25th Feb 2005 07:00
Provalis PLC25 February 2005 For Immediate Release 25th February 2005 Provalis plc Notice of intent to terminate ADR program, to de-list from NASDAQ and to suspend SEC registration and reporting obligations Provalis plc (LSE: PRO; NASDAQ: PVLS), the International Medical Diagnostics andPharmaceuticals Group, announces that it intends to: • Terminate its American Depositary Receipt (ADR) programme and its NASDAQ listing; and • As soon as possible thereafter, suspend its registration and reporting obligations to the United States Securities and Exchange Commission (SEC) Provalis has taken this decision following a careful review of the merits of the Company's secondary listing on NASDAQ. This review concluded that the significant costs and management time necessary to comply with additional requirements introduced by recent changes in United States securities laws, including the Sarbanes-Oxley Act of 2002, far outweighed the benefits of the listing. This action, which is expected to save the Group approximately $700,000 between now and 30th June 2006 and at least $400,000 in each year thereafter, should not cost more than $50,000. The Company has been informed that there are presently 19 US residentsregistered as holding ordinary shares on the London Stock Exchange andapproximately 930 US residents holding ADRs on NASDAQ. As at the end of January,the total ADR holding of these US residents represented just under 5.5m ordinaryshares, or approximately 1.5% of Provalis' entire issued share capital. Theaverage trading volume in Provalis' ADRs during 2004 was less than 12,000 perweek. Provalis may suspend its SEC registration and reporting obligations if thenumber of US residents who hold Provalis securities (either ADRs on NASDAQ orordinary shares on the London Stock Exchange), directly or through nominees,falls below 300. In order to reduce the number of US residents holding Provalis securities toless than 300, Provalis intends to implement the following as soon as possible: • Give written notice of termination of Provalis' ADR programme, effective in 90 days; • Upon the termination of the programme at the end of this 90-day notice period, no further transfers of ADRs will be permitted and trading of ADRs on NASDAQ will cease; as a consequence, there will be no liquid trading market for the sale or purchase of Provalis ADRs; • Holders of any ADRs which remained outstanding would then have 2 months in which to surrender their ADRs in return for Provalis ordinary shares, subject to payment by the holder of a cancellation fee; • Any ADR holders that surrender their ADRs in return for Provalis ordinary shares would subsequently hold and trade the ordinary shares on the London Stock Exchange; and • On the expiry of this 2 month period, the ordinary shares underlying any remaining outstanding ADRs would be sold by the Bank of New York (the provider of Provalis' ADR programme) on the open market, with the sale proceeds distributed to the ADR holders in cash. Provalis intends to give holders of its ADRs formal written notice of thetermination of the ADR programme by no later than 31st March 2005. That noticewill explain in detail the process for termination of the ADR programme and thesteps to be taken by holders of ADRs. Provalis believes that few ADR holders are likely to surrender their ADRs forordinary shares. Consequently, the probable result of the process describedabove is that most holders of its ADRs will receive cash for their ADRs shortlyafter the sale of the underlying ordinary shares by the Bank of New York andwill therefore cease to hold Provalis securities. Provalis expects, therefore, that this will result in the number of US residentsholding Provalis securities falling below 300. Should this be the result,Provalis will as soon as is practicable terminate the US registration of itssecurities under Section 12 of the Securities Exchange Act of 1934 (the ExchangeAct) and suspend its reporting obligations under Section 15 of the Exchange Act.As a result of these actions, Provalis would no longer be required to fileperiodic or current reports with the SEC, or to comply with the requirements ofthe Sarbanes-Oxley Act of 2002. Provalis believes that such deregistration andsuspension should take effect before 31st August 2005. Provalis also intends to propose resolutions at its Annual General Meeting to beheld later this year to introduce changes to Provalis' Articles of Associationthat will, in effect: • Limit the number of US residents permitted as holders of Provalis ordinary shares to less than 300 (or such other number as would ensure that Provalis' SEC registration and reporting requirements are not reinstated); and • Give Provalis the power to compel the involuntary sale by US residents of their holdings of ordinary shares to the extent necessary to accomplish this result. The text of the proposed amendments to Provalis' Articles of Association anddetailed information concerning the amendments will be provided in the Notice ofthe Annual General Meeting which will be given to holders of ordinary sharesprior to the 2005 Annual General Meeting. If these changes are approved at the Annual General Meeting, and if the numberof US residents holding Provalis' securities had not already been reduced toless than 300, Provalis would exercise the powers granted by its amendedArticles of Association to so reduce them. As soon as is practicable thereafter,Provalis would terminate its Exchange Act registration and suspend its SECreporting requirements as described above. Provalis believes that, under thisscenario, deregistration and suspension would take effect before the end ofDecember 2005. Once deregistration and suspension has taken effect (howsoever achieved),Provalis would exercise the powers resulting from the passing of resolutionsreferred to above to the extent necessary to ensure that the number of USresidents holding its securities remains below 300, in order to avoid any futurereinstatement of its SEC registration and reporting obligations. Provalis' ordinary shares will remain listed on the London Stock Exchange andProvalis will continue to fulfil its registration and reporting obligations tothe UK Listing Authority and the London Stock Exchange. Commenting on this announcement, Frank Harding, Chairman of Provalis plc, said:"As a UK listed company, Provalis complies fully with UK listing rules andapplicable regulations. Complying with the additional US obligations is asignificant and on-going burden on our finances and our management time andoutweighs the benefit of our US listing. We believe that this deregistration andsuspension of SEC reporting requirements will save the Group approximately$700,000 between now and 30th June 2006 and at least $400,000 in each yearthereafter. As such, there is a real commercial benefit in implementing thisproposal as soon as possible." END Visit Provalis' Revised Website at http://www.provalis.com "Safe Harbor" Statement under the US Private Securities Litigation Reform Act of1995: Statements in this announcement that relate to future plans, expectations,events, performances and the like are forward-looking statements as defined inthe US Private Securities Litigation Reform Act of 1995. Actual results ofevents could differ materially from those described in the forward-lookingstatements due to a variety of factors. Such factors include, among others, thepossibilities that a greater than expected number of holders of Provalis' ADRsmay elect to surrender them for ordinary shares, such that SEC deregistrationmay not be feasible; that the holders of ordinary shares may not approve theproposed amendments to the company's Articles of Association at its 2005 AnnualGeneral Meeting; and that the cost savings realized from the withdrawal of thecompany from the US regulatory scheme may be less than anticipated. Otherfactors that could affect the Company's future results are more fully describedin its filings with the US Securities and Exchange Commission, in particular thelatest 20-F filing, copies of which are available from the Company Secretary atthe Company's registered address. For further information:-Dr Phil Gould, Chief Executive Officer, Provalis plc Tel: 01244 833463Mr Peter Bream, Finance Director, Provalis plc Tel: 01244 833552Mr Lee Greenbury, Company Secretary, Provalis plc Tel: 01244 833402Lisa Baderoon, Buchanan Communications Tel: 020 7466 5000 Notes to Editors Provalis plc (LSE: PRO; NASDAQ: PVLS) is an international healthcare group withtwo operating businesses:- • Medical Diagnostics - develops medical diagnostic products for chronic disease management for sale to world markets. The business' principal products are in2it(TM)A1c and Glycosal(R), both diabetes diagnostic tests, and Osteosal(R), a diagnostic test for osteoporosis. • Pharmaceuticals - sells and markets its own, and third party, branded, prescription medicines in the UK and Ireland to GPs and hospitals through its regionally managed sales force. The business' principal product is Diclomax(R), a medicine for use in the treatment of musculo-skeletal disorders, and it also sells products in the areas of osteoporosis, migraine and dermatology. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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