High costs prompt Culver Holdings to leave Exchange

Culver Holdings wants to delist from the London Stock Exchange because of the high cost of regulation.

“Being listed costs between £100,000 and £500,000 a year and that’s just the basics,” said John Biles, the company’s finance director. “The real problem is that any transaction under current legislation is incredibly expensive in terms of advisers’ fees.”

He said costs exceeded £500,000 when Culver disposed of its general insurance business last year – “and that is not in shareholders’ interest.”Culver retained its Lloyd’s broking business specialising in professional risk, aviation and commercial property.

The company’s ordinary shares, which plummeted 71.14% to 50.5p last Friday when it announced its plans, have been listed on the London Stock Exchange since 1991. The original core business was demerged to shareholders in 1997.

Culver said it had intended to use its ordinary shares as a currency for acquisitions, but that the market had rarely reflected the value of the company as perceived by its directors. When it did, there was little appetite by investors for an issue. As a result the issue of ordinary shares had not been a practical means of funding at any time in the past five years.

The company also dismissed an AIM (alternative investment market) listing as too expensive. Plus it said costs had increased in the second half of last year while income had gone down because of the poor economic climate.

The company’s statement warned that it would not receive full payment for Culver Insurance Brokers, which was sold to Protectagroup Acquisitions, a subsidiary of Cullum Capital Ventures, after the two companies entered into a conditional agreement.

“Contractually, the maximum deferred consideration which might be payable is £2m although the directors are not confident this or any sum will be payable,” the statement said.

The delisting will be discussed at the company’s annual general meeting on 21 April in Cardiff. It must be approved by at least 75% of shareholders present.

Steve Burrows, chief executive of the AIM-listed Cobra, said it was worrying that companies were increasingly thinking of delisting. “I understand that two-thirds of all the companies on AIM are considering it. This doesn’t make it a particularly healthy environment.”

But he added that Cobra had thought about delisting last year. “Delisting just hides you from the public eye – that is, you can stop your shares from being traded. But you have to adhere to AIM rules for 10 years.

“This is something we looked into six months ago, but delisting for us wasn’t attractive.”