ࡱ> ;>:_ V*bjbj 46bbV"      *$NNNNN)))       $4L/ )))))/  NND) N N ) Njן+3 Z0= ,)))))))//Sv)))))))))))))))) : HOWMAC LTD Meon House, Stratford Road, Mickleton, Chipping Campden, Glos, GL55 6SU Tel; 01386 438529, e-mail charles@gillev.com Registered in England & Wales No 1942924 IMPORTANT INFORMATION SHARE CONSOLIDATION PLEASE NOTE TO RECEIVE ANY FUNDS OR A NEW CERTIFICATE YOU MUST RESPOND TO THIS LETTER BY SENDING IN YOUR OLD SHARE CERTIFICATE 14th June 2011 Dear Shareholder, Your Board has been concerned for a number of years at the high cost of running a small company whilst maintaining a large shareholder register that relates to a different era and scale of corporate ambition. When the company was formed in the 1980s it had high hopes, but after a good start the recession of the early 1990s and an over exposure to a single investment led to a rapid retrenchment. At that point we decided to preserve our remaining capital and grow as best we could, still as an investment holding company, but with a lower cost base and more diversified portfolio, whilst still being receptive to corporate transactions if they made sense to our members. We also, in reflection of our earlier more adventurous years, had a bias towards quoted private equity holdings. That has served us reasonably well and our investments have consistently out performed the wider market indices, allowing a gradual rebuilding of shareholder value. With a generally favourable tax and cost structure this success has led the Board to persevering with the company, rather than, as some members have suggested, liquidating it and forsaking those advantages. Nevertheless the most common sized holding (1000 shares) is still worth only just over 100 and the company pays no dividends. There is no market in the shares. Your Board questions the value to those members of so small a holding and has been concerned for some years at the accuracy and completeness of the Register of Members as a significant number of holders or their heirs fail (for various reasons) to update the Company when their circumstances change. The cost of administering over one hundred shareholder accounts, where over half of those holders have an interest in the company that is currently worth below 250, is not one the Company can bear indefinitely. Accordingly your Board now proposes that the Existing Ordinary Shares with a nominal value of Two Pence (2p) each in the capital of Howmac Ltd are consolidated into New Ordinary Shares with a nominal value of Eighty Pounds (80) each in the capital of Howmac Ltd on the basis of one New Ordinary Share for every 4000 existing Ordinary Shares. This will divide the existing members between Continuing Shareholders (currently holding 4000 existing Ordinary Shares or more) and Outgoing Holders (currently holding 3,999 shares or less); the latter will receive a cash payment but cease to be members of the Company. A Continuing Shareholders percentage ownership will not change materially as a result of the share consolidation. Immediately following the share consolidation, a Continuing Shareholder will have substantially the same proportionate interest in the profits, net assets and dividends (if any) as it had immediately prior to the consolidation. Any change can by definition only relate to that arising from a fraction of a New Ordinary Share. For those holders of less then 4000 existing Ordinary Shares the Board has procured undertakings (from Board members or their associates) to buy the fractions of New Ordinary Shares arising and pay the proceeds to those Outgoing Holders. The same basis will be used to value fractions of a share owned by Continuing Shareholders, where the existing holding is not a multiple of 4000, except in those cases fractional entitlements of less than 10, will not be distributed, but will be retained by the company. The basis for the cash payment for a fraction of a share cannot be the market price as there is no market in the shares. Nor do the Directors believe that the Continuing Shareholders (who are not having a cash offer made for their holding) should bear the costs of the process. Accordingly, a formula will be used based on the bid price of the quoted investment portfolio on the day before the General Meeting to be held on July 7th 2011 as adjusted for any marketability discount (on, for example, AIM stocks or unquoted holdings) that may be appropriate and current liabilities (the company has no bank debt) and the expected costs of the exercise. Cash will be included at face value, but no value will be ascribed to intangible assets (such as deferred tax), as their value is wholly dependent on the capital continuing to be made available to make investment profits, which by definition will not be the case for Outgoing Holders. No income that relates to the period prior to the General Meeting but which has not been paid on the day of the General Meeting will be included. The resulting sum, on a per Existing Ordinary Share basis, will be rounded down to the nearest half penny to give a value per Existing Ordinary Share for Outgoing Holders and fractional entitlements. The Companys auditors will be asked to review the calculation for accuracy but will not audit the calculation nor provide any certificate as to its accuracy. Whilst the outcome of this calculation is unknown, the Board estimates the payment will be between 90% and 95% of the net tangible asset value of the company and accordingly be in the range of 11.5 pence to 12.5 pence a share. At the mid point of that range most Outgoing Holders would therefore receive either 120 (for 1000 shares) or 240 (for 2000 shares) under these proposals, although this will depend (inter alia) on market conditions on the day prior to the General Meeting. Holders should take their own tax advice, but the Board understands for Continuing Shareholders this may be treated as a de minimis part disposal for Capital Gains Tax (and hence a reduction in the base cost only) but for Outgoing Holders it will generally be a disposal for Capital Gains Tax. In the case of the original holders who subscribed for shares in the late 1980s this will typically create a tax loss, although each holder should take advice on their particular circumstances. The Company will only make the above payments upon the surrender by holders of their share certificates. If you have lost your certificate please complete the appropriate indemnity (a copy of which is available on the website or by post from the Company Secretary) to obtain a new one. All payments will be by cheque made out to the first named holder on the certificate and sent to the address shown on the Register of Members. All documents posted are at the Shareholders risk. For Continuing Shareholders please return your certificate(s) and new certificates will be issued to you and sent to the address on the Register in the name(s) currently shown on the Register. As with Outgoing Holders please obtain and complete an indemnity for any lost certificates. Payments to Continuing Shareholders for fractions (if any) will be payable to the first named holder on the Register of Members. All documents posted are at the holders risk. Outgoing Holders who fail to return certificates will have the sums due to them held in trust by the Company for 12 years, after which they will be surrendered to the Company if not claimed, save that Article 172 of the Companys Articles of Association will still apply to holders who are already considered untraced. Article 172 states that proceeds of the sale of shares will be held for a period of twelve years from the date on which the Company first became aware that the details on the Register were no longer materially correct. If the first indication of the Register not being correct is a failure to return the certificate following this share consolidation, that will be twelve years from the date of the General Meeting. Continuing Shareholders who fail to return their certificate(s) will not be treated as untraced solely for that reason. However, new certificates and cheques for the fractional sum will not be sent to them and the old share certificates they currently hold will cease to be valid. Any future dividend declared will also be retained by the Company. If you have questions on this procedure or any other matters relating to your holding, please contact the Company Secretary, by post, e-mail or telephone. As a change in share capital, this proposal must be approved by shareholders at a General Meeting; the resolutions to be voted on at the forthcoming General Meeting are set out below. A clause is also included that allows the Board to abandon these proposals, should extreme market movements occur. J.G. 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