TIDMNSCI
RNS Number : 1988V
NetScientific PLC
05 August 2020
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NetScientific PLC
("NetScientific" or the "Company")
Proposed acquisition of EMV Capital Ltd ("EMV Capital")
Proposed GBP2.3 million placing
Approval of waiver of obligations under Rule 9 of the Takeover
Code
Capital reorganisation
Related party transactions
Notice of General Meeting
NetScientific plc, the transatlantic healthcare IP
commercialisation group, is pleased to announce that the Company
has conditionally agreed to acquire EMV Capital, an investment
services company which has interests in the industrial high-tech,
energy, circular economy, smart city, transportation and healthcare
sectors.
The Directors are proposing a capital reorganisation ("Capital
Reorganisation") in order to increase the market value of the
Company's shares relative to their nominal value.
The Company also announces that it is conducting a placing (the
"Placing") to raise gross proceeds of approximately GBP2.3 million
before expenses, via the issue of an aggregate of approximately
3,538,455 million new Ordinary Shares ("Placing Shares") at a price
of 65 pence per share ("the Placing Price") (as adjusted for the
Capital Reorganisation which effectively consolidates 10 Existing
Ordinary Shares into one New Ordinary Share). The Placing Price of
65 pence per New Ordinary Share equates to 6.5 pence per Existing
Ordinary Share prior to the implementation of the Capital
Reorganisation. Further information is detailed in section 6 of
this announcement.
WH Ireland Limited is acting as sole broker in relation to the
Placing ("WH Ireland" or the "Broker"). The Company expects to
issue the Placing Shares via a conditional placing (the "Placing")
being conducted through an accelerated book-build process (the
"Bookbuild"), which will be launched immediately following this
Announcement. A placing agreement has been entered into today
between the Company and the Broker in connection with the Placing
(the "Placing Agreement").
The acquisition of EMV Capital Ltd ("Acquisition") and Placing
are subject, inter alia, to shareholder approval, with the General
Meeting expected to be convened for 10.00 a.m. on 24 August
2020.
Acquisition Highlights:
-- EMV Capital is an investment services company, which has
interests in the industrial high-tech, energy, circular economy,
smart city, transportation and healthcare sectors.
-- The company is owned and managed by Dr Iliev (the interim CEO of NetScientific).
-- EMV Capital's model is to syndicate investments between
financial and corporate investors, and for its management team to
take a strong hands-on role post-investment.
-- The Directors believe that strong synergies would result from
the Acquisition, enabling a commercial and investment strategy with
increased revenues and capital gain.
-- Additional benefits include a combined portfolio with a
broader balance, across more sectors and stages of development, an
enhanced team of investment professionals, providing the enlarged
group (following the Acquisition) ("Enlarged Group") with the
capacity to originate, execute and manage a greater portfolio, and
specialist IP skills, including patent evaluation and licensing
strategy.
-- The Acquisition has been structured as a share for share
exchange, thereby aligning the interests of all of the Shareholders
of the Enlarged Group, as well as ensuring consistency of
objectives, both immediately and longer term.
Placing Highlights:
-- Proposed Placing of approximately GBP2.3 million before
expenses (approximately GBP2.0 million, net of expenses) at a price
of 65 pence per New Ordinary Share.
-- The Placing is being conducted through an accelerated
book-build process, which will open with immediate effect following
this Announcement.
-- The Placing Shares, assuming full take-up, will represent
approximately 23.72 per cent. of the Company's issued share capital
as enlarged by the Acquisition and Placing ("Enlarged Share
Capital")
-- The final number of Placing Shares will be agreed by the
Broker and the Company at the close of the Bookbuild, and the
result will be announced as soon as practicable thereafter.
-- The timing for the close of the Bookbuild and allocation of
the Placing Shares shall be at the discretion of WH Ireland, in
consultation with the Company. The Placing is not underwritten.
-- The Appendix to this Announcement (which forms part of this
Announcement) contains the detailed terms and conditions of the
Placing.
-- The issue of the Placing Shares is subject to, inter alia,
the passing of shareholder resolutions ("Resolutions") at a General
Meeting.
-- The General Meeting is expected to be convened for 10.00 a.m.
on 24 August 2020, with the minimum necessary quorum of two
shareholders (which will be facilitated by the Company) and will
take place at Level 39, One Canada Square London E14 5AB.
-- Due to the ongoing COVID-19 pandemic, it will not be possible
for Shareholders to attend the General Meeting in person.
Shareholders are strongly urged to vote by proxy in advance of the
deadline by completing their form of proxy, or voting online, in
accordance with the instructions and further details set out in the
Circular and the form of proxy.
John Clarkson, Chairman of NSCI, said: "The Board identified
through its recent strategy review strong underlying asset value
and significant growth opportunities for the business, which it
believes has been further increased following COVID-19. Accordingly
we propose to adopt a new strategy, with proactive management to
realise that potential and maximise shareholder value. In that
regard, the Board is delighted to announce that NetScientific has
conditionally agreed to acquire EMV Capital in an all share
transaction. This will accelerate implementation, mitigate risk,
and also transform the company, with a broader portfolio, greater
prospects and enhanced capabilities, to significantly increase
shareholder returns.
"We very much appreciate investors' support in the placing and
with that, look forward to utilising the stronger financial base
and leveraging the business to exploit the transatlantic and global
opportunities, and deliver for shareholders."
Enquiries:
NetScientific plc Ilian Iliev Tel: +44 (0)20 3514 1800
WH Ireland Limited Corporate Finance: Tel: +44 (0) 207 220
(Nomad and Broker) Chris Fielding 1666
Jessica Cave
Darshan Patel
Sales / Corporate
Broking:
Jasper Berry
Harry Ansell
David Kilbourn
Additional Information
The Placing
The Company is carrying out the Placing to raise approximately
GBP2.3 million, before expenses, via a conditional placing of
approximately 3.5 million Placing Shares at the Placing Price of 65
pence per New Ordinary Share.
Having adjusted for the Capital Reorganisation, the Placing
Price represents a discount of approximately 33 per cent to the
closing mid-market price of the Company's existing ordinary shares
of 9.75 pence on 4 August 2020 (being the last business day prior
to this Announcement). The Placing Shares, assuming full take-up
pursuant to the Placing, will represent approximately 23.72 per
cent. of the Company's Enlarged Share Capital.
WH Ireland Limited is acting as agent for the Company and has
agreed to use reasonable endeavours to place approximately 3.5
million Placing Shares at the Placing Price with new and existing
investors. The final number of Placing Shares will be agreed by the
Broker and the Company at the close of the Bookbuild and the result
will be announced as soon as practicable thereafter. The timing for
the close of the Bookbuild and allocation of the Placing Shares
shall be at the discretion of the Broker, in consultation with the
Company. The Placing is not underwritten. The Appendix to this
Announcement (which forms part of this Announcement) contains the
detailed terms and conditions of the Placing.
In connection with the Placing, the Company has entered into a
Placing Agreement with the Broker, which contains customary
warranties given by the Company with respect to the Company's
business and customary indemnities given by the Company in respect
of liabilities arising out of or in connection with the
Placing.
The issue of the Placing Shares is conditional, inter alia, on
the passing by the Company's shareholders ("Shareholders") of
certain resolutions at the General Meeting of the Company which is
expected to be convened for 10.00 a.m. on 24 August 2020.
Application will be made to the London Stock Exchange for the
Placing Shares to be admitted to trading on AIM ("Admission"). On
the assumption that, amongst other things, the Resolutions are
passed by Shareholders at the General Meeting, it is expected that
Admission will become effective and that dealings in the Placing
Shares will commence at 8.00 a.m. on 25 August 2020.
A circular (the "Circular") and notice of General Meeting (the
"Notice") will shortly be posted to Shareholders and placed on the
Company's website. Information contained in the Circular is set out
below.
1. INTRODUCTION
The Company announces that it has (i) entered into an agreement
to conditionally acquire EMV Capital, an investment services
company which has interests in the industrial high-tech, energy,
circular economy, smart city, transportation and healthcare
sectors; and (ii) is undertaking a Placing to raise gross proceeds
of up to approximately GBP2.3 million (together with the Option
Grant referred to below, the "Proposals"). The Directors are also
proposing a Capital Reorganisation in order to increase the market
value of the Company's shares in relative to the nominal value of
the Company's shares.
Under the Acquisition Agreement, the Company has conditionally
agreed to acquire from Futura Messis Group Ltd ("Futura Messis"), a
company owned and managed by Dr Iliev (the interim CEO of
NetScientific), 100 per cent. of the issued share capital of EMV
Capital in consideration for the issue to Futura Messis of
3,521,480 New Ordinary Shares representing in aggregate 30.0 per
cent. of the Company's fully diluted share capital as enlarged only
by the Acquisition, i.e. before taking into account the Placing or
any shares issued pursuant to the Option Grant referred to below.
Based on the mid-market closing price of an Existing Ordinary Share
on 4 August 2020 (being the latest practical date prior to the
announcement of the Proposals on 4 August 2020), this values EMV
Capital at approximately GBP3.4 million.
Under the Placing Agreement, the Company has agreed to issue
3,538,455 Placing Shares, at 65p each (on the basis that the
Capital Reorganisation has become effective), to raise gross
proceeds of GBP2.3 million. Dr Iliev has agreed to subscribe
GBP50,000 for 76,923 Placing Shares at the Placing Price, and
entities associated with Melvin Lawson have agreed to subscribe
GBP600,000 for 923,076 Placing Shares at the Placing Price.
The directors of the Company (together, the "Board") are
proposing that the Company undertakes the Capital Reorganisation in
order to achieve a greater disparity between the market value and
the nominal value of the Company's shares and to increase the
trading price of the Company's shares by reducing the number of
shares in issue. This has the effect of consolidating each ten
Existing Ordinary Shares into one New Ordinary Share. Further
details of the Capital Reorganisation are set out at paragraph 6
below.
The Independent Directors (being John Clarkson and Professor
Stephen Smith) have also agreed that the Company will, following
Admission, grant options to senior managers of the Enlarged Group.
It is intended that, as part of these arrangements, Dr Iliev will
be granted options (the "Option Grant") over 2.5 per cent. of the
Enlarged Share Capital (taking into account this option grant)
under the NetScientific Share Option Scheme. The option exercise
price will be determined by the remuneration committee of the
Company's board of Directors and will not be less than the average
of the closing or middle (as appropriate) market quotations for New
Ordinary Shares over the five dealing days prior to the date on
which the option is granted.
The Acquisition Agreement and the participation of Melvin Lawson
and Dr Iliev in the Placing constitute related party transactions
in accordance with Rule 13 of the AIM Rules.
In addition Dr Iliev and Melvin Lawson, together with certain
persons connected with them, are presumed to be acting in concert,
as defined by the City Code on Takeovers and Mergers (the "Takeover
Code"). Melvin Lawson is the sole shareholder and a director of AB
Group, is a trustee and beneficiary of A Beckman SSAS and is a
trustee of Lawson Beckman Charitable Trust, which collectively hold
29.98 per cent. of the Existing Ordinary Shares.
Immediately following Admission, the Concert Party will be
interested in 46.10 per cent. of the Enlarged Share Capital,
excluding for the avoidance of doubt Dr Iliev's interest in the
Option Grant. Further details of the Concert Party's maximum
potential holding following implementation of the Proposals, and
the underlying assumptions, are set out in paragraph 15 below.
Under Rule 9 of the Takeover Code, the issue of the
Consideration Shares, the participation of the Concert Party in the
Placing, the issue of the New Ordinary Shares the subject of the
Option Grant and the resultant increase in the Concert Party's
percentage holding of New Ordinary Shares, would normally result in
the Concert Party being obliged to make a Rule 9 Offer to the
Company's other Shareholders. However, the Panel has agreed to
waive this obligation subject to the approval of the Waiver
Resolution, on a poll, of the Independent Shareholders of
NetScientific at the General Meeting. Your attention is drawn to
the section on the Takeover Code contained in paragraph 15 of this
letter.
Furthermore, the issue of the New Ordinary Shares in connection
with the Acquisition and the Placing and the Capital Reorganisation
require Shareholder approval.
A General Meeting is therefore being convened at 10.00 a.m. on
24 August 2020 at Level 39, One Canada Square London E14 5AB for
the purposes of seeking approval of considering the
Resolutions.
Due to ongoing circumstances surrounding COVID-19, Shareholders
wishing to participate are requested not to attend the General
Meeting in person and instead vote in advance by using the form of
proxy for use by Shareholders in connection with the General
Meeting ("Form of Proxy") or, if you hold your Existing Ordinary
Shares in uncertificated form (that is, in CREST), you may vote
using the CREST Proxy Voting service in accordance with the
procedures set out in the CREST Manual. Please refer to paragraph
17 and the Notice of General Meeting for further information.
2. BACKGROUND
Following the various changes to the directors of the Company
announced over the past fifteen months, the current Directors of
the Company have undertaken this year a strategic review of the
Company and its subsidiaries (together the "Group") and its
portfolio.
This review included, in respect of each portfolio company, an
analysis of its current position, target market, commercial
development options, intellectual property, risk profile, core
funding needs, grants and other "soft" finance available,
investment opportunities, value inflection points, exit and
liquidity potential, and the actions and resources likely to be
needed to achieve these.
The Directors concluded that there is a strong underlying asset
value, with significant potential to enhance Shareholder value in
each of the portfolio companies by changing from the current more
passive approach to a more proactive management of the portfolio.
This should involve a greater focus on execution, improved controls
and more efficient procedures, combined with judicious investment
by the Company, leveraged where possible by third party equity
whether by equity, debt or grants, as well as corporate
collaborations.
This revised strategy, in the opinion of the Directors, protects
the Company and shareholder value, mitigates risks and allows the
portfolio companies to work though the current impact on markets
and in certain cases take advantage of the new opportunities
arising from COVID-19.
The Board believes that the revised strategy has the potential
over the next several years to transform the business and create
shareholder value through increasing the value of the Company's
holdings in portfolio companies, adding new revenue streams, and
securing appropriate exits and/or liquidity events of the
portfolio, prior to positioning the Company for further growth in
due course.
The Directors believe that the Group would benefit from a larger
portfolio with varying time horizons and stages of development and
a wider focus than the current healthcare portfolio. In addition,
following NetScientific's earlier focus on minimising costs and
overheads, the Company does not have sufficient expertise and
resource, below Board/ CFO level, to fully implement the
strategy.
The Independent Directors have therefore further concluded that,
consistent with the Company's original objectives and revised
strategy, it is in the interests of Shareholders for it to acquire
EMV Capital.
EMV Capital is an investment services company, which has
interests in the industrial high-tech, energy, circular economy,
smart city, transportation and healthcare sectors. The model of EMV
Capital is to syndicate investments between financial and corporate
investors, and for its management team to take a strong hands-on
role post-investment. Monetisation is through a mixture of
corporate finance fees, management and incubation services, and
carried interest in the investments it has syndicated.
The Directors (and the Concert Party) believe that strong
synergies would result from the Acquisition, enabling a commercial
and investment strategy with increased revenues and capital gain.
This includes:
-- Balanced portfolio: The combined portfolio would provide a
broader balance, across more sectors and stages of development,
with a range of follow-on investment opportunities;
-- Exit opportunities: A structured exit programme, with
flexibility to exit at the right time to maximise shareholder
value;
-- Executive capacity: Dr Iliev would be able to devote all of
his expertise and time to the operations and portfolio of the
Enlarged Group;
-- Expanded team: Enhanced team capabilities through the
addition of EMV Capital's existing team of investment
professionals, providing the Enlarged Group with the capacity to
originate, execute and manage a greater portfolio;
-- Additional revenues: An additional source of recurring
revenues and capital gain, through EMV Capital's existing business
lines;
-- Co-investment syndication capability: EMV Capital has access
to third-party investment funding, including a network of private
and institutional sources;
-- International network of corporate partners : Providing
additional channels for growth, support and sources of
co-investment;
-- Combined footprint: The combination of NetScientific's brand
with full execution capability, and the combined market recognition
of the two companies in a broader range of sectors and different
stages of development; and
-- Specialist IP skills: The EMV Capital team has greater experience than the Group in the commercialisation of IP, including patent evaluation and licensing strategy.
The Acquisition has been structured as a share for share
exchange, thereby aligning the interests of all of the Shareholders
of the Enlarged Group, as well as ensuring consistency of
objectives, both immediately and longer term. Following completion
of the Acquisition, it is the intention of the Directors and the
Concert Party that the operations and headquarters of NetScientific
will relocate to the offices of EMV Capital at Level 39, One Canada
Square, London E14 5AB.
Alternative scenario in case resolutions are not approved:
In the event that the Resolutions are not approved by
Shareholders, the Directors would be unable to implement the
revised strategy described above, would have limited resources and
therefore may have to liquidate the Company's portfolio in the very
near future.
NetScientific has tried in the past to dispose of its assets in
a passive way, but has been unable to secure good offers for the
portfolio or the individual assets, and it is in the Board's
opinion even less likely to succeed now. The development timelines
and illiquidity of the underlying assets make it unlikely that
asset values will be maximized.
The Directors believe that the time required for NetScientific's
portfolio companies to generate significant Shareholder value is
beyond NetScientific's current cash runway, as the companies are
still in early stages of development. Furthermore, NetScientific's
small team alone would not have the resources and capabilities to
execute a high-return liquidation strategy. The Board therefore
believes that such a scenario would be to the detriment of
Shareholders.
3. INFORMATION ON NETSCIENTIFIC
Information on NetScientific's portfolio companies:
Portfolio company Sector and description Fully diluted Fair Value
(further detail set Group interest of stake
out below)
ProAxsis UK Medical diagnostics 51.5% equity N/D(1)
Ltd - early stage commercialisation
--------------------------------- ------------------ --------------
Glycotest, Inc. Liver cancer diagnostics 54.0% equity GBP10.4m(2)
- late stage clinical
--------------------------------- ------------------ --------------
PDS Biotechnology Immuno-oncology (NASDAQ 7.2% equity GBP3.5m(3)
Corporation quoted) - early stage
clinical
--------------------------------- ------------------ --------------
CytoVale, Inc. Medical biomarker diagnostics 1.0% equity GBP380,000(2)
- late stage clinical
--------------------------------- ------------------ --------------
EpiBone, Inc. Regenerative medicine 0.8% equity GBP324,000(2)
- late stage clinical
--------------------------------- ------------------ --------------
G-Tech, Inc. Wearable medical diagnostics 3.8% equity GBP430,000(2)
- early stage clinical
--------------------------------- ------------------ --------------
Longevity Biotech, Therapeutics - early $250k convertible N/A
Inc. stage clinical loan note
--------------------------------- ------------------ --------------
QuantalX Neuroscience Medical diagnostics Negligible
of the brain - late
stage clinical
--------------------------------- ------------------ --------------
Note 1: N/D = not disclosed
Note 2: Valuation based on observable input (price of recent
investment by third parties)
Note 3: Valuation based on observable input (share price as at
20 July, publicly listed on NASDAQ: PDSB)
The fair value quoted for any particular portfolio company are
indicative only and are subject to change without notice, and in
certain circumstances may not be realised.
Core portfolio companies
ProAxsis UK Ltd , ( https://proaxsis.com ) is commercialising a
range of products for the capture, detection and measurement of
active protease biomarkers of disease, including: NEATstik(R), a
rapid test for measuring active neutrophil elastase at
point-of-care, which was registered with a CE Mark in September
2017; and ProteaseTag(R) an active neutrophil elastase immunoassay
launched in 2016. ProAxsis has recently expanded production
capacity for its clinical trial support services, and received
three grants, in particular to progress a number of interesting
COVID-19 opportunities.
Glycotest Inc , New York, US ( https://www.glycotest.com ) is a
private liver disease diagnostics company commercialising novel
clinical laboratory testing services for patients with serious
liver disease. It employs unique non-invasive blood tests based on
proprietary serum biomarkers, biomarker panels and assay technology
that exploit novel sugar-based disease signal chemistry. Its
pipeline includes tests for liver cancers as well as liver
fibrosis-cirrhosis. Fosun Pharmaceutical Co. Ltd of China committed
a US$10 million to the company in 2019 to accelerate the
development program.
PDS Biotechnology Corporation , New Jersey, US (
https://www.pdsbiotech.com ) is a clinical-stage immunotherapy
company with a growing pipeline of cancer immunotherapies and
infectious disease vaccines (including focus on COVID-19) based on
the company's proprietary Versamune(R) T-cell activating technology
platform. Versamune(R) effectively delivers disease-specific
antigens for in vivo uptake and processing, while also activating
the type 1 interferon immunological pathway, resulting in
production of potent disease-specific killer T-cells as well as
neutralizing antibodies. PDS has engineered multiple therapies,
based on combinations of Versamune(R) and disease-specific
antigens, designed to train the immune system to better recognise
disease cells and effectively attack and destroy them. PDS has
partnered with some of the leading institutions in cancer research
and vaccine development to advance clinical testing of its products
in multiple therapeutic areas.
Venture portfolio
CytoVale, Inc. , San Francisco , US ( http://cytovale.com ) is
developing mechanical biomarkers to improve human health through
probing individual cells to quantify the mechanical signatures of
disease. The first target is sepsis, a condition whose early
detection dramatically improves patient outcomes and reduces
treatment cost, where CytoVale has enrolled a multi-hundred patient
clinical study, which has the potential to significantly reduce
morbidity and mortality, decrease healthcare costs, and satisfy a
$1B+ diagnostic market. CytoVale completed a preferred Series B
funding round in December 2019 of $15m.
Epibone, Inc. , New York, US ( https://www.epibone.com ) is
looking to transform skeletal repair using innovative tissue
engineering, which is intended to replace surgery and long recovery
with the body's power to provide easier healing. Epibone completed
a Series A funding round in January 2020 raising $8 million.
G-Tech, Inc. California, US ( www.gtechmedical.com ) is
developing a wearable medical technology that will be used to
measure gastrointestinal motility. The G-Tech system consists of a
wireless, wearable electrode patch that reads electrical signals at
the skin surface, a smartphone app that collects the raw data from
the patches via Bluetooth LE and sends it to a cloud server, and
data analysis algorithms that process and quantify the motor
activity of the digestive organs. In May 2020, G-Tech announced
completion of $6.7m Series A financing round led by DigiTx
Partners.
Longevity Biotech , Inc. Philadelphia, US (
www.longevitybiotech.com ) is developing a new class of therapeutic
candidates, called Hybridtides(R), to tackle the most challenging
aspects of medicine today, by providing critical enhancements over
previous peptide development efforts. To date, it has applied the
Hybridtide(R) scaffold primarily to the class B-GPCR family of drug
targets, which are in preclinical development.
QuantalX Neuroscience , Israel ( https://www.quantalx.com ) is
developing DELPHI(TM,) a simple, precise and objective evaluation
of functional brain status to enable early prevention of brain
degeneration. Modern medicine lacks the ability to successfully
cope with brain disorders, yet 35% of all disease burden is
attributed to brain disorders. DELPHI(TM) is the first
patient-independent active cerebral function imaging system that
delivers a visual map of brain network health.
4. INFORMATION ON EMV CAPITAL
EMV Capital ( www.emvcapital.com ) is a London-based investment
advisory business, owned and managed by Dr Iliev, the Interim CEO
of NetScientific, which advises and has interests in B2B companies
in a range of sectors including industrial high-tech, energy,
circular economy, smart city, transportation and healthcare.
It has interests in the UK, Israel and the US, all of which are
in the form of carried interests in companies involved in
technologies including robotics and AI, machine learning,
industrial chemistry, internet of things, advanced engineering and
health-tech.
EMV Capital's model is to syndicate investments between
financial and corporate investors in seed, pre-Series A and Series
A stages of investment, and to take a hands-on role post-investment
in these portfolio companies with a focus on venture capital-type
returns. It also operates a growing EIS investment practice.
Investments to date are sourced from its network of investors from
family offices, wealth managers and institutional and corporate
venture capital funds. Included amongst these investors is Deeptech
Disruptive Growth Investments Limited ("Deeptech"), a company with
which the Company entered into a share purchase agreement in March
2019 pursuant to which the Company sold to Deeptech all shares of
stock owned in Vortex Biosciences, Inc. and Wanda, Inc.
As is common in the venture capital industry, EMV Capital has a
carried interest arrangement with investors it has introduced into
its portfolio companies. Under these arrangements, EMV Capital is
entitled, on realisation of the investments, to a share of profits
(or carried interest) for capital amounts under advisory. The
carried interests range between 10 per cent. and 20 per cent. of
profits above a minimum return hurdle rate of up to 10 per cent.
EMV Capital's carried interest entitlements, as well as the capital
amounts under advisory which those carried interest arrangements
pertain to, are set out in the table below. It is noted that six of
the portfolio companies are already generating revenues. Where EMV
Capital does not have a carried interest arrangement with investors
it is entitled to a share of excess profits for capital amounts
under advisory pursuant to a management services agreement with the
relevant investor.
Portfolio company Sector and description Carried interest Capital Under
(further detail set out arrangements Advisory
below) (CIA) or profits
share (PS)
with investors
Sofant Technologies Semiconductors-Satellite 17-20% (CIA) GBP2.3m
Ltd and 5G wireless communications
------------------------------------------- ------------------- --------------
Q-Bot Limited Building automation-Robotics 10-20% (CIA) GBP2.0m
& artificial intelligence
("AI")
------------------------------------------- ------------------- --------------
SageTech Medical Chemistry & medical technology-Halocarbon 20% (CIA) Confidential
Equipment Limited capture
------------------------------------------- ------------------- --------------
Nanotech Industrial
Solutions,
Inc. Material science and chemistry 15% (CIA) $1.0m
------------------------------------------- ------------------- --------------
PointGrab, Building automation-Robotics 15% (CIA) GBP3.3m
Inc. & AI
------------------------------------------- ------------------- --------------
Wanda Health, AI & medical technology-Digital
Inc. health platform 20% (PS) $1.4m
------------------------------------------- ------------------- --------------
Vortex Biosciences, Medical technology-Oncology
Inc. diagnostics 20% (PS) $3.4m
------------------------------------------- ------------------- --------------
Insight Photonic Semiconductors-Akinetic 20% (PS) Warrants
Solutions, Swept Source Laser for $1.25m
Inc.
------------------------------------------- ------------------- --------------
EMV Capital generates revenue from:
1. the provision of corporate finance advice to current
portfolio companies and companies seeking investments;
2. incubation and growth consultancy support for portfolio companies; and
3. a share of investors' profit on realisation, as a carried
interest or profits share on investments into its portfolio
companies by its investor network.
EMV Capital notes key strengths of its strategy include:
-- International network of private and financial investors: EMV Capital has arranged co-investment/syndication of larger deals through its UK and international network of investors from family offices, wealth managers, and institutional and corporate venture capital funds;
-- Corporate co-investment model: EMV Capital has originated and
executed several transactions with corporate venture capital
involvement, and has advised on collaborations with corporate
partners internationally. This capability and the network of
corporate contacts provides a unique source of deal flow,
validation partners, and routes to market for portfolio
companies;
-- Longstanding experience in the sector: EMV Capital has a team
of seven investment professionals, and works with venture partners
and advisors with substantial experience in industrial high-tech,
clean technology, and healthcare in the UK and internationally;
-- Thought leadership: EMV Capital's employees and consultants
regularly engage with leading research institutions to identify
emerging technology trends, and investment opportunities;
-- Incubation capability: EMV Capital has considerable
experience in providing incubation support to innovative technology
companies, via for example board participation and access to
venture partners; and
-- Deal flow sourcing and valuation framework: EMV Capital's
deal flow framework provides a consistent source of investment
opportunities, reviewed periodically by EMV Capital's analysts.
In the year ended 31 December 2019, EMV Capital made a profit
for the year of GBP163,685 on revenue of GBP570,801. Its net assets
at that date amounted to GBP116,477.
Against the background of the COVID-19 pandemic and
NetScientific, EMV Capital has this year experienced a decline in
activity with several transactions being postponed. However market
conditions are now improving with several transactions expected to
complete this year and continuing work on portfolio companies.
Information on EMV Capital's portfolio companies and stages of
development
EMV Capital's portfolio companies span different levels of
development. The majority are already generating commercial
revenues, with several attracting corporate co-investment and
corporate collaborations.
Sofant Technologies, Edinburgh ( http://www.sofant.com/ ):
Sofant's technology enables the passive steering of radio signals
in future wireless systems, using RF MEMS technology. Innovative,
novel, patented technology enables the next generation of wireless
networks to operate with increased efficiency at a decreased cost,
generating potential power consumption reductions of over 70 per
cent. Sofant's technology has dual market applicability within
satellite communications and 5G network infrastructure.
Stage of development: Pre-revenue, negotiating advanced purchase
commitments.
Q-Bot , London ( https://q-bot.co/ ) has the potential to
disrupt the construction industry by providing a robotic service
and digitisation platform technology. Q-Bot's first application is
a semi-automated under-floor insulation service using robotic
devices to enter void spaces, analyse the underfloor dimensions
through machine vision, and spray expanding insulation foam to the
calculated required thickness. This reduces the duration of such a
project undertaken manually from over 2 weeks to up to 2 days, and
reduces the disruption to homeowners. In 2019, French construction
industry giant St.Gobain invested in Q-Bot, building on a Joint
Development Agreement.
Stage of development: Commercial sales in UK and France, Series
A completed, looking at growth
SageTech Medical , Paignton, Devon (
http://www.sagetechmedical.com/ ) uses patented platform technology
that captures, extracts, and purifies halocarbon based gases. As a
first entry market, SageTech is disrupting the anaesthesia industry
by processing waste volatile anaesthetic agents from patient
exhalation. These anaesthetics are significant greenhouse gases,
which SageTech can prevent from ever reaching the atmosphere,
whilst providing cost savings for hospitals through a new circular
economy. SageTech's technology is being piloted at NHS trusts. Its
use cases include the rapid scale-up of ICUs needed to address the
COVID-19 crisis.
Stage of development: Advanced pilots with NHS, targeting
commercial deployment in 2021
Nanotech Industrial Solutions, New Jersey, US (
https://nisusacorp.com/ ) is a developer and manufacturer of
nanomaterials for the petrochemical and applied materials industry.
Its award-winning technology enables the commercial production of
nanoparticles made of tungsten disulphide. When added to
lubricants, the particles significantly reduce both friction and
wear under conditions of extreme pressure and temperature. The
company has JDA partnerships with major corporations, including an
investment by leading global chemicals specialist Evonik
Industries.
Stage of development: Commercial sales directly to market and
co-developing new product lines with corporate partners.
PointGrab , Israel ( https://www.pointgrab.com/ ) provides a
smart sensing solution for the smart buildings and commercial real
estate technology ("CRE-Tech") industries with its CogniPoint
platform. It applies its superior deep-learning technology to the
smart buildings and CRE-Tech ecosystems where opportunities to
gather data are abundant, yet efficient, real-time analytics of
occupants are lacking. The company applies a joint development and
market approach with global and leading application providers and
building service providers. The company is backed by ABB Ventures
and Signify (formerly Philips Lighting), and has deployments
globally with many global companies such as Deloitte and leading
banks. PointGrab's offering enables the transformation of the
workplace to adapt to COVID-19, such as through monitoring
workplace density and social distancing.
Stage of development: Commercial sales in core market, focus on
growth of SaaS offering + entry in other markets in collaboration
with corporate partners.
Wanda Health, Seattle, US ( https://www.wandahealth.com/ ) is a
UCLA-spin-out remote monitoring healthcare analytics and management
company for primary care patients with chronic diseases. Wanda's
platform enables the control and reduce hospitalisation rates
through a Remote Monitoring System that collects data from
patients' homes and provides it to clinicians, highlighting the
high risks and implementing any procedures to prevent those risks.
This life-personalised medicine combined with secure computing and
revolutionary data mining and analytics improves the quality of
life for people with chronic conditions, initially focused on
congestive heart failure. Wanda has recently adapted its platform
to enable hospitals and healthcare practitioners to monitor
thousands of patients for COVID-19 infection rates and
compliance.
Stage of development: Early commercial sales, looking at
scale-up on back of COVID-19 offering; targeting Series A
investment in 2020/21
Vortex Biosciences, San Francisco, US (
https://vortexbiosciences.com/ ) is an oncology diagnostic company,
that has developed and is selling novel liquid biopsy automated
instrument (VTX-1) and microfluidic cartridge for the isolation of
circulating tumour cells (CTCs) from whole blood without the need
for any pre-treatment. Vortex Biosciences' innovation in CTC
capture technology aims to deliver diagnostic tests that improve
therapeutic decisions and saves lives. The key potential is to
revolutionize cancer diagnosis leading to better therapeutic
outcomes. Its technology integrates cancer biology, microfluidic
engineering, clinical research and the identification of cancer
therapies and drug targets.
Stage of development: Growing commercial sales and equipment
leases in the RUO market; targeting collaborations to scale-up
offering through to FDA clearance toward 2023-4. Targeting Series
A+ in 2020/21
Insight Photonics, Colorado, US ( https://www.sweptlaser.com/ )
has developed an Akinetic, all semiconductor laser: a platform
technology with a step-change in performance for multiple
applications including industrial maintenance and process
monitoring for resource efficiency, Light Detection and Ranging
(LiDAR), and Medical Imaging. Insight's first market application is
within Ophthalmological imaging using Optical Coherence Tomography
to scan the retina at higher resolution than currently available.
It has attracted in the past investments from Zeiss.
Stage of development: Early sales of core product. Scaling up
through corporate partnerships
5. THE ACQUISITION AGREEMENT
On 4 August 2020 the Company entered into a share purchase
agreement (the "Acquisition Agreement") with Futura Messis and Dr
Iliev pursuant to which it conditionally agreed to acquire the
entire issued share capital of EMV Capital.
The consideration payable for the Acquisition is the issue to
the Futura Messis of the Consideration Shares. The Consideration
Shares represent 30.0 per cent. of the Company's fully diluted
share capital as enlarged only by the Acquisition, i.e. before
taking into account the Placing or shares issued pursuant to the
Option Grant. Based on the mid-market closing price of an Existing
Ordinary Share on 4 August 2020 (being the latest practical date
prior to this announcement), this values EMV Capital at
approximately GBP3.4 million.
Completion of the Acquisition Agreement is subject to various
conditions including Shareholder approval and Admission. Futura
Messis has agreed to certain customary undertakings in relation to
the actions of EMV Capital pending completion of the agreement.
The Acquisition Agreement contains customary warranties from
Futura Messis, subject to customary limitations, and Dr Iliev has
guaranteed the obligations of Futura Messis.
Should the Acquisition Agreement be terminated due to the
conditions not being satisfied, and provided that (i) the
Independent Directors have not changed their recommendation to vote
in favour of the Resolutions, (ii) a third party offer for the
Company has not become wholly unconditional and (iii) the break fee
is not otherwise deemed invalid by Rule 21.2 of the Takeover Code,
the Company will pay Futura Messis GBP26,400.
6. CAPITAL REORGANISATION
The Directors are also proposing a Capital Reorganisation in
order to increase the market value of the Company's shares in
relative to the nominal value of the Company's shares.
Furthermore, a consequence of having a large number of shares in
issue, with a low market share price, is that small share trades
can result in large percentage movements in the market share price,
which results in considerable share price volatility.
The Directors propose therefore that the Company effects the
Capital Reorganisation on the basis that:
1. the Existing Ordinary Shares of GBP0.05 will each be sub-divided into:
a. one Interim Ordinary Share, being an ordinary share in the
capital of the Company with a nominal value of GBP0.005; and
b. one Deferred Share being a deferred share in the capital of
the Company with a nominal value of GBP0.045 each, and
2. the resulting Interim Ordinary Shares will be consolidated
into New Ordinary Shares of GBP0.05 each (the "New Ordinary
Shares") on the basis of one New Ordinary Share for every 10
Interim Ordinary Shares.
To ensure that the number of Interim Ordinary Shares is exactly
divisible by 10, it is proposed that Neville Registrars Limited is
issued with 4 Existing Ordinary Shares after the General Meeting
and before the Record Date, at which point the 4 Existing Ordinary
Shares will be consolidated off the register immediately.
The Sub-Division of the issued Existing Ordinary Shares will
not, of itself, affect the value of any shareholding, as the number
of Interim Ordinary Shares held by each Shareholder will be equal
to the number of Existing Ordinary Shares held by each Shareholder
immediately prior to the Sub-Division.
Where the Capital Reorganisation results in any Shareholder
being entitled to a fraction of a New Ordinary Share, in accordance
with the Company's articles of association, such fractions shall be
aggregated and the Directors intend to sell (or appoint another
person to sell) such aggregated fractions in the market and retain
the net proceeds for the benefit of the Company. The costs
(including the associated professional fees and expenses) that
would be incurred in distributing such proceeds in relation to such
fractions are likely to exceed the total net proceeds distributable
to such fractional Shareholders. In the Board's view, any such
costs would therefore be disproportionate in the circumstances.
The Deferred Shares will not be transferable. The holders of the
Deferred Shares shall not, by virtue of or in respect of their
holdings of Deferred Shares, have the right to receive notice of
any general meeting of the Company or the right to attend, speak or
vote at any such general meeting.
The rights attaching to the Deferred Shares will be minimal and
such shares will not carry any dividend rights and will only be
entitled to a payment on a return of capital (whether by winding up
or otherwise) after an amount of GBP10,000,000 has been paid in
respect of each New Ordinary Share (an extremely remote
possibility). The Deferred Shares will not be listed or admitted to
trading on AIM (nor any other stock market) and will not be
transferable without the prior written consent of the Company.
The holders of the Deferred Shares shall be deemed to have
conferred the irrevocable authority on the Company at any time to:
(i) appoint any person, for and on behalf of such holder, to, inter
alia, transfer some or all of the Deferred Shares (without making
any payment therefor) to such person(s) as the Company may
determine (including without limitation the Company itself); and
(ii) repurchase or cancel such Deferred Shares without obtaining
the consent of the holders thereof. In addition, the Company may
repurchase all of the Deferred Shares, at a price not exceeding one
pence in aggregate.
The Articles have been amended to reflect the creation of the
Deferred Shares and to set out the rights attaching to them and,
accordingly, Resolution 1 seeks approval to adopt the New Articles.
The changes in respect of the Deferred Shares are the only changes
being made to the Articles.
A copy of the New Articles will be available on request from the
Company at Wilkins Kennedy LLP Anglo House, Bell Lane Office
Village, Bell Lane, Amersham, Buckinghamshire, HP6 6FA from the
date of the Circular until the time of the General Meeting and at
the place of the General Meeting for at least 15 minutes prior to
and during the General Meeting.
No share certificates will be issued in respect of the Interim
Ordinary Shares or the Deferred Shares. If you hold a share
certificate in respect of your Existing Ordinary Shares in the
Company, your certificate will no longer be valid from the time
that the proposed Capital Reorganisation becomes effective. If you
hold more than nine Existing Ordinary Shares on the Record Date,
you will be sent a new share certificate evidencing the New
Ordinary Shares to which you are entitled under the Capital
Reorganisation. Such certificates are expected to be despatched by
not later than 10 business days following Admission. Upon receipt
of the new certificate, you should destroy any old Ordinary Share
certificates.
The New Ordinary Shares will be freely transferable, and
application will be made for the New Ordinary Shares to be admitted
to trading on AIM. The record date for the Capital Reorganisation
is 6.00 p.m. on 24 August 2020, unless otherwise agreed by the
Board.
The rights attaching to the New Ordinary Shares will be
identical in all respects to those of the Existing Ordinary
Shares.
A consequence of the Capital Reorganisation is that Shareholders
holding fewer than 10 Existing Ordinary Shares will receive no New
Ordinary Shares, they will, however, receive Deferred Shares.
It is proposed that subsisting options granted under the
NetScientific Share Option Scheme be adjusted in accordance with
their terms for the Capital Reorganisation.
7. THE PLACING
The purpose of the Placing is to provide the Group as enlarged
by the Acquisition with sufficient funds to implement its refined
strategy outlined above. The net proceeds will therefore be used
to:
-- protect and enhance the position in portfolio companies;
-- invest in expanded opportunities;
-- leverage NetScientific's funding to anchor investment syndication;
-- expand revenue streams, market and value; and
-- position the Group for further growth and working capital purposes.
The Company has conditionally raised gross proceeds of GBP 2.3
million before expenses (approximately GBP2.0 million, net of
expenses) through the conditional issue of 3,538,455 Placing Shares
at 65 pence per share (on the basis that the Capital Reorganisation
has become effective).
WH Ireland has conditionally placed the Placing Shares with new
and existing investors. The Placing is not being underwritten.
The Placing Agreement and the issue of the Placing Shares are
conditional, inter alia, upon:
(i) the passing of the Resolutions to be proposed at the General
Meeting;
(ii) the compliance by the Company with all of its obligations
under the Placing Agreement to the extent that they are required to
be performed on or prior to Admission;
(iii) the Placing Agreement not having been terminated prior to
Admission; and
(iv) Admission occurring by no later than 8.00 a.m. on 25 August
2020 (or such later time and/or date as the Company and WH Ireland
may agree, being not later than 8.00 a.m. on 30 November 2020).
Accordingly, if any of such conditions are not satisfied, or, if
applicable, waived, the Placing will not proceed.
The Placing Agreement contains customary warranties given by the
Company to WH Ireland as to matters relating to the Company and its
business and a customary indemnity given by the Company to WH
Ireland in respect of liabilities arising out of or in connection
with the Placing.
WH Ireland may terminate the Placing Agreement prior to
Admission in certain circumstances, including, amongst other
things, if the Company is in breach of any of its obligations under
the Placing Agreement (including the warranties contained in the
Placing Agreement); if there is a material adverse change in the
financial position or prospects of the Group; or if there is a
material adverse change in national or international financial,
monetary, economic, political, environmental, or stock market
conditions, which (in the opinion of WH Ireland acting in good
faith and having consulted with the Company) is or will be or is
likely to be materially prejudicial to the Group or to the Placing
or Admission of the Placing Shares.
The Placing Shares will represent approximately 23.72 per cent.
of the Enlarged Share Capital.
The Placing Shares are not being made available to the public
and are not being offered or sold in any jurisdiction where it
would be unlawful to do so.
8. INDEPENT DIRECTOR'S IRREVOCABLE UNDERTAKING
Professor Smith has entered into an irrevocable undertaking in
favour of the Company dated 4 August 2020 to vote in favour of the
Resolutions in respect of all of the Existing Ordinary Shares held
by him, being 28,571 Existing Ordinary Shares representing 0.02 per
cent. of the Existing Ordinary Shares.
9. ADMISSION OF THE NEW ORDINARY SHARES
Application will be made to the London Stock Exchange for the
New Ordinary Shares to be admitted to trading on AIM. It is
expected that Admission of the New Ordinary Shares will become
effective on 25 August 2020 and that dealings for normal settlement
in the New Ordinary Shares will commence at 8.00 a.m. on 25 August
2020. The Consideration Shares and Placing Shares, when issued and
fully paid, will rank pari passu in all respects with the other New
Ordinary Shares and will rank for all dividends or other
distributions declared, made or paid after the date of issue.
10. INFORMATION ON CURRENT TRADING
The Company's recent financial performance was set out in the
Company's preliminary results announcement on 27 April 2020. In the
year ended 31 December 2019, the Company reported a consolidated
loss after taxation of GBP4.9 million and had at 31 December 2019
net assets of GBP5.1 million, including cash and cash equivalents
of GBP3.5 million.
11. NETSCIENTIFIC STRATEGY FOLLOWING COMPLETION OF THE
PROPOSALS
Following completion of the Proposals, the Directors intend to
pursue a more active management of the enlarged portfolio.
In the opinion of the Directors, the combination of
NetScientific and EMV Capital has the potential to deliver
shareholder value, firstly, by maximising returns from existing
portfolio companies through focused execution and thereafter
through further targeted investments in existing and new
opportunities.
In this revised approach, the Directors intend that
NetScientific will:
-- concentrate its investment strategy on life sciences and technology opportunities;
-- implement a balanced way of growth, combining new and
recurring revenue sources from the ongoing activities of the
Enlarged Group, capital gains from balance sheet investments, and
capturing 'upside' from the carried interest arrangements as
investments are realised;
-- combine its professional organisation with EMV Capital's
tight cost base and enhanced team capabilities, creating a highly
efficient operation appropriate for the stage of development of the
Enlarged Group;
-- obtain greater leverage and impact from a combination of
NetScientific's investments and status, with EMV Capital's
syndication capabilities;
-- achieve more efficient execution and delivery, with the core
team managing a greater number of portfolios and transactions;
-- leverage the trans-Atlantic relationships and resources,
helping US companies access UK and European markets, corporate
linkages, and talents; and conversely helping UK companies access
US markets, venture capital ecosystem and corporate linkages;
-- utilise international growth opportunities for the portfolio
companies, relating to investment, corporate linkages, market
access, access to talent, and exits; and
-- participate selectively in superior investments opportunities
arising from the combined footprint and networks.
The Directors have drawn up plans for a smooth integration of
the two businesses as part of the implementation of the strategic
plan.
12. PROPOSED SENIOR MANAGEMENT
Following completion of the Proposals, it is proposed that the
appointment of Dr Iliev as Chief Executive Officer will progress
from interim and part-time to permanent and full-time Chief
Executive Officer. It is further proposed that Stephen Crowe's role
becomes full-time Group Chief Financial Officer, with oversight
over reporting and controls of the portfolio companies.
In addition, the Company has agreed with John Clarkson, in the
event that the Proposals are implemented, to extend his consultancy
agreement until EMV Capital has been integrated with the Group and
any related projects falling within his expertise are concluded.
The consultancy agreement is with Mr Clarkson's consultancy
company, Development, Financial and Management Services Ltd. Under
the agreement Mr Clarkson is expected to provide a minimum of 5
days per month of consultancy services at a rate of GBP2,000 per
day, up to 10 days per month. If Mr Clarkson works in excess of 5
days per month, he can elect to receive his daily fee in New
Ordinary Shares instead of cash. The parties may terminate the
agreement inter alia on 30 days' notice.
The Company intends to appoint an additional non-executive
director as Chair of the Audit Committee, and in due course a
further non-executive director with suitable industry experience.
It is expected that some of the NetScientific Board members will
take non-executive director, or observer seats in portfolio
companies, and will contribute to critical NetScientific projects
where their expertise is appropriate.
The Independent Directors consider it is appropriate to review
the current remuneration arrangements for senior management,
including the NetScientific Share Option Scheme, following the
Acquisition to better align their incentives with the interests of
all of the Shareholders of the Enlarged Group and support the
strategy and business objectives of the Enlarged Group.
13. OPTION GRANT
It is currently proposed that the Company will, following
Admission, award options over New Ordinary Shares to its senior
management under the NetScientific Share Option Scheme. The option
exercise price will be determined by the remuneration committee of
the Company's board of directors and will not be less than the
average of the closing or middle (as appropriate) market quotations
for New Ordinary Shares over the five dealing days prior to the
date on which the option is granted.
The remuneration committee intends that, as part of this award,
Dr Iliev will be awarded the Option Grant over 2.5% of the Enlarged
Share Capital, enlarged by this grant.
14. RELATED PARTY TRANSACTIONS
Each of the following represents a related party transaction
under Rule 13 of the AIM Rules (together the "Related Party
Transactions"):
-- the acquisition of EMV Capital from Futura Messis, a company
controlled by Dr Ilian Iliev who is a director of the Company;
-- the participation in the Placing of parties connected with Dr
Iliev and Melvin Lawson. Melvin Lawson is the sole shareholder, and
a director, of AB Group, is a trustee and beneficiary of A Beckman
SSAS and is a trustee of Lawson Beckman Charitable Trust, each a
party connected with him which collectively hold 29.98 per cent. of
the Existing Ordinary Shares;
-- the Option Grant; and
-- the extension to the consultancy agreement with John
Clarkson's consultancy company, Development, Financial and
Management Services Ltd, referred to in paragraph 12 above.
The Independent Directors consider, having consulted with WH
Ireland, the Company's nominated adviser, that the terms of each of
the Related Party Transactions are fair and reasonable insofar as
the Shareholders are concerned.
15. CITY CODE ON TAKEOVERS AND MERGERS
The issue of the Consideration Shares, those Placing Shares
proposed to be issued to the Concert Party and the issue of the New
Ordinary Shares the subject of the Option Grant gives rise to
certain considerations under the Takeover Code. Brief details of
the Panel, the Takeover Code and the protections they afford are
set out below.
The Takeover Code is issued and administered by the Panel. The
Company is a public limited company whose Existing Ordinary Shares
are admitted to trading on AIM and its Shareholders are therefore
entitled to the protections afforded by the Takeover Code.
For the purposes of the Takeover Code, the members of the
Concert Party are presumed to be acting in concert, as defined by
the Takeover Code, with regard to their holdings of Existing
Ordinary Shares. Further details of the Concert Party are set out
below.
Under Rule 9 of the Takeover Code, where any person acquires,
whether by a series of transactions over a period of time or by one
specific transaction, an interest (as defined in the Takeover Code)
in shares which (taken together with shares in which persons acting
in concert with him are interested) carry 30 per cent, or more of
the voting rights of a company that is subject to the Takeover
Code, that person is normally required by the Panel to make a Rule
9 Offer to the remaining shareholders to acquire their shares.
Similarly, Rule 9 of the Takeover Code also provides, among
other things, that where any person, together with 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 a company
which is subject to the Takeover Code, but does not hold shares
carrying more than 50 per cent. of the voting rights of that
company and such person or any such person 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, then such person or persons acting in concert with him
will normally be required by the Panel to make a Rule 9 Offer to
the remaining shareholders to acquire their shares.
An offer under Rule 9 of the Takeover Code must be in cash (or
with a cash alternative) and at the highest price paid within the
preceding 12 months for any interest in shares in the company by
the person required to make the offer or any person acting in
concert with him.
For the purposes of the Takeover Code, persons acting in concert
include persons who, pursuant to an agreement or understanding
(whether formal or informal), co-operate to obtain or consolidate
control of a company or frustrate the successful outcome of an
offer for a company subject to the Takeover Code. For the purposes
of the Takeover 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. Under the Takeover Code,
shareholders in a private company who sell their shares in that
company in consideration for the issue of new shares in a company
to which the Takeover Code applies are also presumed to be acting
in concert in respect of that company unless the contrary is
established.
15.1 Concert Party
Upon implementation of the Proposals, the Concert Party will be
interested in 7,258,881 New Ordinary Shares representing
approximately 47.45 per cent. of the voting rights of the Company
(on the basis that only the options proposed to be granted to Dr
Iliev under the Option Grant are exercised in full at the earliest
opportunity being the third anniversary of the date of grant and
that no other New Ordinary Shares are issued prior to such
exercise), which, without a waiver of the obligations under Rule 9
of the Takeover Code, would require the Concert Party to make a
Rule 9 Offer to the Company's remaining Shareholders. However, the
Panel has agreed, subject to the Waiver Resolution being passed on
a poll by the Independent Shareholders at the General Meeting, to
waive the requirement under Rule 9 of the City Code for the Concert
Party to make a Rule 9 Offer that would otherwise apply. Those
members of the Concert Party and any Placing Participant will not
be able to vote on the Waiver Resolution as they are not
independent. Those persons have undertaken to the Company that they
will not vote on the Waiver Resolution. Further information on the
waiver of the obligation to make such a Rule 9 Offer is set out in
paragraph 15.3 below.
The interests of the persons presumed to be acting in concert
with each other in Existing Ordinary Shares upon implementation of
the Proposals, and the underlying assumptions are set out in the
table below in paragraph 15.2.
15.2 Information on the Concert Party
For the purposes of the Takeover Code, the members of the
Concert Party are regarded as acting in concert by the Panel with
regard to their holdings of Existing Ordinary Shares.
Implementation of the Proposals will result in Dr Iliev, Futura
Messis, Melvin Lawson and Melvin Lawson's connected entities being
presumed to be acting in concert for the purposes of the Takeover
Code.
Melvin Lawson's interest in the Existing Ordinary Shares arises
through his association with the following entities, which in
aggregate hold 29.98 per cent. of the Existing Ordinary Shares:
-- AB Group Limited, an English private limited company wholly
owned by Melvin Lawson, of which he is one of three directors;
-- A Beckman plc SSAS Retirement Benefit Scheme, a small
self-administered pension scheme registered with HMRC of which
Melvin Lawson is one of three trustees and interested in the
trust's assets (together with his wife, who is also a trustee);
and
-- the Lawson Beckman Charitable Trust, an English registered
charity and an unincorporated body constituted under a trust deed
dated 30 May 1970 of which Melvin Lawson is one of three trustees
(and neither a settlor nor a beneficiary).
The interests of the Concert Party (both number and percentage)
in the New Ordinary Shares and their interests in the issued share
capital ("ISC") of the Company upon implementation of each of the
Proposals (including the exercise of the New Ordinary Shares the
subject of the Option Grant) are set out below.
Existing Effect Effect Effect of
ISC (post of completion of completion completion
Capital Reorganisation of the of the of the Acquisition
basis) Acquisition Acquisition and Placing
and Placing and exercise
of options
under the
Option Grant
Futura Messis - 3,521,480 3,598,403 3,598,403
30.95% 24.12% 23.52%
Dr Iliev - - 382,465
2.50%
Dr Iliev total - 3,521,480 3,598,403 3,946,787
------------------------ --------------- --------------- --------------------
30.95% 24.12% 26.02%
Melvin Lawson
AB Group 1,056,763 1,056,763 1,518,301 1,518,301
13.45% 9.29% 10.18% 9.92%
A Beckman SSAS 980,987 980,987 1,442,525 1,442,525
12.49% 8.62% 9.67% 9.43%
Lawson Beckman Charitable
Trust 317,187 317,187 317,187 317,187
4.04% 2.79% 2.13% 2.07%
Melvin Lawson total 2,354,937 2,354,937 3,278,013 3,278,013
------------------------ --------------- --------------- --------------------
29.98% 20.70% 21.98% 21.43%
Concert Party's Total 2,354,937 5,876,417 6,876,416 7,258,881
29.98% 51.65% 46.10% 47.45%
------------------------ --------------- --------------- --------------------
Resultant share capital
at each stage 7,856,187 11,377,667 14,916,122 15,298,587
------------------------ --------------- --------------- --------------------
Note: the above figures are based on the assumption the capital
reorganisation has taken place pursuant to Resolutions 2 and 3.
The above interests have been calculated on the basis:
-- of completion of the Acquisition and Placing;
-- that the Concert Party subscribe to the Placing as disclosed; and
-- that options over New Ordinary Shares the subject of the
Option Grant to Dr Iliev are exercised in full at the earliest
possible date (being the third anniversary of the date of grant),
and that no other options or conversion rights are exercised by
other persons.
Other than as disclosed in the table above, as at 4 August 2020
2020, being the latest practical date prior to publication of the
Circular , no member of the Concert Party, their immediate families
or person connected with any of them (within the meaning of Part 22
of the Act and related regulations) nor any persons acting in
concert with any them, had any interests, rights to subscribe or
short positions (whether conditional or absolute and whether in the
money or otherwise), including any short position under a
derivative, any agreement to sell or any delivery obligation or
right to require another person to purchase or take delivery in any
relevant securities of the Company.
There are no relationships (personal, financial and commercial),
arrangements and understandings between the Concert Party members
and any of the Shareholders or any person who is, or is presumed to
be, acting in concert with any Shareholder to disclose.
15.3 Waiver of Rule 9 obligation
Under Note 1 on the Notes on the Dispensations from Rule 9 of
the Takeover Code, the Panel will normally waive the requirement
for a Rule 9 Offer if, inter alia, those shareholders of the
company who are independent of the persons who would otherwise be
required to make a Rule 9 Offer pass an ordinary resolution on a
poll at a general meeting approving such a waiver.
The Company has applied to the Panel for a waiver of the
obligation of the Concert Party under Rule 9 of the Takeover Code
that would otherwise arise and require it to make a Rule 9 Offer to
the Company's other Shareholders as a result of the issue of the
Placing Shares, the Consideration Shares and any New Ordinary
Shares subsequently issued pursuant to the Option Grant to the
Concert Party in connection with the implementation of the
Proposals. Subject to the approval of the Independent Shareholders
of the Waiver Resolution, to be taken on a poll at the General
Meeting, the Panel has agreed to waive such obligation to make a
Rule 9 Offer. To be passed, the Waiver Resolution will require a
simple majority of the votes cast on a poll by the Independent
Shareholders voting at the General Meeting. Members of the Concert
Party and Placing Participants will not be permitted to vote on the
Waiver Resolution and have undertaken to the Company that they will
not vote on the Waiver Resolution.
The Notice of the General Meeting, at which the Resolutions will
be proposed, is set out at the end of the Circular. Should
Shareholder approval not be obtained for the Waiver Resolution,
neither the Acquisition nor the Placing will proceed.
Following implementation of the Proposals, the members of the
Concert Party will hold between them an interest in New Ordinary
Shares carrying 30 per cent. or more of the Company's voting share
capital but will not hold New Ordinary Shares carrying in excess of
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 New Ordinary Shares will be subject
to the provisions of Rule 9 of the Takeover Code.
The Concert Party will not be restricted from making a
subsequent offer in the future for the Company in the event that
the Waiver Resolution is approved by the Independent Shareholders.
For the avoidance of doubt, the waiver from the obligation that the
Concert Party would otherwise have to make a Rule 9 Offer to the
Company's other shareholders granted pursuant to the Waiver
Resolution applies only in respect of increases in shareholdings of
the Concert Party resulting from the implementation of the
Proposals and not in respect of other increases in its
holdings.
15.4 Disqualifying Transactions
The waiver to which the Panel has agreed under the Takeover Code
will be invalidated if any purchases are made by any member of the
Concert Party, or any person acting in concert with it, in the
period between the date of this Circular and the General Meeting.
No member of the Concert Party, nor any person acting in concert
with it, has purchased or acquired an interest in Existing Ordinary
Shares in the 12 months preceding the date of this Circular.
15.5 Intentions of the Concert Party
The Concert Party intends that the Enlarged Group will, as more
fully described in paragraph 2, adopt a more proactive management
of a larger portfolio with varying time horizons and stages of
development, and a wider technological focus than healthcare, in
order to grow shareholder value. The Concert Party has no intention
of making any changes in relation to any research and development
functions of the Company.
Otherwise than as set out in paragraph 12, (of which the Concert
Party is supportive), the Concert Party has no intention of making
any changes to the continued employment of the employees and
management of the Company or of its subsidiaries, including any
material change in the conditions of employment or in the balance
of the skills and functions of the employees and management.
Following the Acquisition, the headquarters and headquarters
functions of the Enlarged Group will be relocated to the offices of
EMV Capital at Level 39, One Canada Square, London E14 5AB. Other
than that relocation, the Concert Party does not believe its
strategic plans for the Enlarged Group (as set out above) will have
any repercussions on employment or on the locations of the
Company's places of business. The Concert Party has no intention of
making any changes to employer contributions into the Company's
pension scheme(s) (including with regards to current arrangements
for the funding of any scheme deficits ) , the accrual of benefits
for existing members, or the admission of new members.
The Concert Party has no intention to redeploy the Company's
fixed assets (other than relocating the headquarters are mentioned
above).
The Concert Party has no intention of making any changes to the
maintenance of the existing trading facilities for the New Ordinary
Shares.
The Independent Directors fully agree with the Concert Party's
intentions and strategic plans, in particular , in relation to
their likely repercussions on employment and the locations of the
Company's place of business.
16. RELATIONSHIP AGREEMENT AND LOCK-IN AGREEMENT
The Company, WH Ireland and the Concert Parties have entered
into the Relationship and Lock-in Agreement. This agreement will
ensure that the Company is capable of carrying out its business
independently of the Concert Parties and their associates. It also
contains undertakings from each member of the Concert Party (i)
not, for a period of 12 months from Admission, to sell, charge or
grant any interest over any Consideration Shares held by it and
(ii) at the end of that 12 month period, to only dispose of such
Consideration Shares through WH Ireland for a further 12 months, in
each case subject to certain exceptions including:
-- an acceptance of an offer for the Company's shares at any stage; or
-- agreeing to accept any offer for the Company's shares either
before or after its announcement.
Pursuant to the Relationship and Lock-In Agreement, for so long
as Dr Iliev and Futura Messis and their connected persons hold at
least 10 per cent. of the voting rights on issue in the Company,
they are entitled to nominate one director to the Board, which,
following admission, will be Ilian Iliev.
Further details of the Relationship and Lock-in Agreement are
set out in paragraph 8(i) of Part II of the Circular.
17. GENERAL MEETING
For the reasons set out above, completion of the Acquisition and
of the Placing is conditional upon, inter alia, the approval by the
Shareholders of the Resolutions at the General Meeting.
Only Independent Shareholders may vote on the Waiver Resolution,
that is to say no members of the Concert Party nor any Placing
Participant.
As Shareholders will be aware, the UK Government's restrictive
measures in connection with COVID-19 and, in particular, the
restrictions on non-essential travel and on gatherings, will
restrict the ability of Shareholders to attend the General Meeting
in person. Although the situation is fast changing and constantly
evolving, it appears that the measures will continue beyond the
date of the General Meeting and as such the Board strongly advises
and recommends that all Shareholders refrain from attending the
General Meeting in person and, instead, submit a Form of Proxy. In
order to ensure that Shareholders votes count, the Board recommends
that Shareholders appoint the Chairman of the General Meeting as
their proxy for the General Meeting.
Shareholders attempting to attend the General Meeting will be
refused entry.
The Board will continue to assess the situation in the UK, and
in particular any new or existing measures that the UK Government
takes or extends and will duly notify Shareholders as appropriate
and what further action, if any, they should take in respect of the
General Meeting.
18. INDEPENT ADVICE PROVIDED TO THE INDEPENT DIRECTORS
WH Ireland has provided formal advice to the Independent
Directors, in accordance with the requirements of paragraph 4(a) of
Appendix 1 of the Takeover Code, in relation to the Proposals. Such
advice was provided by WH Ireland to the Independent Directors only
and, in providing such advice, WH Ireland has taken into account
the Independent Directors' commercial assessments. The advice must
regard the merits of the Proposals, the controlling position they
will create, and the effect which they will have on the
Shareholders generally. Accordingly, the Independent Directors, who
have been so advised by WH Ireland, consider the terms of the
Proposals to be fair and reasonable and in the best interests of
the Shareholders and the Company as a whole.
WH Ireland confirms that it, and any person who is or is
presumed to be acting in concert with it, is independent of the
Concert Party and has no personal, financial or commercial
relationship or arrangements or understandings with the Concert
Party, save for (i) as Nominated Adviser having advised Dr Iliev in
his capacity as a Director of the Company and (ii) Melvin Lawson
being interested in 3.08% of the issued share capital of WH
Ireland.
19. RECOMMATIONS AND UNDERTAKINGS
Shareholders should be aware that if the Resolutions are not
passed at the General Meeting, the Proposals will not proceed.
Accordingly, the Independent Directors recommend that (i) the
Independent Shareholders vote in favour of the Waiver Resolution
and (ii) the Shareholders vote in favour of the other Resolutions
in each case at the General Meeting. Professor Smith, the only
Independent Director with an interest in the Existing Share
Capital, has undertaken to vote in favour of the Resolutions in
respect of his holding of Existing Ordinary Shares, being 28,571
Existing Ordinary Shares in aggregate and representing
approximately 0.02 per cent. of the Existing Ordinary Shares.
STATISTICS FOR ACQUISITION, SHARE REORGANISATION, PLACING AND
ADMISSION
Number of Existing Ordinary Shares in issue as at the
date of the Circular 78,561,866
Number of New Ordinary Shares of GBP0.05 upon the Capital
Reorganisation becoming effective* 7,856,187
Nominal Value of the New Ordinary Shares GBP0.05
Number of Consideration Shares to be issued pursuant
to the Acquisition (on the basis that the Capital Reorganisation
has become effective)* 3,521,480
Number of Placing Shares to be issued pursuant to the
Placing (on the basis that the Capital Reorganisation
has become effective)* 3,538,455
Placing Price (on the basis that the Capital Reorganisation
has become effective) 65p
Proceeds of the Placing (before expenses) GBP2.3
million
Enlarged Share Capital immediately following Admission GBP9.69
at the Placing Price million
Percentage of Enlarged Share Capital represented by
the Placing Shares 23.72%
Percentage of Enlarged Share Capital represented by
the Consideration Shares 23.61%
ISIN code for the New Ordinary Shares GB00BN4R5Q82
SEDOL code for the New Ordinary Shares BN4R5Q8
*Assuming the relevant Resolutions are passed at the
General Meeting
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Publication of the Circular and Form of 6 August 2020
Proxy
Latest time and date for receipt of Forms 10.00 a.m. on 21 August
of Proxy 2020
General Meeting 10.00 a.m. on 24 August
2020
Announcement of result of General Meeting 10.30 a.m. on 24 August
2020
Record date for Capital Reorganisation 6.00 p.m. on 24 August
2020
Admission and commencement of dealings in 8.00 a.m. on 25 August
the New Ordinary Shares on AIM 2020
Completion of the Acquisition 25 August 2020
CREST accounts credited with Placing Shares 25 August 2020
in uncertified form
Dispatch of share certificates in respect no later than 10 business
of the Placing Shares and the New Ordinary days following Admission
Shares to be issued in certified form
Notes : Each of the dates and times in the above timetable are
subject to change at the absolute discretion of the Company and WH
Ireland. In this announcement all references to times and dates are
in reference to those observed in London, United Kingdom.
This Announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014 ("MAR"). In addition, market
soundings (as defined in MAR) were taken in respect of the Placing
with the result that certain persons became aware of inside
information (as defined in MAR), as permitted by MAR. This inside
information is set out in this Announcement. Therefore, those
persons that received inside information in a market sounding are
no longer in possession of such inside information relating to the
Company and its securities.
**S**
APPIX
TERMS AND CONDITIONS OF THE PLACING
THIS ANNOUNCEMENT, INCLUDING THIS APPIX, (TOGETHER, THE
"ANNOUNCEMENT") AND THE INFORMATION IN IT IS RESTRICTED AND IS NOT
FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY,
IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA,
CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER
JURISDICTION IN WHICH SUCH PUBLICATION OR DISTRIBUTION WOULD BE
UNLAWFUL.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE
PLACING. THIS APPIX AND THE TERMS AND CONDITIONS SET OUT HEREIN ARE
FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT: (A) PERSONS
WHO ARE IN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA AND ARE,
UNLESS OTHERWISE AGREED BY THE BROKER, ("QUALIFIED INVESTORS") AS
DEFINED IN ARTICLE 2.1(E) OF THE EU PROSPECTUS DIRECTIVE (WHICH
MEANS DIRECTIVE 2003/71/EC AND INCLUDES ANY RELEVANT IMPLEMENTING
DIRECTIVE MEASURE IN ANY MEMBER STATE) (THE "PROSPECTUS
DIRECTIVE"); AND (B) IN THE UNITED KINGDOM, PERSONS WHO ARE: (I)
"INVESTMENT PROFESSIONALS" WITHIN THE MEANING OF ARTICLE 19(5) OF
THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION)
ORDER 2005 (THE "ORDER"); (II) PERSONS FALLING WITHIN ARTICLE
49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED
ASSOCIATIONS, ETC") OF THE ORDER; OR (III) PERSONS TO WHOM IT MAY
OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING
REFERRED TO AS "RELEVANT PERSONS"). THIS APPIX AND THE TERMS AND
CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY
PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT
ACTIVITY TO WHICH THIS APPIX AND THE TERMS AND CONDITIONS SET OUT
HEREIN RELATE IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE
ENGAGED IN ONLY WITH RELEVANT PERSONS.
THIS ANNOUNCEMENT IS NOT AN OFFER FOR SALE OR SUBSCRIPTION IN
ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL UNDER THE SECURITIES LAWS OF ANY JURISDICTION. THIS
ANNOUNCEMENT DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR
SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT IS
NOT AN OFFER OF OR SOLICITATION TO PURCHASE OR SUBSCRIBE FOR
SECURITIES IN THE UNITED STATES. THE SECURITIES REFERRED TO HEREIN
HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED
OR SOLD IN THE UNITED STATES, EXCEPT PURSUANT TO AN APPLICABLE
EXEMPTION FROM, OR AS PART OF A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. NEITHER THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY SECURITIES
REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE
UNITED STATES HAS APPROVED OR DISAPPROVED OF AN INVESTMENT IN THE
SECURITIES OR PASSED UPON ORORSED THE MERITS OF THE PLACING OR THE
ACCURACY OR ADEQUACY OF THE CONTENTS OF THIS ANNOUNCEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE UNITED
STATES. NO PUBLIC OFFERING OF SECURITIES IS BEING MADE IN THE
UNITED STATES.
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL,
TAX, BUSINESS AND RELATED ASPECTS OF AN INVESTMENT IN PLACING
SHARES. THE PRICE OF SHARES AND THE INCOME FROM THEM (IF ANY) MAY
GO DOWN AS WELL AS UP AND INVESTORS MAY NOT GET BACK THE FULL
AMOUNT INVESTED ON DISPOSAL OF SHARES.
The relevant clearances have not been, nor will they be,
obtained from the securities commission of any province or
territory of Canada; no prospectus has been lodged with or
registered by the Australian Securities and Investments Commission
or the Japanese Ministry of Finance or the South African Reserve
Bank; and the Placing Shares have not been, nor will they be,
registered under or offered in compliance with the securities laws
of any state, province or territory of Australia, Canada, Japan or
the Republic of South Africa. Accordingly, the Placing Shares may
not (unless an exemption under the relevant securities laws is
applicable) be offered, sold, resold or delivered, directly or
indirectly, in or into Australia, Canada, Japan, the Republic of
South Africa or any other jurisdiction in which such offer, sale,
resale or delivery would be unlawful.
Solely for the purposes of the product governance requirements
contained within: (a) EU Directive 2014/65/EU on markets in
financial instruments, as amended ("MiFID II"); (b) Articles 9 and
10 of Commission Delegated Directive (EU) 2017/593 supplementing
MiFID II; and (c) local implementing measures (together, the "MiFID
II Product Governance Requirements"), and disclaiming all and any
liability, whether arising in tort, contract or otherwise, which
any "manufacturer" (for the purposes of the Product Governance
Requirements) may otherwise have with respect thereto, the Placing
Shares have been subject to a product approval process, which has
determined that the Placing Shares are: (i) compatible with an end
target market of: (a) retail investors, (b) investors who meet the
criteria of professional clients and (c) eligible counterparties
(each as defined in MiFID II); and (ii) eligible for distribution
through all distribution channels as are permitted by MiFID II (the
"Target Market Assessment"). Notwithstanding the Target Market
Assessment, distributors should note that: the price of the Placing
Shares may decline and investors could lose all or part of their
investment; the Placing Shares offer no guaranteed income and no
capital protection; and an investment in the Placing Shares is
compatible only with investors who do not need a guaranteed income
or capital protection, who (either alone or in conjunction with an
appropriate financial or other adviser) are capable of evaluating
the merits and risks of such an investment and who have sufficient
resources to be able to bear any losses that may result therefrom.
The Target Market Assessment is without prejudice to the
requirements of any contractual, legal or regulatory selling
restrictions in relation to the offer.
For the avoidance of doubt, the Target Market Assessment does
not constitute: (a) an assessment of suitability or appropriateness
for the purposes of MiFID II; or (b) a recommendation to any
investor or group of investors to invest in, or purchase, or take
any other action whatsoever with respect to the Placing Shares.
Each distributor is responsible for undertaking its own target
market assessment in respect of the Placing Shares and determining
appropriate distribution channels.
Persons (including, without limitation, nominees and trustees)
who have a contractual or other legal obligation to forward a copy
of this Appendix or this Announcement of which it forms part should
seek appropriate advice before taking any action.
These terms and conditions apply to persons making an offer to
acquire Placing Shares. Each Placee hereby agrees with the Broker
and the Company to be bound by these terms and conditions as being
the terms and conditions upon which Placing Shares will be issued
or acquired. A Placee shall, without limitation, become so bound if
WH Ireland confirms to such Placee its allocation of Placing
Shares.
Upon being notified of its allocation of Placing Shares, a
Placee shall be contractually committed to acquire the number of
Placing Shares allocated to it at the Placing Price and, to the
fullest extent permitted by law, will be deemed to have agreed not
to exercise any rights to rescind or terminate or otherwise
withdraw from such commitment.
In this Appendix, unless the context otherwise requires,
"Placee" means a Relevant Person (including individuals, funds or
others) on whose behalf a commitment to subscribe for or acquire
Placing Shares has been given.
Details of the Placing Agreement and the Placing Shares
The Broker and the Company have entered into a Placing
Agreement, under which the Broker has, on the terms and subject to
the conditions set out therein, undertaken to use its reasonable
endeavours to procure subscribers for approximately 3.5 million
Placing Shares. It is expected that the Placing will raise, in
aggregate, up to approximately GBP2.3 million in gross proceeds at
a price of 65 pence per share ("Placing Price") with up to
approximately 3.5 million Placing Shares expected to be issued. The
Placing is not being underwritten by the Broker or any other
person.
The number of Placing Shares will be determined following
completion of the Bookbuild as set out in this Announcement. The
timing of the closing of the Bookbuild, the number of Placing
Shares and allocations are at the discretion of the Broker and a
further announcement confirming these details will be made in due
course.
The Placing Shares will, when issued, be subject to the articles
of association of the Company, will be credited as fully paid and
will rank pari passu in all respects with the Existing Ordinary
Shares, including the right to receive all dividends and other
distributions (if any) declared, made or paid on or in respect of
Ordinary Shares after the date of issue of the Placing Shares.
The Placing Shares will trade on AIM under NSCI with ISIN
GB00BN4R5Q82.
Application for admission to trading
Application will be made to London Stock Exchange for admission
to trading of the Placing Shares on AIM. It is expected that
settlement of any such shares and Admission will become effective
on or around 8.00 a.m. on 25 August 2020 and that dealings in the
Placing Shares will commence at that time.
Bookbuild
The Broker will today commence an accelerated bookbuilding
process to determine demand for participation in the Placing by
potential Placees at the Placing Price. This Appendix gives details
of the terms and conditions of, and the mechanics of participation
in, the Placing. No commissions will be paid to Placees or by
Placees in respect of any Placing Shares.
The Broker and the Company shall be entitled to effect the
Placing by such alternative method to the Bookbuild as they may, in
their sole discretion, determine.
Participation in, and principal terms of, the Placing are as
follows:
1 The Broker is arranging the Placing as agent for, and broker of, the Company.
2 Participation in the Placing is only available to persons who
are lawfully able to be, and have been, invited to participate by
the Broker. The Broker is entitled to participate in the Placing as
principal.
3 The Bookbuild will establish the number of Placing Shares to
be issued at the Placing Price, which will be agreed between the
Broker and the Company following completion of the Bookbuild. The
number of Placing Shares will be announced on a Regulatory
Information Service following the completion of the Bookbuild.
4 To bid in the Bookbuild, Placees should communicate their bid
by telephone to their usual contact at WH Ireland. Each bid should
state the number of Placing Shares which the prospective Placee
wishes to subscribe for or purchase at the Placing Price. Bids may
be scaled down by the Broker on the basis referred to in paragraph
8 below.
5 The timing of the closing of the Bookbuild will be at the
discretion of the Broker. The Company reserves the right to reduce
or seek to increase the amount to be raised pursuant to the
Placing, in its absolute discretion.
6 Each Placee's allocation will be confirmed to Placees orally,
or by email, by WH Ireland following the close of the Bookbuild and
a trade confirmation or contract note will be dispatched as soon as
possible thereafter. WH Ireland's oral or emailed confirmation will
give rise to an irrevocable, legally binding commitment by that
person (who at that point becomes a Placee), in favour of WH
Ireland and the Company, under which it agrees to acquire by
subscription the number of Placing Shares allocated to it at the
Placing Price and otherwise on the terms and subject to the
conditions set out in this Appendix and in accordance with the
Company's articles of association. Except with WH Ireland's
consent, such commitment will not be capable of variation or
revocation.
7 The Company will make a further announcement following the
close of the Bookbuild detailing the total number of Placing Shares
to be issued at the Placing Price.
8 Subject to paragraphs 4 and 5 above, WH Ireland may choose not
to accept bids and/or to accept bids, either in whole or in part,
on the basis of allocations determined at their discretion (after
consultation with the Company) and may scale down any bids for this
purpose on such basis as it may determine. WH Ireland may also,
notwithstanding paragraphs 4 and 5 above, subject to the prior
consent of the Company, allocate Placing Shares after the time of
any initial allocation to any person submitting a bid after that
time.
9 A bid in the Bookbuild will be made on the terms and subject
to the conditions in this Announcement (including this Appendix)
and will be legally binding on the Placee on behalf of which it is
made and except with WH Ireland's consent will not be capable of
variation or revocation from the time at which it is submitted.
10 Except as required by law or regulation, no press release or
other announcement will be made by the Broker or the Company using
the name of any Placee (or its agent), in its capacity as Placee
(or agent), other than with such Placee's prior written
consent.
11 Irrespective of the time at which a Placee's allocation
pursuant to the Placing is confirmed, settlement for all Placing
Shares to be acquired pursuant to the Placing will be required to
be made at the same time, on the basis explained below under
"Registration and Settlement".
12 All obligations of the Broker under the Placing will be
subject to fulfilment of the conditions referred to below
"Conditions of the Placing" and to the Placing not being terminated
on the basis referred to below under "Right to terminate under the
Placing Agreement".
13 By participating in the Placing, each Placee agrees that its
rights and obligations in respect of the Placing will terminate
only in the circumstances described below and will not be capable
of rescission or termination by the Placee following the close of
the Bookbuild.
14 To the fullest extent permissible by law and the applicable
rules of the FCA, neither the Broker nor any of its affiliates
shall have any liability to Placees (or to any other person whether
acting on behalf of a Placee or otherwise whether or not a
recipient of these terms and conditions) in respect of the Placing.
Each Placee acknowledges and agrees that the Company is responsible
for the allotment of the Placing Shares to the Placees and the
Broker and its affiliates shall have no liability to the Placees
for the failure of the Company to fulfil those obligations. In
particular, neither the Broker nor any of its affiliates shall have
any liability (including to the extent permissible by law, any
fiduciary duties) in respect of the Broker's conduct of the
Placing.
Conditions of the Placing
The Broker's obligations under the Placing Agreement in respect
of the Placing Shares are conditional on, inter alia:
1 the Shareholders passing new authorities to allot and issue
the Placing Shares and disapply pre-emption rights at the General
Meeting and the Independent Shareholders approving the Waiver
Resolution;
2 the release of this Announcement to a Regulatory Information
Service by no later than 4.30 p.m.
on 5 August 2020;
3 the application and all other documents required to be
submitted with the application being
delivered to the London Stock Exchange not later than 5.00 p.m. on 20 August 2020;
4 the delivery by the Company to the Broker of certain documents
required under the Placing Agreement;
5 the publication of an announcement announcing the results of
the Placing through a Regulatory Information Service by no later
than 4.30 p.m. on 5 August 2020 (or such later time and/or date as
may be agreed in writing between the Company and the Broker);
6 the Company having fully performed its obligations under the
Placing Agreement to the extent that such obligations fall to be
performed prior to Admission;
7 none of the warranties given in the Placing Agreement being
untrue or inaccurate or misleading in any respect at any time
between the date of the Placing Agreement and Admission and no fact
or circumstance having arisen which would render any of the
warranties untrue or inaccurate or misleading in any material
respect if it was repeated as at Admission;
8 the posting by no later than 6 August 2020 (by first class
pre-paid mail) of the Circular to Shareholders and such other
persons (if any) entitled to receive the Circular in accordance
with the Company's articles of association;
9 the issue and allotment of the Placing Shares, conditional
only upon Admission, by 8.00 a.m. 25 August 2020 or such later time
as may be agreed between the Company and the Broker, not being
later than 5.00
p.m. on 30 November 2020 (the "Long Stop Date");
10 Admission taking place no later than 8.00 a.m. on 25 August
2020 (or such later time and/or date as may be agreed in writing
between the Company and the Broker but in any event no later than
5.00 p.m. on the Long Stop Date); and
11 the Placing Agreement not having been terminated by the Broker.
If: (i) any of the conditions contained in the Placing
Agreement, including those described above, are not fulfilled or
(where applicable) waived by the Broker by the respective time or
date where specified (or such later time or date as the Broker may
notify to the Company); (ii) any of such conditions becomes
incapable of being fulfilled; or (iii) the Placing Agreement is
terminated in the circumstances specified below, the Placing will
not proceed and the Placees' rights and obligations hereunder in
relation to the Placing Shares shall cease and terminate at such
time and each Placee agrees that no claim can be made by the Placee
in respect thereof.
The Broker may, at its discretion and upon such terms as it
thinks fit, waive, or extend the period for, compliance by the
Company with the whole or any part of any of the Company's
obligations in relation to the conditions in the Placing Agreement
save that the condition relating to Admission taking place by the
Long Stop Date may not be waived nor extended. Any such extension
or waiver will not affect Placees' commitments as set out in this
Announcement.
Neither the Broker, the Company nor any of their respective
affiliates shall have any liability to any Placee (or to any other
person whether acting on behalf of a Placee or otherwise) in
respect of any decision they may make as to whether or not to waive
or to extend the time and/or date for the satisfaction of any
condition to the Placing nor for any decision they may make as to
the satisfaction of any condition or in respect of the Placing
generally and by participating in the Placing each Placee agrees
that any such decision is within the absolute discretion of the
Broker.
Right to terminate the Placing Agreement
The Broker is entitled, at any time before Admission, to
terminate the Placing Agreement by giving notice to the Company in
certain circumstances, including, inter alia, if before
Admission:
1 the Company is in breach of any provision of the Placing
Agreement, or with the requirements of any laws or regulations
(including the Market Abuse Regulation and the AIM Rules) in
relation to the Placing;
2 the Broker becomes aware of any circumstance which results in
a breach of any of the warranties given in the Placing Agreement
when given at the date of the Placing Agreement or which results in
or might in the opinion of the Broker result in a breach of any of
the warranties when deemed given;
3 it should come to the notice of the Broker that any statement
contained in any of the Placing Documents (as defined in the
Placing Agreement) is untrue, inaccurate or misleading which the
Broker (acting reasonably) considers to be material or that matters
have arisen which would, if the Placing Documents were issued at
that time, constitute an omission therefrom which the Broker
(acting reasonably) considers to be material, and such matter may
not, in the opinion of the Broker (acting reasonably) be addressed
by the publication of a further document or the making of an
announcement;
4 in the opinion of the Broker (acting in good faith) any
material adverse change in the financial or trading position or
prospects of the Company or any Group Company has or will occur;
or
5 an event or other matter (including, without limitation, any
change or development in economic, financial, political or other
market conditions or any change in any government regulation) has
occurred or is likely to occur which, in the opinion of the Broker
acting in good faith, is (or will be if it occurs) likely
materially and prejudicially to affect the financial position or
the business or prospects of the Company or otherwise makes it
impractical or inadvisable for the Broker to perform its
obligations under the Placing Agreement.
The rights and obligations of the Placees will not be subject to
termination by the Placees or any prospective Placees at any time
or in any circumstances. By participating in the Placing, Placees
agree that the exercise by the Broker of any right of termination
or other discretion under the Placing Agreement shall be within the
absolute discretion of the Broker and that the Broker need not make
any reference to Placees in this regard and that neither the Broker
nor any of its affiliates shall have any liability to Placees
whatsoever in connection with any such exercise or failure so to
exercise.
No Admission Document or Prospectus
The Placing Shares are being offered to a limited number of
specifically invited persons only and have not been nor will be
offered in such a way as to require the publication of an admission
document or prospectus in the United Kingdom or any equivalent
document in any other jurisdiction. No offering document, admission
document or prospectus has been or will be submitted to be approved
by the FCA or the London Stock Exchange in relation to the Placing,
and Placees' commitments will be made solely on the basis of the
information contained in this Announcement (including this
Appendix) and the business and financial information that the
Company is required to publish in accordance with the AIM Rules
(the "Exchange Information"). Each Placee, by accepting a
participation in the Placing, agrees that the content of this
Announcement is exclusively the responsibility of the Company and
confirms that it has neither received nor relied on any other
information (other than the Exchange Information), representation,
warranty, or statement made by or on behalf of the Company or the
Broker or any other person and neither the Broker, the Company nor
any other person will be liable for any Placee's decision to
participate in the Placing based on any other information,
representation, warranty or statement which the Placees may have
obtained or received and, if given or made, such information,
representation, warranty or statement must not be relied upon as
having been authorised by the Broker, the Company or their
respective officers, directors, employees or agents. Each Placee
acknowledges and agrees that it has relied on its own investigation
of the business, financial or other position of the Company in
accepting a participation in the Placing. Neither the Company nor
the Broker are making any undertaking or warranty to any Placee
regarding the legality of an investment in the Placing Shares by
such Placee under any legal, investment or similar laws or
regulations. Each Placee should not consider any information in
this Announcement to be legal, tax or business advice. Each Placee
should consult its own solicitor, tax adviser and financial adviser
for independent legal, tax and financial advice regarding an
investment in the Placing Shares. Nothing in this paragraph shall
exclude the liability of any person for fraudulent
misrepresentation.
Registration and Settlement
Following the close of the Bookbuild, each Placee allocated
Placing Shares in the Placing will be sent a trade confirmation or
contract note in accordance with the standing arrangements in place
with the Broker, stating the number of Placing Shares allocated to
it at the Placing Price, the aggregate amount owed by such Placee
(in GBP) and a form of confirmation in relation to settlement
instructions.
Each Placee will be deemed to agree that it will do all things
necessary to ensure that delivery and payment is completed as
directed by WH Ireland in accordance with the standing CREST
settlement instructions, which they have in place with WH
Ireland.
Settlement of transactions in the Placing Shares (ISIN:
GB00BN4R5Q82) following Admission will take place within the system
administered by Euroclear UK & Ireland Limited ("CREST")
provided that, subject to certain exceptions, the Broker reserves
the right to require settlement for, and delivery of, the Placing
Shares (or a portion thereof) to Placees by such other means that
it deems necessary if delivery or settlement is not possible or
practicable within CREST within the timetable set out in this
Announcement or would not be consistent with the regulatory
requirements in any Placee's jurisdiction.
It is expected that settlement will be on 25 August 2020 in
accordance with the instructions set out in the form of
confirmation.
Interest is chargeable daily on payments not received from
Placees on the due date in accordance with the arrangements set out
above at the rate of 4 percentage points above the prevailing LIBOR
as determined by WH Ireland.
Each Placee is deemed to agree that, if it does not comply with
these obligations, the Broker may sell any or all of the Placing
Shares allocated to that Placee on such Placee's behalf and retain
from the proceeds, for WH Ireland's account and benefit (as agent
for the Company), an amount equal to the aggregate amount owed by
the Placee plus any interest due. The relevant Placee will,
however, remain liable and shall indemnify WH Ireland on demand for
any shortfall below the aggregate amount owed by it and may be
required to bear any stamp duty or stamp duty reserve tax or
securities transfer tax (together with any interest or penalties)
which may arise upon the sale of such Placing Shares on such
Placee's behalf. By communicating a bid for Placing Shares, each
Placee confers on WH Ireland such authorities and powers necessary
to carry out any such sale and agrees to ratify and confirm all
actions which WH Ireland lawfully takes in pursuance of such sale.
Legal and/or beneficial title in and to any Placing Shares shall
not pass to the relevant Placee until it has fully complied with
its obligations hereunder.
If Placing Shares are to be delivered to a custodian or
settlement agent, Placees should ensure that the form of
confirmation is copied and delivered immediately to the relevant
person within that organisation.
Insofar as Placing Shares are registered in a Placee's name or
that of its nominee or in the name of any person for whom a Placee
is contracting as agent or that of a nominee for such person, such
Placing Shares should, subject as provided below, be so registered
free from any liability to UK stamp duty or stamp duty reserve tax
or securities transfer tax. Neither the Broker nor the Company will
be liable in any circumstances for the payment of stamp duty, stamp
duty reserve tax or securities transfer tax in connection with any
of the Placing Shares. Placees will not be entitled to receive any
fee or commission in connection with the Placing.
Representations, Warranties and Further Terms
By participating in the Placing, each Placee (and any person
acting on such Placee's behalf) makes the following
representations, warranties, acknowledgements, agreements and
undertakings (as the case may be) to the Broker (for itself and on
behalf of the Company):
1 that it has read and understood this Announcement, including
the Appendix, in its entirety and that its subscription for or
purchase of Placing Shares is subject to and based upon all the
terms, conditions, representations, warranties, acknowledgements,
agreements and undertakings and other information contained herein
and undertakes not to redistribute or duplicate this
Announcement;
2 that its obligations are irrevocable and legally binding and
shall not be capable of rescission or termination by it in any
circumstances;
3 that the exercise by the Broker of any right or discretion
under the Placing Agreement shall be within the absolute discretion
of the Broker and the Broker need not have any reference to it and
shall have no liability to it whatsoever in connection with any
decision to exercise or not to exercise any such right and each
Placee agrees that it has no rights against the Broker or the
Company, or any of their respective officers, directors or
employees, under the Placing Agreement pursuant to the Contracts
(Rights of Third Parties Act) 1999;
4 that these terms and conditions represent the whole and only
agreement between it, the Broker and the Company in relation to its
participation in the Placing and supersedes any previous agreement
between any of such parties in relation to such participation.
Accordingly, each Placee, in accepting its participation in the
Placing, is not relying on any information or representation or
warranty in relation to the Company or any of its subsidiaries or
any of the Placing Shares other than as contained in this
Announcement and the Exchange Information, such information being
all that it deems necessary to make an investment decision in
respect of the Placing Shares. Each Placee agrees that neither the
Company, the Broker nor any of their respective officers, directors
or employees will have any liability for any such other
information, representation or warranty, express or implied;
5 that in the case of any Placing Shares acquired by it as a
financial intermediary, as that term is used in Article 3(2) of the
Prospectus Directive, (i) the Placing Shares acquired by it in the
Placing have not been acquired on behalf of, nor have they been
acquired with a view to their offer or resale to, persons in any
Member State of the European Economic Area which has implemented
the Prospectus Directive other than Qualified Investors or in
circumstances in which the prior consent of the Broker has been
given to the offer or resale; or (ii) where Placing Shares have
been acquired by it on behalf of persons in any member state of the
EEA other than Qualified Investors, the offer of those Placing
Shares to it is not treated under the Prospectus Directive as
having been made to such persons;
6 that neither it nor, as the case may be, its clients expect
the Broker to have any duties or responsibilities to such persons
similar or comparable to the duties of "best execution" and
"suitability" imposed by the FCA's Conduct of Business Source Book,
and that the Broker is not acting for it or its clients, and that
the Broker will not be responsible for providing the protections
afforded to customers of the Broker or for providing advice in
respect of the transactions described herein;
7 that it has made its own assessment of the Placing Shares and
has relied on its own investigation of the business, financial or
other position of the Company in accepting a participation in the
Placing and neither the Broker nor the Company nor any of their
respective affiliates, agents, directors, officers or employees or
any person acting on behalf of any of them has provided, and will
not provide, it with any material regarding the Placing Shares or
the Company or any other person other than the information in this
Announcement, the Presentation or the Publicly Available
Information; nor has it requested the Broker, the Company or any of
their respective affiliates, agents, directors, officers or
employees or any person acting on behalf of any of them to provide
it with any such information;
8 that it is: (i) unless otherwise agreed in writing with the
Broker, located outside the United States and is not a US person as
defined in Regulation S under the Securities Act ("Regulation S")
and is subscribing for and/or purchasing the Placing Shares only in
"offshore transactions" as defined in and pursuant to Regulation S,
and (ii) it is not subscribing for and/or purchasing Placing Shares
as a result of any "directed selling efforts" as defined in
Regulation S or by means of any form of "general solicitation" or
"general advertising" as such terms are defined in Regulation D
under the Securities Act;
9 that the Placing Shares have not been and will not be
registered under the Securities Act, or under the securities
legislation of, or with any securities regulatory authority of, any
state or other jurisdiction of the United States and that, subject
to certain exceptions, the Placing Shares may not be offered, sold,
pledged, resold, transferred, delivered or distributed into or
within the United States;
10 that the only information on which it is entitled to rely on
and on which it has relied in committing to subscribe for the
Placing Shares is contained in this Announcement and Publicly
Available Information, such information being all that it deems
necessary to make an investment decision in respect of the Placing
Shares and it has made its own assessment of the Company, the
Placing Shares and the terms of the Placing based on this
Announcement and Publicly Available Information;
11 that neither the Broker nor the Company nor any of their
respective affiliates, agents, directors, officers or employees has
made any representation or warranty to it, express or implied, with
respect to the Company, the Placing or the Placing Shares or the
accuracy, completeness or adequacy of the Publicly Available
Information.
12 that, unless specifically agreed with the Broker, it is not and was not acting on a non-discretionary basis for the account or benefit of a person located within the United States at the time the undertaking to subscribe for and/or purchase Placing Shares was given and it is not acquiring Placing Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or indirectly, of any Placing Shares into the United States and it will not reoffer, resell, pledge or otherwise transfer the Placing Shares except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and otherwise in accordance with any applicable securities laws of any state or jurisdiction of the United States;
13 that it is not a national or resident of Canada, Australia,
Ireland, South Africa or Japan or a corporation, partnership or
other entity organised under the laws of Canada, Australia, the
Republic of South Africa or Japan and that it will not offer, sell,
renounce, transfer or deliver, directly or indirectly, any of the
Placing Shares in Canada, Australia, the Republic of South Africa
or Japan or to or for the benefit of any person resident in Canada,
Australia, the Republic of South Africa or Japan and each Placee
acknowledges that the relevant exemptions are not being obtained
from the Securities Commission of any province of Canada, that no
document has been or will be lodged with, filed with or registered
by the Australian Securities and Investments Commission or Japanese
Ministry of Finance and that the Placing Shares are not being
offered for sale and may not be, directly or indirectly, offered,
sold, transferred or delivered in or into Canada, Australia, the
Republic South Africa or Japan;
14 that it does not have a registered address in, and is not a
citizen, resident or national of, any jurisdiction in which it is
unlawful to make or accept an offer of the Placing Shares and it is
not acting on a non-discretionary basis for any such person;
15 that it has not, directly or indirectly, distributed,
forwarded, transferred or otherwise transmitted, and will not,
directly or indirectly, distribute, forward, transfer or otherwise
transmit, any presentation or offering materials concerning the
Placing or the Placing Shares to any persons within the United
States or to any US persons (as that term is defined in Regulation
S);
16 that, except as disclosed in the Announcement in relation to
the Concert Party members participating in the Placing, it is
entitled to subscribe for and/or purchase Placing Shares under the
laws of all relevant jurisdictions which apply to it and that it
has fully observed such laws and obtained all governmental and
other consents which may be required thereunder or otherwise and
complied with all necessary formalities and that it has not taken
any action which will or may result in the Company or the Broker or
any of their respective directors, officers, employees or agents
acting in breach of any regulatory or legal requirements of any
territory in connection with the Placing or its acceptance;
17 that, subject to the passing of the Waiver Resolution, it has
obtained all necessary consents and authorities to enable it to
give its commitment to subscribe for and/or purchase the Placing
Shares and to perform its subscription and/or purchase
obligations;
18 that where it is acquiring Placing Shares for one or more
managed accounts, it is authorised in writing by each managed
account: (a) to acquire the Placing Shares for each managed
account; (b) to make on its behalf the representations, warranties,
acknowledgements, undertakings and agreements in this Appendix and
this Announcement of which it forms part; and (c) to receive on its
behalf any investment letter relating to the Placing in the form
provided to it by the Broker;
19 that it is either: (a) a person of a kind described in
paragraph 5 of Article 19 (persons having professional experience
in matters relating to investments and who are investment
professionals) of the Order; or (b) a person of a kind described in
paragraph 2 of Article 49 (high net worth companies, unincorporated
associations, partnerships or trusts or their respective directors,
officers or employees) of the Order; or (c) a person to whom it is
otherwise lawful for this Announcement to be communicated and in
the case of (a) and (b) undertakes that it will acquire, hold,
manage or dispose of any Placing Shares that are allocated to it
for the purposes of its business;
20 that, unless otherwise agreed by the Broker, it is a
qualified investor (as defined in section 86(7) of the Financial
Services and Markets Act 2000, as amended ("FSMA"));
21 that, unless otherwise agreed by the Broker, it is a
"professional client" or an "eligible counterparty" within the
meaning of Chapter 3 of the FCA's Conduct of Business Sourcebook
and it is purchasing Placing Shares for investment only and not
with a view to resale or distribution;
22 it has only communicated or caused to be communicated and
will only communicate or cause to be communicated any invitation or
inducement to engage in investment activity (within the meaning of
section 21 of FSMA) relating to the Placing Shares in circumstances
in which section 21(1) of FSMA does not require approval of the
communication by an authorised person;
23 that any money held in an account with the Broker (or its
nominee) on its behalf and/or any person acting on its behalf will
not be treated as client money within the meaning of the rules and
regulations of the FCA. Each Placee further acknowledges that the
money will not be subject to the protections conferred by the FCA's
client money rules. As a consequence, this money will not be
segregated from the Broker (or its nominee's) money in accordance
with such client money rules and will be used by the Broker in the
course of its own business and each Placee will rank only as a
general creditor of the Broker;
24 that it will (or will procure that its nominee will) if
applicable, make notification to the Company of the interest in its
ordinary shares in accordance with the Disclosure Guidance and
Transparency Rules published by the FCA;
25 that it is not, and it is not acting on behalf of, a person
falling within subsections (6), (7) or (8) of sections 67 or 70
respectively or subsections (2) and (3) of section 93 or subsection
(1) of section 96 of the Finance Act 1986;
26 that it will not deal or cause or permit any other person to
deal in all or any of the Placing Shares which it is subscribing
for and/or purchasing under the Placing unless and until Admission
becomes effective;
27 that it appoints irrevocably any director of the Broker as
its agent for the purpose of executing and delivering to the
Company and/or its registrars any document on its behalf necessary
to enable it to be registered as the holder of the Placing
Shares;
28 that, other than Placees that are members of the Concert
Party, as far as it is aware it is not acting in concert (within
the meaning given in The City Code on Takeovers and Mergers) with
any other person in relation to the Company;
29 that any Placee that, prior to subscribing for or purchasing
the Placing Shares, is already a shareholder of the Company, will
not vote on the Waiver Resolution at the General Meeting of the
Company;
30 that this Announcement does not constitute a securities
recommendation or financial product advice and that neither the
Broker nor the Company has considered its particular objectives,
financial situation and needs;
31 that it has sufficient knowledge, sophistication and
experience in financial, business and investment matters as is
required to evaluate the merits and risks of subscribing for or
purchasing the Placing Shares and is aware that it may be required
to bear, and it, and any accounts for which it may be acting, are
able to bear, the economic risk of, and is able to sustain, a
complete loss in connection with the Placing;
32 that it will indemnify and hold the Company and the Broker
and their respective affiliates harmless from any and all costs,
claims, liabilities and expenses (including legal fees and
expenses) arising out of or in connection with any breach of the
representations, warranties, acknowledgements, agreements and
undertakings in this Appendix and further agrees that the Company
and the Broker will rely on the truth and accuracy of the
confirmations, warranties, acknowledgements and undertakings herein
and, if any of the foregoing is or becomes no longer true or
accurate, the Placee shall promptly notify the Broker and the
Company. All confirmations, warranties, acknowledgements and
undertakings given by the Placee, pursuant to this Announcement
(including this Appendix) are given to the Broker for itself and on
behalf of the Company and will survive completion of the Placing
and Admission;
33 that time shall be of the essence as regards obligations pursuant to this Appendix;
34 that it is responsible for obtaining any legal, financial,
tax and other advice that it deems necessary for the execution,
delivery and performance of its obligations in accepting the terms
and conditions of the Placing, and that it is not relying on the
Company or the Broker to provide any legal, financial, tax or other
advice to it;
35 that all dates and times in this Announcement (including this
Appendix) may be subject to amendment and that the Broker shall
notify it of such amendments;
36 that (i) it has complied with its obligations under the
Criminal Justice Act 1993, Part VIII of FSMA and the Market Abuse
Regulation, (ii) in connection with money laundering and terrorist
financing, it has complied with its obligations under the Proceeds
of Crime Act 2002 (as amended), the Terrorism Act 2000 (as
amended),the Terrorism Act 2006 and the Money Laundering, Terrorist
Financing and Transfer of Funds (Information on the Payer)
Regulations 2017 and (iii) it is not a person: (a) with whom
transactions are prohibited under the Foreign Corrupt Practices Act
of 1977 or any economic sanction programmes administered by, or
regulations promulgated by, the Office of Foreign Assets Control of
the U.S. Department of the Treasury; (b) named on the Consolidated
List of Financial Sanctions Targets maintained by HM Treasury of
the United Kingdom; or (c) subject to financial sanctions imposed
pursuant to a regulation of the European Union or a regulation
adopted by the United Nations (together, the "Regulations"); and,
if making payment on behalf of a third party, that satisfactory
evidence has been obtained and recorded by it to verify the
identity of the third party as required by the Regulations and, if
making payment on behalf of a third party, that satisfactory
evidence has been obtained and recorded by it to verify the
identity of the third party as required by the Regulations and has
obtained all governmental and other consents (if any) which may be
required for the purpose of, or as a consequence of, such purchase,
and it will provide promptly to the Broker such evidence, if any,
as to the identity or location or legal status of any person which
the Broker may request from it in connection with the Placing (for
the purpose of complying with such Regulations or ascertaining the
nationality of any person or the jurisdiction(s) to which any
person is subject or otherwise) in the form and manner requested by
the Broker on the basis that any failure by it to do so may result
in the number of Placing Shares that are to be subscribed for
and/or purchased by it or at its direction pursuant to the Placing
being reduced to such number, or to nil, as the Broker may decide
in its absolute discretion;
37 that it will not make any offer to the public of those
Placing Shares to be subscribed for and/or purchased by it for the
purposes of the Prospectus Rules made by the FCA pursuant to
Commission Regulation (EC) No. 809/2004;
38 that it will not distribute any document relating to the
Placing Shares and it will be acquiring the Placing Shares for its
own account as principal or for a discretionary account or accounts
(as to which it has the authority to make the statements set out
herein) for investment purposes only and it does not have any
contract, understanding or arrangement with any person to sell,
pledge, transfer or grant a participation therein to such person or
any third person with respect to any Placing Shares; save that if
it is a private client stockbroker or fund manager it confirms that
in purchasing the Placing Shares it is acting under the terms of
one or more discretionary mandates granted to it by private clients
and it is not acting on an execution only basis or under specific
instructions to purchase the Placing Shares for the account of any
third party;
39 that it acknowledges that these terms and conditions and any
agreements entered into by it pursuant to these terms and
conditions shall be governed by and construed in accordance with
the laws of England and Wales and it submits (on behalf of itself
and on behalf of any person on whose behalf it is acting) to the
exclusive jurisdiction of the English courts as regards any claim,
dispute or matter arising out of any such contract, except that
enforcement proceedings in respect of the obligation to make
payment for the Placing Shares (together with any interest
chargeable thereon) may be taken by the Company or the Broker in
any jurisdiction in which the relevant Placee is incorporated or in
which its assets are located or any of its securities have a
quotation on a recognised stock exchange;
40 that any documents sent to Placees will be sent at the
Placees' risk. They may be sent by post to such Placees at an
address notified to the Broker;
41 that the Broker owes no fiduciary or other duties to any
Placee in respect of any representations, warranties, undertakings
or indemnities in the Placing Agreement;
42 that the Broker or any of its affiliates may, at their
absolute discretion, agree to become a Placee in respect of some or
all of the Placing Shares;
43 that no prospectus or offering document has been or will be
prepared in connection with the Placing and it has not received and
will not receive a prospectus or other offering document in
connection with the Placing or the Placing Shares; and
44 that if it has received any confidential price sensitive
information concerning the Company in advance of the publication of
this Announcement, it has not: (i) dealt in the securities of the
Company; (ii) encouraged, required, recommended or induced another
person to deal in the securities of the Company; or (iii) disclosed
such information to any person, prior to such information being
made publicly available.
The Company, the Broker and their respective affiliates will
rely upon the truth and accuracy of each of the foregoing
representations, warranties, acknowledgements and undertakings
which are given to each Broker for itself and on behalf of the
Company and are irrevocable.
The provisions of this Appendix may be waived, varied or
modified as regards specific Placees or on a general basis by the
Broker.
The agreement to settle a Placee's subscription and/or purchase
(and/or the subscription of a person for whom such Placee is
contracting as agent) free of stamp duty and stamp duty reserve tax
depends on the settlement relating only to a subscription by it
and/or such person direct from the Company for the Placing Shares
in question. Such agreement assumes that the Placing Shares are not
being subscribed for in connection with arrangements to issue
depositary receipts or to transfer the Placing Shares into a
clearance service. If there are any such arrangements, or the
settlement relates to any other subsequent dealing in the Placing
Shares, stamp duty or stamp duty reserve tax may be payable, for
which neither the Company or the Broker will be responsible, and
the Placee to whom (or on behalf of whom, or in respect of the
person for whom it is participating in the Placing as an agent or
nominee) the allocation, allotment, issue or delivery of Placing
Shares has given rise to such UK stamp duty or stamp duty reserve
tax undertakes to pay such UK stamp duty or stamp duty reserve tax
forthwith and to indemnify on an after-tax basis and to hold
harmless the Company and the Broker in the event that any of the
Company and/or the Broker have incurred any such liability to UK
stamp duty or stamp duty reserve tax. If this is the case, each
Placee should seek its own advice and notify the Broker
accordingly.
In addition, Placees should note that they will be liable for
any stamp duty and all other stamp, issue, securities, transfer,
registration, documentary or other duties or taxes (including any
interest, fines or penalties relating thereto) payable outside the
UK by them or any other person on the subscription or purchase by
them of any Placing Shares or the agreement by them to subscribe
for or purchase any Placing Shares.
This Announcement has been issued by, and is the sole
responsibility, of the Company. No representation or warranty
express or implied, is or will be made as to, or in relation to,
and no responsibility or liability is or will be accepted by the
Broker or by any of their respective affiliates or agents as to or
in relation to, the accuracy or completeness of this Announcement
or any other written or oral information made available to or
publicly available to any interested party or its advisers, and any
liability therefore is expressly disclaimed.
Definitions:
"Admission" admission of the Placing Shares to trading on AIM
becoming effective in accordance with the AIM Rules
"AIM Rules" the AIM Rules for Companies and/or the AIM Rules
for Nominated Advisers (as the context may require)
-----------------------------------------------------------
"Announcement" this announcement (including the Appendix which
forms part of this announcement) dated 5 August
2020
-----------------------------------------------------------
"Acquisition Agreement" the conditional agreement entered into between
NetScientific, Futura Messis, and Dr Iliev in relation
to the Acquisition dated 4 August 2020.
-----------------------------------------------------------
"Bookbuild" the accelerated bookbuilding to be conducted by
WH Ireland pursuant to the Placing Agreement and
this Announcement
-----------------------------------------------------------
"Broker" WH Ireland
-----------------------------------------------------------
"Capital Reorganisation" the Sub- D ivision and the Consolidation
-----------------------------------------------------------
"Concert Party" means Dr Iliev, Futura Messis, Melvin Lawson, AB
Group, A Beckman SSAS and the Lawson Beckman Charitable
Trust
-----------------------------------------------------------
"Consolidation" the proposed consolidation of the Company's share
capital pursuant to which every 10 Interim Ordinary
Shares will be consolidated into 1 New Ordinary
Share as further described in paragraph 6 of Part
I of the Circular
-----------------------------------------------------------
"Deferred Shares" the deferred shares of GBP0.045 each in the capital
of the Company immediately following the Sub-Division,
having the rights set out in the New Articles
-----------------------------------------------------------
"EEA" the European Economic Area
-----------------------------------------------------------
"Enlarged Share the issued share capital of the Company as enlarged
Capital" by the issue of the Consideration Shares and the
Placing Shares
-----------------------------------------------------------
"Existing Ordinary the 78,561,866 Ordinary Shares in issue as at the
Shares" date of this announcement
-----------------------------------------------------------
"FCA" the Financial Conduct Authority of the United Kingdom
-----------------------------------------------------------
"General Meeting" the general meeting of the Company to be held at
10.00 a.m. on 24 August 2020 (or any reconvened
meeting following any adjournment of the general
meeting) at Level 39, One Canada Square London
E14 5AB
-----------------------------------------------------------
"Group Company" the Company and its existing subsidiaries and subsidiary
undertakings
-----------------------------------------------------------
"Independent Shareholders" shareholders who are independent of a person who
would otherwise be required to make a Rule 9 Offer
and any person acting in concert with him or her
(as defined by the Takeover Code) which, for the
purposes of the Panel Waiver, does not include
members of the Concert Party or Placing Participants
-----------------------------------------------------------
"Interim Ordinary the interim ordinary shares of GBP0.005 each in
Shares" the capital of the Company arising pursuant to
the Sub-Division
-----------------------------------------------------------
"Market Abuse the Market Abuse Regulation (2014/596/EU) (incorporating
Regulation" the technical standards, delegated regulations
and guidance notes, published by the European Commission,
London Stock Exchange, the FCA and the European
Securities and Markets Authority)
-----------------------------------------------------------
"NetScientific NetScientific Share Option Scheme adopted by the
Share Option Scheme" Company by a board resolution on 9 May 2013, as
amended on 13 August 2013 and 15 June 2016
-----------------------------------------------------------
"New Articles" the articles of association of the Company to be
adopted by the Company at the General Meeting
-----------------------------------------------------------
"New Ordinary the new ordinary shares of GBP0.05 each following
Shares" the Consolidation of the Interim Ordinary Shares,
including, where the context so requires, the Placing
Shares and the Consideration Shares
-----------------------------------------------------------
"Ordinary Shares" ordinary shares of GBP0.05 each in the capital
of the Company
-----------------------------------------------------------
"Panel" The Panel on Takeovers and Mergers
-----------------------------------------------------------
"Panel Waiver" the waiver granted by the Panel (conditional on
the approval of the Waiver Resolution by the Independent
Shareholders) of the obligation that would otherwise
arise for the Concert Party to make a Rule 9 Offer
under the Takeover Code as a consequence of the
allotment and issue to it (or members of it) of
the Consideration Shares, the Placing Shares or
the New Ordinary Shares issued upon exercise of
the option the subject of the Option Grant
-----------------------------------------------------------
" Placing " the conditional placing of the Placing Shares pursuant
to the Placing Agreement
-----------------------------------------------------------
"Presentation" the investor presentation to prospective Placees
relating to the Group and its business
-----------------------------------------------------------
"Proposals" the Acquisition, the Placing, the Capital Reorganisation
and the Option Grant
-----------------------------------------------------------
"Publicly Available any information announced through a Regulatory
Information" Information Service by or on behalf of the Company
on or prior to the date of this Announcement
-----------------------------------------------------------
"Relationship the conditional agreement between the Company,
and Lock-in Agreement" WH Ireland and the Concert Parties, further details
of which are set out in paragraph 8(i) of Part
II of the Circular
-----------------------------------------------------------
"Regulatory Information one of the regulatory information services authorised
Service" by the FCA acting in its capacity as the UK listing
authority to receive, process and disseminate regulatory
information
-----------------------------------------------------------
"Resolutions" resolutions 1 to 8 to be proposed at the General
Meeting
-----------------------------------------------------------
"Securities Act" the United States Securities Act of 1933, as amended
-----------------------------------------------------------
"Sub-Division" the sub-division of each Existing Ordinary Share
into one Interim Ordinary Share and one Deferred
Share as further described in paragraph 6 of Part
I of the Circular
-----------------------------------------------------------
"Waiver Resolution" the ordinary resolution of the Independent Shareholders
to approve the Panel Waiver, to be proposed on
a poll at the General Meeting and set out as Resolution
4 in the Notice
-----------------------------------------------------------
"WH Ireland" W H Ireland Limited
-----------------------------------------------------------
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
MSCEAXPSEFEEEEA
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August 05, 2020 03:30 ET (07:30 GMT)
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