Urban Exposure plc (UEX)
Urban Exposure plc: Update on Strategic Review and Related Party Transaction
with Urban Exposure Philanthropy Limited
05-May-2020 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
5 May 2020
THIS ANNOUNCEMENT INCLUDES INSIDE INFORMATION
Urban Exposure Plc
Update on Strategic Review
Related Party Transaction with Urban Exposure Philanthropy Limited
Update on Strategic Review
Further to the announcement on 17 April 2020 and discussions with
shareholders, Urban Exposure plc (the "Company") has reviewed its strategic
options for its future business.
In light of current business conditions, including the market uncertainty
created by COVID-19, the Company has determined that it will not enter into
any new lending opportunities for the foreseeable future.
Instead the Company will focus entirely on the management of its existing
loan portfolio to maturity in order to maximise the returns from the
portfolio for the benefit of its shareholders.
The Company is continuing to investigate numerous possibilities regarding
the potential sale of its loan book with a view to determining whether a
sale of all or some of the loan book may be more attractive to shareholders
than holding those loans to maturity. Shareholders will be updated in due
course on the outcome of those discussions.
In the meantime, the Company wishes to reiterate to its existing borrowers
and business partners that it remains fully committed to its current loan
portfolio and that the Company will continue to deliver the same high
service levels as at present.
Related Party Transaction with Urban Exposure Philanthropy Limited
On 1 October 2019, Urban Exposure Lendco Limited ("UE Lendco"), a wholly
owned subsidiary of the Company, entered into a loan agreement with Urban
Exposure Philanthropy Limited ("UEP") pursuant to which UE Lendco agreed to
grant an interest-free unsecured loan of GBP701,800 to UEP (the "Loan"). The
Loan was novated to Urban Exposure Amco Limited ("UE Amco"), also a wholly
owned subsidiary of the Company, in January 2020 and increased to
GBP1,235,646. GBP907,000 is currently outstanding under the Loan and no further
advances will be made. The Loan is repayable by UEP to UE Amco on demand
under the terms of the loan agreement.
The Loan, made by UE Lendco to UEP, was made in advance of UEP commencing
fundraising activities so that UEP could gift the proceeds of the Loan to
the Harris Federation in time for the refurbishment of a nursery school in
south-east London, and fund ongoing running costs to provide for meals,
developmental and education needs for children in a disadvantaged area.
Social impact considerations are an important part of the Company's strategy
and whilst in 2019 it was determined by the Board that the Company was not
in a position to make a substantial gift donation to the project, and
accordingly a loan was made instead.
UEP was formed in March 2019 and registered as a charity in September 2019,
to support the Company's charitable endeavours. On the basis of charity law
advice received at the time of its formation, UEP is not a subsidiary of the
Company and instead is owned and controlled by the CEO, Randeesh Sandhu, and
his wife Daljit Sandhu who acts as COO. Both Mr Sandhu and Mrs Sandhu are
directors of UE Lendco and UE Amco. As it is a charitable company, neither
Mr or Mrs Sandhu have any economic interest in UEP. There is a board of four
directors of UEP, two of whom are not directors of the Company or its
subsidiaries.
In conjunction with the preparation of the Company's audited financial
statements for the year ended 31 December 2019 which is currently on-going,
the Loan was brought to the attention of Liberum Capital Limited
("Liberum"), the Company's nominated adviser, for the first time by an
independent director. UEP is a related party of the Company for the purposes
of the AIM Rules for Companies and the Loan is a related party transaction
for the purposes of Rule 13 of the AIM Rules for Companies. Liberum was not
consulted at the time that the Loan was entered into as required by AIM Rule
13. Liberum is unable to advise that the Loan is fair and reasonable insofar
as the shareholders are concerned.
As UEP is a connected person of Mr and Mrs Sandhu for the purposes of the
Companies Act 2006, shareholder approval should also have been obtained
prior to the Loan being made because it is a loan to a person connected with
directors of the Company or its subsidiaries under section 200 of the
Companies Act 2006. The Company is not currently expecting to take any
immediate action to remedy this matter.
The board of directors has decided that an inquiry into the circumstances
concerning the making of the Loan should be conducted by an independent
third party.
The Loan Agreement provides that the Loan will be repaid out of charitable
donations received by UEP. As UEP is a newly formed charity with limited
charitable donations to date, Mr and Mrs Sandhu informally agreed at the
outset personally to underwrite the balance of the Loan not funded from
charitable donations to UEP and voluntary contributions from other employees
of the Company, to ensure that the Loan is repaid in full, and this remains
the case. The Company's board of directors will determine the appropriate
timing for seeking full repayment of the Loan in due course and will provide
a further update in due course.
Enquiries:
Urban Exposure plc Tel: +44(0)207 408 0022
William McKee, Chairman
Randeesh Sandhu, Chief Executive Officer
Sam Dobbyn, Chief Financial Officer
Jefferies (Financial adviser and Joint Corporate Broker) Tel: +44(0)207 029
8000
Rishi Bhuchar
Ed Matthews
James Thomlinson
William Brown
Liberum (NOMAD and Joint Corporate Broker) Tel: +44(0)203 100 2000
Neil Patel
Gillian Martin
Jonathan Wilkes-Green
Louis Davies
MHP Communications (Financial Public Relations) Tel: +44(0)203 128 8540/
+44(0)203 128 8731
Charlie Barker
Sophia Samaras
UrbanExposure@mhpc.com
ISIN: GB00BFNSQ303
Category Code: MSCU
TIDM: UEX
LEI Code: 213800Q7WLHGIHUFBT43
Sequence No.: 61643
EQS News ID: 1035621
End of Announcement EQS News Service
(END) Dow Jones Newswires
May 05, 2020 02:01 ET (06:01 GMT)
