TEP Exchange Group PLC Statement re Licence Arrangements
03 September 2012 - 3:06PM
UK Regulatory
TIDMTEX
3 September 2012
TEP Exchange Group PLC
("TEP" or "the Company")
Further re: licence agreement
Further to the announcement made on 30 July 2012, the Company announces that it
has agreed with SL Investment Management Limited ("SL") to extend the licence
agreement, as announced on 12 November 2010, to 31 October 2012 ("the initial
period"). Following the initial period, the terms of the agreement have been
amended such that the quarterly fee payable to TEP for the exclusive rights to
develop and modify the electronic platform ("the Licence Agreement") will be GBP
30,000. There will be no change to the existing arrangements between TEP and SL
in the licence of the Company's electronic platform and all technology to SL
for a quarterly fee payable to TEP of GBP20,000. The non-exclusive licence
between TEP Limited (the trading subsidiary of TEP) and SL ("the Sub-Licence")
will continue at a quarterly fee of GBP25,000 payable by TEP Limited to SL.
In addition, SL will now have the right to terminate the Licence Agreement upon
giving 30 days' prior written notice to TEP. In the event that SL terminates
the Licence Agreement, the Sub-Licence between TEP Limited and SL will also
terminate.
The income that is now expected to be generated from the licensing arrangements
for 2011 and 2012 is forecasted to be GBP1,866,666. Under the terms of the
warrants that were issued as part of the equity subscription announced by the
Company on 3 October 2011 the warrant holders could exercise the warrants in
full in the event of the Company achieving consolidated revenue of at least GBP
900,000 in each of the financial years ending 31 December 2011 and 31 December
2012. The warrants holders, being SL, Close Horizons Limited and Preferred
Asset Management (together "the Concert Party") have now agreed to waive
3,870,000,000 of the 4,500,000,000 warrants held by them in recognition of the
reduction in the ongoing recurring income stream of TEP. The warrants are
exercisable at 0.002p per ordinary share and under the new arrangements between
TEP and the Concert Party the warrants can be exercised for 12 months
commencing from 1 October 2012 provided the Company has declared, made and paid
a dividend of at least GBP250,000 to all shareholders prior to the exercise of
the warrants.
Following the cancellation of part of the warrants, the current Concert Party
shareholding and the Concert Party shareholding following the exercise of the
warrants (assuming the warrants are exercised and assuming that no other
ordinary shares have been issued by the Company) would be as follows:
Current shareholding Maximum holding following
exercise of the warrants
Number of Percentage Number of Percentage
Ordinary of enlarged Ordinary of enlarged
Shares issued Shares issued
ordinary
share
capital share
capital
SL Investment Management 408,032,798 48.00 ,708,032,798 47.84
Limited
Close Horizons Limited 186,833,333 21.98 386,833,333 26.14
Preferred Asset Management 85,000,000 10.00 215,000,000 14.53
Limited
Totals 679,866,131 79.98 1,309,866,131 88.51
The amendment to the Licence Agreement and the Sub-Licence are related party
transactions in accordance with AIM Rule 13. The Independent Directors, being
George Kynoch, Moses Kraus and Abraham Weitz, consider, having consulted with
the Company's nominated adviser, Merchant Securities Limited, that the terms of
the transactions are fair and reasonable insofar as its shareholders are
concerned.
For further information please contact:
TEP Exchange Group plc
David Roxburgh 00 353 1 260 7746
Merchant Securities Limited
Simon Clements/Virginia Bull 020 7628 2200
7
END
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