22nd Mar 2006 07:00
Capcon Holdings PLC22 March 2006 Capcon Holdings PLC22 March 2006 Capcon Holdings plc ("Capcon" or the "Company" or the "Group") Board recommendation Further to the announcement issued by the Company on 3 March 2006 concerning theposting of a circular to Shareholders in relation to the convening of anExtraordinary General Meeting of the Company ("EGM") to be held on 29 March 2006to consider proposals for: 1. the constitution of £800,000 (nominal) 10% Convertible RedeemableGuaranteed Secured Loan Stock 2006 (the "Convertible Loan Stock"); or failingapproval thereof by Shareholders 2. the sale (the "Disposal") of the business, assets and certainliabilities of the Audit and Stocktaking and the Commercial InvestigationsDivisions of the Capcon group (the "Audit and Investigations Businesses") to acompany in which the executive directors of the Company are interested the Company has received an alternative offer to acquire the Audit andInvestigations Businesses for £1 million from a competitor of the Audit andStocktaking division (the "Alternative Proposal"). The Directors reiterate their recommendation that shareholders vote in favour ofResolutions 1, 2, and 4 to be proposed at the EGM to enable the constitution andissue of the Convertible Loan Stock and the subscription for the ConvertibleLoan Stock (the "Subscription") by the Directors, certain shareholders of theCompany and third parties. As set out in the announcement of 3 March, after considering several alternativemeans of raising urgently needed cash the Board has concluded that theSubscription is the most efficient and certain route to raising the urgentlyrequired funds in a short timescale, whilst minimising disruption to the Capcongroup businesses overall. The purpose of the EGM is to seek shareholder approvalfor the arrangements that will facilitate the Subscription which will providethe Company with up to £800,000 of working capital without reducing the valueand substance of the existing enterprise. The Board does not believe that it isin Shareholders' interest to break up the Company's businesses. However, should the constitution and issue of the Convertible Loan Stock not beapproved by Shareholders at the EGM, it is intended that Resolution 5, toapprove the Disposal, will be put to Shareholders as an alternative in order toenable the Group to meet its financial obligations. The Disposal has beenstructured so as to ensure that the existing opportunities for cross-fertilisation between the various parts of the Group's businesses can still becaptured through mutual referral arrangements. This will provide the Companywith a vital lifeline while the remaining business can be developed andalternative strategies implemented by the Board. The Alternative Proposal doesnot provide the Company with certainty that funds will be received or receivedin the required time, nor does it assure the Company of the continued benefitfollowing the Disposal of the current level of business provided to the Groupthrough referrals made to the rest of its businesses by the Audit andInvestigations Businesses. Accordingly, the Board cannot recommend that theAlternative Proposal be considered as a viable alternative to the Disposal. Capcon Holdings plc Paul Jackson Tel: 0870 067 5050 Insinger de Beaufort Louis Castro Tel: 020 7190 7000 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
MTR.L