Stanley Gibbons Group PLC Update re Subsidiary and New York Property (9313L)
September 16 2021 - 2:00AM
UK Regulatory
TIDMSGI
RNS Number : 9313L
Stanley Gibbons Group PLC
16 September 2021
16 September 2021
THE STANLEY GIBBONS GROUP PLC
(the "Company" or the "Group")
Update re Subsidiary and New York Property
The Company's wholly owned subsidiary Mallett Inc (Mallett), has
been involved in a legal dispute regarding a leasehold property in
New York which it sub-let as described in the Company's final
results announced on 10 August 2021. In April 2020 Mallett's tenant
ceased paying the rent, which in turn meant that Mallett was unable
to pay the landlord. In August 2021 Mallett reached a settlement
agreement with the tenant which terminated their tenancy. Mallett
Inc has been unable to negotiate a settlement with the landlord for
the outstanding rental arrears and has been unable to negotiate
early termination of the lease. On the advice of its attorneys, the
Directors of Mallett have agreed to enter Mallett into a Chapter 11
process in the United States. The Chapter 11 bankruptcy filing will
allow Mallett to promptly liquidate its assets in the order of
priority required by the US federal Bankruptcy Code, with timing
and amount paid to creditors approved by the New York Bankruptcy
Court before distributions are made.
Mallett is a cross guarantor of the Group's finance facilities
with Phoenix S.G. Limited ("Phoenix"), the Group's 58.09% majority
shareholder and principal lender. As a result of Mallett Inc
entering Chapter 11 proceedings in the United States, the Group is
in technical default of its loan facility. As a result of this the
loan facility would become immediately due if called by Phoenix.
The Group's Directors requested and have received from Phoenix S.G.
Limited a signed letter of intent stating their intention not to
call in the loans and to continue to support the Group. This letter
is consistent with the support that Phoenix have offered throughout
their involvement as lender to the Group but is not a waiver of the
default and the loan facility is payable on demand.
At 31 August 2021 the carrying value of right of use asset in
the Group's balance sheet for the New York leasehold property is
GBP2.6m whereas the total carrying value of the lease liability is
GBP4.3m. The Mallett balance sheet at 31 August 2021 has
approximately GBP2.5m of net assets. Under the Chapter 11 process,
these assets will be divided between the creditors of Mallett
according to the creditors share of the liabilities. Other than the
landlord, Mallett's other creditors are mainly amounts owed to
other Group companies. The Chapter 11 process will apply the US
federal Bankruptcy Code to creditors which will limit some of the
liabilities. The Directors have been advised by the Mallett
attorneys that no claim from this process can be attached back to
other Group companies and the Directors are hopeful that on
conclusion of this process some of the assets will be distributed
to Group companies.
The Company will update shareholders on any material
developments in the Chapter 11 process as and when they occur.
Graham Shircore CEO said:
"It was always our hope that we could reach a negotiated
settlement with all parties in connection with the New York lease.
Unfortunately, this has not been possible with regard to one of the
parties concerned. Therefore, in order to protect the Group's
remaining assets and minimise the future liabilities the decision
to place Mallett Inc in to Chapter 11 has been taken.
Phoenix continue to show their support for the business and we
hope that the Chapter 11 process in the United States can be
concluded as swiftly as possible and in a manner which is optimal
for all creditors which include a number of other Group
companies.".
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as amended by The
Market Abuse (Amendment) (EU Exit) Regulations 2019.
For further information, please contact:
The Stanley Gibbons Group plc Tel: +44 (0)207 836
8444
Graham Shircore
Harry Wilson
Liberum (Nominated Adviser and Broker) Tel: +44 (0)203 100
2000
Andrew Godber
Edward Thomas
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