Released: 30/04/2008
RNS Number:3952T
Spiritel PLC
30 April 2008
30 April 2008
Spiritel plc
PUBLICATION OF CIRCULAR RE BALANCE SHEET RESTRUCTURING
CONVERSION OF LOAN FACILITIES AND PREFERENCE SHARES
AMENDMENT TO THE TERMS OF THE PREFERENCE SHARES
APPROVAL OF WAIVER TO BE GRANTED BY THE PANEL ON TAKEOVERS AND MERGERS
NOTICE OF EXTRAORDINARY GENERAL MEETING
The Board of Spiritel plc ("the Company", AIM: STP) the telecommunications
services company, is pleased to declare that, further to the announcement dated
25 February 2008, the Circular detailing the particulars of Penta's proposed
conversion and convening an Extraordinary General Meeting to seek shareholder
approval for the proposals and the waiver granted by the Panel on Takeovers and
Mergers has been posted to shareholders.
Spiritel plc announced on 4 April 2007 proposals to enable the Concert Party to
convert £2,000,000 of the Loan Facilities into 115,222,222 Ordinary Shares and
amend the terms of the Preference Shares concerning their rights to convert into
Ordinary Shares and, in respect of £500,000 of the Loan Facilities, to introduce
a redemption premium of 35 per cent. of the nominal amount redeemed in
consideration for the waiving of interest with effect from 1 May 2005 ("the
Original Proposals"). Resolutions approving the Original Proposals were duly
passed at an Extraordinary General Meeting of the Company held on 27 June 2007.
The Concert Party has not, however, exercised any of the rights of conversion in
respect of the Loan Facilities and the Preference Shares under the Original
Proposals.
Further Loan Facilities were provided by members of the Concert Party on 2 March
2007 and 27 July 2007, as set out in Part IV of the circular. Of the Further
Loan Facilities £1,550,000 is convertible into Ordinary Shares at 2p per
Ordinary Share. As at 31 October 2007 the aggregate accumulated unpaid interest
and redemption premiums on the Further Loan Facilities amounts to approximately
£460,000. Interest currently accrues under the terms of the Further Loan
Facilities at the rate of £66,500 per month.
All of the Preference Shares in which the Concert Party is currently interested
were acquired at the time of the Company's admission to AIM on 28 July 2004. Of
the Ordinary Shares in which the Concert Party is currently interested,
11,827,592 were acquired on 28 July 2004 and 27,586,207 upon conversion of Loan
Notes of the Company held by the Concert Party on 3 March 2006.
On 25 February 2008, the Company announced new proposals ("New Proposals") so
that, conditional on the approval of the Independent Shareholders at an EGM and,
subject to the Panel on Takeovers and Mergers agreeing to waive the obligation
on the Concert Party to make a general offer to the Company's Shareholders under
Rule 9 of the City Code:
(i) all of the Concert Party's current rights to convert the Company's
indebtedness into Ordinary Shares of the Company under the terms of the
Preference Shares and the Loan Facilities as outlined in the Original Proposals
and under the terms of the Further Loan Facilities shall lapse from the date of
the EGM;
(ii) the Concert Party has agreed, immediately after the EGM, to convert such of
the Company's indebtedness pursuant to the Loan Facilities, the Further Loan
Facilities and the Preference Shares into Ordinary Shares at the price of 1.1p
per Ordinary Share so that, following the said conversion, the Concert Party's
aggregate interests in shares carrying voting rights shall be 49.99 per cent.
(the "Initial Conversion");
(iii) following the Initial Conversion set out in paragraph (ii) above, the
Concert Party shall have the right to convert in whole or in part the
outstanding indebtedness in respect of the Loan Facilities, the Further Loan
Facilities and Preference Shares into Ordinary Shares at a price per Ordinary
Share which is the higher of (i) the then most recent placing price of Ordinary
Shares and (ii) 1.5p per Ordinary Share (the "Subsequent Conversions"). However,
the Concert Party has undertaken to limit its rights to convert into Ordinary
Shares so that after any Subsequent Conversions and/or the exercise of the
Option the aggregate holding of Ordinary Shares of the Concert Party shall be
less than 50 per cent. of the issued Ordinary Shares;
(iv) any interest and redemption premium payable in respect of the Loan
Facilities, the Further Loan Facilities and the Preference Shares shall be
frozen as at 31 October 2007 and the Company shall not be liable to make any
interest or redemption premium payments in respect thereof to the Concert Party
from such date;
(v) with effect from 1 May 2010 any amount outstanding under the Loan
Facilities, the Further Loan Facilities or the Preference Shares that has not
been redeemed or converted will accrue interest in respect of any month at the
rate of 8 per cent. per annum if, for that month, the average closing mid-market
price of the Ordinary Shares is below 1.5p per Ordinary Share. If the average
closing mid-market price of the Ordinary Shares for that month is above 1.5p the
Company shall have no liability for interest. The Company, however, shall only
be liable to pay such interest on redemption of the indebtedness to which it
relates. Any such interest accrued shall be convertible into Ordinary Shares at
the same rate as the principal to which it relates; and
(vi) in the event that there is any adjustment to the nominal value of the
Ordinary Shares then such adjustments shall be made to the prices stated in the
Circular so that there is the same economic effect.
The New Proposals require the amendment of the Company's Articles of Association
and hence need the approval of Shareholders in general meeting. Furthermore, the
New Proposals require the granting by the Independent Shareholders of a waiver
from the application of Rule 9 of the City Code, as described in further detail
below.
The Board believes that the New Proposals will have a number of advantages for
the Company; leaving the Company with a stronger balance sheet and without the
burden of the interest on the Further Loan Facilities, making it more attractive
to providers of finance which will enable the Company to further develop.
After the EGM, the Company will seek to raise external finance in support of its
M&A programme as and when suitable M&A opportunities arise and when market
conditions allow and to provide working capital to expand its operations through
organic growth. It is anticipated that as new placings take place, the Concert
Party will periodically increase its shareholding of Ordinary Shares by
undertaking Subsequent Conversions and/or the exercise of the Option (whilst
limiting its holding to under 50 per cent. of the then enlarged issued Ordinary
Shares). The consequent reduction in outstanding debt and increase in market
capitalisation of the Company are expected to enhance its attractiveness to
potential future investors, thus facilitating the Company's strategic plans for
expansion.
The Company is, therefore, requesting Shareholders' support for the Resolutions
required to implement the New Proposals, which will be proposed at an
Extraordinary General Meeting to be held at 10.00 a.m. on 22 May 2008.
City Code
The Concert Party currently holds 12.5 per cent. of the Ordinary Shares.
Following the Initial Conversion the Concert Party will have 276,819,845
Ordinary Shares representing approximately 49.99 per cent. of the issued
Ordinary Shares of the Company. The Initial Conversion will reduce the aggregate
of the Loan Facilities, Further Loan Facilities and Preference Shares by
£2,611,467 and leave a remaining balance of £8,405,809 available for conversion
at a later date. The Concert Party has, however, undertaken that it will not
undertake any Subsequent Conversions or exercise of the Option if, in doing so
it would result in it holding 50 per cent. or more of the then enlarged issued
Ordinary Shares.
Following the Initial Conversion the Concert Party's shareholding will be as
follows:
Penta Fund 1 Penta Fund 1
Limited S P Limited Penta Funds
Partnership Per cent.* Partnership Per cent.* Total Per cent.*
Current
holding of
Ordinary
Shares 39,167,932 12.4 245,867 0.1 39,413,799 12.5
Ordinary
Shares issued
pursuant to
the Initial
Conversion 235,925,085 - 1,480,961 - 237,406,046 -
===================================================================================================
Total holding
of Ordinary
Shares
immediately
following the
Initial
Conversion 275,093,017 49.68 1,726,828 0.31 276,819,845 49.99
---------------------------------------------------------------------------------------------------
* The percentage relates to the Ordinary Share capital of the Company at the
time stated.
Following the Initial Conversion the Concert Party will still retain rights
(subject always to the above restriction on conversion) to the following maximum
interests:
Penta Fund 1 Penta Fund 1 Penta Funds Per cent.**
Limited Limited Total
Partnership Per cent.** Partnership SP Per cent.**
Outstanding
Preference
Shares
convertible into
Ordinary Shares 166,523,588 14.95 1,045,311 0.09 167,568,899 15.04
Ordinary
Shares issued
upon
conversion of the Loan
Facilities 225,196,862 20.21 320,181 0.03 225,517,043 20.24
Ordinary
Shares issued
upon
conversion of the
Further Loan
Facilities 167,301,370 15.02 - - 167,301,370 15.02
--------------------------------------------------------------------------------------------------------------------
559,021,820 50.18 1,365,492 0.12 560,387,312 50.30
Ordinary
Shares issued
under Option 100,000 0.01 - - 100,000 0.01
--------------------------------------------------------------------------------------------------------------------
Total maximum
retained
conversion
rights 559,121,820 50.19 1,365,492 0.12 560,487,312 50.31
Ordinary
Shares held
post the
Initial
Conversion 275,093,017 24.69 1,726,828 0.15 276,819,845 24.84
--------------------------------------------------------------------------------------------------------------------
Maximum
holding of
Ordinary
Shares 834,214,837 74.88 3,092,320 0.27 837,307,157 75.15
--------------------------------------------------------------------------------------------------------------------
** In each case the percentage relates to the enlarged Ordinary Share capital of
the Company following the conversion of all of the Loan Facilities, the Further
Loan Facilities, the Preference Shares and the Option.
Rule 9 of the City Code ("Rule 9") is designed to prevent the acquisition or
control of a company to which the City Code applies without a general cash offer
being made to all shareholders of that company.
Under Rule 9 when any person acquires, whether by a series of transactions over
a period of time or not, an interest in shares which (together with shares in
which persons acting in concert with him are interested) carry 30 per cent. or
more of the voting rights of a company or when a person, together with persons
acting in concert with him, is interested in shares which in aggregate carry not
less than 30 per cent. of the voting rights of a company but does not hold
shares carrying more than 50 per cent. of such voting rights and such person, or
any person acting in concert with him, acquires an interest in other shares
which increases the percentage of shares carrying voting rights in which he is
interested, that person, or persons acting in concert with him, is normally
obliged to make a general offer to all shareholders at not less than the highest
price paid by him, for shares of that class within the preceding 12 months.
Following the Initial Conversion the Concert Party would collectively hold
approximately 49.99 per cent. of the Ordinary Shares. Accordingly, the Initial
Conversion and any Subsequent Conversion and/or the exercise of the Option would
normally give rise to an obligation on the Concert Party to make a general offer
to all Shareholders.
The Panel has agreed, however, subject to the passing on a poll by the
Independent Shareholders of the Company of the Whitewash Resolution, to waive
the obligation on the Concert Party (both individually and collectively) to make
a general offer to Shareholders under Rule 9 which would otherwise arise as a
result of the Initial Conversion and any Subsequent Conversion and/or the
exercise of the Option.
Shareholders should note that, following the Initial Conversion, the Concert
Party (for so long as members are treated as acting in Concert with each other)
will only be able to increase its aggregate percentage interests in shares
carrying voting rights through a Rule 9 threshold without triggering an
obligation to make a mandatory offer if:
(i) this increase occurs through a Subsequent Conversion or the exercise of the
Option; and
(ii) the Concert Party would not thereby come to be interested in more than
49.99 per cent. of the Company's issued share capital carrying voting rights.
Therefore, if, following the Initial Conversion, the Concert Party's aggregate
percentage interests in shares carrying voting rights is at any time diluted or
reduced to below 49.99 per cent, the Concert Party will then be able, without
triggering an obligation to make a mandatory offer under Rule 9, to undertake
such Subsequent Conversions and/or exercise the Option as would ensure that its
aggregate interest in shares carrying voting rights did not then amount to more
than 49.99 per cent.
The waiver, which the Panel has agreed to provide, subject to the Whitewash
Resolution being passed on a poll by Independent Shareholders at the EGM, will
be invalidated if any purchases or exercise of options of Ordinary Shares are
made by any member of the Concert Party or any person acting in concert with any
of them in the period between the date of the circular and the EGM. Each member
of the Concert Party has undertaken to the Company that they will not make any
such purchases or exercise any option of Ordinary Shares between the date of the
circular and the date of the EGM.
Extraordinary General Meeting
Set out at the end of the Circular is a notice convening the EGM to be held at
10.00 a.m. on 22 May 2008 at the offices of Lane & Partners LLP, 15 Bloomsbury
Square, London WC1A 2LS, at which resolutions will be proposed to:
Resolution 1
(a) increase the authorised share capital of the Company from £19,100,000 to
£24,100,000 by the creation of 500,000,000 Ordinary Shares;
(b) grant the Directors authority pursuant to Section 80 of the Act to allot
relevant securities (within the meaning of Section 80(2) of the Act) up to a
maximum nominal amount of £15,000,000;
(c) authorise the Directors to allot relevant equity securities for cash outside
the Shareholders' statutory pre-emption provisions up to an aggregate nominal
amount of £8,000,000 for the purposes of the New Proposals and up to an
aggregate nominal amount of £5,750,000 generally; and
(d) amend the terms of the Preference Shares; and
Resolution 2
Approve the waiver of the obligations on the Concert Party under Rule 9 for the
Initial Conversion and any Subsequent Conversions and/or exercise of the Option
that may be effected by the Concert Party (this resolution requires voting on a
poll by Independent Shareholders).
Action to be taken by Shareholders
Whether or not you propose to attend the EGM in person, you are asked to
complete the Proxy Form appended to the Circular and return it in the enclosed
pre-paid envelope to Neville Registrars, Neville House, 18 Laurel Lane,
Halesowen, West Midlands B63 3DA so as to arrive as soon as possible but in any
event no later than 10.00 a.m. on 20 May 2008. Completion and return of the
Proxy Form will not preclude you from attending the EGM and voting in person
should you so wish.
Admission, settlement and dealings
Application will be made to the London Stock Exchange for the New Spiritel
Shares to be admitted to trading on AIM upon the approval of the Resolutions
proposed at the EGM.
It is expected that Admission will become effective and dealings will commence
in the New Spiritel Shares on 23 May 2008. No application has or will be made
for the enlarged share capital to be admitted to trading or to be listed on any
other stock exchange.
No temporary documents of title will be issued in respect of the New Spiritel
Shares and, pending dispatch of the definitive share certificates, instruments
of transfer will be certified against the register of members of the Company.
Further information
Shareholders' attention is drawn to the circular which provides additional
information on the matters referred to above. Further information on the Concert
Party is included in Part IV of the circular.
In accordance with the AIM Rules, a copy of the circular is available on
Spiritel's website www.spiritelplc.com
Recommendation
The New Proposals, if implemented, will have a number of advantages for the
Company. It will mean that the Company will have a stronger balance sheet,
assuming a constant share price, the greater number of shares in issue will
result in a higher market capitalisation and the Company will not be liable for
interest on the Further Loan Facilities. Subject to the Company's share price
remaining above 1.5p per Ordinary Share after 1 May 2010 the Company will not be
liable for interest on any indebtedness remaining outstanding after that date
under the Loan Facilities, the Further Loan Facilities and the Preference
Shares. The Board believes that implementation of the New Proposals will make
the Company more attractive to providers of finance which will enable the
Company to further develop.
Resolution 1
The Directors consider the authorisation to allow the Directors to undertake the
New Proposals, in the manner referred to in Resolution 1, to be fair and
reasonable and, in the best interests of Shareholders as a whole, and
unanimously recommend Shareholders to vote in favour of Resolution 1, as they
intend to do in respect of their shares totalling 88,580,732 Ordinary Shares,
being 28.0 per cent. of the issued Ordinary Share capital of the Company.
Resolution 2
In light of his relationship with the Penta Funds described in paragraph 2.2 of
Part IV of the circular, Steven Scott has not been deemed independent for the
purposes of recommending Shareholders to vote on Resolution 2, and he has
accordingly, not taken part in the Board's decision to recommend this
Resolution.
The Independent Directors, who have been so advised by Daniel Stewart, consider
the New Proposals and also the waiver of the obligations which would arise under
Rule 9 of the Code as a result of the New Proposals, both for the Initial
Conversion and any Subsequent Conversions and/or the exercise of the Option made
possible through the dilution or reduction of the Concert Party's aggregate
percentage interests in shares carrying voting rights to be fair and reasonable
and in the best interests of the Shareholders as a whole and unanimously
recommend Independent Shareholders to vote in favour of Resolution 2, as they
intend to do in respect of their shares totaling 49,166,933 Ordinary Shares,
being 15.5 per cent. of the issued Ordinary Share capital of the Company.
For further information please contact:
Spiritel plc Tel.020 7160 0100
Alastair Mills CEO
Daniel Stewart & Company plc Tel. 020 7776 6550
Simon Leathers / Stewart Dick
Tavistock Communications Tel. 020 7920 3150
Simon Hudson / Clemie Carr
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Circular publication date 28 April 2008
Last time and date for receipt of Forms of Proxy 10.00 a.m. on 20 May 2008
Extraordinary General Meeting of Spiritel plc 10.00 a.m. on 22 May 2008
Conversion of debt and allotment of
Ordinary Shares to the Concert Party 22 May 2008
Admission of New Spiritel Shares to trading on AIM
and commencement of dealings in New Spiritel Shares on AIM 23 May 2008
SHARE CAPITAL STATISTICS
Number of Spiritel Ordinary Shares in issue 316,233,646
Current holding of the Concert Party 39,413,799
Percentage of issued Ordinary Share capital
held by the Concert Party 12.5 percent.
Ordinary Shares to be issued pursuant to the Initial Conversion 237,406,046
Total number of Ordinary Shares in issue
following the Initial Conversion 553,639,692
Holding of the Concert Party following the Initial Conversion 276,819,845
Percentage of issued Ordinary Share capital held
by the Concert Party following the Initial Conversion 49.99 per cent.
* Further share capital statistics are set out in Part I of the Circular.
DEFINITIONS
The following words and expressions shall have the following meanings in the
circular unless the context otherwise requires:
"Act" the Companies Act 1985 as amended by the Companies Acts
1989 and 2006
"AIM" AIM, a market operated by the London Stock Exchange
"AIM Rules" the current rules published by the London Stock
Exchange governing the operation of AIM
"Circular" the circular dated 28 April 2008, a copy of which is
available on Spiritel's website www.spiritelplc.com
"City Code" the City Code on Takeovers and Mergers published by the
Panel on Takeovers and Mergers (as amended from time
to time)
"Company" or "Spiritel" Spiritel plc
"Concert Party" together the Penta Funds
"Concert Party Director" Steven Scott
"Daniel Stewart" Daniel Stewart & Company Plc, a company registered in
England and Wales with company number 2354159 whose
registered office is at Becket House, 36 Old Jewry,
London EC2R 8DD
"Directors" or "Board" the Directors of the Company, whose names are set out
on page 2 of the circular
"Existing Shares" 316,233,646 Ordinary Shares in issue at the date of the
circular
"Extraordinary General
Meeting" or "EGM" the extraordinary general meeting of the Company to be
held at the offices of Lane & Partners LLP, 15
Bloomsbury Square, London WC1A 2LS at 10.00 a.m. on
22 May 2008 or any adjournment thereof, notice of which
is set out at the end of the circular
"FRS" a Financial Reporting Standard issued by the Accounting
Standards Board
"Further Loan
Facilities" the loan facilities in the amount of £2,050,000 entered
into by the Company with Penta Fund 1 Limited
Partnership as referred to in paragraph 4.2 (xv) and
(xxiv) of Part IV of the circular.
"Group" Spiritel and its subsidiary undertakings
"Independent Directors" the Directors apart from Steven Scott
"Independent
Shareholders" the Shareholders apart from the Penta Funds
"Initial Conversion" the conversion, immediately following the EGM, of such
of the Company's indebtedness pursuant to the Loan
Facilities, Further Loan Facilities and Preference
Shares into Ordinary Shares at the price of 1.1p per
Ordinary Share so that, following the said conversion,
the Concert Party's aggregate per cent. interests in
shares carrying voting rights shall be 49.99
per cent.
"Loan Facilities" the loan facilities in the amount of £2,500,000 entered
into by the Company with Penta Fund 1 Limited
Partnership
"Loan Notes" the £2.5 million Loan Notes issued to the Penta Funds
on 28 July 2004
"London Stock Exchange" London Stock Exchange plc
"New Proposals" the conversion of £11,017,276 of the Loan Facilities,
the Further Loan Facilities and the Preference Shares
and the amendment of the terms of the Preference Shares
as set out in the introduction at page 3 of the
Circular
"New Spiritel Shares" the new Ordinary Shares to be issued to the Concert
Party as a consequence of the Initial Conversion
"Option" the Option dated 28 November 2005 pursuant to which
Penta Fund 1 Limited Partnership was granted an option
to acquire 100,000 Ordinary Shares at 7.5p per Ordinary
Share
"Ordinary Shares" ordinary shares of 1p each in the capital of the
Company
"Penta Capital" Penta Capital Partners Limited, the investment manager
for the Penta Funds
"Penta Funds" together Penta Fund 1 Limited Partnership and Penta
Fund 1 SP Limited Partnership
"Preference Shares" the £4,100,000 Preference Shares of £1 each in the
Company
"Proxy Form" the proxy form for use at the Extraordinary General
Meeting appended to the Circular
"Resolutions" the resolutions to be proposed at the EGM as set out in
the Notice of EGM at the end of the Circular
"Shareholders" holders of Ordinary Shares
"Subsequent Conversion" the subsequent conversion, of part or all, of the
remaining balance of the Loan Facilities, Further Loan
Facilities and Preference Shares after the Initial
Conversion
"Whitewash Resolution" the resolution set out in the notice of EGM as
resolution 2 (to be approved by Independent
Shareholders voting on a poll) to approve the
waiver of the obligations on the Concert Party that
would otherwise arise to make a mandatory cash offer
for the Existing Shares not owned by the Concert Party
"WN1" WN1 Limited
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCKKLFLVZBZBBV