28th Nov 2008 16:59
28 November 2008
RAM INVESTMENT GROUP PLC
Proposed Disposal of the Company's investment in Parallel Media Group plc and Extinguishment and
Satisfaction of Indebtedness
New Investing Strategy and Grant of Options
Increased authority to issue shares
Notice of Meeting of Shareholders
1. Introduction
Further to the announcement made on 13 November 2008, RAM announced today that it had entered into a conditional sale agreement to dispose of its interest in 33,196,000 ordinary shares of 0.01p per share (representing 8.9% of the issued share capital) in PMG. The sale is to Allied Trust, NS Lebetkin and L Selman and is in consideration for the extinguishment of the principal amount owing to the Purchasers of £375,000 (plus accrued interest of £68,528 as at 31 May 2008) pursuant to the Loan Facility. On completion of the Disposal, RAM will have no remaining investments.
The Disposal constitutes a fundamental change of business under Rule 15 of the AIM Rules. Accordingly, completion of the Disposal is conditional, inter alia, on the approval of Shareholders at a general meeting of the Company, notice of which is set out in this Document. Following the Disposal, the Company's assets will substantially comprise its cash balances, which will amount to £116,588.
Following the Disposal the Company will be classified under the AIM Rules as an investing company. Accordingly, the Investment Strategy, details of which are set out in paragraph 7 below, is also subject to the approval of Shareholders at the General Meeting. The Company will have to make an acquisition or acquisitions which constitute a reverse takeover under the AIM Rules or otherwise implement its Investment Strategy within 12 months of the General Meeting failing which, the Company's Ordinary Shares would then be suspended from trading on AIM. If the Company's Investment Strategy has not been implemented within 18 months of the General Meeting the admission to trading on AIM of the Company's Ordinary Shares would be cancelled and the Directors will convene a general meeting of the Shareholders to consider whether to continue seeking investment opportunities or to wind up the Company and distribute any surplus cash back to Shareholders.
The Purchasers are Allied Trust as trustee of the Asvatta Trust, a trust of which BE Adams, a Director of the Company, is the primary beneficiary, NS Lebetkin and L Selman, former Directors of the Company who have an interest in 14.4%, 22.10% and 22.10% of the issued share capital respectively. Accordingly, the Purchasers are related party for the purposes of Rule 13 of the AIM Rules. The independent members of the Board for these purposes, being Tim Baldwin and Mark Callaway, having consulted with Beaumont Cornish Limited, the Company's nominated adviser, unanimously consider the terms of the Disposal are fair and reasonable insofar as the Company's Shareholders are concerned.
Allied Trust, which is owed £25,500 plus accrued interest under the Loan Facility is connected with BE Adams and accordingly, such of the Disposal to Allied Trust requires the approval of Shareholders at the Meeting of Shareholders for the purposes of section 190 of the Companies Act 2006 (disposal of a substantial non-cash asset to a director or person connected with a director).
2. Background and Corporate Update
On 7 February 2006, RAM Media Limited (a wholly owned subsidiary of the Company) signed an agreement with the Greek Government to hold the FIFPro event in Athens in November 2006. The Greek Government was contractually bound to pay €4m to RAM Media as a hosting fee.
On 2 November 2006, it was announced that the event in Athens would no longer be taking place. Subsequently RAM Media filed a claim against the Greek Ministry of Culture on 20 December 2006. The contract between the two parties is governed by English law and is in the exclusive jurisdiction of the English Courts. On 8 February 2007, the Greek Ministry of Culture filed a defence and counterclaim.
On 4 May 2007, Malcolm Cohen and Antony David Nygate (both of BDO Stoy Hayward LLP, 8 Baker Street, London W1U 3LL) were appointed Joint Administrators of RAM Media.
On 13 August 2008, the Company announced an update on the Litigation with the Greek Ministry of Culture. This was as follows:
'As detailed in the Chairman's statement for the results for the full year 2007 and interims for 2008 the Company's wholly owned subsidiary RAM Media has been involved in litigation with the Greek Ministry of Culture since December 2006. The trial has recently been concluded and on 31 July 2008 Mr Justice Tugendhat handed down judgment in favour of RAM Media.
Damages were awarded to RAM Media in the sum of €2.4 million plus interest and costs. The Greek Ministry of Culture was refused permission to appeal by the trial judge, but has until 4 September 2008 to make an application to the Court of Appeal. A copy of the judgment can be found at:
http://www.bailii.org/ew/cases/EWHC/QB/2008/1835.html
In order to protect RAM Media from creditors whilst the litigation was ongoing, its directors appointed Malcolm Cohen and Tony Nygate of BDO Stoy Hayward LLP as administrators in May 2007.
The financial outcome to the Company as the parent of RAM Media is currently difficult to quantify as it will depend on the level of irrecoverable legal costs in the litigation and the level of creditors' claims as adjudicated by the administrators. The Directors expect to be able to make further announcements in the final quarter of this year.'
The Company confirms that the Greek Ministry lodged an appeal on 4 September 2008 and this is now being considered by the Court of Appeal. If permission is granted, the matter will go forward to an appeal hearing which will hopefully take place before the end of June 2009. If permission is refused the judgement will become final.
On 31 October 2008, RAM Media was placed in creditors' voluntary liquidation.
The Company currently owns 33,196,000 ordinary shares of 0.01p each in PMG which were acquired on 3 October 2006 in order to further the Company's strategy of making media and leisure investments. This investment is currently valued at £66,392 in the Company's books. On 31 December 2006, Allied Trust, Nicholas Lebetkin and Laurence Selman provided a £375,000 loan facility to the Company secured by a debenture over the Company's assets, which has been drawn down in full for the purposes of financing this investment. As detailed above, the Company's wholly owned subsidiary RAM Media has won a legal case as announced on 13 August 2008, currently subject to appeal. If the appeal is unsuccessful, the Company will endeavour to recover monies owed to it from RAM Media.
3. Subscriptions
As previously announced, on 13 November 2008 the Company issued 1,250,000 new Ordinary Shares each at a price of 4p per share to raise £50,000 before expenses, with an institutional investor on behalf of clients.
On 24 November 2008, the Company also issued 4,450,000 new Ordinary Shares at a price of 4p per share raising £178,000 before expenses. The new Ordinary Shares rank pari passu with the existing Ordinary Shares in issue and application will be made for such new Ordinary Shares to be admitted to trading on AIM. This is expected to be on 5 December 2008. The proceeds of this issue, after expenses, will be used for the working capital requirements of the Company.
4. Proposed Disposal
RAM announced today that it had entered into a conditional agreement to dispose of 33,196,000 ordinary shares in PMG to the Purchasers in consideration for the extinguishment of the £375,000 principal amount and all accrued interest under the Loan Facility and the consequential discharge of the debenture granted in favour of the Purchasers. The value of the investment in PMG is valued at £49,794 as at 27 November 2008 (being the last practical day prior to the publication of this Document). The investment was valued at £66,392 in the Company's Balance Sheet as at 31 May 2008. In addition, the Purchasers will be given options over 10% of the enlarged issued share capital. The enlarged issued share capital will be based on that outstanding prior to the issue of the circular to shareholders seeking approval for a reverse transaction under Rule 14 of the AIM Rules ("RTO") in due course or the first anniversary of completion of the Agreement, whichever is the sooner to occur. The Purchasers will also have the right to participate in part of the possible proceeds received by RAM Media and made available to the Company as a result of RAM Media's legal claim against the Greek Ministry of Culture up to a maximum of £100,000. Together, these are referred to as the 'Proposals'.
5. Summary of the Agreement
Under the terms of the conditional Sale Agreement, the Company intends, subject to Shareholder approval in compliance with the AIM Rules and the Companies Act, to undertake the following:
1) Transfer of the 33,196,000 ordinary shares held in PMG in the following percentages: Nicholas Lebetkin and Laurence Selman 46.6% each and Allied Trust 6.8%.
2) In the event that the Company recovers monies from the claim against the Greek Ministry of Culture through RAM Media (either by way of its creditors claim on RAM Media or recovery of its costs) the first £94,000 will be retained by RAM. Thereafter, any such monies will be distributed as follows: Nicholas Lebetkin, Laurence Selman and Edward Adams 30% each and Iain Manley (Company Secretary) 10%, with a maximum aggregate distribution of £100,000. These figures exclude the £7,500 disbursement to be paid by RPC directly to Messrs Adams and Manley for consultancy services rendered during the case.
3) The Company will be devising a new share option scheme and options over 10% of the enlarged issued share capital will be issued and divided as follows: Nicholas Lebetkin, Laurence Selman and Edward Adams 30% each and Iain Manley 10%. The enlarged issued share capital will be based on that outstanding prior to the issue of the first circular to shareholders seeking approval for a reverse transaction under AIM Rule 14 ("RTO") in due course or the first anniversary of completion of the Agreement, whichever is the sooner to occur. The options should have a minimum life of 3 years and the exercise price should be the same as the RTO share consideration and/or equity fundraising per share at the date of that transaction but if an RTO doesn't occur by the first anniversary of completion of the Agreement, the exercise price per share will instead be the average mid-market price of an Ordinary Share during the 10 working days prior to such anniversary. The Options will only be granted in accordance with Rule 21 of the AIM Rules and when the Company is outside a 'close period' as defined by the AIM Rules.
If approved, the Company shall not receive any securities or shares in any other entity as part of the consideration.
6. Related Party Transaction
The Purchasers are Allied Trust as trustee of the Asvatta Trust, a trust of which BE Adams, a Director of the Company, is the primary beneficiary and NS Lebetkin and L Selman, former Directors of the Company who have an interest in 14.4%, 22.10% and 22.10% of the issued share capital respectively and are therefore related parties for the purposes of Rule 13 of the AIM Rules. The Directors who are independent of the transaction being M Callaway and T Baldwin, having consulted with Beaumont Cornish Limited, the Company's nominated adviser, unanimously consider the terms of the Proposals are fair and reasonable insofar as the Company's Shareholders are concerned.
The Proposals are summarised as follows: the Purchasers are extinguishing the right to receive payment of secured loans with a face value of £375,000 plus accrued interest (£68,528 at 31 May 2008) in return for shares in PMG with a market value of £49,794, the right to a possible maximum of £100,000 out of the legal claim proceedings in RAM Media and an option over 10% of the issued share capital of the Company ahead of the publication of a Circular in connection with any reverse takeover or, if earlier, the first anniversary of the date of the Agreement reflecting these matters.
Under the Loan Facility, interest is payable on the principal amount of the loan outstanding at the rate of 1.75 per cent. per annum above the base lending rate of Barclays bank plc. The loan is repayable on demand and is secured by a debenture over the undertaking and assets of the Company.
7. The Company's operations following the Disposal
Cash Balances
Prior to paying the expenses incurred by the Company in connection with the Disposal, the Company has a gross cash balance of approximately £118,595.84. The Company has no other material liabilities outstanding at the date of this Document other than expenses incurred in relation to the Disposal.
Pro Forma
The Company's unaudited pro forma Balance sheet following completion of the Placing and Disposal, and based on the Audited Balance Sheet as at 31 May 2008, will be as follows:
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Ram Investment Group Plc |
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Proforma balance sheet as at 27 November 2008 |
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2008 |
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£ |
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Assets |
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Current assets |
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Trade and other receivables |
107,755 |
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Cash and cash equivalents |
116,588 |
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224,343 |
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Total assets |
224,343 |
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Equity |
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Capital and reserves attributable to equity holders of the company |
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Ordinary shares |
113,779 |
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Deferred shares |
9,983,447 |
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Share premium account |
11,543,145 |
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Retained earnings |
(21,522,813) |
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Total equity |
117,558 |
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Liabilities |
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Current liabilities |
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Trade and other payables |
106,785 |
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106,785 |
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Total liabilities |
106,785 |
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Total equity and liabilities |
224,343 |
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8. Use of Proceeds by the Company
On completion of the Disposal, the Board anticipates that the Company will have a cash balance as at 31 December 2008 of approximately £116,588.
In addition, the Board will review and assess potential new investments in accordance with the Investment Strategy, further details of which are set out in paragraph 8 below. The Company's cash balances will be used to make investments in accordance with the Investment Strategy and to provide working capital for the day-to-day business of the Company and its group companies.
9. Proposed Investment Strategy and Directors' CV's
Following the Disposal the Company would be an investing company under the AIM Rules. The Company's proposed Investment Strategy, which is subject to shareholder approval, is set out below:
Investment Strategy
RAM's proposed strategy is to broaden the Company's investment strategy to acquire mainly significant minority interests in both listed and unlisted companies and/or assets which the Directors believe are undervalued and where such a transaction has the potential to create value for Shareholders. The Company will be an active investor. The Directors believe that opportunities will be provided by both the technology, emerging technology and natural resources sectors, but no sector will be ruled out. Normally, such businesses will be controlled from the UK, but such companies may operate worldwide.
Such investments may result in RAM acquiring the whole or part of a company or project. RAM's investments may take the form of equity, joint venture debt, convertible instruments, licence rights, or other financial instruments as the Directors deem appropriate.
The Directors believe that their broad collective experience in the areas of acquisitions, accounting, corporate and financial management together with the opinion of consultant experts in the evaluation and exploitation of potential investments which will assist them in the identification and evaluation of suitable opportunities, will enable the Company to achieve its objectives. Internationally recognised competent persons will be commissioned to prepare reports on the projects being considered by the Company, where the directors consider it necessary. The Directors may undertake the initial project assessments themselves with additional independent technical advice as required.
If the strategy is approved, there is no limit on the number of projects into which the Company may invest, and the Company will consider possible opportunities anywhere in the World. The Directors are currently reviewing potential investment and acquisition opportunities in line with RAM's strategy but have not, at this stage, commissioned any due diligence nor entered into any firm commitment in connection with any investments or acquisitions.
The Company will have to make an acquisition or acquisitions which constitute a reverse takeover under the AIM Rules or otherwise implement its Investment Strategy within 12 months of the General Meeting failing which, the Company's Ordinary Shares would then be suspended from trading on AIM. If the Company's Investment Strategy has not been implemented within 18 months of the General Meeting the admission to trading on AIM of the Company's Ordinary Shares would be cancelled and the Directors will convene a general meeting of the Shareholders to consider whether to continue seeking investment opportunities or to wind up the Company and distribute any surplus cash back to Shareholders.
Details of Directors' CVs
Timothy ("Tim") Edward Baldwin (Executive Chairman)
Tim Baldwin is a highly experienced financier. Most recently he created Equity For Growth Ltd, a corporate finance business which has seeded and developed emerging technology plays and natural resource ventures in Africa and Central Asia. As a former analyst, Tim has specialist knowledge of the oil and gas sector. But in his 20 year career, he has been responsible for the flotation, acquisition and fund raising for a range of companies within other sectors of the UK quoted market also. The former Head of Smaller Companies Research and Director of Institutional Stock-broking at Greig Middleton, Tim Baldwin was an institutional salesman and corporate broker at Investec Securities and Canaccord Capital.
Mark Callaway (Executive/ Finance Director)
Mark has a long track record in oil and gas including a 25 year international career with Shell, where he was the Chief Financial Officer for the famous Kazakhstan Caspian Sea discovery, Kashagan. Subsequently he was a Vice President with Nelson Resources in Kazakhstan, and CFO of FirstAfrica Oil Plc in London and more recently has been CFO of Elko Energy Inc, a private Canadian company.
Barry Edward Adams (Non-Executive Director)
Edward graduated from Oxford University and subsequently gained an MA at London University. For the past 15 years he has served as a Director of various AiM listed companies including London & Boston Investments Plc (now PSG plc), Bartercard Plc and Parallel Media Group Plc. He is an active investor in a number of public and private companies with interests in media rights and property.
10. Meeting of Shareholders
Purpose of the Meeting of Shareholders
The Meeting of Shareholders is being convened for the purpose of approving the Disposal, approving the Investment Strategy and dealing with various other matters.
Resolution 1:
This resolution is to approve the buyback of all of the issued deferred shares of 9.99 pence each in the capital of the Company for the aggregate purchase price of £998.34. This will principally tidy up the Company's balance sheet. It would also ensure that any risk that the Ordinary Shares are deemed to have preferential rights by virtue of the presence of such deferred shares thereby resulting in the Ordinary Shares not meeting the shares requirement in the event that the Company is otherwise able to issue shares qualifying for relief under the Enterprise Investment Scheme pursuant to part V of the Income Tax Act 2007 is extinguished.
Resolution 2:
Once the deferred shares have been bought back, the Company will sub-divide and reclassify them into Ordinary Shares. This will result in the Company having only one class of share
Resolution 3:
This resolution is for an increase in the Company's authorised share capital from £11,500,000 to £13,500,000 by the creation of a further 200,000,000 ordinary shares of 1 pence each.
Resolution 4:
Together with Resolution 9, this resolution gives the Directors the power to issue all or any of these new shares on such terms as they think fit until the next annual general meeting of the Company. The Directors consider it prudent to seek such capital raising authority at this stage in the Company's life and given the current uncertainties in the world financial markets and the revised strategy of the Company of making investments for a combination of equity and cash.
Resolution 5:
This resolution approves the Disposal by the Company to Allied Trust in accordance with the terms of the Agreement for the purposes of section 190 of the Companies Act 2006.
Resolution 6:
That the Disposal by the Company to the Purchasers in accordance with the terms of the Agreement be approved for the purposes of Rule 15 of the AIM Rules and that the Directors of the Company be authorised to take all such steps as any of them may consider necessary or desirable to implement and give full effect to the intentions of the parties under the Agreement (including by waiver or variation of the terms and conditions of the Agreement).
Resolution 7:
This resolution approves the Investment Strategy and authorises the Directors of the Company to take all such steps as any of them may consider necessary or desirable to implement the Investment Strategy.
Resolution 8:
This resolution amends the Company's articles of association to give the board of Directors of the Company the power to sanction conflicts of interest involving the Directors pursuant to section 175 of the Companies Act 2006 and to enable the Company to communicate with its Shareholders electronically.
Resolution 9:
This resolution is to disapply any statutory pre-emption rights applying to any of the new Ordinary Shares created pursuant to Resolution 3 and for which power to issue is given to the Directors pursuant to Resolution 4.
The Company announces that it will also change its accounting year end from 31 May to 31 December.
11. Circular
The Company is posting a Circular relating to the above matters today and convening a meeting of shareholders to held on 22 December 2008.
A copy of this annoucement and the circular referred to herein will be available on the Company's website:
www.raminvestmentgroup.co.uk
Enquiries:
Edward Adams, RAM Investment Group plc on 07967 008448
Tim Baldwin, RAM Investment Group plc on 0207 518 4303
Roland Cornish, Beaumont Cornish Limited on 020 7628 3396
DEFINITIONS
The following definitions apply throughout this Document unless the context requires otherwise:
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"Act" |
the Companies Act 1985 and the Companies Act 2006 as amended and includes the regulations made under the Act; |
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"Agreement" |
the conditional agreement setting out details of the Disposal and other matters; |
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"AIM" |
AIM, a market operated by the London Stock Exchange; |
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"AIM Rules" |
the rules of the London Stock Exchange governing admission to, and operation of, AIM and comprising the AIM Rules for Companies and the AIM Rules for Nominated Advisers; |
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"Allied Trust " |
Allied Trust Company Limited, a company acting as trustee of the Asvatta Trust, a trust of which BE Adams, a Director of the Company, is the primary beneficiary; |
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"Beaumont Cornish" |
Beaumont Cornish Limited, the Company's Nominated Adviser authorised and regulated by the Financial Services Authority; |
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"Directors" or the "Board" |
the directors of the Company whose names are set out on page 4 of this Document; |
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"Disposal" |
the sale of the investment in PMG pursuant to the Agreement; |
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"Document" |
this document; |
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"Existing Articles" |
the Articles of Association of the Company at the date of this Document; |
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"Form of Proxy" |
the form of proxy for use by the Shareholders in connection with the Meeting of Shareholders; |
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"Investment Strategy" |
the investment strategy of the Company; |
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"Loan Facility" |
the £375,000 secured loan facility granted by the Purchasers to the Company pursuant to a loan facility agreement dated 31 December 2006 between the Purchasers and the Company; |
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"Meeting of Shareholders" or "General Meeting" |
the meeting of shareholders to be held at 9.00 a.m. GMT on 22 December 2008, notice of which is set out at the end of this Document, or any adjournment of that meeting; |
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"Notice" |
the notice of the Meeting of Shareholders set out at page 10 of this Document; |
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"NPI" |
New Planet Investments Limited, incorporated in England and Wales with company number 5546516; |
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"Ordinary Shares" |
the existing ordinary shares in the capital of the Company, each of 1 pence; |
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"PMG" |
Parallel Media Group Plc, incorporated in England and Wales with company number 00630968; |
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"Proposals" |
the Disposal and associated arrangements as set out in the Agreement and this Document; |
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"Purchasers" |
Allied Trust, N S Lebetkin and L Selman |
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"RAM" or the "Company" |
RAM Investment Group PLC (incorporated and registered in Scotland with registered number SC147230) whose registered office is at Level 2, Saltire Court, 20 Castle Terrace, Edinburgh, EH1 2ET; |
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"RAM Media" |
RAM Media Limited (in creditors' voluntary liquidation), a wholly owned subsidiary of the Company; |
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"Resolutions" |
the resolutions set out in the Notice to be proposed at the Meeting of Shareholders; |
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"Shareholders" |
holders of Ordinary Shares in the Company. |
Related Shares:
RAM.L