TIDMGSH
RNS Number : 7042Y
Green & Smart Holdings plc
03 January 2020
Not for publication, distribution or release directly or
indirectly, in whole or in part, in or into the United States, the
Republic of South Africa, Australia, Canada or Japan in or into any
other jurisdiction where offers or sales would be prohibited by
applicable law. This announcement is for information purposes only
and is not an offer to sell or a solicitation to buy securities in
Green & Smart Holdings plc or any other entity in any
jurisdiction, including the United States, the Republic of South
Africa, Australia, Canada or Japan.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the EU Market Abuse Regulation (596/2014). Upon the publication of
the announcement via a regulatory information service, this
information is considered to be in the public domain.
3 January 2020
Green & Smart Holdings plc
("Green & Smart", the "Company" or the "Group")
Proposed waiver of obligations under Rule 9, Directorate Change
and Notice of Extraordinary General Meeting
Green & Smart Holdings plc (AIM: GSH), a renewable energy
company generating power from biogas captured through the treatment
of palm oil mill effluent ("POME") in Malaysia, announces that it
has today posted to its Shareholders a circular (the "Circular")
convening an Extraordinary General Meeting ("EGM") of the Company
to be held on 24 January 2020 at 2.00pm GMT at the offices of
Charles Russell Speechlys LLP, 5 Fleet Place, London EC4M 7RD to
seek independent Shareholder approval of a waiver of obligations
under Rule 9 of the City Code on Takeovers and Mergers in
connection with a debt-for-equity swap (the "Whitewash
Resolution").
A copy of the Circular is available on the Company's website:
http://www.greennsmart.com.my/
It has been proposed that, following the passing of the
Whitewash Resolution at the Company's EGM, Mohd Abdul Karim Bin
Abdullah, Managing Director and CEO of Serba Dinamik Holdings, be
appointed as Non-executive Chairman of the Company to replace Datuk
Haji Radzali Hassan and that Habizan Rahman Bin Habeeb Rahman be
appointed as a Non-executive Director of the Company. These
appointments are subject to standard regulatory checks and
approvals. In addition, it is intended that Messrs Saravanan
Rasaratnam and Navindran Balakrishnan step down as Executive
Directors with effect from the forthcoming Annual General Meeting
(which is expected to be held in February 2020, notice of which
will be given to Shareholders in due course), but will remain with
the Company as consultants to assist with the Company's operations.
Further announcements will be made to the market in due course.
Further information on the Whitewash Resolution and the proposed
directorate change can be found in the extracts from the Circular
below.
Capitalised and defined terms used in this announcement have the
meanings given to them in the Circular.
Enquiries
Green & Smart Holdings plc
Syed Nazim bin Syed Faisal, Executive Director +603 2095 0024
Beaumont Cornish (Nominated Adviser)
Roland Cornish, Felicity Geidt +44 20 7628 3396
Optiva Securities (Broker)
Vishal Balasingham +44 20 3137 1903
Luther Pendragon (Financial PR Adviser)
Claire Norbury, Rachel So +44 20 7618 9100
Extracts from the circular
Approval of a waiver under Rule 9 of the City Code on Takeovers
and Mergers and Notice of General Meeting
1 Introduction
1.1 On 19 July 2018, the Company announced that it had raised
approximately GBP3.2 million via the subscription for 51,806,000
new Ordinary Shares by Serba Dinamik International, at a price of
approximately 6.19 pence per Ordinary Share.
On 25 September 2018, the Company announced the appointment of
Mr Syed Nazim bin Syed Faisal as Finance Director and an Executive
Director of the Company with immediate effect, pursuant to the
Company's subscription agreement with Serba Dinamik
International.
On 4 December 2018, the Company announced that it has been
notified that Serba Dinamik Group had purchased from K2M Ventures,
a company wholly-owned by Mr Saravanan Rasaratnam (CEO and a
director of the Company) and Mr Navindran Balakrishnan (COO and a
director of the Company), 34,537,581 Ordinary Shares, representing
10.0 per cent. of the issued share capital of the Company at a
price of 6.97 pence per Ordinary Share.
On 24 May 2019, the Company announced that it had entered into
an agreement with Mr Syed Nazim bin Syed Faisal, Finance Director
of the Company, for a 12-month interest-free loan of GBP1.6 million
(the Loan) to be used by the Company for working capital
purposes.
The Company has now agreed with Mr Syed Nazim bin Syed Faisal to
convert the Loan into 86,343,953 new Ordinary Shares representing
20 per cent. of the Enlarged Share Capital, which is at an
effective share price of approximately 1.85 pence and therefore at
a 51.9 per cent. discount, compared to the closing mid-market price
on AIM of the Company's Ordinary Shares on 2 January 2020 (being
the latest practical date before publication of this Circular) of
3.85 pence.
In addition, it has been proposed by the Concert Party that Mohd
Abdul Karim Bin Abdullah, Managing Director and CEO of Serba
Dinamik Holdings (short biography set out at paragraph 3.9 of this
Part 1 below) is appointed a Non-executive Chairman of the Company
following the passing of the Whitewash Resolution at the Company's
EGM to replace Datuk Haji Radzali Hassan. Furthermore, the Company
proposes at the same time to appoint Habizan Rahman Bin Habeeb
Rahman, Director of K2MV, as a Non-executive Director of the
Company. These appointments are subject to standard regulatory
checks and approvals and a further announcement will be made in due
course. In addition, it is intended with effect from the
forthcoming AGM that Messrs Saravanan Rasaratnam and Navindran
Balakrishnan step down as Executive Directors but will remain with
the Group as consultants to assist with the Group's operations. The
Company is reviewing the need for the appointment of further
Executive Directors and may also make future Non-executive Director
appointments to support the Group's ongoing business strategy.
The primary focus of the Company's business is to Build, Own and
Operate (BOO) Biogas Power Plants on behalf of Palm Oil Mill
owners. This benefits the Mill owners as they are not required to
outlay capital to build a palm oil mill effluent (POME) treatment
facility and at the same time become compliant with Malaysian and
international environmental standards. Consequently, the Company
has sought to create a sustainable long-term capital structure from
which to further develop its business. The Independent Directors
consider the loan restructuring would allow the Company to progress
various alternative financing options and hence consider the Debt
for Equity Swap as necessary to remove the overhang of the debt,
which is hindering progress in these matters.
In their consideration of the Debt for Equity Swap and the
Whitewash Resolution, the Independent Directors have taken note of
the facts that the members of the Concert Party will be locked in
(as described below) in respect of their entire holdings of
Ordinary Shares, including those held before the Debt for Equity
Swap, and also that the members of the Concert Party have entered
into the Relationship Agreement to ensure that the Group can act
independently of the members of the Concert Party.
1.2 Serba Dinamik International and Serba Dinamik Group are both
wholly-owned subsidiaries of Serba Dinamik Holdings Berhad and Mr
Syed Nazim bin Syed Faisal has been, since August 2015, Chief
Financial Officer of Serba Dinamik Holdings. Accordingly, these
parties are considered a Concert Party under the City Code.
1.3 The Concert Party is currently interested in, in aggregate,
86,343,581 Existing Ordinary Shares, representing approximately 25
per cent. of the Existing Ordinary Shares.
1.4 Accordingly, on completion of the Debt for Equity Swap, the
Concert Party's interest in the Company would increase to, in
aggregate, 172,687,534 Ordinary Shares representing approximately
40 per cent. of the Enlarged Share Capital.
1.5 Therefore, the Board is seeking the approval of the
Independent Shareholders on a poll of the Rule 9 Waiver which the
Panel has agreed with the Company to grant, subject to the passing
of the Whitewash Resolution by the Independent Shareholders at the
EGM, of any obligation on the part of the Concert Party, to make a
general offer to Shareholders under Rule 9 of the City Code which
would arise upon the Debt for Equity Swap as more fully set out in
paragraph 1.1 of this Part 1. Further details of the Rule 9 Waiver
are set out in paragraph 4 of this Part 1.
1.6 The Rule 9 Waiver is conditional upon, inter alia,
Independent Shareholder approval of the Whitewash Resolution on a
poll, which will be sought at the forthcoming EGM to be held at the
offices of Charles Russell Speechlys LLP, 5 Fleet Place, London
EC4M 7RD at 2:00 p.m. on 24 January 2020. You will find a Notice of
EGM at the end of this Circular. A Form of Proxy is also enclosed
with this Circular.
1.7 The purpose of this Circular is to: (i) provide you with
details of and background to the Rule 9 Waiver and the reasons why
the Directors believe that the Transaction is in the best interests
of the Company and its Shareholders as a whole and, also, why the
Independent Directors recommend that the Independent Shareholders
vote in favour of the Whitewash Resolution at the EGM; and (ii)
seek your approval for the Whitewash Resolution to be proposed at
the EGM.
1.8 The actions that you should take to vote on the Whitewash
Resolution, and the recommendation of the Independent Directors,
are set out in paragraphs 9 and 12 of this Part 1,
respectively.
1.9 Should the Whitewash Resolution be approved at the EGM, the
Ordinary Shares to be issued in connection with the Debt for Equity
Swap are expected to be issued on or around 27 January 2020. The
Company and the members of the Concert Party have entered into a
relationship agreement (effective subject to the passing of the
Whitewash Resolution and the issue of Ordinary Shares pursuant to
the Debt for Equity Swap) to regulate the relationship between them
and to ensure that the rights of Independent Shareholders are fully
upheld and which is summarised at paragraph 3.11 of this Part 1 and
paragraph 7.1.1 of Part 3. In addition, the members of the Concert
Party have entered into lock-in agreements in respect of the
Ordinary Shares in the Company already held by them and the new
Ordinary Shares to be issued in connection with the Debt for Equity
Swap, which are summarised at paragraph 3.12 of this Part 1 and
paragraphs 7.1.2 and 7.1.3 of Part 3.
2 Current activities, trading and prospects
2.1 Green & Smart, which was listed on AIM, a market
operated by the London Stock Exchange, on 12 May 2016, operates in
the renewable energy sector in Malaysia, focusing on the generation
of power from biogas captured through the treatment of POME. Its
principal wholly-owned operating subsidiary, Green and Smart Sdn.
Bhd. ("GNS"), incorporated on 11 March 1980 as Mardec Engineering
Sdn Bhd, was primarily involved in wastewater treatment for the
rubber industry before venturing into waste treatment for the Palm
Oil Sector as this became an increasingly important market in
Malaysia and Indonesia.
GNS has undertaken and completed numerous wastewater treatment
projects in Asia including a World Bank project and four biogas
capture facilities owned by Felda Palm Industries Sdn Bhd, a
subsidiary of Felda Global Ventures, which is the world's largest
crude Palm Oil producer.
In 2018, Serba Dinamik Holdings, a publicly listed company on
Bursa Malaysia with a market capitalisation of RM6.241 billion
(Source: Bloomberg https://www.bloomberg.com/quote/SDH:MK, dated 7
November 2019), via its subsidiaries, Serba Dinamik International
and Serba Dinamik Group, acquired a 25 per cent. stake in the
Company. The Chief Financial Officer of Serba Dinamik Holdings, Mr
Syed Nazim bin Syed Faisal, was then appointed Executive Director
of the Company.
Since Serba Dinamik Holdings invested in the Company, Green
& Smart has changed its business focus from being an EPCC
contractor building Biogas Power Plant (BPP) for other Palm Oil
Mill owners into building their own BPP.
To date, Green & Smart has successfully commissioned its
first fully-owned BPP of 2MWh installed capacity at Kluang, Felda
Kahang and its second fully-owned BPP of 2MWh in Malpom, Penang.
Preliminary ground works, including technical drawings and
specifications, vendor selection and necessary approvals are all in
place for the third BPP. Construction has already commenced and as
at today's date has reached about 50 per cent., with completion
expected in mid-2020.
The Company has therefore positioned itself as an IPP through
the construction, operation and ownership of BPPs providing
electricity to the Malaysian National Grid through the
Feed-in-Tariff mechanism.
The change in business direction is largely to take advantage of
government incentives and as well as capitalising on the Company's
own intellectual properties. This will guarantee captive income for
the Company in the next sixteen years and beyond. The Company
expects to secure and own more Biogas Plants in years to come given
the significant market potential in Malaysia and Indonesia.
The Company will continue, as a secondary line of business
income, to offer its expertise as an EPCC contractor for third
party power plants as well as providing Operations &
Maintenance Management of these power plants upon successful
commissioning, for the entire duration of the plants'
existence.
The Company has developed a strong pipeline of opportunities,
both in the building and ownership of BPP to produce electricity
through the process of treating POME, as well as in contracting to
develop BPP for third parties, and has built relationships with
some of Malaysia's largest Palm Oil businesses.
GNS operates in a fast-growing market underpinned by Government
legislation to reduce greenhouse gases and increase contribution of
renewable energy (RE) in Malaysia. The 2014 Directive issued by the
Malaysian Palm Oil Board for all Palm Oil Mills to have in place
Biogas Facilities / Methane Avoidance Facility by 2020. In
addition, all applications for new Mills and Mills seeking approval
for expansion in capacity must provide details of having in place
Biogas Facilities / Methane Avoidance Facilities prior to approval.
As at end 2016, there were 453 mills in operations in Malaysia with
an estimated 30 to 40 plants under planning and construction, all
expected to have biogas facilities by the year 2020.
3 City Code on Takeovers and Mergers
Application of the City Code to the Company
3.1 As a company incorporated in Jersey with shares admitted to
trading on AIM, the Company is subject to the City Code and the
requirements of Rule 9 of the City Code, which requires that any
person who acquires, whether by a single transaction or a series of
transactions over a period of time, an Interest (as defined in the
City Code) in shares which, taken together with shares in which
persons acting in concert with him are already interested, carry 30
per cent. or more of the voting rights of a company which is
subject to the City Code, will normally be required by the Panel to
make a general offer to all the remaining shareholders of that
company to acquire their shares.
3.2 Rule 9 of the City Code further provides that where any
person, together with any persons acting in concert with him, is
interested in shares which, in aggregate, carry not less than 30
per cent. of the voting rights of such a company but does not hold
shares carrying more than 50 per cent. of such voting rights, and
such person, or any such persons acting in concert with him,
acquires an interest in any other shares which increases the
percentage of shares carrying voting rights in which he is
interested, such person or persons acting in concert with him will
normally be required to make a general offer to all remaining
shareholders to acquire their shares.
3.3 An offer under Rule 9 of the City Code must be made in cash
and at the highest price paid by the person required to make the
offer, or any person acting in concert with him, for any interest
in shares in the company during the 12 months prior to the
announcement of the offer.
3.4 Under the City Code, a concert party arises where persons
acting together pursuant to an agreement or understanding (whether
formal or informal) co-operate to obtain or consolidate control of,
or to frustrate the successful outcome of an offer for a company,
subject to the City Code. Control means an interest, or interests,
in shares carrying, in aggregate, 30 per cent. or more of the
voting rights of a company, irrespective of whether such interest
or interests give de facto control. The members of the Concert
Party are deemed to be acting in concert for the purposes of the
City Code.
Position of the Concert Party
3.5 Serba Dinamik Holdings is currently interested in, in
aggregate, 86,343,581 Ordinary Shares, via its wholly-owned
subsidiaries Serba Dinamik International, which holds 51,806,000
Ordinary Shares and Serba Dinamik Group which holds 34,537,581
Ordinary Shares. This aggregate interest represents 25 per cent. of
the Existing Ordinary Shares.
3.6 Mr Syed Nazim bin Syed Faisal, Serba Dinamik Holdings and
its two subsidiaries Serba Dinamik International and Serba Dinamik
Group are considered to be acting in concert for the purposes of
the City Code. Mr Syed Nazim bin Syed Faisal is an executive
director of the Company and was appointed on 25 September 2018. His
appointment was made pursuant to the Company's subscription
agreement with Serba Dinamik International announced on 19 July
2018, pursuant to which Serba Dinamik International was entitled to
appoint one executive director to the Company's Board of Directors
for as long as Serba Dinamik International holds at least 15 per
cent. of the Company's issued share capital.
3.7 The aggregate interests of all the members of the Concert
Party currently comprises 86,343,581 Ordinary Shares representing
approximately 25 per cent. of the Existing Ordinary Shares.
3.8 The table below sets out the proposed participation in the
Debt for Equity Swap, along with current shareholdings. Further
information on each member of the Concert Party is provided in
paragraph 3.9 of this Part 1 below.
Name Number of Percentage Total Number of
Ordinary of number Ordinary
Shares Existing of Ordinary Shares
interested Ordinary Shares interested
in as at Shares interested in
the in following
date of the following completion
Circular completion of the
of the Debt Debt
for Equity for Equity
Swap Swap as
a
percentage
of the
Enlarged
Share
Capital
Serba Dinamik
International 51,806,000 14.99% 51,806,000 12%
Serba Dinamik
Group 34,537,581 9.99% 34,537,581 8%
Syed Nazim
bin Syed
Faisal - 0.00% 86,343,953 20%
Serba Dinamik - - - -
Holdings
Concert Party
aggregate
total 86,343,581 25.00% 172,687,534 40%
Other
Shareholders 259,032,231 75.00% 259,032,231 60%
Total 345,375,812 100% 431,719,765 100%
3.9 Information on each member of the Concert Party
Serba Dinamik Holdings, Serba Dinamik International and Serba
Dinamik Group
Serba Dinamik International and Serba Dinamik Group are both
wholly-owned subsidiaries of Serba Dinamik Holdings, which is
listed on the Main Market of Bursa Malaysia Securities Berhad.
Serba Dinamik Holdings has been listed since 8 February 2017 and
its stock name is SERBADK and Stock Code 5279.
Serba Dinamik Holdings was incorporated as a private limited
company in Malaysia, under the name of Serba Dinamik Holdings Sdn
Bhd on 2 December 2015, and was subsequently converted into a
public limited company on 13 May 2016. Established in 1993, Serba
Dinamik Holdings, through its subsidiaries, is an international
energy services group providing integrated engineering solutions to
the Oil & Gas, petrochemical, power generation industries,
water & wastewater and utilities.
The main business of the Serba group is in operations and
maintenance (O&M), and engineering, procurement, construction
and commissioning (EPCC), IT Solutions and Education &
Training. It has operational offices in Malaysia, Indonesia, UAE,
Bahrain, Qatar, Singapore, India and UK. Serba Dinamik Holdings
itself is an investment holding company and is principally involved
in the provision of management services.
Set out below are details of the names of the directors,
registered office and activities of each of the corporate Concert
Party members.
Company Serba Dinamik Serba Dinamik Group Serba Dinamik Holdings
International Berhad Berhad
Limited
Registered Number, LL03436 663460-T 1167905-P
Registered office
and place of Level 6(D), Level 15, Level 15,
incorporation Main Office Menara Serba Dinamik, Menara Serba Dinamik,
Tower, Presint 3.4, Presint 3.4,
Financial Park, Persiaran Perbandaran, Persiaran Perbandaran,
Jalan Merdeka, Seksyen 14, Seksyen 14,
P.O. Box 80887, 40000 Shah Alam, 40000 Shah Alam,
87018 Labuan, Selangor, Selangor,
F.T. Labuan, Malaysia. Malaysia.
Malaysia.
Directors 1. Mohd Abdul 1. Mohd Abdul Karim 1. Tengku Dato'
Karim bin Abdullah bin Abdullah Seri Hasmuddin
2. Awang Daud 2. Awang Daud bin Tengku Othman
bin Awang Putera Awang Putera 2. Mohamed Nor
3. Abdul Kadier bin Abu Bakar
Sahib 3. Mohd Abdul Karim
bin Abdullah
4. Awang Daud bin
Awang Putera
5. Abdul Kadier
Sahib
6. Sharifah Irina
binti Syed Ahmad
Radzi
7. Hasman Yusri
bin Yusoff
8. Rozilawati binti
Haji Basir
Activities Trading and Investment holding Investment holdings
Non-trading: and provision of and provision of
Undertake Serba management services. management services.
Dinamik's group
international
business for
total engineering
maintenance
services.
Information on Controlling Shareholders in Serba Dinamik
Holdings
Dato' Dr. Ir. Mohd Abdul Karim Bin Abdullah (Malaysian, age
54)
Dato' Karim has been SDHB's Group Managing Director/Group CEO
and Non-Independent Executive Director since May 2016. He has a
23.7% interest in Serba Dinamik Holdings. Dato' Karim holds a
Bachelor in Mechanical Engineering from Universiti Teknologi
Malaysia. He started his engineering career 31 years ago with Asean
Bintulu Fertilizer Sdn Bhd (1988) as a Mechanical Engineer. In
1993, he formed Serba Dinamik and assumed the position as the Group
Chief Executive Officer.
Dato' Awang Daud Bin Awang Putera (Malaysian, age 59)
Dato' Awang Daud is the Non-Executive Director and 9.5%
shareholder in Serba Dinamik Holdings. In 2018, Dato' Awang Daud
was conferred the highest professional qualification of CHARTERED
FELLOW which carries the post nominal FCILT from The Chartered
Institute of Logistics and Transport Malaysia (CILTM) which is
locally and internationally recognized. He joined Serba Dinamik in
1994 as a director and was involved in field supervision,
coordination and managing various projects, construction and
fabrication tasks, planning and tendering, attending negotiation
and handling managerial portfolios.
Abdul Kadier Sahib (Malaysian, age 70)
Abdul Kadier is the Non-Independent Non-Executive Director and
18.9% shareholder in Serba Dinamik Holdings. He obtained his
Bachelor Degree in Economics in 1973 from the University of Malaya,
Malaysia. He began his career as a marketing executive with
Diethlem Sdn Bhd in 1973 for one year and later joined Sarawak
Economic Development Corporation, where he served as a marketing
officer until 1976. In 1976, he started his own business in
diversified areas of food industry, road transportation,
agriculture and forestry. In July 1994, he was appointed as a
director in Serba Dinamik and subsequently became a shareholder of
Serba Dinamik in October 1994.
In the 2018 Annual Report of Serba Dinamik Holdings, the MD/CEO
reported "Financially, we have achieved a significant growth of
20.60% in revenue at RM3.28 billion for the Financial Year Ended
2018 ("FYE2018"), as compared to RM2.72 billion for the preceding
financial year ended 31 December 2017 ("FYE2017"). The improvement
in revenue was mainly driven by our operations & maintenance
("O&M") segment. Hence, the Company's Profit Before Tax ("PBT")
and Profit After Tax ("PAT") for FYE2018 stood at RM437.63 million
and RM392.84 million, with an increment of 26.46% and 28.89%
respectively as compared to RM346.0 million and RM304.79 million in
FYE2017."
Certain financial information of Serba Dinamik Holdings is
incorporated by reference into this document as set out at Part 2
Section B.
Syed Nazim bin Syed Faisal (Malaysian, age 39)
Syed Nazim is an Executive Director of the Company and has over
15 years' experience in the accounting and banking sectors. Since
August 2015, Mr Nazim has been the Chief Financial Officer of Serba
Dinamik Holdings Berhad, the Malaysia-based investment holding
company that manages the Serba Dinamik group of international
energy services companies. Prior to joining Serba Dinamik, he held
positions at Ibdar Bank, RHB Islamic Bank and KPMG. Mr Nazim is
also a director or partner of the following companies or
partnerships: CSE Global Limited, Fahrenheit Café Sdn Bhd, NAK
Ventures Sdn Bhd, BIRR Capital Limited and PT Amorsk Indonesia.
3.10 Related Party Transaction
3.10.1 The Debt for Equity Swap, will be a related party
transaction for the purposes of Rule 13 of the AIM Rules for
Companies (Rule 13), as (i) Syed Nazim bin Syed Faisal is a
Director of the Company; and (ii) the issue of 86,343,953 new
Ordinary Shares pursuant to the Debt for Equity Swap will exceed 5
per cent. in certain of the class tests (as that term is defined in
the AIM Rules for Companies).
3.10.2 Saravanan Rasaratnam and Navindran Balakrishnan are
guarantors to the Loan and are therefore considered to be
interested in the Debt for Equity Swap for the purposes of Rule
13.
3.10.3 Accordingly, the Directors (excluding Mr Syed Nazim bin
Syed Faisal, Saravanan Rasaratnam and Navindran Balakrishnan)
confirm that, having consulted with the Company's nominated
adviser, Beaumont Cornish, they consider the terms of Debt for
Equity Swap to be fair and reasonable insofar as Shareholders are
concerned, and in the best interests of Shareholders and of the
Company as a whole.
3.11 The Relationship Agreement
Pursuant to an agreement dated 2 January 2020 made between (1)
the Company, (2) Mr Syed Nazim bin Syed Faisal, (3) Serba Dinamik
Holdings, (4) Serba Dinamik International, (5) Serba Dinamik Group
and (6) Beaumont Cornish Limited (the Relationship Agreement) the
parties, subject to the passing of the Whitewash Resolution and the
issue of the Ordinary Shares pursuant to the Debt for Equity Swap,
agreed to manage the relationship between them to ensure, inter
alia, that:
-- the Company will at all times be capable of carrying on its
business independently of the members of the Concert Party; and
-- all transactions and arrangements between the Company and the
members of the Concert Party will be at arm's length and on normal
commercial terms.
The provisions of the Relationship Agreement will remain in
force for so long as:
-- the Ordinary Shares are admitted to trading on AIM; and
-- the aggregate interest of the Concert Party in the Ordinary
Shares represents 20 per cent. or more of the issued Ordinary
Shares.
3.12 Lock-in Deeds
3.12.1 Pursuant to an agreement dated 2 January 2020 made
between (1) the Company, (2) Mr Syed Nazim bin Syed Faisal, (3)
K2MV, (4) Saravanan Rasaratnam, (5) Navindran Balakrishnan, (6)
Serba Dinamik Group, (7) Simon Peter and (8) Beaumont Cornish
Limited (the SEDA Lock-in Deed), each of the parties agreed,
subject to the passing of the Whitewash Resolution and the issue of
the Ordinary Shares pursuant to the Debt for Equity Swap, not to
effect any disposal of the Ordinary Shares held by them unless and
until the proposed transferor obtains a legal opinion from its
Malaysian lawyers in terms satisfactory to the Company and Beaumont
Cornish that no member of the Group is subject to any restriction
on foreign ownership under the Malaysian Renewable Energy Rules,
including without limitation a requirement that no foreign person
or persons should hold, directly or indirectly, more than 49 per
cent. of the voting power or issued share capital (excluding
preference shares) of a Malaysian incorporated company which
qualifies as an "eligible producer" under the relevant Malaysian
Renewable Energy Rules. For those parties to the agreement who are
members of the Concert Party, the agreement imposes a lock-in
period of 12 months from the date of issue of the Ordinary Shares
pursuant to the Debt for Equity Swap, irrespective of whether a
legal opinion is obtained or not.
Further, any acquirer of such Ordinary Shares is required to
enter into a lock-in agreement on equivalent terms to the SEDA
Lock-in Deed and the Company may also impose further arrangements
or requirements on a proposed disposal to prevent any breach of the
Malaysian Renewable Energy Rules. This agreement, subject to the
condition to its coming into force being met, will supersede the
agreement between the parties (other than Mr Syed Nazim bin Syed
Faisal) dated 4 December 2018, which contains identical
restrictions on disposals of Ordinary Shares.
3.12.2 Pursuant to an agreement dated 2 January 2020 made
between (1) the Company, (2) Serba Dinamik International and (3)
Beaumont Cornish, Serba Dinamik International agreed to not dispose
of any Ordinary Shares held by it for a period of 12 months from
the date of issue of the Ordinary Shares pursuant to the Debt for
Equity Swap. Serba Dinamik International entered into a separate
lock-in agreement as, for the purposes of the Malaysian Renewable
Energy Rules, it is a foreign entity as it is established in
Labuan, an offshore free trade zone, and therefore is not a
Malaysian person.
3.12.3 The restrictions on the disposal of Ordinary Shares
contained in the Lock-In Deeds do not apply to certain
circumstances. Further details of the Lock-In Deeds can be found in
paragraphs 7.1.2 and 7.1.3 of Part 3.
4 Rule 9 Waiver and Whitewash Resolution
4.1 Following consultation by the Company, the Panel has
confirmed that Mr Syed Nazim bin Syed Faisal, Serba Dinamik
Holdings, Serba Dinamik International and Serba Dinamik Group,
constitute a 'concert party' under the City Code. Details of the
individual Shareholders who qualify as the Concert Party and
further information on the members of the Concert Party are set out
in paragraphs 1.2 and 3.9 of this Part 1.
4.2 The Debt for Equity Swap will result in Mr Syed Nazim bin
Syed Faisal having a 20 per cent. holding of the Company's issued
share capital and will also result in an increase in the Concert
Party's aggregate percentage interest to over 30 per cent. of the
Company's issued share capital and as such prompt a mandatory offer
under Rule 9 of the City Code.
4.3 Under Note 1 of the Notes on the Dispensations from Rule 9
of the City Code, the Panel may waive the requirement for a general
offer to be made in accordance with Rule 9 of the City Code if,
inter alia, the shareholders of the company who are independent of
the person who would otherwise be required to make an offer, and
any person acting in concert with him, pass an ordinary resolution
on a poll at a general meeting or by way of a written resolution
approving such a waiver.
4.4 Accordingly, the Company proposes that the Independent
Shareholders waive the obligation on the Concert Party to make a
mandatory offer under Rule 9 of the City Code, which would
otherwise arise as a result of the Debt for Equity Swap.
4.5 The Panel has agreed, subject to the passing of the
Whitewash Resolution by the Independent Shareholders on a poll at
the EGM, to waive the requirement under Rule 9 of the City Code for
the Concert Party, collectively and/or individually, to make a
mandatory offer for the Ordinary Shares not already owned by it or
persons connected with it as would otherwise arise on the Debt for
Equity Swap.
4.6 The Panel has agreed to the Rule 9 Waiver on the basis that
the Independent Directors, who have been so advised by Beaumont
Cornish, consider the terms of the Rule 9 Waiver to be fair and
reasonable and in the best interest of the Independent Shareholders
and the Company as a whole.
5 Potential voting rights of the Concert Party
If the Whitewash Resolution is passed at the EGM, on the
assumption that no options or convertibles are awarded or exercised
and no other shares are issued, the Concert Party's holding in the
Company's issued share capital would increase to 172,687,534
Ordinary Shares, representing 40 per cent. of the voting rights in
the Company.
As a result of the Debt for Equity Swap, the Concert Party will,
in aggregate, be interested in shares carrying more than 30 per
cent. of the Company's voting share capital but will not hold
shares carrying more than 50 per cent. of such voting rights and
(for so long as they continue to be treated as acting in concert)
any further increase in that aggregate interest in voting shares in
the Company (other than the issue of the Ordinary Shares pursuant
to the Debt for Equity Swap) will be subject to the provisions of
Rule 9.
6 Independent advice
6.1 Beaumont Cornish has provided advice to the Independent
Directors in relation to the Rule 9 Waiver in accordance with the
requirements of paragraph 4(a) of Appendix 1 to the City Code.
6.2 This advice was provided by Beaumont Cornish to only the
Independent Directors and, in providing such advice, Beaumont
Cornish has taken into account the Independent Directors'
commercial assessments.
6.3 The Independent Directors, who have been so advised by
Beaumont Cornish, consider that the approval of the waiver by the
Panel of any requirement for the members of the Concert Party to
make a general offer to shareholders under Rule 9 of the City Code,
is fair and reasonable and in the best interests of the Independent
Shareholders and the Company as a whole.
7 Intentions of the Concert Party
7.1 The Concert Party has confirmed that, other than the
proposed appointment of the Non-executive Chairman to the Board of
the Company nominated by the Concert Party, further details of
which are set out at paragraph 1.1 above, it and each individual
member of the Concert Party (whether acting in its capacity as a
Director or a Shareholder) has no intention to make, or seek to
make, any change in respect of the Company's: (i) business or any
research and development functions; (ii) maintenance of its
admission to AIM; (iii) the continued employment of the employees
and management or any conditions of employment or in the balance of
skills and functions of the employees and management; (iv)
strategic plans and their likely repercussions on employment and on
the location of the Company's place of business or on the location
of the Company's headquarters and headquarters functions; or (iv)
redeployment of its fixed assets and those of its subsidiaries
following any increase in its shareholding as a result of the Debt
for Equity Swap. In addition, the Concert Party has no intention to
change employer contributions into
the Company pension scheme, the accrual of benefits for existing
members (if any) or the admission of new members.
7.2 In the event that the Debt for Equity Swaps and Rule 9
Waiver are approved at the EGM, no member of the Concert Party will
be restricted from making an offer for the Company.
8 EXTRAORDINARY General Meeting
8.1 An Extraordinary General Meeting of the Company, notice of
which is set out at the end of this Circular, is to be held at the
offices of Charles Russell Speechlys LLP, 5 Fleet Place, London
EC4M 7RD on 24 January 2020 at 2:00 p.m. at which the Whitewash
Resolution will be proposed. Please note that the summary and
explanation set out below is not the full text of the Whitewash
Resolution and Shareholders should review the full text of the
Resolution before returning their Forms of Proxy.
8.2 In summary, the Whitewash Resolution, which will be proposed
as an ordinary resolution, seeks the approval of the Independent
Shareholders to waive the obligation on the Concert Party which
would otherwise arise under Rule 9 of the City Code as a result of
the Debt for Equity Swap.
8.3 Only the Independent Shareholders will be entitled to vote
on the Whitewash Resolution which will be conducted on a poll at
the EGM.
9 Action to be taken
You will find enclosed with this Circular, a Form of Proxy for
use at the EGM. Whether or not you intend to attend the EGM in
person you are requested to complete the Form of Proxy in
accordance with the instructions printed on it and to return it to
the Company's registrars, Link Asset Services, The Registry, PXS 1,
34 Beckenham Road, Beckenham, Kent BR3 4ZF as soon as possible and
in any event by no later than 2.00 p.m. on 22 January 2020. The
completion and return of a Form of Proxy will not preclude
Shareholders from attending the EGM and voting in person should
they so wish.
10 Importance of vote
The Debt for Equity Swap is required in order to ensure the
continued support of Serba Dinamik group to the Company.
Shareholders should note that in the event the Whitewash Resolution
is not approved and the Debt for Equity Swap does not complete, the
Company would not be able to rely upon Serba Dinamik Holdings or
its subsidiaries for future debt and equity funding and so would be
required to seek alternative sources of funding. The Directors are
unable to provide any assurance that alternative financing or
re-financing could immediately be secured or, that if it were
secured, it would be on terms as favourable to the Company or would
not result in a substantial dilution of Shareholders'
interests.
11 JERSEY REGULATION
The Jersey Financial Services Commission has also given, and has
not withdrawn, its consent under Article 2 of the Control of
Borrowing (Jersey) Order 1958 to the issue of shares in the
Company.
12 Recommendation
The Independent Directors, who have been so advised by the
Company's financial adviser, Beaumont Cornish, consider the Debt
for Equity Swap and the Whitewash Resolution to be fair and
reasonable and in the best interests of the Independent
Shareholders and of the Company as a whole. Accordingly, the
Independent Directors recommend that the Independent Shareholders
vote in favour of the Whitewash Resolution at the EGM as they
intend to do in respect of their entire holdings which amount to
interests in 23,686,668 Ordinary Shares, representing approximately
6.8 per cent. of the Existing Ordinary Shares. In providing advice
to the Independent Directors, Beaumont Cornish has taken into
account the Independent Directors' commercial assessment.
Voting on the Whitewash Resolution will be by means of a poll at
the Extraordinary General Meeting of Independent Shareholders.
Members of the Concert Party, including Syed Nazim bin Syed
Faisal, the Executive Director of the Company, are not able to vote
on the Whitewash Resolution at the Extraordinary General
Meeting.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCEAEFDELLEEFA
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