Amara Issues Open Letter to the Board of PLUS Markets Plc

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• Publié par: amara-dhari-investments-limited
• Nombre de lectures: 14
• Langue: English

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Amara Issues Open Letter to the Board of

PLUS Markets Plc

PR Newswire

LONDON, June 14, 2012

LONDON

,

June 14, 2012

/PRNewswire/ --

Amara Dhari Investments Limited today issued the following open letter to the

board of directors of Plus Markets Group plc:

Amara Dhari Investments Limited

Wickhams Cay 1

PO Box 3085

Road Town, Tortola, BVI

June 14, 2012

Board of Directors

Plus Markets Group plc

33 Queen Street,London

EC4R 1BR

Dear Sirs,

Plus Markets Group Plc (the "Company")

As one of the Company's largest shareholders, without whose funding the

Company may have already ceased to exist, we are extremely disappointed at

the contents of the announcement made on

8 June 2012

, which we believe is

inaccurate, and is a distraction from the very serious matters to be voted on by

shareholders at the upcoming General Meeting and Annual General Meeting.

We do however, consider it necessary to address and respond to the points

specifically referencing Amara in the aforementioned announcement.

Strategy and Formal Sale Process:

The assertion made by the Company that we agreed with the sale and overall

strategy of the Company, as stated in the announcement, is inaccurate.

By way of background, the rationale for our investment in the Company in

2009, was on the basis that the Company's strategy would be to focus on the

stock exchange ("SX") and to enhance its business by using the SX as a

platform to promote tie-ups with other exchanges worldwide and to facilitate

dual listings. To this end, given our substantial connections in the

Middle East

,

we offered to provide the Company with regional offices, fund business

development and marketing in the region, and provide bilingual personnel - all

for the nominal sum of £1 per annum.

Following a substantive change of management at Plus, this generous offer was

rejected by the Company. Our investment agreement contains specific

obligations of the Company to open an office in the

Middle East

, to facilitate

such a strategy.

We were also in discussions with several established stock exchanges located in

high growth regions of the world, who were attracted to the idea of promoting

dual-listings in

London

in conjunction with Plus. We brought this to the attention

of Plus management, yet nothing was pursued.

As we expressed directly to the management of the Company, and later

publicly in the press, we did not believe the strategy of pursing a Derivatives

Exchange would bear fruit for Plus investors. We have been proved right.

With respect to our opposition to the proposed sale, our written

correspondence to the Company's board and its advisors on

31 January 2012

(only several days before the Formal Sales Process was announced), could not

have been more clear. We have included the text for clarity:

"….As we have expressed to both management and your advisors, as

significant shareholders, we oppose any attempt to sell the business in whole or

part (with the exception of a minority stake in either TS or DX), and will be very

vigorous in opposing any such deal, if presented…"

We did not believe, as stated, that a sale of the Company, or its main asset, in

whole or part, would generate adequate returns for shareholders.

Offers to Finance:

Following our initial investment, we made it apparent to the board in both

verbal and written communication that we were willing and able to provide

further financing should it be required. In fact, we made specific provision for

future fundraisings within the Amara corporate structure.

We also wish to make the point that our initial financing was completed without

the incurrence of exorbitant advisors fees in contrast to those fees which have

been incurred by the Company more recently and in particular, in relation to

the current proposed transaction.

Please also note that at the time of our initial investment, our directors and

shareholders went through the full FSA regulatory process without

complication.

Summer 2011 Offer of Funding:

We were approached by the Company's advisors in the summer of 2011, with a

view to providing additional financing to the Company via either an

underwritten private placement or an underwritten rights issue, whereby the

underwriter(s) would cover any shortfall if other shareholders did not take up

their entitlement. We expressed our willingness to provide finance, however,

explained that any such financing was conditional on a change of management

of the Company as we did not believe that such management had the capability

to take the Company forward and make it a success.

When it became apparent to the Company that the other major shareholders

did not wish to participate in such fundraising and that we were the only

shareholders offering financing (with a condition of management change),

discussions were promptly terminated. Astonishingly, the Company paid their

advisers a fee relating to these aborted discussions!

Amara's shareholders, who were willing to participate in such further funding of

Plus, include some of the most prominent and wealthiest names in the

Middle

East

. There is not, nor was there ever, an issue with proof of funds either during

our most recent discussions with the Company or when we provided the

Company with the initial £5 million. We would have welcomed discussions and

negotiations with the Company to have reached the point where the amount

required by the Company specified, terms agreed and confirmation of funds

was required.

January 2012

Offer of Funding:

During the third week of

December 2011

, the Company's CEO and Senior

Independent Director met with the Amara board in

London

. At this meeting, the

Company's representatives stated that the Company was in serious need of

financing and that an amount of £2 million was required. On that basis, an offer

of underwritten funding was prepared for discussion and sent to the Company

via our advisors Markab Capital on

3 January 2012

. The term sheet was explicit

in that such financing was "

in conjunction with Amara Dhari Investments

Limited

".

On

13 January 2012

, we chased the Company as we had heard nothing from

them since our term sheet was submitted. We have included the text for

clarity:

"....

I remind the board that our offer is not open indefinitely and we have had

no substantive discussions with the Company to advance the financing since

our offer has been tabled, despite the Company's critical funding

requirements....."

On

20 January 2012

, the Company finally responded in writing, suggesting a

telephone call to discuss the matter further, stating inter alia, that their initial

assessment of the capital requirements had been too low and that the pricing

of our private placement offer was not high enough. The Company, however,

did not specify any amounts that it believed it would require, nor did they

suggest a price at which financing would be acceptable.

Thus, on

24 January 2012

, a call was arranged between Amara and members

of the Plus executive board and its advisors to discuss our offer of funding.

During this call the general principles of a financing were discussed, including

changes we believed necessary to ensure the Company's success. During this

call management neither suggested a pricing level that it deemed acceptable

nor outlined the specific quantum it required. We mutually agreed to continue

these discussions the following day, with a telephone call being arranged by

management and its advisors. No-one got back to us, so on

31 January 2012

,

we again chased the Company. We have included the text for clarity:

"...It has been almost one week since we last spoke, after having agreed on our

call to continue the conversation the next day and begin to more fully discuss

the terms of a transaction.

We have yet to have a meaningful discussion on terms and have not once had

any sort of negotiation, despite our term sheet now being with you for almost a

month.

For a company that is weeks away from potentially being put in the situation of

an orderly wind-down by the regulator due to lack of capital, where all

shareholder value will be destroyed, I find it astonishing that management have

not engaged in substantive discussions with us.

It is quite clear that you have no interest in proceeding with a financing

provided by us...."

Several days later, having failed to respond to our offer, the Company

announced the Formal Sales Process.

Continued Offers of Financial Support:

On

5 March 2012

, in written correspondence to the Company's advisors, upon

electing not to participate in the formal sale process, we reiterated our offer of

financial support. For clarity we have included the text:

"...We remind you and the management that we remain open to financing the

Company, as an existing shareholder, through a placing. We would welcome a

serious dialogue with the management of the Company to further such a

transaction.

Further, as we have previously stated, we would be against any non-existing

shareholder financing, particularly in light of several offers over the past two

years to refinance the Company at much higher prices, which the Company

had rejected. After rejecting these offers, we would take a negative view of any

attempt to refinance the Company with outside shareholders, given the shares

are at or near an all time low, as we believe the result would be a punitive

dilution to existing shareholders, who have stuck with the business through this

difficult period.

We are available at any time to discuss this matter and look forward to working

together with the Company. Please bring this position to the attention of the

Company's board...."

On

9 March 2012

, having received no response to the above correspondence,

we sent further correspondence to the Company's advisors. For clarity we have

included the text:

"...It has been one business week since we sent you our invitation to discuss a

funding solution for PLUS and we have heard nothing.

Given the precarious nature of the Company's financial position and our belief

that it is not in the best interest of shareholders for management to sell or

refinance the business with outside parties while the share price is near all time

lows, we find it disturbing that yourself as advisor and management have not

initiated any discussions with us.

The fact that management have not held any substantive dialogue with us as

long term shareholders to discuss a financing when a firm term sheet was put

forward by us in January (was on the table for a month and not once were

terms even discussed), and further declined to engage in discussions with us

after yet another invitation was put forward to do so, raises serious questions.

These concerns arise particularly in light of the Company's desperate need for

funding.

If management have a solution that they believe will satisfy shareholders and

the business concerns of PLUS, it should put them to shareholders for

discussion immediately. Absent that, it at the very least indicates uncertainty.

Uncertainty creates risk. In case of PLUS, an RIE, risk should be minimised by

the directors, acting prudently, by pursuing all avenues available to it to ensure

the Company survives. We know management is not doing this, by failing to

engage any dialogue with us regarding funding.

We cannot believe that other shareholders do not share similar views to

ourselves. It is time that the management of the Company listen to its

shareholder base.

As always, we are available to speak at any time and expect a timely

response. Please bring this position to the attention of the Company's board....."

The assertion therefore that the Company was "not aware" of an offer of

funding from us is untrue, as it is very clear that offers of funding were

presented both verbally and in writing to the Company and its advisors.

It is also evident that the level of co-operation required from management to

assist us in the production of a business plan (as required by the FSA and

relating to a change in control should we have provided funding), was not

forthcoming.

Management

As we have stated both privately and publicly, we believe that the actions of this

board have directly led to the destruction of shareholder value, witnessed by

the substantial decline in the value of our holdings since we have made our

investment.

Accordingly, we have initiated steps to reconstitute the board, starting with our

nominated director Ahmad Al Asfour (given this is a replacement procedure

which is less complex than that under the Companies Act 2006). As the

Company is aware, we put into motion Al Asfour's replacement on the board in

early May, using the procedures under our investment agreement with Plus.

The board is now in possession of a legal opinion noting that we, the board of

Amara, have the authority to manage the business and have acted pursuant to

that authority to remove Al Asfour. Amara's directors, Ahmad Al-Omani and

Spencer Wilson, constitute the board of Amara, and have been the sole

directors since its investment in Plus.

Conclusion

We would like to reiterate our view that the management of the Company

should be focusing all of its efforts on the substantial task of creating and

preserving shareholder value, rather than releasing press statements which are

derogatory to the very shareholders who have historically provided much

needed financing, without which the Company may not exist today.

We are appalled that executive management have agreed to take "enhanced"

payouts of £423,000, for selling shareholders' business for £1 and call on

management to waive those payouts.

Moreover, we consider the expenditure of £960,000 of shareholder funds on

professional and advisory fees to sell the business for £1 as incompetent,

particularly in light of the fact that the main reason for the forced sale of the

business is lack of capital.

Very truly yours,

Spencer Wilson

Ahmad Alomani

For more information please contact Amara Dhari Investments Limited:

[phone]