TIDMTHAL
RNS Number : 9064C
Rock Solid Images plc
08 May 2012
ROCK SOLID IMAGES plc
OFFEREE BOARD RESPONSE TO OFFER
On 23 April 2012 Thalassa Holdings Ltd ("Thalassa") posted a
Partial Cash Offer to RSI Shareholders pursuant to which Thalassa
offered to acquire up to 40,952,521 RSI Shares, representing
approximately 25.89 per cent. of the entire issued ordinary share
capital of RSI. If the Partial Offer is accepted in full, Thalassa,
together with its existing shareholding of 6,342,322 RSI Shares,
will hold 47,295,496 RSI Shares, representing approximately 29.90
per cent. of the entire issued ordinary share capital of RSI.
After evaluating various factors in relation to the Offer, the
Directors make no recommendation to RSI Shareholders to accept or
decline the Offer. In assessing whether or not to accept the
Partial Offer, the Directors suggest that RSI Shareholders take the
following issues into account.
-- The Cash Offer price appears opportunistic given that it
represents a discount of approximately 52.0 per cent to 1.0 pence,
being the closing price on AIM on 30 March 2012 (being the last
Business Day prior to the commencement of the Offer Period). As
previously stated, in the Directors' opinion, the trading price of
the Ordinary Shares on AIM did not reflect the true value of the
Company and its business.
-- The Cash Offer of 0.48 pence values the entire RSI Group at
approximately GBP760,000, which is significantly less than the
consideration of approximately GBP12.0 million paid by the Company
when it acquired Rock Solid Images, Inc. on 22 August 2007. Rock
Solid Images, Inc. is the Company's principal trading subsidiary
and since it joined the RSI Group over four years ago it has
strengthened its technology portfolio and made no significant asset
disposals.
-- The Directors have concluded that RSI needs to raise further
capital to continue to build on the significant progress made,
however, they have yet to conclude on how much capital will be
required and consequently terms have not been agreed with potential
providers of this capital. These terms, once agreed and approved
would determine the extent of any future dilution of the interests
of existing RSI shareholders.
-- The delisting from AIM has resulted in limited liquidity for
RSI Shares. RSI Shares can no longer be traded on a recognised
stock exchange although a matched bargain platform for RSI shares
is provided by BritDAQ on its website at www.britdaq.com.
-- The Partial Offer states that Thalassa has no intention of
proposing any changes to the board of RSI or Thalassa or the
existing employment rights of management and employees of RSI or
Thalassa. Furthermore the Partial Offer states that Thalassa has no
intention to propose changes to the location of any of RSI's or
Thalassa's operations, nor to propose the redeployment of any of
the fixed assets of RSI or Thalassa. Thalassa have also stated that
they have no intention to propose changes to the existing trading
facilities of Thalassa or RSI Shares. Accordingly the Board is
indifferent to the Partial Offer in so far is relates to the
offeror's plans for the Group and its employees.
RECENT FINANCIAL PERFORMANCE AND CURRENT TRADING
The following is an extract from the announcement made on 12
March 2012:
"Since 18 January 2012, when the Company reported its results
for the 12 months ending 31 August 2011, it has continued to move
forward with developing its business. Sales revenues in January and
February were less than anticipated due to operational delays in
processing client data, however management has now resolved the
issue and the processing team is working hard to catch up.
Revenues in the second half are anticipated to be significantly
above those of the first half and will benefit from the large
contract awards announced in November, December and January.
Consequently the second half is expected to also be significantly
more profitable than the first half at the pre-tax level. Total
revenues for the full year to 31st August 2012 are expected to be
in the GBP5.5 to GBP7 million range, which compares favourably with
revenues of GBP4.0 million for the year ended 31st August 2011.
Although the Company's backlog and prospective pipeline are at
record levels the aforementioned production delays and larger
contracts require the Company to have a stronger working capital
base and in order to address this short term requirement the Board
has agreed, subject to finalising legally binding documentation,
with EuroTrans Skips AS ("EuroTrans") and East Hill Venture Fund,
LLP (an affiliate of East Hill Hedge Fund, LLC ("East Hill")) two
of the Company's largest shareholders, to put in place a secured
Credit Facility of up to $1 million. To the extent that it is drawn
upon (and an initial advance of $250,000 has already been made) the
Credit Line facility will carry an annual interest charge of 10.75%
above US prime and will expire on 30 September 2012. Due to their
respective holdings of 24.82% and 12.13% in the ordinary share
capital of the Company, EuroTrans and East Hill are classified as
related parties for the purposes of the Credit Facility. The
directors of the Company have consulted with its nominated adviser,
Fox-Davies Capital Limited, and consider that the terms of the
Credit Facility are fair and reasonable insofar as the Company's
shareholders are concerned."
Since this announcement was made on 12 March 2012, the Company
has added to its backlog, though not at the rate that was
anticipated earlier, and although revenues are expected to be
higher in the second half of the year, total revenues for the full
year to 31 August 2012 are expected to be in the GBP5.0 to GBP5.5
million range, which still compares favourably with revenues of
GBP4.0 million for the year ended 31 August 2011.
CONCLUSION
The Directors, who have been so advised by Fox-Davies, make no
recommendation whether to accept or reject the Partial Offer. In
providing advice to the Directors, Fox-Davies has taken into
account the commercial assessments of the Directors.
The employee representative's opinion can be found in Appendix
2.
As previously stated, the Directors do not intend to accept the
Partial Offer in respect of their own shareholdings.
A response circular has been posted to shareholders in response
to the Thalassa Offer Document dated 23 April 2012. The wording in
this announcement has been extracted from the response circular, a
copy of which can be found at the Company's website,
www.rocksolidimages.com.
CONTACT:
Richard Cooper - Chief Executive Officer +1 713 723 2566
Bob Auckland - Chief Financial Officer +44 (0) 7919 490911
Appendix 1
1. Responsibility statement
The Directors, whose names are set out in paragraph 2 below,
accept responsibility for the information contained in this
document, except that the only responsibility accepted by them in
respect of the information contained in this document relating to
the Thalassa Group and the Thalassa Directors, which has been
compiled from published sources, is to ensure that such information
has been correctly and fairly reproduced and presented. To the best
of the knowledge and belief of the Directors (who have taken all
reasonable care to ensure that such is the case) the information
contained in this document is in accordance with the facts and does
not omit anything likely to affect the import of such
information.
2. Directors
The names of the Directors, and their respective positions, are
set out below:
Name Position
Richard Charles Cooper Chief Executive Officer and Executive Chairman
Robert Ian Auckland Chief Financial Officer
Dr. Lucy MacGregor Chief Technical Officer
Keith Geddes Lough Non-executive Director and Senior Independent
Director
The following are no longer Directors:
Name Position
Alan Kennedy Faichney Non-executive Director (resigned 18 April
2012)
Peter Andrew Reilly Non-executive Chairman (resigned 18 April
2012)
Each of the Directors has a business address at c/o Pinsent
Masons LLP, 30 Crown Street, London, EC2A 4ES, which is the
registered office of RSI.
3. Interests and dealings
3.1 For the purposes of this paragraph 3 and paragraph 4 below:
(a) "acting in concert" has the meaning given to it in the City Code;
(b) "arrangement" includes indemnity or option arrangements, and
any agreement or understanding, formal or informal, of whatever
nature, relating to securities which may be an inducement to deal
or refrain from dealing (but does not include an irrevocable
undertaking or letter of intent to accept or not accept the Partial
Offer, or to vote in favour of or against a resolution of Thalassa
or RSI in the context of the Partial Offer or, in either case, to
procure another person to do so);
(c) "associate" of any company means, unless otherwise stated:
(i) its parent, subsidiaries and fellow subsidiaries, and their
associated companies, and companies of which such companies are
associated companies (for this purpose ownership or control of 20%
or more of the equity share capital of a company is regarded as the
test of associated company status);
(ii) connected advisers and persons controlling, controlled by
or under the same control as such connected advisers;
(iii) the directors (together with their close relatives and
related trusts) of the company or any company covered in
sub-paragraph (i);
(iv) the pension fund of the company or any company covered in sub-paragraph (i);
(v) any investment company, unit trust or other person whose
investments an associate manages on a discretionary basis, in
respect of the relevant investment accounts;
(vi) an employee benefit trust of the company or any company covered in subparagraph (i); and
(vii) a company having a material trading arrangement with a company;
(d) "connected adviser" includes (i) in relation to RSI, an
organisation which is advising RSI in relation to the Offer, and a
corporate broker to RSI; (ii) in relation to a person who is acting
in concert with RSI, an organisation which is advising that person
either in relation to the Partial Offer or in relation to the
matter which is the reason for that person being a member of the
relevant concert party; and (iii) in relation to a person who is an
associate of RSI by virtue of sub-paragraph (i) of paragraph
3.1(c), an organisation which is advising that person in relation
to the Partial Offer (save that a corporate broker which is unable
to act in connection with the Partial Offer because of a conflict
of interest will not normally be treated as a connected
adviser);
(e) "control" means an interest, or interests, in shares
carrying 30 per cent. or more of the voting rights attributable to
the share capital of a company which are currently exercisable at a
general meeting, irrespective of whether the holding or holdings
give(s) de facto control;
(f) "dealing" includes:
(i) the acquisition or disposal of securities, of the right
(whether conditional or absolute) to exercise or direct the
exercise of the voting rights attaching to securities, or of
general control of securities;
(ii) the taking, granting, acquisition, disposal, entering into,
closing out, termination, exercise (by either party) or variation
of an option (including a traded option contract) in respect of any
securities;
(iii) subscribing or agreeing to subscribe for securities;
(iv) the exercise or conversion, whether in respect of new or
existing securities, of any securities carrying conversion or
subscription rights;
(v) the acquisition of, disposal of, entering into, closing out,
exercise (by either party) of any rights under, or variation of, a
derivative referenced, directly or indirectly, to securities;
(vi) entering into, terminating or varying the terms of any
agreement to purchase or sell securities; and
(vii) any other action resulting, or which may result, in an
increase or decrease in the number of securities in which a person
is interested or in respect of which he has a short position.
(g) "derivative" includes any financial product whose value in
whole or in part is determined directly or indirectly by reference
to the price of an underlying security;
(h) "disclosure period" means the period beginning on 2 April
2012 and ending on 4 May 2012 (being the latest practicable date
prior to the posting of this document);
(i) "exempt fund manager" has the meaning given to it in the City Code;
(j) "exempt principal trader" has the meaning given to it in the City Code;
(k) a person has an "interest", or is "interested", in relevant
securities if he has long economic exposure, whether absolute or
conditional, to changes in the price of securities. In particular,
a person will be treated as having an interest in securities
if:
(i) he owns them;
(ii) he has the right (whether conditional or absolute) to
exercise or direct the exercise of the voting rights attaching to
them or has general control of them;
(iii) by virtue of any agreement to purchase, option or derivative he:
(A) has the right or option to acquire them or call for their
delivery; or
(B) is under an obligation to take delivery of them,
whether the right, option or obligation is conditional or
absolute and whether it is in the money or otherwise; or
iv) he is party to any derivative:
(A) whose value is determined by reference to their price;
and
(B) which results, or may result, in his having a long position
in them,
and references to interests of a Director in relevant securities
shall include all interests of any other person whose interests in
shares are attributed to that Director, pursuant to Part 22 of the
Companies Act 2006;
(l) "relevant Thalassa securities" mean relevant securities
(such term having the meaning given to it in the City Code in
relation to an offeror) of Thalassa including Thalassa
Consideration Shares and other equity share capital in Thalassa (or
derivatives referenced thereto) and securities convertible into,
rights to subscribe for and options (including traded options) in
respect thereof;
(m) "relevant RSI securities" mean relevant securities (such
term having the meaning given to it in the City Code in relation to
an offeree) of RSI including RSI Shares and other equity share
capital of RSI (or derivatives referenced thereto) and securities
convertible into, rights to subscribe for and options (including
traded options) in respect thereof; and
(n) "short position" means any short position (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 deliver.
References to a pension fund of RSI or of any company that is an
associate of RSI by virtue of sub-paragraph (i) of paragraph 3.1(c)
do not include any such pension fund whose assets are managed under
an agreement or arrangement with an independent third party which
gives the third party absolute discretion regarding dealing, voting
and offer acceptance conditions relating to the fund.
Interests in RSI Shares
3.2 As at 4 May 2012 (being the latest practicable date prior to
the posting of this document), the Directors (and those persons who
have recently resigned as directors of the Company) held the
following interest in, or rights to subscribe in respect of,
relevant RSI securities:
Issued Share Capital:
Name Number of RSI Shares Percentage of RSI
issued share capital
Keith Lough 550,000 0.35%
Alan Faichney (Resigned) 125,000 0.08%
Peter Reilly (Resigned) 1,705,000 1.08%
Richard Cooper 323,306 0.20%
Dr. Lucy MacGregor 1,064,686 0.67%
Robert Auckland 325,000 0.21%
TOTAL 4,092,992 2.59%
Share options and share awards:
Richard Cooper has the following share options and share
awards:
(i) A share award of 570,859 Shares at an award price of 1
pence, subject to performance conditions which are required to be
met by 30 November 2012
(ii) Options over 2,750,000 Shares at an exercise price of 6
pence with an earliest exercise date of 28 February 2012 and an
expiry date of 28 February 2021
Lucy MacGregor has the following share options and share
awards:
(i) Options over 141,031 Shares at an exercise price of 29.81
pence with an earliest exercise date of 1 December 2004 and an
expiry date of 30 November 2013.
(ii) A share award of 339,030 Shares at an award price of 1
pence, subject to performance conditions which are required to be
met by 30 November 2012
(iii) Options over 1,750,000 Shares at an exercise price of 6
pence with an earliest exercise date of 28 February 2012 and an
expiry date of 28 February 2021
Bob Auckland has the following share options and share
awards:
(i) A share award of 354,519 Shares at an award price of 1
pence, subject to performance conditions which are required to be
met by 30 November 2012
(ii) Options over 1,750,000 Shares at an exercise price of 6
pence with an earliest exercise date of 28 February 2012 and an
expiry date of 28 February 2021
4. Interests and dealings - General
4.1 Save as disclosed in paragraph 3 above, as at 4 May 2012
(being the latest practicable date prior to the posting of this
document):
(a) no member of the RSI Group nor any person acting in concert
with RSI or with whom RSI or any person acting in concert with RSI
has an arrangement had any interest in, right to subscribe in
respect of or any short position in relation to relevant RSI
securities or relevant Thalassa securities nor has any such person
dealt for value in any relevant RSI securities or relevant Thalassa
securities during the Offer Period;
(b) none of the Directors had any interest in, right to
subscribe in respect of, or any short position in relation to
relevant RSI securities, or relevant Thalassa securities nor has
any such person dealt for value in any relevant RSI securities or
any relevant Thalassa securities during the Offer Period;
(c) no companies which are associates of RSI by virtue of
sub-paragraph (i) of paragraph 3.1(c) had any interest, right to
subscribe in respect of or any short position in relation to
relevant RSI securities or relevant Thalassa securities nor has any
such person dealt for value in any relevant RSI securities or
relevant Thalassa securities during the Offer Period;
(d) no pension funds of RSI or of any company which is an
associate of RSI by virtue of sub-paragraph (i) of paragraph 3.1(c)
had any interest, right to subscribe in respect of or any short
position in relation to relevant RSI securities or relevant
Thalassa securities nor has any such person dealt for value in any
relevant RSI securities or relevant Thalassa securities during the
Offer Period;
(e) no employee benefit trusts of RSI or of any company which is
an associate of RSI by virtue of sub-paragraph (i) of paragraph
3.1(c) had any interest, right to subscribe in respect of or any
short position in relation to relevant RSI securities or relevant
Thalassa securities nor has any such person dealt for value in any
relevant RSI securities or relevant Thalassa securities during the
Offer Period;
(f) no connected advisers (including any person controlling,
controlled by or under the same control as any connected adviser
(except for an exempt principal trader or an exempt fund manager))
to RSI, or to any company which is an associate of RSI by virtue of
sub-paragraph (i) of paragraph 3.1(c) had any interest, right to
subscribe in respect of or any short position in relation to
relevant RSI securities or relevant Thalassa securities nor has any
such person dealt for value in any relevant RSI Securities or
relevant Thalassa securities during the Offer Period;
(g) no persons who have an arrangement with RSI, or with any
company which is an associate of RSI by virtue of sub-paragraphs
(i) to (iv) of paragraph 3.1(c) had any interest, right to
subscribe in respect of or any short position in relation to
relevant RSI securities or relevant Thalassa securities nor has any
such person dealt for value in any relevant RSI Securities or
relevant Thalassa securities during the Offer Period; and
(h) neither RSI, nor any person acting in concert with RSI has
borrowed or lent any relevant RSI securities or any relevant
Thalassa securities save for any borrowed shares which have been
either on-lent or sold.
4.2 Save as disclosed in paragraph 7 below, neither RSI nor any
of its associates has procured that any other person give any
irrevocable or other commitment in relation to relevant RSI
securities.
4.3 Save as disclosed herein, neither RSI nor any associate of
RSI has any arrangement in relation to relevant securities.
4.4 No relevant RSI securities have been redeemed or purchased
by RSI during the disclosure period.
5. Directors' service contracts and letters of appointment
Executive Directors:
Dr. MacGregor entered into a service agreement with the Company
on 1 February 2003 as amended on 1 November 2003 and 27 October
2010 and further amended on 11 September 2011, the principal terms
of which are that she is entitled to a salary of GBP140,625 per
annum and her service agreement is terminable on twelve months'
notice by either party. There is no entitlement to permanent health
insurance but she receives contributions to her personal pension
plan, life insurance cover and private medical insurance.
Mr. Cooper entered into a service agreement with the Company on
23 August 2008, the principal terms of which are that he is
entitled to a salary of GBP186,737 per annum and his service
agreement is terminable on twelve months' notice by either party.
There is no entitlement to permanent health insurance but he
receives life insurance cover and private medical insurance.
Mr. Auckland entered into a service agreement with the Company
on 1 January 2006 as amended on 27 October 2010, the principal
terms of which are that he is entitled to a salary of GBP135,955
per annum and his service agreement is terminable on nine months'
notice by either party. There is no entitlement to permanent health
insurance but he receives contributions to his personal pension
plan, life insurance cover and private medical insurance.
Non-executive Director:
Mr. Lough received a letter of appointment from the Company on
11 August 2004, the principal terms of which are that he is
entitled to a salary of GBP45,000 per annum and his service
agreement is terminable on three months' notice by either party.
There is no entitlement to permanent health insurance, life
insurance cover or private medical insurance.
Save as disclosed above, there are no service contracts in force
between any Director of RSI and RSI or any of its subsidiaries and
no such contract has been entered into or amended during the last
six months preceding the date of this document.
6. Material contracts
6.1 Save as disclosed in paragraphs 6.2, 6.3, 6.4, 6.5 and 6.6
below, there have been no contracts entered into by RSI or any of
its subsidiaries during the period commencing on 2 April 2010
(being the date two years before commencement of the Offer Period)
and ending on 4 May 2012 (being the latest practicable date prior
to posting of this document) which are outside the ordinary course
of business and which are or may be considered material.
6.2 OHM Disposal - November 2010
The Company entered into a conditional sale agreement on 13
October 2010 (the "Sale Agreement") pursuant to which it
conditionally agreed to sell OHM Ltd and OHM Surveys Sdn Bhd ("OHM
Malaysia") to a company controlled by Sector Asset Management and
its affiliates ("Sector") and Euro Trans Skips AS ("ETS") for a
consideration of $150,000 (the "Disposals"). The sale and purchase
was conditional inter alia upon the Asset Transfer Agreement being
entered into and the Company writing off the inter-company debt due
from OHM Ltd to the Company (excluding any sum outstanding on
inter-company trading account), ETS and Sector committing to OHM
Ltd to provide $7 million of funding and ETS entering into
arrangements pursuant to which it agreed to defer payments due from
OHM Ltd of up to $3 million until 20 December 2010. The Company
provided a limited number of warranties to the buyer and an
indemnity against any tax liability that OHM Ltd might suffer by
reason of the writing off of the inter-company loan account.
Prior to the Disposals being completed the Company entered into
an asset transfer agreement (the "Asset Transfer Agreement")
pursuant to which the employment contracts for certain key
personnel (including Robert Auckland and Dr. Lucy MacGregor),
patents, software and computer hardware and contracts were
transferred from OHM Ltd to the Company and certain patents
tranferred from the Company to OHM Ltd. The agreement was entered
into so that those assets and employees relating to the data
acquisition business which were then owned/employed by the Company
were transferred to OHM Ltd and any assets/employees within OHM Ltd
relating to the geophysical consulting business carried on by the
RSI Group were transferred to the Company.
By an agreement entered into on 13 October 2010 (the
"Subscription Agreement") Sector and ETS conditionally subscribed
for 9,000,000 Shares in aggregate at 10 pence per share
representing a premium of 60 per cent. to the closing mid-market
price on 12 October 2010 (the "First Placing") and had also
conditionally agreed to subscribe for a further 11,000,000 Shares
at the same price (the "Placing"). In aggregate, the First Placing
and the Placing raised GBP2.0 million (GBP1.8 million after
expenses) for the Company. The First Placing was conditional only
upon admission of the First Placing Shares to trading on AIM and
the First Placing Shares were admitted to trading on AIM on 19
October 2010. Following admission of the First Placing Shares to
AIM, the Concert Party held 51.11 per cent. of the Company's issued
share capital (including the First Placing Shares). The members of
the Concert Party were deemed to be acting in concert by the Panel.
In order to complete the First Placing and the Placing, the Panel
agreed to a waiver of the requirement for the Concert Party to make
a general offer for the Company for the purposes of Rule 9 of the
City Code following written confirmations consenting to such waiver
from independent Shareholders who held in excess of 50 per cent. of
the Company's voting rights, excluding those of the Concert
Party.
The Disposals and the Placing (together the "Proposals") were
conditional, inter alia, upon Shareholder approval being obtained.
Due to the size of the Disposals in relation to the Company, the
Directors were required to seek Shareholder consent to the
Disposals for the purposes of AIM Rule 15. In addition, in order to
effect the Placing the Directors sought the required authorities
under the Companies Act 2006. Accordingly, the Company dispatched a
circular to Shareholders convening a general meeting of the Company
held on 1 November 2010 (the "Circular"). The Circular (which is
available to view on the Company's website,
www.rocksolidimages.com) contained further details of the
background to and reasons for the Disposals and the Placing and set
out in further detail why the Board considered the Proposals to be
in the best interests of Shareholders as a whole. The Disposals
were completed on 2 November 2010 and the Placing Shares were
admitted to trading on AIM on 2 November 2010.
On completion of the Sale Agreement on 2 November 2010 the
Company entered into an agreement with OHM Ltd, OHM Malaysia and
Rock Solid Images, Inc (the "Services Agreement") pursuant to which
the parties agreed to provide services to each other in order for
the parties to continue to provide a seamless integrated CSEM
service to the oil industry and with a view to developing a
marketing strategy to progress and capitalise on joint
opportunities to utilise their respective services. Under the terms
of the Services Agreement OHM Ltd and OHM Malaysia agreed to prepay
$3 million (the "Advance Payment") to secure 2,033 man-days of WISE
services at a rate of $2,200 per day of which $1,475 per day was
prepaid by way of the Advance Payment with a balance of $725 per
day payable as the man-days are utilised. WISE services are those
services relating to the advanced combination of CSEM data and
seismic information to provide analysis of rock and fluid
properties. Under the Services Agreement the parties also agreed to
provide certain administrative and management function services to
each other at contracted rates agreed on an arm's length basis to
reflect the cost to the service provider. Under the Services
Agreement the unutilised balance of the Advance Payment (currently
$2.5 million) is repayable on 30 June 2012.
With a view to preserving the independence of the Company from
its majority shareholders the Company entered into a relationship
agreement (the "Relationship Agreement") with ETS and Sector
pursuant to which each of them agreed that, for so long as it
controlled 25 per cent. or more of the voting rights of the
Company, it would use its reasonable endeavours to ensure that the
majority of the members of the Board will be independent of ETS and
Sector and their respective associates.
In connection with the Proposals, the Company entered into the
Subscription Agreement and the Sale Agreement and also entered into
the Asset Transfer Agreement, the Services Agreement and the
Relationship Agreement. Further details of these agreements are set
out in the Circular. The Concert Party was deemed to be a related
party for the purposes of the AIM Rules and accordingly the
entering into of the Subscription Agreement, the Sale Agreement,
the Services Agreement and the Relationship Agreement (together the
"Related Party Agreements") were all deemed to be related party
agreements for the purposes of the AIM Rules.
6.3 Change of Nomad and Broker - April 2011
Pursuant to the Nominated Advisor and Broker Agreement dated 8
April 2011 between the Company (1) and Fox-Davies (2) the Company
appointed Fox-Davies to act as Nominated Advisor and Broker to the
Company for the purposes of the AIM Rules. The agreement contains
certain undertakings and indemnities given by the Company in
respect of, inter alia, compliance with all applicable laws and
regulations. The agreement continues for a fixed period of one year
from the date of the agreement and, thereafter, is subject to
termination on the giving of three month's notice.
6.4 Placing - June 2011
Pursuant to a placing agreement dated 9 June 2011 between the
Company (1), the Directors (and Fox-Davies agreed to use its
reasonable endeavours, as agent for the Company, to procure
subscribers for 47,342,700 Shares at 4 pence per Share. The placing
agreement contained warranties and indemnities from the Company in
favour of Fox-Davies together with provisions which enabled
Fox-Davies to terminate the placing agreement in certain
circumstances prior to Admission, including circumstances where any
warranties were found to be untrue or inaccurate in any material
respect.
6.5 Simmons - October 2011
The Board was keen to capitalise on the industry's renewed focus
on RSI's services and value proposition and therefore engaged
Simmons & Company International Limited ('Simmons') on 9
September 2011 to assist in reviewing the strategic options
available to RSI and its operating divisions, WSS and WISE. The
engagement with Simmons was terminated on 13 March 2012.
6.6 Credit Facility Agreement
By an agreement dated 4 April 2012 (the "Credit Facility
Agreement") between (1) the Company and (2) ETS and East Hill
Venture Fund, L.P. - Series 08A (an associate of East Hill Venture
Fund LLP, one of the largest shareholders in the Company) ("East
Hill"), ETS and East Hill (together the "Lenders") agreed to
provide the Company with a credit facility of up to $1 million. The
principal terms of the facility are:
(a) the Lenders agreed to provide up to $1 million equally;
(b) interest is payable at 14% per annum payable monthly in
arrears commencing on 31 March 2012
(c) security cover is a floating charge over all of the assets
of the Company and Rock Solid Images, Inc, the Company's main
trading subsidiary
(d) the facility ceases to be available on 30 September 2012 and
is repayable on or before such date unless the Lenders agree
otherwise.
7. Non acceptance of the Partial Offer
Each of the Directors do not intend to accept the Offer in
respect of their own beneficial holdings of RSI Shares, as set out
in paragraph 3.2 above, amounting to, in aggregate, 2,262,992 RSI
Shares, representing approximately 1.43% of RSI's current issued
share capital.
8. Consent
Fox-Davies has given and not withdrawn its consent to the issue
of this document with the inclusion of the references to its
recommendation and to its name in the form and context in which
they appear.
9. Material changes
Save as disclosed in this document there have been no known
material changes in the financial or trading position of RSI
subsequent to 31 August 2011 (being the date to which the last
published audited accounts of RSI were prepared).
10. Fees and expenses
The aggregate fees and expenses which are expected to be
incurred by RSI in connection with the Partial Offer are estimated
to amount to between GBP40,000 and GBP50,000 (excluding applicable
VAT). This aggregate number consists of the following
categories:
(i) Financial and corporate broking advice: GBP25,000 (excluding VAT);
(ii) Legal advice: between GBP10,000 and GBP15,000 (excluding applicable VAT);
(iii) Other professional services: between GBP3,000 and GBP5,000
(excluding applicable VAT); and
(iv) Other costs and expenses (including printing costs):
between GBP2,000 and GBP5,000 (excluding VAT).
11. Documents available for inspection
11.1 Copies of the following documents may be inspected at the
offices of Pinsent Masons LLP during the usual business hours of
any weekday (Saturdays and public holidays excepted) from the date
of this document up to the end of the Offer Period:
(a) memorandum and articles of association of RSI;
(b) audited consolidated accounts of RSI for each of the
financial years ended 31 August 2011 and 31 August 2010;
(c) the service contracts of the Directors referred to in paragraph 5 above;
(d) the letter of consent referred to in paragraph 8; and
(e) the material contracts referred to in paragraph 6.
Appendix 2
EMPLOYEE REPRESENTATIVE'S OPINION
The employee representative, Stan Warren (Financial Controller),
has noted the comment in the Partial Offer on the "Employees,
locations and existing trading facilities of RSI and Thalassa".
Accordingly the Partial Offer states that Thalassa has no intention
of proposing any changes to the board of RSI or Thalassa or the
existing employment rights of management and employees of RSI or
Thalassa. Furthermore the Partial Offer states that Thalassa has no
intention to propose changes to the location of any of RSI's or
Thalassa's operations, nor to propose the redeployment of any of
the fixed assets of RSI or Thalassa. Thalassa have also stated that
they have no intention to propose changes to the existing trading
facilities of Thalassa or RSI Shares.
The matters noted in the paragraph above, will therefore,
continue to be managed by the RSI Board and in light of this the
employee representative is indifferent to the Partial Offer.
Appendix 3
"AIM" the market of that name operated by
the London Stock Exchange
"Board" or "Directors" the board of directors of the Company
whose names are set out in Appendix
1 of this document
"AIM Rules" the rules governing the admission to,
and operation of, AIM as set out in
the AIM Rules for Companies published
by the London Stock Exchange
"Cash Offer" the offer, under the terms and conditions
of the Partial Offer, to acquire each
RSI share for 0.48 pence in cash
"City Code" the City Code on Takeovers and Mergers
"Concert Party" Sector Speculare (Private Equity) IV
Fund (a sub-fund of Sector Umbrella
Trust, a trust incorporated under the
laws of Ireland, which sub-fund is
managed by Sector Omega ASA, a Norwegian
limited company, registered with the
Norwegian Register of Business Enterprises
under registration no. 981 122 089
pursuant to an investment agreement
between Sector Asset Management Ltd
as manager of Sector Umbrella Trust
and Sector Omega ASA), Euro-Trans Skips
AS (a company incorporated in Norway
and managed by Seatrans A.S.) and Mr
Lars Helge Kyrkjeboe
"Fox-Davies" Fox-Davies Capital Ltd, financial adviser
to RSI
"FSA" the Financial Services Authority
"FSMA" the Financial Services and Markets
Act 2000 (as amended)
"IFRS" International financial reporting standards
as adopted for use in the European
Union
"London Stock Exchange" London Stock Exchange PLC
"Offer Period" the period commencing on 2 April 2012
and ending on the later of the first
closing date of the Partial Offer,
the date the Partial Offer lapses,
or the date on which the Partial Offer
becomes or is declared unconditional
as to acceptances
"Panel" or "Takeover the Panel on Takeovers and Mergers
Panel"
"Partial Offer Document" the document, dated 23 April 2012,
setting out the terms of the Partial
Offer
"Partial Offer" or "Thalassa the partial cash offer, with the Thalassa
Offer" or "Offer" Share Alternative, made by Thalassa
to acquire up to 40,952,521 RSI Shares,
on the terms and subject to the Conditions
set out in the Partial Offer Document
announced on 2 April 2012 by Thalassa
for the part of the issued and to be
issued share capital of RSI on the
terms and subject to the conditions
set out in the Offer Document including,
where the context so requires, any
subsequent revision, variation, extension
or renewal of such Offer
"Pounds", "Pence", "GBP" the lawful currency of the United Kingdom
and "p"
"Restricted Jurisdiction" the United States, Canada, Australia,
Japan or any other jurisdiction where
the relevant action made or does constitute
a violation of the securities laws
of regulations or such jurisdictions
"RSI Group" RSI and its subsidiary undertakings
and/or (where the context requires)
any one or more of them
"RSI Shares" or "Shares" ordinary shares of one pence each in
the issued share capital of RSI
"RSI" or "Company" Rock Solid Images plc
"Shareholders" or "RSI holders of RSI Shares
Shareholders"
"Thalassa Consideration the Thalassa Shares to be issued to
Shares" Shareholders as consideration under
the Thalassa Shares Alternative
"Thalassa Directors" the directors of Thalassa
"Thalassa Group" Thalassa and its subsidiaries and/or
(where the context requires) any one
or more of them
"Thalassa Share Alternative" the offer, under the terms and conditions
of the Partial Offer, to acquire 43
RSI Shares for 1 new Thalassa Share
"Thalassa Shares" ordinary shares of $0.01 each in the
issued capital of Thalassa
"Thalassa" Thalassa Holdings Limited
"United Kingdom" or the United Kingdom of Great Britain
"UK" and Northern Ireland
"United States" or "US" the United States of America, its territories
and possessions, any states of the
United States and the District of Columbia.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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