Anybody who turned down the tender offer when PKL cancelled its Aim quotation has done well.
Chairman Peter Joy and chief operating officer Paul Rogers have set up a buyout vehicle called Bison Projects to offer 100p a share to PKL shareholders. That values PKL at £36.2m.
PKL cancelled its Aim quotation on 6 October 2006. The two men’s wives tendered for shares at 29p each as part of the process of cancelling the temporary catering and healthcare facilities supplier’s quotation. This offered shareholders a way out prior to the loss of the quote. The board didn’t think that Aim was worth the cost or time and effort especially as they felt that the market had lost confidence in PKL.
PKL floated on Aim at 110p a share in April 2004 so it was quoted for less than three years. It got off to a good start because the flotation was at a time when business was booming. The share price subsequently slumped. Brewin Dolphin has tried to match bargains in the shares since October 2006.
In November 2007, PKL posted on its website a view of its auditors Hazlewood that the shares were worth 122p to 130p each. The shares had been trading at a much lower price. In March 2008, the average trading price was 17.5p a share but there is no indication whether this is much lower than previous trades.
The Joy and Rogers families own 78.8% of PKL. After the bid is completed Bison Projects will be acquired by Bison Projects 2, which is owned by the wives of the two men, on the basis of a one-for-one share swap. This apparently strange structure to the deal is because if Bison Projects had offered its shares it would have needed to issue a prospectus which would have been time consuming and expensive.
PKL’s articles of association will be changed so that minority shareholders have to transfer their shares on the same terms as the majority. That means that any shareholders who don’t accept the cash will have to swap a PKL share for a Bison Projects 2 share. Bison Projects 2 will end up owning 100% of the business.
Since dropping the Aim quotation PKL has sold its modular contracting business. It was still included in the figures for the year to April 2008, which show an operating profit of £8.9m on turnover of £37.7m. In the year to April 2007 the operating profit was £2.9m.
PKL appears to have prospered since it left Aim, although there is no indication of the make up of the profits. It is a shame that the management couldn’t have had a bit more patience and stuck with Aim, but they didn’t seem happy in the quoted environment.
It is no surprise that illiquid matched bargains trading led to low deal prices because there won’t be many people who want to buy shares in an unquoted company where the management has more than 75% of the shares.
It seemed sensible two years ago to accept the tender offer because of the lack of a trading facility in the future. There was a danger that the minority shareholders would be left with no real way of trading their shares. PKL’s management are obviously keen to mop up those minority stakes so they have offered a more generous price, although still some way below what their auditors thought the company was worth before it sold its loss-making modular contracting business.
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