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PCF Group PLC on Tuesday said it is in talks with Castle Trust Capital PLC about a possible all-share takeover offer, while at the same time its majority shareholder has agreed to invest up to £4.2 million in the company.
The London-based specialist bank also released its delayed results for the financial year that ended September 30 last year, allowing its shares to resume trading on AIM in London.
PCF said it is in ‘early-stage discussions’ with Castle Trust Capital regarding a potential all-share takeover offer. Castle is a London-based bank, offering savings accounts and mortgage lending. It must make a firm offer for PCF by June 28 under the UK takeover code.
Under the terms of the possible offer, PCF shareholders would have a small minority position in the combined group, PCF said.
Meanwhile, majority shareholder Somers Ltd plans to invest more into PCF via a subscription of 54.9 million shares at 5 pence per share, which would raise gross proceeds of £2.7 million for PCF. The subscription shares would represent 22% of existing share capital and would increase Somers's ownership from 64% to 73%, when taking into account dilution.
Somers also is willing to support a further equity subscription of £1.5 million in late June this year, PCF said.
Assuming the subscription by Somers goes ahead, PCF plans to make an open offer to other shareholders at the same price to raise up to £6.9 million more. PCF will aim to ensure that shareholders who take up their rights are not diluted by the Somers subscriptions.
PCF drew no connection between the Castle Trust Capital takeover approach and the Somers subscription, which were announced in separate statements.
Turning to results, for the most recent financial year, pretax loss narrowed to £3.1 million compared to a loss of £5.1 million a year ago. Net operating income increased by 1% to £26.8 million, compared with £26.5 million in the previous year.
PCF's return on average equity was negative 6.1%, compared to negative 11.4% in financial 2020.
Chair Simon Moore said: ‘Though the 2021 financial year was a difficult one for the PCF Group, with significant events and subsequent change taking place in the business, I am pleased to report that since the end of this reporting period, amidst a challenging social and economic backdrop, the group has achieved major milestones in its recovery programme’.
PCF also confirmed Garry Stran as chief executive officer, effective from May 5 after 12 months as interim CEO.
‘Stran has led the company through the remediation process and has been critical in driving through the necessary cultural and operational changes to put the bank on solid foundations for the future,’ PCF noted.
Looking ahead, PCF remains confident of the company's potential to leverage its core strengths in origination and servicing of loans to generate value for shareholders.
PCF shares were down 22% at 6.60 pence on Tuesday morning in London. The stock was quoted at 1,300p as recently as January.
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