20th Oct 2006 07:00
Multi Group PLC20 October 2006 MULTI GROUP PLC ("Multi" or the "Company") Sale of Global Medics Limited Further to announcements made by the Company on 28 July, 18 August and 28September 2006, the directors of Multi are pleased to announce that the Companyhas entered into a conditional agreement for the sale of the entire issued sharecapital of Global Medics Limited ("Global Medics"), the medical recruitmentbusiness acquired by Multi in February 2006, together with its principalsubsidiary Doctors on Call Limited (the "Sale"). The Sale is subject to theapproval of Multi's shareholders which will be sought at an ExtraordinaryGeneral Meeting of the Company ("EGM") to be held on 14 November 2006. Acircular containing details of the Sale and convening the EGM is being sent toshareholders today. Terms of the Sale Under the terms of the Sale, Global Group (UK) Limited ("the Purchaser") (anewly incorporated company controlled by the original Global Medicsshareholders) has conditionally agreed to acquire the entire issued sharecapital of Global Medics from Multi for a cash consideration of £520,000, ofwhich £350,000 will be payable on completion of the Sale and £170,000 will besatisfied by the issue to Multi by the Purchaser of a £170,000 nominal valueloan note which is repayable no later than 31 May 2007. In addition as part of the terms of the Sale, the original Global Medicsshareholders will: • convert the 160,000,000 ordinary shares of 0.1 pence each inthe Company ("Ordinary Shares") held by them into 160,000,000 deferred shares of0.1 pence each in the Company ("Deferred Shares"); • convert the £2,600,000 of convertible redeemable preferenceshares of £1 each in the Company ("Preference Shares") held by them into2,600,000,000 Deferred Shares; • waive their entitlement to receive the further cashconsideration of £500,000 due under the original terms of the acquisition ofGlobal Medics by Multi ("the Acquisition"); • convert the £1,000,000 nominal value loan notes issued byMulti held by them into 1,000,000,000 Deferred Shares; • waive all rights to further consideration payable to thempursuant to the Acquisition; and • waive all other rights against the Company pursuant to theAcquisition, such that any outstanding or future obligations of the Companypursuant thereto shall terminate with effect from completion of the Sale. Immediately following the EGM, it is proposed that the Company buy back all ofthe Deferred Shares from the original Global Medics shareholders for anaggregate consideration of £1.00 pursuant to the terms of a buy-back agreement.Such a purchase would be an off-market purchase (as the Deferred Shares wouldnot be listed) and can only be undertaken with the approval by shareholders ofthe buy-back agreement. Once purchased, it is expected that the Deferred Shareswill be cancelled. Financial Performance of Global Medics In the year ended 31 May 2005, the last period reported upon prior to theAcquisition, Global Medics reported a profit before taxation of £1.31 million onrevenue of £9.32 million. As at 31 May 2005 Global Medics had net assets of£1.27 million, including £967,000 of cash, which it subsequently applied towardsthe acquisition of Doctors on Call. Related Party Transaction Currently, the original Global Medics shareholders hold, in aggregate,160,000,000 Ordinary Shares, representing 27.4 per cent. of the issued OrdinaryShare capital of the Company, together with the entire issued Preference Sharecapital of the Company. In light of the original Global Medics shareholders' shareholdings in Multi andthe fact that they together own and control the Purchaser, the Sale is atransaction with a related party for the purposes of the AIM Rules. The Directors, having consulted with Corporate Synergy, the Company's nominatedadviser, consider that the terms of the Sale are fair and reasonable insofar asshareholders are concerned. AIM Rules Under the AIM Rules, the Sale is considered to be a disposal resulting in afundamental change to the business of Multi and as such requires the consent ofshareholders in general meeting. City Code on Takeovers and Mergers ("City Code") Under Rule 9 of the City Code ("Rule 9") when any person acquires, whether by aseries of transactions over a period of time or not, an interest in shares which(taken together with shares in which persons acting in concert with him areinterested) carry 30 per cent. or more of the voting rights of a company that issubject to the City Code, that person is normally required to make a generaloffer to the shareholders of that company to acquire the balance of the equityshare capital of the company. Similarly, where any person or persons acting inconcert is interested in Shares which in the aggregate carry 30 per cent. ormore of the voting rights of a company but does not hold shares carrying morethan 50 per cent. of such voting rights, a general offer will normally berequired if any further shares are acquired. The requirement to make such offersis known as a "mandatory bid". Under the City Code a concert party arises when persons acting together pursuantto an agreement or an understanding (whether formal or informal) activelyco-operate to obtain or consolidate control of a company. In October 2003, the then shareholders of the Company resolved, with theapproval of the Panel on Takeovers and Mergers ("the Panel"), to waive theobligation on Southwind Limited, Oliver Cooke and Michael Jackson, who weredeemed to be acting in concert, to make a mandatory bid in connection with theiracquisition of, in aggregate, up to 67.1 per cent. of the issued share capitalof the Company at the time. In March 2005 Antony Berry was deemed to also be acting in concert withSouthwind Limited, Oliver Cooke and Michael Jackson (together, "the ConcertParty") following the acquisition by Multi of Berry Recruitment HoldingsLimited. Following his addition, the Concert Party was interested in 61.3 percent. of the Company's voting share capital. The Concert Party is currently interested in an aggregate of 254,536,781Ordinary Shares, representing 43.5 per cent. of the issued Ordinary Sharecapital of the Company. As such, the individuals comprising the Concert Partyare unable to acquire any further interest in shares in the Company withoutincurring an obligation on the Concert Party, unless waived by independentshareholders and with the consent of the Panel, to make a mandatory bid underRule 9 for the issued share capital of Multi not owned by it. In addition,Southwind Limited is interested in 225,304,524 Ordinary Shares, representing38.5 per cent. of the issued Ordinary Share capital of Multi and has a similarobligation under Rule 9 in its own regard if it acquires any further interest inOrdinary Shares. The Panel however confirmed in October 2003 that the restrictions on the ConcertParty and Southwind Limited under Rule 9 referred to above do not apply inrespect of the receipt of Ordinary Shares by Oliver Cooke, a member of theConcert Party, on the exercise of options over Ordinary Shares currently held byhim. Mr Cooke currently holds options over 9,000,000 new Ordinary Shares,exercisable at any time until 16 November 2013. In the event that Mr Cookeexercised this option, and assuming no other issues of Ordinary Shares, hisholding in the Company would rise to 13,000,000 Ordinary Shares, representing2.2 per cent. of the then issued Ordinary Share capital and the Concert Party'sinterest would increase to 263,536,781 Ordinary Shares, representing 44.4 percent. of the then issued Ordinary Share capital of the Company. As part of the Sale, 160,000,000 Ordinary Shares currently held by the originalGlobal Medics shareholders will be converted into Deferred Shares. As a result,the number of Ordinary Shares in issue will fall to 424,704,820. FollowingCompletion, the Concert Party will continue to hold an aggregate interest of254,536,781 Ordinary Shares but this will now represent approximately 59.9 percent of the issued Ordinary Share capital of the Company and Southwind Limitedalone will hold 225,304,524 Ordinary Shares representing approximately 53.0 percent. of the issued share capital. In the event that Oliver Cooke exercises theoptions held by him, as described above, the Concert Party's interest would riseto, in aggregate, a maximum of 263,536,781 Ordinary Shares, representing amaximum of 60.8 per cent. of the then issued Ordinary Share capital of theCompany. Under the City Code, because Oliver Cooke is a director of the Company, such anincrease in the relative interest of the Concert Party requires the approval ofthe Panel and of independent shareholders in general meeting. The Panel has been consulted and has agreed that it will not require the membersof the Concert Party, individually or collectively, to make a general offer incash for shares in the Company which might otherwise arise as a result of theSale, subject to resolution 3 to be proposed at the EGM being passed on a pollby the independent shareholders in the Company. Following completion of the Sale, the Concert Party will hold, in aggregate,more than 50 per cent. of the voting share capital of the Company and (for solong as they continue to be treated as acting in concert) may accordingly beable to increase their aggregate shareholding without incurring any furtherobligation under Rule 9 of the City Code to make a general offer, althoughindividual members of the Concert Party will not be able to increase theirpercentage shareholdings through a Rule 9 threshold without Panel andShareholder consent. In addition, Southwind Limited will itself hold more than50 per cent. of the voting share capital of the Company and accordingly be ableto increase its shareholding without incurring any further obligation under Rule9 of the City Code. Effect on the Company As reported on 28 July 2006, the underperformance of Global Medics is expectedto contribute to the Company reporting a loss for the period to 31 March 2007,in contrast to the directors' original expectations of profitability for theperiod. The disposal of Global Medics will significantly increase the reported loss forthe period to 31 March 2006 as a result of the impairment in the carrying valueof Global Medics' goodwill. However, the terms of the Sale release Multi from any obligation to make furtherpayments to the Original Global Shareholders and will enable the directors tofocus on the development of Multi's other two businesses, Berry Medical and TLP. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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