TIDMRUR
RNS Number : 5322W
Rurelec PLC
09 November 2014
10 November 2014
Rurelec PLC
("Rurelec" or "the Company")
Proposed reduction of the Share Premium Account
Notice of General Meeting
The Directors of Rurelec PLC (AIM: RUR), the owner, operator and
developer of power generation capacity internationally, are pleased
to announce that the Company has applied to the High Court for
approval to reduce its share premium account. The rationale for
this proposal is to permit Rurelec to return as quickly as possible
to paying dividends to shareholders. A circular will today be
posted to shareholders outlining the reasons for the reduction and
requesting approval at a General Meeting to be held on 25(th)
November, 2014. The text of the circular has been posted on the
Rurelec website and is attached as an Appendix to this
announcement.
In the interim results released on 30 September 2014, the
Company announced that it was exploring one or more major alliances
in Latin America. This will allow the Company to accelerate its
growth without further capital from existing shareholders and this
is part of a wider strategy to return to paying dividends. The
Company is pleased to report that it is close to agreement on a
series of transactions which will cement its alliances and take
Rurelec closer to its aim to resume dividend payments to
shareholders from 2015.
As shareholders will have seen from both the annual report
issued on 6 June 2014 as well as from the interim results, the
Bolivian arbitration award and the resulting settlement eliminated
the Group's distributable reserves leaving a deficit of over GBP22
million. It would take many years of profits from operations to
remove that deficit and in the intervening period the Company would
be unable to pay dividends.
To overcome this problem, the Company has applied to the High
Court for permission to reduce the Company's Share Premium Account
in order to eliminate the deficit and to create distributable
reserves. If approved, this will permit a return to dividend
payments as soon as the Company records a profit and only if the
directors believe it prudent to propose to shareholders the payment
of a dividend. There can be no guarantee of the timing of any
dividend payment, if at all.
The partnership transactions now being finalised each assume the
sell down of a share stake in one of the Group's regional holding
companies. If the Company is successful in closing these
transactions, we expect to record development profits on the
portfolio of underlying projects. Since 2013, the Company's
business has included the development of new power plants as well
as the ownership and operation of existing power plants held for
investment. Developers make money by selling share stakes in their
developments. Any sale of a share stake at a premium will
constitute a realisation of a profit from which dividends could be
paid.
Commenting on the proposed reduction in the Share Premium
Account, Peter Earl, CEO of Rurelec said:
"At a time when shareholders may have despaired at seeing daily
the large discount to net assets at which the Company's shares are
currently trading, the Board believes that the resumption of
dividend payments will position the Company on the stock market as
an income producing utility, in line with the Company's trading
performance in its early days as the first utility company traded
on the AIM Market. We believe that the opportunities offered to us
and our current projects reflect our credibility in South America
following many years of successful power development there. We are
confident that we can turn this into shareholder value as we put
the difficulties of the Bolivian settlement behind us. "
For further information please log onto our website at
www.rurelec.com or contact:
Peter Earl, CEO, Rurelec Tel: 0207 793 5610
PLC
Tel: 020 3219 8904
Ana Ribeiro, Capital Mobile: 07980 321505
MSL
-------------------------- ----------------------
Paul Shackleton & Alex Tel: 020 7776 6550
Brearley
Daniel Stewart & Company
Plc
-------------------------- ----------------------
James Joyce and Nick Tel: 020 7 220 1666
Field
W.H. Ireland
-------------------------- ----------------------
Notes for Editors
10 November 2014
RURELEC PLC
("Rurelec" or the "Company")
Notice of General Meeting
Proposed reduction of the Company's Share Premium Account
Rurelec PLC (AIM: RUR), the AIM listed owner, operator and
developer of power generation capacity internationally, announces
that it is today posting a circular containing details of the
proposed reduction of its Share Premium Account, together with
formal notice of the requisite general meeting.
Unless the context otherwise requires, defined terms used in
this announcement shall have the meanings given to them in the
Circular and Notice of General Meeting dated 10 November 2014.
Highlights:
Proposed reduction of the Company's Share Premium Account in the
amount of GBP45,000,000, subject to the receipt of shareholders'
approval at a duly convened General Meeting.
The proposal is also subject to the approval of the High Court
and comprise:
the reduction of the Company's Share Premium Account; and
utilising the sums arising from the Capital Reduction to (i)
eliminate the accumulated losses in the profit and loss reserve of
the Company and (ii) create distributable reserves to allow the
Company to pay dividends in due course.
The Capital Reduction does not affect the number of Shares in
issue or the nominal value per Share and does not affect the voting
or dividend rights of any Shareholder.
The General Meeting will be held at 10.30 a.m. on 25 November
2014 at the offices of Rurelec PLC, Millbank Tower, 21-24 Millbank,
17th Floor, London SW1P 4QP. The record date for Shareholders to be
entitled to receive the Distribution is 6 p.m. on 21 November
2014.
The proposals are unanimously recommended by the Board of
Rurelec and, subject to receiving the requisite shareholder and
High Court approvals, it is currently anticipated that Capital
Reduction will be effective on or around 19 December 2014.
For further information please contact:
Rurelec PLC Daniel Stewart W H Ireland
& Company PLC
Peter Earl, CEO Paul Shackleton James Joyce and
Ana Ribeiro, Capital and Alex Brearley James Bavister
MSL
+44 (0)20 3219 +44(0) 20 7776 +44 (0)20 7220
8801 6550 1666
Introduction
The Company today announces details of its proposal to reduce
the Company's capital by the reduction of the Share Premium Account
of the Company (the "Capital Reduction"). The purpose of this
announcement is to provide details of the Capital Reduction and the
Resolution to be proposed to Shareholders at the forthcoming
General Meeting. The Board considers that the Resolution to be
proposed at the General Meeting is in the best interests of the
Company and its Shareholders as a whole and unanimously recommends
that Shareholders vote in favour of the Resolutions.
Background to the Capital Reduction
At the date of this announcement, the Company has accumulated
losses on its profit and loss account of GBP7,371,683. The
existence of these losses prevents the Company from paying
dividends to its shareholders out of future profits until these
losses have been eliminated. Given the size of the accumulated
losses, there is in the opinion of the Board no reasonable prospect
of the losses being eliminated in the short term. It is therefore
proposed that the permanent loss should be recognised by
eliminating the deficit on the profit and loss account. This would
be achieved by the reduction in the balance on the Share Premium
Account of the Company.
The Company has built up a substantial Share Premium Account
through the issue of shares for cash at values in excess of the
nominal value of those shares. At the date of this announcement,
the balance standing to the credit of the share premium account is
GBP67,835,921. It is proposed that the Share Premium Account be
reduced in an amount of GBP45,000,000 to GBP22,835,921.
If approved by Shareholders and subsequently confirmed by the
High Court in the terms proposed by your Board, the effect of the
Capital Reduction will be to release part of the amount standing to
the credit of the Share Premium Account of the Company so that
GBP45,000,000 (i) may be used by the Company to eliminate the
deficit on the profit and loss account and (ii) the balance
credited to the distributable reserves of the Company to allow the
Company to pay dividends in due course.
The implementation of the Capital Reduction is subject to a
number of criteria and legal processes which are explained further
below.
Capital Reduction - Share Premium Account
Share premium is treated as part of the capital of the Company
and arises on the issue by the Company of shares at a premium to
their nominal value. The premium element is credited to the Share
Premium Account. The Company is generally precluded from the
payment of any dividends or other distributions or the redemption
or buy back of its issued shares in the absence of sufficient
distributable reserves, and the Share Premium Account can be
applied by the Company only for limited purposes.
In particular, the Share Premium Account is a non-distributable
capital reserve and the Company's ability to use any amount
credited to that reserve is limited by the Companies Act. However,
with the approval of its shareholders by way of a special
resolution and subsequent confirmation by the High Court, a company
may reduce or cancel its share premium account and in certain
circumstances either return all or part of the sum arising to
shareholders as a return of capital, or credit some or all of such
sum arising to its profit and loss account.
To the extent that the release of such a sum from the Share
Premium Account creates or increases a credit on the profit and
loss account, that sum represents distributable reserves of the
Company.
Capital Reduction - Procedure
In order to effect the Capital Reduction, the Company firstly
requires the authority of its Shareholders by the passing of a
special resolution at the General Meeting to approve and effect the
reduction of the Share Premium Account.
Secondly, the Capital Reduction must be confirmed by the High
Court, to which the Company will make an application if the special
resolution is passed.
The Capital Reduction will take effect when the Order of the
High Court confirming it and a statement of capital approved by the
High Court have been registered with the Registrar of Companies.
The Effective Date of the Capital Reduction is currently expected
to be 19 December 2014. That date is likely to be within a few
working days after the hearing at which the Capital Reduction is
confirmed by the High Court, which is currently expected to be on
or around 17 December 2014.
In order to approve the Capital Reduction, the High Court will
need to be satisfied that the interests of the Company's creditors
will not be prejudiced by the Capital Reduction. The Company is not
required to seek written consent to the Capital Reduction from its
creditors. However, for the benefit of those of its creditors from
whom consent is not required, the Company may be obliged to provide
security in a form acceptable to the High Court. This is in order
that the Capital Reduction can be confirmed by the High Court on
terms that will permit any part of the sum released by the Capital
Reduction either to be returned to Shareholders as a capital
payment or credited to the profit and loss account of the Company
so as to create distributable reserves.
If the Company is unable in the timetable proposed to obtain
consent from, or is unable or unwilling to provide security (where
security is required) for all such creditors, then the amount
released by the Capital Reduction, when the Capital Reduction is
confirmed by the High Court, will remain undistributable for the
time being until any such outstanding consents have been obtained,
security (where security is required) has been put in place, or the
relevant obligations have been discharged, and the Company may be
required to give an undertaking to that effect to the High
Court.
The Board reserves the right (where necessary by application to
the High Court) to abandon, discontinue or adjourn any application
to the High Court for confirmation of the Capital Reduction, and
hence the Capital Reduction itself, if the Board believes that the
terms required to obtain confirmation are unsatisfactory to the
Company or if as the result of a material unforeseen event the
Board considers that to continue with the Capital Reduction is
inappropriate or inadvisable.
The Resolutions
An explanation of the Resolution which is to be proposed as
special business at the General Meeting is set out below:
Capital Reduction - Reduction of the Share Premium Account
The resolution reduces the amount standing to the credit of the
share premium account of the Company by GBP45,000,000.
The Capital Reduction does not affect the number of Shares in
issue, the nominal value per Share or the voting or dividend rights
of any Shareholder.
General Meeting
A Circular containing a formal notice of a General Meeting to be
held at the offices of Rurelec PLC, Millbank Tower, 21-24 Millbank,
17th Floor, London SW1P 4QP at 10.30 a.m. on 25 November 2014 is
today being posted, together with a form of proxy, to those
shareholders who have elected to receive hard copy shareholder
communications from the Company and will shortly be made available
to download from the Company's website at
http://www.rurelec.com/investors/circulars.
Expected Timetable of Principal Events
Publication of the Circular 10 November 2014
Latest time and date for 6 p.m. on 21 November
receipt of Forms of Proxy 2014
for the General Meeting
Date and time of General 10.30 a.m. on 25 November
Meeting 2014
Expected date for confirmation 17 December 2014
of the Capital Reduction
by the High Court
Expected Effective Date 19 December 2014
of the Capital Reduction
Notes:
(1) All references in this announcement to time are to London time.
(2) If any of the above times or dates should change, the
revised times and/or dates will be notified to Shareholders via an
appropriate announcement on a Regulatory Information Service.
(3) All events in the above timetable following the holding of
the General Meeting are conditional upon: (i) the passing of the
Resolution; (ii) approval of the Capital Reduction by the High
Court; and (iii) registration of the High Court Order confirming
the Capital Reduction with the UK Registrar of Companies.
**ENDS**
This information is provided by RNS
The company news service from the London Stock Exchange
END
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