Proposed Open Offer and Notice of General Meeting
August 02 2010 - 12:00PM
UK Regulatory
TIDMEVOL
RNS Number : 3934Q
Evolve Capital PLC
02 August 2010
02 August 2010
Evolve Capital plc
('Evolve' or the 'Company')
Notice of General Meeting, Proposed Open Offer, Share Capital Reorganisation and
Waiver of Obligation under Rule 9 of the Takeover Code (the 'Proposals')
The Board of Evolve announces that a circular is today being sent to
shareholders of the Company (the "Circular") giving notice of a general meeting
of the Company to be held at the offices of Fasken Martineau LLP, 17 Hanover
Square, London W1S 1HU at 10.00 am on 25 August 2010. The purpose of the
Circular is to provide background on and set out the reasons for the Proposals,
to explain why Directors consider the Proposals are in the best interests of the
Company and its shareholders as a whole and to set out the resolutions to be
considered at the general meeting to approve:
· a share issue to raise up to approximately GBP1 million (before expenses)
through an Open Offer of up to 200,797,014 New Ordinary Shares to be issued at
0.5 pence per Open Offer Share;
· the division of every Existing Ordinary Share into One New Share and nine
Deferred Shares and every unissued Ordinary Share into 10 New Shares; and
· a Waiver of Obligation under Rule 9 of the Takeover Code.
Extracts from the Circular, including the expected timetable and Open Offer
statistics, are set out below and the document will be available shortly on the
Company's website at www.evolvecapital.co.uk, free of charge in accordance with
the requirements of the AIM Rules. All defined terms used in this announcement
shall have the meaning given to them in the Circular unless otherwise defined
herein.
Background to and reasons for the Fundraising
At the time of its admission to AIM in December 2007, Evolve raised
approximately GBP4,000,000 (before costs) to enable it to cover its working
capital requirements and to invest in companies already on the PLUS-quoted
market or seeking to join the PLUS-quoted market.
Since that time the Company has fully utilised its cash resources and has
invested in one unlisted company, four companies that have been admitted to the
PLUS-quoted market and has acquired a controlling stake in AIM listed Astaire
Group plc.
Some of these investments have grown significantly in value. Most notable among
them are Woodspeen Training plc and 3D Diagnostic Imaging plc.
The Directors believe that the ultimate realisation of the investments could
deliver significant returns to shareholders, in time. None of the investments
benefit from significant liquidity in their shares and an early realisation of
shareholdings in any investment is unlikely to realise full value.
The Directors wish to have the ability to participate in any further
fundraisings by these companies as they develop into the future and to invest in
new and interesting opportunities as they present themselves as well as to cover
the limited working capital requirements of the Company. In order to do this the
Company needs to raise additional equity capital. This is being done at a
significant discount to the Company's current share price to encourage
shareholders to participate, to allow them an opportunity to average down the
cost of their investment in the Company and also in recognition of the difficult
economic circumstances currently being experienced and the uncertain environment
in which the Company operates.
If the Resolutions are not passed by Shareholders at the General Meeting, the
Open Offer would not be able to proceed. In this situation, the value inherent
in the current investments made by the Company may not be fully realised or
realised at all and the Company would need to make alternative arrangements to
meet its day to day working capital requirements which the Directors consider
are unlikely to be in the best interests of Shareholders. In the event that the
Company is unable to make such alternative arrangements there is a risk that the
value of shares could be significantly reduced. In the event that the
Resolutions are not passed by the Shareholders, any monies subscribed pursuant
to the Open Offer will be returned to the Shareholder.
It is the Directors' intention that the proceeds of the Open Offer be applied to
support, through further investment, in companies where the Company has already
invested, to invest in other interesting opportunities which the Directors
consider meet the Company's investing strategy and to provide for the Company's
working capital requirements generally as well as to pay the costs of the Open
Offer.
To maximise the proportion of the Open Offer proceeds available for further
investment by the Company the Directors have sought to reduce the day to day
running costs of the Company.
Details of the Open Offer
Evolve is proposing to raise up to approximately GBP1 million (before expenses)
pursuant to the issue of up to 200,797,014 New Shares to be issued through an
Open Offer at 0.5 pence per Open Offer Share. The Issue Price represents a
discount of approximately 71.43 per cent. to the price of 1.75 pence per share,
being the mid-market price of the Company's Existing Ordinary Shares at the
close of business on 30 July 2010.
The Open Offer is being made on a pre-emptive basis, allowing all Qualifying
Shareholders the opportunity to participate. The Open Offer is underwritten and
so the Fundraising is not conditional upon the level of applications made to
subscribe under the Open Offer.
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:
9 Open Offer Shares for every 8 Existing Ordinary Shares
and so on in proportion for 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 Qualifying Holder's Entitlement.
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 such Admission will
become effective and that dealings will commence at 8.00 a.m. on 26 August 2010.
Underwriting Agreement
Kimono, which is an existing Shareholder, and the Company have entered into the
Underwriting Agreement. Under the terms of the Underwriting Agreement if
Qualifying Shareholders validly subscribe for less than 200,797,014 Open Offer
Shares then Kimono will subscribe for the Underwriting Amount of Loan Notes. In
other words, to the extent that the gross proceeds of the Open Offer are less
than GBP1,003,985, then Kimono will subscribe for an amount of Loan Notes equal
to the shortfall, thus ensuring that the proceeds received by the Company are
GBP1,003,985 before expenses.
The Underwriting Agreement is subject to the satisfaction, amongst other
matters, of the following conditions on or before 26 August 2010 (or such later
date being not later than 8.00 a.m. on 10 September 2010, as the Company may
decide):
(i) the Resolutions each having been duly passed;
(ii) the Panel Waiver having been granted; and
(iii) Admission becoming effective.
The Open Offer Shares will, when issued and fully paid, rank pari passu in all
respects with the New Shares which derive (as part of the Share Capital
Reorganisation) from the Existing Ordinary Shares, including the right to
receive all dividends and other distributions declared, made or paid after the
date of Admission.
Share Capital Reorganisation
In order to permit Open Offer Shares to be subscribed for at 0.5 pence (and for
the conversion rights contained in the Loan Notes to be exercised at the same
price), which is lower than the current par value of the Company's ordinary
shares (i.e. 1 pence), the Company is proposing to divide each issued Existing
Share into one New Share (i.e. an ordinary share of 0.1 pence) and nine deferred
shares of 0.1 pence each and to divide each unissued Ordinary Share into 10 New
Shares.
New share certificates will not be issued and the existing share certificates
will continue to be valid following the Share Capital Reorganisation.
Shareholders who hold their shares in the Company through CREST should note that
the Company's ISIN number (GB00B29WXB29) will continue to be valid.
The Deferred Shares will have no income or voting rights. The only right
attaching to the Deferred Shares will be to receive the amount paid up above on
a winding-up of the Company once the holders of Ordinary Shares have received
GBP1,000,000 per New Share held. The Deferred Shares will not be transferable
and will be held by the secretary of the Company as trustee for the holders.
Background to and reasons for the Panel Waiver
Oliver Vaughan, his wife and his children, Edward Vandyk, his wife and his
children, David Snow, Kimono, Thomas Vaughan, and HSBC Global Custody Nominee
(UK) Limited are deemed to be acting in concert in relation to Evolve for the
purposes of the Takeover Code. As at 30 July 2010, being the last practicable
date prior to the publication of the Circular the Concert Party is interested
in, in aggregate, 53,673,017 Existing Ordinary Shares representing 30.07 per
cent. of the Existing Share Capital. Further details about the Concert Party and
the holdings of the Concert Party are contained in the Circular.
The terms of the Open Offer and the issue of New Shares to the Concert Party
give rise to certain considerations under the Takeover Code. Brief details on
the Panel, the Takeover Code and the protections they afford are described
below.
The Takeover Code is issued and administered by the Panel. The Takeover Code
applies to all takeovers and merger transactions, however effected, where the
offeree company is, inter alia, a listed or unlisted public company resident in
the United Kingdom and to certain categories of private companies. Evolve is
such a public company and its shareholders are entitled to the protections
afforded by the Takeover Code.
Under Rule 9 of the Takeover Code, any person who acquires, whether by a series
of transactions over a period of time or not, an interest (as defined in the
Takeover Code) in shares which (taken together with shares in which persons
acting in concert with him are interested) carry 30 per cent. or more of the
voting rights of a company which is subject to the Takeover Code, is normally
required by the Panel to make a general offer in cash to all other shareholders
of that company to acquire the balance of the equity share capital of the
company.
Rule 9 of the Takeover Code also provides, inter alia, that where any person,
together with persons acting in concert with him, is interested in shares
carrying not less than 30 per cent. but does not hold shares carrying more than
50 per cent. of that company's voting rights and such person, or any person
acting in concert with him, acquires an interest in any additional shares, such
person is normally required to make a general offer in cash to all other
shareholders of that company to acquire the balance of the equity share capital
of the company.
An offer under Rule 9 must be in cash and at the highest price paid within the
12 months prior to the announcement of the offer for the shares in the company
by the person required to make the offer or any person acting in concert with
him.
Under the Takeover Code, a concert party arises where persons acting together
pursuant to an agreement or understanding (whether formal or informal)
co-operate to obtain or consolidate control of, or frustrate an offer for, a
company to which the Takeover Code applies.
Control means an interest, or interests in shares carrying 30 per cent. or more
of the voting rights of a company, irrespective of whether such interest or
interests give de facto control.
Following completion of the Open Offer, the Concert Party may, in aggregate,
hold New Shares carrying more than 50 per cent. of Evolve's voting share
capital. However, the Panel has agreed, subject to the passing of Resolution 1
by the Independent Shareholders on a poll at the General Meeting, to waive any
obligation to make a general offer that would otherwise arise as a result of the
proposed issues of New Shares. The Independent Shareholders are the Shareholders
other than the members of the Concert Party.
Should the Concert Party hold more than 50 per cent., (for so long as they
continue to be treated as acting in concert) they will be able to acquire
interests in further New Shares without incurring any further obligation under
Rule 9 to make a general offer.
Current trading and prospects
The 12 month period to 31 December 2009 proved a very difficult time for Evolve.
A number of the financial services businesses in the Group that the Board
expected to flourish disappointedly did not.
Significant management resource had to be applied to Astaire Group Plc
("Astaire"), including reviewing and refocusing the strategy, exiting some areas
of activity, reducing operating costs as well as pursuing complementary
acquisitions. With the restructuring of Astaire now substantially completed
Evolve has stepped back from its direct involvement in Astaire and has reverted
to treating its investment in this company in the same manner as it treats its
other investments.
The Board is taking steps to reduce the running costs of the business as far as
possible. The outlook for the coming year is by no means certain and the Board's
expectations remain cautious.
+-----------------------------------------------+----------------------+
| Expected timetable of principal events | 2010 |
+-----------------------------------------------+----------------------+
| | |
+-----------------------------------------------+----------------------+
| Record Date and time for the Open Offer | 5.00 p.m. on 30 July |
+-----------------------------------------------+----------------------+
| Announcement of the Open Offer and Posting | 2 August |
+-----------------------------------------------+----------------------+
| Ex-entitlement date of the Open Offer | 3 August |
+-----------------------------------------------+----------------------+
| Latest time and date for splitting of | |
| Application Forms | |
+-----------------------------------------------+----------------------+
| (to satisfy bona fide market claims only) | 3.00 p.m. on 20 |
| | August |
+-----------------------------------------------+----------------------+
| Latest time and date for receipt of proxy | 10.00 a.m. on 23 |
| | August |
+-----------------------------------------------+----------------------+
| Latest time and date for receipt of completed | 11.00 a.m. on 24 |
| Application Forms | August |
+-----------------------------------------------+----------------------+
| General Meeting | 10.00 a.m. on 25 |
| | August |
+-----------------------------------------------+----------------------+
| Admission and commencement of dealings of the | 26 August |
| Open Offer Shares | |
+-----------------------------------------------+----------------------+
| Open Offer Shares credited to CREST stock | |
| accounts for uncertificated holders | 26 August |
+-----------------------------------------------+----------------------+
| Despatch of definitive share certificates for | week commencing 6 |
| Open Offer Shares for certificated holders | September |
+-----------------------------------------------+----------------------+
| | |
+-----------------------------------------------+----------------------+
| Open Offer Statistics | |
+-----------------------------------------------+----------------------+
| | |
+-----------------------------------------------+----------------------+
| Market price per Existing Ordinary Share (1) | 1.75 pence |
+-----------------------------------------------+----------------------+
| Number of Existing Ordinary Shares in issue | 178,486,235 |
| (2) | |
+-----------------------------------------------+----------------------+
| Price of each Open Offer Share | 0.5 pence |
+-----------------------------------------------+----------------------+
| Number of Open Offer Shares to be offered for | |
| subscription by the Company | up to 200,797,014 |
+-----------------------------------------------+----------------------+
| Maximum proceeds of Open Offer (before | GBP1,003,985 |
| expenses) | |
+-----------------------------------------------+----------------------+
| Maximum Enlarged Share Capital following | 379,283,249 |
| Admission (3) | |
+-----------------------------------------------+----------------------+
| Maximum percentage of Enlarged Share Capital | |
| represented by the Open Offer Shares (3) | 52.9 per cent. |
+-----------------------------------------------+----------------------+
Notes:
(1) Mid-market price on AIM on 30 July 2010, being the last practicable Business
Day prior to the announcement of
the Open Offer.
(2) As at 30 July 2010, being the last practicable Business Day prior to the
announcement of the Open Offer.
(3) Assuming full take up of the Open Offer.
**ENDS**
For further information please contact:
+---------------------------------------------+----------------------+
| Evolve Capital plc | Tel: 020 7937 4445 |
| Oliver Vaughan, Chairman | |
| | |
| | |
+---------------------------------------------+----------------------+
| Allenby Capital Limited | Tel: 020 3328 5656 |
| Nick Naylor | |
| Nick Athanas | |
| | |
+---------------------------------------------+----------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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