The London Stock Exchange Quotations committee has seriously rebuked City Site Estates (CSE) for breaking procedural rules when it sold one of its Birmingham properties to MEPC on July 2, 1997.
MEPC acquired the 27,870 sq m (300,000 sq ft) property – which comprises Priory House and Cannon House – on Priory Queensway in the city for £30m. The deal reflects a yield of 9.25%.
The committee found that CSE was in breach of rule 10.37 of the listing rules. The company failed to obtain shareholder approval and failed to publish a circular to shareholders in relation to the deal.
A precondition of the deal with MEPC was that the deal should complete by July 2. However, if CSEs had gone by the book the sale would not have completed until October.
In their defence, CSE’s directors said they went ahead with the sale because they were concerned that the company and the shareholders would lose out on a favourable deal. They also point out that when the deal was put to the shareholders, it was overwhelmingly endorsed.
However, the committee was “seriously concerned” that CSE did not contact the Stock Exchange at the time to seek a waiver of rule 10.37. In fact, the company contacted the Exchange through its brokers Bell Lawrie White on 16 July, 1997.
The quotations committee concluded: “The directors of CSE proceeded with the sale of Priory House and Cannon House in the knowledge that the company was breaching Rule 10.37; in the committee’s view the circumstances upon which CSE have relied do not excuse that conduct”.
A spokesman for CSE declined to comment.
EGi News 31/10/97
