Placing, Asset Swap & Proposed Open Offer
SPARK Ventures plc
21 July 2015
Placing, Asset Swap & Proposed Open Offer of up to £17 million,
Proposed Change to Investing Policy & Investment Manager,
and Proposed Share Consolidation & Adoption of New Articles.
The Board of SPARK Ventures plc, the investor in early stage digital information and technology companies ("SPARK"), is pleased to announce that it has successfully raised approximately £10.1 million from a Placing of new Ordinary shares arranged by Liberum Capital Limited ("Liberum") and finnCap Limited ("finnCap"), a further £3.8 million via asset swaps and proposes to raise up to an additional £3.1 million from an Open offer of new Ordinary shares, in order to pursue a new investment strategy in partnership with Gresham House plc ("GH"), the specialist asset management group. It is the intention of the board of SPARK to appoint Liberum as joint corporate broker following the successful completion of the Placing.
SPARK proposes to appoint GH as its new investment adviser, replacing its existing manager SPARK Venture Management Holdings Limited ("SVMH"), in order to pursue its Strategic Public Equity ("SPE") investment strategy. The SPE strategy targets superior long-term investment returns through applying private equity techniques to investing in public markets. GH will focus on inefficient areas of the market, taking influential block stakes in smaller companies and then constructively engage to identify value creation catalysts. GH also has the ability to invest a limited amount in private equity which will include selective venture capital investments.
GH has also agreed heads of terms with SVMH with the intention in principle to acquire a majority stake in the business.
In addition, SPARK is pleased that existing shareholders together with GH have also agreed to inject a limited number of selective shareholdings into the enlarged SPARK to the value of approximately £3.8 million. These companies have the characteristics that have historically generated strong returns including potentially supporting management in shareholder value creating strategies.
Thomas Teichman, the founder of SPARK and chairman of SVMH, will join the Investment Committee of GH's SPE team. All these transactions are subject to shareholder approval at the General Meeting to be held on 6 August 2015.
SPARK will also consolidate its share capital on a 1:200 basis.
Announcing these key strategic moves, the chairman of SPARK, David Potter, said - "Over the past six years we have succeeded in tripling shareholder value in SPARK, and in recent months we have been seeking to develop a new corporate strategy which will both maximise the value of our existing assets and continue to create similarly high levels of shareholder value in the future. We believe that our proposed partnership with GH will enable us to deliver those objectives, and we have a high degree of confidence, in GH's ability to execute this strategy as our new Investment Manager, with the Board also personally committing to participate through the open offer alongside the Gresham team in the fundraising.
"The successful placing has enhanced the strength and quality of our shareholder base, and we have been much encouraged by the enthusiasm our new and existing shareholders have shown for these strategic changes. We also want to give our many loyal private shareholders the opportunity to participate in these exciting developments, and the Open Offer will allow them to do so. For those who decide not to participate we will establish a dealing facility following the General Meeting for smaller shareholders to allow them to sell easily."
Gresham House's Chief Executive, Anthony Dalwood, added - "Securing our first investment mandate is an exciting step for Gresham House as we deliver on our plans to develop as a specialist asset manager of differentiated and illiquid alternative investment strategies. SPARK provides an ideal platform for us to execute our Strategic Public Equity investment strategy.
"The SPARK board is supportive of our plan to deploy the initial capital raised and then to scale the company in a staged approach. The positive feedback from the narrow group of investors we have seen recently is extremely encouraging and we believe there will be strong interest from Family Offices and Private Wealth Managers in addition to institutions."
For further information, please contact:
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SPARK Ventures plc |
David Potter/ Andrew Betton
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07478 189 178 |
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Gresham House plc |
Anthony Dalwood |
020 3837 6272
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finnCap |
Matt Goode/ Emily Watts
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020 7220 0500 |
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Attila Consultants |
Charles Cook/ Sorrel Davies
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020 7947 4489 or 07710 910563 |
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Liberum |
Peter Tracey/ Neil Elliot/ Clayton Bush |
020 3100 2199 |
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
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2015 |
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Record Date for entitlement upon the Open Offer |
6.00 p.m. on 16 July |
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Announcement of the Fundraising and posting of the Circular, Application Form and Form of Proxy |
21 July |
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Ex-entitlement date of the Open Offer |
8.00 a.m. on 21 July |
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Open Offer Entitlements and Excess CREST Open Offer Entitlements credited to stock accounts of Qualifying CREST Shareholders |
8.00 a.m. on 22 July |
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Recommended latest time for requesting withdrawal of Open Offer Entitlements and Excess CREST Open Offer Entitlements from CREST |
4.30 p.m. on 28 July |
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Latest time and date for depositing Open Offer Entitlements and Excess CREST Open Offer Entitlements into CREST |
3.00 p.m. on 29 July |
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Latest time and date for splitting Application Forms (to satisfy bona fide market claims only) |
3.00 p.m. on 31 July |
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Latest time and date for receipt of completed Application Forms and payment in full under the Open Offer and settlement of relevant CREST instructions (as appropriate) |
11.00 a.m. on 4 August |
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Latest time and date for receipt of the Form of Proxy or CREST Proxy Instruction for the General Meeting |
10.00 a.m. on 4 August |
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Announcement of result of the Open Offer |
5 August |
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General Meeting |
10.00 a.m. on 6 August |
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Announcement of result of the General Meeting |
6 August |
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Record date for Share Consolidation |
4:30 p.m. 6 August |
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New Ordinary Shares admitted to trading on AIM and dealings in the New Ordinary Shares commence and enablement in CREST |
8.00 a.m. on 7 August |
1. Background to and reasons for the Fundraising
As has been mentioned in shareholder communications in the past, the Board has striven to maximise the values of each of the Company's investments, and it believe this has been a highly successful operation on which the Company's investment managers, SVM, should be congratulated. Over the last six years, investors have received 13 pence per share in dividends. The Board has also sought to ensure that all other values relating to the Company give benefit to its Shareholders, these are the remaining primary asset (IMImobile PLC), the brand value of the Company as a successful investment company, our stock exchange status and our tax losses, which are currently estimated at approximately £150 million. The Board has sought to maximise these values for the benefit of Shareholders and believe that the Proposals represent an attractive opportunity to enable the Company to achieve these goals.
Some months ago, on the introduction of a shareholder, the Company was brought together with Gresham House and the Proposals emanate from those discussions. The Board believes that through deploying SPE style investment, where the Company will take influential stakes in publicly quoted smaller companies within a concentrated portfolio and, through a policy of constructive corporate engagement, seek to benefit from value created by strategic, operational or management initiatives. The Company will aim to generate superior investment returns over the longer term and will also be able to continue to optimise the value of the existing portfolio and the Company's unutilised tax losses.
The Company proposes to raise approximately £13.2 million from new and existing investors through the Fundraising, and a further £3.8 million via the asset swaps and to engage Gresham House as its investment manager focussing on SPE and private equity, in which they have a strong track record. Gresham House will invest £5 million in the Company and undertake one of the asset swaps. Once the Fundraising is complete and the New Investment Strategy established, Messrs Teichman and Betton will retire from the Board and two new independent directors will be appointed in due course. David Potter will continue as Chairman.
2. SPE Strategy
The SPE strategy seeks to utilise private equity techniques including due diligence and engagement with management teams to identify value opportunities. The New Investment Manager believes this approach can lead to superior investment returns as it targets inefficiencies in certain segments of the public markets. There are over 1,200 companies in the FTSE Small Cap index and on AIM: these companies typically have limited research coverage and may often have limited access to growth capital often leading to value opportunities being overlooked by the wider market. In addition, the Company is also aware of a number of privately held and venture capital opportunities that may benefit from the SPE approach.
The Company will focus mainly on cash generative companies where there is scope for management engagement to identify opportunities to implement either strategic, management or operational changes to create shareholder value in the business and to generate improved equity returns.
In addition to publicly listed opportunities, the New Investment Manager will also have the flexibility to invest up to 30 per cent. of the portfolio in selected unquoted securities, including venture capital opportunities.
3. SPE Investment Process
The Investment Manager has a disciplined four stage process which it uses to identify and make suitable investments.
Initially, a one page summary of the investment opportunity will be produced for the internal investment team to consider, which will summarise the investment thesis and the suitability of the opportunity against the Company's Investing Policy. If the opportunity is deemed to be suitable the Investment Manager will undertake preliminary due diligence, including procedures such as meetings with the target investment management, board and advisers, a peer group and industry review and an assessment of the target company's strategy, and will produce a Preliminary Investment Report ("PIR"). The Investment Committee will review the PIR and identify the areas in which to focus a more detailed due diligence exercise and will authorise the Investment Manager to proceed accordingly. Additional due diligence may include, inter alia, the following:
· Counterparty analysis;
· Financial, commercial or technical due diligence reports;
· Bespoke research;
· External research;
· Management referencing; and
· Exit and catalyst identification.
A Final Investment Report ("FIR") will be produced once the due diligence exercise has been completed following which a decision whether or not to invest a full portfolio position will be made. The Investment Committee will then continue to monitor the performance of the investment against the original investment thesis. The manager has the ability to invest in limited and prescribed levels as the diligence process progresses.
4. New Investing Policy
In accordance with Rule 8 of the AIM Rules, the Company is seeking the consent of the Shareholders at the General Meeting to its proposed revised investing policy which will, if approved, read as follows:
Business characteristics
The Company will seek to use the expertise and experience of its Board and the members of its Investment Committee to invest according to a rigorous strategic public equity process. The Company will have an active investing policy, investing in assets that will typically have a number of the following characteristics:
· investments that can generate a 15 per cent. IRR over the medium to long term principally through capital appreciation; and
· investments where the manager believes there are value creation opportunities through strategic, management or operational changes.
The Company intends to invest the majority of its capital in a concentrated portfolio of between 10 to 15 smaller UK/European publicly traded companies, typically with market capitalisations of less than £250 million and would typically expect a holding period of three to five years. In addition, the Company may also invest in interests in privately held companies, primarily in equity and equity-related instruments and also in preferred equity, convertible and non-convertible debt instruments. The Company will seek to acquire influential block stakes (typically between 10 per cent. and 25 per cent.) for cash or share consideration.
Exposure limits
Any investment which represents more than 15 per cent. of the Group's gross assets, at the time when the investment is made, in securities issued by any single company will require the Board's approval. An investment will only be made after the Investment Committee believes that the risk/return relationship is acceptable and the target return hurdle is exceeded.
Gearing
The Company intends to put in place a bank facility but will limit borrowing to no more than 20 per cent. of gross assets.
Returns on investment
The initial intention is to distribute up to 50 per cent. of profits on realisations through dividends, share buybacks or other returns of capital.
Any material change to the New Investing Policy by the Company will require prior Shareholder approval in accordance with the AIM Rules.
5. Change of Investment Manager
The Company has agreed to appoint Gresham House as its new investment manager (the "New Investment Manager") subject to the terms of the New Management Agreement, which will become effective on Admission.
The Company will give three months' notice to terminate the Existing Management Agreement following Admission: this will give rise a payment of approximately £2.3 million to the Existing Investment Manager to settle the amounts due to it (including the incentive fee in respect of IMImobile PLC). As the SPARK name is owned by the Existing Investment Manager and licensed to the Company pursuant to a licence which expires in October 2015, the Company and the Existing Investment Manager intend to extend this licence until October 2017.
In addition, Gresham House has agreed heads of terms with an intention to acquire the Existing Investment Manager. Upon completion of this transaction, Gresham House will (in addition to its existing investment team detailed below) have the continued venture capital investment expertise of the Existing Investment Manager at its disposal.
6. Information in relation to Gresham House
Gresham House is an Investing Company (as defined in the AIM Rules) quoted on AIM. Gresham House holds a mixture of property assets and quoted and unquoted securities. As at 31 December 2014, Gresham House had a NAV per ordinary share of 298.0 pence.
Gresham House will continue to operate as an Investing Company in the short to medium term. However, the directors of Gresham House intend to develop the company as a specialist asset management group, either organically or through acquisitions, focussed on managing funds and co-investments across a range of differentiated and illiquid alternative investment strategies. Future investments by Gresham House which meet the criteria for the SPE Strategy will be made through SPARK or other funds or vehicles managed by GHAM such that Gresham House's exposure to such opportunities will be through its investment in SPARK, such funds or other vehicles only.
In pursuit of this objective, Gresham House has established Gresham House Asset Management Limited ("GHAM") and applied to the FCA for regulatory approval. Following Admission, and until GHAM receives regulatory approval, Sapia Partners LLP ("Sapia") will act, on an interim basis, as investment manager to the Company and GHAM will act as investment adviser. Upon receiving regulatory approval, GHAM will be appointed investment manager and adviser to the Company and the relationship with Sapia will cease. Gresham House, in accordance with its investment policy, will make cornerstone investments in specialist funds managed by GHAM.
Further information on Gresham House can be found on its website www.greshamhouse.com.
The Investment Committee
Following Admission, it is intended that SPARK's Investment Committee will be chaired by Anthony (Tony) Dalwood with the other members being Graham Bird (Head of Gresham House Strategic Investments), Tom Teichman, Bruce Carnegie-Brown and Rupert Robinson. Further details of the Investment Committee's relevant experience is set out below.
Anthony (Tony) Dalwood
Tony is an experienced investor and adviser to public and private equity businesses and CEO of Gresham House. Tony established SVG Investment Managers (a former subsidiary of SVG Capital plc), acted as CEO and chairman of this entity, and launched Strategic Equity Capital plc. His previous appointments include CEO of SVG Advisers (formerly Schroder Ventures (London) Limited), membership of the UK Investment Committee of UBS Phillips & Drew Fund Management (PDFM), chairman of Downing Active Management Investment Committee and the board of Schroders Private Equity Funds.
He is currently on the investment committee and board of the London Pensions Fund Authority, a non-executive director of JP Morgan Private Equity Limited and a director of Branton Capital Limited. Tony is also an adviser to LDC through Gresham House.
Graham Bird
Graham leads the strategic public equity strategy alongside Tony Dalwood. He is experienced in fund management and in corporate advisory.
Graham has spent the last six years as a senior executive at PayPoint plc, most recently as Director of Strategic Planning and Corporate Development. He was Executive Chairman and President of PayByPhone, a multi-national division of PayPoint operating out of Canada, the UK and France between 2010-2014. Prior to joining PayPoint, Graham was a fund manager and Head of Strategic Investment at SVG Investment Managers where he helped to establish and then co-manage the Strategic Recovery Fund II and the investment trust, Strategic Equity Capital plc. Before joining SVGIM he was a Director in Corporate Finance at JP Morgan Cazenove.
Thomas Teichman
Tom was previously Chairman of NewMedia Investors Limited, which he founded in 1996 and from which SPARK was created in 1999 when it was admitted to trading on AIM. He was Executive Chairman of SPARK from 1999 to 2009 and re-joined the Board in July 2014 in a non-Executive role. He chairs SVM, which has managed SPARK's investment portfolio since 2009. He was responsible for the investments in Kobalt Music, Mergermarket and notonthehighstreet, SPARK's largest exits to date. Tom has over 30 years of venture capital and investment banking experience with firms including Credit Suisse/CSFB, Mitsubishi and Bank of Montreal, where he ran corporate finance. He has extensive venture capital experience in technology ranging from on-line information, telecoms, video games and chip design to travel and healthcare and online retailing. He has backed many successful early stage technology businesses, mostly from start-up, all the way to flotation (London and NASDAQ) or trade sale. He was on the boards of these companies normally for many years, chairing several of them.
Bruce Carnegie-Brown
Bruce is chairman of Aon UK Limited and of Moneysupermarket.com Group plc and a non-executive director of Santander UK plc and Close Brothers Group plc. He was previously a managing partner of 3i QPE plc, a managing director of JP Morgan and CEO of Marsh Limited.
Rupert Robinson
Rupert was previously CEO of Schroders (UK) Private Bank and head of private clients at Rothschild Asset Management Limited.
7. Share Consolidation
Pursuant to the Share Consolidation it is proposed that, the Ordinary Shares will be subject to a 1 for 200 consolidation resulting in Ordinary Shares of the Company with nominal value of 50 pence each.
Save as explained below with regards to fractional entitlements, following the Share Consolidation each Shareholder will hold such number of Ordinary Shares as is equal to 0.5 per cent. of the number of Existing Ordinary Shares that he or she held immediately beforehand, with a nominal value per Ordinary Share of 50 pence.
With regards to fractional entitlements, where the Share Consolidation results in any member being entitled to a fraction of a share, such fraction shall, so far as is possible, be aggregated with the fractions of Ordinary Shares to which other members of the Company may be entitled. It is proposed that the Directors will be authorised to sell (or appoint any other person to sell) to any person, on behalf of the relevant members, all the Ordinary Shares representing such fractions at the best price reasonably obtainable to any person and to distribute the net process of sale of such Ordinary Shares (less expenses) representing such fractions in due proportion amongst the persons entitled (except that if the amount due to a person is less than £5 the sum may be retained for the benefit of the Company).
It is proposed that the Ordinary Shares resulting from the Share Capital Reorganisation will have exactly the same rights as those currently accruing to the Existing Ordinary Shares under the Articles, including those relating to voting and entitlement to dividends.
8. Details of the Placing and details of the Directors Intentions
The Company proposes to raise gross proceeds up to £10.1 million (approximately £9.8 million net of estimated expenses) from new and existing institutional investors, pursuant to the Placing. The Placing Shares have been conditionally placed by the Joint Brokers with new and existing institutional investors. The Placing is not being underwritten and, therefore, there is no certainty that any funds will be raised under the Placing.
David Potter, Thomas Teichman, Charles Berry and Helen Sinclair, who are directors of the Company, intend to subscribe for New Ordinary Shares pursuant to the Open Offer (using excess entitlements where required) with a value at the Issue Price of £25,000; £25,000; £5,000; and £5,000 respectively. In addition, Anthony Dalwood, Graham Bird, Bruce Carnegie-Brown, Rupert Robinson and Michael Philips, who are members of the Gresham House management team, intend to subscribe for New Ordinary Shares pursuant to the Placing with a value in aggregate at the Issue Price of £425,000. Gresham House has also agreed to subscribe £5.0 million (representing approximately 50.0 per cent of the Placing Shares).
The Issue Price represents a discount of 10 per cent to the 1000 pence post- Share Consolidation equivalent closing price of an Ordinary Share on 20 July 2015 (based on the Closing Price of 5 pence), being the Last Practicable Date. The Placing Shares will, when issued, rank pari passu in all respects with the Existing Ordinary Shares. Application will be made for the Placing Shares to be admitted to trading on AIM. It is expected that Admission will take place, and dealings in the New Ordinary Shares will commence, on 7 August 2015.
The Placing is conditional, inter alia, on:
· the passing of the Resolutions at the General Meeting;
· the Placing Agreement becoming unconditional in all relevant respects and not having been terminated in accordance with its terms prior to Admission; and
· Admission becoming effective by no later than 8.00 a.m. on 7 August 2015 or such other date (being not later than 8.00 a.m. on 31 August 2015) as the Joint Brokers and the Company may agree.
9. Details of the Open Offer
The Board considers it important to provide the Company's loyal and supportive Shareholders with an opportunity to participate in the Fundraising in recognition of their continued support of the Company.
Qualifying Shareholders can therefore subscribe for, in aggregate, up to approximately £3.1 million (before expenses) in Open Offer Shares without the Company having to produce a prospectus (in accordance with the Prospectus Rules) which would have both cost and timing implications for the Company.
Qualifying Shareholders, on and subject to the terms and conditions of the Open Offer, will be given the opportunity under the Open Offer to apply for any number of Open Offer Shares at the Issue Price pro rata to their holdings on the following basis:
1 Open Offer Share for every 1,200 Existing Ordinary Shares
The Open Offer Shares will rank pari passu in all respects with the Existing Ordinary Shares. Fractions of Open Offer Shares will not be allotted to Qualifying Shareholders in the Open Offer and entitlements under the Open Offer will be rounded down to the nearest whole number of Open Offer Shares. The Issue Price represents a discount of 10 per cent to the 1000 pence post-Share Consolidation equivalent closing price of an Ordinary Share on 20 July 2015 (based on the Closing Price of 5 pence), being the Latest Practicable Date.
There will be up to 349,038 New Ordinary Shares available to Qualifying Shareholders under the Open Offer. A full take up of the Open Offer Shares would represent approximately 8.8 per cent of the Enlarged Issued Share Capital.
Qualifying Shareholders are being offered the opportunity to apply for additional Open Offer Shares in excess of their Open Offer Entitlement to the extent that other Qualifying Shareholders do not take up their Open Offer Entitlements in full.
The Open Offer is not underwritten and therefore there is no certainty that any funds will be raised under the Open Offer.
A Qualifying Shareholder may only apply for additional Open Offer Shares if they have taken up their Open Offer Entitlement in full.
In the event that applications are received from Qualifying Shareholders for in excess of 349,038 Open Offer Shares, it is intended excess applications will be scaled back pro rata to such Qualifying Shareholders' entitlements taken up under the Open Offer.
Application has been made for the Open Offer Entitlements and Excess CREST Open Offer Entitlements to be admitted to CREST. It is expected that the Open Offer Entitlements and Excess CREST Open Offer Entitlements will be admitted to CREST on 22 July 2015. The Open Offer Entitlements and Excess CREST Open Offer Entitlements will also be enabled for settlement in CREST on 22 July 2015. Applications through the CREST system may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim.
The latest time and date for acceptance and payment in full under the Open Offer will be 11.00 a.m. on 4 August 2015, unless otherwise announced by the Company via a Regulatory Information Service. Qualifying CREST Shareholders should note that, although the Open Offer Entitlements and Excess CREST Open Offer Entitlements will be admitted to CREST and be enabled for settlement, applications in respect of entitlements under the Open Offer may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim raised by Euroclear's Claims Processing Unit. Qualifying Non-CREST Shareholders should note that their Application Form is not a negotiable document and cannot be traded.
The Open Offer will be conditional, inter alia, on the approval of the Resolutions by the Shareholders at the General Meeting and upon the Placing Agreement becoming unconditional in all respects (other than as to Admission) and Admission of the Open Offer Shares becoming effective by not later than 8.00 a.m. on 7 August 2015 (or such later time and/or date as the Company and the Joint Brokers may determine, not being later than 8.00 a.m. on 31 August 2015).
If Admission does not take place on or before 8.00 a.m. on 7 August 2015 (or such later time and/or date as the Company, and the Joint Brokers may determine, not being later than 8.00 a.m. on 31 August 2015), the Open Offer will lapse, any Open Offer Entitlements and Excess CREST Open Offer Entitlements admitted to CREST will thereafter be disabled and application monies under the Open Offer will be refunded to the applicants, by cheque (at the applicant's risk) in the case of Qualifying Non-CREST Shareholders and by way of a CREST payment in the case of Qualifying CREST Shareholders, without interest as soon as practicable thereafter.
Settlement and dealings
Application will be made to the London Stock Exchange for the Open Offer Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings in the New Ordinary Shares will commence at 8.00 a.m. on 7 August 2015.
10. Details of the Asset Swap
As part of its New Investing Policy, the Company has agreed, conditional upon Admission, to acquire the following interests in other public companies:
(a) 2,062,500 ordinary shares in SpaceandPeople plc: this interest is being acquired from Gresham House at a value of approximately £1.4 million to be satisfied by the issue of 151,250 New Ordinary Shares. This valuation represents a discount of 7 per cent to the Closing Price on the Last Practicable Date of an ordinary share in SpaceandPeople plc;
(b) 5,000,000 ordinary shares in Miton Group plc: this interest is being acquired from River & Mercantile Asset Management at a value of approximately £1.3 million to be satisfied by the issue of 145,833 New Ordinary Shares. This valuation represents the Closing Price on the Last Practicable Date of an ordinary share in Miton Group plc;
(c) 3,492,065 ordinary shares in Castle Street Investments plc: this interest is being acquired from Majedie Asset Management at a value of approximately £1.1 million to be satisfied by the issue of 123,192 New Ordinary Shares. This valuation represents the Closing Price on the Last Practicable Date of an ordinary share in Castle Street Investments plc.
11. Share dealing facility
The Company recognises that some Shareholders may not want to continue as investors as the Company pursues its New Investing Policy. Accordingly, the Company has arranged with Capita Asset Services to provide a low cost dealing facility to allow Shareholders to realise their investment's potential in a cost effective way. The service will be available to all private Shareholders resident in the EEA. After the Share Consolidation has taken place, Capita Asset Services will be offering free dealing to Shareholders wishing to sell their entire shareholdings of up to 500 Ordinary Shares (following the Share Consolidation). A reduced dealing fee of 0.75 per cent, (subject to a minimum of £25) will be applied to all sales of over 500 Ordinary Shares (following the Share Consolidation). Further information including instruction forms and details of your shareholdings, will be provided with the despatch of your new share certificates following the implementation of the Share Consolidation.
12. General Meeting
The General Meeting has been convened at the offices of Nabarro LLP, 125 London Wall, London EC2Y 5AL at 10.00 a.m. on Thursday 6 August 2015. Notice of the General Meeting is set out at the end of the shareholder circular. In order to consider and vote on each of the Resolutions that are put to the meeting Shareholders will also be sent a Form of Proxy for use in respect of the General Meeting. Resolutions 1 to 3 will be proposed as ordinary resolutions and will be passed if at least 50 per cent. of the votes cast (whether in person or by proxy) are in favour. Resolutions 4 and 5 (inclusive) will be proposed as special resolutions and will be passed if at least 75 per cent. of the votes cast (whether in person or by proxy) are in favour.
Shareholders have the right to attend, speak and vote at the General Meeting (or, if they are not attending the meeting, to appoint someone else as their proxy to vote on their behalf) if they are on the Register at the Voting Record Time (namely 6.00 p.m. on 5 August 2015). Changes to entries in the Register after the Voting Record Time will be disregarded in determining the rights of any person to attend and/or vote at the General Meeting. If the General Meeting is adjourned, only those Shareholders on the Register 48 hours before the time of the adjourned General Meeting (excluding any part of a day that is not a Business Day) will be entitled to attend, speak and vote or to appoint a proxy.
The number of Ordinary Shares a Shareholder holds as at the Voting Record Time will determine how many votes a Shareholder or his proxy will have in the event of a poll.
Explanation of the Resolutions to be proposed at the General Meeting
The notice convening the General Meeting will set out the Resolutions to be proposed at the General Meeting. An explanation of these Resolutions is set out below:
Resolution 1 - Change of Investing Policy
In accordance with Rule 8 of the AIM Rules, the Company is required to seek the consent of Shareholders at the General Meeting to its proposed revised investing policy. The Company proposes to revise the existing investment policy, such that the Company will implement an SPE strategy utilising private-equity style techniques. The Company intends to invest in assets that can generate a 15 per cent. IRR over the medium to long term and those assets will have value creation opportunities through effecting strategic, management or operational changes.
Resolution 2 - Share Consolidation
This resolution is to consolidate the ordinary shares of 0.25 pence each on a 200 for 1 basis into New Ordinary Shares of 50 pence each. This resolution also authorises the Directors to deal with fractional entitlements that arise under the Share Consolidation.
Resolution 3 - Authority to allot shares
This resolution is to authorise the Directors, for the purposes of section 551 of the Act, to allot shares in the Company or grant rights to subscribe for or convert any security into shares in the Company of up to a maximum aggregate nominal amount of £943,748.50 in connection with the Proposals and a further nominal amount of £663,620.50 generally. The general authority is equal to approximately one third of the Enlarged Issued Share Capital. Resolution 3 also authorises the directors of the Company from time to time to allot up to a further nominal amount of £663,620.50 for use only in connection with a fully pre-emptive rights issue. Save as disclosed in the shareholder circular, there are no immediate plans to exercise these authorities. The authorities will expire at the date of the annual general meeting in 2016 or, if earlier, 6 November 2016.
Resolution 4 - Disapplication of pre-emption rights
This resolution is to disapply statutory pre-emption rights up to an aggregate nominal amount of £769,229.50 in connection with the Proposals, a rights or other pre-emptive issue and any other issue of equity securities for cash up to an aggregate nominal amount of £199,086 (representing approximately 10 per cent. of the Enlarged Issued Share Capital). The authority will expire on the date of the annual general meeting in 2016 or, if earlier, 6 November 2016.
Resolution 5 - Amendment to the articles of association
This resolution is to approve the amendment of the articles of association of the Company to change the definition of Ordinary Shares to reflect the Share Consolidation.
13. Irrevocable Undertakings and letters of support
Insofar as they are interested in Ordinary Shares, certain of the Directors and persons connected with them have given irrevocable undertakings to the Company to vote in favour of the Resolutions (and, where relevant, to procure that such action is taken by the relevant registered holders if that is not them), in respect of their entire beneficial holdings totalling, in aggregate, 16,990,469 Ordinary Shares, representing approximately 4.1 per cent. of the Existing Total Voting Rights
In addition, certain other Shareholders have given irrevocable undertakings to the Company to vote in favour of the Resolutions to be proposed at the General Meeting (and, where relevant, to procure that such action is taken by the relevant registered holders if that is not one of them) in respect of their holdings totalling, in aggregate, 71,555,190 Ordinary Shares, representing approximately 17.1 per cent. of the Existing Total Voting Rights and other shareholders have given letters of support in favour of the Resolutions to be proposed at the General Meeting in respect of their holdings of 95,571,567 Ordinary Shares, representing approximately 22.8 per cent. of the Existing Total Voting Rights.
In total, therefore, the Company has received irrevocable undertakings or letters of support to vote in favour of the Resolutions in respect of holdings totalling in aggregate 184,117,226 Ordinary Shares, representing approximately 44.0 per cent. of the Existing Total Voting Rights.
14. Action to taken
A Form of Proxy for use in connection with the General Meeting will be sent with the Circular. Whether or not Shareholders intend to be present at the General Meeting, they are requested to complete and sign the Form of Proxy and return it, in accordance with the instructions printed on it, by post or (during normal business hours only) by hand to Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU to arrive as soon as possible and, in any event, by no later than 10.00 a.m. on 4 August 2015. Shareholders who hold their Existing Ordinary Shares in CREST may appoint a proxy by completing and transmitting a CREST Proxy Instruction to Capita Asset Services so that it is received by no later than 10.00 a.m. on 4 August 2015. The return of a completed Form of Proxy or the transmission of an electronic proxy or CREST Proxy Instruction will not prevent a Shareholder from attending the General Meeting and voting in person (in substitution for their proxy vote) should they wish to do so and are so entitled.
15. Recommendation
The Board considers the Resolutions are likely to promote the success of the Company and are in the best interests of the Company and its Shareholders as a whole. The Directors unanimously recommend that Shareholders vote in favour of the Resolutions which are proposed at the General Meeting.
The Directors have irrevocably undertaken or intend to vote in favour of all of the Resolutions which are proposed at the General Meeting in respect of their own beneficial holdings, amounting in aggregate to 19,673,019 Existing Ordinary Shares (representing approximately 4.7 per cent of the Existing Total Voting Rights .
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, SOUTH AFRICA OR JAPAN.
Certain statements in this announcement are forward-looking statements which are based on the Company's expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Factors that would cause actual results or events to differ from current expectations, intentions or projections might include, amongst other things, changes in equity markets, political risks, changes to regulations affecting the Company's activities, delays in obtaining or failure to obtain any required regulatory approval, uncertainties relating to the availability and costs of financing needed in the future, acquisitions and other strategic transactions. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements, which are not guarantees of future performance. Forward-looking statements speak only as of the date of such statements and, except as required by the FCA, the London Stock Exchange or applicable law, each of the Company, finnCap and Liberum expressly disclaims any obligation or undertaking to review, revise or release publicly any updates to any forward-looking statements to reflect any changes in SPARK's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based, whether as a result of new information, future events or otherwise.
This announcement is for information purposes only and shall not constitute an offer to buy, sell, issue, or subscribe for, or the solicitation of an offer to buy, sell, issue, or subscribe for any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. This announcement has been issued by and is the sole responsibility of SPARK.
No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by finnCap or Liberum or by any of their respective affiliates or agents as to, or in relation to, the accuracy or completeness of this announcement, including the Appendices, or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.
finnCap, which is authorised and regulated in the United Kingdom by the FCA, is acting for SPARK and for no-one else in connection with the Placing, and will not be responsible to anyone other than SPARK for providing the protections afforded to customers of finnCap nor for providing advice to any other person in relation to the Placing or any other matter referred to herein.
Liberum, which is authorised and regulated in the United Kingdom by the FCA, is acting for SPARK and for no-one else in connection with the Placing, and will not be responsible to anyone other than SPARK for providing the protections afforded to customers of Liberum nor for providing advice to any other person in relation to the Placing or any other matter referred to herein.
The distribution of this announcement and the offering of the Placing Shares in certain jurisdictions may be restricted by law. No action has been taken by SPARK, finnCap or Liberum that would permit an offering of such shares or possession or distribution of this announcement or any other offering or publicity material relating to such shares in any jurisdiction where action for that purpose is required. Persons into whose possession this announcement comes are required by SPARK, finnCap and Liberum to inform themselves about, and to observe such restrictions.
The price of shares and the income from them may go down as well as up and investors may not get back the full amount invested on disposal of the shares.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS ANNOUNCEMENT (INCLUDING THE APPENDICES) AND THE TERMS AND CONDITIONS SET OUT IN THIS ANNOUNCEMENT ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT PERSONS WHO ARE: (A) (I) INVESTMENT PROFESSIONALS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER"), OR (II) PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC") OF THE ORDER, OR (III) PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED; AND (B) (I) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA WHO ARE QUALIFIED INVESTORS (AS DEFINED IN ARTICLE 2(1)(E) OF EU DIRECTIVE 2003/71/EC (THE "PROSPECTUS DIRECTIVE")), AND/OR (II) PERSONS IN THE UNITED KINGDOM WHO ARE QUALIFIED INVESTORS (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS ANNOUNCEMENT (INCLUDING THE APPENDICES) AND THE TERMS AND CONDITIONS SET OUT IN THIS ANNOUNCEMENT MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT (INCLUDING THE APPENDICES) AND THE TERMS AND CONDITIONS SET OUT IN THIS ANNOUNCEMENT RELATE IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS ANNOUNCEMENT (INCLUDING THE APPENDICES) DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN SPARK VENTURES PLC.
Persons (including individuals, funds or otherwise) by whom or on whose behalf a commitment to acquire Placing Shares has been given ("Placees") will be deemed to have read and understood this announcement, including the Appendices, in its entirety and to be making such offer on the terms and conditions, and to be providing the representations, warranties, acknowledgements, and undertakings contained in Appendix I. In particular, each such Placee represents, warrants and acknowledges that it is: (i) a Relevant Person (as defined above) and undertakes that it will acquire, hold, manage or dispose of any Placing Shares that are allocated to it for the purposes of its business; (ii) not within the United States; (iii) not within Australia, Canada, South Africa, Japan or any other jurisdiction in which it is unlawful to make or accept an offer to acquire the Placing Shares; (iv) not acquiring the Placing Shares for the account of any person who is located in the United States, unless the instruction to acquire was received from a person outside the United States and the person giving such instruction has confirmed that it has the authority to give such instruction, and that either (a) it has investment discretion over such account or (b) it is an investment manager or investment company and, in the case of each of (a) and (b), that it is acquiring the Placing Shares in an "offshore transaction" (within the meaning of Regulation S under the United States Securities Act of 1933, as amended ("Securities Act"); and (v) it is not acquiring the Placing Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or indirectly, of any such Placing Shares into the United States or any other jurisdiction referred to in (iii) above.
This announcement, including the Appendices, is not for distribution directly or indirectly in or into the United States (including its territories and possessions, any State of the United States and the District of Columbia), Canada, Australia, South Africa or Japan or any jurisdiction into which the same would be unlawful. This announcement is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. No offering of securities will be made in the United States by SPARK in connection with the Placing.
This announcement does not constitute or form part of an offer or solicitation to purchase or subscribe for shares in the capital of SPARK in Canada, Australia, South Africa or Japan or any jurisdiction in which such an offer or solicitation is unlawful. No public offering of securities of SPARK will be made in connection with the Placing in the United Kingdom or elsewhere.
The relevant clearances have not been, and nor will they be, obtained from the securities commission of any province or territory of Canada; no prospectus has been lodged with, or registered by, the Australian Securities and Investments Commission or the Japanese Ministry of Finance; and the Placing Shares have not been, and nor will they be, registered under or offered in compliance with the securities laws of any state, province or territory of Canada, Australia, South Africa or Japan. Accordingly, the Placing Shares may not (unless an exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into the United States, Canada, Australia, South Africa or Japan or any other jurisdiction outside the United Kingdom.
The Placing Shares have not been approved or disapproved by the US Securities and Exchange Commission, any State securities commission or any other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the Placing or the accuracy or adequacy of this announcement. Any representation to the contrary is unlawful.
Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of the Appendices or this announcement should seek appropriate advice before taking any action.
The Placing Shares to be issued pursuant to the Placing will not be admitted to trading on any stock exchange other than the London Stock Exchange. Neither the content of SPARK's website nor any website accessible by hyperlinks on SPARK's website is incorporated in, or forms part of, this announcement.
APPENDIX I
TERMS AND CONDITIONS OF THE PLACING
IMPORTANT INFORMATION FOR PLACEES ONLY REGARDING THE PLACING
Details of the Placing
The Joint Brokers have entered into an agreement with SPARK (the "Placing Agreement") under which, subject to the conditions set out in that agreement, the Joint Brokers have agreed to use reasonable endeavours to procure subscribers for the Placing Shares at a price of 900 pence per Placing Share (the "Placing Price") on the terms and subject to the conditions set out in this announcement.
The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing Ordinary Shares including the right to receive all dividends and other distributions declared in respect of such ordinary shares after the date of issue of the Placing Shares.
Application for admission to trading
Application will be made to the London Stock Exchange for admission of the Placing Shares to trading on AIM. Admission is conditional upon the passing of the Resolutions at the General Meeting proposed to be convened on or around 6 August 2015 by the shareholders of the Company. It is expected that Admission will become effective on or around 7 August 2015 and that dealings in the Placing Shares will commence at that time.
Bookbuild
The Joint Brokers have undertaken a bookbuilding process in respect of the Placing (the "Bookbuild") to determine demand for participation in the Placing by Placees. This Appendix gives details of the terms and conditions of, and the mechanics of participation in, the Placing. No commissions will be paid to Placees or by Placees in respect of any Placing Shares.
The Joint Brokers and SPARK shall be entitled to effect the Placing by such alternative method to the Bookbuild as they may, in their sole discretion, determine.
Participation in, and principal terms of, the Placing:
1. finnCap and Liberum are acting as joint brokers and agents of SPARK.
2. Participation in the Placing will only be available to persons who may lawfully be, and are, invited to participate by the Joint Brokers. The Joint Brokers and their affiliates are each entitled to enter bids in the Bookbuild as principal.
3. The Bookbuild has closed. The Joint Brokers may, in agreement with SPARK, accept bids that are received after the Bookbuild has closed. SPARK reserves the right (upon the agreement of the Joint Brokers) to reduce or seek to increase the amount to be raised pursuant to the Placing, in its absolute discretion.
4. Each prospective Placee's allocation will be agreed between the Joint Brokers and SPARK and will be confirmed orally by one of the Joint Brokers as agent of SPARK following the close of the Bookbuild. That oral confirmation will constitute an irrevocable legally binding commitment upon that person (who will at that point become a Placee) in favour of the Joint Brokers and SPARK to subscribe for the number of Placing Shares allocated to it at the Placing Price on the terms and conditions set out in this Appendix and in accordance with SPARK's articles of association.
5. Each prospective Placee's allocation and commitment will be evidenced by a contract note issued to such Placee by one of the Joint Brokers. The terms of this Appendix will be deemed incorporated in that contract note.
6. Each Placee will also have an immediate, separate, irrevocable and binding obligation, owed to SPARK and the relevant Joint Broker as agent of SPARK, to pay the relevant Joint Broker (or as it may direct) in cleared funds, an amount equal to the product of the Placing Price and the number of Placing Shares such Placee has agreed to subscribe and SPARK has agreed to allot and issue to that Placee.
7. The Joint Brokers may choose to accept bids, either in whole or in part, on the basis of allocations determined in agreement with SPARK and may scale down any bids for this purpose on such basis as they may determine. The Joint Brokers may also, notwithstanding paragraphs 4 and 5 above, subject to the prior consent of SPARK (i) allocate Placing Shares after the time of any initial allocation to any person submitting a bid after that time and (ii) allocate Placing Shares after the Bookbuild has closed to any person submitting a bid after that time.
8. A bid in the Bookbuild will be made on the terms and subject to the conditions in this announcement and will be legally binding on the Placee on behalf of which it is made and except with the consent of either of the Joint Brokers will not be capable of variation or revocation after the time at which it is submitted.
9. Irrespective of the time at which a Placee's allocation pursuant to the Placing is confirmed, settlement for all Placing Shares to be acquired pursuant to the Placing will be required to be made at the same time, on the basis explained below under "Registration and Settlement".
10. All obligations under the Bookbuild and Placing will be subject to fulfilment of the conditions referred to below under "Conditions of the Placing" and to the Placing not being terminated on the basis referred to below.
11. By participating in the Bookbuild, each Placee will agree that its rights and obligations in respect of the Placing will terminate only in the circumstances described below and will not be capable of rescission or termination by the Placee.
12. To the fullest extent permissible by law, neither of the Joint Brokers nor any of their affiliates shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise). In particular, neither of the Joint Brokers nor any of their affiliates shall have any liability (including to the fullest extent permissible by law, any fiduciary duties) in respect of the Joint Broker's conduct of the Bookbuild or of such alternative method of effecting the Placing as the Joint Brokers and SPARK may agree.
Conditions of the Placing
The obligations of the Joint Brokers under the Placing Agreement are conditional on, amongst other things:
(a) the passing of the Resolutions, without amendment, at the General Meeting of the Company to be convened on or around 6 August 2015;
(b) Admission taking place by 8.00 a.m. (London time) on 7 August 2015 (or such later date as SPARK and the Joint Brokers may otherwise agree); and
(c) the Placing Agreement becoming unconditional in all other respects.
If any of the conditions contained in the Placing Agreement in relation to the Placing Shares are not fulfilled or waived by the Joint Brokers, by the respective time or date where specified (or such later time and/or date as SPARK and the Joint Brokers may agree), the Placing will not proceed and the Placee's rights and obligations hereunder in relation to the Placing Shares shall cease and terminate at such time and each Placee agrees that no claim can be made by the Placee in respect thereof.
The Joint Brokers may, at their discretion and upon such terms as they think fit, waive compliance by SPARK with the whole or any part of any of SPARK's obligations in relation to the conditions in the Placing Agreement save that the conditions in the Placing Agreement relating to Admission taking place may not be waived. Any such extension or waiver will not affect Placees' commitments as set out in this announcement.
None of the Joint Brokers, SPARK or any other person shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision they may make as to whether or not to waive or to extend the time and / or the date for the satisfaction of any condition to the Placing nor for any decision they may make as to the satisfaction of any condition or in respect of the Placing generally, and by participating in the Placing each Placee agrees that any such decision is within the absolute discretion of the Joint Brokers.
The Placing Agreement may be terminated by the Joint Brokers at any time prior to Admission in certain circumstances including, among other things, following a breach of the Placing Agreement by the Company or the occurrence of certain force majeure events.
Upon such termination, the parties to the Placing Agreement shall be released and discharged (except for any liability arising before or in relation to such termination) from their respective obligations under or pursuant to the Placing Agreement subject to certain exceptions.
By participating in the Placing, Placees agree that the exercise by the Joint Brokers of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of the Joint Brokers and that they need not make any reference to Placees and that they shall have no liability to Placees whatsoever in connection with any such exercise or failure so to exercise.
No prospectus
No offering document, prospectus or admission document has been or will be submitted to be approved by the FCA or submitted to the London Stock Exchange in relation to the Placing and Placees' commitments will be made solely on the basis of the information contained in this announcement (including the Appendices) released by SPARK today and any information previously published by SPARK by notification to a Regulatory Information Service, and subject to the further terms set forth in the contract note to be provided to individual prospective Placees.
Each Placee, by accepting a participation in the Placing, agrees that the content of this announcement (including the Appendices) is exclusively the responsibility of SPARK and confirms that it has neither received nor relied on any other information (other than any information previously published by SPARK by notification to a Regulatory Information Service), representation, warranty, or statement made by or on behalf of SPARK or the Joint Brokers or any other person and none of the Joint Brokers or SPARK nor any other person will be liable for any Placee's decision to participate in the Placing based on any other information, representation, warranty or statement which the Placees may have obtained or received. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of SPARK in accepting a participation in the Placing. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.
Registration and settlement
Settlement of transactions in the Placing Shares following Admission will take place within the system administered by Euroclear UK & Ireland Limited ("CREST"), subject to certain exceptions. SPARK reserves the right to require settlement for and delivery of the Placing Shares (or a portion thereof) to Placees in certificated form if, in the Joint Brokers' opinion, delivery or settlement is not possible or practicable within the CREST system or would not be consistent with the regulatory requirements in the Placee's jurisdiction.
Following the close of the Bookbuild for the Placing, each Placee allocated Placing Shares in the Placing will be sent a contract note stating the number of Placing Shares to be allocated to it at the Placing Price and settlement instructions.
Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with the standing CREST or certificated settlement instructions that it has in place with the Joint Brokers. SPARK will deliver the Placing Shares to CREST accounts operated by each of the Joint Brokers as agents for SPARK, and the Joint Brokers will enter their respective delivery (DEL) instruction into the CREST system. The input to CREST by a Placee of a matching or acceptance instruction will then allow delivery of the relevant Placing Shares to that Placee against payment.
It is expected that settlement will take place on 7 August 2015, being the business day following the General Meeting, on a delivery versus payment basis.
Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at the rate of two percentage points above LIBOR as determined by the Joint Brokers.
Each Placee is deemed to agree that, if it does not comply with these obligations, SPARK may sell any or all of the Placing Shares allocated to that Placee on such Placee's behalf and retain from the proceeds, for SPARK's account and benefit, an amount equal to the aggregate amount owed by the Placee plus any interest due. The relevant Placee will, however, remain liable for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties) which may arise upon the sale of such Placing Shares on such Placee's behalf.
If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the trade confirmation is copied and delivered immediately to the relevant person within that organisation. Insofar as Placing Shares are registered in a Placee's name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below, be so registered free from any liability to UK stamp duty or stamp duty reserve tax. Placees will not be entitled to receive any fee or commission in connection with the Placing.
Representations and warranties
By participating in the Placing each Placee (and any person acting on such Placee's behalf) irrevocably acknowledges, confirms, undertakes, represents, warrants and agrees (as the case may be) with each of the Joint Brokers (in their capacity as joint brokers and placing agents of the Company in respect of the Placing) and the Company, in each case as a fundamental term of their application for Placing Shares the following:
1. it has read this announcement, including the appendices, in its entirety;
2. that (i) no offering document, listing particulars, prospectus or admission document has been or will be prepared in connection with the Placing and (ii) it has not received a prospectus, admission document or other offering document in connection with the Bookbuild, the Placing or the Placing Shares;
3. that the Ordinary Shares are admitted to trading on AIM, and SPARK is therefore required to publish certain business and financial information in accordance with the rules and practices of AIM (collectively, the "Exchange Information"), which includes a description of the nature of SPARK's business and SPARK's most recent balance sheet and profit and loss account and that it is able to obtain or access (i) such Exchange Information and (ii) such information or comparable information concerning any other publicly traded company, in each case without undue difficulty;
4. that none of the Joint Brokers or SPARK nor any of their affiliates nor any person acting on behalf of any of them has provided, and will not provide, it with any material regarding the Placing Shares or SPARK or any other person other than this announcement; nor has it requested any of the Joint Brokers, SPARK, any of their affiliates or any person acting on behalf of any of them to provide it with any such information;
5. acknowledges that the Placing Shares have not been and will not be registered under the securities legislation of the United States, Australia, Canada, South Africa or Japan and, subject to certain exceptions, may not be offered, sold, transferred, delivered or distributed, directly or indirectly, in or into those jurisdictions;
6. that (i) it is not within the United States; (ii) it is not within Australia, Canada, South Africa, Japan or any other jurisdiction in which it is unlawful to make or accept an offer to acquire the Placing Shares; (iii) it is not acquiring the Placing Shares for the account of any person who is located in the United States, unless the instruction to acquire was received from a person outside the United States and the person giving such instruction has confirmed that it has the authority to give such instruction, and that either (a) it has investment discretion over such account or (b) it is an investment manager or investment company and, in the case of each of (a) and (b), that it is acquiring the Placing Shares in an "offshore transaction" (within the meaning of Regulation S under the Securities Act); and (iv) it is not acquiring the Placing Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or indirectly, of any such Placing Shares into the United States or any other jurisdiction referred to in (ii) above;
7. that the content of this announcement is exclusively the responsibility of SPARK and that neither of the Joint Brokers nor any person acting on their behalf has or shall have any liability for any information, representation or statement contained in this announcement or any information previously published by or on behalf of SPARK and will not be liable for any Placee's decision to participate in the Placing based on any information, representation or statement contained in this announcement or otherwise. Each Placee further represents, warrants and agrees that the only information on which it is entitled to rely and on which such Placee has relied in committing itself to subscribe for the Placing Shares is contained in this announcement and any information previously published by SPARK by notification to a Regulatory Information Service, such information being all that it deems necessary to make an investment decision in respect of the Placing Shares and that it has neither received nor relied on any other information given or representations, warranties or statements made by any of the Joint Brokers or SPARK and none of the Joint Brokers or SPARK will be liable for any Placee's decision to accept an invitation to participate in the Placing based on any other information, representation, warranty or statement. Each Placee further acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of SPARK in deciding to participate in the Placing;
8. that neither of the Joint Brokers nor any person acting on behalf of them nor any of their affiliates has or shall have any liability for any publicly available or filed information, or any representation relating to SPARK, provided that nothing in this paragraph excludes the liability of any person for fraudulent misrepresentation made by that person;
9. that neither it, nor the person specified by it for registration as a holder of Placing Shares is, or is acting as nominee or agent for, and that the Placing Shares will not be allotted to, a person who is or may be liable to stamp duty or stamp duty reserve tax under any of sections 67, 70, 93 and 96 of the Finance Act 1986 (depositary receipts and clearance services);
10. that it has complied with its obligations in connection with money laundering and terrorist financing under the Proceeds of Crime Act 2002, the Terrorism Act 2000, the Terrorism Act 2006 and the Money Laundering Regulations 2007 (the "Regulations") and, if making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations;
11. that it is acting as principal only in respect of the Placing or, if it is acting for any other person (i) it is duly authorised to do so, (ii) it is and will remain liable to the Company and/or the Joint Brokers for the performance of all its obligations as a Placee in respect of the Placing (regardless of the fact that it is acting for another person), (iii) it is both an "authorised person" for the purposes of FSMA and a "qualified investor" as defined at Article 2.1(e)(i) of Directive 2003/71/EC (known as the Prospectus Directive) acting as agent for such person, and (iv) such person is either (1) a "qualified investor" as referred to at section 86(7) of FSMA or (2) a "client" (as defined in section 86(2) of FSMA) of its that has engaged it to act as such client's agent on terms which enable it to make decisions concerning the Placing or any other offers of transferable securities on such client's behalf without reference to such client;
12. that, if a financial intermediary, as that term is used in Article 3(2) of EU Directive 2003/71/EC (the "Prospectus Directive") (including any relevant implementing measure in any member state), the Placing Shares purchased by it in the Placing will not be acquired on a non-discretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in a member state of the European Economic Area which has implemented the Prospectus Directive other than to qualified investors, or in circumstances in which the prior consent of the Joint Brokers has been given to the proposed offer or resale;
13. that it has not offered or sold and, prior to the expiry of a period of six months from Admission, will not offer or sell any Placing Shares to persons in the United Kingdom, except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted and which will not result in an offer to the public in the United Kingdom within the meaning of section 85(1) of the Financial Services and Markets Act 2000 ("FSMA");
14. that it has not offered or sold and will not offer or sell any Placing Shares to persons in the European Economic Area prior to Admission except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted in and which will not result in an offer to the public in any member state of the European Economic Area within the meaning of the Prospectus Directive (including any relevant implementing measure in any member state);
15. that it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) relating to the Placing Shares in circumstances in which section 21(1) of FSMA does not require approval of the communication by an authorised person;
16. that it has complied and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the Placing Shares in, from or otherwise involving, the United Kingdom;
17. that (i) it is a person falling within Article 19(5) and / or Article 49(2)(a) to (d) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or is a person to whom this announcement may otherwise be lawfully communicated; and (ii) any offer of Placing Shares may only be directed at persons to the extent in member states of the European Economic Area who are "qualified investors" within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC) and represents and agrees that it is such a qualified investor;
18. that it is entitled to purchase the Placing Shares under the laws of all relevant jurisdictions which apply to it, and that its subscription/purchase of the Placing Shares will be in compliance with applicable laws and regulations in the jurisdiction of its residence, the residence of the Company, or otherwise;
19. that it (and any person acting on its behalf) will make payment for the Placing Shares allocated to it in accordance with this announcement on the due time and date set out herein, failing which the relevant Placing Shares may be placed with other subscribers or sold as the Joint Brokers may in their discretion determine and without liability to such Placee;
20. that its allocation (if any) of Placing Shares will represent a maximum number of Placing Shares which it will be entitled, and required, to subscribe for, and that SPARK may call upon it to subscribe for a lower number of Placing Shares (if any), but in no event in aggregate more than the aforementioned maximum;
21. that neither of the Joint Brokers, nor any of their respective affiliates, nor any person acting on behalf of either of them, is making any recommendations to it, advising it regarding the suitability of any transactions it may enter into in connection with the Placing and that participation in the Placing is on the basis that it is not and will not be a client of either Joint Broker and that the Joint Brokers have no duties or responsibilities to it for providing the protections afforded to their clients or customers or for providing advice in relation to the Placing nor in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement nor for the exercise or performance of any of its rights and obligations thereunder including any rights to waive or vary any conditions or exercise any termination right;
22. that the person whom it specifies for registration as holder of the Placing Shares will be (i) itself or (ii) its nominee, as the case may be. Neither of the Joint Brokers or SPARK will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement. Each Placee and any person acting on behalf of such Placee agrees to participate in the Placing and it agrees to indemnify SPARK and the Joint Brokers in respect of the same on the basis that the Placing Shares will be allotted to the CREST stock accounts of the Joint Brokers who will hold them as nominee on behalf of such Placee until settlement in accordance with its standing settlement instructions;
23. that these terms and conditions and any agreements entered into by it pursuant to these terms and conditions and any non-contractual obligations arising out of or in connection with such agreements shall be governed by and construed in accordance with the laws of England and Wales and it submits (on behalf of itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the English courts as regards any claim, dispute or matter arising out of any such contract, except that enforcement proceedings in respect of the obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by SPARK or the Joint Brokers in any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange;
24. that the Company, finnCap and Liberum will rely upon the truth and accuracy of the representations, warranties and acknowledgements set forth herein and which are irrevocable and it irrevocably authorises the Company, finnCap and Liberum to produce this announcement, pursuant to, in connection with, or as may be required by any applicable law or regulation, administrative or legal proceeding or official inquiry with respect to the matters set forth herein;
25. that it will indemnify and hold SPARK, the Joint Brokers and their respective affiliates harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings in this Appendix I and further agrees that the provisions of this Appendix I shall survive after completion of the Placing;
26. that it will acquire any Placing Shares purchased by it for its account or for one or more accounts as to each of which it exercises sole investment discretion and it has full power to make the acknowledgements, representations and agreements herein on behalf of each such account;
27. that its commitment to subscribe for Placing Shares on the terms set out herein and in the contract note will continue notwithstanding any amendment that may in future be made to the terms of the Placing and that Placees will have no right to be consulted or require that their consent be obtained with respect to SPARK's conduct of the Placing. The foregoing representations, warranties and confirmations are given for the benefit of SPARK as well as the Joint Brokers. The agreement to settle a Placee's subscription (and/or the subscription of a person for whom such Placee is contracting as agent) free of stamp duty and stamp duty reserve tax depends on the settlement relating only to the subscription by it and/or such person direct from SPARK for the Placing Shares in question. Such agreement assumes, and is based on a warranty from each Placee, that neither it, nor the person specified by it for registration as holder, of Placing Shares is, or is acting as nominee or agent for, and that the Placing Shares will not be allotted to, a person who is or may be liable to stamp duty or stamp duty reserve tax under any of sections 67, 70, 93 and 96 of the Finance Act 1986 (depositary receipts and clearance services). If there are any such arrangements, or the settlement relates to any other dealing in the Placing Shares, stamp duty or stamp duty reserve tax may be payable. In that event the Placee agrees that it shall be responsible for such stamp duty or stamp duty reserve tax, and neither SPARK nor the Joint Brokers shall be responsible for such stamp duty or stamp duty reserve tax. If this is the case, each Placee should seek its own advice and notify the Joint Brokers accordingly;
28. that no action has been or will be taken by any of the Company, the Joint Brokers or any person acting on behalf of SPARK or the Joint Brokers that would, or is intended to, permit a public offer of the Placing Shares in any country or jurisdiction where any such action for that purpose is required;
29. that, in making any decision to purchase the Shares, it has knowledge and experience in financial, business and international investment matters as is required to evaluate the merits and risks of subscribing for or purchasing the Placing Shares. It further confirms that it is experienced in investing in securities of this nature in this sector and is aware that it may be required to bear, and is able to bear, the economic risk of, and is able to sustain a complete loss in connection with the Placing. It further confirms that it relied on its own examination and due diligence of the Company and its associates taken as a whole, and the terms of the Placing, including the merits and risks involved;
30. that it has (i) made its own assessment and satisfied itself concerning legal, regulatory, tax, business and financial considerations in connection herewith to the extent it deems necessary; (ii) had access to review publicly available information concerning the SPARK group that it considers necessary or appropriate and sufficient in making an investment decision; (iii) reviewed such information as it believes is necessary or appropriate in connection with its subscription or purchase of the Placing Shares; and (iv) made its investment decision based upon its own judgement, due diligence and analysis and not upon any view expressed or information provided by or on behalf of finnCap and Liberum;
31. that it may not rely on any investigation that finnCap and Liberum or any person acting on their behalf may or may not have conducted with respect to the Company, its group, or the Placing and finnCap and Liberum have not made any representation to it, express or implied, with respect to the merits of the Placing, the subscription or purchase of the Placing Shares, or as to the condition, financial or otherwise, of the Company, its group, or as to any other matter relating thereto, and nothing herein shall be construed as a recommendation to it to purchase the Placing Shares. It acknowledges and agrees that no information has been prepared by finnCap, Liberum or the Company for the purposes of this Placing;
32. that accordingly it will not hold finnCap or Liberum, any of their respective associates or any person acting on their behalf responsible or liable for any misstatements in or omission from any publicly available information relating to the Company's group or information made available (whether in written or oral form) in presentations or as part of roadshow discussions with investors relating to the Company's group (the "Information") and that none of finnCap, Liberum or any person acting on behalf of finnCap or Liberum, makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of such Information or accepts any responsibility for any of such Information; and
33. that in connection with the Placing, each of finnCap, Liberum and any of their respective affiliates acting as an investor for its own account may take up shares in the Company and in that capacity may retain, purchase or sell for its own account such shares in the Company and any securities of the Company or related investments and may offer or sell such securities or other investments otherwise than in connection with the Placing. Accordingly, references in this announcement to shares being issued, offered or placed should be read as including any issue, offering or placement of such shares in the Company to any of finnCap, Liberum and any relevant affiliate acting in such capacity. Neither finnCap nor Liberum intends to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.
By participating in the Placing, each Placee (and any person acting on Placee's behalf) subscribing for Placing Shares acknowledges that: (i) the Placing Shares are being offered and sold only pursuant to Regulation S under the Securities Act in a transaction not involving a public offering of securities in the United States and the Placing Shares have not been and will not be registered under the Securities Act; and (ii) the offer and sale of the Placing Shares to it has been made outside of the United States in an "offshore transaction" (as such term is defined in Regulation S under the Securities Act) and it is outside of the United States during any offer or sale of Placing Shares to it.
In addition, Placees should note that they will be liable for any stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the United Kingdom by them or any other person on the subscription by them of any Placing Shares or the agreement by them to subscribe for any Placing Shares.
Each Placee and any person acting on behalf of each Placee acknowledges and agrees that the Joint Brokers or any of their affiliates may, at their absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares.
When a Placee or person acting on behalf of the Placee is dealing with the Joint Brokers, any money held in an account with any of the Joint Brokers on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the rules and regulations of the FCA made under FSMA. The Placee acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from the relevant Joint Brokers' money in accordance with the client money rules and will be used by the relevant Joint Brokers in the course of their own business; and the Placee will rank only as a general creditor of the Joint Brokers.
All times and dates in this announcement may be subject to amendment. The Joint Brokers shall notify the Placees and any person acting on behalf of the Placees of any changes.
Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.
APPENDIX II
RISK FACTORS
An investment in New Ordinary Shares may not be suitable for all people and involves a number of risks. All the information set out in this announcement and, in particular, those risks relating to the Fundraising (which includes the Placing and the Open Offer) described below, should be carefully considered prior to making any investment decision. Accordingly, you are strongly recommended to consult an investment adviser authorised under the FSMA if you are in the United Kingdom or, if not, another appropriately authorised independent financial adviser, who specialises in the acquisition of shares and other securities before making a decision to invest. In addition to all the other information contained in this announcement and the Circular to Shareholders, potential investors should carefully consider the following risk factors which the Directors consider to be all the known material risks in respect of the business of the Company and its securities, but are not set out in any particular order of priority.
If any of the circumstances identified in the risk factors were to materialise the Company's business, financial condition and operating results could be materially affected. In particular, the Company's performance is likely to be affected by changes to the market and/or economic conditions and/or legal,
accounting, regulatory and tax requirements currently unknown by the Company. Investors should note that the trading price of the Ordinary Shares could decline due to any of these risks and investors may lose all or part of their investment.
Additional risks which are not presently known to the Board, or that the Board currently deems to be immaterial, may also have an effect on the Group's business, financial condition and operating results.
1. Risks relating to the Company
Ability to utilise tax losses
The Group has substantial accumulated tax losses which, if utilised, would reduce the on-going tax burden of the Group. However, there can be no guarantee that the Group will be able to utilise these tax losses and may therefore have to pay more tax than is currently envisaged.
Ability to pay dividends or return cash to shareholders
The Company has returned cash to Shareholders over the last few years. The ability to continue to return
cash to Shareholders through the payment of dividends or otherwise is dependent on the Company generating sufficient surplus cash to be able to do so and having sufficient distributable resources to be able to make any such proposed payments. If the Company does not do so then it may be unable to pay dividends or return cash to shareholders.
Change to the regulatory environment
The Company engages the services of a regulated investment manager. In the event that the regulatory environment changes, it is possible that the Company may have to change its investment manager or be required to bear additional costs to carry on its activities.
2. Risks relating to the New Investing Policy and the new investment strategy
Ability to recruit and retain skilled personnel
The Company's success will depend on the ability of the New Manager to recruit and retain qualified and experienced employees. Should Gresham House be unable to attract new employees this could have a material adverse effect on the Company's ability to grow its business. In this respect, Anthony Dalwood and Graham Bird are viewed as key men.
Dependence on key executives
The Company's development and prospects are dependent upon the service and performance of the New Manager and its senior management. The loss of the services of any of the senior management of Gresham House could cause disruption which could have a material adverse effect on the deliverability of the New Investing Policy.
Poor investment decision making
There is no assurance the Company will meet its investment objectives. Meeting those objectives is a target, but the existence of such objectives should not be considered as an assurance or guarantee that they can or will be met in relation to the Company's portfolio in general or in relation to any part of it. In particular, there is no assurance that the Company will find suitable, and/or sufficient securities to invest in. There can be no assurance as to the level of IRR over the long term.
The Company will be investing in assets selected in accordance with the New Investing Policy. The value of investments and the income from them, and therefore the value of and income from Ordinary Shares will be closely linked to the performance of such investments. Investments made by the Company will be speculative and an investment in the Company therefore involves a degree of risk.
Valuation risk
The Company's New Investment Policy is to invest in largely quoted assets, although some investments are private assets and the valuation of such investments involves the Investment Manager exercising judgement.
There can be no guarantee that the basis of calculation of the value of the Company's investments used in the valuation process will reflect the actual value on realisation of those investments. The New Investment Manager will be entitled to receive a management fee for its services to the Company which is based, in part, on the value of the Company's investments. This creates a potential conflict of interest as the Investment Manager is involved in the valuation of the Company's investments.
Currency Risk
In the event that the Company invests in companies which do not have sterling as their operational currency, the Company will be exposed to potential currency fluctuations, which may have an adverse impact on its results of operations.
Exposure to macroeconomic, geographic, sector-related and geo-political risks
As noted above in respect of general risks, the Company's investment activities will expose the Shareholders to risks arising from macroeconomic, geographic, sector-related and geo-political risks.
Nature of investee companies
A majority of the direct investments made by the Company will be in the securities of small and medium
sized companies. Such securities may involve a higher degree of risk than would be the case for the securities of larger companies. In addition, the New Investing Policy is to identify and invest in companies that are believed to be undervalued, such companies may not prove to be capable of generating any additional value for their shareholders and so would not assist in achieving the Company's investment objective.
It is intended that the Company will generally be a minority investor in the entities in which it invests and, accordingly, its ability to promote and to protect its interests will be limited and the subsequent management and control of such an asset may entail risks associated with multiple owners and decision-makers. Any such investment also involves the risk that third party owners might become insolvent or fail to fund their share of any capital contribution which might be required. In addition, such third parties may have economic or other interests which are inconsistent with the Company's interests, or they may obstruct the Company's plans (for example, in implementing active asset management measures), or they may propose alternative plans. If such third parties are in a position to take or influence actions contrary to the Company's interests and plans, the Company may face the potential risk of impasses on decisions that affect the ability to implement its strategies and/or dispose of the asset. The above circumstances may have a material adverse effect on the Company's performance, financial condition and business prospects.
Companies in which the Company may invest may be highly geared which may significantly affect the
equity values of such investee companies and, in a winding up of any such investee company, may significantly reduce the amounts returned to shareholders in such company (including the Company).
Concentrated portfolio
Once fully invested, the Company expects that the majority of the value of its portfolio of investments will be represented by investments in a small number of companies. Accordingly, shareholders should be aware that the portfolio potentially carries a higher level of risk than a more diversified portfolio.
Liquidity of portfolio
The Company may invest in securities that are not readily tradable, which may make it difficult for the company to sell its investments. Shareholders should not expect that the Company will necessarily be able to realise, within a period which they would otherwise regard as reasonable, its investments, or that any realisation will be on a basis which necessarily reflects the Company's valuation of such investments.
Past performance
In considering any information contained in this announcement relating to past performance or the background of Gresham House, Shareholders should bear in mind that past performance is not necessarily indicative of future results and there can be no assurance that the Company will achieve results comparable to those achieved by Gresham House in their previous roles. The Company is long established but the new Investing Policy is a new start with no guarantee of success.
Delay/failure to make significant investments
There can be no assurance as to how long it will take for the Company to invest any or all of the net proceeds of the Placing and it may not find suitable assets in which to invest all of such proceeds. The Company is likely to face competition from a variety of other potential purchasers in identifying and acquiring suitable assets. The longer the period before investment the greater the likelihood that the Company's financial condition, business, prospects and results of operations will be materially adversely affected. Market conditions may have a negative impact on the Company's ability to identify and execute investments in suitable assets that generate acceptable returns.
Potential requirement for further investment
Any potential expansion activity and/or business development may require additional capital. There can be no guarantee that the necessary funds will be available on a timely basis on favourable terms or at all or that such funds (if raised) would be sufficient. If additional funds are raised by issuing equity securities, dilution to the existing Shareholders may result. If the Company is not able to obtain additional capital on acceptable terms or at all, it may be forced to curtail or abandon such planned expansion, activity and/or business development.
Use of Ordinary Shares as consideration for acquisitions would result in dilution of existing Shareholders
Under the new strategy, the Company may make acquisitions for cash or share consideration. If Ordinary Shares are used as consideration to make acquisitions the proportionate ownership and voting interests of the then Shareholders in the Company will be reduced and the percentage of the total share capital of the Company that their shares will represent will be reduced accordingly with a potential consequential reduction in their power to affect the direction of the Group.
Control systems may prove inadequate
The Company has in place appropriate regulatory, financial and management controls. The Directors believe the Company also has in place appropriate protections against detrimental activities such as fraud, theft, misuse of funds, money laundering or other unauthorised or criminal activities. Nevertheless, such systems may prove inadequate. In the event that such controls fail or the Group is subject to such detrimental activities and such protections prove inadequate, this may lead to a material adverse effect on the Company.
3. Risks relating to the New Investment Manager
The New Investment Manager allocates many of its resources to activities in which the Company is not
engaged, which could have a negative impact on the Company's ability to achieve its investment objective
The New Investment Manager is not required to commit all of their resources to the Company's affairs. Insofar as the New Investment Manager devotes resources to their responsibilities to other business interests, their ability to devote resources and attention to the Company's affairs will be limited. This could adversely affect the Company's ability to achieve its investment objective, which could have a material adverse effect on the Company's profitability, Net Asset Value and share price.
The New Investment Manager and its affiliates may provide services to other clients which could compete directly or indirectly with the activities of the Company and may be subject to conflicts of interest in respect of its activities on behalf of the Company
The New Investment Manager and their affiliates are involved in other financial, investment or professional activities which may on occasion give rise to conflicts of interest with the Company. In particular, the New Investment Manager manages funds other than the Company and may provide investment management, investment advisory or other services in relation to these funds or future funds which may have similar investment policies to that of the Company.
The New Investment Manager and their affiliates may carry on investment activities for other accounts in which the Company has no interest. The New Investment Manager and their affiliates may also provide management services to other clients, including other collective investment vehicles. The New Investment Manager and their affiliates may give advice and recommend securities to other managed accounts or investment funds which may differ from advice given to, or investments recommended or bought for, the Company, even though their investment policies may be the same or similar.
Due diligence
Prior to investing in companies, the New Investment Manager will assist, in conjunction with the Investment Committee, in performing due diligence on the proposed investment. To the extent that the New Investment Manager underestimates or fails to identify risks and liabilities associated with companies through which the Company invests, this may impact on the profitability of any investment.
4. Risks relating to the Company's securities
General
An investment in the Ordinary Shares is only suitable for investors capable of evaluating the risks (including the risk of capital loss) and merits of such investment and who have sufficient resources to sustain a total loss of their investment. An investment in the Ordinary Shares should be seen as long-term in nature and complementary to investments in a range of other financial assets and should only constitute part of a diversified investment portfolio. Accordingly, typical investors in the Company are expected to be institutional investors, private client fund managers and private client brokers, as well as private individuals who have received advice from their professional advisers regarding investment in the Ordinary Shares and/or who have sufficient experience to enable them to evaluate the risks and merits of such investment themselves.
Conditionality of the Placing and Open Offer
The Placing and Open Offer are conditional upon, inter alia, Admission. In the event that any condition to which Admission is subject is not satisfied or, if capable of waiver, waived, Admission will not take place.
Share price volatility and liquidity
Following Admission, the market price of the Ordinary Shares may be subject to wide fluctuations in response to many factors, including stock market fluctuations and general economic conditions or changes in political sentiment that may substantially affect the market price of the Ordinary Shares irrespective of the progress SPARK may make in terms of developing and launching its products or its actual financial, trading or operational performance. These factors could include the performance of SPARK, purchases or sales of the Ordinary Shares (or the perception that the same may occur), legislative changes and market, economic, political or regulatory conditions or price distortions resulting from limited liquidity. The share price for publicly traded companies, particularly those at an early stage of development, such as the Company, can be highly volatile. The Company's quotation on AIM should not be taken as implying that a liquid market for the Ordinary Shares either exists, or will develop or be sustained. Active, liquid trading markets generally result in lower price volatility and more efficient execution of buy and sell orders for investors. The liquidity of a securities market is often a function of the volume of the underlying shares that are publicly held by unrelated parties. If a liquid trading market for the Ordinary Shares does not develop, the price of the Ordinary Shares may become more volatile and it may be more difficult to complete a buy or sell order even for a relatively small number of such Ordinary Shares discount to NAV.
Substantial sales of Ordinary Shares could cause the price of Ordinary Shares to decline
There can be no assurance that certain Directors or other Shareholders will not elect to sell their Ordinary Shares in the future. The market price of Ordinary Shares could decline as a result of any such sales of Ordinary Shares or as a result of the perception that these sales may occur. In addition, if these or any other sales were to occur, the Company may in the future have difficulty in offering Ordinary Shares at a time or at a price it deems appropriate.
There is no guarantee that the Company's Ordinary Shares will continue to be traded on AIM
The Company cannot assure investors that the Company's Ordinary Shares will always continue to be traded on AIM or on any other exchange. If such trading were to cease, certain investors may decide to sell their shares, which could have an adverse impact on the price of the Ordinary Shares. Additionally, if in the future the Company decides to obtain a listing on another exchange in addition or as an alternative to AIM, the level of liquidity of the Ordinary Shares traded on AIM could decline.
Investment in AIM traded securities
The Ordinary Shares are, and the New Ordinary Shares will be, traded on AIM rather than admitted to the Official List of the UK Listing Authority. AIM is designed primarily for emerging or smaller companies to which a higher investment risk tends to be attached than to larger or more established companies. The rules of AIM are less demanding than those admitted to the Official List and an investment in shares traded on AIM may carry a higher risk than an investment in shares admitted to the Official List. In addition, the market in shares traded on AIM may have limited liquidity, making it more difficult for an investor to realise its investment on AIM than to realise an investment in a company whose shares are admitted to the Official List. Investors should therefore be aware that the market price of the Ordinary Shares may be more volatile than that of shares admitted to the Official List, and may not reflect the underlying value of the Company.
Investors may, therefore, not be able to sell at a price which permits them to recover their original investment and could lose their entire investment.
Issuance of additional Ordinary Shares
It is possible that the Company may decide to issue, pursuant to a public offer or otherwise, additional
Ordinary Shares in the future at a price or prices higher or lower than the Issue Price. An additional issue of Ordinary Shares by the Company, or the public perception that an issue may occur, could have an adverse effect on the market price of Ordinary Shares and could dilute the proportionate ownership interest, and hence the proportionate voting interest, of Shareholders if, and to the extent that, such an issue of Ordinary Shares is not effected on a pre-emptive basis or Shareholders do not take up their rights to subscribe for further Ordinary Shares as a pre-emptive offer.
DEFINITIONS
Terms not otherwise defined below have the same meanings given to them elsewhere in this announcement:
"Admission" means admission of the Placing Shares to trading on the London Stock Exchange's AIM market;
"AIM" means the AIM market of the London Stock Exchange;
"Board" means the board of directors of the Company;
"finnCap" means finnCap Limited;
"Company" or "SPARK" means SPARK Ventures plc;
"Directors" means the directors of the Company;
"General Meeting" means the General Meeting of the Company proposed to be held on or around 6 August 2015;
"Group" means the Company and its subsidiary undertakings;
"Joint Brokers" means finnCap and Liberum;
"London Stock Exchange" means London Stock Exchange plc;
"Liberum" means Liberum Capital Limited;
"Ordinary Shares" means the ordinary shares of 50 pence each in the share capital of the Company following the share consolidation as described in the circular sent to shareholders;
"Placees" means investors with whom Placing Shares are placed;
"Placing" means the placing of the Placing Shares described in this announcement;
"Placing Agreement" means the agreement dated 20 July 2015 entered into by the Company, finnCap and Liberum in connection with the Placing;
"Placing Price" means the price of 900 pence per Placing Share;
"Placing Shares" means the new Ordinary Shares to be issued pursuant to the Placing;
"Resolutions" means the resolutions to be set out in the notice of General Meeting;
"United States" or "US" means the United States of America, its territories and possessions, any State of the United States and the District of Columbia; and
"£" means the lawful currency of the United Kingdom
This information is provided by RNS
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