         Sub-division 

The existing ordinary share capital comprises 206,239,331 ordinary shares of GBP0.05 in issue. As each CLN is convertible into New Ordinary Shares at a price of GBP0.00025 per Ordinary Share, a re-organisation of the Company's share capital is required to enable the CLNs to be converted into New Ordinary Shares. It is proposed that the share capital of the Company be sub-divided by each Existing Ordinary Share being divided into one New Ordinary Share of GBP0.0001 each and one Deferred Share of GBP0.0499 each.

The New Ordinary Shares will continue to carry the same rights as to voting, distributions and participant on a liquidation or winding up of the Company as are attached to the Existing Ordinary Shares.

The Deferred Shares will not entitle Shareholders to receive notice of or attend and vote at any general meeting of the Company, or to receive a dividend or other distribution, or to participate in any return on capital on a winding up other than the nominal amount paid on such shares following a substantial distribution to holders of ordinary shares in the Company. Share certificates will not be issued in respect of the New Deferred Shares.

The practical effect of the Sub-division, if approved, will be that each Shareholder will hold the same number of New Ordinary Shares as they hold Existing Ordinary Shares, together with one Deferred Share for each Existing Ordinary Share held.

   5.         Amendments to the Articles of Association 

In connection with the sub-division and creation of the Deferred Shares pursuant to resolution 1 it is proposed that the articles of association of the Company be amended to record the rights attaching to the Deferred Shares.

A copy of the articles of association, as amended by resolution 4 will be available for inspection at the General Meeting and will be made available on the Company's website at www.lb-shell.com.

   6.         Warrants 

Subject to the passing of Resolutions 1, 3, 4 and 6, the Company proposes issuing to Peterhouse Capital warrants to subscribe for up to such number of New Ordinary Shares as is equal to 3 per cent. of the Fully Enlarged Issued Capital. These Peterhouse Warrants shall be exercisable at the Conversion Price for a period of 3 years from the date of their issue and are proposed to be issued as part of the remuneration arrangements entered into with Peterhouse Capital in connection with the CLNs.

Subject to the passing of Resolutions 1, 2,, 4 and 5, the Company also proposes issuing to each of the Directors warrants to subscribe for up to such number of New Ordinary Shares as is equal to 5 per cent. of the Fully Enlarged Issued Capital (being, in aggregate, up to 15 per cent. of the Fully Enlarged Issued Capital). These Director Warrants shall be exercisable at the Conversion Price for a period of 5 years from the date of their issue.

   7.         General Meeting 

The Notice of General Meeting, which is to be held at the offices of Shakespeare Martineau, 6th Floor, 60 Gracechurch Street, London, EC3V 0HR at 11.30 a.m. on 19 June 2018, is set out at the back of this document. At the General Meeting, the following Resolutions will be proposed. Resolutions 1, 2, 4 and 5 are each conditional on the other being passed, while Resolutions 3 and 6 are each conditional on the other, as well as Resolutions 1 and 4, being passed:

   1.         Resolution 1, which is an ordinary resolution to approve the Sub-division; 

2. Resolution 2, which is an ordinary resolution to authorise the Directors to allot relevant securities up to an aggregate nominal amount of GBP149,194 being equal to 1,491,940,000 New Ordinary Shares;

3. Resolution 3, which is an ordinary resolution to authorise the Directors to allot relevant securities up to an aggregate nominal amount of GBP59,839 being equal to 598,390,000 New Ordinary Shares;

4. Resolution 4, which is a special resolution to amend the Company's articles of association to provide for rights attaching to the Deferred Shares; and

5. Resolution 5, which is a special resolution to authorise the Directors to allot the Ordinary Shares referred to in Resolution 2 on a non-pre-emptive basis.

6 Resolution 6, which is a special resolution to authorise the Directors to allot the Ordinary Shares referred to in Resolution 3 on a non-pre-emptive basis.

MEL, which holds 20.36 per cent. of the Existing Ordinary Shares, has agreed to vote in favour of Resolutions 1, 2, 4 and 5 to be proposed at the General Meeting.

The authorities to be granted pursuant to Resolutions 2, 3, 5 and 6 shall expire on the date of the next annual general meeting of the Company.

   8.         Sale of New Ordinary Shares 

In the event that all Resolutions are passed, Shareholders who wish to dispose of any of their New Ordinary Shares may do so by contacting Peterhouse Capital within 15 days of the announcement of results of the General Meeting. Peterhouse Capital has agreed to use its reasonable endeavours, to arrange the execution of a sale of any New Ordinary Shares held by Shareholders on the date of the General Meeting who wish to dispose of their New Ordinary Shares at a price of GBP0.00025 each, being the Conversion Price of the CLNs.

Any Shareholder wishing to take advantage of the above sale facility should contact Peterhouse Capital directly on 020 7469 0933.

   9.         Action to be taken 

Shareholders will find a Form of Proxy enclosed for use at the General Meeting. Whether or not you intend to be present at the General Meeting, you are requested to complete and return the Form of Proxy in accordance with the instructions printed thereon as soon as possible. To be valid, completed Forms of Proxy must be received by 15 June 2018, no later than 48 hours before the time appointed for holding the meeting. You are entitled to appoint a proxy to attend and to exercise all or any of your rights to vote and to speak at the General Meeting instead of you. Completion of the Form of Proxy will not preclude you from attending and voting at the General Meeting in person if you so wish. Your attention is drawn to the notes to the Form of Proxy.

   10.       Recommendation 

The Directors consider the Resolutions to be in the best interests of the Company and the Shareholders as a whole. The Directors therefore recommend that you vote in favour of the Resolutions.

MEL which holds 20.36 per cent of the Existing Ordinary Shares, has agreed to vote in favour of Resolutions 1, 2, 4 and 5 to be proposed at the General Meeting, notice of which is set out in this Document.

Yours faithfully,

For and on behalf of the Board

Melissa Sturgess

Chairman

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

NOGLLFVRRFISIIT

(END) Dow Jones Newswires

June 05, 2018 02:01 ET (06:01 GMT)