RNS Number : 0469C
Millbrook Scientific InstrumentsPLC
05 November 2009
Millbrook Scientific Instruments plc (the "Company" or "MSI plc")
Result of General Meeting and Chairman's statement
Result of General Meeting
At the General Meeting of the Company held earlier today both resolutions were duly passed. The cancellation of trading of the Company's shares on AIM will therefore take effect from 7.00 am on 17 November 2009.
Chairman's statement
The Chairman made the following statement at the opening of the General Meeting:
"I would like to provide a summary of the situation in relation to the Company's former subsidiary, Millbrook Instruments Limited ("MIL"), and where the Board proposes to take the Company from here.
At the end of April 2009, prospects for MIL looked good with 2 major orders 'about to be confirmed'. One shipment had just been made after the year end. So bearing in mind MIL's budget is to sell 6 - 8 instruments per year, all was looking good with a possible 3 sales in the first quarter. Various technical improvements were in the process of being made as well and software rewrites had been completed.
As weeks progressed after April, the board became concerned when the 'imminent' orders were not confirmed and when no further orders were on the horizon. The reason for our concern was that MIL costs run at £51k per month (excluding central costs) and, since they consist mainly of salaries to people with notice periods varying from 3 to 6 months, cost cannot be turned off immediately.
The Board determined that action must be taken in early June in order to give ourselves time to close MIL if that became unavoidable without bringing down the whole Group. On 5 June 2009 we took the decision to carry out a strategic review. Staff were notified of possible redundancy and most of them agreed salary sacrifices or short time working. At the same time Zeus Capital undertook a full marketing process on our behalf as part of the strategic review trying to sell MIL as a going concern.
We had received an initial approach the previous year but the potential suitor had said he was not interested until MIL became profitable. As a board, we understood the high risk nature of MIL, with its high value low volume sales, but we did not consider there was a realistic prospect of a sale at a reasonable value at least until after FY2009 had been completed, hopefully profitably.
Some 20 companies from large to small were contacted in June 2009 in addition to those shareholders who agreed to be made insiders. Interest was shown by one local company and one shareholder. The shareholder soon withdrew and the local company in the end made a very low offer which would also have left MSI plc with on-going liabilities. The local company was a good fit as it was a major consulting company with a small instrumentation business wanting to expand into instrumentation sales. It also had knowledge of making ToF analysers, which we sourced from Switzerland at great cost due to the value of the pound. Being local there was also a good chance of finding employment for our staff. The Board had kept MIL going as long as possible in the hope that further orders would materialise or competitive interest could be awakened in the acquisition of MIL.
One of the original two orders did in fact come in but the other went elsewhere, no other had been achieved so the directors, with extreme regret, called in administrators in order to protect the Company's other subsidiary Micro Materials Limited ("MML"). At that time, MIL owed the bank £262,000 which was supported by cross guarantees from the Company and MML.
Once in administration, the administrators attempted to sell the business as a going concern. We are informed by the administrators that the local company came forward again but with a very low offer and a group of shareholders / employees made a similar offer. We understand that the local company was persuaded to increase its offer and was given exclusivity as extreme urgency was required to preserve any goodwill and indeed give the chance to keep the one order alive. This sale by the administrators has now completed and was in no sense a pre-pack.
The sale of MIL, in which the Company had invested so much, by the administrators for a small amount gives no pleasure to the Board although it appears two employees might have had their jobs effectively saved. In a small group such lumpy sales as MIL depended on will always have more downside than upside potential. When the global market turned down, there was nowhere to go especially acting in the full glare of publicity which our competitors were quick to exploit. It is, inter alia, to avoid any possibility of the same fate for MML that the Board wishes to delist. The combination of lack of orders and lack of interest in buying the MIL business suggests that the original view of market potential which we shared was incorrect.
Way forward
If approved, we will register with Sharemark which provides an information service but more importantly a scientific auction based dealing service, somewhat similar to eBay. In this way realistic approximations of share value can be seen by all shareholders. This will provide an alternative to the AIM quoted figure.
The Board has committed to remaining a PLC which provides protection to shareholders in excess of the already extensive CA 2006 provisions; specifically we are still subject to the Takeover Code.
If we delist, Malcolm Fortnam has indicated he will step down as a director and I will renegotiate downwards my fee. May I say how much personally I will miss Malcolm's thoughtful and incisive input not to mention his clear acknowledgement of, and unwavering adherence to, the many and varied responsibilities that a director has to consider.
For further information:
Millbrook Scientific Instruments plc Tel: +44 (0) 1978 261 615
Stephen Blank, Chairman www.millbrook-instruments.com
Paul Grasske, Chief Executive Officer
Zeus Capital Limited Tel: +44 (0) 161 831 1512
Alex Clarkson
Tom Rowley
This information is provided by RNS
The company news service from the London Stock Exchange
END
RAGZGMGMFKLGLZM
