TIDMCHA
RNS Number : 8400Z
Concha plc
12 March 2013
12 March 2013
Concha plc
("Concha" or the "Company")
Proposed acquisition of 40 per cent of Moshen Limited
Proposed Placing to raise up to GBP850,000 and Share
Consolidation
Proposed Warrant Issue
Notice of General Meeting
Appointment of Joint Broker
The Board of Concha (AIM: CHA) is pleased to announce proposals
for its first investment under the investing policy approved by
Shareholders at the general meeting on 27 December 2012, together
with a Placing and a Share Consolidation.
Concha has agreed conditionally to acquire a 40 per cent
interest in Moshen, a leading developer and distributor of digital
Apps focusing on the sports, games and entertainment sectors, for a
consideration of GBP250,000 payable in cash and to provide a
further GBP250,000 in the form of a term loan to Moshen for working
capital purposes.
Moshen has built an extensive worldwide client base that
includes a number of the leading sporting federations,
associations, leagues, clubs and individuals such as the English
Premier League, Manchester United Football Club, Manchester City
Football Club, Chelsea Football Club, the International Cricket
Council, International Management Group, Professional Darts
Championships and Sir Steve Redgrave.
Concha is also pleased to announce proposals for an equity
fundraising of up to GBP850,000 (before expenses) via a placing of
up to 243,000,000 new Consolidated Ordinary Shares at a price of
0.35 pence each with both new and existing investors and a Share
Consolidation of 1 new Consolidated Ordinary Share for 10 Existing
Ordinary Shares.
The Placing and the Share Consolidation are subject to
shareholder approval and Admission of the shares to trading on AIM,
and the Moshen Acquisition is conditional, inter alia, on
completion of the Placing. Accordingly, a General Meeting of the
Company is to be held at 9.30 a.m. on 5 April 2013 at the offices
of Brown Rudnick LLP, 8 Clifford Street, London W1S 2LQ to approve
the various Resolutions.
Concha is pleased to confirm that a Circular setting out further
details will be posted to Shareholders today and is available to
download from the Company's website www.conchaplc.com. Copies of
the Circular are also available from the offices of Strand Hanson
Limited, 26 Mount Row, London W1K 3SQ.
The Company is also pleased to announce the appointment of
PeterHouse Corporate Finance Limited as Joint Broker to the Company
with immediate effect.
Chris Akers, Chairman of Concha, commented:
"The Board of Concha is very pleased with its acquisition of 40
per cent in Moshen. Moshen is experiencing significant revenue
growth and has developed a strong existing client base and future
pipeline. We hope this will be the first of a number of investments
and look forward to updating the market on future investments in
due course."
Unless the context otherwise requires, terms defined in the
Circular being sent to Shareholders shortly have the same meaning
in this announcement.
Enquiries:
Concha plc 077 6777 5888
Chris Akers, Executive Chairman
Strand Hanson Limited (Nominated Adviser and Joint Broker) 020 7409 3494
James Harris
Andrew Emmott
PeterHouse Corporate Finance (Joint Broker) 020 7926 0935
Jon Levinson
Lucy Williams
Background information on Moshen Limited
Moshen is a specialist developer and distributor for digital
Apps focusing on the sports, games and entertainment sectors. It is
based in Lancaster and currently employs 19 people. Moshen has
built an extensive worldwide client base during its relatively
short three year history and includes official Apps for a number of
leading sporting federations, associations, leagues, clubs and
individuals such as the English Premier League, Manchester United
Football Club, Manchester City Football Club, Chelsea Football
Club, the International Cricket Council, International Management
Group, Professional Darts Championship and Sir Steve Redgrave. In
addition, Moshen has developed a number of proprietary Apps,
including the popular "Darts Night" App which has been downloaded
by 1.4 million users.
Moshen was founded in 2009 by the current Chief Executive
Officer and majority shareholder, Graham Baines, who was formerly a
Director of ROK Entertainment Group Inc., a mobile television and
value added services provider for mobile network operators and
handset manufacturers. Following the Moshen Acquisition, Chris
Akers, Executive Chairman of Concha, will become a Non-executive
Director of Moshen with immediate effect in order to monitor
Concha's 40 per cent investment and also to give Moshen access to
his worldwide database of sports contacts.
Moshen is a growing business and its audited consolidated
accounts for the 15 months ended 31 December 2011 show revenues of
GBP0.84m and EBITDA of GBP0.18m (loss) which has increased to
GBP1.09m and GBP0.25m (loss) respectively in the unaudited
management accounts for the year ended 31 December 2012 (with the
majority of this activity occurring in the second half of the
year). Net liabilities were GBP0.04m in the audited accounts as at
31 December 2011 and GBP0.14m in the unaudited management accounts
as at 31 December 2012.
Overall, the Directors believe the market for the leading
official sports Apps for the major sporting federations,
associations, leagues and clubs will continue to experience strong
growth over the coming years as a result of their brand strength,
large fan bases and social media followings. Accordingly, the
Directors believe Moshen is well positioned to benefit from its
existing and prospective pipeline of internet, App and SMS
releases, which are expected to generate income through design and
build fees, through ongoing revenue share agreements with the
content and intellectual property owners of premium Apps and
through within-App purchases. Furthermore, Moshen is entitled to a
share of advertising revenue from its proprietary Apps. New product
launches for new customers, continued product development for
existing customers and increasing accessibility of existing
products are expected to drive strong sales growth in 2013.
Principal terms of the Moshen Acquisition
Under the terms of the Moshen Acquisition Agreement, Graham
Baines, founder and CEO of Moshen, has agreed to sell to Concha
1,816 ordinary shares of GBP1 each held by him in the share capital
of Moshen (equal to approximately 40 per cent of the entire issued
share capital of Moshen) for a purchase price of GBP137.66 per
Moshen Share. Following Completion of the Acquisition, the
shareholders in Moshen will be: Mr Bains with approximately 55 per
cent, Concha with 40 per cent and minority shareholders with the
remaining 5 per cent.
The total consideration payable under the Moshen Acquisition
Agreement of GBP250,000 is payable in cash on completion of the
Moshen Acquisition which is conditional upon the Resolutions being
approved by the Shareholders at the General Meeting.
Customary warranties have been given by Mr Baines including a
warranty that Moshen will not require any further capital funding
for a period of 6 months following completion.
In addition, Concha has agreed to make an interest free loan to
Moshen of GBP250,000 for working capital purposes and the repayment
of certain indebtedness of Moshen. The Moshen Loan is repayable in
10 equal monthly installments of GBP25,000 beginning on 31 May
2013. Default interest is payable at the rate of 5 per cent per
annum above Lloyds TSB base rate from time to time.
Mr Baines has granted Concha a charge over 1,816 of his shares
in Moshen amounting to approximately 40 per cent of the entire
issued share capital of Moshen in respect of his liabilities under
the warranties in the Moshen Acquisition Agreement and the
guarantee given by him in relation to the Moshen Loan. Further,
Moshen has granted a debenture over its assets in favour of Concha
in relation to the Moshen Loan.
The shareholders in Moshen have agreed to enter into a
shareholders' agreement and to adopt new articles of association of
Moshen in order to regulate their relationship. Concha shall have
the right to appoint to the Moshen Board two fifths of the
directors from time to time and to remove such director(s). A
quorum of the Moshen Board requires the presence of one Concha
director. No transfer of any shares in Moshen may take place
without either the prior consent of shareholders holding at least
75 per cent of the share capital of Moshen or in accordance with
the pre-emption provisions of the new articles of association and
shareholders agreement. The shareholders agreement contains rights
whereby (i) if holders of 65 per cent of the shares in Moshen wish
to transfer their shares, such shareholders may drag all other
shareholders and require that they sell their shares on the same
terms; and (ii) in the event of a proposed transfer of shares in
Moshen by holder(s) of more than 25 per cent of the shares in
Moshen, the remaining shareholders may tag along or force that such
selling shareholders also procure the purchase of their shares on
the same terms.
Principal terms of the Placing
The Company is proposing to raise up to GBP850,000 before
expenses by the issue of up to 243,000,000 new Consolidated
Ordinary Shares at 0.35 pence per Placing Share. After expenses,
the net proceeds of the Placing are expected to be up to GBP750,000
and will be applied to the acquisition of Moshen, investing in
accordance with the Investing Policy and for general working
capital purposes.
The Placing Shares will represent up to 43.88 per cent of the
Enlarged Share Capital of the Company and will when issued rank
pari passu with the Consolidated Ordinary Shares.
The issue of the Placing Shares is conditional, inter alia, upon
the approval by Shareholders of Resolutions 3 and 4 to be proposed
at the General Meeting convened for 5 April 2013. If Resolutions 3
and 4 are not approved by Shareholders, the Placing will lapse, any
monies received in respect of the Placing will be returned to the
applicants without interest and the Moshen Acquisition will not
occur.
In view of the fact that the Placing Shares are not being
offered on a pro rata basis to all existing Shareholders, the
Placing is also conditional, inter alia, upon Shareholders
resolving to disapply statutory pre-emption rights. As such the
Placing is subject to the approval of Shareholders, which is being
sought at the General Meeting to be held at 9.30 a.m. on 5 April
2013, notice of which is set out at the end of this document.
Restoration of trading on AIM and Admission of Placing
Shares
Concha is an Investing Company for the purposes of the AIM
Rules, under which the Company must implement the Investing Policy
as approved by shareholders. The Acquisition will not, on its own,
be sufficient to implement the Investing Policy to the satisfaction
of the London Stock Exchange and Concha will therefore remain
suspended from trading on AIM. Restoration of trading is
conditional on Concha undertaking a further acquisition or series
of acquisitions that constitute a reverse takeover, or otherwise
implementing its Investing Policy to the satisfaction of the London
Stock Exchange, within a six month period from the date of
suspension (8 February 2013). Failure to so will likely lead to the
Company being cancelled from trading on AIM with effect from 8.00
a.m. 9 August 2013.
The Directors are actively pursuing investment opportunities and
are confident that they will be able to conclude further
investments before 9 August 2013 which will be sufficient to ensure
restoration and to generate shareholder value.
Following completion of the Proposals, Shareholders will be
advised of their shareholdings in Consolidated Ordinary Shares. The
London Stock Exchange will be advised of the new structure and of
the new International Securities Identification Number
("ISIN").
Application will be made to the London Stock Exchange for the
Consolidated Ordinary Shares arising from the Share Consolidation
and Placing Shares to be admitted to AIM. However, trading will not
commence until the Company has implemented its investing policy in
full in accordance with the AIM Rules and trading in its shares on
AIM is restored (as discussed above).
The Consolidated Ordinary Shares will not be admitted to trading
on any other investment exchange. The shares arising from the
Placing Shares will rank pari passu in all respects with the
Consolidated Ordinary Shares and will rank in full for all
dividends and other distributions thereafter declared, made or paid
on the ordinary share capital of the Company.
Share Consolidation
At present the issued share capital of the Company consists of
3,108,284,090 Existing Ordinary Shares of GBP0.0001 each. The
Directors consider that the number of Existing Ordinary Shares in
issue is excessively high and results in additional administration
costs. In view of this, the Directors propose to reduce the total
number by way of the Share Consolidation. The effect of the Share
Consolidation will be to reduce the number of Existing Ordinary
Shares held by each member, but, save for fractional entitlements,
the proportion of the total issued share capital of the Company
held by each shareholder following the Share Consolidation will be
unchanged.
As part of the Proposals, the Company is seeking Shareholder
approval at the General Meeting for the Share Consolidation,
whereby the Existing Ordinary Shares of GBP0.0001 each are
consolidated into Consolidated Ordinary Shares of GBP0.001 each in
the capital of the Company on the basis of one Consolidated
Ordinary Share for every ten Existing Ordinary Shares held.
The purpose of the Share Consolidation is to reduce the total
number of shares in issue. The Directors believe that this may
reduce the volatility in the price of the Company's shares, may
avoid large dealing spreads in the shares and may ensure that the
price of the shares is more appropriate for a company of its
size.
It is proposed that the Share Consolidation will consist of the
following steps:
a) every ten Existing Ordinary Shares in issue will be
consolidated into one new Consolidated Ordinary Share; and
b) fractional entitlements arising out of the consolidation
under sub-paragraph a) above by reason of there being either less
than ten Existing Ordinary Shares or a number not divisible by ten
shall be rounded down to the nearest whole number. Fractions of a
share cannot be issued by the Company. Instead, in accordance with
its Articles, all such fractional entitlements shall be aggregated
into new Consolidated Ordinary Shares and the whole number of new
Consolidated Ordinary Shares so arising shall be sold in the market
and where the net proceeds of the sale in respect of any holding
does not exceed GBP3.00 shall be held for the benefit of the
Company as the administrative cost of distributing the proceeds to
shareholders concerned would outweigh the value of any individual
fractional entitlements. Those shareholders who hold less than 10
Existing Ordinary Shares will not be entitled to any Consolidated
Ordinary Shares arising on the completion of the Share
Consolidation and will therefore no longer be shareholders in the
Company.
The Companies Act and the Articles require that Shareholder
consent is sought for the Share Consolidation and approval will be
sought at the General Meeting which has been convened for 9.30 a.m.
on 5 April 2013 at the offices of Brown Rudnick LLP, 8 Clifford
Street, London, W1S 2LQ. It is anticipated that new certificates
for the new Consolidated Ordinary Shares will be issued and
dispatched at the shareholder's risk by 15 April 2013 and that
CREST holders will have their CREST accounts credited with their
new holdings on 8 April 2013. Pending the issue of new share
certificates, existing share certificates will remain valid until
the record date in respect of the Share Consolidation, which is
5.00 p.m. on 5 April 2013, being the date occurring on the date of
the General Meeting. The new Consolidated Ordinary Shares will
carry the rights and be subject to the same restrictions as the
Existing Ordinary Shares as set out in the Articles.
The resolution to effect the Share Consolidation is set out in
the Notice which can be found at the end of the document.
On completion of the Placing and Share Consolidation, the
Company will have in issue a total of up to 553,828,409 ordinary
shares of GBP0.001 each.
Warrants
As at 11 March 2013 (being the last practicable date prior to
the date of this announcement), a total of 905,700,000 Existing
Warrants have been granted by the Company and are outstanding of
which 900,000,000 were granted pursuant to the Warrant Instrument
2012 and the remaining 5,700,000 are due to expire on 25 March 2013
and are currently underwater.
Following the Share Consolidation and pursuant to the terms of
the various warrant instruments including the Warrant Instrument
2012, the subscription rights of the Existing Warrants will be
adjusted to reflect the impact of the Share Consolidation on the
Company's share capital. The adjusted subscription rights will be
certified by the auditor of the Company and the Warrant Holders
will receive notice of such adjustment within 14 days of such
certification.
It is also anticipated that following the General Meeting, the
Board will (subject to approval by the Remuneration Committee)
grant further warrants pursuant to the terms of a new warrant
instrument to be adopted by the Board over up to a further
71,997,693 Consolidated Ordinary Shares representing 13.00 per cent
of the Enlarged Share Capital at a subscription price of 0.35 pence
being the Placing Price. Up to 55,382,841 New Warrants are proposed
to be issued to Christopher Akers and up to 11,076,568 New Warrants
to Marcus Yeoman both being directors of the Company representing
respectively 10.00 per cent and 2.00 per cent of the Enlarged Share
Capital. Up to 5,538,284 New Warrants are proposed to be issued to
Strand Hanson representing 1.00 per cent of the Enlarged Share
Capital pursuant to the terms of its engagement letter with the
Company. The warrants will have an exercise period of five years
from the date of issue.
Related Party Transaction
The grant of the Warrants to the Directors is a related party
transaction under the AIM Rules. Ordinarily the AIM Rules require
that the directors, other than those with an interest in the
transaction, consider and make a statement as to whether the terms
of a related party transaction are fair and reasonable insofar as
shareholders are concerned. However, in this instance, both of the
Directors are interested in the transaction and there are no
independent directors available to give such a statement.
Accordingly, the grant of warrants is being made subject to
shareholder approval and Strand Hanson Limited, the Company's
Nominated Adviser, has reviewed the grant of warrants and considers
that the terms are fair and reasonable insofar as Shareholders are
concerned.
Outlook
The Company is confident that it has identified a strong
business in Moshen at an attractive price and that further
complementary investment opportunities will be identified in the
coming weeks and months. Therefore, the Company is confident that
the underlying net asset value of the Company will grow in the
current year and that the investment policy should provide
shareholders with capital growth over time.
The Directors are also seeking shareholder authority pursuant to
resolutions 3 and 4 to fund the whole or part of any future
acquisitions by the issue of shares in the capital of the Company
for cash or as consideration, and accordingly are seeking authority
to allot securities up to an aggregate nominal value of GBP300,000
representing approximately 54% of the Enlarged Share Capital, in
connection with future issues for cash and an equal amount in
connection with future acquisitions.
General Meeting
The General Meeting, notice of which is set out at the end of
this document, has been convened for 9.30 a.m. on 5 April 2013 at
the offices of Brown Rudnick LLP, 8 Clifford Street, London W1S 2LQ
for the purpose of considering and, if thought fit, passing the
following Resolutions which need to be passed to permit the
Proposals to proceed:
Ordinary resolutions to:
1. approve the Share Consolidation;
2. approve the grant of New Warrants;
3. authorise the Directors to allot shares in the capital of the
Company and other relevant securities up to an aggregate nominal
amount of GBP914,998, including in connection with the Placing
Shares and the Warrant Issue;
Special resolution to:
4. disapply statutory pre-emption rights in relation to the
allotment of equity securities for cash other than in accordance
with the statutory pre-emption rights up to a nominal aggregate
amount of GBP300,000 and in addition in connection with the Placing
Shares and the Warrant Issue.
Action to be taken by Shareholders
A Form of Proxy for use at the General Meeting is enclosed with
the Circular.
Shareholders holding Existing Ordinary Shares in certificated
form should complete and sign the Form of Proxy and return it to
Share Registrars Ltd, Suite E, First Floor, 9 Lion & Lamb Yard,
Farnham, Surrey GU9 7LL or send by fax to the following number
01252 719 232 as soon as possible but in any event to be received
not later than 9.30 a.m. on 3 April 2013 or 48 hours before any
adjourned meeting.
The return of a Form of Proxy will not, however, prevent a
Shareholder from attending the General Meeting and voting in
person, should he/she wish to do so. Shareholders who wish to
attend in person should contact Share Registrars Ltd in advance to
confirm what identity documents they should bring with them and to
complete a form of representation (available on request from Share
Registrars Ltd) if necessary.
Recommendation
The Board unanimously recommends that Shareholders vote in
favour of the Resolutions to be proposed at the General Meeting, as
they intend to do in respect of their own beneficial holdings of
88,333,334 Existing Ordinary Shares amounting, in aggregate, to
approximately 2.84 per cent of the Existing Ordinary Shares).
Shareholders should note that in the event the Resolutions are
not passed at the General Meeting, the Placing and the Moshen
Acquisition would not proceed. There can be no guarantee that the
Company would be able to complete the Moshen Acquisition on any
other basis or to raise funds on terms which would not result in a
substantial dilution of Shareholders' interests, if indeed at
all.
The Board urges all Shareholders to submit a Form of Proxy as
soon as possible and in any event so as to arrive no later than
9.30am on 3 April 2013.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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