Rethink Group to sell technology services division
The deal will be carried out through the sale of the entire issued share capital to Medina House Limited.
Medina House Limited is a vehicle controlled by the management team of Aiimi, including Steve Salvin, executive director of Rethink. Accordingly, Steve Salvin has resigned from the board of Rethink with immediate effect.
The Disposal of this non-core business reflects Rethink's growth strategy which is driven by the Talent Management and Recruitment divisions. The Disposal will enable the Group to focus resources on enhancing the value of these core divisions, which comprised 96 per cent. of Group revenues in the six month period ended 30 June 2013.
In the six months to 30 June 2013, Aiimi generated a contribution from operations of £2,000 (year ended 31 December 2012: loss of £2,000).
Commenting on the Disposal, Steve Wright, Chief Executive Officer said: "After careful review and consideration, it has been concluded that Aiimi's services and capabilities fall outside the Group's growth strategy. Consequently, the Board has agreed that it is in the best interests of all stakeholders, that the business be sold to a management led buy-out team, whose aspirations for the business are more likely to be realised with new investment and independence moving forward. We wish Steve Salvin and his team success in their endeavours."
As consideration for the Disposal, the Group will receive:
• initial cash consideration of £220,000
• an interest bearing loan note of £200,000 (with accrued interest), payable on 1 February 2014 and
• an irrevocable undertaking ("Undertaking") by Steve Salvin to lodge his entire holding of ordinary shares in the Group with Rethink's broker, Shore Capital Stockbrokers Limited, to be held to the order of the Group.
The consideration will be subject to adjustment based on the variance of net assets in Aiimi above/below £320,000 on completion. Completion accounts will be delivered by 22 November 2013 with any adjusting payment made 10 business days later, subject to there being no queries by Medina House Limited on the completion accounts.
The ordinary shares subject to the Undertaking represent 3.09 per cent. of the Group's issued share capital and will either, at the sole discretion of the Group, be sold for the benefit of the Group or, at a future date and subject to the requisite shareholder authorities, be bought back by the Group.
Proceeds from the Disposal will be retained for working capital purposes, for future investment within the Group.
Related Party Opinion
The Disposal constitutes a related party transaction under the AIM Rules. The Board consider, having consulted with Shore Capital & Corporate Limited, the Company's nominated adviser, that the terms of the sale of Aiimi to Medina House Limited are fair and reasonable insofar as shareholders are concerned.