REG - Sondrel (Holdings) - Proposed cancellation of Admission, Notice of GM

Sondrel (Holdings)Announcement

22/07/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240722:nRSV1261Xa&default-theme=true

RNS Number : 1261X  Sondrel (Holdings) plc  22 July 2024

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
THE MARKET ABUSE REGULATIONS (EU) NO. 596/2014 WHICH FORMS PART OF DOMESTIC UK
LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("UK MAR"). UPON THE
PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO
BE IN THE PUBLIC DOMAIN.

 

 

 

22 July 2024

 

Sondrel (Holdings) plc

("Sondrel", the "Company" and together with its subsidiaries the "Group")

 

Proposed Cancellation of admission to trading on AIM

 

Proposed Re-registration as a Private Limited Company

 

Notice of General Meeting

 

Sondrel (AIM: SND), a leading provider of ultra-complex chips for leading
global technology brands, announces, further to the Company's announcement of
18 July 2024 concerning the publication of its audited annual report and
accounts for the year ended 31 December 2023, the proposed cancellation of the
admission of its ordinary shares to trading on AIM (the "Cancellation") and
the proposed re-registration of the Company as a private limited company
following the Cancellation becoming effective (the "Re-registration").

 

A circular (the "Circular") will today be sent to Shareholders setting out the
background to and reasons for the proposed Cancellation and the
Re-registration together with the adoption of new articles of association with
effect from the Re-registration ("New Articles"). The Circular will also
contain a notice convening a general meeting (the "General Meeting") at which
Shareholders are invited to consider the proposed resolutions therein
("Resolutions").

 

The General Meeting will be held at Sondrel House, Theale Lakes Business Park,
Moulden Way, Sulhampstead, Reading, RG7 4GB at 10 a.m. on 12 August 2024.

 

The Directors consider that the proposals are in the best interests of the
Company and its Shareholders as a whole and, therefore, unanimously recommend
that you vote in favour of the Resolutions  at the General Meeting as each of
the Directors intends to vote, or procure the vote, in respect of, in
aggregate, 124,943,504 Ordinary Shares to which they or their connected
persons are beneficially entitled, representing approximately 72.45% of the
Company's issued ordinary share capital.

 

The Circular and the notice of General Meeting will be made available shortly
on the Company's website at
https://ir.sondrel.com/investors/shareholder-information#notices and defined
terms used in this announcement shall have the meaning ascribed to them in the
Circular.

 

Process for Cancellation

Under the AIM Rules for Companies (the "AIM Rules"), it is a requirement that
the Cancellation must be approved by Shareholders holding not less than 75 per
cent. of votes cast by Shareholders at the General Meeting. Accordingly, the
notice of General Meeting set out in the Circular contains a special
resolution to approve the Cancellation (the "Cancellation Resolution").

Furthermore, Rule 41 of the AIM Rules requires any AIM company that wishes the
London Stock Exchange to cancel the admission of its shares to trading on AIM
to notify shareholders and to separately inform the London Stock Exchange of
its preferred cancellation date at least 20 clear Business Days prior to such
date. In addition, a period of at least five clear Business Days following
Shareholders' approval of the Cancellation is required before the Cancellation
may become effective.

In accordance with AIM Rule 41, the Directors have notified the London Stock
Exchange of the Company's intention, subject to the Cancellation Resolution
being passed at the General Meeting, to cancel the Company's admission of the
Ordinary Shares to trading on AIM on 21 August 2024. Accordingly, if the
Cancellation Resolution is passed by the Shareholders, the Cancellation will
become effective at 7.00 a.m. on 21 August 2024.

 

Sherry Madera, a Non-Executive Director of the Company, has confirmed that she
intends to resign as a Director of the Company from the date of Cancellation.

 

Re-registration

 

As set out above, following the Cancellation, the Directors believe that the
requirements and associated costs of the Company maintaining its public
company status will be difficult to justify and that the Company will benefit
from the more flexible requirements and lower costs associated with private
company status. It is therefore proposed to re-register the Company as a
private company limited by shares. In connection with the Re-registration, it
is proposed that the New Articles be adopted to reflect the change in the
Company's status to a private company. The principal effects of the
Re-registration and the adoption of the New Articles on the rights and
obligations of Shareholders and the Company are summarised in Part 2 of the
Circular.

 

An application will be made to the Registrar of Companies for the Company to
be re-registered as a private company limited by shares. Re-registration will
take effect when the Registrar of Companies issues a certificate of
incorporation on Re-registration. The Registrar of Companies will issue the
certificate of incorporation on Re-registration when it is satisfied that no
valid application can be made to cancel the resolution to re-register as a
private company or that any such application to cancel the resolution to
re-register as a private company has been determined and confirmed by the
Court.

Dealing and settlement arrangements

The Directors are aware that certain Shareholders may wish to acquire or
dispose of Ordinary Shares in the Company following the Cancellation.

Therefore, the Company has made arrangements for the Matched Bargain Facility
to assist Shareholders to trade in the Ordinary Shares to be put in place from
the day of Cancellation if the Resolution is passed. The Matched Bargain
Facility will be provided by J P Jenkins Limited ("JP Jenkins"). JP Jenkins is
a liquidity venue for unlisted or unquoted assets in companies, enabling
shareholders and prospective investors to buy and sell equity on a matched
bargain basis. JP Jenkins is a trading name of InfinitX Limited and
Appointed Representative of Prosper Capital LLP (FRN453007).

Under the Matched Bargain Facility, Shareholders or persons wishing to acquire
or dispose of Ordinary Shares will be able to leave an indication with JP
Jenkins, through their stockbroker (JP Jenkins is unable to deal directly with
members of the public), of the number of Ordinary Shares that they are
prepared to buy or sell at an agreed price. In the event that JP Jenkins is
able to match that order with an opposite sell or buy instruction, they would
contact both parties and then effect the bargain. Should the Cancellation
become effective and the Company put in place the Matched Bargain Facility,
details will be made available to Shareholders on the Company's website at
https://ir.sondrel.com/investors (https://ir.sondrel.com/investors) and
directly by letter or e-mail (where appropriate).

Following Cancellation, the provision of the Matched Bargain Facility will be
kept under review by the Board and, in determining whether to continue to
offer a Matched Bargain Facility, the Company shall consider expected (and
communicated) Shareholder demand for such a facility as well as the
composition of the Company's register of members and the costs to the Company
and Shareholders. Shareholders should therefore note that there can be no
certainty that the Matched Bargain Facility will continue to be in place for
an extended period of time following Cancellation.

 

 

 

For further information:

 

 Sondrel (Holdings) plc                                        Via Buchanan
 John Chubb, CEO                                               Tel: +44 (0) 20 7466 5000
 Nick Stone, Interim CFO

 Cavendish Capital Markets Limited                             Tel: +44 (0) 20 7220 0500
 Ben Jeynes / Katy Birkin / George Lawson - Corporate Finance
 Michael Johnson / Charlie Combe - Sales and ECM

 Burson Buchanan                                               Tel: +44 (0) 20 7466 5000
 Chris Lane                                                    sondrel@buchanan.uk.com (mailto:sondrel@buchanan.uk.com)

 Stephanie Whitmore
 Jack Devoy
 Abby Gilchrist

 

 

Background to and reasons for the Cancellation and Re-registration

 

On 28 March 2024, the Company announced, inter alia, that it had resolved to
adopt a transformation plan to assist the Company in re-establishing its
baseline costs, introducing revised robust management processes and refocusing
the business to resolve matters which were central to the cash flow issues
being faced by the Group (the "Transformation Plan"). The Transformation Plan
was adopted in connection with the Company's entry into a £2 million secured
15% convertible loan agreement with ROX ("Loan") and alongside a then proposed
subscription by ROX to raise gross proceeds of £5.6 million for the Company
(the "Subscription"). The Loan was conditional upon the adoption of the
Transformation Plan and was required to ensure that the Company could continue
to operate. The Subscription was conditional, inter alia, on a waiver being
granted by the Panel ("Rule 9 Waiver"), conditional upon the approval by the
Shareholders of the resolution approving such Rule 9 Waiver. The Rule 9 Waiver
was obtained, the Shareholders approved the Rule 9 Waiver at a general meeting
of the Company held on 30 May 2024 and the Subscription was subsequently
completed on 14 June 2024.

 

As part of the Transformation Plan and as announced by Sondrel on 14 May 2024,
the Company decided (including by unanimous approval of the independent
Non-Executive Directors at the time) that it would seek to cancel the
admission of the Ordinary Shares to trading on AIM.

 

The Directors are of the opinion that the Cancellation is in the best
interests of the Company and its Shareholders as a whole. The significant
management time, cost and the legal and regulatory burden associated with
maintaining the Company's admission to trading on AIM is, in the Directors'
opinion and in light of the above, now disproportionate to the benefits of the
Company's continued admission to trading on AIM, particularly at a time when
the business is undergoing significant transformation.

Given the lower costs associated with private company status, it is estimated
that the Proposals will reduce the Company's recurring administrative and
adviser costs by approximately £400,000 per annum, which amount the Directors
believe can be better spent supporting growth in the Group's business for the
benefit of Shareholders.

 

Furthermore, with ROX and Graham Curren (and his connected parties)
collectively owning approximately 72.05 per cent. of the Company's issued
Ordinary Shares, the Directors believe that there is now limited liquidity in
the trading of the Ordinary Shares and, consequently, the admission of the
Ordinary Shares to trading on AIM does not necessarily offer investors the
opportunity to trade in meaningful volumes or with frequency within an active
market.

 

Following careful consideration, the Directors therefore believe that it is in
the best interests of the Company and Shareholders as a whole to seek the
proposed Cancellation and Re-registration at the earliest opportunity.

 

In addition, in connection with the Re-registration, it is proposed that the
New Articles be adopted to reflect the change in the Company's status to a
private company limited by shares. The principal effects of the
Re-registration and the adoption of the New Articles on the rights and
obligations of Shareholders and the Company are summarised in Part 2 of the
Circular.

 

Current trading and prospects

 

On 18 July 2024 the Company published its audited final results for the year
ended 31 December 2023, with the Company reporting revenues of £9.4 million
(2022: £17.3 million), an operating loss of £17.3 million (2022: £5.2
million) and a loss after tax of £21.5 million (2022: £3.2 million).

 

The business experienced a very difficult and challenging year from a trading
point of view that also came at the same time as a slow-down in the
semi-conductor market in Europe in particular. Additionally, the strategic
decision taken to focus on project-based ASIC work meant that some of the
smaller scale time and materials-based services work was lost. Winning of new
contracts in FY23 was particularly weak, with a total of new business won of
only £4.0m (2022: £25.6m). 

 

Steady project progress was made during the first half of the year before the
lack of new business won during the year and delays on the largest ASIC
project being undertaken meant that second half revenues fell significantly.
This project had originally been forecast to be completed in September 2023
but only reached its successful conclusion in April 2024. This led to revenue
of some £2.7m being deferred from 2023 into 2024. In parallel to this, the
second phase of the project that had been expected to commence in July 2023
was also delayed and has not yet commenced.

 

As at 31 December 2023, the Company held gross cash balances of approximately
£20,000 and a net debt position of £0.9m.

 

The completion of the recent Subscription and the support of ROX will ensure
that the business is stabilised and put on a growth footing in the future
based on a more solid foundation. In the short term, the current trading
losses are targeted by the transformation planning to be eliminated by the
last quarter of the current year and thereby avoiding the need for any further
subscription or other fundraising to support trading activities. To achieve
this target, new business wins and further cost saving measures will be
required, some of them related to the Cancellation process.

 

During the 12-month period from completion of the Subscription, Sondrel can
request (but not require) ROX to provide a further £1.5m funding to Sondrel
by way of a subscription for up to 15,000,000 Ordinary Shares at a price of 10
pence per share ("Additional Subscription"). If the Additional Subscription is
agreed to by ROX, this would provide more liquidity should it be necessary.
However, it is recognised that the Additional Subscription may not be
sufficient should the expected new business wins fall short of current
forecasts over the next 12 months. This creates a material uncertainty over
the cash flows of the business until such time as the revenues increase.

 

Despite this, the Board believes that the future prospects for the business
will be more positive once the Transformation Plan has been delivered and
Sondrel is able to compete more effectively for the many opportunities that
are available in the market

 

General Meeting

 

The Company is convening the General Meeting to consider and, if thought fit,
pass: (i) a special resolution to approve the Cancellation, (ii) a special
resolution to approve the Re-registration (including approving the New
Articles), (iii) an ordinary resolution to present the Company's FY23 Annual
Report to Shareholders, and (iv) an ordinary resolution to consider the
re-appointment of the Company's auditors. The resolution to approve the
Re-registration is conditional upon the resolution to approve the Cancellation
being passed by Shareholders at the General Meeting.

 

The General Meeting will be held at Sondrel House, Theale Lakes Business Park,
Moulden Way, Sulhampstead, Reading, RG7 4GB at 10 a.m. on 12 August 2024.

 

 

 

 

 

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  UPDBXGDRGDBDGSC