REG - Partway Group PLC - Proposed cancellation, MVL and notice of GM
21/06/2024 07:00
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RNS Number : 2780T Partway Group PLC 21 June 2024
21 June 2024
Partway Group plc
("Partway Group" or the "Company")
Proposed cancellation, members' voluntary liquidation and notice of GM
Partway Group plc (AIM: PTY) announces that further to its announcement of 10
June 2024, the Board has formally resolved to place the Company into a
members' voluntary liquidation ("MVL") and a circular setting out the details
of the proposed MVL and cancellation of admission to trading on AIM of the
Company's ordinary shares (the "Proposals") will be posted to shareholders
shortly and made available on the Company's website at www.partway.net
(http://www.partway.net) . Further information regarding the Proposals can be
found below and in the circular.
The Proposals are subject to shareholder approval at a General Meeting of the
Company to be held on 8 July 2024 at 10:00 a.m. Notice of the General Meeting
and further information regarding voting and attendance is provided within the
Circular.
Unless otherwise defined, terms used in this announcement have the defined
meaning given to them in the appendix at the end of this announcement.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Event Date and Time
Publication and posting of this document and the Form of Proxy 21 June 2024
Latest time and date for receipt of Forms of Proxy for the General Meeting 10.00 a.m. on 4 July 2024
Close of the Register and Record Date for participation in the MVL1 6:00 p.m. on 4 July 2024
General Meeting 10.00 a.m. on 8 July 2024
Appointment of the Liquidator 8 July 2024
Announcement of results of General Meeting through an RIS 8 July 2024
Cancellation becomes effective 7:00 a.m. on 9 July 2024
Expected date for the interim distribution to Shareholders2 September 2024
Expected date for the final distribution to Shareholders2 April 2025
1 The actual time and date on which the Register is closed and the
Record Date is set for participation in the MVL will ultimately be determined
by the Liquidator and is therefore subject to change.
2 The actual date on which any distribution will be complete will
ultimately be determined by the Liquidator and is therefore subject to change.
Contacts
Partway Group plc www.partway.net
Mark Braund, Executive Chairman m.braund@partway.net
Mike Johns, Chief Financial Officer m.johns@partway.net
Allenby Capital Limited (Nominated Adviser and Broker) Tel: +44 (0) 20 3328 5656
David Hart / Dan Dearden-Williams (Corporate Finance)
The following is an extract from the circular that will be posted to
shareholders shortly, a full version of which is available on the Company's
website at www.partway.net (http://www.partway.net) .
Introduction
Following the Company's disposal of its main operating business, Parity
Professionals Limited which was announced on 7 December 2023, the Company
was reclassified as a Rule 15 cash shell under the AIM Rules. As a result, it
was required to complete a transaction that would constitute a reverse
takeover under Rule 14 of the AIM Rules for Companies before 7 June 2024 to
avoid the suspension of the trading in the Company's ordinary shares. As
announced on 10 June 2024, with this deadline having passed, and the trading
in the Company's ordinary shares suspended, the Board has now resolved to:
(i) cancel the admission of the Ordinary Shares to trading on AIM;
and
(ii) place the Company into a members' voluntary liquidation.
The Resolutions to approve the Proposals are to be proposed at the General
Meeting, which has been convened for 10.00 a.m. on 8 July 2024 at the offices
of Allenby Capital, 5 St. Helen's Place, London, EC3A 6AB.
Background to and reasons for the Proposals
For more than a decade, Partway Group plc, formerly known as Parity Group plc,
has, under several different management teams, attempted without success to
diversify away from its core competency in IT contract recruitment.
In the three years prior to 2021, the core recruitment division had been
starved of investment in order to fund a failed attempt to build a new
consulting capability.
During the second half of 2021, the business was restructured, shutting down
the consulting division to refocus on IT recruitment, a business that was
generating greater than 95% of the revenue at the time. After years of
underinvestment, and the loss of key personnel, the core recruitment business
was returned to a position of strength in the public sector market,
re-establishing Parity's heritage as a well-recognised recruitment brand, and
delivered against a backdrop of tough economic conditions.
Despite a much slimmer management structure and materially lower overheads,
the costs associated with maintaining an AIM listing along with the continuing
obligation to fund a legacy defined benefit pension scheme, did not leave
capacity to fund further investment.
With significant challenges to source new investment for growth, continuing
economic uncertainty, and no expectation of a short-term return to a growth in
the recruitment market, the Directors took the decision in November 2023 that
the best opportunity to deliver value for all stakeholders, (shareholders,
employees, customers and suppliers) was to find a new home for the recruitment
business, giving it the opportunity to flourish within a larger group. This
was completed on 8 December 2023, realising £1.6m of cash after costs of the
disposal, and the settlement reached with the trustees of the pension scheme
that removed future obligations to fund the defined benefit pension scheme.
Over the last six months, the Directors have assessed a number of potential
acquisition opportunities that would have constituted a Reverse Takeover
("RTO"). The criteria the Directors have used in assessing these acquisition
opportunities have included:
• the opportunity to generate future value for the Company's
shareholders;
• the likelihood of delivering a RTO within the timeframes set
out in Rule 15 and Rule 41 of the AIM Rules for Companies before the Company
would be delisted, being 9 December 2024; and
• the significant potential costs and risks associated with
undertaking an RTO.
The Directors have also been very conscious of the ongoing use of the
Company's existing cash resources associated with its continued listing whilst
the search for a suitable Reverse Takeover candidate progressed.
The Board is no longer in discussions with any potential RTO candidate.
Against this backdrop, the Board has considered the merits of continuing to
pursue the completion of a Reverse Takeover and has concluded that the risks
associated with such a transaction being achieved on or before 9 December 2024
(being the first business day following the anniversary of the sale of the
recruitment business and the deadline for completing an RTO before the
Company's shares are cancelled from trading in accordance with Rule 41 of the
AIM Rules for Companies) are high.
The Board believes it is not in the best interests of the Company's
shareholders to continue to pursue this strategy and has therefore resolved to
place the Company into a Members Voluntary Liquidation, subject to the
Resolutions at the General Meeting being passed, appointing the Liquidator to
place the Company into a solvent members' voluntary liquidation pursuant to
the UK Companies Act 2006, enabling surplus funds, after paying creditors, to
be distributed to shareholders.
Principal effects of the Cancellation
Prior to the Company being dissolved pursuant to the MVL, the principal
effects of the Cancellation will be that:
• Shareholders will no longer be afforded the protections given
by the AIM Rules, such as the requirement to be notified of certain events
and the requirement that the Company seek shareholder approval for certain
corporate actions where applicable, including substantial transactions,
financing transactions, reverse takeovers and fundamental changes in the
Company's business, related party transactions and certain acquisitions and
disposals;
• the levels of transparency and corporate governance applicable
to the Company will not be as high as for a company whose shares are admitted
to trading on AIM;
• following approval of the MVL by Shareholders at the General
Meeting, Shareholders will not be able to transfer Ordinary Shares without the
prior consent of the Liquidator. In addition, there will be no formal market
mechanism enabling Shareholders to trade in Ordinary Shares;
• as a result of the MVL being approved by Shareholders at the
General Meeting and in the absence of a formal market in, and quotation of,
the Ordinary Shares, it may be more difficult for Shareholders to determine
the value of their shareholding in the Company at any given time;
• the regulatory and financial reporting regime applicable to
companies whose shares are admitted to trading on AIM will no longer apply;
• the Company will cease to have a nominated adviser and broker;
• whilst the Company's CREST facility will remain in place
following the Cancellation becoming effective, the Company's CREST facility
may be cancelled in future and the Ordinary Shares will cease to be
transferable through CREST if the CREST facility is cancelled.
• the Cancellation may have taxation consequences for
Shareholders. Shareholders who are in any doubt about their tax position
should consult their own professional independent tax adviser.
Subject to, and prior to the conclusion of the winding-up of, the Company's
affairs pursuant to the MVL, the Company will remain incorporated and
registered in England and Wales under the Companies Act 1948 to 1976,
notwithstanding the Cancellation becoming effective. Shareholders should also
note that the Takeover Code will continue to apply to the Company during the
period following the Cancellation and prior to the Company being dissolved in
connection with the MVL. The Company will also continue to be bound by the
Articles following the Cancellation becoming effective.
The above considerations are not exhaustive, and Shareholders should seek their own independent advice when assessing the likely impact of the Cancellation on them.
Process for Cancellation
Under the AIM Rules, it is a requirement that the Cancellation must be
approved by not less than 75 per cent. of votes cast by Shareholders at a
general meeting. Accordingly, the Notice of General Meeting set out at the end
of this document contains a special resolution to approve the Cancellation.
Furthermore, Rule 41 of the AIM Rules requires any AIM company that wishes the
London Stock Exchange to cancel the admission of its shares to trading on AIM
to inform the London Stock Exchange of its preferred cancellation date at
least 20 Business Days prior to such date and to notify shareholders. In
accordance with AIM Rule 41, the Company (through its nominated adviser,
Allenby Capital Limited) has notified the London Stock Exchange of its
intention, subject to the passing of the special resolution numbered 1 in the
notice of General Meeting set out at the end of this document to approve the
Cancellation at the General Meeting, to cancel admission of the Ordinary
Shares to trading on AIM. It is expected that the Liquidator will be appointed
immediately following the conclusion of the General Meeting and the
Cancellation will become effective at 7.00 a.m. on 9 July 2024, being the
Business Day following the General Meeting. If the Cancellation becomes
effective, the Company will no longer be required to comply with the AIM Rules
and Allenby Capital Limited will cease to be the Company's nominated adviser
and broker.
Members' Voluntary Liquidation
The Proposals involve the Company being placed into a members' voluntary
liquidation. If the MVL and the appointment of the Liquidator are approved by
Shareholders at the General Meeting, the Company will be wound-up in
accordance with the Insolvency Act. Following their appointment, the
Liquidator will assess the Company's financial position and, when they are in
a position to do so, it is expected that they will make the distribution
detailed in this circular.
Shareholders should note that the Company is solvent and the MVL is not an
insolvent liquidation.
Since the Company's cash balances represent the Company's sole material asset
and the liabilities of the Company are expected to be less than the cash
balance, the Directors anticipate that the Liquidator will undertake a
distribution of surplus funds in a proportion which is as close as practicable
to such Shareholders' pro rata interests in the capital of the Company at the
Record Date. The MVL will allow the orderly winding-up of its affairs, and
upon the conclusion of the MVL, the Company will be dissolved. Upon the
appointment of the Liquidator, which, subject to Shareholders' approval being
obtained at the General Meeting, will take effect immediately following the
passing of the resolutions approving such appointment at the General Meeting,
all powers of the Board will cease and the Liquidator will deal with the
affairs of the Company until it is dissolved.
The Board estimates that the costs and expenses of the Proposals will amount
to approximately £200,000, which includes the fees of the Liquidator of
£18,000 and estimated costs for concluding the wind up of the group of
companies for which the Company is the ultimate parent company. A summary of
the estimated costs is provided within Appendix A. The Liquidator will retain
the Liquidation Fund to pay the Company's known and contingent liabilities and
costs of liquidation not already paid at the point of the commencement of the
MVL including the contractual obligations of the directors' contracts (circa
£393,000) and an amount for unknown contingencies.
It is currently expected, based upon the estimated costs, that a distribution
of 0.68 pence for every 1 Ordinary Share held by Shareholders on the Record
Date is expected to be made, subject to a minimum total distribution of £20
per Shareholder. As a result, Shareholders holding less than 2,923 Ordinary
Shares in the Company will not be eligible to receive a distribution due to
the associated cost. Shareholders who hold their Ordinary Shares in CREST will
receive any distributions through
the CREST system. Other Shareholders will be sent a cheque. Cheques in respect
of the final
distribution to Shareholders will be sent once the liquidation is completed.
The distribution to Shareholders is expected to be made in two payments:
· an interim distribution to Shareholders on the Record Date is
proposed to be made in September 2024, the value of the distribution will be
confirmed by the Liquidator prior to the distribution being made; and
· a final distribution to Shareholders on the Record Date is
anticipated to be made in April 2025.
The final distribution will not be made until the Liquidator has completed
their statutory duty to adjudicate and pay creditors' claims and is satisfied
that all tax returns due to HMRC have been dealt with and all amounts owing
have been paid. Each distribution will be rounded down to the nearest value
in pence.
The precise timing of the final distribution is uncertain (although it is
expected to be at least nine months from the commencement of the MVL before a
final distribution can take place due to the requirement to wind up the other
subsidiaries within the group including three non-trading overseas entitles).
The Liquidator will subsequently prepare a final account which will be sent
to Shareholders giving eight weeks' notice of the date upon which the
Liquidator intends to deliver the final account to the Registrar of
Companies. The Company will be dissolved on the expiry of three months
following the filing of the final account with the Registrar of Companies.
DEFINITIONS
The following definitions apply throughout this document and in the Form of
Proxy, unless the context requires otherwise:
Term
Definition
"Act" the UK Companies Act 2006, as amended;
"AIM" the market of that name operated by the London Stock Exchange;
"AIM Rules" the rules which set out the obligations and responsibilities in relation to
companies whose shares are admitted to AIM as published by the London Stock
Exchange from time to time;
"Allenby Capital" Allenby Capital Limited, the Company's Nominated Adviser in accordance with
the AIM Rules
"Articles" the articles of association of the Company from time to time;
"Board" the board of directors of the Company for the time being;
"Business Day" a day other than a Saturday, Sunday or public holiday on which banks are open
for commercial business in the City of London;
"Cancellation" the proposed cancellation of admission of the Ordinary Shares to trading on
AIM;
"certificated" or in "certificated form" a share or other security recorded on the relevant register of the relevant
company as being held in certificated form and title to which may be
transferred by means of a stock transfer form;
"Company" Partway Group plc, a company registered in England and Wales with registered
number 03539413;
"CREST" the relevant system (as defined in the CREST Regulations) in respect of which
Euroclear is the Operator (as also defined in the CREST Regulations);
"CREST Manual" the rules governing the operation of CREST as published by Euroclear;
"CREST Member" a person who has been admitted to CREST as a system-member (as defined in the
CREST Manual);
"CREST Participant" a person who is, in relation to CREST, a system-participant (as
defined in the CREST Regulations);
"CREST Regulations" the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755),as amended;
"CREST sponsor" a CREST Participant admitted to CREST as a CREST sponsor;
"CREST sponsored member" a CREST member admitted to CREST as a sponsored member;
"Directors" the directors of the Company at the date of this document;
"Euroclear" Euroclear UK & Ireland Limited;
"FCA" the United Kingdom Financial Conduct Authority;
"Form of proxy" the form of proxy accompanying this circular for use by Shareholders in
relation to the General Meeting;
"FSMA" the Financial Services and Markets Act 2000 of the United Kingdom, as amended;
"General Meeting" the general meeting of the Company to be held at the offices of Allenby
Capital at 5 St. Helen's Place, London, EC3A 6AB at 10.00 a.m. on 8 July 2024;
"Group" the Company and its subsidiary undertakings from time to time;
"HMRC" HM Revenue & Customs;
"Insolvency Act" the Insolvency Act 1986 (as amended);
"Liquidator" the proposed liquidator of the Company, namely William Antony Batty of Antony
Batty & Company LLP;
"Liquidation Fund" the cash to be retained by the Liquidator to pay the
Company's liabilities, the VAT inclusive (if applicable) costs of the
liquidation and an additional retention for contingencies;
"London Stock Exchange" London Stock Exchange plc;
"Market Abuse Regulation" the UK version of the EU Market Abuse Regulation (2014/596) which is part of
UK law by virtue of the European Union (Withdrawal) Act 2018, as amended and
supplemented from time to time including by the Market Abuse (Amendment) (EU
Exit) Regulations 2019;
"MVL" has the meaning ascribed to it in paragraph 1 of Part 1 of this document;
"Ordinary Resolution" has the meaning given in section 282 of the Act;
"Ordinary Shares" ordinary shares of 2 pence each in the capital of the Company;
"Proposals" the proposals for Cancellation, the MVL and the appointment of the Liquidator,
as described in more detail in the letter from the Chairman in Part I of this
document;
"Record Date" 6.00 p.m. on 4 July 2024;
"Register" the register of members of the Company;
"Registrar" Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA
"Resolutions" the resolutions to be proposed at the General Meeting to approve the Proposals
as set out in the notice of General Meeting;
"RIS" or "Regulatory Information Service" a regulatory information service that is approved by the FCA as meeting the
FCA's primary information provider criteria and that is on the list of
authorised regulatory information service providers maintained by the FCA;
"Shareholders" the persons who are registered as holders of the Ordinary Shares;
"Special Resolution" has the meaning given in section 283 of the Act;
"Sterling" or "£" the legal currency of the UK;
"Takeover Code" the UK City Code on Takeovers and Mergers;
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland;
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