TIDMLCG
RNS Number : 8680J
London Capital Group Holdings PLC
18 June 2014
The following amendment has been made to the 'Proposed
Financing' announcement released on 17 June 2014 at 18.00 under RNS
No 8635J.
The first sentence of the announcement incorrectly contained the
word 'million', which has now been removed.
All other details remain unchanged. The full revised text is
shown below:
London Capital Group Holdings plc
("London Capital" or the "Company")
Proposed Financing and Notice of General Meeting
The Board of London Capital is pleased to announce that it
intends to raise up to GBP17,500,000 through a proposed
Financing.
The Proposed Financing is conditional, inter alia, on the
passing of the Resolutions, by shareholders to be proposed at the
General Meeting convened for 3 July 2014.
It is intended that Charles-Henri Sabet will be appointed to the
Board of the Company and the board of London Capital Group Limited
("LCG"), and will hold the position of Executive Chairman of the
Company and of LCG.
A circular containing the details of the Proposed Financing (the
"Circular") has today been posted to shareholders and will be
available to view shortly on the Company's website at:
www.londoncapitalgroup.com.
The same definitions apply throughout this announcement as are
applied in the Circular.
Commenting, Kevin Ashby, CEO of London Capital said,"This is an
exciting development for the London Capital group. The additional
funds and the involvement of Charles-Henri Sabet will enable the
business to accelerate our strategy of introducing new products and
growing internationally."
ENDS
For further information, please contact:
www.londoncapitalgroup.com
London Capital Group
Kevin Ashby, Chief Executive
Officer 020 7456 7000
Smithfield Consultants
John Kiely 020 7360 4900
Cenkos Securities plc
Nicholas Wells 020 7397 8900
GLIO Holdings Limited
Bell Pottinger
Gavin Davis 020 7861 3159
Introduction
On 1 May 2014, the Company and GLIO signed heads of terms
setting out the terms of the Financing (the "GLIO Heads of Terms").
Pursuant to the GLIO Heads of Terms, the Company and GLIO agreed a
legally binding term that, subject to the prior approval (if
required) by the Takeover Panel, if (following the first public
announcement on 2 May 2014 referred to above):
-- the Company elects not to proceed with the Financing, due to
the announcement of an alternative proposal or any form of offer
from a third party (including any form of capital distribution),
then the Company shall pay to GLIO a break/abort fee of GBP225,000
(being equal to 1.5% of GLIO's maximum investment), to cover fees
and expenses incurred by GLIO in connection with matters referred
to in the GLIO Heads of Terms; or
-- if GLIO elects not to proceed with the Financing for any
reason, save for the Approvals not being granted, then GLIO shall
pay to the Company a break/abort fee of GBP112,500 (being equal to
0.75% of GLIO's maximum investment), to cover fees and expenses
incurred by the Company in connection with matters referred to in
the GLIO Heads of Terms.
In addition, upon completion of the Financing, the Company will
pay Peterhouse Corporate Finance Limited, the sole financial
advisor to GLIO, a fee equal to 1.5% of the investment made by GLIO
under the GLIO Convertible Loan Note Instrument.
GLIO will, conditional on the passing of the Resolutions and the
grant of the Approvals, subscribe for the GLIO Convertible Loan
Notes in an aggregate principal amount of between GBP12,500,000 and
GBP15,000,000.
The Company is seeking commitments from the Institutional
Investors to subscribe the Institutional Investors Convertible Loan
Notes. There is no guarantee that any such commitments will be
received. It is proposed that, if any such commitments are
received, then the Institutional Investors will, conditional on the
passing of the Resolutions, the grant of the Approvals and the GLIO
Convertible Loan Note Instrument becoming unconditional in all
respects in accordance with its terms, subscribe for the
Institutional Investors Convertible Loan Notes in an aggregate
principal amount of between GBP500,000 and GBP2,500,000.
Therefore the Financing is conditional upon, amongst other
things, the grant of the Approvals, and the passing of the
Resolutions by Shareholders to authorise the Directors to grant
rights to subscribe for or to convert any security into Ordinary
Shares in connection with the issue of the Convertible Loan Notes
and the Warrants. Accordingly, the General Meeting is being
convened for the purpose of considering the Resolutions to approve
such authorities. Further details of these Resolutions are set out
below.
Please note that there is no guarantee that the Approvals will
be obtained by the Long Stop Date. Further details of the Approvals
which are sought (and the status of the applications in connection
with the Approvals) are set out below under the heading
"Approvals".
The Financing will comprise:-
-- in the case of GLIO, between GBP12,500,000 and GBP15,000,000
of GLIO Convertible Loan Notes and for up to 75,000,000 GLIO
Warrants (assuming the maximum principal amount of GLIO Convertible
Loan Notes is subscribed and the Conversion Price is calculated as
being GBP0.27); and
-- in the case of the Institutional Investors (assuming the
Institutional Investors Convertible Loan Notes are subscribed
pursuant to the Institutional Investors Convertible Loan Note
Instrument), between GBP500,000 and GBP2,500,000 of Institutional
Investors Convertible Loan Notes and for up to 12,500,000
Institutional Investors Warrants (assuming the maximum principal
amount of Institutional Investors Convertible Loan Notes is
subscribed and the Conversion Price is calculated as being
GBP0.27).
The number of Warrants to be issued may be greater than the
number of Warrants specified above depending on the Conversion
Price and the amount of Convertible Loan Notes subscribed by the
Investors.
The Convertible Loan Notes will pay interest on the principal
amount at 5 per cent. per annum and will be convertible at any time
into Ordinary Shares at the Conversion Price. Any redemption of the
Convertible Loan Notes prior to, on or after the Maturity Date,
shall only be made after relevant permission to do so has been
granted by the FCA. The Convertible Loan Note Issue has not been
underwritten.
Background to and reasons for the Financing
As stated in the Company's 2013 Annual Report the Board has
adopted a three-stage strategy with the aim of returning the Group
to growth.
The first stage has already been completed with the successful
migration of the Group's IT platform. The Company has also made
improvements in the level of management information available and
are also starting to improve key business processes.
As LCG's activities are centered on the UK market, one of the
most competitive markets in the world, the Board believes that
product innovation is the primary route to differentiating LCG from
its competitors. Accordingly, the Board believes that the Group
should focus its efforts on creating and promoting new products
utilising viral marketing, PR and online campaigns to attract new
clients at a reduced cost with a view to being recognised as a
Company with innovative products.
To further support the Company's growth the Board also intends
to develop business channels in less mature markets, attracting new
clients and reducing the Group's current dependence on the UK
market.
Whilst the Board has a clear plan and strategy for the Group's
future growth the Board recognises that, despite the Group being
well capitalised, the Company faces considerable risks in being
able to deliver on its growth plan and will be, to an extent,
reliant on growing in a static UK market, trading conditions
improving from their current level and being able to deliver
innovative products that appeal to the trading community. However,
the Board is mindful that in order to continually develop products
and drive overseas expansion, the Company is likely to at some
stage require additional funds.
In 2013 the Board was introduced to Charles-Henri Sabet as a
potential non-executive director. Mr Sabet spent a considerable
amount of time getting to know the Company's business,
understanding the Group and the Board's longer-term growth
strategy, following which it was proposed that he become more
involved in the day-to-day running of the Company. He also
recognised that the execution ability of the Company could be
enhanced and accelerated with new capital, improved technology and
improved access to institutional and global markets.
Given the breadth of Mr Sabet's connections he identified a
group of individuals who he believed could help deliver the capital
and technology that the Company needed to execute its growth plan
and created GLIO as a vehicle through which their contribution
could be channelled.
The Convertible Loan Notes and the Warrants allow for a
mechanism whereby the Group can embark on the acceleration of its
strategy as well as increase its capabilities in the institutional
markets. The net proceeds of the Financing shall be made
immediately available to LCG without limitation to fund LCG's
regulatory capital requirements. Whilst the capital injection is
very attractive to the Group, the Board further believes that the
additional technological capability and market access that GLIO
brings will have a significant impact on the prospects for the
Company in the short and medium term.
The Board believes that the combination of proposed new capital
from GLIO and the proposed involvement of Mr Sabet and GLIO is
highly attractive and in the best interests of the Company. In
addition, the Board believes that the conditional subscription of
the Institutional Investors Convertible Loan Notes would be in the
best interests of the Company and therefore the Board is continuing
to seek commitments from the Institutional Investors to subscribe
the Institutional Investors Convertible Loan Notes. There is no
guarantee that any such commitments will be received.
Information on the Investors
GLIO
The Company has agreed to issue GLIO with the GLIO Convertible
Loan Notes and the GLIO Warrants.
GLIO is a Jersey incorporated special purpose vehicle, which has
been established for the sole purpose of making this investment
into London Capital. GLIO was incorporated on 3 April 2014 and will
not commence business operations until an investment into London
Capital has been completed.
The largest shareholder in GLIO is ILOG Investments Limited, a
Jersey-incorporated company which is wholly owned by Mr
Charles-Henri Sabet. The other large shareholders of GLIO are STP
Fund (EUR) Ltd, Dr Jamal Kaddaj and Simon Benhamou. The remaining
shareholders in GLIO each hold less than 10 per cent. of the issued
share capital of GLIO.
The directors of GLIO are:
Kathleen Gillen; and
Dermot Joseph Boylan.
Ms Gillen and Mr Boylan are both Partners of Moore Stephens,
Jersey.
Institutional Investors
As stated above, the Board believes that the conditional
subscription of the Institutional Investors Convertible Loan Notes
would be in the best interests of the Company and therefore the
Board is continuing to seek commitments from the Institutional
Investors to subscribe the Institutional Investors Convertible Loan
Notes. There is no guarantee that any such commitments will be
received. Further announcement(s) will be made in due course if
appropriate including as regards the identity of the Institutional
Investors who will subscribe for the Institutional Investors
Convertible Loan Note Instruments and their subscriptions (if
any).
Current Trading and Prospects
The Company released a trading statement through a Regulatory
Information Service on 2 May 2014, the full text of which can be
found on the Company's website at www.londoncapitalgroup.com.
In summary, whilst the Company experienced an increase in
trading activity in January and February 2014, activity in March
was muted resulting in trading revenue for Q1 2014 being GBP4.7
million (2013 continuing operations: GBP7.6 million). Average daily
spread betting and CFD trades in the quarter were down 11 per cent.
on the prior year, moving from 24,298 to 21,586.
The loss before tax for Q1 2014 was GBP0.4 million (2013
continuing operations: GBP0.7 million profit).
The Group's net cash resources (including amounts due from
brokers) were GBP18.1 million at 31 March 2014 and, following the
payment of settled claims in Q1 2014, the FOS claims provision at
31 March 2014 was GBP1.5 million.
The Company is in initial discussions (subject to contract) with
Algoweb S.A.R.L ("Algoweb"), a company in which Mr Charles-Henri
Sabet currently has an interest, in connection with the possible
licensing to LCG of a straight-through processing (STP) trading
solution. The Company will commence due diligence in connection
with the proposed licensing referred to above as soon as reasonably
practicable following the entry into the GLIO Convertible Loan Note
Instrument, and the GLIO Convertible Loan Note Instrument
recognises that a licensing agreement will not be entered into
until after the issue of the GLIO Convertible Loan Notes. There is
no guarantee that any licensing agreement will be concluded or
concluded on the basis referred to above. A further announcement
will be made in due course as appropriate.
From time to time the Company is in discussions with third
parties (including competitors) with regard to possible mergers and
acquisitions transactions. The Company, as at the date of the
Circular, has no current intention to pursue any such mergers or
acquisitions or similar transactions (other than as disclosed in
the Circular). Should the position change, an appropriate
announcement will be made
The Approvals
The Financing is conditional on the following approvals being
granted by the FCA:
1. Approved Persons Regime
An approved person is a person who has been approved by either
or both of the FCA and the Prudential Regulation Authority to
perform certain functions for or on behalf of an authorised firm
(known as "controlled functions"). Section 59 of FSMA requires
authorised firms to take reasonable care not to allow persons to
perform controlled functions without the approval of the
appropriate regulator. An application was submitted to the FCA
using Form A under section 59 of FSMA on 28 April 2014, seeking
approval for the appointment of Charles-Henri Sabet to carry on the
CF1 (Director) function in relation to LCG (this being on the basis
of his proposed appointment as Executive Chairman of the Company
and of the Company itself. The approval process can take up to
three months, and without approval being granted, Charles-Henri
Sabet will not be able to be appointed as Executive Chairman of the
Company, nor carry out any other controlled functions for LCG.
2. Change of Control Regime
Any person who decides to acquire or increase control over an
authorised firm must notify the appropriate regulator in writing
before proceeding with the acquisition or increase in control in
accordance with section 178 of FSMA. Failure to obtain the
appropriate approval constitutes a criminal offence. GLIO would
become an indirect "controller" of LCG on the basis that it plans
to convert a portion of the Convertible Loan Notes it will acquire
under the Financing into approximately 25% of the Ordinary Shares.
As the Company is the parent company of LCG, an FCA-authorised
firm, a section 178 notice was submitted to the FCA by GLIO on 1
May 2014. A section 178 notice was also submitted by Charles-Henri
Sabet to the FCA on the same date. Charles-Henri Sabet would become
an indirect "controller" of LCG on the basis that he would be able
to exercise a significant influence on LCG through his shareholding
in GLIO. The FCA can take up to 90 working days to assess a
complete application, and until such time as approval is granted,
the Financing cannot be completed.
The Financing
The Financing is to be structured as follows:
The Convertible Loan Notes
GLIO will, conditional on the passing of the Resolutions and the
grant of the Approvals, subscribe for the GLIO Convertible Loan
Notes in an aggregate principal amount of between GBP12,500,000 and
GBP15,000,000.
The Company is seeking commitments from the Institutional
Investors to subscribe the Institutional Investors Convertible Loan
Notes. There is no guarantee that any such commitments will be
received. It is proposed that, if any such commitments are
received, then the Institutional Investors will, conditional on the
passing of the Resolutions, the grant of the Approvals and the GLIO
Convertible Loan Note Instrument becoming unconditional in all
respects in accordance with its terms, subscribe for the
Institutional Investors Convertible Loan Notes in an aggregate
principal amount of between GBP500,000 and GBP2,500,000.
The Convertible Loan Notes are convertible into new Ordinary
Shares at the Conversion Price. The Convertible Loan Notes will be
issued in multiples of GBP1.00.
Payments of interest (whether by way of the issue of Ordinary
Shares or otherwise) on the Convertible Loan Notes will be subject
to deduction on account of UK income tax at the basic rate
(currently 20%) unless, at the time the payment is made, either:
(a) the Company reasonably believes that the person beneficially
entitled to the interest is: (i) a company resident in the UK; or
(ii) a company not resident in the UK that carries on a trade in
the UK through a permanent establishment and which brings into
account the interest in computing its UK taxable profits; or (iii)
a partnership each member of which is a company referred to in (i)
or (ii) above, provided that HMRC has not given a direction (in
circumstances where it has reasonable grounds to believe that it is
likely that one of the above exemptions is not available in respect
of such payment of interest at the time the payment is made) that
the interest should be paid under deduction of tax, or (b) the
Company has received a direction permitting payment without
withholding or deduction from HMRC in respect of such relief as may
be available pursuant to the provisions of any applicable double
taxation treaty.
The principal terms of the Convertible Loan Note Instruments
are, inter alia, as follows:
GLIO Convertible Loan Note Instrument
Status/Security
The GLIO Convertible Loan Notes will be unsecured and shall be
fully subordinated to the liabilities of all other unsecured
creditors of the Company.
Interest
Until the GLIO Convertible Loan Notes are redeemed or converted
in accordance with the provisions of the GLIO Convertible Loan Note
Instrument, interest shall accrue on the principal amount of the
GLIO Convertible Loan Notes, which are outstanding at 5% per annum
(the "Interest Rate") and be convertible into Ordinary Shares at
the Conversion Price at the election of GLIO. In addition, the
Company is also liable to pay a minimum interest return (by means
of the issue of Ordinary Shares at the Conversion Price in
satisfaction thereof) calculated using the following formula:
MIR = (P x IR) x Y
Where:
Pis the principal amount of Notes subscribed for by GLIO;
MIRis the Minimum Interest Return
IRis the Interest Rate; and
Yis 7 years.
On conversion of some or all of the GLIO Convertible Loan Notes
all of the accrued but unpaid interest and a pro rata amount of the
Minimum Interest Return on such GLIO Convertible Loan Notes less
any interest already paid or accrued but unpaid shall be converted
into new fully paid Ordinary Shares at the Conversion Price. Such
conversion will be in satisfaction of the Company's obligation to
pay interest in respect of those GLIO Convertible Loan Notes.
No interest under the GLIO Convertible Loan Note Instrument
including the Minimum Interest Return shall be payable by the
Company in cash. Where the Company is required to deduct tax from
payments of interest as set out above, it is required under the
GLIO Convertible Loan Note Instrument to pay such additional
amounts to the relevant holder of GLIO Convertible Loan Notes so
that such holder receives a net amount (after the deduction of
withholding tax) as will equal the full amount which such holder
would have received had no deduction of withholding tax been
made.
Conversion Price
The GLIO Convertible Loan Note Instrument provides the
methodology for determining the price at which both the GLIO
Convertible Loan Notes and the Institutional Investors Convertible
Loan Notes and interest thereon and the Minimum Interest Return are
to be converted into Ordinary Shares, and such methodology is based
on the net current assets of the Company to be agreed between the
Company and GLIO based on a balance sheet to be prepared by the
Company as at 31 August 2014. The GLIO Convertible Loan Note
Instrument provides that (in the absence of relevant adjustment
events) in no circumstances can the Conversion Price exceed GBP0.27
nor be lower than GBP0.10. Following agreement of the net current
assets in accordance with the GLIO Convertible Loan Note
Instrument, the Conversion Price shall be calculated in accordance
with the following formula:
CP = CPS - D%
Where:
BCPS is the base cash per share of GBP0.2884 calculated as at 31
March 2014;
BP is the base price of GBP0.27;
CP is the Conversion Price;
CPS is the cash per share equal to (NCA/S) x 100;
D is the percentage discount applied to CPS equal to 100 -
(BP/BCPS x 100);
NCA is the amount of net current assets set out in the agreed
balance sheet;
S is the 55,800,908 ordinary shares in issue in the Company,
Provided that if the NCA is greater than GBP16,094,642, the
Conversion Price shall be GBP0.27.
Redemption
Unless converted, the GLIO Convertible Loan Notes will be
redeemed in full on the Maturity Date or at the election of GLIO,
following LCG becoming insolvent (as defined in section 123 of the
Insolvency Act 1986) or is otherwise put into liquidation provided
that such redemption shall only be made provided relevant
permission to do so has been granted by the FCA. On redemption, any
accrued but unpaid interest shall be converted at the Conversion
Price into new Ordinary Shares. When the GLIO Convertible Loan
Notes become payable, the Company shall pay to GLIO the full
principal amount of the GLIO Convertible Loan Notes to be
repaid.
Conversion
Each GLIO Convertible Loan Note (and any interest) will be
convertible at the election of GLIO at any time upon 10 Business
Days' notice following the issue of the GLIO Convertible Loan Notes
before the Maturity Date into new Ordinary Shares at the Conversion
Price, provided that any such conversion is effected in respect of
not less than 5,000,000 Ordinary Shares.
The terms of the GLIO Convertible Loan Note Instrument provide
that GLIO Convertible Loan Notes may not be converted unless in
accordance with the terms of the GLIO Convertible Loan Note
instrument.
Miscellaneous
Under the GLIO Convertible Loan Note Instrument, the Company
gives certain warranties and undertakings to GLIO and GLIO gives
certain warranties and undertakings to the Company.
Institutional Investors Convertible Loan Note Instrument
The Company is seeking commitments from the Institutional
Investors to subscribe the Institutional Investors Convertible Loan
Notes. There is no guarantee that any such commitments will be
received. It is proposed that, if any such commitments are
received, then the Institutional Investors will, conditional on the
passing of the Resolutions, the grant of the Approvals and the GLIO
Convertible Loan Note Instrument becoming unconditional in all
respects in accordance with its terms, subscribe for the
Institutional Investors Convertible Loan Notes in an aggregate
principal amount of between GBP500,000 and GBP2,500,000. It is
intended that any Institutional Investors Convertible Loan Notes
will be issued substantially on the terms set out below:
Status/Security
The Institutional Investors Convertible Loan Notes will be
unsecured and shall be fully subordinated to the liabilities of all
other unsecured creditors of the Company.
Interest
Until the Institutional Investors Convertible Loan Notes are
redeemed or converted in accordance with the provisions of the
Institutional Investors Convertible Loan Note Instrument, interest
shall accrue on the principal amount of the Institutional Investors
Convertible Loan Notes, which are outstanding at 5% per annum (the
"Interest Rate") and be convertible into Ordinary Shares at the
Conversion Price at the election of the Institutional Investors. In
addition, the Company is also liable to pay a minimum interest
return (by means of the issue of Ordinary Shares at the Conversion
Price in satisfaction thereof) calculated using the following
formula:
MIR = (P x IR) x Y
Where:
P is the principal amount of Notes subscribed for by the
Institutional Investors;
MIR is the Minimum Interest Return
IR is the Interest Rate; and
Y is 7 years.
On conversion of some or all of the Institutional Investors
Convertible Loan Notes all of the accrued but unpaid interest and a
pro rata amount of the Minimum Interest Return on such
Institutional Investors Convertible Loan Notes less any interest
already paid or accrued but unpaid shall be converted into new
fully paid Ordinary Shares at the Conversion Price. Such conversion
will be in satisfaction of the Company's obligation to pay interest
in respect of those Institutional Investors Convertible Loan
Notes.
No interest under the Institutional Investors Convertible Loan
Note Instrument including the Minimum Interest Return shall be
payable by the Company in cash.
Conversion Price
The GLIO Convertible Loan Note Instrument provides the
methodology for determining the price at which the Institutional
Investors' Convertible Loan Notes and interest thereon and the
Minimum Interest Return are to be converted into Ordinary Shares,
and such methodology is based on the net current assets of the
Company to be agreed between the Company and GLIO based on a
balance sheet to be prepared by the Company as at 31 August 2014.
The GLIO Convertible Loan Note Instrument provides that (in the
absence of relevant adjustment events) in no circumstances can the
Conversion Price exceed GBP0.27 nor be lower than GBP0.10.
Following agreement of the net current assets in accordance with
the GLIO Convertible Loan Note Instrument, the Conversion Price
shall be calculated using the same formula as the Conversion Price
calculation for the GLIO Convertible Loan Note Instrument, as
described above.
If the net current assets are less than GBP8,500,000, the
Investors will not be obliged to subscribe for the Convertible Loan
Notes.
Redemption
Unless converted, the Institutional Investors Convertible Loan
Notes will be redeemed in full on the Maturity Date or at the
election of the Institutional Investors, following LCG becoming
insolvent (as defined in section 123 of the Insolvency Act 1986) or
is otherwise put into liquidation provided that such redemption
shall only be made provided relevant permission to do so has been
granted by the FCA. On redemption, any accrued but unpaid interest
shall be converted at the Conversion Price into new Ordinary
Shares. When the Institutional Investors Convertible Loan Notes
become payable, the Company shall pay to the Institutional
Investors the full principal amount of the Institutional Investors
Convertible Loan Notes to be repaid.
Conversion
Each Institutional Investors Convertible Loan Note (and any
interest) will be convertible at the election of the Institutional
Investors at any time upon 10 Business Days' notice following the
issue of the Institutional Investors Convertible Loan Notes before
the Maturity Date into new Ordinary Shares at the Conversion Price,
provided that any such conversion is effected in respect of not
less than 1,000,000 Ordinary Shares.
The terms of the Institutional Investors Convertible Loan Note
Instrument provide that Institutional Investors Convertible Loan
Notes may not be converted unless in accordance with the terms of
the Institutional Investors Convertible Loan Note Instrument.
The Warrants
The Company will, conditional upon the passing of the
Resolutions, the grant of the Approvals and the issue of the GLIO
Convertible Loan Notes to GLIO, execute the GLIO Warrant Instrument
and then grant the GLIO Warrants to GLIO under the terms of the
GLIO Warrant Instrument.
The Company will, conditional upon the passing of the
Resolutions, the grant of the Approvals, the issue of the GLIO
Convertible Loan Notes, and the issue of the Institutional
Investors Convertible Loan Notes to the Institutional Investors,
execute the Warrant Instruments and then grant the Institutional
Investors Warrants to the Institutional Investors under the terms
of the Institutional Investors Warrant Instrument.
The GLIO Warrants may be exercised in full or in part in minimum
tranches of 5,000,000 and the Institutional Investors Warrants may
be exercised in full or in part in minimum tranches of 1,000,000 at
any time upon 10 Business Days' notice after the issue of the
Convertible Loan Notes to the Investors up and until the Maturity
Date, provided that the equivalent number of Convertible Loan Notes
have been converted.
The number of Ordinary Shares to which a particular Investor
will be entitled on exercise of the relevant Warrants will be
calculated pro rata to the number of Convertible Loan Notes which
such Investor subscribes calculated in accordance with the
following formula:
N = (P/CP) + (MIR/CP)
Where:
CP is the Conversion Price;
MIR is the Minimum Interest Return;
N is the number of Warrants to be issued pursuant to the Warrant
Deed; and
P is the principal amount of Convertible Loan Notes subscribed
for by the Investor.
Board Changes
Under the terms of the GLIO Convertible Loan Note Instrument and
under the Relationship Agreement (as described in more detail
below), GLIO is entitled to appoint a director to the Board of the
Company and the board of LCG. Accordingly, it is intended that
Charles-Henri Sabet will be appointed to the Board of the Company
and the board of LCG, and will hold the position of Executive
Chairman of the Company and (at GLIO's election) of LCG with effect
from the grant of the Approvals and the receipt by the Company of
the subscription monies in respect of the GLIO Convertible Loan
Notes. Any such appointment by GLIO is subject to the Company's
nominated adviser from time to time confirming such appointee's
suitability and to the satisfaction of the Company's reasonable
requirements (including as regard compliance with the AIM Rules and
any requirements in respect of the FCA).
GLIO's right to appoint directors referred to above shall apply
for so long as GLIO holds GLIO Convertible Loan Notes and/or
Ordinary Shares resulting from the conversion of such GLIO
Convertible Loan Notes over not less than 15% of the Company's
Enlarged Issued Share Capital.
Mr Charles-Henri Sabet (aged 52) is, and has previously been, a
significant and successful investor in online trading platforms
with a track record of building online trading businesses. Mr Sabet
founded Synthesis Bank in September 1999. Synthesis Bank was active
in e-trading offering a multiproduct platform. Synthesis Bank was
sold to Saxo Bank A/S, Denmark in December 2007. Mr Sabet was
initially introduced to the Company by Kevin Ashby.
In addition to Mr Sabet's experience in the online trading
sector, he has significant experience in trading, investments and
risk management and has held a number of executive board positions
within different financial institutions. From December 2007 until
September 2008, Mr Sabet was Head of Global Trading and Chairman of
the Board of Directors of Saxo Bank (Switzerland) SA.
The existing Chairman, Mr Giles Vardey, will step down from his
position as Chairman but remain a non-executive director of the
Company.
The composition of the Board immediately following the Financing
is proposed to be:
Charles-Henri Sabet (Executive Chairman)
Giles Vardey (Independent Non-executive
Director)
Kevin Ashby (Chief Executive Officer)
David Sparks (Chief Financial Officer)
John Jones (Chief Operating Officer)
Frank Chapman (Non-independent, non-executive
Director)
The Board is currently seeking to appoint a further Independent
Non-executive Director, who it is intended will become a member of
the Audit, Risk and Remuneration Committees. The Company will
announce further details in due course.
Relationship Agreement
On 17 June 2014, the Company and GLIO entered into the
Relationship Agreement. The obligations of the parties under the
Relationship Agreement are conditional upon the satisfaction of the
conditions set out in the GLIO Convertible Loan Note Instrument and
the receipt by the Company of the GLIO Convertible Loan Notes
subscription monies by no later than the Long Stop Date. Under this
agreement, and subject to its terms and the exceptions set out in
it, GLIO gives a number of undertakings relating to certain
actions, including that (except with the prior written consent of
the Board, such consent not to be unreasonably withheld or
delayed):
-- it will refrain from , and will use reasonable endeavours to
procure that its Connected Persons and Affiliates (as defined
therein) will refrain from, exercising their voting rights and
other rights (if any) in favour of the election or re-election of
any person to the Board or the removal of any person from the Board
if the election or re-election or removal (as applicable) of such
person would result in a reduction in the number of Independent
Director(s) (as defined in the Relationship Agreement) being
members of the Board;
-- it will exercise its voting rights and other rights (if any),
and use its reasonable endeavours to procure that its Connected
Persons and Affiliates will exercise their voting rights and other
rights and take all other necessary steps so as to procure (so far
as it is able) that, inter alia:
o the Company and its subsidiaries are capable at all times of
carrying on their business independently of GLIO or any of its
Connected Persons and Affiliates;
o all transactions, agreements or arrangements entered into
between (i) GLIO or any of its Connected Persons and Affiliates and
(ii) the Company (or any subsidiary of the Company) are, and will
be made, on an arm's length basis and on normal commercial terms;
and
o no variations are made to the Articles that would be contrary
to the Company's independence from GLIO or be inconsistent with, or
in violation of, any of the terms of the Relationship
Agreement.
Charles-Henri Sabet's Service Agreement
Conditional on the issue of the GLIO Convertible Loan Notes,
Charles-Henri Sabet shall be appointed as Executive Chairman of the
Company and (at GLIO's election) LCG under the terms of a service
agreement to be entered into between (1) the Company, (2) LCG, and
(3) Charles-Henri Sabet. Charles-Henri Sabet will be employed by
LCG. Pursuant to the service agreement, the Company agrees to pay
to Charles-Henri Sabet a salary of GBP260,000 per annum. His salary
will be reviewed by the Remuneration Committee of the Company. The
appointment is for an initial term of 12 months and thereafter is
terminable on 12 months' notice by either party, such notice not to
be given until at least 12 months after the commencement of the
employment. Either LCG or Mr Sabet may elect for a payment in lieu
of notice to be made following notice of termination. He will be
entitled to an Executive Bonus, details of which are to be agreed
and will be entitled to a pro rata sum if his employment terminates
part way through the year. The bonus is subject to compliance with
the regulatory requirements and the Company's Executive
Remuneration Policy. The service agreement is terminable by the
Company in the limited circumstances provided for in the service
agreement. The service agreement is terminable with immediate
effect in the event of the FCA refusing to grant Charles-Henri
Approved Person status, or withdrawing Charles-Henri's Approval at
any time, or informing the Company that Charles-Henri Sabet's
continued appointment will directly result in the Company or any
Associated Company (as defined in the Corporation Tax Act 1988)
being in breach of one or more regulatory rules or requirements
applicable to the Company or Associated Company. The Company may by
notice also terminate the service agreement with immediate effect
if the shareholders of the Company pass a resolution to remove or
fail to elect Charles-Henri Sabet in accordance with the Articles.
Charles-Henri Sabet is entitled to 40 days' holiday in each holiday
year and LCG will fund Critical Illness Cover for Charles-Henri
Sabet for the full pay for the first 3 months of illness and for
80% of pay for the next 21 months of illness.
Rule 9 of the Takeover Code
The terms of the Financing give rise to certain considerations
under the Takeover Code. Brief details on the Takeover Panel, the
Takeover Code and the protections they afford are described
below.
The Takeover Code is issued and administered by the Takeover
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. The Company
is such a public company and its shareholders are entitled to the
protections afforded by the Takeover Code.
Under Rule 9.1 of the Takeover Code, except with the consent of
the Panel, when:
(a) any person acquires, whether by a series of transactions
over a period of time or not, an interest in shares which (taken
together with shares in which persons acting in concert with him
are interested) carry 30% or more of the voting rights of a
company; or
(b) any person, together with persons acting in concert with
him, is interested in shares which in the aggregate carry not less
than 30% of the voting rights of a company but does not hold shares
carrying more than 50% of such voting rights and such person, or
any person acting in concert with him, acquires an interest in any
other shares which increases the percentage of shares carrying
voting rights in which he is interested,
such person shall extend offers, to the holders of any class of
equity share capital whether voting or non-voting and also to the
holders of any other class of transferable securities carrying
voting rights. An offer under Rule 9 must be made in cash or be
accompanied by a cash alternative at not less than the highest
price paid by the offeror or any person acting in concert with it
for any interest in shares of that class during the 12 months prior
to the announcement of that offer.
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
that company.
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.
No dispensation from Rule 9 of the Takeover Code in relation to
the Financing
Under Note 10 to Rule 9.1 of the Takeover Code, in general, the
acquisition of securities convertible into, warrants in respect of,
or options or other rights to subscribe for, new shares does not
give rise to an obligation under Rule 9 of the Takeover Code to
make a general offer, but the exercise of any conversion or
subscription rights or options will be considered to be an
acquisition of an interest in shares for the purposes of Rule
9.
The Panel will not normally require an offer to be made
following the exercise of conversion of subscription rights
provided that the issue of convertible securities, or rights to
subscribe for new shares carrying voting rights, to the person
exercising the rights is approved by a vote of independent
shareholders in general meeting in the manner described in Note 1
on the Notes on the Dispensations from Rule 9 (i.e. the
shareholders of the company who are independent of the person who
would otherwise be required to make an offer and any person acting
in concert with him pass an ordinary resolution on a poll at a
general meeting approving such a waiver). Therefore, if any
dispensation from Rule 9 is to be sought by the Concert Party, this
will need to be done prior to the date on which the Convertible
Loan Notes are issued not the date on which the Convertible Loan
Notes are converted.
In connection with the Financing, the Concert Party has not
sought or obtained dispensation from Rule 9 of the Takeover Code
and therefore, in the event of any of the Concert Party becoming
interested in shares representing 30% or more of the voting rights
of the Company, the Concert Party would be obligated to make a
general offer to existing Shareholders pursuant to Rule 9 of the
Takeover Code.
Concert Party
GLIO has confirmed that as at 17 June 2014, the Concert Party
does not hold any Ordinary Shares.
General Meeting
Set out at the end of the Circular is a notice convening the
General Meeting to be held at 2nd Floor, 6 Devonshire Square,
London, United Kingdom, EC2M 4AB at 9.00am on 3 July 2014 for the
purposes of considering and, if thought fit, passing the
Resolutions.
The Resolutions deal with the following matters:
Resolution 1 - Authority to allot shares in the Company or to
grant rights to subscribe for, or convert any security into, shares
in the Company
Resolution 1, which will be proposed as an ordinary resolution,
authorises the Directors to allot shares or grant rights to
subscribe for or to convert any security into shares in the Company
up to an aggregate nominal amount of GBP47,250,000 in connection
with the Financing. The authority granted by this Resolution will
expire on the Long Stop Date in the event that the Convertible Loan
Notes have not been issued by such date.
Resolution 2 - Disapplication of pre-emption rights
Resolution 2, which will be proposed as a special resolution,
and will be conditional on the passing of Resolution 1 above,
allows the Directors to allot equity securities up to an aggregate
nominal amount of GBP47,250,000 on a non pre-emptive basis,
provided this power is limited to the equity securities to be
allotted in connection with the Financing. The authority granted by
this Resolution will expire on the Long Stop Date in the event that
the Convertible Loan Notes have not been issued by such date.
Recommendation
The Directors consider that the Financing, the Resolutions, and
the proposed changes to the Board are fair and reasonable and in
the best interests of the Company and its Shareholders as a whole
and accordingly unanimously recommend Shareholders to vote in
favour of the Resolutions to be proposed at the General Meeting as
they intend to do in respect of their own beneficial holdings
amounting, in aggregate, to 7,249,352 Existing Ordinary Shares,
representing approximately 12.99 per cent. of the existing issued
share capital of the Company.
Expected timetable of principal events
Circular posted to Shareholders (by first 17 June 2014
class post)
Latest time and date for receipt of completed 9.00 am on 1 July
Forms of Proxy and electronic appointments 2014
of proxy
General Meeting 9.00 am on 3 July
2014
Long Stop Date by which all conditions including 31 December 2014
the Approvals must be satisfied
This information is provided by RNS
The company news service from the London Stock Exchange
END
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