TIDMIGP
RNS Number : 8004S
Intercede Group PLC
28 December 2016
28 December 2016
INTERCEDE GROUP plc
('Intercede', the 'Company' or the 'Group')
Proposed Issue of Convertible Loan Notes and Subscription
Shares
Intercede, the software and service company specialising in
identity, credential management and secure mobility is pleased to
announce that it has conditionally raised a total of approximately
GBP5.0m (the "Fundraising") through the issue of GBP4.495m of
convertible loan notes ("CLNs") which are convertible at 68.8125p
and a subscription for up to 877,192 ordinary shares of 1p in the
Company ("Ordinary Shares") at a price of 57.0p per Ordinary Share.
The Fundraising remains conditional on approval by shareholders of
the Company and it is expected that a notice of General Meeting
will shortly be sent to shareholders.
Background to, and reasons for, the Fundraising
On 16 September 2016, the Company announced the following
trading update:
"The Company announces that it has had a slow start to the
current financial year and is continuing to experience delays in
the receipt of anticipated MyID license orders from both new and
existing customers. Consequently, trading for the year to date is
below expectations and the prior year.
The Company still has a strong pipeline of MyID license
opportunities and is continuing to make good progress in pursuit of
its short to medium term strategic objectives. However, the Board
recognises that revenues for the full year are now likely to be
lower than last year's record sales of GBP11.0m."
In light of current trading, it is unlikely that the Company
will generate sufficient cash in the financial year ending 31 March
2017 to continue to support the Company's rate of investment in its
main areas as initially planned. The Board believes that to
continue the journey to becoming a leading enabler of digital trust
services and technology for mobile devices and the "Internet of
Things", the Company must undertake the Fundraising to take
advantage of the large market opportunity it believes exists.
Use of proceeds
The net proceeds of the Fundraising will be used to continue to
support the Company's main areas of selective investment,
including:
-- The development of mobile security applications involving
interoperability with technologies such as iOS, Android, Windows
and BlackBerry.
-- The establishment and launch of MyTAM, a cloud-based service
that enables organisations such as app developers, service
providers, banks and media streaming companies to load apps into
the TEE built into chipsets in a rapidly increasing proportion of
Android devices.
-- Increased collaboration with major industry players such as Intel, Microsoft, ARM and Citrix.
-- Creation of a dedicated Intercede Services team focused on
delivering Intercede solutions into the consumer market.
-- Enhancing the core MyID platform to support US Standard FIPS
201-2 compliant derived credentials, thereby extending Intercede's
dominant position in the US federal government PIV market to mobile
devices.
-- Re-engineering and expansion of the MyID platform as a
cloud-based service to improve scalability to consumer levels and
to ensure that all of the new areas of opportunity are
supported.
-- Sales and marketing to promote and protect the MyID, MyTAM
and RapID names and technology and to build industry
relationships.
Information on the CLNs and the Subscription Shares
The issue of the CLNs remains conditional on:
-- the directors of the Company approving the terms of, and the
transactions contemplated by, the Subscription Agreement and CLN
Instrument;
-- the Company granting security by way of a composite guarantee
and debenture in favour of Welbeck to secure the repayment of
principal and interest due on the CLNs to the CLN Subscribers;
and
-- the passing of the Resolution (which will authorise and
empower the directors of the Company to allot the CLNs during the
period of five years following the date on which the Resolution is
passed).
-- In addition, GBP1.0m of the GBP4.495m of CLN's is conditional
on not less than GBP4.0m being raised in the current fundraising
process and on the GBP1.0m being paid to an offshore bank account
which the Company intends to open prior to 31 January 2017.
As and when the CLNs (or any part of them) are due to be
redeemed in accordance with the CLN Instrument, the Company shall
pay to the CLN Subscriber entitled thereto the principal amount of
the CLNs to be redeemed at par together with any accrued and unpaid
element of interest (after deduction of tax) up to (but excluding)
the date of redemption. The final redemption date is the date
falling five years and one day after the date of execution of the
CLN Instrument (the Final Redemption Date).
Until the CLNs are redeemed in accordance with the CLN
Instrument, the Company shall accrue (and on redemption pay to the
relevant CLN Subscriber) interest (after deduction of tax) on the
principal amount of the Notes. Interest on the CLNs shall accrue in
respect of each interest period at the rate of 8 per cent. per
annum.
The Subscription Agreement contains undertakings and warranties
given by the Company to the CLN Subscribers and Welbeck (as agent
for the CLN Subscribers), including as to the accuracy of
information contained in this document, to matters relating to the
Group and its business and a customary indemnity given by the
Company to Welbeck (in its capacity as agent and security trustee
for the CLN Subscribers) in respect of liabilities arising out of
or in connection with the CLNs.
The CLNs are convertible into Shares upon the terms set out in
the CLN Instrument. A CLN Subscriber shall have the right at any
time from the date of issue of the CLNs until the Final Redemption
Date to serve a conversion notice on the Company to convert all or
part of his CLNs outstanding into Shares at the Conversion Price
which for the GBP4.495m of CLNs referred to above will be
GBP0.688125. Any Shares issued as a result of a Conversion will be
issued credited as fully paid up, including any premium thereon,
and will rank pari passu with the existing Shares for all dividends
and other distributions in respect of the financial year or
accounting period of the Company in which the Conversion falls,
provided that the record date for such dividends or other
distributions falls after the date on which Conversion takes place.
In all other respects the Shares issued on Conversion will rank
pari passu and form one class with the other Shares in issue in the
same class as the Shares on the Conversion date and will carry the
rights set out in the articles of association of the Company.
The CLNs are repayable early on certain customary events of
default.
The CLNs are not being made available to the public and are not
being offered or sold in any jurisdiction where it would be
unlawful to do so.
Repayment of principal and interest due on the CLNs to the CLN
Subscribers shall be secured by a composite guarantee and debenture
to be granted by each member of the Group registered in England in
favour of Welbeck (as security trustee for the CLN
Subscribers).
The Company is also proposing to raise up to GBP500,000 (before
fees and expenses) by the issue of Subscription Shares. The issue
of the Subscription Shares is conditional on AIM Admission becoming
effective and not less than GBP3,500,000 of CLNs being
unconditionally allotted. The quantum of Subscription Shares is 10
per cent of the value of the CLN's to be initially issued subject
to a maximum of GBP500,000. The Subscription Shares will be issued
at a price of 57.0p.
Notice of General Meeting
A Circular and notice convening a General Meeting, to be held at
the offices of the Company at Lutterworth Hall, St. Mary's Road,
Lutterworth, Leicestershire, LE17 4PS at 11.00 a.m. on 27 January
2017, will be posted to shareholders shortly and will be available
from the Company's website at
https://www.intercede.com/about-investors. At the General Meeting
the Resolution will be proposed as a special resolution authorising
the Directors to issue the CLNs on a non-pre-emptive basis. This
authorisation will last for a period of five years after the date
on which the Resolution is passed. The allotment of the
Subscription Shares will utilise the existing authority and power
granted to the directors of the Company at the annual general
meeting held on 14 September 2016.
The Directors believe that the Resolution to be proposed at the
General Meeting is in the best interests of the Company and
Shareholders as a whole and unanimously recommend that shareholders
vote in favour of the Resolution as they intend to do (or procure
be done) in respect of their own beneficial holdings totaling
19,178,621 Shares, representing approximately 39 per cent. of the
current issued share capital.
Related Party Transactions
Richard Parris, his wife (Jayne Kathryn Murphy), Andrew Walker
and The Azalia Trust each propose to subscribe for GBP30,000,
GBP20,000, GBP50,000 and GBP1,000,000 of CLNs (respectively). Each
such person is a "related party" of the Company under the AIM Rules
and accordingly their participation in the Fundraising constitutes
a related party transaction for the purposes of Rule 13 of the AIM
Rules. The independent directors (being the Directors apart from
Richard Parris, Andrew Walker and Jacques Tredoux who, as potential
subscribers or because of their relationship with certain
subscribers of CLNs, are not regarded as independent for this
purpose), having consulted with the Company's nominated adviser,
finnCap, consider that the terms on which such related parties
propose to participate in the Fundraising are fair and reasonable
insofar as Shareholders are concerned.
Admission of, and dealings in, the CLNs and AIM Admission of the
Subscription Shares
Application will be made by the Company to the CISEA as soon as
is reasonably practicable following the issue of the CLNs for the
CLNs to be admitted to trading on the CISEA. It is expected that
trading will become effective by the first Interest Payment Date
(as defined in the CLN Instrument, such date expected to be 31
March 2017) and that dealings in the CLNs will commence at 8.00
a.m. on the relevant date.
Application will also be made to the London Stock Exchange for
the AIM Admission of the Subscription Shares. It is expected that
the AIM Admission of the Subscription Shares will become effective
and that dealings in the Subscription Shares on AIM will commence
at 8.00 a.m. on 31 January 2017.
ENQUIRIES
Intercede Group plc Tel. +44 (0)1455 558 111
Richard Parris, Chairman & Chief Executive
Andrew Walker, Finance Director
finnCap Tel. +44 (0)20 7220 0500
Stuart Andrews, Corporate Finance
Simon Hicks, Corporate Finance
Bell Pottinger Tel. +44 (0)7802 442486
Archie Berens
About Intercede
Intercede is a software and service company specializing in
identity, credential management and secure mobility. Its solutions
create a foundation of trust between connected people, devices and
apps and combine expertise with innovation to provide world-class
cybersecurity. Intercede has been delivering solutions to high
profile customers, from the US and UK governments to some of the
world's largest corporations, telecommunications providers and
information technology firms, for over 20 years. Intercede's
product portfolio includes MyID, an identity and credential
management system that assigns trusted digital identities to
employees citizens and machines. In 2015, Intercede launched MyTAM,
enabling trusted applications to be loaded into a mobile device's
Trusted Execution Environment (TEE), providing hardware-level
security for Android apps. In 2016, Intercede launched RapID, a
secure, easy to implement authentication service for mobile apps
and cloud services to completely eliminate the need for
passwords.
For more information visit: www.intercede.com
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
Definitions
The following definitions apply throughout this document
(including the Notice of General Meeting) and the Form of Proxy
unless the context requires otherwise:
"Act" the Companies Act 2006, as
amended from time to time;
"Admission" the admission of the CLNs to
trading on the CISEA;
"AIM" the AIM market of the London
Stock Exchange;
"AIM Admission" the admission of the Subscription
Shares to trading on AIM;
"AIM Rules" the AIM Rules for Companies
published by the London Stock
Exchange, as amended from time
to time;
"Business Day" any day on which banks are
generally open in England and
Wales for the transaction of
business, other than a Saturday,
Sunday or public holiday;
"CISEA" the CISEA market operated by
the Channel Islands Securities
Exchange;
"CLN Instrument" the convertible loan note instrument
dated 28 December 2016 executed
by the Company constituting
the CLNs;
"CLN Subscribers" such persons who subscribe
for CLNs in accordance with
the terms of the Subscription
Agreement;
"CLNs" fixed rate secured convertible
loan notes 2021 constituted
by the CLN Instrument or, as
the case may be, the principal
amount outstanding;
"Company" or "Intercede" Intercede Group plc;
"Conversion" conversion of the CLNs into
Shares at the relevant Conversion
Price in accordance with the
terms of the CLN Instrument;
"Conversion Price" the price at which the CLNs
convert into Shares, being:
(a) in relation to the Original
Notes (as defined in the CLN
Instrument), GBP0.688125 (being
a 25 per cent premium to lower
of (i) the average closing
share price of the Shares for
the 10 trading days prior to
the announcement to AIM by
or on behalf of the Company
of the Company making available
for subscription the CLNs and
(ii) the placing price for
Shares issued to investors
at the time of such announcement);
and
(b) in relation to any Further
Notes (as defined in the CLN
Instrument), the higher of
(i) the price referred to in
(a) above and (ii) a 25 per
cent premium to the average
closing share price of the
Shares for the 10 trading days
prior to their date of issue,
subject, in each case, to adjustment
in accordance with the CLN
Instrument;
"CREST" a relevant system (as defined
in the CREST Regulations) in
respect of which Euroclear
is the Operator (as defined
in the CREST Regulations);
"CREST Regulations" the Uncertificated Securities
Regulations 2001 (SI 2001/3755),
as amended from time to time;
"Directors" or "Board" the existing directors of the
Company
"Euroclear" Euroclear UK & Ireland Limited;
"Existing Shares" the 49,114,547 Shares in issue
at the date of this document;
"finnCap" finnCap Ltd (company number
06198898);
"FSMA" Financial Services and Markets
Act 2000, as amended from time
to time;
"Form of Proxy" the form of proxy for use in
connection with the General
Meeting;
"Fundraising" the proposed issue of the CLNs
and Subscription Shares by
the Company;
"General Meeting" the general meeting of the
Company to be held at 11.00
a.m. on 27 January 2017 at
the offices of Intercede Group
plc at Lutterworth Hall, St.
Mary's Road, Lutterworth, Leicestershire,
LE17 4PS or any adjournment
of it, notice of which is set
out in the Notice of General
Meeting;
"Group" or "Intercede the Company and its subsidiaries
Group" (such subsidiaries being: Intercede
Limited, Intercede 2000 Limited
and Intercede MyID Inc.);
"London Stock Exchange" London Stock Exchange plc;
"Notice of General the notice convening the General
Meeting" Meeting
"Regulatory Information the regulatory information
Service" services approved by the London
Stock Exchange for the distribution
of AIM announcements;
"Resolution" the resolution to be proposed
at the General Meeting, details
of which will be set out in
the Notice of General Meeting;
"Shareholders" the holders of Shares from
time to time;
"Shares" ordinary shares of one penny
each in the share capital of
the Company;
"Shares Subscriber" Peter Lloyd;
"Subscription Agreement" the subscription agreement
dated 28 December 2016 made
between (1) the Company, (2)
Welbeck Capital Partners LLP
and (3) the CLN Subscribers;
and
"Subscription Shares" up to 877,192 new Shares proposed
to be allotted and issued to
the Shares Subscriber; and
"Welbeck" Welbeck Capital Partners LLP
(OC393454) and/or, as the context
requires, Welbeck Ventures
LLP (OC401614).
This information is provided by RNS
The company news service from the London Stock Exchange
END
IODEAAAXASAKFAF
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