Proposed CLN, Share Reorganisation and VST Update
Certain information contained within this Announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 ("MAR") as applied in the United Kingdom. Upon publication of this Announcement, this information is now considered to be in the public domain.
18 October 2023
Bidstack Group Plc
("Bidstack" or the "Company" or the "Group")
Secured Convertible Loan Agreement with Irdeto B.V.
Share Capital Reorganisation
Update on Proposed Commercial Partnership with Virtual Sport Technology Limited ("VST")
Bidstack Group Plc (AIM: BIDS), the in-game brand activation platform, announces that it has agreed to enter into (i) a loan agreement ("Loan Agreement"), (ii) a subscription and share option agreement ("Share Option Agreement"); and (iii) a composite guarantee and debenture ("Security Agreement") with Irdeto B.V. ("Irdeto") (the Loan Agreement and Share Option Agreement together being the "CLN", and the CLN and the Security Agreement being the "Agreements"). The Agreements will, subject to certain shareholder approvals explained below, provide the Company with a secured convertible loan note facility of up to four separate tranches of £0.6m, aggregating up to £2.4m from Irdeto. Irdeto, a world leader in digital platform cybersecurity, empowering businesses to innovate for a secure, connected future, previously invested £5m in Bidstack as part of the Company's fundraise in October 2022. Irdeto currently holds 175,438,596 ordinary shares in Bidstack, representing 13.49% of the total voting rights ("TVR") in the Company.
The funds received from the Loan Agreement will provide the Company with additional working capital.
In order to enable Irdeto to utilise the Share Option Agreement, drawdown of further full tranches under the Loan Agreement (following the initial tranche of £0.6m) is conditional upon : (i) the approval by the Company's shareholders of a share capital reorganisation; and (ii) the approval of a waiver of Rule 9 ("Rule 9 Waiver") of the City Code on Takeovers and Mergers (the "City Code") by the Panel on Takeovers and Mergers ("the Panel") and the independent shareholders of the Company, voting on a poll, in general meeting, which is further explained below.
The Agreements
The principal terms of the Agreements are as follows:
Loan Agreement
· Bidstack is to be provided with a secured loan facility ("Facility"), drawable in individual tranches each of up to £0.6m, with an aggregate facility cap of £2.4m.
· Interest will be charged at 10% per annum on drawn amounts - to be capitalised on the last business day of each month.
· Irdeto will charge a commitment fee of 2% per annum on any undrawn facility - capitalised on the last business day of each month.
· Repayment in whole or in part (of not less than £0.5m per repayment) can be undertaken by the Company on 20 business days' notice (unless Irdeto serves notice to convert under the Share Option Agreement).
· Subject to the terms of the loan, drawdowns remain available until 31 December 2024 and the final repayment date for the loan is 31 December 2026.
· Bidstack may not create other security or indebtedness without Irdeto's consent and the Loan Agreement remains subject to certain financial covenants in respect of operating expenditure and cash.
· Bidstack is to produce a circular ("Circular") to seek shareholders' approval of a Rule 9 Waiver and to approve the subdivision of its ordinary shares such that the nominal value for an ordinary share in the Company will be 0.001 pence per share (and, for each new ordinary share of 0.001 pence per share, a deferred share of 0.499 pence per share will be created). The reason for the subdivision is explained further below.
· Drawdown is subject to a number of conditions precedent including that Bidstack may not drawdown beyond a level that would, if converted, lead to Irdeto holding more than 29.99% of Bidstack's issued share capital without having obtained a Rule 9 Waiver approved by the independent shareholders voting on a poll at a general meeting.
· During the term of the Loan Agreement, Irdeto will be given the opportunity to participate in any equity offers so as to maintain its interest in Bidstack immediately prior to the relevant equity offer.
Share Option Agreement
· The earliest date which Irdeto can serve an option notice to convert the Facility into ordinary shares is the date after the general meeting to be called pursuant to the Circular.
· During the option period, Irdeto may elect to convert some or all of the amount outstanding under the Loan Agreement, from time to time, into ordinary shares at a conversion price of the lower of 0.275p per ordinary share (before the share consolidation set out below) and 10% below the closing mid-market price per ordinary share on the date of Irdeto's election to convert or, where that date is not a trading day, the last closing mid-market price per ordinary share ("Subscription Price"). However, if the Subscription Price would result in a price which is less than the nominal value of an ordinary share, to enable to convert at such time, Irdeto can elect to pay the nominal value for each ordinary share.
· Ordinary shares issued under the Share Option Agreement will rank pari passu with the existing ordinary shares and the Company will apply to AIM for permission for the shares to be admitted to trading.
· Bidstack may not in any event issue new ordinary shares to Irdeto that would result in Irdeto holding in excess of 29.99% of the TVR in Bidstack, in the absence of a Rule 9 Waiver having been approved by the independent shareholders in Bidstack, voting on a poll, at a general meeting.
· Subject to obtaining a Rule 9 Waiver, if Irdeto's shareholding does exceed 30% of Bidstack's issued capital, Irdeto will be entitled to nominate an additional Non-Executive Director to the Company's Board (that is, in addition to Doug Lowther, the CEO of Irdeto, who is currently a Non-Executive Director on the Company's Board).
Security Agreement
Bidstack Group Plc and each English trading subsidiary provides a guarantee and indemnity under the Security Agreement and provides security, by way of fixed and floating charges (as applicable) over the shares of Bidstack Group Plc's subsidiaries, Group intellectual property, Group UK bank accounts and the amounts standing to the credit of them from time to time and Group insurance contracts.
Related Party Transaction
Irdeto is a substantial shareholder in the Company with a holding of 175,438,596 ordinary shares which represents 13.49% of Bidstack's currently issued share capital and TVR. Doug Lowther, the CEO of Irdeto, is a Non-Executive Director on the Company's Board.
The Board, (save for Doug Lowther who has not participated in any discussion relating to the Facility or the Agreements) having consulted with the Company's Nominated Adviser, SPARK Advisory Partners Limited, considers the entry into the Facility and the terms of the Agreements are fair and reasonable insofar as the Company's shareholders are concerned.
Share Capital Reorganisation
The Company's existing ordinary shares have a nominal value of 0.5 pence at present. Given the Company's current share price, in order to issue shares, and in order to enable the Company to issue new ordinary shares pursuant to the Share Option Agreement at the Subscription Price, the Company is proposing to undertake a share capital reorganisation ("Reorganisation"). The Board considers the Reorganisation to have merit in its own right as the the high number of existing ordinary shares combined with the low absolute share price is unwieldly for the shareholders of the Company and others wishing to deal in the Company's shares and negatively affects investors' perception of the Company.
Subject to approval by the Company's shareholders at the proposed general meeting, pursuant to the proposed sub-division, each existing ordinary share of 0.5 pence would be divided into one new ordinary share of 0.001 pence ("New Ordinary Share") and one deferred share of 0.499 pence ("Deferred Share").
At the same general meeting, the Company will also propose a 1,000 for 1 consolidation of New Ordinary Shares to create "New Consolidated Ordinary Shares" with a nominal value of 1 pence per New Consolidated Ordinary Share. The Company will issue a further 16 New Ordinary Shares immediately prior to the consolidation taking effect to ensure the aggregate total New Ordinary Shares prior to the consolidation are divisible by 1,000.
Certain amendments must be made to the Company's articles of association to facilitate the Reorganisation. Full details of those amendments and the Reorganisation generally will be given in the shareholder circular and notice convening a general meeting, which will be published as soon as is practicable, made available on the Company's website and sent to shareholders who have requested physical copies of the Company's documents.
Rule 9 Waiver
The Code applies to Bidstack. Under Rule 9 of the Code, any person who acquires an interest in shares which, taken together with shares in which that person or any person acting in concert with that person is interested, carry 30% or more of the voting rights of a company which is subject to the Code is normally required to make an offer to all the remaining shareholders to acquire their shares.
An offer under Rule 9 must be made in cash at the highest price paid by the person required to make the offer, or any person acting in concert with such person, for any interest in shares of the company during the 12 months prior to the announcement of the offer.
If the CLN was fully utilised at the earliest opportunity and Bidstack made no cash repayments, Irdeto could own a maximum of 336,903,938,596 New Ordinary Shares (or 336,903,938 New Consolidated Ordinary Shares) in the Company representing 99.67% of the TVR. Note this is a theoretical calculation based on the lowest price at which Bidstack could issue shares of 0.001 pence per New Ordinary Share (or 1 pence per New Consolidated Ordinary Share) following the Reorganisation and assumes no other shares are issued.
|
Conversion Price |
New Ordinary Shares (assuming full conversion at 31 December 2026) |
Total Ordinary Shares in issue (assuming no other issues within the timeframe) |
Aggregate Total of Irdeto's holding including existing ordinary shares and New Ordinary Shares |
Irdeto's maximum percentage of TVR |
|
0.275 pence (maximum) |
1,224,467,273 |
2,525,323,273 |
1,399,905,869 |
55.44% |
|
0.1375 pence (midway) |
2,448,934,545 |
3,749,790,545 |
2,624,373,141 |
69.99% |
|
0.001 pence (lowest) |
336,728,500,000 |
338,029,356,000 |
336,903,938,596 |
99.67% |
Note: This illustrative table is shown prior to the Reorganisation, but Irdeto's percentage of TVR should remain unchanged post the Reorganisation.
Therefore, the Company will seek the approval of the Panel to waive the obligation to make a general offer that would otherwise arise on Irdeto as a result of conversion under the Share Option Agreement, subject to approval on a poll by the independent shareholders of the Company (being all shareholders other than Irdeto) of the Rule 9 Waiver Resolution as set out in the Notice of General Meeting to be sent to shareholders shortly.
General Meeting
A circular ("Circular") containing further details of the Agreements, Reorganisation, changes to the articles of association of the Company in respect of the Reorganisation and the Rule 9 Waiver and notice of the general meeting to approve the resolutions required to implement the Reorganisation, changes to the articles of association and the proposed Rule 9 Waiver, is expected to be published and despatched to Bidstack shareholders in due course, when a further announcement will be made. Following its publication, the Circular will be available on the Group's website.
Update on the proposed New Commercial Partnership with Virtual Sport Technology Limited ("VST")
Following further discussions between the Company, its advisers and VST, and the entering into the Agreements outlined herein, it has been resolved, at this point, not to progress further with the proposed new multi-year licensing agreement between Bidstack and VST on the (non-binding, subject to contract) terms which were outlined in an announcement dated 29 September 2023. Discussions will continue with the new management of VST around the potential of the Company and VST working together in some capacity, but with a materially revised structure, to support the growth of the Company's sports offering.
James Draper, CEO of Bidstack said:
"The loan agreement with our strategic investor Irdeto provides Bidstack with additional working capital to focus on execution of recently announced commercial partnerships. We are grateful for Irdeto's continued support at this pivotal inflection point for Bidstack and the in-game advertising industry."
Kelly van Krieken, Director - Corporate Development of Irdeto said:
"Irdeto is pleased to announce the extension of our strategic support for Bidstack. The in-game advertising market is an exciting growth area in the video game space, and we look forward to the opportunity that this continued investment will bring."
-ENDS-
Contacts
|
Bidstack Group Plc James Draper, CEO |
via SPARK |
|
SPARK Advisory Partners Limited (Nomad) Mark Brady / Neil Baldwin / James Keeshan |
+44 (0) 203 368 3550 |
|
Stifel Nicolaus Europe Limited (Broker) Fred Walsh / Tom Marsh |
+44 (0) 20 7710 7600 |
Notes to editors
About Bidstack
Bidstack's technology empowers video game publishers to monetise and manage spaces within their virtual environments. Its platform provides real-time reporting, dynamic targeting and player communication tools for brand activations and fan engagement.
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