Disposal and Notice of EGM
27 Diciembre 2006 - 1:01AM
UK Regulatory
RNS Number:6348O
NBA Quantum PLC
22 December 2006
NBA Quantum PLC
22 December 2006
PROPOSED DISPOSAL OF THE BUSINESS ASSETS OF DMS AND NOTICE OF EGM
NBA Quantum PLC announces that it has entered into a conditional agreement to
sell the business assets of its trading subsidiary, DMS International
(Construction Consulting) Inc. to DMS International (WBE/MBE) Inc., a new
company which has been set up and is controlled by Tara Glick, the current
manager of DMS.
In view of its size, the Disposal is conditional upon the approval of
Shareholders, which is to be sought at an EGM of the Company to be held on 15
January 2007.
Information on DMS
DMS was formed by Neil Sinclair, a former director of NBA, in 1988 to provide
professional construction management services to a wide range of public and
private organisations. In particular, the services included the provision of
cost management, constructability review, scheduling and cost control during
construction.
NBA acquired DMS in March 2001 to provide a platform for the development of
NBA's dispute resolution and multimedia services in the United States.
Reasons for the Disposal
DMS is focussed on certain clients and has relied heavily on the relationship
between them and Neil Sinclair and his deputy Tara Glick. As a result, since its
acquisition, DMS has remained a stand alone operation and it has continued to be
a local business with its own service base.
DMS's main area of business is the provision of cost estimating and management
services and these do not provide a direct link to the business of the remainder
of the Group. The DMS offices opened in Boston and Chicago in 2004 have had a
limited impact on the business in this regard.
In early 2005 Neil Sinclair stated his wish to step down from day-to-day control
of DMS. The issue of finding a replacement for Neil as president of DMS was a
major concern to the future health of DMS as a business within the Group and a
barrier to the DMS growth plans. As a result, NBA undertook a strategic review
of the DMS business with the primary intention of resolving the issue of
president succession and protecting the DMS business from the impact of Neil
Sinclair's departure on both the client base and the staff.
There were three options open to the Company. In order of preference these were:
Option A - The acquisition of a suitable business with existing management
capable of absorbing the DMS operation and satisfactorily managing the expanded
operation.
Option B - Identify and head hunt a suitable replacement for Neil Sinclair.
Option C - Attract a buyer to take over DMS and thereby liquidate NBA's
investment.
After much searching, Option A did not prove possible. The potential benefits of
the acquisition targets identified were not matched by the initial consideration
required and, moreover, such a move would have required significant management
from the UK, which was not feasible.
The Board were also not able to find a suitable replacement to take over from
Neil Sinclair. Under both Option B and Option C there was concern as to Neil
Sinclair's position within the business as his strong client relationships were
seen as pivotal to the business.
It was agreed that from February 2006 Neil Sinclair would take on a consultancy
role within DMS, which relieved him of the day-to-day management role that he
wished to step away from. Tara Glick then took on the management role as
reported in the interim statement in March 2006.
It was recognised that NBA was in a commercially difficult situation with a
requirement to not only maintain the business, but also to ensure that the value
contained in it remained largely intact.
The Board explored a number of options aimed at preserving the business
including a proposal from Tara Glick. This was that the business of DMS could be
significantly expanded by participation in the US Federal and State set-aside
programmes for disadvantaged groups. Participation in the programmes, however,
is conditional upon the company being under the ownership and business control
of a member of a disadvantaged group of which Tara Glick qualifies under gender
and ethnicity. Therefore, this effectively eliminates the possibility of DMS
acting as sole contractor or having direct participation in the management of
the business.
In these circumstances and following negotiations with Tara Glick, it has been
agreed that the business assets will be sold to DMS International (WBE/MBE) Inc.
As a result, conditional upon the approval of Shareholders, WBE/MBE will acquire
the current client base and staff of DMS whilst the financial assets of DMS will
remain with NBA. Faced with the circumstances set out above this represents the
best available course of action for NBA and for the business.
Financial Performance
The financial performance of DMS for the three years ended 30 June 2004, 2005
and 2006 has been as follows:
Year Year Year
ended 30 ended 30 ended 30
June 2006 June 2005 June 2004
#'000 #'000 #'000
Turnover 1,222 1,120 1,110
Operating profit 220 158 226
Profit after tax 132 96 126
Net assets 1,050 956 849
$/# exchange rate 1.8494 1.7925 1.8137
Principal terms of the Disposal
Subject to Shareholder approval, WBE/MBE will acquire the business assets of DMS
for an aggregate consideration of $1.2m, together with the prepaid expenses of
the business as at that date and the fixed assets at book value, amounting to
approx $83,000.
DMS will provide an interest free working capital loan of $100,000 to WBE/MBE.
In return, WBE/MBE will act for DMS in the collection of outstanding debts in
respect of all work completed or in progress as at 31 December 2006 which are
anticipated to total around $650,000.
The consideration will be paid as to $10,000 in January 2007, prepaid expenses
of $46,000 in the first quarter of 2007, $200,000 in January 2008, $190,000 in
January 2009 and the balance of the consideration together with the working
capital loan in annual instalments in April each year beginning 2010 by way of
35% of the profits of WBE/MBE for the year ended 31 December 2009 and subsequent
years.
WBE/MBE will be entitled to draw down from the receipt of such collections,
subject to prior approval by NBA and on a collateralised basis, as additional
working capital in any quarter amounts of up to $250,000 with any amounts drawn
being repaid within 7 days of the end of each quarter.
The agreement includes provisions whereby the business sold to WBE/MBE may, in
certain circumstances be transferred back to DMS.
DMS will continue as a separate company under NBA's ownership and there are
non-compete provisions with WBE/MBE for the earlier of one year from the date of
the final payment or three years from completion.
It is envisaged that as WBE/WME expands there will be areas where the two
companies will work together on commercial terms. NBA anticipates developing
services for the US market which would work either alongside WBE/MBE or on
non-compete products such as graphical presentation.
Use of proceeds
It is envisaged that the proceeds from the sale of DMS and the collection of the
outstanding DMS debts will be used as working capital to facilitate the
development and implementation of the Group strategy going forward.
Post disposal strategy
Following the Disposal, the Group will focus on its core activities covering
claims and dispute resolution services together with graphical multi-media
presentation work. It will aim to have a geographical diversification based on
its domestic and international clients with these being serviced from its
current offices in the UK and Australia. These offices will also cover business
for South East Asia and the Middle East.
NBA will retain the right to use the name DMS, which is well known in the
construction industry in the Washington, Maryland and Virginia areas for
non-competing products such as graphical presentation of claims. The Group also
has the ability to use the existing DMS offices as a base for US operations if
an opportunity arises. It is envisaged that as WBE/MBE expands further that
there will be opportunities for NBA to work with WBE/MBE, particularly, if it
requires claims based expertise and personnel.
Related Party
As Tara Glick was a director of DMS within the last 12 months and she is a
director and controlling shareholder in WBE/MBE, this transaction constitutes a
related party transaction under the AIM Rules.
Circular
A circular containing information about the proposed disposal and giving notice
of an EGM has today been posted to Shareholders, together with the related
Form of Proxy.
EGM
An EGM has been convened for 11.00 a.m. on 15 January 2007 at the offices of NBA
at 3000 Cathedral Hill, Guildford, GU2 7YB at which the Resolution to approve
the Disposal will be put to Shareholders. You are requested to complete and
return the Form of Proxy, whether or not you intend to be present at the
meeting. To be valid, Forms of Proxy must be completed and returned so as to
reach the Company's registrar, Capita Registrars (Proxies), The Registry, 34
Beckenham Road, Kent, BR3 4TU as soon as possible and, in any event, so as to
arrive not later than 48 hours before the time fixed for the meeting.
Recommendation
The Board, having examined the options available to it, considers that the sale
of the business assets of DMS to WBE/MBE is in the best interests of the Company
and, having consulted with Brewin Dolphin, that the terms of the transaction are
fair and reasonable insofar as its Shareholders are concerned.
The Board, therefore, unanimously recommends Shareholders to vote in favour of
the Resolution as they intend to do so in relation to their holdings of
3,370,903 shares representing 51.54% of the shares entitled to vote on the
Resolution.
Yours faithfully
P D Elliott-Hughes
Chairman
DEFINITIONS
The following definitions apply throughout this document unless the context
otherwise requires or unless otherwise stated:
"Act" the Companies Act 1985 (as amended)
"AIM" the AIM market operated by the London
Stock Exchange
"AIM Rules" the rules of the London Stock Exchange
governing admission to and the operation
of AIM
"Brewin Dolphin" Brewin Dolphin Securities Ltd, the
Company's nominated adviser
"Board" or "Directors" the directors of the Company whose names
are set out page 3 of this document
"Circular" the document dated 22 December 2006,
containing details of the Disposal
"Company" or "NBA" NBA Quantum PLC
or "Group"
"Disposal" the proposed disposal of the business
assets of DMS
"DMS" DMS International (Construction
Consulting) Inc.
"EGM" or "Extraordinary the extraordinary general meeting of the
Company convened
General Meeting" for 11.00 a.m. on 15 January 2007
"Form of Proxy" the form of proxy for use at the EGM
"Group" the Company and its subsidiaries at the
date of this document
"London Stock Exchange" London Stock Exchange plc
"Ordinary Shares" the Ordinary Shares of 10p each in the
capital of the Company in issue as at the
date of this document
"Resolution" the ordinary resolution contained in the
notice of the EGM set out in the Circular
"Sale Agreement" the conditional agreement relating to the
Disposal between the Company, DMS and WBE/
MBE
"Shareholders" holders of Ordinary Shares
"Share Option Scheme" the NBA Quantum PLC share option scheme
"UK" or "United Kingdom" United Kingdom of Great Britain and
Northern Ireland
"United States" The United States of America; its
territories and possessions, any state of
the United States and the District of
Columbia
"WBE/MBE" DMS International (WBE/MBE) Inc.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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