Proposed cancellation of admission to trading on AIM

Pubished 11th May 2018


The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

11 May 2018

INTERQUEST GROUP PLC

(“InterQuest” or the “Company”)

Proposed cancellation of admission to trading on AIM

Notice of Extraordinary General Meeting

InterQuest Group plc, the specialist recruiter in the technology, analytics and digital market, announces the Company’s proposed cancellation from trading on AIM (“Cancellation”). Following discussions with representatives of Chisbridge Limited (“Chisbridge”), the Company’s major shareholder, the Company has decided to seek Shareholders’ approval to cancel the admission of the Ordinary Shares to trading on AIM.

The Directors consider the Cancellation to be in the best interest of Shareholders, after considering, amongst other things, the costs of maintaining trading in the Ordinary Shares on AIM and the limited free float and liquidity in the Ordinary Shares.

The Ordinary Shares will continue to be admitted to trading on AIM, prior to the Cancellation. Chisbridge has agreed with the Company that on 17 May 2018 it will place an order with its broker, Peterhouse Corporate Finance Limited, to purchase in the market up to 4,166,667 Ordinary Shares offered for sale at a price of 24 pence per Ordinary Share. Chisbridge intends that such order will remain open until the earlier of the date the order is fulfilled and the expected last trading day on AIM being 11 June 2018. If Shareholders wish to sell their Ordinary Shares pursuant to the order from Chisbridge, they should consult with their own independent financial adviser and/or broker, as it will be necessary to instruct a broker to place an order with Peterhouse Corporate Finance Limited for the sale of relevant shares. The order from Chisbridge will be fulfilled on a first come, first served basis.

The Company will shortly post to Shareholders a circular (the "Circular") in connection with Cancellation containing a notice convening an extraordinary general meeting of the Company (the "EGM") to be held 10.00 a.m. on 4 June 2018(or as soon thereafter as the annual general meeting convened for 9.00 a.m. on 4 June 2018 is concluded or adjourned) at the Company’s offices at Cannon Green, 27 Bush Lane, London, England, EC4R 0AA.

Shareholders should note that Gary Ashworth, has an interest in 30,203,572 Ordinary Shares in the Company, equating to 58.16 per cent. of the voting rights in the Company. This figure includes the 22,544,070 Ordinary Shares held by Chisbridge and the 6,059,502 Ordinary Shares held by Recruitment Capital Partners LLP. James Constable has an interest in 5,613,898 Ordinary Shares, equating to 10.81 per cent. of the voting rights in the Company.

Gary Ashworth, Chisbridge, Recruitment Capital Partners LLP and James Constable have irrevocably undertaken to vote in favour of the resolutions effecting the Cancellation at the EGM, in respect of, in aggregate, 68.97 per cent. of the issued share capital of the Company.

Defined terms used in this announcement have the meaning set out at the end of this announcement and as in the Circular.

Enquiries:

InterQuest Group plc

Tel: +44 (0) 20 7025 0100

Chris Eldridge (CEO)

David Bygrave (CFO)

Allenby Capital Limited (Nomad)

Tel: +44 (0)20 3328 5656

John Depasquale and Asha Chotai

EXTRACTS FROM THE CIRCULAR

The following has been extracted without amendment from, and should be read in conjunction with, the Circular dated 11 May 2018, which will be available shortly from the Company's website: www.interquestgroup.com.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS(1)(2)

Notice provided to the London Stock Exchange to notify it of the proposed Cancellation

11 May 2018

Publication and posting of this Document and Form of Proxy to Shareholders

11 May 2018

Commencement of market purchase of Ordinary Shares by the Major Shareholder pursuant to their standing purchase order(3)

17 May 2018

Latest time and date for receipt of completed Forms of Proxy

in respect of the Extraordinary General Meeting

10.00 a.m. on 31 May 2018

Time and date of the Extraordinary General Meeting

10.00 a.m. on 4 June 2018(4)

Expected last day of dealings in Ordinary Shares on AIM

11 June 2018

Expected time and date of Cancellation(5)

7.00 a.m. on 12 June 2018

Notes:

(1) All of the times referred to in this Document refer 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.

(3) See paragraph 4.1 of Part I of this Document for further information.

(4) Or as soon thereafter as the annual general meeting convened for 9.00 a.m. on 4 June 2018 is concluded or adjourned.

(5) The Cancellation requires the approval of not less than 75 per cent. of the votes cast by Shareholders at the Extraordinary General Meeting.

LETTER FROM THE CHAIRMAN

Proposed cancellation of admission of Ordinary Shares to trading on AIM

Notice of Extraordinary General Meeting

Re-registration as a private limited company

and

Adoption of New Articles

1. Introduction

As announced by the Company today, the Directors have concluded that it is in the best interests of the Company and its Shareholders to cancel the admission of the Ordinary Shares to trading on AIM, re-register the Company as a private limited company and amend the Company’s Articles. In accordance with Rule 41 of the AIM Rules, the Company has notified the London Stock Exchange of the date of the proposed Cancellation.

The Cancellation Resolution is conditional, pursuant to Rule 41 of the AIM Rules, upon the approval of not less than 75 per cent. of the votes cast by Shareholders (whether present in person or by proxy) at the Extraordinary General Meeting, notice of which is set out in Part III of this Document.

The Company is seeking Shareholders’ approval of the Resolutions, including the Cancellation Resolution, at the Extraordinary General Meeting, which has been convened for 10.00 a.m. on 4 June 2018 (or as soon thereafter as the annual general meeting convened for 9.00 a.m. on 4 June 2018 is concluded or adjourned) at the Company’s registered office at Cannon Green, 27 Bush Lane, London, EC4R 0AA. If the Cancellation Resolution is passed at the Extraordinary General Meeting, it is anticipated that the Cancellation will become effective at 7.00 a.m. on 12 June 2018.

The purpose of this Document is to seek Shareholders’ approval for the Resolutions, to provide information on the background and reasons for Cancellation, the Re-registration and the New Articles and to explain the consequences of the Cancellation, the Re-registration and the New Articles and why the Directors unanimously consider the Cancellation, the Re-registration and the New Articles to be in the best interests of the Company and its Shareholders as a whole.

The Notice of the Extraordinary General Meeting is set out in Part III of this Document.

2. Background and reasons for Cancellation

The Directors have conducted a review of the benefits and drawbacks to the Company and its Shareholders in retaining its quotation on AIM, and believe that Cancellation is in the best interests of the Company and its Shareholders as a whole. In reaching this conclusion, the Directors have considered the following key factors, amongst others:

l the considerable cost, management time and the legal and regulatory burden associated with maintaining the Company’s admission to trading on AIM are, in the Directors’ opinion, disproportionate to the benefits to the Company;

l the Directors and the Major Shareholder hold, in total, 58.16 per cent. of the Company’s current issued share capital, resulting in a limited free float and liquidity in the Ordinary Shares with the consequence that the AIM listing of the Ordinary Shares does not, in itself, offer investors the opportunity to trade in meaningful volumes or with frequency within an active market; and

l the share price volatility has defeated one of the core reasons for the Company retaining its AIM quotation, namely to attract, motivate and retain staff of an appropriate calibre through share options and share ownership.

Following careful consideration, the Directors believe that it is in the best interests of the Company and Shareholders to seek the proposed Cancellation at the earliest opportunity.

3. 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 5 clear Business Days have passed following the passing of the Cancellation Resolution. If the Cancellation Resolution is passed at the Extraordinary General Meeting, it is proposed that the last day of trading in Ordinary Shares on AIM will be 11 June 2018 and that the Cancellation will take effect at 7.00 a.m. on 12 June 2018.

The principal effects of the Cancellation will be that:

l there will be no formal market mechanism enabling the Shareholders to trade Ordinary Shares. Save for the proposed Matched Bargain Facility referred to in paragraph 4.2 below, no other recognised market or trading facility is intended to be put in place to facilitate the trading of the Ordinary Shares;

l while the Ordinary Shares will remain freely transferrable, it is possible that the liquidity and marketability of the Ordinary Shares will, in the future, be even more constrained than at present and the value of such shares may be adversely affected as a consequence;

l in the absence of a formal market and quote, it may be more difficult for Shareholders to determine the market value of their investment in the Company at any given time;

l the regulatory and financial reporting regime applicable to companies whose shares are admitted to trading on AIM will no longer apply;

l Shareholders will no longer be afforded the protections given by the AIM Rules, such as the requirement to be notified of certain events and the requirement that the Company seek shareholder approval for certain corporate actions, where applicable, including substantial transactions, financing transactions, reverse takeovers, related party transactions and fundamental changes in the Company’s business, including certain acquisitions and disposals. Shareholders should be aware that once Cancellation occurs the Company expects to negotiate further the reimbursement of costs incurred and other services provided by the Major Shareholder since August 2017. These costs and services include PR and marketing services, M&A and other advisory services. As at 31 December 2017, the Company had provided for a payment of £175,000 to the Major Shareholder and further costs have been provided for in the Company’s accounts since this date. As at the date of this Document, no contract is in place for the services provided by the Major Shareholder and no payments have been made to the Major Shareholder. Prior to the Cancellation payments to the Major Shareholder would have been deemed related party transactions under the AIM Rules and would have required the Independent Director, after consulting with the Company’s nominated adviser, to confirm that the terms of the transactions are fair and reasonable insofar as Shareholders are concerned;

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

l the Company will cease to have an independent nominated adviser and broker;

l the Company will no longer benefit from the current relationship agreement between it and the Major Shareholder. The current relationship agreement governs the relationship between the Company and the Major Shareholder and, in particular, ensures that the Company is managed for the benefit of the Shareholders independently of the Major Shareholder. No such replacement relationship agreement is in contemplation;

l whilst the Company’s CREST facility will remain in place 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 this instance, Shareholders who hold Ordinary Shares in CREST will receive share certificates; and

l the Cancellation 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 Company will remain registered with the Registrar of Companies in England & Wales in accordance with and subject to the Companies Act 2006 (the “Law”), notwithstanding the Cancellation. Shareholders should also note that the Takeover Code will continue to apply to the Company following the Cancellation for the period of 10 years from the date of Cancellation (although it should also be noted that, as the Major Shareholder and its concert parties own in excess of 50 per cent. of the existing Ordinary Shares, they are free to acquire further Ordinary Shares without incurring any obligation under Rule 9 of the Takeover Code).

The Resolutions to be proposed at the Extraordinary General Meeting include the adoption of the New Articles with effect from completion of the Cancellation. A summary of the principal changes being made by the adoption of the New Articles is included in Part II of this Document.

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

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:

l continue to communicate information about the Company (including annual accounts) to its Shareholders, as required by the Law;

l continue to hold annual general meetings; and

l continue, for at least 12 months following the Cancellation, to maintain its website, www.interquestgroup.com and to 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 AIM Rule 26 or to update the website as required by the AIM Rules.

In addition, the Company confirms that there is currently no intention to change the existing Directors following the Cancellation.

4. Transaction in the Ordinary Shares prior to and post the proposed Cancellation

4.1 Prior to Cancellation

Shareholders should note that they are able to trade in the Ordinary Shares on AIM, prior to the Cancellation Date. In addition, the Major Shareholder has agreed with the Company that on 17 May 2018 it will place an order with its broker, Peterhouse Corporate Finance Limited, to purchase in the market up to 4,166,667 Ordinary Shares offered for sale at a price of 24 pence per Ordinary Share. The Major Shareholder intends that such order will remain open until the earlier of the date the order is fulfilled and the last trading day on AIM being 11 June 2018. If Shareholders wish to sell their Ordinary Shares pursuant to the order from the Major Shareholder, they should consult with their own independent financial adviser and/or broker, as it will be necessary to instruct a broker to place an order with Peterhouse Corporate Finance Limited for the sale of relevant shares. The order from the Major Shareholder will be fulfilled on a first come, first served basis.

4.2 Following Cancellation

The Board is aware that the proposed Cancellation, should it be approved by Shareholders at the Extraordinary General Meeting, would make it more difficult for Shareholders to buy and sell Ordinary Shares should they wish to do so.

Therefore, the Company has made arrangements for a Matched Bargain Facility to assist Shareholders to trade in the Ordinary Shares to be put in place from the day of Cancellation if the Cancellation Resolution is passed. The Matched Bargain Facility will be provided by JP Jenkins Limited (“JP Jenkins”) and will be reviewed on an annual basis. JP Jenkins is part of Peterhouse Corporate Finance Limited, which is authorised and regulated by the Financial Conduct Authority, a member of the London Stock Exchange and a NEX Exchange Corporate Adviser. Under the Matched Bargain Facility, Shareholders or persons wishing to acquire or dispose of Ordinary Shares will be able to leave an indication with JP Jenkins, through their stockbroker (JP Jenkins is unable to deal directly with members of the public), of the number of Ordinary Shares that they are prepared to buy or sell at an agreed price. In the event that JP Jenkins is able to match that order with an opposite sell or buy instruction, they would contact both parties and then effect the bargain. Should the Cancellation become effective and the Company put in place the Matched Bargain Facility, details will be made available to Shareholders on the Company’s website at www.interquestgroup.com and directly by letter or e-mail (where appropriate).

5. Re-registration

Following the Cancellation, the Board believes 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 Part II of this Document.

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 not issue the certificate of incorporation on Re-registration until the Register of Companies is satisfied that no valid application can be made to cancel the resolution to re-register as a private limited company.

6. Current Trading, Strategy and Prospects

Following a year of change, the financial results for the year ended 31 December 2017 for the Group were slightly behind the management team's expectations. The Group has invested in new service offerings and developed its international footprint in order to focus on niche, fast growth technologies and higher margin opportunities. During the course of the year the Group’s leadership team has made significant progress in refining its value proposition and simplifying its brand structure in order to meet its client's needs and offer a total talent management solution. The Group remains focused on capitalising on the opportunity in assisting its clients wherever they are in the digital maturity lifecycle.

Trading has been mixed in the first few months of the year with net fee income above budget in some of the US businesses, whilst trading in the UK remains challenging in the more traditional recruitment businesses. The Group’s solutions business has won two new clients in the second quarter and the management team is pleased to have acquired the Albany Beck business in April 2018, which it hopes will lead to cross selling opportunities in the future.

7. Irrevocable Undertakings

The Company has received irrevocable undertakings from Gary Ashworth, James Constable, Recruitment Capital Partners LLP and the Major Shareholder to vote or procure votes in favour of the Resolutions, in respect of all Ordinary Shares held by each of them (or in which they are interested) on the date of the Extraordinary General Meeting which currently amounts to 35,817,470 Ordinary Shares in aggregate, representing approximately 68.97 per cent. of the issued share capital of the Company.

Accordingly, the Directors believe it is likely that the Resolutions will be passed at the Extraordinary General Meeting.

8. Process for Cancellation

Under the AIM Rules, it is a requirement that the Cancellation must be approved by not less than 75 per cent. of votes cast by Shareholders at an Extraordinary General Meeting. Accordingly, the Notice of Extraordinary General Meeting set out in Part III of this Document 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 Extraordinary General Meeting, to cancel the Company’s admission of the Ordinary Shares to trading on AIM on 12 June 2018. Accordingly, if the Cancellation Resolution is passed the Cancellation will become effective at 7.00 a.m. on 12 June 2018. If the Cancellation becomes effective, Allenby Capital Limited will cease to be nominated adviser of the Company and the Company will no longer be required to comply with the AIM Rules.

9. Extraordinary General Meeting

The Extraordinary General Meeting will be held at the Company’s registered office at Cannon Green, 27 Bush Lane, London, EC4R 0AA commencing at 10.00 a.m. on 4 June 2018 (or as soon thereafter as the annual general meeting convened for 9.00 a.m. on 4 June 2018 is concluded or adjourned).

10. Action to be taken

You will find enclosed with this Document a Form of Proxy for use at the Extraordinary General Meeting. Whether or not you propose to attend the Extraordinary General Meeting in person, you are requested to complete and return the Form of Proxy to the Company’s registrars Link Asset Services, PXS1, 34 Beckenham Road, Beckenham, Kent BR3 4ZF, in accordance with the instructions printed thereon as soon as possible but, in any event, to be received no later than 10.00 a.m. on 31 May 2018. Completion and return of a Form of Proxy will not preclude you from attending and voting at the Extraordinary General Meeting in person if you so wish.

11. Recommendation

The Directors consider that the Cancellation is 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 Extraordinary General Meeting as those Directors who hold Ordinary Shares intend to do in respect of their own beneficial holdings amounting to, in aggregate 30,203,572 Ordinary Shares representing 58.16 per cent. of the total voting rights in the Company.

Yours faithfully,

Gary Ashworth Chairman

DEFINITIONS

The following definitions apply throughout this Document, unless the context requires otherwise:

“AIM”

AIM, the market operated by the London Stock Exchange;

“AIM Rules”

the rules and guidance for companies whose shares are admitted to trading on AIM entitled “AIM Rules for Companies” published by the London Stock Exchange, as amended from time to time;

“Articles”

the articles of association of the Company as amended from time to time;

“Business Day”

a day (excluding Saturday, Sunday and public holidays in England and Wales) on which banks are generally open for business in London for the transaction of normal banking business;

“Cancellation”

the cancellation of admission of the Ordinary Shares to trading on AIM, subject to passing of the Cancellation Resolution and in accordance with Rule 41 of the AIM Rules;

“Cancellation Resolution”

Resolution number 1 to be proposed at the Extraordinary General Meeting;

“Circular”

this Document, containing information about the Cancellation, the Matched Bargain Facility, Re-registration, the New Articles and the Extraordinary General Meeting;

“Company” or “InterQuest”

InterQuest Group Plc, a company incorporated in England and Wales with registered number 04298109;

“CREST”

the relevant system (as defined in the CREST Regulations) in respect of which Euroclear is the operator (as defined in those regulations);

“CREST Regulations”

the Uncertificated Securities Regulations 2001 (SI2001/3755), as amended;

“Current Articles”

the articles of association of the Company at the date of this Document;

“Directors” or “Board”

the directors of the Company, whose names are set out on page 4 of this Document. The Board comprises the directors at any time or the directors present at a duly convened meeting at which a quorum is present or, as the case may be, the directors assembled as a committee of such Board;

“Disclosure Guidance and Transparency Rules”

the disclosure rules and transparency rules made by the UK Financial Conduct Authority pursuant to section 73A of FSMA;

“Extraordinary General Meeting”

the Extraordinary General Meeting of the Company convened for 10.00 a.m. on 4 June 2018 (or as soon thereafter as the annual general meeting convened for 9.00 a.m. on 4 June 2018 is concluded or adjourned) and any adjournment thereof, notice of which is set out at the end of this Document;

“Form of Proxy”

the form of proxy enclosed with this Document for use at the Extraordinary General Meeting or at any adjournment thereof;

“Group”

InterQuest and its subsidiary undertakings (as defined in the Companies Act 2006);

“Independent Director”

Mr. David Higgins;

“London Stock Exchange”

London Stock Exchange plc;

“Major Shareholder”

Chisbridge Limited, a company incorporated in England and Wales with registered number 10451963;

“Matched Bargain Facility”

the matched bargain trading facility to be put in place by the Company with JP Jenkins Limited following the Cancellation, subject to the passing of the Cancellation Resolution, as described in paragraph 4.2 of Part I of this Circular;

“New Articles”

the new articles of association of the Company to be adopted following the passing of the Resolution number 2 to be proposed at the Extraordinary General Meeting;

“Notice of Extraordinary General Meeting” or “Notice”

the notice of Extraordinary General Meeting which is set out in Part III of this Document;

“Ordinary Shares”

ordinary shares of 1p each in the capital of the Company, and “Ordinary Share” means any one of them;

“Registrars”

Link Asset Services, a trading name of Link Asset Services Holdings Limited;

“Re-registration”

the re-registration of InterQuest as a private limited company and the consequential adoption of the New Articles;

“Regulatory Information Service”

has the meaning given to it in the AIM Rules for any of the services approved by the London Stock Exchange for the distribution of AIM announcements and included within the list maintained on the website of the London Stock Exchange;

“Resolutions”

the resolutions to be proposed at the Extraordinary General Meeting in the form set out in the Notice of Extraordinary General Meeting (and each of which shall be a “Resolution”);

“Shareholders”

holders of Ordinary Shares from time to time and “Shareholder” means any one of them;

“Takeover Code”

the City Code on Takeovers and Mergers;

“Takeover Panel”

The Panel on Takeovers and Mergers; and

“United Kingdom”

the United Kingdom of Great Britain and Northern Ireland.

A reference to “£” is to pounds sterling, being the lawful currency of the UK.