Pavilion has said its planned 2006 share buyback was invalid as the company has insufficient distributable profits available to carry it out.
The discrepancy came about as Pavilion prepared the offer document for its takeover bid by JLT Corporate Risks Limited, a wholly owned subsidiary of Jardine Lloyd Thomson Group.
At the company's AGM on the 11 May 2006, shareholders approved a resolution to authorise the company to buy back up to five million ordinary shares representing 9.07% of the shares then in issue. However at the time the company had insufficient distributable profits available to effect the purchases, thereby rendering the buy back invalid.
The directors have been advised that the shares which were the subject of the buyback are therefore still in issue. The terms of the offer value the share capital of Pavilion at approximately £7.15 million.
JLT Corporate Risks has agreed that it will be a term of the offer that any shareholders who wish to accept the offer must irrevocably authorise JLT Corporate Risks to pay on their behalf to the company the amount that they originally received from the company at the time of the buy back.
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