TIDMCIN
RNS Number : 6629K
City of London Group PLC
22 December 2022
22 December 2022
City of London Group plc
("COLG", the "Company" or the "Group")
Proposals for cancellation of admission of Ordinary Shares to
trading on AIM,
the members' voluntary liquidation of the Company
and
Equity subscription in Recognise Bank Limited
- Proposals to simplify group corporate structure
- Investment of GBP25m in Recognise Bank from COLG's largest
shareholder for working capital and to support growth of commercial
loan book and further product development
The Company announces that it is today posting a circular (the
"Circular") to its shareholders ("Shareholders") in connection with
proposals that its directors (the "Directors") have concluded are
in the best interests of the Company and its Shareholders,
including proposals to:-
(i) cancel the admission of the Company's ordinary shares of 2
pence each (the "Ordinary Shares") to trading on AIM
("Cancellation") pursuant to Rule 41 of the AIM Rules for
Companies; and
(ii) place the Company into a members' voluntary liquidation ("MVL") as part of a solvent re-organisation of the group structure, pursuant to which it is expected that the joint liquidators proposed to be appointed at the General Meeting (as defined below) ("Joint Liquidators") will carry out a distribution in specie of all the Company's shares in the capital of its wholly-owned subsidiary, Recognise Bank Limited (" RBL "), to the Shareholders in a proportion which is as close as practicable to such Shareholder's pro rata interests in the capital of the Company immediately prior to such distribution (the " Distribution ").
The Circular includes notice of a general meeting (the "General
Meeting") of the Company which is being convened for 10.00 a.m. on
25 January for the purposes of considering and, if thought fit,
passing the requisite shareholder Resolutions to approve the
Proposals (as defined below).
Whilst the Company has historically acted as a holding company
for a number of operating subsidiaries, RBL is now the only
subsidiary owned by the Company and therefore a holding company is
no longer required. The Directors have therefore concluded that it
is in the best interests of the Company and the Shareholders as a
whole to simplify the Group's corporate structure by removing the
holding company from the Group structure through the cancellation
of admission of the Company's shares to trading on AIM, the
implementation of an MVL of the Company and the Joint Liquidators
carrying out the Distribution. As a result, immediately following
the Distribution, Shareholders will become direct shareholders in
RBL and such Shareholders will no longer hold any Ordinary
Shares.
The Company's only material asset is its interest in RBL and the
Company has no material liabilities. The Directors have concluded
therefore that it is no longer beneficial for the Company to
continue in existence and that it would be preferable for the Group
to have a simpler corporate structure without a holding entity
whose shares are admitted to trading on AIM. Accordingly, the
Directors believe that the Cancellation, the MVL and the
Distribution (together the " Proposals ") are in the long-term
operational interests of Shareholders as a whole, the Group's
stakeholders and RBL.
In addition, conditional inter alia upon the Distribution being
implemented and shortly following the Distribution, PV27, which
currently holds 57,125,000 Ordinary Shares, representing
approximately 47.83 per cent. of the Company's issued share
capital, has agreed conditionally to invest GBP25 million in RBL at
GBP1.06 per new RBL Share, which equates to 30 pence per Ordinary
Share (the " Equity Subscription ").
Following the Distribution, in order to support liquidity in the
RBL Shares for Shareholders who will hold RBL Shares as a result of
the Distribution (" RBL Shareholders "), RBL intends to put a
matched bargain facility (the " RBL Matched Bargain Facility ") in
place for a period of time to assist RBL Shareholders who wish to
trade in RBL Shares. The RBL Matched Bargain Facility will be
provided by Asset Match Limited.
The Company has received irrevocable undertakings from certain
Shareholders, who, in aggregate, hold 90,017,349 Ordinary Shares,
representing slightly above 75 per cent. of the Company's issued
share capital, to vote in favour of the Resolutions. In view of
these irrevocable undertakings, the Directors believe that each of
the Resolutions will be passed at the General Meeting.
Capitalised terms in this announcement, unless otherwise
defined, have the same meaning as will be set out in the
Circular.
Expected Timetable of Principal Events
Notice provided to the London Stock Exchange 22 December 2022
to notify it of Cancellation
-----------------
Publication and posting of the Circular and 22 December 2022
the Form of Proxy
-------------------------------------------------------- -----------------
Latest time and date for receipt of Forms of 10.00 a.m. on
Proxy for the General Meeting 23 January 2023
-------------------------------------------------------- -----------------
Last day of dealings in the Ordinary Shares 24 January 2023
on AIM
-------------------------------------------------------- -----------------
Close of the Register and Record Date for participation 6.00 p.m. on
in the MVL(1) 24 January 2023
-------------------------------------------------------- -----------------
Suspension of the trading in the Ordinary Shares 7.30 a.m. on
on AIM 25 January 2023
-------------------------------------------------------- -----------------
General Meeting 10.00 a.m. on
25 January 2023
-------------------------------------------------------- -----------------
Appointment of the Joint Liquidators 25 January 2023
-------------------------------------------------------- -----------------
Announcement of results of General Meeting 25 January 2023
through an RIS
-------------------------------------------------------- -----------------
Cancellation becomes effective 7.00 a.m. on
26 January 2023
-------------------------------------------------------- -----------------
Expected date for the distribution of RBL Shares 20 February 2023
to Shareholders pursuant to the Distribution(2)
-------------------------------------------------------- -----------------
Expected date of satisfaction of all conditions 27 February 2023
under the Equity Subscription and settlement
of the Equity Subscription2
(1) The actual time and date on which the Register is closed and
the Record Date is set for participation in the MVL will ultimately
be determined by the Joint Liquidators and is therefore subject to
change.
(2) The actual date on which the Distribution will be complete
will ultimately be determined by the Joint Liquidators and is
therefore subject to change. The completion of the Distribution is
one of the conditions to the Equity Subscription.
Notes:
(1) The dates set out above and throughout this circular may be
adjusted by the Company in which event details of the new dates
will be notified to AIM and, where appropriate, to Shareholders by
announcement through a Regulatory Information Service.
(2) All of the above times refer to UK time.
(3) Each of the Cancellation, the MVL and the Distribution is
conditional, inter alia, on the passing of the Resolutions at the
General Meeting.
Recommendation
The Directors consider that the Proposals are in the best
interests of the Company and its Shareholders as a whole and
therefore unanimously recommend that Shareholders vote in favour of
the Resolutions. Philip Jenks and Richard Gabbertas, as independent
Directors who are interested in Ordinary Shares, have undertaken to
vote, or procure the vote, in favour of the Resolutions in respect
of, in aggregate, 57,000 Ordinary Shares, representing
approximately 0.06 per cent. of the Company's issued share capital,
to which they are beneficially entitled. In addition, PV27 (in
which Ruth Parasol and Nyreen Llamas are interested) and Paul
Milner have undertaken to vote, or procure the vote, in favour of
the Resolutions in respect of, in aggregate, 57,231,238 Ordinary
Shares, representing approximately 47.9 per cent. of the Company's
issued share capital, to which they are beneficially entitled.
Philip Jenks, Chair of City of London Group, commented : " The
proposed changes to our structure will make Recognise Bank more
streamlined and efficient and will save costs, so we can focus our
resources and continue to develop new services and products for all
our customers.
"The new investment shows how much Recognise Bank has achieved
in a short period of time and sets the Bank up for a bright and
successful future. We have quietly gone about the business of
creating a new digital bank for SMEs and will continue to focus all
our energy on growing Recognise, with the backing of COLG's largest
shareholder, one of the best management teams in the business and
an energised team of colleagues."
For further information, please contact:
City of London Group Plc +44 (0)20 3988 6504
Georgina Behrens (Group Counsel)
Email - Georgina.Behrens@recognisebank.co.uk
Shore Capital (Nominated Adviser
and Broker)
Tom Griffiths
Guy Wiehahn
Iain Sexton +44 (0)20 7408 4090
For media enquiries, please contact:
Paul Beadle, Head of Communications,
Recognise Bank +44 (0)7801 105001
Paul.Beadle@recognisebank.co.uk
This announcement contains inside information as defined in
Regulation (EU) No. 596/2014 on market abuse which is part of UK
domestic law by virtue of the European Union (Withdrawal) Act 2018
("MAR") and is made in accordance with the Company's obligations
under article 17 of MAR. Upon publication of this announcement,
this inside information is now considered to be in the public
domain. This announcement has been issued by and is the sole
responsibility of the Company.
This announcement is not intended to, and does not, constitute
or form part of any offer, invitation or the solicitation of an
offer to purchase, otherwise acquire, subscribe for, sell or
otherwise dispose of, or vote in any manner, any securities
pursuant to this announcement or otherwise. The distribution of
this announcement in jurisdictions outside the United Kingdom may
be restricted by law and therefore persons into whose possession
this announcement comes should inform themselves about and observe
such restrictions. Any failure to comply with the restrictions may
constitute a violation of the securities law of any such
jurisdiction.
Each of Shore Capital and Corporate Limited and Shore Capital
Stockbrokers Limited (together, "Shore Capital") are authorised and
regulated by the Financial Conduct Authority. Shore Capital and
Corporate Limited act as nominated adviser to the Company and Shore
Capital Stockbrokers Limited act as broker to the Company. Shore
Capital is acting solely for Company in connection with all matters
referred to herein and will not be responsible to anyone other than
the Company for providing the protections afforded to its customers
or for advising any other person in relation to the contents of
this announcement or on any transaction or arrangement referred to
in this announcement.
The statements contained in this announcement that are not
historical facts are "forward-looking" statements. These
forward-looking statements are subject to a number of substantial
risks and uncertainties, many of which are beyond the Company's
control and actual results and developments may differ materially
from those expressed or implied by these statements for a variety
of factors. These forward-looking statements are statements based
on the Company's current intentions, beliefs and expectations about
among other things, the Company's financial condition, prospects,
growth, strategies and the industry in which the Company operates.
Forward-looking statements are typically identified by the use of
forward-looking terminology such as "believes", "expects", "may",
"will", "could", "should", "intends", "estimates", "plans",
"assumes" or "anticipates" or the negative thereof or other
variations thereon or comparable terminology, or by discussions of
strategy that involve risks and uncertainties. By their nature,
forward-looking statements involve risks and uncertainties because
they relate to events and depend on circumstances that may or may
not occur in the future. In addition, from time to time, the
Company or its representatives have made or may make
forward-looking statements orally or in writing. Furthermore, such
forward-looking statements may be included in, but are not limited
to, press releases or oral statements made by or with the approval
of an authorised executive officer of the Company. No assurance can
be given that such future results will be achieved; actual events
or results may differ materially from those expressed in or implied
by these statements as a result of risks and uncertainties facing
the Company and its subsidiaries. Many of these risks and
uncertainties relate to factors that are beyond the Company's
ability to control. Such risks and uncertainties could cause actual
results to vary materially from the future results indicated,
expressed or implied in such forward-looking statements. The
forward-looking statements contained in this announcement speak
only as of the date of this announcement and the Company undertakes
no duty to update any of them publicly in light of new information
or future events, except to the extent required by applicable law
or regulation.
APPIX I - EXTRACTS FROM THE DRAFT CIRCULAR TO SHAREHOLDERS
Dear Shareholder,
Proposals for Cancellation of admission of Ordinary Shares to
trading on AIM and Members' Voluntary Liquidation of the Company,
and equity subscription in Recognise Bank Limited
1. Introduction
Earlier today, the Company announced that the Directors had
concluded that it is in the best interests of the Company and its
Shareholders as a whole to:
(i) cancel the admission of the Ordinary Shares to trading on AIM; and
(ii) place the Company into a members' voluntary liquidation
("MVL"), pursuant to which it is expected that the Joint
Liquidators will carry out a distribution in specie of all the
Company's shares in the capital of Recognise Bank Limited (" RBL ")
to Shareholders on the Distribution Date, in a proportion which is
as close as practicable to such Shareholders' pro rata interests in
the capital of the Company as at the Record Date.
The Resolutions to approve the Proposals are to be proposed at
the General Meeting, which has been convened for 10.00 a.m. on 25
January 2023 at RBL's registered office at Augustine House, 6a
Austin Friars, London, England, EC2N 2HA. Notice of the General
Meeting is set out at the end of this document.
The purpose of this document is to seek Shareholders' approval
for the Resolutions, to provide you with information on the
background to and reasons for the Proposals, explain the
consequences of the Proposals becoming effective and why the
Directors unanimously consider that the Proposals are in the best
interests of the Company and its Shareholders as a whole.
The Company has received irrevocable undertakings from certain
Shareholders, who, in aggregate, hold 90,017,349 Ordinary Shares,
representing slightly above 75 per cent. of the Company's issued
share capital, to vote in favour of the Resolutions in respect of
all Ordinary Shares held by each of them (or in which they are
interested). In view of these irrevocable undertakings, the
Directors believe that each of the Resolutions will be passed at
the General Meeting. Further details of the irrevocable
undertakings received by the Company are set out in paragraph 10
below.
This circular also includes details of a proposed equity
fundraising by RBL to raise GBP25 million at GBP1.06 per RBL Share,
which equates to approximately 30 pence per Ordinary Share, to meet
RBL's capital requirements, for general working capital purposes
and to support growth in its loan book. Further details of the
proposed equity fundraising are set out in paragraphs 2 and 5
below.
2. Background to and reasons for the Proposals
Whilst the Company has historically acted as a holding company
for a number of operating subsidiaries, RBL is now the only
subsidiary owned by the Company and therefore a holding company is
no longer required. The Directors have therefore concluded that it
is in the best interests of the Company and the Shareholders as a
whole to simplify the Group's corporate structure by removing the
holding company from the Group structure by seeking cancellation of
admission of the Company's shares to trading on AIM and
implementing an MVL of the Company. As part of the MVL process, it
is anticipated that the Joint Liquidators will carry out a
distribution in specie of the Company's shares in RBL (the "RBL
Shares") to Shareholders in a proportion which is as close as
practicable to such Shareholders' pro rata interests in the capital
of the Company as at the Record Date (the " Distribution "). As a
result, immediately following the Distribution, Shareholders will
become direct shareholders in RBL and will no longer hold any
Ordinary Shares.
The Company's only material asset is its interest in RBL and the
Company has no material liabilities. The Directors have concluded
therefore that it is no longer beneficial for the Company to
continue in existence and that it would be preferable for RBL to
have a simpler corporate structure without a holding entity whose
shares are admitted to trading on AIM. Accordingly, the Directors
believe that the Cancellation, the MVL and the Distribution are in
the long-term operational interests of Shareholders as a whole, the
Group's stakeholders and RBL.
In addition, conditional inter alia upon the Cancellation
becoming effective and immediately following the Distribution,
PV27, which currently holds 57,125,000 Ordinary Shares,
representing approximately 47.83 per cent. of the Company's issued
share capital, has agreed to conditionally invest GBP25 million in
RBL at GBP1.06 per new RBL Share (the " Equity Subscription "),
which equates to approximately 30 pence per Ordinary Share. Further
details of the Equity Subscription are set out in paragraph 5
below.
Following the Distribution, in order to support liquidity in the
RBL Shares for Shareholders who will hold RBL Shares as a result of
the Distribution (" RBL Shareholders "), RBL intends to put a
matched bargain facility (the " RBL Matched Bargain Facility ") in
place for a period of time to assist RBL Shareholders who wish to
trade in RBL Shares. The RBL Matched Bargain Facility will be
provided by Asset Match. Further details of the RBL Matched Bargain
Facility are set out in paragraph 6 below.
3. Cancellation
Reasons for the Cancellation
The Directors have considered the benefits and drawbacks to the
Company and Shareholders of retaining the admission of the
Company's shares to trading on AIM and believe that the
Cancellation is in the best interests of the Company and its
Shareholders as a whole. In reaching this conclusion, the Directors
have considered the following key factors:
-- it is the Directors' belief that the Group would be able to
attain greater access to investment capital privately or off market
than is currently available to the Company (given its current scale
and stage of development) through the continued admission of the
Ordinary Shares to trading on AIM;
-- the considerable cost, management time and the legal and
regulatory burden associated with maintaining admission of the
Ordinary Shares to trading on AIM is currently, in the Directors'
opinion, disproportionate to the benefits to the Group of AIM
admission; and
-- there is a limited free float and liquidity in the Ordinary
Shares with the consequence that admission of the Ordinary Shares
to trading on AIM does not, in the Directors' opinion, offer
investors the opportunity, should they wish to, to trade in
meaningful volumes, or with any frequency, in an active market.
Following careful consideration, the Directors believe that it
is in the best interests of the Company and Shareholders as a whole
for the Cancellation to become effective at the earliest
practicable opportunity.
Principal effects of the Cancellation
Prior to the Company being dissolved pursuant to the MVL, the
principal effects of the Cancellation will be that:
-- Shareholders will no longer be afforded the protections given
by the AIM Rules, such as the requirement to be notified of certain
events and the requirement that the Company seek shareholder
approval for certain corporate actions where applicable, including
substantial transactions, financing transactions, reverse takeovers
and fundamental changes in the Company's business, related party
transactions and certain acquisitions and disposals;
-- the levels of transparency and corporate governance
applicable to the Company will not be as high as for a company
whose shares are admitted to trading on AIM;
-- following approval of the MVL by Shareholders at the General
Meeting, Shareholders will not be able to transfer Ordinary Shares
without the prior consent of the Joint Liquidators. In addition
there will be no formal market mechanism enabling Shareholders to
trade in Ordinary Shares;
-- as a result of the MVL being approved by Shareholders at the
General Meeting and in the absence of a formal market in, and
quotation of, the Ordinary Shares, it may be more difficult for
Shareholders to determine the value of their shareholding in the
Company at any given time;
-- the regulatory and financial reporting regime applicable to
companies whose shares are admitted to trading on AIM will no
longer apply;
-- the Company will cease to have a nominated adviser and broker;
-- whilst the Company's CREST facility will remain in place
following the Cancellation becoming effective, the Company's CREST
facility may be cancelled in future and, although the Ordinary
Shares will remain transferable prior to the approval by
Shareholders of the MVL at the General Meeting, they will cease to
be transferable through CREST if the CREST facility is cancelled.
In this instance, Shareholders who hold Ordinary Shares in CREST
would receive definitive share certificates; and
-- the Cancellation may have taxation consequences for
Shareholders. Shareholders who are in any doubt about their tax
position should consult their own professional independent tax
adviser.
Subject to, and prior to the conclusion of the winding-up of,
the Company's affairs pursuant to the MVL, the Company will remain
incorporated and registered in England and Wales under the
Companies Act 1948 to 1976, notwithstanding the Cancellation
becoming effective. Shareholders should also note that the Takeover
Code will continue to apply to the Company during the period
following the Cancellation and prior to the Company being dissolved
in connection with the MVL. The Takeover Code will not apply to RBL
and accordingly shareholders of RBL will not be afforded the
protections of the Takeover Code. The Company will also continue to
be bound by the Articles following the Cancellation becoming
effective.
The above considerations are not exhaustive and Shareholders
should seek their own independent advice when assessing the likely
impact of the Cancellation on them.
Following the Cancellation and the MVL, and subsequently the
Distribution becoming effective, the RBL Directors intend:
-- to continue to communicate information about RBL (including
posting annual accounts) to the shareholders of RBL from time to
time, as required by the Act;
-- to continue to hold annual general meetings of RBL;
-- for at least 12 months following the Cancellation becoming
effective, to maintain RBL's website and to post updates on the
website from time to time. Whilst it is RBL's intention to continue
to post updates on the website from time to time, Shareholders
should be aware that there will be no obligation on RBL to include
all of the information required under AIM Rule 26 and/or to update
the website as required by the AIM Rules; and
-- to seek to provide a match bargain trading facility through
Asset Match as referred to in paragraph 6 below.
Process for Cancellation
Under the AIM Rules, it is a requirement that the Cancellation
must be approved by not less than 75 per cent. of votes cast by
Shareholders at a general meeting. Accordingly, the Notice of
General Meeting set out at the end of this document contains a
special resolution to approve the Cancellation.
Furthermore, Rule 41 of the AIM Rules requires any AIM company
that wishes the London Stock Exchange to cancel the admission of
its shares to trading on AIM to inform the London Stock Exchange of
its preferred cancellation date at least 20 Business Days prior to
such date and to notify shareholders. In accordance with AIM Rule
41, the Company (through its nominated adviser, Shore Capital and
Corporate Limited) has notified the London Stock Exchange of its
intention, subject to the passing of the special resolution
numbered 1 in the notice of General Meeting set out at the end of
this document to approve the Cancellation at the General Meeting,
to cancel admission of the Ordinary Shares to trading on AIM. It is
expected that trading in the Company's shares on AIM will be
suspended at 7.30 a.m. on the day of the General Meeting, being 25
January 2023, the Joint Liquidators will be appointed immediately
following the conclusion of the General Meeting and the
Cancellation will become effective at 7.00 a.m. on 26 January 2023,
being the Business Day following the General Meeting. If the
Cancellation becomes effective, the Company will no longer be
required to comply with the AIM Rules and Shore Capital and
Corporate Limited will cease to be the Company's nominated adviser
and Shore Capital Stockbrokers Limited will cease to be the
Company's broker.
4. Members' Voluntary Liquidation
The Proposals involve the Company being placed into a members'
voluntary liquidation. If the MVL and the appointment of the Joint
Liquidators are approved by Shareholders at the General Meeting,
the Company will be wound-up in accordance with the Insolvency Act.
Following their appointment, the Joint Liquidators will assess the
Company's financial position and, when they are in a position to do
so, it is expected that they will make the distributions in specie
detailed in this circular.
Shareholders should note that the Company is solvent and the MVL
is not an insolvent liquidation. It is part of a solvent
re-organisation of the group structure which is intended to
streamline the holding structure and cancel the Company's admission
to trading on AIM as referred to above. In the Directors' opinion,
the MVL will not have a material adverse impact on the operations
of RBL.
In pursuit of this aim, since its shareholding in RBL represents
the Company's sole material asset and the Company has no material
liabilities, the Directors anticipate that the Joint Liquidators
will undertake a distribution in specie of the RBL Shares to
Shareholders on the Distribution Date, in a proportion which is as
close as practicable to such Shareholders' pro rata interests in
the capital of the Company at the Record Date. Following the
Distribution, Shareholders will hold shares directly in the capital
of RBL, and the Company will effectively become a shell company,
allowing for the orderly winding-up of its affairs pursuant to the
MVL. Shareholders should also note that the Takeover Code will not
apply to RBL following the Distribution taking place. At the
conclusion of the MVL, the Company will be dissolved. Upon the
appointment of the Joint Liquidators, which, subject to
Shareholders' approval being obtained at the General Meeting, will
take effect immediately following the passing of the resolutions
approving such appointment at the General Meeting, all powers of
the Board will cease and the Joint Liquidators will deal with the
affairs of the Company until it is dissolved. The Company confirms
that the board of RBL will continue to comprise a majority of
independent directors, as required by the PRA and RBL will continue
to be authorised by the PRA and regulated by the FCA and the
PRA.
The distribution ratio shall be 0.284 RBL Shares for every 1
Ordinary Share held by Shareholders on the Record Date. Fractions
of RBL Shares will not be allotted and therefore any distributions
will be rounded down to the nearest whole number.
To the extent that any persons currently hold warrants to
subscribe for new Ordinary Shares, RBL will issue replacement
warrants to such persons entitling them to subscribe for new RBL
Shares at an equivalent exercise price. To the extent that any
persons currently hold options to subscribe for new Ordinary
Shares, such options may either be exercised and/or will lapse upon
completion of the MVL. It is intended that a replacement share
option plan will be established in due course at the RBL level.
The Board estimates that the costs and expenses of the Proposals
will amount to approximately GBP880,000, which includes the fees of
the Joint Liquidators and those of the Company's advisers
(inclusive of VAT to the extent applicable). The Joint Liquidators
will retain the Liquidation Fund to pay the Company's known and
contingent liabilities (inclusive of VAT to the extent applicable),
costs of liquidation not already paid at the point of the
commencement of the MVL and an amount for unknown
contingencies.
Once the Joint Liquidators have made the Distribution, realised
the Company's assets, satisfied claims of creditors of the Company
and paid the costs and expenses of the MVL, the Joint Liquidators
may make a final distribution to Shareholders according to their
respective rights and interests in the Company. This final
distribution, if any, will not be made until the Joint Liquidators
have completed their statutory duty to adjudicate and pay
creditors' claims and obtained HMRC clearance confirming the
agreement of HMRC to the Company's tax returns and that HMRC has no
objection to the closure of the liquidation.
The precise timing of this final distribution (if any) is
uncertain and is likely to be of a nominal amount per Ordinary
Share, but is be expected to be paid within 12 months of the
commencement of the MVL.
The Joint Liquidators will subsequently prepare a final account
which will be sent to Shareholders giving eight weeks' notice of
the date upon which the Joint Liquidators intend to deliver the
final account to the Registrar of Companies. The Company will be
dissolved on the expiry of three months following the filing of the
final account with the Registrar of Companies.
Shareholders who hold their Ordinary Shares in CREST will
receive RBL Shares pursuant to the Distribution through CREST.
Shareholders who hold their Ordinary Shares in certificated form
will be issued new share certificates relating to the RBL Shares to
which they are entitled pursuant to the Distribution. It is
expected that such new share certificates will be issued by 2 March
2023.
5. Equity Subscription
The Company has also announced that it and RBL had entered into
a subscription agreement (the "Subscription Agreement") with PV27
pursuant to which PV27 has, among other things, conditionally
agreed to subscribe for GBP25 million of new shares in RBL at an
agreed subscription price of GBP1.06 for each new RBL Share, which
equates to approximately 30 pence per Ordinary Share.
The Equity Subscription is conditional, inter alia , on:
(i) the Company passing resolutions to authorise the allotment
of new RBL Shares pursuant to the Equity Subscription;
(ii) the Distribution having taken place;
(iii) RBL and PV27 having reached agreement in relation to the
proposed board composition of RBL (the board of RBL will continue
to comprise a majority of independent directors);
(iv) RBL and PV27 having reached agreement in relation to the
proposed business strategy of RBL to be implemented following
completion of the Distribution;
(v) no changes being made to the composition of RBL's executive management team;
(vi) the articles of association of RBL not having been cancelled, replaced or superseded;
(vii) there not having occurred a material adverse change, or
any development which would be reasonably likely to result in a
material adverse change, in the condition (financial, operational,
legal or otherwise) or the earnings, management, business affairs,
solvency or prospects of RBL; and
(viii) there not being any offer or any other proposal to
acquire 20 per cent or more of the share capital and/or assets of
the Company or RBL.
The Board expects that all of the above conditions will be
satisfied by 27 February 2023, following which RBL will publish an
announcement through a Regulatory Information Service and on its
website confirming that the Equity Subscription has become
unconditional. RBL will use the net proceeds of the Equity
Subscription to meet its capital requirements, for general working
capital purposes and to support growth in its loan book. The
subscription price of GBP1.06 per RBL Share represents an
equivalent price of approximately 30 pence per Ordinary Share
(adjusting for the other assets and liabilities of the Company). In
addition, PV27 will receive one warrant for each RBL Share that it
subscribes for (the " Subscription Warrants "). The Subscription
Warrants will be exercisable (in whole or in part) at an exercise
price of GBP1.06 per RBL Share until the Lapse Date and, if not
exercised prior to that date, shall lapse.
The new RBL Shares issued pursuant to the Equity Subscription
and any new RBL Shares resulting from the exercise of the
Subscription Warrants will be credited as fully paid and will rank
pari passu in all respects with the existing RBL Shares, including
the right to receive all dividends and other distributions
declared, made or paid after their date of issue.
PV27 is also in discussions with RBL to underwrite a further
subscription for new RBL Shares for an additional GBP25 million
during 2023, subject to certain conditions and operational
milestones being achieved by RBL. Further details of any such
underwriting will be communicated in due course to Shareholders
through a Regulatory Information Service and on RBL's website.
6. RBL Matched Bargain Facility
As stated above, if the Cancellation is approved by
Shareholders, the Company has made arrangements for the RBL Matched
Bargain Facility to be put in place to assist RBL Shareholders to
trade in the RBL Shares following the Distribution becoming
effective. Under the RBL Matched Bargain Facility, Asset Match will
operate an electronic off-market dealing facility for the RBL
Shares. This facility will allow RBL Shareholders and any new
investors to trade in RBL Shares by matching buyers and sellers
through periodic auctions.
The Asset Match facility operates under its own code of practice
which governs the behaviour of participants and the running of the
periodic auctions. Asset Match operates an open auction system
where volumes of bids and offers at different prices are displayed
on its website together with the closing date of the auction. At
the end of each auction period, Asset Match passes this information
through a non-discretionary algorithm and determines a
"market-derived" share price based on supply and demand and
allocates transactions accordingly. Bids and offers may be made and
withdrawn at any time before the close date of each auction.
RBL Shareholders will be able to hold their RBL Shares in CREST
and should check with their existing stockbroker whether they are
willing or able to trade in unquoted shares. RBL Shareholders
wishing to trade RBL Shares through Asset Match must do so through
a stockbroker. A comprehensive list of stockbrokers who have signed
up to access the Asset Match platform is available on request by
emailing dealing@assetmatch.com .
Further details of the RBL Matched Bargain Facility will be made
available to RBL Shareholders on RBL's website and directly by
letter or e-mail (where appropriate). RBL Shareholders may contact
Asset Match with any queries regarding trading via the secondary
market trading facility by emailing dealing@assetmatch.com .
In addition to the amount being invested in the Equity
Subscription, PV27 has expressed an interest in making available up
to a further GBP300,000 to bid for RBL Shares at the first auction
to be held pursuant to the RBL Matched Bargain Facility following
the Distribution. The reason for PV27 making available such monies
would be to attempt to "tidy up" RBL's shareholder register by
seeking to acquire small holdings of shares. Accordingly, the
maximum value of any offer to sell RBL Shares to PV27 in that first
auction operated pursuant to the RBL Matched Bargain Facility will
be GBP20,000.
7. Interim Results
Earlier today, the Company announced its unaudited interim
results for the six months ended 30 September 2022 ("Interim
Results") which are available on the News & Investors page of
its website www.cityoflondongroup.com . The Group made a loss
before tax of GBP7.2 million (30 September 2021: loss before tax of
GBP5.8 million ) in line with the Board's expectations. Deposits
increased from GBP95.0 million to GBP127.9 million (30 September
2021: GBP8.7 million) over the 6-month period, reflecting the
successful launch of business savings products which contributed
GBP46 million of deposits at 30 September 2022, while the loan book
grew from GBP101.1 million to GBP112.1 million (30 September 2021:
GBP24.1 million). Having achieved its target of lending GBP100
million to British businesses by 31 March 2022, just six months
after receiving its full banking licence, the pace of lending was
moderated deliberately as RBL focused its resources on building its
technology capabilities and launching new savings products during
the period. RBL has reviewed its lending product mix and risk
appetite against the backdrop of a challenging economy, as it
prepares for the next phase of RBL's development and its return to
full lending capacity.
8. Current Trading and Outlook
The Interim Results include my comments as follows:
"After a milestone year that saw Recognise Bank achieve fully
licensed status, the last six months have continued to be busy. We
continue to build our strategy for the next phase of Recognise
Bank's development, focusing in particular on the digital journey
to help improve our processes and delivery of product to customers.
The SME sector is still woefully under-supported by the established
banks, so the opportunity for fresh ideas and innovation is huge.
We look forward to the proposals which have been separately
announced today being implemented, including the investment by PV27
of GBP25 million in new shares in Recognise Bank. This latest
investment of GBP25 million will be used to fund working capital,
the further development of innovations and improvements to existing
services, at the same time supporting the growth of our commercial
lending book. This new investment demonstrates the confidence of
our major shareholder in the Bank's strategy and potential, and our
vision for business banking in the UK. While we do not
underestimate the ongoing challenges that SMEs and their customers
face from the current economic conditions, the Board believes
Recognise Bank is in a good position to capitalise on the
opportunities we foresee. The loan book is strong because of
prudent credit management, we are well capitalised, and with our
innovation team we are already looking to develop the financial
solutions SMEs will need in the future."
9. General Meeting
Set out at the end of this document is a notice convening the
General Meeting to be held at 10.00 a.m. on 25 January 2023 at
RBL's registered office at Augustine House, 6a Austin Friars,
London, England, EC2N 2HA at which the Resolutions will be
proposed.
The Resolutions are inter-conditional so that passing of each of
the Resolutions is conditional on the passing of each of the other
Resolutions.
10. Irrevocable Undertakings
The Company has received irrevocable undertakings from certain
Shareholders in respect of, in aggregate, 90,017,349 Ordinary
Shares, representing slightly above 75 per cent. of the Company's
issued share capital to vote or procure votes in favour of each of
the Resolutions, in respect of all Ordinary Shares held by each of
them (or in which they are interested). Details of these
Shareholders and the number of Ordinary Shares held by them are as
follows:
Shareholder No. of Shares
PV27 57,125,000
--------------
Max Barney Investments Limited,
certain of its related parties
and Paul Milner 19,410,478
--------------
The EBT 4,813,819
--------------
Jason Oakley 3,496,052
--------------
David Kyte 2,195,000
--------------
Adrian Golumbina 1,920,000
--------------
Bryce Glover 1,000,000
--------------
Philip Jenks 35,000
--------------
Richard Gabbertas 22,000
--------------
Total 90,017,349
--------------
Accordingly, as set out above, the Directors believe that each
of the Resolutions will be passed at the General Meeting.
11. Related Party Transactions
RBL and PV27 entered into a relationship agreement on 23 August
2021 (the "Relationship Agreement") which was amended and restated
pursuant to an amendment and restatement agreement entered into
between RBL and PV27 on 17 May 2022, and RBL and PV27 entered into
a further deed of variation on 22 December 2022 to vary the terms
of the Relationship Agreement to reflect, among other things, the
Cancellation (the "Deed of Variation"). The Deed of Variation is
conditional on, inter alia , the Cancellation becoming effective
and the Equity Subscription having been completed. In addition, the
Company, RBL and PV27 have entered into the Subscription Agreement
in relation to the Equity Subscription, further details of which
are set out in paragraph 5 above.
The entry into each of the Deed of Variation and the
Subscription Agreement constitutes a related party transaction for
the purposes of Rule 13 of the AIM Rules for Companies. The
Independent Directors (being the Directors other than Nyreen Llamas
and Ruth Parasol) consider, having consulted with the Company's
nominated adviser, Shore Capital and Corporate Limited, that the
terms of each of the Deed of Variation and the Subscription
Agreement are fair and reasonable insofar as Shareholders are
concerned.
12. Action to be taken
You will find enclosed with this document a Form of Proxy for
use at the General Meeting. Whether or not you propose to attend
the General Meeting in person, you are requested to complete and
return the Form of Proxy to the Registrar, in accordance with the
instructions printed thereon as soon as possible but, in any event,
so as to be received by no later than 10.00 a.m. on 23 January
2023. Completion and return of a Form of Proxy will not preclude
you from attending and voting at the General Meeting in person if
you so wish.
13. Recommendation
The Directors consider that the Proposals are in the best
interests of the Company and its Shareholders as a whole and
therefore unanimously recommend that you vote in favour of the
Resolutions. Philip Jenks and Richard Gabbertas, as independent
Directors who are interested in Ordinary Shares, have undertaken to
vote, or procure the vote, in favour of the Resolutions in respect
of, in aggregate, 57,000 Ordinary Shares, representing
approximately 0.06 per cent. of the Company's issued share capital,
to which they are beneficially entitled. In addition, PV27 (in
which Ruth Parasol and Nyreen Llamas are interested) and Paul
Milner have undertaken to vote, or procure the vote, in favour of
the Resolutions in respect of, in aggregate, 57,231,238 Ordinary
Shares, representing approximately 47.9 per cent. of the Company's
issued share capital, to which they are beneficially entitled.
Philip Jenks
Independent Non-executive Chair
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END
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