TIDMFFX
RNS Number : 3396N
FAIRFX Group PLC
08 August 2017
RNS
8 August 2017
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES OF
AMERICA, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA, NEW
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TO DO SO MIGHT CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF SUCH JURISDICTION.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
FairFX Group plc
("FairFX" or "the Company")
Conditional Acquisition of CardOne
Conditional Placing to raise net proceeds of up to approximately
GBP25.0 million
Open Offer to raise additional proceeds of up to approximately
GBP1.0 million
FairFX Group plc (AIM: FFX), an online international payment
services provider, today announces its proposed Acquisition of
CardOne for a consideration of GBP15 million, together with a
conditional Placing to raise, in aggregate, approximately GBP25.0
million (net of fees and expenses) by the issue and allotment by
the Company of 46,034,485 New Ordinary Shares at the Issue Price of
58 pence per Ordinary Share.
In addition, in order to provide Shareholders who have not taken
part in the Placing with an opportunity to participate in the
proposed issue of New Ordinary Shares, the Company is providing all
Qualifying Shareholders with the opportunity to subscribe at the
Issue Price for an aggregate of up to 1,730,669 Open Offer Shares,
to raise up to approximately GBP1.0 million.
Transaction highlights:
-- Significantly oversubscribed conditional Placing with new and
existing institutional investors
-- GBP22.0 million raised from the General Placing (before expenses)
-- GBP4.7 million raised from the VCT/EIS Placing (before expenses)
-- Majority of net General Placing proceeds will fund the acquisition of CardOne
-- Acquisition expected to provide Group with significant scale
and faster growth in the business sector
-- Proceeds from the VCT/EIS Placing to accelerate IT
development, marketing spend and international expansion
-- Enlarged Group to benefit from digital banking offering
-- Trading continues to be positive and in line with market expectations
FairFX CEO, Ian Strafford-Taylor, commented:
"The acquisition of CardOne is a major step forward for FairFX
as the Group looks to broaden its offering and build a digital
banking services company. To date, FairFX has been successful in
disrupting the currency payments market by offering its customers a
better service and value. CardOne has done much the same in the
banking space, and together we believe we can provide a product
offering which will deliver greater services and faster
growth."
Enquiries:
FairFX Group plc
Ian Strafford-Taylor,
CEO +44 (0) 20 7778 9308
Cenkos Securities plc
Max Hartley/Callum Davidson +44 (0) 20 7397 8925
Yellow Jersey PR
Abena Affum
Katie Bairsto +44 (0)7555 159 808
About FairFX
FairFX is an online international payment services provider,
first established in the UK in 2007. The Company has developed a
cloud-based peer-to-peer payments platform that enables personal
and business customers to make easy, low-cost multi-currency
payments in a broad range of currencies and across a range of
products all via one integrated system. The FairFX platform
facilitates payments either direct to Bank Accounts or, via its
prepaid cards, at over 35 million merchants and over 1 million ATMs
worldwide. The platform operates on desktop, mobile responsive
website or app and as such is accessible across a wide range of
users.
FairFX operates within the rapidly growing online multi-currency
payments market and provides transactional services to both
personal and business customers through four channels being
Currency Cards, Physical Currency, online and telephone. The
Currency Card and Physical Currency offerings facilitate multiple
overseas payments at points of sale and ATMs whereas the online and
telephone products support wire transfer foreign exchange
transactions direct to Bank Accounts.
For Corporates, FairFX has a business-expenses solution based
around its corporate prepaid card allied to a platform designed to
allow a corporate to better control expenses and improve
transparency whilst removing administrative burdens from staff. The
corporate offering also covers UK domestic expense management and
as such is a solution for all companies, not just those with
overseas travel.
In addition, FairFX has entered into a number of "white-label"
arrangements for the use of its P2P matching platform. Customers
include easyjet and ThinkMoney. FairFX has also partnered with
Concur Technologies, Inc. a leading provider of integrated travel
and expense management solutions with over 25 million users
globally. Such relationships provide strong support for FairFX's
customer acquisition strategy.
IMPORTANT NOTICES
Cenkos Securities, which is authorised and regulated in the
United Kingdom by the FCA, is acting as nominated adviser and
broker to the Company and no-one else in connection with the
Placing, the Open Offer and Admission. Cenkos Securities will not
be responsible to anyone other than the Company for providing the
regulatory and legal protections afforded to customers (as defined
in the rules of the FCA) of Cenkos Securities nor for providing
advice in relation to the contents of this announcement or any
matter, transaction or arrangement referred to in it. The
responsibilities of Cenkos Securities, as nominated adviser under
the AIM Rules for Nominated Advisers, are owed solely to London
Stock Exchange and are not owed to the Company or any director of
the Company or to any other person in respect of their decision to
subscribe for or purchase Placing Shares or Open Offer Shares.
Forward-looking statements
Some of the statements in this announcement include forward
looking statements which reflect the Directors' current views with
respect to financial performance, business strategy, plans and
objectives of management for future operations (including
development plans relating to the Group's products and services).
These statements include forward looking statements both with
respect to the Group and with respect to the sectors and industries
in which the Group operates. Statements which include the words
"expects", "intends", "plans", believes", "projects",
"anticipates", "will", "targets", "aims", "may", "would", "could",
"continue" and similar statements or negatives thereof are of a
forward looking nature.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future and therefore
are based on current beliefs and expectations about future events.
Forward-looking statements are not guarantees of future performance
and the Group's actual operating results and financial condition,
and the development of the industry in which it operates may differ
materially from those made in or suggested by the forward-looking
statements contained in this announcement. In addition, even if the
Group's operating results, financial condition and liquidity, and
the development of the industry in which the Group operates are
consistent with the forward looking statements contained in this
announcement, those results or developments may not be indicative
of results or developments in subsequent periods. Accordingly,
prospective investors should not rely on these forward-looking
statements.
These forward looking statements speak only as of the date of
this announcement. The Company expressly disclaims any obligation
to publicly update or review any forward looking statement, whether
as a result of new information, future developments or otherwise,
unless required to do so by applicable law or the AIM Rules for
Companies. All subsequent written and oral forward looking
statements attributable to the Group or individuals acting on
behalf of the Group are expressly qualified in their entirety by
this paragraph. Prospective investors should specifically consider
the factors identified in this announcement which could cause
actual results to differ from those indicated or suggested by the
forward looking statements in this announcement before making an
investment decision.
Important information
Neither this announcement nor any copy of it may be made or
transmitted into the United States, or distributed, directly or
indirectly, in the United States. Neither this announcement nor any
copy of it may be taken or transmitted directly or indirectly into
Australia, Canada, the Republic of South Africa, New Zealand,
Japan, the Republic of Ireland or to any persons in any of those
jurisdictions, except in compliance with applicable securities
laws. Any failure to comply with this restriction may constitute a
violation of United States, Australian, Canadian, South African,
New Zealand, or Japanese or Irish securities laws or the securities
laws of any other jurisdiction (other than the United Kingdom). The
distribution of this announcement in other jurisdictions may be
restricted by law and persons into whose possession this
announcement comes should inform themselves about, and observe any
such restrictions. This announcement does not constitute or form
part of any offer or invitation to sell or issue, or any
solicitation of any offer to purchase or subscribe for securities
in the United States, Australia, Canada, the Republic of South
Africa, New Zealand, Japan, the Republic of Ireland or in any
jurisdiction in which such offer or solicitation is unlawful.
The securities to which this announcement relates have not been,
and will not be, registered under the Securities Act or with any
regulatory authority or under any applicable securities laws of any
state or other jurisdiction of the United States, and may not be
offered, sold, resold, transferred or delivered, directly or
indirectly, within, into or in the United States except pursuant to
an applicable exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act and in
compliance with the securities laws of any applicable state or
other jurisdiction of the United States. There will be no public
offer of the securities in the United States. The securities have
not been approved or disapproved by the US Securities and Exchange
Commission, any state securities commission in the United States or
any US regulatory authority, nor have any of the foregoing
authorities passed upon or endorsed the merits of the offering of
the securities or the accuracy or adequacy of this announcement.
Any representation to the contrary is a criminal offence in the
United States. In addition, offers, sales or transfers of the
securities in or into the United States for a period of time
following completion of the Placing and the Open Offer by a person
(whether or not participating in the Placing or Open Offer) may
violate the registration requirement of the Securities Act.
The securities referred to herein have not been and will not be
registered under the applicable securities laws of Australia,
Canada, the Republic of South Africa, New Zealand, Japan or the
Republic of Ireland and, subject to certain exceptions, may not be
offered or sold within Australia, Canada, the Republic of South
Africa, New Zealand, Japan, or the Republic of Ireland or to any
national, resident or citizen of Australia, Canada, the Republic of
South Africa, New Zealand, Japan, or the Republic of Ireland or any
other jurisdiction where to do so might constitute a violation of
local securities laws or regulations.
No representation or warranty, express or implied, is made by
the Company or Cenkos Securities as to any of the contents of this
announcement, including its accuracy, completeness or for any other
statement made or purported to be made by it or on behalf of it,
the Company, the Directors or any other person, in connection with
the Placing, the Open Offer and Admission and nothing in this
announcement shall be relied upon as a promise or representation in
this respect, whether as to the past or the future (without
limiting the statutory rights of any person to whom this
announcement is issued). Cenkos Securities does not accept any
liability whatsoever for the accuracy of any information or
opinions contained in this announcement or for the omission of any
material information from this announcement for which the Company
and the Directors are solely responsible.
There can be no assurance that the conditions to the Acquisition
Agreement will be satisfied and that the Acquisition will be
completed. Completion is conditional upon, inter alia, the FCA
consenting to the acquisition by the Company of a Qualifying
Holding (as defined in Payment Services Regulations 2009) in the
Target as a result of Completion and approval by Shareholders of
the Resolutions to be proposed at the General Meeting. In the event
that the FCA does not give its consent or Shareholders do not vote
in favour of the Resolutions, the Acquisition will not be
completed. In the event that the Acquisition cannot be completed,
the Placing and Open Offer will not become unconditional and will
terminate in accordance with the terms of the Placing
Agreement.
Introduction
The Company is pleased to announce its proposed Acquisition of
CardOne for a consideration of GBP15 million, payable in a mixture
of cash and Consideration Shares, together with a conditional
Placing consisting of a VCT/EIS Placing and a General Placing to
raise, in aggregate, GBP26.7 million (before fees and expenses) by
the issue and allotment by the Company of 46,034,485 New Ordinary
Shares at the Issue Price of 58 pence per Ordinary Share.
In addition, in order to provide Shareholders who have not taken
part in the Placing with an opportunity to participate in the
proposed issue of New Ordinary Shares, the Company is providing all
Qualifying Shareholders with the opportunity to subscribe at the
Issue Price for an aggregate of up to 1,730,669 Open Offer Shares,
to raise up to approximately GBP1.0 million (before fees and
expenses), on the basis of:
1 Open Offer Share for every 60 Existing Ordinary Shares
held on the Record Date, at 58 pence each, payable in full on
acceptance.
The General Placing and the Open Offer are conditional, inter
alia, upon the satisfaction of certain conditions to the
Acquisition, including the receipt of FCA approval under the PSR
and Shareholders approving the Resolutions to be proposed at the
General Meeting, which will grant to the Directors the authority to
allot the New Ordinary Shares and the power to disapply statutory
pre-emption rights in respect of the New Ordinary Shares. The
Resolutions will be contained in the Notice of General Meeting at
the end of the Circular (which is expected to be posted to
Shareholders later today). In addition to the satisfaction of the
conditions to the Acquisition, General Placing and the Open Offer,
the VCT/EIS Placing is also conditional upon the Company having
obtained, prior to the GM Date, advance assurance from HMRC in
respect of its status under EIS and for VCT investment purposes.
Admission is expected to occur at 8.00 a.m. on 25 August 2017 or
such later time and/or date as Cenkos Securities and the Company
may agree, not being later than 15 September 2017. The Placing and
the Open Offer are not underwritten.
The Open Offer provides Qualifying Shareholders with an
opportunity to participate in the proposed issue of the New
Ordinary Shares on a pre-emptive basis whilst providing the Company
with additional capital to invest in the business of the Group.
The Issue Price is at a discount of approximately 19.4 per cent.
to the closing middle market price of 72 pence per Existing
Ordinary Share on 7 August 2017 (being the last practicable date
before publication of this announcement).
The Circular will set out further details of the Acquisition,
the Placing and the Open Offer and will also contain the terms and
conditions in respect of the Open Offer and set out the key dates
in respect of the Fundraising. The Circular, which will also have
attached to it the Notice of General Meeting, is expected to be
posted to Shareholders later today, along with the Application Form
in respect of the Open Offer. These documents will also be
available to view on the Company's investor relations website at
www.fairfxplc.com.
Background to and reasons for the Acquisition and
Fundraising
In 2016 FairFX saw strong growth in its Corporate Expense
management platform and that has continued in the first half of
2017. The Directors believe that the corporate space represents a
significant opportunity for the Company, particularly in the SME
sector. Against this background, in January 2017 FairFX acquired an
e-money licence and stated its intention to enter the digital
banking space for SMEs.
An e-money licence allows a company to hold money on behalf of a
customer and as such can support a full-service digital banking
proposition. To do this, a customer needs to be able to receive
money into their account across the full range of payment options
ranging from cash, cheques and transfer (BACS, Chaps, Faster
Payments) and also to be able to pay out of their account with
similar flexibility augmented with a debit card.
The Directors believe that building this functionality from its
current position and connecting it, reliably, to the various
payment networks and options described above will be complicated
and time consuming, which is not helped by the legacy IT systems
employed by certain networks.
The Target, CardOne, already possesses the key components of a
technology stack and connectivity and has been providing digital
banking services, since 2013, to both SME and retail consumers
across desktop, mobile-responsive website and app platforms. The
Directors believe that the Acquisition will allow the Group to
fast-track its push into offering digital banking services to the
SME space to complement its current corporate expense management
platform.
The Fundraising will allow FairFX to acquire CardOne and also to
raise additional funds to facilitate growth and technological
innovation. In addition, with the Acquisition the Group will be
able to achieve greater scale and turnover and the additional funds
gives the Group flexibility in terms of posting collateral where
needed to achieve optimum unit costs of transactions.
Company Background
The Group was established in 2007 and over the past 10 years has
built out its online currency services into Europe. Initially
offering travel cash in the post, the Group's business has
developed to offer a full suite of products including prepaid
currency cards, cash and bank to bank transfers. FairFX's
award-winning currency cards have attracted over 600,000 customers
to date and continues to grow. In the financial year ended 31
December 2016 ("FY 16"), Group revenue increased 28% to GBP10.2m,
with gross profit (pre-operational costs) up 31% to GBP7.5m. The
Group's turnover (gross value of currency sold) increased 27.4% in
FY 16 to GBP798.3 million.
In August 2014, the Company was admitted to AIM and since that
time has had a strong focus on achieving profitability. In its
announcement on 5 July 2017, the Company was pleased to declare its
first interim net profit for the six months ended 30 June 2017,
which was ahead of management expectations.
FairFX services a mix of consumer and business customers and
most recently launched an expense management platform aimed at SMEs
to allow them to take control of their expenditure both
domestically and overseas. The product has seen rapid growth. The
Directors believe it appeals to companies without travel
requirements, given approximately 60 per cent. of transactions
through the platform are undertaken in Sterling.
Changing Landscape
Over the past few years, the financial services industry in
general has undergone significant change. FairFX has sought to
capitalise on industry changes and the expansion of the Fintech
market. The Group was one of the earliest companies to launch a
currency card supported by desktop, mobile and app platforms
providing FX payment services and as the industry continues to
change, the Company has sought to continue to change with it.
In the consumer market, FX services has seen competition
increase with the emergence of companies seeking to gain market
share by offering customers a "free" service initially and adding
fees later on. The Directors believe that new entrants will
continue to offer this pricing model but will normalise their
tariffs as their focus shifts towards growing revenues and
generating profits. Accordingly, the Directors believe that FairFX
will continue to represent fair value to consumers augmented by
outstanding customer service.
In the opinion of the Directors, in the business market, the
pricing of FX services has remained less competitive and actually
offers a much bigger opportunity than the consumer market. It is
estimated that SMEs in the UK turnover GBP1.8 trillion of which
GBP0.7 trillion is in international trade. This is forecast to grow
by 33% by 2019.
The Directors believe that the FairFX business expense
management platform represents a significant competitive advantage
and this is driving the current rapid growth of this product. In
growing the business payments and expense management platform in
recent years, FairFX now has a firm foothold in this market, from
which it has ambitions to grow significantly.
The Acquisition
FairFX has identified CardOne as a target that will help the
Group achieve even faster growth in the business sector.
CardOne is an independent, FCA authorised group that has been
providing banking platforms and money management tools since 2007.
It provides current accounts and a digital banking platform, not
only for personal account customers, but also to SMEs. With
efficient KYC and AML checking processes, accounts can typically be
opened far more quickly than the high street banks. The Directors
believe that CardOne is one of very few providers that have a
combination of regulatory compliance, technology stack and payment
scheme memberships required to produce digital banking. The CardOne
Group's products and services are complemented by desktop, mobile
and app account management platforms. To date they have opened
approximately 80,000 accounts and processed GBP3 billion of
customers' money.
Over the past two financial years ended 30 November and for the
six months ended 31 May 2017, the CardOne Group achieved the
following financials:
FY 2015 FY 2016 H1 2017
---------------- -------- -------- --------
Revenue (GBPm) 4.6 5.5 2.8
---------------- -------- -------- --------
Gross profit
(GBPm) 3.5 3.9 2.1
---------------- -------- -------- --------
Net profit
(GBPm) 0.4 0.8 0.6
---------------- -------- -------- --------
As at 31 March 2017, CardOne Group reported gross assets of
GBP1.88 million.
The Directors believe that the Acquisition of CardOne will allow
FairFX to leverage CardOne Group's infrastructure and technical
capability with the aim of significantly shortening the Group's
planned roll out of a SME business banking product, whilst also
growing CardOne's own offering
The Acquisition is expected to be earnings enhancing in the
first full year following Completion, with cost savings and
synergies of an estimated GBP3.5 million over 3 years. The
directors intend that cost savings and synergies are to be derived
from rationalisation of back office functions, as well as
simplification of the supply chain within the Enlarged Group. In
addition, further opportunities are expected to be derived from
cross selling of products between CardOne and FairFX's respective
customers and services.
As was seen in the Group's results for the financial year ended
31 December 2016 and the recent announcement of its maiden first
half profit in the six months to June 2017, revenue gains have
resulted in strong improvements in the Group's net operating result
due primarily to the operational gearing of the Group. Having made
a significant investment in the Group's IT infrastructure in prior
years and with marketing expenses expected to stay at or around
similar levels for the foreseeable future, the Board expects the
Group to continue to benefit from this high level of operational
gearing as revenues grow further.
This level of operational gearing, taken together with the
opportunities, synergies and cost savings expected as a result of
the Acquisition of CardOne, means that the Board believe the Group
has the potential to grow the business from its current position to
achieve targeted annual revenues and EBITDA in excess of GBP30
million and GBP15 million respectively by the end of 2020 and to
achieve a targeted increase in the Group's net profit margin to
approaching 50 per cent.
The Group expects to retain CardOne's existing management, as
well as its brand, which the Directors believe is well respected
and therefore a valuable asset.
The Company entered into the Acquisition Agreement with the
Sellers on 8 August 2017.
The Acquisition Agreement provides for the Company to acquire
the entire issued share capital of the Target for a maximum
consideration of GBP15,000,000 on a debt free/cash free basis. The
consideration can be satisfied in cash or Consideration Shares at
each Seller's election. It will be satisfied by GBP12,817,500.60 in
cash and by the issue of the Consideration Shares at the Issue
Price.
The Acquisition Agreement contains warranties and other
protections given by the Sellers.
The Acquisition Agreement is conditional upon:
(a) FCA approval under the Payment Services Regulations 2009;
(b) The Resolutions being passed;
(c) The Placing Agreement becoming unconditional (save for any
condition relating to the Acquisition Agreement or Admission);
and
(d) Admission.
Use of the proceeds of the Fundraising
The net cash proceeds of the Placing are expected to be
approximately GBP25.0 million. Approximately GBP12.8 million of the
proceeds will be used to satisfy the cash consideration payable for
the Acquisition. It is intended that the balance of the proceeds
from the General Placing, together with any net proceeds received
pursuant to the Open Offer, will be used for international
expansion, marketing and product development, as well as providing
working capital for the Enlarged Group and strengthening the
Company's balance sheet.
The proceeds from the VCT/EIS Placing of GBP4.7 million will be
used to grow and expand the FairFX offering in three key areas.
Firstly, to accelerate IT development across both consumer and
business platforms. Secondly, to selectively increase marketing
spend and thirdly, to roll-out the product offering overseas from
the UK hub. In relation to international expansion, the Group has
recently launched in Ireland and have identified two other key
markets for further expansion.
Current trading and prospects
On 5(th) July, the Company announced a trading statement in
respect of the six months trading to 30(th) June 2017 as
follows:
"FairFX, the low cost multi-currency payments service, is
pleased to provide the market with a trading update for the
six-month period ended 30th June 2017.
The Company achieved its first interim net profit since IPO,
which was ahead of management expectations. Turnover for the first
half was up 25.8% year on year to GBP433.8 million with broad-based
growth. A combination of a more profitable business mix, leading to
an improved gross margin, and cost benefits of rationalising the
supply chain resulted in the profitable period. Total turnover from
prepaid cards and international payments rose 23% and 35%
respectively. Usage of the Company's corporate card platform rose
93% year on year. The sustained growth in the period was achieved
despite the headwinds of the UK General Election, which weakened
Sterling both before and after the result.
On the retail card and travel money side of the business, the
focus has remained on improving the user experience (UX) of FairFX
across all its platforms. This has taken the form of improvements
to both the app and the website. In addition, targeted campaigns
have been made during the period to grow revenue from existing
customers by improving retention, reactivation and cross-selling by
using improved data collection and analysis.
Growth in the corporate card segment grew 93% versus the same
period last year. A mobile-responsive website was launched together
with new features on the corporate app - both of which
significantly improve the usability of the platform. More
deployments are planned for the second half of 2017 to further
improve functionality and UX of the platform and the outlook
remains positive."
The Company confirms that, since the announcement of the above
trading update, trading continues to be positive and in line with
market expectations.
Details of the Placing and the Open Offer
Placing
FairFX is proposing to raise GBP26.7 million in aggregate
(before expenses) pursuant to the VCT/EIS Placing and the General
Placing. The Placing has conditionally raised a total of GBP4.7
million through the placing of 8,103,450 VCT/EIS Placing Shares and
a total of GBP22.0 million through the placing of 37,931,035,
General Placing Shares. The Issue Price of 58 pence per Placing
Share represents a discount of 19.4 per cent. to the Closing Price
of 72 pence on 7 August 2017, the latest Business Day prior to
publication of this announcement.
The VCT/EIS Placing and the General Placing are conditional
upon, inter alia, the Acquisition Agreement becoming unconditional
in accordance with its terms (including FCA approval under the
Payment Services Regulations 2009), save for any condition relating
to the Placing Agreement and Admission, the Resolutions being
passed at the General Meeting (or any adjournment thereof) and
Admission occurring no later than 8.00 a.m. on 25 August 2017 (or
such later date as the Company and Cenkos shall agree, being no
later than 15 September 2017).
In addition, the VCT/EIS Placing is conditional upon the Company
having obtained, prior to the GM Date, advance assurance from HMRC
in respect of its status under EIS and for VCT investment
purposes.
Open Offer
FairFX is proposing to raise up to approximately a further
GBP1.0 million pursuant to the Open Offer. The Issue Price of 58
pence per Open Offer Share represents a discount of 19.4 per cent.
to the Closing Price of 72 pence on 7 August 2017, the latest
Business Day prior to publication of this announcement. The Open
Offer is being made on a pro-rata basis, allowing all Qualifying
Shareholders the opportunity to participate.
The Open Offer provides Qualifying Holders with the opportunity
to apply to acquire Open Offer Shares at the Issue Price pro rata
to their holdings of Existing Ordinary Shares as at the Record Date
on the following basis:
1 Open Offer Share for every 60 Existing Ordinary Shares
and so on in proportion to any other number of Existing Ordinary
Shares then held.
Entitlements to apply to acquire Open Offer Shares will be
rounded down to the nearest whole number and any fractional
entitlement to Open Offer Shares will be disregarded in calculating
the Basic Entitlement.
Qualifying Shareholders who do not take up their Basic
Entitlements in full will experience a dilution to their interests
of approximately 33.2 per cent. following Admission (assuming full
subscription under the Placing, Open Offer and the issue of the
Consideration Shares).
Qualifying Shareholders should note that the Open Offer Shares
have neither been placed under the Placing subject to clawback
under the Open Offer nor have they been underwritten, and that the
Placing is not conditional upon the number of applications received
under the Open Offer.
The Open Offer is subject to the satisfaction, amongst other
matters, of the following conditions on or before 25 August 2017
(or such later date, being not later than 8.00 a.m. on 15 September
2017, as the Company and Cenkos may decide):
-- the General Placing becoming unconditional in all respects;
-- the passing of the Resolutions at the General Meeting (or any adjournment thereof);
-- Admission becoming effective by 8.00 a.m. on 25 August 2017
(or such later time or date not being later than 8.00 a.m. on 15
September 2017 as the Company and Cenkos may decide).
The Open Offer Shares will, when issued and fully paid, rank
pari passu in all respects with the Existing Ordinary Shares,
including the right to receive all dividends and other
distributions declared, made or paid after the date of
Admission.
Excess applications
The Open Offer is structured to allow Qualifying Shareholders to
subscribe for Open Offer Shares at the Issue Price pro rata to
their existing holdings of Ordinary Shares on the Record Date.
Qualifying Shareholders may also make applications in excess of
their Basic Entitlements. To the extent that Basic Entitlements are
not subscribed by Qualifying Shareholders, such Open Offer Shares
will be available to satisfy such excess applications, subject to a
maximum of 1,730,669 Open Offer Shares in aggregate. To the extent
that applications are received in respect of an aggregate of more
than 1,730,669 Open Offer Shares, excess applications will be
scaled back accordingly.
However, excess applications will be rejected if and to the
extent that acceptance would result in the Qualifying Shareholder,
together with those acting in concert with him/her/it for the
purposes of the City Code, holding 30 per cent. or more of the
Enlarged Share Capital immediately following Admission.
Those Placees who are Qualifying Shareholders will also be
entitled to participate in the Open Offer.
Qualifying Shareholders should note that the Open Offer is not a
rights issue
Qualifying non-CREST Holders should be aware that the
Application Form is not a negotiable document and cannot be traded.
Qualifying Shareholders should also be aware that, in the Open
Offer, unlike in a rights issue, any entitlements to Open Offer
Shares not applied for or not taken up will not be sold in the
market or placed for the benefit of Qualifying Shareholders who do
not apply under the Open Offer.
Settlement and dealings
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 become effective and that dealings
will commence at 8.00 a.m. on 25 August 2017. Further information
in respect of settlement and dealings in the New Ordinary Shares is
set out in paragraph 8 of Part III of the Circular
Admission remains subject to the satisfaction of the receipt of
FCA approval under the PSR being obtained prior to the date of the
GM. Accordingly, it is possible that Admission will be delayed,
pending completion of this outstanding condition. However,
Admission may not occur any later than 15 September 2017.
Overseas Shareholders
Certain Overseas Shareholders may not be permitted to subscribe
for Open Offer Shares pursuant to the Open Offer and should refer
to paragraph 6 of Part III of the Circular when it is
published.
CREST instructions
Application has been made for the Basic Entitlements for
Qualifying CREST Holders to be admitted to CREST. It is expected
that the Basic Entitlements will be admitted to CREST on 9 August
2017.
The Excess CREST Open Offer Entitlements will also be admitted
to in CREST on 9 August 2017. Applications through the CREST system
may only be made by the Qualifying Holder originally entitled or by
a person entitled by virtue of a bona fide market claim.
Qualifying non-CREST Holders will receive an Application Form
which gives details of their Basic Entitlement under the Open Offer
(as shown by the number of the Open Offer Shares allocated to them)
with the Circular. If they wish to apply for Open Offer Shares
under the Open Offer, they should complete the accompanying
Application Form in accordance with the procedure for application
set out in the Circular and on the Application Form itself. The
completed Application Form, accompanied by full payment, should be
returned by post or by hand (during normal business hours only) to
Capita Asset Services, Corporate Actions, The Registry 34 Beckenham
Road Beckenham, Kent BR3 4TU so as to arrive as soon as possible
and in any event no later than 11.00 a.m. on 23 August 2017.
Qualifying CREST Holders, will receive no Application Form with
the Circular but will receive a credit to their appropriate stock
account in CREST in respect of their Basic Entitlement and if
appropriate their Excess Entitlement. They should refer to the
procedure for application set out in Part III of the Circular. The
relevant CREST instruction must have settled by no later than 11.00
a.m. on 23 August 2017.
The latest time for applications under the Open Offer to be
received is 11.00 a.m. on 23 August 2017. The procedure for
application and payment depends on whether, at the time at which
application and payment is made, a Qualifying Shareholder has an
Application Form in respect of their Basic Entitlement or have
their Basic Entitlement credited to their stock account in
CREST.
Placing Agreement
Pursuant to the Placing Agreement, Cenkos Securities has agreed
to use its reasonable endeavours as agent of the Company to procure
subscribers for the Placing Shares at the Issue Price.
The Placing Agreement provides, inter alia, for payment by the
Company to Cenkos Securities of commissions based on certain
percentages of the product of the number of Placing Shares placed
by Cenkos Securities multiplied by the Issue Price.
The Company will bear all other expenses of and incidental to
the Placing, including the fees of the London Stock Exchange,
printing costs, Registrar fees, all legal and accounting fees of
the Company and all stamp duty and other taxes and duties
payable.
The Placing Agreement contains certain warranties and
indemnities from the Company in favour of Cenkos Securities and the
obligations of Cenkos under the Placing Agreement in connection
with the General Placing and Open Offer are conditional, inter
alia, upon:
(a) the passing of all the Resolutions at the General Meeting;
(b) the Acquisition Agreement becoming unconditional in all
respects (including FCA approval under the Payment Services
Regulations 2009), save for any condition relating to the Placing
Agreement and Admission;
(c) the Placing Agreement having become unconditional in all
respects (save for the condition relating to Admission) and not
having been terminated in accordance with its terms prior to
Admission; and
(d) Admission becoming effective not later than 8.00 a.m. on 25
August 2017 or such later time and/or date as the Company and
Cenkos Securities may agree, being not later than 8.00 a.m. 15
September 2017.
In addition the obligations of Cenkos under the Placing
Agreement in connection with the VCT/EIS Placing are conditional
upon all of the conditions relating to the General Placing being
satisfied, together with the Company having obtained, prior to the
GM Date, advance assurance from HMRC in respect of its status under
EIS and for VCT investment purposes. If each of the Conditions save
for the condition relating specifically to the VCT/EIS Placing are
satisfied, the General Placing, Open Offer and Acquisition will
proceed, but the VCT/EIS Placing will be terminated in accordance
with the terms of the Placing Agreement.
Cenkos Securities may terminate the Placing Agreement in certain
circumstances, if, inter alia, the Company has failed to comply
with any of its obligations under the Placing Agreement; if there
is a material adverse change in the financial position and
prospects of the Company; or if there is a material adverse change
in the financial, political, economic or stock market conditions,
which in its opinion, acting in good faith, is or will be
materially prejudicial to the successful outcome of the
Placing.
VCT / EIS relief
The Directors believe that the VCT/EIS Placing Shares should be
eligible (subject to the circumstances of relevant Placees) for tax
reliefs under EIS and for investment by VCTs.
The Company has applied for, but not, as at the date of this
announcement, received, advance assurance from HMRC, in respect of
its status under EIS and for VCT investment purposes.
Although the Company currently expects to satisfy the relevant
conditions for EIS and VCT investment, and the Directors are not
aware of any subsequent change in the qualifying conditions or the
Company's circumstances that would prevent the VCT/EIS Placing
Shares from being eligible EIS and VCT investments on this
occasion, neither the Directors nor the Company give any warranty
or undertaking that relief will be available in respect of any
investment in the VCT/EIS Placing Shares pursuant to the Circular,
nor do they warrant or undertake that the Company will conduct its
activities in a way that qualifies for or preserves its status.
The Placing of VCT/EIS Placing Shares is conditional upon the
Company having obtained, prior to the GM Date, advance assurance
from HMRC in respect of its status under EIS and for VCT investment
purposes. Consequently, if such advance assurance is not received
by the GM Date, Admission of the VCT/EIS Placing Shares will not
occur, the Placees subscribing for VCT/EIS Placing Shares will not
be able to subscribe for VCT/EIS Placing Shares and the Company
will not receive the proceeds of the Placing of the VCT/EIS Placing
Shares.
To enable certain Placees to take advantage of VCT/EIS tax
treatment, it is expected that the VCT/EIS Placing Shares will be
unconditionally allotted and issued on 24 August 2017 and the
General Placing Shares will be allotted and issued conditional only
upon Admission on 25 August 2017.
Due to the limitations of the VCT/EIS rules in respect of the
amount of monies that may be raised by the Company pursuant to the
Fundraising that will benefit from VCT/EIS tax reliefs, the Open
Offer will not be subject to relief.
General Meeting
The Directors do not currently have authority to allot all of
the New Ordinary Shares on a non pre-emptive basis and,
accordingly, the Board is seeking the approval of Shareholders to
allot the New Ordinary Shares at the General Meeting and to
dis-apply pre-emption rights.
A notice convening the General Meeting, which is to be held at
the offices of Bates Wells Braithwaite, 10 Queen St Pl, London EC4R
1BE at 1.00 p.m. on 24 August 2017, will be set out at the end of
the Circular, which is expected to be posted to Shareholders later
today.
Recommendation
The Directors believe the Acquisition, the Placing and the Open
Offer to be in the best interests of the Company and its
Shareholders as a whole. Accordingly, the Directors unanimously
recommend Shareholders to vote in favour of the Resolutions as they
intend so to do in respect of their beneficial shareholdings
amounting to 2,127,750 Ordinary Shares, representing approximately
2.1 per cent. of the existing issued ordinary share capital of the
Company.
DEFINITIONS
The following definitions apply throughout this announcement
unless the context requires otherwise or unless it is otherwise
specifically provided:
"Acquisition" the proposed acquisition by the Company of the
entire issued share capital of the Target
"Acquisition Agreement" the agreement relating to the
Acquisition, made between the Company and the Sellers
"Act" the Companies Act 2006 (as amended)
"Admission" admission of the New Ordinary Shares (as applicable)
to trading on AIM becoming effective
"AIM" AIM, a market operated by the London Stock Exchange
"AIM Rules" the AIM rules for companies published by London
Stock Exchange
"AML" Anti-Money Laundering
"Application Form" the application form relating to the Open
Offer which accompanies the Circular (where relevant)
"Basic Entitlement" the number of Open Offer Shares which
Qualifying Holders are entitled to subscribe for at the Issue Price
pro rata to their holding of Existing Ordinary Shares at the Record
Date pursuant to the Open Offer as described in Part III of the
Circular
"Business Day" a day (other than a Saturday or Sunday) on which
commercial banks are open for general business in London,
England
"Capita Asset Services" a trading name of Capita Registrars Limited
"CardOne" Spectrum Financial Group Limited, the holding company
of a group of companies the main trading name of which is
CardOneBanking, a company registered in England with Company number
06329226
"CardOne Group" the Target and its subsidiaries
"Cenkos" Cenkos Securities plc (registered number 5210733)
"Certificated" or "certificated form" recorded on a company's
share register as being held in certificated form (i.e., not in
CREST)
"Circular" the document detailing the Acquisition and
Fundraising to be posted to Shareholders containing the Notice of
General Meeting
"City Code" the City Code on Takeovers and Mergers
"Closing Price" the closing middle market quotation of an
Existing Ordinary Share as derived from the AIM Appendix to the
Daily Official List of the London Stock Exchange
"Companies Act" or "Act" Companies Act 2006 (as amended)
"Company" or "FairFX" FairFX Group plc (registered number
08922461)
"Completion" means completion of the Acquisition, pursuant to
the Acquisition Agreement
"Consideration Shares " the 3,762,930 New Ordinary Shares to be
issued and allotted to certain of the Sellers at the Issue Price
pursuant to the Acquisition Agreement
"CREST" the relevant system (as defined in the CREST
Regulations) in respect of which Euroclear is the Operator (as
defined in the CREST Regulations)
"CREST Manual" the rules governing the operation of CREST,
consisting of the CREST Reference Manual, CREST International
Manual, CREST Central Counterparty Service Manual, CREST Rules,
Registrars Service Standards, Settlement Discipline Rules, CREST
Courier and Sorting Services Manual, Daily Timetable, CREST
Application Procedures and CREST Glossary of Terms (all as defined
in the CREST Glossary of Terms promulgated by Euroclear on 15 July
1996 and as amended since) as published by Euroclear
"CREST member" a person who has been admitted by Euroclear as a
system member (as defined in the CREST Regulations)
"CREST Participant" a person who is, in relation to CREST, a system-participant (as defined in the CREST Regulations)
"CREST payment" shall have the meaning given in the CREST
Manual
"CREST Regulations" the Uncertificated Securities Regulations
2001 (SI 2001/3755) (as amended)
"CREST sponsor" a CREST Participant admitted to CREST as a CREST
sponsor
"CREST sponsored member" a CREST member admitted to CREST as a
sponsored member (which includes all-CREST personal members)
"Directors" or "Board" the directors of the Company
"EBITDA" earnings before interest, tax, depreciation and
amortisation
"EIS" enterprise investment scheme
"enabled for settlement" in relation to Basic Entitlements and
Excess Entitlements, enabled for the limited purpose of settlement
of claim transactions and USE transactions
"Enlarged Group" the Company and its subsidiaries immediately
following Completion
"Enlarged Share Capital" the issued ordinary share capital of
FairFX immediately following Admission
"EU" the European Union
"Euroclear" Euroclear UK & Ireland Limited, the operator of
CREST
"Excess Application Facility" to the extent that Basic
Entitlements to Open Offer Shares are not subscribed for by
Qualifying Shareholders, such Open Offer Shares will be available
to satisfy excess applications, subject to a maximum of 1,730,669
Open Offer Shares in aggregate, as described in Part III of the
Circular
"Excess CREST Open Offer in respect of each Qualifying CREST
Shareholder who has taken
Entitlements" up his Basic Entitlement in full, the entitlement
to apply for Open Offer Shares in addition to his Basic Entitlement
credited to his stock account in CREST, pursuant to the Excess
Application Facility, which may be subject to scaling back in
accordance with the provisions of the Circular
"Excess Entitlements" the entitlement for Qualifying
Shareholders to apply to acquire any number of Open Offer Shares
subject to the limit on applications under the Excess Application
Facility, as described in Part III of the Circular
"Excess Shares" the Open Offer Shares applied for under the
Excess Application Facility, as defined in Part III of the
Circular
"Existing Group" the Company and its subsidiaries prior to
completion of the Acquisition
"Existing Ordinary Shares" the Ordinary Shares in issue at the
date of the Circular
"FCA" the Financial Conduct Authority of the UK
"FX" foreign exchange
"FSMA" the Financial Services and Markets Act 2000 (as
amended)
"Fundraising" together the Placing and the Open Offer
"General Meeting" or "GM" the general meeting of the Company as
described in the Circular, notice of which is set out at the end of
the Circular
"General Placing" the proposed issue and allotment at 58 pence
per share of the General Placing Shares to the Placees as described
in the Circular
"General Placing Shares" the 37,931,035 New Ordinary Shares to
be issued and allotted to the Placees pursuant to the General
Placing
"GM Date" the date of the General Meeting
"HMRC" Her Majesty's Revenue and Customs
"Group" the the Company and its subsidiaries from time to
time
"ISIN" International Securities Identification Number
"Issue Price" 58 pence per New Ordinary Share
"KYC" Know Your Customer
"Listing Rules" the Listing Rules of the UKLA made in accordance
with section 73A(2) of FSMA
"London Stock Exchange" London Stock Exchange plc
"Member Account ID" the identification code or number attached
to any member account in CREST
"Money Laundering Regulations" the Money Laundering Regulations
2007 (as amended and supplemented from time to time)
"Net Proceeds" the proceeds of the Fundraising less costs (and
assuming full subscription of the Open Offer Shares)
"New Ordinary Shares" the Placing Shares, the Open Offer Shares
and the Consideration Shares
"Official List" the Official List of the UK Listing
Authority
"Open Offer" the proposed issue and allotment at 58 pence per
share of up to 1,730,669 Open Offer Shares to Qualifying
Shareholders
"Open Offer Shares" the up to 1,730,669 New Ordinary Shares to
be issued and allotted to Qualifying Shareholders pursuant to the
Open Offer
"Ordinary Shares" ordinary shares of 1 penny each in the capital
of the Company
"Overseas Shareholders" or Shareholders with registered
addresses in, or who are citizens,
"Overseas Holders" residents or nationals of, jurisdictions
outside the UK
"Panel" the Panel on Takeovers and Mergers
"Participant ID" the identification code or membership number
used in CREST to identify a particular CREST member or other CREST
Participant
"Placees" those persons who have conditionally agreed to
subscribe for, in aggregate, 46,034,485 Placing Shares under the
Placing
"Placing" the VCT/EIS Placing and the General Placing (as
applicable)
"Placing Agreement" the conditional agreement dated 8 August
2017 between Cenkos and the Company relating to the Placing and the
Open Offer, details of which are set out in the Circular
"Placing Shares" the VCT/EIS Placing Shares and the General
Placing Shares
"PSR" the Payment Services Regulations 2009 (as amended)
"Qualifying CREST Holders" or Qualifying Holders holding Existing Ordinary Shares in
"Qualifying CREST Shareholders" uncertificated form
"Qualifying Holders" or Shareholders whose names appear on the
register of members of
"Qualifying Shareholders" FairFX on the Record Date as holders
of Existing Ordinary Shares and who are eligible to be offered Open
Offer Shares under the Open Offer in accordance with the terms and
conditions set out in the Circular
"Qualifying non-CREST Holders" Qualifying Holders holding Existing Ordinary Shares in
or "Qualifying non-CREST certificated form
Shareholders"
"Receiving Agent" Capita Asset Services
"Record Date" 5.00 p.m. on 3 August 2017
"Resolutions" the resolutions to be proposed at the General
Meeting as set out in the notice of General Meeting appended to the
Circular
"RIS" a regulatory information service as defined by the Listing
Rules
"Securities Act" the US Securities Act of 1933, as amended
"Sellers" the existing shareholders of the Target
"Shareholders" holders of Ordinary Shares
"SME" small and medium-sized enterprise
"Sterling" pounds sterling, the basic unit of currency in the
UK
"Target" CardOne
"UK" or "United Kingdom" the United Kingdom of Great Britain and
Northern Ireland
"UK Listing Authority" or "UKLA" the UK Listing Authority, being
the FCA acting as competent authority for the purposes of Part IV
of FSMA
"uncertificated" or recorded on the relevant register or other
record of the share or
"uncertificated form" other security as being held in
uncertificated form in CREST and title to which, by virtue of the
CREST Regulations, may be transferred by way of CREST
"US" or "United States" the United States of America, its
territories and possessions, any State of the United States, and
the District of Columbia
"VCT" Venture Capital Trust
"VCT/EIS Placing" the proposed issue and allotment at the Issue
Price of the VCT/EIS Placing Shares to the Placees
"VCT/EIS Placing Shares" the 8,103,450 New Ordinary Shares to be
issued and allotted to the Placees pursuant to the VCT/EIS
Placing
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Record Date for the Open Offer 5.00 p.m. on 3 August 2017
Announcement of the Acquisition, Placing and Open Offer 8 August
2017
Existing Ordinary Shares marked "ex" by the London Stock
Exchange 8.00 a.m. on 8 August 2017
Basic and Excess Entitlements credited to stock accounts in
CREST of Qualifying CREST Holders 9 August 2017
Recommended latest time for requesting withdrawal of
Basic Entitlements and Excess Entitlements from CREST 4.30 p.m.
on 17 August 2017
Latest time for depositing Basic Entitlements and/or
Excess Entitlements into CREST 3.00 p.m. on 18 August 2017
Latest time and date for splitting of Application Forms
(to satisfy bona fide market claims only) 3.00 p.m. on 21 August
2017
Latest time and date for receipt of Forms of Proxy 1.00 p.m. on
22 August 2017
Latest time and date for receipt of completed Application
Forms
and payment in full under the Open Offer or settlement of
relevant
CREST instruction (as appropriate) 11.00 a.m. on 23 August
2017
General Meeting 1.00 p.m. on 24 August 2017
Results of the General Meeting announced through a Regulatory
Information Service 24 August 2017
Expected date for Admission and commencement of dealings of
the
New Ordinary Shares and completion of the Acquisition 8.00 a.m.
on 25 August 2017
Expected date for New Ordinary Shares to be credited to CREST
stock accounts 25 August 2017
Expected date for despatch of definitive share certificates for
New Ordinary Shares on 1 September 2017
Notes:
(i) References to times in this announcement are to London time (unless otherwise stated).
(ii) If any of the above times or dates should change, the
revised times and/or dates will be notified by an announcement to
an RIS.
(iii) The timing of the events in the above timetable and in the
rest of this announcement is indicative only and subject to the
satisfaction of the Conditions to the Acquisition, Placing and Open
Offer, and assumes receipt of FCA approval under the PSR being
obtained prior to the date of the GM. Accordingly, it is possible
that Admission will be delayed, pending completion of any
outstanding conditions. However, Admission may not occur any later
than 15 September 2017.
(iv) In order to subscribe for Open Offer Shares under the Open
Offer, Qualifying Shareholders will need to follow the procedure
set out in Part III of the Circular and, where relevant, complete
the accompanying Application Form. If Qualifying Shareholders have
any queries on the procedure for acceptance and payment, or wish to
request another Application Form, they should contact Capita Asset
Services on 0371 664 0321. Calls are charged at the standard
geographic rate and will vary by provider. Calls outside the United
Kingdom will be charged at the applicable international rate. The
helpline is open between 9 am - 5.30 p.m., Monday to Friday
excluding public holidays in England and Wales. Please note that
Capita Asset Services cannot provide any financial, legal or tax
advice and calls may be recorded and monitored for security and
training purposes.
PLACING AND OPEN OFFER STATISTICS
Number of Existing Ordinary Shares in issue(1) 103,840,175
Basic Entitlement under the Open Offer 1 Open Offer Share for
every
60 Existing Ordinary Shares
Issue Price of each New Ordinary Share 58 pence
Market Price per Existing Ordinary Share (2) 72 pence
Discount to Market Price of 72 pence per Existing Ordinary Share
(2)
19.4 per cent.
Number of Open Offer Shares to be offered for subscription
by
Qualifying Shareholders 1,730,669
Number of Placing Shares to be issued pursuant to the
Placing
46,034,485
Maximum proceeds of the Open Offer (before expenses) (3)
up to GBP1.0 million
Maximum proceeds of the Placing (before expenses) (3) GBP26.7
million
Maximum proceeds of the Fundraising (before expenses) (3)
up to GBP27.7 million
Estimated maximum net proceeds of the Fundraising up to GBP26
million
Number of Consideration Shares 3,762,930
Maximum Enlarged Share Capital following Admission(2)
155,368,259
Maximum percentage of Enlarged Share Capital represented by the
Placing Shares(2) 29.6 per cent.
Maximum percentage of Enlarged Share Capital represented by the
Open Offer Shares(2) 1.1 per cent.
ISIN for Basic Entitlements GB00BYXCYL99
ISIN for Excess Entitlements GB00BYXCYM07
Notes:
1. On 7 August 2017, being the last practicable date prior to
the publication of this announcement.
2. Based on the Closing Price on 7 August 2017, being the last
practicable date prior to the publication of this announcement.
3. Assuming full subscription under the Open Offer.
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACQPRMBTMBMMTAR
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August 08, 2017 02:01 ET (06:01 GMT)
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