Quite a few small companies will be reviewing their NASDAQ listings, thanks to increased regulation costs.
Provalis PLC announces Notice of intent to terminate ADR program, to de-list from NASDAQ and to suspend SEC registration and reporting obligations
Friday February 25, 2:00 am ET
Deeside, Flintshire, UK--(MARKET WIRE)--Feb 25, 2005 -- For Immediate Release 25th February 2005
Provalis plc
Notice of intent to terminate ADR program, to de-list from NASDAQ
and to suspend SEC registration and reporting obligations
Provalis plc (LSE: PRO; NASDAQ: PVLS), the International Medical Diagnostics and Pharmaceuticals Group, announces that it intends to:
- Terminate its American Depositary Receipt (ADR)
programme and its NASDAQ listing; and
- As soon as possible thereafter, suspend its registration
and reporting obligations to the United States Securities and Exchange
Commission (SEC)
Provalis has taken this decision following a careful review of the merits of the Company's secondary listing on NASDAQ. This review concluded that the significant costs and management time necessary to comply with additional requirements introduced by recent changes in United States securities laws, including the Sarbanes-Oxley Act of 2002, far outweighed the benefits of the listing. This action, which is expected to save the Group approximately $700,000 between now and 30th June 2006 and at least $400,000 in each year thereafter, should not cost more than $50,000.
The Company has been informed that there are presently 19 US residents registered as holding ordinary shares on the London Stock Exchange and approximately 930 US residents holding ADRs on NASDAQ. As at the end of January, the total ADR holding of these US residents represented just under 5.5m ordinary shares, or approximately 1.5% of Provalis' entire issued share capital. The average trading volume in Provalis' ADRs during 2004 was less than 12,000 per week.
Provalis may suspend its SEC registration and reporting obligations if the number of US residents who hold Provalis securities (either ADRs on NASDAQ or ordinary shares on the London Stock Exchange), directly or through nominees, falls below 300.
In order to reduce the number of US residents holding Provalis securities to less than 300, Provalis intends to implement the following as soon as possible:
- Give written notice of termination of Provalis' ADR
programme, effective in 90 days;
- Upon the termination of the programme at the end of this 90-day
notice period, no further transfers of ADRs will be permitted and
trading of ADRs on NASDAQ will cease; as a consequence, there will be
no liquid trading market for the sale or purchase of Provalis ADRs;
- Holders of any ADRs which remained outstanding would then have
2 months in which to surrender their ADRs in return for Provalis
ordinary shares, subject to payment by the holder of a cancellation fee;
- Any ADR holders that surrender their ADRs in return for
Provalis ordinary shares would subsequently hold and trade the ordinary
shares on the London Stock Exchange; and
- On the expiry of this 2 month period, the ordinary shares underlying
any remaining outstanding ADRs would be sold by the Bank of New York
(the provider of Provalis' ADR programme) on the open market, with the
sale proceeds distributed to the ADR holders in cash.
Provalis intends to give holders of its ADRs formal written notice of the termination of the ADR programme by no later than 31st March 2005. That notice will explain in detail the process for termination of the ADR programme and the steps to be taken by holders of ADRs.
Provalis believes that few ADR holders are likely to surrender their ADRs for ordinary shares. Consequently, the probable result of the process described above is that most holders of its ADRs will receive cash for their ADRs shortly after the sale of the underlying ordinary shares by the Bank of New York and will therefore cease to hold Provalis securities.
Provalis expects, therefore, that this will result in the number of US residents holding Provalis securities falling below 300. Should this be the result, Provalis will as soon as is practicable terminate the US registration of its securities under Section 12 of the Securities Exchange Act of 1934 (the Exchange Act) and suspend its reporting obligations under Section 15 of the Exchange Act. As a result of these actions, Provalis would no longer be required to file periodic or current reports with the SEC, or to comply with the requirements of the Sarbanes-Oxley Act of 2002. Provalis believes that such deregistration and suspension should take effect before 31st August 2005.
Provalis also intends to propose resolutions at its Annual General Meeting to be held later this year to introduce changes to Provalis' Articles of Association that will, in effect:
- Limit the number of US residents permitted as holders of Provalis
ordinary shares to less than 300 (or such other number as would ensure
that Provalis' SEC registration and reporting requirements are not
reinstated); and
- Give Provalis the power to compel the involuntary sale by
US residents of their holdings of ordinary shares to the extent
necessary to accomplish this result.
The text of the proposed amendments to Provalis' Articles of Association and detailed information concerning the amendments will be provided in the Notice of the Annual General Meeting which will be given to holders of ordinary shares prior to the 2005 Annual General Meeting.
If these changes are approved at the Annual General Meeting, and if the number of US residents holding Provalis' securities had not already been reduced to less than 300, Provalis would exercise the powers granted by its amended Articles of Association to so reduce them. As soon as is practicable thereafter, Provalis would terminate its Exchange Act registration and suspend its SEC reporting requirements as described above. Provalis believes that, under this scenario, deregistration and suspension would take effect before the end of December 2005.
Once deregistration and suspension has taken effect (howsoever achieved), Provalis would exercise the powers resulting from the passing of resolutions referred to above to the extent necessary to ensure that the number of US residents holding its securities remains below 300, in order to avoid any future reinstatement of its SEC registration and reporting obligations.
Provalis' ordinary shares will remain listed on the London Stock Exchange and Provalis will continue to fulfil its registration and reporting obligations to the UK Listing Authority and the London Stock Exchange.
Commenting on this announcement, Frank Harding, Chairman of Provalis plc, said:
"As a UK listed company, Provalis complies fully with UK listing rules and applicable regulations. Complying with the additional US obligations is a significant and on-going burden on our finances and our management time and outweighs the benefit of our US listing. We believe that this deregistration and suspension of SEC reporting requirements will save the Group approximately $700,000 between now and 30th June 2006 and at least $400,000 in each year thereafter. As such, there is a real commercialbenefit in implementing this proposal as soon as possible."
Visit Provalis' Revised Website at provalis.com |
