Tandem Group seeks backing for financial shake-down - BikeBiz

Tandem Group seeks backing for financial shake-down

The distributor of Dawes and Falcon wants shareholders to back plans to cancel Tandem Group's share premium account
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Tandem Group plc is listed on London Stock Exchange's Alternative Investment Market. It distributes Falcon and Dawes bicycles, Ben Sayers golf equipment and licensed toys from MV Sports and Leisure.

In the year ended 31 January 2008 Tandem's turnover was up 3.2 percent to £34,878,000 and profit before tax was up 70.3 percent to £1,105,000. At the company's AGM held on 19th June chairman Graham Waldron told shareholders "The total number of bicycles sold increased by 4.8 percent over the previous year. With lower sales of higher priced models...our cycle businesses was down by 5.9 percent."

Tandem has now posted a circular to its shareholders providing notice of an Extraordinary General Meeting to be held on Monday 21st July seeking the cancellation of its share premium account, a radical step.

Waldron told shareholders: "The Act prevents a company from purchasing its own shares or paying dividends where the company does not have sufficient distributable prof its to do so.

"The Proposal provides for the creation of distributable reserves for the Company by cancelling the share premium account. This would create realised prof its in the amount of those reserves which would first be applied in eliminating the accumulated deficit on the Company’s profit and loss account.

"The balance remaining after the elimination of the deficit will comprise distributable profits which, subject to any steps required to protect the position of the creditors of the Company as at the date of the reduction of capital, the Directors could then use for the purposes of paying future dividends or for the Company to purchase its own Ordinary Shares.

"As at 31 January 2008 the Company had an accumulated deficit on its profit and loss account of £3,529,802. In order to eliminate the accumulated def icit on the Company’s prof it and loss account and to create distributable profits to enable a distribution to be made in the future by way of dividend or purchase of its Ordinary Shares, it is proposed to cancel the balance standing to the credit of the share premium account of the Company. At the date of this document, there is a balance of £5,257,701 standing to the credit of the share premium account.

"The cancellation of the share premium account requires the approval of Shareholders and, under the provisions of the Act, the subsequent conf irmation of the Court. The Company will not be in a position to complete the Proposal until conf irmation from the Court has been obtained and the Court’s order has been registered at Companies House. If the Resolution is not passed at the General Meeting and/or Court conf irmation is not obtained, it will not be possible to make dividend payments or for the Company to purchase its Ordinary Shares until the def icit on the Company’s profit and loss account has been eliminated."

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