Notice of AGM
19 Januar 2009 - 6:02PM
UK Regulatory
TIDMAINC
RNS Number : 8972L
Applied Intellectual Capital Ltd
19 January 2009
APPLIED INTELLECTUAL CAPITAL LIMITED
19th JANUARY 2009
Annual General Meeting and cancellation of listing
Applied Intellectual Capital Limited ("AIC" or the Company") has today posted a
circular ("Circular") to shareholders to call an Annual General Meeting of the
Company on 17th February 2009, at 11:00 a.m. California time at the principal
offices of the Company at 2450 Mariner Square Loop, Alameda, California, USA
94501, at which:
* the report of the directors and the audited accounts for the year to 31st July
2008 will be received;
* Robert Stoffregen and Darron Brackenbury are retiring by rotation and will be
subject to reappointment;
* AIC's auditors will be proposed for reappointment and it will be proposed that
the Board be authorised to agree their remuneration; and
* it will be proposed that the Company's admission of its Shares on AIM be
cancelled.
The Board believes that it is in the best interests of Shareholders for the
Company to cancel its admission on AIM and has recommended that shareholders
vote in favour of it.
Cancellation of listing
Firstly, the Board considers that the Company's recent share price performance
significantly undervalues the businesses and technologies of the AIC Group and
has resulted in unwarranted loss in shareholder value. This undervaluation
undermines important negotiations that are currently underway with respect to
operational aspects of the AIC Group's technology and is unhelpful to its
commercial relationships in general. The low prices at which the Shares have
traded on AIM has a potentially negative impact on the AIC Group's ability to
raise additional capital, the Company's use of its Shares for acquisitions of
other companies and the grant of equity incentives for management and employees.
Whilst the Board cannot be certain that ongoing commercial negotiations will
succeed, against a background of widespread economic uncertainty and weak equity
and loan markets, it considers that the cancellation of listing may support
them.
Secondly, the Board considers that the costs associated with being a company
with its shares traded on AIM are now disproportionate to the benefits of that
market. The Board believes that there would be significant costs savings from
the Shares not being traded on AIM. These costs savings could be up to US$
650,000 per year, not including savings in the considerable amount of executive
and administrative time that is currently devoted to meeting regulatory and
reporting requirements. These funds could then be available to the businesses
and technologies of the AIC Group.
Thirdly, on 3rd December 2008, the Company's Nominated Adviser to AIM, Nabarro
Wells & Co. Limited ("Nabarro Wells"), notified the Company of its intention to
cease to act on behalf of the Company as its Nominated Adviser. Termination of
Nabarro Wells' engagement is to be effective as of 3rd March 2009. Following the
acquisition of Nabarro Wells by Ambrian Partners Limited ("Ambrian") the Company
agreed to engage Ambrian for the remainder of Nabarro Wells' notice period. If
the Company is not able to replace its Nominated Adviser by 3rd March 2009,
trading of its shares will be suspended and if this is not rectified by
3rd April 2009 the admission of its shares to trading on AIM will be cancelled.
All companies listed on AIM are required to have a NOMAD. As noted in an
announcement of final results made on 15th January 2009, the Company's future is
dependent on securing additional working capital. The working capital position
is discussed further in the auditors' report dated 13th January 2009 on AIC's
audited accounts for the year to 31st July 2008. The actions being taken by the
Board to manage expenditure are described below. The Company is in the process
of discussing several initiatives towards meeting the working capital shortfall
by an injection of new funding. If the Company is unable to complete one of
these initiatives by 3rd April 2009 the Board believes that it will be unable to
attract a replacement Nominated Adviser. Accordingly, this increases the
importance of the Board seeking opportunities for the Company but to do so
against such a deadline is not considered by the Board to be in the
Shareholders' best interests as discussed above.
Finally, the loss of the AIM status will detrimentally affect liquidity for the
Company's shares. This will affect all Shareholders. However, the Board
considers that the Company's shares are not sufficiently liquid on AIM anyway.
If anything, this situation can be expected to worsen unless working capital
improves considerably.
If the Board identifies a new opportunity before the proposed Annual General
Meeting, which it considers is worth pursuing and which alters the above
assessment, for example where the working capital position changes significantly
as a result of a new investment in AIC, the Board will inform Shareholders and
may decide, in the best interests of Shareholders, to change their
recommendation as to how to vote on the resolution to cancel the listing on AIM.
Following the cancellation, the Shares will cease to trade on AIM on or around
25th February 2009 (being at least 5 business days following the date of the
Annual General Meeting) assuming that the resolution to cancel trading of the
shares on AIM is approved. The Shares will come out of the CREST system and
Shareholders who currently hold Shares in uncertificated form will receive share
certificates.
ITI
Discussions with ITI Scotland Limited ("ITI") about the GBP3.86 million debt
owed to ITI by AIC and about the future of Plurion Ltd. are ongoing. To
facilitate this continuing dialogue, ITI has agreed to extend the payment period
on the debt to 1st July 2009 and to waive interest accruing on the balance from
1st February 2009 onwards. The Board believes AIC will be able to reach a timely
and acceptable resolution of these matters.
Company Reorganisation and Redirection
Assuming Shareholders resolve to cancel the admission of AIC, the Board is
preparing to reorganise the Company's business priorities by rationalising its
operations, and simplifying its management and governance structure.
Tony Amor would resign as Chief Executive Officer immediately after the
Company's proposed cancellation from AIM. Mr. Amor originally assumed the role
of interim CEO in mid-July 2008. He has significantly exceeded the three month
term to which he agreed, and he has done this at the expense of other business
and personal obligations which now require his urgent attention. The Board is
grateful to him for his commitment and guidance during one of the most
challenging periods in the Company's history. Upon his resignation, Stephen
Clarke will be re-appointed CEO.
New share-based incentivisation arrangements for directors and staff of the AIC
Group are being put in place, whereby existing out of the money options are
being cancelled and share awards are being made. The Directors consider that
these new arrangements are appropriate to incentivise and retain staff. The
previous option arrangements were no longer serving this purpose because they
were set at prices which are now significantly higher than the present trading
price. In view of the working capital position, the Board considers these new
arrangements to be sensible as a way of keeping and encouraging staff in a way
which is aligned with shareholder interests.
In anticipation of these changes, the Board has already taken measures to
downsize the organisation, to adjust geographic focus, and to reduce overhead
and burn rate. Projects that have not met their technical and commercial targets
or where current market conditions do not allow for successful financing and
commercialisation will be documented and shelved.
Resources will continue to be devoted to those developments where the Board
believes that the Company's technical and competitive advantages, market demand,
and investor interest combine to create real, near-term commercial
opportunities. For example, the change of the political administration in the
U.S. has resulted in increased interest in water technologies and advanced
batteries. Accordingly, the Company has re-prioritised its development efforts
to take advantage of these opportunities. Certain technologies developed as part
of shelved projects will be reassigned to these higher priority ventures.
Similarly, technologies which were previously shelved when water technology
markets collapsed in 2001 are being re-evaluated.
Although the Company is currently critically short of cash, the Board believes
that the prioritised developments, some of which should start to materialise as
fully funded ventures during the first half of 2009, hold the prospect of
creating shareholder value. Additionally, the Company has re-started its
consulting activities as AIC Technica and is now generating revenues both
through the provision of technical services and through the supply of commercial
equipment. One example of this was the first shipment of commercial quality
nitrate destruction systems for use in water treatment markets by our licensee,
Rohm and Haas.
Consistent with these objectives, the management team is being re-aligned,
building on the successes of the last 12 months and adjusting to both the
challenges and the opportunities ahead.
Proposed Change of Directors
Robert Clarke, Darron Brackenbury and Robert Stoffregen are retiring from the
Board by rotation, in accordance with the Company's articles of association. Mr.
Stoffregen, the Company's Chief Financial Officer, will be offering himself for
reappointment as an Executive Director, and Mr. Brackenbury will be offering
himself for reappointment as a non-Executive Director. Robert Clarke is not
offering himself for election. Robert has agreed to chair the new Technical
Advisory Board, which will report to the Board on technical matters. The
Directors thank him for his enormous contribution to the Company to date as a
Director, for his valuable insight and for now taking on the role as chairman of
the Technical Advisory Board.
It is not proposed to fill the vacancy created by the resignation of Sir Andrew
Likierman, who stepped down, as was announced on 19th December 2008, in order
to assume increased responsibilities at the London Business School.
Assuming the resolutions to reappoint Mr. Stoffregen and Mr. Brackenbury are
passed by Shareholders, the composition of the Board after the proposed
cancellation of listing will be Stephen Clarke and Robert Stoffregen (Executive
Directors) and David Thompson (Chairman), Jamie Weir, Tony Amor and Darron
Brackenbury (Non-Executive Directors). It is anticipated that the composition of
the Board may change further as the needs of the business evolve during 2009.
Uncertain and Potential Negative Consequences from the cancellation of trading
of shares on AIM
Following the date of cancellation of the AIM listing, the Shares will cease to
trade on AIM and CREST on or around 25th February 2009 (being the date at least
5 business days following the date of the Annual General Meeting) assuming the
resolution to delist is approved.
As noted above, the Board considers that cancellation is in the best interests
of Shareholders. However, the overall impact of the proposed cancellation cannot
be accurately predicted for certain and there may be negative consequences. The
cost savings may be materially less than anticipated. Moreover, the provision of
certain financial and other publicly available information required by the AIM
Rules for Companies would be discontinued, although the Company will continue to
provide financial information to Shareholders through its annual report and
account, its website and periodic circulars.
In addition, following the proposed cancellation there will be very limited
liquidity in the Shares, which may make it more difficult for Shareholders to
realise their investment in the Company by the sale of part or the whole of
their shareholdings. There will be no public market for the Shares in the UK or
the United States. Resale of the Shares may be limited also by provisions of the
US federal securities laws relating to restricted securities as defined for
Regulations S purposes and in Rule 144 promulgated by the US Securities and
Exchange Commission.
Upon cancellation of the shares from trading on AIM, the takeover protection in
the Company's articles of association, whereby an offer needs to be made to all
shareholders if a party acquires over 30% of the Shares, will automatically come
to an end.
Although, in the current difficult market conditions, there can be no certainty
about the future, the Board believes that the Company is currently undervalued
on AIM and that, following the proposed cancellation of the listing, the Company
will be better positioned to attract financing for its projects. It also
believes that there will be opportunities for Shareholders to realise value from
the Company's activities through a variety of mechanisms once the capital
adequacy of the operations is stabilised such as dividend payments, stock
buy-back programmes and the partial sale of equity in affiliates and
subsidiaries to third parties. As Shareholders, the Board, founders, management
and staff are all similarly motivated for there to be liquidity events for all
the Company's Shareholders.
The Board is also active in seeking further investment into the Company. Such
investment may be in the form of equity. The articles of association of the
Company set out certain pre-emption rights on a new equity fund raise, which
operate when any new issue exceeds 10% of the then outstanding issued share
capital, at Article 3.7. It is the Board's intention that in the event of an
equity fund raise exceeding 10%, the existing shareholders would be invited to
participate in accordance with Article 3.7 or (having regard to the subscription
timetable) on similar terms. The Board would thereby intends, if possible, to
give investors the opportunity to participate and not be diluted.
Who can Vote
Only holders of record of Shares at the close of business on the record date of
15th February 2009 will be entitled to vote in person or by proxy. Shareholders
are urged to vote by proxy regardless of whether they attend the Annual General
Meeting. On 19th January 2009, there were 44,990,115 outstanding Shares. Each
Share carries one vote (subject to the below).
Enclosed with the Circular is a Disclosure Notice. It asks for disclosure of
information about shareholdings as at 19th January 2009. Shareholders are urged
to respond to the Disclosure Notice as the Directors may resolve in their
discretion that any Shareholder failing to do so shall have his or its votes
suspended (pursuant to Article 13.11). A previous form of the Disclosure Notice
was distributed to Shareholders as at the relevant record date (28th November
2008) on 19th December 2008 and some Shareholders have replied.
Approval Required and Expected Timing
Under the AIM Rules for Companies, it is a requirement that any voluntary
cancellation of trading of the shares on AIM must be approved by not less than
75 per cent of votes cast by Shareholders in general meeting. Accordingly, the
relevant Resolution contained in the Notice of Annual General Meeting that
accompanies the Circular seeks the approval by Shareholders of the Company's
application to London Stock Exchange plc for cancellation of admission to
trading in the Shares on AIM. The Company has notified London Stock Exchange plc
of its preferred cancellation date and, if the Resolution is approved, it is
expected that cancellation will take effect on or about 25th February 2009.
Terms contained and defined in the Circular have the same meaning in this
announcement. A copy of the Circular, which was posted today, is available on
the Company's website www.apicap.com
ENQUIRIES:
Applied Intellectual Capital: Bob Stoffregen Tel +1 510 239 0025
Perlgut Group: Mark Perlgut Tel +1 212 799 0026
Ambrian Partners: Marc Cramsie Tel +44 (0)20 7634 4858
This information is provided by RNS
The company news service from the London Stock Exchange
END
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