The information contained within
this announcement is deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulation (EU)
596 / 2014 which forms part of United Kingdom law by virtue of the
European Union (Withdrawal) Act 2018. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
28 March 2024
Sondrel (Holdings)
plc
("Sondrel", the
"Company" and together with
its subsidiaries the "Group")
Further Convertible Loan and
Amended Exclusivity Agreement
Further to the announcement on 6
March 2024 (RNS Number: 7221F) ("Previous Announcement"), Sondrel is
pleased to announce that it has entered into a further £2 million
("Principal Amount")
secured 15% convertible loan agreement (the "Second Loan") with ROX Equity Partners Limited
("ROX"), a UK-based private
equity firm and long term investor specialising in emerging
technology companies (the "Second Loan Agreement").
Second Loan Agreement
The Second Loan Agreement is
substantially on the same terms as the first £874,600 loan (the
"First Loan") agreement
made between Sondrel and ROX which is described in the Previous
Announcement (the "First Loan
Agreement"). The same rate of interest of 15% per
annum applies to the Second Loan which accrues daily and is
payable quarterly on the last day of March,
June, September and December with the Second Loan and any unpaid
interest being repayable in full on the third anniversary of the
drawdown date.
The proceeds of the Second Loan are
expected to be received by the Company on 28 March 2024 and will be
utilised to enable the Group to meet March and April 2024 payroll
and immediate working capital requirements.
Subject to certain events set out in
the Second Loan Agreement, the Principal Amount of the Second Loan
(excluding any interest accrued but unpaid or compounded) is
convertible into ordinary shares of £0.001 in the Company
("Ordinary Shares") at the
discretion of ROX or, if earlier, automatically on completion of
the proposed equity fundraise by the Company as envisaged by the
amended Exclusivity Agreement referenced below (the "Fundraise"). The conversion price for
the Principal Amount will be 10 pence per Ordinary Share
("Second Conversion Shares").
The Second Loan is secured by the
all-monies debenture and deed of guarantee granted by the Company's
UK subsidiaries, Sondrel Limited and Sondrel (SOC Solutions) Ltd,
to ROX in connection with the First Loan Agreement as referenced in
the Previous Announcement.
Exclusivity Agreement
As confirmed in the Previous
Announcement, the Company entered into an exclusivity agreement
with ROX on 5 March 2024 ("Exclusivity Agreement"), granting ROX
the right to participate, alongside existing shareholders, in the
Fundraise. The Company has entered into a deed of variation to the
Exclusivity Agreement pursuant to which the size of the proposed
Fundraise has been increased from £6.5 million to £8.5 million,
inclusive of the proceeds of the First Loan and Second
Loan.
Under the terms of the Exclusivity
Agreement (as amended), ROX has confirmed, depending on the level
of existing shareholders' participation in the Fundraise and
subject to certain conditions including, inter alia, a waiver of Rule 9 of the
City Code on Takeovers and Mergers (the "Takeover Code") being obtained from the Panel on
Takeovers and Mergers of the obligation that would otherwise arise
on ROX to make a general offer to the shareholders of the Company
pursuant to Rule 9 of the Takeover Code as a result of the issue to
them of more than 29.9 per cent. of the Company's issued ordinary
share capital as enlarged by the Fundraise ("Rule 9 Waiver") and the approval of the
Company's shareholders of such Rule 9 Waiver ("Shareholders' Approval"), its
willingness to subscribe for all of the new Ordinary Shares to be
issued in the Fundraise to raise gross proceeds of £8.5 million for
the Company ("Potential
Investment"). Therefore, subject to the relevant conditions
being fulfilled, the Fundraise is expected to be fully
subscribed.
In addition to the Rule 9 Waiver and
the Shareholders' Approval, ROX's
commitment to acquire up to 85,000,000 new Ordinary Shares
(including the Conversion Shares referenced in the Previous
Announcement and the Second Conversion Shares) and is subject to
the approval of the Secretary of State pursuant to the National
Security and Investments Act 2021.
In addition, under the amended terms
of the Exclusivity Agreement, the Company has agreed, in the event
that the Fundraise completes, to extend the exclusivity period for
a further 12 months from completion of the Fundraise. During
this 12 month period, ROX has agreed to consider a request from the
Company to provide additional funding in order to finance the
Transformation Plan (as defined below), up to a maximum additional
amount of £1.5 million which would, if approved by ROX, be
subscribed for by way of additional Ordinary Shares at 10 pence per
share.
Transformation Plan
Under the Second Loan Agreement the
Company has agreed to implement a transformation plan which is
expected to involve certain changes being made to its board of
directors including the appointment of two additional independent
non-executive directors in due course ("Transformation Plan").
As part of the Transformation Plan,
Graham Curren has agreed that he will transition from his role as
Chief Executive Officer of the Company and become Chief Executive
Officer of a newly established subsidiary of the Company which will
concentrate on the strategy and growth of the Group. In this new
role, which would take effect from completion of the Fundraise,
Graham's significant experience and relationships with participants
in the semiconductor industry will continue to deliver value to the
Company. Graham will retain his role as a statutory director on the
board of the Company.
It is anticipated that David
Mitchard will shortly be appointed by the Company as interim Chief
Executive Officer in a non-board capacity. David has more than 20
years' experience in leading large corporate divisions in complex
engineering environments and successfully implementing turnaround
strategies. Most recently, David was Managing Director of Maritime
Services at BAE Systems. David brings with him a wealth of
experience which the Company believes will benefit its ability to
execute the transformation of its business.
As part of the Transformation Plan,
the Company has resolved (including by unanimous approval of the
independent non-executive directors) to seek a proposal to cancel
the admission of the Ordinary Shares to trading on AIM
("Cancellation") in such
manner that would allow an orderly exit for those shareholders who
do not wish to hold shares in a private company environment, where
a trading facility will not be offered. The Company and ROX are of
the opinion that the costs and complexities of being quoted on AIM
do not benefit the Company and its shareholders during a period
where the business is undergoing transformation.
It is anticipated that a
Cancellation resolution will be put to Shareholders within six
months of completion of the Fundraise. Graham Curren has
irrevocably undertaken to the Company and to ROX to vote in favour
of a Cancellation resolution in respect of those shares in which he
and his connected persons are interested, being in aggregate
39,253,866 Ordinary Shares, representing 44.88% of the Company's
existing issued Ordinary Share capital.
Details of any changes to the
Company's board of directors will be announced in due course and
further details of the Transformation Plan will be included in the
Rule 9 Waiver circular and further announcements to be released by
the Company in connection with the Fundraise and the Potential
Investment. The irrevocable undertaking provided by Graham Curren
also includes an irrevocable undertaking to the Company and to ROX
to vote in favour of the resolutions to be proposed by the Company
in the Rule 9 Waiver circular in respect of those shares in which
he and his connected persons are interested, being in aggregate
39,253,866 Ordinary Shares, representing 44.88% of the Company's
existing issued Ordinary Share capital.
There can be no certainty that the conditions to the Potential
Investment will be satisfied or that ROX will proceed with the
Potential Investment or that ROX will provide any further funding
to the Company. Under the terms of the Exclusivity Agreement, the
Company has undertaken (subject to ROX not withdrawing from
negotiations with the Company) not to solicit other forms of
investment from third parties prior to 30 September 2024 save for
engaging with the Company's existing shareholders in connection
with their participation in the Fundraise. Should ROX not proceed
with the Potential Investment, the Company will not have sufficient
working capital resources to meet its immediate requirements and
may have to cease trading.
For further information:
Sondrel (Holdings) plc
|
Via
Buchanan
|
Graham Curren, CEO
|
Tel: +44
(0) 20 7466 5000
|
Nick Stone, Interim CFO
|
|
|
|
Cavendish Capital Markets Limited
|
Tel: +44
(0) 20 7220 0500
|
Ben Jeynes / Katy Birkin / George
Lawson - Corporate Finance
|
|
Michael Johnson - Sales
|
|
|
|
Buchanan Communications
|
Tel: +44
(0) 20 7466 5000
|
Chris Lane / Stephanie Whitmore /
Abby Gilchrist
|
sondrel@buchanan.uk.com
|
About Sondrel
Sondrel is a UK-based fabless
semiconductor company specialising in high end, complex digital
Application Specific Integrated Circuits (ASICs) and System on
Chips (SOCs). It provides a full turnkey service in the design,
prototyping, testing, packaging and production of ASICs and
SoCs.
The Company is one of only a few
companies capable of designing and supplying the higher-spec chips
built on the most advanced semiconductor technologies, selling into
a range of hyper growth end markets such as high-performance
computing, automotive, artificial intelligence, VR/AR, video
analytics, image processing, mobile networking and data
centres. Sondrel designs have enabled products by leading
technology brands including Apple (iPhone), Sony (PlayStation),
Meta's (Oculus), Samsung, Google and Sony smartphones, JVC
(prosumer camcorders), Tesla and Mercedes-Benz cars.
Sondrel is well-established, with a
20-year track record of successful delivery, supported by long
standing ecosystem partnerships including Arm, TSMC and Samsung.
Headquartered in the UK, Sondrel has a global presence with offices
in UK, USA, China, India and Morocco.
For more information please
visit: ir.sondrel.com.