CASE STUDY 4: Listed software company –
return of capital to shareholders and market re-rating
This financial trading software company listed
on the main market of the LSE at the height of
the “dotbomb” boom in 2000 and almost
immediately encountered difficulties with the
“plc” culture, and its own trading
ethos.
Some restructuring had already taken place under
new management, but public shareholders were disinterested
and staff de-motivated as stock options were underwater.
The market capitalisation was significantly below
the cash value of the company which had no debt.
Detailed financial models were produced to demonstrate
that a significant amount of cash could be distributed
to shareholders. The final form of this took the
style of a “scheme of arrangement”
which was coupled with a re-listing on AIM. When
announced, the stock was the highest rising on
the market and had the result of; significantly
improving real returns to shareholders; re-rating
the company in the eyes of the City; re-incentivising
staff through a new share option programme.
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