Fundraising, board changes, change of adviser
THIS ANNOUNCEMENT (INCLUDING THE APPENDICES) AND THE INFORMATION HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE, TRANSMISSION, DISTRIBUTION OR FORWARDING DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, TRANSMISSION, RELEASE, DISTRIBUTION OR FORWARDING WOULD BE UNLAWFUL.
For immediate release
9 August 2023
("Gfinity" or the "Company")
Proposed Board changes
Proposed share capital reorganisation
Change of adviser
The Board of Gfinity plc (AIM:GFIN) is pleased to announce that the Company has today conditionally raised £450,000 through a Company arranged Subscription at a price of 0.06 pence per New Ordinary Share (the "Issue Price"). The Subscription is conditional on the passing of the resolutions to be proposed at a General Meeting ("Resolutions").
As the Company's Existing Ordinary Shares have a nominal value of 0.1 pence at present, to enable the Company to issue shares pursuant to the Subscription at 0.06 pence per share, the Company is proposing to undertake a Share Capital Reorganisation, pursuant to which each Existing Ordinary Share of 0.1 pence currently in issue will be subdivided into one New Ordinary Share of 0.01 pence each and one Deferred Share of 0.09 pence each.
The recently announced restructuring has allowed the Company to focus on its digital media business, Gfinity Digital Media, which has a significant position in the Gamer website industry. To support that strategy, the Company is proposing certain Board changes:
· David Halley will be joining the Company as Chief Executive Officer on completion of the customary regulatory checks under the AIM Rules.
· Jonathan Hall ceases to be a director with immediate effect and the Board would like to thank Jonathan for his significant contribution to the Company since it was first admitted to AIM, and to wish him well for the future. In the interim he will continue in his role as Company Secretary until a new appointment is made.
The Company has today appointed Beaumont Cornish Limited ("BCL") as the Company's Nominated Adviser and Broker with immediate effect.
A circular, containing further details of the Subscription and the Share Capital Reorganisation and notice of a General Meeting to, inter alia, approve the Resolutions required to implement the Subscription and the Share Capital Reorganisation, is expected to be published and despatched to Shareholders shortly and a further announcement will be made in due course.
The Company has today conditionally raised £450,000 (before expenses) through the Company arranged Subscription at the Issue Price. The Subscription is conditional on the passing of the Resolutions. The Issue Price compares to the 10-day volume weighted average price per share of 0.94 pence for the period ended on 8 August 2023 (being the Last Practicable Date prior to the announcement of the Subscription). Subject to shareholder approval, the Company will issue 750,000,000 New Ordinary Shares ("Subscription Shares") pursuant to the Subscription which will rank pari passu with the New Ordinary Shares arising on the Share Capital Reorganisation as described above. Application will be made for admission of the Subscription Shares and the New Ordinary Shares resulting from the Share Capital Reorganisation to trading on AIM subject to the passing of the Resolutions.
Current trading and use of proceeds
On 31 March 2023, the Company announced its half year results for the six-month period ended 31 December 2022. These results reported revenue of £4.1 million, an adjusted operating loss of £0.8 million and a period-end cash of £1.7m, supplemented by a post period-end placing and subscription, raising £2.0 million before expenses.
Following the divestment of 72.5% of Athlos, the closure of the Esports Solutions Division and associated significant cost reductions across the business, the Directors believe that the business has now stabilised. As at 4 August 2023, the Company's cash amounted to approximately £205,000.
Given the restructuring as described above, the Company will be reviewing in accordance with normal year-end procedures, the carrying cost of goodwill in its next audited Accounts to 30 June 2023 and it is likely that a substantial part of the goodwill (which stood at £4.7m as per the last published balance sheet as at 31 December 2022) will be written off, which would also be reflected as a charge to the Income Statement.
The net proceeds from the Subscription are intended to fund the immediate day-to-day working capital needs of the Company's media business and the ongoing cost of its AIM listing. The Directors are targeting cash break-even and attracting a monthly audience of 10m+ monthly active users over the next six months. Gfinity has invested extensively in its tech content platform and, more recently in the deployment of artificial intelligence ("AI"). Combined with more effective use of "ad-tech" to boost CPM rates and direct advertising, the Board believes it can create a market leader in the gaming digital media space.
If the Resolutions are not passed at the General Meeting, the Subscription will not proceed in the form currently envisaged, with the result that the anticipated net proceeds of the Subscription will not become available. The Directors would as a result need to consider urgently alternative sources of funding to meet its immediate working capital needs, including a trade sale of its operating subsidiary. There is no assurance that any such alternative funding arrangements could be put in place in the timescale required, which would have a materially adverse effect on the Company.
Share Capital Reorganisation
A company is not permitted under the Companies Act 2006 to issue shares with an issue price which is below their nominal value. The Company's Existing Ordinary Shares have a nominal value of 0.1 pence at present and to enable the Company to issue shares pursuant to the Subscription at 0.06 pence per share, the Company is proposing to undertake the Share Capital Reorganisation, pursuant to which each Existing Ordinary Share currently in issue will be subdivided into one New Ordinary Share of 0.01 pence each and one Deferred Share of 0.09 pence each.
Immediately following the Share Capital Reorganisation, the number of New Ordinary Shares in issue will be the same as the number of Existing Ordinary Shares currently in issue, in each case excluding the Subscription Shares, which as at the date of this announcement is 2,649,029,913. Accordingly, immediately following the Share Capital Reorganisation and before completion of the Admission of the Subscription Shares, 2,649,029,913 New Ordinary Shares and 2,649,029,913 Deferred Shares will be in issue.
Application will be made for Admission to trading on AIM for the New Ordinary Shares arising on the Share Capital Reorganisation, which on Admission will have the same rights as those currently attaching to the Existing Ordinary Shares under the Articles, including the rights relating to voting and entitlement to dividends. New share certificates for New Ordinary Shares will not be issued and the existing certificates are expected to remain valid.
Holders of warrants over Existing Ordinary Shares will maintain the same rights as currently accruing to them, subject to adjustment of their subscription rights in respect of the New Ordinary Shares, on the terms of the Existing Warrant Instrument, to reflect the Share Capital Reorganisation. As such, upon completion of the Share Capital Reorganisation, each Existing Warrant will entitle its holder to subscribe for one New Ordinary Share and one Deferred Share, subject to the terms and conditions set out in the Existing Warrant Instrument.
The Deferred Shares will have no substantive rights attached to them and, accordingly, will not carry the right to vote or to participate in any distribution of surplus assets. They will not be admitted to trading on AIM and will effectively carry no value.
The holders of the Deferred Shares will be deemed to have given an irrevocable authority to the Company at any time to: (i) appoint any person, for and on behalf of such holder, to, among other things, transfer some or all of the Deferred Shares (at nil consideration) to such person(s) as the Company may determine; and (ii) purchase or cancel such Deferred Shares. In addition, the Company may purchase all of the Deferred Shares, at a price not exceeding £1 in aggregate.
As part of this process, the Articles will need to be amended to set out the rights and restrictions attaching to the Deferred Shares and the existing share authorities will need to be replaced. A special resolution in the Notice of General Meeting will propose the necessary amendments to the Articles and will set out the rights attaching to the Deferred Shares, details of which will be set out in the Notice of General Meeting.
A circular, containing further details of the Subscription and the Share Capital Reorganisation and notice of the General Meeting to, inter alia, approve the Resolutions required to implement the Subscription and the Share Capital Reorganisation, is expected to be published and despatched to Shareholders shortly and a further announcement will be made in due course (the "Circular"). Following its publication, the Circular will be available on the Group's website.
Proposed Board changes
As previously announced on 6 June 2023, the Company announced that it had sold 72.5% of Athlos to Tourbillon Group UK Limited and the closure of its Esports division, as the market for esports remained soft and the Directors saw limited profitable growth opportunities. This restructuring has allowed the Company to focus on its digital media business, Gfinity Digital Media, which has a significant position in the Gamer website industry. Accordingly, the Company is proposing certain Board changes to support its new strategy.
David Halley will be joining the Company as Chief Executive Officer on completion of the customary regulatory checks under the AIM Rules. David has over 25 years' experience spanning banking, hedge funds and insurance, incorporating risk management and trading roles. He founded and served as the CIO of Capstone Financial (HK) Ltd, founded a crypto related insurance broker and has previously been a member of the investment management team for Man-Vector Limited, a commodity trading advisor (CTA) hedge fund that was part of the Man Group. David Halley served as the Risk Manager for the fund. David is currently a director of Tourbillon Group UK Limited which, as announced in June this year, acquired 72.5 per cent. of the Company's gaming subsidiary, Athlos. On appointment to the Board, David Halley will not receive any direct monetary remuneration in place of which the Company intends to make a significant award of share options to him to subscribe for New Ordinary Shares at the Issue Price.
Jonathan Hall ceases to be a director with immediate effect and the Board would like to thank Jonathan for his significant contribution to the Company since it was first admitted to AIM, and to wish him well for the future. In the interim he will continue in his role as Company Secretary until a new appointment is made.
Following the appointment of David Halley, Neville Upton will revert to his previous role of non-executive Chairman.
Change of Adviser
The Company has today appointed Beaumont Cornish Limited ("BCL") as the Company's Nominated Adviser and Broker with immediate effect.
Directors' and Proposed Director's Participation and Related Party Subscription
The directors are not participating in the Subscription. David Halley, a proposed director, has participated in the Subscription by subscribing for 66,666,667 New Ordinary Shares, representing 1.96% in the Company's Enlarged Share Capital on Admission.
Robert Keith is subscribing for 333,333,333 Subscription Shares pursuant to the Subscription. Robert Keith is currently interested in 12.02% of the Company's Ordinary Shares held by him directly and indirectly.
The subscription by Robert Keith for the Subscription Shares is therefore a related party transaction pursuant to rule 13 of the AIM Rules for Companies. Accordingly, the Directors consider, having consulted with the Company's nominated adviser, Beaumont Cornish, that the subscription for the Subscription Shares by Robert Keith which is on the same terms and conditions as for the other subscribers, is fair and reasonable insofar as Gfinity's Shareholders are concerned.
Further information is available from the Company's website which details the company's project portfolio as well as a copy of this announcement: www.gfinityplc.com
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR").
The person who arranged for the release of this announcement on behalf of the Company was Neville Upton, Executive Chairman and Director.
Beaumont Cornish Limited
Nominated Adviser and Broker
+44 (0)207 628 3369
Beaumont Cornish Limited ("Beaumont Cornish"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as nominated adviser to the Company in connection with the proposed admission of the Subscription Shares and the New Ordinary Shares arising from the Share Capital Reorganisation to trading on AIM and the proposals described in this document. It will not regard any other person as its client and will not be responsible to anyone else for providing the protections afforded to the clients of Beaumont Cornish or for providing advice in relation to such proposals. Beaumont Cornish has not authorised the contents of, or any part of, this document and no liability whatsoever is accepted by Beaumont Cornish for the accuracy of any information or opinions contained in this document or for the omission of any information. Beaumont Cornish as nominated adviser to the Company owes certain responsibilities to the London Stock Exchange which are not owed to the Company, the Directors, Shareholders or any other person.
The New Ordinary Shares referred to in this document have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act") and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the requirements of the Securities Act. There will be no public offer of the New Ordinary Shares in the United States, the United Kingdom or elsewhere. The New Ordinary Shares are being offered and sold outside the United States in reliance on Regulation S under the Securities Act. The New Ordinary Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission or other regulatory authority, nor have the foregoing authorities passed upon or endorsed the merits of this offering. Any representation to the contrary is a criminal offence in the United States and any re-offer or resale of any of the New Ordinary Shares in the United States or to a US Person may constitute a violation of US law or regulation.
The distribution of this document and the offering or sale of the New Ordinary Shares in certain jurisdictions may be restricted by law. No action has been taken by the Company or Beaumont Cornish that would permit an offering of the New Ordinary Shares or possession or distribution of this document or any other offering or publicity material relating to the New Ordinary Shares in any jurisdiction where action for that purpose is required. Persons into whose possession this document comes are required by the Company and Beaumont Cornish to inform themselves about and to observe any such restrictions.
This document is directed only at members of the Company falling within the meaning of Article 43(2)(a) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (all such persons together being referred to as "Relevant Persons"). This document must not be acted on or relied on by persons who are not Relevant Persons. This document does not constitute an offer of securities and accordingly is not a prospectus, neither does it constitute an admission document drawn up in accordance with the AIM Rules.
FORWARD LOOKING STATEMENTS
This document includes "forward-looking statements" which include all statements other than statements of historical facts, including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for future operations, or any statements preceded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or "similar" expressions or negatives thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this document. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based unless it is required to do so by applicable law or the AIM Rules.
Number of Existing Ordinary Shares prior to Admission of any of the Subscription Shares
Total number of Subscription Shares issued by the Company pursuant to the Subscription
Gross proceeds of the Subscription
Enlarged Share Capital following completion of the Subscription and Admission
Percentage of the Enlarged Share Capital comprised by the Subscription Shares
22.1 per cent.
Number of Existing Warrants
the Companies Act 2006 (as amended);
the admission of the Subscription Shares and the New Ordinary Shares arising from the Share Capital Reorganisation to trading on AIM becoming effective in accordance with the AIM Rules;
the AIM Rules for Companies, as published and amended from time to time by the London Stock Exchange;
the articles of association of the Company at the date of this announcement;
"Board" or "Directors"
the directors of the Company as at the date of this announcement;
Beaumont Cornish Limited, the Company's nominated adviser and broker pursuant to the AIM Rules;
any day (other than a Saturday or Sunday) upon which commercial banks are open for business in London, UK;
"Company", "Group" or "Gfinity"
the relevant system for the paperless settlement of trades and the holding of uncertificated securities operated by Euroclear in accordance with the CREST Regulations;
a person who has been admitted by Euroclear as a system-member (as defined in the CREST Regulations);
the deferred shares of 0.09 pence each in the capital of the Company to be created as part of the Share Capital Reorganisation;
"Enlarged Share Capital"
the New Ordinary Shares in issue on Admission, including the Subscription Shares;
Euroclear UK & International Limited, the operator of CREST;
"Existing Ordinary Shares"
the 2,649,029,913 existing ordinary shares of 0.1p each in the capital of the Company as at the date of this announcement;
the warrants over 1,373,053,334 Ordinary Shares pursuant to the Existing Warrant Instrument, granting warrant holders the right to subscribe for Ordinary Shares in the Company;
"Existing Warrant Instrument"
the warrant instrument entered into by the Company, dated 6 March 2023;
the Financial Conduct Authority;
the Financial Services and Markets Act 2000 (as amended);
"General Meeting" or "GM"
the general meeting of Shareholders to be held notice of which will be set out in a circular;
International Securities Identification Number;
0.06 pence per New Ordinary Share;
"Last Practicable Date"
8 August 2023;
"Link" or "Link Group"
a trading name of Link Asset Services Limited, registrar to the Company;
"London Stock Exchange"
London Stock Exchange plc;
"New Ordinary Shares"
the ordinary shares of 0.01 pence each in the capital of the Company in issue following completion of the Share Capital Reorganisation;
"Notice of General Meeting"
the notice of General Meeting to set out in the Circular;
the ordinary shares of 0.1p each in the capital of the Company, prior to the Share Capital Reorganisation;
the resolutions to be set out in the Notice of General Meeting to be proposed at the General Meeting;
each and any of the United States of America, Australia, Canada, Japan, New Zealand, Russia, and the Republic of South Africa and any other jurisdiction where extension or availability of the Subscription would breach any applicable law or regulations;
"Share Capital Reorganisation"
the sub-division of each Existing Ordinary Share into one New Ordinary Share and one Deferred Share to be effected by the passing of the Resolutions;
holder(s) of Existing Ordinary Shares;
"sterling", "pounds sterling", and "£", "pence" or "p"
the lawful currency of the United Kingdom
the persons who have conditionally agreed to subscribe for the Subscription Shares;
the subscription for the Subscription Shares at the Issue Price as described in this announcement;
the 750,000,000 New Ordinary Shares to be subscribed for by persons who have entered or intend to enter into subscription letters with the Company; and
"US Securities Act"
the United States Securities Act of 1933 (as amended).