Urban Exposure is proposing to enter voluntary solvent liquidation once its loan book has matured or been sold.
The property finance firm said it anticipated that an orderly wind down of the business had the potential to produce net returns for shareholders of between 70p and 83p per share.
It estimated that 80% of proceeds should be returned to shareholders within seven to 15 months.
Quarterly distributions to shareholders from the net proceeds of the loans are expected. These will most likely be own-share tender offers.
The company also intends to make on-market purchases of its shares.
Chief executive Randeesh Sandhu and chief operating officer Daljit Sandhu have resigned with immediate effect. Both will receive settlement payments in lieu of notice and other contractual entitlements.
Chief financial officer Sam Dobbyn has taken over the management of the group’s operations.
The firm also announced that chairman William McKee intends to retire as a director at the company’s AGM in July. It plans to appoint Graham Warner, formerly finance director of JO Hambro Capital Management Group, as McKee’s replacement as non-executive chairman of the company.
In addition, chief risk officer Ravi Takhar will leave the company at the end of June. He will receive a settlement payment in lieu of notice and other contractual and statutory entitlements.
Urban Exposure said it expects to report later in June revenue of £11.1m and pretax profit of £0.2m for 2019, and net asset value of £133.1m, equating to 84p per share. The company had £22.8m of cash at the end of December.
In addition, the business confirmed it had retained a law firm to investigate a loan made to children’s education charity, Harris Federation to refurbish and fund the running costs of a nursery in south-east London.
The loan was given on the basis that it would be repaid from fund raising activities and staff contributions.
The investigation is to identify governance failures and the investigation is expected to complete later in June.
The firm said there was no evidence of any “deliberate wrong-doing by any person”.
Mr and Mrs Sandhu have agreed to make sure the loan is repaid in full before the end of the year. To secure this commitment a deposit into an escrow arrangement of 2.8m Urban Exposure shares owned by Mr and Mrs Sandhu, has been made. Urban Exposure can require the sale of the shares from escrow and use the proceeds of this to repay the company.
Urban Exposure has also agreed to pay £134,000 in legal fees Mr and Mrs Sandhu have incurred from taking advice relating to their employment by the company and the loan.
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