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Share capital restructuring

RNS Number : 2740I

AdEPT Telecom plc

13 June 2011

AdEPT Telecom plc (“AdEPT” or the “Company”) 

Proposed restructuring of share capital to enable dividend payments 

AdEPT Telecom plc (AIM: ADT), a leading independent provider of award-winning telecommunications services for fixed line, mobile and data connectivity, announces that it has posted a Circular to Shareholders setting out the details of a proposed cancellation of share capital. At the General Meeting to be held at 10 a.m. on 30 June 2011, the Company will ask shareholders to approve proposals to restructure the balance sheet of the Company by means of the cancellation of the share premium account (the “Capital Cancellation”) for the purpose of eliminating the current deficit on the Company’s profit and loss account and creating positive distributable reserves to facilitate the payment of dividends by the Company in due course.

Defined terms used in this announcement have the same meaning as set out in the Circular. 

Information about the Capital Cancellation is set out below together with an expected timetable of events. Your attention is drawn to the further information concerning the Capital Cancellation included within the Circular. 

A copy of the Circular is available for download from the Company’s website at Further announcements will be made as appropriate.


AdEPT Telecom plc  
Roger Wilson, Chairman 07786 111 535
Ian Fishwick, Chief Executive 01892 550 225
John Swaite, Finance Director   01892 550 243
Northland Capital Partners Limited   
Shane Gallwey 020 7796 8823
Katie Shelton  020 7796 8850
Charles Vaughan 020 7796 8851


Following the Company’s acquisition of Telecom Direct in November 2007, significant restructuring and closure costs of c£2.7 million were incurred to facilitate the integration of the Telecom Direct business into the Tunbridge Wells operations.  Although the Company continued to generate operating cash flow during this period, these restructuring and closure costs, combined with the non-cash amortisation of the 16 customer bases acquired to date, resulted in the accumulation of a reserves deficit of c£1.8 million at 31 March 2010.

Until the deficit to the distributable reserves has been eliminated, the Company is precluded by the Companies Act 2006 from paying dividends to Shareholders. The Directors propose to eliminate the deficit by the Capital Cancellation and, to the extent that the amount of the Capital Cancellation exceeds the deficit, to create distributable reserves.

Capital Cancellation

Under English law, a company may reduce or cancel its share capital (including its share premium account) and apply the reserve arising on the reduction against an accumulated deficit on its profit and loss account provided that it obtains the approval of shareholders in a general meeting and the confirmation of the High Court. 

Accordingly, subject to the approval of Shareholders at the General Meeting and the confirmation of the High Court, it is intended that the Company cancel the amount standing to the credit of the share premium account, which as at the date of this document is £7.965 million, and apply the reserve arising on the cancellation to eliminate the accumulated deficit on the Company’s profit and loss account. To the extent that the Capital Cancellation exceeds the deficit, it will result in positive distributable reserves.


As a condition to approving the Capital Cancellation, the High Court will need to be satisfied that the interests of the Company’s creditors are not adversely affected, i.e. that there is no material likelihood of creditors not being paid. The Company is satisfied that it will be able to demonstrate this to the High Court but, if necessary, the Company will put into place such form of creditor protection as it may be advised is appropriate. 

The Directors reserve the right to abandon or discontinue any application to the High Court if they believe that the terms required to obtain confirmation are unsatisfactory to the Company. The Capital Cancellation will take effect upon the registration of the Court Order by the Registrar of Companies.


Once the Capital Cancellation has been completed and any creditor protection requirements imposed by the High Court have been satisfied, the Company, provided that it has an accumulated surplus on its profit and loss account, would then be in a position to pay dividends when, and in such amounts, as the Directors determine, subject to the usual shareholder approvals and any conditions imposed by the Court. It is the intention of the Directors to resume a progressive dividend policy in due course.

General Meeting

To effect the Capital Cancellation, Shareholders must approve the cancellation of the share premium account by way of a special resolution at the General Meeting. Notice convening the General Meeting is set out in the Circular. Subject to Shareholders passing the Resolution, approval of the High Court will be sought as soon as reasonably practicable after the General Meeting and it is anticipated that the process shall be completed before the end of July 2011.


Your Directors consider the passing of the Resolution and the proposed Capital Cancellation to be fair and reasonable and in the best interests of the Shareholders and the Company as a whole. Accordingly, your Directors recommend that all Shareholders vote in favour of the Resolution to be proposed at the General Meeting.

Latest time and date for receipt of Forms of Proxy for use at the General Meeting  10.00 a.m. on 28 June 2011
General Meeting  10.00 a.m. on 30 June 2011
Date for hearing of claim and confirmation of the Capital Cancellation by the Court  20 July 2011
Expected effective date of Capital Cancellation 21 July 2011