VPhase plc
(“VPhase” or the “Company”)
Placing, Rule 9 Waiver, Capital Reorganisation, Adoption of Investing Policy
Change of Name, Board Changes, Adoption of New Articles of Association
Restoration of Trading
Further to the announcement dated 7 January 2014, the Company is pleased to announce
that it has conditionally raised gross proceeds of approximately £150,000 through a
conditional placing (the “Placing”), to fund the payment of creditors and for general working
capital purposes.
It is expected that trading in the Company’s existing ordinary shares of 0.25 pence each (the
“Existing Ordinary Shares”) (trading of which had been suspended), will be restored today at
7.30am.
Background to and Reasons for the Placing
On 7 January 2014, the Company announced its exit from administration (effective from 27
December 2013) and its entry into a company voluntary arrangement with its creditors and
members.
Through a conditional Placing to Henderson Global Investors (“Henderson”) of 5,000,000,000
new ordinary shares of 0.003 pence each (the “New Ordinary Shares”), the Company has
conditionally raised £150,000 (approximately £119,000 net of expenses) to fund the payment
of creditors and for general working capital purposes.
Subject to the Placing becoming unconditional, Henderson, which currently holds Ordinary
Shares carrying approximately 25.8 per cent. of the voting rights of the Company, will increase
its interest in the voting rights of the Company to approximately 83.9 per cent. Henderson’s
acquisition of New Ordinary Shares would normally, without a waiver by the Panel on
Takeover and Mergers (the “Panel”) of the obligations under Rule 9 of the Takeover Code,
result in Henderson being required to make a general offer for the remaining New Ordinary
Shares of the Company. The Panel has agreed to such a waiver, following written
confirmations, consenting to such waiver being granted, being received from certain
Independent Shareholders who hold in excess of 50 per cent. of the Company’s existing voting
shares (the “Consenting Independent Shareholders”).
Adoption of an Investing Policy
Whilst the Company was in administration, it made certain disposals of its business and
assets which represented a fundamental change to the business of the Company and which
has resulted in the Company disposing of all of its tangible operating assets and business.
The Company has, thereby, become an Investing Company under the AIM Rules and, as a
consequence, Rule 15 of the AIM Rules requires the Company to obtain the approval of its
Shareholders for its adoption of an Investing Policy.
The Company’s proposed Investing Policy is to invest in businesses that typically have
attributed to them some or all of the following criteria and characteristics:
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Strong management;
An established entity or product in growth mode;
A differentiated product or offering;
A significant potential market opportunity; and
The ability to generate strong cashflows in the future.
Further details of the proposed Investing Policy are set out in the additional information below
(“Additional Information”).
Other Corporate Actions
In connection with the Placing, the Board is also proposing that certain associated corporate
actions be taken which would require the approval of Shareholders at the general meeting of
the Company (the “General Meeting”), including the change of name of the Company to lafyds
plc and the appointment of new directors to the Board, details of which are provided in the
Additional Information below.
Application will be made for admission of the Placing Shares to trading on AIM (“Admission”).
It is expected that, conditional, inter alia, on the passing of the resolutions (the “Resolutions”)
to be proposed at the General Meeting to be held at the offices of Panmure Gordon, One New
Change, London, EC4M 9AF at 10am on 7 February 2014, Admission will become effective
and dealings will commence at 8.00 a.m. on 10 February 2014.
Immediately following the Placing and Admission, the Company will have 6,389,756,800 New
Ordinary Shares in issue and admitted to trading on AIM.
Recommendations and Irrevocable Undertakings
The Directors consider that the Placing and the Resolutions are in the best interests of the
Company and its Shareholders as a whole.
The Directors unanimously recommend that Shareholders vote in favour of the Resolutions
to be proposed at the General Meeting as they have irrevocably undertaken to do in respect of
the 29,909,045 Ordinary Shares beneficially held by them, representing approximately 2.2
per cent. of the entire issued share capital of the Company.
Certain other Shareholders representing in aggregate 37.1 per cent. of the entire issued
share capital of the Company have also irrevocably undertaken to vote in favour of the
Resolutions to be proposed at the General Meeting. Therefore, in aggregate, Shareholders
representing 39.3 per cent. of the entire issued share capital have irrevocably undertaken to
vote in favour of the Resolutions.
A circular to Shareholders, including a notice convening the General Meeting (the “Circular”),
will be dispatched shortly and will also be available on the Company's website at
http://www.vphase.co.uk/Investor-Relations/Documents.
All capitalised terms in this announcement have the same meaning as defined in the Circular
to Shareholders dated 22 January 2014 unless otherwise stated.
For further information:
VPhase plc
Rick Smith
+44 (0) 75 8246 8505
Panmure Gordon
Hugh Morgan / Callum Stewart
+44 (0) 20 7886 2500
www.panmure.com
Additional Information
Further details of the Placing:
The Placing is conditional upon, inter alia, a Capital Reorganisation having taken effect. The
Placing Shares will comprise New Ordinary Shares representing approximately 78.3 per cent.
of the Enlarged Share Capital following Admission. The Placing Price will be at the nominal
value of the New Ordinary Shares, the Capital Reorganisation having taken effect.
The Placing is conditional upon, inter alia, the Resolutions being duly passed at the General
Meeting and Admission becoming effective on or before 8.00 a.m. on 28 February 2014.
Henderson is a substantial shareholder in the Company and is therefore classified as a
related party pursuant to the AIM Rules and the Placing is a related party transaction. The
Directors consider, having consulted with the Company’s nominated adviser, that the terms of
the Placing are fair and reasonable insofar as its Shareholders are concerned.
The Placing Shares will, on Admission, rank pari passu in all respects with the remaining New
Ordinary Shares and will rank in full for all dividends and other distributions declared, made or
paid in respect of the New Ordinary Shares after Admission.
Capital Reorganisation
Prior to the proposed Capital Reorganisation, the subscription price being proposed by
Henderson for subscription for new shares in the Company (i.e. the Placing Price), would
have been less than the current nominal value of the Existing Ordinary Shares and, under the
Companies Act 2006, a company cannot issue shares at a price below their nominal value.
Before the Placing becomes unconditional, the Directors propose, therefore that the Company
effects a Capital Reorganisation on the basis that each of the Existing Ordinary Shares of
0.25 pence each will be subdivided into and reclassified as:
(a) one Redenominated Share (being an ordinary share in the capital of the Company with a
nominal value of 0.003 pence each); and
(b) one Deferred Share (being a deferred share in the capital of the Company with a nominal
value of 0.247 pence each).
The Deferred Shares will not be admitted to trading on AIM (or any other investment
exchange). The Deferred Shares will have limited rights, and will be subject to the restrictions,
as set out in the Company’s new articles of association (“New Articles”), proposed to be
adopted at the General Meeting.
Board Changes
The existing Directors of the Company have agreed immediately following, and conditional
on, Admission, to resign as Directors of the Company. The Company is seeking, the approval
of Shareholders for the appointment of Clive Carver and Colin Hutchinson (the “Proposed
Directors”) as the new Directors of the Company, brief biographies in respect of whom are set
out below. Mr Carver and Mr Hutchinson have consented to joining the Board, conditional on
Admission occurring.
Clive Carver, Proposed Non-Executive Director, FCA, MCT (dip), aged 53
Clive qualified as a chartered accountant in 1986 before spending 8 years in the corporate
finance departments of Kleinwort Benson, Price Waterhouse and Shire Trust. He then spent
17 years in the corporate broking arena becoming successively head of corporate finance at
Seymour Pierce, Williams de Broë and finnCap.
Since 2006 Clive has been chairman of AIM listed Roxi Petroleum, a Kazakh based oil & gas
exploration and production company, becoming Executive Chairman in June 2012. He is also
Non-Executive Chairman of Ascent Resources, an AIM listed company with gas interests in
Slovenia.
Colin Hutchinson, Proposed Non-Executive Director, LLB, ACA, MBA, aged 37
Colin is a chartered accountant and holds an MBA from Warwick Business School. He has 15
years of international experience gained in commercially orientated finance roles with high
growth organisations and start-ups. He has experience across a range of different sectors
including telecoms, technology & energy. His most recent role has been as Group Financial
Controller & Company Secretary of Ascent Resources plc.
Investing Policy
The Company’s proposed Investing Policy is to invest in businesses that typically have
attributed to them some or all of the following criteria and characteristics:
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Strong management;
An established entity or product in growth mode;
A differentiated product or offering;
A significant potential market opportunity; and
The ability to generate strong cashflows in the future.
The Company will initially focus on projects located in the United Kingdom but will also
consider investments in other geographical regions in the future. The Company will consider
all sectors, however, the Proposed Directors recognise that there are sectors which are
unlikely to meet its investment criteria.
The Proposed Directors believe that their collective experience, together with their extensive
network of contacts will assist it in the identification, evaluation and funding of suitable
investment opportunities. When necessary, other external professionals will be engaged to
assist in the due diligence of prospective opportunities. The Proposed Directors will also
consider appointing additional directors with relevant experience if the need arises.
The objective of the Proposed Directors is to generate capital appreciation and any income
generated by the Company will be applied to cover costs or will be added to the funds
available to further implement the investment policy. In view of this, it is unlikely that the
Proposed Directors will recommend a dividend in the early years. However, they may
recommend or declare dividends at some future date depending on the financial position of
the Company. Given the nature of the Company’s Investing Policy, the Company does not
intend to make regular periodic disclosures or calculations of net asset value.
The proposed investment to be made by the Company is likely to be in just one investment
which may be deemed to be a reverse takeover under the AIM Rules, in which case
shareholder approval will be required. Investments will be made with a view to yielding returns
over the medium to long term.
As required by the AIM Rules, until the Investment Policy is substantially implemented, at
each annual general meeting of the Company shareholder approval of its Investing Policy will
be sought.
In order to avoid suspension of its securities from trading, AIM Rule 15 requires an investing
company to make an acquisition which constitutes a reverse takeover under AIM Rule 14 or
otherwise implement its investing policy to the satisfaction of the London Stock Exchange
within twelve months of the disposal occurring.
Waiver of Rule 9 of the Takeover Code
Under Rule 9 of the Takeover Code (“Rule 9”), where any person acquires, whether by a
series of transactions over a period of time or not, an interest in shares which (taken together
with shares already held by that person and an interest in shares held or acquired by persons
acting in concert with that person) carry 30% or more of the voting rights of a company which
is subject to the Takeover Code, that person is normally required to make a general offer to
all the holders of any class of equity share capital or other class of transferable securities
carrying voting rights in that company to acquire the balance of their interests in the company.
Rule 9 also provides that, among other things, where any person who, together with persons
acting in concert, is interested in shares which in aggregate carry not less than 30% but not
more than 50% of the voting rights of a company which is subject to the Takeover Code, and
such person, or any person acting in concert with them, acquires an additional interest in
shares which increases the percentage of shares carrying voting rights in which he or she is
interested, then such person is normally required to make a general offer to all the holders of
any class of equity share capital or other class of transferable securities carrying voting rights
of that company to acquire the balance of their interests in the company.
An offer under Rule 9 must be in cash (or with a cash alternative) and at the highest price
paid within the preceding 12 months for any shares in the company by the person required to
make the offer or any person acting in concert with him or her.
Rule 9 further provides, amongst other things, that where any person who, together with
persons acting in concert with him or her holds over 50 per cent. of the voting rights of a
company, acquires an interest in shares which carry additional voting rights, then they will not
generally be required to make a general offer to the other shareholders to acquire the balance
of their shares.
Following completion of the Placing, Henderson will have increased its interest in shares
carrying voting rights of the Company from approximately 25.8 per cent. to approximately 83.9
per cent. which, without a waiver of the obligations under Rule 9, would oblige Henderson to
make a general offer to Shareholders for the remaining shares in the Company under Rule 9.
Dispensation from General Offer
Under Note 1 on the Notes on the Dispensations from Rule 9, the Takeover Panel will
normally waive the requirement for a general offer to be made in accordance with Rule 9 (a
“Rule 9 Offer”) if, inter alia, the shareholders of the company who are independent of the
person who would otherwise be required to make an offer and any person acting in concert
with him or her (the “Independent Shareholders”) pass an ordinary resolution on a poll at a
general meeting (a “Whitewash Resolution”) approving such a waiver. The Takeover Panel
may waive the requirement for a Whitewash Resolution to be considered at a general meeting
(and for a circular to be prepared in accordance with Section 4 of Appendix 1 to the Takeover
Code) if Independent Shareholders holding more than 50 per cent. of the company’s shares
capable of being voted on such a resolution confirm in writing that they would vote in favour of
the Whitewash Resolution, were such a resolution to be put to the shareholders of the
company at a general meeting.
The Company has obtained such written confirmation from the Consenting Independent
Shareholders and the Panel has accordingly waived the requirement for a Whitewash
Resolution. Accordingly, by voting in favour of the Resolutions to be proposed at the General
Meeting, the Placing will be effected without the requirement for Henderson to make a Rule 9
Offer.
Shareholders should note that, following the Placing, Henderson will control approximately
83.9 per cent. of the voting rights of the Company and will therefore be entitled to increase its
interest in the voting rights of the Company without incurring a further obligation under Rule 9
to make a general offer.
Independent Shareholders
Independent Shareholders (who together are the beneficial owners of 542,602,157 Ordinary
Shares, representing 39.0 per cent. of the Company’s issued share capital carrying voting
rights as at 21 January 2014, being the last practical date prior to this announcement and
52.7 per cent. of the Company’s issued share capital carrying voting rights eligible to give
written consent) have written to the Takeover Panel confirming that they would vote in favour
of a Whitewash Resolution were such a resolution to be put to the shareholders of the
Company at a general meeting.
General Meeting
A notice convening the General Meeting of the Company at the offices of Panmure Gordon,
One New Change, London, EC4M 9AF at 10am on 7 February 2014 is contained within the
Circular which will be sent to all Shareholders.
The purpose of the General Meeting is (a) to consider, in accordance with section 656 of the
Companies Act 2006, whether any, and if so what, steps should be taken to deal with the
situation that the net assets of the Company currently represent less than half of its called-up
share capital; and (b) to consider and, if thought fit, approve the Resolutions. The
Resolutions to be proposed at the General Meeting are as follows:
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Resolution 1, which will be proposed as an ordinary resolution, seeks approval for the
new Investing Policy of the Company;
Resolution 2, which will be proposed as an ordinary resolution, seeks approval for the
Capital Reorganisation;
Resolution 3, which will be proposed as an ordinary resolution, seeks to grant the
Directors of the Company authority to allot New Ordinary Shares in the capital of the
Company pursuant to the Placing;
Resolution 4, which will be proposed as an ordinary resolution, seeks to grant the
Directors of the Company a further authority to allot shares in the capital of the Company
(i.e. in addition to those allotments made pursuant to the Placing), up to an aggregate
nominal amount of £63,897.57 (representing a further one third of the Enlarged Share
Capital);
Resolution 5, which will be proposed as an ordinary resolution, seeks approval to
appoint Clive Carver to the Board, conditional, inter alia, on Admission, such
appointment to take effect by no later than 28 February 2014;
Resolution 6, which will be proposed as an ordinary resolution, seeks approval to
appoint Colin Hutchinson to the Board, conditional, inter alia, on Admission, such
appointment to take effect by no later than 28 February 2014;
Resolution 7, which will be proposed an a special resolution, seeks the adoption of the
New Articles;
Resolution 8, which will be proposed as a special resolution, seeks to disapply
applicable pre-emption rights in respect of the allotment for cash of equity securities in
the Company pursuant to the Placing, conditional, inter alia, on the passing of Resolution
3;
Resolution 9, which will be proposed as a special resolution, seeks to disapply
applicable pre-emption rights in respect of an allotment of further shares in the capital of
the Company, up to an aggregate nominal amount of £38,338.54 representing 20 per
cent. of the Enlarged Share Capital, conditional, inter alia, on the passing of Resolution
4; and
Resolution 10, which will be proposed as a special resolution, seeks approval to change
the name of the Company to lafyds plc, conditional on the passing of Resolutions 1, 2, 3,
4, 5, 6 and 7.