TIDMCYAN
RNS Number : 0846U
Cyan Holdings Plc
15 December 2011
15 December 2011
Cyan Holdings plc
("Cyan" or "the Company")
Proposed Placings
Notice of General Meeting
Cyan Holdings Plc (AIM:CYAN.L), the integrated system design
company delivering mesh based flexible wireless solutions for
lighting control, utility metering and industrial telemetry
announces raising, subject to certain conditions and shareholder
approval, approximately GBP1.7 million before expenses, by way of
two share placings ("Placings") pursuant to which 420,200,000 New
Ordinary Shares will be issued at 0.4 pence each. The Placings were
managed by Cenkos Securities plc and XCAP Securities plc as joint
brokers to the Company. It is intended that the net proceeds from
the Placings will be used for general working capital requirements
and other development work as set out below. In addition, Placees
have been granted warrants ("Warrants") to subscribe for up to a
further 420,200,000 New Ordinary Shares at 0.6 pence per New
Ordinary Share within six months of Admission. A General Meeting
("GM") to approve the necessary resolutions has been convened for
2.00 p.m. on 5 January 2012 and a circular containing the notice of
the GM (the "Circular") has been posted to all shareholders in the
Company and is available to view on the Company's website at:
www.cyantechnology.com.
Definitions in this announcement are the same as those in the
Circular, unless otherwise stated.
Background to and reasons for the Placings
As recent announcements demonstrate, Cyan has now established a
foothold in the burgeoning Indian smart metering market. The board
is delighted with progress in displacing Zigbee as the likely
preferred solution in smart metering through repeated practical
demonstration of the robust range and functionality of Cyan's mesh
networking technology. Interoperability is the next most critical
requirement, any one utility must be able to purchase meters from a
selection of suppliers. CyLec has interoperability as a core
feature and can be integrated into existing meter designs without
requiring disclosure of confidential or proprietary information.
Current wireless meter installations utilise handheld units
permitting meter reading without entering a property. An overnight
transition to a remote meter reading methodology is not practical.
CyLec has to support both handheld and remote meter reading and
CyLec will have to support a rollout to convert installed meters to
remote meter reading, ideally 'over the air' so visits are not
required. The primary benefit to utilities of smart metering will
be reduction of losses through transmission and theft, but demand
control is an increasingly important requirement. These benefits
must be tightly integrated into the billing and meter management
systems currently used by the utilities.
Very few of these features were in place at the beginning of
2011. The exact requirement was not fully understood; the required
partners had not been identified; Zigbee appeared poised to be the
preferred solution; interoperation using CyLec had not been
demonstrated; utilities had not seen or realised the possibility
that Live Tamper Alarms, Over The Air Upgrade, Remote Switch Off,
Load Balancing, Demand Control and Pre-Pay metering were available
for the next phase of installation and did not include these in
tender specifications.
All of the above has now been changed such that Cyan, together
with its partners, now has the most complete and sophisticated
smart metering solution for the Indian market. It is practical,
robust, easy to install and was recently demonstrated to a wide
audience that expressed surprise, plaudits and who are now
enthusiastically embracing Cyan's solution.
Cyan's engineers were already employed developing Lighting
Products and supporting Chinese customers. They worked longer
hours, but to get to where the Company is now in the Indian
metering market, with new tenders reflecting the CyLec features,
interoperability demonstrated, a working installation demonstrated
in India with MDMS partners has required additional investment, and
orders have been delayed while tender specifications have
settled.
Without these Placings and the further funds that can be
received from the exercise of some of the Warrants, the Directors
believe that the Company would run out of funds prior to being able
to take advantage of these opportunities. This has been exacerbated
by the need to fund the incremental investment in developing
metering products plus the cost of 'on the ground' time for members
of the Cyan team with prospective customers in India. Therefore,
shareholders are requested to vote in favour of the resolutions in
order to safeguard their investment and to allow the Company to
demonstrate a suitable level of financial strength to its partners.
In order to ensure that the Placings give the Company the maximum
headroom, the Board is considering the most appropriate Board
structure for the Company on an ongoing basis. Additionally, should
the Company succeed in completing pending and further orders, the
Board expects the Warrants will permit the Company to receive
incremental resources for working capital to fund a significant
increase in stock of finished modules for these.
The Directors believe that Cyan remains in an outstanding
position to secure substantial revenues from a huge market, and to
a large extent the Placings represent the cost to the Company of
securing that position.
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 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 the Circular and in particular in the paragraph below. If
the Placings are completed, the Directors do not consider that any
additional action needs to be taken.
Capital Reorganisation
In order to partly address the fact that the Company's net
assets has reached a level that is less than half of its called-up
share capital, in addition to considering what steps should be
taken at the GM, it is proposed to sub-divide and convert each
unissued and issued existing ordinary share of 0.2 pence into one
new ordinary share of 0.01 pence ("New Ordinary Shares") and one
deferred share of 0.19 pence (the "Deferred Shares") (together the
"Capital Reorganisation"). The rights attaching to the New Ordinary
Shares and the Deferred Shares are set out in the New Articles.
Essentially, the passing of the resolution in relation to the New
Articles would change the par value of the ordinary share capital
of the Company to 0.01 pence per Ordinary Share.
The Deferred Shares created will be effectively valueless as
they will not carry any rights to vote or dividend rights. In
addition, holders of Deferred Shares will only be entitled to a
payment on a return of capital or on a winding up of the Company
after each of the holders of New Ordinary Shares have received a
payment of GBP10,000,000 on each such share. The Deferred Shares
will not be listed or traded on AIM and will not be transferable
without the prior written consent of the Board. No share
certificates will be issued following the Capital Reorganisation
for the Deferred Shares. The Board may further appoint any person
to act on behalf of all the holders of the Deferred Shares to
procure the transfer all such shares back to the Company (or its
nominee) for an aggregate consideration of 1 penny.
It is not intended to issue new share certificates to the
holders of the New Ordinary Shares following the Capital
Reorganisation. Existing share certificate(s) will remain valid for
the same number of shares but with a different par value of 0.01
pence.
In summary, the practical effect of the Capital Reorganisation,
if implemented, will be that each Shareholder will receive the same
number of New Ordinary Shares as they hold in Existing Ordinary
Shares, without diminution in rights (subject to the provisions of
the New Articles).
The creation of the Deferred Shares requires amendment to the
Existing Articles. As the Existing Articles were adopted prior to
October 2009, they contain certain transitional provisions which
require updating. It is therefore appropriate for the Company to
adopt a complete new set of articles of association. A summary of
the New Articles and the repurchase of the Deferred Shares is set
out in the Circular.
Details of the Placings
The New Ordinary Shares
The Company intends to raise approximately GBP1.7 million,
before expenses, through the issue of 420,200,000 New Ordinary
Shares at the Placing Price pursuant to the Placings.
The Placing Price represents a discount of approximately 45.2
per cent. to the closing mid-market price of 0.73 pence per
Ordinary Share as at 14 December 2011, 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 26.1 per cent.
of the 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 6
January 2012 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 to be held the
Stanley Library, Girton College, Cambridge, CB3 0JG at 2.00 p.m. on
5 January 2012;
(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 occurring no later than 8.00 a.m. on 6 January 2012
(or such time and date as the Company, Cenkos and XCAP may agree,
being not later than 6 February 2012).
Pursuant to the terms of the Placing Agreement, each of Cenkos
and XCAP have 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 being underwritten by
Cenkos and XCAP.
The Placing Agreement contains customary 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 and XCAP in connection with the Placings and
Cenkos' and XCAP's performance of services in relation to the
Placings. Each of Cenkos and XCAP is entitled to terminate the
Placing Agreement in specified circumstances including where there
has been a material breach of the warranties.
The Warrants
In addition, conditional upon Admission, Placees will be issued
with one Warrant for each New Ordinary Share they have agreed to
acquire through the Placings. Each Warrant will give the Placees
the right, but not the obligation, to acquire one New Ordinary
Share at an exercise price of 0.6 pence (the "Exercise Price"),
conditional on such exercise request being made within the period
ending six months from Admission.
The Warrants have been constituted by an instrument of the
Company dated 15 December 2011 (the "Warrant Instrument") and their
issue is conditional upon Admission occurring. The maximum number
of Warrants which may be issued under the Warrant Instrument is
420,200,000.
Directors' Shareholdings
The current beneficial and non-beneficial interests of the
Directors in Ordinary Shares (not including Ordinary Shares held by
the Cyan Employee Benefit Trust) and the beneficial and
non-beneficial interests following the Placings are set out
below:
Existing Following the Placings
Number of Ordinary Existing Number of Issued New
Ordinary New Ordinary Ordinary
Director Shares Share Capital Shares Share Capital
Kenneth Lamb 13,759,579 1.15% 15,634,579 0.97%
Dr. John Read 12,340,760 1.03% 15,090,760 0.94%
Simon Smith 9,896,422 0.83% 12,646,422 0.78%
The following Ordinary Shares held by the Cyan Employee Benefit
Trust are beneficially owned by the following Directors to the
extent the share price of the Company exceeds 2.5 pence per
Ordinary Share:
Director Number of Ordinary
Shares
Kenneth Lamb 30,000,000
Dr. John Read 1,000,000
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
XCAP Securities plc
Jon Belliss / Adrian Kirk Tel +44 (0)20 7101 7070
Media - Hansard Communications
Adam Reynolds / Guy McDougall Tel: +44(0)20 7245 1100
This information is provided by RNS
The company news service from the London Stock Exchange
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