Bookie’s shareholders kept in running by deal

Aug 28 2008 by Karen Dent, The Journal

SHAREHOLDERS in collapsed bookmaker Neville Porter have agreed to a rescue deal to turn the business into a shell company, which will be used to acquire another business.

The move got the green light at an extraordinary general meeting, where shareholders in the Birtley company were informed of the approach by London group Coran Investments Ltd.

Coran, a specialist in transforming failing listed companies by using them to acquire other businesses, has taken the reins at Neville Porter, which has been renamed LP Hill Investments plc.

Coran Investments director Nigel Weller said: “It brings it back from the grave. It will be used as a shell vehicle to make an acquisition in a larger company. If we hadn’t come along and refinanced it, it would have been in administration.” Coran Investments put together a deal to repay Neville Porter’s creditors under a Company Voluntary Arrangement – an agreement between an insolvent company and its creditors which allows the business to pay some or all of its debts from future profits or the sale of assets.

Creditors will be offered a total of 100,000 new 1p ordinary shares in the company, which will be divided among those making a claim within three months of the CVA being agreed.

Coran plans to refinance the company by issuing 400,000 new 1p shares. It will hold 200,000 of these and will also put up a £50,000 loan to provide working capital.

A further 50,000 shares will then be issued to insolvency practitioner Antony Batty & Co, which is supervising the CVA, and the same number to adviser Blomfield Corporate Finance.

Coran, Antony Batty and Blomfield also have warrants for new ordinary shares. Mr Weller and Leo Knifton, also of Coran Investments, have been appointed directors of LP Hill Investments. Neville Porter directors David Soley, David Neville Porter, Simon Walters, Brian Morton and Arthur Baker have resigned from the board.

Mr Weller said the business would restart trading on the AIM in the next few days and his team were looking at investment opportunities.

He said: “It can trade for a year as a shell company. It has to make an acquisition within a year of the shares being suspended.

“We get a lot of opportunities, ranging from green businesses to uranium mines. It is a question of making sure there is some longevity.”

Neville Porter shares were suspended last April, 14 months after its float on the AIM. In the second half of 2007, it made pre-tax losses of £268,756 and blamed the internet and phone systems for failing to bring expected revenue.

Best hope of a future

A SHELL company is defined as one which exists only in name.

A shell company listed on the stock exchange provides a cheap way for another business to acquire a listing by “reversing” into the shell.

Vinay Bedi, divisional director of Brewin Dolphin stockbrokers in Newcastle, said that opting for this route could well be the best option for Neville Porter shareholders hoping to see a return on their investments. “This scenario would appear to be the best hope that shareholders have and from that point of view one would be inclined to say it is a good deal,” he said.

“The company will continue to trade and therefore there is the prospect of a future for this business.

“At this stage, this is the best shareholders could have hoped for, give the difficulties the company got itself into.”