Parsley Box Group has announced the proposed cancellation of admission of its ordinary shares to trading on the Alternative Investment Market (AIM) of the London Stock Exchange.
The Edinburgh-based ready meal business plans to re-register as a private limited company and will adopt new articles of association.
Further to its announcement of 25 October, the board has assessed the various potential sources of capital available to fund medium term growth plans, evaluating the benefits and drawbacks of being listed.
"As a result of this review, the directors have concluded that the cancellation and re-registration are in the best interests of the company and its shareholders as a whole," read a stock exchange update.
The note goes on to explain that an equity fundraise through the public markets would not necessarily be available to the company in the near or medium term at an appropriate valuation.
"There has been limited liquidity in the shares for some time and, consequently, the admission of the shares to trading on AIM does not necessarily offer investors the opportunity to trade in meaningful volumes or with frequency within an active market.
"With low trading volumes, the company's share price can move up or down significantly following trades of small volumes of shares - i the opinion of the directors, the adverse share price performance is detrimental to the perception of the group amongst customers, suppliers and other partners, which, in turn, has the potential to negatively impact its product development, staff morale and industry reputation."
The directors added that the "considerable management time, cost and the legal and regulatory burden associated with maintaining the company's admission to trading on AIM" is disproportionate to the benefits.
Given the lower costs associated with private limited company status, it is estimated that the cancellation and re-registration will materially reduce recurring administrative and adviser costs by approximately £400,000 per annum.
"The directors also believe that the company's current public market valuation does not reflect the underlying potential of the business with the result that growth prospects are more readily accessible and managed in a private market environment," the statement explained, adding that due to the limited liquidity in shares and the company's "modest market capitalisation", continuing admission no longer enables shares to be used to effect strategic acquisitions.
To be passed, the resolution requires the approval of not less than 75% of the votes cast by shareholders at the forthcoming general meeting.
The board understands that MoveFresh, a company that Kevin Dorren is a director of and majority shareholder in - and exercises significant control over - intends to purchase ordinary shares in the market until such point that it holds those comprising no more than 29.99% of its capital.
Should the resolutions be approved by shareholders, Parsley Box will implement a matched bargain facility which would facilitate shareholders buying and selling shares on a matched bargain basis following cancellation.
The general meeting will be held at the offices of Dickson Minto on Charlotte Square, Edinburgh on 14 December.
The company has received irrevocable undertakings from each of the directors and their connected parties to vote, or procure votes, in favour of the resolutions representing, in aggregate, 25,971 shares - representing approximately 35.8% of issued share capital.
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