TIDMCYAN
RNS Number : 5862H
Cyan Holdings Plc
13 July 2012
Cyan Holdings plc
("Cyan" or "the Company")
Proposed Placings
Notice of General Meeting
Cyan Holdings plc (AIM:CYAN.L), the integrated system and
software design company delivering mesh based flexible wireless
solutions for utility metering and lighting control announces
raising, subject to certain conditions, approximately GBP2.1
million before expenses, by way of two share placings ("Placings")
pursuant to which 602,730,000 Ordinary Shares will be issued at
0.35 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, business development and
other product development work as set out below. In addition
Placees have been granted warrants ("Warrants") to subscribe for up
to a further 301,365,000 Ordinary Shares at 0.5 pence per Ordinary
Shares within twelve months of Admission. A General Meeting ("GM")
will be held at 11.00 a.m. on 2 August 2012. A circular containing
the notice of the GM (the "Circular") will be posted to all
shareholders in the Company on Monday 16 July 2012 and will be
available to view on the Company's website at:
www.cyantechnology.com.
Background to and reasons for the Placings
In the first quarter of 2012, Cyan continued to strengthen its
strategic partnerships in India. In February, Cyan announced that
it was entering into a Strategic Partnership Agreement with Larsen
& Toubro (L&T) to provide Indian customers with Advanced
Metering Infrastructure (AMI) products. L&T is a recognised
leader in the Energy and Utilities sector with proven products and
a Tier 1 reputation. The alliance with Cyan enabled L&T to
offer an 865 MHz interoperable smart metering solution for a number
of projects identified in India.
During this time, Cyan also made a significant addition to the
management team. In March, John Cronin, a telecoms and smart
metering industry expert, was appointed as a Non-Executive Director
before taking over the position of Executive Chairman following the
Annual General Meeting in May. Consequently John Read, who had been
appointed to the role as an interim measure, assumed his previous
position as a Non-Executive Director.
Cyan has established a strong position in the Indian smart
metering market by working with leading meter manufacturers, system
integrators and utility providers. These key partners are promoting
CyLec, Cyan's interoperable smart metering solutions that can be
easily integrated. In May, Cyan received a substantial order
exceeding US$1M from one of its partners to fulfill the initial
stages of a number of projects with several Indian electricity
utilities. Shareholders will be aware that the Company's position
of being poised for significant growth in India has taken several
years to reach through deep and wide eco-system contacts (utilities
and system integrators through to meter manufacturers).
As recent announcements demonstrate, the Tamil Nadu Electricity
Board ("TNEB") Automatic Meter Reading ("AMR") tender process has
progressed and is nearing the final stages. With four Cyan partners
getting ready and planning to install 500 unit pilots during July
and August, Cyan understands that TNEB will make a decision on
suppliers within 45 days of the start of the pilots and the Board
remains confident of a positive outcome for Cyan. Cyan's technology
has been integrated into five leading meter manufacturers in India
with two more in progress. This provides the Company with a very
strong position as new tenders get released.
Cyan is in the process of migrating its business model away from
a supplier of hardware by adding Software as a Service (SaaS) to
the revenue stream. For example, in the electricity metering
market, this will take the form of a monthly per meter user fee as
well as annual maintenance and license revenues. These fees are
expected to be borne by the system integrators who will offer a
turnkey service to their utility customers. Cyan's SaaS pricing is
competitive with the current cost in India of reading meters
manually. Several quotes have been provided to customers and this
new revenue source is expected to start in 2013. Incremental
development work is required to complete this new offering.
Provided that the TNEB tender is awarded to it, Cyan is expected
to build out a local operation in India which will be responsible
for local customer support as well as developing new sales
opportunities for Cyan in the local market. Additionally, Cyan has
received requests from its customers in India to start local
sub-contract manufacturing in order to avoid import duties.
The Placing Shares will be allotted at a price of 0.35 pence per
Ordinary Share. The Directors believe that this price represents
the best price achievable to raise additional working capital and
development funding. Without these Placings, the Directors believe
that the Company would not have sufficient funds to take advantage
of these opportunities as an independent company.
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 addition, the Warrants will permit the Company to
receive incremental resources for working capital to fund a
significant increase in stock of finished modules that will be
required for initial shipments to pending orders, which the Company
hopes to announce at the appropriate time.
The Directors believe that Cyan remains in an outstanding
position to secure substantial revenues from a very large market
and, to a large extent, the Placings represent the cost to the
Company of securing that position. It is therefore essential to
Cyan's growth strategy, that the Company approaches this crucial
phase in its life, in the strongest position possible.
Details of the Placings
Ordinary Shares
The Company intends to raise approximately GBP2.1 million,
before expenses, through the issue of 602,730,000 Ordinary Shares
at the Placing Price pursuant to the Placings.
The Placing Price represents a discount of approximately 26 per
cent. to the closing mid-market price of 0.47 pence per Ordinary
Share as at 12 July 2012, 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 Ordinary Shares, including
the right to receive dividends and other distributions declared
following Admission.
The Placing Shares will represent approximately 26.6 per cent.
of the Enlarged Share Capital.
Further to this, the Placing Warrants will represent
approximately 11.8% of the Enlarged Share Capital following
exercise of the Warrants.
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 by 8.00 a.m. on 6
August 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;
(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 August 2012
(or such time and date as the Company, Cenkos and XCAP may agree,
being not later than 3 September 2012).
Pursuant to the terms of the Placing Agreement, each of Cenkos
and XCAP 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 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.
XCAP and Cenkos will each be issued with Corporate Finance
Warrants in addition to corporate finance fees and commissions
charged by them to the Company in connection with their services
relating to the Placings. The Corporate Finance Warrants will have
similar terms and conditions to the Placing Warrants which are
described in more detail below.
The Placing Warrants
In addition, conditional upon Admission, Placees will be issued
with one Placing Warrant for every two Ordinary Shares they have
agreed to acquire through the Placings. Each Placing Warrant will
give the Placees the right, but not the obligation, to acquire one
Ordinary Share at an exercise price of 0.5 pence (the "Exercise
Price"), conditional on such exercise request being made within the
period ending twelve months from Admission.
The Placing Warrants have been constituted by the Placing
Warrant Instrument and their issue is conditional upon Admission
occurring. The maximum number of Placing Warrants which may be
issued under the Placing Warrant Instrument is 301,365,000. The
Placing Warrant Instrument contains the terms and conditions upon
which the Placing Warrants will be issued and the principal terms
and conditions are as follows:
Form of Placing Warrants
Placing Warrant Holders will be recorded as the holders of
Placing Warrants in a register of Placing Warrants maintained on
behalf of the Company.
Each Placing Warrant Holder shall be entitled to a certificate.
Joint holders will be entitled to only one certificate in respect
of their joint holding. A form of notice of exercise and the full
terms and conditions of the Placing Warrants will be attached to
each certificate.
Conditions attaching to exercise
The Directors may require, as a condition of exercise of any
Placing Warrant, that the registered holder of the Placing Warrant
certifies that such exercise is not being made with a view to a
transfer of the Ordinary Shares to which it relates to an overseas
person.
Allotment of Shares
On the due exercise of any Placing Warrant, the Company will
allot the number of Ordinary Shares for which subscription is made
to the registered holder of the Placing Warrant. Following exercise
of the Placing Warrants, the Company will apply for those Ordinary
Shares to be admitted to dealing on any recognised investment
exchange on which the Company's shares are then quoted.
Insolvency
If an Insolvency Event (as defined in the Placing Warrant
Instrument) occurs in respect of the Company (except as part of a
reconstruction or amalgamation which has been approved by the
Placing Warrant Holders by extraordinary resolution) each Placing
Warrant Holder shall, in respect of its Placing Warrant(s) be
treated as if its Placing Warrant(s) had been exercised on the day
immediately preceding the happening of the Insolvency Event and
shall receive out of the surplus assets of the Company available in
the liquidation such sum as it would have received if it had been
registered as the holder of the number of fully paid Ordinary
Shares for which it is entitled to subscribe under the Warrant(s)
then registered in its name after the deduction from such sum of a
sum equal to the Exercise Price in respect of those Ordinary
Shares.
Adjustment
If the Company alters its share capital by consolidating or
subdividing shares the Company shall within 10 business days after
such event give written notice to the Placing Warrant Holders
giving full details of the event in question.
Within 10 business days after the service of a notice the
Placing Warrant Holders may serve written notice on the Company
requiring it to instruct auditors to prepare and deliver to the
Placing Warrant Holders and the Company a certificate as to what is
in their opinion the amount of the adjustment which ought
reasonably to be made to the number of Ordinary Shares subject to
the Warrant and/or to the Exercise Price for each of those Ordinary
Shares but so that:
(a) the aggregate amount payable on the exercise of the Placing
Warrants in full is not increased; and
(b) the Exercise Price for an Ordinary Share is not reduced
below its nominal value, and the Company shall give to the auditors
all information reasonably requested by the auditors to enable the
auditors to produce their certificate.
Meetings of Placing Warrant Holders & Modification of
Placing Warrant rights
The Company may (and shall on the written request in writing of
Placing Warrant Holders holding at least one-fifth of the Placing
Warrants then outstanding) convene a meeting of the Placing Warrant
Holders by at least 14 days' clear written notice, and such meeting
shall have power by an extraordinary resolution (that is to say a
resolution passed by a majority consisting of at least seventy-five
per cent. of the Placing Warrant Holders voting on a show of hands
or (if a poll is demanded by the chairman of the meeting or by
Placing Warrant Holders holding at least three quarters of the
Placing Warrants then outstanding and in respect of which notice of
conversion has not been given) by a simple majority of the votes
given on such poll):
(a) to sanction any modification or compromise or any agreement
in respect of the rights of the Placing Warrant Holders;
(b) to assent to any modification of these conditions proposed
or agreed to by the Company and to agree to the issue of a
supplemental instrument embodying the modification; and
(c) to appoint any persons (whether Placing Warrant Holders or
not) as a committee to represent the interest of the Placing
Warrant Holders and to confer upon such committee any powers or
discretions which the Placing Warrant Holders could themselves
exercise by an extraordinary resolution.
A resolution signed by Placing Warrant Holdersholding at least
75% of the Placing Warrants in issue shall be as valid and
effectual as if it had been passed at a meeting of the Placing
Warrant Holders duly convened and held. Such resolution may be
contained in one document or in several documents in like form each
signed by one or more of the Placing Warrant Holders.
Law and Jurisdiction
The Placing Warrant Instrument is governed by and construed in
accordance with English law and the Company and the Placing Warrant
Holders submit to the non-exclusive jurisdiction of the English
courts.
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:
Date of this document Following the Placings
Existing Percentage Number of Issued Ordinary
Number of of Ordinary OrdinaryShares Share Capital
Ordinary Shares Share
Capital
Director
John Cronin 9,580,096 0.58% 24,237,239 1.07%
Dr. John Read 18,291,293 1.10% 24,087,579 1.06%
Simon Smith 14,085,389 0.85% 20,447,675 0.90%
The Directors' participation in this placing will be paid for in
part by sacrificing their entire salaries for the remainder of
2012. This will take the place of the current directors' share
purchase plan whereby the directors purchase shares on a monthly
basis out of varying portions of their salaries.
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
Dr. John Read 1,000,000
Enquiries:
Cyan Holdings plc Tel: +44 (0) 1954 234 400
John Cronin, Chairman
www.cyantechnology.com
Cenkos Securities plc Tel: +44 (0)20 7397 8900
NOMAD and Joint Broker
Stephen Keys / Adrian Hargrave
-------------------------
XCAP Securities plc Tel: +44 (0)20 7101 7070
Joint Broker
Jon Belliss / Adrian Kirk
-------------------------
Newgate Threadneedle Tel: +44 (0)20 7653 9850
Financial PR
Caroline Evans- Jones / Guy McDougall
-------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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