SOA Stonemartin

    RNS Number : 1999J
  Stonemartin PLC
  28 November 2008
   

    Stonemartin plc
    ('Stonemartin' or 'the Company' or 'the Group')

    PROPOSED SALE OF STONEMARTIN CORPORATE CENTRES LIMITED

    PROPOSED CANCELLATION OF ADMISSION TO TRADING ON AIM

    PROPOSED CHANGE OF NAME

    AND

    NOTICE OF GENERAL MEETING


    Stonemartin announces that it has entered into a conditional agreement for the sale of the entire issued share capital of Stonemartin
Corporate Centres Limited ("SCC"), the Company's sole operating subsidiary, to Regus Group Limited ("Regus") for a price of up to �1.5m to
be satisfied in cash and subject to adjustment to reflect any net cash/debt and working capital in SCC at 30 November 2008 (the "Disposal").
Because all of the Group's trading business activities are carried on through SCC, the Disposal is required by the AIM Rules to be
conditional upon the approval of Shareholders. This approval is being sought pursuant to the Resolutions at a general meeting of the Company
being convened for 10.30 a.m. on 22 December 2008 to be held at New Broad Street House, 35 New Broad Street, London EC2M 1NH (the "General
Meeting").
    Substantially all of the assets and liabilities of the Group are held by SCC. In the financial year of the Group ended 31 March 2008,
SCC made a profit before tax of �448,000. Following completion of the Disposal ("Completion"), the Group will not have any trading
subsidiaries or any trading businesses and will have no material assets, other than cash (including the net proceeds of the Disposal) and no
material liabilities other than the expenses and other liabilities incurred in connection with the Disposal. Accordingly, the Directors also
propose that, conditional on Completion occurring and subject to Shareholder approval of the second Resolution at the General Meeting,
admission of the Stonemartin Shares to trading on AIM be cancelled as soon as practicable after Completion.  Following Completion of the
Disposal and the delisting from AIM becoming effective, the Board intends to return cash to Shareholders as expeditiously as possible,
probably by means of a solvent winding-up of the Company.  
    A circular will today be posted to Shareholders, outlining the terms of the proposed Disposal, the delisting from AIM and the proposed
change of name. Accompanying the circular is the Notice of General Meeting. Copies of the circular will shortly be available on the
Company's website: http://www.stonemartin.co.uk

    For further information, please contact:

 Richard Mead - Chairman, Stonemartin plc                   Tel: 020 7194 7500
 Graham Ede / Tim Worboys - Joint Managing Directors,
 Stonemartin plc
 Reg Hoare/Miranda Good, Smithfield                         Tel: 020 7360 4900
 Jeff Keating/Simon Brown, Teathers                         Tel: 020 7131 3000

    Background to and terms of the Disposal

    As announced on 31 March 2008, SCC entered into a Settlement Agreement on that date with the limited partnership which owned the
buildings managed by the Group in Birmingham, Manchester and Reading to relinquish those buildings in exchange for compensation of �7.0
million (exclusive of VAT and before expenses). The Settlement Agreement became effective on 17 April 2008 following its approval by
Shareholders.
    Once the transaction with the limited partnership had been concluded, the Board undertook a review of the Group's future strategic
options. It concluded that it was not in the interests of the Group to seek to acquire new buildings with third party funding or to invest
the cash which the Group had received into alternative investments, inside or outside the serviced office industry. Instead, it felt that
Shareholders' interests would be best served by entering into discussions with a number of the parties which had expressed interest either
in acquiring the Company, or in reversing their businesses into it, or in acquiring SCC, so that value could be returned to Shareholders.
These discussions have culminated in the Company and Regus entering into the Sale Agreement.
    Pursuant to the Sale Agreement, Regus has agreed to acquire the entire issued share capital of SCC for a consideration of up to �1.5m,
to be satisfied in cash and subject to adjustment to reflect any net cash/debt and working capital in SCC at 30 November 2008. The Sale
Agreement contains customary warranties given by the Company to Regus in connection with SCC and SCC's business, assets and liabilities. The
Sale Agreement is conditional only on Shareholders' approval being given to the Disposal at the General Meeting and Completion is expected
to take place as soon as practicable following the General Meeting if such approval is given.
    Substantially all the Group's cash is currently held by SCC. To the extent that SCC has sufficient distributable reserves, this will be
paid up to the Company as a dividend prior to Completion, with the balance, less any amount agreed between the parties as required for
working capital purposes, being paid as to 90 per cent. on Completion and the remainder after agreement of completion accounts, subject to
any adjustments arising therefrom. Following Completion the Board intends to return cash to Shareholders as expeditiously as possible,
probably by means of a solvent winding-up of the Company (as more particularly described under "Future Strategy" below).
    If the Disposal is not approved at the General Meeting, the Company will continue to be admitted to trading on AIM and the Board will
continue to seek opportunities to return value to Shareholders and reduce costs in the Group's business. If the Disposal is approved and
Completion occurs but the Cancellation is not approved at the General Meeting, the Company will be an "investing company" for the purposes
of the AIM Rules and will be required to formulate an investing strategy.   Any investing strategy proposed by the Board will be notified to
Shareholders as soon as practicable following Completion and will require the approval of Shareholders in general meeting before it becomes
effective.
    Potential effect of the Disposal on possible offer for the Company
    Because the Company was pursuing a twin-track strategy of seeking offers for both SCC and the Company, the Company itself was, until 6
November 2008 in an "offer period" for the purposes of the City Code on Takeovers and Mergers (the "Code") and was therefore prohibited by
Rule 21.1 of the Code from taking any action which might result in an offer or bona fide possible offer for the Company itself being
frustrated or from, inter alia, selling or agreeing to sell any assets of a material amount or entering into contracts in the ordinary
course of business, in each case without the consent of Shareholders. Although the Board has pursued this twin-track strategy, no offer for
the Company has been forthcoming that the Board considers offers a better outcome for Shareholders than the Proposals and the Company,
despite a recent re-statement of interest from a potential bidder, is not in talks with any party regarding an offer for the Company.
Nonetheless, Shareholders should be aware in considering how to vote at the General Meeting that if the Disposal is approved, any potential offers for the Company might be frustrated by the sale of SCC.
Notwithstanding this possibility, and having given the matter due consideration, the Board considers that the terms of the Disposal are fair
and reasonable insofar as Shareholders are concerned and unanimously recommends that Shareholders vote in favour of the Resolutions at the
General Meeting. Given the re-statement of interest noted above, the Company will today re-enter an Offer Period under the rules of the
Code.

    Future strategy
    Following the Disposal, the Group will have no material assets, other than cash (including the proceeds of the Disposal), and no
material known liabilities other than the expenses and other liabilities incurred in connection with the Proposals and to be incurred in
concluding the Group's affairs. Immediately following Completion, the Board anticipates that the Company's assets will include approximately
�10 million of cash, subject to adjustment through a completion accounts mechanism to reflect any net/cash debt and working capital in SCC
at 30 November 2008.  In addition, the Company will have a contingent right of up to �280,000 (plus accrued interest from Completion)
following the final determination of the amount of any corporation tax due in respect of SCC's current accounting period.
    As set out in the Company's preliminary announcement of 2 September 2008 of its results for the year ended 31 March 2008, the Board
intends, if the Disposal is approved at the General Meeting and Completion occurs, to return cash to Shareholders as expeditiously as
possible and to continue to reduce the overheads of the Group commensurate with the Group's diminished activities. Accordingly, Timothy
Worboys, Joint Managing Director with particular responsibility for operational matters and sales, has agreed to resign with effect from the
date of Completion. All other members of the Board currently intend to remain in office until a liquidator of the Company is appointed.
    The Company has a significant accrued deficit in its profit and loss account such that, even taking account of the proceeds of the
Disposal, the Company would not be able to make substantial returns of value to Shareholders by way of dividend payments. The Board
therefore intends, as soon as practicable following Completion and the selection of a suitable liquidator (which latter process has begun
and is ongoing), to propose a special resolution to Shareholders that the Company be wound up voluntarily on a solvent basis so that the
liquidator can make distributions of cash to Shareholders in the course of the Company's winding-up. It is the Board's current intention to
convene a general meeting to consider the resolution to wind up the Company and appoint a liquidator as soon as possible. It is expected
that this will be no later than during the first quarter of 2009. Given the currently envisaged level of cash assets of the Company
following Completion and the Company's history (it having been simply a holding company for a number of years), the Board is optimistic that the liquidator will be willing to make significant distributions of
value to Shareholders within a short period of his appointment. Shareholders should note however that the Board will not be able to require
the liquidator to make distributions of a particular size to Shareholders, or at all, and the level and timing of any distributions
Shareholders receive will be determined exclusively by the liquidator in light of his view at the relevant time of the Company's financial
position and liabilities, actual and contingent.
    Proposed Cancellation and change of name and their effect on Shareholders
    In light of the Board's decision to return cash to Shareholders, the Directors do not believe that continued admission to trading on AIM
of the Stonemartin Shares is in the interests of the Company and Shareholders following Completion because of the considerable related
direct and indirect costs. These costs include fees paid to the Company's nominated adviser and broker, costs relating to legal, accounting
and communications advice required in connection with the Stonemartin Shares being admitted to trading on AIM and fees payable to the London
Stock Exchange. Accordingly, the Company announces that, subject to Completion occurring and Shareholders approving the Cancellation at the
General Meeting, it intends to cancel its admission to trading on AIM with effect from 5 January 2009.
    The Directors do not anticipate moving the Stonemartin Shares to an alternative trading platform and any transaction in Stonemartin
Shares undertaken after Cancellation will only be capable of being effected by private sale. Accordingly, the effect of the Cancellation
will be that Stonemartin Shares will no longer be quoted or tradable on AIM and Shareholders' ability to deal in their Stonemartin Shares
readily (including Shareholders who acquire their Stonemartin Shares following the exercise of options/awards granted under the Share
Schemes) is likely to be substantially reduced.
    If any transactions in Stonemartin Shares are effected following the Cancellation, the parties should contact the Company Secretary at
the Company's registered office, so that the transaction(s) can be registered by the Company.
    The Company has agreed in the Sale Agreement to propose a resolution to change its name following completion so as to protect the
goodwill in SCC being acquired by Regus. Accordingly, a resolution to change the Company's name to Eagle Realisations plc with effect from
the time that Stonemartin Shares cease to be admitted to trading on AIM is included in the notice calling the General Meeting.
    Following the Cancellation, the Stonemartin Shares will no longer be transferable through CREST and Shareholders who immediately before
the Cancellation held shares in uncertificated form will be issued with share certificates in respect of their holdings.  If the resolution
to approve the change of name of the Company is approved, the new share certificates will bear the Company's new name. New share
certificates will not be issued to Shareholders who immediately before the Cancellation held shares in certificated form, whether or not the
change of name resolution is approved at the General Meeting.
    Following the Cancellation, the Company will no longer be required to comply with the AIM Rules in respect of announcing material events
or its results and will no longer be required to comply with the corporate governance requirements applicable to AIM companies. The Company
will however continue to hold general meetings in accordance with the applicable statutory requirements and its articles of association and
to continue to send Shareholders copies of the Company's audited accounts and notices of any Shareholder meetings, including those that will
be required in connection with any solvent winding up.
    The Resolutions to approve the Cancellation and the change of name at the General Meeting will be proposed as special resolutions and
therefore require votes in favour representing at least 75 per cent. of the votes cast in person or by proxy at that meeting.
    On Cancellation, the Company will cease to have a nominated adviser or broker.
    It is intended that, if the Cancellation resolution proposed at the General Meeting is passed by the requisite majority, admission of
the Stonemartin Shares to trading on AIM will be cancelled with effect from 8.00 a.m. on 5 January 2009. 
    Recommendation
    The Directors, who have been advised by Teathers, unanimously recommend that Shareholders vote in favour of the Resolutions at the
General Meeting as they and their connected persons have undertaken to do. Their undertakings, together with undertakings received from
other Shareholders to vote in favour of the Resolutions, represent 45,975,574 Stonemartin Shares in aggregate, being approximately 39.25 per
cent. of the Stonemartin Shares in issue.  
    Relevant Securities in Issue

    As a result of this announcement the Company is now in an Offer Period under the rules of the Code. 

    Further announcements will be made as appropriate. 
    In accordance with Rule 2.10 of the Code, the Company confirms that it has 117,149,921 Ordinary Shares of 1 pence each in issue and
111,571,421 deferred shares of 19 pence each in issue at the close of business on 27 November 2008 and is admitted to trading on the AIM
market of the London Stock Exchange under the UK ISIN code GB0009136580.  The deferred shares do not have a UK ISIN code.

    Dealing Disclosure Requirements

    Under the provisions of Rule 8.3 of the Code, if any person is, or becomes, "interested" (directly or indirectly) in 1% or more of any
class of "relevant securities" of the offeror or of the offeree company, all "dealings" in any "relevant securities" of that company
(including by means of an option in respect of, or a derivative referenced to, any such "relevant securities") must be publicly disclosed by
no later than 3.30 pm (London time) on the London business day following the date of the relevant transaction. This requirement will
continue until the date on which the offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on
which the "offer period" otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or
informal, to acquire an "interest" in "relevant securities" of the offeror or the offeree company, they will be deemed to be a single person
for the purpose of Rule 8.3.

    Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevant securities" of the offeror or of the offeree company by the
offeror or the offeree company, or by any of their respective "associates", must be disclosed by no later than 12.00 noon (London time) on
the London business day following the date of the relevant transaction. 

    A disclosure table, giving details of the companies in whose "relevant securities" "dealings" should be disclosed, and the number of
such securities in issue, can be found on the Takeover Panel's website at www.thetakeoverpanel.org.uk.
    'Interests in securities' arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in
the price of securities. In particular, a person will be treated as having an 'interest' by virtue of the ownership or control of
securities, or by virtue of any option in respect of, or derivative referenced to, securities. 
    Terms in quotation marks are defined in the Code, which can also be found on the Panel's website. If you are in any doubt as to whether
or not you are required to disclose a 'dealing' under Rule 8, you should consult the Panel.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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