TIDMHDD
RNS Number : 9616U
Hardide PLC
02 July 2009
Hardide plc ('Hardide' or 'the Company')
Notice of General Meeting, Fundraising, Share Reorganisation and Grant of
Options
The Board of Hardide (AIM: HDD), the provider of unique metal surface
engineering technology, is pleased to announce it has raised, subject to
shareholder approval and certain other conditions, GBP2,566,200 (before
expenses) via a Fundraising. The net proceeds will fund working capital needs
and also allow further development of the Company's diamond coating technology,
as well as enhancement of market development in the USA.
Further to the announcement of 1 May 2009 the Board has now completed its
strategic review via the Fundraising and is not currently seeking a trade sale.
A circular to shareholders has been posted convening a General Meeting of the
Company to seek shareholder approval for each of the Resolutions.
A full copy of the circular is available on the Company's website:
www.hardide.com and a summary of the key points are set out below.
For further information:
+-------------------------------------------+----------------------------+
| Hardide plc | |
+-------------------------------------------+----------------------------+
| Graham Hine, Chief Executive Officer | Tel: +44 (0) 1869 353 830 |
| Jackie Robinson, Head of Communications | |
+-------------------------------------------+----------------------------+
| jrobinson@hardide.com | www.hardide.com |
+-------------------------------------------+----------------------------+
+-------------------------------------------+----------------------------+
| Seymour Pierce Limited | |
+-------------------------------------------+----------------------------+
| Nicola Marrin, Corporate Finance | Tel: +44 (0) 20 7107 8000 |
+-------------------------------------------+----------------------------+
| nicolamarrin@seymourpierce.com | www.seymourpierce.com |
+-------------------------------------------+----------------------------+
The Fundraising
The Company proposes to raise approximately GBP2,566,200 (before expenses). The
new capital raised will fund working capital needs and allow the continuation of
development of the Company's applications, including its diamond coating
technology, as well as enhancement of market development in the USA.
A number of Shareholders and new investors have agreed to subscribe under the
Placing for a total of 311,066,667 New Ordinary Shares at an issue price of 0.3
pence per share. Pursuant to the terms of the Placing Agreement, Seymour Pierce,
as agent for the Company, has agreed conditionally to use reasonable endeavours
to procure subscribers for the Placing Shares at the Placing Price. The Placing
Agreement is conditional upon, amongst other things, the Resolutions being duly
passed at the Meeting and Admission becoming effective on or before 8.00 a.m. on
20 July 2009 (or such later time and/or date as the Company and Seymour Pierce
may agree, but in any event no later than 8.00 a.m. on 7 August 2009). The
Placing Agreement contains provisions entitling Seymour Pierce to terminate the
Placing Agreement at any time prior to Admission in certain circumstances. If
this right is exercised, the Placing will not proceed. The Placing has not been
underwritten by Seymour Pierce.
One other existing Shareholder has agreed (subject to certain conditions) to
provide GBP633,000 in the form of a loan note with a coupon of 8 per cent. and
convertible into New Ordinary Shares at a conversion price of 0.45 pence per
share, representing a 50 per cent. premium to the Placing Price. The conversion
price of the Existing Loan Note, which was also provided by this Shareholder, is
to be reduced from 4.5p per share to 0.45p per share, representing a 50 per
cent. premium to the Placing Price. Certain other terms of the Existing Loan
Note are to be amended to conform to the terms of the New Loan Note. The maximum
aggregate number of New Ordinary Shares that the New Loan Note and the Existing
Loan Note can be converted into is 190,666,667 New Ordinary Shares.
In addition, two Shareholders, Boyce Investments Limited and Mrs M D Badenoch,
each of whom have previously made loans of GBP500,000 each to the Company, have
both agreed (subject to certain conditions) to convert their loans into New
Ordinary Shares at the Placing Price. They have also agreed (subject to certain
conditions) to reduce the exercise price for the associated option agreements
(the "Option Agreements"), each to subscribe for 4,166,667 Ordinary Shares, from
9p per share to 0.45p per share, representing a 50 per cent. premium to the
Placing Price, and to extend the exercise period until the third anniversary of
the Fundraising. The Directors, having consulted with Seymour Pierce, the
Company's nominated adviser, consider the terms of the conversion and the new
option terms to be fair and reasonable insofar as shareholders are concerned.
The Directors of Hardide are also taking part in the placing and subscribing for
a total of GBP135,000 as follows:
Cash amount Number of
Name Position subscribed Placing Shares
Graham Hine CEO GBP30,000 10,000,000
Yuri Zhuk Technical Director GBP5,000
1,666,667
Peter Davenport Finance Director GBP5,000
1,666,667
William Zakroff Non-Executive Director GBP5,000
1,666,667
Hugh Smith Non-Executive Director GBP80,000 26,666,667
Robert Goddard Chairman GBP10,000 3,333,333
As all of the Directors are participating in the Fundraising and thus there are
no independent Directors, Seymour Pierce, the Company's nominated adviser, has
reviewed the terms on which the above Directors are participating in the
Fundraising and on the grounds that they are participating on the same terms as
all of the other placees, consider such terms to be fair and reasonable insofar
as shareholders are concerned.
Share Re-organisation
The nominal value of the Existing Ordinary Shares is currently GBP0.01 per
share. As a matter of English law, the Company is unable to issue the Placing
Shares at a Placing Price which is below their nominal value. It is therefore
proposed to sub-divide the entire existing authorised share capital, both issued
and to be issued, consisting of 250,000,000 Ordinary Shares of GBP0.01 each.
Each Existing Ordinary Share will be sub-divided into one New Ordinary Share of
GBP0.001 each and one Deferred Share of GBP0.009 each, thus enabling the Company
lawfully to implement the Placing at the Placing Price. The aggregate nominal
value of the Company's authorised share capital immediately after this
alteration is approved by Shareholders will remain the same, but it is intended,
as indicated below, then to seek approval to increase the Company's authorised
share capital to permit the Placing to occur.
The rights attached to the New Ordinary Shares will be substantially the same as
the rights attached to the Existing Ordinary Shares. The lower nominal value of
the New Ordinary Shares will allow the Placing to proceed. The Deferred Shares
will, as their name suggests, have very limited rights which are deferred to the
New Ordinary Shares and will effectively carry no value as a result.
Accordingly, the holders of the Deferred Shares will not be entitled to receive
notice of, attend or vote at general meetings of the Company; nor be entitled to
receive any dividends or any payment on a return of capital until at least
GBP10,000,000 has been paid on each New Ordinary Share. No application will be
made for the Deferred Shares to be admitted to trading on AIM.
The Company will also be given power to arrange for all the Deferred Shares to
be transferred to a custodian or to be purchased for nominal consideration only
without the prior sanction of the holders of the Deferred Shares. It is the
current intention of the Directors to exercise this power within a reasonable
period after the passing of the Resolutions so that the Shareholders in the
Company will, as now, hold only Ordinary Shares in the Company. It is not
intended therefore to issue share certificates for the Deferred Shares.
Existing options will be unaffected by the Share Re-organisation, save that the
Ordinary Shares to be issued on the exercise of such options will be New
Ordinary Shares. In the case of EMI options granted under the Company's
Enterprise Management Incentive Scheme, the confirmation of HMRC will be applied
for, such that options granted as EMI options will retain their tax approved
status and that no adjustment will be required to the exercise price payable
under the options as part of the Share Re-organisation. However, please see
further the section below in relation to the grant of New Options to employees.
No new certificates for the New Ordinary Shares will be dispatched if the Share
Re-organisation becomes effective. Instead, on the date the Share
Re-organisation is due to become effective, a letter confirming that the Share
Re-organisation has become effective will be sent to Shareholders holding New
Ordinary Shares in certificated form. If any Shareholder wishes to receive a
replacement certificate for New Ordinary Shares he should send his certificate
in respect of his holding of Existing Ordinary Shares to the Company's
registrars, Capita Registrars, The Registry, 34 Beckenham Road, Beckenham, Kent
BR3 4TU and the registrars will then issue to the Shareholder a replacement
certificate for New Ordinary Shares.
If the Share Re-organisation becomes effective, then, prior to the commencement
of dealings in the New Ordinary Shares on AIM, the appropriate stock account in
CREST of the relevant shareholder will be credited with such person's
entitlement to New Ordinary Shares and the relevant holding of the Existing
Ordinary Shares will be cancelled. The New Ordinary Shares are expected to be
eligible to be traded through the CREST system with effect from the date of
commencement of dealings on AIM.
Grant of New Options to employees
The Board wishes to continue to incentivise employees and the Remuneration
Committee has resolved to offer certain of its employees and directors new share
options at an exercise price of 0.45p or the market price of the shares at the
date of grant, whichever is the higher (the "Exercise Price") 0.45p represents a
50 per cent. premium to the Placing Price. It is proposed that a proportion of
each of the grants will vest over 3 years and the balance of the grants will
vest according to performance criteria to be established by the Remuneration
Committee. Options will be exercisable after vesting at any time until the tenth
anniversary of grant. In the event of an acquisition of the Company, employees
holding options may exercise any vested options.
Employees holding existing share options under the Company's EMI Scheme will be
offered the opportunity to exchange their existing share options over Existing
Ordinary Shares for options over the same number of New Ordinary Shares, but
exercisable at the Exercise Price in which case their existing share options
would be cancelled.
The number of New Ordinary Shares over which options may be granted to
employees, or exchanged for existing options, on any date is limited so that the
total number of shares issued or capable of being issued in a ten-year period
under all employee share option schemes adopted by the Company shall not exceed
10 per cent. of the sum of Company's Diluted Ordinary Share capital from time to
time.
If all of the employees concerned take up the offer of New Options, on
completion of the Fundraising, the total number of share options granted to
employees and directors will be equivalent to approximately 7.2225 per cent. of
the Diluted Share Capital or 9.6421 per cent. of the issued share capital
immediately following completion of the Placing. As a percentage of the Diluted
Share Capital, the number of options granted to individual directors and other
employees after the passing of the resolutions at this general meeting will be
as follows:
Peter Davenport 0.7500%
Robert Goddard 0.6000%
Graham Hine 2.7914%
Yuri Zhuk 0.7500%
Other Employees 2.3311%
The Remuneration Committee intends that the grant of the new share options and
the exchange of the existing share options for new share options as detailed
above shall take place on or around the date of the Fundraising.
Recommendation
The Directors believe that the Fundraising and the Resolutions to be proposed at
the Meeting are in the best interests of the Company and Shareholders as a whole
and unanimously recommend that you vote in favour of the Resolutions, to enable
the Fundraising, as they intend to do in respect of their own beneficial
holdings of shares in the Company representing in total 4.80 per cent. of the
current issued share capital.
Should the Resolutions not be approved at the Meeting, the Fundraising would not
be able to be completed and, in the absence of alternative funding arrangements
being made available, it is unlikely that the Company would be able to meet its
financial obligations and may therefore be unable to continue to trade.
Meeting
The General Meeting will be held at the offices of Seymour Pierce Limited, 20
Old Bailey, London, EC4M 7EN on 17 July 2009 at 11.30 a.m.
Set out below are details of the Resolutions to be proposed at the Meeting and
an explanation of the Resolutions:
+--------------+-----------------------------------------------------------+
| Resolution 1 | to effect the Share Re-organisation including the |
| | creation of the Deferred Shares; |
+--------------+-----------------------------------------------------------+
| Resolution 2 | to increase the authorised share capital of the Company |
| | from GBP2,500,000 to GBP4,000,000 by the creation of an |
| | additional 1,500,000,000 New Ordinary Shares; |
+--------------+-----------------------------------------------------------+
| Resolution 3 | to approve the changes to the Company's Articles of |
| | Association required to create the rights attaching to |
| | the New Ordinary Shares and the Deferred Shares and to |
| | authorise any technical variation of the rights of the |
| | Existing Ordinary Shares involved in the Share |
| | Re-organisation; |
+--------------+-----------------------------------------------------------+
| Resolution 4 | to grant the Directors authority for the purposes of |
| | section 80 of the Act to allot relevant securities up to |
| | an aggregate nominal value of GBP1,560,358 (1,560,357,764 |
| | New Ordinary Shares). This authority, which is over the |
| | balance of the unissued ordinary share capital as |
| | increased pursuant to Resolution 2, covers the issue of |
| | the Placing Shares, the granting of the conversion rights |
| | under the New Loan Note and under the amended Existing |
| | Loan Note, the Loan Conversion, the granting of New |
| | Options and the granting of options pursuant to the |
| | amended Option Agreements. The authority sought by |
| | Resolution 4 will last for a period of 15 months from the |
| | date of the passing of the Resolution or if earlier the |
| | date of the next Annual General Meeting; and |
+--------------+-----------------------------------------------------------+
| Resolution 5 | to disapply the statutory pre-emption rights contained in |
| | section 89 of the Act in connection with (i) the issue of |
| | the Placing Shares, (ii) the granting of the conversion |
| | rights under the New Loan Note and under the amended |
| | Existing Loan Note, (iii) the Loan Conversion, (iv) the |
| | granting of options pursuant to the amended Option |
| | Agreements, (v) the grant of the New Options, (vi) in |
| | respect of a rights issue and (vii) any other issue of |
| | equity securities for cash for up to approximately 15 per |
| | cent., of the Enlarged Ordinary Share Capital. The |
| | authorities sought by Resolution 5 will last for 15 |
| | months from the date of the passing of the Resolution or, |
| | if earlier, until the next Annual General Meeting. |
+--------------+-----------------------------------------------------------+
All the Resolutions are, for technical reasons, conditional on the other
Resolutions being passed. Resolutions 1, 2 and 4 will be proposed as ordinary
resolutions and Resolutions 3 and 5 as special resolutions.
The circular, which contains further and more detailed information, will be
available on the website at www.hardide.com
Definitions as referred to above:
+------------------+-----------------+
| "Act" | the |
| | Companies |
| | Act 1985 |
| | including |
| | any |
| | statutory |
| | modification |
| | or |
| | re-enactment |
| | of such Act |
| | for the time |
| | being in |
| | force and |
| | any |
| | provisions |
| | of the |
| | Companies |
| | Act 2006 for |
| | the time |
| | being in |
| | force |
+------------------+-----------------+
| "Admission" | the |
| | admission |
| | of the |
| | New |
| | Ordinary |
| | Shares to |
| | trading |
| | on AIM |
| | becoming |
| | effective |
| | in |
| | accordance |
| | with the |
| | AIM Rules |
+------------------+-----------------+
| "AIM" | AIM, a |
| | market |
| | operated |
| | by the |
| | London |
| | Stock |
| | Exchange |
| | plc |
+------------------+-----------------+
| "AIM | the |
| Rules" | AIM |
| | Rules |
| | for |
| | Companies |
| | published |
| | by the |
| | London |
| | Stock |
| | Exchange |
| | plc from |
| | time to |
| | time |
+------------------+-----------------+
| "Capita | a |
| Registrars" | trading |
| | name of |
| | Capita |
| | Registrars |
| | Limited |
+------------------+-----------------+
| "City | The |
| Code" | City |
| | Code |
| | on |
| | Takeovers |
| | and |
| | Mergers |
+------------------+-----------------+
| "Company" | Hardide |
| or | plc |
| "Hardide" | |
+------------------+-----------------+
| "CREST" | the |
| | computerised |
| | settlement |
| | system (as |
| | defined in |
| | the CREST |
| | Regulations) |
| | operated by |
| | Euroclear UK |
| | & Ireland |
| | Limited |
| | which |
| | facilitates |
| | the transfer |
| | of title to |
| | shares in |
| | uncertificated |
| | form |
+------------------+-----------------+
| "Deferred | deferred |
| Shares" | shares |
| | of |
| | GBP0.009 |
| | pence |
| | each in |
| | the |
| | capital |
| | of the |
| | Company |
| | following |
| | the |
| | passing |
| | of the |
| | Resolutions |
+------------------+-----------------+
| " | the |
| Diluted | Enlarged |
| Share | Ordinary |
| Capital" | Share |
| | Capital |
| | plus the |
| | maximum |
| | number |
| | of New |
| | Ordinary |
| | Shares |
| | to be |
| | issued |
| | pursuant |
| | to the |
| | Option |
| | Agreements, |
| | upon |
| | conversion |
| | of the |
| | Existing |
| | Loan Note |
| | and the New |
| | Loan Note |
| | and |
| | pursuant to |
| | the |
| | exercise of |
| | the New |
| | Options |
+------------------+-----------------+
| "Directors" | the |
| or "Board" | directors |
| | of the |
| | Company, |
| | whose |
| | names are |
| | set out |
| | on page 5 |
| | of the |
| | circular |
+------------------+-----------------+
| "Enlarged | the |
| Ordinary | 834,042,236 |
| Share | New |
| Capital" | Ordinary |
| | Shares |
| | (including |
| | the Placing |
| | Shares) in |
| | issue |
| | immediately |
| | following |
| | Admission |
| | and the |
| | Loan |
| | Conversion |
+------------------+-----------------+
| "Existing | the |
| Issued | 189,642,236 |
| Ordinary | Existing |
| Shares" | Ordinary |
| | Shares in |
| | issue at |
| | the date of |
| | this |
| | document |
+------------------+-----------------+
| "Existing | the |
| Loan | loan |
| Note" | note |
| | of |
| | GBP225,000 |
| | issued by |
| | the |
| | Company in |
| | June 2008, |
| | the terms |
| | of which |
| | are to be |
| | amended, |
| | further |
| | details of |
| | which are |
| | set out on |
| | page 6 of |
| | the |
| | circular |
+------------------+-----------------+
| "Existing | ordinary |
| Ordinary | shares |
| Shares" | in the |
| | capital |
| | of the |
| | Company, |
| | having a |
| | nominal |
| | value of |
| | GBP0.01 |
| | prior to |
| | the |
| | passing |
| | of the |
| | Resolutions |
+------------------+-----------------+
| "Form | the |
| of | form |
| Proxy" | of |
| | proxy |
| | enclosed |
| | with |
| | this |
| | document |
| | for use |
| | in |
| | connection |
| | with the |
| | Meeting |
+------------------+-----------------+
| "Fundraising" | the |
| | Placing, |
| | the Loan |
| | Conversion |
| | and the |
| | New Loan |
| | Note to |
| | raise |
| | approximately |
| | GBP2,566,200 |
| | before |
| | expenses |
+------------------+-----------------+
| "Group" | the |
| | Company |
| | and its |
| | subsidiaries |
| | and |
| | subsidiary |
| | undertakings |
+------------------+-----------------+
| "HMRC" | Her |
| | Majesty's |
| | Revenue |
| | and |
| | Customs |
+------------------+-----------------+
| "Loan | the |
| Conversion" | conversion |
| | of loans |
| | totalling |
| | GBP1 |
| | million |
| | previously |
| | made to |
| | the |
| | Company, |
| | further |
| | details of |
| | which are |
| | set out on |
| | page 6 of |
| | the |
| | circular |
+------------------+-----------------+
| "Meeting" | the |
| | general |
| | meeting |
| | of the |
| | Company |
| | convened |
| | for |
| | 11.30 |
| | a.m. on |
| | 17 July |
| | 2009, |
| | notice |
| | of which |
| | is set |
| | out at |
| | the end |
| | of this |
| | document |
| | of the |
| | circular |
+------------------+-----------------+
| "Meeting | the |
| Notice" | notice |
| | convening |
| | the |
| | Meeting |
| | which is |
| | set out |
| | at the |
| | end of |
| | the |
| | circular |
+------------------+-----------------+
| "New | a loan |
| Loan | note |
| Note" | of |
| | GBP633,000 |
| | to be |
| | issued by |
| | the |
| | Company, |
| | further |
| | details of |
| | which are |
| | set out on |
| | page 8 of |
| | the |
| | circular |
+------------------+-----------------+
| "New | Options |
| Options" | (including |
| | any |
| | replacement |
| | options) |
| | over New |
| | Ordinary |
| | Shares to |
| | be granted |
| | to certain |
| | Directors |
| | and |
| | employees |
| | of the |
| | Company, |
| | further |
| | details of |
| | which are |
| | set out on |
| | pages 7 and |
| | 8 of the |
| | circular |
+------------------+-----------------+
| "New | ordinary |
| Ordinary | shares |
| Shares" | in the |
| | capital |
| | of the |
| | Company |
| | having a |
| | nominal |
| | value of |
| | GBP0.001 |
| | following |
| | the |
| | passing |
| | of |
| | Resolutions |
+------------------+-----------------+
| "Option | 0.45 |
| Exercise | pence |
| Price" | per |
| | New |
| | Ordinary |
| | Share |
+------------------+-----------------+
| "Option | shall |
| Agreements" | have |
| | the |
| | meaning |
| | ascribed |
| | on page |
| | 7 of of |
| | the |
| | circular |
+------------------+-----------------+
| "Ordinary | ordinary |
| Shares" | shares |
| | in the |
| | capital |
| | of the |
| | Company |
| | having a |
| | nominal |
| | value of |
| | GBP0.01 |
| | prior to |
| | the |
| | passing |
| | of the |
| | Resolutions |
| | set out in |
| | the Meeting |
| | Notice and |
| | following |
| | the passing |
| | of such |
| | Resolutions |
| | having a |
| | nominal |
| | value of |
| | GBP0.001 |
+------------------+-----------------+
| "Placing" | the |
| | conditional |
| | placing by |
| | Seymour |
| | Pierce of |
| | the Placing |
| | Shares |
| | pursuant to |
| | the Placing |
| | Agreement |
+------------------+-----------------+
| "Placing | the |
| Agreement" | conditional |
| | agreement |
| | dated 1 |
| | July 2009 |
| | between the |
| | Company and |
| | Seymour |
| | Pierce |
| | relating to |
| | the Placing |
+------------------+-----------------+
| "Placing | 0.3 |
| Price" | pence |
| | per |
| | Placing |
| | Share |
+------------------+-----------------+
| "Placing | the |
| Shares" | 311,066,667 |
| | New |
| | Ordinary |
| | Shares to |
| | be issued |
| | pursuant to |
| | the Placing |
+------------------+-----------------+
| "Resolutions" | the |
| | resolutions |
| | set out in |
| | the Meeting |
| | Notice at |
| | the end of |
| | of the |
| | circular |
+------------------+-----------------+
| "Seymour | Seymour |
| Pierce" | Pierce |
| | Limited |
+------------------+-----------------+
| "Shareholders" | holders |
| | of |
| | Ordinary |
| | Shares |
+------------------+-----------------+
| "Share | the |
| Issuance | authorities |
| Authorities" | proposed as |
| | Resolutions |
| | 4 and 5 set |
| | out in the |
| | Meeting |
| | Notice |
+------------------+-----------------+
| "Share | the |
| Re-organisation" | share |
| | re-organisation |
| | proposed to be |
| | effected by |
| | Resolutions 1 |
| | to 3 set out in |
| | the Meeting |
| | Notice |
+------------------+-----------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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