Proposed Placings
September 01 2010 - 6:16AM
UK Regulatory
TIDMCYAN
RNS Number : 9620R
Cyan Holdings Plc
01 September 2010
Cyan Holdings plc
("Cyan" or "the Company")
Proposed Placings
Notice of General Meeting
Cyan Holdings Plc (AIM:CYAN.L), announces details of proposed placings of
257,333,333 ordinary shares at 0.75 pence per ordinary share ("Placings") by
Cenkos Securities to raise approximately GBP1.8 million after expenses and a
General Meeting ("GM"), to be held at 11.00 a.m. on 16 September 2010. It is
intended that the net proceeds from the Placings will be used for general
working capital requirements and will provide the Company with sufficient
resources to execute orders to generate meaningful revenues. First Columbus also
acted as placing agent. The Company has also entered into non-binding heads of
terms relating to the proposed issue of a convertible loan note totalling
GBP450,000 (the "Convertible Loan Note"). A document containing the notice of
the GM has been posted to all shareholders in the Company and is available to
view on the Company's website at: www.cyantechnology.com.
Background to and reasons for the Placings
Cyan has completed the transition from a fabless MCU manufacturer to a system
supplier which offers an integrated suite of software and hardware products
targeting the utility metering and street lighting sectors. These products can
be retrofitted to customers' existing products, thus enabling them to benefit
from wireless control, enhanced range and penetration within buildings using
Cyan's mesh networking solution. The Company has now reached the stage where its
products have been designed into those of its customers, thereby significantly
improving the prospects for material orders over the next twelve months.
The Directors believe that the growth of Cyan's target markets is driven by a
number of factors, including detection and minimisation of fraud and enforcement
of payment for utility providers, which can generate financial returns for end
customers far in excess of the cost of retrofitting Cyan wireless meter control
products. Similarly, the Directors believe that energy and maintenance cost
savings realised from individually monitoring, controlling and dimming street
lighting can generate significant financial savings far in excess of the cost of
retrofitting Cyan wireless lighting control products. The Directors expect this
functionality to become a default requirement as governments become aware of the
energy savings that can be realised from street lighting monitoring and control
via mesh networks.
Cyan's products can be adapted to have additional features such as meter tamper
alarms and lighting power consumption reports. Importantly, Cyan's system
solutions are designed for ease of use, which the Directors believe has been an
important factor in these products being integrated into customers' end
products.
The Directors understand that Cyan's customers have tested competitors' products
alongside those of Cyan and in these tests Cyan's products have operated
consistently well in locations where those of competitors have failed.
Demonstration of this has, the Directors believe, assisted the Company's
distributors greatly, thereby accelerating the pace of new business prospects.
The Directors believe that Cyan has a technological advantage that has been
achieved through significant investment in development and field trials. The
Company's mesh networking protocol has been developed to operate in the sub 1GHz
frequency bands which have good building penetration capability and has been
further enhanced to maximise range at low signal strengths and data rates. The
intellectual property is embedded across multiple products and the Directors
believe that duplication of this would require considerable time and expense
from a competitor. The Directors believe that Cyan's superior building
penetration and signal range provides an opportunity for the Company to become
widely and quickly adopted, as well as being difficult to displace.
The existing manufacturing capacity of the customers with which Cyan is
currently engaged in tenders is comfortably in excess of the volume required to
take Cyan into profitability and the purpose of the Placings is to provide the
Company with sufficient resources to execute these initial and follow on orders
and to generate meaningful revenues through fulfilling the orders into 2011 and
beyond. The Directors are excited by the level of opportunities that they are
seeing and recommend that Shareholders support the Resolutions to enable the
Placings.
Issue of convertible loan note
Cyan has entered into non-binding heads of terms with an institution for the
issue of the Convertible Loan Note. The issue of the Convertible Loan Note is
still subject to negotiation of final terms, documentation and appropriate board
and shareholder approvals. The proposed terms of the Convertible Loan Note are
as follows:
a) interest rate of 6 per cent. per annum;
b) loan term of five years;
c) certain fixed and floating security in respect of the loan notes;
d) ability to convert the loan into ordinary shares at a conversion
price of 1 penny per ordinary share, a 33 per cent. premium to the Placing
Price; and
e) if the loan is redeemed early, Cyan shall issue warrants over such
number of Ordinary Shares which would have been issued had the loan been
converted at a price of 1 penny per Ordinary Share, exercisable until the end of
the 5 year term.
Current trading and prospects
Cyan has developed new products specifically for the Indian Electricity Metering
market and for the Sodium and Xenon HID lighting markets and has several
customers with these embedded into their own products which have already been
submitted into multiple tenders, some of which are understood to be for 100k
units. These customers are established suppliers to the utilities and all have
existing run rate manufacturing capacity in excess of one million units per
annum. These customers have indicated to Cyan that significant costs are
incurred in each tender bid and that they expect to win at least a portion of
most of the tenders for which they bid. Specifically, the Company has signed an
MOU with a multinational electronics customer to integrate Cyan's products into
that customer's sodium ballast and the Directors expect this to develop into a
volume order during 2011.
With a product range that is now well developed and which is receiving increased
levels of commercial traction from its primary customers, the Directors believe
that the prospects for the Company for the remainder of 2010 and beyond are
promising. Given the number of prospective companies with which Cyan is actively
engaged and the fact that several customers are tendering for major projects
which, if successful, would result in significant orders in 2011, the Directors
are excited about Cyan's prospects and view the future with confidence.
Serious loss of capital
The value of the Company's net assets has reached a level that is less than half
of its called-up share capital. In such circumstances, the Directors are
required under section 656 of the Companies Act 2006 to convene a general
meeting of the Company for the purpose of considering whether any, and if so
what, steps should be taken to deal with the situation. This matter will be
considered at the GM. The steps which are recommended by the Directors are set
out in paragraph 2 above. If the steps are implemented, the Directors do not
consider that any additional action needs to be taken.
Details of the Placings
The Company intends to raise approximately GBP1.8 million, net of expenses,
through the issue of 257,333,333 new ordinary shares (the "Placing Shares") at
0.75 pence per ordinary share (the "Placing Price") pursuant to the Placings,
comprising of a VCT placing and a general placing.
The Placing Price represents a discount of approximately 9.1 per cent. to the
closing mid-market price of 0.825 pence per ordinary share as at 31 August 2010,
the latest practicable date prior to the announcement of the Placings. The
Placing Shares will, when issued, rank pari passu in all respects with the
Existing Ordinary Shares, including the right to receive dividends and other
distributions declared following Admission.
The Placing Shares will represent approximately 28.21 per cent. of the Company's
enlarged share capital.
The Placings are being made on a non pre-emptive basis as the time delay and
costs associated with a pre-emptive offer are considered by the Directors to be
excessive.
Application will be made by the Company for the Placing Shares to be admitted to
trading on AIM. Subject to completion of the Placings, it is expected that the
Placing Shares will be admitted to trading on AIM and that dealings will
commence at 8.00 a.m. on 17 September 2010 in respect of the Placing Shares.
The issue of the Placing Shares, is conditional, inter alia, upon:
(a) the approval of the Resolutions at the GM;
(b) the Placing Agreement becoming unconditional in all respects and not
having been terminated in accordance with its terms; and
(c) Admission,
in each case by no later than 8.00 a.m. on 17 September 2010 (or such time and
date as the Company and Cenkos Securities plc may agree, being not later than 1
October 2010).
Pursuant to the terms of the Placing Agreement, Cenkos Securities plc has
conditionally agreed to use its reasonable endeavours, as agent to the Company,
to place the Placing Shares at the Placing Price with certain institutional and
other investors. The above obligations are subject to certain conditions
including those listed above. The Placings are not underwritten.
The Placing Agreement contains warranties given by the Company with respect to
its business and certain matters connected with the Placings. In addition, the
Company has given certain indemnities to Cenkos Securities plc in connection
with the Placings and Cenkos Securities plc's performance of services in
relation to the Placings. Cenkos Securities plc is entitled to terminate the
Placing Agreement in specified circumstances.
Directors' Shareholdings
The beneficial and non-beneficial interests of the Directors in Ordinary Shares
(not including Ordinary Shares held by the Cyan Employee Benefit Trust) on the
date of this document and following the Placings are set out below:
+-------------------+------------+------------+-----------+-----------+
| | Existing | Following the |
| | | Placings |
+-------------------+-------------------------+-----------------------+
| | Number of | Existing | Number | Issued |
| | Ordinary | Ordinary | of | Ordinary |
| | | | Ordinary | |
+-------------------+------------+------------+-----------+-----------+
| Director | Shares | Share | Shares | Share |
| | | Capital | | Capital |
+-------------------+------------+------------+-----------+-----------+
| Kenneth Lamb | 8,500,000 | 1.30% | 8,500,000 | 0.92% |
+-------------------+------------+------------+-----------+-----------+
| Dr. John Read | 5,351,636 | 0.82% | 5,351,636 | 0.58% |
+-------------------+------------+------------+-----------+-----------+
| Simon Smith | 3,000,000 | 0.46% | 3,000,000 | 0.33% |
+-------------------+------------+------------+-----------+-----------+
The following ordinary shares held by the Cyan Employee Benefit Trust are
beneficially owned by the following Directors to the extent the share price
exceeds 2.5p per ordinary share:
Number of Ordinary
Director
Shares
Kenneth Lamb
30,000,000
Dr. John Read
1,000,000
The Directors have also agreed that, in the interests of retaining cash within
the Company, they will use a determined portion of their income from the Company
to purchase newly issued ordinary shares on a monthly basis on the 1st day of
each month, the number of which will be determined by the closing mid-market
share price of the ordinary shares on the trading day immediately prior to the
issue of the ordinary shares. The following Directors have agreed to use a
percentage of their income to acquire ordinary shares:
Director Percentage of Income
Monetary amount
Kenneth Lamb
50% GBP5,010.21 per month
Dr. John Read
100% GBP2.794.01 per month
Save as stated above, the Directors have no interest in the share capital of the
Company.
Enquiries:
Cyan Holdings plc www.cyantechnology.com
Kenn Lamb, CEO Tel: +44 (0)1954 234 400
Cenkos Securities plc
Stephen Keys / Adrian Hargrave Tel: +44 (0)20 7397 8900
First Columbus Investments LLP
Chris Crawford / John Nuttall Tel +44 (0)20 3002 2070
Media - Hansard Group
John Bick Tel: +44(0)20 7245 1100
This information is provided by RNS
The company news service from the London Stock Exchange
END
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