REG - Water Intelligence - Notice of AGM, Rule 9 Waiver & Notice of Results

Water IntelligenceAnnouncement

16/09/2024 07:00

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RNS Number : 2325E  Water Intelligence PLC  16 September 2024

 

 

Notice of AGM, Proposed Share Buyback, Rule 9 Waiver and Notice of Interim
Results

Water Intelligence plc (AIM: WATR.L) ("Water Intelligence", the "Company" or
"Group"), a leading multinational provider of precision, minimally-invasive
leak detection and remediation solutions for both potable and non-potable
water, announces today that it has posted a Circular to Shareholders giving a
Notice of Annual General Meeting, to be held at 10:30am on Monday 7 October
2024.

Further to the Chairman's Statement in the Group's 2023 Annual Report,
published on 27 June 2024, this Circular includes resolutions to enable the
Group to have the full flexibility to pursue its  approach to capital
allocation, including the ability to repurchase some of the Company's ordinary
shares to return capital to and provide liquidity for shareholders. Further
details in relation to the Circular and some of the resolutions to be proposed
at the Annual General Meeting can be found at the bottom of this announcement.

The Group also announces that it plans to release its Interim Results for the
six months to 30 June 2024 during the week commencing 23 September 2024.

 

Proposed Share Buyback and Rule 9 Waivers

The Company has historically sought authority and received approval from its
Shareholders to make market purchases of its own shares, with the most recent
authority being granted at the Company's AGM on 26 July 2023, permitting the
Company to repurchase up to 873,384 Ordinary Shares. This authority is due to
expire at the end of the AGM and it is proposed that the Company be authorised
to continue to make market purchases up to an aggregate of 1,956,769 of its
Ordinary Shares (the "Proposed Buyback Authority"). The Company has been
previously restricted from using these authorities in a meaningful manner
owing to the Concert Party being interested in more than 30 per cent. but less
than 50 per cent. of the total voting rights of the Company. Any repurchases
of Ordinary Shares under such buyback authority is liable to trigger an
obligation for the Concert Party to make an offer, in cash, for the entire
issued and to be issued share capital of the Company, pursuant to Rule 9 of
the City Code. Therefore, the Company is seeking the approval of Independent
Shareholders for a waiver from this obligation to provide the Company the
flexibility to return capital to and provide liquidity for shareholders as set
out in the Group's 2023 Annual Report.

The Company is also seeking a waiver from the obligation that might otherwise
arise under Rule 9 of the Takeover Code for the Concert Party to make a
mandatory offer for the Ordinary Shares not already owned by it as a result of
the issue of a maximum of 585,000 Ordinary Shares already held by certain
members of the Concert Party under option (the "Concert Party Options"). In
the absence of such approval, upon exercise of the Concert Party Options the
relevant members of the Concert Party would have to immediately sell any
resultant Ordinary Shares, as opposed to being able to hold the resultant
Ordinary Shares as part of their shareholding.

The Concert Party

For the purposes of the City Code, Patrick DeSouza, Plain Sight, Ronald
Coifman, Michael Reisman, Laura Hills, Bryan DeSouza, James Bass, Yael
Coifman, Frances DeSouza and Daniel DeSouza are considered to be acting in
concert (the "Concert Party"). The Concert Party currently holds, in
aggregate, 5,902,780 Ordinary Shares and 2,080,000 Partly Paid Shares
representing 40.98 per cent. of the Company's current total voting rights of
19,478,688 as at 12 September 2024 (being the latest practicable date before
publication of the Circular). In addition, the Concert Party also holds
585,000 Concert Party Options.

Assuming the full utilisation of the Proposed Buyback Authority (assuming no
member of the Concert Party participates in the proposed buyback and no
further Ordinary Shares or Partly Paid Shares are issued by the Company), the
full exercise of the Concert Party Options and no exercise of any other
Options, is 6,487,780 Ordinary Shares and 2,080,000 Partly Paid Shares
representing 47.32 per cent. of the then voting rights of the Company of
18,106,919.

The full Circular to Shareholders will be made available on the Company's
website at
https://waterintelligence.co.uk/rule-26-investor-relations/documentation/public-documents/
(https://waterintelligence.co.uk/rule-26-investor-relations/documentation/public-documents/)
. Defined terms used in this announcement are the same as those defined in the
Circular unless the context requires otherwise.

 

Enquiries:

Water Intelligence plc

Laura Bass, Director, Strategic
Finance
                                   Tel: Tel:
+1 203 584-8240

Grant Thornton UK LLP - Nominated Adviser
                  Tel: +44 (0)20 7383 5100

Philip Secrett

Harrison Clarke

Ciara Donnelly

RBC Capital Markets - Joint Broker
 
Tel: +44 (0)20 7653 4000

Jill Li

Elizabeth Evans

Daniel Saveski

Dowgate Capital Ltd - Joint Broker
 
Tel: +44 (0)20 3903 7715

Stephen Norcross

 

Disclaimer

Grant Thornton UK LLP ("Grant Thornton") which is authorised and regulated by
the Financial Services Authority (FCA), is acting as Financial Adviser to the
Company in connection with the matters described in this announcement. Grant
Thornton will not be responsible to anyone other than the Company for
providing the protections afforded to clients of Grant Thornton or for
advising any other person on the the Rule 9 Waiver or any other arrangements
described in this announcement. Grant Thornton has not authorised the contents
of, or any part of, this announcement and no liability whatsoever is accepted
by Grant Thornton for the accuracy of any information or opinions contained in
this announcement or for the omission of any information.

 

The below text has been extracted from the circular

Takeover Code

The Takeover Code is issued and administered by the Panel. The Takeover Code
applies, inter alia, to all public companies which have their registered
office in the United Kingdom and are considered by the Takeover Panel to have
their place of central management and control in the United Kingdom, Channel
Islands or the Isle of Man. The Company is such a company and Shareholders are
therefore entitled to the protections afforded by the Takeover Code.

Under Rule 9 of the Takeover Code, any person who acquires an interest in
shares which, taken together with shares in which that person or any person
acting in concert with that person is interested, carry 30 per cent. or more
of the voting rights of a company which is subject to the Code is normally
required to make an offer to all the remaining shareholders to acquire their
shares.

Similarly, when any person, together with persons acting in concert with that
person, is interested in shares which in the aggregate carry not less than 30
per cent. of the voting rights of such a company but does not hold shares
carrying more than 50 per cent. of the voting rights of the company, an offer
will normally be required if such person or any person acting in concert with
that person acquires a further interest in shares which increases the
percentage of shares carrying voting rights in which that person is
interested.

An offer under Rule 9 must be made in cash at the highest price paid by the
person required to make the offer, or any person acting in concert with such
person, for any interest in shares of the company during the 12 months prior
to the announcement of the offer.

Under Rule 37 of the Takeover Code, when a company purchases its own voting
shares, the resulting increase in the percentage of shares carrying voting
rights in which a person or group of persons acting in concert is interested
will be treated as an acquisition for the purpose of Rule 9 of the Takeover
Code (although a shareholder who is neither a director nor acting in concert
with a director will not normally incur an obligation to make an offer under
Rule 9 in these circumstances).

The Concert Party

For the purposes of the Takeover Code, a concert party arises where persons
acting in concert pursuant to an agreement or understanding (whether formal or
informal) co-operate to obtain or consolidate control of a company or to
frustrate the successful outcome of an offer for a company. Control means an
interest, or interests, in shares carrying in aggregate 30 per cent. or more
of the voting rights of the company, irrespective of whether such interest or
interests give de facto control.

The Company has agreed with the Panel that the following persons and entities
are considered to be acting in concert in relation to the Company, Patrick
DeSouza, Plain Sight Systems, Inc. ("Plain Sight"), Ronald Coifman, Michael
Reisman, Laura Hills, Bryan DeSouza, James Bass, Yael Coifman, Frances DeSouza
and Daniel DeSouza (the "Concert Party").

The Company has agreed with the Panel that the following individuals and
entities, which were part of the Concert Party as disclosed in the Company's
admission document dated 7 July 2010, are no longer considered to be part of
the Concert Party: Stanford Berenbaum, Frederick Warner, Andreas Coppi, James
Carter, Komodo Trust for Health and Education, Stephen Leeb, Pam Vigue, Todd
Carter, Jeffrey Greenberg, Eric Remole, Nicholas Black, David Sandell, Lana
Gayevsky and Steven Fishman.

Plain Sight was founded by a group of scientists affiliated with Yale
University and is a technology holding company. It was incorporated in 2000
and is based in New Haven, Connecticut where it has close links to Yale
University, a Plain Sight shareholder. Plain Sight's registered office is 199
Whitney Avenue, New Haven, Connecticut 06511. Its directors are Patrick
DeSouza and Ronald Coifman. The major shareholders are Patrick DeSouza and
Ronald Coifman who hold approximately 24 per cent. and 16 per cent. the voting
issued share capital, respectively. Plain Sight does not produce accounts.

Laura Hills is a current Director of the Company and a longstanding business
associate of Patrick DeSouza. Frances DeSouza, Bryan DeSouza and Daniel
DeSouza are the respective spouse, brother and son of Patrick DeSouza. Yael
Coifman is the daughter of Ronald Coifman and co-founder of Leisure
Development Partners LLP, a strategic advisory firm. James Bass is a former
business associate of Patrick DeSouza.

The Concert Party currently holds, in aggregate, 5,902,780 Ordinary Shares and
2,080,000 Partly Paid Shares representing an aggregate interest of 40.98 per
cent. of the Company's 19,478,688 Total Voting Rights as at the Last
Practicable Date. The Concert Party also holds 585,000 Concert Party Options.

The following table shows the number of Ordinary Shares, Partly Paid Shares
and Concert Party Options in which each member of the Concert Party is
interested at the Last Practicable Date.

 
 Concert Party Member  Number of Ordinary Shares held  Number of Partly Paid Shares held  Percentage of Total Voting Rights (%)  Number of Options held
 Patrick DeSouza*      2,794,760                       2,080,000                          25.03                                  170,000
 Plain Sight           2,430,410                       0                                  12.48                                  0
 Ronald Coifman*       190,595                         0                                  0.98                                   0
 Michael Reisman*      184,126                         0                                  0.95                                   155,000
 Laura Hills           130,373                         0                                  0.67                                   145,000
 Bryan DeSouza         104,600                         0                                  0.54                                   20,000
 James Bass            52,916                          0                                  0.27                                   0
 Yael Coifman          15,000                          0                                  0.08                                   0
 Frances DeSouza       0                               0                                  0.00                                   90,000
 Daniel DeSouza        0                               0                                  0.00                                   5,000
 TOTAL                 5,902,780                       2,080,000                          40.98                                  585,000

*Shareholders in Plain Sight.

The maximum percentage of the Company's voting rights which could be held by
the Concert Party following the approval of Resolution 7, 8 and 9, assuming
the full utilisation of the Proposed Buyback Authority (assuming no member of
the Concert Party participates in the proposed buyback and no further Ordinary
Shares or Partly Paid Shares are issued by the Company), the full exercise of
the Concert Party Options and no exercise of any other Options, is 6,487,780
Ordinary Shares and 2,080,000 Partly Paid Shares representing 47.32 per cent.
of the then voting rights of the Company of 18,106,919 as further set out
below. For so long as they continue to be acting in concert, any increase in
aggregate interest in Voting Rights of the Concert Party will be subject to
the provisions of Rule 9 of the Takeover Code. Furthermore, individual members
of the Concert Party will not be able to increase their percentage interests
in Voting Rights through or between a Rule 9 threshold without Panel consent.

All members of the Concert Party have confirmed that none of them will, nor do
they have any current intention to, sell any of the Ordinary Shares which they
beneficially own to the Company should the Company utilise the Proposed
Buyback Authority.

 

 Concert Party Member  Number of Ordinary Shares held  Number of Partly Paid Shares held  Number of Options exercised and issued as Ordinary Shares  Percentage of Total Voting Rights (assuming the Proposed Buyback Authority is fully utilised, Partly Paid Shares are issued in full and only Options held by Concert Party Members are exercised)
 Patrick DeSouza       2,794,760                       2,080,000                          170,000                                                    27.86
 Plain Sight           2,430,410                       0                                  0                                                          13.42
 Ronald Coifman        190,595                         0                                  0                                                          1.05
 Michael Reisman       184,126                         0                                  155,000                                                    1.87
 Laura Hills           130,373                         0                                  145,000                                                    1.52
 Bryan DeSouza         104,600                         0                                  20,000                                                     0.69
 James Bass            52,916                          0                                  0                                                          0.29
 Yael Coifman          15,000                          0                                  0                                                          0.08
 Frances DeSouza       0                               0                                  90,000                                                     0.50
 Daniel DeSouza        0                               0                                  5,000                                                      0.03
 Total                 5,902,780                       2,080,000                          585,000                                                    47.32

Proposed Share Buyback

The Proposed Buyback Authority authorises the Company to purchase up to
1,956,769 Ordinary Shares, representing 10 per cent. of the Company's issued
share capital as at the date of this document.

The Board believes that making market purchases of Ordinary Shares will allow
the Company to efficiently utilise the Company's excess cash whilst at the
same time enhancing earnings per share to deliver value to Shareholders. The
Board will only exercise the Proposed Buyback Authority after taking account
of the overall financial position of the Company and in circumstances where
they believe that to do so would result in either an increase or protection of
value for the remaining Shareholders and be in the best interests of
Shareholders as a whole.

Any share purchase by the Company under the Proposed Buyback Authority will
take place in open market transactions and may be made from time to time
depending on market conditions, share price, trading volume and other terms.
The maximum price paid per Ordinary Share will be no more than 105 per cent.
of the average closing middle market quotations of an Ordinary Share for the
five business days immediately preceding the day on which such Ordinary Shares
are purchased.

There is no guarantee that the Proposed Buyback Authority will be utilised in
full or that any purchases will be made. Any Ordinary Shares purchased under
the Proposed Buyback Authority will be held in treasury and the number of
voting rights reduced accordingly. Ordinary Shares held in treasury may be
used to satisfy future share issuances to employees or third parties or to
satisfy the exercise of Options to minimise dilution to existing Shareholders.
Ordinary Shares held in treasury have no ultimate beneficial owner.

The Waiver Resolutions

The Independent Directors have consulted with the Panel, which has agreed
that, subject to approval of the Waiver Resolutions by the Independent
Shareholders on a poll at the AGM, it will grant the Waiver. The effect of the
Waiver, if approved by the Independent Shareholders, would be that the Concert
Party would not be required to make a Rule 9 Offer that would otherwise arise
due to the increase in the aggregate holding of the Concert Party resulting
from the purchase by the Company of its own Ordinary Shares pursuant to the
Proposed Buyback Authority and the issue of Ordinary Shares held under the
Concert Party Options.

The Waiver Resolutions are subject to the approval of Independent Shareholders
on a poll, where each Independent Shareholder will be entitled to one vote for
each Ordinary Share they hold. Members of the Concert Party are not entitled
to vote on this poll as they are not considered to be independent.

Shareholders should note that any further increase in the interests of the
Concert Party in the Ordinary Shares, which increases the percentage of the
voting rights in which they are interested, whether collectively or
individually, other than as a result of the purchase of Ordinary Shares
pursuant to the Proposed Buyback Authority or the issue of Ordinary Shares in
relation to the Options Waiver Resolution will be subject to the provisions of
Rule 9. Whether or not the Waiver Resolutions are passed by the Independent
Shareholders, members of the Concert Party will not be restricted from making
an offer for the Company.

Further information

Your attention is drawn to the remainder of this document which contains
further information relating to the Company and the members of the Concert
Party.

Financial information on the Company is set out in the Company's Annual Report
and Accounts for the year ended 31 December 2023. The Annual Report and
Accounts can be downloaded from the Company's website:
https://waterintelligence.co.uk/rule-26-investor-relations/documentation/annual-reports-and-accounts/.

Recommendation

The Independent Directors, who have been so advised by Grant Thornton,
consider that the Proposals are fair and reasonable and are in the best
interests of the Company and Independent Shareholders as a whole.  In
providing its advice to the Independent Directors, Grant Thornton has taken
into account the Independent Director's commercial assessments. The
Independent Directors therefore unanimously recommend that the Independent
Shareholders vote in favour of Resolutions 9 and 10 as they intend to do in
respect of their own beneficial holdings of Ordinary Shares which, as at 12
September 2024, being the last practicable date prior to the publication of
this document, in aggregate amount to 70,370 Ordinary Shares.  The Directors
who are members of the Concert Party are not able to vote on Resolution 9 and
10.

The Directors consider that Resolutions 1 to 8, as set out in the Notice, are
in the best interests of the Company and its Shareholders as a whole and are
most likely to promote the success of the Company. The Directors, therefore,
unanimously recommend that you vote in favour of Resolutions 1 to 8, as they
intend to do in respect of their own beneficial holdings.

 

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