TIDMTSTR
RNS Number : 8067G
Tri-Star Resources PLC
01 June 2017
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No. 596/2014 until the release of this
announcement
1 June 2017
Tri-Star Resources plc
("Tri-Star" or the "Company")
Variation and Conversion of Loan Notes, Placing, Redemption of
Loan Notes
and Notice of General Meeting
Tri-Star announces that it has reached agreement with the
holders of its convertible loan notes ("Loan Notes") to restructure
the Company's balance sheet and raise additional working capital
(the "Proposals"). The Proposals are conditional on, inter alia,
shareholder approval of the Takeover Panel's waiver of the Odey
Entities' (as defined below) obligation to make an offer under Rule
9 of the Takeover Code ("Whitewash Resolution"). The Proposals
entail all of the outstanding Loan Notes, amounting to
approximately GBP12.185 million, being converted or redeemed. The
Company will also raise GBP1.3 million, before expenses, for
general working capital purposes. Full details of the Proposals are
set out below.
Following completion of the Proposals, funds under the
discretionary management of Odey Asset Management (the "Odey
Entities") will become the holder of 54.27% of the Company's
enlarged outstanding share capital, including the OAM Fee shares
(as defined below).
The Company will be posting to shareholders a circular shortly
setting out further details of the Proposals and giving notice of a
general meeting of shareholders to be held on 20 June 2017 to
consider resolutions to allow the Proposals to proceed, including
the Whitewash Resolution.
Highlights:
-- Reduction in the conversion price of the Loan Notes from 0.20
pence to 0.121855 pence per ordinary share ("Issue Price"),
unconditional and effective 1 June 2017;
-- Subject to, inter alia, approval by shareholders at the General Meeting:
o Odey Entities to convert approximately GBP4.4 million of Loan
Notes into approximately 3,614 million new ordinary shares of the
Company ("Shares") (the "Conversion");
o Placing by the Company of approximately 7,453 million new
Shares at the Issue Price to raise a total of approximately GBP9.1
million before expenses (the "Placing"), of which approximately
6,964 million Shares (GBP8.5 million) will be subscribed by the
Odey Entities and approximately 489 million Shares (GBP0.6 million)
have been placed by SP Angel Corporate Finance LLP with existing
and new shareholders of the Company;
o Approximately GBP7.8 million of the Placing proceeds will be
applied to redeem the balance of the Loan Notes and the remaining
GBP1.3 million will be used to meet expenses of the transaction and
for general working capital purposes;
-- Following the Conversion and the Placing and the award of
Shares as part payment of fees payable to Odey Asset Management LLP
(the "OAM Fees"), the Odey Entities will hold approximately 10,660
million Shares representing 54.27% of the enlarged share capital of
the Company.
Update on the Oman Antimony Roaster project ("OAR")
The Company has a 40 per cent. interest in Strategic &
Precious Metals Processing LLC ("SPMP"), a joint venture company
which is constructing an antimony roasting facility in Oman. The
Company reports:
-- Test-work has been completed for process issues and Initial
independent test reports have confirmed good recoveries of antimony
and gold from the test process;
-- Final plant design changes and revised operational readiness
considerations are forecast to move commissioning of the OAR
facility into Q1 2018, with first antimony metal due in March
2018;
-- SPMP is expecting to conclude negotiations to address its
feedstock requirements for 2018 in the coming months.
The Proposals will also result in the restructuring and
strengthening of the Company's balance sheet which the Directors
believe will enhance the Company's ability to raise additional
capital in the short term to satisfy expected significant
additional funding requests from SPMP in respect of completing the
development of the OAR during the remainder of 2017.
Mark Wellesley-Wood, Chairman of Tri-Star Resources said:
"This proposed restructuring represents a landmark moment in
Tri-Star's history. The proposals being put to shareholders will,
if approved, see the Company eliminate its debt, strengthen its
balance sheet and bolster its working capital reserves. We welcome
the commitment shown by the Odey Entities in taking a significant
equity stake in our business and look forward to working closely
with them as we enter this next exciting phase of Tri-Star's
development."
Enquiries:
Tri-Star Resources plc Tel: +44 (0) 20 3470 0470
Guy Eastaugh, Chief Executive Officer
SP Angel Corporate Finance (Nomad and Broker) Tel: +44 (0) 20
3470 0470
Robert Wooldridge / Jeff Keating
Strand Hanson (Independent Financial Adviser to Tri-Star) Tel: +44 (0) 20 7409 3494
Simon Raggett / Matthew Chandler / Ritchie Balmer
Yellow Jersey PR Limited (Media Relations) Tel: +44 (0) 7825 916
715
Felicity Winkles/ Alistair de Kare-Silver
Variation and Proposed Part Conversion of Loan Notes
Proposed Placing of 7,452,901,067 new Ordinary Shares at
0.121855 pence per share
Proposed Redemption of Loan Notes
Proposed Approval of a Waiver of the Obligations under Rule 9 of
the Takeover Code
and
Notice of General Meeting
Note: Capitalised terms used in this announcement are as defined
in the "Definitions" section at the end of the announcement, unless
the context requires otherwise
1. Introduction
The board of directors of Tri-Star (the "Board") today announce
a number of important and necessary developments to restructure the
Company's balance sheet and raise additional working capital,
further to discussions with the holders of the outstanding Loan
Notes. All of the outstanding Loan Notes are currently held by two
funds, Odey European Inc. and OEI MAC Inc. (the "Odey Funds") under
the discretionary management of Odey Asset Management LLP ("OAM")
(together with Odey Swan Fund, the "Odey Entities"), which have
provided considerable debt funding and support to the Company over
the course of the last four years. In summary, the Company has:
-- varied the terms of all of the outstanding Loan Notes so as
to reduce the conversion price from 0.20 pence to 0.121855 pence
per share and to permit conditional exercise of conversion rights,
such unconditional Variation being a pre-requisite to the Odey
Funds consenting to the Proposals;
-- received notice from the Odey Funds of the conditional
exercise, at the varied conversion price, of their conversion
rights over such amount of their holding of Loan Notes that would
result in the Odey Funds being issued, in aggregate, with
3,613,884,866 new Ordinary Shares, representing approximately 29.9
per cent. of the Company's issued share capital as enlarged by the
issue of such Conversion Shares; and
-- conditionally, raised approximately GBP9.1 million (gross) by
way of a placing of 7,452,901,067 new Ordinary Shares. The net
proceeds of the Placing of approximately GBP8.8 million to be
applied as follows:
-- approximately GBP7.8 million to redeem the balance of the
Loan Notes remaining following the above mentioned Conversion;
and
-- the balance of approximately GBP1.0 million for the Group's
general working capital purposes.
The Company also announces that the Odey Funds and Swan have
subscribed for, in aggregate, approximately GBP8.5 million worth of
Ordinary Shares of the GBP9.1 million (gross) raised pursuant to
the Placing.
The Conversion is conditional upon, inter alia, the passing of
the Resolutions at the General Meeting. Upon completion of the
Conversion and the Placing, the Odey Entities will hold, in
aggregate, 10,659,531,331 new Ordinary Shares representing
approximately 54.27 per cent. of the Enlarged Share Capital
(including the OAM Fee Shares), being an amount that, in the
absence of a waiver of the obligations under Rule 9 of the Takeover
Code, would require the Odey Entities to make a general offer to
Shareholders. As is customary, the Panel has agreed to grant a
waiver of such obligation provided the Whitewash Resolution
(Resolution 1) is approved at the General Meeting on a poll by
Shareholders holding more than 50 per cent. of the Existing
Ordinary Shares.
In addition, OAM, on behalf of the Odey Funds, has, on the
condition that the Resolutions are passed and the Proposals are
completed, agreed to waive interest due on the Loan Notes for the
period from 1 April 2017 up to and including the date of the
General Meeting in order to facilitate negotiation, documentation
and implementation of the Variation and the Proposals. However,
should the Resolutions not be passed by Shareholders at the General
Meeting and the Proposals not be implemented, OAM (on behalf of the
Odey Funds) reserves the right to add back all the accrued
outstanding interest on the Loan Notes.
A circular is today being posted to Shareholders (the
"Circular") which sets out the details of, and reasons for, the
Variation and the Proposals; to explain why the Directors believe
that they are in the best interests of the Company and its
Shareholders as a whole; to provide further detail in relation to
the Whitewash Resolution and the implications for Shareholders of
the obligations under Rule 9 of the Takeover Code being waived; and
to unanimously recommend that Shareholders vote in favour of all of
the Resolutions to be proposed at the forthcoming General Meeting.
An extract of the majority of Part 1 of the Circular is set out
below.
Without such a restructuring, the Board believes that there is a
material risk that the Company would fail to retain the support of
the Odey Entities and also fail to attract the further capital that
will be needed to meet the Company's share of joint venture company
SPMP's future additional funding requirements. Tri-Star has a 40
per cent. equity interest in SPMP which is the Company's principal
asset.
Furthermore, the Odey Funds are entitled to call for redemption
of such proportion of the Loan Notes that remain outstanding
following a conversion which results in the Odey Funds holding 29.9
per cent. of the then enlarged share capital of the Company. The
Company currently has insufficient cash reserves to fund any such
redemption request.
2. Variation and Proposed Part Conversion of the Loan Notes
In June and September 2013, the Company issued, in aggregate,
GBP4.0 million principal amount of Loan Notes to OEI and further
tranches of Loan Notes were issued in August 2014 (GBP2.0 million)
and August 2015 (GBP2.0 million) with the terms of such Loan Notes
being amended in September 2015. All of the Loan Notes are
currently held by the Odey Funds which are under the discretionary
management of OAM. The proceeds from the issue of the Loan Notes
were utilised to satisfy part of the Company's share of the funding
obligations in respect of the development of the OAR held by SPMP
as well as for other general corporate purposes.
The rate of interest accruing on the Loan Notes is a non-cash
coupon of 15 per cent. per annum, calculated on a daily basis, and
compounding half yearly. As referred to above, OAM, on behalf of
the Odey Funds, has, on the condition that the Resolutions are
passed and the Proposals are completed, agreed to waive interest
due on the Loan Notes for the period from 1 April 2017 up to and
including the date of the General Meeting in order to facilitate
negotiation, documentation and implementation of the Variation and
the Proposals. However, should the Resolutions not be passed by
Shareholders at the General Meeting and the Proposals not be
implemented, OAM (on behalf of the Odey Funds) reserves the right
to add back all the accrued outstanding interest on the Loan Notes.
The approximate aggregate amount currently outstanding under the
Loan Notes including accrued interest up to and including 31 March
2017 is GBP12.185 million. The Odey Funds have the right to serve a
conversion notice at any time prior to the scheduled maturity of
the Loan Notes on 19 June 2018.
Under the terms of the Loan Notes, the Odey Funds currently have
the right to convert all or part of their holding into Ordinary
Shares. If the Odey Funds issue a conversion notice and the full
conversion of the notes under such notice would result in the Odey
Funds holding more than 29.9 per cent. of the Company's then
enlarged voting share capital, the Company may allot and issue such
shares to the extent the holding of the Odey Funds does not exceed
29.9 per cent. of the then enlarged share capital of the Company.
In respect of the portion of the Loan Notes which are the subject
of a conversion notice, but are not converted, the Odey Funds have
the option of either continuing to hold those notes or, at the Odey
Funds' election, to have those notes redeemed for cash by the
Company. The Company currently has insufficient cash reserves to
fund any such redemption request.
In order to ensure the continuing support of the Odey Entities,
the Company agreed with the Odey Funds to amend the existing terms
of the Loan Notes to:
-- vary the conversion price downwards from 0.20p per share to
0.121855p per Ordinary Share (which is equal to the Issue Price),
representing a discount of approximately 24 per cent. to the
Company's closing mid-market share price of 0.16p on 31 May 2017
being the last Business Day immediately prior to the announcement
of the Proposals; and
-- to allow for the exercise of conversion rights to be conditional.
This unconditional Variation was a pre-requisite to the Odey
Funds consenting to the Proposals, including the injection of
additional capital into the Company pursuant to the Placing.
Conditional upon the conditions to the Placing (save for the
condition relating to Admission) being satisfied or waived, the
Odey Funds have given notice to the Company that they wish to
convert GBP4,403,699.40 of the Loan Notes at the Issue Price into
the Conversion Shares.
3. Details of the Placing
SP Angel, as placing agent for the Company, has conditionally
placed the Placing Shares at the Issue Price with the Odey Funds,
Swan (a fund under the discretionary management control of OAM) and
certain other investors to raise approximately GBP9.1 million
before expenses. The Odey Funds and Swan have agreed to subscribe
for, in aggregate, 6,963,581,716 of the Placing Shares at the Issue
Price raising approximately GBP8.5 million whilst certain other
investors have agreed to subscribe for, in aggregate, the remaining
489,319,351 Placing Shares at the Issue Price raising approximately
GBP0.6 million. The Placing Shares will represent approximately
37.9 per cent. of the Enlarged Share Capital.
The net proceeds of the Placing are to be applied to redeem the
balance of the Loan Notes outstanding following the Conversion in
order to strengthen the Company's balance sheet with the remainder
to be utilised for the Company's general working capital
purposes.
Accordingly, on completion of the Proposals, the Odey Entities
will, in aggregate, hold approximately 54.27 per cent. of the
Enlarged Share Capital (including the OAM Fee Shares).
4. Principal terms of the Placing, issue of the Fee Shares and
Admission
The Placing is conditional, among other things, upon:
-- the Panel's waiver of the Odey Entities' obligation to make
an offer under Rule 9 of the Takeover Code on allotment and issue
to them of the Placing Shares and the OAM Fee Shares;
-- the passing of the Resolutions;
-- the Placing Agreement becoming unconditional in all respects
and not having been terminated in accordance with its terms;
and
-- Admission of the Placing Shares and Conversion Shares to
trading on AIM becoming effective by not later than 8.00 a.m. on 21
June 2017 (or such later time and/or date (not being later than 31
July 2017) as SP Angel and the Company may agree).
Accordingly, if such conditions are not satisfied, or, as
applicable, waived, the Placing and Conversion will not
proceed.
In addition, as part of its engagement terms with the Company,
Strand Hanson will be issued 20,516,187 Ordinary Shares on
completion in lieu of part of its fee for advising the Company in
connection with the Proposals. The Company has also agreed that OAM
will be separately issued 82,064,749 Ordinary Shares on completion
as part settlement of an arrangement fee in recognition of the
professional advisory costs that OAM has incurred in connection
with the renegotiation and restructuring of the Loan Notes.
Furthermore, as part of its engagement terms with the Company,
on Admission SP Angel will be issued warrants to subscribe for
24,465,968 Ordinary Shares in lieu of part of its fee for advising
the Company in connection with the Placing. The warrants will be
exercisable at the Issue Price per new Ordinary Share for a period
of four years from the date of grant and ending on the fourth
anniversary of grant.
The New Ordinary Shares, when issued fully paid, will rank
equally in all respects with the Existing Ordinary Shares including
the right to receive any dividends or other distributions declared,
made or paid after the date of issue of the New Ordinary
Shares.
Application will be made to the London Stock Exchange for the
New Ordinary Shares to be admitted to trading on AIM and such
admission is expected to become effective on 21 June 2017. It is
expected that CREST accounts will be credited on the day of
Admission as regards the Placing Shares in uncertificated form and
that certificates for Placing Shares to be issued in certificated
form will be dispatched by first class post the week commencing 26
June 2017.
The Placing Agreement contains certain warranties and
indemnities given by the Company in favour of SP Angel as to
certain matters relating to the Company and its business. The
obligations of SP Angel under the Placing Agreement may be
terminated in certain circumstances if there occurs either a
material breach of any of the warranties or if a materially adverse
event occurs at any time prior to Admission. Such rights exist in
the event that such circumstances arise prior to Admission. If the
conditions in the Placing Agreement are not fulfilled on or before
the relevant date in the Placing Agreement then the subscription
monies will be returned to Placees without interest.
The Placing Agreement also provides for the Company to pay SP
Angel a corporate finance fee, commissions and certain other costs
and expenses incidental to the Placing and Admission.
5. Current activities, trading and prospects
The Company's most recent financial results for the year ended
31 December 2016 were announced on 10 March 2017 and the Company's
Annual Report and Financial Statements were posted to shareholders
on 15 March 2017.
Since the start of 2017, the antimony market has risen
significantly, driven by concerns over the availability of antimony
from China, the world's largest producer. Such concerns were
recently heightened following environmental inspections on numerous
antimony blast furnace facilities in a twelve-month inspection
programme that commenced in April 2017, which has already resulted
in approximately 50 per cent. of certain plant capacity in China
being shut or suspended for non-compliance.
Tri-Star's principal asset and focus of activities is its 40 per
cent. interest in SPMP. SPMP is an Omani company developing the
OAR. Construction of the OAR has commenced on site and the first
items of major equipment will start to arrive during June 2017.
Photographs showing the project's progress have recently been
uploaded to the Company's website and are available to view at
www.tri-starresources.com.
As reported in the Company's 2016 results announcement on 10
March 2017, test-work has been continuing and this has been
completed for process issues. Initial independent test reports have
confirmed good recoveries of antimony and gold from the test
process and good quality of end product. Testing has also been
extended to prepare for operational readiness. As a result of these
tests, it has been necessary to change some casting equipment
specifications and the lining of the casting kettles has had to be
modified in the interests of preserving the product quality of the
finished antimony ingot.
These final plant design changes and revised operational
readiness considerations are expected to move commissioning and
first antimony metal into Q1 2018. Meanwhile, SPMP's discussions
with end customers and contracting for feedstock supply are well
advanced and SPMP is expecting to conclude negotiations to address
its feedstock requirements for 2018 in the coming months.
As at 31 May 2017, being the latest practicable date prior to
publication of this announcement, the Company held cash balances of
approximately GBP192,000. Accordingly, if the Proposals are not
approved by Shareholders, or for whatever reason are not
implemented, the Company will need to secure additional working
capital within two months.
The Directors understand that the issue of the New Ordinary
Shares arising on completion of the Conversion and Placing will
have a substantial dilutive effect on the holdings of Shareholders.
The Directors, however, consider the Proposals to be in the best
interests of the Company and its Shareholders as a whole since the
Proposals remove the risk of the Odey Funds exerting their right to
require the redemption, in cash, of the balance of the Loan Notes
remaining after the Conversion. The Proposals will also result in
the restructuring and strengthening of the Company's balance sheet
which the Directors believe will enhance the Company's ability to
raise additional capital in the short term to satisfy expected
significant additional funding requests from SPMP in respect of
completing the development of the OAR during the remainder of
2017.
The Directors consider that the possibility of the Company being
able to raise approximately GBP7.8 million to redeem the balance of
the Loan Notes remaining post Conversion at short notice would be
extremely challenging and that the best outcome for the Company and
its Shareholders in such circumstances will be achieved by the
completion of the Proposals.
Assuming completion of the Proposals, the Directors believe that
the Company's prospects will be enhanced as the Proposals so
enacted will, inter alia, result in the orderly elimination of the
Company's existing indebtedness, the removal of the current
uncertainty with respect to the timing and consequences of the Loan
Notes' conversion and redemption, provide the requisite additional
working capital and secure the introduction of the Odey Funds as
majority shareholders in the business.
If the Proposals are not approved by Shareholders at the General
Meeting and are not implemented, the Directors would immediately
have to seek alternative sources of potential funding which may or
may not be obtainable on similar commercial terms or secured on a
timely basis, or at all. If such alternative sources of potential
funding are not found to be available, the Directors believe it is
highly likely that the Company would be forced into
administration.
6. Relationship Agreement
The Company, SP Angel, the Odey Funds and Swan have entered into
a Relationship Agreement, which is conditional upon completion of
the Proposals, pursuant to which the Odey Funds and Swan, in their
capacities as substantial shareholders, have given various
undertakings to the Company and SP Angel regarding the relationship
between the Odey Funds, Swan, their associates and the Company.
In particular, the Odey Funds and Swan have agreed:
-- not to take any action that would result in the Company not
being capable at any time of carrying on its business independently
of the Odey Funds, Swan and their associates; and
-- not to exercise their voting rights to prevent there being
not less than two independent directors of the Company from time to
time who have not been nominated by the Odey Funds, Swan and/or
their associates.
The agreement will terminate if the Odey Funds, Swan and their
associates cease to be interested in more than 29.9 per cent. of
the Company's voting share capital from time to time. Some
provisions of the Relationship Agreement survive termination and
these include the right of the Odey Funds and Swan together to
appoint non-executive directors to the Board based on their
interest in the Ordinary Shares of the Company as described
below.
In view of the substantial shareholdings of the Odey Funds and
Swan, the Company has agreed in the Relationship Agreement that for
so long as the Odey Funds and Swan are together interested in at
least 10 per cent. of the Ordinary Shares, they may appoint one
non-executive director to the Board and that for so long as the
Odey Funds and Swan are together interested in at least 30 per
cent. of the Ordinary Shares, they may appoint two non-executive
directors. No such nominated director will be appointed or continue
in office if the Company (acting reasonably) determines that such
appointment or continuation in office would have a material adverse
effect on the ongoing appropriateness of the Company for admission
to trading on AIM, such approval not be unreasonably withheld.
The Odey Funds and Swan also separately confirm that they have
every intention to act in the best interests of the Company and in
turn, to seek to improve the valuation of the Company for all
Shareholders.
7. Proposed Board appointments
Pursuant to the provisions of the Relationship Agreement, on
completion of the Proposals the following persons will join the
Board as non-executive directors at the request of the Odey Funds
and Swan:
David Fletcher
David is a Partner and Non-Executive Chairman of OAM. He has
been part of the OAM management team for over 20 years since
joining as Chief Executive in 1995. David is also a Senior Adviser
at Social Finance, a not for profit social sector innovator. Prior
to OAM, David was CEO at Leopold Joseph, the quoted UK merchant
bank, where he had worked since graduating from New College,
Oxford, in 1980.
Karen O'Mahony
Karen is currently Managing Director of PE Advisors Ltd
("PEAL"). Prior to the establishment of PEAL in 2014, Karen spent
10 years at Misland Capital Ltd where she was Deputy Chief
Investment Officer. From 2002 to 2004, she was a Director at Davy
Stockbrokers Ltd in Dublin and prior to that, she worked as an
Associate at Goldman Sachs covering Pan European Equity Research.
She holds a master's degree in Quantitative Finance from University
College Dublin and an undergraduate degree in Finance from Trinity
College Dublin.
8. The Takeover Code
The Placing gives rise to certain considerations under the
Takeover Code. Brief details of the Panel, the Takeover Code and
the protections they afford are set out below.
The Takeover Code is issued and administered by the Panel. The
Takeover Code applies to all takeover and merger transactions,
however effected, where the offeree company is, among other things,
a listed or unlisted public company resident in the United Kingdom,
the Channel Islands or the Isle of Man (and to certain categories
of private limited companies). The Company is a public company
whose Ordinary Shares are admitted to trading on AIM, and 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 series of transactions over a period of time or not,
an interest in shares which (taken together with shares already
held by that person and any interest in shares held or acquired by
persons acting in concert with him) 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 to all the holders of any class of equity share
capital or other class of transferable securities carrying voting
rights in that company to acquire the balance of their interests in
the company.
Similarly, Rule 9 of the Takeover Code also provides, among
other things, that where any person who, together with persons
acting in concert with him, is interested in shares which in
aggregate carry not less than 30 per cent. but not more than 50 per
cent. of the voting rights of a company which is subject to the
Takeover Code, and such person, or any person acting in concert
with him, acquires an additional interest in shares which increases
the percentage of shares carrying voting rights in which he is
interested, then such person is normally required by the Panel to
make a general offer to all the holders of any class of equity
share capital or other class of transferable securities carrying
voting rights of that company to acquire the balance of their
interests in the company.
An offer under Rule 9 of the Takeover Code must be in cash (or
with a cash alternative) and at the highest price paid within the
preceding 12 months for any interest in shares in the company by
the person required to make the offer or any person acting in
concert with him.
Shareholders should be aware that Rule 9 of the Takeover Code
further provides, inter alia, that where any person who, together
with persons acting in concert with him, holds interests in shares
carrying more than 50 per cent. of the voting rights of a company,
acquires an interest in shares which carry additional voting
rights, then they will not normally be required to make a general
offer to the other shareholders to acquire their shares.
Under the Takeover Code, a concert party arises where persons
acting together pursuant to an agreement or understanding (whether
formal or informal) co-operate to obtain or consolidate control of,
or frustrate the successful outcome of an offer for, a company
subject to the Takeover Code. Control means an interest or
interests in shares carrying, in aggregate, 30 per cent. or more of
the voting rights of the company, irrespective of whether the
holding or holdings give de facto control. OAM and the relevant
funds over which it has control of all voting and investment
decisions, being OEI, OMI and Swan (i.e. the Odey Entities), (the
"Concert Party") are considered to be acting in concert for the
purposes of the Takeover Code (as such term is defined in the
Takeover Code). However, for the purposes of Rule 9, the Takeover
Panel considers the Concert Party to be a single entity. Given that
on completion of the Proposals the Concert Party will hold over 50%
of the voting rights of the Company, any transfer of shares in the
Company between entities within the Concert Party and any further
acquisitions of the Company's shares by any member of the Concert
Party, whether individually or collectively, will not be subject to
the restrictions of Rule 9 of the Takeover Code.
9. Dispensation from the requirement to make a general offer
under the Takeover Code
Immediately following completion of the Proposals and the issue
of the Conversion Shares, Placing Shares and OAM Fee Shares, the
Odey Entities will have acquired interests in the Ordinary Shares
carrying, in aggregate, 54.27 per cent. of the then enlarged voting
rights of the Company which, without a waiver of the obligations
under Rule 9 of the Takeover Code, would oblige the Odey Entities
(and any party deemed to be acting in concert with the Odey
Entities) to make a general offer to Shareholders under Rule 9 of
the Takeover Code. Each of the Odey Entities' existing and
resultant interests will comprise:
Existing Holdings Holdings immediately
following
completion of the
Proposals
-------------
No. of Percentage Resultant Percentage
Existing of the shareholding of the Enlarged
Ordinary Existing Share Capital
Odey Entity Shares Share Capital
------------- ----------- ---------------- --------------- -----------------
OEI - - 5,782,969,103 29.44%
OMI - - 4,216,975,093 21.47%
Swan - - 577,522,386 2.94%
OAM - - 82,064,749 0.42%
Total: - - 10,659,531,331 54.27%
=========== ================ =============== =================
The Company has applied to the Panel for a waiver of the
obligations under Rule 9 of the Takeover Code in order to permit
the Placing to proceed without triggering an obligation on the part
of the Odey Entities to make a general offer to Shareholders. Under
Note 1 of the Notes on the Dispensations from Rule 9 of the
Takeover Code, the Panel will normally waive the requirement for a
general offer to be made in accordance with Rule 9 of the Takeover
Code (a "Rule 9 Offer") if, among other things, 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 approving such a waiver on a poll
at a general meeting.
Accordingly, the Panel has agreed to grant a waiver of the
obligation of the Odey Entities to make a general offer under Rule
9 of the Takeover Code that would otherwise arise as a result of
the issue of the Placing Shares and OAM Fee Shares to the Odey
Entities pursuant to the Proposals, subject to Shareholders
approving the Whitewash Resolution (Resolution 1) on a poll at the
General Meeting. To be passed, the Whitewash Resolution will
require a simple majority of the votes cast on a poll by the
Shareholders entitled to vote. Shareholders should note that if the
Whitewash Resolution is passed by Shareholders at the General
Meeting and the Proposals completed, the Odey Entities, or any
individual entity thereof, will not be restricted from making an
offer for the Company.
Shareholders should further note that, following completion of
the Proposals and issue of the Conversion Shares, Placing Shares
and OAM Fee Shares, the Odey Entities will between them be
interested in approximately 54.27 per cent. of the then enlarged
voting rights of the Company and that:
-- by virtue of holding more than 50 per cent. of the Company's
voting rights, the Odey Entities will be entitled to increase their
holdings or aggregate interest in the voting rights of the Company
without incurring any obligation under Rule 9 of the Takeover Code
to make a general offer to all Shareholders to acquire their
Ordinary Shares; and
-- this will increase the percentage of the Ordinary Shares that
are not in public hands. This may in turn have the effect of
reducing the liquidity of trading in the Ordinary Shares on AIM.
The Odey Entities' stake in the voting rights of the Company will
also mean that the Odey Entities will be able, if they so wish, to
exert significant influence over resolutions proposed at future
general meetings of the Company.
The attention of Shareholders is drawn to the information on the
Odey Entities set out in Part 2 of the Circular and the additional
information required by the Takeover Code set out in Part 3 of the
Circular.
10. Independent advice provided to the Board
The Takeover Code requires the Board to obtain competent
independent advice regarding the merits of the transaction which is
the subject of the Whitewash Resolution, the controlling position
which it will create, and the effect which it will have on
Shareholders generally. Accordingly, Strand Hanson, as the
Company's independent financial adviser, has provided formal advice
to the Board regarding the Proposals. Strand Hanson confirms that
it, and any person who is or is presumed to be acting in concert
with it, is independent of the Odey Entities and has no personal,
financial or commercial relationship or arrangements or
understandings with the Odey Entities.
11. General Meeting
The Directors do not currently have authority to allot all of
the New Ordinary Shares and, accordingly, the Board is seeking the
approval of Shareholders to allot the Placing Shares at the General
Meeting. In addition, the Panel's waiver of the obligations under
Rule 9 of the Takeover Code has been granted subject to
Shareholders entitled to vote approving the Whitewash Resolution on
a poll at the General Meeting.
The formal Notice of General Meeting is set out at the end of
the Circular convening the meeting to be held at the offices of
Fladgate LLP at 16 Great Queen Street, London WC2B 5DG at 10.00
a.m. on 20 June 2017. At the General Meeting the following
Resolutions will be proposed:
-- Resolution 1 is an ordinary resolution to approve the waiver
of the obligations under Rule 9 of the Takeover Code, conditional
on approval of the Panel. This resolution will be taken on a poll,
and must be approved by Shareholders entitled to vote who together
represent a simple majority of the issued Ordinary Shares held by
such Shareholders being voted (whether in person or by proxy) at
the General Meeting;
-- Resolution 2, which is conditional on the passing of
Resolution 1 and is an ordinary resolution, to authorise the
Directors to allot relevant securities up to an aggregate nominal
amount of GBP372,645.05335, being equal to 7,452,901,067 Ordinary
Shares (i.e. the maximum number of Ordinary Shares available under
the Placing); and
-- Resolution 3, which is conditional on the passing of
Resolutions 1 and 2 and is a special resolution to authorise the
Directors to issue and allot up to 7,452,901,067 Ordinary Shares
pursuant to the Placing on a non-pre-emptive basis.
Completion of the Conversion and Placing is conditional upon the
passing of the Resolutions. If any of the Resolutions are not
passed then the Conversion and Placing will not complete and the
Company will need to raise additional working capital in the short
term.
If the Proposals are not approved by Shareholders and are not
implemented and the Odey Funds were to exert their right to serve a
conversion notice at any time prior to the scheduled maturity of
the Loan Notes on 19 June 2018 and elect to have the unconverted
balance of their Loan Notes redeemed for cash at that time or
otherwise hold all or a portion of their Loan Notes until maturity,
the Company would be forced to seek alternative sources of
potential funding which may or may not be obtainable on similar
commercial terms or of a sufficient quantum and may or may not be
secured on a timely basis or at all. If any such alternative
sources of potential funding are not available when required, the
Directors believe it is highly likely that the Company would be
unable to satisfy either redemption of the unconverted Loan Notes
or its further funding obligations in respect of the OAR, leading
to dilution of its existing ownership interest in SPMP and/or
potentially being forced into administration.
The Strand Hanson Fee Shares are to be allotted and issued to
Strand Hanson in lieu of part of its fee for advising the Company
in connection with the Proposals. The SP Angel Warrants are to be
granted in lieu of part of its fee for advising the Company in
connection with the Placing. The Company has also agreed to pay OAM
GBP175,000 (plus VAT in respect of the cash portion of this
payment) in recognition of the professional advisory costs that OAM
has incurred in connection with the renegotiation and restructuring
of the Loan Notes, such fee to be satisfied by the payment of
GBP75,000 plus VAT in the sum of GBP15,000 in respect of the
professional advisory costs in cash and the allotment and issue of
the OAM Fee Shares to OAM (or to any person or entity as it
directs). The Fee Shares and the SP Angel Warrants will be allotted
and issued pursuant to the general authorities to be granted to the
Directors at the Company's forthcoming Annual General Meeting.
12. Irrevocable undertakings
The Company has received irrevocable undertakings to vote in
favour of all the Resolutions, including the Whitewash Resolution
(Resolution 1), from all of the Directors who hold Existing
Ordinary Shares, in respect of, in aggregate, 1,663,745,800
Existing Ordinary Shares representing approximately 19.64 per cent.
of the Existing Ordinary Shares. Further details of the irrevocable
undertakings are set out in paragraph 4.5 of Part 3 of the
Circular.
13. Intentions of the Odey Entities following implementation of the Proposals
Following completion of the Proposals, OAM intends to work
alongside the Board to carry out a review of the business structure
and operations of the Company, including its investment in SPMP
with a view to optimising the ongoing cost base and administration
of the Company and increasing the Company's revenue and improving
its performance. Some operational and administrative restructuring
may be required but OAM has not made any decisions about how any
such restructuring should be carried out. When carrying out the
review and any restructuring OAM has every intention to act in the
best interests of the Company and in turn, to seek to improve the
valuation of the Company for all shareholders.
14. Recommendation
The Directors, having been so advised by Strand Hanson, consider
the Proposals and the passing of the Resolutions, including the
Whitewash Resolution, to be fair and reasonable and in the best
interests of the Shareholders and the Company as a whole. In
providing its advice to the Directors, Strand Hanson has taken into
account the Directors' commercial assessments.
Accordingly, the Directors unanimously recommend that
Shareholders vote in favour of all of the Resolutions, as they have
irrevocably undertaken so to do in respect of their own beneficial
shareholdings of, in aggregate, 1,663,745,800 Existing Ordinary
Shares, representing approximately 19.64 per cent. of the existing
issued share capital of the Company.
The Conversion and the Placing are conditional, among other
things, upon the passing of the Resolutions at the General Meeting.
Shareholders should be aware that if the Resolutions are not
approved at the General Meeting by Shareholders, the Conversion and
the Placing will not proceed.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
2017
Announcement of the Proposals 7.00 a.m. on 1 June
Publication and posting of 1 June
the Circular and the Form
of Proxy
Latest time and date for 10.00 a.m. on 16
receipt of completed Forms June
of Proxy to be valid at the
General Meeting
General Meeting 10.00 a.m. on 20
June
Admission effective and dealings 8.00 a.m. on 21 June
in the New Ordinary Shares
expected to commence
New Ordinary Shares expected 21 June
to be credited to CREST members'
accounts (where applicable)
Despatch of definitive share week commencing 26
certificates for New Ordinary June
Shares in certificated form
(where applicable)
Notes:
If any of the details contained in the timetable above should
change, the revised times and/or dates will be notified by means of
an announcement through a Regulatory Information Service.
Certain of the events in the above timetable are conditional
upon, amongst other things, the approval
of the Resolutions to be proposed at the General Meeting.
All references are to London time unless stated otherwise.
KEY STATISTICS
Number of Existing Ordinary Shares 8,472,686,593
Issue Price of the Conversion
Shares, Placing Shares and Fee
Shares 0.121855p
Number of Conversion Shares 3,613,884,866
Number of Placing Shares 7,452,901,067
Number of Fee Shares 102,580,936
Total number of New Ordinary Shares 11,169,366,869
Enlarged Share Capital 19,642,053,462
Conversion Shares as a percentage 18.4 per cent.
of the Enlarged Share Capital
9.1Placing Shares as a percentage 37.9 per cent.
of the Enlarged Share Capital
New Ordinary Shares as a percentage 56.9 per cent.
of the Enlarged Share Capital
Number of SP Angel Warrants 24,465,968
Market Capitalisation of the Company c. GBP23.9 million
at the Issue Price on Admission
Estimated gross proceeds of the c. GBP9.1 million
Placing
Estimated proceeds of the Placing c. GBP8.8 million
(net of expenses)
DEFINITIONS
The following definitions apply throughout this announcement and
in the Circular and accompanying Notice of General Meeting and Form
of Proxy, unless the context requires otherwise:
"Admission" admission of the New Ordinary
Shares to trading on AIM in
accordance with the AIM Rules
for Companies;
"AIM" the AIM market operated by
London Stock Exchange;
"AIM Rules for the AIM Rules for Companies
Companies" and guidance notes as published
by the London Stock Exchange
from time to time;
"Board" or "Directors" the directors of the Company
as at the date of this announcement
whose names are set out on
page 10 of the Circular;
"Business Day" a day (other than a Saturday,
Sunday or public holiday in
England) when banks in London
are open for general commercial
business;
"CA 2006" the UK Companies Act 2006 (as
amended);
"certificated" a share or other security which
or "certificated is not in uncertificated form
form" (that is, not in CREST);
"Company" or "Tri-Star" Tri-Star Resources PLC (registered
in England with registration
number 04863813) with its registered
office at Suite 31, Second
Floor, 107 Cheapside, London
EC2V 6DN;
"Capita Asset Services" a trading name of Capita Registrars
Limited, whose registered office
is at The Registry, 34 Beckenham
Road, Kent, BR3 4TU, being
Tri-Star's registrar;
"Conversion" the conditional conversion
of GBP4,403,699.40 of the outstanding
balance of the Loan Notes into
the Conversion Shares at the
Issue Price;
"Conversion Shares" 3,613,884,866 new Ordinary
Shares;
"CREST" the relevant system (as defined
in the CREST Regulations) in
respect of which Euroclear
is the operator (as defined
in the CREST Regulations);
"CREST Manual" the manual, as amended from
time to time, produced by Euroclear
and available at www.euroclear.com;
"CREST member" a person who has been admitted
to CREST as a system member
(as defined in the CREST Manual);
"CREST Regulations" the Uncertificated Securities
Regulations 2001 (SI 2001/3755),
as amended from time to time;
"CREST Sponsor" a CREST participant admitted
to CREST as a CREST sponsor;
"CREST sponsored a CREST member admitted to
member" CREST as a sponsored member;
"Daily Official the Daily Official List published
List" by the London Stock Exchange;
"Enlarged Share the entire issued Ordinary
Capital" Share capital of the Company
following the issue of the
New Ordinary Shares;
"Euroclear" Euroclear UK & Ireland Limited,
the operator of CREST;
"Existing Ordinary the 8,472,686,593 Ordinary
Shares" Shares in issue as at the date
of this announcement;
"FCA" the Financial Conduct Authority
of the UK;
"Fee Shares" the Strand Hanson Fee Shares
and the OAM Fee Shares;
"Form of Proxy" the form of proxy for use in
connection with the General
Meeting enclosed with the Circular;
"FSMA" the UK's Financial Services
and Markets Act 2000 (as amended)
including any regulations made
pursuant thereto;
"General Meeting" the General Meeting of the
Company, convened for 10.00
a.m. on 20 June 2017, or any
adjournment thereof, notice
of which is set out at the
end of the Circular;
"Group" the Company and its subsidiaries;
"Issue Price" 0.121855 pence per New Ordinary
Share;
"Loan Notes" the convertible loan notes
issued by the Company pursuant
to an instrument dated 19 June
2013 (as subsequently restated
and amended) as currently held
by the Odey Funds;
"London Stock Exchange" London Stock Exchange plc;
"New Ordinary Shares" the Placing Shares, the Conversion
Shares and the Fee Shares;
"Notice of General the formal notice convening
Meeting" the General Meeting as set
out in the Circular;
"OAM" Odey Asset Management LLP (registered
in England & Wales with registration
number OC302585) with its registered
office at 12 Upper Grosvenor
Street, London W1K 2ND;
"OAM Fee Shares" the 82,064,749 new Ordinary
Shares to be issued to OAM
(or to any person or entity
as it directs) on Admission;
"OAR" the Oman Antimony Roaster Project
in Sohar, Oman being developed
by SPMP;
"Odey Entities" OAM, OEI, Swan and OMI collectively;
"Odey Funds" OEI and OMI collectively;
"OEI" Odey European Inc. (registered
in the Cayman Islands with
registration number CR-114227)
whose registered office is
at Landmark Square, West Bay
Road, PO Box 775, Grand Cayman,
KY1-9006;
"OMI" OEI MAC Inc. (registered in
the Cayman Islands with registration
number CR-114226) whose registered
office is at Landmark Square,
West Bay Road, PO Box 775,
Grand Cayman, KY1-9006;
"Ordinary Shares" ordinary shares of 0.005p each
in the capital of the Company
from time to time;
"Panel" or "Takeover the Panel on Takeovers and
Panel" Mergers;
"Pence" or "p" UK pence sterling, the lawful
currency of the United Kingdom;
"PEAL" PE Advisors Ltd, a consultant
to OAM;
"Placees" subscribers for the Placing
Shares;
"Placing" the proposed conditional placing
of the Placing Shares at the
Issue Price, the details of
which are set out in this announcement;
"Placing Agreement" the agreement entered into
between the Company and SP
Angel in respect of the Placing,
dated 1 June 2017, as
described in paragraph 4 of
this announcement;
"Placing Shares" the 7,452,901,067 new Ordinary
Shares to be issued by the
Company pursuant to the Placing
subject to the satisfaction
of the relevant conditions;
"Pounds" or "GBP" UK pounds sterling, the lawful
currency of the United Kingdom;
"Proposals" together, the Conversion, the
Placing and the waiver of the
Odey Entities' obligations
under Rule 9 of the Takeover
Code;
"Prospectus Rules" the rules made by the FCA under
Part VI of FSMA in relation
to offers of transferable securities
to the public and admission
of transferable securities
to trading on a regulated market;
"Regulatory Information has the meaning given in the
Service" AIM Rules for Companies;
"Relationship Agreement" the conditional agreement dated
1 June 2017 between the Company,
SP Angel, Swan and the Odey
Funds as more particularly
described in paragraph 6 of
this announcement;
"Resolutions" the resolutions to be proposed
at the General Meeting as set
out in the Notice of General
Meeting at the end of the Circular;
"Shareholder(s)" a person(s) who is/are registered
as a holder(s) of Ordinary
Shares from time to time;
"SP Angel" S.P. Angel Corporate Finance
LLP, the Company's nominated
adviser and broker;
"SP Angel Warrants" the warrants to subscribe for
24,465,968 Ordinary Shares
to be issued to SP Angel conditional
on Admission.
"SPMP" Strategic & Precious Metals
Processing LLC registered in
the Sohar Free Zone in the
Sultanate of Oman with number
1199095 whose principal place
of business is at PO Box 329,
Postal Code 115, Madinat Al
Sultan Qaboos, Sultanate of
Oman;
"Strand Hanson" Strand Hanson Limited, the
Company's independent financial
adviser;
"Strand Hanson the 20,516,187 new Ordinary
Fee Shares" Shares to be issued to Strand
Hanson on Admission;
"Swan" Odey Swan Fund, a sub-fund
of Odey Investments plc, an
open-ended umbrella type investment
company with segregated liability
between its various sub-funds
and incorporated with limited
liability under the laws of
Ireland with registered number
501534 and its registered office
at 33 Sir
John Rogerson's Quay, Dublin
2, Ireland;
"subsidiary" a subsidiary of the Company
as that term is defined in
section 1159 and schedule 6
of the CA 2006;
"Takeover Code" the City Code on Takeovers
and Mergers, issued by the
Panel;
"UKLA" the UK Listing Authority, being
the FCA acting as competent
authority for the purposes
of Part V of FSMA;
"uncertificated" recorded on the relevant register
or "in uncertificated or other record of the share
form" or other security concerned
as being held in uncertificated
form in CREST and title to
which, by virtue of the CREST
Regulations, may be transferred
by means of CREST;
"United Kingdom" the United Kingdom of Great
or "UK" Britain and Northern Ireland,
its territories and dependencies;
"United States", the United States of America,
"United States its territories and possessions,
of America" or any state of the United States
"US" of America and the District
of Columbia and all areas subject
to its jurisdiction;
"Variation" the variation of the terms
of the Loan Notes so as to
reduce the conversion price
from 0.20 pence to 0.121855
pence per share and to permit
conditional exercise of conversion
rights; and
"Whitewash Resolution" the ordinary resolution to
approve the Panel's waiver
of the Odey Entities' obligation
to make an offer under Rule
9 of the Takeover Code on allotment
and issue to them of the Placing
Shares and the OAM Fee Shares,
which is set out at Resolution
1 of the Notice of General
Meeting, and is required to
be passed on a poll at the
General Meeting.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCLIFFERLILIID
(END) Dow Jones Newswires
June 01, 2017 02:00 ET (06:00 GMT)
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