Parsley Box Group - Proposed Cancellation and Notice of GM

RNS Number : 8361G

Parsley Box Group PLC

18 November 2022

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED IN ARTICLE 7 OF THE UK VERSION OF REGULATION (EU) NO 596/2014 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL OF 16 APRIL 2014 ON MARKET ABUSE (MARKET ABUSE REGULATION) AS RETAINED AS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 AS AMENDED.

UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

Parsley Box Group plc

("Parsley Box", the "Group" or the "Company")

Proposed cancellation of admission of Ordinary Shares to trading on AIM,

Re-registration as a Private Limited Company,

Adoption of New Articles of Association

and

Notice of General Meeting

Parsley Box Group plc (AIM: MEAL), the direct to consumer provider of ready meals and other products focused on the 65+ demographic, today announces the proposed cancellation of admission of its ordinary shares to trading on AIM (the "Cancellation"), re-registration of the Company as a private limited company (the "Re-registration") and the adoption of new articles of association (the "New Articles").

The Company has today published a circular, setting out the background to and reasons for the proposed Cancellation and the Re-registration and associated adoption of the New Articles (the "Circular"). The Circular also contains a notice convening a general meeting (the "General Meeting") at which Shareholders are invited to consider and, if thought fit, approve the proposed Cancellation and the Re-registration and associated adoption of the New Articles.

Details of the proposed Cancellation and Re-registration

Further to the announcement of 25 October 2022, the Board has assessed the various potential sources of capital available to the Company to fund its medium term growth plans and, in doing so, has reviewed and evaluated the benefits and drawbacks for the Company and its Shareholders in retaining the admission to trading of the Ordinary Shares on AIM. This review has focussed on a comparative assessment of the opportunities for the Company to raise further growth capital in the public and private markets respectively in the next 12 months and included, amongst other things, assessment of the public market liquidity and valuation volatility of the Ordinary Shares and a cost versus benefit analysis of maintaining the Company's status as a publicly traded company. As a result of this review, the Directors have concluded that the Cancellation and Re-registration are in the best interests of the Company and its Shareholders as a whole. A detailed explanation of the background to, and reasons for, the Cancellation and Re-registration is set out below.

To be passed, the resolution in respect of the Cancellation requires, pursuant to Rule 41 of the AIM Rules, the approval of not less than 75 per cent. of the votes cast by Shareholders at the General Meeting. The resolution to approve the Re-registration and the adoption of New Articles also requires the approval of not less than 75 per cent. of the votes cast by shareholders at the General Meeting.

The expected timetable for the proposed Cancellation and Re-registration is set out below.

Transactions in the Ordinary Shares prior to and post the proposed Cancellation

Shareholders should note that they are able to continue trading in the Ordinary Shares on AIM prior to the Cancellation. The Board understands that, as at the date of this announcement, MoveFresh Limited, a company that Kevin Dorren is a director of and majority shareholder in, and exercises significant control over, intends to purchase Ordinary Shares in the market until such point that it holds, together with persons acting in concert with it, such number of Ordinary Shares comprising no more than 29.99 per cent. of the Company's issued share capital. However, there can be no guarantee that any purchases of Ordinary Shares by MoveFresh Limited will take place and there can be no guarantee as to the price of such purchases. Shareholders should consult with their own independent financial adviser and/or broker should they wish to consider selling their interests in the market prior to the Cancellation becoming effective.

Should the Resolutions be approved by Shareholders, the Company will implement a matched bargain facility which would facilitate Shareholders buying and selling Ordinary Shares on a matched bargain basis following Cancellation. In anticipation of providing a matched bargain facility, the Company has sought quotes from third party providers. Further details of the Matched Bargain Facility will be communicated to Shareholders separately in due course and made available on the Company's website.

Shareholders should also be aware that any such Matched Bargain Facility could be withdrawn at a later date. Following Cancellation, the provision of a Matched Bargain Facility will be kept under review by the Board and, in determining whether to continue to offer a Matched Bargain Facility, the Company shall consider expected (and communicated) Shareholder demand for such a facility as well as the composition of the Company's register of members and the costs to the Company and Shareholders.

The General Meeting

The General Meeting will be held at the offices of Dickson Minto W.S. at 16 Charlotte Square, Edinburgh EH2 4DF at 10.00 a.m. on 14 December 2022.

The Company has received irrevocable undertakings from each of the Directors and their connected parties to vote, or procure votes, in favour of the Resolutions representing, in aggregate, 25,971,937 Ordinary Shares. Accordingly, the Company has received irrevocable undertakings to vote in favour of the Resolutions representing approximately 35.8 per cent. of the Company's issued share capital as at the date of this announcement.

General

Capitalised terms in this announcement, unless otherwise defined, have the same meaning as will be set out in the Circular.

A copy of the Circular and the New Articles will be made available on the Company's website at https://corporate.parsleybox.com.

Enquiries:

Parsley Box

Holly McComb

Kevin Dorren

Tel: 0131 608 1990

Email: invest@parsleybox.com

finnCap (Nominated Adviser and Broker)

Matt Goode / Charlie Beeson (Corporate Finance)

Tim Redfern / Charlotte Sutcliffe (ECM)

Tel: +44 20 7220 0500

EXTRACTS FROM THE CIRCULAR TO SHAREHOLDERS

Background to and reasons for the Cancellation and Re-registration

As highlighted in the announcement of 25 October 2022, the Board has undertaken an assessment of the various potential sources of capital available to the Company to fund its medium term growth plans and, in doing so, has reviewed and evaluated the benefits and drawbacks for the Company and its Shareholders in retaining the admission to trading of the Ordinary Shares on AIM. This review has focussed on a comparative assessment of the opportunities for the Company to raise further growth capital in the public and private markets respectively in the next 12 months and included, amongst other matters, assessment of the public market liquidity and valuation volatility of the Ordinary Shares and a cost versus benefit analysis of maintaining the Company's status as a publicly traded company. As a result of this review, the Directors have concluded that the Cancellation and Re-registration are in the best interests of the Company and its Shareholders as a whole. Further details of the background to and reasons for the Cancellation and Re-registration are set out below.

· The Board believes that it is important for the Company to have access to additional capital to fund its medium term growth plans. The Directors note that an equity fundraise through the public markets would not necessarily be available to the Company in the near or medium term (outside of Director and associated party commitments) at an appropriate valuation. Further, the public markets are unlikely to provide the Company with wider or more cost-effective access to capital than the funding options it already has from the Company's existing major shareholders in the next 12 months. Accordingly, the Board is of the view that the public markets do not provide the optimal platform to raise such funds and, in particular, that there may be greater opportunities to raise additional capital in the private markets.

· There has been limited liquidity in the Ordinary Shares for some time and, consequently, the admission of the Ordinary Shares to trading on AIM does not necessarily offer investors the opportunity to trade in meaningful volumes or with frequency within an active market. With low trading volumes, the Company's share price can move up or down significantly following trades of small volumes of Ordinary Shares. In the opinion of the Directors, the adverse share price performance is detrimental to the perception of the Group amongst customers, suppliers and other partners, which, in turn, has the potential to negatively impact its product development, staff morale and industry reputation.

· The considerable management time, cost and the legal and regulatory burden associated with maintaining the Company's admission to trading on AIM is, in the Directors' opinion and in the light of the above, disproportionate to the benefits of the Company's continued admission to trading on AIM. Given the lower costs associated with private limited company status, it is estimated that the Cancellation and Re-registration will materially reduce the Company's recurring administrative and adviser costs by approximately £400,000 per annum, which the Directors believe can be better spent supporting growth in the Group's business.

· The Directors also believe that the Company's current public market valuation does not reflect the underlying potential of the business with the result that growth prospects are more readily accessible and managed in a private market environment.

· Due to the limited liquidity in the Ordinary Shares and the Company's modest market capitalisation, continuing admission to trading on AIM no longer enables the Ordinary Shares to be used to effect strategic acquisitions, should the Company wish to pursue that strategy.

Following careful consideration, the Directors therefore believe that it is in the best interests of the Company and Shareholders as a whole to seek the proposed Cancellation and Re-registration.

In addition, in connection with the Re-registration, it is proposed that the New Articles be adopted to reflect the change in the Company's status to a private limited company. The principal effects of the Re-registration and the adoption of the New Articles on the rights and obligations of Shareholders and the Company are summarised in the Circular.

Process for, and principal effects of, the Cancellation

The Directors are aware that certain Shareholders may be unable or unwilling to hold Ordinary Shares in the event that the Cancellation is approved and becomes effective. Such Shareholders should consider selling their interests in the market prior to the Cancellation becoming effective.

Under the AIM Rules, the Company is required to give at least 20 clear Business Days' notice of Cancellation. Additionally, Cancellation will not take effect until at least five clear Business Days have passed following the passing of the Cancellation Resolution. If the Cancellation Resolution is passed at the General Meeting, it is proposed that the last day of trading in Ordinary Shares on AIM will be 21 December 2022 and that the Cancellation will take effect at 7.00 a.m. on 22 December 2022.

The principal effects of the Cancellation will include the following:

· there will be no formal market mechanism enabling the Shareholders to trade Ordinary Shares;

· it is possible that, following the publication of the Circular, the liquidity and marketability of the Ordinary Shares will be reduced and their value adversely affected (however, as set out above, the Directors believe that the existing liquidity in the Ordinary Shares is in any event limited);

· the Ordinary Shares may be more difficult to sell compared to shares of companies traded on AIM (or any other recognised market or trading exchange);

· in the absence of a formal market and quote, it may be difficult for Shareholders to determine a market value for their investment 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. In particular, Shareholders will no longer be afforded the protections given by the AIM Rules, such as the requirement to be notified of certain events and to publicly disclose any changes in major shareholdings in the Company. In addition, the requirement that the Company seek shareholder approval for certain corporate actions, where applicable, including substantial transactions, reverse takeovers, related party transactions and fundamental changes in the Company's business, including certain acquisitions and disposals, will no longer apply;

· the levels of disclosure and corporate governance within the Company may not be as stringent as for a company quoted on AIM;

· the Company will no longer be subject to UK MAR regulating inside information and other matters;

· finnCap will cease to be nominated adviser to the Company;

· whilst the Company's CREST facility will remain in place immediately post the Cancellation, the Company's CREST facility may be cancelled in the future and, although the Ordinary Shares will remain transferable, they may cease to be transferable through CREST (in which case, Shareholders who hold Ordinary Shares in CREST will receive share certificates);

· stamp duty will be due on transfers of shares and agreements to transfer shares unless a relevant exemption or relief applies to a particular transfer; and

· the Cancellation and Re-registration may have personal taxation consequences for Shareholders. Shareholders who are in any doubt about their tax position should consult their own professional independent tax adviser.

The above considerations are not exhaustive, and Shareholders should seek their own independent advice when assessing the likely impact of the Cancellation on them.

For the avoidance of doubt, the Company will remain registered with the Registrar of Companies in Scotland in accordance with, and subject to, the Companies Act, notwithstanding the Cancellation and Re-registration.

The Company currently intends to continue to provide certain facilities and services to Shareholders that they currently enjoy as shareholders of an AIM company. The Company will:

· continue to communicate information about the Company (including annual accounts) to its Shareholders, as required by the Companies Act;

· continue, for at least 12 months following the Cancellation, to maintain its website, https://corporate.parsleybox.com/ and post updates on the website from time to time, although Shareholders should be aware that there will be no obligation on the Company to include all of the information required under the Disclosure Guidance and Transparency Rules, AIM Rule 26 or to update the website as required by the AIM Rules; and

· implement a matched bargain facility, as referred to in further detail below, which would facilitate Shareholders buying and selling Ordinary Shares on a matched bargain basis following Cancellation.

Chris Britton and Ana Stewart will step down from the Board following the Cancellation and Re-registration. The composition of the Board is expected to remain otherwise unchanged.

The Resolutions to be proposed at the General Meeting include the adoption of the New Articles, with effect from the Re-registration. A summary of the principal differences between the Current Articles and the proposed New Articles is included in the Circular. A copy of the New Articles will be available at https://corporate.parsleybox.com.

Transactions in the Ordinary Shares prior to and post the proposed Cancellation

Prior to Cancellation

Shareholders should note that they are able to continue trading in the Ordinary Shares on AIM prior to Cancellation. Shareholders should note that they are able to continue trading in the Ordinary Shares on AIM prior to the Cancellation. The Board understands that, as at the date of this announcement, MoveFresh Limited, a company that Kevin Dorren is a director of and majority shareholder in, and exercises significant control over, intends to purchase Ordinary Shares in the market until such point that it holds, together with persons acting in concert with it, such number of Ordinary Shares comprising no more than 29.99 per cent. of the Company's issued share capital. However, there can be no guarantee that any purchases of Ordinary Shares by MoveFresh Limited will take place and there can be no guarantee as to the price of such purchases. Shareholders should consult with their own independent financial adviser and/or broker should they wish to consider selling their interests in the market prior to the Cancellation becoming effective.

Dealing and settlement arrangements

The Directors are aware that Shareholders may wish to acquire or dispose of Ordinary Shares in the Company following the Cancellation. Should the Resolutions be approved by Shareholders, the Company will implement a Matched Bargain Facility which would facilitate Shareholders buying and selling Ordinary Shares on a matched bargain basis following Cancellation. In anticipation of providing a Matched Bargain Facility, the Company has sought quotes from Matched Bargain Facility providers. Further details of the Matched Bargain Facility will, if implemented, be communicated to Shareholders separately in due course and made available on the Company's website at https://corporate.parsleybox.com/investors/documents/.

If Shareholders wish to buy or sell Ordinary Shares on AIM they must do so prior to the Cancellation becoming effective. As noted above, in the event that Shareholders approve the Cancellation, it is anticipated that the last day of dealings in the Ordinary Shares on AIM will be 21 December 2022 and that the effective date of the Cancellation will be 22 December 2022.

Directors' intentions

Each of the Directors has indicated their current intention to retain their Ordinary Shares in the event that the Cancellation is implemented.

Share Account

The Share Account agreement between EFSL (as provider of the Share Account) and the Company (as sponsor of the Share Account) will terminate on the passing of the Resolutions. EFSL expects to provide a dealing service (subject to liquidity in the Ordinary Shares following publication of the Circular) for instructions received until 14 December 2022. Any trade instruction that cannot be completed by the last day of dealings in the Ordinary Shares will be rejected. Any Ordinary Shares remaining in the Share Account at Cancellation will be transferred into the name of the beneficial holder on the Company's register of members and a share certificate will be issued within 10 business days of Re-registration. Closing Share Account statements will also be issued within 10 business days of Re-registration.

Re-registration

As set out above, following the Cancellation, the Directors believe that the requirements and associated costs of the Company maintaining its public company status will be difficult to justify and that the Company will benefit from the more flexible requirements and lower costs associated with private limited company status. It is therefore proposed to re-register the Company as a private limited company. In connection with the Re-registration, it is proposed that the New Articles be adopted to reflect the change in the Company's status to a private limited company. The principal effects of the Re-registration and the adoption of the New Articles on the rights and obligations of Shareholders and the Company are summarised in the Circular.

An application will be made to the Registrar of Companies for the Company to be re-registered as a private limited company. Re-registration will take effect when the Registrar of Companies issues a certificate of incorporation on Re-registration. The Registrar of Companies will issue the certificate of incorporation on Re-registration when it is satisfied that no valid application can be made to cancel the resolution to re-register as a private limited company or that any such application to cancel the resolution to re-register as a private limited company has been determined and confirmed by the Court.

Takeover Code

Notwithstanding the Cancellation and Re-registration, under the Takeover Code the Company will continue to be subject to its terms for a period of 10 years following the Cancellation (subject to the Re-registration occurring). However, the Takeover Code may cease to apply earlier if the Company ceases to have its place of central management and control in the UK, Channel Islands or Isle of Man.

However, the Takeover Code may apply for a period of longer than 10 years following Cancellation given that the Company will implement a Matched Bargain Facility, if that facility results in dealings and/or prices at which persons were willing to deal in any of the Ordinary Shares being published on a regular basis for a continuous period of at least six months, within the scope of paragraph 3 (a)(ii)(B) of the Introduction to the Takeover Code. The Takeover Code would, in this event, cease to apply 10 years after the Matched Bargain Facility has been terminated.

The Takeover Code applies to all offers for companies which have their registered offices in the United Kingdom, the Channel Islands or the Isle of Man if any of their equity share capital or other transferable securities carrying voting rights are admitted to trading on a regulated market or a multilateral trading facility in the United Kingdom or on any stock exchange in the Channel Islands or the Isle of Man.

The Takeover Code also applies to all offers for companies (both public and private) which have their registered offices in the United Kingdom, the Channel Islands or the Isle of Man which are considered by the Takeover Panel to have their place of central management and control in the United Kingdom, the Channel Islands or the Isle of Man, but in relation to private companies only if one of a number of conditions are met, including that any of the company's equity share capital or other transferable securities carrying voting rights have been admitted to trading on a regulated market or a multilateral trading facility in the United Kingdom or on any stock exchange in the Channel Islands or the Isle of Man at any time in the preceding ten years.

If the Re-registration and the Cancellation are approved by Shareholders at the General Meeting and become effective, the Company will be re-registered as a private company and its securities will no longer be admitted to trading on a regulated market or a multilateral trading facility in the United Kingdom. In these circumstances, the Takeover Code will only apply to the Company if it is considered by the Panel to have its place of central management and control in the United Kingdom, the Channel Islands or the Isle of Man. This is known as the "residency test". In determining whether the residency test is satisfied, the Takeover Panel has regard primarily to whether a majority of a company's directors are resident in these jurisdictions.

The Takeover Panel has confirmed to the Company that, on the basis of the current residency of the Directors, the Company will have its place of central management and control in the United Kingdom following the Cancellation. In view of the Re-registration, and provided that the Company's place of central management and control continues to be considered by the Takeover Panel to be in the United Kingdom, the Takeover Code will apply to the Company for ten years following the Cancellation, including the requirement for a mandatory cash offer to be made if either:

(i) a person acquires an interest in shares which, when taken together with the shares in which persons acting in concert with it are interested, increases the percentage of shares carrying voting rights in which it is interested to 30 per cent. or more; or

(ii) a person, together with persons acting in concert with it, is interested in shares which in the aggregate carry not less than 30 per cent. of the voting rights of a company but does not hold shares carrying more than 50 per cent. of such voting rights and such person, or any person acting in concert with it, acquires an interest in any other shares which increases the percentage of shares carrying voting rights in which it is interested.

Under Rule 9 of the Takeover Code, when any person or group of persons acting in concert, individually or collectively, are interested in shares which in aggregate carry not less than 30 per cent. of the voting rights of a company but do not hold shares carrying more than 50 per cent. of the voting rights of a company and such person or any person acting in concert with him/her acquires an interest in any other shares, which increases the percentage of the shares carrying voting rights in which he/she is interested, then that person or group of persons is normally required by the Panel to make a general offer in cash to all shareholders of that company at the highest price paid by them for any interest in shares in that company during the previous 12 months. Rule 9 of the Takeover Code further provides that where any person, together with persons acting in concert with him/her, holds over 50 per cent. of the voting rights of a company to which the Takeover Code applies and acquires additional shares which carry voting rights, then that person will not generally be required to make a general offer to the other shareholders to acquire the balance of the shares not held by that person or his/her concert parties.

Following the expiry of the 10 year period from the date of the Cancellation (subject to the Re-registration occurring), or such other date on which the Takeover Code ceases to apply to the Company, the Company will no longer be subject to the provisions of the Takeover Code. A summary of the protections afforded to Shareholders by the Takeover Code which will be lost is set out in the Circular.

Process for Cancellation

Under the AIM Rules, it is a requirement that the Cancellation must be approved by Shareholders holding not less than 75 per cent. of votes cast by Shareholders at the General Meeting. Accordingly, the Notice of General Meeting set out in the Circular 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 notify shareholders and to separately inform the London Stock Exchange of its preferred cancellation date at least 20 Business Days prior to such date. In accordance with AIM Rule 41, the Directors have notified the London Stock Exchange of the Company's intention, subject to the Cancellation Resolution being passed at the General Meeting, to cancel the Company's admission of the Ordinary Shares to trading on AIM on 22 December 2022. Accordingly, if the Cancellation Resolution is passed, the Cancellation will become effective at 7.00 a.m. on 22 December 2022. If the Cancellation becomes effective, finnCap will cease to be nominated adviser of the Company and the Company will no longer be required to comply with the AIM Rules.

Recommendation

The Directors consider that the Cancellation and the Re-registration and adoption of the New Articles are in the best interests of the Company and its Shareholders as a whole and, therefore, unanimously recommend that you vote in favour of the Resolutions at the General Meeting as the Directors intend to vote, or procure the vote, in respect of, in aggregate, 25,971,937 Ordinary Shares to which they are beneficially entitled.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Event Notice of the proposed Cancellation provided to the London Stock Exchange	2022 18 November
Publication and posting of the Circular	18 November
Latest time and date for receipt of Forms of Direction in respect of the General Meeting	10.00 a.m. on 9 December
Latest time and date for receipt of proxy appointments in respect of the General Meeting	10.00 a.m. on 12 December
General Meeting	10.00 a.m. on 14 December
Last day for trade instructions to be received in respect of Ordinary Shares held in the Share Account	14 December
Last day of dealings in Ordinary Shares on AIM	21 December
Cancellation	7.00 a.m. on 22 December
Closure of the Share Account	7.00 a.m. on 22 December
Re-registration as a private company	by 30 December
Share certificates issued in respect of Ordinary Shares previously held in the Share Account	Within 10 business days of Re-registration
Share Account closure statements issued	Within 10 business days of Re-registration
Notes: 1. References to times in this announcement are to London time, unless otherwise stated.
2. Each of the times and dates in the above timetable is subject to change. If any of the above times and/or dates change, the revised times and dates will be notified to Shareholders by an announcement through a Regulatory Information Service.

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