TIDMAAA
RNS Number : 1289C
All Active Asset Capital Limited
16 June 2021
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF THE MARKET ABUSE REGULATIONS (EU) NO. 596/2014 AS
RETAINED IN UK LAW ("MAR"). UPON THE PUBLICATION OF THIS
ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN
THE PUBLIC DOMAIN
16 June 2021
ALL ACTIVE ASSET CAPITAL LIMITED
('AAA' or 'the Company')
Proposed placing to raise a total of GBP120m at 80p per
share
Proposed agreement to acquire at least 75% of Sentiance
Proposed cancellation of admission to trading on AIM
Portfolio update
The Board of AAA is pleased to announce a number of proposed
matters which the Directors believe will be transformational for
the Company once completed. The Company also provides an update on
its current portfolio of investments.
Proposed matters
Proposed placing and proposed conditional placing (together the
'Proposed Placing')
The Company is in the advanced stages of raising gross proceeds
of a) GBP12 million through a placing of 15 million new ordinary
shares at 80p per share to be conducted within the Company's
current share allotment authorities and b) gross proceeds of GBP108
million through a conditional placing of 135 million new ordinary
shares at a price of 80p per share ('the Proposed Conditional
Placing').
The Proposed Conditional Placing will be conditional, inter
alia, upon the passing of all resolutions at an extraordinary
general meeting of the Company that is to be convened (as described
below), the Company having completed the purchase of not less than
75% of the share capital of Sentiance (see below); and the Company
having exercised the remaining EUR119 million of its AAQUA Option
(see below).
Proposed acquisition
On 9 March 2021, MESH Holdings plc ('MESH') and AAQUA B.V.
('AAQUA') agreed a sale and purchase agreement whereby AAQUA would
acquire a significant majority equity holding in Sentiance N.V.
with MESH acquiring the balance ('SPA').
AAA is now proposing to enter into new conditional agreements
with MESH and AAQUA under which the benefit and burden of the SPA
would be transferred to AAA ('the Proposed Acquisition'). Under
these agreements, AAA is proposing to allot and issue 500 million
new AAA ordinary shares ('the Consideration Shares') to MESH or as
MESH directs. Upon completion of the Proposed Acquisition, AAA
would own at least 75% of the equity of Sentiance, with the balance
owned by AAQUA. It is also intended that AAA will agree to set off
repayment of the EUR3.65 million loan that it made to MESH in 2020
against the consideration for the Proposed Acquisition. AAA will
also lodge a bond in favour of Sentiance with Sentiance's legal
counsel. Should the Proposed Acquisition not complete, this bond
will automatically convert into Sentiance equity.
Suspension of trading on AIM
The Proposed Acquisition would be classed as a reverse takeover
under the AIM Rules for Companies and trading in the Company's
ordinary shares on AIM would be suspended, pending the publication
of an AIM admission document. Noting the Company's proposals in
relation to the Proposed Acquisition and the Proposed Cancellation
(as described below), trading in AAA's ordinary shares on AIM will
remain suspended.
Proposed cancellation of trading on AIM
Subject to entering into binding agreements for the Proposed
Placing and the Proposed Acquisition, AAA then intends to issue a
circular ('the Circular') to Shareholders convening an
extraordinary general meeting ('EGM') of the Company's
shareholders, detailing the reasons why it would then propose to
cancel the admission of the Company's ordinary shares to trading on
AIM via a special resolution that would be included in the notice
of EGM contained in the Circular ('the Proposed Cancellation'). The
Circular will set out further details of the background to and
reasons for the Proposed Cancellation, the reasons why the
Directors believe that the Proposed Cancellation will be in the
best interests of the Company and its shareholders as a whole, and
the Directors' recommendation to shareholders to vote in favour of
the special resolution to approve the Proposed Cancellation .
Should all of the resolutions be passed at the EGM, and on
completion of the Proposed Acquisition, the Proposed Placing and
the anticipated exercise of the remaining EUR119m of the AAQUA
Option (which would occur following the Proposed Cancellation), AAA
will own a substantial portfolio of technology assets, including a
controlling interest in Sentiance, which the Board believes have
the potential to unlock significant value for shareholders in the
future. The Company will also have a substantial balance sheet.
Furthermore, the Directors believe the opportunity to generate
significant incremental shareholder value means that the Company
will be better suited to being listed, in due course, on an
alternative international exchange.
Should the proposed special resolution in respect of the
Proposed Cancellation be approved by shareholders at the EGM, the
Directors will then consult with advisers to determine the most
efficient and effective route to achieve a listing for AAA on an
alternative international exchange in due course.
Update on portfolio
The Company has investments in the following companies:
AAQUA
AAQUA is developing a reimagined proposition around passions,
where community participants jointly curate original content,
combined with member inspired online-to-offline initiatives.
Incorporated in the Netherlands in July 2020, AAQUA is a private
company which currently has over 175 employees (including recent
joiners who are due to commence work) and plans for further rapid
expansion. During the past six months, senior employees have joined
AAQUA from companies including Facebook, TikTok, Netflix, ESPN,
Spotify, Twitter, Uber, Sony Pictures, and Red Bull.
AAQUA is planning a phased public activation of its services in
conjunction with multiple well-known global partners and brands in
Asia prior to the end of this year, with successive roll outs in
Europe and the rest of the world planned for 2022. As AAQUA has yet
to activate its services to the public, it is not yet revenue
generating. For the period from incorporation on 23 July 2020 to 31
January 2021, AAQUA's unaudited net loss was EUR5.1 million and its
unaudited net assets as at 31 January 2021 were EUR49.6
million.
AAA owns 6,000 ordinary AAQUA shares, which currently represent
1.2% of AAQUA's issued share capital. AAA also has an option
agreement with AAQUA (the 'AAQUA Option'). If exercised in part or
full, the AAQUA Option would form part of AAQUA's ongoing C-Round
equity financing, which is capped at a maximum of EUR200 million.
Under the terms of the AAQUA Option, AAA can, subject to certain
conditions, subscribe for up to 125,000 new AAQUA ordinary shares
('Option Shares') at EUR1,000 per share, of which EUR119 million
remains to be exercised.
The pre-money valuation of AAQUA for the purposes of the AAQUA
Option was c.EUR500 million. This valuation was determined
following negotiation between the boards of AAQUA and AAA as part
of AAQUA's ongoing C-round funding. The valuation was agreed having
taken into account historic and planned funding rounds by AAQUA and
the exercise conditions, the length of the AAQUA Option's term, its
Acceleration Clause (as described below) and the substantial size
of the option. The EUR1 million fee for the grant of the option was
negotiated to be offset against AAA's exercise of the option,
meaning that if AAA exercised EUR1 million or more of the option,
the cost of entering the option was effectively zero. This offset
occurred following the Company's first EUR6 million partial
exercise of the option in March 2021.
The AAQUA Option lapses on 10 December 2021, but this period
will be shortened if certain fundraising conditions are achieved by
AAQUA (the 'Acceleration Clause'). If the Acceleration Clause is
activated, AAA would then have 60 calendar days to exercise some or
all of the AAQUA Option. After that, the AAQUA Option automatically
lapses.
The AAQUA Option contains various vesting conditions within the
option agreement, to ensure that exercise of the AAQUA Option,
which is at the sole discretion of AAA, cannot under any
circumstances trigger a reverse takeover under Rule 14 of the AIM
Rules for Companies. Notwithstanding the AAQUA Option's vesting
restrictions, AAA does not presently have the funding to exercise
the AAQUA Option in full. Further capital would need to be raised
by AAA to enable full exercise of the AAQUA Option.
For illustrative purposes, in the event that AAA were able to
exercise the balance of the AAQUA Option in full today, then such
exercise would result in the Company owning 125,000 shares in
AAQUA, which would represent 19.5% of AAQUA's thus-enlarged share
capital. If AAA were to exercise the AAQUA Option in full and AAQUA
were to close its C-Round of funding in full, then AAA's 125,000
shares in AAQUA would represent a holding of 16.7% of AAQUA's
enlarged share capital. As is customary for a minority shareholder,
the Company does not have board representation or formal
information rights in relation to AAQUA.
AAQUA has been working in close collaboration with Sentiance on
its core technology. This includes a development and long-term
licence agreement regarding AAQUA's Algorithm of You, enabling
users to control the way content is recommended to them.
As announced by the Company on 9 March 2021, AAA provided an
update in relation to the proposed acquisition of Sentiance by MESH
and AAQUA, whereby, under a sale and purchase agreement, 100% of
Sentiance was to be acquired by AAQUA and MESH, with AAQUA being
due to acquire the significant majority equity holding in
Sentiance. As described in the Proposed acquisition section above,
it is proposed that these arrangements will be replaced by the
Proposed Acquisition of at least 75% of Sentiance by AAA, with the
balance being acquired by AAQUA. These new proposals, should they
be confirmed via binding agreements, will be conditional upon
certain other matters and will require the passing of certain
resolutions by shareholders at the EGM.
MESH and Sentiance
MESH is a private holding company whose principal asset is a 17%
equity stake in Sentiance, a Belgian intelligence-driven data
science and behaviour change company. For the year ended 30
September 2019, MESH's audited loss for the year was GBP13,859,000
(2018: GBP337,000) and its audited net assets as at 30 September
2019 were GBP16,636,000 (2018: GBP493,000).
Sentiance's technology is designed to turn motion data into
contextual insights and uses behavioural change techniques to
personalise engagement for safer and sustainable mobility and
wellbeing experiences. Sentiance works with many global companies
to create personalised engagement services and products through
intelligent contextual recommenders, delivering technology for a
new human-centric economy where the user is in control of their
data.
For the year ended 31 December 2019, Sentiance's unaudited loss
for the period was EUR5.8 million (2018: EUR8.1 million) and its
unaudited total assets as at 31 December 2019 were EUR4.2 million
(2018: EUR5.2 million).
AAA has a EUR3.65 million convertible loan note in MESH, which
can be converted, at the sole discretion of AAA, into new ordinary
MESH shares at 40p per MESH share. Should AAA fully exercise this
EUR3.65 million convertible loan note, then the Company would own
2.5% of MESH's share capital. MESH currently owns 21,333 shares in
Sentiance, or 17% of Sentiance's share capital, and as such the
full exercise of AAA's convertible loan note would give AAA an
indirect 0.43% interest in Sentiance.
AAA has acquired indirect holdings in Sentiance, via its EUR3.65
million convertible loan note in MESH and its equity interests in
Asimilar Group plc ('ASLR') because it is the Board's belief that
Sentiance is an exciting technology company with the potential to
grow significantly in value over time.
ASLR
ASLR is an AIM quoted company that focuses on investing in
businesses in the fields of big data, machine learning, telematics
and the internet of things (IoT) with content and delivery
capability which engage customers, monetise the user experience and
have potential to scale.
AAA owns 1,200,000 ordinary shares and 240,000 warrants in ASLR
(exercisable at 5p per share in ASLR and expiring on 31 May 2022).
Should AAA exercise its warrants, AAA's resultant holding would
represent 1.2% of ASLR's share capital. ASLR owns 24 million shares
in MESH, which is equivalent to 7.8% of MESH's share capital, while
MESH owns 17% of Sentiance's share capital. This means that AAA's
investments in ASLR provide the Company with an indirect 0.02%
interest in Sentiance.
AAA also holds an option to acquire warrants over 1,200,000 ASLR
shares, with these warrants being exercisable at 5p per ASLR share
each, expiring on 31 May 2022 (with AAA's option expiring on the
same date). Should AAA choose to exercise this option, then the
Company would need to issue 255,000,000 new ordinary shares in the
Company as consideration. Because of the market price of AAA's
shares this option will not be exercised by AAA but is noted here
for the sake of completeness.
Comparison of the holding value of AAA's investments relative to
its market capitalisation
As at 30 April 2021, the Company's investments had the following
unaudited holding values:
AAQUA: GBP5,228,000
MESH: GBP3,694,000
ASLR: GBP337,000
--------------------------------------
Total: GBP9,259,000
======
The investments are valued at fair value, in accordance with the
Company's accounting policies, as set out in its latest audited
accounts for the year ended 31 December 2019 published on 28
September 2020.
As at 30 April 2021 AAA had no investments other than those
listed above. In addition, AAA had GBP7,480,000 of cash with no
debt, and the net asset position shown by the Company's unaudited
consolidated balance sheet was GBP16,739,000. The most recent
previously announced unaudited net asset value prior to this was
GBP13,657,036 as at 11 December 2020. The remaining EUR119 million
AAQUA Option, which currently remains unexercised is valued at nil
in AAA's consolidated balance sheet. This compares to the Company's
market capitalisation of GBP551 million when its shares were
suspended from trading on AIM on 29 April 2021.
Other matters
The executive director of AAA, Rodger Sargent, has a 0.2% equity
holding in MESH. Neither he, nor any of the other directors of the
Company, has any other holdings in MESH, AAQUA, ASLR or
Sentiance.
The Board of AAA looks forward to updating the market in
relation to the Proposed Acquisition, Proposed Placing and the
Proposed Cancellation in due course.
For further information:
All Active Asset Capital Limited
James Normand, Non-Executive Chairman
Rodger Sargent, Executive Director
www.aaacap.com
Allenby Capital Limited (Nominated Adviser and Broker)
Alex Brearley / Nick Athanas
T: +44 (0) 203 328 5656
www.allenbycapital.com
Buchanan (Financial PR)
Richard Oldworth / Chris Lane / Toto Berger
T: +44 (0) 207 466 5000
E: AAAC@buchanan.uk.com
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END
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June 16, 2021 07:47 ET (11:47 GMT)
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