05 August 2010
IPSO Ventures plc
("IPSO" or the "Company")
Notice of General Meeting and
Subscription of 3,250,000 new Ordinary Shares at 10 pence per share
The Board of IPSO announces that a circular has been sent to shareholders of the Company (the "Circular") giving notice of a general meeting of the Company to be held at Elizabeth House, 39 York Road, London, SE1 7NQ on 27 August 2010 at 9.30am. A copy of the Circular will also shortly be made available on the Company's website, www.ipsoventures.com. The purpose of the Circular is to provide background on and set out the reasons for the proposals contained in the Circular, to explain why the Directors consider the proposals to be in the best interests of the Company and its shareholders as a whole and to set out the resolutions to be considered at the general meeting. These resolutions are to approve, inter alia, the increase of the Company's authorities for the allotment of securities to satisfy the second tranche of the Subscription to raise £325,000 as announced by the Company on 27 July 2010. Edited extracts from the Circular are set out below.
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EDITED EXTRACTS FROM THE CIRCULAR
All defined terms used in this announcement shall have the meaning given to them in the Circular unless otherwise defined herein.
Your Board announced on 27 July 2010 that IPSO had conditionally raised £325,000 from a group of new investors by way of a subscription of 2,000,000 new Ordinary Shares together with a conditional subscription of 1,250,000 new Ordinary Shares at the Issue Price. The net proceeds of the Subscription (which total £289,000) will provide the Company with additional working capital.
The Second Subscription is conditional, inter alia, on the passing of the Subscription Resolution at the General Meeting, which is set out in the Notice of General Meeting at the end of this document. Your Board has received irrevocable undertakings to vote in favour of the Subscription Resolution to be proposed at the General Meeting from certain shareholders which, taken together, amount to 10,441,173 ordinary shares representing 68.7 per cent. of the current issued share capital of the Company. The Issue Price was at a discount of 60 per cent. to the closing middle market price of 25 pence per share on 26 July 2010, being the last practicable date prior to the announcement of the Subscription.
Resolution 3 will also be proposed at the General Meeting to provide the directors with authority to issue up to a further 3,000,000 new Ordinary Shares in the Company.
In addition, Shareholders are being asked to adopt the New Articles of Association by passing Resolution 2 at the General Meeting. The New Articles of Association reflect the provisions of the Companies Act 2006 which have now come into force and reflect other changes in law and practice since the Existing Articles were adopted in 2007. A summary of the principal changes contained in the New Articles of Association as against the Existing Articles is contained in the Appendix to this document.
Background to and reasons for the Subscription
The Company has been seeking further funding for some months as was indicated in the interim report in January 2010. The economic situation and the poor state of the UK stock market have made this difficult and the pricing of the Subscription reflects this. The Board believe that the Subscription is in the best interests of the Company and Shareholders as a whole.
The additional funding raised through the Subscription will enable IPSO to take forward its demand-led commercialisation model. It will provide the Company with funds for additional working capital and limited further investment in its existing portfolio of companies. The investors in the Subscription are an experienced group of investors and, inter alia, are investors in early stage technology businesses. The Board believes that the Subscription will provide IPSO with a strong platform for collaboration and lead to new opportunities for the IPSO group particularly as its portfolio matures.
As part of the terms of the Subscription, the Subscribers have the right to appoint two directors to the Board of the Company. Accordingly, John Kelly and Craig Rochford both joined the Board as non-executive directors of the Company with effect from 27 July 2010.
John Kelly was previously Chief Executive Officer and a director of Man Investments (USA) Corp., an SEC-registered investment adviser, and Man Investments Inc., an SEC-registered broker-dealer, positions he held from February 2002 prior to his retirement in January 2008. As Chief Executive Officer, John was responsible for the day-to-day operations of both Man Investments (USA) Corp. and Man Investments Inc. John joined the Man group in 1987 and pioneered the firm's hedge fund business in the Middle East as well as the expansion of the international regional network of the Man group.
Craig Rochford is Managing Director of Arka Technologies Ltd and Magnetic Connection Company Limited as well as a non-executive director of a number of small technology companies. Craig is currently working with a number of companies operating in technology distribution, product design and the renewable energy sectors. He was also previously adviser to the board of Gresham House plc from 2003 to December 2008 on their technology investments.
As part of the Subscription, John Kelly and Craig Rochford have acquired 150,000 and 200,000 new Ordinary Shares in the Company respectively. In addition, 160,000 new Ordinary Shares, being part of the Adviser Shares, will be issued to Craig Rochford. On completion of the Subscription, John Kelly will be interested in 150,000 Ordinary Shares representing 0.91 per cent. of the enlarged share capital of the Company and Craig Rochford will be interested in 360,000 Ordinary Shares representing 2.18 per cent. of the enlarged share capital of the Company.
In addition, Dr. Peter Knox has stepped down as a non-executive director of the Company with effect from 27 July 2010 but will continue to be involved in the IPSO group going forward.
Directors' view of the portfolio of investments
As part of the recently announced fundraising exercise the Board has considered the value of the businesses in the IPSO portfolio. In the view of the Board, the portfolio has a value of approximately £4.8 million (equivalent to approximately 32 pence per each issued Ordinary Share). This is an unaudited figure for illustration purposes only and is based on the Board's reasonable belief as of the date of this document.
Current trading and prospects
On 30 July 2010, IPSO announced its unaudited preliminary results for the year ended 30 April 2010. As detailed in that announcement, this year has been a tough one for the sector and particularly for IPSO as a result of working capital constraints, despite a maturing portfolio. The Board have taken appropriate steps to address this by reducing IPSO's cost base to suit the circumstances. We believe that following this restructuring we have the potential to deliver greater profitability in the future. We are also excited about the opportunities for new business that we have identified from our discussions with our industrial partners.
Details of the Subscription
IPSO has conditionally raised £325,000 (approximately £289,000 net of expenses) by way of the Subscription of 3,250,000 new Ordinary Shares at 10 pence per share to the Subscribers. The Second Subscription is conditional, inter alia, on Resolution 1 being passed at the General Meeting and Admission.
The Subscription is not a rights issue or an open offer and the Subscription Shares will not be offered generally to Shareholders, whether on a pre-emptive basis or otherwise. The Directors believe that the considerable extra cost and delay involved in a rights issue or open offer would not be in the best interests of the Company or its Shareholders as a whole in the present circumstances.
The Board considers that it is in the best interests of the Company and Shareholders as a whole for the funds to be raised by the Subscription. Application will be made to the London Stock Exchange for the Conditional Subscription Shares and the Adviser Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that trading in the Conditional Subscription Shares and the Adviser Shares will commence on AIM at 8.00 a.m. on 31 August 2010.
The Conditional Subscription Shares and the Adviser Shares will be issued fully paid and will rank pari passu in all respects with the existing Ordinary Shares, including the right to receive any dividend or other distributions.
New Articles of Association
It is proposed, pursuant to Resolution 2, to adopt the New Articles of Association in order to update the Company's Existing Articles primarily to take account of the 2006 Act, the last parts of which came into force on 1 October 2009.
A copy of the New Articles of Association is available for inspection during normal business hours on any weekday (Saturdays, Sundays and public holidays excepted) at the Company's registered office, and at the offices of Memery Crystal LLP, 44 Southampton Buildings, London WC2A 1AP.
The Directors believe that the Proposals and the passing of the Resolutions are in the best interests of the Company and Shareholders, taken as a whole. The Directors unanimously recommend the Shareholders to vote in favour of the Resolutions as they intend to do so in respect of their own beneficial holdings of 3,076,470 Ordinary Shares representing 20.25 per cent. of the existing ordinary share capital of the Company.