TIDMANIC
RNS Number : 8200X
Agronomics Limited
06 May 2021
6 May 2021
Agronomics Limited
("Agronomics" or the "Company")
New Consultancy Agreement and Related Party Transaction
Agronomics, a leading listed company in alternative proteins
with a focus on cellular agriculture and cultivated meat, announces
that it has agreed revised terms of its consultancy agreement with
Shellbay Limited ("Shellbay"), principally concerning the fee
arrangements in connection with the provision of consultancy
services to the Company by Shellbay.
Background to and reasons for the changes to the agreement
The Company has since 2011 had a consulting agreement with
Shellbay which is owned by Mr Jim Mellon, Director and 22.75%
shareholder in the Company, as reported annually in the Company's
Report and Accounts. In December 2019, following shareholder
feedback and in consultation with the Company's advisers, the terms
of this agreement were altered for the subsequent 12 months on the
basis that from January 2021 new arrangements would be put in place
to (i) ensure the terms of Shellbay's appointment were consistent
with market standard terms for commensurate services; (ii) provide
greater transparency and corporate governance regarding the role of
Shellbay; and (iii) establish a remuneration structure fully
aligned with shareholders, and acceptable to existing and future
investors.
The independent Directors of the Company, being Mr Richard Reed
and Mr David Giampaolo ("Independent Directors"), in consultation
with the Company's Nominated Adviser, have now agreed terms of a
new consulting agreement with Shellbay (the "New Shellbay
Agreement"), effective from 1 July 2020 (the "Effective Date"),
details of which are set out below.
Summary of the principal terms of the New Shellbay Agreement
Services to be provided
Under the terms of the New Shellbay Agreement Shellbay will
provide certain consulting services including:
-- Reviewing prospective asset purchases;
-- Procuring and coordinating due diligence in relation to any
target approved by the Company;
-- Providing appropriate information to the Board in relation to
any proposed acquisition or disposal opportunity;
-- Providing transaction support services as requested by the Company;
-- Assisting in operating, developing and commercialising any
intellectual property and/or assets of the Company (including by
way of joint venture, licensing agreement or other
partnership);
-- Developing new markets and/or territories for assets and/or
intellectual property owned by the Company (including by way of
manufacturing, distribution and/or branding partnerships);
-- Supplying the Board with regular reports on the progress of
companies and intellectual property where the Company has an
interest (including any financings); and
-- Assisting with recruitment of management teams and
operational supply chain partners for relevant products and
intellectual property.
Annual Fees and Expenses
Shellbay shall not be paid an annual consultancy fee (whether
fixed or relating to the net asset value of the Company's assets)
but the Company shall reimburse it for all reasonable and properly
documented direct expenses incurred in performing the services
(including the direct costs of remunerating employees and/or
consultants), save that aggregate monthly expenses shall not exceed
GBP20,000 other than with the consent of the Company.
Fee
Shellbay shall be entitled to an annual fee equal to the value
of 15% of any increase between the Company's net asset value
("NAV") on a per issued share basis at the start of a reporting
period and 30 June ("Closing NAV Date") each year during the term
of the New Shellbay Agreement, with the first reporting period
being from 1 July 2020 to 30 June 2021, and annually thereafter.
The opening and closing NAV for each period will be based on the
audited financial statements of the Company for the relevant
financial year, with the opening NAV for each reporting period
being the higher of (i) 5.86 pence per share (the highest annual
audited NAV per share since the Company adopted its current
investment policy and reported NAV per share in September 2019)),
and (ii) the highest NAV per share reported at a Closing Date for
the previous reporting periods during the term of the agreement
(establishing a rolling high-watermark for Shellbay to qualify for
such fee). Any increase in NAV per share will then be applied to
the issued share capital at the end of the relevant period for the
purposes of determining the 15% fee. Any change in NAV per share
that arises from funds raised at a premium or discount to the
existing NAV per share will therefore be considered for the
purposes of calculating Shellbay's fee by reference to the annual
audited accounts (for clarity being an increase in respect of a
premium and a decrease in respect of a discount).
The Independent Directors believe these are more appropriate
incentivisation criteria than under the current agreement, under
which the high water mark was reset at the price of each equity
raise and have also noted that Shellbay has not historically
charged any commission or fees in relation to its own fundraising
efforts for the Company.
At the election of the Company, the performance fee shall be
payable either in whole or in part by the issue of new shares at a
price equal to the mid-price on the last day of the relevant
Performance Period or grant of nil price warrants over shares; or
in cash; or (with the agreement of Shellbay), in cash-equivalents
(such as shares), and other assets held by the Company.
Shellbay has agreed with the Company that any fee due for the
first reporting period will be taken in shares to the equivalent
value of the fee (with shares issued at the mid-market price of
Ordinary Shares at close of markets on the last day of the
performance period, being 30 June 2021).
Other fees and expenses
The Company shall also pay to the Shellbay any additional fees
as mutually agreed in connection with any proposed fundraising or
strategic acquisition or disposal of an asset or any subsequent
offer of shares.
Term
Save in limited circumstances where the appointment of Shellbay
can be terminated for cause, or where Mr Mellon ceases to be a
Director of the Company and hold greater than 10% of issued shares,
the agreement can be terminated by either party on 12 months'
notice after an initial 5 year period (the "Initial Period"). Where
the New Shellbay Agreement is terminated prior to expiry of the
Initial Period, other than for cause or with the agreement of
Shellbay, Shellbay shall receive fees for the duration of the
Initial Term in relation to assets held by the Company at such date
(reflecting the fact that NAV increases may be recorded in relation
to assets acquired during the terms of Shellbay's appointment after
the termination date).
Related Party Transaction
Mr Jim Mellon and Mr Denham Eke are Directors of the Company and
Mr Mellon is currently interested in 22.75 per cent. of the
Company's ordinary shares (held by Galloway Limited ("Galloway"),
which is indirectly wholly owned by Mr Jim Mellon, and of which Mr
Denham Eke is a director). In addition, Galloway is the owner of
100% of the issued shares of Shellbay, and Mr Eke is its sole
director.
Due to Mr Jim Mellon's and Mr Denham Eke's interests in the
transaction, entering into the New Shellbay Agreement constitutes a
related party transaction under the AIM Rules.
Accordingly, Mr Richard Reed and Mr David Giampaolo, being the
Directors who are independent of the transaction, consider having
consulted the Company's Nominated Adviser, that the terms of the
transaction are fair and reasonable insofar as the Company's
Shareholders are concerned.
Separately, it is also noted that the Board is actively seeking
the appointment of an additional independent non-executive
Director.
About Agronomics
Agronomics is a leading listed alternative proteins company with
a focus on cellular agriculture and cultivated meat. The Company
has established a portfolio of 16 companies at the Seed to Series B
stage in this rapidly advancing sector. It seeks to secure a 5-10%
initial ownership in technologies with defensible intellectual
property that offer new ways of producing food and materials with a
focus on products historically derived from animals. These
technologies are driving a major disruption in agriculture,
offering solutions to improve sustainability, as well as addressing
human health, animal welfare and environmental damage. This
disruption will decouple supply chains from the environment and
animals, as well as being fundamental to feeding the world's
expanding population. A full list of Agronomics' portfolio
companies is available at https://agronomics.im/ .
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014 which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018.
For further information please contact:
Agronomics Beaumont Cenkos Peterhouse TB Cardew
Limited Cornish Limited Securities Capital
Plc Limited
The Company Nomad Joint Broker Joint Broker Public Relations
------------------ --------------- --------------------- ------------------------
Richard Reed Roland Cornish Giles Balleny Lucy Williams Ed Orlebar
Denham Eke James Biddle Max Gould Charles Goodfellow Joe McGregor
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+44 (0) 20 7930
0777
+44 (0) 1624 +44 (0) 7738
639396 +44 (0) 207 +44 (0) 207 +44 (0) 207 724 630
info@agronomics.im 628 3396 397 8900 469 0936 agronomics@tbcardew.com
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