RNS Number:2328O
ID Data PLC
01 August 2003
ID Data plc ('ID Data' or 'the Company')
Fundraising and Notice of EGM
ID Data, a leading supplier of secure transaction systems and smart card
services to the international telephony, banking, retail and secure access
sectors, today announces a proposed placing of up to #4 million secured
convertible loan notes 2008 and an issue of equity.
Summary
* A firm commitment from #1.74 million proposed Loan Noteholders
* An issue of equity for cash raising approximately #0.23 million
* The ability to raise up to #4 million by the issue of Loan Notes
"On 18 March 2003, the Company informed shareholders of its funding requirement
in a trading statement and the Board is pleased, in a comparatively short
period, to have raised in aggregate approximately #2 million of additional
working capital for the Company."
Set out below is an extract from the Circular being posted to Shareholders
today, further copies of the Circular are available during normal business hours
for one month from today, free of charge, from the Company's registered office
Wansell Road, Weldon North, Corby, Northamptonshire, NN17 5LX.
Unless otherwise expressly defined, words and expressions defined in the
Circular shall bear the same respective meanings within this announcement.
For further information, please contact:
ID Data plc
Peter Cox, Chief Executive Tel: +44 (0) 1536 207 000
Email: peter.cox@id-data.co.uk
Media enquiries:
Bankside
Peter Curtain / Heather Salmond Tel: +44 (0) 20 7444 4140
Email: heather.salmond@bankside.com
"Letter from the Chairman
1. Introduction
On 1 August 2003 the Company announced its preliminary financial results for the
year ended 31 March 2003, and also informed Shareholders of its intention to
raise additional funds primarily by way of an issue of secured convertible loan
notes 2008 up to #4 million (before expenses). The purpose of this letter is to
provide you with further information regarding the terms of the Loan Notes, to
inform Shareholders of an issue of equity and to seek your approval of the
Resolutions at the EGM.
Further to the Company's trading statement released on 18 March 2003, your
Directors are pleased to inform Shareholders that they have firm commitments for
a total of approximately #2.0 million additional funds of which #1.74 million is
by way of the Placing and the Company intends to place further Loan Notes to
other interested parties as soon as practicable.
In addition, the Company is pleased to announce that it has raised approximately
#0.23 million before expenses by way of a placing of 7,829,100 new Ordinary
Shares of 1p each at a placing price of 2.9p per share. Application has been
made for the 7,829,100 new ordinary shares to be admitted to trading on the AIM
Market of the London Stock Exchange and dealings are expected to commence on 7
August 2003. The shares will rank pari passu in all respects with the existing
shares in issue.
At the time of the Company's last fundraising exercise in May 2002, the Company
had hoped not to seek additional finance before it reached profitability,
however it became clear to the Directors earlier this year that due to
continuing poor market conditions further working capital would be required. On
18 March 2003, the Company informed shareholders of its funding requirement in a
trading statement and the Board is pleased, in a comparatively short period, to
have raised in aggregate approximately #2 million of additional working capital
for the Company. However, the Directors believe that an additional #1 million of
further funds will be required to fund the Company until it becomes cash
generative, which the Board is confident in securing from interested parties in
the near future.
The Directors examined a range of fundraising options available to the Company
and given its current stage of development and the current market conditions and
after careful consideration, they believe that the Placing is in the best
interests of Shareholders. In the opinion of the Directors, the Placing
represents the most cost effective and least dilutive method of raising funds
available to the Company.
Even Flow Holdings Limited ("Even Flow") is classed as a substantial Shareholder
by the AIM Rules by virtue of its 24 per cent. holding in the Company's ordinary
share capital. Even Flow intends to participate in the Placing and due to it
being a substantial Shareholder is classed as a related party pursuant to Rule
12 of the AIM Rules. Furthermore, Peter Cox, the Chief Executive of the Company,
is also classed as a related party pursuant to Rule 12 of the AIM Rules. As a
consequence, the Board is required to consider, having consulted with Durlacher,
the Company's nominated adviser, that the basis on which it is proposed that the
related parties participate in the Placing is fair and reasonable insofar as the
Shareholders are concerned. Accordingly, the Board has consulted with Durlacher,
and confirms that it is satisfied that Even Flow and Peter Cox's participation
in the Placing are fair and reasonable insofar as the Shareholders are
concerned.
Notice of the EGM, which will be held at 9.15 a.m. on 4 September 2003 (or as
soon thereafter as the AGM convened for 9.00 a.m. on the same date and at the
same place shall have been concluded or adjourned) is set out at the end of this
document.
2. Requirement for Shareholder Approval
As the Placing involves the issue of up to #4 million Loan Notes which may in
the future convert up to a maximum of 72,727,272 new Ordinary Shares together
with the issue of equity, the Board has resolved, because of the size of this
potential conversion, to seek an increase in the Company's authorised share
capital and an extension of the Directors' current authorities to allot shares
on a non pre-emptive basis. Accordingly, the Directors have convened the
Extraordinary General Meeting at which Shareholders will consider and, if
thought fit, pass certain resolutions relating, inter alia, to increase the
authorised share capital of the Company and to authorise the allotment of new
Ordinary Shares on a non-pre-emptive basis in the event that the conversion
rights attached to the Loan Notes are exercised.
3. Summary Terms of the Loan Note
Pursuant to the terms of the Loan Note Instrument the Company is proposing to
issue Loan Notes to raise up to #4 million before expenses on the following
terms:
* the Loan Note Instrument constitutes 7 per cent. convertible secured
loan notes 2008 and allows the Company to issue Loan Notes with a nominal value
up to #4 million at any time prior to 31 March 2004. The authorised denomination
of each Loan Note is #1. The 7 per cent. interest is payable by the Company
quarterly in arrears, the interest amount is calculated on the nominal value of
the Loan Notes held by the Loan Noteholder.
* the Loan Noteholders, subject to the terms of conversion set out in the
Loan Note Instrument, are entitled to convert the whole or any part, in nominal
amounts of #100 or integral multiples thereof, of their holdings of Loan Notes
at any time, into fully paid Ordinary Shares at the rate of one Ordinary Share
per 5.5p nominal value of Loan Notes if issued prior to 31 August 2003 or, if
issued after this date, the higher of 5.5p and the average mid-market closing
price of the Company's Ordinary Shares for the preceding three trading days to
the date of the issue of the Loan Note to the Loan Noteholder (see also Section
7 - "City Code"). Ordinary Shares allotted on conversion shall be issued fully
paid, free from encumbrances and shall rank pari passu with any Ordinary Shares
then in issue. Fractions of Ordinary Shares will not be issued. The Company
cannot require the Loan Noteholders to convert their Loan Notes.
* the Directors have not applied, and do not intend to apply to the London
Stock Exchange or any other recognised investment exchange for the Loan Notes to
be admitted to trading. The Loan Notes are transferable in amounts or integral
multiples of #100. The Company will use its best endeavours to seek admission
to trading of the new Ordinary Shares issued on conversion of the Loan Notes on
any recognised investment exchange on which the Ordinary Shares are then traded.
* the Loan Notes will be secured by a debenture issued by the Company over
the assets of the Company in favour of the holders of Loan Notes. Further
details regarding the Loan Notes are set out in Part III of this document.
The net proceeds from the issue of the Loan Notes will provide additional
working capital for the Company.
Even Flow and Peter Cox, are substantial Shareholders of the Company and have
agreed to participate in the issue of the Loan Notes by having conditionally
agreed to subscribe for #0.5 million and #0.4 million of Loan Notes
respectively. No other substantial Shareholders of the Company, other than Even
Flow and Peter Cox, have indicated at the date of this document that they would
like to participate in the Placing.
At present After the issue of equity and passing of Resolutions
Number # Number #
Authorised Share Capital 250,000,000 2,500,000 350,000,000 3,500,000
Issue Share Capital 192,946,746 1,929,467 200,775,846 2,007,758
4. Increase in authorised share capital and Directors'
authority to allot shares
Resolution 2 seeks Shareholder approval to increase the authorised share capital
of the Company from #2.5 million to #3.5 million by the creation of an
additional 100,000,000 Ordinary Shares.
Resolution 3 seeks Shareholder approval to give the Directors general authority
to allot shares in connection with the maximum number of new Ordinary Shares to
be issued in connection the Loan Notes, such authority to expire no later than 5
years from the date of this resolution. Accordingly, resolution 3 will give the
Directors general authority to issue a maximum of 72,727,272 new Ordinary
Shares, which is equivalent to approximately 27.4 per cent. of the Ordinary
Share capital of the Company as enlarged by the conversion in full of the Loan
Notes.
5. Disapplication of pre-emption rights
Resolution 4, which is a special resolution, seeks Shareholder approval to give
the Directors authority to allot shares for cash to persons other than
Shareholders. This authority is in respect of the allotment of Ordinary Shares
on the conversion, in full, of the Loan Notes in accordance with the terms of
the Loan Note Instrument and on the exercise, in full, of existing options, and
thereafter is limited to a maximum of a further, 72,727,272 new Ordinary Shares,
which is equivalent to approximately 27.4 per cent. of the share capital of the
Company as enlarged by the conversion in full of the Loan Notes.
6. City Code
The issue of Loan Notes to certain Shareholders gives rise to considerations
under the City Code.
Under Rule 9 of the City Code ("Rule 9"), where (i) any person acquires shares
which, when taken together with shares already held by him or shares acquired by
persons acting in concert with him, carry 30 per cent. or more of the voting
rights of a company subject to the City Code (which includes the Company) or
(ii) any person who, together with persons acting in concert with him, holds not
less than 30 per cent. but not more than 50 per cent. of the voting rights of a
company subject to the City Code and such person, or persons acting in concert
with him, acquires any additional shares which increase that person's percentage
of voting rights, that person is normally obliged to make a general offer in
cash to all shareholders to purchase their shares at no less than the highest
price paid by him, or any person acting in concert with him, within the
preceding 12 months.
The Loan Notes, further details of which are set out in Part III of this
document, include certain rights of conversion into Ordinary Shares. The
exercise of any of the rights of conversion by any of the holders of the Loan
Notes would constitute the acquisition of shares in the Company for the purposes
of Rule 9. Accordingly it is possible that following the conversion of any of
the Loan Notes an obligation could arise for a Shareholder to make an offer in
accordance with Rule 9 if, as a result of such conversion, the holder of such
Loan Notes is then entitled to exercise not less than 30 per cent. of the voting
rights of the Company in general meeting. It is likely that Rule 9 will only be
of potential significance for Even Flow Holdings Limited and Peter Cox who
currently hold 24.3 per cent. and 20.3 per cent. respectively of the issued
Ordinary Share capital of the Company at the date of this document.
It is possible for the consent of the Panel to be sought to waive the
obligations on any person to make an offer in accordance with Rule 9 if at the
time any new ordinary shares are issued by a company, and are therefore acquired
by a particular shareholder for the purposes of Rule 9, the independent
shareholders of the company concerned waive the requirement to make such an
offer by the passing of an ordinary resolution on a poll at a general meeting of
the Company. However, it is only possible for the approval of the independent
shareholders of the Company to be sought for the waiver of any obligation of any
holder of the Loan Notes to make an offer in accordance with Rule 9 following
any conversion into Ordinary Shares, at the time that the Loan Note Instrument
is constituted by the Company. The Directors have been advised by Even Flow
Holdings Limited and Peter Cox that they do not wish to seek the waiver of any
obligation to make an offer in accordance with Rule 9 if, as a result of the
conversion of any of the Loan Notes which they may hold, there would otherwise
be an obligation on them to make such an offer in accordance with Rule 9.
7. Irrevocable undertakings
The Company has received an irrevocable undertaking to vote in favour of the
Resolutions from a number of Shareholders and Peter Cox, the Chief Executive,
who have a beneficial interest in respect of 125,270,033 Ordinary Shares
representing approximately 64.9 per cent. of the current issued share capital of
the Company.
Furthermore, the Company has received firm undertakings to vote in favour of the
Resolutions from certain Shareholders, who have a beneficial interest in respect
of 17,701,741 Ordinary Shares representing approximately 9.2 per cent. of the
current issued share capital of the Company.
In aggregate firm undertakings to vote in favour of the Resolutions received by
the Company in respect of 142,971,774 Existing Ordinary Shares representing
approximately 74.1 per cent. of the current issued share capital of the Company.
8. The Extraordinary General Meeting
There is set out at the end of this document a notice convening the
Extraordinary General Meeting of the Company to be held at Simmons & Simmons at
CityPoint, One Ropemaker Street, London, EC2Y 9SS on 4 September 2003 at 9.15
a.m. (or as soon thereafter as the AGM convened for 9.00 a.m. on the same date
and at the same place shall have been concluded or adjourned). At this meeting
resolutions will be proposed to:
* approve the Loan Note Instrument dated on or around 1 August 2003
for all purposes (including but not limited to approvals required under s.320 of
the Companies Act 1985).
* increase the authorised share capital of the Company;
* grant the Directors authority to allot shares pursuant to Section
80 of the Act; and
* grant the Directors authority to allot shares pursuant to Section
95 of the Act as if Section 89(1) of the Act did not apply to such allotment.
9. Action to be taken by Shareholders
Shareholders will find enclosed with this document a Form of Proxy for use at
the Extraordinary General Meeting. The Form of Proxy should be completed and
returned in accordance with the instructions printed thereon so as to arrive at
the Company's registrars, Capita IRG Plc, 34 Beckenham Road, Beckenham, BR3 4TU
as soon as possible and in any event not later than 9.15 a.m. on 2 September
2003. Completion and return of a Form of Proxy will not prevent Shareholders
from attending and voting in person at the Extraordinary General Meeting should
they so wish.
9. Recommendation
Your Directors, who have consulted with Durlacher, believe that the Proposals
are in the best interests of the Company and its Shareholders and intend to vote
in favour of the Resolutions and accordingly recommend you to vote in favour of
the Resolutions.
Yours faithfully
Jeffrey Michael Blackburn
Non-Executive Chairman"
This information is provided by RNS
The company news service from the London Stock Exchange
END
NOEPBMLTMMJMMLJ
