TIDMZMNO
RNS Number : 8406N
Zamano PLC
11 August 2017
This announcement contains inside information
zamano plc
("zamano" or the "Company")
Disposal of All of the Company's Operating Business and
Assets
zamano announces that, further to the announcement on 9 August
2017, it has entered into a conditional sale and purchase agreement
(the "SPA") to sell all of the Company's operating business and
assets to Kilavan Holdings Limited (the "Purchaser" or "Kilavan")
(the "Disposal").
On 3 February 2017 the Company announced its intention to wind
down the existing business lines in order to protect the cash
position on the balance sheet. The board of zamano ("Board") has
considered its options for effecting this course of action in a
manner that maximises the cash available for distribution to
shareholders. The Board concluded that the wind down would most
effectively be completed by a sale of the Company's remaining
operating business and assets comprising its premium rate SMS
("PRSMS") business. Accordingly, having conducted discussions with
several parties, the Company has entered into the SPA with Kilavan,
a company formed by the existing management team of this
business.
Under the terms of the SPA, zamano is proposing to sell the
entire issued share capital of its wholly-owned subsidiaries which
operate the PRSMS business, zamano Solutions Limited and zamano
Limited (the "Target Companies"), to Kilavan for a total
consideration of EUR1 on a debt-free / cash-free basis (agreed
between the parties as being the net amount of cash, debt, debtors
and creditors of the Target Companies) (the "Consideration"). Based
on an effective date of 30 June 2017, the amount of cash which
would have to remain in the Target Companies for this purpose is
EUR982,000. This represents the amount by which the Target
Companies current liabilities exceeded their current assets at that
date and such amount would be retained by the Target Companies to
pay those excess liabilities in all sale or wind-down
scenarios.
Pursuant to the terms of the SPA, zamano is making a
pre-completion contribution to the Target Companies of EUR555,000.
This amount is primarily provided in respect of known and unknown
liabilities that may arise after completion of the Disposal which
may have otherwise been protected through post-completion warranty
and indemnity protection.
Following completion of the Disposal, zamano will retain cash of
approximately EUR5,582,000 out of which it shall discharge existing
Plc liabilities and transaction expenses related to the Disposal of
approximately EUR282,000 and will have no other significant assets
or liabilities. Following completion of the Disposal, the Board
will commence the process required for the company to be in a
position to make a return of cash to shareholders. Such process is
expected to take up to six months. During this time, the Board
considers it is in Shareholders' interest to continue to examine
possible investment opportunities whilst this process is ongoing.
The Board confirms that any material or significant investment
opportunity will be conditional on Shareholder approval being
obtained.
The Disposal constitutes a disposal resulting in a fundamental
change in business of zamano pursuant to Rule 15 of the AIM Rules
and the ESM Rules and requires the approval of the Company's
shareholders ("Shareholders"). Contingent on the approval of the
Disposal by Shareholders, the Company will become an AIM Rule 15
cash shell pursuant to the AIM Rules and an investing company
pursuant to the ESM Rules. Accordingly, the Company will have a
period of six and twelve months under the AIM Rules and the ESM
Rules, respectively, to complete a reverse takeover before trading
in its shares will be automatically suspended by the relevant
exchange. The Company will also seek Shareholder approval for its
investing policy. A circular, which will contain further details of
the Disposal and the investing policy (the "Circular") is expected
to be posted to Shareholders shortly and will also be available on
the Company's website at www.zamano.com.
Kilavan is a newly incorporated company owned by the existing
management team of the Target Companies (Brian Gilsenan and Michael
Connolly). As Mr Gilsenan is a director of zamano Solutions Limited
and Mr Connolly is a director of both Target Companies, the
Disposal also constitutes a related party transaction pursuant to
Rule 13 of the AIM Rules and ESM Rules and the Directors consider,
having consulted with the Company's nominated adviser and ESM
advisor, that the terms of the transaction are fair and reasonable
insofar as its Shareholders are concerned.
The Company's three largest shareholders comprising Pageant
Holdings Limited (holding 19,747,442 ordinary shares), The Ulster
Bank Diageo Venture Fund Limited Partnership (holding 13,888,889
ordinary shares) and Grillon Investments (holding 9,085,928
ordinary shares) have each undertaken to vote in favour of the
Resolutions to be proposed at the extraordinary general meeting
(the "EGM"). In aggregate, these shareholdings represent
approximately 43 per cent of the existing issued share capital of
zamano.
Notice of the EGM to approve the Disposal and the investing
policy will be included in the Circular that will shortly be posted
to shareholders and it is expected to be held at the Conrad Hotel,
Earlsfort Terrace, Dublin 2 on 30 August 2017.
Summary of the proposals:
-- zamano to dispose of all of the Company's business operations
and assets for a total consideration of EUR1. Based on an effective
date of 30 June 2017, the amount of cash which would have to remain
in the Target Companies for this purpose is EUR982,000. This
represents the amount by which the Target Companies current
liabilities exceeded their current assets at that date and such
amount would be retained by the Target Companies to pay those
excess liabilities in all sale or wind-down scenarios.
-- Pursuant to the terms of the SPA, zamano is making a
pre-completion contribution to the Target Companies of EUR555,000.
This amount is primarily provided in respect of known and unknown
liabilities that may arise after completion which may have
otherwise been protected through post completion warranty and
indemnity protection.
-- Upon completion of the Disposal, zamano will retain cash of
approximately EUR5,582,000 out of which it will discharge existing
Plc liabilities and transaction expenses related to the Disposal of
approximately EUR282,000 and will have no other significant assets
or liabilities.
-- All of the operating business of the Company is within the
Target Companies. Accordingly, the Target Companies generated a
pre-tax loss for the 12 months to 31 December 2016 of EUR5.2
million.
-- Following completion of the Disposal, the Board will commence
the process required for the company to be in a position to make a
return of cash to shareholders and / or continue to examine
possible investment opportunities. Such process is expected to take
up to six months.
-- Whilst this process is ongoing, zamano will be classified as
an AIM Rule 15 cash shell under the AIM Rules and an investing
company under the ESM Rules with a new investing policy implemented
for the purpose of reviewing potential investment opportunities
that may arise.
-- Investing policy will have a focus on target companies with
either strong existing profitability or significant growth
potential, operating in both cases in attractive underlying
markets.
Commenting on the Disposal, Colin Tucker, Interim Chairman
said:
"The Board has worked hard to achieve the Disposal and carefully
compared and considered the merits of the Disposal against all
alternatives that were available to the Company and is satisfied,
based on its analysis of all such alternatives, that the Disposal
provides the Company with the most appropriate option in terms of
(1) maximising the amount of cash that will be available for
distribution to shareholders or reinvestment; (2) minimising the
remaining contingent liabilities of the Group and the risk that the
remaining cash will not be available for shareholders; (3)
providing the highest level of certainty regarding completion and
costs; and (4) achieving the highest level of simplification of the
remaining group structure. We believe the Disposal is the most
favourable outcome for our shareholders at this time."
Background to and reasons for the Disposal
Regulatory Environment
For some time, the regulatory environment for zamano's core
business has posed an increasing challenge to the Company's
operations. PayForIt, a UK mobile network operators joint
initiative to further regulate mobile payments was implemented by
all major UK mobile network operators on 1 November 2016 and has
had a significant adverse impact on all of zamano's UK business
lines. The Company has experienced a significant reduction in new
business in the UK market as a direct result of this change and
operations in that market are in the process of being discontinued
and realising the remaining revenue from existing clients.
Furthermore, actions by certain mobile network operators in Ireland
in 2017 have also further significantly impacted the Group's
business in Ireland.
Following the implementation of PayForIt in November 2016 the
Group has taken steps to reduce the cost base of the business. This
included the implementation of a redundancy programme across all
divisions (reducing payroll and related costs by approximately
EUR330,000 on an annualised basis) as well as a number of other
cost saving measures including reducing the number of Directors and
streamlining I.T. and customer service costs.
Whilst these actions achieved material cost reductions it became
clear to the Board during early 2017 that the impact of the
regulatory changes across zamano's business lines will prevent the
Group from maintaining a cashflow positive trading position going
forward. In light of this, the Board took the decision in early
February 2017 to formally wind down the existing business lines in
order to protect the cash position on the balance sheet.
Alternative Exit Considerations
In assessing the merits of the Disposal, the Board has
considered its options for effecting the wind down in a manner that
maximises the cash available for distribution to shareholders
following the wind down. This included a full orderly wind-down and
termination of the current activities overseen by the Company
itself as well as a small number of approaches from third parties
that expressed an interest in acquiring the Target Business.
The Board has carefully compared and considered the merits of
the Disposal against these alternatives and has formed the view,
based on its analysis of all the available alternatives, that the
Disposal provides the Company with the most appropriate option in
terms of (1) maximising the amount of cash that will be available
for distribution to shareholders or reinvestment; (2) minimising
the remaining contingent liabilities of the Group and the risk that
the remaining cash will not be available for shareholders; (3)
providing the highest level of certainty regarding completion and
costs; and (4) achieving the highest level of simplification of the
remaining group structure.
In the event that the Disposal is not approved by shareholders
or does not complete for some other reason, the Board's intention
will be to proceed immediately to progress the wind down of all
existing business operations.
Details of the Disposal
If approved, the Disposal will be effected in accordance with
the terms of the SPA. Pursuant to the SPA, zamano is proposing to
sell the entire issued share capital of the Target Companies to
Kilavan for a total consideration of EUR1 on a debt-free /
cash-free basis (agreed between the parties as being the net amount
of cash, debt, debtors and creditors of the Target). Based on an
effective date of 30 June 2017, the amount of cash which would have
to remain in the Company for this purpose is EUR982,000. This
represents the amount by which the Target Companies current
liabilities exceed their current assets and such amount is required
to be retained by the Target Companies to pay those excess
liabilities in all sale or wind-down scenarios.
Pursuant to the terms of the SPA, zamano is making a
pre-completion contribution to the Target Companies of EUR555,000.
This amount is primarily provided in respect of known and unknown
liabilities that may arise after completion which may have
otherwise been protected through post completion warranty and
indemnity protection. Such liabilities would include regulatory,
employment and any other commercial issues that may arise. The
warranties of zamano (as Seller) that remain in the SPA are limited
to fundamental warranties such as title to shares of the Target
Companies being sold and the capacity of zamano to enter this
transaction.
Upon completion of the disposal, zamano will retain cash of
approximately EUR5,582,000 out of which it will discharge existing
Plc liabilities and transaction expenses related to the Disposal of
approximately EUR282,000 and will have no other significant assets
or liabilities.
Completion of the Disposal is conditional, inter alia, on
approval of the Disposal by Shareholders and completion of certain
inter-group distributions and contributions necessary for the
purpose of the disposal.
Future Strategy and Investing Policy
Following the Disposal, it is estimated that zamano's net cash
position will be approximately EUR5,582,000, which will be used in
part to discharge zamano's existing Plc liabilities and transaction
costs related to the Disposal of approximately EUR282,000.
Following the discharge of such liabilities and transaction
expenses related to the Disposal, it is expected that zamano will
retain approximately EUR5,300,000 of cash, and will have no other
significant assets or liabilities.
Following completion of the Disposal, the Board will commence
the process required for the company to be in a position to make a
return of cash to shareholders. Such process is expected to take up
to six months. During that time, the Board considers it is in
Shareholders' interest to continue to examine possible investment
opportunities whilst this process is ongoing. The Board confirms
that any material or significant investment opportunity will be
conditional on Shareholder approval in due course.
Following the Disposal, the Company will be classified as an AIM
Rule 15 cash shell company under the AIM Rules and an investing
company under the ESM Rules. Details of the Company's proposed
investing policy going forward will be set out in Section 8 of the
Circular, which is also subject to Shareholder approval. The
investing policy will have a focus on opportunities with either
strong existing profitability or significant growth potential, in
both cases in attractive underlying markets.
Recommendation
The Directors consider the passing of the Resolutions to be
proposed at the EGM to be in the best interests of zamano and its
Shareholders as a whole and, accordingly unanimously recommend that
Shareholders vote in favour of the Resolutions. Furthermore,
Pageant Holdings Limited, The Ulster Bank Diageo Venture Fund
Limited Partnership and Grillon Investments, the largest
shareholders of the Company, support the Directors view and,
accordingly, have undertaken to vote in favour of the Disposal in
respect of their aggregate shareholdings of 42,722,259 Ordinary
Shares representing approximately 43 per cent of the issued share
capital of zamano.
zamano plc
Colin Tucker, Interim Tel: + 353 1 488 5820
Chairman
Investec Corporate Finance
Shane Lawlor/Ian McGreal Tel: + 353 1 421 0000
Cenkos Securities
Derrick Lee/Neil McDonald Tel: + 44 (0) 131 220
6939
MCOMM Communications Consultants
Richard Moore Tel: +353 1 661 3788
Mob: +353 87 241 4751
This information is provided by RNS
The company news service from the London Stock Exchange
END
DOCUAUNRBOAWAAR
(END) Dow Jones Newswires
August 11, 2017 12:27 ET (16:27 GMT)
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