THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF
ARTICLE 7 OF EU REGULATION 596/2014 (WHICH FORMS PART OF DOMESTIC
UK LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018), AS
AMENDED. ON PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY
INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE
PUBLIC DOMAIN AND ANY PERSONS WHO RECEIVED INSIDE INFORMATION IN A
MARKET SOUNDING ARE NO LONGER IN POSSESSION OF SUCH INSIDE
INFORMATION.
22 November 2024
OTAQ
plc
("OTAQ" or the
"Company")
Proposed
cancellation of admission to trading on the AQSE Growth
Market
Amendment to
Convertible Loan Note Instrument
Notice of general
meeting
OTAQ (AQSE: OTAQ),
the innovative technology company targeting the aquaculture and
offshore markets, today announces:
-
subject to Shareholder approval,
the proposed cancellation of the admission of its ordinary shares
of 1 penny each ("Ordinary Shares") from trading on the Access
Segment of the AQSE Growth Market (the "AQSE Growth Market and the "Cancellation"), the re-registration of
the Company as a private limited company (the "Re-registration")
following the Cancellation and the adoption of new articles of
association (the "New Articles of Association") to be effective on
the Re-registration (together the "Proposals"); and
-
the posting of a circular to
Shareholders (the "Circular") which contains further information on
the Cancellation and the Re-registration and notice of a general
meeting to be held at The Barracks, White Cross, Lancaster, LA1 4XF
on 10 December 2024 at 10.00 a.m. (the "General Meeting") at which
shareholder approval will be sought for the Proposals.
Proposed
Cancellation and Re-registration
The Board has
extensively reviewed and evaluated the benefits and drawbacks for
the Company and its Shareholders in retaining the admission to
trading of the Ordinary Shares on the AQSE Growth Market. The Board
has taken into consideration numerous factors, both positive and
negative, and considered the interests of all Shareholders in
reaching its decision. These factors include the limited liquidity
in the Ordinary Shares and share price volatility, access to
appropriate finance, less corporate and strategic flexibility and
the costs and regulatory burden of maintaining a public listing
being disproportionate to the benefits of the Company's continued
admission to trading on the AQSE Growth Market. Following this
review, the Board has concluded that the continued admission to
trading of the Ordinary Shares on the AQSE Growth Market is not
appropriate and, accordingly, the Cancellation and Re-registration
are in the best interests of the Company and Shareholders as a
whole. A detailed explanation of these reasons is set out in
Appendix I to this announcement.
Following the
Cancellation and Re-registration, the Company will continue to
evaluate the optimal corporate structure to ensure its long-term
success, which could include listing on an alternative exchange at
a future date, should this provide appropriate access to capital
and liquidity to support the Company's strategy.
To be passed, the
resolution to approve the Cancellation requires, pursuant to Rule
5.3 of the AQSE Rules, the approval of not less than 75 per cent.
of the votes cast by Shareholders at the General Meeting. The
resolution to approve the Re-registration and the adoption of New
Articles of Association also requires the approval of not less than
75 per cent. of the votes cast by Shareholders at the General
Meeting.
Amendment to
Convertible Loan Note Instrument
On 26 June 2024,
the Company constituted a Convertible Loan Note Instrument for the
issue of a maximum principal amount of up to £2.7 million and on 12
July 2024 issued £1.79 million of 10 per cent. secured Convertible
Loan Notes. Pursuant to the issuance of the Convertible Loan Notes,
the Company agreed to certain customary rights and protections for
Noteholders, including granting a charge over the Company’s
existing Sealfence acoustic deterrent system product inventory,
namely its Sealfence 3 and Sealfence 4 control units, related
projectors and related battery boxes.
Under the terms of
the Convertible Loan Note Instrument, the proposed Cancellation
would constitute an event of default and accordingly the
Noteholders would be entitled to require the immediate repayment of
all amounts of principal and/or interest owing in respect of the
Convertible Loan Notes held by them. However, Noteholders holding
more than 75 per cent. of the Convertible Loan Notes have agreed to
waive this event of default on the basis that the Company will
undertake to sell the existing Sealfence acoustic deterrent system
product inventory to repay the Convertible Loan Notes.
In addition to the
above waiver, Noteholders holding more than 75 per cent. of the
Convertible Loan Notes have agreed to vary the terms of the
Convertible Loan Note Instrument so that:
-
the Company is entitled to
capitalise interest accruing due; and
-
up to 75 per cent. (formerly 50 per
cent.) of the proceeds of sale of the Sealfence acoustic deterrent
system product inventory will be applied to redeem the outstanding
Convertible Loan Notes and settle any accrued interest.
General
Meeting
The General Meeting
will be held at The Barracks, White Cross, Lancaster, LA1 4XF on 10
December 2024 at 10.00 a.m.
Resolution 1 to be
proposed at the General Meeting is a special resolution to approve
the Cancellation.
Conditional on the
passing of Resolution 1, Resolution 2 to be proposed at the General
Meeting is a special resolution to re-register the Company as a
private limited company and to approve the adoption by the Company
of the New Articles of Association.
Resolution 1 to
approve the Cancellation is not conditional on Resolution 2 to
approve the Re-registration, but Resolution 2 is conditional on
Resolution 1. If Resolution 1 is passed, but Resolution 2 is not,
the Company still intends to proceed with the
Cancellation.
As at today's
date, the Company has received irrevocable undertakings to vote in
favour of the Resolutions from each of the Directors and their
connected parties along with certain Shareholders who in aggregate
hold 58,846,081 Ordinary Shares representing approximately 45.8 per
cent. of the Company's issued share capital.
A copy of this
announcement and the Circular will be made available on the
Company's website later today at
www.otaq.com/investors/.
Capitalised
terms used but not defined in this announcement shall have the same
meaning given to such term in the Circular.
Enquiries:
|
OTAQ
PLC
|
+44 (0) 1524 748028
|
|
Adam Reynolds, Non-Executive
Chairman
|
|
|
Phil Newby, Chief Executive
Officer
Justine Dowds, Chief Financial
Officer
|
|
|
|
|
|
Dowgate Capital
Limited - AQSE Corporate Advisor & Broker
|
+44 (0)20 3903 7715
|
|
James Serjeant / Russell
Cook
|
|
|
|
|
|
Walbrook PR
Limited - PR
Tom Cooper / Nick Rome
|
+44 (0)20 7933 8780
07971221972 or
07748325236
|
|
|
OTAQ@walbrookpr.com
|
| |
|
|
|
APPENDIX
I
Extracts from
the Circular
Background to
and reasons for the Cancellation and Re-registration
The Board has
extensively reviewed and evaluated the benefits and drawbacks for
the Company and its Shareholders in retaining the admission to
trading of the Ordinary Shares on the AQSE Growth Market. The Board
has taken into consideration numerous factors, both positive and
negative, and considered the interests of all Shareholders in
reaching its decision. Following this review, the Board has
concluded that the continued admission to trading of the Ordinary
Shares on the AQSE Growth Market is not appropriate and,
accordingly, the Cancellation and Re-registration are in the best
interests of the Company and its Shareholders as a whole for the
reasons set out below.
-
Costs and
regulatory burden: The
considerable cost and management time and the legal and regulatory
burden associated with maintaining the Company's admission to
trading on the AQSE Growth Market is, in the Board's opinion,
disproportionate to the benefits of the Company's continued
admission to trading on the AQSE Growth Market, particularly given
the limited and inconsistent liquidity in the Ordinary Shares as
described below. Given the lower costs associated with private
limited company status, the Cancellation and Re-registration will
reduce the Company's recurring administrative and adviser costs
which the Board believes can be better spent supporting and
investing in the Group's business.
-
Limited liquidity
in the Ordinary Shares: There continues to be limited and inconsistent
liquidity in the Ordinary Shares, as a result of which small trades
in the Ordinary Shares can have a significant impact on price and,
therefore, on the market valuation of the Company. The Board
believes that this, in turn, has a materially adverse impact on the
Company's ability to seek appropriate financing or realise an
appropriate value for any material future transactions. Moreover,
the limited liquidity in the Ordinary Shares makes it challenging
for Shareholders of any size to acquire additional Ordinary Shares
or dispose of any Ordinary Shares in the market at an attractive
price.
-
Access to
appropriate finance: The
Company’s aquaculture activities remain in development. The Company
has sought further funding to support the commercialisation of
these activities. The Company did receive support from investors
with the issue of the Convertible Loan Note earlier this year, but
necessary further funding utilising the Company’s quoted Ordinary
Shares is unlikely. In the circumstances the costs of continued
admission to trading on the AQSE Growth Market cannot be
justified.
-
Corporate and
strategic flexibility: The
Board believes that a private limited company can take and
implement strategic decisions more quickly than a company which is
publicly traded as a result of the more flexible regulatory regime
that is applicable to a private limited company. It has also been
disadvantageous to publicly announce news of significance, as this
has given the Company’s competitors insights they would not
otherwise have if the Company was a private limited company. This
will be advantageous in the Company's business development
discussions which may ultimately benefit the Company and
Shareholders as a whole.
Therefore, as a
result of this review, the Board has unanimously concluded that the
proposed Cancellation and Re-registration are in the best interests
of the Group and Shareholders as a whole.
Strategic
corporate re-organisation
The Board agree
that to ensure the Company’s long-term success it will pause, with
immediate effect, the development of Aquaculture and Technology
products and focus all available resources on the profitable and
growing Offshore division.
With offices in
Aberdeen and Cumbria, the Offshore division, which includes
offshore products and connector solutions, produces a range of
marine technology products and solutions for offshore industries,
supplying customers around the world including subsea oil and gas,
remotely operated vehicle operations, commercial diving and
oceanographic research, with significant growth opportunities in
the offshore renewables sector. Specialising in subsea leak and
cement detection, laser measurement systems, underwater imagery and
telemetry solutions, as well as subsea survey solutions, major
customers include Expro and Amphenol for its underwater connector
solutions and Oceaneering, Fugro and Subsea 7 for its OceanSense
rental business, with the rental business remaining significantly
cash generative.
Following the
proposed Cancellation, Re-registration, and strategic corporate
re-organisation, the Board forecasts annualised cost savings of
£1.2 million in addition to the £0.5 million of cost savings
undertaken to restructure the Group over recent months to enable it
to focus on its core, profitable operations and prospects. The
additional cost savings are expected to derive from costs
associated with maintaining the Company’s quote and reduced Board
costs, approximately £0.3 million each, further overhead reductions
of approximately £0.2 million, and other identified cost savings of
approximately £0.4 million.
Despite these cost
savings, the Board believes the Offshore division has the
appropriate corporate and management structure as well as expertise
to execute on both the immediate and medium term prospects
available to it.
Current
trading and outlook
For the year ending
31 December 2024, the Board expects the Group to achieve revenue of
not less than £3.0 million (2023: £4.4 million) and an Adjusted
EBITDA loss of £1.0 million (2023: loss of £0.3 million). However,
at a divisional level, the Board expects that the Offshore division
will achieve revenue of £2.5 million and Adjusted EBITDA of £0.7
million.
Following the
proposed Cancellation, Re-registration, and strategic corporate
re-organisation, the Board forecasts that for the year ending 31
December 2025 the Offshore division is expected to achieve revenue
of £3.0 million and Adjusted EBITDA of £0.9 million.
Process for,
and principal effects of, the Cancellation
The Directors are
aware that certain Shareholders may be unable or unwilling to hold
Ordinary Shares in the event that the Cancellation is approved and
becomes effective. Such Shareholders should consider selling their
interests in the market prior to the Cancellation becoming
effective.
Under the AQSE
Rules, the Company is required to give at least 20 clear Business
Days' notice of the Cancellation. Additionally, the Cancellation
will not take effect until at least five clear Business Days have
passed following the passing of the Cancellation Resolution. If the
Cancellation Resolution is passed at the General Meeting, it is
proposed that the last day of trading in the Ordinary Shares on the
AQSE Growth Market will be 20 December 2024 and that the
Cancellation will take effect at 7.00 a.m. on 23 December
2024.
Under the AQSE
Rules, it is a requirement that the Cancellation must be approved
by Shareholders holding not less than 75 per cent. of votes cast by
Shareholders at the General Meeting. Accordingly, the Notice of
General Meeting set out in the Circular contains a special
resolution to approve the Cancellation.
The principal
effects of the Cancellation will include the following:
-
it is possible that, following the
publication of this announcement, the liquidity and marketability
of the Ordinary Shares may be significantly reduced and their value
adversely affected (however, as set out above, the Directors
believe that the existing liquidity in the Ordinary Shares is, in
any event, limited);
-
the Ordinary Shares may be more
difficult to sell compared to shares of companies traded on the
AQSE Growth Market (or any other recognised market or trading
exchange);
-
in the absence of a formal market
and quoted price, it may be difficult for Shareholders to determine
the market value of their investment in the Company at any given
time;
-
the regulatory and financial
reporting regime applicable to companies whose shares are admitted
to trading on the AQSE Growth Market will no longer
apply;
-
Shareholders will no longer be
afforded the protections given by the AQSE Rules, such as the
requirement to be notified of price sensitive information or
certain events and the requirement that the Company seek
Shareholder approval for certain corporate actions, where
applicable, including substantial transactions, reverse takeovers,
related party transactions and fundamental changes in the Company's
business, including certain acquisitions and disposals;
-
the levels of disclosure and
corporate governance within the Company may not be as stringent as
for a company quoted on the AQSE Growth Market;
-
the Company will no longer be
subject to UK MAR regulating inside information and other
matters;
-
the Company will no longer be
required to publicly disclose any change in major shareholdings in
the Company under the Disclosure Guidance and Transparency
Rules;
-
the Takeover Code is expected to
cease to apply to the Company shortly following the Cancellation
and the Re-registration given anticipated Board
changes;
-
Dowgate Capital will cease to be
AQSE Corporate Adviser to the Company but will be appointed
Corporate Adviser;
-
whilst the Company's CREST facility
will remain in place immediately after the Cancellation, the
Company's CREST facility may be cancelled in the future and,
although the Ordinary Shares will remain transferable, they may
cease to be transferable through CREST (in which case, Shareholders
who hold Ordinary Shares in CREST will receive share
certificates);
-
stamp duty will be due on transfers
of shares and agreements to transfer shares unless a relevant
exemption or relief applies to a particular transfer;
and
-
the Cancellation and
Re-registration may have personal taxation consequences for
Shareholders. Shareholders who are in any
doubt about their tax position should consult their own
professional independent tax adviser.
The above
considerations are not exhaustive, and Shareholders should seek
their own independent advice when assessing the likely impact of
the Cancellation on them.
For the avoidance
of doubt, the Company will remain registered with the Registrar of
Companies in England and Wales in accordance with, and subject to,
the Companies Act, notwithstanding the Cancellation and
Re-registration.
Provision of
information, services and facilities following the
Cancellation
The Company
currently intends to continue to provide certain information,
services and facilities to Shareholders following the Cancellation,
including:
-
to continue to communicate
information about the Company (including annual accounts) to its
Shareholders, as required by the Companies Act; and
-
to continue, for at least 12 months
following the Cancellation, to maintain its website, www.otaq.com
and to post updates on the website from time to time, although
Shareholders should be aware that there will be no obligation on
the Company to include all of the information required under the
Disclosure Guidance and Transparency Rules, AQSE Rule 4.14 or to
update the website as currently required by the AQSE
Rules.
Transactions
in the Ordinary Shares prior to and post the proposed
Cancellation
Prior to the
Cancellation
Shareholders should
note that they are able to continue trading in the Ordinary Shares
on the AQSE Growth Market prior to Cancellation.
Following
the Cancellation
Shareholders should
be aware that following the proposed Cancellation, the ability to
transact in the Ordinary Shares will be greatly
inhibited.
If
Shareholders wish to buy or sell Ordinary Shares on the AQSE Growth
Market they must do so prior to the Cancellation becoming
effective. As noted above, in the event that Shareholders approve
the Cancellation, it is anticipated that the last day of dealings
in the Ordinary Shares on the AQSE Growth Market will be 20
December 2024 and that the effective date of the Cancellation will
be 23 December 2024.
Process for
the Re-registration
As set out above,
following the Cancellation, the Directors believe that the
requirements and associated costs of the Company maintaining its
public company status will be difficult to justify and that the
Company will benefit from the more flexible requirements and lower
costs associated with private limited company status. It is
therefore proposed to re-register the Company as a private limited
company. In connection with the Re-registration, it is proposed
that the New Articles of Association be adopted to reflect the
change in the Company's status to a private limited company. The
principal effects of the Re-registration and the adoption of the
New Articles of Association on the rights and obligations of
Shareholders and the Company are summarised in Part II of the
Circular.
Under the Companies
Act, the Re-registration and the adoption of the New Articles of
Association must be approved by Shareholders holding not less than
75 per cent. of votes cast by Shareholders at the General Meeting.
Accordingly, the Notice of General Meeting set out in the Circular
contains a special resolution to approve the Re-registration and
adopt the New Articles of Association.
If the Cancellation
Resolution and the Re-registration Resolution are approved at the
General Meeting, an application will be made to the Registrar of
Companies for the Company to be re-registered as a private limited
company. Re-registration will take effect when the Registrar of
Companies issues a certificate of incorporation on Re-registration.
The Registrar of Companies will issue the certificate of
incorporation on Re-registration when it is satisfied that no valid
application can be made to cancel the Re-registration Resolution or
that any such application to cancel the Re-registration Resolution
has been determined and confirmed by the Court.
If the Resolutions
are passed at the General Meeting and no application to cancel the
Re-registration Resolution is made, it is anticipated that the
Re-registration will become effective on or before 31 January
2025.
Takeover
Code
The Takeover Code
currently applies to all offers for companies which have their
registered offices in the United Kingdom, the Channel Islands or
the Isle of Man if any of their equity share capital or other
transferable securities carrying voting rights are admitted to
trading on a UK regulated market or a UK multilateral trading
facility or on any stock exchange in the Channel Islands or the
Isle of Man.
Currently the
Takeover Code also applies to all offers for companies (both public
and private) which have their registered offices in the United
Kingdom, the Channel Islands or the Isle of Man and which are
considered by the Takeover Panel to have their place of central
management and control in the United Kingdom, the Channel Islands
or the Isle of Man, but in relation to private companies only if
one of a number of conditions is met - for example, if the
company's ordinary shares were admitted to trading on a UK
regulated market or a UK multilateral trading facility or on any
stock exchange in the Channel Islands or the Isle of Man at any
time in the preceding ten years.
If the Cancellation
and Re-registration are approved by Shareholders at the General
Meeting, the Company will be re-registered as a private company and
its securities will no longer be admitted to trading on a regulated
market or a multilateral trading facility in the United Kingdom and
the Takeover Code will continue to apply to the Company for a
period of at least ten years from the date of the Cancellation if
the Company.
Currently,
following the expiry of the ten-year period from the date of the
Cancellation (subject to Re-registration occurring), the Takeover
Code will cease to apply to the Company and Shareholders will no
longer be afforded the protections provided by the Takeover
Code. This
includes the requirement for a mandatory cash offer to be made if
either:
-
a person acquires an interest in
ordinary shares which, when taken together with the ordinary shares
in which persons acting in concert with it are interested,
increases the percentage of ordinary shares carrying voting rights
in which it is interested to 30 per cent. or more; or
-
a person, together with persons
acting in concert with it, is interested in ordinary shares which
in the aggregate carry not less than 30 per cent. of the voting
rights of a company but does not hold ordinary shares carrying more
than 50 per cent. of such voting rights and such person, or any
person acting in concert with it, acquires an interest in any other
ordinary shares which increases the percentage of ordinary shares
carrying voting rights in which it is interested.
However, the
Takeover Panel has proposed amendments to the Takeover Code so
that, with effect from 3 February 2025, the ten-year period during
which the Takeover Code would continue to apply will be reduced to
two years. Consequently, the Takeover Code would cease to apply to
the Company from 3 February 2027.
Brief details of
the Takeover Panel, and of the protections afforded by the Takeover
Code are set out in Part III of the Circular.
Before giving
your consent to the Cancellation and the Re-registration, you may
want to take independent professional advice from an appropriate
independent financial adviser.
APPENDIX
II
Expected
timetable of principal events
Announcement of the Cancellation
and Re-registration 22 November 2024
Publication and posting of the
Circular 22 November 2024
Latest time for receipt of proxy
appointments in respect of 10.00 a.m. on 6 December 2024
the General Meeting
General Meeting 10.00 a.m. on 6 December 2024
Last day of dealings in Ordinary
Shares on the 20 December 2024
AQSE Growth Market
Cancellation of admission of the
Ordinary Shares to trading 7.00 a.m. on 23 December 2024
on the AQSE Growth
Market
Expected Re-registration as a
private company on or before 31 January 2025
Notes:
-
All of the times referred to in
this announcement refer to London time, unless otherwise
stated.
-
Each of the times and dates in the
above timetable is subject to change. If any of the above times
and/or dates change, the revised times and dates will be notified
to Shareholders by an announcement through a Regulatory Information
Service.
