Fundraising, Board Changes and Notice of GM
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA, AUSTRALIA, NEW ZEALAND OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION. PLEASE SEE THE IMPORTANT NOTICES AT THE END OF THIS ANNOUNCEMENT AND AT THE START OF THE APPENDIX.
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES IN MICROSAIC SYSTEMSPLC OR ANY OTHER ENTITY IN ANY JURISDICTION. NEITHER THIS ANNOUNCEMENT NOR THE FACT OF ITS DISTRIBUTION, SHALL FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION WITH ANY INVESTMENT DECISION IN RESPECT OF MICROSAIC SYSTEMS PLC.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014 AS RETAINED IN UK LAW PURSUANT TO SECTION 3 EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("MAR"). IN ADDITION, MARKET SOUNDINGS WERE TAKEN IN RESPECT OF THE MATTERS CONTAINED IN THIS ANNOUNCEMENT, WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF INSIDE INFORMATION. THIS INSIDE INFORMATION IS SET OUT IN THIS ANNOUNCEMENT. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN AND SUCH PERSONS SHALL THEREFORE CEASE TO BE IN POSSESSION OF SUCH INSIDE INFORMATION
Microsaic Systems plc
(AIM: MSYS)
(" Microsaic " or "the Company")
Oversubscribed £5.0 million Conditional Placing of 5,000,000,000 New Ordinary Shares at 0.1 pence per share and £0.5 million Conditional Broker Option of up to 500,000,000 New Ordinary Shares at 0.1 pence per share and Broker Warrants
Proposed Board Changes
Notice of General Meeting
Microsaic, the high technology company which develops point-of-need mass spectrometers, designed to improve the efficiency of chemical and biological workflows , announces that it has through Turner Pope Investments (TPI) Ltd ("Turner Pope") conditionally raised £5 million, before expenses, by way of an oversubscribed placing ("Placing") of 5,000,000,000 new Ordinary Shares ("Placing Shares") at a price of 0.1 pence per New Ordinary Share ("Placing Price"). A Conditional Broker Option granted to Turner Pope of up to 500,000,000 New Ordinary Shares ("Broker Option Shares") at a price of 0.1 pence per New Ordinary Share is open until 5.00 p.m. on 22 January 2021.
It is intended that Gerard Brandon will join the Board as Non-executive Chairman and Dr Nigel Burton will join the Board as a Non-executive Director, in each case immediately upon completion of the proposed Placing, at which time the current Non-executive Chairman, Peter Grant and Non-executive Director, Eric Yeatman, will also step down from the Board. Eric Yeatman will be retained as a consultant to the Company.
The Transaction is, amongst other things, conditional upon each of the Resolutions being passed at the forthcoming General Meeting and includes:
-- a Placing with certain institutional and other investors, to raise £5.0 million before expenses through the issue of 5,000,000,000 New Ordinary Shares at the Placing Price of 0.1 pence per New Ordinary Share.
-- the Placing Price is at a discount of approximately 50 per cent. to the closing middle market price of 0.2 pence per Existing Ordinary Share on 15 January 2021, being the latest practicable date prior to the publication of this announcement;
-- a Broker Option whereby the Broker, Turner Pope may conditionally allocate up to 500,000,000 New Ordinary Shares (in addition to the Placing Shares) (the "Broker Option Shares") at the Placing Price in order to give the flexibility to meet any additional demand for New Ordinary Shares arising during the period from the announcement of the Transaction up to 5.00 p.m. on 22 January 2021;
-- the issuance of the Fees Shares, whereby (i) 35,000,000 New Ordinary Shares are to be issued at the Placing Price in respect of the first year of fees due to Turner Pope for the provision of its broking services to the Company and (ii) 85,000,000 New Ordinary Shares are to be issued at the Placing Price in settlement of the first year's fees of the Proposed Directors;
-- the issuance of Broker Warrants, whereby transferable warrants are to be issued to JIM Nominees Limited (as nominee on behalf of Turner Pope) for up to 997,000,000 New Ordinary Shares, equivalent to 20 per cent. of the Placing Shares issued to non-director placees, exercisable at the Placing Price for two years from Admission, as part of the consideration payable to Turner Pope for its services as placing agent to the Transaction;
-- proposed Board changes and proposed directors being appointed on the terms summarised in Section 9 below, and proposed Director Options and Warrants over 750,000,000 New Ordinary Shares on the terms and subject to the performance condition set out in Section 10 below; and
-- a Share Reorganisation, further details of which are set out in Section 5 below, to enable shares to be issued at the Placing Price, which is below the current nominal value of the Ordinary Shares.
The proceeds receivable by the Company from the Transaction on Admission amount to £5.0 million (before expenses) and approximately £4.6 million (net of expenses) (assuming that no Broker Option Shares are issued). If the Broker Option Shares are issued in full, the proceeds receivable by the Company from the Transaction amount to £5.5 million (before expenses) and approximately £5.0 million (net of expenses).
The General Meeting has been convened for 10.00 a.m. on 4 February 2021. As explained in the Notice, due to the current restrictions relating to Covid-19 the meeting will not be held in any particular place, and shareholders will not be entitled to attend the meeting but are encouraged to cast their votes by proxy to arrive no later than 10.00 a.m. on 2 February 2021. Instructions for voting can be found in Section 14 below .
Related Party Transactions
Certain aspects of the Transaction are deemed to constitute related party transactions pursuant to Rule 13 and Rule 16 of the AIM rules. Please see Section 8 of the letter from the Chairman for further information.
Glenn Tracey, Microsaic Systems plc CEO, commented:
"We are delighted to receive substantial support from our existing investors, and a significant number of new investors introduced by Turner Pope. The net funds from the Placing will fund the commercialisation of Microsaic's current miniaturised products and services, provide funds to further develop Microsaic's product and service portfolio and fund general working capital purposes to drive increased revenues by collaborations and revenue sharing opportunities that build and extend our existing sales, marketing and distribution channels."
Reproduced below without material adjustment is the Expected Timetable of Principal Events, Key Statistics and an extract from the Chairman's letter to Shareholders, the full text of which will be contained within the Circular expected to be posted to Shareholders today.
Definitions in this announcement are the same as those included in the Circular.
Enquiries:
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Microsaic Systems plc |
+44 (0) 1483 751 577 |
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Glenn Tracey, CEO |
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Bevan Metcalf, FD
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N+1 Singer (Nominated Adviser & Joint Broker) |
+44 (0)20 7496 3000 |
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Aubrey Powell / George Tzimas (Corporate Finance) |
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Tom Salvesen (Corporate Broking)
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Turner Pope Investments (TPI) Limited (Joint Broker) James Pope (Corporate Broking) Andy Thacker (Corporate Broking) |
+44 (0) 20 3657 0050
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N+1 Singer, which is authorised and regulated in the United Kingdom by the FCA and is a member of the London Stock Exchange, is acting as nominated adviser to the Company for the purposes of the AIM Rules. N+1 Singer is not acting for any other person in connection with the matters referred to in this document and will not be responsible to anyone other than the Company for providing the protections afforded to clients of N+1 Singer or for giving advice in relation to the matters referred to in this document. N+1 Singer has not authorised the contents of this document for any purpose and, without limiting the statutory rights of any person to whom this document is issued, no representation or warranty, express or implied, is made by N+1 Singer as to any of the contents or the completeness of this document and N+1 Singer does not accept responsibility for this document and accordingly disclaims all and any liability, whether arising in tort, contract or otherwise, which it might otherwise be found to have in respect of this document.
Turner Pope, which is authorised and regulated in the United Kingdom by the FCA and is a member of the London Stock Exchange, is acting as placing agent to the Company. Turner Pope is not acting for any other person in connection with the matters referred to in this document and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Turner Pope or for giving advice in relation to the matters referred to in this document. Turner Pope has not authorised the contents of this document for any purpose and, without limiting the statutory rights of any person to whom this document is issued, no representation or warranty, express or implied, is made by Turner Pope as to any of the contents or the completeness of this document and Turner Pope does not accept responsibility for this document and accordingly disclaims all and any liability, whether arising in tort, contract or otherwise, which it might otherwise be found to have in respect of this document.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
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Announcement of the General Meeting |
19 January 2021 |
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Publication and posting of this document and Form of Proxy |
19 January 2021 |
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Latest time and date for exercise of the Broker Option |
5.00 p.m. on 22 January 2021 |
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Latest time and date for receipt of Forms of Proxy for the General Meeting |
10.00 a.m. on 2 February 2021 |
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Time and date of General Meeting |
10.00 a.m. on 4 February 2021 |
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AnnouncementofresultofGeneralMeeting |
4 February 2021 |
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Share Reorganisation effective |
6.00 pm on 4 February 2021 |
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Creation of the deferred shares |
6.00 pm on 4 February 2021 |
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Admission and commencement of dealings in New Ordinary Shares |
8.00 a.m. on 5 February 2021 |
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CREST accounts credited in respect of New Ordinary Shares in uncertificated form |
5 February 2021 |
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Despatch of definitive share certificates in respect of New Ordinary Shares to be issued in certificated form |
week commencing 8 February 2021 |
Notes:
(1) If any of the above times and/or dates change, Shareholders will be notified of the revised times and/or dates by the Company via announcement through a Regulatory Information Service.
(2) All of the above times refer to London time unless otherwise stated.
(3) Admission and dealings in the New Ordinary Shares are conditional on, inter alia, the passing of the Resolutions at the General Meeting.
(4) No new certificates will be issued in relation to the Existing Ordinary Shares.
KEY STATISTICS
Placing statistics
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Existing Ordinary Shares |
456,365,146 |
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Nominal value of Existing Ordinary Shares |
0.25 pence |
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Number of New Ordinary Shares following the Share Reorganisation |
456,365,146 |
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Number of Deferred Shares following the Share Reorganisation |
456,365,146 |
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Nominal value of the New Ordinary Shares following the Share Reorganisation |
0.01 pence |
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Nominal value of the Deferred Shares following the Share Reorganisation |
0.24 pence |
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New Ordinary Shares to be issued as Placing Shares |
5,000,000,000 |
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New Ordinary Shares to be issued in respect of the Fees Shares |
120,000,000 |
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Enlarged issued share capital following the Share Reorganisation and the issue of the Placing Shares and the Fees Shares |
5,576,365,146 |
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Placing Shares and Fees Shares as a percentage of the enlarged issued share capital |
91.8 per cent. |
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Placing Price of New Ordinary Shares to be issued as Placing Shares |
0.10 pence |
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Pro-forma market capitalisation (at the Placing Price) following the Share Reorganisation and the issue of the Placing Shares and the Fees Shares |
£5,576,365 |
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Gross proceeds of the Placing |
£ 5,000,000 |
Note:
These placing statistics assume that no further Ordinary Shares or New Ordinary Shares are issued following the date of this document apart from the Placing Shares and Fees Shares, and that no Broker Option Shares are issued.
Broker Option statistics
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Maximum number of Broker Option Shares |
500,000,000 |
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Maximum additional gross proceeds from the full exercise of the Broker Option |
£500,000 |
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Potential enlarged issued share capital on Admission following the issue of the Placing Shares, Fees Shares and the Broker Option Shares if fully subscribed |
6,076,365,146 |
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Placing Shares and Broker Option Shares as a percentage of the potential enlarged issued share capital on Admission |
92.5 per cent. |
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Note: These Broker Option statistics assume that no further Ordinary Shares or New Ordinary Shares are issued following the date of this document apart from the Placing Shares and the Fees Shares, and the maximum number of Broker Option Shares are issued.
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Fully Diluted Share Capital statistics |
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Number of New Ordinary Shares over which Broker Warrants will be issued |
997,000,000 |
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Number of New Ordinary Shares over which Director Options and Warrants will be issued |
750,000,000 |
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Potential fully diluted share capital assuming that the Broker Warrants and Director Options and Warrants are exercised in full |
7,823,365,146 |
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Note: These fully diluted share capital statistics do not take into account existing employee share options, which in practical terms have no likelihood of being exercised, or any new share options which may be issued to employees under the Company's existing share option schemes and authorities or any future such schemes. |
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IMPORTANT INFORMATION
This Announcement should be read in full, and the Circular, including but not limited to the Risk Factors found in Section 2 of the Circular, should be read in full by those lawfully entitled to be in possession of it. If you are in any doubt about what action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other financial adviser authorised under the Financial Services and Markets Act 2000.
This announcement does not constitute an offer to sell, or the solicitation of an offer to acquire or subscribe for, New Ordinary Shares in any jurisdiction where such offer or solicitation is unlawful or would impose any unfulfilled registration, qualification, publication or approval requirements on the Company, N+1 Singer or Turner Pope.
The New Ordinary Shares have not been, and will not be, registered under the United States Securities Act of 1933 (as amended) (the "Securities Act"), or the securities laws of any state or any other jurisdiction of the United States. The New Ordinary Shares may not be offered or sold, directly or indirectly, in or into the United States (except pursuant to an exemption from, or a transaction not subject to, the registration requirements of the US Securities Act). No public offering of the New Ordinary Shares is being made in the United States. The New Ordinary Shares are being offered and sold only outside the United States in "offshore transactions" within the meaning of, and in reliance on, Regulation S under the Securities Act.
The New Ordinary Shares have not been approved or disapproved by the United States Securities and Exchange Commission, any state securities commission in the United States or any other regulatory authority in the United States, nor have any of the foregoing authorities passed on or endorsed the merits of the Placing and/or the Broker Option or the accuracy or adequacy of the information contained in this announcement. Any representation to the contrary is a criminal offence in the United States.
The securities referred to herein have not been and will not be registered under the applicable securities laws of Australia, Canada, Japan or the Republic of South Africa and, subject to certain exceptions, may not be offered or sold within Australia, Canada, Japan, New Zealand, Ireland or the Republic of South Africa or to any national, resident or citizen of Australia, Canada, Japan, New Zealand Ireland or the Republic of South Africa.
Members of the public are not eligible to take part in the Placing. This announcement is for information purposes only and is being made in circumstances in which section 21(1) of the Financial Services and Markets Act 2000 does not require the approval of the relevant communication by an authorised person.
This announcement is directed only at persons whose ordinary activities involve them in acquiring, holding, managing and disposing of investments (as principal or agent) for the purposes of their business and who have professional experience in matters relating to investments and are: (1) if in a member state of the European Economic Area ("EEA"), qualified investors as defined in Article 2(e) of Regulation (EU) 2017/1129 (the "Prospectus Regulation"); (2) if in the United Kingdom, investors who either (a) fall within article 19(5) of the Financial Services and Markets Act 2000 (financial promotion) Order 2005, as amended (the "Order") (investment professionals); (b) fall within article 49(2)(a) to (d) of the Order (high net worth companies, unincorporated associations, etc); (c) qualified investors as defined in article 2(e) of Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (the "UK Prospectus Regulation"); or (d) persons to whom it may lawfully otherwise be communicated (all such persons together being referred to as "Relevant Persons").
This announcement must not be acted on or relied on by persons who are not Relevant Persons. Persons distributing this announcement must satisfy themselves that it is lawful to do so. Any investment or investment activity to which this announcement relates is available only to Relevant Persons and will be engaged in only with Relevant Persons.
All offers of the Placing Shares in the EEA will be made pursuant to an exemption under the Prospectus Regulation from the requirement to produce a prospectus. All offers of the Placing Shares in the United Kingdom will be made pursuant to an exemption under section 86 of the Financial Services and Markets Act 2000.
This announcement contains (or may contain) certain forward-looking statements with respect to certain of the Company's and/or the Directors' current expectations and projections about future events. These statements, which sometimes use words such as "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning, reflect the directors' beliefs and expectations and involve a number of risks, uncertainties and assumptions that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by any such forward-looking statement. Statements contained in this announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The information contained in this announcement is subject to change without notice and neither N+1 Singer nor Turner Pope nor, except as required by applicable law, the Company assumes any responsibility or obligation to update publicly or review any of the forward-looking statements contained herein. You should not rely on forward-looking statements, which speak only as of the date of this announcement.
INFORMATION TO DISTRIBUTORS
Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended and as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018; and (c) the FCA Rules (together, the "Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that such securities are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment"). Notwithstanding the Target Market Assessment, distributors should note that: the price of the Placing Shares may decline and investors could lose all or part of their investment; the Placing Shares offer no guaranteed income and no capital protection; and an investment in the Placing Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Placing.
For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II or the FCA Rules; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Placing Shares.
Each distributor is responsible for undertaking its own target market assessment in respect of the Placing Shares and determining appropriate distribution channels.
EXTRACT FROM THE CHAIRMAN'S LETTER TO SHAREHOLDERS
BACKGROUND
On 29 July 2020, the Company announced that it had appointed BDO LLP as its financial adviser to undertake a Strategic Review, including a formal sale process as defined under the City Code on Takeovers and Mergers.
On 22 December 2020 , the Company announced the end of the formal sale process and the appointment of KRE Corporate Recovery Limited ("KRE") to offer the business and assets of the Company for sale, a process expected to run until around the end of January 2021 . The announcement noted that:
"At this time, no party has been identified which is prepared to make an offer for the Company, or its business and assets and there can be no certainty that any transaction will be concluded, nor as to the terms on which any form of transaction would be made. A sale of the business and assets might involve an administration process."
"It is possible (but not certain) that a sale of the Company's business and assets may be effected following the appointment of an administrator. In the event that KRE identifies that the sale of the Company's business and assets is unlikely to generate incremental value for creditors or other stakeholders, the Board would have to initiate steps to appoint a liquidator to wind-up the Company's affairs. Any appointment of an administrator or liquidator would be likely to trigger immediate suspension of the Company's shares from admission to trading on AIM. In addition, if the Company were to go into administration or liquidation, additional costs would be incurred and liabilities may accelerate or crystallise which would diminish the potential realisations for stakeholders. "
With the announcement of the Transaction today and the likelihood of substantial funding being available to the Company through the Placing, the Board has halted the process which was being run by KRE.
COMPANY OVERVIEW
About the Company
Founded in 2001, Microsaic Systems is a high technology company which develops point-of-need mass spectrometers ("MS"), designed to improve the efficiency of chemical and biological workflows.
The Company was initially established to develop miniaturised MS instruments based on micro-electro-mechanical systems (MEMS) technology originating at the highly regarded Optical and Semiconductor Devices Group at Imperial College London.
The Company has been based at headquarters in Woking, UK since September 2004 and its shares were admitted to trading on AIM in April 2011.
Since being established in 2001, the Company has invested substantially in core intellectual property specific to its miniaturised MS, with over 60 patents in chip based, compact MS. The Company has sold over 160 instruments to date.
To date the Company has signed over ten commercial partners, including in North America, Europe, China, SE Asia and Japan, with the majority of signings occurring in 2018 and 2019.
Recent trading
In 2019 the Company increased its revenues by over 50 per cent. compared with 2018, and significantly improved its margins in the second half of 2019 through focus on key markets and targeted sales.
As announced with the interim results on 2 September 2020, despite the significant progress made in 2019, the performance in H1 2020 was significantly impacted by the COVID-19 pandemic, with travel restrictions, many customer sites being closed and investment decisions postponed. These conditions also prevailed throughout the second half of 2020.
Faced by these unprecedented conditions, the Company's Directors and employees have supported steps taken to protect the future of the Company by agreeing to a temporary pay reduction and home working where possible. In addition, costs were saved during 2020 by making use of the UK Government's furlough scheme and a number of staff and non-payroll cost reductions were implemented, whilst retaining appropriate skills and resources to be able to continue to sell products and to support new and existing customers and partners.
As a result of the COVID-19 pandemic, revenues in the first half year of 2020 were focused on the continuing sales of consumables, spare parts and service and support income to existing customers and partners and totalled 72k (H1 2019: 328k).
In the second half of 2020, although two unit sales were made, revenues continued to be focussed on the continuing sales of consumables, spare parts and service and support income to existing customers and partners. However, a growing pipeline of opportunities has been generated especially in markets which are currently less affected by the COVID-19 pandemic.
As at 31 December 2020, the Company had net cash of approximately £398k and t he business has continued to be operated in a manner which conserves cash in order to protect the interests of creditors and other stakeholders .
USE OF PROCEEDS
The Company intends to use the funds raised from the Transaction to:
i. fund the commercialisation of Microsaic's current miniaturised products and services;
ii. provide funds to further develop Microsaic's product and service portfolio; and
iii. fund general working capital purposes.
Following the completion of the proposed Transaction, the new Board of Directors will explore options that may contribute to lower development costs and have the potential to increase higher value recurring revenue streams that include:
•collaboration, co-operation and joint development partnerships based on further advances to the Microsaic technology;
•investigation of greater use of maintenance contracts which are treated as operating expenditure for clients;
•development and in-licence of new services that offer advanced data aggregation and analysis which may support an increase in average revenue per client; and
•extending sales, marketing and distribution agreements on a shared revenue basis with existing clients and external partners in the life sciences and environmental services sector.
This reflects a belief that a natural next step for the Company goes beyond just selling equipment and includes many service-based opportunities across life and environmental science, with distribution channel partners which can provide global reach and form part of a supply chain that contributes to solving large scale problems.
INFORMATION ON THE TRANSACTION
Details of the Share Reorganisation
The Placing Price is below the nominal value of the Existing Ordinary Shares. The Company is not permitted by law to issue shares at a price which is below their nominal value. Therefore, in order to create a nominal value for a share which is below the Placing Price, the Board is proposing the Share Reorganisation. The proposed Share Reorganisation will comprise:
a) the sub-division and re-designation of every Existing Ordinary Share of 0.25 pence each into: (i) one (1) ordinary share of 0.01 pence each; and (ii) twenty-four (24) deferred share of 0.01 pence each; and
b) the immediate consolidation of every twenty four (24) deferred shares of 0.01 pence each arising under (a) above into one (1) deferred share of 0.24 pence.
Each New Ordinary Share will carry the same rights as each Existing Ordinary Share does at present under the Existing Articles. No new certificates will be issued in relation to the Existing Ordinary Shares, and the existing share certificates will remain valid entitling the registered holder to the same number of New Ordinary Shares. If you hold your Existing Ordinary Shares in uncertificated form (that is, in CREST), you should expect to have your CREST account adjusted to reflect your entitlement to New Ordinary Shares as soon as practicable after the Share Reorganisation takes effect. Existing Ordinary Shares credited to any stock account in CREST will be disabled and all Existing Ordinary Shares will be removed from CREST in due course.
Each Deferred Share will have very limited rights and will effectively be valueless. CREST accounts of Shareholders will not be credited in respect of any entitlement to Deferred Shares and no share certificates will be issued in respect of Deferred Shares.
The Deferred Shares will have the rights and restrictions as set out in the Amended Articles (as such term is defined in the Notice), which do not entitle their holders to receive notice of or attend or vote at any general meeting of the Company or to receive a dividend or other distribution and provide the Company will the authority to transfer them at effectively nil consideration per Deferred Share to a custodian nominated by the Company.
Immediately following the passing of all of the Resolutions, the Company will implement the Share Reorganisation and make an application for admission of its New Ordinary Shares to trading on AIM, including the Placing Shares, the Fees Shares and any Broker Option Shares.
Details of the Placing
The Placing is conditional, inter alia, on:
(i). all the Resolutions being passed without amendment at the General Meeting;
(ii). the Company allotting, subject only to Admission, the Placing Shares and the Broker Option Shares (if any) in accordance with the Placing Agreement;
(iii). Admission becoming effective by no later than 8.00 a.m. on 5 February 2021 (or such other time and/or date, being no later than 8.00 a.m. on 19 February 2021, as N+1 Singer, Turner Pope and the Company may agree);
(iv). the conditions in the Placing Agreement being satisfied or (if applicable) waived; and
(v). the Placing Agreement not having been terminated in accordance with its terms prior to Admission.
The Placing Shares will be credited as fully paid and will rank pari passu in all respects with the New Ordinary Shares then in issue, including the right to receive all future distributions, declared, paid or made in respect of the New Ordinary Shares from the date of Admission. The Placing Shares will represent approximately 89.7 per cent. of the Enlarged Issued Share Capital, if no Broker Option Shares are issued.
None of the Directors nor the Company give any warranty or undertaking that a subscription for VCT/EIS Shares (i) is a qualifying holding for the purposes of Part 6 of the Income Tax Act 2007, or that such qualifying status will not be withdrawn; or (ii) would be regarded as "eligible shares" for the purposes of Part 5 of the Income Tax Act 2007, nor do they warrant or undertake that the Company will conduct its activities in a way that qualifies for or preserves its status or the status of any investment in New Ordinary Shares. Investors considering taking advantage of any of the reliefs available to VCTs or under EIS should seek their own professional advice in order that they may fully understand how the rules apply in their individual circumstances and what they are required to do in order to claim any reliefs (if available). As the rules governing VCT and/or EIS reliefs are complex and interrelated with other legislation, if any potential investors are in any doubt as to their tax position, require more detailed information than the general outline above or as set out in Part 2 of this document, or are subject to tax in a jurisdiction other than the UK, they should consult their professional advisers.
Application will be made for the Placing Shares, the Fees Shares and the Broker Option Shares (if any) to be admitted to trading on AIM following the approval of the Resolutions. The Placing is expected to become effective by no later than 8.00 a.m. on 5 February 2021. Settlement of the Placing Shares and Broker Option Shares (if any) is expected to take place within the CREST system following Admission.
It is expected that CREST accounts of the Placees who hold their Ordinary Shares in CREST will be credited with their Placing Shares and/or Broker Option Shares (if any) on 5 February 2021. In the case of Placees holding Ordinary Shares in certificated form, it is expected that certificates will be dispatched during the week commencing 8 February 2021.
The Placing is not being underwritten and the Placing Shares and Broker Option Shares are not subject to clawback.
Details of the Broker Option
The Company has granted the Broker Option to Turner Pope to enable the Company to raise additional funds in the event of there being additional demand under the Placing. The Broker Option enables Turner Pope to procure subscribers for up to 500,000,000 Broker Option Shares, at the Placing Price, which they may use to satisfy additional demand for New Ordinary Shares. Turner Pope may exercise the Broker Option during the period from the date of this document (on more than one occasion if partially exercising) at any time up to 5.00 p.m. on 22 January 2021. The allotment and issue of the Broker Option Shares is subject to the Placing proceeding and all Resolutions having been passed, amongst other things.
Any issue of Broker Option Shares will be made on the same terms and conditions as the issue of the Placing Shares. The Broker Option Shares are not being offered to the public and are not being offered or sold in any jurisdiction where it would be unlawful to do so.
The Broker Option Shares, if and when issued, will be credited as fully paid and will rank pari passu in all respects with the New Ordinary Shares then in issue, including the right to receive all future distributions, declared, paid or made in respect of the New Ordinary Shares from the date of Admission. If the Broker Option is fully exercised, the Broker Option Shares arising will represent approximately 8.2 per cent. of the Enlarged Issued Share Capital as further increased by the full issuance of the Broker Option Shares.
Details of the Fees Shares
The Fees Shares comprise:
(a) 35,000,000 New Ordinary Shares to be issued at the Placing Price in respect of £35,000 in the first year of fees, paid in advance, due to Turner Pope for the provision of its broking services to the Company following Admission, upon which it will be appointed as joint broker to the Company; and
(b) 85,000,000 New Ordinary Shares to be issued at the Placing Price in respect of the first year's fees of the Proposed Directors, paid in advance, as set out in Section 9.
The issue of the Fees Shares reflects the agreement of Turner Pope and the Proposed Directors, in each case under the terms of the relevant agreements with the Company described below, to accept New Ordinary Shares in satisfaction of amounts owed to them by the Company for the provision of services. The Fees Shares will be issued shortly following Admission, credited as fully paid and will rank pari passu in all respects with the New Ordinary Shares then in issue, including the right to receive all future distributions, declared, paid or made in respect of the New Ordinary Shares from the date of Admission. The Fees Shares will represent approximately 2.2 per cent. of the Enlarged Issued Share Capital, if no Broker Option Shares are issued, or approximately 2.0 per cent. of the Enlarged Issued Share Capital as further increased if the Broker Option is exercised in full.
Details of the Broker Warrants
Pursuant to the terms of the Broker Warrant Instrument, the Company will, conditional upon Admission, grant to JIM Nominees Limited (as nominee on behalf of Turner Pope) warrants to subscribe for up to 997,000,000 New Ordinary Share, which represents 20 per cent. of the Placing Shares excluding Director subscriptions. The exercise price of the Broker Warrants shall be the Placing Price and the Broker Warrants shall be capable of exercise for a period of two years from Admission. The Broker Warrants will not be listed, but are transferable and any transfers must be registered with the Company. The Broker Warrants are exercisable by new holders on the same terms as they could be exercised by Turner Pope, subject to such new holders having been registered as warrant holders in accordance with the transfer terms of the Warrant Instrument.
PLACING AGREEMENT
The Company has entered into the Placing Agreement with each of N+1 Singer and Turner Pope, pursuant to which N+1 Singer has agreed to act as nominated adviser in connection with the Transaction and Turner Pope has agreed (as the Company's placing agent) to use reasonable endeavours to procure placees for the Placing Shares at the Placing Price. The Company has also granted the Broker Option to Turner Pope, although Turner Pope is not obliged to use reasonable endeavours to procure placees for Broker Option Shares. The Placing Price represents a discount of approximately 50 per cent. to the closing mid-market price of 0.2 pence per Ordinary Share on 15 January 2021, being the latest practicable date prior to the publication of this document.
The Placing Agreement contains customary warranties given by the Company to N+1 Singer and Turner Pope as to matters relating to the Company and its business and a customary indemnity given by the Company to N+1 Singer and Turner Pope in respect of liabilities arising out of or in connection with the Transaction. Each of N+1 Singer and Turner Pope is entitled to terminate the Placing Agreement in certain circumstances prior to Admission, including circumstances where any of the warranties are found not to be true or accurate or to be misleading in any respect or on the occurrence of certain force majeure events.
The Placing Shares are not being offered to the public and are not being offered or sold in any jurisdiction where it would be unlawful to do so.
DIRECTORS' AND PROPOSED DIRECTORS' PARTICIPATION IN THE PLACING AND THEIR RESULTING INTERESTS IN THE COMPANY
The Executive Directors and Proposed Directors propose to subscribe for an aggregate of 135,000,000 Placing Shares, representing approximately 2.7 per cent. of the Placing Shares. Immediately following Admission (assuming the issue of the Fees Shares but that no Broker Option Shares are issued), the Executive Directors and Proposed Directors will together hold an aggregate of 222,350,000 Ordinary Shares, representing 3.99 per cent. of the Enlarged Issued Share Capital, as set out in the table below. This figure decreases to 3.66 per cent. of the Enlarged Issued Share Capital as further increased if the Broker Option is exercised in full.
|
Director |
Number of Ordinary Shares held as at the date of this document |
Number of |
Number of
|
Resulting |
Resulting |
|
|
Executive Directors |
|
|||||
|
Glenn Tracey |
800,000 |
5,000,000 |
- |
5,800,000 |
0.10% |
|
|
Bevan Metcalf |
1,050,000 |
10,000,000 |
- |
11,050,000 |
0.20% |
|
|
Proposed Directors |
|
|||||
|
Gerard Brandon |
0 |
90,000,0002 |
50,000,000 |
140,000,000 |
2.51% |
|
|
Dr. Nigel Burton |
500,000 |
30,000,000 |
35,000,000 |
65,500,000 |
1.17% |
|
1 The above excludes the 9,420,000 unexercised but out-of-the-money options over Ordinary Shares held at the date of this document by Directors Glenn Tracey and Bevan Metcalf, as disclosed in the 2019 Annual Report. The intention is that these options will be cancelled prior to the options described in Section 10 below being granted.
2 This figure includes a subscription of 50,000,000 shares by a person closely associated with Gerard Brandon.
RELATED PARTY TRANSACTIONS
The Directors' and the Proposed Directors' aggregate participation in the Placing and their aggregate incentivisation arrangements set out in Sections 9 and 10 below are deemed to constitute a related party transaction pursuant to Rule 13 and Rule 16 of the AIM Rules.
Furthermore, Unicorn Asset Management, a substantial shareholder in the Company (and therefore a related party of the Company for the purposes of the AIM Rules), has subscribed for 600,000,000 Placing Shares at the Placing Price. The participation by Unicorn Asset Management in the Placing is deemed to be a related party transaction pursuant to Rule 13 of the AIM Rules.
The Director independent of the Placing and the incentivisation arrangements, being Peter Grant (Non ‐ executive Chairman), considers, having consulted with the Company's nominated adviser that the terms of the Directors' and the Proposed Directors' aggregate participation and incentivisation arrangements, and those of the participation of Unicorn Asset Management in the Placing, are fair and reasonable insofar as the Company's shareholders are concerned.
PROPOSED BOARD CHANGES
Conditional on the approval of the Resolutions at the General Meeting and Admission, and subject always to the satisfactory discharge by N+1 Singer of its obligations under the AIM Rules for Nominated Advisers in respect of the board changes, it is intended that Gerard Brandon will join the Board as Non-executive Chairman and Dr. Nigel Burton will join the Board as a Non-executive Director, in each case immediately upon completion of the proposed Placing, also at which time the current Non-executive Chairman, Peter Grant and Non-executive Director, Eric Yeatman, will step down from the Board. Eric Yeatman will be retained as a consultant. Peter Grant will receive three months' pay in lieu of notice on stepping down as a Director in line with his service agreement. Eric Yeatman will receive no termination payment for stepping down as a Director.
The proposed board recognises the importance of good governance arrangements. Following the changes detailed above, the Board intends to initiate a process to identify and appoint an independent Non-executive Director with a view to making an appointment as soon as reasonably practicable and ideally within 6 months following Admission, subject to finding an appropriate candidate with relevant experience. Further consideration will be given to appointing a second independent Non-executive Director following the anniversary of completion of the Transaction and before the Company's 2022 annual general meeting.
On their appointment to the Board, it is proposed that both the Finance & Audit and Remuneration Committees will be chaired by Dr. Nigel Burton, and Gerard Brandon will be a member of both committees. Dr. Nigel Burton will assume the responsibilities of Senior Non-Executive Director. These arrangements will be reviewed when an independent Non-executive Director joins the Board.
Gerard Brandon
Gerard Brandon is Chief Executive Officer of both DeepVerge plc and Cellulac plc. In 1996 he became founder and CEO of Alltracel Pharmaceuticals PLC, where he built a team that oversaw numerous patents granted on refined cellulose. Alltracel was admitted to trading on AIM in 2001. In 2004, he was appointed as a Managing Partner for Farmabrand Private Equity. In March 2020, he was appointed as a Non-executive Chairman to Modern Water plc, which was subsequently acquired by DeepVerge plc in November 2020. He is a Fellow of the Ryan Academy of Entrepreneurs in Dublin.
Dr. Nigel Burton
Following over 14 years as an investment banker at leading City institutions including UBS Warburg and Deutsche Bank, including as the Managing Director responsible for the energy and utilities industries, Nigel spent 15 years as Chief Financial Officer or Chief Executive Officer of a number of private and public companies. Nigel is currently a Non-executive Director of LSE listed BlackRock Throgmorton Investment Trust plc as well as AIM quoted companies Digitalbox plc, eEnergy Group plc and Mobile Streams plc. In February 2020, he was appointed as a Non-executive Director of Modern Water plc, which was subsequently acquired by DeepVerge plc in November 2020 following which he became a Non-executive Director of DeepVerge plc.
Proposed remuneration and terms for the Proposed Directors
|
Proposed Director |
Position |
Appointment term |
Annual Remuneration |
Number of Fees Shares to be issued on Admission for first year of service |
Number of New Ordinary Shares to be issued for second year of service |
Number of Director Warrants to be issued (see Section 10 below) |
|
Gerard Brandon |
Non-executive Chairman |
Three years, subject to three months' notice* |
£50,000 |
50,000,000 |
50,000,000 |
250,000,000 |
|
Nigel Burton |
Non-executive Director, Chairman of the Finance & Audit Committee and Chairman of the Remuneration Committee |
Three years, subject to three months' notice* |
£35,000 |
35,000,000 |
35,000,000 |
200,000,000 |
* Notice cannot be given by the Proposed Directors during the first two years of their appointment except to the end of the period to which their fees have been paid in advance.
Summary details of the letters of appointment to be entered into between the Company and each of the Proposed Directors prior to Admission are set out below:
· To make the most effective use of the proceeds, each of the Proposed Directors has agreed that for each of the first two years of their appointment, the relevant fee will be paid annually in advance and the cash payment owed by the Company to each of the Proposed Directors will be satisfied by the issue of such number of New Ordinary Shares as equals the annual remuneration set out in the table above divided by the Placing Price ("Director Fees Shares"), subject to payment by the Proposed Director of all necessary employee's taxes and social charges. Thereafter, fees will be paid in cash monthly in arrears.
· It is intended that the gross fees for the entire first year will be satisfied by issuing New Ordinary Shares to each of the Proposed Directors at the Placing Price on Admission, with each of the Proposed Directors reimbursing the Company in cash for the employee national insurance and PAYE taxes due in respect of those fees. A similar mechanism will apply for the second year fees.
· In the event that the appointment of a Proposed Director terminates for any reason within the first or second year of service, the relevant Proposed Director will reimburse the Company in cash for the gross value of any over-payment for that year calculated on a pro-rata basis.
· The appointment of each Proposed Director is for an initial term of three years and can be terminated by either party upon three months' notice (although the Proposed Directors cannot give notice to terminate their appointment prior to the end of any twelve-month period during which they have been remunerated annually in advance in shares) or immediately by the Company in certain circumstances.
· In the event that a third-party takes direct or indirect beneficial ownership of more than 50 per cent. of the share capital, voting rights or assets of the Company or the right to direct the affairs of the Company (a "Change of Control") for a consideration per share which is at least a 100% premium to the Placing Price, the annual fees for the second year's service (to the extent that any amount has not already been paid) will become payable by the Company in cash as soon as the transaction leading to the Change of Control becomes unconditional and any reimbursement obligation of advance payment shall not apply in the event of termination after the Change of Control. This payment will be satisfied by the issuance to the Proposed Directors of Director Fees Shares.
The terms of appointment for each of Glenn Tracey and Bevan Metcalf remain as reported in the 2019 Annual Report. A temporary 20 per cent. reduction in pay implemented in April 2020 for all Directors and employees will cease to have effect from the date of Admission and for payments made after that time their remuneration, including that of Glenn Tracey and Bevan Metcalf, will revert to their normal contractual pay.
PROPOSED DIRECTOR OPTIONS AND WARRANTS
To incentivise the new Board appropriately, the following Director Options and Warrants will be awarded subject to the Transaction being unconditional in all respects save for Admission. These options and warrants will be exercisable at the Placing Price for 5 years from the Admission, provided that the New Ordinary Shares have traded at a Volume Weighted Average Price (VWAP) at or above a 50 per cent. premium to the Placing Price for 20 consecutive Business Days, or on a change of control of the Company.
|
Director |
Number of New Ordinary Shares subject to Director Options |
Number of New Ordinary Shares subject to Director Warrants |
|
Glenn Tracey |
150,000,000 |
|
|
Bevan Metcalf |
75,000,000 |
|
|
Eric Yeatman1 |
|
75,000,000 |
|
Gerard Brandon |
|
250,000,000 |
|
Dr. Nigel Burton |
|
200,000,000 |
1 Following completion of the Transaction, Professor Eric Yeatman, a founder director of the Company, will step down from the Board but will be retained as a consultant.
The Director Options and Warrants will be subject to the terms of the Company's Share Option Schemes, which contains customary conditions including in respect of good/bad leavers and change of control of the Company.
In aggregate, the 750,000,000 New Ordinary Shares subject to Director Options and Warrants represent 13.4 per cent. of the Enlarged Issued Share Capital (i.e. after the issue of the Placing Shares and the Fees Shares). This figure reduces to 9.6 per cent. of the Enlarged Issued Share Capital as further increased by the exercise in full of the Broker Option, the Broker Warrants, and the Director Options and Warrants (and assuming no other issuance, including such as that which may arise from the exercise of other options which may be granted to other employees in future).
SELLING SHAREHOLDER
Turner Pope has agreed (as the Selling Shareholder's agent) to use reasonable endeavours to procure placees for the Sale Shares at the Placing Price. The placing of the Sale Shares is conditional on Admission. The Placing is not conditional on the placing of the Sale Shares. The Selling Shareholder has undertaken to the Company and Turner Pope that it will vote all the Ordinary Shares it controls in favour of the Resolutions.
RISK FACTORS
The attention of Shareholders is drawn to the risk factors set out in Part 2 of this document, which provide additional information on the Transaction and the context in which it is taking place.
GENERAL MEETING
A Notice convening the General Meeting for 10.00 a.m. on 4 February 2021 is set out at the end of this document. The business to be considered at the General Meeting is set out in the Notice.
Explanation of the Resolutions
The Placing Price is below the nominal value of the Existing Ordinary Shares. The Company is not permitted by law to issue shares at a price which is below their nominal value. Additionally, the Company does not currently have sufficient authority to allot shares under the Companies Act 2006 (the "Act") to effect the Transactions. Accordingly, the Resolutions, summarised below, are being proposed at the General Meeting to approve the Share Reorganisation and to ensure that the Directors have sufficient authority to allot and issue the New Ordinary Shares to be issued on a non-pre-emptive basis.
Resolution 1 is a special resolution, the passing of which is conditional on the passing of Resolutions 2 to 6, to amend the articles of association of the Company to reflect the rights and restrictions attaching to the Deferred Shares;
Resolution 2 is an ordinary resolution, the passing of which is conditional on the passing of Resolutions 1 and 3 to 6, to approve the sub-division, re-designation and consolidation of each Ordinary Share into (a) one ordinary share of 0.01 pence each in the capital of the Company and (b) one (1) deferred share of 0.24 pence in the capital of the Company;
Resolution 3 is an ordinary resolution, the passing of which is conditional on the passing of Resolutions 1, 2 and 4 to 6, to grant the Directors authority pursuant to section 551 of the Act to issue equity securities up to an aggregate nominal amount of £800,000;
Resolution 4 is a special resolution, the passing of which is conditional on the passing of Resolutions 1 to 3 and 5 and 6, to empower the Directors, pursuant to section 570 of the Act, to allot equity securities up to a maximum aggregate nominal amount of £800,000 on a non-pre-emptive basis (i) pursuant to the Transaction; (ii) for the purpose of issuing Director Fees Shares for the Proposed Directors' second year of service; (iii) to grant further options and/or warrants under the Company's Share Option Schemes; (iv) for general corporate purposes; and/or (v) for acquisitions or specified capital investments;
Resolution 5 is an ordinary resolution, the passing of which is conditional on the passing of Resolutions 1 to 4 and 6, to approve the appointment of Gerard Brandon as a director of the Company; and
Resolution 6 is an ordinary resolution, the passing of which is conditional on the passing of Resolutions 1 to 5, to approve the appointment of Nigel Burton as a director of the Company.
The authorities to be granted to the Directors by the Resolutions will be in addition to the authority to allot shares given at the Company's annual general meeting held on 25 June 2020 and will only be used in connection with the Transaction.
Resolutions 2, 3, 5 and 6 are ordinary resolutions and require a majority of more than 50 per cent. of the Shareholders voting to be passed. Resolutions 1 and 4 are special resolutions and require the approval of not less than 75 per cent. of the Shareholders voting to be passed.
ACTION TO BE TAKEN
In respect of the General Meeting
A Form of Proxy for use at the General Meeting is enclosed with this document. You are requested to return the duly completed Form of Proxy to the Company's registrars, Neville Registrars Limited, Neville House, Steelpark Road, Halesowen, B62 8HD or email to info@nevilleregistrars.co.uk as soon as possible and in any event, so as to be valid, to arrive before 10.00 a.m. on 2 February 2021.
Under normal circumstances, the Board greatly values the opportunity to meet the Company's Shareholders in person. However, as a result of the public safety measures introduced in response to the COVID-19 pandemic, and measures relating to the conduct of general meetings recently introduced by the Corporate Insolvency and Governance Act, the Board is adopting a number of changes to the traditional running of a General Meeting.
The meeting will not be held in any particular place, and shareholders will not be entitled to attend the meeting. Therefore, the Company strongly encourages all Shareholders to submit their Form of Proxy, appointing the Chairman of the General Meeting as proxy.
Should a Shareholder have a question that they would have raised at the General Meeting, the Company asks that it be sent to info@microsaic.com by 10.00 a.m. on 2 February 2021. The Company will publish relevant questions received, together with answers, on the Company's website as soon as practicable after the deadline for receipt. The questions may be grouped into generic classes as the Board deems appropriate and answers will not include any price-sensitive information that has not previously been made public in a Regulatory News Service announcement ("RNS").
Shareholders can vote on the General Meeting resolutions without being physically present by appointing the Chairman of the General Meeting as their proxy to attend the General Meeting and vote on their behalf. A hard copy Form of Proxy is enclosed for use at the General Meeting. The Company recommends that shareholders complete, sign and return a Form of Proxy to the Company's registrars Neville Registrars Limited, at Neville House, Steelpark Road, Halesowen, West Midlands B62 8HD. Forms of Proxy must be returned so as to be received by Neville Registrars Limited by 10.00 a.m. on 2 February 2021. Further details as to how to complete and return a Form of Proxy are set out in the notes to the Notice at the end of this document and also on the Form of Proxy itself. Forms of proxy may be sent either by post or to info@nevilleregistrars.co.uk.
At the General Meeting, instead of the usual practice of each Resolution being voted on initially by a show of hands, the Chairman of the General Meeting shall exercise his right to demand a poll on each Resolution which shall be taken immediately. This will enable those votes cast by those shareholders of the Company who have submitted a Form of Proxy to be recorded and used as the basis for determining whether or not a Resolution has been passed at the General Meeting. Results of the votes cast on each Resolution will be disclosed in the RNS that follows the General Meeting confirming the outcome of the General Meeting.
RECOMMENDATION
The Directors consider that the Transaction is in the best interests of the Company and its Shareholders as a whole and unanimously recommend that Shareholders vote in favour of the Resolutions, as each Board member intends to do in respect of his own beneficial holdings of Ordinary Shares, which in aggregate represent 1.59 per cent. of the Ordinary Shares in issue at 15 January 2021, being the latest practicable date prior to the publication of this document.
The Transaction is conditional, inter alia, upon the passing of the Resolutions at the General Meeting. Shareholders should be aware that if the Resolutions are not approved at the General Meeting, the Transaction will not proceed in any respect. If the Transaction does not proceed, and in the absence of any other transaction, the Company would be likely to be placed into administration or liquidation (see Section 2 above for recent developments). In such circumstances, there can be no assurance that Shareholders would realise any value for their shares in the Company. Shareholders are therefore urged to vote in favour of the Resolutions, which the Directors consider to be in the best interests of the Shareholders of the Company as a whole.
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