Fundraise of up to £27.9 million and other matters
29/08/2023 07:00
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RNS Number : 5475K Grafenia plc 29 August 2023
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29 August 2023
Grafenia plc
("Grafenia" or "the Company" or the "Group")
Placing and Subscription to raise approximately £23.0 million
Open Offer to raise up to approximately £4.9 million
and
Notice of General Meeting
Grafenia plc (AIM: GRA) is pleased to announce a Fundraising to raise a total
of up to approximately £27.9 million (before expenses), comprising a
conditional Placing and Subscription, supported by new and existing investors,
and a conditional Open Offer to Qualifying Shareholders.
Fundraising highlights
· Placing and Subscription to raise approximately £23.0 million at an
Issue Price of 8.5p per New Ordinary Share
· Open Offer to Qualifying Shareholders to raise up to approximately
£4.9 million at an Issue Price of 8.5p per New Ordinary Share
· The Issue Price represents a discount of 17.1 per cent. to the
closing mid-market price of 10.25p per ordinary share on 25 August 2023
· Fundraising proceeds to be used to:
§ fund future acquisitions;
§ repurchase certain of the Company's existing bond arrangements; and
§ pay deferred consideration on previous acquisitions
· Grafenia trading in line with internal forecasts
· Newly acquired business units performing as expected and contributing
to profitability
Qualifying Shareholders are invited to apply for Open Offer Shares under the
Open Offer at the Issue Price of 8.5 pence per Open Offer Share, payable in
full on application and free of all expenses, pro rata to their existing
shareholdings on the basis of:
One Open Offer Share for every Two Existing Ordinary Shares held at the Record
Date.
For further information:
Grafenia plc
Gavin
Cockerill
07968 510 662
Allenby Capital Limited (Nominated Adviser and Broker)
David Hart / Piers Shimwell (Corporate
Finance)
0203 328 5656
Background to and reasons for the Fundraising
Grafenia, historically, has been known predominantly within the graphics
sector. Over the years, moving from a franchise model with printing.com to a
software licensing model with Nettl. In both cases, the 'secret sauce' was
always the software. We've built software for many years. It runs our Nettl
Systems business and we licence it around the world.
Given the Company's background in software, in 2021, we announced a change in
our acquisition plans. Repositioning the business to better utilise our status
as a public company. To focus on and invest in building the structure required
to become a serial acquirer of vertical market software ("VMS") businesses.
The first step in the transition was the sale of our production facility,
Works Manchester Limited. That moved our business away from asset-heavy
manufacturing, enabling us to focus on software and systems.
What that meant was our Nettl Systems business became a software operation,
with a significantly reduced cost base. But as a Group, we became smaller as a
result of the divestment, with the same central costs. Growing the size of the
Group, faster, became the priority.
Since then, we've doubled down on our acquisition strategy with the aim of
achieving that growth. Developing an active deal origination process which has
resulted in four acquisitions during the previous financial year ended 31
March 2023 ("FY23"). Building a healthy deal flow at the same time.
To date, we've utilised our bond facility to fund the acquisitions. During
FY23 we issued £11.2m of bonds, at nominal value, raising £9.5m before
expenses. We deployed £9.6m of capital, including deal costs.
Our method
We're continually evaluating multiple VMS business targets. We find
potential acquisitions through our outreach program. Engaging with niche,
business-to-business, and mission-critical platforms.
We look for businesses where the majority of revenues are recurring in nature
and logo churn is low. The sustainability of our strategy is underpinned by
the recurring revenue model. This approach allows for a more reliable revenue
stream, promoting long-term stability.
The businesses we have acquired have been stable or shown growth over the past
three years.
We've invested in building an acquisition 'flywheel'. A structured approach to
drive leads for potential acquisition targets. Our deal flow continues to look
healthy, having a pipeline of deals we are hoping may progress.
To help us find and prioritise the right kind of deals, we have a framework, a
set of what we call 'Guard Rails'. For example:
● Target is UK/IE based
● Target has a clearly defined niche market
● Majority of revenues are recurring in nature, a minimum of £500k
per annum
● Valuation multiple → up to 7x (adj EBITDA)
● Logo churn < 10%
● Customer concentration as % of recurring revenue is low
● Number of customers > 30
We run our business units in a decentralised way and actively avoid
centralisation and consolidation. We do this to encourage an entrepreneurial
spirit and culture in each business which is run by its own management team,
supported by the Board. Our aim is to become the permanent home for those
businesses and their management talent.
Depending on the reason for the sale, sometimes the owners remain. Sometimes
the owners leave as part of the deal but the targets have an existing
management team in place. Other times, we'll hire a managing director to
replace the owners during a transition period.
Once there is mutual conviction that a target is right, we value a business
based on a multiple of its adjusted earnings. Our experience from the first
four deals we've completed suggests we are able to acquire VMS businesses at
4-6x adjusted EBITDA.
Our progress so far
Over the last 12 months, we set out to prove three things. That we can find
and buy businesses that meet our criteria within the valuation metrics that we
set. That we can complete those deals quickly and efficiently. And of course,
that we can successfully operate those businesses.
A year on, Grafenia is now home to five software business units across
multiple sectors that match our criteria. Those businesses have been, in the
main, acquired during the latter stages of FY23.
As a result, the Group looks a little different today. We no longer own the
production facility Works Manchester and Grafenia no longer exists solely in
the graphics space. Our portfolio of businesses operate primarily within the
following sectors: Graphics & Ecommerce, Finance, Property and Care
sectors.
Vertical Plus Limited ("Vertical Plus")
In October 2022, we acquired Vertical Plus, an E-commerce storefront and
inventory management platform for a consideration of £2.25m plus an earnout
of up to £0.63m. Recurring revenues are generated through licence fees to
access the software and royalties from sales generated via the platform.
Two owner-managers left the business, and one is remaining for a transitionary
period as a consultant. The sales director, also an owner, was promoted to
managing director(*) upon completion.
(*)Not a Statutory Director
Vertical Plus Historic Performance - Last three financial years(1)
Financial Year 2020 2021 2022
Sales £1.8m £2.4m £2.0m
EBITDA £0.35m £0.66m £0.25m
Adj EBITDA(2) £0.27m £0.39m £0.38m
ROS % 15% 16% 19%
(1)Unaudited Management Accounts
(2)Adjustments to EBITDA made during Financial Due Diligence. This does not
reflect all adjustments made for valuation or future company adjustments to
EBITDA
EBITDA Adjustments: Directors' Pensions, Exiting Staff Costs, Deal Costs,
Non-Recurring Costs, CJRS Income, EU Grant, Dividends.
Watermark Technologies Limited ("Watermark")
In December 2022, we acquired Watermark, a document management platform
optimised for independent financial advisors, for a consideration of £2.5m.
Recurring revenues are generated through licence fees to access the software.
Two founder-managers left the business, both remaining for a transitionary
period as consultants. A new managing director(*), involved during the
acquisition process, has been hired to drive the business forward.
(*)Not a Statutory Director
Watermark Historic Performance - Last three financial years(1)
Financial Year 2020 2021 2022
Sales £1.2m £1.2m £1.2m
EBITDA £0.19m £0.34m £0.44m
Adj EBITDA(2) £0.32m £0.39m £0.42m
ROS % 27% 33% 35%
(1)Unaudited Management Accounts
(2)Adjustments to EBITDA made during Financial Due Diligence. This does not
reflect all adjustments made for valuation or future company adjustments to
EBITDA
Adjustments: Directors' Pensions, CJRS Income, Dividends.
Care Management Systems Limited ("Care Docs")
In January 2023, we acquired Care Management Systems t/a Care Docs, a Care
Home Management platform, for a consideration of £3.5m. Recurring revenues
are generated through licence fees to access the software on each device
required.
Two founder managers left the business, one remaining for a transitionary
period as a consultant. A management team was already in place and has
remained since completion.
Care Docs Historic Performance - Last three financial years(1):
Financial Year 2020 2021 2022
Sales £2.1m £2.3m £2.5m
EBITDA £0.58m £0.45m £0.14m
Adj EBITDA(2) £0.74m £0.66m £0.38m
ROS % 36% 29% 15%
(1)Unaudited Management Accounts
(2)Adjustments to EBITDA made during Financial Due Diligence. This does not
reflect all adjustments made for valuation or future company adjustments to
EBITDA
Adjustments: Non-recurring costs.
Topfloor Ltd ("Topfloor")
In February 2023, we acquired Topfloor, a property management platform, for a
consideration of €4.8m plus an earnout of up to €1.4m. Recurring revenues
are generated through licence fees to access the software.
One of three founder managers left upon completion. Two remain, the CEO and
CTO(*).
(*)Not a Statutory Director.
Topfloor Historic Performance - Last three financial years(1)
Financial Year 2020 2021 2022
Sales €1.2m €1.4m €1.6m
EBITDA €0.11m €0.05m €0.38m
Adj EBITDA(2) €0.48m €0.65m €0.74m
ROS % 39% 48% 46%
(1)Unaudited Management Accounts
(2)Adjustments to EBITDA made during Financial Due Diligence. This does not
reflect all adjustments made for valuation or future company adjustments to
EBITDA
Adjustments: Directors' Remuneration, Directors' Pensions.
We have successfully onboarded our newly acquired businesses and they are
contributing to profitability and performing as expected.
We plan to drive organic growth by benchmarking performance metrics, providing
focus, structure and know-how around operational best practice. Ultimately, we
acquire these businesses for what they can do for the Company i.e. bring
recurring revenues and profit.
The four acquisitions have a combined annual turnover of over ~£7.0m. £2.2m
of total Group sales in the FY23 was generated by these acquired businesses,
having been acquired during the latter stages of FY23.
Our Nettl Systems business generated £9.5m of sales (2022: £8.9m) during
FY23 which is a 7% year-on-year increase. That's a welcome result, but it was
coming off a year still impacted by the COVID pandemic. We still expect Nettl
Systems to grow organically, as we continually develop the platform to
future-proof our partners and increase the product range offered. But that
growth may be more modest and may not significantly 'move the needle' in terms
of Group size. Our focus at Group level, is therefore on scaling by way of
acquisition.
Our Current Portfolio
Below, you'll see a breakdown of the FY23 sales contribution of our five
operating business units for the period since acquisition.
Business Sector Date Initial Deferred Group Sales
Unit
Acquired
Consideration
FY23
Consideration
Nettl Systems Graphics & Ecommerce n/a n/a n/a £9.53m
Vertical Plus Ecommerce & Inventory Management 01/10/22 £1.25m £1.00m £1.01m
Watermark Document Management 07/12/22 £1.50m £1.00m £0.42m
Care Docs Care Management 18/01/23 £2.98m £0.52m £0.55m
TopFloor Property Management 17/02/23 £3.42m £0.85m £0.17m
Total £9.15m £3.37m £11.68m
Use of Proceeds
The Company funded the first round of deals using our Bond facility. This
helped us prove the story and allowed us to link fundraising with
opportunities in a flexible way.
Initial Consideration Deferred Consideration Bond 1 (Cash) Bond 2 (Cash) Bond 3 (Cash) Total (Cash)
- - £4.25m £2.72m £2.55m £9.52m
Vertical Plus £1.25m £1.00m £1.25m - -
Watermark £1.50m £1.00m £1.50m - -
Care Docs £2.98m £0.52m - £2.98m -
Topfloor £3.42m(*) £0.85m(*) - - £3.42m(*)
Total Consideration £9.15m £3.37m £12.52m
Capital Deployed £2.75m £2.98m £3.42m £9.15m
Difference £1.5m -£0.26m -£0.87m £0.37m
(*)EUR to GBP conversion as at 17/02/23 = 0.89
Source:
https://www.exchangerates.org.uk/EUR-GBP-17_02_2023-exchange-rate-history.html
(https://www.exchangerates.org.uk/EUR-GBP-17_02_2023-exchange-rate-history.html)
For phase two, our aim is to continue the execution of our acquisition
strategy and the growth of the Group. We plan to use the proceeds of this
Fundraising to acquire more VMS businesses that match our criteria.
In the short term, while the Company is seeking to identify and negotiate
further acquisitions, the Company expects to utilise some of the proceeds from
issue of the First Placing Shares to repurchase certain of its existing Bond
arrangements. Following discussions with bond holders and the Company's
substantial shareholders, the Board expect to repurchase up to £7.6m of bonds
at 87% of their face value (utilising up to £6.6m of the proceeds of the
Fundraising excluding accrued interest payable and costs).
In addition, the Fundraising will enable the Company to pay £3.4m of deferred
consideration that will become due for the first four acquisitions, and £0.3m
of fundraising costs.
The Company expects to utilise the remaining amount to acquire VMS businesses
that match our criteria. The Company plans to finance further acquisitions
with a prudent mix of equity and debt which may include further restructuring
of the remaining bond facility. Alongside this, the Company plans to source
traditional bank debt facilities to provide a long-term funding option to
support the Company's serial acquisition strategy.
Current trading and outlook
With the acquisitions we've added to the Group, on a run-rate basis,
annualised sales would be approximately £17m. We're currently trading in line
with our internal forecasts and newly acquired business units are performing
as expected and contributing to profitability. We're therefore cautiously
optimistic about the upcoming year. With a full year's trade from our newly
acquired businesses, our goal of achieving EBITDA at 10-15% of sales, after
central costs, is considered by the directors to be a realistic target.
As we further reposition our business, the search for VMS businesses continues
and our deal flow looks healthy. Our focus remains on scaling the Group by way
of acquisition.
Our preliminary results statement for the year ended 31 March 2023 was
announced on 26 July 2023.
Details of the Placing and Subscription
The Company has conditionally raised £23.0 million of cash by means of the
Placing and Subscription of 270,588,228 new Ordinary Shares at the Issue
Price.
The Placing is conditional upon, inter alia, the passing of the Resolutions to
be put to Shareholders at the General Meeting.
The Placing is being conducted in two tranches to allow the Company to utilise
certain funds from the First Placing Shares to repurchase certain of its
existing issued bonds and allow those bondholders to re-invest in the Company
and receive new Ordinary Shares.
Subject to the passing of the Resolutions at the GM, the first tranche of the
Placing, will raise a total of approximately £10.4 million by the issue of
122,941,172 new Ordinary Shares (being the First Placing Shares) at the Issue
Price. In addition, the Subscription will raise approximately £2.7 million by
the issue of 31,764,702 new Ordinary Shares (being the Subscription Shares) at
the Issue Price. It is expected that First Admission will take place on or
around 20 September 2023. The allotment of the First Placing Shares is
conditional, inter alia, upon First Admission and the Placing and Open Offer
Agreement becoming unconditional in respect of the First Placing Shares and
not being terminated in accordance with its terms prior to First Admission.
Subject to the passing of the Resolutions at the GM, the second tranche of the
Placing will raise a total of approximately £9.9 million by the issue of
115,882,354 Ordinary Shares (being the Second Placing Shares) at the Issue
Price. In addition, the allotment of the Second Placing Shares is conditional,
inter alia, on the Placing and Open Offer Agreement becoming unconditional in
respect of the Second Placing Shares and not being terminated in accordance
with its terms prior to Second Admission. Open Offer Shares to be issued
pursuant to the Open Offer will also be included in the Second Admission. It
is expected that Second Admission will take place on or around 29 September
2023.
The Placing Shares, the Subscription Shares and the Open Offer Shares, when
issued and fully paid, will rank equally in all respects with the Existing
Ordinary Shares, including the right to receive all dividends and other
distributions declared, made or paid after admission to trading on AIM.
Following First Admission, the Company's enlarged issued ordinary share
capital will comprise 269,196,702 Ordinary Shares with voting rights. The
Company does not hold any Ordinary Shares in treasury. Therefore, the total
number of Ordinary Shares in the Company with voting rights will be
269,196,702. As the take-up of the Open Offer cannot be predicted, the
number of Ordinary Shares in issue (and the total number of voting rights)
following Second Admission will be announced at that time.
The placing and Open Offer Agreement
Pursuant to the terms of the Placing and Open Offer Agreement, Allenby as
agents to the Company, has conditionally agreed to use its reasonable
endeavours to procure Placees for the Placing Shares to be issued under the
Placing. The Placing is conditional, inter alia, upon the Placing and Open
Offer Agreement becoming unconditional and not being terminated in accordance
with its terms, First Admission occurring by no later than 8.00 a.m. on 20
September 2023 and Second Admission occurring by no later than 8.00am on 29
September 2023 (or in either case such later date as the Company and the
Allenby may agree, being no later than 8.00 a.m. on 13 October 2023). Once
Second Admission has occurred, no party to the Placing and Open Offer
Agreement can terminate any part of the Placing and Open Offer Agreement which
relates to the Second Admission and/or the Placing, allotment and/or issue of
the New Ordinary Shares subject to admission to trading on AIM.
Director Participation in the Fundraising
The Directors' interests as at today and following completion of the
Fundraising are as follows:
Director Existing beneficial interest in Ordinary Shares % of current share capital Subscription Shares subscribed for Open Offer Shares to be applied for Ordinary Shares after Placing and Subscription % of Enlarged Share Capital
Jan Mohr - - - - - -
Gavin Cockerill 92,518 0.08% - 46,259 138,777 0.03%
Iain Brown 84,208 0.07% - - 84,208 0.02%
Richard Lightfoot 152,156 0.13% - 467,646 619,802 0.14%
Matthias Riechert - 2,352,940 - 2,352,940 0.53%
Simon Barrell 85,356 0.07% - 42,678 128,034 0.03%
Conrad Bona 1,168,841 1.02% - 1,294,118 2,462,959 0.56%
Related Party Transactions
Investmentaktiengesellschaft fur Langfistige Investoren TGV (Langfrist) and
Value Focus Beteilgungs GmbH (Value Focus), are substantial shareholders in
the Company and are subscribing for 79,411,764 Placing Shares and 76,470,588
Placing Shares respectively, which constitute related party transactions under
the AIM Rules.
The Directors, other than Matthias Riechert, Conrad Bona and Richard Lightfoot
who are not considered independent due to Mr Riechert's participation in the
Subscription and Mr Bona and Mr Lightfoot's proposed use of the Excess
Application Facility under the Open Offer, are considered to be independent
directors of the Company for the purposes of AIM Rule 13 (the "Independent
Directors"). Having consulted with the Company's nominated adviser, the
Independent Directors consider that the terms of the participation in the
Placing by Langfrist and Value Focus are fair and reasonable insofar as
Shareholders are concerned.
Matthias Riechert, a Director, is subscribing for 2,352,940 Subscription
Shares, and Conrad Bona and Richard Lightfoot, both Directors, intend to
subscribe for 1,294,118 and 467,646 Open Offer Shares respectively under the
Excess Application Facility. The subscriptions by each of Matthias Riechert,
Conrad Bona and Richard Lightfoot (the "Directors' Participation") constitute
a related party transaction under the AIM Rules.
Having consulted with the Company's nominated adviser, the Independent
Directors consider that the terms of the Directors' Participation are fair and
reasonable insofar as Shareholders are concerned.
Open Offer
In order to provide all Qualifying Shareholders with an opportunity to
participate, the Company is conducting an Open Offer providing those
shareholders the opportunity to subscribe at the Issue Price for an aggregate
of 57,245,414 Open Offer Shares. This allows Qualifying Shareholders to
participate on a pre-emptive basis whilst providing the Company with the
flexibility to raise additional equity capital to further improve its
financial position.
Qualifying Shareholders are being offered the opportunity to apply for
additional Open Offer Shares in excess of their pro rata entitlements to the
extent that other Qualifying Shareholders do not take up their entitlements in
full. In the event of applications in excess of the maximum number of Open
Offer Shares available, the Company will decide on the basis for allocation,
however if this scenario occurs, preference is likely to be given to
Qualifying Shareholders with smaller shareholdings (who historically may have
had less opportunity to participate in placings conducted by the Company). The
Open Offer Shares have not been placed subject to clawback nor have they been
underwritten. Consequently, there may be fewer than 57,245,414 Open Offer
Shares issued pursuant to the Open Offer.
The Placing, the Subscription and the Open Offer are conditional upon, inter
alia, the approval of Shareholders of the Resolutions at the General Meeting
and upon the Placing and Open Offer Agreement becoming unconditional in all
respects.
Management Incentive Proposals
The remuneration committee of the Board (Remuneration Committee) proposes to
adopt and implement a cash bonus scheme (the Cash Bonus Plan) for key
personnel employed in the Group's operations team (the Operations Team) and
mergers and acquisitions team (the M&A Team). All bonuses payable under
the Cash Bonus Plan (the Cash Bonuses) are discretionary and personal to each
participant, and the terms may be amended, varied, cancelled or adjusted in
accordance with the rules of the Cash Bonus Plan at the discretion of the
Remuneration Committee. Cash Bonuses payable to members of the Operations Team
are referred to as Operations Cash Bonuses, with Cash Bonuses payable to
members of the M&A Team being referred to as M&A Cash Bonuses.
It is envisaged that Cash Bonuses will be payable by reference to financial
years of the Group (each being a Bonus Period), with each subsequent financial
year being a further Bonus Period.
It is proposed that all Cash Bonuses will be subject to malus and clawback
provisions under which the Remuneration Committee has the right to recover
amounts already paid to participants or, where appropriate, cancel or reduce
any further payments that may become due.
If a recipient leaves before they receive a Cash Bonus, any present or future
entitlements to receive Cash Bonuses will cease. The Board does, however, have
discretion to allow recipients who are good leavers to retain such
entitlements.
Whilst the precise terms of the Cash Bonuses remain to be finalised:
● The maximum amount of the proposed Operations Cash Bonuses for
each Bonus Period (the Operations Cash Bonus Pool) will be 20% of the
aggregate organic growth of sustainable earnings of companies owned by the
Group (the EBIT) above a Hurdle of 5% (the Hurdle). The organic growth will be
determined by the Board by observing the change of actual aggregate EBIT over
one period, or, where the company has been recently acquired, by taking the
difference between actual EBIT and an internal target of sustainable EBIT. The
target and the Hurdle may be adjusted on a time-apportioned basis where a
company is acquired part way through a Bonus Period. It is envisaged that the
absolute Hurdle will not be reduced in case the aggregate organic growth falls
below it. Each recipient of an Operations Cash Bonus will receive a proportion
of the Operations Cash Bonus Pool for each Bonus Period to be determined at
the discretion of the Remuneration Committee. Cash Bonuses payable to
Operations Team members are envisaged to be paid following the end of each
Bonus Period and once financial results have been determined by the Board. The
first Bonus Period for the Operations Cash Bonuses will be the current
financial year.
● The maximum aggregate amount of the proposed M&A Cash Bonuses
for each Bonus Period will be 2.75% of the "value creation" achieved in
respect of companies acquired by the Group during that Bonus Period,
determined by reference to any difference between our internal estimate of
post-acquisition value of those companies and the price paid for them, with
each recipient receiving a proportion of that amount to be determined at the
discretion of the Remuneration Committee. M&A Cash Bonuses will be payable
in two instalments, with 50% of each individual's M&A Cash Bonus being
payable following the end of the Bonus Period and once financial results have
been determined by the Board, and the remaining 50% payable following the end
of the next Bonus Period and once financial results have been determined by
the Board. Should any further acquisitions take place, M&A Cash Bonuses
would be payable on the same basis, with 50% of the M&A Cash Bonuses
payable following the end of the Bonus Period in which the acquisition takes
place, and 50% following the end of the next Bonus Period. To reward members
of the M&A Team for acquisitions made prior to the current financial year,
it is envisaged that the first Bonus Period for M&A Cash Bonuses will be
the financial year ended 31 March 2023. In respect of this Bonus Period only,
it is proposed that 50% of the M&A Cash Bonus due in respect of that Bonus
Period will be due and payable in the October 2023 payroll, with the remaining
50% payable following the end of the current financial year and once financial
results have been determined by the Board for that financial year.
The Remuneration Committee also proposes to adopt a non-tax-advantaged,
discretionary share option plan (the Share Option Plan) under which it intends
to grant share options (the Options) to certain key individuals. Whilst the
precise terms of the proposed Share Option Plan remain to be finalised, it is
proposed that the Options granted, when aggregated with other awards over
Ordinary Shares under other Company discretionary share schemes, will
represent no more than 5% of the issued share capital of the Company following
the Fundraising and at the time of the grant of the Options. It is also
intended that the Options will have a three year holding period and will then
vest annually pro rata over a four year period thereafter, with an exercise
price calculated by taking the Issue Price and applying a 10% year-on-year
hurdle multiple over that seven year period.
The Remuneration Committee have also recommended the adoption in due course of
a tax advantaged discretionary company share option plan (the CSOP Plan) for
the benefit of employees generally. The precise parameters of the CSOP Plan
are to be finalised by the Remuneration Committee but it is intended the
strike price of any awards under the CSOP Plan would be aligned to shareholder
interests and that the maximum awards under the CSOP Plan would, when
aggregated with other awards over Ordinary Shares under other Company
discretionary share schemes, not exceed 5% of the issued share capital of the
Company following the Fundraising.
General Meeting
A Circular containing a Notice of General Meeting will be posted to
shareholders shortly and will be made available on the Company's website at:
https://www.grafenia.com/reports-downloads/
(https://www.grafenia.com/reports-downloads/) .
The expected timetable of principal events in relation to the Fundraising can
be found in Appendix I of this announcement.
All capitalised terms used throughout this announcement shall have the
meanings given to such terms in the Definitions section in Appendix II to this
announcement and as defined in the Circular.
The FCA notification, made in accordance with the requirements of UK MAR, is
appended below.
Appendix I - Expected Timetable of Principal Events
Record Date for the Open
Offer
Close of Business on 24 August 2023
Announcement of the
Fundraising
29 August 2023
Publication of Circular, Form of Proxy and Application
Form on or
by 29 August 2023
Ex entitlement date for the Open
Offer
8.00 a.m. on 30 August 2023
Open Offer Entitlements and Excess CREST Open
Offer
as soon as possible after
Entitlements credited to stock accounts of Qualifying
CREST 8.00 a.m. on 31 August
2023
Shareholders
Recommended latest time for requesting withdrawal
4.30 p.m. on 7
September 2023
of Open Offer Entitlements and Excess CREST Open
Offer Entitlements from CREST
Latest time for depositing Open Offer Entitlements
3.00 p.m.
on 8 September 2023
and Excess CREST Open Offer Entitlements in to CREST
Latest time and date for splitting of Application Forms
3.00 p.m. on 11 September
2023
(to satisfy bona fide market claims only)
Latest time and date for receipt of Form of Proxy
10.00
a.m. on 13 September 2023
for General Meeting
Latest time and date for receipt of completed Application
11.00 a.m. on 13 September 2023
Forms and payment in full under the Open Offer and
settlement of relevant CREST instructions (as appropriate)
Announcement of the result of Open
Offer
by 14 September 2023
General Meeting
10.00 a.m. on 15 September 2023
Announcement of the results of the General
Meeting
15 September 2023
First Admission and commencement of dealings in the
8.00 a.m. on 20 September
2023
First Placing Shares and the Subscription Shares
CREST members' accounts credited in respect of the
as soon as possible after
First Placing Shares and Subscription Shares
in
8.00 a.m. on 20 September 2023
uncertificated form
Second Admission and commencement of dealings
8.00 am
on 29 September 2023
in the Second Placing Shares and Open Offer Shares
CREST members' accounts credited in respect of
as soon as possible after
the Second Placing Shares and Open Offer Shares
8.00
am on 29 September 2023
Dispatch of definitive share certificates for the New
13 October 2023
Ordinary Shares In certificated form
Appendix II - Definitions
"Act"
the Companies Act 2006 (as amended);
"AIM"
a market of that name operated by London Stock Exchange Plc;
"AIM
Rules"
the AIM Rules for Companies as published by London Stock Exchange Plc from
time to time;
"Allenby"
Allenby Capital Limited;
"Application
Form" the
personalised application form that will be posted on 29 August 2023 for use by
Qualifying Shareholders in connection with the Open Offer;
"Business
Day"
means a day (excluding Saturdays, Sundays and statutory holidays) on which
banks are open for business in the City of London;
"Circular"
this circular to shareholders dated 29 August 2023;
"Company" or "Grafenia" Grafenia
plc;
"CCSS"
the CREST Courier and Sorting Service, established by Euroclear to facilitate,
inter alia, the deposit and withdrawal of certificated securities;
"CREST"
the relevant system (as defined in the CREST Regulations) for paperless
settlement of share transfers and the holding of shares in uncertificated form
which is administered by Euroclear;
"CREST
Manual"
the rules governing the operation of CREST consisting of the CREST Reference
Manual, the CREST International Manual, the CREST Central Counterpart Service
Manual, the CREST Rules, the CCSS Operations Manual, the Daily Timetable, the
CREST Application Procedures and the CREST Glossary of Terms, as published by
Euroclear from time to time;
"CREST
member"
a person who has been admitted to CREST as a system-member (as defined in the
CREST Regulations);
"CREST member account ID" the identification
code or number attached to a member account in CREST;
"CREST
participant"
a person who is, in relation to CREST, a system-participant (as defined in the
CREST Regulations);
"CREST participant ID"
shall have the meaning given in the CREST Manual issued by Euroclear;
"CREST
payment"
shall have the meaning given in the CREST Manual issued by Euroclear;
"CREST
Regulations" the
Uncertificated Securities Regulations 2001(SI 2001/3755) (as amended);
"CREST
sponsor"
a CREST participant admitted to CREST as a CREST sponsor;
"CREST sponsored member" a CREST member admitted
to CREST as a sponsored member;
"Directors" or "Board"
the directors of the Company at the date of this document whose names are set
out on page 10 of this document;
"Enlarged Share Capital" the
number of Ordinary Shares in issue following completion of the Fundraising;
"EU"
the European Union;
"Euroclear"
Euroclear UK & International Limited;
"Excess Application Facility" the arrangement
pursuant to which Qualifying Shareholders may apply for any number of Open
Offer Shares in excess of their Open Offer Entitlement provided that they have
agreed to take up their Open Offer Entitlement in full;
"Excess CREST Open Offer in respect of
each Qualifying CREST Shareholder, the entitlement (in addition to his Open
Offer Entitlement) to apply for Open Offer Shares pursuant to the Excess
Application Facility, which is conditional on him taking up his Open Offer
Entitlement in full;
Entitlement"
"Existing Ordinary Shares" the
114,490,828 Ordinary Shares in issue at the date of this document;
"FCA"
the Financial Conduct Authority;
"First
Admission"
admission of the First Placing Shares and the Subscription Shares
to trading on AIM becoming effective in accordance with the AIM Rules;
"First Placing
Shares"
122,941,172 new Ordinary Shares to be allotted pursuant to the Placing;
"Form of
Proxy"
the form of proxy for use by Shareholders in connection with the GM;
"FSMA"
the Financial Services and Markets Act 2000 (as amended);
"Fundraising"
the Placing, Subscription and Open Offer;
"GM" or "General Meeting" the general meeting of
the Company convened for 10 a.m. on 15 September 2023 and any adjournment
thereof, notice of which is set out at the end of this document;
"ISIN"
International Securities Identification Number;
"Issue
Price"
8.5 pence per Ordinary Share;
"Link
Group"
a trading name of Link Market Services Limited;
"Money Laundering Regulations" The Money Laundering, Terrorist
Financing and Transfer of Funds (Information on the Payer) Regulations 2017,
as amended;
"New Ordinary Shares" the
new Ordinary Shares to be issued by the Company pursuant to the Fundraising;
"Official
List"
the Official List of the FCA;
"Open
Offer"
the offer to Shareholders, constituting an invitation to apply for the Open
Offer Shares on the terms and subject to the conditions set out in this
document and, in the case of non-CREST Shareholders, in the Application Form;
"Open Offer Entitlement" an
entitlement of a Qualifying Shareholder, pursuant to the Open Offer, to apply
for 1 Open Offer Share for every 2 Existing Ordinary Shares held by the
Qualifying Shareholder at the Record Date;
"Open Offer
Shares" up to
57,245,414 new Ordinary Shares which are the subject of the Open Offer;
"Ordinary
Shares"
ordinary shares of 1p each in the capital of the Company;
"Overseas Shareholders" Shareholders
who are resident in or a citizen or national of any country outside the United
Kingdom;
"Placees"
the subscribers for Placing Shares pursuant to the Placing;
"Placing"
the proposed conditional placing by Allenby of the Placing Shares at the Issue
Price;
"Placing and Open Offer Agreement" the conditional agreement dated 28
August 2023 between (1) the Company and (2) Allenby relating to the Placing
and Open Offer;
"Placing
Shares"
the 238,823,526 new Ordinary Shares which have been conditionally placed by
Allenby pursuant to the Placing;
"Proposals"
the proposals set out in this document;
"Qualifying CREST Shareholders" Qualifying Shareholders holding
Existing Ordinary Shares in uncertificated form via CREST;
"Qualifying non-CREST
Qualifying Shareholders holding Existing Ordinary Shares in certificated form;
Shareholders"
"Qualifying Shareholders" Shareholders
whose Ordinary Shares are on the register of members of the Company at the
close of business on the Record Date with the exclusion (subject to
exemptions) of persons with a registered address or located or resident
outside the United Kingdom;
"Receiving Agent" or "Registrar" Link Group;
"Record
Date"
close of business on 24 August 2023;
"Regulatory Information Service" a service approved by the FCA for
the distribution to the public of AIM announcements and included within the
list on the website of the FCA;
"Resolutions"
the resolutions to be proposed at the GM, details of which are set out in the
notice of General Meeting set out at the end of this document;
"Restricted Jurisdiction" each
and any of the United States, Australia, Canada, France, Japan, the Republic
of Ireland and the Republic of South Africa and any other jurisdiction where
the extension or availability of the Open Offer would breach any applicable
law;
"Second Admission"
admission of the Second Placing Shares and the Open Offer Shares to trading on
AIM becoming effective in accordance with the AIM Rules;
"Second Placing Shares"
115,882,354 new Ordinary Shares to be allotted pursuant to the Placing;
"Shareholders"
holders of Ordinary Shares;
"Subscription"
the proposed conditional subscription of the Subscription Shares at the Issue
Price;
"Subscription Shares"
the 31,764,702 New Ordinary Shares subscribed for pursuant to the
Subscription;
"United Kingdom" or "UK" the United
Kingdom of Great Britain and Northern Ireland;
"United States" of "US" the
United States of America, its territories and possessions, any state of the
United States and the District of Columbia; and
"USE"
Unmatched Stock Event.
IMPORTANT NOTICES
Notice to Distributors
Solely for the purposes of the temporary product intervention rules made under
sections S137D and 138M of the FSMA and the FCA Product Intervention and
Product Governance Sourcebook (together, the "Product Governance
Requirements"), and disclaiming all and any liability, whether arising in
tort, contract or otherwise, which any "manufacturer" (for the purposes of the
Product Governance Requirements) may otherwise have with respect thereto, the
Fundraising Shares have been subject to a product approval process, which has
determined that the Fundraising Shares are: (i) compatible with an end target
market of retail investors and investors who meet the criteria of professional
clients and eligible counterparties, as defined under the FCA Conduct of
Business Sourcebook COBS 3 Client categorisation, and are eligible for
distribution through all distribution channels as are permitted by the FCA
Product Intervention and Product Governance Sourcebook (the "Target Market
Assessment").
Notwithstanding the Target Market Assessment, distributors should note that:
the price of the Fundraising Shares may decline and investors could lose all
or part of their investment; the Fundraising offers no guaranteed income and
no capital protection; and an investment in the Fundraising is compatible only
with investors who do not need a guaranteed income or capital protection, who
(either alone or in conjunction with an appropriate financial or other
adviser) are capable of evaluating the merits and risks of such an investment
and who have sufficient resources to be able to bear any losses that may
result therefrom. The Target Market Assessment is without prejudice to the
requirements of any contractual, legal or regulatory selling restrictions in
relation to the Fundraising. Furthermore, it is noted that, notwithstanding
the Target Market Assessment, Allenby Capital Limited will only procure
investors who meet the criteria of professional clients and eligible
counterparties. For the avoidance of doubt, the Target Market Assessment does
not constitute: (a) an assessment of suitability or appropriateness for the
purposes of the FCA Conduct of Business Sourcebook COBS 9A and 10A
respectively; or (b) a recommendation to any investor or group of investors to
invest in, or purchase, or take any other action whatsoever with respect to
the Fundraising Shares.
Each distributor is responsible for undertaking its own target market
assessment in respect of the Fundraising Shares and determining appropriate
distribution channels.
Forward Looking Statements
This announcement contains forward-looking statements which are based on the
beliefs, expectations and assumptions of the Directors and other members of
senior management about the Group's businesses. All statements other than
statements of historical fact included in this announcement may be
forward-looking statements. Generally, words such as "will", "may", "should",
"could", "estimates", "continue", "believes", "expects", "aims", "targets",
"projects", "intends", "anticipates", "plans", "prepares", "seeks" or, in each
case, their negative or other variations or similar or comparable expressions
identify forward-looking statements.
These forward-looking statements are not guarantees of future performance, and
there can be no assurance that the expectations reflected in such
forward-looking statements will prove to have been correct. Rather, they are
based on the current beliefs, expectations and assumptions and involve known
and unknown risks, uncertainties and other factors, many of which are outside
the control of the Company and are difficult to predict, that may cause actual
results, performance, plans, objectives, achievements or events to differ
materially from those express or implied in such forward-looking statements.
Undue reliance should, therefore, not be placed on such forward-looking
statements.
New factors will emerge in the future, and it is not possible to predict which
factors they will be. In addition, the impact of each factor on the Group's
business or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those described in any
forward-looking statement or statements cannot be assessed, and no assurance
can therefore be provided that assumptions will prove correct or that
expectations and beliefs will be achieved.
Any forward-looking statement contained in this announcement based on past or
current trends and/or activities of the Group should not be taken as a
representation that such trends or activities will continue in the future. No
statement in this announcement is intended to be a profit forecast or to imply
that the earnings of the Group for the current year or future years will match
or exceed historical or published earnings of the Group.
Prospective investors are strongly recommended to read the risk factors set
out in Part II of the Circular for a more complete discussion of the factors
that could affect the Company's future performance and the industry in which
the Company operates. In light of these risks, uncertainties and assumptions,
the events described in the forward-looking statements in this announcement
may not occur.
Each forward-looking statement speaks only as at the date of this announcement
and is not intended to give any assurance as to future results. The Company
and/or its Directors expressly disclaim any obligation or undertaking to
release publicly any updates or revisions to any forward-looking statements
contained herein as a result of new information, future events or other
information, except to the extent required by the FCA's Disclosure Guidance
and Transparency Rules, the rules of the London Stock Exchange, including the
AIM Rules or by applicable law.
Notice to overseas persons
This announcement does not constitute, or form part of, a prospectus relating
to the Company, nor does it constitute or contain any invitation or offer to
any person, or any public offer, to subscribe for, purchase or otherwise
acquire any shares in the Company or advise persons to do so in any
jurisdiction, nor shall it, or any part of it form the basis of or be relied
on in connection with any contract or as an inducement to enter into any
contract or commitment with the Company.
This announcement is not for release, publication or distribution, in whole or
in part, directly or indirectly, in or into the United States, Australia, New
Zealand, Russia, Canada, Japan, the Republic of South Africa, Singapore or any
jurisdiction into which the publication or distribution would be unlawful.
This announcement is for information purposes only and does not constitute an
offer to sell or issue or the solicitation of an offer to buy or acquire
shares in the capital of the Company in the United States, Australia, New
Zealand, Russia, Canada, Japan, the Republic of South Africa, Singapore or any
jurisdiction in which such offer or solicitation would be unlawful or require
preparation of any prospectus or other offer documentation or would be
unlawful prior to registration, exemption from registration or qualification
under the securities laws of any such jurisdiction. Persons into whose
possession this announcement comes are required by the Company to inform
themselves about, and to observe, such restrictions. Any failure to comply
with these restrictions may constitute a violation of securities laws of such
jurisdictions.
This announcement is not for publication or distribution, directly or
indirectly, in or into the United States of America. This announcement is not
an offer of securities for sale into the United States. The securities
referred to herein have not been and will not be registered under the U.S.
Securities Act of 1933, as amended, and may not be offered or sold in the
United States, except pursuant to an applicable exemption from registration.
No public offering of securities is being made in the United States.
General
Neither the content of the Company's website (or any other website) nor the
content of any website accessible from hyperlinks on the Company's website (or
any other website) or any previous announcement made by the Company is
incorporated into, or forms part of, this announcement.
Allenby Capital Limited, which is authorised and regulated by the FCA in the
United Kingdom, is acting as Nominated Adviser and Broker to the Company in
connection with the Fundraising. Allenby Capital will not be responsible to
any person other than the Company for providing the protections afforded to
clients of Allenby Capital or for providing advice to any other person in
connection with the Fundraising. Allenby Capital has not authorised the
contents of, or any part of, this announcement, and no liability whatsoever is
accepted by Allenby Capital for the accuracy of any information or opinions
contained in this announcement or for the omission of any material
information.
Certain figures contained in this announcement, including financial
information, have been subject to rounding adjustments. Accordingly, in
certain instances, the sum or percentage change of the numbers contained in
this announcement may not conform exactly with the total figure given.
All references to time in this announcement are to London time, unless
otherwise stated.
Notification and public disclosure of transactions by persons discharging
managerial responsibilities and persons closely associated with them.
1. Details of the person discharging managerial responsibilities / person closely
associated
a) Name Matthias Riechert via Maxigendance Ltd
2. Reason for the Notification
a) Position/status Non-executive director
b) Initial notification/Amendment Initial Notification
3. Details of the issuer, emission allowance market participant, auction
platform, auctioneer or auction monitor
a) Name Grafenia plc
b) LEI 213800OKTI2518K5KM22
4. Details of the transaction(s): section to be repeated for (i) each type of
instrument; (ii) each type of transaction; (iii) each date; and (iv) each
place where transactions have been conducted
a) Description of the Financial instrument, type of instrument Ordinary shares of 1p each
Identification code ISIN: GB0009638130
b) Nature of the transaction Conditional subscription of ordinary shares
c) Price(s) and volume(s) Price(s) Volume(s)
8.5p 2,352,940
d) Aggregated information: n/a
- Aggregated volume
- Price
e) Date of the transaction 25 August 2023 expected to be completed on 20 September 2023
f) Place of the transaction London Stock Exchange, XLON
d)
Aggregated information:
- Aggregated volume
- Price
n/a
e)
Date of the transaction
25 August 2023 expected to be completed on 20 September 2023
f)
Place of the transaction
London Stock Exchange, XLON
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