Cancellation of AIM Listing and Reconstruction

15th Jun 2009 07:30



15 June 2009

Albany Capital plc

("Albany" or "the Company")

Cancellation of AIM Listing

Reconstruction and Voluntary Winding Up of the Company

Albany, (AIM: ALB) the pre-IPO investment company, announces that following a review of the Company's operations, the Board has taken the decision to implement proposals which seek to provide a more efficient investment structure for the Company and its Continuing Shareholders and unlock the value of the Company's underlying investments for Non-Continuing Shareholders.

The proposals involve amongst other things the cancellation of the Company's shares to trading on AIM following which the Company will enter into a members' voluntary liquidation and effect a scheme of reconstruction under section 110 of the Insolvency Act 1986.

Reasons for the Proposals

The Board wishes to effect the Proposals for the following reasons:

to remove the on-going costs of maintaining an AIM listing and the associated regulatory burden;

to give Continuing Shareholders an opportunity to continue to hold their winding-up entitlements through a private unlisted company incorporated in the Cayman Islands, Albany Capital Group,  which will continue to focus its investment activities on China and which the Directors consider will provide a more efficient investment structure better able to secure additional funding going forward; and

to give Non-Continuing Shareholders an opportunity to realise the discount to NAV at which the Ordinary Shares currently trade via a distribution of the principal investments of the Company.

Choices Available to Shareholders 

Under the Proposals, Shareholders (other than Small Shareholders) will be given the choice of receiving in respect of their entire holding of Ordinary Shares:

a proportionate number of shares in Albany Capital Group if they choose the Continuation Option; or

a proportionate distribution of the Company's investments and other assets (other than the Deminimis Assets and the Hermes Receivable) in respect of their holding if they choose the Non-Continuation Option.

Shareholders who fail to make an Election or who do not make a valid Election will be deemed to have elected for the Continuation Option in respect of their entire holding of Ordinary Shares and as a result they will receive Continuation Shares.

Circular to shareholders

A circular (the "Circular") has been posted to Shareholders, Warrant Holders and FSR Holders today with details of the Proposals, to explain why your Board believes the Proposals are in the best interests of the Company and its Shareholders, Warrant Holders and FSR Holders as a whole and to recommend that Shareholders vote in favour of the Resolutions. The Notices convening the Meetings at which the Resolutions will be proposed are set out at the end of the Circular which will be made available on the Company's website at www.albanycapital.co.uk.

Further information on Albany Capital Group can be found in paragraph 1 in Part IV of the Circular.

Process for Cancellation

Pursuant to Rule 41 of the AIM Rules, the Board has notified the London Stock Exchange of its intention to cancel the admission of the Ordinary Shares to trading on AIM (subject to the passing of Resolution 1 at the First General Meeting). If the Resolution 1 at the First General Meeting on 16 July 2009 is passed, the cancellation of trading on AIM will become effective from 07:00 A.M. on 24 July 2009. Shareholders should note that the Ordinary Shares will remain disabled in Crest and Shareholders will not be able to effect any transactions in the Ordinary Shares post Cancellation.

 

Dealings and settlement

The share register of the Company will be closed and the Ordinary Shares will be disabled in CREST at 6.00 p.m. on 13 July 2009. The last day for dealings in Ordinary Shares on the London Stock Exchange for normal account settlement (to enable settlement prior to the General Record Date) will accordingly be 8 July 2009. After 8 July 2009, dealings should be for cash settlement only and will be registered in the normal way if the transfer, accompanied by the documents of title, is received by the Registrar by 5.00 p.m. on 13 July 2009. The Ordinary Shares will be suspended from trading on AIM at 7 a.m. on 14 July 2009

Unless otherwise defined herein, terms in this announcement shall have the same meanings as those defined in the Circular.  

Enquiries:

Albany Capital , John McLean, Chairman	tel: +44 (0)7768 031454
WH Ireland, James Joyce/ Sarang Shah	tel: +44 (0) 20 7220 1666
Hansard Group, John Bick	tel: +44 (0)7872 061007

See below for the expected timetable of principal events and the letter from the Chairman of the Company as set out in Part 1 of the Circular. For the full Circular please visit the Company's website: www.albanycapital.co.uk.

  EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Small Shareholder Record Date		15 June 2009
Date from which it is advised that dealings in Ordinary Shares should only be for cash settlement and immediate delivery of documents of title		8 July 2009
Latest time for delivery to Registrar of documents of title relating to dealings in Ordinary Shares subject to cash settlement		5 p.m. on 13 July 2009
Register of Shareholders closed and General Record Date for Shareholders' entitlements under the Proposals1		6 p.m. on 13 July 2009
Ordinary Shares suspended from trading on AIM		7 a.m. on 14 July 2009
Latest time for receipt of Forms of Election		10 a.m. on 14 July 2009
Latest time for receipt of Forms of Proxy for the First GM		10 a.m. on 14 July 2009
Latest time for receipt of Forms of Proxy for Warrant Holders' Meeting		10 a.m. on 14 July 2009
Latest time for receipt of Forms of Proxy for FSR Holders' Meeting		10 a.m. on 14 July 2009
First GM		10 a.m. on 16 July 2009
Warrant Holders' Meeting		10.10 a.m. on 16 July 2009
FSR Holders' Meeting		10.20 a.m. on 16 July 2009
Cancellation of the admission of the Ordinary Shares on AIM on or around		7 a.m. on 24 July 2009
Latest time for receipt of Form of Proxy for Second GM		10 a.m. on 27 July 2009
Calculation Date		27 July 2009
Second GM, appointment of Liquidators and Effective Date		10 a.m. on 29 July 2009
Expected date for implementation of the Scheme and the first distribution by the Liquidators	As soon as practical after the Implementation Date which the proposed Liquidators have indicated should be within 6-8 weeks after commencement of the liquidation

1.  Subject to the Scheme becoming unconditional in all respects, the Register of Shareholders will be subsequently updated to record the transfers of Ordinary Shares to be made pursuant to the Evolve Share Exchanges.

  Dear Shareholder, Warrant Holder and FSR Holder

Recommended Proposals for the Cancellation of Admission, Reconstruction and Voluntary Winding Up of the Company and Notices of Two General Meetings, Notice of a meeting of Warrant Holders and Notice of a meeting of FSR Holders

1. Introduction

As announced earlier today, your Board has taken the decision to implement the Proposals which involve amongst other things the cancellation of the Company's shares to trading on AIM following which the Company will enter into a members' voluntary liquidation and effect a scheme of reconstruction under section 110 of the Insolvency Act 1986.

The purpose of this Circular is to provide you with details of the Proposals, to explain why your Board believes the Proposals to be in the best interests of the Company and its Shareholders, Warrant Holders and FSR Holders as a whole, and to recommend that you vote in favour of the Resolutions. The Proposals are conditional upon the approval of Shareholders at two separate Shareholders' Meetings and the passing of the Warrant Holders' Resolution and the FSR Holders' Resolution. The Notices convening the Meetings at which the Resolutions will be proposed are set out at the end of this document.

2. Reasons for the Proposals

The Board wishes to effect the Proposals for the following reasons:

to remove the on-going costs of maintaining an AIM listing and the associated regulatory burden;

to give Continuing Shareholders an opportunity to continue to hold their winding-up entitlements through a private unlisted company incorporated in the Cayman Islands (being Albany Capital Group) which will continue to focus on China and which the Directors consider will provide a more efficient investment structure better able to secure additional funding going forward; and

to give Non Continuing Shareholders an opportunity to realise the discount to NAV at which the Ordinary Shares currently trade via a distribution of the principal investments of the Company.

3. Outline of the Proposals

3.1 Choices Available to Shareholders

The Proposals involve the Company cancelling the trading of the Company's shares on AIM, entering into a members' voluntary liquidation of the Company and effecting a scheme of reconstruction under s110 of the Insolvency Act 1986, with Shareholders (other than Small Shareholders) being given the choice of receiving in respect of their entire holding of Ordinary Shares:

a proportionate number of shares in Albany Capital Group if they choose the Continuation Option; or

a proportionate distribution of the Company's investments and other assets (other than the Deminimis Assets and the Hermes Receivable) in respect of their holding if they choose the Non-Continuation Option.

Further information on Albany Capital Group can be found in paragraph 1 in Part IV of the circular.

3.2 Default Option

Shareholders who fail to make an Election or who do not make a valid Election will be deemed to have elected for the Continuation Option in respect of their entire holding of Ordinary Shares and as a result they will receive Continuation Shares. Albany Capital Group has agreed that any Shareholder who is so deemed to have elected for the Continuation Option shall be permitted in the period of up to 90 days after the date on which share certificates for Continuation Shares are despatched, by service of a written notice to the company secretary of Albany Capital Group, which is expected to be Key Secretaries Ltd., PO Box 116, Hilgrove House, 10 Hilgrove Street, St. Helier, Jersey JE4 8SU, to request that their entire allocation of Continuation Shares be repurchased by Albany Capital Group in consideration of an in specie distribution by Albany Capital Group of the same amount of cash and other assets that they would have received had they made a valid Election for the Non-Continuation Option, up to an aggregate TAV of £100,000.The decision whether to accept any repurchase request(s) shall be at the sole and absolute discretion of Albany Capital Group and be subject always to all applicable Cayman Islands laws and regulations, such as solvency test requirements. Albany Capital Group anticipate that if written notices in excess of this amount are duly served, allocations will be prioritised on the basis of the number of Continuation Shares held, so that Shareholders with the fewest number of Continuation Shares will take priority. Any repurchase(s) will only be completed after the 90 day period referred to above.

3.3 Small Shareholders

Shareholders who hold less than 1250 Ordinary Shares on both the Small Shareholder Record Date and the General Record Date will automatically receive a cash only distribution on winding up and so will not be entitled to make an election for either the Continuation Option or the Non-Continuation Option. Small Shareholders are expected to receive a premium of 33 per cent. to TAV per Ordinary Share in compensation for their having no right to elect for either the Continuation Option or the Non-Continuation Option under the terms of the Scheme. Small Shareholders will, of course, be free at any time prior to the General Record Date to purchase such number of Ordinary Shares as will result in their holding being not less than 1250 Shares. However, Shareholders must ensure that all such transfers are lodged with the Registrars by close of business on 13 July 2009 in order that these may be registered by the General Record Date.

For the avoidance of doubt, a Shareholder who holds 1250 or more Ordinary Shares on the Small Shareholder Record Date and subsequently sells such number of Ordinary Shares as will result in their holding being less than 1250 Ordinary Shares on the General Record Date will not qualify as a Small Shareholder for the purposes of the Scheme. Similarly, a person who becomes a Shareholder after the Small Shareholder Record Date and holds less than 1250 Ordinary Shares on the General Record Date will not qualify as a Small Shareholder for the purposes of the Scheme.

3.4 Evolve Share Distribution

The Evolve Shareholders have entered into the Evolve Share Exchange and Distribution Agreement with the Company and Mr Simon Wharmby. Under the terms of this agreement, and subject to the Scheme becoming unconditional in all respects, the Evolve Shares will be distributed in specie amongst the Evolve Shareholders in proportion to their respective holdings of, and in full satisfaction of all winding-up entitlements on, in aggregate 1,476,488 Ordinary Shares. The beneficial interests of the Evolve Shareholders for the purposes of the Evolve Share Distribution (and the Evolve Share Exchanges) have been valued by reference to the closing price of the Ordinary Shares and Evolve Shares on 7 April 2009, being 21 .0p and 5.5p respectively.

The Evolve Share Exchange and Distribution Agreement also provides for the Evolve Share Exchanges and certain waivers relating to the Warrants and FSRs held by the Evolve Shareholders. A summary of the Evolve Share Exchange and Distribution Agreement can be found in paragraph 7 of Part IV of this Circular.

4. Summary of the Scheme

4.1 Implementing the Scheme and Calculation Date

It is proposed that Laura Waters and Richard Setchim of PricewaterhouseCoopers LLP (PwC) be appointed as Liquidators of the Company to implement the Scheme of Reconstruction and to conduct the Liquidation.

In order to implement the Scheme, the investments, cash and other assets of the Company will be valued and a Terminal Asset Value calculated as at the Calculation Date. The assets of the Company will then be divided into five pools. Following an allocation of cash and debtors to the Liquidation Pool, an allocation of the Evolve Shares to the Evolve Share Pool and cash to the Small Shareholder Pool, the remaining investments, cash and other assets will be allocated between the Continuation Pool and the Non-Continuation Pool in the order of priority set out in Part II of this document.

Depending on Elections, the assets allocated to the Continuation Pool are expected to comprise various proportions of the Company's holdings in the Portfolio Investments (including for the avoidance of doubt all of the Deminimis Assets), the Hermes Receivable and a cash component. Shareholders electing for the Continuation Option will receive a distribution of shares in Albany Capital Group in proportion to their entitlements.

Depending on Elections, the assets allocated to the Non-Continuation Pool are expected to comprise a proportion of the Company's holdings in the Portfolio Investments (apart from the Deminimis Assets) and cash. Shareholders electing for the Non-Continuation Option are expected to receive a cash distribution and an in specie distribution of shares in the Portfolio Investments (apart from the Deminimis Assets) in proportion to their entitlements.

4.2 Calculation of TAV

In calculating TAV, the aggregate value as at the Calculation Date (determined in accordance with, and subject to, paragraph 4 of the Scheme) of the undertaking, cash and other assets of the Company, less a provision for all outstanding actual and contingent liabilities and other amounts for which appropriation to the Liquidation Pool is required under paragraph 3 of the Scheme, will be determined by the Directors. The Auditors will then perform certain agreed-upon procedures on the calculation of TAV (and TAV per Ordinary Share) and will report to the Company thereon. You should note that the Auditors' procedures will not constitute an audit.

For the reasons explained in paragraph 3.3 above, Small Shareholders are expected to receive a premium of 33 per cent. to TAV per Ordinary Share. Due to the valuations agreed in respect of the Evolve Share Distribution (as set out in paragraph 3.4 above), the Evolve Shareholders are expected, in respect of their Ordinary Shares subject to the Evolve Share Distribution, to receive less than TAV per Ordinary Share. The costs of paying the premium to Small Shareholders will be shared proportionately amongst the Continuation Pool and the Non-Continuation Pool and the excess in TAV per Ordinary Share expected to arise from the Evolve Share Distribution will be shared proportionately amongst the Continuation Pool, the Non-Continuation Pool and the Small Shareholder Pool. Both Continuing Shareholders and Non-Continuing Shareholders are expected to receive distributions (valued as at the Calculation Date) modestly in excess of TAV per Ordinary Share.

4.3 Conditions of the Scheme

The Scheme is conditional on:

the passing of the Shareholders' Resolutions at the Shareholders' Meetings;

the passing of the Warrant Holders' Resolution and FSR Holders' Resolution; and

the Directors not resolving to abandon the Scheme.

For the Resolutions to be passed, they must be approved by 75 per cent. of those attending and voting at the Meetings (or 75 per cent. of votes cast on a poll). If the Resolutions are passed by Shareholders, Warrant Holders and FSR Holders (as applicable), the Liquidation will commence immediately upon the passing of the winding up resolution at the Second GM and the appointment of the Liquidators will become effective at such time.

As required by the Insolvency Act 1986, on a members' (solvent) voluntary liquidation, the Directors intend to make a statutory declaration prior to the Second GM stating that they have made a full enquiry into the affairs of the Company and that, having done so, they have formed the opinion that the Company will be able to pay its debts in full, together with interest at the official rate, within a period of 12 months from the commencement of the Liquidation.

If any of the Resolutions are not passed, then the Company will continue to be traded on AIM and none of the Proposals will be implemented.

4.4 Reclassification of Ordinary Shares

In order to effect the Scheme, the Ordinary Shares will be reclassified to reflect the Elections made (or deemed to be made) in respect of them, the entitlements of Small Shareholders and the entitlements of Evolve Shareholders. Accordingly, at the First GM, a special resolution will be proposed to reclassify the rights attaching to the Ordinary Shares on implementation of the Proposals, such that, following the reclassification:

Ordinary Shares in respect of which valid Elections for the Continuation Option are made, or are deemed to be made, will (subject to the special resolutions to be proposed at the First GM being passed) have attached to them "A" rights;

Ordinary Shares in respect of which valid Elections for the Non-Continuation Option are made will (subject to the special resolutions to be proposed at the First GM being passed) have attached to them "B" rights;

Ordinary Shares held by Small Shareholders will (subject to the special resolutions to be proposed at the First GM being passed) have attached to them "C" rights; and

1,146,488 Ordinary Shares held by the Evolve Shareholders will (subject to the special resolutions to be proposed at the First GM being passed) have attached to them "D" rights.

4.5 The Liquidation Pool

The value of the cash and debtors to be allocated to the Liquidation Pool will represent an amount which the Board considers sufficient to provide for all the liabilities of the Company (including tax and contingent liabilities and the costs of implementing the Scheme). It is currently estimated by the Liquidators that the amount to be set aside in the Liquidation Pool to provide for unknown and unascertained liabilities over and above the Company's known and contingent liabilities will be £120,000.Any surplus cash remaining in the Liquidation Pool after the discharge of all the Company's liabilities will be paid to all Shareholders (other than the Evolve Shareholders and those Shareholders who have validly exercised their rights under section 111(2) of the Insolvency Act 1986) on the Register at 6.00 p.m. on the General Record Date pro rata to their respective holdings as one or more cash distributions. However, if any such distribution is less than £5.00 it will be donated to Macmillan Cancer Support (registered charity number 261017 in England and Wales). The precise timing of such distribution(s) (if any) would depend on the progress of the Liquidation.

4.6 Costs of implementing the Scheme

The costs and expenses of the Proposals to the Company, excluding the costs associated with the transfer and distribution of the Company's investments, cash and other assets in accordance with the Scheme (which will be borne by Shareholders in the manner described below), are estimated to amount to approximately £300,000 (including irrecoverable VAT).In the event that the Proposals are not approved by Shareholders at the Meetings (or the Warrant Holders' Resolution and/or the FSR Holders' Resolution are not passed), the majority of the costs and expenses referred to above will still be incurred by the Company.

The costs of establishing ACGL and any costs (such as stamp duty) associated with the transfer of assets to it will be borne by ACGL, i.e. Continuing Shareholders; such costs (excluding stamp duty) are estimated as being £25,000. The costs associated with the distribution of the Non-Continuation Pool will be borne by Non-Continuing Shareholders through a deduction from the Non-Continuation Pool prior to any distributions in accordance with the Scheme. The costs associated with the Evolve Distribution will be borne by the Evolve Shareholders.

The payment of directors' fees to the Directors by the Company will cease when the Liquidators are appointed.

4.7 Timing of Distributions

The Liquidators will not be able to effect the Scheme and distribute the assets of the Company immediately on commencement of the Liquidation after the Second GM as, under s107 of the Insolvency Act 1986, they have a statutory duty to pay the Company's debts first before distributing the Company's property amongst Shareholders. As part of their statutory duty, the Liquidators must advertise to ascertain the Company's creditors under Rule 4.182A and Rule 11.2 of the Insolvency Rules 1986. In practice creditors require one month's notice of commencement of the Liquidation. It is, therefore, expected that on the expiry of the creditor claims' period, being at least one month after the Second GM and the appointment of the Liquidators, the Liquidators will effect the Scheme and make a first and main distribution of assets to Shareholders. The distributions are expected to be made as soon as practical after the Implementation Date which the proposed Liquidators have indicated should be 6-8 weeks after commencement of the Liquidation. All cash and distributions in specie will be sent by post to Shareholders who are on the Register on the General Record Date and, in the case of Small Shareholders, the Small Shareholder Record Date (save that, subject to the Scheme becoming unconditional in all respects, the Register will be updated to record the transfers of Ordinary Shares to be made as part of the Evolve Share Exchanges).

The amount and timing of distributions to Shareholders will be dependent primarily upon the absence of any significant claims being notified to the Liquidators. The Board is not currently aware of any such claims that would adversely impact on the return of assets to Shareholders.

On the closure of the Liquidation, in the event that there remain any unrealisable investments in the Liquidation, the Liquidators may abandon such assets.

5. Illustrative financial effects of the Scheme

Once the Elections have been received and counted, the Terminal Asset Value will be determined as at the Calculation Date and the proportion of the assets represented by the entitlements of the Continuing Shareholders, the Non-Continuing Shareholders, the Small Shareholders and the Evolve Shareholders will be divided into four pools (following appropriations to the Liquidation Pool) and subsequently distributed in accordance with the Scheme.

Had the Proposals been implemented on 31 May 2009, the Directors estimate (assuming no exercise of any of the Options, the FSRs and/or the Warrants), that the TAV per Ordinary Share would have been 29.1 p, equivalent to 75 per cent. of the NAV per Ordinary Share at that date. The closing price of the Ordinary Shares on 11 June 2009 (being the latest practicable date prior to the date of this document) was 21 p.

The above figures are for illustrative purposes only and do not represent a forecast under the Proposal. The TAV may change materially up to the Calculation Date as a result of, inter alia, changes in the value of the Company's investments. Further details of how the assets will be valued can be found in paragraph 4.2 above.

6. Information on Albany Capital

Albany Capital is an activist and pre-IPO investment company listed on AIM and primarily focused on investing in profitable and cash-generative growth companies which are based in China.

In the year ended 30 September 2008 Albany made a loss after tax of £847,674 (2007: £114,250). At the year-end, the net asset value per share for the Company was 49.4p. (2007: 51.1p). As at 30 September 2008 the Company had no debt and had cash balances in excess of £2.6 million.

In the six months to 31 March 2009, the Company made a loss before tax of £3,145,882 (31 March 2008: profit of £727,316) and reported net assets per share were 39 pence (31 March 2008: 55.9 pence). The Company's consolidated cash reserves as at 31 March 2009 were £1.16 million (31 March 2008: £8.96 million) and the Company had no debt.

On 20 December 2008 the Company entered into an agreement to provide Hermes with a secured loan facility of up to £1,750,000 and on 10 March 2009 the sum of £1,704,545.45 was drawn down under the facility (comprising a net advance of £1,500,000, pre-paid interest of £153,409.09 and £51,136.36 in arrangement fees). On 15 May 2009, a total payment of £661,010.78 was received by the Company of which £46,774.65 was the repayment of reimbursable expenses and £614,236.13 was applied as a partial repayment of the Hermes Receiveable. The total amount now outstanding under the facility is £1,090,309.32 and no further draw downs can be made. Security is by way of charges in the Company's favour over approximately 5.6 million shares in Sorbic.

The Company released its interim figures for the six month period ending 31 March 2009 this morning and details are available to all Shareholders on the Company's website www.albanycapitalplc.com. Further information on the Portfolio Investments is set out in paragraph 2 of Part IV of this document.

7. Hive Down and Disposal

The proposed future management arrangements of Albany Capital Group are described in paragraph 1 of Part IV of this Circular. Those arrangements contemplate ACA, currently a wholly owned non-trading subsidiary of the Company, being sold to Albany Capital Group on the Effective Date, for a nominal sum and otherwise pursuant to the terms of the Disposal Agreement. Immediately prior to the Disposal, it is intended that the head office function of the Company carried on at its offices at 53 Davies Street, London, together with certain related assets and liabilities and the name "Albany Capital" will be hived down to ACA and a one off payment of £200,000, as a contribution towards ACA's immediate working capital requirements, will be made by the Company.

In order to ensure that no conflicts of interest arise between those Directors whose service arrangements are expected to transfer to ACA as part of the Hive Down and the Company, Mr Christopher Mills (whose service arrangements will not be transferring to ACA) was asked to consider the merits of the Hive Down and the Disposal. Mr Mills understands that the unaudited liabilities (actual and contingent) of the Company relating to the head office function, which would otherwise fall on the Company if the Proposals are approved and the Hive Down and Disposal do not proceed, are estimated at approximately £210,000. Accordingly, Mr Mills considers the terms of the Hive Down and Disposal to be fair and reasonable as far as Shareholders are concerned.

The Hive Down and Disposal are effectively conditional on the Scheme becoming unconditional in all respects. Summaries of the Hive Down Agreement and Disposal Agreement can be found in paragraphs 8 and 9 respectively of Part IV of this Circular.

8. Treatment of holders of Options, Warrants and FSRs 

8.1 Option Holders

The exercise of awards of Options under the Albany Share Option Scheme is subject to the achievement of certain performance conditions. The passing of a resolution to voluntarily wind up the Company constitutes a "change of control" event under the terms of the Albany Share Option Scheme and sets an end date for the period within which the performance conditions may be met. As at the date of this document the performance conditions have not been met and the Directors do not expect that they will be met on or before the date of the Second GM (at which a resolution (Resolution 1A) to voluntarily wind up the Company will be proposed). Accordingly, all awards of Options are expected to lapse upon the passing of Resolution 1A to be proposed at the Second GM.

8.2 Warrant Holders and FSR Holders

Under the terms of the Warrant Instrument and FSR Instrument, Warrant Holders and FSR Holders are entitled on a reconstruction of the Company to be granted substituted rights, equivalent to the value of their rights immediately prior to the reconstruction, in the reconstructed company. Accordingly, it is proposed that Warrant Holders and FSR Holders (other than the Evolve Shareholders who have agreed to waive their entitlements under the terms of the Evolve Share Exchange and Distribution Agreement) will be, subject to the Scheme becoming unconditional in all respects, granted such equivalent rights in Albany Capital Group on the Implementation Date, or as soon as practicable thereafter. Warrant Holders and FSR Holders will be notified separately of their substitute entitlements.

The amendments to the Articles and the Reclassification provided for by Resolution 2 set out in the notice of the First GM, and each and every alteration or abrogation of rights attached to the Warrants and/or FSRs made or deemed to be made as result thereof, require the sanction of an extraordinary resolution passed at a meeting of the Warrant Holders and an extraordinary resolution passed at a meeting of the FSR Holders. An extraordinary resolution for this purpose is one passed by a majority consisting of not less than 75 per cent. of the votes cast, whether on a show of hands or on a poll.

8.2.1 Warrant Holders' Meeting

The notice convening the Warrant Holders' Meeting to be held at the offices of Charles Russell LLP, 5 Fleet Place, London EC4M 7RD on 16 July 2009, at 10.10 a.m. (or as soon thereafter as the First GM shall have been concluded or adjourned) is set out at the end of this document. The Warrant Holders' Resolution is an extraordinary resolution to approve the amendments to the Articles and the Reclassification provided for by Resolution 2 set out in the notice of the First GM and each and every alteration or abrogation of the rights attached to the Warrants made or deemed to be made a result thereof.

8.2.2 FSR Holders' Meeting

The notice convening the FSR Holders' Meeting to be held at the offices of Charles Russell LLP, 5 Fleet Place, London EC4M 7RD on 16 July 2009, at 10.20 am (or as soon thereafter as the Warrant Holders' Meeting shall have been concluded or adjourned) is set out at the end of this document. The FSR Holders' Resolution is an extraordinary resolution to approve the amendments to the Articles and the Reclassification provided for by Resolution 2 set out in the notice of the First GM and each and every alteration or abrogation of the rights attached to the FSRs made or deemed to be made a result thereof.

9. Overseas Shareholders

Overseas Shareholders will not receive a Form of Election. If the Proposals become effective, Overseas Shareholders (other than Small Shareholders) will be deemed to have made an Election for the Non-Continuation Option unless the Board is satisfied (in its absolute discretion) that an Overseas Shareholder may make an Election and hold Continuation Shares without infringing any relevant laws, regulations or other requirements in the relevant jurisdiction, in which case such Shareholder shall be entitled to make an Election for the Continuation Option in respect of their holding of Ordinary Shares. Overseas Shareholders that are Small Shareholders will automatically receive a cash only distribution as more particularly described in paragraph 3.3 above.

Shareholders who are resident or ordinarily resident in, or citizens or nationals of, a jurisdiction outside the United Kingdom are responsible for informing themselves about and observing any legal requirements in that jurisdiction.

Shareholders who are subject to taxation outside the United Kingdom are responsible for informing themselves about and observing any legal requirements in that jurisdiction.

Shareholders who are subject to taxation outside the United Kingdom should consult their tax adviser.

Further information in relation to Overseas Shareholders is set out in paragraph 4 of Part IV of the circular.

10. Process for Cancellation

Under the AIM Rules, it is a requirement that the Cancellation must be conditional upon the consent of not less than 75 per cent. of votes cast by shareholders at a general meeting. Accordingly, the notice of the First GM set out at the end of this document contains a special resolution to approve the cancellation of admission of the Ordinary Shares to trading on AIM. The Company has notified the London Stock Exchange of its intention to seek Shareholder approval of cancellation of the admission of the Ordinary Shares to trading on AIM and if the resolution is approved at the First GM on 16 July 2009, it is expected that cancellation of trading will take effect on 24 July 2009.

11. Dealings and settlement

The share register of the Company will be closed and the Ordinary Shares will be disabled in CREST at 6.00 p.m. on 13 July 2009. The last day for dealings in Ordinary Shares on the London Stock Exchange for normal account settlement (to enable settlement prior to the General Record Date) will accordingly be 8 July 2009. After 8 July 2009, dealings should be for cash settlement only and will be registered in the normal way if the transfer, accompanied by the documents of title, is received by the Registrar by 5.00 p.m. on 13 July 2009. Transfers received after that time will be returned to the persons lodging them.

If the Scheme becomes unconditional, after the liquidation of the Company and the making of any subsequent distributions to Shareholders out of the Liquidation Pool, existing certificates in respect of Ordinary Shares held in certificated form will cease to be of value for any purpose and any existing credit of Ordinary Shares held in uncertificated form in any stock account in CREST will be redundant.

12. Shareholders' Meetings

The Proposals require the approval of Shareholders.

12.1 First General Meeting

The notice convening the First GM to be held at the offices of Charles Russell LLP, 5 Fleet Place, London EC4M 7RD on 16 July 2009 at 10 a.m. is set out at the end of this document. At the First GM, three Resolutions will be proposed:

Resolution 1 is a special resolution to approve the Cancellation

Resolution 2 is a special resolution to amend the Articles to establish the Reclassified Shares

Resolution 3 is a special resolution to approve the Scheme.

12.2 Second General Meeting

The notice convening the Second GM to be held at the offices of Charles Russell LLP, 5 Fleet Place, London EC4M 7RD on 29 July 2009 at 10 a.m. is set out at the end of this document. At the Second GM, two Resolutions will be proposed:

Resolution 1 is a special resolution to wind up the Company and approve the appointment of the Liquidators to effect the Members' Voluntary Liquidation

Resolution 2 is a special resolution to provide the necessary powers under the Insolvency Act to the Liquidators.

13.  Irrevocables in respect of the Resolutions and Elections

The Company has received irrevocable undertakings to vote in favour of the Shareholders' Resolutions and to make an Election for the Continuation Option in respect of 19,495,931 Ordinary Shares, representing, in aggregate, approximately 61 .8 per cent. of the Ordinary Shares. The Company has also received irrevocable undertakings to vote in favour of the Warrant Holders' Resolution in respect of 272,000 Warrants, representing, in aggregate, approximately 42 per cent. of the Warrants and to vote in favour of the FSR Holders' Resolution in respect of 170,000 FSRs, representing, in aggregate, approximately 38.6 per cent. of the FSRs.

 

14. Action to be Taken 

14.1 To Make an Election under this Scheme

It is important that Shareholders return their Forms of Election as soon as possible and in any event by 10 a.m. on 14 July 2009. Shareholders who fail to make an Election or who do not make a valid Election will be deemed to have elected for the Continuation Option in respect of their entire holding of Ordinary Shares. As a result they will receive shares in Albany Capital Group. Accordingly, Shareholders do not need to return a Form of Election in respect of Ordinary Shares for which they wish to elect for the Continuation Option.

Small Shareholders will receive cash in respect of their entire holding of Ordinary Shares and therefore do not need to return their Forms of Election.

The choice between the options available under the Scheme is a matter for each Shareholder and will be influenced by their individual investment objectives and financial and tax circumstances. Accordingly, Shareholders should read the whole of this document carefully before making any Election and to understand the consequences of making no Election. The Directors cannot, and do not, offer any advice or recommendations to Shareholders as to which Election they should make. If Shareholders are in any doubt about the action they should take, they should consult their stockbroker, bank manager, solicitor, accountant or other financial adviser authorised under the Financial Services and Markets Act 2000 immediately.

14.2 To vote at the Shareholders' Meetings

Regardless of the Election(s) they intend to make, Shareholders are requested to complete and return their Forms of Proxy for the First GM and the Second GM, in accordance with the instructions printed thereon, so as to be received by the Registrar in hard copy by post, by courier or by hand (during normal business hours only) not later than 48 hours before the relevant Meeting. All documents should be returned to the address printed on the relevant form.

14.3 To vote at the Warrant Holders' Meeting

Whether or not Warrant Holders intend to be present at the Warrant Holders' Meeting, they are requested to complete and return the Warrant Holders' Form of Proxy, in accordance with the instructions printed thereon, as soon as possible and in any event so as to be received by the Registrar in hard copy, by post, by courier or by hand (during normal business hours only) not later than 48 hours before the Warrant Holders' Meeting. All documents should be returned to the address printed on the relevant form.

14.4 To vote at the FSR Holders' Meeting

Whether or not FSR Holders intend to be present at the FSR Holders' Meeting, they are requested to complete and return the FSR Holders' Form of Proxy, in accordance with the instructions printed thereon, as soon as possible and in any event so as to be received by the Registrar in hard copy, by post, by courier or by hand (during normal business hours only) not later than 48 hours before the FSR Holders' Meeting. All documents should be returned to the address printed on the relevant form.

14.5 General

If you have any queries regarding the voting or election procedures, you can call Share Registrars Limited on 01252 821390 or, if telephoning from outside the UK, on +44 1252 821390. Share Registrars Limited cannot provide advice on the merits of the Proposals nor give any financial, legal or tax advice.

15. Recommendations

All of the Directors consider that the Proposals are in the best interests of the Shareholders as a whole. The Directors therefore recommend Shareholders to vote in favour of the Shareholders' Resolutions at the Shareholders' Meetings as they have provided irrevocable undertakings to do in respect of their own Ordinary Shares, amounting to 5,657,339 Albany Shares, representing approximately 17.9 per cent. of the issued share capital of the Company.

All of the Directors also recommend that the Warrant Holders vote in favour of the resolution to be proposed at the Warrant Holders' Meeting as those Directors who hold Warrants intend to do in respect of their Warrants which amount to 8,000 Warrants in aggregate (representing 1 .2 per cent. of the number of Warrants in issue).

All of the Directors also recommend that the FSR Holders vote in favour of the resolution to be proposed at the FSRs Holders' Meeting as those Directors who hold FSRs intend to do in respect of their FSRs which amount to 8,000 FSRs in aggregate (representing 1 .8 per cent. of the number of FSRs in issue).

Yours faithfully

John McLean 

Chairman 

  

Definitions
"Admission"	the admission of Ordinary Shares on AIM in accordance with the AIM Rules
"AIM"	a market operated by the London Stock Exchange
"AIM Rules"	means the AIM Rules for Companies published by the London Stock Exchange (as amended from time to time) governing the admission of securities to trading on AIM and the regulation and operation of AIM
"Albany Capital" or "Albany" or  "Company"	Albany Capital Plc, a company incorporated in England with registered number 03995223, whose registered office is at 17 Hanover Square, London W1 S 1 HU
"Albany Capital Advisers" or "ACA"	Albany Capital Advisers Limited, a company incorporated in England with registered number 5892866
"Albany Capital Advisers Shares"	the shares in the capital of Albany Capital Advisers held by the Company
"Albany Capital Group" or "ACGL"	a Cayman Islands registered company to which the Continuation Pool is to be transferred under the terms of the Scheme, in respect of which further information can be found in the section headed "About Albany Capital Group" in paragraph 1 of Part IV of the Circular
"Albany Share Option Scheme"	the unapproved share incentive plan of the Company adopted by the Board on 31 January 2007
"Articles" or "Articles of Association"	the articles of association of the Company as amended from time to time
"Auditors"	the Company's auditors, being PricewaterhouseCoopers LLP, Chartered Accountants, 1 Embankment Place, London WC2N 6RH
"Board" or "Directors"	the board of directors of the Company (or any duly authorised committee thereof, from time to time)
"Brimac"	Brimac Environmental Services Limited, a company incorporated in England with registered number 04031593
"Brimac Shares"	the shares in the capital of Brimac held by the Company
"Business Day"	any day other than Saturday, Sunday or public holiday in England and Wales
"Cancellation" or "Cancellation of Admission"	the proposed cancellation of the Company's Ordinary Shares from admission to trading on AIM, subject to the passing of the Resolutions
"Calculation Date"	means two Business Days before the date of the Second GM
"China Evoline"	China Evoline Plc, a company incorporated in England with registered number 3928553
"China Evoline Shares"	the shares in the capital of China Evoline held by the Company
"China Food"	China Food Company plc, a company incorporated in England with registered number 06077223
"Circular"	Circular to shareholders
"Companies Act" or "Act"	the Companies Act 1985 and the Companies Act 2006, each in so far as in force from time to time
"Continuation Option"	the option for Shareholders (other than Small Shareholders and Evolve Shareholders) to receive Continuation Shares in respect of all of their holding of Ordinary Shares under the terms of the Scheme, as later described in this document
"Continuation Pool"	the pool of assets to be established under the Scheme, to be transferred to Albany Capital Group for the purpose of meeting Elections by Shareholders for the Continuation Option, which is expected to include a cash component, various proportions of the Company's holding in the Portfolio Investments and the Hermes Receivable (including for the avoidance of doubt all of the Deminimis Assets)
"Continuation Shares"	shares in Albany Capital Group
"Continuing Shareholders"	those Shareholders who elect for the Continuation Option
"CREST"	the relevant system (as defined in the CREST Regulations) in respect of which Euroclear is the Operator (as defined in the CREST Regulations)
"Deminimis Assets"	the Brimac Shares, the China Evoline Shares and the Journey Group Warrants
"Densitron Technologies"	Densitron Technologies Plc, a company incorporated in England with registered number 3928553
Discount Rate"	the average percentage discount in sale prices (expected to be 30 per cent.) the Directors estimate would have to be applied to enable the Company's holdings of large and/or illiquid blocks of shares to be sold
"Disposal"	the sale of ACA to Albany Capital Group pursuant to the terms of the Disposal Agreement
"Disposal Agreement"	the agreement to be entered into by the Company, the Liquidators and Albany Capital Group transferring the entire issued share capital of ACA to Albany Capital Group, a summary of which is set out in paragraph 9 of Part IV of this Circular
"Dissenting Shareholders"	Shareholders who have validly exercised their rights to dissent from the Scheme under Section 111(2) of the Insolvency Act
"Effective Date"	the date on which the Scheme becomes unconditional pursuant to paragraph 14 of Part II of the Circular
"Election"	election under the Scheme for the Continuation Option or the Non-Continuation Option in respect of Ordinary Shares (including, where relevant, a deemed election)
"Evolve"	Evolve Capital PLC a company incorporated in England with registered number 6383902
"Evolve Share Distribution"	the distribution in specie of the Evolve Shares amongst the Evolve Shareholders to be made by the Liquidators pursuant to the Evolve Share Exchange and Distribution Agreement and in accordance with the Scheme
"Evolve Share Exchange and Distribution Agreement"	the share exchange and implementation agreement dated 15 June 2009 between the Company, Simon Wharmby and the Evolve Shareholders, a summary of which is set out in paragraph 7 of Part IV of the Circular
"Evolve Share Exchanges"	the share exchange transactions between Simon Wharmby and the Evolve Shareholders to be effected pursuant to the Evolve Share Exchange and Distribution Agreement
"Evolve Shares"	the shares in the capital of Evolve held by the Company
"Evolve Share Pool"	the pool of Evolve Shares to be established under the Scheme and to be transferred to the Evolve Shareholders pursuant to the Evolve Share Distribution
"Evolve Shareholders"	Thomas Vaughan, Oliver Vaughan, Diana Vaughan and Kimono
"First GM" or "First General Meeting"	the general meeting of the Company to be held on 16 July 2009
"Form of Election"	the form of election for use by Shareholders other than Overseas Shareholders to make an Election
"Forms of Proxy"	the Shareholders' Forms of Proxy and/or the Warrant Holders' Form of Proxy and/or the FSR Holders' Form of Proxy, as the context requires
"FSA"	Financial Services Authority
"FSMA"	the Financial Services and Markets Act 2000 (as amended)
"FSR Holders"	holders of FSRs
"FSR Holders' Meeting"	the meeting of all the FSR Holders to be held on 16 July 2009, or any adjournment of that meeting
"FSR Holders' Form of Proxy"	the blue form of proxy for use in connection with the FSR Holders' Meeting, sent to the FSR Holders together with the Circular
"FSR Holders' Resolution"	the resolution to be proposed at the FSR Holders' Meeting, as set out in the notice of the FSR Holders' Meeting at the end of this document
"FSR Instrument"	a deed poll dated 21 December 2000 regarding the issue of Further Subscription Rights (as amended from time to time)
"Further Subscription Rights" or "FSRs"	a further subscription right entitling the registered holder to subscribe for one Ordinary Share at 62.5p at any time and to be issued two Warrants in respect of each Ordinary Share subscribed for, issued pursuant to the FSR Instrument
"General Record Date"	without prejudice to the additional qualification requirement applicable to Small Shareholders, the date on which a Shareholder must be on the Register in order to participate in the Proposals
"Hermes"	Hermes Financial Group (BVI) Ltd, a company incorporated in the British Virgin Islands, with registered number 1422329, whose registered office is at P.O. Box 933, 2nd Floor, Abbott Building, Road Town, Tortola, British Virgin Islands
"Hermes Receivable"	all amounts outstanding under the Loan together with all pre-paid but unaccrued interest and the benefit of all security granted under the Loan, in each case as at the Calculation Date
"Hive Down"	the hive down of the head office function of the Company and certain assets and liabilities relating thereto, together with the name "Albany Capital" pursuant to the terms of the Hive Down Agreement
"Hive Down Agreement"	the conditional agreement between the Company and Albany Capital Advisers dated 12 June 2009 relating to the Hive Down, a summary of which can be found in paragraph 8 of Part IV of this Circular
"Implementation Date"	expected to be two Business Days after expiry of the creditors' claims period in respect of the Members' Voluntary Liquidation, being a statutory requirement under Rule 4.182A and Rule 11.2 of the Insolvency Rules1 986
"Journey Group"	Journey Group Plc, a company incorporated in England with registered number 1944667
"Journey Group Warrants"	the warrants to subscribe for ordinary shares in Journey Group held by the Company
"Loan"	the secured loan facility of up to £1,750,000 granted by the Company to Hermes described in paragraph 2.9 of Part IV of the Circular
"Liquidation"	the members' voluntary liquidation of the Company forming part of the Proposals
"Liquidation Pool"	the pool of assets to be established under the Scheme and to be held and managed in accordance with the Scheme for the purpose of discharging all the outstanding, actual and contingent liabilities of the Company
"Liquidators"	the liquidator or liquidators of the Company jointly and severally, from time to time
"London Stock Exchange"	London Stock Exchange plc
"Meetings"	the First GM and/or Second GM and/or Warrant Holders' Meeting and/or FSR Holders' Meeting, as the context may require
"Members' Voluntary Liquidation" or "MVL"	the members' voluntary liquidation of the Company, further details of which are set out in this document
"NAV per Ordinary Share" or "Net Asset Value per Ordinary Share"	an amount equal to the NAV divided by the number of Ordinary Shares in issue at the relevant time
"Net Asset Value" or "NAV"	the value of the assets of the Company less its liabilities, calculated in accordance with the current accounting policies of the Company
"Non-Continuation Option"	the option for Shareholders (other than Small Shareholders) to receive a mixture of cash and shares in the Portfolio Investments (other than the Deminimis Assets) in respect of all of their holding of Shares under the terms of the Scheme, as later described in this document
"Non-Continuation Pool"	the pool of assets to be established under the Scheme for the purpose of meeting Elections by Shareholders for the Non-Continuation Option which is expected to include a cash component and a proportion of the Company's holdings in the Portfolio Investments (other than the Deminimis Assets)
"Non-Continuing Shareholders"	Shareholders who elect for the Non-Continuation Option
"Options"	the options over 2,797,200 Ordinary Shares granted under the Albany Share Option Scheme
"Optionholders"	holders of options over Ordinary Shares under the Albany Share Option Scheme
"Ordinary Shares" or "Shares"	the ordinary shares of sterling 25 pence each in the capital of the Company
"Overseas Shareholder"	a Shareholder who is resident or ordinarily resident in, or a citizen or national of, a jurisdiction outside the UK or with a registered address outside the UK
"Portfolio Investments"	means the shares held by the Company in China Food, Sorbic, Densitron Technologies, Journey Group, Brimac and China Evoline, together with the Journey Group Warrants, in respect of which further information can be found in paragraph 2 of Part IV of this Circular
"Proposals"	the proposals regarding the future of the Company described in this document, including the Cancellation, the Members' Voluntary Liquidation and the Scheme
"Reclassification"	the proposed reclassification of Ordinary Shares provided for by resolution 2 set out in the notice of First GM
"Reclassified Shares"	Ordinary Shares with "A" rights "B" rights "C" rights or "D" rights arising as a result of the Proposals
"Register"	the register of Shareholders maintained by the Registrars on behalf of the Company
"Registrar"	the Company's registrars being Share Registrars Limited, Suite E, First Floor, 9 Lion and Lamb Yard, Farnham, Surrey GU9 7LL
"Resolutions"	the Shareholders' Resolutions, the Warrant Holders' Resolution and the FSR Holders' Resolution
"Scheme of Reconstruction" or "Scheme"	the proposed scheme of reconstruction of the Company under Section 110 of the Insolvency Act 1986, as set out in Part II of the Circular
"Second GM" or  "Second General  Meeting"	the general meeting of the Company to be held on 29 July 2009
"Share Capital"	the fully paid-up share capital of the Company
"Shareholder"	a registered holder of Ordinary Shares including where the context requires, Reclassified Shares
"Shareholders' Forms of  Proxy"	the white form of proxy for use at the First GM and/or the green form of proxy for use at the Second GM, as the context requires
"Shareholders'  Meetings"	the First GM and the Second GM
"Shareholders'  Resolutions"	the resolutions to be proposed at the First GM and the Second GM as set out in the notices at the end of this document
"Small Shareholder  Record Date"	the first date on which a Shareholder must be a Small Shareholder in order to qualify as a Small Shareholder under the Proposals
"Small Shareholder"	a Shareholder who holds less than 1250 Ordinary Shares on both the Small Shareholder Record Date and General Record Date
"Small Shareholder  Pool"	the pool of cash to be established under the Scheme and to be held and managed in accordance with the Scheme for the purpose of meeting the cash entitlements of Small Shareholders
"Sorbic"	Sorbic International Plc, a company incorporated in England with registered number 06280431
"Sterling" or "£"	Pound sterling, being the lawful currency of the UK
"TAV" or "Terminal  Asset Value"	the aggregate value as at the Calculation Date (determined in accordance with, and subject to, paragraph 4 of the Scheme) of the undertaking, cash and other assets of the Company, less a provision for all outstanding actual and contingent liabilities of the Company and other amounts for which appropriation to the Liquidation Pool is required under paragraph 3 of the Scheme
"TAV per Ordinary  Share"	an amount equal to the TAV divided by the number of Ordinary Shares in issue at the relevant time
"Taxes Act"	the Income and Corporation Taxes Act 1988 (as amended)
"Transfer Agreement"	the transfer agreement to be entered into by the Company, the Liquidators and Albany Capital Group, a summary of which is set out in paragraph 6 of Part IV of this document
"uncertificated" or "in uncertificated form"	recorded on the Register as being held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST
"United Kingdom" or  "UK"	United Kingdom of Great Britain and Northern Ireland
"Warrants"	warrants to subscribe for Ordinary Shares issued by the Company pursuant to the Warrant Instrument
"Warrant Holders"	holders of Warrants
"Warrant Holders' Meeting"	the meeting of all the Warrant Holders to be held on 16 July 2009, or any adjournment of that meeting
"Warrant Holders'  Form of Proxy"	the pink form of proxy for use in connection with the Warrant Holders' Meeting, sent to Warrant Holders together with this document
"Warrant Holders'  Resolution"	the resolution to be proposed at the Warrant Holders' Meeting, as set out in the notice of the Warrant Holders' Meeting at the end of this document
"Warrant Instrument"	a deed poll executed by the Company on 21 December 2000 relating to the issue of Warrants (as amended from time to time)

ENDMSCILFVERLISLIA

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ALB.L