REG - Mindflair PLC - Placing, Loan Notes Re-profile & Portfolio Update

MindflairAnnouncement

24/12/2024 07:00

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RNS Number : 1951R  Mindflair PLC  24 December 2024

 

24 December 2024

 

Mindflair plc

 

("Mindflair" or the "Company")

 

 

Placing, Re-profile of Loan Notes, Related Party Transaction, Warrant
repricing

and Portfolio Update

 

Mindflair plc (AIM: MFAI), the company investing in next generation technology
focused on AI, announces a placing to raise gross proceeds of £490,000
through the issue of equity with attached warrants and the re-profiling of its
outstanding loan notes (the "Loan Notes"), including the repricing of its
outstanding warrants.

 

Placing

 

The Company has raised gross proceeds of £490,000 (the "Placing") through the
issue of 81,666,666 new ordinary shares of 0.25 pence in the Company (the
"Placing Shares") at a price of 0.6 pence per share (the "Placing Price").
Placees will also receive one warrant for every two shares issued as part of
the Placing (the "Placing Warrants"), on the same terms as the Repriced
Warrants (as defined below), subject to the approval of an increase in share
issue headroom which will be sought at the Company's next general meeting.

 

The Placing Price represents a 11.1% discount to the closing mid-market price
of 0.675 pence on 23 December 2024.

 

Loan Note Re-profile

 

On 22 December 2022, the Company issued Loan Notes amounting to £1,235,000,
in aggregate.  The Company has now agreed with the holders of the Loan Notes
to re-profile the Loan Notes which were due for repayment in December 2024
("Re-profile").  The principal elements of this re-profile comprise:

 

-     a payment to redeem £185,250 of Loan Notes to reduce part of the
principal owed

-     the issue of 78,238,798 new shares in the Company at a price of 0.6
pence to the Loan Note holders to redeem part of the principal owed and settle
accrued interest and costs to date (the "Loan Note Shares"). In aggregate,
£469,433 will be redeemed from the Loan Notes through the issuance of Loan
Note Shares

-     the exercise price of the warrants issued as part of the original
issue of the Loan Notes in December 2022 (the "Repriced Warrants") has been
reduced to 1.6 pence (from 4 pence), the vesting hurdle for the Repriced
Warrants has been reduced to 2.5 pence (from 5.16 pence) and the exercise
period of the Repriced Warrants has been extended to 31 December 2026

-     50% of the remaining balance due on the Loan Notes plus future
accrued interest is to be repaid by 31 December 2025 and 50% of the remaining
balance plus future accrued interest is to be repaid by 31 December 2026.

 

The Re-profile will reduce the amount due under the Loan Notes to circa
£800,000.

 

Background to the Placing and Re-profile of the Loan Notes

 

Whilst the Company expects certain of its investments to be sold in the short
to medium term which would be expected to generate sufficient proceeds to
repay the Loan Notes, the precise timing of this may vary and therefore the
combination of a placing now, along with the re-profile of the Loan Notes will
provide the Company with additional flexibility and enable it to preserve
additional cash for investment purposes.

 

Portfolio update

 

As previously announced, the first Sure Valley Ventures ("SVV") fund, SVV1, is
in the realisation phase of its investment cycle. Activity in this regard has
increased significantly in recent months with certain companies in this fund
actively pursuing either sales or exploring alternative forms of liquidity for
their shareholders.  Such activity includes the hiring of advisers to manage
sale processes, the holding of discussions with potential buyers and the
possible provision of other forms of liquidity. We expect to be able to
provide a further update on how these activities are progressing in due
course.

 

In addition, SVV2, the second SVV fund, corner-stoned by the British Business
Bank, is continuing to actively invest in AI focused businesses.  This
portfolio now comprises eight exciting AI-driven companies that are all making
good progress in developing their operations. These businesses span a number
of sectors including education, e-commerce, transport, and robotics.
Additionally, the SVV team is increasingly recognised as a thought leader in
the AI sector and has recently published a paper on AI Predictions for 2025.
In addition, SVV has partnered with Imperial College in London to help AI
researchers commercialise their research and with NVIDIA to present an AI
masterclass for researchers and venture capitalists.

 

 

Related Party Transaction

 

Following the issue of the Loan Notes on 22 December 2022, a Loan Note holder
disposed of their Loan Note to Riverfort Global Opportunities PLC ("RGO")
which has an existing interest over 38,228,393 ordinary shares in the Company,
representing 10.4% of the Company's issued share capital and, as such, is a
substantial shareholder as defined in the AIM Rules for Companies ("AIM
Rules").  Nicholas Lee, a director of the Company, is also the Investment
Director of RGO.  Accordingly, the Re-profile of the Loan Note held by RGO is
a related party transaction ("Transaction") pursuant to Rule 13 of the AIM
Rules.

 

David Palumbo, the director of the Company independent of the Transaction,
having consulted with the Company's nominated adviser, Cairn Financial
Advisers LLP, consider the terms of the Transaction to be fair and reasonable
insofar as the Company's shareholders are concerned.

 

Admission

 

Application will be made to the London Stock Exchange to admit the Placing
Shares and the Loan Note Shares to trading on AIM ("Admission"). Admission of
the new ordinary shares is expected to occur on or around 2 January 2025. The
Placing Shares and Loan Note Shares will rank pari passu with the existing
ordinary shares.

 

Total Voting Rights

 

For the purpose of the Disclosure and Transparency Rules, following Admission,
the enlarged issued share capital of the Company will comprise 526,662,106
ordinary shares of 0.25 pence each. The above figure may be used by
shareholders as the denominator for the calculations by which they will
determine if they are required to notify their interest in, or a change to
their interest in, the Company, under the Disclosure and Transparency Rules.

 

Nicholas Lee, Director of Mindflair, commented:

 

"We believe that the Placing and Re-Profile is a good solution for all parties
and provides the Company with additional flexibility, notwithstanding the
proximity of potential realisations from our portfolio.  We firmly believe
that we are at a very exciting time in the development of the Company."

 

This announcement contains inside information for the purposes of the UK
Market Abuse Regulation and the Directors of the Company are responsible for
the release of this announcement. The person who arranged for the release of
this information is Nicholas Lee, a director of the Company.

 

Enquiries:

 

 Mindflair plc

 Nicholas Lee, Director         Tel: +44 (0) 20 3368 8961
 Nominated Adviser

 Cairn Financial Advisers LLP   Tel: +44 (0) 20 7213 0880

 Liam Murray

 Ludovico Lazzaretti

 Joint broker                   Tel: +44 (0) 20 7469 0935

 Peterhouse Capital Limited     Tel: +44 (0) 20 7469 0936

 Duncan Vasey/Lucy Williams

 

 Joint broker                 Tel: +44 (0) 20 7601 6100

 Shard Capital Partners LLP

 Damon Heath

 

Notes to Editors

 

About Mindflair plc

 

Mindflair plc (AIM: MLAI) is an investment company providing investors with
access to a portfolio of next generation technology businesses focused on AI
with significant growth potential.

 

The Company is building an investment portfolio of high-tech businesses across
areas such as Artificial Intelligence, Internet of Things, Cyber Security,
Machine Learning, Immersive Technologies and Big Data, which the Board
believes demonstrate evidence of traction and the potential for exponential
growth, due to increasing global demand for development in these sectors.

For further information, visit is http://www.mindflair.tech/
(http://www.mindflair.tech/) .

 

Caution regarding forward looking statements

 

Certain statements in this announcement, are, or may be deemed to be, forward
looking statements. Forward looking statements are identified by their use of
terms and phrases such as ''believe'', ''could'', "should" ''envisage'',
''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect",
''will'' or the negative of those, variations or comparable expressions,
including references to assumptions. These forward-looking statements are not
based on historical facts but rather on the Directors' current expectations
and assumptions regarding the Company's future growth, results of operations,
performance, future capital and other expenditures (including the amount,
nature and sources of funding thereof), competitive advantages, business
prospects and opportunities. Such forward looking statements reflect the
Directors' current beliefs and assumptions and are based on information
currently available to the Directors.

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