TIDMMTMY
RNS Number : 0062F
Matomy Media Group Ltd
11 November 2020
FOR IMMEDIATE RELEASE
November 11, 2020
Matomy Media Group Ltd.
Re: Merger Agreement with Global Auto Max Ltd
Further to the announcement made by Matomy Media Group Ltd.
(LSE: MTMY, TASE: MTMY.TA) ( hereinafter: ' The Company ' or '
Matomy ' ) on September 29, 2020 (RNS Number: 4816A) regarding
entering a memorandum of understanding regarding a potential merger
transaction between the Company and Global Auto Max Ltd., a private
company that does business in the parallel import of a variety of
leading automobile brands (hereinafter: 'Automax'), the Company
announces that on November 9, 2020, further to the approval of the
Board of Directors of the Company of November 5, 2020, the Company
has entered into a conditional merger agreement with Automax,
Automax Shareholders (hereinafter: 'Automax Shareholders') and
M.R.M. Merhavit Holdings and Management Ltd. (the 'Corporate
Adviser'), by way of an exchange of shares between the Company and
Automax Shareholders (hereinafter: 'the Merger Transaction').
Automax imports models made by Toyota, FCA (Jeep, Chrysler and
Fiat), Mercedes-Benz, Hyundai, Volkswagen, Volvo and Ford. During
last year, 2019, Automax sold approximately 3,000 vehicles with a
turnover of ILS 355 million.
The main points of the Merger Transaction are as follows:
1. The Merger Transaction
According to the merger agreement, on the date of completion of
the Merger Transaction (hereinafter: 'the Completion Date'), an
exchange of securities will be made, such that the Company will
issue to Automax Shareholders shares, rights to shares when
milestones are reached, which will constitute, after the merger,
approximately 53% of the issued and paid-up capital of the Company
and the voting rights in it, on a non-diluted basis.
In return, Automax Shareholders will transfer to the Company
their shares and rights as shareholders of Automax, so that after
the transfer thereof, the Company will hold 100% of the shares of
Automax. The offered shares will be issued to Automax Shareholders
according to their proportional share before the merger in the
issued and paid-up capital of Automax.
Moreover, the Company will issue to the Corporate Adviser shares
in a sum of approximately 2% of the issued and paid-up share
capital of the Company with full dilution (assuming that all the
milestones stated in section 2 below are reached), in addition to
certain share options which are further described in section 6
below.
The completion of the Merger Transaction is conditional upon the
fulfillment of the conditions precedent stated in section 5
below.
2. Milestones
On the Completion Date, rights will be issued to Automax
Shareholders to receive additional shares of the Company, when the
following milestones are reached:
The first milestone - immediately after the appointment of the
Company/Automax as the direct importer of any brand of automobiles
and after the completion of the sale of the tenth automobile of
that brand, Automax Shareholders will be entitled to the issue of
additional ordinary shares, resulting in Automax Shareholders
holding 55% of the issued and paid-up capital of the Company with
full dilution.
The second milestone - if the Company achieves certain sales and
net profit targets between April 1, 2021 and September 30, 2022 or
if the market value of the Company's shares exceeds a certain
target by June 30, 2022, Automax Shareholders will be entitled to
the issue of additional shares of the Company, resulting in Automax
Shareholders holding 62% of the issued and paid-up capital of the
Company with full dilution.
If the second milestone is reached before the first milestone,
Automax Shareholders will not be entitled to an additional issue
for reaching the first milestone.
The third milestone - if the Company achieves certain sales and
net profit targets between April 1, 2021 and December 31, 2023 or
if the market value of the Company's shares exceeds a certain
target by December 31, 2023, Automax Shareholders will be entitled
to the issue of additional ordinary shares, resulting in Automax
Shareholders holding 73% of the issued and paid-up capital of the
Company with full dilution, on the basis of the capital on the
Completion Date, whether or not shares were issued in connection
with the first milestone or the second milestone.
If completion of the Merger Transaction occurs after April 30,
2021, the relevant periods for the milestones will be adjusted. The
merger agreement also provides for partial achievement of each
milestone.
Even if all of three milestones are achieved, the maximum
holding of Automax Shareholders is not expected to exceed 73% of
shares of the Company.
3. Issue of options to officers
In addition, on the Completion Date, the Company will issue to
the officers of Automax, Messer Daniel Levy, Yinon Amit, Eyal
Baruch, Emil Pozeilov, Chaim Levy, Gal Levy and Tomer Levy,
59,257,103 (non-listed securities) options that may be converted
into shares of the Company according to the Company's option
program, on a scale of 15% of the issued and paid-up capital of the
Company (with full dilution and on the assumption of reaching the
aforesaid milestones after the issue), which may be exercised for
shares in return for ILS 0 .32 per share, for a period of four
years beginning on the Completion Date and with vesting period of 2
years. However, the officers will undertake to the Company on the
Completion Date not to sell the shares that will result from
exercising the options for two years from the Completion Date.
4. The net amount of cash on the Completion Date
One of the conditions precedent for the completion of the Merger
Transaction is that on the Completion Date, the Company's account
will contain a net amount of cash that will not be less than ILS
19,500,000 (i.e., the amount of the assets in cash), after payment
of all the Company's undertakings that are agreed between the
parties (hereinafter: 'the Net Amount of Cash on the Completion
Date').
5. Issue of options according to a prospectus
Immediately after the Completion Date, the Company will issue,
according to a prospectus for a rights issue, subject to receiving
the approvals required by law, to the holders of the entitling
securities (as will be determined in the prospectus) 26,253,781
listed options, which will constitute approximately 6.65% of the
issued and paid-up capital of the Company (with full dilution as
defined in the footnote below) after the issue, as well as
14,012,754 listed options of the Company from the same series to
the Corporate Adviser of the Merger Transaction, which will
constitute approximately 3.55%) of the issued and paid-up capital
of the Company (with full dilution as defined in this section)
after the issue
Subject to the following paragraph, Automax Shareholders and the
officers of Automax will give notice in advance that they undertake
not to exercise the rights units that will be offered to them in
the prospectus, insofar as they will be entitled to participate in
the rights issue, and not to sell those rights in the course of
trading, and they will give a suitable irrevocable instruction to
the trustees who hold for them the securities that entitle them to
participate in the rights issue. The Company will act to make the
aforesaid issue on as early a date as possible after the Completion
Date.
Moreover, the Corporate Adviser has the right to buy rights
units from Automax Shareholders, instead of issuing options to the
Corporate Adviser, in return for a sum of ILS 20 thousand, in such
a way that will bring the total amount of options in the Company to
the amounts (or percentages, as applicable) stated in this section
above.
Without derogating from any other provision in the Merger
Transaction, if as a result of the exercise of the options for the
public, the total amount of the holdings of the Automax
shareholders is less than 50% of the issued and paid-up capital of
the Company, Automax Shareholders will be entitled to an additional
issue of shares of the Company, from the first milestone shares,
and insofar as they will not be sufficient to cover the difference,
the balance will be from the second milestone shares, so that the
percentage of the holding of the Automax shareholders will be 50%
of the issued and paid-up capital of the Company, on the basis of
the supplementary capital, even if the merged company did not reach
any of the aforesaid milestones. The first additional shares will
be held by a trustee for the Automax shareholders until one of the
milestones that will entitle them to receive them is reached. If by
the end of the period of the milestones, as stated in section 2
above, not even one of the milestones will be reached, the first
additional shares will be returned by the trustee to the Company
and will become dormant shares.
If, as a result of the exercise of the options to the public,
Automax Shareholders hold less than 45% of the issued and paid-up
capital of the Company, additional ordinary shares will be issued
to the Automax shareholders, in such a number to bring their
holding to 45% of the issued and paid-up capital of the Company, on
the basis of the supplementary capital.
It should be clarified that as of the date of the report, the
Company has not yet published a prospectus for a rights issue and
there is no certainty that such a prospectus will be published.
6. Conditions precedent for the completion of the Merger Transaction
The Merger Transaction is conditional upon the complete
fulfillment in aggregate of all the following conditions precedent
by February 28, 2021:
6.1 Receiving lawful approval of the organs of the Company for
all the matters that will be on the agenda of the general meeting
for the approval of the Merger Transaction, according to its terms,
including the issue of the shares, the rights to the milestone
shares, the options for the officers, the issue of the Corporate
Adviser's shares, the release from guarantees and the agreements
with the officers of Automax.
6.2 Receipt of lawful approval for all the contracts within the
framework of the Merger Transaction, for the completion of which
the approval of Automax's organs is required.
6.3 Receipt of the approval of the TASE for the listing of all
the securities issued according to the merger agreement (including
the Corporate Adviser's shares, the shares that will derive from
the exercise of the options for the officers and the shares that
will derive from the realization of the rights to the milestone
shares).
6.4 Before the completion of the Merger Transaction, and subject
to its completion, the Company will comply with the Tel-Aviv Stock
Exchange Ltd.'s (hereinafter: 'the TASE') rules for the purpose of
moving the trading in its shares from the maintenance list to the
main list (it should be clarified that the actual moving of the
trading will occur after the completion of the Merger
Transaction).
6.5 The receipt of approval from the tax authorities for the tax
arrangement under the provisions of section 103T of the Income Tax
Ordinance, which will apply to the Merger Transaction to the
satisfaction of the Company, Automax and Automax's
shareholders.
6.6 The Net Amount of Cash in the Company's account on the
Completion Date will be a sum of ILS 19,500,000.
6.7 On the Completion Date, there will be no legal impediment to
the performance of the Merger Transaction, and inter alia, there
will be no valid judicial order that prevents the completion of the
Merger Transaction according to its terms.
6.8 The receipt of the court's approval for a creditors'
arrangement in which the Company's debts and undertakings of every
kind will be written off.
6.9 The receipt of the approval of the Competition Commissioner
for the merger between the parties according to the merger
agreement.
If all the conditions precedent are not be fulfilled by February
28, 2021(hereinafter: 'the Expected Completion Date'), each party
will be entitled to give notice of an extension of the period for
fulfilling them until May 31, 2021 (hereinafter: 'the Deferred
Date'). If the conditions precedent are not be fulfilled by the
deferred date and the parties have not agreed on a deferral thereof
and neither of the parties has given notice that it waives the
fulfillment of a condition precedent that is for its benefit, the
merger agreement will expire on the Expected Completion Date or the
Deferred Date (as applicable), without either of the parties having
any claim and/or demand thereunder for it not coming into effect or
for its cancellation.
7. Removal from the TASE's maintenance list/De-listing from the LSE
As of the date of the report, the Company is a public company
whose shares are traded on the TASE and on the High Growth segment
of the Main Market of the London Stock Exchange (hereinafter:
'LSE').
Prior to the entry of the Merger Agreement, trading of the
Company's securities both on the TASE and on the LSE has been
suspended, and on September 22, 2020, the Company announced its
intention to delist the shares from the LSE which was approved by
shareholders (as announced on 20 October 2020), and as announced by
the Company on 13 October 2020, the listing of the Company's shares
on the LSE is expected to be cancelled with effect from November
23, 2020.
In addition, the Company's shares may be moved to be traded on
the Tel-Aviv Stock Exchange in the Maintenance List, as a shell
company.
The Merger Transaction is expected to allow the trading in the
Company's shares to be moved from the Maintenance List to the Main
List of the TASE. However, it should be clarified that the actual
transfer of the trading to the Main List will occur after the
completion of the Merger Transaction.
In order to comply with the TASE's Maintenance Rules for the
purpose of moving the trading of the Company's shares from the
Maintenance List to the Main List, the Company will be required to
comply with the conditions required of a new Company of its kind as
stated in the regulations under the second part of the TASE's
rules, including the equity requirements, the value of public
holdings, the percentage of public holdings and the seniority of
activity.
As of the date of the report, there is no certainty that the
completion of the Merger Transaction, insofar as it will be
completed, will result in the move of the trading in the Company's
shares from the TASE's maintenance list to the main list.
8. Additional provisions from the merger agreement
8.1 Before the Completion Date, the Automax shareholders will
sign a voting agreement, which will relate, inter alia, to the
appointment of directors in the merged company.
8.2 Subject to the completion of the Merger Transaction, for 12
months from its Completion Date, the Company will not raise capital
according to an effective company value (which will be calculated
on the basis of the issued capital immediately after the completion
of the Merger Transaction) in an amount lower than ILS 67
million.
8.3 In addition, the agreement includes representations, no-shop
provisions, indemnity provisions, report arranging provisions,
jurisdiction provisions and other provisions that are usual in
agreements of this type.
The information, forecasts and estimates stated in this report
about the Company and/or Automax, including about the fulfillment
of any of the conditions precedent for the Merger Transaction
and/or the completion of the Merger Transaction and/or Automax's
operations are forward-looking statements as defined in the Israeli
Securities Law, 5728-1968. These forecasts and estimates may not
materialize or may materialize on different conditions and dates
than estimated by the Company and/or Automax, inter alia for
reasons that are not within the control of the Company and/or
Automax.
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END
AGREAAFFFEAEFFA
(END) Dow Jones Newswires
November 11, 2020 07:04 ET (12:04 GMT)
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