REG - BlueRock DiamondsPLC - Posting of Circular and Notice of AGM
15/08/2022 16:00
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RNS Number : 0709W BlueRock Diamonds PLC 15 August 2022
BlueRock Diamonds PLC / AIM: BRD / Sector: Natural Resources
15 August 2022
BlueRock Diamonds PLC ('BlueRock' or the 'Company')
Posting of Circular and Notice of Annual General Meeting
BlueRock Diamonds PLC, the AIM listed diamond producer, which owns and
operates the Kareevlei Diamond Mine ('Kareevlei') in the Kimberley region of
South Africa, is pleased to announce that further to the announcement of 5
July 2022, a shareholder circular (the 'Circular') has been published today
that contains information on the background to, and reasons for, the proposed
redemption of the £1,066,411 Simple Loan Note to Teichmann Company Limited
('TCL') and parties connected with TCL (together, 'Teichmann'). Subject to
shareholder approval, the Simple Loan Notes will be redeemed in consideration
for the issue by the Company of the Subscription Shares and this will be
accompanied by the issue of New Convertible Loan Notes of £583,746 and an
amendment to the Existing CLN, subject to the conditions set out in the
Subscription Agreement and summarised in the Circular (the 'Transaction'). The
Transaction is conditional on the passing of a Whitewash Resolution and
additional share authorities which are being proposed at an annual general
meeting of the Company ("Annual General Meeting").
The Circular contains a notice convening an Annual General Meeting which will
be held at 10.00a.m. on 7 September 2022, will be posted to Shareholders today
and is available on the Company's website at www.bluerockdiamonds.co.uk.
Unless otherwise indicated, all defined terms in this announcement shall have
the same meaning as described in the Circular.
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018 ('MAR'). Upon the publication of this
announcement via Regulatory Information Service ('RIS'), this inside
information is now considered to be in the public domain.
**ENDS**
For further information, please visit BlueRock's
website www.bluerockdiamonds.co.uk (http://www.bluerockdiamonds.co.uk/) or
contact:
BlueRock Diamonds PLC
Mike Houston m.houston@bluerockdiamonds.co.uk
David Facey, FD dfacey@bluerockdiamonds.co.uk
SP Angel (NOMAD and Broker)
Stuart Gledhill / Caroline Rowe Tel: +44 (0)20 3470 0470
St Brides Partners Ltd (Financial PR)
Isabel de Salis / Charlotte Page bluerock@stbridespartners.co.uk
Notes to editors:
BlueRock Diamonds is an AIM-listed diamond producer which operates the
Kareevlei Diamond Mine near Kimberley in South Africa which produces diamonds
of exceptional quality and ranks in the top ten in the world in terms of
average value per carat. The Kareevlei licence area covers 3,000 hectares and
hosts five known diamondiferous kimberlite pipes with a combined inferred
resource of 10.4 million tonnes / 516,200 carats (February 2021); based on its
planned production of 1 million tonnes per annum, this provides a minimum
10-year life of mine.
To Shareholders, option-holders and the holders of Existing CLNs
Dear All
PROPOSED ISSUE OF SUBSCRIPTION SHARES, NEW CONVERTIBLE LOAN NOTES, APPROVAL OF
WAIVER GRANTED BY THE PANEL ON TAKEOVERS AND MERGERS OF RULE 9 OF THE CITY
CODE ON TAKEOVERS AND MERGERS AND NOTICE OF ANNUAL GENERAL MEETING
1 Introduction
On 5 July 2022 the Company announced that it had entered into the Subscription
Agreement with Teichmann Company Limited and parties connected with TCL for an
aggregate £1,650,157 and that the Company's subsidiary, Kareevlei, had
entered into the Facility Agreement with TSA for up to ZAR30m.
Subject to the satisfaction of a number of conditions relating to the grant of
security, the Company expects, pursuant to the Subscription Agreement, to
issue £1,066,411 Simple Loan Notes to the Noteholders with the intention
that, subject to independent shareholder approval, further details of which
are set out below, the Simple Loan Notes will be redeemed in consideration for
the issue by the Company of the Subscription Shares and that this will be
accompanied by the issue of New Convertible Loan Notes of £583,746 and an
amendment to the Existing CLN, subject to the conditions set out in the
Subscription Agreement and summarised below.
The Company is requesting the support of Shareholders for the passing of the
Resolutions, which are required in order to complete the Teichmann Financing
(to the extent not already completed) and to avoid the need to redeem the
Simple Loan Notes in case the Resolutions are not passed. The Resolutions
will be proposed at the Annual General Meeting to be held on 7 September 2022.
The Teichmann Concert Party currently holds 3,785,556 Ordinary Shares,
equating to 17.4% of the issued ordinary share capital of the Company. The
total number of Ordinary Shares of the Company immediately following issue of
the Subscription Shares will be 37,011,192, of which the Teichmann Concert
Party will hold 19,019,993 Ordinary Shares, representing 51.75% of the
enlarged ordinary share capital of the Company. Following the issue of the
Subscription Shares and conversion of the Existing CLNs and NCLNs into
Ordinary Shares through the allotment and issue of the Existing Conversion
Shares and the New Conversion Shares respectively, the enlarged share capital
will be 52,094,972 Ordinary Shares (assuming no other share issues and
exercise of Michael Houston's options), of which the Teichmann Concert Party
would hold 34,103,773 Ordinary Shares, representing 65.46% of the enlarged
issued ordinary share capital of the Company. The total enlarged share capital
and the Teichmann Concert Party's holding may be further increased by the
issue of shares in accordance with the Broker Option which is further
described in paragraph 5 below. Under the Broker Option, the Teichmann Concert
Party's holding would still represent a maximum of 65.46% of the enlarged
issued ordinary share capital of the Company.
2 BACKGROUND
As announced by the Company on 1 June 2022, during the first five months of
2022, the Kareevlei Diamond Mine experienced nearly double its normal annual
rainfall (561mm/22 inches). The wet season extended into what are normally
considered dry months, April and May and in particular May, when the Company
experienced over three times the long-term average, and this following on from
a very wet Q1 had a significant impact on both mining development and
processing against expectations.
Mining development fell 36% (400,000 tonnes) as compared to budget for April
and May, which limited the mine's access to quality kimberlite and
necessitated the use of lower grade and more difficult to handle material
(clay content) in Kareevlei's processing operations. Additionally, where the
Company had hoped to ramp up production at its new 1Mtpa processing plant, the
unforeseen lost days to rain and the lower-grade feed resulted in operations
being down against budget over the period March to May by 48% on tonnes
processed, 51% on grade and 74% on carats produced.
Accordingly, while South Africa has since experienced drier weather
conditions, the delayed roll out of the Company's mining development plan has
impacted production output in Q2, and will impact Q3 and therefore the 2022
outlook which was revised down in the Company's announcement of 11 July
2022. In addition, as a result of global economic conditions, the Company is
facing increased costs of production due to higher diesel prices and increased
costs of major suppliers.
As a result of fewer diamonds being produced and sold (3,570 and 2,699 carats
respectively in Q2 2022 versus 5,442 and 5,106 in Q2 2021) as well as
increasing costs, BlueRock's cash resources have been depleted during what
continues to be a period of heavy investment in mining development. The
Company, therefore, entered discussions with TCL to support it through this
period.
On 5 July 2022, the Company announced the Noteholders' subscription for
£1,066,411 Simple Loan Notes. If the Resolutions are passed, they will be
refinanced by subscription for the Subscription Shares for £1,066,411 in
aggregate. Further, if the Resolutions are passed, the Noteholders will
subscribe for the New Convertible Loan Notes for £583,746 in aggregate and
the Existing CLN will be amended as described section 4 of part 2.
If the Resolutions are not passed, then the Simple Loan Notes become
redeemable immediately plus the greater of £1,000,000 and the market value of
the New Conversion Shares had they been issued. The refinancing of the Simple
Loan Notes by subscription for the Subscription Shares, combined with the
issue of the New Convertible Loan Notes and amendment of the Existing CLN,
will, therefore, save the Company considerable liability.
The terms of the Subscription Agreement, the Simple Loan Note Instrument, the
New Convertible Loan Note Instrument and amendment of the Existing CLN are
summarised in section 4 of part 2.
The Teichmann Concert Party has been a substantial shareholder and partner of
BlueRock for a number of years now and has a good working relationship with
the Board. The Teichmann Financing will allow the Noteholders to increase
their exposure to the Kareevlei mine which the Company believes offers
considerable value to all shareholders particularly once the current expansion
project, which the Teichmann Concert Party has helped to fund, is completed
and the mine is operating at its targeted run rate of 1m tonnes per annum.
The Noteholders and TSA have confirmed that the NCLNs will be funded from
their existing cash resources. No management incentivisation arrangements
are agreed or proposed in connection with the Teichmann Financing.
3 THE TEICHMANN FINANCING
Subscription Agreement, SLNs and CLNs
On 4 July 2022 the Company and Noteholders entered into the Subscription
Agreement pursuant to which £1,066,411 Simple Loan Notes will be issued to
the Noteholders. The SLNs are redeemable on 7 September 2022 with zero
interest payable. Subject to the passing of the Resolutions, the SLNs will
be redeemed for 15,234,437 new Ordinary Shares, issued at £0.07 per share,
which would have the effect of increasing the interest of the Teichmann
Concert Party in the Company's voting share capital from 17.38% as at the date
of the Circular to 51.75% (before conversion of the Existing CLN or the New
Convertible Loan Notes but assuming the exercise of Michael Houston's
options).
If the Resolutions are not approved by 7 September 2022, the Company will be
required to redeem the Simple Loan Notes at the amount invested by the
Noteholders plus the greater of £1,000,000 and the market value of the New
Conversion Shares had they been issued.
Subject to approval of the Resolutions, a New Convertible Loan Note of
£583,746 will be issued to the Noteholders, with a conversion price of £0.07
and a maturity date of 30 November 2025. The SLN, the NCLN and the Existing
CLN will, subject to regulatory approval in South Africa, be secured by a
charge over the Company's shares in Kareevlei, as well as a charge over the
Company's bank accounts for the benefit of TSA, as lender under the Facility
Agreement, and the holders of the Existing CLNs, SLNs and New CLNs.
Furthermore, and again subject to the approval of the Resolutions, the
Existing CLN of £1,610,000 will be amended to provide for redemption and to
run to an extended term of 30 November 2025. It will also remove applicable
interest to its maturity and amend the conversion price from 40 pence to 24.9
pence (the commercial effect among the parties being the same due to the
treatment of interest and which will not alter the maximum number of shares to
be issued under the Existing CLN, being 6,465,247 Ordinary Shares).
If the NCLN Subscription takes place, the Company will issue £583,746 of New
Convertible Loan Notes to the Noteholders convertible into Ordinary Shares at
a price of £0.07 per share.
The total number of Ordinary Shares of the Company immediately following issue
of the Subscription Shares and conversion of the Existing CLNs and NCLNs into
Ordinary Shares through the allotment and issue of the Existing Conversion
Shares and the New Conversion Shares respectively would be 52,094,972
(assuming no other share issues and exercise of Michael Houston's options), of
which the Teichmann Concert Party would hold 34,103,773 Ordinary Shares,
representing 65.46% of the enlarged issued ordinary share capital of the
Company.
Facility Agreement
On 4 July 2022, Kareevlei entered into a new extended credit facility with its
mining contractor, TSA, for up to ZAR30 million which reduces to ZAR20 million
180 days after the effective date (being the date on which the borrower
satisfies the conditions precedent to drawdown). Subject to South African
regulatory approvals, where relevant, the facility will be secured over the
plant, machinery, equipment and other moveable assets of Kareevlei. Subject to
South African regulatory approvals, where relevant, the facility will also be
guaranteed by the Company in favour of TSA and secured by a charge over the
Company's bank accounts for the benefit of TSA and the holders of the Existing
CLNs, SLNs and New CLNs.
Further details of the Subscription Agreement, SLN Instrument, NCLN Instrument
and Existing CLN Amendment Deed are set out in section 4 of part 2 of the
Circular.
Further details relating to TCL, its ultimate beneficial owners and the
Teichmann Concert Party are set out in section 1 of part 2 of the Circular.
4 Other arrangements
In addition to the Teichmann Financing, the Company, its nominated adviser SP
Angel and TCL have entered into a new Relationship Agreement. Under this
agreement, TCL has the right to appoint up to three directors to the board of
the Company (as long as this number is matched by independent directors who
will retain the casting vote) and to participate in future fundraisings to
maintain its shareholding (calculated on a fully diluted basis). This
agreement includes typical clauses on the ability of the Company to operate
independently of TCL. Further details of the Relationship Agreement are set
out in section 4 of part 2 of the Circular.
The Company, Kareevlei, TCL and TSA have also entered into a Governance
Agreement which sets out a framework under which TCL and other material
shareholders of BlueRock and Kareevlei can appoint directors at the Kareevlei
level subject to the Company retaining control of the operation of Kareevlei
through a casting vote. The Company and TCL are to agree terms of reference
for a management committee of Kareevlei, such committee to include an
independent technical expert. Further details of the Governance Agreement are
set out in section 4 of part 2 of the Circular.
Assuming the Resolutions are passed at the AGM to enable the Teichmann
Financing to proceed (to the extent it has not at that time done so), it is
the intention of Michael Houston, David Facey and Tim Leslie to resign as
directors, subject to suitable replacements being identified.
5 BROKER OPTION
To provide Shareholders and other investors who were not able to participate
in the Teichmann Financing the option to subscribe for Ordinary Shares at the
issue price of 7p per share, the Company has agreed with Teichmann to provide
the Broker Option. This allows subscriptions for up to an aggregate £0.3
million at 7p per share with priority given to existing Shareholders of the
Company. The Teichmann Concert Party will subscribe for 65% of the total
number of Ordinary Shares issued under the Broker Option such that its maximum
percentage shareholding is maintained at no more than 65.46%. This has the
effect of up to approximately £105,000 of the Broker Option being available
to Shareholders and investors that are independent of the Teichmann Concert
Party.
The maximum number of Ordinary Shares to be issued under the terms of the
Broker Option, if exercised, will be 4,285,714 Ordinary Shares.
To subscribe under the Broker Option, Shareholders should communicate their
interest to the SP Angel by 5:00 pm on 24 August 2022 via their independent
financial adviser, stockbroker or other firm authorised by the Financial
Conduct Authority, as SP Angel cannot take direct orders from individual
private investors.
There is no guarantee that SP Angel will exercise the Broker Option or that
Shareholders and investors will be able to acquire any Broker Option Shares.
6 significant shareholders
The holders of more than 3% of the Company's Ordinary Shares following issue
of the Subscription Shares, the Existing Conversion Shares and the New
Conversion Shares are set out below: .
Name of Shareholder Number of Ordinary Shares held at 12 August 2022 Percentage of issued ordinary share capital of the Company held as at 12 Number of new Ordinary Shares following issue of the Existing Conversion Percentage of issued ordinary share capital of the Company held immediately
August 2022 Shares, the Subscription Shares and the New Conversion Shares following issue of the Existing Conversion Shares, the Subscription Shares and
the New Conversion Shares and assuming exercise of Michael Houston's options
TCL* 2,480,262 11.4 22,753,380 43.68
T3* 971,624 4.5 9,059,319 17.39
Binvic (Pty) Ltd 2,682,487 12.32 2,682,487 5.15
Edale Europe Absolute Master Fund 1,167,500 5.36 1,167,500 2.24
*Under common ownership, part of the Teichmann Concert Party
7 Related Party Transaction
TCL, and certain connected parties connected with the owners of Teichmann
Group, as a substantial Shareholder of the Company, are each considered to be
a "related party" as defined under the AIM Rules and, accordingly, the
Teichmann Financing, the Relationship Agreement, Governance Agreement and
Broker Option constitute a related party transaction for the purposes of Rule
13 of the AIM Rules.
The Directors independent of the Teichmann Financing, the Relationship
Agreement, Governance Agreement and Broker Option from an AIM Rules
perspective, being Michael Houston, David Facey, Tim Leslie and Rob Croll,
consider, having consulted with the Company's nominated adviser, that the
terms of the Teichmann Financing, the Relationship Agreement, Governance
Agreement and Broker Option are fair and reasonable insofar as the Company's
Shareholders are concerned.
8 THE TAKEOVER CODE
The Teichmann Financing gives rise to certain considerations under the
Takeover Code. Brief details of the Panel, the Takeover Code and the
protections they afford are set out below.
Background
The Takeover Code is issued and administered by the Panel. The Takeover Code
applies to all takeover and merger transactions, however effected, where the
offeree company is, among other things, a listed or unlisted public company
resident in the United Kingdom, the Channel Islands or the Isle of Man (and to
certain categories of private limited companies). The Company is a public
company whose Ordinary Shares are admitted to trading on AIM, and its
Shareholders are therefore entitled to the protections afforded by the
Takeover Code.
Under Rule 9 of the Takeover Code, where any person acquires, whether by a
series of transactions over a period of time or not, an interest in shares
which (taken together with shares already held by that person and any interest
in shares held or acquired by persons acting in concert with him) carry 30 per
cent. or more of the voting rights of a company which is subject to the
Takeover Code, that person is normally required by the Panel to make a general
offer to all the holders of any class of equity share capital or other class
of transferable securities carrying voting rights in that company to acquire
the balance of their interests in the company.
Similarly, Rule 9 of the Takeover Code also provides, among other things, that
where any person who, together with persons acting in concert with him, is
interested in shares which in aggregate carry not less than 30 per cent. but
not more than 50 per cent. of the voting rights of a company which is subject
to the Takeover Code, and such person, or any person acting in concert with
him, acquires an additional interest in shares which increases the percentage
of shares carrying voting rights in which he is interested, then such person
is normally required by the Panel to make a general offer to all the holders
of any class of equity share capital or other class of transferable securities
carrying voting rights of that company to acquire the balance of their
interests in the company.
An offer under Rule 9 of the Takeover Code must be in cash (or with a cash
alternative) and at the highest price paid within the preceding 12 months for
any interest in shares in the company by the person required to make the offer
or any person acting in concert with him.
Shareholders should be aware that Rule 9 of the Takeover Code further
provides, among other things, that where any person who, together with persons
acting in concert with him, holds interests in shares carrying more than 50
per cent. of the voting rights of a company, acquires an interest in shares
which carry additional voting rights, then they will not normally be required
to make a general offer to the other shareholders to acquire their shares.
Under the Takeover Code, a concert party arises where persons acting together
pursuant to an agreement or understanding (whether formal or informal)
co-operate to obtain or consolidate control of, or frustrate the successful
outcome of an offer for, a company subject to the Takeover Code. Control means
an interest or interests in shares carrying, in aggregate, 30 per cent. or
more of the voting rights of the company, irrespective of whether the holding
or holdings give de facto control.
The Teichmann Concert Party
The Teichmann Concert Party is comprised of THL, TCL, T3, GFI, Gary Teichmann,
James te Riele, Kenneth Gibbs, Adrian Garvey, Claude Holton, Brett Nicolay,
Alan McKinney, Michael Houston and Aimee te Riele. Further details of these
persons are set out in paragraph 1.1.3 of part 2 of this document.
For the purposes of Rule 9, the Takeover Panel considers the Teichmann Concert
Party to be a single entity. Given that on completion of the Teichmann
Financing the Teichmann Concert Party will hold over 50% of the voting rights
of the Company, any transfer of shares in the Company between entities within
the Teichmann Concert Party and any further acquisitions of the Company's
shares by any member of the Teichmann Concert Party, whether individually or
collectively, will not be subject to the restrictions of Rule 9 of the
Takeover Code.
Dispensation from the requirement to make a general offer under the Takeover
Code
Immediately following issue of the Subscription Shares, the Teichmann Concert
Party will have acquired interests in the Ordinary Shares carrying, in
aggregate, 51 per cent. of the then enlarged voting rights of the Company
which, without a waiver of the obligations under Rule 9 of the Takeover Code,
would oblige the Teichmann Concert Party (and any party deemed to be acting in
concert with the Teichmann Concert Party) to make a general offer to
Shareholders under Rule 9 of the Takeover Code. Each of the Teichmann Concert
Party member's existing and resultant interests will comprise:
As at the date of the Circular Following completion of the Teichmann Financing
Number of Existing Ordinary Shares held % interest of Existing Issued Share Capital(1) Number of Ordinary Shares to be issued if Existing CLN converted Subscription Shares New Conversion Shares Total shares following issue of Existing Conversion Shares, Subscription Maximum % interest in the Potential Enlarged Issued Share Capital and voting
Shares and New Conversion Shares rights of the Company(*)
THL - - - - - - -
TCL 2,480,262 11.4 4,399,355 10,284,735 5,589,028 22,753,380 43.68%
T3 971,624 4.5 1,776,000 4,081,486 2,230,209 9,059,319 17.39%
GFI 26,000 0.1 - - - 26,000 0.05%
Claude Holton 65,354 0.3 116,028 273,430 149,673 604,485 1.16%
Alan McKinney 54,419 0.2 96,555 227,679 124,630 503,283 0.96%
Brett Nicolay 43,612 0.2 77,309 182,465 144,617 448,003 0.86%
Aimee te Riele - - - 184,642 101,072 285,714 0.55%
Gary Teichmann - - - - - - -
James te Riele - - - - - - -
Kenneth Gibbs - - - - - - -
Adrian Garvey - - - - - - -
Michael Houston 144,285 0.7 - - - 423,589(2) 0.81%
Total 3,785,556 17.4 6,465,247 15,234,437 8,339,229 34,103,773 65.46%
*Note:
Includes the exercise of all Michael Houston's options but no other share
options (these are significantly out of the money) This table does not include
the effect of any shares issued in accordance with the Broker Option though
this will not impact the maximum percentage holding of the Teichmann Concert
Party
The Company has applied to the Panel for a waiver of the obligations under
Rule 9 of the Takeover Code in order to permit the Teichmann Financing to
proceed without triggering an obligation on the part of the Teichmann Concert
Party to make a general offer to Shareholders. Under Note 1 of the Notes on
the Dispensations from Rule 9 of the Takeover Code, the Panel will normally
waive the requirement for a general offer to be made in accordance with Rule 9
of the Takeover Code (a "Rule 9 Offer") if, among other things, the
shareholders of the company who are independent of the person who would
otherwise be required to make an offer, and any person acting in concert with
him, pass an ordinary resolution approving such a waiver on a poll at a
general meeting.
Accordingly, the Panel has agreed to grant a waiver of the obligation of the
Teichmann Concert Party to make a general offer under Rule 9 of the Takeover
Code that would otherwise arise as a result of the issue of the Subscription
Shares, the Existing Conversion Shares, the New Conversion Shares and any
Broker Option Shares to the Teichmann Concert Party, subject to Shareholders
approving the Waiver Resolution (Resolution 1) on a poll at the Annual General
Meeting. To be passed, the Waiver Resolution will require a simple majority of
the votes cast on a poll by the Shareholders entitled to vote. Shareholders
should note that if the Waiver Resolution is passed by Shareholders at the
Annual General Meeting and the Teichmann Financing completed, the Teichmann
Concert Party, or any individual entity thereof, will not be restricted from
making an offer for the Company.
Shareholders should further note that, following completion of the Teichmann
Financing and issue of the Subscription Shares, the Teichmann Concert Party
will between them be interested in approximately 51.75% of the then enlarged
voting rights of the Company and in approximately 65.46% of the then
enlarged voting rights of the Company following issue of the Broker Option
Shares, Existing Conversion Shares and the New Conversion Shares and that:
· by virtue of holding more than 50 per cent. of the Company's
voting rights, the Teichmann Concert Party will be entitled to increase their
holdings or aggregate interest in the voting rights of the Company without
incurring any obligation under Rule 9 of the Takeover Code to make a general
offer to all Shareholders to acquire their Ordinary Shares; and
· this will increase the percentage of the Ordinary Shares that are
not in public hands.
This may in turn have the effect of reducing the liquidity of trading in the
Ordinary Shares on AIM. The Teichmann Concert Party's stake in the voting
rights of the Company will also mean that the Teichmann Concert Party will be
able, if they so wish, to exert a controlling influence over resolutions
proposed at future general meetings of the Company.
The attention of Shareholders is drawn to the information on the Teichmann
Concert Party and the additional information required by the Takeover Code set
out in part 2 of this document.
9 INDEPENDENT ADVICE PROVIDED TO THE BOARD
The Takeover Code requires the Board to obtain competent independent advice
regarding the merits of the transaction which is the subject of the Waiver
Resolution, the controlling position which it will create, and the effect
which it will have on Shareholders generally. Accordingly, SP Angel, as the
Company's independent financial adviser, has provided formal advice to the
Board regarding the Teichmann Financing. SP Angel confirms that it, and any
person who is or is presumed to be acting in concert with it, is independent
of the Teichmann Concert Party and has no personal, financial or commercial
relationship or arrangements or understandings with the Teichmann Concert
Party.
10 Annual General Meeting
Set out at the end of the Circular is a notice convening the Annual General
Meeting to be held at 10.00 am on 7 September 2022 at the offices of SP
Angel, Prince Frederick House, 35-39 Maddox Street, London W1S 2PP, at which
the following resolutions will be proposed.
10.1 The "Waiver Resolution"
The Waiver Resolution seeks approval of the waiver granted by the Panel of the
obligation that would otherwise arise on the Teichmann Concert Party to make a
general offer to shareholders of the Company pursuant to Rule 9 of the City
Code as a result of the issue to the Teichmann Concert Party of the
Subscription Shares, the exercise of conversion rights and issue of the
Existing Conversion Shares and the New Conversion Shares under the Existing
CLN (as amended by Existing CLN Amendment Deed) and/or the NCLN, the issue of
Ordinary Shares under the Broker Option and the exercise of Michael Houston's
share options. In order to comply with the City Code, Resolution 1 will be
taken on a poll and the Teichmann Concert Party members that own shares, all
of whom are disenfranchised from voting, have undertaken not to vote on this
Resolution.
10.2 Authority to allot
Resolution numbered 2 will be conditional on the approval of Resolution
numbered 1 and will be proposed as an ordinary resolution to grant authority
to the Directors to allot up to 34,603,940 Ordinary Shares. This resolution
will give the Directors sufficient authority to allot the Subscription Shares
plus the maximum number of Ordinary Shares that could be issued under the
Existing CLN and NCLN plus the maximum number of Ordinary Shares that could be
issued under the Broker Option.
10.3 Disapplication of pre-emption rights
Resolution numbered 3 will be conditional on the approval of Resolutions
numbered 1 and 2 and will be proposed as a special resolution to disapply
statutory pre-emption rights in respect of the allotment of up to 34,603,940
Ordinary Shares for cash. This number represents the Subscription Shares plus
the maximum number of new Ordinary Shares that could be issued under the
Existing CLN and New Convertible Loan Notes plus the maximum number of
Ordinary Shares that could be issued under the Broker Option.
10.4 Laying of reports and accounts
The directors of a public company are required to lay before the shareholders
in a general meeting copies of the directors' reports, the independent
auditors' report and the audited financial statements of the Company in
respect of each financial period. The Company proposes, as an ordinary
resolution, Resolution 4 to receive the annual report and audited accounts of
the Company for the financial period ended 31 December 2021.
10.5 Appointment of directors
Resolutions 5 and 6 will be proposed as ordinary resolutions to re-appoint
Gary Teichmann as a director of the Company (he having been appointed since
the last annual general meeting) and Tim Leslie who is retiring by rotation in
accordance with the articles of association of the Company.
10.6 Auditors re-appointment and remuneration
Shareholders will be asked in resolution 7 to confirm by ordinary resolution
the re-appointment of BDO LLP as auditors of the Company and to grant
authority to the Directors to determine their remuneration.
Irrevocable undertakings to vote in favour of the Waiver Resolutions have been
given to the Company by the Independent Directors in respect of their holdings
of Ordinary Shares) representing in aggregate 0.62% of the issued ordinary
share capital of the Company as at 12 August 2022 (being the last business day
prior to the publication of this document).
Irrevocable undertakings to vote in favour of the Resolutions (other than the
Waiver Resolution) have been given to the Company by the Directors in respect
of their holdings of Ordinary Shares) representing in aggregate 0.76% of the
issued ordinary share capital of the Company as at 12 August 2022 (being the
last business day prior to the publication of this document).
Further details of these irrevocable undertakings are set out in paragraph 2.6
of part 2 of the Circular.
11 Action to be taken by Shareholders
Whether or not you propose to attend the Annual General Meeting in person, you
are asked to complete the Proxy Form and return it to the Company's
registrars, Share Registrars Limited, 3 Millennium Centre, Crosby Way,
Farnham, Surrey, GU9 7XX so as to arrive as soon as possible but in any event
no later than 10.00 am on 7 September 2022. Completion and return of the
Proxy Form will not preclude you from attending the Annual General Meeting and
voting in person should you so wish.
12 Recommendation
Should the Resolutions not be approved at the Annual General Meeting then, in
the absence of alternative funding arrangements being made available and based
on the current anticipated cash flow requirements of the Company, the
Directors believe that current cash resources of the Company will be
insufficient to allow the Company to continue trading, in particular as the
Company will be required to redeem the Simple Loan Notes in accordance with
their terms.
The Independent Directors, who have been so advised by SP Angel acting as the
independent adviser to the Company required for the purposes of Rule 3 of the
City Code, consider the Teichmann Financing, including the waiver of the
obligation which would otherwise arise on TCL and the other members of the
Teichmann Concert Party to make a general offer to Shareholders to acquire
their Ordinary Shares under Rule 9 of the City Code to be fair and reasonable
and in the best interests of Independent Shareholders and the Company as a
whole.
Accordingly, the Independent Directors unanimously recommend Independent
Shareholders to vote in favour of the Waiver Resolution, as they have
irrevocably undertaken to do in respect of the shares in the Company held by
them totalling 133,559 Ordinary Shares, being 0.62% of the issued ordinary
share capital of the Company.
Furthermore, the Directors unanimously recommend Shareholders to vote in
favour of the Resolutions (other than the Waiver Resolution) and resolutions
4, 5, 6 and 7, as they have irrevocably undertaken to do in respect of the
shares in the Company held by them totalling 277,844 Ordinary Shares, being
0.76% of the issued ordinary share capital of the Company. If the Waiver
Resolution is approved, the Concert Party will not be restricted from making
an offer for the Company.
Yours faithfully
Michael Houston
Chairman
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