REG - Bidstack Group PLC - Proposed CLN, Share Reorganisation and VST Update

BidstackAnnouncement

18/10/2023 16:00

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RNS Number : 5718Q  Bidstack Group PLC  18 October 2023

Certain information contained within this Announcement is deemed by the
Company to constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014 ("MAR") as applied in the United Kingdom. Upon
publication of this Announcement, this information is now considered to be in
the public domain.

 

18 October 2023

Bidstack Group Plc

("Bidstack" or the "Company" or the "Group")

Secured Convertible Loan Agreement with Irdeto B.V.

Share Capital Reorganisation

Update on Proposed Commercial Partnership with Virtual Sport Technology
Limited ("VST")

 

 

Bidstack Group Plc (AIM: BIDS), the in-game brand activation platform,
announces that it has agreed to enter into (i) a loan agreement ("Loan
Agreement"), (ii) a subscription and share option agreement ("Share Option
Agreement"); and (iii) a composite guarantee and debenture ("Security
Agreement") with Irdeto B.V. ("Irdeto") (the Loan Agreement and Share Option
Agreement together being the "CLN", and the CLN and the Security Agreement
being the "Agreements"). The Agreements will, subject to certain shareholder
approvals explained below, provide the Company with a secured convertible loan
note facility of up to four separate tranches of £0.6m, aggregating up to
£2.4m from Irdeto.  Irdeto, a world leader in digital platform
cybersecurity, empowering businesses to innovate for a secure, connected
future, previously invested £5m in Bidstack as part of the Company's
fundraise in October 2022. Irdeto currently holds 175,438,596 ordinary shares
in Bidstack, representing 13.49% of the total voting rights ("TVR") in the
Company.

 

The funds received from the Loan Agreement will provide the Company with
additional working capital.

 

In order to enable Irdeto to utilise the Share Option Agreement, drawdown of
further full tranches under the Loan Agreement (following the initial tranche
of £0.6m)  is conditional upon : (i) the approval by the Company's
shareholders of a share capital reorganisation; and (ii) the approval of a
waiver of Rule 9 ("Rule 9 Waiver") of the City Code on Takeovers and Mergers
(the "City Code") by the Panel on Takeovers and Mergers ("the Panel") and the
independent shareholders of the Company, voting on a poll, in general meeting,
which is further explained below.

 

The Agreements

 

The principal terms of the Agreements are as follows:

 

Loan Agreement

 

·      Bidstack is to be provided with a secured loan facility
("Facility"), drawable in individual tranches each of up to £0.6m, with an
aggregate facility cap of £2.4m.

·      Interest will be charged at 10% per annum on drawn amounts - to
be capitalised on the last business day of each month.

·      Irdeto will charge a commitment fee of 2% per annum on any
undrawn facility - capitalised on the last business day of each month.

·      Repayment in whole or in part (of not less than £0.5m per
repayment) can be undertaken by the Company on 20 business days' notice
(unless Irdeto serves notice to convert under the Share Option Agreement).

·      Subject to the terms of the loan, drawdowns remain available
until 31 December 2024 and the final repayment date for the loan is 31
December 2026.

·      Bidstack may not create other security or indebtedness without
Irdeto's consent and the Loan Agreement remains subject to certain financial
covenants in respect of operating expenditure and cash.

·      Bidstack is to produce a circular ("Circular") to seek
shareholders' approval of a Rule 9 Waiver and to approve the subdivision of
its ordinary shares such that the nominal value for an ordinary share in the
Company will be 0.001 pence per share (and, for each new ordinary share of
0.001 pence per share, a deferred share of 0.499 pence per share will be
created). The reason for the subdivision is explained further below.

·      Drawdown is subject to a number of conditions precedent including
that Bidstack may not drawdown beyond a level that would, if converted, lead
to Irdeto holding more than 29.99% of Bidstack's issued share capital without
having obtained a Rule 9 Waiver approved by the independent shareholders
voting on a poll at a general meeting.

·      During the term of the Loan Agreement, Irdeto will be given the
opportunity to participate in any equity offers so as to maintain its interest
in Bidstack immediately prior to the relevant equity offer.

 

Share Option Agreement

 

·      The earliest date which Irdeto can serve an option notice to
convert the Facility into ordinary shares is the date after the general
meeting to be called pursuant to the Circular.

·      During the option period, Irdeto may elect to convert some or all
of the amount outstanding under the Loan Agreement, from time to time, into
ordinary shares at a conversion price of the lower of 0.275p per ordinary
share (before the share consolidation set out below) and 10% below the closing
mid-market price per ordinary share on the date of Irdeto's election to
convert or, where that date is not a trading day, the last closing mid-market
price per ordinary share ("Subscription Price"). However, if the Subscription
Price would result in a price which is less than the nominal value of an
ordinary share, to enable to convert at such time, Irdeto can elect to pay
 the nominal value for each ordinary share.

·      Ordinary shares issued under the Share Option Agreement will rank
pari passu with the existing ordinary shares and the Company will apply to AIM
for permission for the shares to be admitted to trading.

·      Bidstack may not in any event issue new ordinary shares to Irdeto
that would result in Irdeto holding in excess of 29.99% of the TVR in
Bidstack, in the absence of a Rule 9 Waiver having been approved by the
independent shareholders in Bidstack, voting on a poll, at a general meeting.

·      Subject to obtaining a Rule 9 Waiver, if Irdeto's shareholding
does exceed 30% of Bidstack's issued capital, Irdeto will be entitled to
nominate an additional Non-Executive Director to the Company's Board (that is,
in addition to Doug Lowther, the CEO of Irdeto, who is currently a
Non-Executive Director on the Company's Board).

 

Security Agreement

 

Bidstack Group Plc and each English trading subsidiary provides a guarantee
and indemnity under the Security Agreement and provides security, by way of
fixed and floating charges (as applicable) over the shares of Bidstack Group
Plc's subsidiaries, Group intellectual property, Group UK bank accounts and
the amounts standing to the credit of them from time to time and Group
insurance contracts.

 

Related Party Transaction

 

Irdeto is a substantial shareholder in the Company with a holding of
175,438,596 ordinary shares which represents 13.49% of Bidstack's currently
issued share capital and TVR.  Doug Lowther, the CEO of Irdeto, is a
Non-Executive Director on the Company's Board.

 

The Board, (save for Doug Lowther who has not participated in any discussion
relating to the Facility or the Agreements) having consulted with the
Company's Nominated Adviser, SPARK Advisory Partners Limited, considers the
entry into the Facility and the terms of the Agreements are fair and
reasonable insofar as the Company's shareholders are concerned.

 

Share Capital Reorganisation

The Company's existing ordinary shares have a nominal value of 0.5 pence at
present. Given the Company's current share price, in order to issue shares,
and in order to enable the Company to issue new ordinary shares pursuant to
the Share Option Agreement at the Subscription Price, the Company is proposing
to undertake a share capital reorganisation ("Reorganisation"). The Board
considers the Reorganisation to have merit in its own right as the the high
number of existing ordinary shares combined with the low absolute share price
is unwieldly for the shareholders of the Company and others wishing to deal in
the Company's shares and negatively affects investors' perception of the
Company.

 

Subject to approval by the Company's shareholders at the proposed general
meeting, pursuant to the proposed sub-division, each existing ordinary share
of 0.5 pence would be divided into one new ordinary share of 0.001 pence ("New
Ordinary Share") and one deferred share of 0.499 pence ("Deferred Share").

 

At the same general meeting, the Company will also propose a 1,000 for 1
consolidation of New Ordinary Shares to create "New Consolidated Ordinary
Shares" with a nominal value of 1 pence per New Consolidated Ordinary Share.
The Company will issue a further 16 New Ordinary Shares immediately prior to
the consolidation taking effect to ensure the aggregate total New Ordinary
Shares prior to the consolidation are divisible by 1,000.

 

Certain amendments must be made to the Company's articles of association to
facilitate the Reorganisation. Full details of those amendments and the
Reorganisation generally will be given in the shareholder circular and notice
convening a general meeting, which will be published as soon as is
practicable, made available on the Company's website and sent to shareholders
who have requested physical copies of the Company's documents.

 

Rule 9 Waiver

 

The Code applies to Bidstack. Under Rule 9 of the Code, any person who
acquires an interest in shares which, taken together with shares in which that
person or any person acting in concert with that person is interested, carry
30% or more of the voting rights of a company which is subject to the Code is
normally required to make an offer to all the remaining shareholders to
acquire their shares.

 

An offer under Rule 9 must be made in cash at the highest price paid by the
person required to make the offer, or any person acting in concert with such
person, for any interest in shares of the company during the 12 months prior
to the announcement of the offer.

 

If the CLN was fully utilised at the earliest opportunity and Bidstack made no
cash repayments, Irdeto could own a maximum of 336,903,938,596 New Ordinary
Shares (or 336,903,938 New Consolidated Ordinary Shares) in the Company
representing 99.67% of the TVR. Note this is a theoretical calculation based
on the lowest price at which Bidstack could issue shares of 0.001 pence per
New Ordinary Share (or 1 pence per New Consolidated Ordinary Share) following
the Reorganisation and assumes no other shares are issued.

 

 Conversion Price       New Ordinary Shares (assuming full conversion at 31 December 2026)  Total Ordinary Shares in issue (assuming no other issues within the timeframe)  Aggregate Total of Irdeto's holding including existing ordinary shares and New  Irdeto's maximum percentage of TVR
                                                                                                                                                                            Ordinary Shares
 0.275 pence (maximum)  1,224,467,273                                                       2,525,323,273                                                                   1,399,905,869                                                                   55.44%
 0.1375 pence (midway)  2,448,934,545                                                       3,749,790,545                                                                   2,624,373,141                                                                   69.99%
 0.001 pence (lowest)   336,728,500,000                                                     338,029,356,000                                                                 336,903,938,596                                                                 99.67%

 

Note: This illustrative table is shown prior to the Reorganisation, but
Irdeto's percentage of TVR should remain unchanged post the Reorganisation.

 

Therefore, the Company will seek the approval of the Panel to waive the
obligation to make a general offer that would otherwise arise on Irdeto as a
result of conversion under the Share Option Agreement, subject to approval on
a poll by the independent shareholders of the Company (being all shareholders
other than Irdeto) of the Rule 9 Waiver Resolution as set out in the Notice of
General Meeting to be sent to shareholders shortly.

 

General Meeting

 

A circular ("Circular") containing further details of the Agreements,
Reorganisation, changes to the articles of association of the Company in
respect of the Reorganisation  and the Rule 9 Waiver and notice of the
general meeting to approve the resolutions required to implement the
Reorganisation, changes to the articles of association and the proposed Rule 9
Waiver, is expected to be published and despatched to Bidstack shareholders in
due course, when a further announcement will be made.  Following its
publication, the Circular will be available on the Group's website.

 

Update on the proposed New Commercial Partnership with Virtual Sport
Technology Limited ("VST")

 

Following further discussions between the Company, its advisers and VST, and
the entering into the Agreements outlined herein, it has been resolved, at
this point, not to progress further with the proposed new multi-year licensing
agreement between Bidstack and VST on the (non-binding, subject to contract)
terms which were outlined in an announcement dated 29 September 2023.
Discussions will continue with the new management of VST around the potential
of the Company and VST working together in some capacity, but with a
materially revised structure, to support the growth of the Company's sports
offering.

 

James Draper, CEO of Bidstack said:

"The loan agreement with our strategic investor Irdeto provides Bidstack with
additional working capital to focus on execution of recently announced
commercial partnerships.  We are grateful for Irdeto's continued support at
this pivotal inflection point for Bidstack and the in-game advertising
industry."

 

Kelly van Krieken, Director - Corporate Development of Irdeto said:

"Irdeto is pleased to announce the extension of our strategic support for
Bidstack.  The in-game advertising market is an exciting growth area in the
video game space, and we look forward to the opportunity that this continued
investment will bring."

 

-ENDS-

 

Contacts

 Bidstack Group Plc

 James Draper, CEO                           via SPARK
 SPARK Advisory Partners Limited (Nomad)     +44 (0) 203 368 3550

 Mark Brady / Neil Baldwin / James Keeshan
 Stifel Nicolaus Europe Limited (Broker)

 Fred Walsh / Tom Marsh                      +44 (0) 20 7710 7600

Notes to editors

About Bidstack

Bidstack's technology empowers video game publishers to monetise and manage
spaces within their virtual environments.  Its platform provides real-time
reporting, dynamic targeting and player communication tools for brand
activations and fan engagement.

 

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