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Tau Capital PLC (TAU)

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Friday 15 March, 2019

Tau Capital PLC

Distribution of Cash, Placing and Other Matters

RNS Number : 0428T
Tau Capital PLC
15 March 2019
 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATIONS (EU) NO. 596/2014 ("MAR"). IN ADDITION, MARKET SOUNDINGS WERE TAKEN IN RESPECT OF THE MATTERS CONTAINED IN THIS ANNOUNCEMENT, WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF SUCH INSIDE INFORMATION. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN AND SUCH PERSONS SHALL THEREFORE CEASE TO BE IN POSSESSION OF INSIDE INFORMATION.

 

15 March 2019

 

Tau Capital plc

("Tau" or the "Company")

 

Distribution of Cash, Share Capital Re-organisation,

Conditional Placing and Company update

 

Highlights

·      Proposed return of substantially all of the Company's cash to shareholders;

·      Capital return of US$1,185,429 equivalent to US$0.0242 per share;

·      Conditional U$150,000 placing at US$0.001 per share.

·      Capital return and placing conditional on Shareholders' approval at proposed General Meeting, to be held on 8 April 2019

·      Post-completion of capital return;

proposed Board changes; and

change of Company name to "UK Onshore PLC".

Further to the Company's announcement on 4 December 2018, Tau announces that it has completed a review of the proposals received from parties interested in performing a prospective reverse takeover under AIM Rule 14 with the Company. Following this review, and in order for the Company to be positioned to undertake a future reverse takeover ("RTO"), the Board has decided that it is in the best interests of the Company to allow Shareholders the ability to receive a return of the net cash currently held by Tau. In addition, the Company has conditionally raised gross proceeds of US$150,000 via the Placing which will be used, inter alia, to ensure that sufficient working capital is retained by the Company following the return of the net cash to enable the Board to target RTO opportunities.

1.        Background

 

As previously announced, since completion of the sale of the Company's indirect interest in Stopharm LLP on 18 October 2018, Tau has been classified as an AIM Rule 15 cash shell and as such is required to complete an RTO or be re-admitted to trading on AIM as an investing company under the AIM Rules (which requires the raising of at least £6 million) on or before 18 April 2019, failing which trading in the Company's Ordinary Shares on AIM would be suspended pursuant to AIM Rule 40. The admission to trading on AIM of the Company's Ordinary Shares would be cancelled six months after the date of such a suspension, should the reason for the suspension not have been rectified.

Against this background, the Company has been evaluating a number of early stage proposals from third parties who have expressed interest in performing an RTO under AIM Rule 14 with the Company. After a review of these proposals, the Board has concluded that an opportunity now exists to provide the ability for all remaining cash in the Company not required to meet current operating costs and liabilities to be distributed to Shareholders, alongside a proposal to potentially utilise Tau's status as an AIM Rule 15 cash shell for an RTO. It is the Board's view that this combined proposal offers existing Shareholders the most cost effective and immediate means of distributing the Company's remaining cash to Shareholders and also provides the opportunity for existing Shareholders to retain a level of participation in the Company's future. 

2.        Distribution of Cash
 

As at the date of this document, the Company holds US$1,185,429, which is equivalent to US$0.0242 per existing Ordinary Share, available for distribution after retention of funds required to meet its ongoing solvency requirements up until the date the Placing is completed in accordance with the Isle of Man Companies Act 2006 ("2006 Act"). The intention is for the distribution of this net cash to be completed and for the funds to be paid out to Shareholders on 12 April 2019. However, Shareholders should be aware that in the event that the Resolutions are not approved, then a lower amount will be paid out to Shareholders, reflecting the need for the Company to satisfy the additional costs associated with a solvent winding down of the Company, with this process being preceded by a cancellation of the admission to trading of the Company's shares on AIM in accordance with AIM rule 41. 

3.        Share Capital Reorganisation
 

The Company was initially incorporated under the Isle of Man Companies Acts 1931 to 2004 but was re-registered under the 2006 Act on 25 July 2012. The 2006 Act contains no concept of authorised share capital (although it is common for listed companies, such as the Company, to prescribe a fixed number of shares available for issue in their articles of association) and a company governed by the 2006 Act is able to issue shares with or without a par value.

The Company's Articles currently specify that, unless otherwise directed by a shareholder resolution, the number of Ordinary Shares available for issue by the Company is 350,200,000. The par value for the Ordinary Shares is currently £0.01 per Ordinary Share.

To help facilitate the Placing, it is proposed that the Placing Shares have no par value in order that the Placing Shares may be issued and allotted at a subscription price that is lower than the current par value of the existing Ordinary Share. In order to avoid creating an additional class of share, it is therefore proposed that the existing Ordinary Shares be redenominated as Ordinary Shares with no par value.

Under the 2006 Act the Directors may by resolution, subject to contrary provision in the Articles, alter the Company's share capital comprising shares with par value in any way. This power is restricted by Article 11 which provides that a conversion of share capital into shares of a larger or smaller par value requires the sanction of an ordinary resolution. The Articles do not specifically expressly permit the reclassification of shares with a par value as shares without a par value or, more generally, permit the alteration of shares without a par value. To enable the Company to proceed with the Placing, it will therefore be necessary to amend the Articles to enable the existing Ordinary Shares to be reclassified as Ordinary Shares with no par value and to make certain other consequential amendments resulting from the redenomination of the Ordinary Shares as shares with no par value. To achieve this, the following resolutions will be proposed at the EGM

(a)        a special resolution to approve certain amendments to the Articles; and

(b)        an ordinary resolution to authorise the redenomination of the current Ordinary Shares each of £0.01 par value into Ordinary Shares of no par value.

Accordingly, if the Resolutions are passed, Shareholders will hold Ordinary Shares each of no par value.

4.        Conditional Placing
 

The Company has conditionally raised gross proceeds of US$150,000 via a placing of 150,000,000 new Ordinary Shares of no par value (the "Placing Shares") with new investors at a price of US$0.001 per Placing Share (the "Placing"). Peterhouse Capital Limited is acting as broker to the Placing. 

The Placing is subject to the requisite Shareholder approval and, accordingly, the issue of the Placing Shares is conditional on, inter alia, the passing of the Resolutions by the Shareholders at the EGM which is to be held on 8 April 2019.  Whilst Shareholders will retain their shareholdings in the Company, following the issue of the Placing Shares, current Shareholders will be diluted down to collectively represent 24.62% of the enlarged issued share capital of the Company.

Application will be made to the London Stock Exchange for the Placing Shares and the Ordinary Shares of no par value to be admitted to trading on AIM ("Admission"). It is expected that, subject to passing the Resolutions, Admission will become effective and dealings in the Placing Shares and the Ordinary Shares of no par value will commence, at 8:00 am on 9 April 2019.

It is intended that the proceeds of the Placing will be used to maintain and/or strengthen the Company's balance sheet, to ensure that the solvency requirements under the 2006 Act are met and ensure sufficient working capital is retained by the Company to enable the Board to identify an RTO opportunity.

Upon Admission, the Company will grant a total of 1,989,846 warrants over new Ordinary Shares to Allenby Capital Limited, pursuant to an agreement dated 9 December 2016.  Each warrant will entitle Allenby Capital Limited to subscribe for one new Ordinary Share at an exercise price of US$0.001, being equal to the Placing Price, at any time until the date that is three years from Admission.  

5.        Prospective Board Changes and Name Change
 

To ensure that the Board has sufficient experience and expertise in evaluating potential RTO opportunities, conditional on the approval of the Resolutions at the EGM and completion of the proposed Placing and subject to and following approval from the Company's nominated advisor after a customary director due diligence process, it is intended that Gerwyn Williams and Nigel Burton will join the Board, as non-executive directors respectively, replacing Terence Mahony and Philip Lambert.

The appointments of Gerwyn Williams and Nigel Burton are subject to approval from the Company's nominated advisor after a customary director due diligence process.

Gerwyn Llewellyn Williams, aged 69

Gerwyn is a qualified Electrical Engineer with many years' hands on experience in the coal mining and unconventional gas industries having started work as an underground mine worker spending 22 years working for British Coal. He has founded a number of energy businesses and is currently the largest shareholder in Infinity Energy and the company's Chief Executive Officer. Gerwyn is also the Chairman of UK Onshore Gas, his family owned group of companies that hold 139,839 acres of Petroleum Exploration and Development Licences ("PEDL") in South Wales via wholly owned subsidiary companies Coastal Oil and Gas Limited, UK Methane Limited and Adamo Energy (UK) Limited. Gerwyn is also the sole Director of Transgas whose subsidiary South Western Energy Limited holds 203,590 acres of PEDLs in North Somerset and in Dorset adjacent to Wytch Farm. Transgas is wholly owned by the Williams family. Gerwyn is a Chartered Engineer, a Fellow of the Institute of Materials, Minerals and Mining, and a Fellow of the Energy Institute.

Nigel John Burton, aged 61

Nigel has over 25 years' experience in operational and financial management, debt and equity financing, acquisition and integration of businesses, disposals, IPOs and trade sales. Following over 14 years as an investment banker at leading City institutions including UBS Warburg and Deutsche Bank, including as the managing director responsible for the energy and utilities industries, Nigel spent 15 years as chief financial officer of a number of private and public companies, including Navig8 Product Tankers Inc, PetroSaudi Oil Services Limited, Advanced Power AG, and Granby Oil and Gas plc, followed by three years as Chief Executive Officer of Nu-Oil and Gas plc. Nigel is currently non-executive chairman of AIM-listed Remote Monitored Systems plc, and until March 2018 was a non-executive director of AIM-listed Management Resource Solutions plc.

Philip Scales will remain as an Isle of Man domiciled director.

For the avoidance of doubt, it is likely that the Board changes described above will take effect as soon as practicable following the completion of the Placing.

Following and subject to the approval of the Resolutions, it is the intention of the new Board to change the name of the Company to UK Onshore Plc (subject to the prior approval of the new name by the Isle of Man Registrar of Companies).

6.        Anti-Embarrassment Clause
 

As previously announced the Company has put in place an Anti-Embarrassment Clause attached to the disposal of the Company's indirect interest in Stopharm. The Company now confirms that any further consideration that may be received pursuant to the Anti-Embarrassment Clause will only be for the benefit for Shareholders on the Register as of 5 April 2019 (being the record date for the distribution of the Net Cash).  In this way, the Shareholders on the Register as of 5 April 2019 will be the sole beneficiaries of any further consideration received pursuant to the Anti-Embarrassment Clause.

Additional Information
 

Defined terms used but not defined in this announcement have their meanings set out in the circular to shareholders which will be available shortly on the Company's website at www.taucapitalplc.com

Further announcements will be made in due course.

 

For further information, please contact:

 

FIM Capital Limited

Philip Scales

 

Tel: +44 (0) 1624 681250

Allenby Capital Limited (Nominated Adviser and Joint Broker)

John Depasquale / Alex Brearley

Tel: +44 (0) 203 328 5656

 

 Peterhouse Capital Limited (Joint Broker)

Lucy Williams / Eran Zucker

Tel: +44 (0) 207 469 0933

 

 

 

 


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