TIDMSGI
RNS Number : 9191R
Stanley Gibbons Group PLC
14 March 2016
THE STANLEY GIBBONS GROUP PLC
(the "Group")
Proposed Firm Placing and Placing and Open Offer to raise
GBP13m
Notice of General Meeting
Following the Group's announcement on 23 February 2016 that it
was in the process of raising approximately GBP10.0 million of new
equity (the "Fundraising"), the Group is pleased to announce that
it now proposes to raise GBP13.0 million (GBP12.3 million net of
expenses) by way of a Firm Placing and Placing and Open Offer. The
structure of the Fundraising is such that it will satisfy the
Group's intention to recognise the pre-emption rights of existing
shareholders insofar as is possible. The Fundraising has been fully
underwritten by finnCap, subject to certain conditions.
Highlights
-- Proposed Fundraising of GBP13.0 million by the issue of New
Ordinary Shares at 10 pence per Ordinary Share
-- Fundraising to be by way of a Firm Placing of 92,300,000 New
Ordinary Shares and an Open Offer of 37,996,286 New Ordinary
Shares
-- Open Offer on basis of 8 Open Offer Shares for every 10 Existing Ordinary Shares held
-- Proceeds of the Fundraising to be used to repay debt, support
a rationalisation exercise, complete the integration of previous
acquisitions and to provide additional working capital
-- Clive Whiley, Managing Director of Evolution Securities
China, will join the Board as a director following completion of
the Fundraising
-- The Fundraising is subject to approval at an Extraordinary General Meeting
A circular (the "Circular") setting out details of the proposed
Fundraising and giving notice of an Extraordinary General Meeting
to approve these proposals will be sent to Shareholders later today
and will be available on the Company's website
www.stanleygibbonsplc.com
Capitalised terms shall have the same meaning as in the Circular
unless the context requires otherwise.
For further information, contact:
The Stanley Gibbons Group plc
Michael Hall, Chief Executive +44 (0)1534 766
Donal Duff, Chief Finance Officer 711
finnCap Ltd (Nomad & Broker)
Stuart Andrews / Christopher
Raggett (corporate finance)
Tim Redfern / Simon Johnson +44 (0)20 7220
(corporate broking) 0500
+44 (0)20 7920
Tavistock (Financial PR) 3150
Lulu Bridges / Niall Walsh
The Company proposes to raise GBP13 million (GBP12.3 million net
of expenses) by way of the Firm Placing and the Placing and Open
Offer. The Directors have decided, in consultation with its major
Shareholders, to increase the Fundraising from GBP10 million to
GBP13 million in order to provide further headroom to complete the
rationalisation exercise.
The Fundraising has been conditionally underwritten by finnCap.
The Firm Placing is not subject to clawback. Certain major
Shareholders have given undertakings to finnCap and the Company to
subscribe, where permitted in accordance with the terms of the Open
Offer, for 13,432,681 Open Offer Shares which represents these
Shareholders' Basic Entitlements. The 13,432,681 Open Offer Shares
taken up by those Shareholders will set off their subscriptions for
the corresponding number of Placing Shares. The remaining
24,263,605 Placing Shares are subject to clawback to satisfy valid
applications from Qualifying Shareholders under the Open Offer.
The purpose of the Circular is to provide information on the
Company's current financial and trading position, to explain why
the Board considers that the Fundraising is in the best interests
of Shareholders and to provide you with details of and to seek your
approval to implement the Fundraising. The Directors and the
Proposed Director have subscribed for 3,100,000 Firm Placing
Shares.
The details of the Firm Placing and the Placing and Open Offer
are set out below, and the steps required for Qualifying
Shareholders to participate in the Open Offer are set out in Part 2
of the Circular.
The Directors, who have also explored other funding options,
believe that the Fundraising is essential to the Company as it will
enable it to repay the short-term loans that have been made
available to it by its bank since 30 September 2015, when the
Company experienced some unexpected and difficult trading
conditions and circumstances, and will provide it with the
additional funding, which, together with the Company's core
borrowings, will ensure that it has adequate financial resources to
execute its development plan. The Directors have concluded that
none of the other funding options considered would enable the
Company to achieve these key objectives. Shareholders' attention is
drawn to paragraph 3 of this Part 1 of the Circular which provides
details of the Company's current banking arrangements and of
funding and facilities that will be available to the Group
following the Fundraising.
Background to and Reasons for the Fundraising
The Company reported in its interim statement issued in November
2015 that like-for-like turnover in the first half of the year was
21 per cent. down on the same period in the previous year and that
trading profits were GBP0.5 million compared with GBP6.1 million in
respect of the same period in the previous year largely owing to
both lower sales volumes and lower margins in the philatelic
businesses, which, in turn, was partly as a consequence of the
management changes and distractions caused by the efforts to
integrate the acquisitions made during the previous two years. At
the time of writing the interim statement, the Board had expected
that the second half of the year would see improved trading levels
as the impact of the acquisitions took effect. In fact, as
announced on 23 February 2016, the sale of rare collectibles to
high net worth clients has been at a lower level than expected. Of
more concern is the performance of the Group's interiors division,
in which sales and profitability have declined markedly through the
course of 2015/16 particularly in the last four months. Following
its acquisition of Mallett plc in October 2014, the Company learned
that government regulators in the United States were investigating
transactions that had occurred since 1 January 2010 involving a
former client of Mallett Inc., Mallett's New York-based subsidiary.
The former client is not a related person or affiliate of the
Group. Further details of this matter are disclosed in Part 3 of
the Circular. Additionally, the integration of recent acquisitions
has not achieved the level of cost savings that is required and the
Group has continued to invest in its new online collectibles
marketplace. As a result of these factors, the Directors now
believe that for the year to 31 March 2016, the Group will report
an adjusted loss before tax of between GBP1.0 million and GBP2.0
million. This puts the Group's financial resources under severe
pressure.
Since 30 September 2015, our bank has made available an
overdraft facility of GBP6.0 million to the Group. This facility is
repayable by 31 March 2016 and is expected to be substantially
drawn before completion of the Fundraising. As explained below, the
Company will need to repay this overdraft and invest additional
funds in rationalising the business and in completing the
integration of the acquired businesses.
The Board has also decided that the management team will benefit
from the assistance of specialist expertise in doing this and, with
this in mind, conditional on the passing of the Resolutions,
intends to appoint Clive Whiley as a director. The Company has
secured the services of Evolution of which he is managing director,
on a 12 month contract from December 2015 to advise and assist the
Board and executive management with a root and branch review of
every facet of the Group's business, an assessment of the banking
and fundraising options and completion of the rationalisation and
integration of the Noble and Mallet acquisitions. Mr Whiley has
significant experience in both corporate restructurings and in
managing integration programmes following corporate acquisitions.
Currently, in addition to being managing director of Evolution, he
is Chief Executive of Camper & Nicholsons Marinas Limited, and
a non-executive director of its holding company, Camper &
Nicholsons Marina Investments Limited. Mr Whiley was appointed as
Chief Executive of Camper & Nicholsons Marinas Limited in
December 2012 at the request of its major shareholders in order to
oversee a repositioning of that company's businesses, which process
was successfully concluded last year.
In late December 2015, Evolution commenced a full review of the
Stanley Gibbons business, which it will complete over the next 90
days and will agree a comprehensive strategy with the Board
for:
-- transforming the Group into a business which is capable of
trading profitably on a continuing and reasonably predictable
basis, i.e. not relying on one-off or very material sales or other
trading events to achieve profitability;
-- ensuring that the Group is able to operate within its
available funding resources, i.e. developing coherent and reliable
plans for all the activities within the Group, including the
ability to access a wider customer base on a capital-light
foundation;
-- identifying areas of activity which are not being operated
efficiently or, due to capital constraints, are not being exploited
at all and making such changes to those activities as are necessary
to enable them to contribute to the profits of the Group or
formulate disposal or winding-up strategies for such activities;
and
-- identifying and executing a series of short-term actions
which will reduce the current cash burn as soon as possible and
allow the short-term bank loans to be repaid and for a more
appropriate long-term funding arrangement to be put in place than
currently exists ("30 Day Action Plan").
(MORE TO FOLLOW) Dow Jones Newswires
March 14, 2016 03:00 ET (07:00 GMT)
Evolution has already undertaken a preliminary review of the
businesses and of the funding of the Group and is confident that
significant efficiencies can be introduced very quickly and that,
with adequate funding, most of the original aspirations on which
the Noble and Mallett acquisitions were founded can be
achieved.
As a consequence of Evolution's initial findings, the Board
believes that, having repaid the temporary borrowings of GBP6.0
million, thereby reducing the Group's debt to a level more
commensurate with the trading profits and cash generation that can
be achieved over the course of the next 12 months, and with the
continued support of the management and employees:
-- the Group will be able to complete the rationalisation and
integration of the Group's various activities;
-- the benefits of the business improvements referred to above can be harvested;
-- the Group should be able to achieve annualised cost savings
of not less than GBP5.0 million and that from this normalised
position the Board believes it will be both profitable and cash
generative and therefore be able to pursue other improvements and
growth opportunities that will enhance shareholder value;
-- the Group will also consider whether there are opportunities
to exploit the geographical and product gaps within the core stamp
and coin divisions, which have become apparent in recent years,
partly benefiting from an increased interest in rare collectibles
by high net worth individuals as an alternative investment;
-- a return to more disciplined buying and selling strategies
which should help to improve the stock profile, restore the stock
turnover to more normalised levels and thereby reduce the holding
costs; and
-- the Board believes that there is increasing interest in the
collectibles markets in parts of the world outside of the Group's
existing areas of operation, which are principally the United
Kingdom and the United States of America, although it has a small
sales presence in Hong Kong and in Singapore. There is, in
particular, fast growing interest from the Asian markets, in all
types of high quality collectibles as has been evidenced by the
considerable interest and high prices being generated at
collectibles auctions held in Hong Kong on 15-17 January 2016 which
grossed over HK$100 million. World records were broken for both a
stamp essay and a die proof of any country and one of China's most
famous philatelic rarities realised a record price of HK$6.24
million. The Company will work to identify a cost-effective method
to enter these markets and is in discussions with a potential
partner in this respect.
The Board is of the opinion that the Fundraising is not only in
the best interests of the Company but essential to the business as
it will also allow a clear focus on a corporate development plan,
which is designed to optimise the value of the Company's principal
assets as the Board seeks to restore Shareholder value. As
announced on 13 January 2016, the Board has considered a number of
fundraising alternatives to reinforce the Company's working capital
position and, at that time, believed that an equity raise might be
comparatively unattractive if done at a discount to the Group's net
asset value. However, the continuing difficult trading conditions
and the increasing urgency for the Company to secure additional
funding has left little choice but to proceed with the Fundraising,
notwithstanding the significant discount to the prevailing market
price. The Fundraising has been conditionally underwritten and
therefore the Board believes that it provides the Company with a
certainty of funds that could not be assured from the other funding
alternatives considered. Furthermore, the Board believes that the
proposed structure of the Fundraising, namely the Firm Placing and
the Placing and Open Offer, provides the Company with its best
chance of raising the funding that it needs in a manner that
enables all existing Shareholders, should they so wish, to
participate. The Open Offer and Excess Application Facility means
that, to the extent that a Qualifying Shareholder has taken up its
Basic Entitlement in full and applies for and is allocated the
maximum Excess Entitlement, it will suffer no dilution as a result
of the Fundraising.
Funding
The Company currently has outstanding core loans and overdraft
facilities, which are fully drawn, amounting to GBP19.5 million.
Owing to the adverse trading experienced since 30 September 2015,
as explained above, the Company has received additional facilities
from its bank in order to meet its short term obligations and to
fund the unforeseen losses that it has been incurring. These
facilities were in the form of an overdraft which is repayable on
31 March 2016 and which the Company anticipates will be
substantially drawn as to GBP6.0 million by completion of the
Fundraising.
Accordingly, following completion of the Fundraising,
approximately GBP6.0 million will be used to repay the temporary
funding. As a result of the sharp decline in the trading
performance, the Company has agreed with its bank a revision in the
ongoing banking covenants relating to the borrowings and facilities
that will remain in place until 31 May 2018. The facilities will,
for the first 15 months, be subject only to certain asset cover
covenants and from 30 June 2017 will also be subject to certain
earnings covenants formulated by reference to the budgets for
2017/18. The management, taking into account the change in trading
circumstances and having regard to the revised profit and cashflow
expectations believes that the current structure of the lending
package may not be appropriate for the longer term. The management
therefore intends, and the bank has agreed in principle, to explore
a more appropriate borrowing structure once the changes explained
above have been implemented and the effect of the changes has begun
to be visible in the profit and cash generation.
The existing borrowings and facilities, all of which are secured
and guaranteed by various members of the Group comprise:
-- a GBP9.5 million fully drawn loan facility, amortising at
GBP500,000 per quarter from 31 March 2017 but subject to earlier
part-repayment in the event of a major asset disposal;
-- a GBP10.0 million fully drawn revolving credit/overdraft
facility available until 31 May 2018; and
-- a GBP6.0 million overdraft facility expiring on the earlier
of 31 March 2016 and completion of the Fundraising.
Board and Management
Following the Fundraising and the re-profiling of the banking
arrangements the Company's financial stability will be assured and
the management will be better able to address improvements to its
trading performance. In order to achieve an effective turnaround of
the business Michael Hall will concentrate his attentions on
reinforcing Stanley Gibbons' standing in the market, focusing on
sales in the Company's core market and extending its reach
geographically. As announced on 23 February 2016, Clive Whiley will
join the Board with effect from completion of the Fundraising and
will continue to oversee the review of Group overheads which remain
a critical component of the re-launch of the Company.
Martin Bralsford has indicated that he wishes to step down from
the Board and will do so after completion of the Fundraising as
soon as a suitable new Chairman has been identified.
The longer term requirements and roles within the Board and
executive management team will be reviewed as part of Evolution's
ongoing 90 day review of strategy.
Profit forecast for the year ending 31 March 2016 and
Prospects
As explained above, the Group has continued to experience lower
trading activity during the last 6 months and now expects to report
an adjusted loss before tax of between GBP1.0 million and GBP2.0
million for the year ending 31 March 2016, with the actual outcome
being very dependent on the results of some major auction events
this month.
As explained above, the Company has already started to take the
actions necessary, through the 30 Day Action Plan, to restore the
Group to profitability and to reduce the financial pressures from
which it is suffering. These initiatives have included an immediate
review of the operating overheads within the interiors division,
the utilisation of the Group's property resources and
commercialisation of the online marketplace and it is expected that
within the next 12 months these initiatives will lead to a
significant improvement in annualised profitability. The
initiatives will ensure alignment of expenses with the Group's more
predictable income streams without undermining the impact of
material one-off sales which the Group will be better able to
pursue. However, the Company's income will continue to include some
sporadic but material sales with the consequence that there will be
times when the trading performance will be difficult to predict.
Accordingly, the Board's expectation of the Company's performance
for the current financial year, coupled with the estimated
annualised cost savings outlined at paragraph 2 above, should not
be taken to provide meaningful guidance of the Board's expectations
for the overall financial performance in coming years.
The Board notes that the audit report to the financial
statements for the year ended 31 March 2015 contained an emphasis
of matter with respect to a balance of receivables. Whilst the
amount is being collected slowly a significant balance remains
outstanding and overdue.
Use of Proceeds
The gross proceeds of the Fundraising, amounting to GBP13.0
million will be used as follows:
Action GBP million
Repayment of bank extension up to 6.00
(MORE TO FOLLOW) Dow Jones Newswires
March 14, 2016 03:00 ET (07:00 GMT)
Working capital and restructuring costs c. 6.30
Adviser fees, banking arrangement fees c. 0.70
Total 13.00
Fundraising
The Company proposes to raise GBP13.0 million (GBP12.3 million
net of expenses) by the issue of 129,996,286 New Ordinary Shares by
way of the Firm Placing and the Placing and Open Offer, each at an
issue price of 10 pence per New Ordinary Share. The New Ordinary
Shares will represent 73.4 per cent. of the Enlarged Issued Share
Capital. finnCap, as agent of the Company, has conditionally placed
the New Ordinary Shares at the Issue Price pursuant to the
Underwriting Agreement.
Qualifying Shareholders are being offered the right to subscribe
for Open Offer Shares in accordance with the terms of the Open
Offer. Qualifying Shareholders are not being offered the right to
subscribe for the Firm Placing Shares.
The Board considers the Firm Placing and the Placing and Open
Offer to be an appropriate fundraising structure, providing
certainty of funds to complete the plans outlined above whilst
providing existing Shareholders with the opportunity to participate
in the Fundraising through the Open Offer. Indeed, if Qualifying
Shareholders are issued their full Basic Entitlements and receive
their full Excess Entitlements, they will not suffer any dilution
as a consequence of the Fundraising.
The terms and conditions of the Firm Placing and the Placing and
Open Offer are set out in Part 2 of the Circular.
All elements of the Fundraising have the same Issue Price. The
issue price of 10 pence per New Ordinary Share represents a 56.5
per cent. discount to the Closing Price of 23.00 pence per Existing
Ordinary Share on 11 March 2016 (being the latest practicable date
prior to the publication of the Circular). The Issue Price has been
set by the Directors following their assessment of market
conditions and following discussions with a number of institutional
investors. The Directors are in agreement that the level of
discount and method of issue are appropriate to secure the
investment necessary.
The Fundraising has been conditionally underwritten by finnCap.
Further details of the terms of the Underwriting Agreement are set
out in Part 3 of the Circular.
Firm Placing
finnCap, as agent for the Company and pursuant to the
Underwriting Agreement, has conditionally placed the Firm Placing
Shares at the Issue Price to raise gross proceeds of GBP9.2
million. The Firm Placing Shares represent approximately 71.0 per
cent. of the New Ordinary Shares and have been placed with
institutional and other investors, including certain of the
Directors and the Proposed Director. The Firm Placing Shares are
not subject to clawback.
Placing and Open Offer
The Directors recognise the importance of pre-emption rights to
Shareholders and consequently 37,696,286 Open Offer Shares are
being offered to existing Shareholders by way of the Open Offer.
The Open Offer provides Qualifying Shareholders with an opportunity
to participate in the Fundraising by subscribing for their
respective Basic Entitlements and Excess Entitlements.
As part of the Placing and Open Offer, finnCap as agent for the
Company and pursuant to the Underwriting Agreement has
conditionally placed the Placing Shares with Placees who have
agreed to subscribe for the Placing Shares at the Issue Price.
Shareholders should note that certain major Shareholders have given
undertakings to finnCap and the Company to, where permitted in
accordance with the terms of the Open Offer, subscribe for
13,432,681 Open Offer Shares which represents these Shareholders'
Basic Entitlements. The 13,432,681 Open Offer Shares taken up by
these Shareholders will set off their subscription for the
corresponding number of Placing Shares. The remaining 24,263,605
Placing Shares are subject to clawback to satisfy valid
applications by Qualifying Shareholders under the Open Offer.
Subject to the fulfilment of the conditions set out below and in
Part 2 of the Circular, Qualifying Shareholders are being given the
opportunity to subscribe for Open Offer Shares under the Open Offer
at the Issue Price, payable in full on application and free of all
expenses, pro rata to their existing shareholdings on the following
basis:
8 Open Offer Shares for every 10 Existing Ordinary Shares
held by Qualifying Shareholders and registered in their name at
the Record Date.
Open Offer Entitlements under the Open Offer will be rounded
down to the nearest whole number and any fractional entitlements to
Open Offer Shares will not be allocated and will be disregarded.
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
Entitlement.
If you have sold or otherwise transferred all of your Existing
Ordinary Shares after the ex-entitlement Date, you are not entitled
to participate in the Open Offer.
The Open Offer is not a rights issue. Qualifying CREST
Shareholders should note that, although the 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 the Application Form is not a
negotiable document and cannot be traded. Qualifying Shareholders
should be aware that under the Open Offer, unlike in a rights
issue, any New Ordinary Shares not applied for will not be sold in
the market or placed for the benefit of Qualifying Shareholders who
do not apply under the Open Offer, but will be placed with Placees
pursuant to the Underwriting Agreement, and the net proceeds will
be retained, for the benefit of the Company.
Application has been made for the Open Offer Entitlements of
Qualifying CREST Shareholders to be admitted to CREST. It is
expected that such Open Offer Entitlements will be admitted to
CREST on 15 March 2016. The Open Offer Entitlements will also be
enabled for settlement in CREST on 15 March 2016 to satisfy bona
fide market claims only. Applications through the CREST system may
only be made by the Qualifying CREST Shareholder originally
entitled or by a person entitled by virtue of a bona fide market
claim.
Further details of the Open Offer and the terms and conditions
on which it is being made, including the procedure for application
and payment, are contained in Part 2 of the Circular and for
Qualifying Non-CREST Shareholders on the accompanying Application
Form. To be valid, Application Forms (duly completed) and payment
in full for the Open Offer Shares applied for must be received by
Capita Asset Services, Corporate Actions, the Registry, 34
Beckenham Road, Beckenham, Kent BR3 4TU, by no later than 10.00
a.m. on 30 March 2016.
Qualifying Non-CREST Shareholders will have received an
Application Form with the Circular which sets out their maximum
entitlement to Open Offer Shares as shown by the number of Basic
Entitlements allocated to them.
Qualifying Shareholders are also being given the opportunity,
provided that they take up their Basic Entitlements in full, to
apply for Excess Entitlements through the Excess Application
Facility.
To enable the Company to benefit from applicable exemptions to
the requirement under the Prospectus Rules to prepare a prospectus
in connection with the Open Offer, a maximum of 37,696,286 Open
Offer Shares, representing a total consideration of approximately
GBP3.8 million will be made available to Qualifying Shareholders
under the Open Offer, which will be conducted on the basis of 8
Open Offer Shares for every 10 Existing Ordinary Shares held at the
Record Date. The Open Offer is restricted to Qualifying
Shareholders in order to enable the Company to benefit from
exemptions from securities law requirements in certain
jurisdictions outside the United Kingdom.
Excess Application Facility
The Excess Application Facility will enable Qualifying
Shareholders, provided that they take up their Basic Entitlements
in full, to apply for Excess Entitlements to the extent that if a
Qualifying Shareholder has taken up its Basic Entitlements in full
and applies for and is allocated the maximum Excess Entitlements it
will suffer no dilution as a result of the Fundraising. Qualifying
Non-CREST Shareholders who wish to apply to acquire more than their
Basic Entitlements should complete the relevant sections on the
Application Form. Qualifying CREST Shareholders will have Excess
Entitlements credited to their stock account in CREST and should
refer to paragraph 3(f) of Part 2 of the Circular for information
on how to apply for Excess Entitlements pursuant to the Excess
Application Facility. Applications for Excess Entitlements will be
satisfied only and to the extent that corresponding applications by
other Qualifying Shareholders are not made or are made for less
than their Basic Entitlements and may be scaled back at the
Company's absolute discretion.
(MORE TO FOLLOW) Dow Jones Newswires
March 14, 2016 03:00 ET (07:00 GMT)
Once subscriptions by Qualifying Shareholders under their Basic
Entitlements have been satisfied, the Company shall, in its
absolute discretion, determine whether or not to meet any
applications for Excess Entitlements in full or in part and no
assurance can be given that applications by Qualifying Shareholders
under the Excess Application Facility will be met in full, in part
or at all. Application will be made for the Basic Entitlements and
Excess Entitlements in respect of Qualifying CREST Shareholders to
be admitted to CREST. It is expected that New Ordinary Shares
issued pursuant to subscriptions by Qualifying Shareholders
exercising their Basic Entitlements and Excess Entitlements will be
admitted to CREST at 8.00 a.m. on 1 April 2016. Such New Ordinary
Shares will also be enabled for settlement in CREST at 8.00 a.m. on
1 April 2016. Applications through the means of 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 Non-CREST Shareholders will receive an Application Form
with the Circular which sets out their entitlement to Open Offer
Shares as shown by the number of Basic Entitlements allocated to
them. Qualifying Non-CREST Shareholders should note that the
Application Form is not a negotiable document and cannot be
traded.
Qualifying CREST Shareholders will receive a credit to their
appropriate stock accounts in CREST in respect of their Basic
Entitlements on 15 March 2016. Qualifying CREST Shareholders should
note that although the Basic Entitlements and Excess Entitlements
will be admitted to CREST and be enabled for settlement,
applications in respect of their Open Offer Entitlements may only
be made by the Qualifying Shareholder originally entitled or by a
person entitled by virtue of a bona fide market claim. If
applications are made for less than all of the Open Offer Shares
available, then the lower number of Open Offer Shares will be
issued and any outstanding Basic Entitlements will lapse.
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 2 of the Circular. For
Qualifying Non-CREST Shareholders, completed Application Forms,
accompanied by full payment, should be returned by post, or by hand
(during normal business hours only), to Capita Asset Services,
Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent
BR3 4TU so as to arrive as soon as possible and in any event so as
to be received no later than 10.00 a.m. on 30 March 2016. For
Qualifying CREST Shareholders the relevant CREST instructions must
have been settled as explained in the Circular by no later than
10.00 a.m. on 30 March 2016.
Basis of allocation under the Fundraising
The Placing may be scaled back at the Company's absolute
discretion in order to satisfy valid applications by Qualifying
Shareholders under the Open Offer. The Open Offer is being made on
a pre-emptive basis to Qualifying Shareholders. Any New Ordinary
Shares that are available under the Open Offer and are not taken up
by Qualifying Shareholders pursuant to their Open Offer
Entitlements will be reallocated to the Placing.
The number of Placing Shares to be clawed back from Placees to
satisfy valid applications by Qualifying Shareholders under the
Open Offer will be calculated pro rata to each Placee's commitment
to subscribe for Placing Shares. Placees should note that certain
major shareholders have given irrevocable commitments to where
permitted in accordance with the terms of the Open Offer, subscribe
for their Basic Entitlements amounting to 13,432,681 Open Offer
Shares and therefore the pro rata allocation of Placing Shares not
subject to valid clawback will be calculated excluding these
commitments.
Other Information relating to the Fundraising
Each of the placing of the Firm Placing Shares, the Placing
Shares and the issue of the Open Offer Shares is conditional, inter
alia, upon Admission becoming effective by no later than 8.00 a.m.
on 1 April 2016 (or such later time and/or date as finnCap and the
Company may agree being no later than 8.00 a.m. on 22 April 2016).
The Placing is conditional on completion of the Open Offer.
The Open Offer is subject to the satisfaction, amongst other
matters, of the following conditions on or before 1 April 2016 (or
such later date being no later than 8.00 a.m. 22 April 2016, as the
Company may decide):
-- Admission becoming effective by 8.00 a.m. on 1 April 2016 (or
such later time or date not being later than 8.00 a.m. on 22 April
2016 as the Company may decide);
-- the Underwriting Agreement becoming unconditional in all
respects and not having been terminated in accordance with its
terms; and
-- the Resolutions having been duly passed without amendment at
the Extraordinary General Meeting.
In the event that the Open Offer does not become unconditional
by 8.00 a.m. on 1 April 2016 (or such later time and date as the
Company may decide being no later than 8.00a.m. 22 April 2016), the
Open Offer will lapse and application monies will be returned by
post to the Applicant(s) at the Applicant's risk and without
interest, to the address set out in the Application Form, within 14
days thereafter.
The New Ordinary Shares will, when issued and fully paid, rank
pari passu in all respects with the Existing Ordinary Shares,
including the right to receive all dividends and other
distributions declared, made or paid after the date of
Admission.
Settlement and dealings
Application will be made to the London Stock Exchange for the
New Ordinary Shares to be admitted to trading on AIM. It is
expected that such Admission will become effective and that
dealings will commence at 8.00 a.m. on 1 April 2016. Further
information in respect of settlement and dealings in the New
Ordinary Shares is set out in paragraph 7 of Part 2 of the
Circular.
Overseas Shareholders
Certain Overseas Shareholders may not be permitted to subscribe
for Open Offer Shares pursuant to the Open Offer and should refer
to paragraph 6 of Part 2 of the Circular.
Extraordinary General Meeting
An Extraordinary General Meeting of the Company will be held at
Banjo Jersey, 8 Beresford Street, St Helier, Jersey JE2 4WN at
10.00 a.m. on 30 March 2016 for the purpose of considering and, if
thought fit, adopting the Resolutions at the Extraordinary General
Meeting or any adjournment thereof.
Resolution 1 will be proposed as a special resolution and
increases the Company's authorised share capital.
Resolution 2 will be proposed as an ordinary resolution (and is
conditional on the passing of Resolution 1) and authorises the
Directors to allot and issue the New Ordinary Shares pursuant to
the Fundraising. The authority granted by the resolution, if
passed, will be in addition to, and will not revoke or supersede,
the authority to allot Ordinary Shares granted to the Directors at
the annual general meeting of the Company held on 29 July 2015.
Resolution 3 will be proposed as a special resolution (and is
conditional on the passing of Resolution 2) and empowers the
Directors to allot and issue New Ordinary Shares pursuant to the
authority granted by Resolution 2 free of the pre-emption rights
contained in the articles of association of the Company. The power
granted by the resolution, if passed, will be in addition to, and
will not revoke or supersede, the power to allot Ordinary Shares on
a non pre-emptive basis granted to the Directors at the annual
general meeting of the Company held on 29 July 2015.
Related Party Transactions
The following Directors and Proposed Director will be
subscribing for Firm Placing Shares (the "Participating
Directors"):
Director/Proposed Director Ordinary Ordinary Ordinary Percentage
Shares Shares Shares of the
held subscribed held following Enlarged
prior for in the Fundraising Issued
to the the Firm Share
Fundraising Placing Capital
held
Martin Bralsford 204,800 550,000 754,800 0.43%
Mike Hall 227,648 1,000,000 1,227,648 0.69%
Donal Duff 100,000 750,000 850,000 0.48%
Martin Magee 9,456 50,000 59,456 0.03%
Simon Perrée 52,400 250,000 302,400 0.17%
Clive Whiley (via Zodiac
Executive Pension Scheme) - 500,000 500,000 0.28%
The Participating Directors will not be applying for their Basic
or Excess Entitlements in the Open Offer.
The Independent Director, being Clive Jones who is not
subscribing for Firm Placing Shares, having consulted with finnCap,
considers that the participation of the above Directors and the
Proposed Director in the Firm Placing is fair and reasonable
insofar as Shareholders are concerned.
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