REG - Tialis Essential IT - Notice of GM and Related Party Transaction

Tialis Essential ITAnnouncement

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RNS Number : 0410Z  Tialis Essential IT PLC  12 September 2025

12 September 2025

The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK
law by virtue of the European Union (Withdrawal) Act 2018. The information is
disclosed in accordance with the Company's obligations under Article 17 of the
UK MAR. Upon the publication of this announcement, this inside information is
now considered to be in the public domain.

Tialis Essential IT Plc

("Tialis" or the "Company")

Notice of General Meeting, Related Party Transaction and Issue of Voting
Rights

 

Tialis (AIM: TIA), the mid-market IT managed services provider, announces that
a Notice of General Meeting ("GM Notice") and Form of Proxy are being posted
to shareholders.

 

The Company's general meeting will be held on 3 October 2025 at the offices of
Cavendish Capital Markets Limited, 1 Bartholomew Close, London EC1A 7BL at
10:00 a.m.

 

A copy of the GM Notice can be found on the Company's website at
www.tialis.com (http://www.tialis.com) .

 

The GM Notice is accompanied by a Letter from the Executive Director, Ian
Smith, which is set out below.

 

For more information, contact:

 

 Tialis Essential IT Plc                                 Tel: +44 (0)344 874 1000

 Ian Smith, Executive Director
 Cavendish Capital Markets Ltd                           Tel: +44 (0)20 7220 0500

 Nominated Adviser and Broker

 Corporate finance: Jonny Franklin-Adams/ Elysia Bough

 Corporate Broking: Tim Redfern

Introduction and summary

Tialis Essential IT plc (the "Company", the "Group", or "Tialis") today
announced that it had signed a conditional share and purchase agreement with
MXC JV Limited ("MXC JV") for the acquisition of a 50 per cent. investment
stake in MXLG Acquisitions Limited ("MXLG"), a joint venture between MXC JV
and Liberty Global Europe 2 Limited (the "Acquisition").

MXC JV is jointly owned in equal proportions by MXC Guernsey Limited ("MXC
Guernsey") and Guernsey Investment Fund PCC Limited - GIF Technology and
Innovation Cell.

Liberty Global Europe 2 Limited is a wholly owned subsidiary of Liberty Global
Plc the world's largest international TV and broadband company.

 

The Company also announced (i) the proposed conversion of the unsecured
convertible loan notes issued to MXC Guernsey in 2024 (the "Conversion") and
(ii) the settlement of the deferred consideration payable in respect of the
Allvotec acquisition in 2023 to Daisy Intermediate Holdings Limited.

The directors of the Company (the "Board") require the shareholders to provide
them with authority to allot ordinary shares of £0.01 each ("Ordinary
Shares") and to dis-apply statutory pre-emption rights which would otherwise
apply to the allotment and issue of new Ordinary Shares in connection with the
Acquisition, the Conversion and the settlement of the deferred consideration
in respect of the Allvotec acquisition.

I am therefore writing to you with details of the General Meeting (the "GM")
of the Company which we are holding at the offices of Cavendish Capital
Markets Limited, 1 Bartholomew Close, London, EC1A 7BL on 3 October 2025 at
10.00 a.m.

The purpose of this document is to: (i) provide you with information about the
background to and the reasons for the Acquisition and to explain why the Board
considers the Acquisition to be in the best interests of the Company and its
shareholders as a whole; (ii) provide you with information on the Conversion
and the deferred consideration payable in respect of the Allvotec acquisition;
and (iii) explain why the directors of the Company (the "Directors") recommend
that you vote in favour of the Resolutions (as defined below) to be proposed
at the GM.

The Acquisition

Following on from the announcement made on 1 July 2025, and in line with its
stated strategy of delivering growth through acquisitions of targets it
considers synergistic, to deepen its service offerings, Tialis is pleased to
announce that it has signed a conditional sale and purchase agreement with MXC
JV and Tialis Essential IT Investments Limited in relation to the proposed
acquisition of a 50 per cent. investment stake in MXLG. The Acquisition is
conditional upon receipt from Santander UK plc ("Santander") of its consent to
the Acquisition, as required pursuant to the terms of the Company's debt
arrangements with Santander.

The consideration payable in respect of the proposed acquisition is £7.15m
which will be settled by the allotment and issue to MXC JV of 9,533,333 new
Ordinary Shares in the capital of Tialis (the "Consideration Shares"). The
Consideration Shares were calculated using 75p per new Ordinary Share, being
the mid-market closing price of Tialis on 10 September 2025.

MXLG is a joint venture between MXC JV and Liberty Global Europe 2 Limited,
established to create a leading IT services provider focused on the UK SME
sector through a programme of targeted, strategic acquisitions. To date, MXLG
has acquired Koris Communications Group Limited (now trading as Koris365), 365
ITMS Limited, and Converged IT Limited, with each business adding distinct
expertise and service depth to the group's offering. These acquisitions have
been financed through a combination of shareholder equity and a senior debt
facility with the Royal Bank of Scotland, ensuring a robust and flexible
capital structure.

Koris365 is the central pillar of the MXLG group, delivering managed
communication solutions across on-premise, hybrid, private cloud, and cloud
platforms, and holding specialist knowledge in Mitel telephony and Microsoft
Skype for Business technologies. This breadth enables Koris365 to fulfil a
wide range of unified communications and collaboration requirements for its
customers.

In April 2025, Koris365 entered a restructuring phase, resulting in improved
trading performance. Tialis notes that integrating Koris365's operations into
the established Tialis systems and processes presents further opportunities
for synergy and efficiency across the enlarged Group.

The acquisition of a 50 per cent. investment stake in MXLG represents a
strategic opportunity for Tialis and its shareholders. Through this
transaction, Tialis will benefit from operational synergies and enhanced
cross-selling potential, delivering greater efficiency, broader capability,
and improved profitability for the Group as a whole. Partnering with
established market participants also enables Tialis to effectively manage
expansion risk and position itself to meet the evolving needs of the UK SME IT
services market.

For the year ended 31 December 2024, MXLG reported revenue of £28.2m, gross
profit of £10.1m, adjusted EBITDA of £1.9m and a loss before tax (pre
extraordinary itmes) of £0.5m. Following a recent restructuring and cost
optimisation at MXLG, the trading EBITDA run rate in December 2025 is expected
to be approximately £2.7m. Due to being structured as a joint venture,
Tialis's proposed holding of 50 per cent. of MXLG will not be consolidated
within Tialis's accounts but will be treated as a joint venture under the
appropriate accounting treatment.

 

The MXC Guernsey Unsecured Convertible Loan Notes

The Company announced on 10 September 2024, that it had granted to MXC Capital
(via its subsidiary, MXC Guernsey) £300,000 of unsecured convertible loan
notes with an annual compounded interest rate of 15 per cent. and a fixed
conversion price of 40 pence. The Company understands that MXC Guernsey
intends to convert the £300,000 drawn down under the loan notes together with
all accrued but unpaid interest totalling, in aggregate, £348,162 into new
Ordinary Shares in the Company. This will result in the allotment and issue of
870,405 new Ordinary Shares (the "Loan Note Shares") to MXC Guernsey.

 

The Allvotec Acquisition - Deferred Consideration

Leveraging on the continued success of the Allvotec acquisition in 2023,
Tialis was able to agree renewals and extensions of existing contracts. As a
result, the deferred consideration payable in connection with the Allvotec
acquisition has increased to an amount of £1,637,918, which shall be settled
pursuant to the agreement entered into for the purchase of the profitable
partner contracts as agreed by the allotment and issue to Daisy Intermediate
Holdings Limited of 2,339,883 new Ordinary Shares in the capital of Tialis at
70 pence per Ordinary Share (the "Deferred Shares"). The Deferred Shares
together with the Consideration Shares and the Loan Notes Shares comprise the
total number of new Ordinary Shares to be issued by Tialis (the "New Ordinary
Shares"), being 12,743,621 Ordinary Shares.

 

Resultant Holdings and Total Voting Rights

Application will be made to the London Stock Exchange for the admission of the
New Ordinary Shares to trading on AIM ("Admission"). It is expected that
Admission will become effective and dealings in the new Ordinary Shares will
commence on or around 6 October 2025.

The new Ordinary Shares will be issued fully paid and will rank pari passu in
all respects with the Company's existing Ordinary Shares.

Following Admission, the total number of Ordinary Shares in the capital of the
Company in issue will be 39,909,832 (the "Enlarged Issued Share Capital"). As
the Company does not currently hold any Ordinary Shares in treasury, the total
number of voting rights in the Company following Admission will be 39,909,832.
This figure may be used by Shareholders, from Admission, as the denominator
for the calculations by which they will determine if they are required to
notify their interest in, or a change in their interest in, the share capital
of the Company under the FCA's Disclosure and Transparency Rules.

Ian Smith is also the Chief Executive Officer and major shareholder of MXC.
MXC Guernsey is a wholly-owned subsidiary of MXC Capital. The indirect
interest of MXC Capital in Tialis following the allotment and issue of the
Loan Notes Shares to MXC Guernsey and half the Consideration Shares to MXC JV
(the other half of the Consideration Shares will be issued to the Guernsey
Investment Fund PCC Limited) will be 26,722,891 Ordinary Shares, representing
67.0 per cent. of the Enlarged Issued Share Capital. Mr Smith's direct
beneficial interest in the Company is 647,166 Ordinary Shares, which
represents 1.6 per cent. of the Enlarged Issued Share Capital. Ian and MXC
hold in aggregate 27,370,057 Ordinary Shares, representing 68.6 per cent. of
the Company's Enlarged Issued Share Capital.

 

Related Party Transaction

MXC Guernsey and MXC JV are deemed to be related parties of the Company
pursuant to the AIM Rules for Companies because MXC Guernsey is a substantial
shareholder in Tialis and because Ian Smith, is a director of MXC Guernsey,
Tialis and MXC Capital as well as substantial shareholder of MXC Capital. As
such, the acquisition by Tialis of shares in MXLG from MXC JV constitutes a
related party transaction for the purposes of Rule 13 of the AIM Rules for
Companies. The Directors of the Company (other than Ian Smith) consider,
having consulted with Cavendish Capital Markets Limited, the Company's
Nominated Adviser, that the terms of the proposed acquisition are fair and
reasonable insofar as the Company's shareholders are concerned.

 

Settlement and dealings

Application will be made to the London Stock Exchange plc for the New Ordinary
Shares to be admitted to trading on AIM ("Admission"). It is expected that
Admission will occur at 8.00 a.m. on 6 October 2025.

The New Ordinary Shares will rank pari passu in all respects with the existing
Ordinary Shares in the Company, including the right to receive all dividends
and other distributions declared, made or paid on the existing Ordinary Shares
on or after Admission. The total number of issued Ordinary Shares in the
Company on Admission will be confirmed by the Company via an announcement once
the exact number of Consideration Shares to be allotted has been determined.

The New Ordinary Shares will represent approximately 31.9 per cent. of the
Enlarged Issued Share Capital.

 

Resolutions

The Directors do not currently have sufficient authority to allot the New
Ordinary Shares. Accordingly, the Directors are seeking the approval of
shareholders at the GM to allot the New Ordinary Shares. You will find set out
at the end of this document a Notice of General Meeting of the Company to be
held at the offices of Cavendish Capital Markets Limited, 1 Bartholomew Close,
London, EC1A 7BL on 3 October 2025 at 10.00 a.m. at which the following
resolutions (the "Resolutions") will be proposed:

Resolution 1

Resolution 1 will be proposed as an ordinary resolution. This means that for
this resolution to be passed, at least fifty per cent. of the votes cast must
be in favour of the resolution.

Resolution 1 relates to the authorisation for the directors to allot New
Ordinary Shares in connection with the Acquisition, the Conversion and the
settlement of the deferred consideration in respect of the Allvotec
acquisition with a maximum nominal value of £127,437 this being an amount
equal to approximately 31.9 per cent. of the Enlarged Issued Share Capital,
being the latest practicable date prior to the publication of the Notice. This
authority will expire on the earlier of 15 months after the passing of the
resolution or, if earlier, on the conclusion of the annual general meeting of
the Company to be held in 2026.

Resolution 2

Resolution 2 is proposed as a special resolution. This means that for this
resolution to be passed, seventy five per cent. or more of the votes cast must
be in favour of the resolution.

Resolution 2, which is conditional upon the passing of resolution 1, deals
with the disapplication of shareholder statutory pre-emption rights (which
require a company to offer new shares for cash first to existing shareholders
in proportion to their holdings) in order to permit the directors to allot the
12,743,621 New Ordinary Shares in connection with the Acquisition, the
Conversion and the settlement of the deferred consideration in respect of the
Allvotec acquisition (such New Ordinary Shares representing up to
approximately 31.9 per cent. of the Enlarged Issued Share Capital). This
authority will expire on the earlier of 15 months after the passing of this
resolution or, if earlier, on the conclusion of the annual general meeting of
the Company to be held in 2026.

 

Recommendation

The Directors consider that the Resolutions are in the best interests of the
Company and would promote the success of the Company for the benefit of its
Shareholders as a whole. Accordingly, the Directors unanimously recommend that
Shareholders vote in favour of the Resolutions to be proposed at the General
Meeting.

 

Ian Smith

Executive Director

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