TIDMIMTK
RNS Number : 4934F
Imaginatik PLC
25 April 2014
Imaginatik Plc
("Imaginatik" or the "Company")
Proposed Issue of Equity and Notice of General Meeting
Imaginatik plc (AIM: IMTK.L), the world's first full service
innovation provider offering a range of technology products and
consultancy, is pleased to announce that, following a strong show
of support from existing and new investors, it has conditionally
raised GBP1.338m (before expenses) to provide additional working
capital to fund the development of the Group's business.
The Fundraising will be effected through the issue of
1,911,428,572 new Ordinary Shares with new and existing investors,
including certain of the Directors, in each case at the Issue
Price, being 0.07 pence per new Ordinary Share. The Issue Price
represents a premium of 12.0 per cent to the issue price per
Ordinary Share the last time the Company raised capital, a year
ago. The Board believes that, whilst small, this nevertheless
represents a significant indication of the increased confidence
which investors have in our Company, confidence which the Board
very much shares. This is borne out by the fact that each member of
the Board is participating in the Fundraising.
The Issue Price is equal to the closing mid-market price of 0.07
pence per Ordinary Share on 24 April 2014, the latest practicable
dealing day prior to the publication of this document. The New
Ordinary Shares will represent in aggregate 36.75 per cent. of the
Enlarged Share Capital.
Matt Cooper, Executive Chairman of Imaginatik, commented:
"In any business breaking new ground with relatively new
offerings, it takes time to gain real and sustainable traction and
the Board feels Imaginatik is making good progress. We have seen
growth in new customer wins, strong customer retention and a solid
increase in the sales pipeline over the past year. This confidence
means that each of the Board members has participated in the
fundraising and we are delighted that several of our largest
shareholders have similarly shown their support and belief in the
Company through investing. The funds raised last year have enabled
us to recruit high calibre individuals into the sales team and we
expect to see the benefits of this in the year ahead. These new
funds will enable us to recruit a new CEO to lead the Company
through this next phase of growth. We are confident we have a
sensible strategy to succeed in the emerging innovation
market."
Background to and reasons for the Fundraising
The market for the provision of innovation technology and
consulting services continues to develop well, with industry
analysts Forrester and Gartner now following and writing about the
sector. The Directors believe that the Company's repositioning
within the space over the last couple of years as a provider of a
range of innovation solutions combining both technology and
consulting rather than pure technology is a sensible strategy that
will benefit the Company in the long run. This repositioning has
removed the reliance on a single offering and has allowed the
Company to move away from selling to technologists with a limited
budget, to selling into more senior executives with a longer term
vision for how a sustained innovation competence can help benefit
their businesses.
In the last year the Company has increased both the size and
capability of the sales team in the US. The impact on the Company's
business of this new team is yet to be felt, but the sales pipeline
has grown substantially in the last year, from approximately $6m in
April 2013 to $10.8m in April 2014.
As the Company stated in its trading statement released on 14
April 2014, it continues to add new clients and its roster of blue
chip clients grows, adding 15 in the year to March 2014 in a
mixture of annual license contracts as well as consulting
engagements. The Company is witnessing its consulting revenues
becoming a more important part of the Company's overall revenue
mix, and the Company has added a series of additional consulting
offerings in the last 12 months, which are being well received by
its client base.
Client retention has been very good; 14 clients out of 16 whose
contracts were up for renewal in the year to 31 March 2014 chose to
re-contract with the Company, four of which entered into multi-year
contracts.
In any business breaking new ground with relatively new
offerings, it takes time to gain real and sustainable traction, but
the Board feels the Company has made good progress since the
beginning of the Company's last financial year in further
establishing and restructuring the sales team and adding further
service offerings. However, the business is still in need of cash
in order to continue its development and make progress towards
reaching that break-even point and becoming a self sustaining
business. The Company proposes to invest some of the proceeds of
the Fundraising in hiring a new CEO as referred to in the paragraph
below and on increasing the Company's marketing activities by
hiring additional personnel as and when the Board considers it is
prudent to do so.
It is the Board's intention to hire a full time CEO for the
business. With the assistance of a US based search firm which the
Company has engaged, that process is now underway, and the Board
expects to be in a position to advise shareholders on progress
later in the year. At the point that the Company secures the
services of a suitable candidate, Matt Cooper will become the
Non-Executive Chairman of the Company. Furthermore, David Gammon
has indicated that he intends stepping down as a non-executive
director of the Company upon completion of the Placing as he feels
that he has overseen and contributed to a key stage of the
Company's development. The Board thanks him hugely for his
strategic and wise counsel since the time of his appointment and
wishes him well for the future. At that point, Mr Charles will
assume the chairmanship of the audit committee in addition to that
of the remuneration committee.
The Directors have concluded that effecting the Company's
recapitalisation by way of the Fundraising is the most efficient
way to source the funds required. As has previously been the case,
the Directors did consider the possibility of effecting the
recapitalisation by way of an open offer to all existing
Shareholders, but considered that given (i) the considerably
greater expense to the Company involved in effecting an open offer,
(ii) the greater length of time it would take to effect an open
offer in contrast to the relatively swift timetable of the
Fundraising, and (iii) the Company had previously undertaken the
expense and time of seeking a recapitalisation by way of an open
offer in the past which did not generate a material uptake, it was
considered the Fundraising to be the preferable and most efficient
way to source the present funds required.
The Placing and Subscription
The Company has conditionally raised approximately GBP1.263m in
aggregate (before expenses) pursuant to the Placing and the
Subscription. The net proceeds of the Placing and the Subscription
receivable by the Company are estimated to be approximately
GBP1.19m.
Pursuant to the terms of the Placing Agreement, finnCap has
conditionally agreed, as agent for the Company, to use its
reasonable endeavours to procure subscribers for 861,428,572
Placing Shares with institutional and other investors at the Issue
Price. The Issue Price is equal to the closing mid-market price of
an Ordinary Share on 24 April 2014, being the last dealing day
prior to the announcement of the Placing. In addition, the Company
has procured subscribers for 942,857,143 Subscription Shares at the
Issue Price pursuant to the Subscription Agreements. The Placing
Shares and the Subscription Shares will represent in aggregate
36.75 per cent. of the Enlarged Share Capital. This is the first
time in the Company's history of issuing equity that it has agreed
to issue Ordinary Shares at a higher price per Ordinary Share than
the previous fundraise. The Directors believe this shows that the
Company is now in a much more confident and stable place than it
has been for some time.
The Placing has not been underwritten. The Placing Agreement and
Subscription Agreements are conditional, inter alia, upon:
1. the Resolution being duly passed at the General Meeting;
2. Admission becoming effective on or before 8.00 a.m. on 13 May
2014 or such later time and/or date as finnCap may agree in its
absolute discretion, but in any event by no later than 8.00 a.m. on
30 May 2014.
The Placing Shares will upon their issue rank pari passu in all
respects with the Existing Ordinary Shares including the right to
receive all dividends or other distributions declared, made or paid
by the Company following Admission.
Director's Future Subscription
In addition to the GBP1.263m conditionally raised with new and
existing investors pursuant to the Placing and Subscription, Simon
Charles, a non-executive director of the Company, has irrevocably
agreed to subscribe for 107,142,857 new Ordinary Shares at the
Issue Price on or before 31 October 2014. Accordingly, together
with the proceeds raised from the Placing and Subscription, the
Company has conditionally raised, in aggregate, GBP1.338m gross and
GBP1.265m net of estimated expenses. This subscription (and share
issue) is deferred due to Mr Charles having to implement
appropriate financial arrangements to enable full settlement of his
subscription obligations to occur and accordingly he will not be
issued any new Ordinary Shares until the Company is fully in funds
in respect of his subscription commitments. The Director's Future
Subscription is conditional upon, inter alia, the Resolution being
duly passed at the General Meeting.
Working Capital
The Directors believe that the net proceeds of the Fundraising
will be sufficient for the Company's present and anticipated
requirements for a period of not less than twelve months following
Admission.
Expected Admission Dates
Application will be made to the London Stock Exchange for the
New Ordinary Shares to be admitted to trading on AIM. It is
expected that Admission will occur at 8.00 a.m. on 13 May 2014.
Following Admission, the total number of shares in issue will be
4,908,980,456.
Application will be made to the London Stock Exchange for the
Director's Future Subscription Shares to be admitted to trading on
AIM before 31 October 2014.
Directors' participations in the Fundraising
David Gammon, Shawn Taylor and Matt Cooper have in aggregate
given commitments to subscribe in person or by a nominee, for
Subscription Shares as follows:
Director Number of Percentage Number of Number of Percentage
Existing of Existing Subscription Ordinary Shares of Enlarged
Ordinary Ordinary Shares to after Completion Share Capital
Shares (excluding Shares be acquired
interests
in options)
-------------- ------------------- ------------- -------------- ------------------ ---------------
Matt Cooper 311,821,407 10.0% 714,285,715 1,026,107,122 20.9%
-------------- ------------------- ------------- -------------- ------------------ ---------------
David Gammon 140,442,564 4.5% 85,714,286 226,156,850 4.6%
-------------- ------------------- ------------- -------------- ------------------ ---------------
Shawn Taylor 17,903,558 0.6% 7,142,857 25,046,415 0.5%
-------------- ------------------- ------------- -------------- ------------------ ---------------
As announced by the Company on 14 April 2014, Mr Cooper has
provided loans to the Company of an aggregate value of GBP96,666
and as part of the Subscription, it is agreed that he pay the
Company a net balance of GBP403,334 and capitalise the loan amount
currently outstanding so his aggregate participation under the
Subscription is an amount of GBP500,000, equating to 714,285,715
Subscription Shares at the Issue Price.
In addition, Simon Charles has committed to subscribe for the
Director's Future Subscription Shares. His interest in the Ordinary
Shares now and following the Director's Future Subscription is as
follows:
Director Number of Percentage Number of Number of Percentage
Existing of Existing Director's Ordinary of enlarged
Ordinary Ordinary Future Subscription Shares following share capital
Shares (excluding Shares Shares issue of following
interests Director's issue of
in options) Future Subscription Placing Shares
Shares and Director's
Future Subscription
Shares
---------- ------------------- ------------- --------------------- --------------------- ---------------------
Simon
Charles 59,511,771 1.9% 107,142,857 166,654,628 3.4%
---------- ------------------- ------------- --------------------- --------------------- ---------------------
Note: The above tables exclude the Directors' interests to
subscribe for new Ordinary Shares under options granted to them by
the Company.
Directors' Authority to issue and allot further Ordinary
Shares
In the light of the encouraging response to the Fundraising, the
Board considers that it would also be beneficial to both the
Company and Shareholders if the Company were authorised to retain
an element of flexibility to allot and issue (out with the
Fundraising), as a whole or in tranches, Ordinary Shares (and/or
rights to subscribe to them) up to the aggregate nominal value of
GBP613,623 (representing 20 per cent. of the Enlarged Share
Capital) to meet any unforeseen future working capital requirements
or opportunities which the Board believes would be earnings
enhancing for the Company.
Related Party Transactions
The participation of the Directors and the participation by
Hargreave Hale Limited, as a substantial shareholder in the
Company, in the Fundraising constitute related party transactions
for the purposes of Rule 13 of the AIM Rules (the "Related Party
Transactions"). There are no independent directors for the purposes
of providing the fair and reasonable statement required under Rule
13 of the AIM Rules. finnCap, the Company's nominated adviser,
considers that the terms of the Related Party Transactions are fair
and reasonable insofar as Shareholders are concerned.
Circular and Notice of General Meeting
A circular setting out the background to and further details of
the Fundraising will today be sent to Shareholders along with a
notice convening the General Meeting to be held at 10.30 a.m. on 12
May 2014 at the offices of Marriott Harrison LLP, 11 Staple Inn,
London WC1V 7QH, at which the Resolution will be proposed for the
purposes of implementing the Fundraising.
The Resolution is required to grant the Directors sufficient
authority under the Act to allot and issue the New Ordinary Shares
and the Director's Future Subscription Shares and additional new
Ordinary Shares (and rights to subscribe therefor) for a par value
of GBP613,623 representing 20 per cent. of the Enlarged Share
Capital.
Capitalised terms used in this announcement and not otherwise
defined shall have the same meaning given to them in the circular
dated 25 April 2014 ("Circular"). The Circular is available on the
Company's website: www.imaginatik.com.
For further information please contact:
Imaginatik plc Tel: 01329 243243
Matt Cooper, Executive Chairman / Shawn Taylor, CFO
finnCap Tel: 0207 220 0500
Charlotte Stranner/ Victoria Bates
Newgate Threadneedle Tel: 020 7653 9850
Caroline Forde / Hilary Millar
About Imaginatik
Imaginatik(R) is the world's first full-service innovation
provider. We have 16 years of experience building innovation into a
sustainable competence at some of the world's largest and most
respected companies. Through a mix of consulting and advisory,
hands-on innovation projects and program management, and our
award-winning enterprise software platform, we help clients develop
innovation capability into a permanent competitive advantage.
Imaginatik is the trusted partner of leading organisations
including Blue Cross Blue Shield, CSC, Cargill, The World Bank,
Mayo Clinic, The Chubb Group of Insurance Companies, HCA, Dow
Chemical and Goodyear.
Imaginatik is a public company whose shares are traded on the
AIM market of the London Stock Exchange (LSE:IMTK.L) and is a World
Economic Forum Technology Pioneer with offices in Boston, MA, and
Fareham, UK. For more information visit www.imaginatik.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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