REG - Gfinity PLC - Fundraising, board changes, change of adviser
09/08/2023 11:00
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RNS Number : 8060I Gfinity PLC 09 August 2023
THIS ANNOUNCEMENT (INCLUDING THE APPENDICES) AND THE INFORMATION HEREIN IS
RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE, TRANSMISSION, DISTRIBUTION OR
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JURISDICTION IN WHICH SUCH PUBLICATION, TRANSMISSION, RELEASE, DISTRIBUTION OR
FORWARDING WOULD BE UNLAWFUL.
For immediate release
9 August 2023
Gfinity PLC
("Gfinity" or the "Company")
Fundraising
Proposed Board changes
Proposed share capital reorganisation
Change of adviser
Summary
The Board of Gfinity plc (AIM:GFIN) is pleased to announce that the Company
has today conditionally raised £450,000 through a Company arranged
Subscription at a price of 0.06 pence per New Ordinary Share (the "Issue
Price"). The Subscription is conditional on the passing of the resolutions to
be proposed at a General Meeting ("Resolutions").
As the Company's Existing Ordinary Shares have a nominal value of 0.1 pence at
present, to enable the Company to issue shares pursuant to the Subscription at
0.06 pence per share, the Company is proposing to undertake a Share Capital
Reorganisation, pursuant to which each Existing Ordinary Share of 0.1 pence
currently in issue will be subdivided into one New Ordinary Share of 0.01
pence each and one Deferred Share of 0.09 pence each.
The recently announced restructuring has allowed the Company to focus on its
digital media business, Gfinity Digital Media, which has a significant
position in the Gamer website industry. To support that strategy, the Company
is proposing certain Board changes:
· David Halley will be joining the Company as Chief Executive Officer
on completion of the customary regulatory checks under the AIM Rules.
· Jonathan Hall ceases to be a director with immediate effect and the
Board would like to thank Jonathan for his significant contribution to the
Company since it was first admitted to AIM, and to wish him well for the
future. In the interim he will continue in his role as Company Secretary until
a new appointment is made.
The Company has today appointed Beaumont Cornish Limited ("BCL") as the
Company's Nominated Adviser and Broker with immediate effect.
A circular, containing further details of the Subscription and the Share
Capital Reorganisation and notice of a General Meeting to, inter alia,
approve the Resolutions required to implement the Subscription and the Share
Capital Reorganisation, is expected to be published and despatched to
Shareholders shortly and a further announcement will be made in due course.
Fundraising
The Company has today conditionally raised £450,000 (before expenses) through
the Company arranged Subscription at the Issue Price. The Subscription is
conditional on the passing of the Resolutions. The Issue Price compares to
the 10-day volume weighted average price per share of 0.94 pence for the
period ended on 8 August 2023 (being the Last Practicable Date prior to the
announcement of the Subscription). Subject to shareholder approval, the
Company will issue 750,000,000 New Ordinary Shares ("Subscription Shares")
pursuant to the Subscription which will rank pari passu with the New Ordinary
Shares arising on the Share Capital Reorganisation as described above.
Application will be made for admission of the Subscription Shares and the New
Ordinary Shares resulting from the Share Capital Reorganisation to trading on
AIM subject to the passing of the Resolutions.
Current trading and use of proceeds
On 31 March 2023, the Company announced its half year results for the
six-month period ended 31 December 2022. These results reported revenue of
£4.1 million, an adjusted operating loss of £0.8 million and a period-end
cash of £1.7m, supplemented by a post period-end placing and subscription,
raising £2.0 million before expenses.
Following the divestment of 72.5% of Athlos, the closure of the Esports
Solutions Division and associated significant cost reductions across the
business, the Directors believe that the business has now stabilised. As at 4
August 2023, the Company's cash amounted to approximately £205,000.
Given the restructuring as described above, the Company will be reviewing in
accordance with normal year-end procedures, the carrying cost of goodwill in
its next audited Accounts to 30 June 2023 and it is likely that a substantial
part of the goodwill (which stood at £4.7m as per the last published balance
sheet as at 31 December 2022) will be written off, which would also be
reflected as a charge to the Income Statement.
The net proceeds from the Subscription are intended to fund the immediate
day-to-day working capital needs of the Company's media business and the
ongoing cost of its AIM listing. The Directors are targeting cash break-even
and attracting a monthly audience of 10m+ monthly active users over the next
six months. Gfinity has invested extensively in its tech content platform
and, more recently in the deployment of artificial intelligence ("AI").
Combined with more effective use of "ad-tech" to boost CPM rates and direct
advertising, the Board believes it can create a market leader in the gaming
digital media space.
If the Resolutions are not passed at the General Meeting, the Subscription
will not proceed in the form currently envisaged, with the result that the
anticipated net proceeds of the Subscription will not become available. The
Directors would as a result need to consider urgently alternative sources of
funding to meet its immediate working capital needs, including a trade sale of
its operating subsidiary. There is no assurance that any such alternative
funding arrangements could be put in place in the timescale required, which
would have a materially adverse effect on the Company.
Share Capital Reorganisation
A company is not permitted under the Companies Act 2006 to issue shares with
an issue price which is below their nominal value. The Company's Existing
Ordinary Shares have a nominal value of 0.1 pence at present and to enable the
Company to issue shares pursuant to the Subscription at 0.06 pence per share,
the Company is proposing to undertake the Share Capital Reorganisation,
pursuant to which each Existing Ordinary Share currently in issue will be
subdivided into one New Ordinary Share of 0.01 pence each and one Deferred
Share of 0.09 pence each.
Immediately following the Share Capital Reorganisation, the number of New
Ordinary Shares in issue will be the same as the number of Existing Ordinary
Shares currently in issue, in each case excluding the Subscription Shares,
which as at the date of this announcement is 2,649,029,913. Accordingly,
immediately following the Share Capital Reorganisation and before completion
of the Admission of the Subscription Shares, 2,649,029,913 New Ordinary Shares
and 2,649,029,913 Deferred Shares will be in issue.
Application will be made for Admission to trading on AIM for the New Ordinary
Shares arising on the Share Capital Reorganisation, which on Admission will
have the same rights as those currently attaching to the Existing Ordinary
Shares under the Articles, including the rights relating to voting and
entitlement to dividends. New share certificates for New Ordinary Shares will
not be issued and the existing certificates are expected to remain valid.
Holders of warrants over Existing Ordinary Shares will maintain the same
rights as currently accruing to them, subject to adjustment of their
subscription rights in respect of the New Ordinary Shares, on the terms of the
Existing Warrant Instrument, to reflect the Share Capital Reorganisation. As
such, upon completion of the Share Capital Reorganisation, each Existing
Warrant will entitle its holder to subscribe for one New Ordinary Share and
one Deferred Share, subject to the terms and conditions set out in the
Existing Warrant Instrument.
The Deferred Shares will have no substantive rights attached to them and,
accordingly, will not carry the right to vote or to participate in any
distribution of surplus assets. They will not be admitted to trading on AIM
and will effectively carry no value.
The holders of the Deferred Shares will be deemed to have given an irrevocable
authority to the Company at any time to: (i) appoint any person, for and on
behalf of such holder, to, among other things, transfer some or all of the
Deferred Shares (at nil consideration) to such person(s) as the Company may
determine; and (ii) purchase or cancel such Deferred Shares. In addition, the
Company may purchase all of the Deferred Shares, at a price not exceeding £1
in aggregate.
As part of this process, the Articles will need to be amended to set out the
rights and restrictions attaching to the Deferred Shares and the existing
share authorities will need to be replaced. A special resolution in the Notice
of General Meeting will propose the necessary amendments to the Articles and
will set out the rights attaching to the Deferred Shares, details of which
will be set out in the Notice of General Meeting.
General Meeting
A circular, containing further details of the Subscription and the Share
Capital Reorganisation and notice of the General Meeting to, inter alia,
approve the Resolutions required to implement the Subscription and the Share
Capital Reorganisation, is expected to be published and despatched to
Shareholders shortly and a further announcement will be made in due course
(the "Circular"). Following its publication, the Circular will be available
on the Group's website.
Proposed Board changes
As previously announced on 6 June 2023, the Company announced that it had sold
72.5% of Athlos to Tourbillon Group UK Limited and the closure of its Esports
division, as the market for esports remained soft and the Directors saw
limited profitable growth opportunities. This restructuring has allowed the
Company to focus on its digital media business, Gfinity Digital Media, which
has a significant position in the Gamer website industry. Accordingly, the
Company is proposing certain Board changes to support its new strategy.
David Halley will be joining the Company as Chief Executive Officer on
completion of the customary regulatory checks under the AIM Rules. David has
over 25 years' experience spanning banking, hedge funds and insurance,
incorporating risk management and trading roles. He founded and served as the
CIO of Capstone Financial (HK) Ltd, founded a crypto related insurance broker
and has previously been a member of the investment management team for
Man-Vector Limited, a commodity trading advisor (CTA) hedge fund that was part
of the Man Group. David Halley served as the Risk Manager for the fund. David
is currently a director of Tourbillon Group UK Limited which, as announced in
June this year, acquired 72.5 per cent. of the Company's gaming subsidiary,
Athlos. On appointment to the Board, David Halley will not receive any direct
monetary remuneration in place of which the Company intends to make a
significant award of share options to him to subscribe for New Ordinary Shares
at the Issue Price.
Jonathan Hall ceases to be a director with immediate effect and the Board
would like to thank Jonathan for his significant contribution to the Company
since it was first admitted to AIM, and to wish him well for the future. In
the interim he will continue in his role as Company Secretary until a new
appointment is made.
Following the appointment of David Halley, Neville Upton will revert to his
previous role of non-executive Chairman.
Change of Adviser
The Company has today appointed Beaumont Cornish Limited ("BCL") as the
Company's Nominated Adviser and Broker with immediate effect.
Directors' and Proposed Director's Participation and Related Party
Subscription
The directors are not participating in the Subscription. David Halley, a
proposed director, has participated in the Subscription by subscribing for
66,666,667 New Ordinary Shares, representing 1.96% in the Company's Enlarged
Share Capital on Admission.
Robert Keith is subscribing for 333,333,333 Subscription Shares pursuant to
the Subscription. Robert Keith is currently interested in 12.02% of the
Company's Ordinary Shares held by him directly and indirectly.
The subscription by Robert Keith for the Subscription Shares is therefore a
related party transaction pursuant to rule 13 of the AIM Rules for Companies.
Accordingly, the Directors consider, having consulted with the Company's
nominated adviser, Beaumont Cornish, that the subscription for the
Subscription Shares by Robert Keith which is on the same terms and conditions
as for the other subscribers, is fair and reasonable insofar as Gfinity's
Shareholders are concerned.
Other Information
Further information is available from the Company's website which details the
company's project portfolio as well as a copy of this announcement:
www.gfinityplc.com (http://www.gfinityplc.com)
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 ("UK MAR").
The person who arranged for the release of this announcement on behalf of the
Company was Neville Upton, Executive Chairman and Director.
Enquiries:
Gfinity Plc Neville Upton, ir@gfinity.net (mailto:ir@gfinity.net)
Executive Chairman
Beaumont Cornish Limited Roland Cornish +44 (0)207 628 3369
Nominated Adviser and Broker Michael Cornish www.beaumontcornish.co.uk (http://www.beaumontcornish.co.uk/)
Important Notice
Beaumont Cornish Limited ("Beaumont Cornish"), which is authorised and
regulated in the United Kingdom by the Financial Conduct Authority, is acting
as nominated adviser to the Company in connection with the proposed admission
of the Subscription Shares and the New Ordinary Shares arising from the Share
Capital Reorganisation to trading on AIM and the proposals described in this
document. It will not regard any other person as its client and will not be
responsible to anyone else for providing the protections afforded to the
clients of Beaumont Cornish or for providing advice in relation to such
proposals. Beaumont Cornish has not authorised the contents of, or any part
of, this document and no liability whatsoever is accepted by Beaumont Cornish
for the accuracy of any information or opinions contained in this document or
for the omission of any information. Beaumont Cornish as nominated adviser to
the Company owes certain responsibilities to the London Stock Exchange which
are not owed to the Company, the Directors, Shareholders or any other person.
The New Ordinary Shares referred to in this document have not been and will
not be registered under the US Securities Act of 1933, as amended (the
"Securities Act") and may not be offered or sold in the United States except
pursuant to an exemption from, or in a transaction not subject to, the
requirements of the Securities Act. There will be no public offer of the New
Ordinary Shares in the United States, the United Kingdom or elsewhere. The New
Ordinary Shares are being offered and sold outside the United States in
reliance on Regulation S under the Securities Act. The New Ordinary Shares
have not been approved or disapproved by the US Securities and Exchange
Commission, any state securities commission or other regulatory authority, nor
have the foregoing authorities passed upon or endorsed the merits of this
offering. Any representation to the contrary is a criminal offence in the
United States and any re-offer or resale of any of the New Ordinary Shares in
the United States or to a US Person may constitute a violation of US law or
regulation.
The distribution of this document and the offering or sale of the New Ordinary
Shares in certain jurisdictions may be restricted by law. No action has been
taken by the Company or Beaumont Cornish that would permit an offering of the
New Ordinary Shares or possession or distribution of this document or any
other offering or publicity material relating to the New Ordinary Shares in
any jurisdiction where action for that purpose is required. Persons into whose
possession this document comes are required by the Company and Beaumont
Cornish to inform themselves about and to observe any such restrictions.
This document is directed only at members of the Company falling within the
meaning of Article 43(2)(a) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005, as amended (all such persons together being
referred to as "Relevant Persons"). This document must not be acted on or
relied on by persons who are not Relevant Persons. This document does not
constitute an offer of securities and accordingly is not a prospectus, neither
does it constitute an admission document drawn up in accordance with the AIM
Rules.
FORWARD LOOKING STATEMENTS
This document includes "forward-looking statements" which include all
statements other than statements of historical facts, including, without
limitation, those regarding the Company's financial position, business
strategy, plans and objectives of management for future operations, or any
statements preceded by, followed by or that include the words "targets",
"believes", "expects", "aims", "intends", "will", "may", "anticipates",
"would", "could" or "similar" expressions or negatives thereof. Such
forward-looking statements involve known and unknown risks, uncertainties and
other important factors beyond the Company's control that could cause the
actual results, performance or achievements of the Company to be materially
different from future results, performance or achievements expressed or
implied by such forward-looking statements. Such forward-looking statements
are based on numerous assumptions regarding the Company's present and future
business strategies and the environment in which the Company will operate in
the future. These forward-looking statements speak only as at the date of this
document. The Company expressly disclaims any obligation or undertaking to
disseminate any updates or revisions to any forward-looking statements
contained herein to reflect any change in the Company's expectations with
regard thereto or any change in events, conditions or circumstances on which
any such statements are based unless it is required to do so by applicable law
or the AIM Rules.
APPENDIX 1
SUBSCRIPTION STATISTICS
Issue Price 0.06 pence
Number of Existing Ordinary Shares prior to Admission of any of the 2,649,029,913
Subscription Shares
Total number of Subscription Shares issued by the Company pursuant to the 750,000,000
Subscription
Gross proceeds of the Subscription £450,000
Enlarged Share Capital following completion of the Subscription and Admission 3,399,029,913
Percentage of the Enlarged Share Capital comprised by the Subscription Shares 22.1 per cent.
Number of Existing Warrants 1,373,053,334
ISIN GB00BT9QD572
SEDOL BT9QD57
APPENDIX 2
DEFINITIONS
"Act" the Companies Act 2006 (as amended);
"Admission" the admission of the Subscription Shares and the New Ordinary Shares arising
from the Share Capital Reorganisation to trading on AIM becoming effective in
accordance with the AIM Rules;
"AIM Rules" the AIM Rules for Companies, as published and amended from time to time by
the London Stock Exchange;
"Articles" the articles of association of the Company at the date of this announcement;
"Board" or "Directors" the directors of the Company as at the date of this announcement;
"Beaumont Cornish" Beaumont Cornish Limited, the Company's nominated adviser and broker pursuant
to the AIM Rules;
"Business Day" any day (other than a Saturday or Sunday) upon which commercial banks are open
for business in London, UK;
"Company", "Group" or "Gfinity" Gfinity plc;
"CREST" the relevant system for the paperless settlement of trades and the holding of
uncertificated securities operated by Euroclear in accordance with the CREST
Regulations;
"CREST member" a person who has been admitted by Euroclear as a system-member (as defined in
the CREST Regulations);
"Deferred Shares" the deferred shares of 0.09 pence each in the capital of the Company to be
created as part of the Share Capital Reorganisation;
"Enlarged Share Capital" the New Ordinary Shares in issue on Admission, including the Subscription
Shares;
"Euroclear" Euroclear UK & International Limited, the operator of CREST;
"Existing Ordinary Shares" the 2,649,029,913 existing ordinary shares of 0.1p each in the capital of the
Company as at the date of this announcement;
"Existing Warrants" the warrants over 1,373,053,334 Ordinary Shares pursuant to the Existing
Warrant Instrument, granting warrant holders the right to subscribe for
Ordinary Shares in the Company;
"Existing Warrant Instrument" the warrant instrument entered into by the Company, dated 6 March 2023;
"FCA" the Financial Conduct Authority;
"FSMA" the Financial Services and Markets Act 2000 (as amended);
"General Meeting" or "GM" the general meeting of Shareholders to be held notice of which will be set out
in a circular;
"ISIN" International Securities Identification Number;
"Issue Price" 0.06 pence per New Ordinary Share;
"Last Practicable Date" 8 August 2023;
"Link" or "Link Group" a trading name of Link Asset Services Limited, registrar to the Company;
"London Stock Exchange" London Stock Exchange plc;
"New Ordinary Shares" the ordinary shares of 0.01 pence each in the capital of the Company in issue
following completion of the Share Capital Reorganisation;
"Notice of General Meeting" the notice of General Meeting to set out in the Circular;
"Ordinary Shares" the ordinary shares of 0.1p each in the capital of the Company, prior to the
Share Capital Reorganisation;
"Registrars" Link Group;
"Resolutions" the resolutions to be set out in the Notice of General Meeting to be proposed
at the General Meeting;
"Restricted Jurisdiction" each and any of the United States of America, Australia, Canada, Japan, New
Zealand, Russia, and the Republic of South Africa and any other jurisdiction
where extension or availability of the Subscription would breach any
applicable law or regulations;
"Share Capital Reorganisation" the sub-division of each Existing Ordinary Share into one New Ordinary Share
and one Deferred Share to be effected by the passing of the Resolutions;
"Shareholder(s)" holder(s) of Existing Ordinary Shares;
"sterling", "pounds sterling", and "£", "pence" or "p" the lawful currency of the United Kingdom
"Subscribers" the persons who have conditionally agreed to subscribe for the Subscription
Shares;
"Subscription" the subscription for the Subscription Shares at the Issue Price as described
in this announcement;
"Subscription Shares" the 750,000,000 New Ordinary Shares to be subscribed for by persons who have
entered or intend to enter into subscription letters with the Company; and
"US Securities Act" the United States Securities Act of 1933 (as amended).
ENDS
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