TIDMCNS
RNS Number : 6055X
Corero Network Security PLC
17 February 2012
THIS ANNOUNCEMENT IS RESTRICTED AND IT IS NOT FOR RELEASE,
PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, JAPAN, SOUTH
AFRICA, THE REPUBLIC OF IRELAND OR AUSTRALIA OR ANY OTHER STATE OR
JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION
WOULD BE UNLAWFUL.
17 February 2012
Corero Network Security plc
("Corero" or the "Company")
Placing to raise GBP4.56 million
Corero Network Security plc (AIM: CNS), the network security and
business software provider, is pleased to announce a conditional
placing of up to 10,615,694 new Ordinary Shares at a price of 43
pence per share to raise GBP4.56 million (before expenses).
Highlights:
-- GBP4.56 million to be raised by way of a conditional Placing,
which was over-subscribed, to certain institutional and other
investors at a price of 43 pence per Ordinary Share (representing a
discount of 2.3 per cent. against the closing mid-market price on
16 February 2012)
-- Aggregate participation in the Placing by Directors and management of GBP1.4 million
-- Net proceeds of the Placing will be deployed to accelerate the growth plans of the Company
-- Placing subject to approval of Shareholders at a General Meeting on 5 March 2012
-- Admission expected to be effective from 6 March 2012
The proceeds of the Placing will enable the Company to execute
its organic growth plans for 2012 and 2013, by investing in the
sales and marketing function of the Corero Network Security
division, in order to increase brand awareness and deepen existing
channel relationships. The Placing will also fund investment in the
network security division's product development team, thereby
enabling the Company to achieve its planned product roadmap.
The Placing has attracted both new and existing institutional
investors. The Company, in conjunction with finnCap, has
conditionally placed all of Loudwater Trust Limited's interest in
the Company (comprising 4.4 million shares) to enable excess
institutional demand in the Placing to be met. Loudwater Trust
Limited was a vendor to Corero of the Top Layer Networks (since
renamed to Corero Network Security) business acquired by the
Company in March 2011.
This Placing is conditional on, inter alia, the passing of the
Resolution to be proposed at the General Meeting.
Jens Montanana, Chairman of Corero, commented: "This placing
will allow Corero to further penetrate the network security market
and ensure that it is well placed to fully exploit opportunities in
network security, an area which is becoming ever more relevant to
businesses in light of increasing cyber attacks.
"The Board was very encouraged by the level of institutional
interest in this fundraising and thank shareholders for their
continued support of the Company.
"Corero has the technology to offer viable and proven solutions
to enterprises. By using these funds to invest in marketing and
sales personnel and further invest in product development, the
Company will be able make this technology available to a greater
number of potential customers."
Enquiries:
Corero Network Security
plc
Andrew Miller, Chief Operating Tel: 01923 897 333
Officer
finnCap
Sarah Wharry / Henrik Persson Tel: 020 7220 0500
(Corporate Finance)
Stephen Norcross (Corporate
Broking)
Walbrook PR Tel: 020 7933 8780
Bob Huxford (Media Relations) Mob: 07747 635 908 or bob.huxford@walbrookpr.com
Fiona Henson (Media Relations) Mob: 07886 335 992 or fiona.henson@walbrookpr.com
Paul Cornelius (Investor Mob: 07827 879 460 or paul.cornelius@walbrookir.com
Relations)
A circular to Shareholders ("Circular") setting out full details
of the Placing and convening the General Meeting will today be
posted to Shareholders. A full copy of the Circular will soon be
available on the Company's website: www.coreroplc.com.
All defined terms are set out in the Appendix to this
announcement.
About Corero Network Security plc
Corero Network Security plc consists of two businesses: Corero
Network Security and Corero Business Systems.
Corero Network Security is an international network security
company and the leading provider of Distributed Denial of Service
(DDoS) defence and Intrusion Prevention System (IPS) solutions.
Corero's products and services provide comprehensive, integrated,
high-performance protection against constantly evolving
network-borne cyber threats. Customers include enterprises, service
providers and government organisations worldwide. Corero's
appliance-based solutions are highly adaptive and preemptively
respond to modern cyber attacks, known and unknown, protecting
critical information and online assets. Corero's products have
superior performance, are highly scalable, and feature the lowest
latency and best reliability in the industry.
Corero Business Systems is a leading provider of powerful and
dynamic modular accounting, human resources, payroll and management
information software to the schools (including academies) and
further education sectors in the UK and internationally.
The following text has been extracted from the Circular which
has been sent to Shareholders today:
1. Introduction
The Company today announced that it proposes to raise up to
GBP4.56 million (before expenses) by way of a placing of up to
10,615,694 new Ordinary Shares with certain institutional and other
investors at a price of 43p per Placing Share. The Placing is not
being underwritten. Further details of and terms of the Placing are
described below.
This Placing is conditional on, inter alia, the passing of the
Resolution to be proposed at the General Meeting.
The Company is seeking the authority of Shareholders to: (i)
provide the Directors with authority to allot and issue the Placing
Shares; and (ii) disapply pre-emption rights in relation to the
issue of the Placing Shares. Accordingly, the Company is convening
the General Meeting. The Resolution to be proposed at the General
Meeting is set out in the Notice of General Meeting in the circular
to Shareholders.
The purpose of this letter is to outline the reasons for the
Placing and explain why the Board considers the Resolution to be in
the best interests of the Company and the Shareholders as a whole
and why the Directors recommend that you vote in favour of the
Resolution to be proposed at the General Meeting as they intend to
do in respect of the 13,650,190 Ordinary Shares held by them
(representing 28.6 per cent. of the Existing Shares).
2. Background to and Reasons for the Placing
The Company's two businesses, Corero Network Security and Corero
Business Systems, performed strongly in their respective markets in
the year ended 31 December 2011 and have strong sales pipelines of
opportunities going into 2012.
Corero Network Security
The Company took the first step toward implementing its buy and
build strategy in the network security market on 2 March 2011, by
acquiring the (since renamed) Top Layer Networks, Inc. to create
Corero Network Security.
As announced in the Company's trading update of 6 February 2012,
significant progress has been made within the Corero Network
Security business since its acquisition. The business' management
team has been reshaped, investment has been made into product
development (notably with the release of a new product to protect
against the increasing threat from distributed denial-of-service
("DDoS") attacks), the US sales organisation has been reshaped, and
an international sales team has been recruited.
The network security market is forecast to grow strongly in the
period to 2014 with Gartner, Inc., (a leading information
technology research and advisory company), forecasting cumulative
annual growth of over 8 per cent. This growth is fuelled by
escalating real cyber crime and cyber war threats, the costs
associated with cyber attacks, and growing regulatory compliance
mandates and business continuity requirements.
The Board remains confident of the strength of its strategy in
this sector; offering technology solutions to targeted mid to large
enterprise customers in its core vertical markets as well as
telecommunications and hosting service providers, whilst actively
seeking to grow 'mind share', that is to say, brand and customer
awareness of the sector and the solutions offered by Corero Network
Security.
The Board believes that the timing is now right to seek to
capitalise on opportunities in the network security market by
investing in the sales and marketing functions of the business to
gain end-user customer and channel partner awareness, and investing
in its product development capabilities.
Corero Business Systems
The Corero Business Systems division performed strongly in the
year to 31 December 2011. The business won contracts from 192
academies (2010: 70), signed partnerships and agreements with Serco
Learning, the Schools Partnership Trust and Kemnal Academies Trust,
as well as recruiting to strengthen its management and sales
functions. In addition, the business launched Resource Financials
v7, its next generation software solution, which the Board believes
will provide the division with the platform to explore new market
opportunities during the next 12 to 18 months.
The Board believe Corero Business Systems remains well
positioned to deliver organic growth, and as such, will make such
further investments where necessary to drive growth, enhance the
service offering and increase market share.
3. Use of Proceeds
The proceeds of the Placing will enable the Company to execute
its organic growth plans for 2012 and 2013, specifically, by
investing in the sales and marketing function of Corero Network
Security in order to increase brand awareness and deepen existing
channel relationships, and by investing in that business' product
development team in order to achieve the planned product
roadmap.
Since its acquisition, headcount at Corero Network Security has
been increased from 51 to 73 as at 31 December 2011. The Board
believe that increasing this headcount, particularly across
market-facing and product development departments, to a total of
over 100 persons by 31 December 2012, alongside increased
expenditure on other marketing initiatives, will accelerate the
business' growth prospects and enable it to capitalise on the
opportunities that present themselves at this time in this exciting
market.
4. Current trading and prospects
On 6 February 2012, the Company announced a trading update for
the year ended 31 December 2011. A copy of that trading update is
available on the Company's website at www.coreroplc.com. There has
been no change in the outlook for the Group since the trading
update announcement.
5. Details of the Placing
The Company has entered into the Placing Agreement with finnCap
and finnCap has agreed (as the Company's agent) to use reasonable
endeavours to procure placees for the Placing Shares at the Placing
Price. The Placing Price represents a discount of approximately 2.3
per cent. from the closing mid-market price on 16 February 2012,
being the latest practicable date prior to this announcement.
The Placing is conditional on, inter alia:
-- the passing (without amendment) of the Resolution; and
-- Admission becoming effective by no later than 6 March 2012
(or such time and date as the Company and finnCap may agree, being
not later than 23 March 2012).
The Placing is not being underwritten. The Placing Shares will
be issued credited as fully paid and will rank pari passu in all
respects with the Existing Shares, including the right to receive
all future distributions, declared, paid or made in respect of the
Ordinary Shares from the date of Admission. The Placing Shares
represent approximately 18.2 per cent. of the Enlarged Issued Share
Capital.
The Placing Agreement contains customary warranties given by the
Company to finnCap as to matters relating to the Group and its
business and a customary indemnity given by the Company to finnCap
in respect of liabilities arising out of or in connection with the
Placing. finnCap is entitled to terminate the Placing Agreement in
certain circumstances prior to Admission, including, inter alia,in
circumstances where any of the warranties are found not to be true
or accurate or were misleading in any material respect or on the
occurrence of certain force majeure events.
Application will be made for the Placing Shares to be admitted
to trading on AIM. It is expected that Admission will become
effective and dealings in the new Ordinary Shares will commence on
6 March 2012.
It is expected that CREST accounts of the placees who hold their
Ordinary Shares in CREST will be credited with their Placing Shares
and Sale Shares on 6 March 2012. In the case of placees holding
Ordinary Shares in certificated form it is expected that
certificates will be dispatched by 23 March 2012.
6. The Selling Shareholder's Agreement and waiver of the Selling Shareholder lock in
In accordance with the Selling Shareholder Agreement, finnCap
has agreed (as the Selling Shareholder's agent) to use reasonable
endeavours to procure placees for the Sale Shares at the Placing
Price. The placing of the Sale Shares is conditional on Admission.
The Selling Shareholder Agreement will automatically terminate if
the Placing Agreement terminates. The Placing Agreement is not
conditional on the Selling Shareholder Agreement.
On 7 February 2011, the Company, finnCap, Loudwater Trust
Limited ("Loudwater"), CrossHill Debt II, L.P. ("CrossHill Debt")
and CrossHill Georgetown Capital, L.P. ("CrossHill Georgetown")
(Loudwater, CrossHill Debt and CrossHill Georgetown together the
"Covenantors") entered into a lock in deed ("Lock In") pursuant to
which each of the Covenantors agreed, inter alia, that, for a
period of 12 months from 2 March 2011, it would not dispose of any
interest in all or any Ordinary Shares which were issued to them on
or around 2 March 2011.
The entering into of the Selling Shareholder Agreement by the
Selling Shareholder on or about the date of this announcement would
constitute a breach of the terms of the Lock In. However, as the
Lock In will expire on 2 March 2012 (prior to the expected date of
Admission on 6 March 2012), the Company and finnCap have agreed to
waive their rights in respect of this breach of the Lock In
provided that the placing of the Sale Shares by finnCap occurs and
completes at the same time as the placing of the Placing Shares in
accordance with the terms of the Placing Agreement. Under the terms
of the Selling Shareholder Agreement, the Selling Shareholder has
agreed to sell all (and not part only) of the Sale Shares and, if
all of the Sale Shares are successfully placed and sold, the
Selling Shareholder will no longer be a Shareholder of the
Company.
7. Directors' Shareholdings
It is proposed that Jens Montanana, Andrew Miller, and Richard
Last, each a director of the Company, will participate in the
Placing. The interests of the Directors immediately following
Admission will be as follows:
Director Number of Number of Resulting Resulting
Ordinary Shares Placing Shares number of holding as
held as at subscribed Ordinary Shares a percentage
the date of for in the held immediately of the Enlarged
this announcement Placing following Issued Share
Admission Capital
Jens Montanana* 12,828,571 2,965,116 15,793,687 27.1
Andrew Miller 600,000 23,225 623,225 1.1
Richard Last 221,619 178,381 400,000 0.7
Edward Forwood - - - -
* of which 8,971,429 Ordinary Shares are held in the name of JPM
International Limited, which is wholly owned by Jens Montanana.
In addition, it is proposed that Andre Stewart (President of
International Sales of Corero Network Security), who holds
5,638,000 Ordinary Shares (all of which are held in the name of BFG
Investments Group Limited, a company which is wholly owned by Andre
Stewart) at the date of this announcement, will subscribe for
93,023 new Ordinary Shares in the Placing, resulting in a holding
of 5,731,023 Ordinary Shares after Admission. This holding
represents 9.9 per cent. of the Enlarged Issued Share Capital.
8. Related Party Transactions
The participation in the Placing by Jens Montanana, Andrew
Miller and Richard Last, as directors of the Company, and Andre
Stewart, as a substantial shareholder in the Company, constitute
related party transactions pursuant to the AIM Rules. The
Independent Director considers, having consulted with finnCap, that
the participation in the Placing by these individuals, as outlined
in paragraph 6 above, is fair and reasonable insofar as the
Shareholders are concerned.
9. General Meeting
A notice convening the General Meeting, to be held at the
offices of finnCap at 60 New Broad Street, London EC2M 1JJ at 10.00
a.m. on 5 March 2012 is set out at the end of this announcement at
which the following resolution will be proposed as a special
resolution in order:
(a) to authorise the Directors, pursuant to section 551 of the
Act, to allot Ordinary Shares up to a maximum aggregate nominal
value of GBP106,156.94 pursuant to the Placing, which will be in
addition to all existing authorities under section 551 of the Act;
and
(b) to disapply the pre emption rights conferred by the Act in
connection with the allotment of up to 10,615,694 Placing Shares
pursuant to the Placing which will be in addition to the existing
authority.
Pursuant to resolutions passed at the last annual general
meeting of the Company on 24 May 2011, the Directors currently have
authority to allot up to 15,857,905 Ordinary Shares, representing
approximately 27.2 per cent. of the Enlarged Issued Share Capital,
of which 7,136,058 Ordinary Shares are capable of being allotted on
a non pre-emptive basis.
10. Action to be taken
Shareholders will find a Form of Proxy enclosed with the
circular to Shareholders, posted to them today, for use at the
General Meeting. Whether or not you intend to be present at the
General Meeting, you are requested to complete and return the Form
of Proxy in accordance with the instructions printed thereon as
soon as possible. To be valid, completed Forms of Proxy must be
received by the Company's Registrars, Capita Registrars, The
Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU not later than
10.00 a.m. on 1 March 2012. Completion of the Form of Proxy will
not preclude you from attending the meeting and voting in person if
you so wish.
11. Recommendation
The Directors consider the Placing to be in the best interests
of the Company and its Shareholders as a whole. Accordingly, the
Directors recommend that you vote in favour of the Resolution to be
proposed at the General Meeting, as they intend to do in respect of
their own holdings of Ordinary Shares, totalling 13,650,190
Ordinary Shares, being approximately 28.6 per cent of the Existing
Shares.
PLACING STATISTICS
Number of Existing Shares 47,713,718
Number of Placing Shares to be issued pursuant to the Placing*
10,615,694
Number of Ordinary Shares in issue immediately following
Admission* 58,329,412
Placing Price in respect of the Placing Shares 43p
Estimated net proceeds of the Placing receivable by the Company*
GBP4.3 million
Number of Placing Shares as a percentage of the Enlarged Issued
Share Capital 18.2 per cent.
Market capitalisation of the Company at Admission at the Placing
Price* GBP25.1 million
* Assumes no further Ordinary Shares are issued following the
date of this announcement and prior to completion of the Placing
and assumes that the Placing is fully subscribed.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Latest time and date for receipt of Forms of Proxy for the 10.00
a.m. on 1 March 2012 General Meeting
Date and time of General Meeting 10.00 a.m. on 5 March 2012
Admission and commencement of dealings in Placing Shares 08.00
a.m. on 6 March 2012
CREST accounts credited with Placing Shares and Sale Shares 6
March 2012 (CREST shareholders only)
Despatch of definitive share certificates for Placing Shares and
Sale Shares By 23 March 2012 (non-CREST shareholders only)
Each of the times and dates in the above timetable is subject to
change. If any of the above times and/or dates change, the revised
times and/or dates will be notified to holders of Ordinary Shares
by announcement on a Regulatory Information Service.
All of the above times refer to London time unless otherwise
stated.
Admission and dealings in the Placing Shares are conditional on
the passing of the Resolution at the General Meeting.
APPENDIX
DEFINITIONS
The following definitions apply throughout this announcement
unless the context requires otherwise:
'Act' the Companies Act 2006
'Admission' the admission of the Placing Shares to trading on
AIM becoming effective in accordance with the AIM Rules
'AIM' the AIM market operated by the London Stock Exchange
'AIM Rules' the AIM Rules for Companies published by the London
Stock
Exchange from time to time
'Board' or 'Directors' the board of directors of the Company
from time to time
'Business Day' a day (other than a Saturday or Sunday) when
banks are usually open for business in London
'certificated' or the description of a share or security which
is not in
'in certificated form' uncertificated form (that is, not in CREST)
'Company' Corero Network Security plc, a company incorporated in
England and Wales with registered number 02662978
'Corero Business Systems' Corero Business Systems Limited, a
Subsidiary of the Company
'Corero Network Security' Corero Network Systems, Inc.
(previously Top Layer Networks, Inc.), a Subsidiary of the
Company
'CREST' the relevant systems for the paperless settlement of
trades in securities and the holding of uncertificated securities
operated by Euroclear UK & Ireland Limited in accordance with
the CREST Regulations
'CREST Regulations' the Uncertificated Securities Regulations
2001 (SI 2001 No. 3755), including (i) any enactment or subordinate
legislation which amends or supersedes those regulations and (ii)
any applicable rules made under those regulations for the time
being in force
'Enlarged Issued Share Capital' the issued ordinary share
capital of the Company as it will be immediately following the
Placing (assuming no further Ordinary Shares are issued following
the date of this announcement and prior to completion of the
Placing and that the Placing is fully subscribed)
'Existing Shares' the 47,713,718 Ordinary Shares in issue at the
date of this
announcement, all of which are admitted to trading on AIM
'finnCap' finnCap Ltd, the Company's nominated adviser and
broker which is incorporated in England and Wales with the
registered number 06198898
'Form of Proxy' the form of proxy for use by Shareholders in
connection with the General Meeting
'FSA' the UK Financial Services Authority
'General Meeting' the general meeting of the Company convened
for 10.00 a.m. on 5 March 2012 at which the Resolution will be
proposed
'Group' the Company and its Subsidiaries
'IFRS' International Financial Reporting Standards
'Independent Director' Edward Forwood, being the only director
of the Company who is not participating in the Placing
'London Stock Exchange' London Stock Exchange plc
'Notice of General Meeting' the notice of General Meeting
'Ordinary Shares' ordinary shares of 1 pence each in the capital
of the Company
'Placing' the placing to certain institutional and other
investors of the Placing Shares at the Placing Price pursuant to
the Placing Agreement
'Placing Agreement' the conditional agreement, dated 17 February
2012, between the Company and finnCap relating to the Placing
'Placing Price' 43 pence per Placing Share
'Placing Shares' up to 10,615,694 new Ordinary Shares to be
issued pursuant to the Placing
'Prospectus Rules' the Prospectus Rules published by the
Financial Services Authority
'Resolution' the resolution to be proposed at the General
Meeting and set out in the Notice of General Meeting
'Sale Shares' up to 4,399,891 existing Ordinary Shares to be
sold by the Selling Shareholder pursuant to the Selling Shareholder
Agreement
'Selling Shareholder' Loudwater Trust Limited
'Selling Shareholder Agreement' the conditional agreement, dated
17 February 2012, between the Selling Shareholder and finnCap
relating to the Sale Shares
'Shareholder' a holder of Existing Shares
'Subsidiary' has the meaning given to it in section 1159 of the
Companies Act 2006
'UK' and 'United Kingdom' the United Kingdom of Great Britain and Northern Ireland
'US' or 'United States' the United States of America, its
territories and possessions, any state of the United States of
America, the District of Columbia and all other areas subject to
its jurisdiction
This information is provided by RNS
The company news service from the London Stock Exchange
END
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