TIDMICON
RNS Number : 9543H
Iconic Labs PLC
30 March 2020
Iconic Labs Plc ("Iconic Labs" or the "Company")
Re-Admission to trading following publication of New
Prospectus
Iconic Labs Plc (LSE:ICON) (the "Company"), a multi-divisional
new media and technology business, is pleased to announce the
restoration of the Company's Admission to the Official List and the
re-admission of the Company's ordinary shares of GBP0.00001 each
("Ordinary Shares") to trading on the standard segment of the Main
Market of the London Stock Exchange. The suspension has been lifted
and the listing of the shares will be restored from 07:30am
today.
The Company had originally requested the suspension of the
shares because it came to the attention of the Company that, in
respect of a number of Ordinary Shares issued and allotted by the
Company during 2019, not all the necessary submissions had been
submitted to the FCA. Following the approval and publication of the
prospectus on Wednesday 25th March these submissions have now been
made.
The Prospectus relates to the issuance of up to 31,223,750,000
new ordinary shares pursuant to the previous financing agreement,
deed of issuance and the financing agreement, and the admission of
the new ordinary shares to the standard listing segment of the
official list and to the trading on the London Stock Exchange's
main market for listed securities.
INTRODUCTION AND BACKGROUND TO THE PROPOSALS IN THE
PROSPECTUS
The purpose of this Prospectus is to provide the Shareholders
with the details of the Proposals and explain why the Board
considers the Proposals are in the best interests of the Company
and its Shareholders as a whole. It should be noted that, as the
Resolutions have already been passed at the General Meeting, no
further resolutions are required to be passed by the Shareholders
in order to implement the Proposals.
Pursuant to the Previous Financing Agreement, the Company issued
1,223,750,000 Ordinary Shares to the Investor along with a further
237,827,207 Ordinary Shares that were issued to the Investor under
the Deed of Settlement. Furthermore, the Company also issued an
additional 24,200,000 Ordinary Shares to other Shareholders other
than the Investor. None of these Ordinary Shares that have been
issued have been Admitted. Following the publication of this
Prospectus, the Company will make an application for all of these
securities to be Admitted.
On 6 August 2019, the Company announced that it had secured
further financing from the Investor for a gross amount of up to
GBP1.375 million which would provide the Company with capital to
continue to resolve the outstanding legacy issues associated with
the previous operating stem cell business, fund the cash
consideration elements for the acquisition of Social Alchemist
Limited and for general working capital purposes. This involved the
Company entering into the Deed of Issuance with the Investor.
Please note the Company has not yet concluded the acquisition of
Social Alchemist Limited following the entering into of heads of
terms, but is hopeful that this can be concluded in the next
quarter.
Pursuant to the terms of the Deed of Issuance, the Investor
agreed to provide finance to the Company, and to date, the Company
has drawn down net monies amounting to GBP1,300,000 in aggregate
under the Deed of Issuance. Each time the Company has drawn down a
tranche it has issued the Investor with a number of Issuance Notes.
These Issuance Notes attract interest at the rate of five per cent.
per annum and each Issuance Note has a duration of 12 months from
the date of its issue. The Issuance Notes can be freely
transferred, will not be listed on any financial market and are not
capable of being converted into Ordinary Shares. On entering into
the Deed of Issuance, the Company agreed to certain covenants and
undertakings which it gave to the investor. This included
satisfying the Issuance Warrants Conditions, of which, at the
General Meeting the Resolutions were passed, meaning that the
remaining Issuance Warrant Condition to be satisfied was the
approval from the FCA of this document and this document being made
publicly available. Consequently, now that all of the Issuance
Warrants Conditions have been satisfied the Issuance Warrants will
automatically attach to the Issuance Notes that have been issued.
The number of Issuance Warrants to be attached to the Issuance
Notes is to be calculated as follows: for each Issuance Note the
number of Issuance Warrants shall be 5,000 divided by 90 per cent.
of the lowest closing VWAPs of the Ordinary Shares during the five
trading days immediately preceding the date of issue of the
Issuance Warrants. Further details of the Issuance Warrants,
including when they can be exercised and the calculation of the
exercise price once the Issuance Warrants are exercised is set out
in paragraph 13 of Part VII of this document.
The Company also announced on 6 August 2019, that it had agreed
to settle with the Investor the remaining amounts due that were
outstanding under the Previous Financing Agreement entered into
with the Investor. This involved the Company entering into the Deed
of Settlement pursuant to which the Company issued a further
237,827,207 Ordinary Shares to the Investor on the sixth trading
day following the entering into of the Deed of Settlement and with
further Ordinary Shares to be issued in due course, although please
see paragraph 1.8 below.
On 7 February 2020, the Company announced that it had secured
additional financing from the Investor for a gross amount of
GBP5,000,000 with a commitment by the Company to draw down on at
least GBP2,000,000 of funding, with the decision as to whether to
take more than GBP2,000,000 being in the sole discretion of the
Company. This additional financing will provide the Company with
sufficient capital to pursue its near-term growth strategy of
organic expansion and by making opportune, well-priced smaller
acquisitions. It will also be used for general working capital
purposes. The Board intend to utilise the Tranches drawn-down for
general working capital purposes. A small part of future draw-downs
of Tranches may be used to pursue well-priced smaller acquisitions,
although the Board has not as yet identified any specific
acquisition targets, other than Social Alchemist Limited.
To draw-down in full the Tranches under the Financing Agreement,
the Company needed to pass the Resolutions and approval from the
FCA of this document and this document being made publicly
available was needed. Following the passing of the Resolutions and
the FCA giving its approval of this document and its publication,
all of the conditions to drawing down the Tranches under the
Financing Agreement have been met and the Board currently expects
to draw down GBP250,000 under the Financing Agreement all of which
will be made available for general working capital purposes.
Further details of the terms of the Financing Agreement along with
the Financing Notes and Financing Warrants to be issued pursuant to
its terms are set out in paragraph 13 of Part VII of this
document.
The Financing Agreement also dealt with the outstanding sums
still due (including the issue of further Ordinary Shares) under
the Deed of Settlement. This has been resolved by writing down the
amount outstanding by 30 per cent. and the balance being settled by
the issue of notes pursuant to the terms of the Financing Agreement
rather than the issue of further Ordinary Shares.
REASONS WHY THE BOARD CONSIDERS THE PROPOSALS TO BE IN THE BEST
INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS AS A WHOLE
The Company, its Board and the Shareholders have all had to bear
the consequences of the high level of debts and time spent on the
cleaning up of the previous stem cell business and its legacy
funding agreements with the Investor.
The operations of the new Iconic Labs Group business has also
been adversely affected by these legacy issues, as a larger than
expected amount of debt has had to be repaid, leading to funds
allocated to the growth of the new business being spent on settling
the historical debts relating to the previous stem cell business,
which has also meant that the Board had to draw down on the funding
made available by the Investor. Negotiating and resolving these
issues has also taken up a considerable amount of management time
which would have been better spent on developing the new Iconic
Labs Group business.
The Board has therefore worked hard to negotiate and enter into
a new financing agreement with the Investor which will lead to a
clearer and cleaner Company balance sheet. Furthermore, the Board
is also looking to make some opportune and well-priced acquisitions
in the short term in order to demonstrate a clear path forward for
the Company to enable it to achieve its near-term growth strategy.
The Board believes that the acquisition and subsequent successful
relaunch of GSN is a clear indicator that the Board's strategy for
near-term growth is viable and will create long term capital value
in the future. The Board is also looking at an ambitious growth
strategy in the medium to long term that will necessitate growing
the existing business and also making further, larger acquisitions
as and when the opportunity arises and the Company is in a position
to take advantage of such opportunities.
In respect of the previous stem cell business, the Board has
identified a number of final debts which amount to a total of
approximately GBP200,000, and that the Board expects to have to pay
and is in the process of settling these. The Board anticipates
finalising these payments in the next three months. In parallel to
this the Board anticipates seeing the start of revenue growth
shortly. Organic revenues have started to be generated across the
business and while the immediate cash effect is small, it is
growing each month, the pipeline is strong and the Board believes
there is a clear pathway to growth over the next 12 months.
The Directors are of the view that there is a bright future for
the Iconic Labs Group, but acknowledge that it will require more
capital in the future if it is to fully achieve the ambitious
growth plans which the Board believes it is capable of doing.
Furthermore, as traditional debt facilities are not likely to be
available to the Iconic Labs Group at this moment and with the
possible need for further capital to achieve the Board's ambitious
growth plans, there are limited other realistic alternatives to
fund the Company through this period and achieve its near term
growth plans other than the Financing Agreement. It should be noted
that the Board has been in consultation with its advisers and also
certain institutional shareholders to canvass views on the best
steps towards the stated capital aim while enabling the Company to
continue to grow. While the institutional shareholders consulted
indicated that they would consider participating in an equity
offering once the balance sheet was more conventional, they held a
consistent view that there was no appetite to successfully place
equity before this has been achieved. This confirmed the view of
the Board that the move towards a clean balance sheet is the
correct aim, but that it cannot be achieved in one step.
Specifically, a placing or open offer to enable the Company to
settle all existing amounts owed to the Investor and provide growth
and working capital to the business is not possible at this time.
However, on the basis of the consultations with the institutional
shareholders, the Board is confident that there will be interest in
providing equity funding once the situation with the Investor has
been resolved and has therefore negotiated the Financing Agreement
with a view to enabling the Company to move towards a clean balance
sheet.
In light of the above, the Directors, who have carefully
considered the Proposals, believe that the Proposals, are in the
best interests of all of its Shareholders.
Market Abuse Regulation (MAR) Disclosure
The information contained within this announcement is deemed by
the Company to constitute inside information for the purposes of
the Market Abuse Regulation (EU) No. 596/2014. Upon the publication
of this announcement via a Regulatory Information Service, this
inside information is now considered to be in the public
domain.
Iconic Labs Plc (LSE:ICON), is a multi-divisional new media and
technology business set up by Liam Harrington, John Quinlan and Sam
Asante. The initial focus is to expand the content platform, suite
of digital brands, and technology products both organically and
through acquisitions in addition to consultancy and agency
services.
**ENDS**
For further information, please visit the Company's website
www.iconiclabs.co.uk or contact:
Damon Heath Shard Capital Partners Tel: +44 (0) 20 7186 9950
LLP
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END
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