TIDMCNS
RNS Number : 4439U
Corero Network Security PLC
25 November 2019
25 November 2019
Capitalised terms in this announcement shall have the same
meaning as in the Circular that will be posted to shareholders
today.
Corero Network Security plc
("Corero" or the "Company")
Placing and Subscription to raise up to GBP3.25 million and
Notice of General Meeting
Corero Network Security plc (AIM: CNS), the network security
company, is pleased to announce a conditional Placing and
Subscription to raise up to GBP3.25 million ($4.2 million) before
expenses. The net proceeds of the Placing and Subscription will be
used:
-- to support SmartWall sales and marketing activities in the US and Europe;
-- for further development of the SmartWall product; and
-- for the general working capital requirements for the Group.
The Placing and Subscription will require the issue and
allotment by the Company of up to 92,857,143 new Ordinary Shares at
the Placing Price of 3.5 pence per Ordinary Share to certain
investors, including certain Directors, institutions and individual
shareholders.
The Placing and Subscription are conditional, inter alia, upon
Shareholders approving the Resolutions contained in a Notice of
General Meeting to be sent to Shareholders today. Admission is
expected to occur no later than 8.00 a.m. on 13 December 2019 or
such later time and/or date as Cenkos and the Company may agree not
being later than 8.00am on 31 December 2019. The Placing and
Subscription are not underwritten. In the event the Resolutions are
not approved at the General Meeting, the Placing and Subscription
will not proceed. Should the Placing and Subscription not proceed,
the Company and the Group will need to seek alternative financing.
There can be no guarantee that alternative financing will be
available to the Company in the required amounts or on acceptable
terms for the working capital requirements of the Group.
Background to and reasons for the Transaction
On 25 September 2019, the Company announced that in order to
strengthen the Company's balance sheet, to provide the Company with
additional working capital prior to being cash generative and to
support the planned investment in sales and marketing, the Company
planned to undertake an equity fund raise before the end of the
2019 financial year to raise approximately GBP3.0 million. The
Company also indicated that the Chairman and major shareholder
indicated his support for this equity fund raise. The Transaction
is now being undertaken in line with this stated intention.
Use of proceeds
The Company intends to raise up to GBP3.25 million ($4.2
million) before expenses in the Placing and Subscription. The
aggregate estimate of expenses for the Placing and Subscription is
expected to be GBP0.125 million.
The net proceeds of the Transaction will be deployed to support
SmartWall sales and marketing activities in the US and Europe, for
further development of the SmartWall product and for the general
working capital requirements of the Group. If the Resolutions are
not approved by the requisite number of Shareholders or the Placing
and Subscription do not proceed for any other reason, the Company
will be required to immediately secure alternative financing for
the purposes set out above from alternative sources. There can be
no guarantee that such alternative financing will be available to
the Company.
The Placing and Subscription
Details of the Placing
The Company has conditionally raised up to approximately GBP0.95
million before expenses by the conditional Placing of up to
27,268,543 Placing Shares at the Issue Price by Cenkos, as agent
for the Company, with Placees.
The Placing is conditional, inter alia, upon:
(a) the passing of the Resolutions at the General Meeting by Shareholders;
(b) the Placing Agreement becoming or being declared
unconditional in all respects and not having been terminated in
accordance with its terms prior to Admission;
(c) the Subscription Agreements becoming or being declared
unconditional in all respects and not having been terminated in
accordance with their terms prior to Admission; and
(d) Admission becoming effective by no later than 8.00 a.m. on
13 December 2019 or such later time and/or date (being no later
than 8.00 a.m. on 31 December 2019) as Cenkos and the Company may
agree.
If any of the conditions are not satisfied, the Placing Shares
will not be issued and all monies received from the Placees will be
returned to the Placees (at the Placees' risk and without interest)
as soon as possible thereafter. The Placing is not being
underwritten.
The Placing Shares will be issued free of all liens, charges and
encumbrances and will, when issued and fully paid, rank pari passu
in all respects with the Existing Ordinary Shares, including the
right to receive all dividends and other distributions declared,
made or paid after the date of their issue.
Details of the Subscription
The Company intends to conditionally raise approximately GBP2.30
million before expenses by the conditional Subscription of up to
65,588,600 Subscription Shares in aggregate at the Issue Price by
each of Jens Montanana, Juniper and Richard Last. Each of Jens
Montanana, Juniper and Richard Last intend to enter into a
Subscription Agreement with the Company pursuant to which each
would conditionally agree to subscribe for either a specific number
of Subscription Shares or, in respect of Jens Montanana, up to a
maximum number of Subscription Shares. None of the Subscription
Agreements would be conditional on any other Subscription Agreement
but each Subscription Agreement would be subject to the same
conditions.
The Subscription is conditional upon the passing of the
Resolutions at the General Meeting by Shareholders and Admission.
The Subscription is not being underwritten and the Subscription may
not be fully subscribed.
The Subscription Shares will be issued free of all liens,
charges and encumbrances and will, when issued and fully paid, rank
pari passu in all respects with the Existing Ordinary Shares,
including the right to receive all dividends and other
distributions declared, made or paid after the date of their
issue.
Under Juniper's Subscription Agreement, if any other Subscriber
and/or any other Placee defaults under his or its Subscription
Agreement or placing commitment and does not subscribe for some or
all of the Subscription Shares and/or Placing Shares specified
therein, Juniper shall, if applicable, reduce the number of
Subscription Shares which it will subscribe for in the Subscription
to such number as to ensure that, on Admission, Juniper will only
hold such number of Ordinary Shares as will represent no more than
9.99 per cent. of the Company's issued share capital at that
date.
As a result of the obligations imposed by Rule 9 of the City
Code on Takeovers and Mergers (the "Code"), if the Subscription and
the Placing become unconditional then, if any other Subscriber
and/or any other Placee defaults under his or its Subscription
Agreement or placing commitment and does not subscribe for some or
all of the Subscription Shares and/or Placing Shares specified
therein, Jens Montanana shall, if applicable, reduce the number of
Subscription Shares which he will subscribe for in the Subscription
to such number as to ensure that, on Admission, Jens Montanana will
only hold such number of Ordinary Shares as will represent no more
than 38.4 per cent. of the Company's issued share capital at that
date (being the percentage of Existing Ordinary Shares held by him
on 22 November 2019, being the last practicable date prior to
publication of this announcement).
Admission, Settlement and Dealings
Application will be made to the London Stock Exchange for the
admission of the New Ordinary Shares to trading on AIM. It is
expected that Admission will occur and that dealings in the New
Ordinary Shares will commence at 8.00 a.m. on 13 December 2019 at
which time it is also expected that the New Ordinary Shares will be
enabled for settlement in CREST.
Directors' Participation in the Transaction and Related Party
Transaction
Jens Montanana and Richard Last, being Directors of the Company,
intend to enter into Subscription Agreements, pursuant to which
each will conditionally agree to subscribe for new Ordinary Shares
as part of the Subscription. The interests of Jens Montanana and
Richard Last on 22 November 2019 (being the last practicable date
prior to publication of this announcement) is, and immediately
following Admission (assuming they enter into Subscription
Agreements) will be, as follows:
Director Number of Ordinary Number of New Resulting number Resulting holding
Shares held Ordinary Shares of Ordinary as a percentage
on 22 November to be subscribed Shares held of the Enlarged
2019 (being for in the immediately Share Capital
the last Subscription following
practicable Admission
date prior
to publication
of this
announcement)
Jens Montanana 154,382,609* 32,917,797 187,300,406 37.85%
----------------------- ---------------------- ----------------------- ----------------------
Richard Last 2,000,000 500,000 2,500,000 0.51%
----------------------- ---------------------- ----------------------- ----------------------
* of which 33,674,846 Ordinary Shares are held in the name of
JPM International Limited, which is wholly owned by Jens Montanana,
and 102,953,954 Ordinary Shares are held in the name of The New
Millennium Technology Trust of which Jens Montanana is a
beneficiary.
** which will be subscribed for by Jens Montanana in his
personal capacity or JPM International Limited, which is wholly
owned by Jens Montanana, or by The New Millennium Technology Trust
of which Jens Montanana is a beneficiary.
The intended participation in the Subscription by Jens Montanana
and Richard Last, as Directors of the Company, constitutes a
related party transaction pursuant to the AIM Rules. Peter George,
Ashley Stephenson and Andrew Miller, being the Directors who are
not participating in the Transaction, consider, having consulted
with Cenkos, the Company's nominated adviser, that the
participation in the Subscription by Jens Montanana and Richard
Last, as set out above, is fair and reasonable insofar as
Shareholders are concerned.
General Meeting
The Directors do not currently have the authority to allot all
of the New Ordinary Shares on a non-pre-emptive basis and,
accordingly, the Board is seeking the approval of Shareholders to
allot the New Ordinary Shares at the General Meeting. In addition,
the Board is seeking the approval of shareholders to dis-apply
pre-emption rights in respect of the New Ordinary Shares.
A notice is being sent to shareholders convening a general
meeting of the Company to be held at 11.00 a.m. on 12 December 2019
at 68 Lombard Street, London EC3V 9LJ, at which the following
Resolutions will be proposed to approve:
Ordinary Resolution
1. authority for the Directors to allot the New Ordinary Shares
up to a maximum aggregate amount of GBP928,571.43 (being up to
92,857,143 New Ordinary Shares (the maximum number available under
the Placing and Subscription)); and
Special Resolution
2. the disapplication of the statutory pre-emption rights in
connection with the allotment of up to 92,857,143 New Ordinary
Shares pursuant to the Placing and Subscription.
To be passed, Resolution 1 (proposed to be passed as an ordinary
resolution) will require a simple majority, and Resolution 2
(proposed to be passed as a special resolution) will require a
majority of not less than 75 per cent. of persons voting in person
or by proxy in favour of the relevant Resolution.
The authorities to be granted pursuant to Resolutions 1 and 2
shall expire on whichever is the earlier of the conclusion of the
next Annual General Meeting of the Company or the date falling six
months from the date of the passing of Resolutions 1 and 2 (unless
renewed, varied or revoked by the Company prior to or on that date)
and shall be in addition to the Directors' authorities to allot
relevant securities and dis-apply statutory pre-emption rights
granted at the Company's Annual General Meeting held on 21 May
2019.
Circular and Form of Proxy
A Circular and Form of Proxy will be sent to Shareholders today
and will be available from the Company's website:
https://www.corero.com/investors/
Recommendation
The Directors consider the Placing and Subscription to be in the
best interests of the Company and its Shareholders as a whole. The
Directors unanimously recommend that Shareholders vote in favour of
all the Resolutions at the General Meeting, as they intend to do in
respect of their own beneficial holdings, representing, in
aggregate, approximately 39.18 per cent. of the Existing Ordinary
Shares.
The Placing and Subscription are conditional, inter alia, upon
the passing of the Resolutions at the General Meeting. Shareholders
should be aware that if the Resolutions are not approved at the
General Meeting, the Placing and Subscription will not proceed and
the Group will need to seek alternative financing. There can be no
guarantee that alternative financing will be available to the
Company in the required amounts or on acceptable terms for the
ongoing working capital requirements of the Group.
Enquiries:
Corero Network Security plc
Andrew Miller, CFO Tel: 01895 876 382
Cenkos Securities plc Tel: 020 7397 8900
Ben Jeynes/Mark Connelly - NOMAD
Michael Johnson - Sales
Vigo Communications Tel: 020 7390 0230
Jeremy Garcia / Ben Simons /Antonia Pollock
corero@vigocomms.com
About Corero Network Security
Corero Network Security is a leader in real-time,
high-performance DDoS defense solutions. Service providers, hosting
providers and digital enterprises rely on Corero's award winning
technology to eliminate the DDoS threat to their environment
through automatic attack detection and mitigation, coupled with
complete network visibility, analytics and reporting. This industry
leading technology provides cost effective, scalable protection
capabilities against DDoS attacks in the most complex environments
while enabling a more cost effective economic model than previously
available. For more information, visit www.corero.com
Important Information
The information contained within this announcement was deemed to
constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014 prior to release of this announcement.
Upon the publication of this announcement, this inside information
is now considered to be in the public domain.
The distribution of this announcement and the offering of the
Placing Shares and the Subscription Shares in certain jurisdictions
may be restricted by law. No action has been taken by the Company
or Cenkos Securities plc that would permit an offering of such
shares or possession or distribution of this announcement or any
other offering or public 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 the
Company and Cenkos Securities plc to inform themselves about, and
to observe such restrictions.
This announcement contains (or may contain) certain
forward-looking statements with respect to certain of the Company's
current expectations and projections about future events. These
statements, which sometimes use words such as "anticipate",
"believe", "intend", "estimate", "expect" and words of similar
meaning, reflect the directors' beliefs and expectations and
involve a number of risks, uncertainties and assumptions that could
cause actual results and performance to differ materially from any
expected future results or performance expressed or implied by the
forward-looking statement. Statements contained in this
announcement regarding past trends or activities should not be
taken as a representation that such trends or activities will
continue in the future. The information contained in this
announcement is subject to change without notice and neither Cenkos
Securities plc nor, except as required by applicable law, the
Company assumes any responsibility or obligation to update publicly
or review any of the forward looking statements contained herein.
You should not place undue reliance on forward-looking statements,
which speak only as of the date of this announcement.
Cenkos Securities plc, which is authorised and regulated in the
United Kingdom by the Financial Conduct Authority, is acting solely
as nominated adviser and broker to the Company in connection with
the Placing and this announcement and will not be responsible to
anyone other than the Company for providing the protections
afforded to the clients of Cenkos Securities plc or for affording
advice in relation to this announcement or any matters referred to
herein. The responsibilities of Cenkos Securities plc as the
Company's nominated adviser and broker under the AIM Rules for
Companies and the AIM Rules for Nominated Advisers are owed solely
to the London Stock Exchange plc and are not owed to the Company or
to any director of or shareholder of the Company or any other
person, in respect of his decision to acquire shares in the capital
of the Company in reliance on any part of this announcement, or
otherwise.
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
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