TIDMLCG
RNS Number : 7590B
London Capital Group Holdings PLC
21 June 2016
THIS ANNOUNCEMENT, INCLUDING THE APPIX, AND THE INFORMATION
CONTAINED HEREIN, IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION,
DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED
STATES, CANADA, JAPAN, OR REPUBLIC OF SOUTH AFRICA OR ANY OTHER
JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO DO SO.
THE ANNOUNCEMENT IS NOT AN OFFER TO SELL OR THE SOLICITATION OF
AN OFFER TO BUY ANY ORDINARY SHARES OR OTHER SECURITIES OF THE
COMPANY AND NEITHER THE ANNOUNCEMENT NOR ANYTHING HEREIN FORMS THE
BASIS FOR ANY CONTRACT OR COMMITMENT WHATSOEVER. ORDINARY SHARES OR
OTHER SECURITIES OF THE COMPANY MAY NOT BE OFFERED OR SOLD IN THE
UNITED STATES OF AMERICA ABSENT REGISTRATION OR AN EXEMPTION FROM
REGISTRATION AND THE ORDINARY SHARES DESCRIBED HEREIN WILL BE SOLD
IN ACCORDANCE WITH ALL APPLICABLE LAWS AND REGULATIONS.
21 June 2016
LONDON CAPITAL GROUP HOLDINGS PLC
("London Capital Group", the "Company" or the "Group")
Circular regarding a proposed Capital Reorganisation,
Subscription and Open Offer
London Capital Group is pleased to announce that it has
yesterday posted to Shareholders a circular (the "Circular")
detailing the Company's proposals, following and conditional on the
Capital Reorganisation (details of which are set out below), to
issue 215,245,578 Subscription Shares pursuant to the Subscription,
to issue 70,962,201 Open Offer Shares pursuant to the underwritten
Open Offer (and issue of up to 7,096,220 Underwriting Commission
Shares), each at 5 pence per new ordinary share in the Company, the
agreement to issue up to 18,649,880 CLN Interest Shares at a
conversion price of 25.02 pence per share, the redemption of the
CLNs, the proposed waiver of Rule 9 of the City Code on Takeovers
and Mergers, and a notice of general meeting (the "GM").
The Circular, together with the notice of GM, form of proxy and
application form was posted to Shareholders on 20 June 2016. The GM
is scheduled for 11.30 a.m. on 6 July 2016 at the Company's offices
at 1 Knightsbridge, London SW1X 7LX.
The definitions set out in the Circular apply in this
announcement unless the context otherwise requires. The Circular,
excerpts of which can be found below, and this announcement have
been posted on the Company's website www.ir.lcg.com.
- Ends -
For further information, please contact:
London Capital Group Holdings
plc
Charles-Henri
Sabet +44 (0)20 7456
Nicholas Lee 7000
Allenby Capital Limited
Nominated Adviser and Broker
John Depasquale +44 (0)20 3328
Nick Naylor 5656
Peterhouse Corporate Finance
Limited
Financial Adviser
Peter Greensmith +44 (0)20 469
Heena Karani 0933
About London Capital Group
(http://ir.londoncapitalgroup.com/)
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. 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 quoted 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.
1. Introduction
As announced on 29 April 2016, along with its final results for
the year ended 31 December 2015, following the extensive
restructuring and investment programme that the Group has
undertaken over the last 18 months, the Company is now well
positioned for future growth. Furthermore, that against this
background, the Board would be looking at increasing the Company's
regulatory capital in order to provide the Company with the
appropriate capital base to support this growth. To this end, the
Board has now agreed with GLIO that GLIO will subscribe for
195,677,799 Subscription Shares at an issue price of 5 pence per
New Ordinary Share. A further 19,567,779 Subscription Shares will
be issued to GLIO as part of the Subscription in payment of
commission at ten per cent. charged on the initial subscription
amount. There will also be a fully underwritten Open Offer of
70,962,201 Open Offer Shares, pursuant to which up to a further
7,096,220 New Ordinary Shares may be issued to GLIO in payment of
commission at ten per cent. charged on any Open Offer Shares
subscribed for by GLIO pursuant to its commitment to underwrite the
Open Offer. The Company has also agreed to redeem the outstanding
CLNs, and intends to issue a further 18,649,880 New Ordinary Shares
to GLIO at a later date, at GLIO's election, in repayment of the
accrued interest on the CLNs.
As a result of the Proposals, the Company's regulatory capital
will be increased. Furthermore, the Subscription and Open Offer
(assuming no Independent Shareholders participate in the Open
Offer), will lead to GLIO's shareholding increasing from 11.41 per
cent. to 81.23 per cent., and to 82.13 per cent. on the subsequent
issue of the CLN Interest Shares. Mr Sabet's shareholding (together
with GLIO's shareholding, and again assuming no Independent
Shareholder participation in the Open Offer) will increase from
21.3 per cent. to 83.33 per cent., and to 84.12 per cent. on issue
of the CLN Interest Shares. Further details on this are set out in
paragraph 8 of this Part l.
The purpose of this letter is to set out the background to and
reasons for the Proposals and why the Independent Directors
(Nicholas Lee, Rebecca Fuller and Frank Chapman), consider them to
be in the best interests of the Company and its Shareholders as a
whole. This letter also recommends that Shareholders vote in favour
of the Resolutions that are required to be passed in order for the
issue of Subscription Shares, Open Offer Shares (and, if
applicable, Underwriting Commission Shares) and CLN Interest Shares
to take place.
Shareholder approval in respect of the Proposals will be sought
at the General Meeting which is convened for 11.30 a.m. on 6 July
2016 at the offices of the Company, 1 Knightsbridge, Belgravia,
London SW1X 7LX.
Your attention is drawn to the Notice of General Meeting
contained at the end of this document and paragraphs 10 and 11 of
this Part I of this letter which explain the purpose of the General
Meeting and action to be taken by you in relation to the Notice of
General Meeting.
2. Background to and reasons for the Subscription and the Open Offer
In 2014, Mr Charles-Henri Sabet together with certain other
individuals introduced by Mr Sabet, agreed to make a substantial
investment in the Company, through a special purpose investment
company incorporated in Jersey, GLIO Holdings Limited. GLIO
subscribed for GBP15 million of unsecured convertible loan notes in
the Company and also received 80,935,251 warrants. The investment
by GLIO was approved by Shareholders at a general meeting held on 3
July 2014.
Following the investment by GLIO, Mr Sabet became Executive
Chairman, then CEO, and, subsequently in October 2014, he appointed
a new management team. Since then, the Group has undergone a
substantial restructuring of its entire business, including changes
to its premises, staff, a major overhaul of its IT systems and the
development and launch of a new trading platform. With these key
elements in place, the Directors believe that the Company is now
well positioned to grow its business. Whilst the Company has
sufficient cash resources available to fund this growth as a result
of the original investment by GLIO, given that its wholly-owned
subsidiary, LCG, is a provider of regulated financial services (and
is classified as a full scope IPFRU firm), LCG also needs the
appropriate regulatory capital base in order to meet its regulatory
capital obligations and to support both its current activities and
this anticipated future growth.
Regulatory capital is split into Tier 1 and Tier 2 capital. Tier
1 capital is the measure of a company's financial strength from a
regulatory point of view and comprises primarily share capital and
retained earnings. Given the nature of its business, the ability of
the Company to take market risk (which has a direct impact on the
required levels of regulatory capital) is a key driver of revenues.
Against this background, the Company believes that its Tier 1
capital ratios should be strengthened so that it is able to take
advantage of its restructured platform in order to grow and improve
its trading results.
Following the investment by GLIO in July 2014, it was necessary
to carry out a restructuring of the business. As part of this
process, the Company incurred significant costs and delays in the
release of new products, the implementation of new technology and
the start of its scheduled marketing campaign. At the same time,
the Company was affected by certain external factors such as the
exchange rate announcement by the Swiss National Bank on 15 January
2015. As a result, the Company's financial performance has been
poor and below expectation. During this period the Company's share
price has also fallen significantly.
The Company has considered raising additional equity from new
investors, by way of a placing of new shares at a discount to the
Company's prevailing share price. The Company has approached
various potential new investors with regard to such investment.
However, as a consequence of the Company's financial and share
price performance as described above, this has been without
success.
As an alternative, discussions have been held with GLIO and GLIO
has agreed to subscribe for New Ordinary Shares at a price of 5p
per Ordinary Share, on the terms set out below. Whilst this price
is at an 18 per cent. discount to the prevailing share price and so
represents a lower discount than what may ordinarily be available
in such circumstances, it is still below the nominal value of the
Existing Ordinary Shares, and, as a result the Company will need to
implement a capital reorganisation. This will be done, if approved,
by splitting the company's ordinary shares into new ordinary shares
of a lower nominal value and a number of deferred shares. However,
in the Company's case, the consequence of this will be to reduce
its level of Tier 1 capital as deferred shares do not count towards
Tier 1 capital. The Company may therefore subsequently seek to
recover the Tier 1 capital that has been lost as a result of the
capital reorganisation by applying to the Court for a reduction in
capital. GLIO currently holds Convertible Loan Notes with an
outstanding principal amount of GBP13.3 million and under FCA rules
this is classified as Tier 2 and not Tier 1 capital. As such, the
Convertible Loan Notes subscribed for by GLIO, whilst providing
cash resources for the business, do not count towards its Tier 1
regulatory capital requirements. GLIO has only agreed to subscribe
on the basis of the early redemption of the CLNs and payment to
GLIO of a commission of 10 per cent. of the amount of the
Subscription and 10 per cent. of the amount subscribed for by GLIO
pursuant to its commitment to underwrite the Open Offer, which will
be payable by the issue of New Ordinary Shares.
The Directors believe that, at this stage, this is the only
realistic route open to the Company in order to increase its level
of Tier 1 capital. The proposed subscription by GLIO would enhance
the Company's capital base whilst, at the same time, reducing the
Company's indebtedness.
It is intended that redemption of the CLNs in full will occur
shortly after completion of the Subscription and Open Offer and the
accrued interest paid at a later date, at GLIO's election, through
the issue of New Ordinary Shares. As part of the Proposals, the
Company is also providing the other existing Shareholders with the
opportunity to subscribe for New Ordinary Shares at the Issue
Price. Details of the Subscription and the Open Offer are set in
paragraph 7 of this Part I.
3. Tier 1 Capital position
As at 31 December 2015, the Group's common equity tier 1 capital
(after regulatory adjustments) was GBP8.4 million. After effecting
the Proposals, this figure will be increased by GBP4.3 million to
GBP12.7 million. Clearly, any profits or losses subsequently made
by the Company would result in an adjustment to this figure.
Whilst neither the Subscription, the Open Offer nor the
redemption of the CLNs will increase the Company's net cash
position, they would serve to reduce the Company's
indebtedness.
4. Information on GLIO
The shareholders of GLIO are set out at paragraph 3.3 in Part
III of this document and include three current Directors of the
Company, namely Mr Sabet (via his company, ILOG Investments
Limited), Charles Poncet and Dimitri Goulandris, as well as Florian
Rais, the Chief Commercial Officer of the Company. Georges Cohen,
also a shareholder of GLIO, is the father of Julien Cohen, a
non-executive Director of the Company. GLIO has two directors: Mr
Sabet and Mr David Green. Mr Green does not hold any shares in the
Company but is presumed to be acting in concert with Mr Sabet.
The Concert Party comprises GLIO, the GLIO Directors, the GLIO
Shareholders (including amongst others, Mr Sabet, Dr Poncet, Mr
Goulandris, Mr Rais, and excluding STP Fund (EUR) Limited), Mr
Julien Cohen, and the trustees of the EBT (in respect of the
unallocated shares held by the EBT and the JSOP Shares held jointly
by the EBT and each of Mr Sabet and Dr Poncet).
5. Final results for the period ending 31 December 2015
On 29 April 2016, the Company announced final results for
2015:
Financial Highlights
-- Adjusted loss before tax from continuing operations of
GBP13.9 million (2014 restated: profit GBP1.2 million)
-- Statutory loss before tax from continuing operations of
GBP14.5 million (2014 restated: GBP7.7 million)
-- Statutory loss after tax from continuing operations of
GBP14.9 million (2014 restated: GBP7.8 million)
-- Revenue from UK financial spread betting and contracts for
difference down 21 per cent. to GBP15.3 million (2014: GBP19.4
million)
-- Revenue from continuing operations decreased 32 per cent. to
GBP15.5 million (2014 restated: GBP22.7 million)
-- Net cash and short term receivables of GBP16.1 million at
year end (2014 restated: GBP32.9 million) including amounts due
from brokers GBP3.7 million (2014: GBP6.1 million)
6. Current trading and outlook
The Group made a good start to 2016, with trading for the first
quarter ahead of management expectations. Trading in the second
quarter, however, has been noticeably weaker due to a lack of
volatility and concerns about Brexit, reducing clients' propensity
to trade. At the same time, the integration of the Group's new
technology has been successful and most clients have now migrated
across to the new platform. This confirms that the Group's client
base is finding the new platform attractive and easy to use which
is encouraging.
7. Details of the Subscription and the Open Offer
The Directors have given careful consideration to the structure
of the proposed transaction and have concluded that the
Subscription and the Open Offer are the most suitable option
available to the Company and its Shareholders at this time.
Principal terms of the Subscription
The Company is proposing to issue to GLIO 215,245,578
Subscription Shares at 5 pence per New Ordinary Share (including
19,567,779 Subscription Shares to be issued to GLIO in payment of
commission for entering into the Subscription arrangements).
The Subscription Shares are not subject to clawback and are not
part of the Open Offer.
Principal terms of the Open Offer
The Board considers it important that Qualifying Shareholders
also have the opportunity to subscribe for New Ordinary Shares at
the Issue Price, and the Directors have concluded that the Open
Offer is the most suitable option available to the Company and its
Shareholders.
The Open Offer provides an opportunity for all Qualifying
Shareholders to subscribe for New Ordinary Shares at the Issue
Price by both subscribing for their respective Basic Entitlements
and by subscribing for Excess Shares under the Excess Application
Facility, subject to availability. GLIO has undertaken not to take
up and to procure that its fellow Concert Party members do not take
up their entitlements if the Open Offer is fully subscribed
(including under the Excess Application Facility) by the
Independent Shareholders. GLIO has also committed to subscribe for
any Open Offer Shares not subscribed for by Independent
Shareholders, up to the maximum number of Open Offer Shares.
In consideration of underwriting the Open Offer, GLIO is
receiving a commission of 10 per cent. of the total amount it is
required to subscribe for pursuant to its underwriting commitment,
payable by the issue of New Ordinary Shares.
Pursuant to the Open Offer, Qualifying Shareholders will be
given the opportunity to subscribe for 9 Open Offer Shares for
every 10 Existing Ordinary Shares held on the Record Date.
The Open Offer has been structured such that the maximum amount
that can be raised by the Company is approximately GBP3.9 million
which is the maximum amount that can be raised before exceeding the
threshold of EUR5 million (or an equivalent amount) under the FSMA,
at which point the Company would be required to issue a full
FCA-approved prospectus. All proceeds from Independent Shareholders
under the Open Offer will be used towards the redemption of the
CLNs.The Issue Price represents a 18.37 per cent. discount to the
Closing Price of 6.125 pence per Ordinary Share on the Latest
Practicable Date.
Basic Entitlement
Qualifying Shareholders are invited, on and subject to the terms
and conditions of the Open Offer, to apply for any number of Open
Offer Shares (subject to the limit on the number of Excess Shares
that can be applied for using the Excess Application Facility) at
the Issue Price. Qualifying Shareholders have a Basic Entitlement
of:
9 Open Offer Shares for every 10 Existing Ordinary Shares
registered in the name of the relevant Qualifying Shareholder on
the Record Date.
Basic Entitlements under the Open Offer will be rounded down to
the nearest whole number and any fractional entitlements to Open
Offer Shares will be disregarded in calculating Basic Entitlements
and will be aggregated and made available to Qualifying
Shareholders under the Excess Application Facility.
The aggregate number of Open Offer Shares available for
subscription pursuant to the Open Offer will not exceed 70,962,201
New Ordinary Shares.
Allocations under the Open Offer
In the event that valid acceptances are not received in respect
of all of the Open Offer Shares under the Open Offer, unallocated
Open Offer Shares will be allotted to Qualifying Shareholders to
meet any valid applications under the Excess Application Facility
provided always that no Qualifying Shareholder shall be entitled to
receive in excess of the total number of Open Offer Shares
available less an amount equal to such Qualifying Shareholder's
Basic Entitlement.
Excess Application Facility
Subject to availability and assuming that Qualifying
Shareholders have accepted their Basic Entitlement in full, the
Excess Application Facility enables Qualifying Shareholders to
apply for any whole number of Excess Shares in addition to their
Basic Entitlement up to an amount equal to the total number of Open
Offer Shares available under the Open Offer less an amount equal to
a Qualifying Shareholder's Basic Entitlement.
Qualifying Non-CREST Shareholders who wish to apply to subscribe
for more than their Basic Entitlement should complete the relevant
sections on the Application Form and should refer to paragraph
4.1(c) of Part II of this document for further information.
Qualifying CREST Shareholders will have Excess CREST Open Offer
Entitlements credited to their stock account in CREST and should
refer to paragraph 4.2(c) of Part II of this document for
information on how to apply for Excess Shares pursuant to the
Excess Application Facility.
Excess Applications may be allocated in such manner as the
Directors determine, in their absolute discretion, and no assurance
can be given that applications by Qualifying Shareholders under the
Excess Application Facility will be met in full or in part or at
all.
Application procedure under the Open Offer
Qualifying Shareholders may apply for any whole number of Open
Offer Shares subject to the limit on applications under the Excess
Application Facility referred to above. The Basic Entitlement, in
the case of Qualifying Non-CREST Shareholders, is equal to the
number of Basic Entitlements as shown in Box 7 on their Application
Form or, in the case of Qualifying CREST Shareholders, is equal to
the number of Basic Entitlements standing to the credit of their
stock account in CREST.
Qualifying Shareholders with holdings of Existing Ordinary
Shares in both certificated and uncertificated form will be treated
as having separate holdings for the purpose of calculating their
Basic Entitlements.
Qualifying CREST Shareholders will receive a credit to their
appropriate stock accounts in CREST in respect of their Basic
Entitlement and also in respect of their Excess CREST Open Offer
Entitlement as soon as practicable after 8.00 a.m. on 22 June
2016.
Application will be made for the Basic Entitlements and Excess
CREST Open Offer Entitlements to be admitted to CREST. The Basic
Entitlements and Excess CREST Open Offer Entitlements will also be
enabled for settlement in CREST as soon as practicable after 8.00
a.m. on 22 June 2016. Applications through the CREST system may
only be made by the Qualifying Shareholder originally entitled or
by a person entitled by virtue of a bona fide market claim.
Qualifying CREST Shareholders should note that, although the
Basic Entitlements and Excess CREST Open Offer Entitlements will be
admitted to CREST and be enabled for settlement, applications in
respect of entitlements under the Open Offer may only be made by
the Qualifying Shareholder originally entitled or by a person
entitled by virtue of a bona fide market claim raised by
Euroclear's Claims Processing Unit. Qualifying Non-CREST
Shareholders should note that their Application Form is not a
negotiable document and cannot be traded.
Further information on the Open Offer and the terms and
conditions on which it is made, including the procedure for
application and payment, are set out in Part II of this document
and, where relevant, on the Application Form.
Conditionality
The Subscription and the Open Offer are each conditional, inter
alia, upon the following:
(a) the passing, without amendment, of the Resolutions at the General Meeting; and
(b) Admission occurring by no later than 8.00 a.m. on 7 July
2016 (or such later times and/or dates as may be agreed between the
Company and Allenby Capital, being no later than 5.00 p.m. on 29
July 2016).
If the conditions set out above are not satisfied or waived
(where capable of waiver), the Subscription and the Open Offer will
lapse; and
(a) the Subscription Shares will not be issued; and
(b) any Basic Entitlements and Excess CREST Open Offer
Entitlements admitted to CREST will, after that time and date, be
disabled and application monies under the Open Offer will be
refunded to the applicants, by cheque (at the applicant's risk) in
the case of Qualifying Non-CREST Shareholders and by way of a CREST
payment in the case of Qualifying CREST Shareholders, without
interest, as soon as practicable thereafter.
Application for Admission
Application will be made to the London Stock Exchange for the
Subscription Shares and the Open Offer Shares to be admitted to
trading on AIM. Admission of the Subscription Shares and the Open
Offer Shares is expected to take place, and dealings on AIM are
expected to commence, at 8.00 a.m. on 7 July 2016 (or such later
times and/or dates as may be agreed between the Company and Allenby
Capital being no later than 5.00 p.m. on 29 July 2016). No
temporary document of title will be issued.
The Subscription Shares and the Open Offer Shares will,
following Admission, rank pari passu in all respects with the New
Ordinary Shares in issue at the date of this document and will
carry the right to receive all dividends and distributions
declared, made or paid on or in respect of the New Ordinary Shares
after Admission.
Important notice
Qualifying Shareholders should note that the Open Offer is not a
rights issue. Qualifying Shareholders should be aware that in the
Open Offer, unlike with a rights issue, any Open Offer Shares not
applied for by Qualifying Shareholders under their Basic
Entitlements will not be sold in the market on behalf of, or placed
for the benefit of Qualifying Shareholders who do not apply under
the Open Offer, but may be allotted to Qualifying Shareholders to
meet any valid applications under the Excess Application Facility
and that the net proceeds will be retained for the benefit of the
Company.
The Subscription and the Open Offer are separate and distinct
transactions involving the issue of New Ordinary Shares.
Qualifying Shareholders are being invited to participate in the
Open Offer and Qualifying Non-CREST Shareholders (subject to
certain exceptions) will have received an Application Form with
this document. However Qualifying Shareholders are not entitled to
participate in the Subscription unless expressly invited by the
Company and Allenby Capital to do so.
In issuing this document and structuring the Open Offer in this
manner, the Company is relying on the exemption from the
requirement to publish a prospectus by virtue of section 85(5) and
paragraph 9 of Schedule 11A of FSMA and on paragraphs 43 and 60 of
the Financial Services and Markets Act 2000 (Financial Promotion)
Order 2005 (as amended).
Any Qualifying Shareholder who has sold or transferred all or
part of his registered holding(s) of Existing Ordinary Shares prior
to the date on which the shares are marked 'ex-entitlement' is
advised to consult his stockbroker, bank or other agent through or
to whom the sale or transfer was effected as soon as possible since
the invitation to apply for Open Offer Shares under the Open Offer
may be a benefit which may be claimed from him by the purchasers
under the rules of the London Stock Exchange.
8. The City Code on Takeovers and Mergers
As indicated above, the terms of the Proposals set out in this
letter give rise to certain considerations under the Takeover Code.
Brief details of the Panel, the Takeover Code and the protection
they afford are given below.
The purpose of the Takeover Code is to supervise and regulate
takeovers and other matters to which it applies. The Takeover Code
is issued and administered by the Panel. The Company is a company
to which the Code applies and as such its Shareholders are
therefore entitled to the protections afforded by the Takeover
Code.
Under Rule 9 of the Takeover Code, where any person acquires,
whether by a single transaction or a series of transactions over a
period of time, 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,
that person is normally required by the Panel to make a general
offer, in cash, to all the remaining shareholders to acquire their
shares.
Rule 9 of the Takeover Code further provides that, inter alia,
where any person who, together with persons acting in concert with
him, holds shares which in aggregate carry not less than 30 per
cent. of the voting rights of a company but does not hold shares
carrying more than 50 per cent. of such voting rights and such
person, or any such person acting in concert with him, acquires an
interest in additional shares which increases his percentage of
shares carrying voting rights, such person is normally required by
the Panel to make a general offer to the remaining shareholders to
acquire their shares.
Where any person who, together with persons acting in concert
with him holds shares carrying over 50 per cent. of the voting
rights of a company, acquires an interest in shares which carry
additional voting rights, then they will not generally be required
to make a general offer to the other shareholders to acquire the
balance of their shares subject to Note 4 on Rule 9.1.
A table setting out each member of the Concert Party's
individual holding of Ordinary Shares, where applicable, as at the
date of this document, immediately following Admission and
immediately following completion of the Proposals (i.e. following
issue of the CLN Interest Shares) is set out in this paragraph 8 of
this Part I and reasons for them being treated as a concert party
are included in Part III of this document.
The interests of the Concert Party following completion of the
Proposals are set out in the table below. Without a waiver of the
obligations under Rule 9 of the City Code, this would oblige the
Concert Party to make a Rule 9 Offer.
Holdings of Concert
Holdings of Concert Party members after
Party members the issue of the
at Admission CLN Interest Shares(2)
Shareholder Current (assuming (assuming (assuming (assuming
holding Open Offer no Independent Open Offer no Independent
is fully Shareholders is fully Shareholders
subscribed participate subscribed participate
by Independent in the by Independent in the Open
Shareholders) Open Offer) Shareholders) Offer)
GLIO 9,000,000 224,245,578 302,304,000 242,895,459 320,953,880
(11.41%) (61.43%) (81.23%) (63.30%) (82.13%)
Charles-Henri
Sabet 7,800,000 7,800,000 7,800,000 7,800,000 7,800,000
(9.89%) (2.14%) (2.10%) (2.03%) (2.00%)
EBT(1) 4,970,000 4,970,000 4,970,000 4,970,000 4,970,000
(6.30%) (1.36%) (1.34%) (1.30%) (1.27%)
Charles
Poncet 200,000 200,000 200,000 200,000 200,000
(0.25%) (0.05%) (0.05%) (0.05%) (0.05%)
Florian
Rais 50,000 50,000 50,000 50,000 50,000
(0.06%) (0.01%) (0.01%) (0.01%) (0.01%)
Total 22,020,000 237,265,578 315,324,000 255,915,459 333,973,880
(27.93%) (64.99%) (84.73%) (66.70%) (85.46%)
Note 1: This figure does not include 5,000,000 JSOP Shares held
jointly by Mr Sabet and the EBT, and the 200,000 JSOP Shares held
jointly by Charles Poncet and the EBT. Mr Sabet and Dr Poncet's
JSOP Shares have both been included in the figures representing
their respective individual holdings in the table above.
Note 2: The percentages in these two columns assume no other New
Ordinary Shares are issued by the Company between Admission and the
date of issue of the CLN Interest Shares. As referred to above,
there is no date fixed for the issue of the CLN Interest
Shares.
Note: Aside from GLIO, Mr Sabet, Dr Poncet and Mr Rais, there
are no other members of the Concert Party who currently hold
interests in Ordinary Shares (excluding the indirect interests held
by GLIO Shareholders by virtue of their shareholdings in GLIO).
Note: On completion of the Proposals the CLNs will be redeemed.
On redemption it is intended that the Warrants are cancelled.
Shareholders should note that:
Both Admission and on completion of the Proposals (following the
issue of the CLN Interest Shares), the Concert Party will hold
Ordinary Shares carrying more than 50 per cent. of the voting
rights of the Company and (for so long as they continue to be
treated as acting in concert) the Concert Party (and any person
acting in concert with them) will be able to acquire further
Ordinary Shares without incurring an obligation to make a general
offer to Shareholders under Rule 9 of the City Code. However,
individual members of the Concert Party will not be able to
increase their percentage interests in the voting rights of the
Company through or between a Rule 9 threshold without Panel
Consent. On completion of the Proposals, GLIO will hold more than
50 per cent. of the voting share capital of the Company and may be
able to increase its aggregate shareholding in the Company without
incurring any obligations under Rule 9 to make a general offer to
the Company's other Shareholders.
Following Admission and on completion of the Proposals,
individual Concert Party members interested in less than 30 per
cent. of the Company's voting rights will be free to increase their
individual interests in Ordinary Shares without being required to
make a Rule 9 Offer, providing that their individual holding
remains less than 30 per cent. of the voting rights of the
Company.
Shareholders should also note that as the Concert Party will
hold Ordinary Shares carrying more than 50 per cent. of voting
rights, the Concert Party might, collectively, have significant
influence if they vote together on the passing of any proposed
resolutions at future general meetings of the Company.
Dispensation from General Offer
Under Note 1 of the Notes on the Dispensations from Rule 9 of
the City Code, the Takeover Panel will normally waive the
requirement for a general offer to be made in accordance with Rule
9 of the City Code if, inter alia, 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.
The Panel has agreed to such waiver, subject to the Whitewash
Resolution being passed.
Accordingly, by voting in favour of the Whitewash Resolution to
be proposed at the General Meeting, the Proposals can be effected
without the requirement for the Concert Party to make a general
offer for the Company.
The Concert Party will not vote on the Whitewash Resolution. The
Concert Party, and/or any member of the Concert Party, will not be
restricted from making an offer for the Ordinary Shares that it
will not own post Admission.
9. Capital Reorganisation
The nominal value of each Existing Ordinary Share is 10 pence,
which is the minimum price at which additional Ordinary Shares can
be issued. As the Existing Ordinary Shares are now trading at below
this price, in order to proceed with the Subscription and/or the
Open Offer, the Company is proposing to undertake the Capital
Reorganisation so that the nominal value of the Ordinary Shares is
reduced to below the Issue Price. This proposal would, if passed,
involve sub-dividing each issued Existing Ordinary Share into one
New Ordinary Share of 5 pence nominal value and one Deferred Share
of 5 pence nominal value. For the avoidance of doubt, the nominal
value of the Ordinary Shares is unrelated to the AIM market price
of an Ordinary Share.
The New Ordinary Shares will have the same rights (including as
to voting, dividends and return of capital) as the Existing
Ordinary Shares. The number of New Ordinary Shares held by
Shareholders will be the same as the number of Existing Ordinary
Shares held by them immediately prior to the Capital
Reorganisation, but the Capital Reorganisation will allow the
Subscription and Open Offer to take place. A Shareholder's pro rata
entitlement to Existing Ordinary Shares will not be affected. The
Capital Reorganisation should not affect the market value of a
Shareholders aggregate holding of Ordinary Shares.
The rights attaching to the Deferred Shares are set out in the
Notice of GM. The Deferred Shares will effectively be valueless as
they will not carry any rights to vote or any dividend rights. In
addition, holders of Deferred Shares will only in extremely remote
and limited circumstances be entitled to a payment on a return of
capital or on a winding up of the Company. The Deferred Shares will
not be quoted on AIM or any other stock market and will not be
transferable unless with the prior written consent of the Company.
No share certificates will be issued in respect of any of the
Deferred Shares. The Board may further appoint any person to act on
behalf of all holders of the Deferred Shares to transfer all such
shares to the Company (or its nominee) for an aggregate
consideration of 5 pence.
It is not intended that new share certificate(s) will be issued
to the holders of the New Ordinary Shares following the Capital
Reorganisation. Pending the issue of a new share certificate,
Shareholders' existing share certificate(s) will remain valid for
the same number of shares but with a different par value of 5
pence.
10. General Meeting
The General Meeting of the Company, notice of which is set out
at the end of this document, is to be held on 6 July 2016 at the
offices of the Company at 1 Knightsbridge, London SW1X 7LX. The
General Meeting is being held for the purpose of considering and,
if thought fit, passing the Resolutions to approve the
Proposals.
A summary and explanation of the Resolutions is set out below.
Please note that this is not the full text of the Resolutions and
you should read this section in conjunction with the Resolutions
contained in the Notice of General Meeting at the end of this
document.
Resolution 1: Capital Reorganisation
This ordinary resolution approves the sub-division of each
Existing Ordinary Share of 10p into one New Ordinary Share of 5p
and one Deferred Share of 5p.
Resolution 2: Rule 9 whitewash waiver
This resolution, which will be proposed as an ordinary
resolution and will be taken on a poll of the Independent
Shareholders, approves, conditional on the passing of Resolutions
1, 3, 4, 6 and 8, the waiver granted by the Panel of the obligation
that would otherwise fall on GLIO or any person acting in concert
with it to make a general offer to Shareholders pursuant to Rule 9
of the Code as a result of the Proposals.
Resolution 3: Authority to allot shares
Conditional on the passing of Resolutions 1 and 8, this ordinary
resolution will grant the Directors authority to allot to GLIO (or
its nominee(s)) the Subscription Shares pursuant to the
Subscription. The authority given by this Resolution will expire
180 days after the date of the passing of the Resolution. This
authority will be in addition to that given to the Directors
pursuant to Resolutions 4 and 5.
Resolution 4: Authority to allot shares
Conditional on the passing of Resolutions 1 and 8, this ordinary
resolution will grant the Directors authority to allot the Open
Offer Shares and, if applicable, the Underwriting Commission Shares
for the purposes of the Open Offer. The authority given by this
Resolution will expire 180 days after the date of the passing of
the Resolution. This authority will be in addition to that given to
the Directors pursuant to Resolutions 3 and 5.
Resolution 5: Authority to allot shares
Conditional on the passing of Resolutions 1, 3, 4 and 8, this
ordinary resolution grants the Directors authority to allot (i) the
CLN Interest Shares, and (ii) also renews the authority of the
Directors to allot Ordinary Shares (or to grant rights to subscribe
for or convert any securities into Ordinary Shares) up to a maximum
nominal amount of GBP6,513,347 which represents approximately
one-third of the enlarged share capital on completion of the
Proposals (i.e. following issue of the CLN Interest Shares).
The authority given by this Resolution will expire at the
conclusion of the next annual general meeting of the Company or on
30 June 2017, whichever is earlier. This authority will be in
addition to that given to the Directors pursuant to Resolutions 3
and 4.
Resolution 6: Disapplication of pre-emption rights
Conditional on the passing of Resolutions 1, 3 and 8, this
special resolution disapplies the statutory pre-emption rights in
respect of the allotment of the Subscription Shares to be allotted
pursuant to Resolution 3 in connection with the Subscription. The
authority given by this Resolution will expire 180 days after the
date of the passing of the Resolution. This authority will be in
addition to that given to the Directors pursuant to Resolution
7.
Resolution 7: Disapplication of pre-emption rights
Conditional on the passing of Resolutions 1, 4, 5 and 8 this
special resolution renews the authority of the Directors to allot
equity securities otherwise than in accordance with statutory
pre-emption rights in connection with (i) any rights issue or other
pro rata offer (including the Open Offer), (ii) the allotment of
the Underwriting Commission Shares; (iii) the allotment of the CLN
Interest Shares; and (iv) otherwise up to an aggregate nominal
value of GBP1,954,004 which represents approximately 10 per cent.
of the enlarged share capital on completion of the Proposals (i.e.
following issue of the CLN Interest Shares). The authority given by
this Resolution will expire at the conclusion of the next annual
general meeting of the Company or on 30 June 2017, whichever is
earlier. This authority will be in addition to that given to the
Directors pursuant to Resolution 6.
Resolution 8: Amendment to Articles
Conditional on the passing of Resolution 1, Resolution 8 (a
special resolution) makes certain consequential amendments to the
Articles to include provisions in respect of the Deferred Shares.
The Deferred Shares will have no voting rights and will have no
rights as to dividends and only very limited rights on a return of
capital.
11. Action to be taken in relation to the General Meeting
You will find enclosed a Form of Proxy for use at the General
Meeting. Whether or not you intend to be present at the General
Meeting, you are requested to complete the Form of Proxy in
accordance with the instructions printed on it and to return it as
soon as possible and in any case so as to be received by the
Company's registrars at Capita Asset Services, PXS1, The Registry,
34 Beckenham Road, Beckenham, Kent BR3 4ZF no later than 11.30 a.m.
on 4 July 2016. If you hold shares in CREST you may appoint a proxy
by completing and transmitting a CREST Proxy Instruction to Capita
Asset Services (CREST Participant ID: RA10) so that it is received
by no later than 11.30 a.m. on 4 July 2016. The return of the Form
of Proxy or transmission of a CREST Proxy Instruction will not
prevent you from attending the meeting and voting in person if you
wish.
12. Action to be taken in respect of the Open Offer
Qualifying Non-CREST Shareholders (i.e. holders of Existing
Ordinary Shares who hold their Existing Ordinary Shares in
certificated form)
If you are a Qualifying Non-CREST Shareholder you will receive
an Application Form which gives details of your Basic Entitlement
under the Open Offer (as shown by the number of Basic Entitlements
set out in Box 7 of the Application Form). If you wish to apply for
Open Offer Shares under the Open Offer, you should complete the
Application Form in accordance with the procedure for application
set out in paragraph 4.1 of Part II of this document and on the
Application Form itself.
Qualifying Non-CREST Shareholders who wish to subscribe for more
than their Basic Entitlement should complete Boxes 2, 3, 4 and 5 on
the Application Form. Completed Application Forms, accompanied by
full payment in accordance with the instructions in paragraph 4.1
of Part II of this document, should be posted using the
accompanying reply-paid envelope (if posted from the UK only) or
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, in either case, as soon as
possible and in any event so as to be received by no later than
11.00 a.m. on 5 July 2016. If you do not wish to apply for any Open
Offer Shares under the Open Offer, you should not complete or
return the Application Form.
Qualifying CREST Shareholders (i.e. holders of Existing Ordinary
Shares who hold their Existing Ordinary Shares in uncertificated
form)
If you are a Qualifying CREST Shareholder you will not be sent
an Application Form. You will receive a credit to your appropriate
stock account in CREST in respect of your Basic Entitlement under
the Open Offer and also an Excess CREST Open Offer Entitlement for
use in connection with the Excess Application Facility. You should
refer to the procedure for application set out in paragraph 4.2 of
Part II of this document. The relevant CREST instructions must have
settled in accordance with the instructions in paragraph 4.2 of
Part II of this document by no later than 11.00 a.m. on 5 July
2016.
Qualifying CREST Shareholders who are CREST sponsored members
should refer to their CREST sponsors regarding the action to be
taken in connection with this document and the Open Offer.
If you are in any doubt as to the action you should take, you
should immediately seek your own personal financial advice from an
appropriately qualified independent professional adviser.
13. Overseas Shareholders
The attention of Qualifying Shareholders who have registered
addresses outside the United Kingdom, or who are citizens or
residents of countries other than the United Kingdom, or who are
holding Ordinary Shares for the benefit of such persons (including,
without limitation, subject to certain exceptions, custodians,
nominees, trustees and agents), or who have a contractual or other
legal obligation to forward this document, the Form of Proxy or (if
applicable) an Application Form to such persons, is drawn to the
information which appears in paragraph 6 of Part II (Terms and
Conditions of the Open Offer) of this document.
In particular, Qualifying Shareholders who have registered
addresses in or who are resident in, or who are citizens of,
countries other than the UK (including, without limitation, the
United States or any other Restricted Jurisdiction) should consult
their professional advisers as to whether they require any
governmental or other consents or need to observe any other
formalities to enable them to take up their entitlements to the
Open Offer.
14. Taxation
Your attention is drawn to the taxation section contained in
Part IV of this document.
This information is intended only as a general guide to the
current UK tax position. Shareholders who are in any doubt as to
their tax position, or who are subject to tax in a jurisdiction
other than the UK should consult an appropriate professional
adviser immediately.
15. Irrevocable voting commitments from the Directors and GLIO
The Directors who in aggregate hold 12,500,000 Ordinary Shares
(being Charles-Henri Sabet, Charles Poncet and Frank Chapman, and
excluding in the case of Mr Sabet and Dr Poncet any indirect
interests held by virtue of their shareholdings in GLIO),
representing approximately 15.85 per cent. of the Existing Issued
Share Capital, have irrevocably undertaken to vote (and where such
Ordinary Shares are registered in the name of any other persons
have irrevocably undertaken to use reasonable endeavours to procure
that those persons will vote) in favour of all of the Resolutions
at the General Meeting except for the Whitewash Resolution (in
relation to which the Directors who are also members of the Concert
Party are excluded from voting).
Frank Chapman, who in aggregate holds 4,500,000 Ordinary Shares,
representing approximately 5.71 per cent. of the Existing Issued
Share Capital, has also irrevocably undertaken to vote (and, where
such Ordinary Shares are registered in the name of any other
persons, has irrevocably undertaken to use reasonable endeavours to
procure that those persons will vote) in favour of Resolution 2:
the Whitewash Resolution at the General Meeting.
GLIO, which currently holds 9,000,000 Ordinary Shares
representing approximately 11.41 per cent. of the Existing Issued
Share Capital, has irrevocably undertaken to vote (and, where such
Ordinary Shares are registered in the name of any other persons,
has irrevocably undertaken to use reasonable endeavours to procure
that those persons will vote) in favour of all of the Resolutions
at the General Meeting except for the Whitewash Resolution (in
relation to which GLIO is excluded from voting).
Each of the above parties giving undertakings has also
undertaken not to, and in the case of GLIO to procure that its
fellow Concert Party Members do not, exercise any entitlement to
participate in the Open Offer save pursuant to GLIO's commitment to
underwrite the Open Offer.
16. Related party transactions
The proposed participation of GLIO (the Shareholders of which
include, amongst others, Mr Sabet, Dr Poncet and Mr Goulandris) in
the Subscription (including the issue to GLIO of New Ordinary
Shares in payment of commission) and the Open Offer (including the
issue to GLIO of Underwriting Commission Shares), and the amendment
to the GLIO Convertible Loan Note Instrument to allow the early
redemption of the CLNs (including payment of the accrued interest
in Ordinary Shares) will together constitute related party
transactions under the AIM Rules. The Independent Directors
consider, having consulted with Allenby Capital, Nominated Adviser
to the Company, that the terms of the transactions are fair and
reasonable insofar as its Shareholders are concerned.
17. Recommendation and voting intentions
The Independent Directors, who have been so advised by Allenby
Capital, consider the Proposals to be fair and reasonable and in
the best interests of the Shareholders and the Company as a whole.
Accordingly, the Independent Directors recommend that Shareholders
vote in favour of the Resolutions as they have irrevocably
undertaken to do so in respect of their beneficial holdings of
4,500,000 Ordinary Shares representing 5.71 per cent. of the
Company's issued share capital. Dr Poncet, Julien Cohen, Mr Sabet
and Mr Goulandris are not considered independent as they are part
of the Concert Party and have therefore taken no part in the
recommendation.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Record Date for entitlement to participate 6.00 p.m. 15
in the Open Offer June 2016
Announcement of the Subscription 20 June 2016
and the Open Offer and despatch
of the Circular, the Form of Proxy
and, to Qualifying Non-CREST Shareholders,
the Application Form
Expected ex-entitlement date for 8.00 a.m. on
the Open Offer Basic 21 June 2016
Basic Entitlements and Excess CREST 22 June 2016
Open Offer Entitlements credited
to CREST stock accounts of Qualifying
CREST Shareholders
Recommended latest time and date 4.30 p.m. on
for requesting withdrawal of Basic 29 June 2016
Entitlements and Excess CREST Open
Offer Entitlements from CREST
Latest time for depositing Basic 3.00 p.m. on
Entitlements and Excess CREST 30 June 2016
Open Offer Entitlements into CREST
Latest time and date for splitting 3.00 p.m. on
Application Forms (to satisfy bona 1 July 2016
fide market claims only)
Latest time and date for receipt 11.30 a.m. on
of Forms of Proxy for the 4 July 2016
General Meeting
Latest time and date for receipt 11.00 a.m. on
of completed Application Forms and 5 July 2016
payment in full under the Open Offer
or settlement of relevant CREST
instruction (as appropriate)
General Meeting 11.30 a.m. on
6 July 2016
Record Date for the Capital Reorganisation 5.00 p.m. 6
July 2016
Result of Open Offer announced on 6 July 2016
RNS
Admission of the Subscription Shares 8.00 a.m. on
and the 7 July 2016
Open Offer Shares to trading on
AIM
Subscription Shares and the Open after 8.00 a.m.
Offer Shares in on 7 July 2016
uncertificated form expected to
be as
soon as practicable credited to
accounts in CREST (uncertificated
holders only)
Expected date of despatch of definitive on 18 July 2016
share certificates for the Subscription
Shares and the Open Offer Shares
in certificated form (certificated
holders only)
Expected date of redemption of the By 21 July 2016
CLNs
Notes:
(1) The ability to participate in the Open Offer is subject to
certain restrictions relating to Qualifying Shareholders with
registered addresses or located or resident in countries outside
the UK (particularly any Excluded Overseas Shareholders), details
of which are set out in paragraph 6 of Part II of this document.
Subject to certain exceptions, Application Forms will not be
despatched to, and Open Offer Entitlements will not be credited to
the stock accounts in CREST of, Shareholders with registered
addresses in any of the Restricted Jurisdictions.
(2) Each of the times and dates set out in the above timetable
and mentioned in this document is subject to change by the Company
(with the agreement of Allenby Capital Limited), in which event
details of the new times and dates will be notified to the London
Stock Exchange and the Company will make an appropriate
announcement to a Regulatory Information Service.
(3) References to times in this document are to London times unless otherwise stated.
(4) Different deadlines and procedures for applications may
apply in certain cases. For example, if you hold your Ordinary
Shares through a CREST member or other nominee, that person may set
an earlier date for application and payment than the dates noted
above.
(5) Assumes Resolutions 1 to 8 (inclusive) that are set out in
the Notice of General Meeting are passed.
If you require assistance please 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 9.00 a.m. - 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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