Acquisition of DataCash/Placing and Change of Name
Corporate Executive Search Intl PLC
28 February 2000
Corporate Executive Search International plc ('CESI' or 'the Company')
Acquisition of DataCash, Placing at 12p per share and change of name to
auxinet plc
Highlights
CESI announced today that it has entered into a conditional agreement to
acquire DataCash, a leading processor of internet based credit and debit card
payments, by the issue of 158,732,000 Consideration Shares.
In addition CESI propose to raise £6.6 million net of expenses by way of a
placing of Subscription Shares at 12p per share to fund the further
development DataCash's UK market position and the controlled expansion of its
operations into Europe. The Placing has been fully underwritten by Collins
Stewart.
DataCash, established over two years ago, has aimed to be the supplier of
choice of internet based payment solutions in particular to the dot.com
market.
It has over 780 merchant customers which includes specialised e-tailers such
as QXL, lastminute.com, Blackstar, Blue SQ, Scoot and Freecom, as well as blue
chip companies such as Compaq, Telewest and Waterstones.
DataCash's payment solutions gateway is approved by, and integrated with, the
major UK acquiring banks.
DataCash has handled over 700,000 transactions to date worth in excess of £40
million with transaction volumes increasing progressively throughout 1999.
Gavin Breeze, a founder and principle shareholder of DataCash, will join the
Board on completion.
It is proposed that to better reflect the Company's strategy of developing and
focusing activities in the e-enabling area, the Company's name will be changed
to auxinet plc.
CESI is an executive search consultancy focusing on the European technology
sector in particular on the internet and new media start up markets.
Having retrenched in the last couple of years, CESI is now exploring
opportunities available in its core competencies with the development of two
new brands - rocketscience (www.rocketscienceuk.com), which focuses on senior
contingency recruitment within the high technology area, and boldly-go.com
(www.boldly-go.com), aimed at dot.com and e-commerce start-ups.
Trading in the Existing Ordinary Shares on AIM is expected to recommence
tomorrow following the publication of the Prospectus.
The enlarged capital of the Company following the Proposals will be
377,464,000 Ordinary Shares.
An extraordinary general meeting will be held on 22 March 2000 at which
approval for the Proposals will be sought. Admission of the Consideration and
Subscription Shares to trading on AIM is expected to take place on 24 March
2000.
For More information: -
David Bailey, Chairman, CESI +44 171 550 1000
+44 836 25 85 58
Julian Compton, Financial Director, CESI +44 171 550 1000
Julian_c@corpexec.com
Shallu Behar-Gill, Marketing Manager, DataCash +44 171 632 0400
shallu@datacash.com
John Coyle, Chairman, Clerkenwell Communications +44 171 713 0900
+44 370 687 370 (mobile)
+44 1399 727 796 (pager)
For more information on DataCash visit the company web site at
www.datacash.com.
Investor enquiries should be directed to Collins Stewart on +44 171 523 8345.
This announcement has been approved by Collins Stewart Limited ('Collins
Stewart') solely for the purposes of section 57 of the Financial Services Act
1986. Collins Stewart is the Nominated Adviser and Nominated Broker to the
Company.
Collins Stewart which is regulated by The Securities and Futures Authority
Limited, is acting for CESI and no-one else in relation to the Proposals and
will not be responsible to anyone other than CESI for providing the
protections afforded to customers of Collins Stewart, or for providing advice
in relation to the Proposals or any other matter referred to herein.
Introduction
On 14 December 1999, CESI announced it had signed heads of agreement to
purchase the whole of the issued share capital of DataCash, a leading
processor of internet based credit and debit card payments in the UK.
Following that announcement and in view of the size and nature of the
transaction, the Existing Ordinary Shares were suspended from trading on AIM,
pending the sending of an explanatory circular to Shareholders.
The Board announces today that the Company has entered into a conditional
agreement with the Vendors to implement the Acquisition. The consideration for
the Acquisition is to be satisfied by the issue of 158,732,000 Consideration
Shares. The number of Consideration Shares is the same as the number of
Existing Ordinary Shares. Based on the middle market price of the Existing
Ordinary Shares at the time trading in them on AIM was suspended of 6p, the
Existing Ordinary Shares were valued at approximately £9.5million. Gavin
Breeze, a founder and the principal shareholder of DataCash will join the
Board on Completion.
In addition, CESI proposes to raise £6.6 million, net of expenses, by way of a
Placing of 60,000,000 Subscription Shares at 12p per share. The net proceeds
of the Placing of the Subscription Shares will be applied to the further
development of DataCash's UK market position and the controlled roll-out of
its operations into Europe. Gavin Breeze has also agreed to sell 16,000,000
of the Consideration Shares in the Placing, also at 12p per share. The
Placing has been fully underwritten by Collins Stewart.
It is proposed that to better reflect the Company's strategy of developing
activities in the e-enabling arena, as the market develops to support the
growth of businesses implementing e-commerce strategies, the Company's name
will, subject to Admission, be changed to auxinet plc.
As a result of the Acquisition, the Board has decided to change the financial
year end of the Company from 31 March to 31 December. Accordingly, the Board
is announcing a loss estimate for the Company for the nine month period ended
31 December 1999.
A document containing details of the Acquisition and the Placing is being sent
to Shareholders today, along with notice of an EGM at which Shareholders will
be asked to consider and pass resolutions to approve, amongst other things,
the Directors' authority to allot shares and the diapplication of pre-emption
rights, the Acquisition, the Placing and the change to the Company's name.
The EGM is to be held at the offices of Osborne Clarke, Highgate House, 26 Old
Bailey, London EC4M 7TW at 10.00am on 22 March 2000. Copies of the Prospectus
are also available from the Company at 7 Savoy Court, Strand, London, WC2R 0EZ
Trading in the Existing Ordinary Shares on AIM is expected to recommence
tomorrow following the publication of the Prospectus.
Background to and reasons for the Acquisition
CESI is an executive search consultants focused on the European technology
sector and in particular the internet and new media start-up markets. The
Company, having retrenched in the last couple of years, is now exploring
opportunities available in its core competencies within the high technology
and internet sectors.
Two new brands have been developed recently. rocketscience, which focuses on
senior contingency recruitment within the high technology area, was launched
in October 1999, and boldly-go.com, aimed at start-ups in the e-commerce and
dot.com areas is to be launched early next month. The Board believes that the
Group's expertise in the recruitment of senior executives and non-executives
for technology and internet businesses provides it with an excellent
foundation from which to develop related activities in these dynamic and
exciting sectors.
The Board has been examining opportunities to develop the position of the
Company as a provider of e-enabling services.
DataCash is at the forefront of e-commerce enabling in the UK and the Board
believes it is positioned to experience substantial growth over the next few
years. DataCash, established over two years ago, has aimed to be the supplier
of choice of internet based payment solutions to the dot.com market. Its
client base includes a significant proportion of the leading specialist
e-tailers in the UK, as well as blue chip companies.
The combination of CESI and DataCash will move the Group positively into the
developing e-enabling market.
Information on DataCash
DataCash was incorporated in September 1997 and has quickly become a leading
processor of internet based credit and debit card payments in the UK.
DataCash operates a secure e-commerce credit and debit card payment network,
providing a range of payment gateway solutions that enable merchants to send
secure credit and debit card transactions over Internet Protocol based
networks. DataCash's payment solutions gateway is approved by, and integrated
with, the major UK acquiring banks.
DataCash has established a client base of over 780 merchant customers which
includes specialised e-tailers, such as lastminute.com, QXL, Blackstar, Blue
SQ, Scoot and Freecom, as well blue chip companies such as Compaq, Telewest
and Waterstones.
DataCash derives its revenues from a combination of annual licence fees and
monthly transaction charges. Monthly transaction charges are based on the
number of transactions processed through DataCash each month. This revenue
model has been successfully adopted with the objective of attracting those
e-commerce businesses with high expectations of achieving substantial
transaction volumes. DataCash also has the ability to provide bespoke systems
integration services.
Given the growth of both its client base and the number of internet based
transactions generated by those clients, DataCash's revenues grew strongly
last year. DataCash's turnover for the 10 months to 31 December 1999 was £0.3
million, with average monthly amounts invoiced for the last quarter of 1999
being £58,000.
DataCash intends to consolidate this already strong position in the UK through
the development and marketing of its products and services, the extension of
DataCash's brand name recognition and further increasing its share of the
transaction processing market. DataCash is also pursuing initiatives aimed at
developing its position in the emerging B2B marketplace, as well as seeking to
form further relationships with key partners that will extend DataCash's
coverage in the SME market. DataCash's management intend that these
developments will be closely followed by a controlled roll-out
internationally, initially in Europe.
DataCash's proprietary transaction-enabling technology supports highly
automated, easy-to-use and cost-effective services that empower its customers
to take greater control of their transactions. DataCash's payment solutions
enable merchants to access on-line management reporting information, providing
real-time updates of transactions processed or declined, along with analyses
of transactions by card type, issuing bank and country of origin.
Merchants can also use DataCash's back-end capability as a virtual point of
sale system to manually enter credit and debit card transactions taken over
the telephone or from customers at point of sale. A number of DataCash's
customers have already integrated this capability into their call centre
solutions. DataCash's payment solution is able to process payments from any
IP-connected front end device, including new delivery platforms such as mobile
telephones and digital TVs.
Competitive Advantages
Business Model
DataCash has chosen since its inception to adopt a business model based on
charging per number of transactions, rather than the more commonly adopted
model of charging a percentage of transaction value. DataCash's chosen model
has been instrumental in attracting some of the leading operators in the
e-commerce market. The business model should prove equally attractive to
small and medium sized merchants as DataCash expands into the SME market.
Combined with its ability to provide managed server solutions for portals,
DataCash's charging structure provides a margin opportunity to portals in
their role as a reseller of DataCash solutions.
Customers
DataCash's existing customer base of both traditional blue-chip companies and
leading internet-only traders creates a leading position in the UK market,
which would prove an obstacle to potential new entrants achieving a critical
mass of transactions.
Technology
DataCash's payment solutions have been developed with a combination of
proprietary and industry standard technology. In addition to the security and
resilience features required from any payment solution, DataCash's solutions
have been designed to meet the needs of high volume merchants who will
transact in multiple currencies and over multiple delivery platforms, as
points of sale integrate on to IP-based platforms.
Relationships
DataCash has established close relationships with the major card acquiring
banks operating in the UK, a number of tier one internet service providers,
over 50 channel reseller partners and other organisations involved in the
e-commerce market, and is continuing to expand the number of such
relationships.
In particular, DataCash has focused on growing through establishing reseller
relationships, which the Board believes creates a significant barrier to entry
for other market participants, as resellers are often unwilling to change
their product offerings.
In addition, boldly-go.com, CESI's internet start-up enabling business, when
launched should act as a further lead into those start-ups in the e-commerce
marketplace that demonstrate the ability to attract personnel, early-stage
capital and the support of business accelerators and professional advisers.
Business-to-Business (B2B)
DataCash's product and service offering is designed to be attractive to
e-commerce merchants who have high expectations of processing a substantial
number of transactions. The average transaction value in the B2B market is
expected to be significantly higher than that experienced in the B2C market
and the Board expects DataCash's charging structure to prove attractive
compared to competitors who charge for their services on a percentage of
transaction value basis. The Board are confident that DataCash can convert
its experience and relationships with leading merchants, resellers and
technology partners in the B2C market, to the emerging B2B market.
Services and Products
The core business of DataCash is credit and debit card transaction processing
for e-commerce, based upon proprietary software and systems. The DataCash
payment gateway system is a combination of an on-line service and a suite of
software products that connect to merchants' web-sites and provides a
real-time, secure payment mechanism for B2B and B2C e-commerce transactions.
DataCash's solution provides:
- real-time authorisation of credit and debit card transactions;
- overnight batch settlement of credit and debit card transactions;
- full multi-currency trading and settlement;
- systems integration with EDI, merchant servers and back office systems;
- cross-platform compatibility with all major operating systems, including
Microsoft NT and Unix;
- online merchant account management systems; and
- connection to multiple acquiring banks, including NatWest, The Royal Bank
of - Scotland, Bank of Scotland, Barclays Merchant Services, HSBC and
American Express.
Key features of DataCash's payment solutions gateway include the following:
Security
DataCash uses a combination of proprietary and industry standard security
measures to protect its merchant customers as well as their customers.
DataCash's payment solutions use high levels of encryption technology within
the network to protect the card details of merchants' clients.
DataCash's transaction processing systems sit behind comprehensive firewall
engines designed to prevent unauthorised access to card data. Additionally,
communication with the banking network is via private leased circuits in
accordance with banking industry requirements.
Resilience
DataCash has built-in resilience throughout its payment system. Transactions
are processed via a network of payment gateways, utilising an automated
routing mechanism, with each gateway having its own independent link to the
banking network. Added resilience is provided by hosting the gateways at
different locations with different telecommunications bandwidth providers.
Multiple Simultaneous Transactions
Through the application of DataCash's proprietary 'vTID' technology, the
DataCash payment gateway is able to handle multiple simultaneous transactions.
This capability has been a key feature in DataCash attracting merchants who
expect high transaction volumes and, in particular, high volumes within short
periods of time.
Multi-currency
DataCash is able to provide, through NatWest International Merchant Services,
full multi-currency trading and settlement, in addition to sterling to
sterling transactions. DataCash's merchant customers are able to trade in
more than 150 currencies and are also able to have funds credited to their
accounts in any of 16 currencies.
The multi-currency functionality of DataCash's payment gateway provides the
capability to service merchants outside the UK. This multi-currency
functionality has allowed DataCash to win bids to supply companies with a
multi-national service.
Scalability
The modular design of the DataCash payment gateway and related software allows
for the expansion of network and computing capacity, as usage increases and
the service offering is expanded, without interrupting service or requiring
replacement of existing hardware or software.
In addition, DataCash's payment gateway can be deployed as a 'stand alone'
managed server solution for high volume merchants or for portals processing
transactions on behalf of their merchants.
Platform Independence
DataCash, unlike many of its competitors, has, as a matter of policy, not
developed its own 'shopping-cart' solution, preferring instead to build
relationships with leaders in the provision of 'shopping-cart' solutions, such
as Intershop, Infospace, Microsoft Siteserver and Actinic. In this way
DataCash benefits from referral opportunities provided by such leading
e-commerce solution providers. DataCash is the only UK-based payment gateway
provider to have developed a compatible payment solution product approved by
Intershop for use with their 'shopping-cart' offering for the SME market,
'e-pages'.
Fraud Screening
DataCash has recently licensed sophisticated fraud screening software from a
US based software house. This software uses complex algorithms to assess the
likelihood of a particular credit card transaction being fraudulent and
returns a score to enable merchants to assess the risk of fraud based upon
their specific criteria. This fraud screening capability is being integrated
with the core DataCash platform and will be rolled out to merchants in the
next quarter.
Product Development Strategy
DataCash is committed to a strategy of developing world-class payment
solutions within the e-commerce market.
DataCash aims to be able to offer its merchants the ability to transact
securely and reliably, over any IP-based delivery platform and using a broad
range of financial instruments. In addition to credit and debit card
transactions DataCash's solutions should be as applicable to other financial
instruments including, but not limited to, e-cash, electronic direct debit,
e-cheques, corporate purchasing cards and virtual currencies, such as 'beenz'.
Trading History
DataCash began processing transactions on behalf of customers in September
1997. Since that date DataCash has processed over 700,000 e-commerce
transactions with a total transaction value of over £40 million.
The level of transactions processed through DataCash's payment gateway has
increased progressively during 1999. For the year ended 31 December 1999, the
number of transactions processed was approximately 530,000, with a total
transaction value of over £26 million. For the last quarter of 1999, DataCash
processed an average of approximately 81,000 transactions per month with an
average monthly transaction value of approximately £4.2 million in that
period.
DataCash's growth has been in conjunction with the success of its leading
customers. DataCash's leading customers, in terms of the number of
transactions processed, are QXL, lastminute.com, Blackstar, Blue SQ and
UK2Net. These five leading customers account for approximately 80 per cent of
the number of transactions processed by DataCash since inception. DataCash
now has an existing merchant base of over 780, with approximately 380 new
merchants being signed up in the last quarter of 1999.
The following information summarises the results of DataCash since its
incorporation:
Period from Ten months
5 September 1999 to/ ended/as at
as at 28 February 1999 31 Decembe 1999
Turnover 196,000 318,000
Gross profit 176,000 296,000
Loss on ordinary activities
before taxation (122,000) (35,000)
Net liabilities (43,000) (78,000)
Organisational Structure
DataCash currently has 19 full-time employees and its success has been, and
will continue to be, dependent to a large degree on its ability to retain the
services of its employees and to attract and retain qualified personnel in the
future.
Gavin Breeze, founder of DataCash, is responsible for corporate business
development and strategy. Dave MacRae, co-founder of DataCash, is responsible
for technical operations and developments.
DataCash's corporate and sales office is located in London. All major
customer accounts and relationships are managed from this office which is also
the base for DataCash's strategic business development, finance and
administrative infrastructure.
DataCash's technical support and development operations are based in
Edinburgh. This office has the capacity to expand these operations to provide
the main development resource of the Enlarged Group. Edinburgh's universities
provide a good source of developers. DataCash's Edinburgh office has a
relatively low cost base per employee and will be the location for the
majority of pre- and post-sales technical support personnel as well as a
customer support call centre.
DataCash is using the search capabilities of CESI in the process of appointing
additional personnel to senior roles in the organisation.
Current Trading
Trading Update
Transaction volumes have continued to increase since the end of the last
financial period. New merchants have been signed up since the end of last
year and DataCash's management has been pursuing initiatives aimed at
extending DataCash's reach into new markets. This month DataCash was awarded
'merchant bureau' status by The Royal Bank of Scotland plc, enabling DataCash
to set up merchants on its system within five days instead of the, on average,
11 weeks it would normally take for a merchant to obtain clearance to trade
on-line from an acquiring bank.
Settlement Procedure Difficulty
In January DataCash experienced difficulties with its transaction batch
settlement procedures with one of its acquiring banks. As a result the
settlement of funds by the acquiring bank into or from the accounts of clients
of a small number of DataCash's merchants were erroneous and/or delayed.
These transfers have now been rectified and DataCash has since been working
closely with the acquiring bank involved to improve their batch settlement
procedures and has also carried out a review of all critical operational
procedures.
All of the affected merchants continue to be customers of DataCash. DataCash
has made or agreed to make provisions for payments to certain merchants
particularly affected by these difficulties, such payments including amounts
in respect of their direct costs, including the cost of compensating their own
customers. Certain of the Vendors, including Gavin Breeze, have indemnified
the Company in respect of such payments to the extent that they exceed
£200,000.
The Acquisition Agreement
CESI has conditionally agreed to acquire DataCash in consideration of the
allotment and issue by the Company of the Consideration Shares to the Vendors.
The Consideration Shares will rank pari passu with the Existing Ordinary
Shares and the Subscription Shares.
The issued ordinary share capital of DataCash, is held as to 83.6 per cent by
Gavin Breeze and as to 4.4 per cent by David MacRae with the remaining 12 per
cent being held by a number of individual and other investors. Three such
investors, namely David Bailey, Susan Bailey and David Bailey Enterprises
Limited, who between them own, in aggregate, 3.5 per cent of the issued
ordinary share capital of DataCash, are related parties as defined in the AIM
Rules by virtue of being a Director or an associate of such Director.
On Admission Gavin Breeze will join the Board. Completion of the Acquisition
is expected to take place on 24 March 2000. The Acquisition Agreement is
conditional upon, inter alia:
- the approval of the Acquisition by Shareholders at the EGM;
- the waiver by the Panel of the requirement under Rule 9 of the Code for any
of the Concert Party, whether together or individually, to make a general
offer to shareholders as a result of the issue of the Consideration Shares;
- Admission becoming effective on 24 March 2000 (or such later date being not
later than 31 March 2000 as the Company and Collins Stewart may agree).
Pursuant to the Acquisition Agreement, the Vendors have agreed not to dispose
of the Consideration Shares for a period of 12 months following Completion
without the consent of the Company and Collins Stewart.
The Acquisition Agreement contains warranties and indemnities in favour of
CESI and provides that CESI may rescind the Acquisition Agreement in the event
of any material breach of such warranties prior to Completion.
Board Composition
The Board will be considerably strengthened by the appointment of Gavin Breeze
and the Company will continue to strengthen its management team to meet the
requirements of its strategic development. It is the intention of the Board
to appoint at least one additional non-executive director with relevant
expertise in the near future.
The Board of directors of the Enlarged Group at Completion will be:
David John Bailey
David joined the Board as Non-Executive Chairman in November 1999. He is
currently non-executive chairman of Hay & Robertson plc and a director of
Sutherlands (Holdings) Limited, the stockbrokers. As well as being a
non-executive director of a number of other private companies, David is also
an adviser to the capital markets consulting business BTA Consulting.
Previously, David spent many years as a partner of Phillips & Drew and
subsequently a director following its acquisition by UBS.
Jane Reedy
Jane began her career in the IT industry with MBS plc where she became sales
manager of the City team. One of the founders of CESI she has been
responsible for securing many of the Group's major accounts and now has
overall responsibility for the operational and strategic development of the
recruitment businesses.
Julian Warren Compton
Julian joined the Group as Financial Controller in January 1997. He was
previously with banking software company Financial Objects plc where he held
the role of Chief Accountant. Prior to that he was at Christian Salvesen plc
in a commercial accounting role within the Logistics Division. He has been
Finance Director since March 1998.
Gavin Duncan Paul Breeze
Gavin was educated at Queen's College, Cambridge before joining Arthur
Andersen working initially in New York, then later in London. In 1986 he
joined MAI plc in their media division where he became New Business
Development Manager, before leaving to set up his own contract publishing
company, Ashley House Ltd in 1989.
In 1994 he co-founded Business Briefing Publishing (now Mondaq Ltd), building
strategic distribution agreements with Reuters, Dialog, FT Profile, MAID, Dow
Jones and Bloomberg. Gavin formed DataCash in September 1997, and has been
responsible for the development of its payment services and products, as well
as setting up strategic relationships with major banks and developing its
merchant client base.
Current Trading, Loss Estimate and Prospects
In the remaining 3 months of 1999, the Group's results were affected by the
expected downturn in hiring leading up to the new millennium which adversely
affected sales performance. The Group also incurred expenditure in that
period related to the development of two new businesses, rocketscience and
boldly-go.com, and as a result has incurred a loss in the quarter. The
Directors estimate that, in the absence of unforeseen circumstances and on the
basis and assumptions set below, the Group's consolidated loss before taxation
for the nine months ended 31 December 1999 will be not more than £98,000,
representing a loss per share of 0.06p.
Nine months ended
31 December 1999
£'000
Loss before taxation and exceptional items (103)
Exceptional items - severence payment to a director (74)
- share scheme credit 79
-----
Loss before taxation and after exceptional items (98)
-----
Basis of Preparation
The estimate has been prepared under the historic costs convention and in
accordance with applicable accounting standards, on a basis consistent with
the accounting policies normally adopted by CESI. The estimate is based upon:
a) the unaudited interim accounts for the Group for the six months ended 30
September 1999, and
b) the results shown in the unaudited management accounts of the Group for
the three months ended 31 December 1999.
The Group is now focused on developing activities in its core sectors of
servicing high technology and internet companies. In January of this year
retainer income was significantly ahead of the same period for last year and
the current level of ongoing assignments is encouraging. In addition, the
Board expects both rocketscience and boldly-go.com to make a positive
contribution this year.
The Board believes the Group, as enlarged by DataCash, is in an excellent
position to grow as an enabler of e-commerce activities.
The Placing
The Company proposes to raise £6.6 million, net of expenses, by the issue of
60,000,000 Subscription Shares, pursuant to the Placing, at 12p per share. In
addition, Gavin Breeze has agreed to sell 16,000,000 of the Consideration
Shares in the Placing. Collins Stewart has agreed to procure commitments from
institutional and other investors to subscribe for the Placing Shares. To the
extent that any such institutional and other investors fail to subscribe
Collins Stewart will themselves subscribe for the Placing Share. The Placing
has been fully underwritten by Collins Stewart. The Placing is conditional
upon, inter alia, completion of the Acquisition and Admission.
The Subscription Shares will, when issued, rank pari passu, in all respects
with the Existing Ordinary Shares and the Consideration Shares. It is
expected that Admission will become effective and dealing in the Placing
Shares will commence on 24 March 2000.
New Warrants
Following the passing of the Resolutions the Company proposes to introduce a
new warrant scheme over 5 per cent of the issued share capital of the Company
as enlarged by the Acquisition and the Placing. Each holder of the New
Warrants shall have the right to subscribe in cash for such number of Ordinary
Shares as is specified in their warrant certificate. The exercise price for
New Warrants issued will be such price, being not less than 15p per share, as
is determined by the Directors on their issue. The exercise price for New
Warrants issued thereafter will be the average of the middle market price for
the Ordinary Shares, as derived from the London Stock Exchange and Daily
Official List, for the three immediately preceding dealing days.
Suspension of Dealings
Following the Company's announcement on 14 December 1999 regarding the
Acquisition, the Existing Ordinary Shares were suspended from trading on AIM.
Following the publication of the Prospectus, it is expected that trading of
the Existing Ordinary Shares on AIM will recommence tomorrow, following the
publication of the Prospectus. A further suspension of trading of the
Existing Ordinary Shares on AIM will be imposed on 22 March 2000, the date of
the EGM, pending approval of the Acquisition at the EGM and Admission.
Application has been made by the Company for the Existing Ordinary Shares to
be re-admitted to AIM and for the New Ordinary Shares to be admitted to AIM.
Trading in the New Ordinary Shares is expected to commence on 24 March 2000.
If the Acquisition and the Placing is not completed, only the Existing
Ordinary Shares will be re-admitted to AIM, in accordance with the AIM Rules,
following the EGM.
The City Code
Under Rule 9 of the City Code, when any person or a group of persons acting in
concert acquires shares in a company which is subject to the City Code, and
such shares, when taken together with shares already held, would result in
such person or persons holding shares carrying 30 per cent or more of the
voting rights of the company, such person or group is normally obliged to make
a general offer to all the company's shareholders to acquire the remaining
equity share capital.
Rule 9 of the City Code also states that if any person or group of persons
acting in concert holds not less than 30 per cent but not more than 50 per
cent of the voting rights of a company which is subject to the City Code, and
such person, or any person acting in concert with such person is normally
obliged by the Panel to make a general offer to all shareholders if he or it
acquires any further shares in the Company.
The Panel has determined that the Vendors, as listed below, should be regarded
as acting in concert for the purposes of Rule 9 of the City Code. Set out
below is a summary of the percentage of the issued ordinary share capital of
DataCash held by each of the Vendors, the maximum shareholding of each of the
Vendors in the Company following the Proposals and the percentage of the
issued ordinary share capital of the Company they will hold at that time.
Percentage Number of Percentage
Shareholding Ordinary Shares Shareholding in
in DataCash held following the Company
the Proposals following the
Proposals
Vendors % %
Gavin Duncan Paul 83.6 116,699,952 30.9
Breeze
David Ewan MacRae 4.4 7,852,297 2.1
David John Bailey 1.5 2,380,980 0.6
David Bailey 1.0 1,587,320 0.4
Enterprises Limited
Susan Bailey 1.0 1,587,320 0.4
Charlbury Consultants 3.0 4,761,960 1.3
Limited
George Ritchie Gray 1.5 2,380,980 0.6
Richard Arthur Lockwood 1.5 2,380,980 0.6
Delia Norgate 1.5 2,380,980 0.6
Christopher Alan Marsh 1.0 1,587,320 0.4
Note
*Percentage shareholding the Company following the Proposals and assuming
David MacRae has exercised his right to subscribe for Ordinary Shares in
respect of options granted has under the DataCash Share Option Scheme, which
will be rolled over into options under the Share Option Scheme on Completion.
The Concert Party will, following completion own, in aggregate, 143,600,089
Ordinary Shares, representing 37.9 per cent of the Company's issued share
capital, as enlarged by the Acquisition and the Placing.
The Panel has however agreed, subject to approval by the Company's independent
shareholders on a poll, to waive any obligation of the Concert Party, or any
member thereof, to make a general offer for shares in the Company which would
otherwise arise as a result of the Acquisition. Accordingly, a poll will be
held on Resolution 1 which will be proposed as an ordinary resolution at the
EGM for the purpose of waiving any requirement that the Concert Party , or any
member thereof, should, make a general offer to Shareholders for the issued
share capital of the Company arising out of the issue to them of the
Consideration Shares respectively. This resolution will require the approval
of a simple majority of votes cast on that poll. No member of the Concert
Party is a shareholder of the Company and none will vote on Resolution 1. As
the Concert Party will hold more than 30 per cent but less than 50 per cent of
the issued share capital as enlarged by the Proposals, no member of the
Concert Party will be able to acquire any further shares without triggering
Rule 9 of the City Code giving rise to a requirement to make a general offer
under the City Code.
The members of the Concert Party have each entered into a concert party
agreement whereby each agree with the other not to acquire or agree to acquire
any Ordinary Shares or rights over Ordinary Shares of such acquisition could
give rise to an obligation on any one or more parties to make an offer for all
the Ordinary Shares unde Rule 9 of the City Code.
Other Significant Shareholdings
In addition to the interests in the Company of the Vendors, following
Admission, set out above, as at 25 February 2000, the Company had been
notified or had otherwise been aware of the following interests in 3 per cent
or more of the issued ordinary share capital of the Company:
Number Percentage of Percentage of
of issued issued share
Existing ordinary capital
ordinary Share following the
Name Shares Capital Proposals
Jane Reedy, Director 40,058,523 25.2% 10.6%
Barclays Nominees (Jersey) Ltd 14,950,000 9.4% 4.0%
Alan Bates 7,675,889 4.8% 2.0%
William Pears Group of Companies 6,513,262 4.1% 1.7%
Directors' intentions
Jane Reedy and Julian Compton have irrevocably undertaken to vote in favour of
the Resolutions in respect of this own beneficial holdings of 40,475,190
Existing Ordinary Shares, representing approximately 25.5 per cent of the
Company's existing share capital.
DEFINITIONS
The following definitions apply throughout this document
unless the context otherwise requires:
'Acquisition' the proposed acquisition by CESI of
the entire issued share capital of DataCash,
'Acquisition the conditional agreement dated 28
Agreement' February 2000 between the Company (1)
and the Vendors (2) relating to the Acquisition
'Act' the Companies Act 1985 (as amended)
'Admission' Admission of the New Ordinary Shares
and re-admission of the Existing Ordinary Shares
to trading on AIM, in accordance with the AIM
Rules
'AIM' the Alternative Investment Market of the London
Stock Exchange
'AIM Rules' the AIM admission rules contained in chapters 16
and 17 of the Rules of the London Stock Exchange
'Board' or the directors of the Company
'Directors'
'City Code' the City Code on Takovers and Mergers
'Collins Stewart' Collins Stewart Limited
'Company' or CORPORATE EXECUTIVE SEARCH
'CESI' INTERNATIONAL PLC
'Completion' completion of the Acquisition in
accordance with its terms or as the context
requires, the date on which such completion takes
place
'Concert Party' together the Vendors
'Consideration the 158,732,000 New Ordinary Shares to be issued
Shares' to be issued credited as fully paid pursuant to
the Acquisition
'CREST' the relevant system (as defined in the
Uncertificated Securities Regulations 1995) in
respect of which CRESTCo Limited is the operator
'DataCash' DataCash Ltd. (company no. 3430157)
'DataCash the holders of options to subscribe
Optionholders' for shares in the capital of DataCash
under the DataCash Share Option Scheme
'DataCash Share the DataCash Unapproved Executive
Option Scheme' Share Option Scheme dated 14 February 2000
'Enlarged Group' the Group as enlarged by the Acquisition
'Existing Ordinary the 158,732,000 Ordinary Shares in
Shares' issue at the date of this announcement
'Extraordinary the extraordinary general meeting of
General Meeting' the Company to be held at 10.00 am on
or 'EGM' 22 March 2000
'Group' or CESI and its subsidiary undertakings
'Existing Group'
'Independent Jane Reedy and Julian Compton
Directors'
'London Stock London Stock Exchange Limited
Exchange'
'New Ordinary Shares' the Placing Shares and the Consideration Shares
'New Warrants' the warrants to subscribe for up to 5 per
cent. of the share capital of the Company as
enlarged by the Acquisition and the Placing
'Optionholders' the holders of options to subscribe
for Ordinary Shares under the Share Option
Scheme
'Ordinary Shares' ordinary shares of 0.1p each in the capital of
the Company
'Panel' The Panel on Takeovers and Mergers
'Placing' the conditional placing by Collins Stewart of the
76,000,000 Placing Shares pursuant to the Placing
Agreement
'Placing the conditional agreement dated 28 February
Agreement' 2000 between Collins Stewart (1), the Company
(2), the Directors and Proposed Director (3)
and Gavin Breeze in his capacity as the seller of
the Sale Shares (4)
'Placing Price' 12p per Placing Share
'Placing Shares' the Subscription Shares and the Sale Shares
'Proposals' the Acquisition, the Placing and the
other matters referred to in the Prospectus
'Proposed Director' Gavin Breeze
'Prospectus' the document to Shareholder dated 28 February
2000
'Sale Shares' the 16,000,000 Consideration Shares which Gavin
Breeze has agreed, pursuant to the Placing
Agreement, to sell under the Placing
'Shareholders' holders of Ordinary Shares
'Share Option The CESI Unapproved Executive Share
Scheme' Option Scheme dated 28 October 1996
'Subscription the 60,000,000 New Ordinary Shares to
Shares' be issued by the Company pursuant to the Placing
'Regulations' the Public Offers of Securities Regulations 1995
'Resolutions' the resolutions set out in the notice of EGM
'UK' the United Kingdom of Great Britain and Northern
Ireland
'Uncertificated' recorded in the relevant register of
or 'in the share or security concerned as
uncertificated being held in uncertificated form in
form' CREST and title to which by virtue of
the Uncertificated Securities Regulations 1995
may be transferred by means of CREST
'Vendors' the vendors of the entire issued share capital of
DataCash pursuant to the Acquisition Agreement
GLOSSARY
The following are terms used in relation to the Internet:
'B2B' the supply by a business of products and/or
services to another business entity
'B2C' the supply by a business of products and/or
services to a consumer
'dot.com' internet based activities
'e-commerce' electronic commerce, including the electronic
conclusion of transactions by means of the
internet
'EDI' electronic data interchange
'e-enabling' the supply of products and/or services that
enable businesses entities to develop e-commerce
activities
'e-tailers' suppliers of retail products and/or services
through e-commerce
'Internet Protocol' the protocol, governing the software
or 'IP' requirements for the transfer of information over
the Internet to enable the information to be
available to a variety of types of computer
operating system
'portals' a website incorporating a search engine and
additional content
'SME market' small and medium sized enterprises
'vTID technology' virtual terminal technology, consisting of a
proprietary software application that enables
parallel processing of transactions through
DataCash's payment gateway
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