TIDMTXH
RNS Number : 3273M
Tex Holdings PLC
13 September 2019
This announcement contains inside information for the purposes
of Article 7 of Regulation 596/2014 ("MAR"). Upon the publication
of this announcement via a regulatory information service, this
information is now considered to be in the public domain.
13 September 2019
Tex Holdings plc
Proposed related party transaction, proposed transfer of the
Company's listing category on the official list from premium
listing to standard listing and
notice of extraordinary general meeting
The Board of Tex Holdings plc ("Company") today announces a
proposed related party transaction with Mr A R B Burrows, a
director of the Company ("Proposed Transaction") and in addition
the Company's intention to seek shareholder approval for the
transfer of the Company's listing from Premium Listing to Standard
Listing ("Proposed Transfer").
A circular will be published today setting out the background to
and the reasons for the Proposed Transaction and Proposed Transfer
and the implications for the Company's Shareholders ("Circular").
The Circular will also contain a notice convening an extraordinary
general meeting of the Company ("General Meeting") at which
Shareholders are invited to consider the Proposed Transaction and
Proposed Transfer. The General Meeting will be held at Tex Holdings
plc, Claydon Business Park, Gipping Road, Great Blakenham, Ipswich,
Suffolk IP6 0NL at 12.30 pm on 11 October 2019.
Proposed Transaction
In announcements made on 15 April 2019 and 29 April 2019, the
Company stated that because of weak trading, it had breached
certain financial performance covenants contained in the banking
documentation with its bank, National Westminster Bank PLC.
Following this, NatWest informed the Company that it would be
withdrawing the Company's overdraft facility of GBP3.2 million
("NatWest Overdraft").
The directors of the Company (excluding Mr A R B Burrows)
("Independent Directors") have approached other debt funders to
obtain replacement sources of funding for this facility but without
success. However, Mr A R B Burrows has agreed that Edward Le Bas
Properties will provide the Company with up to GBP7 million in
secured loan facilities in order to replace the NatWest Overdraft
and to provide additional finance to build a new factory and
associated working capital.
Edward Le Bas Properties is a Related Party under Chapter 11 of
the Listing Rules by virtue of it being an associate of Mr Burrows.
Mr Burrows is an existing Director, was previously for many years
Chairman of the Company and Mr Burrows' associates are currently
interested in approximately 40 per cent. of the ordinary shares in
the Company.
Therefore the availability and draw down of the Edward Le Bas
Properties loan facility and the grant of security in respect of it
("Proposed Transaction"), are conditional upon the approval of
Shareholders of the Company in accordance with Chapter 11 of the
Listing Rules.
Under the Listing Rules, Edward Le Bas Properties and Mr
Burrows, as related parties of the Company, cannot vote on the
Proposed Transaction. Accordingly, Edward Le Bas Properties has
undertaken to abstain and Edward Le Bas Properties and Mr Burrows
(who does not hold any Ordinary Shares personally and would
therefore not be entitled to vote) have undertaken to ensure that
their associates will abstain, from voting on the relevant
Resolution.
The Board believes that it is in the interests of the Company
and the Shareholders as a whole to have the financial certainty
that committed long term debt of this quantum provides.
Consequently there is no immediate plan to refinance the loan
facility with a bank or financial lending institution and given the
repayment schedule, the proposed Edward Le Bas Properties loan
facility is likely to be in place in whole or in part for at least
7 years. The Board will continue to review the financing
arrangements going forward to assess whether there is any benefit
in refinancing the Edward Le Bas Properties loan facility.
Background to and reasons for the Proposed Transfer from Premium
Listing to Standard Listing
The listing of the Company's Ordinary Shares was suspended on 30
April 2019 at the Company's request pending clarification of its
financial position. At the time, the Company could not publish its
financial statements for the year ended 31 December 2018 within the
period stated in the Listing Rules. The Company has now published
its financial statements for the year ended 31 December 2018 and
has had discussions with the FCA as to whether it would meet the
requirements for a Premium Listed Company prior to or following the
Proposed Transaction.
In order to restore the Company's listing prior to the approval
of the Proposed Transaction the FCA required comfort as to the
ongoing viability of the Company. This was not possible to provide
without the Proposed Transaction being entered into. Should the
Proposed Transaction be approved by Shareholders, the FCA also
required that the Company demonstrate that, despite having a
controlling shareholder, it is able to carry on an independent
business as its main activity. One of the criteria to satisfy this
is that the Company can access financing other than from its
controlling shareholder. Given in particular the scale of the
Company's asset base and that the Company does have some other
funding in place and in prospect, the Independent Directors believe
this to be the case. However the Company will not be able to access
other funding of a similar scale for a period of time following
receipt of the Edward Le Bas Properties loan facility.
Under the Listing Rules, there are two principal categories of
listing available for the equity shares of commercial companies
traded on the Main Market of the London Stock Exchange, where the
Company has had its primary listing for over 40 years. There is the
Standard segment that complies fully with the relevant European
directives, as adopted by all member states in the European Union;
and the Premium segment to which the FCA applies a wide range of
additional 'super-equivalent' provisions.
The Directors have previously considered that a transfer to the
Standard segment could be more consistent with the Company's size
and structure due to the reduction in compliance costs and the
greater degree of regulatory flexibility that a Standard listing
would provide. However the Company has not wanted to incur the cost
involved with a circular to Shareholders. As Shareholders are
required to vote on the Proposed Transaction and taking into
account the issues described above for the Company to restore its
Premium Listing, the Directors believe that it is an appropriate
time to also ask Shareholders to vote on the transfer to the
Standard segment of the Official List ("Proposed Transfer").
The Company's current size means that as a Premium listed
company possible transactions, in particular those involving its
Controlling Shareholder, are likely to require Shareholder approval
requiring the production of a shareholder circular, the calling of
a general meeting and the involvement of advisers such as a
sponsor, accountants and lawyers. This also takes up significant
management resource and leads to significant additional costs and
delays. Because of the Company's reduced market capitalisation
(approximately GBP4.6 million as at 29 April 2019, being the latest
practicable date prior the date when the Company's shares were
suspended), while the Company remains admitted to the Premium
segment, even very small transactions could be classified as class
1 transactions or fall under Chapter 11, Related Party
transactions. The Board has carefully considered the commercial
requirements of the Company in the medium term and believes that
the additional regulatory requirements imposed by maintaining its
listing on the Premium segment are no longer in the best interests
of the Company.
Under the Listing Rules, the Proposed Transfer requires the
Company to first obtain the prior approval of the Shareholders. The
approval of a majority of not less than 75 per cent. of all
Shareholders voting (whether in person or by proxy) at the General
Meeting will be required. In addition, as the Company has a
controlling shareholder, approval is also required from a majority
of votes attaching to the Ordinary Shares excluding Mr Burrows (who
is the Controlling Shareholder) and his associates. Accordingly, Mr
Burrows (who does not hold any Ordinary Shares personally and would
therefore not be entitled to vote) has undertaken to ensure that
his associates will abstain, from voting on Resolution 2.
Pursuant to the Listing Rules, the date of transfer of listing
category must not be less than 20 business days after the passing
of the Resolutions. The Board proposes to apply as soon as possible
for the transfer to be effected and so, subject to the passing of
the Resolutions and agreement by the FCA, it is anticipated that
the date of transfer will be on or around 12 November 2019. The
Ordinary Shares will, on completion of the Proposed Transfer,
continue to be traded on the Main Market, but under the designation
"Listed: Standard".
The Proposed Transaction and the Proposed Transfer, will only go
ahead if both proceed and therefore both Resolutions need to be
approved by Shareholders by the requisite majority.
The transfer to the Standard Listing still requires the Company
to provide comfort with regard to its ongoing viability and also to
satisfy the FCA with regard to its obligations under the Listing
Rules. The Directors believe this will be possible once the
Resolutions have been approved by Shareholders, however the
Proposed Transfer is not certain and it may be that the FCA do not
agree that the Company can maintain a listing on the Official
List.
Further details of both the Proposed Transaction and Proposed
Transfer is provided in the Circular.
A copy of the Circular will be shortly available at
www.tex-holdings.co.uk/investors/ and it will also be submitted to
the National Storage Mechanism and, once submitted, will be
available for inspection at www.morningstar.co.uk/uk/NSM.
Enquiries
C.A. Parker
01473-830144
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END
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