Danka ADS holders to receive higher payment in proposed members' voluntary liquidation

By Lisa Kerner

Charlotte, N.C., Feb. 11 - Danka Business Systems plc said its participating shareholders agreed to an increase in the amount payable to holders of Danka American Depositary Shares to a cash payment equal to $0.12 per ADS, or $0.03 per ordinary share.

The payment will come from proceeds of the proposed members' voluntary liquidation.

Danka shareholders will be asked to approve the voluntary liquidation to distribute the net proceeds from the June 2008 sale of Danka Office Imaging Co. to Konica Minolta Business Solutions U.S.A., Inc. at an extraordinary general meeting on Feb. 19, Danka said.

Some holders of Danka ADSs, including DCML LLC and Ironwood Investment Management, LLC, agreed to vote their ADSs in favor of the members' voluntary liquidation and related resolutions at the meeting.

The committed holders hold the right to vote approximately 25,558,409 ADSs representing 102,233,636 ordinary shares, or 27% of the voting rights exercisable at the meeting, Danka said.

Cypress Merchant Banking Partners II LP and some of its affiliates, which collectively hold participating shares representing approximately 29.9% of the voting rights, also agreed to vote in favor of the liquidation and proposals.

Danka said that if shareholders do not approve the members' voluntary liquidation, there is no guarantee that any future alternative chosen by the board of directors will result in any return to ADS holders.

Holders of participating shares may take action, such as seeking an involuntary winding up of Danka, if the members' voluntary liquidation is not approved, making it unlikely that ADS holders would receive any distribution.

It was previously reported that of the $240 million Konica paid for Danka's imaging business, $10 million was held back by Konica for Danka's purchase price adjustments. An additional $25 million is being held in escrow for up to four years to satisfy any claims made by Konica under a stock purchase agreement.

Danka said $146 million of the sale proceeds were used to repay Danka's credit facilities provided by General Electric Capital Corp. and to pay some change-of-control and severance obligations as well as fees and expenses associated with the sale transaction.

Net proceeds to be distributed were $40 million but were reduced to $37.4 million due to Danka's ongoing expenses, according to a prior news release.

St. Petersburg, Fla.-based Danka Business Systems, prior to the sale of Danka Office Imaging, provided office imaging equipment, software, support and related services and supplies in the United States.

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