REG - Supply @ME Capital - Transaction of a Person Closely Associated

Supply@Me CapitalAnnouncement

30/06/2023 07:00

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RNS Number : 4684E  Supply @ME Capital PLC   30 June 2023

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
REGULATION 2014/596/EU, WHICH IS PART OF UNITED KINGDOM DOMESTIC LAW PURSUANT
TO THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS (SI 2019/310) ("UK
MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION (AS
DEFINED IN UK MAR) IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

30 June 2023

Supply@ME Capital plc

(the "Company" or "SYME")

TradeFlow Restructuring

Notification of Transaction of a Person Closely Associated

SYME, the fintech business which provides an innovative fintech platform (the
"Platform") for use by manufacturing and trading companies to access Inventory
Monetisation© ("IM") solutions enabling their businesses to generate
cashflow, today announces that, further to its announcement on 24 March 2023
entitled "Board changes and TradeFlow update", it will restructure the
ownership of TradeFlow Capital Management Pte. Limited ("TradeFlow") (the
"TradeFlow Restructuring") to better serve the needs of SYME's client
companies and funders of both businesses, and to create value for shareholders
of the Company (the "Shareholders").

Key highlights

·    SYME will reduce its ownership in TradeFlow from 100% to 19% by
selling 81% of the issued share capital in TradeFlow to Tom James and John
Collis (the "Buyers"), creating a clear separation between SYME's IM fintech
Platform and TradeFlow's regulated fund management business.

 

·    This separation is aimed at removing any potential future conflicts
of interest between the two businesses and associated regulatory and
commercial hurdles, which will in turn improve the growth prospects of both
businesses.

 

·    The consideration for SYME's 81% stake in TradeFlow will be
£14,386,100 (the "Cash Quantum") of which £12,386,100 will be netted off
against potential future amounts owed by SYME to the Buyers under the terms of
an earn-out letter relating to the original acquisition of TradeFlow on 1 July
2021 (the "TradeFlow Acquisition").

 

·    SYME's major shareholder, The AvantGarde Group S.p.A. ("TAG"), will
assume the obligation of the Buyers to pay SYME the remaining £2,000,000 of
the Cash Quantum (the "TAG Amount") by way of a novation. The TAG Amount will
be repaid by TAG to SYME in multiple tranches, with the final tranche being
payable by 31 January 2024. In consideration for assuming the £2,000,000
obligation of the Buyers, TAG will acquire 1,026,525,520 existing ordinary
shares of nominal value £0.00002 each in the capital of SYME ("Ordinary
Shares") from the Buyers.

 

·    The TAG Amount will be offset against the current obligations of TAG
under the English law governed fixed term unsecured working capital loan
agreement that was entered into by the Company and TAG on 28 April 2023, as
amended on 30 June 2023 (the "TAG Unsecured Working Capital Loan Agreement")
and reduce the obligations under the TAG Unsecured Working Capital Loan
Agreement to up to £800,000.

 

·    The acquisition of the 1,026,525,520 existing Ordinary Shares by TAG
from the Buyers will not create any dilution to existing Shareholders and the
deemed price per Ordinary Share to be acquired from the Buyers is
approximately 0.195 pence, approximately 50% above the closing price on 29
June 2023 of 0.13 pence per Ordinary Share.

 

·    Additionally, TradeFlow will enter into a three-year white-label
licence agreement with Supply@ME Technologies S.r.l., a wholly owned
subsidiary of SYME, with respect to use of the Platform, on a non-exclusive
basis and limited to the Asia-Pacific ("APAC") region, for a total
consideration of £1,000,000 payable over a three-year period.

 

Background to the TradeFlow Restructuring

Original strategic positioning

Pursuant to the acquisition agreement between the Company and the then
shareholders of TradeFlow, dated 21 May 2021, the Company acquired TradeFlow
on 1 July 2021 for a total accounting consideration of £7.1 million, split
between cash consideration of £4.0 million and £3.1 million in equity
consideration.

The TradeFlow Acquisition enabled SYME to further its offering for the supply
chain industry by enabling the Company to design an end-to-end IM service,
including monetising of both inventory "in-transit" inventory (initially,
commodities), and warehoused goods.

Market evolution

In recent months, the Company's Board has noted an evolution in the regulation
of the fund management industry. The Monetary Authority of Singapore,
Singapore's financial regulator, has approved that TradeFlow should separate
its licensed fund management activities from the rest of the TradeFlow
business.

In light of these market developments, the Company and TradeFlow have mutually
agreed that it is in the best interests of Shareholders to separate the
Platform (fintech business) from the fund management activities (regulated
business), in order to clarify SYME's market position and improve the growth
prospects for both businesses.

This separation is expected to create value for Shareholders by eliminating
any perception of conflicts of interest between the two businesses and
providing both businesses with greater commercial opportunities through the
clear differentiation of responsibilities of the individual entities.

The Company has also agreed to trigger the liquidation process of the Global
Inventory Fund ("GIF"), being the two segregated portfolio funds currently
owned by Apex Group and advised by TradeFlow. The Company has identified an
alternative structure for the management of the Stock Companies, the trading
companies which undertake the IM transactions utilising the Platform.  This
alternative structure is in line with recent market practices regarding the
management of similar trading businesses and will ensure seamless business
continuity. The Company will provide the market with appropriate updates in
due course.

Continuing benefits

In addition to responding to the market evolution, the Company's Directors
believe that the TradeFlow Restructuring will be in the best interests of both
the Company and TradeFlow as both businesses will continue to benefit from the
separate focus and domain expertise. For this reason, with the aim to leverage
the TradeFlow eco-system of partners, TradeFlow will licence and make
available the Company's Platform as a white-label offering to potential
third-party asset managers/inventory funders in the APAC region.

TradeFlow Restructuring SPA

Pursuant to the terms of an English law governed share purchase agreement
between the Company and the Buyers, dated 30 June 2023 ("TradeFlow
Restructuring SPA"), the Company agreed to sell the 81% of TradeFlow's issued
share capital (the "Sale Shares") to the Buyers, and the Company will retain
19% of TradeFlow's issued share capital (the "Minority Shares").

The total Cash Quantum payable by the Buyers under the TradeFlow Restructuring
SPA for the Sale Shares is £14,386,100.

Of the Cash Quantum, £12,386,100 will be netted off against potential future
amounts owed by SYME to the Buyers under an earn-out side letter entered into
by the Company and the Buyers in connection with the TradeFlow Acquisition
Agreement in May 2021 (the "Earn-Out Side Letter").

The remaining £2,000,000 of the Cash Quantum was novated from the Buyers to
TAG on the terms of a novation deed entered into between the Company, the
Buyers and TAG (see "Debt Novation Deed" below).

The TradeFlow Restructuring SPA contains:

·    an "anti-embarrassment" clause, such that, if there is a change of
control of TradeFlow in the two-year period from the date of TradeFlow
Restructuring SPA as a result of a further sale of the Sale Shares by the
Buyers, the Company may be due a proportionate additional amount of
consideration from the Buyers; and

·    an acknowledgment by each of the parties thereto that the TradeFlow
Restructuring SPA supersedes and extinguishes any of the rights or obligations
set out in the Earn-Out Side Letter, which is deemed terminated upon
completion of the TradeFlow restructuring without any further liability for
any of the parties to the Earn-Out Side Letter.

The Company gave limited warranties to the Buyer concerning title, capacity,
and ability to transfer the Sale Shares in the TradeFlow Restructuring SPA.

The TradeFlow Restructuring SPA also contains a call option granted by the
Company to the Buyers, which will allow the Buyers to purchase the Minority
Shares from the Company (the "Call Option"). The Call Option is exercisable
over a maximum of three tranches. The amount payable on exercise of the Call
Option will be calculated with reference to the higher of twice the implied
valuation of the Cash Quantum and twice the then fair market value of
TradeFlow determined by an independent valuer. In the event that there is a
change of control of the Company, the amount payable on exercise of the Call
Option will be 90% of the then fair market value.

Debt Novation Deed

Pursuant to the terms of an English law governed debt novation deed entered
into between the Company, the Buyers and TAG on 30 June 2023 (the "Debt
Novation Deed"), the TAG Amount by way of novation.

Pursuant to the Debt Novation Deed, TAG has agreed with the Company to settle
the TAG Amount in three tranches:

·    £500,000 on 30 June 2023;

·    £1,000,000 on 30 September 2023; and

·    £500,000 on 31 January 2024.

TAG is ultimately beneficially wholly-owned and controlled by its sole
director, Alessandro Zamboni, Chief Executive Officer of the Company.

The entry by the Company and TAG into the Debt Novation Deed constitutes a
material related party transaction for the purposes of DTR 7.3 and was,
accordingly, voted upon by the independent Directors (being the Board other
than Alessandro Zamboni, who constituted a "related party" (as such term is
defined in IFRS)) (the "Independent Directors").

In exchange for acquiring the TAG Amount from the Buyers, TAG has agreed to
acquire 1,026,525,520 Ordinary Shares from the Buyers at a deemed price per
Ordinary Share of 0.195 pence, being 50% above the closing price on 29 June
2023 of 0.13 pence per Ordinary Share. The acquisition of the 1,026,525,520
existing Ordinary Shares by TAG from the Buyers will not create any dilution
to existing Shareholders.

Platform Licence Agreement

The Group and TradeFlow have also entered into an Italian law governed
Platform licence agreement between Supply@ME Technologies S.r.l and TradeFlow,
dated 30 June 2023 (the "Platform Licence Agreement"). Pursuant to the
Platform Licence Agreement, TradeFlow has been granted a non-exclusive
white-label licence for an initial three-year period to use the Group's
proprietary web-based technology Platform on a non-exclusive basis and limited
to the APAC region. The consideration for which is a payment by TradeFlow to
Supply@ME Technologies S.r.l of £1,000,000 over the duration of the initial
three-year period.

Deed of Amendment to TAG Unsecured Working Capital Loan Agreement

On 30 June 2023, the Company and TAG entered into an English law governed deed
of amendment to the TAG Unsecured Working Capital Loan Agreement (the "Deed of
Amendment to TAG Unsecured Working Capital Loan Agreement"), which amended and
restated clause 2.2 of the TAG Unsecured Working Capital Loan Agreement,
confirming that the obligations of TAG to pay, pursuant to clause 2.1 thereof,
to the Company up to £2,000,000 in multiple tranches, with the final tranche
being payable by 31 January 2024, shall be netted-off against the TAG Amount.
The resulting impact of the Deed of Amendment to TAG Unsecured Working Capital
Loan Agreement is:

·    to reduce the amount drawable by the Company from TAG pursuant to the
TAG Unsecured Working Capital Loan Agreement to an amount of up to £800,000
payable by TAG to the Company by 21 July 2023, save to the extent that prior
to 21 July 2023, as specified in the TAG Unsecured Working Capital Loan
Agreement, the Company receives unrestricted cash amounts from the exercise of
any outstanding Warrants and/or alternative equity, debt or hybrid financing
and such unrestricted cash amounts are in the opinion of the Board sufficient
to enable the Company to meet the Group's working capital obligations under
the Prospectus Regulation Rules; and

·    to replace the remaining £2,000,000 from the TAG Unsecured Working
Capital Loan Agreement, also payable in multiple tranches, with the same
amount payable to the Company by TAG in accordance with the Debt Novation
Deed. The TAG Amount will not be repayable by the Company and will not incur
interest.

The entry by the Company and TAG into the Deed of Amendment to TAG Unsecured
Working Capital Loan Agreement constitutes a material related party
transaction for the purposes of DTR 7.3 and was, accordingly, voted upon by
the Independent Directors.

The Deed of Amendment to TAG Unsecured Working Capital Loan Agreement
comprises a material related party transaction under DTR 7.3, and the
Independent Directors consider the entry by the Company into the Debt Novation
Deed as a material related party transaction to be fair and reasonable from
the perspective of the Company and its Shareholders who are not related
parties.

Material related party transactions

The Debt Novation Deed and the Deed of Amendment to TAG Unsecured Working
Capital Loan Agreement comprise a series of material related party
transactions under Disclosure Guidance and Transparency Rule 7.3, and the
Directors (independent of Alessandro Zamboni, a "related party" (as such term
is defined in UK-adopted International Financial Reporting Standards))
consider those material related party transactions to be fair and reasonable
from the perspective of the Company and its Shareholders who are not a related
party. Accordingly, this announcement is made under and in compliance with
Disclosure Guidance and Transparency Rule 7.3.8.

Alessandro Zamboni, CEO of SYME commented:

"Since joining forces with SYME 18 months ago, the TradeFlow team has made a
significant contribution to the Company's progress.  By combining our shared
expertise, we built the first inventory real asset alternative fund, which can
now evolve into a more flexible and open structure. This is a necessary
reconfiguration, rather than a partnership split, with the decision informed
by our proactive engagement with potential inventory funders and regulators."

"We continue to believe in the market positioning of TradeFlow and its risk
transformation methodology to support import/export commodity transactions in
the small-to-medium enterprise space. SYME continues to explore opportunities
for the integration of its unique IM - warehouse based - facility with
in-transit and cross-border inventory programmes, in line with our vision to
support businesses at every stage of the inventory lifecycle. "

Tom James and John Collis, Executive Directors of TradeFlow commented:

"Based on our discussions with the Board and feedback from potential funders,
it's clear that this reconfiguration is in the best interests of all parties
and will provide multiple benefits for both organisations. We will continue to
work closely with the team at SYME to develop its white-label offering in the
APAC region."

Legal notices:

A supplementary prospectus (the "Second Supplementary Prospectus") has been
prepared in connection with the TradeFlow Restructuring, which is is
supplemental to, and should be read in conjunction with, the prospectus for
the purposes of Article 3 of the UK Prospectus Regulation published by the
Company on 3 October 2022 (the "Prospectus") and the first supplementary
prospectus to the Prospectus published by the Company on 4 May 2023. The
Second Supplementary Prospectus is a regulatory requirement under the
Prospectus Regulation Rules of Financial Conduct Authority, following the
announcement of the TradeFlow Restructuring. An electronic copy of the Second
Supplementary Prospectus will be made available for inspection on the
Company's website at https://www.supplymecapital.com/investors/ and will be
submitted to the National Storage Mechanism maintained by the FCA and will be
available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .

For the purposes of UK MAR, the person responsible for arranging release of
this announcement on behalf of SYME is Alessandro Zamboni, CEO.

 

Contact information

Alessandro Zamboni, CEO, Supply@ME Capital
plc, investors@supplymecapital.com (about:blank)

MHP Group, SupplyME@mhpgroup.com (about:blank)

 

Notification of Transaction of a Person Closely Associated

The Company was notified on 30 June 2023 that TAG, a Person Closely Associated
("PCA") with Alessandro Zamboni, a Person Discharging Managerial
Responsibilities ("PDMR") of SYME acquired a total of 1,026,525,520 Ordinary
Shares at a price of 0.195 pence each, details of which are below in
accordance with UK MAR.

 1    Details of the Person Closely Associated (PCA)
 a)   Name                                                         The AvantGarde Group S.p.A.
 2    Reason for the notification
 a)   Position/status                                              PCA to Alessandro Zamboni, Chief Executive Officer of Supply@ME Capital plc
                                                                   and a PDMR
 b)   Initial notification/Amendment                               Initial notification
 3    Details of the issuer, emission allowance market participant, auction
      platform, auctioneer or auction monitor
 a)   Name                                                         Supply@ME Capital plc
 b)   LEI                                                          213800ZY2C2TI2C5WQ61
 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 nominal value £0.00002 each in the capital of Supply@ME

                                                            Capital plc
      Identification code

                                                                   ISIN: GB00BFMDJC60
 b)   Nature of transaction:                                       Acquisition of shares.
 c)   Price(s) and volume(s)                                       Price(s)                                Volume(s)
      0.195 pence                                                                                          1,026,525,520
      Aggregated information

      -  Aggregated volume                                         1,026,525,520

      -  Price                                                     0.195 pence
 e)   Date of the transaction                                      30 June 2023
 f)   Place of the transaction                                     London Stock Exchange, XLO

 

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