26th Jan 2009 07:00
Prime Focus London plc
("Prime Focus" or the "Company")
Reduction of the Company's Share Premium Account
Adoption of new Articles of Association
Notice of Extraordinary General Meeting
The Company announces that it posted a circular to Shareholders on 23 January 2008 outlining the background to and reasons for the proposed reduction of the Company's share premium account and the proposed adoption of new articles of association.
The Company has convened an extraordinary general meeting of the Company for the purpose of seeking Shareholders approval of the Resolutions at 10.00 a.m. on 16 February 2009 to be held at the offices of the Company at 37 Dean Street, London, W1D 4PT.
Reduction of the Share Premium Account
Background and Reasons
On 30 August 2008 the Company announced that it was to undergo a corporate restructure designed to better reflect the global nature of the Prime Focus group of companies. The process in intended to result in a more transparent corporate structure for stakeholders and the financial community and to reduce the total number of group companies from twelve to six. As part of the corporate restructuring process the Company is planning to restructure its balance sheet by way of a reduction of the share premium account.
As at the date of this announcement, the balance of the share premium account stood at £9,383,624. There has been no change in the balance of the share premium account from that disclosed in the Company's audited accounts for the financial year ended 31 March 2008. The share premium account is attributable to the difference (or "premium") between the nominal value of the Ordinary Shares issued by the Company and the price at which the Ordinary Shares were issued.
In light of the current economic climate (and to reflect applicable international accounting standards) the Board, after careful consideration, believes that it is likely that the carrying value of some of the Company's investments will have to be reduced in the audited accounts of the Company for the financial year ending 31 March 2009. The Board has calculated that the carrying value of the Company's assets must be reduced by £3,559,358.53. This reflects a reduction of £1,410,590.53 in the carrying value of the Company's investment in Clear (Post Production) Limited, Outpost Post Production Limited (previously known as Prime Focus London Limited and before that Video Tape Recording Limited) and The Hive Animation Limited and a reduction of £2,148,768 in the carrying value of the debt owed to the Company by its subsidiary Outpost Post Production Limited. Steps have been taken to place Clear (Post Production) Limited and Outpost Post Production Limited into administration/liquidation.
In addition the Board proposes to reduce the share premium account by an additional sum of £209,316.49 being the amount owed by the Company to Soho Estates Limited in connection with the surrender of certain leases relating to 54-58 Wardour Street, London and 74-76 Old Compton Street, London.
As such the Board proposes to reduce the Share Premium Account by a total amount of
£3,768,675.02 (being £3,559,358.53 plus £209,316.49) on or before 31 March 2009 (being the Company's financial year end), so as to enable the Company's balance sheet to absorb these reductions without increasing the deficit on the profit and loss account to potentially unattractive levels.
The Board has therefore concluded that it would now be prudent to undertake the Reduction.
Further Details on the Reduction
Under the Act, a company may reduce its share premium account if so authorised by its articles of association, provided that it obtains the approval of its shareholders by special resolution in general meeting and the Court confirms the reduction. The Company is therefore seeking the approval of Shareholders to reduce its share premium account by a sum of £3,768,675.02.
It should be noted that the Reduction will not involve any distribution or repayment of capital by the Company to any Shareholder. The Reduction will not change the number of Ordinary Shares in issue or the rights attaching to those shares. The Ordinary Shares will continue to be traded on AIM.
Court Approval
Subject to the passing of the Reduction Resolution, the Company intends to apply promptly to the Court for an order confirming the reduction of the share premium account. The Court will need to be satisfied that the interests of the Company's creditors will not be prejudiced as a result of the reduction of the share premium account. It is for the Court, finally, to determine the precise nature of the protection required for creditors. The Directors will give such undertakings or other protection as the Court may require and the Directors are advised is appropriate. If the Court provides its confirmation it is expected that the reduction of the share premium account will take effect shortly before the end of March 2009 once the court order is registered by the Registrar of Companies.
The Directors reserve the right to withdraw the application for confirmation of the Reduction in the event that they consider that the creditor protection demanded by the Court to be unduly onerous or otherwise unsatisfactory to the Company.
Articles of Association
The Company's current articles of association were last amended on 22 January 1999. The Board has concluded that it would be appropriate to adopt a new set of articles of association primarily to address the changes made by the Companies Act 2006. An explanation of the main changes made to the articles of association arising from the Companies Act 2006 is set out in the Appendix of the circular posted to Shareholders. We have not provided a detailed explanation of the other changes but copies of the new articles of association are available for review both at the Company's registered office and on the Company's website (www.pflplc.com).
For more information, please contact:
Tony Bradley
Group Communications Director
020 7565 1000
Charles Stanley Securities
(Nominated Adviser)
Philip Davies / Carl Holmes
020 7149 6000
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Latest time and date for receipt of Form of Proxy 10.00 a.m. on 14 February 2009
EGM 10.00 a.m. on 16 February 2009
Court directions hearing 3 March 2009
Final court hearing 18 March 2009
Provisional court dates have been booked as above. Please note that these dates are subject to change depending on the Court's timetable and are therefore not within the Board's control. It is anticipated that the reduction of the share premium account will become effective shortly before the end of March 2009.
DEFINITIONS
The following definitions apply throughout this announcement unless the context requires otherwise:
|
"Act" |
either the Companies Act 1985 (as amended), or the Companies Act 2006, whichever is in force from time to time |
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"AIM" |
the market of that name operated by London Stock Exchange plc |
|
"Company" |
Prime Focus London Plc |
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"Court'' |
The High Court of Justice in England and Wales |
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"Directors" or "the Board" |
the directors of the Company |
|
"Form of Proxy" |
the form of proxy enclosed with the circular posted to Shareholders for use by Shareholders in connection with the EGM |
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"EGM" |
the extraordinary general meeting of the Company convened for 10.00 a.m. on 16 February 2009. |
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"EGM Notice" |
the notice convening an extraordinary general meeting which is set out at the end of the circular posted to Shareholders. |
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"Ordinary Shares" |
the ordinary shares of 5 pence each in the capital of the Company |
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"Reduction" |
the proposed reduction of the Company's share premium account |
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"Reduction Resolution" |
the resolution to reduce the Company's share premium account to be proposed at the EGM as set out in the EGM Notice |
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"Resolutions" |
the resolutions to be proposed at the EGM as set out in the EGM Notice |
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"Shareholders" |
holders of Ordinary Shares |
Related Shares:
PFO.L