TIDMLCG
RNS Number : 6110R
London Capital Group Holdings PLC
15 September 2014
London Capital Group Holdings plc
(the "Company")
Proposed entry into Software as a Service Agreement and Notice
of General Meeting
Introduction
Further to the publication of the Financing Circular dated 17
June 2014, the Company announces the proposed entry into a software
as a service agreement between the Company's subsidiary, LCG, and
Algoweb pursuant to which Algoweb would grant a licence to LCG to
use certain of its software and services.
As Charles-Henri Sabet, Executive Director, and his wife,
together have a 50 per cent. shareholding in Algoweb, the approval
of the Shareholders is required pursuant to section 190 of the Act,
by virtue of LCG being granted the Licence, pursuant to the
Agreement, from a person connected with one of its directors.
Approval will also be required from LCG's sole shareholder, Tradex
which, in turn, is a wholly owned subsidiary of the Company.
Background to and reasons for entry into the Agreement
Further to the Company's announcement on 17 June 2014,
concerning the proposed financing to raise up to GBP17,500,000
through the issue of convertible loan notes to GLIO and certain
institutional investors, Mr. Sabet was appointed as the Company's
and LCG's Executive Chairman on 3 September 2014 following the
relevant approvals being granted by the Financial Conduct
Authority.
GLIO's subscription will be required to be made following the
determination of the conversion price of the GLIO Convertible Loan
Notes (assuming that there is no outstanding event of default and
LCG's net assets are not less than GBP8.5 million) in accordance
with the terms of the GLIO Convertible Loan Note Instrument.
Further announcements will be made in due course following such
determination and also with respect to the proposed subscription by
certain institutional investors of the Institutional Investors
Convertible Loan Notes.
Mr. Sabet and his wife, together have a 50 per cent.
shareholding in Algoweb and, as stated in the Financing Circular,
the Company has been in discussions (subject to contract) with
Algoweb, in connection with the possible licensing to LCG of a
straight-through processing (STP) trading solution. The Company has
completed due diligence in connection with the proposed licensing
and it is now proposed that following the issue of the GLIO
Convertible Loan Notes, subject to the approval of Shareholders at
the General Meeting, LCG will enter into the Agreement. Further
details of the Agreement are set out below.
The Independent Directors consider that there is an urgent need
for LCG to install the technology offered by Algoweb in the
Agreement (including the Smarttrade and Algoweb add-ins) in order
to improve LCG's execution capabilities. The Independent Directors
believe that, in line with the Company's strategy, the Agreement
offers access to international wholesale FX markets and presents an
opportunity for the Company to significantly expand and diversify
its customer base. The Independent Directors also believe that
entering into the Agreement is in the best interests of the Company
and its shareholders for the reasons set out below:
-- the Licence will provide LCG with direct access to liquidity
providers with aggregation and smart order routing features,
enabling LCG to offer better pricing, tighter spreads and a greater
depth for execution;
-- the Licence will provide downstream users with a unified
order book facilitating trading and allowing for aggregated pricing
with centralised real-time spreads; and
-- the Licence will provide full hardware and maintenance
support 24 hours a day, 6 days a week, to ensure continuity of
service.
Information on Algoweb
Algoweb is a company incorporated in Monaco which was founded by
Mr. Sabet. Algoweb was founded to develop technology for use in the
financial markets. Its platform is a full FX trading stack,
providing direct access, low-latency aggregation and smart order
routing services to a selection of liquidity providers.
Algoweb was incorporated on 18 July 2012. Mr. Sabet and his wife
together hold 50% of the issued share capital of Algoweb. The sole
director of Algoweb is Mr. Gerard Sistek.
The Agreement
The principal terms of the Agreement are follows:
Parties Algoweb and LCG
-------------- -----------------------------------------------------------------
Services Access to retail distribution platforms
to be and software, and connectivity to post-trade
provided services. The services are to be provided
by Algoweb with reasonable skill and
care and in accordance with the service
levels specified in the Agreement.
-------------- -----------------------------------------------------------------
Exclusivity The Licence is granted to LCG on an exclusive,
non-transferable basis.
-------------- -----------------------------------------------------------------
Fees The fees payable by LCG to Algoweb compromise:-
* a fee of GBP780,000 payable on execution of the
Agreement; and
* a fee of GBP300,000 payable in advance in respect of
each financial quarter of the term beginning on 1
October 2014, which fee may be increased at the
commencement of each renewal period in accordance
with any increase in the Retail Price Index (All
Items) as published by the Office of National
Statistics (the "Quarterly Fees").
-------------- -----------------------------------------------------------------
Term The initial term of the Agreement commences
on the date of the Agreement and expires
on 30 September 2017, with automatic
renewals for successive periods of 36
months, unless terminated by written
notice from either party served at least
6 months prior to the expiry of the initial
term or any such renewal period.
The Agreement may be terminated, inter
alia, by either party in the event that
the
other party commits a material breach
of any term of the Agreement which is
either
incapable of being remedied or where
such party has failed to remedy the relevant
breach within a period of 30 days after
being notified in writing of a request
to do so.
-------------- -----------------------------------------------------------------
Liability The liability of Algoweb in connection
with the Agreement is limited, inter
alia, to the aggregate of the Quarterly
Fees paid during the twelve months immediately
preceding the date on which the relevant
claim arose.
-------------- -----------------------------------------------------------------
Assignment Algoweb may assign, transfer, charge
or sub-contract any of its rights and
obligations under the Agreement.
-------------- -----------------------------------------------------------------
Law and The Agreement is subject to the laws
Jurisdiction of England and Wales and the parties
have submitted to the exclusive jurisdiction
of the courts of England and Wales.
-------------- -----------------------------------------------------------------
Licence A licence to permit LCG and certain other
authorised users to use the services
and the documentation provided by Algoweb
to LCG containing user instructions for
the services during the term of the Agreement.
-------------- -----------------------------------------------------------------
Related Party Transaction
Mr. Sabet and his wife, together own 50 per cent. of the share
capital in Algoweb. Under the AIM Rules, Mr. Sabet's interest in
Algoweb and position as a Director means that the proposed entry
into the Agreement by LCG is deemed to be a related party
transaction for the purposes of Rule 13 of the AIM Rules. The
Independent Directors of the Company consider, having consulted
with Cenkos, that the terms of the proposed Agreement are fair and
reasonable insofar as shareholders of the Company are
concerned.
General Meeting
Set out in a circular posted to shareholders on 13 September
2014 (the "Circular") is a notice convening the General Meeting to
be held at 2nd Floor, 6 Devonshire Square, London, United Kingdom,
EC2M 4AB at 11.00 am on 30 September 2014 for the purposes of
proposing, and if thought fit, passing the Resolution set out in
the Notice.
Action to be taken
A Form of Proxy for use at the General Meeting accompanies the
Circular. The Form of Proxy should be completed and signed in
accordance with the instructions printed on it and returned to the
Company's registrars, Capita Asset Services (PXS), 34 Beckenham
Road, Beckenham, Kent, BR3 4TU as soon as possible and, in any
event, so as to be received by no later than 11.00 am on 26
September 2014, being 48 hours (excluding non-working days) before
the time appointed for holding the General Meeting.
Recommendation
The Independent Directors consider that the terms of the
Agreement are fair and reasonable and that entry into the Agreement
and the grant of the Licence are in the best interests of the
Company and its Shareholders as a whole and accordingly unanimously
recommend Shareholders to vote in favour of the Resolution to be
proposed at the General Meeting as they intend to do in respect of
their own beneficial holdings amounting, in aggregate, to 4,500,000
Existing Ordinary Shares, representing approximately 8.06 per cent.
of the existing issued share capital of the Company.
For further information, please contact:
London Capital Group Holdings plc
Giles Vardey, Non-executive senior independent Director
020 7456 7000
Cenkos Securities plc
Nicholas Wells
020 7397 8900
Smithfield Consultants
John Kiely
020 7360 4900
Expected Timetable of Principal Events
Circular posted to Shareholders 13 September
(by first class post) 2014
Latest time and date for receipt 11.00 a.m. on
of completed Forms of Proxy and 26 September
electronic appointments of proxy 2014
General Meeting 11.00 a.m on
30 September
2014
Definitions
"Act" the Companies Act 2006 (as
amended);
"Agreement" or the software as a service
"Software as agreement proposed to be entered
a Service Agreement" into (subject to issue of
the GLIO Convertible Loan
Notes and the passing of the
Resolution) between (1) Algoweb
and (2) LCG pursuant to which
Algoweb would grant LCG the
Licence;
"AIM" AIM, a market operated by
the London Stock Exchange;
"AIM Rules" the AIM Rules for Companies
published by the London Stock
Exchange from time to time;
"Algoweb" Algoweb S.A.R.L, a company
incorporated and registered
in Monaco with registration
number 12S05761 whose registered
office is at 7 BD du Jardin
Exotique, 98000 Monaco;
"Board" the board of Directors of
the Company for the time being,
including a duly constituted
committee of the Directors;
"Business Day" a day on which the London
Stock Exchange is open for
the transaction of business;
"Capita" Capita Asset Services;
"Cenkos Securities" Cenkos Securities plc;
"Company" or London Capital Group Holdings
"London Capital" plc;
"CREST" the relevant system (as defined
in the Uncertificated Securities
Regulations 2001 SI 2001:
No.3755 (as amended)) in respect
of which Euroclear UK & Ireland
Limited is the operator (as
defined in those regulations);
"Directors" Charles-Henri Sabet, Giles
Vardey and Frank Chapman;
"Financing" (a) the investment conditionally
agreed to be made by GLIO
and (b) the possible investment
sought by the Company from
certain investors, by way
of the subscription for convertible
loan notes and warrants;
"Financing Circular" the circular published on
17 June 2014 in connection
with the Financing;
"Form of Proxy" the form of proxy for use
at the General Meeting, which
accompanies the Circular;
"General Meeting" the general meeting of the
Company to be held at 2(nd)
Floor, 6 Devonshire Square,
London, United Kingdom, EC2M
4AB at 11.00 am on 30 September
2014;
"GLIO" GLIO Holdings Limited, a company
registered in Jersey with
company number 115389 and
whose registered office is
at First Island House, Peter
Street, St Helier, Jersey;
"GLIO Convertible the fixed rate convertible
Loan Notes" loan notes proposed to be
issued by the Company at the
Issue Price with the benefit
and subject to the provisions
of the GLIO Convertible Loan
Note Instrument;
"GLIO Convertible the deed constituting the
Loan Note Instrument" GLIO Convertible Loan Notes
dated 17 June 2014 and executed
by the Company and GLIO as
described in the Financing
Circular;
"Group" or "London the Company and its subsidiaries
Capital Group" (as that term is defined in
section 1159 of the Act);
"Independent the Directors other than Mr.
Directors" Charles-Henri Sabet;
"Institutional has the meaning given in the
Investors Convertible Financing Circular;
Loan Notes"
"LCG" London Capital Group Limited,
a subsidiary of the Company,
registered in England and
Wales with company number
03218125 and whose registered
office is at 2(nd) Floor,
6 Devonshire Square, London,
United Kingdom, EC2M 4AB;
"Licence" a licence to use certain software
and services owned and provided
by Algoweb proposed to be
granted (subject to the issue
of the GLIO Convertible Loan
Notes and the passing of the
Resolution) to LCG pursuant
to the Agreement;
"London Stock London Stock Exchange plc;
Exchange"
"Notice of General the notice convening the General
Meeting" Meeting, which is set out
at the end of the Circular;
"Ordinary Shares" ordinary shares of 10 pence
each in the capital of the
Company;
"Prospectus Rules" the Prospectus Rules issued
by the FCA;
"Regulatory Information one of the regulatory information
Service" services authorised by the
United Kingdom Listing Authority
to receive, process and disseminate
regulatory information in
respect of listed companies;
"Shareholders" persons who are registered
as holders of Ordinary Shares
from time to time;
"Tradex" Tradex Enterprises Limited,
a company registered in England
and Wales with company number
05333826 and a wholly owned
subsidiary of the Company;
"UK" or "United the United Kingdom of Great
Kingdom" Britain and Northern Ireland;
and
"United Kingdom the FCA, acting in its capacity
Listing Authority" as the competent authority
for the purposes of Part IV
of FSMA;
All references to "GBP", "pence" or "p" are
to the lawful currency of the United Kingdom
Notes to Editors:
London Capital Group Holdings plc (hereafter "LCGH plc" or "LCG"
or "London Capital Group" or "the Group") is a financial services
company offering online trading services.
London Capital Group Limited (LCG Ltd), a wholly owned trading
subsidiary of LCGH plc, is authorised and regulated by the
Financial Conduct Authority. Its core activity is the provision of
spread betting and CFD products on the financial markets to retail
clients under the trading names Capital Spreads, Capital CFDs and
LCG MT. Its other division provides online foreign exchange trading
services to institutional and professional clients. LCG Ltd is one
of the leading providers of white label financial spread trading
and CFD platforms and its white label partners include TD Direct
Investing, Bwin.party, and Saxo Bank.
LCG Ltd has a European passport and is a member of the London
Stock Exchange. LCG Ltd also has access to international markets
through its global clearing relationships.
LCGH plc is listed on the London Stock Exchange's AIM market.
LCG is included in the General Financial sector (8770) and
Speciality Finance sub sector (8775) and has a RIC code of
LCG.L.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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