RNS Number:1791L
Innobox PLC
16 May 2003
Innobox Plc (the "Company")
New investment strategy and notice of EGM
16 May 2003
The Deputy Chairman of the Company is today writing to shareholders stating the
following:
"Introduction
In the announcement of the interim results on 31 January 2003, it was stated
that the Company was reviewing its future strategy due to the lack of attractive
opportunities in its existing sector. The Board has now completed its review of
the future strategy of the Company and this Circular outlines the proposed new
strategy of the Company.
ACS
The Company's investment in ACS has been converted into equity in Brookspey,
which was subsequently acquired by AeroBox. Material details of these
transactions are set out in announcements made by the Company on 11 and 24 March
2003 and which are reproduced for information purposes only in Parts Four and
Five of this document.
Following the acquisition of ACS by AeroBox, Bob Bushman has joined the board of
AeroBox in order to continue his involvement with the products which ACS has
developed and, as a result, it is proposed he will be stepping down as a
director and Chairman following the EGM. We would like to take this opportunity
to thank Bob Bushman for all his efforts for the Company and wish him every
success with his new role with AeroBox.
New investment strategy
Following the effective conversion of the loan made to ACS to equity in AeroBox
and in light of Bob Bushman's forthcoming departure from the Board, the Company
has considered its future strategy due to the lack of suitable acquisition
targets in its existing sector. The Company has chosen, subject to shareholder
approval, to build a group in the licensed trade sector because of the number of
opportunities that are being presented to the Company, the returns and the
expertise available. Innobox therefore proposes to develop a portfolio of
businesses in the licensed trade sector to include:
- managed public houses which have, in the opinion of the Board, attractive
capital growth prospects in terms of property and business development;
- small hotels, being hotels with thirty bedrooms or less; and
- businesses ancillary to the licensed trade.
Innobox has identified and approached a suitable individual, Arthur Baker (see
details below), with the relevant expertise to pursue this strategy. Subject to
the passing of the Resolutions, Mr Baker will join the Board as Executive
Chairman. Also, subject to the passing of the Resolutions, Mark Jones will step
down as Chief Executive, taking up the position of Non-Executive director, and
Russell Stevens will take up the position of part-time Chief Executive.
By managed public houses, the Directors mean public houses where all of the
risks and benefits of the trade are the responsibility of the operating
company.
Initially, the Directors intend to target managed public houses with capital
growth prospects, being sites that have surrounding land available for
development and which already have the benefit of, or have an opportunity to
obtain, planning permission for letting bedrooms to be developed as part of the
public house or adjacent to it. It is intended that the location of the sites
will be predominantly situated on main roads in areas, which the Directors
perceive will attract both business and leisure customers.
The Company intends to purchase the properties, carry out the development work
and grow each of these businesses such that the values of these businesses are
enhanced. The Directors believe that the increase in value will be achieved due
to an increase in gross profit by virtue of the room lettings and the additional
business the hotel customers bring into the public house. The Directors propose
to fund the purchase of these businesses through a combination of existing cash
resources, bank funding and, if required, the raising of additional equity
funding.
The Directors envisage that there may be instances where the vendors of target
businesses may wish to retain a minority interest and, in these circumstances,
the Company intends to form a special purpose subsidiary to acquire each
business with the vendor holding a minority interest in that subsidiary.
The Directors and the Proposed Director have already identified a number of
possible managed public houses with capital growth prospects, which the
Directors believe fit the above criteria and are currently considering which
potential opportunities to pursue, pending the outcome of the EGM. The Directors
have also had preliminary discussions with certain banks to provide the Company
with a credit line of 60 per cent. of the total purchase and development cost of
any acquisitions and the Directors are confident that such a facility can be
successfully negotiated. Additional funding may be required in order to complete
any specific acquisitions and such acquisitions will only be completed if
sufficient additional funding is available.
Directors and Proposed Director
Bob Bushman, Non-executive Chairman, aged 67, has joined the board of AeroBox
following its flotation and acquisition of ACS. If resolution number 1 is passed
at the EGM, Bob will resign as a director of the Company and Arthur Baker, whose
details are provided below, will take his position as Chairman.
Russell Stevens, Proposed part-time Chief Executive, aged 36, is a certified
chartered accountant and in 1991 founded Hamiltons, a multi-disciplinary
accountancy practice. He became managing director of Hamiltons Group Limited on
its incorporation in May 1997, subsequently stepping down to take up his current
position of part-time chief executive with Meriden Group Plc, a business
services group quoted on AIM. He has a portfolio of unquoted companies in which
he has active investments and specialises in providing strategic advice to
growing businesses. Russell is also part-time managing director of Bidtimes PLC,
an investment company, which was floated on AIM in July 2000. If resolution
number 1 is passed at the EGM, Russell will step down as non-executive deputy
chairman and will be appointed as part time Chief Executive of the Company.
Mark Jones, Proposed Non-executive director, aged 42, is a chartered management
accountant. Between 1987 and 1991 Mark worked for A S W plc as the chief
accountant for two of its divisions. In 1991 he was appointed the group
financial director of A1 Paper plc. At this stage the company had five
subsidiaries, which Mark helped to integrate and consolidate into two specialist
companies. He led the management team that took part in the buy-out of the
company in 1995. During the buy-out Mark organised the financial restructuring
of the A1 Paper Group and became a 50 per cent. shareholder and joint managing
director, a role which he continues to fulfil. If resolution number 1 is passed
at the EGM, Mark will step down as Chief Executive and will be appointed as a
Non-executive Director of the Company.
Arthur Baker, Proposed Executive Chairman, aged 52, has extensive experience in
the licence trade having been a director of Mercury Taverns Plc where he was
instrumental in the acquisition of 111 pubs from Bass, raising #26 million of
equity and debt. That company was subsequently sold to Pubmaster Plc for #34
million. Arthur, together with two colleagues, then developed a small Midlands
based chain of 21 branded pubs, which they subsequently sold to Ushers Plc for
#6.5 million. In addition, Arthur and his colleagues have also developed and
subsequently sold a site in Birmingham city centre, known as "The Fiddle &
Bone", which was voted best new pub in the UK by The Good Pub Guide. Over the
last four years, Arthur has been working with Close Brothers Investment Limited,
creating tax efficient EIS companies for wealthy individuals wishing to invest
in managed public houses and, during this period, 35 pubs have been purchased.
The largest of these companies, Traditional Free Houses Plc, has raised #15.3
million of equity. If resolution number 1 is passed at the EGM, Arthur will be
appointed as a Executive Chairman of the Company.
Directors' and Proposed Director's fees
Bob Bushman is due a payment of US$44,000 following the EGM, which represents
the balance of six months remuneration in accordance with the terms of his
consultancy agreement with the Company, commencing from 1 April 2003 and the
accrued remuneration referred to below.
A fee of #24,000 per annum (plus VAT if applicable) will be payable to Hamiltons
Securities, a partnership in which Russell Stevens is a partner, for the
services of Mr Stevens as part-time Chief Executive of the Company, subject to
the approval of resolution number 1 at the EGM. Mr Stevens has to date received
a fee of #18,000 per annum for his services as Non-executive Deputy Chairman,
and the proposed increase reflects the increased duties that Mr Stevens will
carry out as part-time Chief Executive.
A fee of #10,000 per annum (plus VAT if applicable) will be payable to M J
Consultants, a partnership in which Mark Jones is a partner, for the services of
Mr Jones as non-executive director of the Company, subject to the approval of
resolution number 1 at the EGM. Mr Jones has to date received a fee of #12,000
per annum for his services as Chief Executive, and the proposed decrease
reflects the reduced duties that Mr Jones will carry out as Non-executive
Director.
A fee of #18,000 per annum (plus VAT if applicable) will be payable to Arthur
Baker Associates Limited, a company in which Arthur Baker is a director and
shareholder, for the services of Mr Baker as Executive Chairman of the Company,
subject to the approval of resolution number 1 at the EGM.
The Directors' remuneration for the period up to 28 February 2002 has been
accrued and amounts to #69,324. This accrued remuneration is payable on the
completion of an acquisition by the Company as set out in the circular to
Shareholders dated 20 December 2001. The Directors' remuneration has been paid
from 1 March 2002, the month during which ACS received FAA approval for its
composite panelled air transport container.
It is proposed that the accrued remuneration relating to the services of Mr
Jones and Mr Stevens is paid either when the Company acquires its first business
in the licensed trade sector or enters into its first joint venture to acquire a
business in the licensed trade sector where it has at least an 80 per cent.
interest, whichever is the earlier. The accrued remuneration for Mr Bushman will
be paid following the EGM if the Resolutions are passed and Mr Bushman retires
from the Board.
Share options
In accordance with the option agreement dated 10 January 2001, Mr Bushman's
share options in the Company would lapse on him ceasing to be a director of the
Company. However, in relation to his work undertaken on the ACS investment, Mr
Stevens and Mr Jones, the independent directors, have decided to vary the terms
of that option agreement such that Mr Bushman's options will continue under the
same terms following his resignation.
In addition, the Company has entered into a share option arrangement with the
Proposed Director, subject to the approval of the Resolutions at the EGM,
whereby Mr Baker is to be granted an option to subscribe for 208,333 Ordinary
Shares at an exercise price of 10p.
In total, the Company has entered into share option arrangements with the
Directors and the Proposed Director representing in aggregate the equivalent of
6.67 per cent. of the issued Ordinary Shares. Details of these arrangements with
the Directors and the Proposed Director are set out in paragraph 5 of Part Six
of this document.
Brown Shipley has an option over 375,000 Ordinary Shares, representing 3 per
cent. of the issued Ordinary Shares at an exercise price of 10p. Further details
of this arrangement are set out in paragraph 9.3 of Part Six of this document.
When the first acquisition of a business in the licensed trade sector is made,
the Company may consider adopting an executive share option scheme to
incentivise management.
Financial position of Innobox
The following is a summary of the Balance Sheet of Innobox as at 30 April 2003,
which has been extracted, without material adjustment, from the Accountants'
Report on Innobox set out in Part Three of this document.
As at
30
April
2003
#
Fixed assets
Fixed asset investments 900,001
Current assets
Prepayments and accrued income 19,035
Cash at bank and in hand 647,729
-----------
666,764
Creditors
Amounts falling due within one year (84,152)
-----------
Net current assets 582,612
-----------
Net assets 1,482,613
===========
Current trading and prospects
The Company has not traded since its incorporation on 17 December 1999, except
for the making of the loan to ACS and its subsequent effective conversion into
ordinary shares in AeroBox. Future prospects will primarily depend upon the
implementation of the new strategy and the performance of the acquisitions,
which the Company intends to make.
Following Admission, the Company will incur costs in investigating potential
acquisitions. Some of these potential acquisitions may not be concluded.
Dividend policy
The Directors do not intend to commence the payment of dividends for the
foreseeable future. They consider that during the Company's initial period of
growth, it is likely to be more prudent to retain cash generated to fund the
expansion of the Company.
Corporate governance and internal controls
The Board recognises the importance of sound corporate governance whilst taking
into account the size and nature of the Company. As the Company grows, the
Directors intend that the Company should develop policies and procedures which
reflect the Principles of Good Governance and Code of Best Practice, as
published by the Committee on Corporate Governance (commonly known as "the
Combined Code"), to the extent they are appropriate to the size of the
Company.
Model Code
In January 2001, the Company adopted the Model Code for Directors' dealings then
applicable to AIM companies and will take all reasonable steps to ensure
compliance by the Directors and any relevant employee.
Marketability of Ordinary Shares
Application will be made for the Ordinary Shares to be re-admitted to trading on
AIM. It is expected that Admission will become effective and that dealings will
commence at 8.00am on 10 June 2003.
AIM is a market that is intended to give greater exposure to emerging or smaller
companies wishing to have their shares traded. Shares of companies admitted to
AIM are traded on a segment of the enhanced version of the Stock Exchange
Alternative Trading Services, SEATS PLUS, which enables buyers and sellers to
trade with each other through the London Stock Exchange's trading system.
However, the future success and liquidity of AIM cannot be guaranteed.
UK Taxation
Information concerning UK taxation with regard to the Admission is set out in
paragraph 8 of Part Six of this document.
Extraordinary General Meeting
Given the proposed change in activity of the Company, which is conditional on
the approval of Shareholders, it is proposed to convene an Extraordinary General
Meeting of the Company for 10.05am (or as soon thereafter as the Annual General
Meeting of the Company convened for 10.00am on the same date shall have been
concluded or been adjourned) on 9 June 2003 at Meriden House, 6 Great Cornbow,
Halesowen, West Midlands B63 3AB. A notice convening this meeting is set out at
the end of this document.
In addition, the disapplication of statutory pre-emption rights in respect of
the issue of Ordinary Shares granted at the last AGM has lapsed and resolution
number 2 is proposed in order to reinstate the previous disapplication.
At the EGM the following Resolutions will be proposed:
1. Resolution 1 is an ordinary resolution to change the strategy of the
Company to read 'to develop a portfolio of businesses within the licensed
trade sector.'
2. Resolution 2 is a special resolution to authorise the Directors to allot
equity securities for cash outside shareholders statutory pre-emption
provisions.
Action to be taken
You will find enclosed with this document a Form of Proxy for use by
Shareholders at the EGM.
Whether or not you propose to attend the EGM in person, you are requested to
complete the Form of Proxy in accordance with the instructions printed thereon.
To be valid, completed Forms of Proxy must be returned by post or by hand to
Neville Registrars Limited, 18 Laurel Lane, Halesowen, West Midlands B63 3DA so
as to arrive not later than 10.05am on 7 June 2003, but in any event no later
than 48 hours before the time appointed for the EGM or any adjournment thereof.
If you complete and return the Form of Proxy you may still attend and vote at
the meeting in person should you decide to do so.
Recommendation
The Directors believe that the change in investment strategy of the Company, and
the proposed changes to the board composition, are in the best interests of the
Shareholders as a whole. Accordingly, the Directors unanimously recommend that
you vote in favour of the Resolutions to be proposed at the EGM.
The Directors have irrevocably undertaken to vote in favour of the Resolutions
in respect of their own beneficial holdings of, in aggregate, 450,000 Ordinary
Shares, representing approximately 3.60 per cent. of the issued share capital of
the Company.
In addition, a Shareholder holding a further 1,880,000 Ordinary Shares,
representing approximately 15.04 per cent. of the issued share capital of the
Company has irrevocably undertaken to vote in favour of the Resolutions.
May I take this opportunity to thank you for your continued support of the
Company."
For further information:
Russell Stevens 07860 562 621
Non-executive Deputy Chairman, Innobox Plc russell@innobox.co.uk
Philip Johnson 0161 214 6540
Brown, Shipley & Co. Limited philip.johnson@brownshipley.co.uk
Trevor Phillips 020 7929 5599
Holborn Public Relations Limited trevor.phillips@holbornpr.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCILFIAETIELIV