Conduco Plc
LSE : SIDP

February 02, 2011 11:16 ET

Notice of a General Meeting

                                                                                                 02/02/2011
                                                                                                           


                                                CONDUCO PLC
                                                     
                                       ("Conduco" or "the Company")
                                                     
                                        Notice of a General Meeting
                                                     
Following the appointment of the new non executive directors to the Board on 10th December 2010, the  Board
is  pleased to announce they have now concluded their strategic review. The Board has now decided to seek
the approval of its Shareholders for, inter alia, the disposal of its business, assets and liabilities and
the adoption of a new investment strategy. The Board considers that such a refocusing of the Company will
enable Conduco to deliver meaningful shareholder value in the near future.

Following  completion of the strategic review on 1 February 2011, and prior to the calling of  the  General
Meeting, Scott Fletcher and Chris Malthouse have stood down as Directors of the Company.

Strategic Review

As outlined  in several recent announcements, most recently on 31 December 2010, the Company has had an
extremely tough trading year. During this period, the Company's products failed to generate new business
for the Company. Throughout the current financial year the only revenue generated by the Company has been
via existing support and maintenance contracts, which currently stand at (approximately) £23,500 per month
(£280,000 per annum). There have been numerous customers who have terminated their support and maintenance
contracts with the Company in the current financial year and, given that the associated support and
maintenance revenue is deferred over the time period of the contract, the effect of these terminations are
not  yet  apparent in the Company's current year accounts.  However, projections estimate that the support
and  maintenance revenue of the Company will drop to £18,000 per month (£216,000 per annum) by the end of
the  next  six months. 58% of the Company's current support and maintenance revenue comes from two major
customers, hence there is the risk that if one, or both, of these customers decided to terminate their
contracts then the annual support revenue of the Company would severely reduce.

As  the  sale of the Company's existing products to new customers has been very limited and difficult, the
Board of the Company resolved as part of the Strategic Review that the Company's existing products do not
have a sustainable commercial future within the Company.

Conduco  Plc acquired 19% of Viapost Communications Limited ("Viapost") and has an outstanding contractual
obligation to advance  loans of £107,818.97 to Viapost on the terms of a loan note instrument dated 4
January 2010 (the "Loan Note"). To date, Conduco has paid £392,181.03 to Viapost, however Viapost continues
to encounter financial difficulties. In conclusion, the Board is reluctant to advance further sums to
Viapost, including any part of the £107,818.97 which the Company is contractually obliged to pay under the
Loan Note. The Company does have security (in the form of a debenture) in respect of the monies it
advances to Viapost but this ranks behind other secured creditors. The Loan Note gives the Company the
right to acquire Viapost's product but if it sought to enforce this right, it would probably be prevented
from doing this by the other secured creditors. Viapost does not have the cash to repay loans advanced by
the Company, so demanding repayment would, in the opinion of the Board, see  Viapost  be  placed  into
administration  and/or  liquidation without any (or limited) financial return to the  Company  in  view  of
Viapost's  other  creditors  (secured and otherwise). The Company has the ability  to  convert  the  loans
advanced pursuant to the Loan Note into shares in Viapost but as Viapost is insolvent, without the  support
of further cash investment, the Board  does not see this as a viable continuing asset and therefore sees no
merit in converting the loan into Viapost shares.

In  view  of these facts and circumstances, the Board has carefully considered various options to  try  and
reach a decision as to what is most likely to promote the success of the Company for the benefit  of  its
members as whole.

In conclusion, the Board considers that it is in the Company's economic interest to no longer continue as a
software  company.   As the sale of the Company's existing products to new customers has been very  limited
and  difficult, the board do not believe that the Company's existing products have a sustainable commercial
future  within  the  Company. The Company does not own services or products  that can  be  made  into  a
profitable  business  and, as a result, the Company should no longer be a software company or a trading
company. The Board also considers that Viapost requires a further injection of cash (over and  above  its
obligations under the Loan Note) to remain a viable investment.  The Board considers that it is not in  the
best interests of the Company to advance more monies to Viapost, whether under the Loan Note or otherwise.

The  Board  has  therefore  resolved as part of the Strategic Review that  the  Company  should  become  an
investment  vehicle. The Company has £370,000 of net assets including cash balances of £590,000,  excluding
any  value  placed on the Loan Note. The Board considers that this would be better spent on an  alternative
investment.   Therefore to achieve this, substantially the whole of the business, assets and liabilities of
the  Company  will  need to be transferred, leaving the Company with limited assets  and  liabilities  (the
principal  asset being cash reserves of £467,500). The directors of the Company will, going  forward,  deal
with  those reserves in such a way as the board considers to be most likely to promote the success  of  the
Company for the benefit of its members as a whole

Chris  Malthouse and Scott Fletcher, were not involved in the strategic review and have not voted on its
implementation at the subsequent board meeting, in light of their connected interest in Viapost.

Summary of the Proposals

A circular convening a General Meeting to seek authority to implement the proposals following the strategic
review, has been posted to Shareholders.

- Transfer of substantially the whole of the business, assets and liabilities of the Company to Conduco
Software Limited

The Board are proposing that substantially the whole of the business, assets and liabilities of the Company
should be transferred to Conduco Software Limited ("Newco"), leaving the Company with limited assets  and
liabilities (the  principal asset being cash reserves of 465,000) and a small loan  outstanding  from  its
employee  benefit trust. This excludes any retained liabilities or retained assets which are not considered
material. The Board will, going forward, deal with those reserves in such a way as it considers to be  most
likely to promote the success of the Company for the benefit of its members as a whole.

The Company will also retain obligations under the share options (referred to below) and obligations under
its contracts with PLUS, Rivington Street Corporate Finance and Share Registrars.

In acquiring the assets of the Company, Newco will acquire the benefit and rights of the Company  pursuant
to the Loan Note, including the rights of the Company in respect of the sum of £392,181.03 already advanced
by  the Company to Viapost pursuant to the Loan Note.   If this sum is not repaid, then Newco will have the
right and  ability to enforce the current rights of the Company pursuant to the Loan Note as if Newco  had
advanced the loans to Viapost.  In doing this, the Company is, in effect, writing off in its accounts  the
loans  already  advanced by it to Viapost in the sum of £392,181.03 and the rights  associated  with  those
loans. The Board believes that writing off the loan is in the best interests of the Company and  is  most
likely to promote the success of the Company for the benefit of its members as a whole for the reasons  set
out above and  also  because Newco is willing to assume the further obligations and  liabilities  of  the
Company to advance further monies to Viapost under the terms of the Loan Note which the  Company  is  not
prepared  to do because the Board feels that investing more money into Viapost is not in the best interests
of the Company's members.

As  part  of  the  liabilities transferred, Newco will assume day to day trading liabilities.   Newco  will
assume the liabilities to deliver the support contracts which have been paid in advance.  Newco will assume
all  obligations  and liabilities in respect of the existing employees of the Company.    Newco  will  also
assume  the  liabilities of the Company to advance further sums to Viapost pursuant to the Loan  Note.  The
Company will no longer be liable to lend further sums to Viapost, but Newco will.

The consideration payable by Newco for the business and assets of the Company is £1 (one  pound)  together
with the assumption of the majority of the liabilities of the Company which will be transferred to  Newco.
The aggregate value of the assets and liabilities to be acquired by Newco is negative £116,433. This is  on
the basis that the sum of £392,181.03 attributable to the monies already advanced by the Company to Viapost
under  the  Loan Note has a nil value attributable to it as, in the opinion of the Board, these monies  are
not recoverable at this stage

Newco  is a newly incorporated company which has connections with Scott Fletcher and Chris Malthouse. Scott
Fletcher  and Chris Malthouse are commercially advising the directors and shareholders of Newco, they  have
not  been  appointed  directors, nor are they currently shareholders.  However  it  is  likely  that  Scott
Fletcher and Chris Malthouse will become officers of Newco and it is likely that Chris Malthouse and  Lowry
Trading  Limited (see below) will become shareholders in Newco. Scott Fletcher and Chris Malthouse  believe
that  Newco  can  achieve profitability with the products being divested by the Company, and  believe  that
Viapost  remains a viable investment with further cash investment.  As previously disclosed, Scott Fletcher
and  Chris  Malthouse  each have an interest in Viapost. Chris Malthouse, a former  director  and  company
secretary  of the Company, has a 6% interest in the voting shares in Viapost. Lowry Trading Limited  has  a
37%  interest in the voting shares in Viapost.  The sole shareholder of Lowry Trading Limited is The  Scott
Fletcher  2008 Discretionary Settlement. Scott Fletcher was a director of the Company and is a director  of
Lowry Trading Limited.

- Proposed Investment Strategy

The  Board propose that the Company changes its strategy from the software sector to an investment vehicle,
to  enable  the Company to deliver meaningful shareholder value in the near future. The Company  will  seek
investments which would generally have some or all of the following characteristics, namely:

    *       investments which provide a strategic fit as to opportunistic situations and cashflow generation;
    *       where any investment can potentially generate capital uplift for its shareholders;
    *       which have significant asset or intellectual property value and should have opportunities  for
            consolidation or further development;and
    *       where a large part of the consideration could be satisfied by the issue of Ordinary Shares  or
            other securities in the Company.

Such investments could include companies in which the Directors are shareholders and in which they may also
exercise control, collectively or individually.

On an exceptional basis the Directors will also consider loss-making targets where, in their opinion, there
is a clear opportunity to develop a profitable business.

- Share Options

The  Company  has  had  a management incentive plan since 2007 ("Plan").  The Plan is  intended  to  be  an
'Employee  Share  Scheme'  for the purposes of the Companies Acts 1985 and 2006,  which  is  a  scheme  for
encouraging or facilitating the holding of shares in the Company by bona fide employees or former employees
of the Company.

The  Company entered into a share option agreement with Chris Malthouse in 2007 on the initial  listing  of
the  Company on the PLUS market pursuant to the rules of the Plan ("CM Share Option").  On 1 February 2011,
the Board varied the CM Share Option so that this did not lapse on Chris Malthouse ceasing to be a director
so  that pursuant to section 1166 of the Companies Act 2006, the CM Share Option continues to encourage and
facilitate  the holding of shares in the Company by Chris Malthouse, a former employee of the Company.  The
directors are asking the Shareholders to approve this variation.

The Company entered into a share option agreement with Scott Fletcher in 2007 on the initial listing of the
Company  on  the PLUS market pursuant to the rules of the Plan ("SF Option").  The SF Option  was  assigned
with  the consent of the Board at that time to Lowry Trading Limited on 30 March 2009 in line with a number
of Mr Fletcher's other investments.  On 1 February 2011 the Company entered into a replacement share option
with  Lowry Trading Limited (to replace the SF Option (as assigned) in view of the Plan rules) so  that  in
line  with section 1166 of the Companies Act 2006, former employees of the Company are encouraged  to  hold
shares in the Company. The directors are asking the Shareholders to approve this replacement share option.

- Name change

To  reflect the change in investment strategy, the Company intends to change its name from Conduco  Plc  to
Ronaldsway  Private  Equity  Plc and a resolution will be put to shareholders at  the  forthcoming  General
Meeting to this effect.

General Meeting

A  circular giving further details of these proposals and convening a General Meeting, has been  posted  to
Shareholders.

The  General  Meeting is to be held at Brown Rudnick LLP, 8 Clifford Street, London W1S 2LQ on 28  February
2011 at 2.00pm.

Recommendation

The  Board (Grahame Rose, Marcus Yeoman and Derek McDermot) believe that the resolutions to be proposed  at
the General Meeting are in the best interests of the Company and its Shareholders as a whole.

All  the directors of the Company (to the extent they are Shareholders) intend to vote in favour of all the
proposed  resolutions in respect of their own beneficial holdings which, on the basis of a poll vote,  will
result  in a vote in favour of all the proposed resolutions amounting to 5.07%.  For the proposed  ordinary
resolutions to be passed, more than half of the votes cast must be in favour of the resolutions. For  the
proposed  special  resolution  to  be passed, 75% or more of the votes  cast  must  be  in  favour  of  the
resolution.

Scott  Fletcher (on behalf of Lowry Trading Limited) and Chris Malthouse have confirmed to the  Board  that
they will not be voting on the resolutions at the Meeting in view of their interest in the transaction.

Accordingly, the Directors recommend that you vote in favour of the Resolutions.

The Directors of the issuer accept responsibility for this announcement.

END

Enquiries:

CONDUCO PLC                            TEL: 0797 002 8442
Marcus Yeoman

RIVINGTON STREET CORPORATE FINANCE     TEL: 020 7562 3393
Heena Karani


Contact Information

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