TIDMIDE
RNS Number : 2357W
IDE Group Holdings PLC
31 July 2018
IDE Group Holdings Plc
("IDE Group" or the "Company")
Subscription and issue of Convertible Loan Notes to raise GBP5.0
million (gross)
and
proposed Open Offer to raise up to a further GBP0.5 million
(gross)
IDE Group Holdings plc, the mid-market network, cloud and IT
Managed Services provider, announces a fundraising to raise up to
approximately GBP5.5 million (the "Fundraising"), before expenses,
comprising of a firm subscription for gross proceeds of GBP0.5
million (the "Firm Subscription"), a conditional subscription for
gross proceeds of GBP2.7 million (the "Conditional Subscription"),
the issue of GBP1.8 million convertible loan notes (the "CLNs"),
constituted by a convertible loan note instrument issued by the
Company (the "CLN Instrument") and an excess entitlement open offer
for up to GBP0.5 million (the "Open Offer"). Alongside the
Fundraising, the Company will repay the GBP2 million unsecured loan
notes issued on 29 May 2018 (the "Existing Loan Notes") to
alleviate the Company of the financial burden of the interest
attached to the Existing Loan Notes. Repayment of GBP1.25 million
of the Existing Loan Notes will be made by way of an allotment of
30,000,000 new ordinary shares of 2.5p each in the capital of the
Company ("Ordinary Shares") and 20,000,000 new Ordinary Shares at
2.5 pence per share to MXC Guernsey Limited ("MXC"), a wholly owned
subsidiary of MXC Capital Limited and Salvators Lending Limited
("Salvators") respectively (together, the "Redemption Shares").
Repayment of the remainder of the Existing Loan Notes, being
GBP0.75 million, will be made to Kestrel Opportunities, a cell of
Guernsey Portfolios PCC Limited ("Kestrel") by way of the issue of
additional CLNs, pursuant to the terms of the CLN Instrument.
Together, the Subscription, the Convertible Loan Notes, the Open
offer, and redemption of Existing Loan Notes make up the
transaction (the "Transaction").
As highlighted at the time of the trading update on 16 July
2018, the board of directors of IDE Group (the "Board") has been
reviewing the Company's options to address the ongoing working
capital requirements of the Group. As at 30 June 2018, net debt
totaled c.GBP13 million, which includes the GBP2 million Loan Note
announced on 30 May 2018 and a draw down on the Company's entire
overdraft facility with The Royal Bank of Scotland plc ("RBS") of
GBP3.5 million, the facility is repayable upon demand at RBS's
discretion. The Board has explored a number of options and believes
that the Fundraising is the best option available to the Group to
re-capitalise its balance sheet and build a strong base from which
to exploit the opportunities available to it.
The net proceeds from the Fundraising will be used to alleviate
the short term cash pressures on the Company and work towards
normalising creditors. The proceeds will facilitate the restructure
to right-size the business enabling the Company to trade profitably
whilst the Company continues its strategic and operational review
evaluating a range of options to recognise value for stakeholders,
including the divestiture of certain business lines and assets
within the Group. RBS remains supportive of the Company and have
confirmed that they will not call for the overdraft to be repaid
upon receipt of the funds from the Fundraising.
A circular in respect of the Conditional Subscription, the issue
of the CLNs and the Open Offer will be posted to shareholders in
due course along with a notice of general meeting (the "General
Meeting") of the Company (the "Circular"). The Circular,
Application form and Form of Proxy will be available on the
Company's website at www.idegroup.com.
The Fundraising:
The Subscription:
-- The Conditional Subscription for 107,999,998 new Ordinary
Shares at 2.5 pence per share ("Subscription Shares") and the Firm
Subscription for 20,000,000 new Ordinary Shares at 2.5 pence per
share to raise, in aggregate, GBP3.2 million (the
"Subscription").
-- MXC, an existing 21.9 per cent. shareholder in the Company,
and Salvators, an investment vehicle of Bill Dobbie, IDE's interim
Non-Executive Chairman and existing 8.85 per cent. shareholder in
the Company, have agreed to subscribe for 78,851,125 Subscription
Shares and 18,305,764 Subscription Shares respectively in the
Conditional Subscription. MXC has also agreed to subscribe for all
of the 20,000,000 new Ordinary Shares under the Firm
Subscription.
-- As the Company only has authority from shareholders to issue
a limited number of new ordinary shares on a non-pre-emptive basis,
the Subscription will take place in two tranches in order for the
Company to raise the GBP0.5 million Firm Subscription funds without
undue delay. Completion of the Conditional Subscription, which
shall raise GBP2.7 million, will be conditional on the consent of
the shareholders of the Company being given at the General Meeting
to dis-apply pre-emption rights over and authorise the allotment of
the new Ordinary Shares.
The Convertible Loan Note
-- The issue of the CLNs to raise GBP1.8 million.
-- The CLNs are convertible over a term of five years from the
date of issuance at the issue price of 2.5 pence per Ordinary Share
and have no interest attached. If the CLNs are not converted, the
outstanding principal amount will become repayble at the end of the
five year term.
-- Kestrel, an existing 17.99 per cent. shareholder in the Company, has agreed to subscribe for approximately GBP1.216 million of the CLNs. Kestrel Partners LLP ("Kestrel Partners") for and on behalf of The Vanderbilt University ("Vanderbilt") has subscribed for a further GBP0.432 million of the CLNs.
The Open Offer
-- An excess entitlement open offer to existing shareholders of
up to 20,000,000 new Ordinary Shares at 2.5 pence per share (the
"Open Offer Shares") to raise up to GBP0.5 million.
-- None of MXC, Kestrel or Salvators will take up their entitlements under the Open Offer.
Accelerated Whitewash
As a result of the Fundraising, MXC, an existing 21.9 per cent.
shareholder in the Company, will have a maximum possible
shareholding of 172,811,125 shares or 45.6 per cent. of the
Company's voting rights at such time.
The Company has successfully applied, on behalf of MXC, for a
dispensation from making a mandatory offer under Rule 9 of the City
Code on Takeovers and Mergers (the "Code") in relation to the
Fundraising. In accordance with Note 5(c) in the Notes on
Dispensations from Rule 9 of the Code, in the case of an issue of
new securities, independent shareholders holding shares carrying
more than 50% of the voting rights of the Company which would be
capable of being cast on a "whitewash" resolution have confirmed in
writing that they approve the proposed waiver and would vote in
favour of any resolution to that effect at a general meeting.
Independent shareholders representing more than 50% of the
independent shareholders of the Company's share capital provided
their confirmation in writing in the form outlined at the end of
this announcement.
Related Party Transaction
As each of Kestrel and MXC are substantial shareholders of the
Company, and Salvators is beneficially held and controlled by Bill
Dobbie, the Interim Non-Executive Chairman, they are deemed to be
related parties pursuant to the AIM Rules for Companies (the "AIM
Rules"). The participation of MXC, Salvators and Kestrel in the
Transaction is therefore a related party transaction for the
purposes of Rule 13 of the AIM Rules. Ian Smith, Executive
Director, is not independent for the purposes of the Related Party
Transaction given that he is a substantial shareholder and CEO of
MXC. The independent director of IDE Group, Katherine Ward,
considers, having consulted with the Company's nominated adviser,
finnCap, that the terms of the related party transaction are fair
and reasonable insofar as the shareholders of the Company are
concerned.
Admission
As a result of the Fundraising, a total of up to 197,999,998 new
Ordinary Shares will be admitted to trading on AIM. These shares
will rank pari passu in all respects with the existing ordinary
shares of 2.5p each in the Company including the right to receive
any dividend or other distribution thereafter declared, made or
paid.
Application has been made to the London Stock Exchange for
20,000,000 new Ordinary Shares arising from the Firm Subscription
(the "Firm Subscription Shares") to be admitted to trading on AIM
("Firm Admission"). It is expected that the Firm Admission will
become effective and that dealings in the Firm Subscription Shares
will commence on or around the 1 August 2018.
Application will be made to the London Stock Exchange for the
107,999,998 new Ordinary Shares arising from the Conditional
Subscription (the "Conditional Subscription Shares"), 50,000,000
Redemption Shares and up to 20,000,000 Open Offer Shares (together,
the "Second Admission Shares") to be admitted to trading on AIM
("Second Admission"). It is expected that the Second Admission will
become effective and that dealings in the Second Admission Shares
will commence on or around 21 August 2018. The issue of the
Conditional Subscription Shares, the Redemption Shares and the Open
Offer Shares will be conditional, inter alia, upon approval of
resolutions by the Company's shareholders at the General Meeting
granting the directors of the Company authority to allot the
Conditional Subscription Shares, the Redemption Shares and the Open
Offer Shares and disapplying statutory pre-emption rights in
relation to such allotment.
Total Voting Rights
Following the issue of the Firm Subscription Shares, the total
number of shares in issue will be 220,729,121 Ordinary Shares.
There are no shares held in treasury. Therefore, the total number
of voting rights in the Company will be 220,729,121. This figure
may be used by shareholders in the Company as the denominator for
the calculations by which they will determine if they are required
to notify their interest in, or a change to their interest under
the Disclosure Guidance and Transparency Rules.
Market Abuse Regulation (MAR) Disclosure
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.
IDE Group Holdings Plc Tel: +44 (0)344
Bill Dobbie, Interim Chairman 874 1000
Ian Smith, Executive Director
finnCap Limited Tel: +44 (0)20 7220
Nominated Adviser and Broker 0500
Corporate finance: Jonny Franklin-Adams/
Scott Mathieson/ Hannah Boros
ECM: Tim Redfern/ Richard Chambers
The Proposed Transaction
Subscription
The Subscription is being conducted in two tranches, due to the
Company's current limited authority to issue new shares on a
non-preemptive basis.
a) The Firm Subscription
Pursuant to a subscription letter between the Company and MXC,
the Firm Subscription Shares have been allotted at the issue price
of 2.5 pence per Firm Subscription Share for an aggregate
subscription value of GBP500,000 before expenses, conditional only
upon the Firm Admission. Application for Firm Admission has been
made to the London Stock Exchange and Firm Admission is expected to
become effective on or around 1 August 2018.
b) The Conditional Subscription
Pursuant to subscription agreements between the Company and each
of, MXC and Salvators, the Conditional Subscription Shares have
been conditionally allotted at the issue price of 2.5 pence per
Conditional Subscription Share for an aggregate subscription price
of GBP2.7 million before expenses. The Conditional Subscription is
conditional on the approval of resolutions by the Company's
shareholders at the General Meeting granting the directors of the
Company authority to allot the Conditional Subscription Shares and
disapplying statutory pre-emption rights in relation to such
allotment, and, in respect of MXC, the waiver of the obligation
that might otherwise fall upon them pursuant to Rule 9 of the
Takeover Code which is more fully described above.
Convertible Loan Notes
The CLNs are convertible over a term of five years from the date
of issuance into new Ordinary Shares at an issue price of 2.5 pence
per ordinary share and have no interest attached. If the CLNs are
not converted, the outstanding principle amount will become
repayable at the end of the five year term.
The CLNs will not be admitted to trading on AIM or any other
exchange. The issue of the CLNs is conditional on the approval of a
resolution by the Company's shareholders at the General Meeting
granting the directors of the Company authority to allot new
Ordinary Shares pursuant to any exercise notice received relating
to the CLNs. Any new Ordinary Shares arising on conversion will
rank pari passu with the Ordinary Shares in issue at that time and
application for admission to trading on AIM will be made at the
appropriate time.
Open Offer
In order to allow all shareholders of the Company to participate
on the same terms as the Subscription, under the terms of the Open
Offer, qualifying shareholders will be invited to apply for Open
Offer Shares pro rata to their existing shareholdings on the basis
of 1 Open Offer Share for every 10 existing ordinary shares held as
at the record date, being 5.00 p.m. on or around 30 July 2018, at a
price of 2.5 pence per Open Offer Share, payable in full on
application and free of all expenses.
Excess applications for Open Offer Shares over and above the
qualifying shareholders' pro-rata entitlements will be accepted
from shareholders to the extent that other shareholders do not take
up their entitlements. If such excess applications, together with
the applications under the Open Offer, exceed the number of new
Ordinary Shares which are the subject of the Open Offer, then
excess applications will be scaled back at the discretion of the
Company.
The Open Offer will allow the Company's existing shareholders to
participate in the fundraising on the same terms as the
Subscription. The Open Offer will be conditional, inter alia, upon
approval of resolutions by the Company's shareholders at the
General Meeting granting the directors of the Company authority to
allot the Open Offer Shares disapplying statutory pre-emption
rights in relation to such allotment.
MXC, Kestrel and Salvators have confirmed that they will not
take up their entitlements under the Open Offer.
Redemption of Existing Loan Notes
On 30 May 2018, the Company announced it had issued the GBP2.0
million Existing Loan Notes to MXC, Kestrel and Salvators (together
the "Loan Note Holders"). The Existing Loan Notes were unsecured
and had a three-year term with an annual coupon of 10 per cent.
payable annually, alongside an arrangement fee of 1.5 per cent.,
payable on the first anniversary of the issue of the Existing Loan
Notes. To alleviate the Company of the financial burden of the
interest and arrangement fee attached to the Existing Loan Notes,
the Company is repaying the Existing Loan Notes. The repayment of
the Existing Loan Notes will be made by way of an allotment of
30,000,000 new Ordinary Shares and 20,000,000 new Ordinary Shares
at 2.5 pence per share to MXC and Salvators respectively. Repayment
of the remainder of the Existing Loan Notes, being GBP0.75 million,
will be made to Kestrel by way of the issue of GBP0.75 million of
additional CLNs, pursuant to the terms of the CLN Instrument. The
Loan Note Holders will receive no compensation for future interest
payments forgone attributed to the Existing Loan Notes, no payment
for interest accrued to date and the arrangement fee of 1.5 per
cent will be waived. The redemption of the Existing Loan Notes is
conditional on the approval of resolutions by the Company's
shareholders at a General Meeting granting the directors of the
Company authority to allot the Redemption Shares and allot new
Ordinary Shares pursuant to any exercise notice received relating
to the CLNs and dis-applying statutory pre-emption rights in
relation to such allotment and issue, and, in respect of MXC, the
waiver of the obligation that might otherwise fall upon them
pursuant to Rule 9 of the Takeover Code which is more fully
described above. RBS has provided consent to the redemption of the
Existing Loan Notes and issue of the new CLNs, subject to certain
conditions precedent being satisfied.
Further Warrant Issue
In accordance with the warrant instrument dated 31 December
2015, disclosed on page 91 of the Company's admission document
dated 4 January 2016, available on the Company's website, MXC will
be issued with additional warrants amounting to 5 per cent. of all
new shares issued pursuant to the Transaction.
Accelerated Whitewash Letter
Independent Shareholders representing 60.34% of Independent
Shareholders of the Company's share capital provided their
confirmation in writing in the form outlined below:
FAO: Takeover Panel
RE: IDE Group Holdings ("IDE" or the "Company")
I have been made aware of the proposal that the Company raise up
to GBP5.5 million by way of (in summary):
1. a subscription for 127,999,998 new ordinary shares at 2.5
pence per share ("Subscription Shares") to raise GBP3.2 million
(the "Subscription");
2. the issue of convertible loan notes at 2.5 pence per share to
raise GBP1.8 million (the "CLNs" or "Convertible Loan Notes");
and
3. an open offer to existing shareholders of up to 20,000,000
new ordinary shares at 2.5 pence per share (the "Open Offer
Shares") to raise up to approximately GBP0.5 million (the "Open
Offer").
Together the Subscription, the CLNs and the Open Offer comprise
the fundraising (the "Fundraising").
Alongside the Fundraising, the Company proposes the redemption
(the "Redemption") of GBP2m existing unsecured loan notes issued in
May 2018 ("Existing Loan Notes"). Repayment of GBP1.25 million of
the Existing Loan Note will be made by way of an allotment of
30,000,000 new ordinary shares and 20,000,000 new ordinary shares
at 2.5 pence per share to MXC Guernsey Limited ("MXC"), a wholly
owned subsidiary of MXC Capital Markets, and Salvators Lending
Limited ("Salvators") respectively (together the "Redemption
Shares"). Repayment of the remainder of the Existing Loan Note,
GBP0.75 million, will be made to Kestrel Investment Partners
("Kestrel") by way of the issue of a new convertible loan note, on
the same terms as the CLNs.
Together, the Subscription, the Convertible Loan Notes, the Open
offer, and the Redemption make up the transaction (the "Proposed
Transaction").
MXC, an existing 21.9 per cent. shareholder in the Company, and
Bill Dobbie, IDE's interim Non-Executive Chairman and existing 8.85
per cent. shareholder in the Company, through the investment
vehicle Salvators, have agreed to subscribe for up to 98,851,125
Subscription Shares and 18,305,764 Subscription Shares respectively
in the Subscription. Taken together these two firm commitments
represent 91.5% of the Subscription. As the Company only has
authority from shareholders to issue a limited number of New
Ordinary Shares the Subscription will take place in two tranches,
details of which are further described below.
Kestrel, an existing 17.99 per cent. shareholder in the Company,
has agreed to subscribe for GBP1,215,996 of the CLNs. Kestrel
Partners LLP ("Kestrel Partners") for and on behalf of The
Vanderbilt University ("Vanderbilt") has subscribed for a further
GBP431,553 of the CLNs.
The participation of MXC, Kestrel and Salvators in the Proposed
Transaction is not conditional upon the participation of the
others.
Supplemental to the Subscription and issue of Convertible Loan
Notes, and in order to allow all existing shareholders to
participate on the same terms as those investors in the
Subscription, the Company is undertaking a 1 for 10 excess
entitlement open offer ("Open Offer") to raise up to approximately
GBP0.5 million. None of MXC, Kestrel or Salvators will take up
their entitlements under the Open Offer.
The Company does not have sufficient authority to issue all of
the new ordinary shares pursuant to the Fundraise. Under existing
authorities, 20,000,000 Subscription Shares can be issued pursuant
to the Subscription (the "Firm Subscription Shares") and these will
be issued as a first tranche in order for the Company to be in
receipt of the corresponding funds without undue delay (the "Firm
Subscription"). The issue of the second tranche of 107,999,998
Subscription Shares pursuant to the Subscription (the "Conditional
Subscription Shares") (the "Conditional Subscription"), the Open
Offer Shares pursuant to the Open Offer and the 50,000,000
Redemption Shares, is conditional on the consent of the
shareholders of the Company being given in a general meeting to
disapply pre-emption rights over and authorise the allotment of the
new ordinary shares.
We also confirm that we are aware that the maximum possible
shareholding of MXC after the completion of the Proposed
Transaction is 45.6 per cent.
Background and reasons for the Fundraising
Since January 2018 IDE has been going through a cost reduction
programme. As announced in the Company's trading update on 16 July
2018, there is still significant work to be done to ensure the
business has a sustainable and profitable operating model and an
appropriate underlying cost base going forward. Furthermore,
certain supplier agreements entered into during previous periods
relating to fibre, data centres and outsourced support have
adversely affected profitability for the current period and are
therefore being reviewed in the context of current performance.
Whilst profitability was expected to improve steadily throughout
2018 the expected benefits of the cost reduction programme have not
been realised at the anticipated rate, but this continues to be a
target for the full-year as the ongoing strategic and operational
review is accelerated and executed.
As at 30 June 2018 net debt totalled c.GBP13 million, which
includes a draw down on the entire of the Company's GBP3.5 million
overdraft facility with RBS, a facility that can be called upon
without notice and at the bank's discretion. The bank remains
supportive of the Company and have confirmed that they will not
call for the overdraft to be repaid upon receipt of the funds from
the proposed Fundraise.
The use of funds from the Fundraise will be used to alleviate
the short term cash pressures on the Company, normalise creditors
and facilitate the restructure to right-size the business and
enable it to trade profitably and cash generatively whilst the
Company continues its strategic and operational review evaluating a
range of options to recognise value for stakeholders, including the
divestiture of certain business lines and assets within the
Group.
The Board has explored a number of options and believes that the
Fundraise is the best option available to the Group to
re-capitalise its balance sheet and build a strong base from which
to exploit the opportunities available to it.
The Proposed Transaction
Subscription
The Subscription is being conducted in two tranches, due to the
Company's current limited authority to issue new shares on a
non-preemptive basis.
a) The Firm Subscription
Pursuant to a subscription letter between the Company and MXC,
the Firm Subscription Shares have been allotted at the issue price
of 2.5 pence per Firm Subscription Share for an aggregate
subscription value of GBP0.5 million before expenses, conditional
only upon admission to trading on AIM of the Firm Subscription
Shares ("Firm Admission"). Application for Firm Admission has been
made to the London Stock Exchange and Firm Admission is expected to
become effective on or around 1 August 2018.
b) The Conditional Subscription
Pursuant to subscription agreements between the Company, MXC and
Salvators, the Conditional Subscription Shares have been
conditionally allotted at the issue price of 2.5 pence per
Conditional Subscription Share for an aggregate subscription price
of GBP2.7 million before expenses. The Conditional Subscription is
conditional on the approval of resolutions by the Company's
shareholders at a General Meeting (the "General Meeting") granting
the directors of the Company authority to allot the Conditional
Subscription Shares and disapplying statutory pre-emption rights in
relation to such allotment, and, in respect of MXC, the waiver of
the obligation that might otherwise fall upon them pursuant to Rule
9 of the Takeover Code which is more fully described below.
Convertible Loan Notes
The CLNs are convertible over a term of five years from the date
of issuance into new Ordinary Shares at a issue price of 2.5 pence
per ordinary share and have no interest attached. If the CLNs are
not converted, the outstanding principle amount will become
repayable at the end of the five year term.
The CLNs will not be admitted to trading on AIM or any other
exchange. The issue of the CLNs is conditional on the approval of a
resolution by the Company's shareholders at the General Meeting
granting the directors of the Company authority to allot new
Ordinary Shares pursuant to any exercise notice received relating
to the CLNs. Any new Ordinary Shares arising on conversion will
rank pari passu with the Ordinary Shares in issue at that time and
application for admission to trading on AIM will be made at the
appropriate time.
Open Offer
In order to allow all shareholders of the Company to participate
on the same terms as the Subscription, under the terms of the Open
Offer, qualifying shareholders will be invited to apply for Open
Offer Shares pro rata to their existing shareholdings on the basis
of 1 Open Offer Share for every 10 existing ordinary shares held as
at the record date, being 5.00 p.m. on or around 30 July 2018, at a
price of 2.5 pence per Open Offer Share, payable in full on
application and free of all expenses.
Excess applications for Open Offer Shares over and above the
qualifying shareholders' pro-rata entitlements will be accepted
from shareholders to the extent that other shareholders do not take
up their entitlements. If such excess applications, together with
the applications under the Open Offer, exceed the number of new
Ordinary Shares which are the subject of the Open Offer, then
excess applications will be scaled back at the discretion of the
Company.
The Open Offer will allow the Company's existing shareholders to
participate in the fundraising on the same terms as the
Subscription. The Open Offer will be conditional, inter alia, upon
approval of resolutions by the Company's shareholders at the
General Meeting granting the directors of the Company authority to
allot the Open Offer Shares disapplying statutory pre-emption
rights in relation to such allotment.
MXC, Kestrel and Salvators have confirmed that they will not
take up their entitlements under the Open Offer.
Redemption of Existing Loan Notes
On 30 May 2018, the Company announced it had issued the GBP2.0
million Existing Loan Notes to MXC, Kestrel and Salvators (together
the "Loan Note Holders"). The Existing Loan Notes were unsecured
and had a three-year term with an annual coupon of 10 per cent.
payable annually, alongside an arrangement fee of 1.5 per cent.,
payable on the first anniversary of the issue of the Existing Loan
Notes. To alleviate the Company of the financial burden of the
interest and arrangement fee attached to the Existing Loan Notes,
the Company is repaying the Existing Loan Notes. The repayment of
the Existing Loan Notes will be made by way of an allotment of
30,000,000 new Ordinary Shares and 20,000,000 new Ordinary Shares
at 2.5 pence per share to MXC and Salvators respectively. Repayment
of the remainder of the Existing Loan Notes, being GBP0.75 million,
will be made to Kestrel by way of the issue of GBP0.75 million of
new convertible loan notes, on the same terms as the CLNs. The Loan
Note Holders will receive no compensation for future interest
payments forgone attributed to the Existing Loan Notes, no payment
for interest accrued to date and the arrangement fee of 1.5 per
cent will be waived.
MXC
MXC (http://mxccapital.com/) is a technology focussed adviser
and investor listed on AIM (ticker: MXCP). MXC was founded fifteen
years ago and aims to bring both capital and experience to
companies seeking to grow their business. MXC has two classes of
securities; ordinary shares of no par value which are traded on
AIM, and unquoted redeemable B shares which do not hold any
exercisable voting rights.
MXC was appointed as Financial Adviser to IDE on 30 May 2018 and
at the same time, Mr Ian Smith, CEO of MXC was appointed to the
board of IDE in a part time executive capacity to lead the Group's
strategic and operational review.
I am informed by the Company that it is not aware of any reason
to consider MXC, Kestrel or Salvators to be acting in concert for
purposes of the Takeover Code (the "Code").
Rule 9 of the Takeover Code
[I/Shareholder name] understand[s] that, under Rule 9 of the
Takeover Code ("the Code"), if any person acquires an interest in
shares which, when taken together with shares in which he and
persons acting in concert with him are already interested, carry
30% or more of the voting rights of a company which is subject to
the Code, that person is normally required to make a general offer
in cash to all shareholders in the company at the highest price
paid by him or any person acting in concert with him for an
interest in such shares within the preceding 12 months.
[I/Shareholder name] also understand[s] that Rule 9 also
provides that if any person, together with persons acting in
concert with him, is interested in shares which in the aggregate
carry not less than 30% of the voting rights of a company which is
subject to the Code but does not hold shares carrying more than 50%
of such voting rights, and such person, or any person acting in
concert with him, acquires an interest in any other shares which
increases the percentage of shares carrying voting rights in such
company in which he is interested, that person is normally required
to make a general offer in cash to all shareholders in the company
at the highest price paid by him or any person acting in concert
with him for an interest in such shares within the preceding 12
months.
The Subscription and issue of CLNs
Following completion of the Proposed Transaction, assuming that
the Subscription completes in full (that is to say, MXC Capital and
Salvators fulfill their obligations under the Subscription), that
there is no conversion of the CLNs and no take up of the Open
Offer, the consequent maximum controlling position of MXC would be
a holding of 172,811,125 shares, representing an interest of 45.6%
per cent. of the Company's voting rights at such time.
I understand that, consequent of this participating by MXC in
the Fundraise (which is conditional upon my approval of such
participation), MXC will hold shares representing more than 30 per
cent., but less than 50 per cent., of the voting rights of the
Company. Accordingly, any further increase in that interest by MXC
will incur an obligation under Rule 9 of the Code to make a general
offer.
Waiver of Rule 9 obligation
[I/Shareholder name] understand[s] that, under Note 1 on the
Notes on the Dispensations from Rule 9, the Takeover Panel ("the
Panel") will normally waive the requirement for a general offer to
be made in accordance with Rule 9 (a "Rule 9 offer") if, inter
alia, those 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/it] and do not have any interest
in the proposed transaction which may compromise their independence
("the Independent Shareholders") pass an ordinary resolution on a
poll at a general meeting ("a Whitewash Resolution") approving such
a waiver.
[I/Shareholder name] also understand[s] that the Panel may waive
the requirement for a Whitewash Resolution to be considered at a
general meeting (and for a circular to be prepared in accordance
with Section 4 of Appendix 1 to the Code) if Independent
Shareholders holding more than 50% of the company's shares capable
of being voted on such a resolution confirm in writing that they
would vote in favour of the Whitewash Resolution were one to be put
to the shareholders of the company at a general meeting.
Confirmations and Acknowledgements
I hereby confirm the following:
1) that [I am/Shareholder name is] the beneficial owner of
62,091,859 ordinary shares in the issued share capital of the
Company, representing 30.9% of the Company's issued share capital
carrying voting rights, and [I have/it has] absolute discretion
over the manner in which these shares are voted. These shares are
held free of all liens, pledges, charges and encumbrances;
2) that (a) save for the fact that we are both shareholders in
the Company, there is no connection between [me/Shareholder name]
and MXC, (b) [I do/Shareholder name does] not have any interest or
potential interest, whether commercial, financial or personal, in
the outcome of the Proposed Transaction, and (c) [I am/Shareholder
name is] an Independent Shareholder of the Company as defined
above; and
3) that, in connection with the Proposed Transaction:
a. [I /Shareholder name] consent[s] to the Panel granting a
waiver from the obligation for MXC to make a Rule 9 offer to the
shareholders of the Company;
b. subject to Independent Shareholders of the Company holding
more than 50% of the shares capable of being voted on a Whitewash
Resolution to approve the waiver from the obligation for MXC to
make a Rule 9 offer giving confirmations in writing in a similar
form to this letter, [I/Shareholder name] consent[s] to the Panel
dispensing with the requirement that the waiver from such
obligation be conditional on a Whitewash Resolution being approved
by Independent Shareholders of the Company at a general meeting;
and
c. [I/Shareholder name] would vote in favour of a Whitewash
Resolution to waive the obligation for MXC to make a Rule 9 offer
were one to be put to the Independent Shareholders of the Company
at a general meeting.
In giving the confirmations referred to above, I
acknowledge:
1) that, if the Panel receives such confirmations from
Independent Shareholders of the Company holding more than 50% of
the shares capable of being voted on a Whitewash Resolution, the
Panel will approve the waiver from the obligation for MXC to make a
Rule 9 offer without the requirement for the waiver having to be
approved by Independent Shareholders of the Company at a general
meeting;
2) that if no general meeting is held to approve the Whitewash
Resolution to waive the obligation for MXC to make a Rule 9
offer:
a. there will not be an opportunity for any other person to make
any alternative proposal to the Company conditional on such
Whitewash Resolution not being approved by Independent Shareholders
of the Company;
b. there will not be an opportunity for other shareholders in
the Company to make known their views on the Proposed Transaction;
and
c. there will be no requirement for the Company either (i) to
obtain and make known to its shareholders competent independent
advice under Rule 3 of the Code on the Proposed Transaction and the
waiver of the obligation for MXC to make a Rule 9 offer or (ii) to
publish a circular to shareholders of the Company in compliance
with Appendix 1 of the Code in connection with this matter.
I consider myself to be a sophisticated investor in relation to
equity investments. I confirm that I have had the opportunity to
take independent financial advice before signing this letter.
I confirm that I will not sell, transfer, pledge, charge, or
grant any option or other right over, or create any encumbrance
over, or otherwise dispose of its shares in the Company until at
least after the conclusion of the proposed General Meeting to
approve the issuance of the new ordinary shares pursuant to the
Proposed Transaction.
I, the signee, have full power and authority to sign this letter
on behalf of [Shareholder name] which is a binding obligation upon
it.
Signee............................................ Date....................................
[--]
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London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IOELFFIFDLIIVIT
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July 31, 2018 02:01 ET (06:01 GMT)
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