Proposal for the cancellation of the Company’s share premium account and capital redemption reserve
THE ALUMASC GROUP PLC (the “Company”)
The board of the Company is proposing to seek shareholder approval at an extraordinary general meeting, of the Company to be held at 10.00 a.m. on 30 May 2007 at the offices of Wragge & Co LLP at 3, Waterhouse Square, 142 Holborn, London, EC1N 2SW for the cancellation of the Company’s share premium account and capital redemption reserve. This will involve applying to the High Court for the reduction of the share premium account and capital redemption reserve. The board believes that the increase in the Company’s distributable reserves, achieved by the proposed cancellations, will assist with the maintenance of the Company’s current dividend policy and, consequently, the marketability of the Company’s shares as well as allowing a more efficient utilisation of the Company’s reserve accounts.
2 Reasons, effect and benefits of the board’s proposal
br/>The Company currently has a balance on its share premium account of £28,538,881 which has arisen as a result of various prior issues by the Company of its shares at prices in excess of their nominal value. The Company currently also has a balance on its capital redemption reserve of £693,352 which has arisen as a result of prior purchases by the Company of its own shares out of distributable profits. Under the Companies Act 1985, a company’s share premium account and capital redemption reserve constitute non-distributable reserves of a company and the sums credited to those reserves are not distributable to shareholders.
The Company’s articles of association and the Companies Act 1985 permit the Company to cancel its share premium account and capital redemption reserve in appropriate circumstances provided the Company resolves by special resolution to do so and if subsequent confirmation of those cancellations is given by the High Court of Justice.
The reserve which arises as a result of the cancellation of those reserves can then be transferred to the Company’s distributable reserve account as representing realised profit except to the extent that, and for so long as, the Company has undertaken that it will not treat the reserve arising as a realised profit, or where the court has directed that it shall not be treated as a realised profit.
Subject to any direction given by the court in confirming the proposed cancellations and subject to the terms of any undertaking given by the Company in relation to the reserve which arises, the effect of the proposal, if approved by shareholders, will enable the Company to increase its distributable reserves by the aggregate of the relevant balances on the Company’s share premium account and capital redemption reserve in existence at the time the proposed cancellations take effect.
The current aggregate balance of these reserves is approximately £29.2 million. The board does not anticipate that there will be any material change to the aggregate balance of those reserves prior to the proposed cancellations taking effect.
3 Extraordinary general meeting
As explained above, the proposal is conditional on the approval of the Company’s shareholders. Accordingly, the Company is today issuing a circular to shareholders in relation to the proposal which includes a notice to convene an extraordinary general meeting of the Company to be held at 10.00 a.m. on 30 May 2007 at the offices of Wragge & Co LLP at 3, Waterhouse Square, 142 Holborn, London, EC1N 2SW, at which a resolution will be proposed as a special resolution to:
• cancel the share premium account of the Company; and
• cancel the capital redemption reserve of the Company.
Full details of the proposal are contained in the circular. The circular has also been submitted to the UK Listing Authority and will shortly be available for inspection at the UK Listing Authority’s Document Viewing Facility which is situated at: Financial Services Authority, 25 The North Colonnade, Canary Wharf