TIDMBOX
RNS Number : 5083U
Boxhill Technologies PLC
12 July 2018
Prior to publication, the information contained within this
announcement was deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulations (EU)
No. 596/2014 ("MAR"). With the publication of this announcement,
this information is now considered to be in the public domain.
12 July 2018
BOXHILL TECHNOLOGIES PLC
("Boxhill", the "Group" or the "Company")
Group Restructuring, Disposal and Notice of General Meeting
On 5 July 2018 the Company announced that it had experienced a
substantial decline in certain payment processing revenues during
May and June due to a requirement by particular banks to change the
nature of transactions they are willing to deal with following
regulatory changes. To address this issue the Board today announces
a restructuring of the Group and the disposal of certain
subsidiaries. The Transaction constitutes a fundamental change of
business under the AIM Rules, and this requires the approval of the
Resolution by shareholders at the General Meeting. As the
Transaction will not result in the Company divesting of all, or
substantially all, of its trading business, activities or assets,
the Company will not, following the completion of the Disposal, be
deemed to become an AIM Rule 15 Cash Shell under the AIM Rules.
The General Meeting is being held at the offices of Allenby
Capital Limited, 5 St. Helen's Place, London EC3A 6AB at 11.00 am
on 30 July 2018. A copy of the Circular is being posted to
Shareholders today and will also be published on the Company's
website, https://boxhillplc.com/.
Definitions can be found at the foot of this announcement.
The Transaction and its Background
The Group has been actively engaged in providing payment
services for non-mainstream eCommerce businesses, notably those
involved in online gambling activities, since first entering the
payment services business in 2013. The Group has recently
encountered rapidly increasing difficulties in the transacting of
payments involving non-mainstream eCommerce merchants in certain
jurisdictions ("Non-Conforming Customers"), with a growing list of
its partner banks and other financial institutions, following
recent regulatory changes, and in turn, this is having a negative
impact on its banking and payment relationships relating to other
merchants. For the months of May and June, this has resulted in a
reduction of circa 75 per cent in revenues relating to payment
processing compared with the previously announced (28 March 2018)
average for the period October 2017 to January 2018 of GBP120,000
per month. For the year to 31 January 2018, Non-Conforming
Customers accounted for circa half the revenue of the payments
division of the Group.
As announced on 28 March 2018, the Company established a new
subsidiary, Market Access, whose initial focus was on foreign
exchange and treasury services. Market Access became authorised as
an "EMD Agent" under the rules of the Financial Conduct Authority
with effect from 9 May 2018 and is thus authorised to undertake
payment processing services.
As a result of the changing market landscape, as described
above, the Board has concluded that it is in the best interest of
Shareholders to separate the provision of payment services to
Non-Conforming Customers from the rest of the Group. As a result,
and following negotiation, the Board has agreed to sell Emex to
MDC, subject to the approval, by Shareholders, of the
Resolution.
The consideration for the purchase of Emex will be GBP2,000,000,
satisfied through the issue by MDC of the Loan Note, which has the
following key terms:
-- Amount - GBP2,000,000
-- Term - 10 years
-- Interest rate - 0 per cent
-- Security - A debenture over the issued share capital of:
o Emex Technologies Limited;
o EmexConsult Ltd.;
o Net World Limited; and
o Emex (UK) Group Limited
-- Repayment - by way of:
o The establishment of a sinking fund into which the net
revenues of Emex resulting from the customers left in place at the
time of the transaction or any new Non-Conforming Customers
referred by Market Access shall be transferred on a monthly basis
and used for general working capital purposes; and
o Any balance outstanding at the end of 10 years, after the
above sinking fund has been extinguished, by MDC.
As part of the Transaction, those merchants other than
Non-Conforming Customers of Emex ("Conforming Customers") will be
novated to Market Access with effect from the date of completion of
the transaction, clear of any liabilities. In consideration for the
novation of the Conforming Customers, Boxhill will issue
100,000,000 Shares to MDC.
Under the terms of the Transaction, Market Access will continue
to have an ongoing commercial relationship with Emex, with Market
Access referring any new Non-Conforming Customers to Emex, and
Market Access providing certain ongoing support services to Emex.
Once the Loan Note is fully repaid, Market Access will receive a
commission of 50 per cent of the net revenues resulting from the
Non-Conforming Customers both in place at the time of the
Transaction and those subsequently referred to Emex by Market
Access.
The Board believes that it may have a legal claim against a
former director of the Emex companies. It has been agreed with MDC
that any successful claim, after legal costs, will be paid into the
sinking fund described above in order to accelerate the repayment
of the Loan Note.
The Board believes that this transaction will be financially
beneficial to the Group. While profits will be reduced in the
short-term until Market Access becomes more established, the
structure of the transaction will be neutral in terms of Group
cashflow. The separation of the Conforming Clients from the
Non-Conforming Clients is anticipated to lead to improved banking
relationships for the Group, which in turn should generate
financial benefits. For the year to 31 January 2017, the most
recently available audited accounts, Emex made a profit for the
financial period of GBP8,060, had turnover of GBP561,321 and had
gross assets of GBP2,680,723.
The full terms of the Transaction are set out in a sale and
purchase agreement, a copy of which can be found on the Company's
website, https://boxhillplc.com/.
Related Party Transaction
MDC is owned by John Botros, a director of certain Group
subsidiaries and, with persons closely associated (as defined under
the Market Abuse Regulation), a substantial shareholder (as defined
by the AIM Rules) of Boxill. The Transaction therefore constitutes
a related party transaction under the AIM Rules. The Board
consider, having consulted with Allenby Capital Limited, the
Company's nominated adviser, that the terms of the transaction are
fair and reasonable insofar as its shareholders are concerned.
Recommendation
The Board believes that the passing of the Resolution is in the
best interests of the Company and its Shareholders as a whole.
Accordingly, the Board unanimously recommends that Shareholders
vote in favour of the Resolution. The Directors have given an
irrevocable undertaking to vote in favour of the Resolution in
relation to the 98,639,988 Shares they own or where they control
the voting rights (equivalent to 3.50 per cent of the total voting
rights), and certain directors of Group subsidiaries, has have
given an irrevocable undertaking to vote in favour of the
Resolution in relation to the 426,656,580 Shares they own or where
they controls the voting rights (equivalent to 15.15 per cent of
the total voting rights). John Botros and persons closely
associated with him will not vote on the Transaction.
The Board believes that alternative options to this would either
be too slow to deal with the immediate requirement to address the
concerns of many of the key banks with which the Group transacts,
resulting in a permanent degradation in the business of the
Payments division, or would result in a substantial immediate
diminution of Shareholder value. In the event that Shareholders
vote against the Resolution, then the Board will likely to novate
the Conforming Clients as above and then seek to wind down Emex,
which it is anticipated would produce an adverse return to
Shareholders compared with the Transaction.
The Board believes that alternative options to this would either
be too slow to deal with the immediate requirement to address the
concerns of many of the key banks with which the Group transacts,
resulting in a permanent degradation in the business of the
Payments division, or would result in a substantial immediate
diminution of Shareholder value.
Annual General Meeting ("AGM")
The AGM of the Company, announced on 5 July 2018 and to be held
on 31 July 2018, includes the following resolution:
"To receive the report of the Directors and the statement of
accounts and the balance sheet of the Company for the year ended 31
January 2018 with the auditors' report thereon."
As the Company's annual report and accounts has not yet been
published, the AGM will be adjourned on the day in relation to this
resolution as Shareholders will not have had the required period to
review the accounts ahead of the meeting. The AGM is expected to be
reconvened at the offices of Allenby Capital Limited, 5 St. Helen's
Place, London EC3A 6AB at 11.00 am on 4 September 2018, of which
due notice will be given to Shareholders.
For further information, contact:
Boxhill Technologies PLC
Lord Razzall, Executive Chairman
Website www.boxhillplc.com 020 7493 9644
Allenby Capital Limited (Nomad & Broker)
John Depasquale / Nick Harriss 020 3328 5656
Definitions
The following definitions apply throughout this announcement
unless the context otherwise requires:
"Act" the Companies Act 2006;
"AIM" AIM, a market operated by the London Stock
Exchange;
"AIM Rules" the AIM Rules for Companies, published
by the London Stock Exchange, as amended
from time to time;
"Articles" the articles of association of the Company
for the time being;
"Board" or "Directors" the board of directors of the Company as
at the date of this document;
"Circular" the document that has been posted today
to Shareholders, including the notice of
General Meeting, and the Form of Proxy,
which can be viewed on the Company's website,
https://boxhillplc.com/;
"Company" or "Boxhill" Boxhill Technologies Plc, a company incorporated
in England and Wales with registered number
04458947 and having its registered office
at 39 St James's Street, London, SW1A 1JD;
"Directors" the directors of the Company as at the
date of this document;
"Emex" collectively, 1) the following wholly owned
subsidiaries of Boxhill: Emex Technologies
Limited, a company incorporated in England
& Wales with registration number 0926123
and Emex (UK) Group Limited, a company
incorporated in Scotland with registration
number SC518243; and 2) the following wholly
owned subsidiaries of Emex (UK) Group Limited:
EmexConsult Ltd., a company incorporated
in Northern Ireland with registration number
NI614354 and Net World Limited, a company
incorporated in Mauritius;
"Group" Boxhill together with its subsidiaries
and associates;
"General Meeting" the general meeting of the Company, notice
of which can be viewed on the Company's
website, https://boxhillplc.com/;
"Loan Note" the secured loan note issued by MDC to
Boxhill as consideration for the purchase
of Emex, further details of which can be
found in this document;
"Market Access" Market Access Limited, a company incorporated
in England & Wales with registration number
11119688, a wholly owned subsidiary of
Boxhill;
"MDC" MDC Nominees Limited, a company incorporated
in England & Wales with registration number
09606912;
"Resolution" the resolution to be proposed at the General
Meeting which is set out in full in the
Notice of General that can be viewed on
the Company's website, https://boxhillplc.com/;
"Shareholders" holders of Shares;
"Shares" the ordinary shares of 0.1 pence each in
the capital of the Company;
"this document" this announcement;
"Transaction" the sale of Emex by Boxhill to MDC, details
of which can be found in this document.
This information is provided by RNS, the news service of the
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCFKBDDPBKDOOD
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