Proposed Acquisitions and Placing to Raise £10m
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN ARE RESTRICTED AND ARE NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA OR JAPAN OR IN OR INTO ANY OTHER JURISDICTION WHERE TO DO SO WOULD BREACH ANY APPLICABLE LAW OR REGULATION.
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES OF K3 CAPITAL GROUP PLC IN ANY JURISDICTION WHERE TO DO SO WOULD BREACH ANY APPLICABLE LAW OR REGULATION.
UNLESS OTHERWISE INDICATED, CAPITALISED TERMS IN THIS ANNOUNCEMENT HAVE THE MEANINGS GIVEN TO THEM IN THE DEFINITIONS SECTION IN THIS ANNOUNCEMENT.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED IN ARTICLE 7 OF THE MARKET ABUSE REGULATION NO. 596/2014 (AS AMENDED) AS IT FORMS PART OF THE DOMESTIC LAW OF THE UNITED KINGDOM BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (AS AMENDED) ("UK MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
K3 CAPITAL GROUP PLC
("K3", the "Company" and including its subsidiaries, the "Group")
Proposed Acquisitions
and
Proposed Placing to raise £10 million for the Company
K3 Capital Group plc, a multi-disciplinary professional services firm providing advisory services to SMEs, today announces the proposed acquisitions of Knight Corporate Finance Group Limited ("KCFG") and Knight R&D Limited ("KRD") (together, the "Acquisitions"), together with a proposed placing of new ordinary shares of 1 penny each in the capital of the Company ("Ordinary Shares") to raise gross proceeds for the Company of approximately £10.0 million through the issue of up to 2,941,934 new Ordinary Shares (the "Placing Shares") at an issue price of 340 pence (the "Placing Price") (the "Placing").
KCFG is a specialist M&A advisory firm within the telecoms and tech sector, and KRD is a specialist research and development ("R&D) tax advisory firm servicing UK SMEs. The Acquisitions are in line with K3's strategy to acquire complementary and value accretive businesses to build out its existing SME focussed service lines. The proceeds of the Placing will be used in part to fund the Acquisitions and to satisfy an element of fees payable in relation to the Placing and the Acquisitions.
The Placing is subject to the satisfaction of certain conditions set out in this announcement and the appendices hereto ("Appendices") (together, this "Announcement") and is being conducted by way of an accelerated bookbuild, which will be launched immediately following the publication of this Announcement. finnCap Ltd ("finnCap") is acting as Nominated Adviser, Joint Broker and Joint Bookrunner and Canaccord Genuity Limited ("Canaccord Genuity") is acting as Joint Broker and Joint Bookrunner in connection with the Placing. The timing of the closing of the bookbuilding process and the allocations are at the absolute discretion of finnCap, Canaccord Genuity and the Company. The Placing is not being underwritten.
Acquisitions highlights
• KCFG is a specialist M&A advisory firm within the telecoms and technology sectors with consistent growth of revenue and EBITDA over recent years.
o For the financial year ended 31 March 2021, KCFG generated revenue of £1.71 million and normalised* EBITDA of £0.78 million, representing an EBITDA margin of c.45%.
o Consideration of up to £8.6 million, comprising:
§ Initial consideration of £3.3 million on a debt free, cash free basis (to be satisfied as to £2.2 million in cash and £1.1 million by the issue of new Ordinary Shares at the Placing Price ("KCFG Consideration Shares")); and
§ Deferred consideration expected to be approximately £1.1 million (capped at £2.25 million) payable as to 60% cash and 40% new Ordinary Shares for the financial year ending 31 May 2022 ("Earn Out Year 1"), 70% cash and 30% new Ordinary shares for the financial year ending 31 May 2023 ("Earn Out Year 2"), 80% cash and 20% new Ordinary shares for the financial year ending 31 May 2024 ("Earn Out Year 3"), and 90% cash and 10% new Ordinary shares for the financial year ending 31 May 2025 ("Earn Out Year 4"), in each case contingent upon the future EBITDA performance.
§ Further earn-out equal to three times the EBITDA of Knight Transaction Services Limited ("KTS"), a subsidiary of KCFG, for the financial year ending 31 May 2026 (capped at £3.0 million) ("TS earn out").
• KRD is a specialist R&D tax advisory firm servicing UK SMEs, with consistent levels of revenue and EBITDA growth over recent years and an impressive EBITDA margin.
o For the financial year ended 30 September 2020, KRD generated revenue of £3.16 million and EBITDA of £1.98 million representing an EBITDA margin of 63%.
o Consideration of up to £16.3 million, comprising:
§ Initial consideration of £9.328 million on a debt free, cash free basis (to be satisfied as to £7.296 million in cash and £2.032 million by the issue of new Ordinary Shares at the Placing Price ("KRD Consideration Shares"); and
§ Deferred consideration expected to be approximately £4.0 million (capped at £7.0 million) payable as to 60% cash and 40% new Ordinary Shares contingent upon the future EBITDA performance, payable over 4 years
• The Directors believe that KCFG's and KRD's existing growth profile will benefit from cross referrals of Group clients, from the K3 Hub Database, as well as its marketing, research resources, data and expertise.
• The Acquisitions are in line with K3's strategy to acquire complementary and value accretive businesses to build out its existing SME focused service lines.
• Both acquisitions are expected to be immediately earnings enhancing.
• The Acquisitions are conditional upon but will complete immediately prior to Admission.
* Normalised EBITDA is unaudited and is stated before the impact of certain non-recurring items.
Fundraising highlights
• Proposed Placing of up to 2,941,934 new Ordinary Shares at the Placing Price to raise gross proceeds of approximately £10 million.
o Such new Ordinary Shares to be allotted pursuant to the Company's existing authorities to allot Ordinary Shares
o the Placing is conditional, inter alia, upon completion of the Acquisitions and Admission
• The proceeds of the Placing will be used in part to fund the Acquisitions and to satisfy an element of fees payable in relation to the Placing and the Acquisitions.
• The Placing is being conducted via an accelerated bookbuilding process which will commence immediately following the publication of this Announcement in accordance with the terms and conditions set out in the Appendix to this Announcement
• The Placing Price represents a premium of approximately 0.6 per cent. to the closing mid-market price of an Ordinary Share on 6 July 2021, being the last trading day prior to this Announcement.
Admission
It is proposed that the shares the subject of the Placing, the KCFG Consideration Shares and the KRD Consideration Shares will together comprise of up to 3,863,200 new Ordinary Shares that will be allotted pursuant to existing authorities and powers to allot shares on a non-pre-emptive basis and will be admitted to trading on AIM on 9 July 2021 ("Admission").
For further information, please contact:
K3 Capital Group plc | Tel: c/o finnCap 020 7220 0500 |
John Rigby, Chief Executive Officer | www.k3capitalgroupplc.com |
Andrew Melbourne, Chief Financial Officer | |
finnCap Ltd (Nominated Adviser, Joint Broker and Joint Bookrunner) | Tel: 020 7220 0500 |
Jonny Franklin-Adams, Charlie Beeson, George Dollemore (Corporate Finance) | |
Tim Redfern, Richard Chambers (Corporate Broking)
|
|
Canaccord Genuity Limited (Joint Broker and Joint Bookrunner) | Tel: 020 7523 8000 |
Bobbie Hilliam (Corporate Broking) Alex Aylen (Head of Equities) |
About K3 Capital
K3 Capital Group plc is a multi-disciplinary professional services firm providing advisory services to SMEs, with operations throughout the UK and overseas.
Services provided by K3 M&A Advisory Group:
• Mergers and Acquisitions (M&A) - Company sales, brokerage and corporate finance services to SME's looking to achieve full or partial exit, advising on sales to private, trade, plc, private equity or overseas acquirors. Strategic advisory and valuations, financial due diligence and debt advisory.
Services provided by K3 Tax Advisory Group:
• Research & Development tax credit advisory: advising clients on Research and Development Tax Credit (RDTC) claims.
• Intax: Tax investigations relating to tax fraud / tax avoidance / disclosures and code of practice 9 (COP9) related work.
Services provided by K3 Restructuring Advisory Group:
• Restructuring advisory: formal insolvency appointments, informal restructuring advisory, personal insolvency and pension restructuring and insolvency advice.
• Financial advisory: comprehensive analysis of business performance through business toolkit, independent reviews, stakeholder management and turnaround and interim support.
• Creditor Services: creditor representation and liquidations.
• Forensic accounting and expert witness: forensic investigations, intelligence and forensic accounting.
The Group's medium-term strategy is to build a wider group of growing and complementary professional services businesses to provide SME's with high quality advice across specialist disciplines.
K3 Capital Group trades on the London Stock Exchange (AIM: K3C.L), having listed on 11 April 2017. Please visit www.k3capitalgroupplc.com for more information.
This Announcement should be read in its entirety. In particular, you should read and understand the information provided in the "Important Notice" section below and the Appendix to this Announcement (which forms part of this Announcement) which sets out the terms and conditions of the Placing. Persons who have chosen to participate in the Placing, by making an oral or written offer to acquire Placing Shares, will be deemed to have read and understood this Announcement in its entirety (including the Appendix) and to be making such offer on the terms and subject to the conditions herein, and to be providing the representations, warranties, agreements, confirmations, acknowledgements and undertakings contained in the Appendix.
1. Background to the Placing
The Company proposes to raise approximately £10 million (before expenses) via a placing in cash, in part to fund the Acquisitions and to satisfy fees payable in relation to the Placing and the Acquisitions.
2. Background to and reasons for the Acquisitions
K3 is pleased to announce that it has conditionally agreed to acquire the entire issued and to be issued share capital of KCFG and KRD.
Both acquisitions are in line with K3's stated strategy to enhance the Group's professional services offering through high quality accretive acquisitions within both existing and potentially new service lines. Both acquisitions are expected to be immediately earnings enhancing.
2.1 Proposed acquisition of KCFG
About KCFG
KCFG was founded in December 2008 and is a specialist M&A advisory firm within the technology telecoms sector. KCFG's deep sector knowledge and capability provides strong synergy with K3's existing M&A offerings. KCFG's newly established transaction services division, Knight Transaction Services Limited ("KTS") fits strategically into the wider group of K3 and is believed will provide exciting growth opportunities.
Terms of the acquisition
Consideration of up to £8.6 million, comprising:
· Initial consideration of £3.3 million on a debt free, cash free basis (to be satisfied as to £2.2 million in cash and £1.1 million of KCFG Consideration Shares (equating to 323,530 new Ordinary Shares));
· Deferred consideration expected to be approximately £1.1 million (capped at £2.25 million) payable as to 60% cash and 40% new Ordinary Shares for Earn Out Year 1, 70% cash and 30% new Ordinary Shares for Earn Out Year 2, 80% cash and 20% new Ordinary Shares for Earn Out Year 3 and 90% cash and 10% new Ordinary Shares for Earn Out Year 4, in each case contingent upon the future EBITDA performance.
· Further earn-out equal to three times the EBITDA of Knight Transaction Services Limited ("KTS"), a subsidiary of KCFG, for the financial year ending 31 May 2026 (capped at £3.0 million) ("TS Earn Out").
· In addition, 25,000 D1 ordinary shares of £0.00001, which comprise growth shares, each in the share capital of K3 Advisory Group Limited, a subsidiary of K3, will be granted to the vendors of KCFG, subject to the same terms as set out in paragraph 5 below.
All KCFG Consideration Shares and future earn out shares issued are subject to a 2 year lock in plus a 1 year orderly market provision, from the respective dates of admission of the new Ordinary Shares.
Summary Financial information
KCFG is a growing and high margin business offering funding, strategy, acquisition and exit advice. KCFG has recorded consistent revenue growth over recent years and the Directors believe that K3's distribution platform provides the opportunity to accelerate growth.
Financial Year End 31 March | |||||
£ '000 | FY21 | FY20 | FY19 | FY18 | CAGR |
Revenue | 1,712 | 1,488 | 1,251 | 1,112 | 15% |
Normalised EBITDA* | 778 | 463 | 257 | 209 | 55% |
Normalised EBITDA* Margin | 45% | 31% | 21% | 19% |
KCFG had gross assets of £570,399 and profit before tax of £830,631 (as at 31 March 2021).
2.2 Proposed acquisition of KRD
About KRD
Established in 2016, KRD is a specialist tax advisory firm providing services to UK SMEs. KRD has an excellent reputation with an 100% success rate with HMRC, and a strong management team with approximately 25 years of combined experience in the R&D sector. KRD's sector knowledge and technical specialisms will further strengthen the Group's existing R&D offering. KRD brings with it a strong pipeline and contracted revenues that underpin continuing growth, as well as 20 staff located across 2 UK offices (Warrington and London).
KRD provides significant scale and growth to K3's tax division with a northern and southern office to complement K3's current midlands base. KRD's sector expertise and technical abilities complement the existing R&D offering within the K3 Group.
Terms of the acquisition
Consideration of up to £16.3 million, comprising:
· Initial consideration of £9.328 million on a debt free, cash free basis (to be satisfied as to £7.296 million in cash and £2.032 million of KRD Consideration Shares (equating to 597,736 new Ordinary Shares);
· Deferred consideration expected to be approximately £4.0 million (capped at £7.0 million) payable as to 60% cash and 40% new Ordinary Shares contingent upon the future EBITDA performance, payable over 4 years
In addition, 200,000 D1 ordinary shares of £0.00001, which comprise growth shares, each in the share capital of K3 Advisory Group Limited, a subsidiary of K3, will be granted to the vendors and key management of KRD, subject to the same terms as set out in paragraph 5 below.
All KRD Consideration Shares and future earn out shares issued are subject to a 2 year lock in plus a 1 year orderly market provision, from the respective dates of admission of the new Ordinary Shares.
Summary financial information
KRD is a rapidly growing and high margin business with a strong pipeline and contracted revenues to underpin continuing growth. KRD has demonstrated strong levels of revenue and EBITDA growth over recent years with an impressive EBITDA margin. KRD's revenue model is based on charging a percentage of client R&D tax credit, with clients typically contracted for 3 years. For its financial year ended 30 September 2020, 88% of revenue was re-occurring revenue (based on repeat customers recorded in its financial year ended 30 September 2019).
Financial Year End 30 September | |||||
£ '000 | FY20 | FY19 | FY18 | FY17 | CAGR |
Revenue | 3,156 | 1,541 | 1,179 | 315 | 116% |
EBITDA* | 1,980 | 848 | 616 | 105 | 166% |
EBITDA* Margin | 63% | 55% | 52% | 33% |
KRD had gross assets of £2,142,023 and profit before tax of £2,253,495 (as at 30 September 2020).
3. Current trading
As stated in the Company's pre-close trading update released on 15 June 2021, the year ended May 2021 ("FY21") closed well ahead of original market expectations with revenue of c.£46 million and EBITDA of not less than £14.25 million. Cash on the balance sheet as of 31 May 2021 was c.£14 million (up 63% from £8.6 million in FY20).
The diversified professional services group is seeing strong performance from all three divisions with acquisitions integrated and performing well. Key strategic initiatives are gaining strong momentum with K3 hub and direct marketing roll out starting to drive new business growth.
The board are extremely pleased with the outstanding performance throughout FY21 and remain confident in the future direction of the enlarged and diversified group.
The board continue to consider acquisitions of complementary professional services businesses as they look to accelerate the growth of existing service lines and further diversify revenues. A new debt facility was announced in May 2021 providing further flexibility and options in the funding of future acquisitions.
4. Details of the Placing
The proposed Placing is to raise £10 million, which is to be used in connection with the Acquisitions and associated fees.
Under the terms of a placing agreement entered into between finnCap, Canaccord Genuity and the Company on 7 July 2021 (the "Placing Agreement"), finnCap and Canaccord Genuity have procured subscribers for the Placing Shares.
The Placing Shares will, following Admission, rank pari passu with the existing issued Ordinary Shares and will have the right to receive all dividends and other distributions declared, made or paid in respect of the Ordinary Shares following Admission.
The Placing, which is subject to the terms and conditions set out in the appendix to this Announcement, is conditional upon, inter alia, the relevant conditions in the Placing Agreement being satisfied or, where capable of waiver, waived and the Placing Agreement not having been terminated in accordance with its terms. Application has been made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM.
The allotment and issue of the Placing Shares, KCFG Consideration Shares and KRD Consideration Shares will not exceed the Company's existing authorities. Therefore, no shareholder approval is required.
5. Grant of share incentives
In addition to the D1 ordinary shares of £0.00001 each being issued as detailed in paragraphs 2.1 and 2.2 above to the vendors of KCFG and KRD, in order to incentivise the vendors of KCFG and KRD and key management of KCFG and KRD, the Company will procure the grant of a total of 425,000 D2 ordinary shares of £0.00001 each, which comprise growth shares, in the capital of K3 Advisory Group Limited, a subsidiary of the Company, to those vendors and key management. Growth shares are awards granted in the form of an immediate beneficial interest in the growth shares to be held by participants and in relation to the current award comprises the D1 and D2 ordinary shares detailed in paragraphs 2.1, 2.2 and this paragraph 5, totalling 650,000 new shares in K3 Advisory Group Limited (the "Growth Shares").
After a minimum period of five years (being not before the announcement of the Company's financial results for the financial year ending 31 May 2026, the Growth Shares may be exchanged for new Ordinary Shares in the Company or cash (at the Company's discretion), subject to K3 Advisory Group Limited's articles of association, continued employment, performance related vesting, and meeting certain share price hurdles, which the Remuneration Committee considers to be challenging. If the share price for the 5 day period following the announcement of the Company's financial results for the financial year 31 May 2026 is below £7.00, all of the Growth Shares will be bought back by the Company for nominal value. If the share price following the announcement of the Company's financial results for the financial year 31 May 2026 is £7.00 or above the Growth Shares will vest in full, when each vested Growth Share may be exchanged for a new Ordinary Share.
Cautionary Statements
This Announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "envisages", "plans", "anticipates", "targets", "aims", "continues", "expects", "intends", "hopes", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not facts. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation: a condition to the Fundraising (or any part of it)not being satisfied, expected cost savings not being realised, changing demands of consumers, changing business or other market conditions, and general economic conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described in this Announcement. Forward-looking statements contained in this Announcement based on past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Subject to any requirement under the AIM Rules, the Disclosure Guidance and Transparency Rules or other applicable legislation or regulation, the Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Investors should not place undue reliance on forward-looking statements, which speak only as of the date of this Announcement.
This Announcement does not identify or suggest, or purport to identify or suggest, the risks (direct or indirect) that may be associated with an investment in the Placing Shares. Any investment decision to buy Placing Shares in the Placing must be made solely on the basis of publicly available information, which has not been independently verified by finnCap or Canaccord Genuity.
The Ordinary Shares to be issued pursuant to the Placing will not be admitted to trading on any stock exchange other than AIM, a market operated by the London Stock Exchange plc.
Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into or forms part of this Announcement.
APPENDIX: TERMS AND CONDITIONS OF THE PLACING
IMPORTANT INFORMATION FOR INVITED PLACEES ONLY REGARDING THE PLACING.
THIS ANNOUNCEMENT, INCLUDING THIS APPENDIX AND THE INFORMATION CONTAINED HEREIN (TOGETHER THIS "ANNOUNCEMENT") IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES (SUBJECT TO CERTAIN LIMITED EXCEPTIONS DESCRIBED BELOW), THE REPUBLIC OF IRELAND, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. THIS ANNOUNCEMENT HAS NOT BEEN APPROVED BY THE LONDON STOCK EXCHANGE, NOR IS IT INTENDED THAT IT WILL BE SO APPROVED.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS ANNOUNCEMENT (INCLUDING THE APPENDIX) IS FOR INFORMATION PURPOSES ONLY AND IS DIRECTED ONLY AT: (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA ("EEA") WHO ARE QUALIFIED INVESTORS AS DEFINED IN SECTION 86(7) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000, AS AMENDED ("QUALIFIED INVESTORS"), BEING PERSONS FALLING WITHIN THE MEANING OF ARTICLE 2(E) OF PROSPECTUS REGULATION (EU) 2017/1129 AND TO THE EXTENT IMPLEMENTED IN THE RELEVANT MEMBER STATE (THE "EU PROSPECTUS REGULATION "); AND (B) IN THE UNITED KINGDOM, QUALIFIED INVESTORS AS DEFINED IN ARTICLE 2(E) OF REGULATION (EU) 2017/1129 WHICH FORMS PART OF DOMESTIC LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (THE "UK PROSPECTUS REGULATION") WHO ARE PERSONS WHO (I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(5) (INVESTMENT PROFESSIONALS) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE "ORDER"); (II) ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) (HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC.) OF THE ORDER; OR (III) ARE PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS").
THIS ANNOUNCEMENT AND THE INFORMATION IN IT MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. PERSONS DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS ANNOUNCEMENT DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN K3 CAPITAL GROUP PLC.
SUBJECT TO CERTAIN LIMITED EXCEPTIONS DESCRIBED BELOW, THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES FOR SALE INTO THE UNITED STATES. THE PLACING SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT 1933, AS AMENDED (THE "SECURITIES ACT") OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR JURISDICTION OF THE UNITED STATES, AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THE PLACING SHARES ARE BEING OFFERED AND SOLD ONLY (I) OUTSIDE THE UNITED STATES IN "OFFSHORE TRANSACTIONS" WITHIN THE MEANING OF, AND IN ACCORDANCE WITH, REGULATION S UNDER THE SECURITIES ACT, OR (II) AT THE DISCRETION OF THE COMPANY, in the United States only to persons reasonably believed to be "qualified institutional buyers" (as defined in Rule 144A of the Securities Act) in transactions not involving any "public offering" within the meaning of Section 4(a)(2) of the Securities Act , AND OTHERWISE IN ACCORDANCE WITH APPLICABLE LAWS. NO PUBLIC OFFERING OF THE PLACING SHARES IS BEING MADE IN THE UNITED STATES, THE UNITED KINGDOM OR ELSEWHERE.
EACH PLACEE SHOULD CONSULT WITH ITS ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF AN INVESTMENT IN THE PLACING SHARES. THE DISTRIBUTION OF THIS ANNOUNCEMENT, ANY PART OF IT OR ANY INFORMATION CONTAINED IN IT MAY BE RESTRICTED BY LAW IN CERTAIN JURISDICTIONS, AND ANY PERSON INTO WHOSE POSSESSION THIS ANNOUNCEMENT, ANY PART OF IT OR ANY INFORMATION CONTAINED IN IT COMES SHOULD INFORM THEMSELVES ABOUT, AND OBSERVE, SUCH RESTRICTIONS.
No action has been taken by the Company, finnCap Ltd ("finnCap"), Canaccord Genuity Limited ("Canaccord") or any of their respective affiliates that would permit an offer of the Placing Shares or possession or distribution of this announcement or any other offering or publicity material relating to such Placing Shares in any jurisdiction where action for that purpose is required.
This announcement or any part of it does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States (including its territories and possessions, any state of the United States and the District of Columbia) subject to the limited exceptions described above, or Canada, the Republic of Ireland, Australia, the Republic of South Africa, Japan or any other jurisdiction in which the same would be unlawful. No public offering of the Placing Shares is being made in any such jurisdiction.
All offers of the Placing Shares in the United Kingdom or the EEA will be made pursuant to an exemption from the requirement to produce a prospectus under the UK Prospectus Regulation or the EU Prospectus Regulation, as appropriate. In the United Kingdom, this Announcement is being directed solely at persons in circumstances in which section 21(1) of the Financial Services and Markets Act 2000 (as amended) ("FSMA") does not require the approval of the relevant communication by an authorised person.
The Placing Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission or other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the Placing or the accuracy or adequacy of this announcement. Any representation to the contrary is a criminal offence in the United States. The relevant clearances have not been, nor will they be, obtained from the securities commission of any province or territory of Canada, no prospectus has been lodged with, or registered by, the Australian Securities and Investments Commission or the Japanese Ministry of Finance; the relevant clearances have not been, and will not be, obtained for the South Africa Reserve Bank or any other applicable body in the Republic of South Africa in relation to the Placing Shares and the Placing Shares have not been, nor will they be, registered under or offered in compliance with the securities laws of any state, province or territory of Australia, Canada, Japan or the Republic of South Africa. Accordingly, the Placing Shares may not (unless an exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into Australia, Canada, Japan or the Republic of South Africa or any other jurisdiction outside the United Kingdom.
Persons (including, without limitation, nominees and trustees) who have a contractual right or other legal obligations to forward a copy of this announcement should seek appropriate advice before taking any action.
This announcement should be read in its entirety.
No prospectus
No prospectus or other offering document has been or will be submitted to be approved by the Financial Conduct Authority ("FCA") in relation to the Placing or the Placing Shares and Placees' commitments will be made solely on the basis of the information contained in this announcement and any information publicly announced through a Regulatory Information Service by or on behalf of the Company on or prior to the date of this announcement (the "Publicly Available Information") and subject to any further terms set forth in the contract note to be sent to individual Placees.
Each Placee, by participating in the Placing, agrees that the content of this announcement is exclusively the responsibility of the Company and confirms that it has neither received nor relied on any information (other than the Publicly Available Information), representation, warranty or statement made by or on behalf of finnCap, Canaccord, the Company or any other person and none of finnCap, Canaccord or the Company or any other person acting on such person's behalf nor any of their respective affiliates has or shall have any liability for any Placee's decision to participate in the Placing based on any other information, representation, warranty or statement. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Placing. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.
Details of the Placing Agreement and the Placing Shares
finnCap (in its capacity as Nominated Adviser and joint broker to the Company) and Canaccord (in its capacity as joint broker to the Company, for the purposes of the Placing) have entered into the Placing Agreement with the Company (further details of which are provided below) under which, on the terms and subject to the conditions set out in the Placing Agreement, each of finnCap and Canaccord, as agents for and on behalf of the Company, have each agreed to use their respective reasonable endeavours to procure Placees for the Placing Shares at the Placing Price. The Placing is not being underwritten by finnCap, Canaccord or any other person.
The Placing Shares will, when issued, be subject to the Articles and credited as fully paid and will rank pari passu in all respects with the Existing Ordinary Shares in the capital of the Company, including the right to receive all dividends and other distributions declared, made or paid in respect of such Ordinary Shares after the date of issue of the Placing Shares.
Bookbuilding Process
Commencing today, finnCap and Canaccord will be conducting an accelerated bookbuilding process to determine demand for participation in the Placing by Placees (the "Bookbuilding Process"). This Appendix gives details of the terms and conditions of, and the mechanics of participation in, the Placing. However, finnCap and Canaccord will be entitled to effect the Placing (or any part of it) by such alternative method to the Bookbuilding Process as they may determine.
No commissions will be paid by or to Placees in respect of any participation in the Placing or subscription for Placing Shares.
The book will open with immediate effect. The Bookbuilding Process is expected to close not later than close of business on 7 July 2021, but may be closed at such earlier or later time as finnCap and Canaccord may, in their absolute discretion (after consultation with the Company), determine. A further announcement will be made following the close of the Bookbuilding Process detailing the aggregate number of Placing Shares to be subscribed for by the Placees at the Placing Price (the "Placing Results Announcement").
By participating in the Placing (such participation to be confirmed either via email from or in a recorded telephone conversation with finnCap or Canaccord), each Placee will be deemed to have read and understood this announcement (including this Appendix) in its entirety, to be participating and acquiring Placing Shares on the terms and conditions set out herein and to be providing the representations, warranties, indemnities, acknowledgements, agreements and undertakings contained in this Appendix.
In particular, each Placee represents, warrants, undertakes, agrees and acknowledges (amongst other things) that:
1. it is a Relevant Person and undertakes that it will acquire, hold, manage or dispose of any Placing Shares that are allocated to it for the purposes of its business;
2. in the case of a Relevant Person in the United Kingdom who acquires any Placing Shares pursuant to the Placing:
2.1 it is a Qualified Investor within the meaning of Article 2(e) of the UK Prospectus Regulation; and
2.2 in the case of any Placing Shares acquired by it as a financial intermediary, as that term is used in Article 5(1) of the UK Prospectus Regulation:
2.1.1 the Placing Shares acquired by it in the Placing have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in the United Kingdom other than Qualified Investors or in circumstances in which the prior consent of finnCap been given to the offer or resale; or
2.1.2 where Placing Shares have been acquired by it on behalf of persons in the United Kingdom other than Qualified Investors, the offer of those Placing Shares to it is not treated under the UK Prospectus Regulation as having been made to such persons; and
3. in the case of a Relevant Person in a member state of the EEA (each, a "Relevant Member State") who acquires any Placing Shares pursuant to the Placing:
3.1 it is a Qualified Investor within the meaning of Article 2(e) of the EU Prospectus Regulation;
3.2 in the case of any Placing Shares acquired by it as a financial intermediary, as that term is used in Article 5(1) of the EU Prospectus Regulation:
3.2.1 the Placing Shares acquired by it in the Placing have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than Qualified Investors or in circumstances in which the prior consent of finnCap and Canaccord has been given to the offer or resale;
3.2.2 where Placing Shares have been acquired by it on behalf of persons in any Relevant Member State other than Qualified Investors, the offer of those Placing Shares to it is not treated under the EU Prospectus Regulation as having been made to such persons;
4. it is acquiring the Placing Shares for its own account or is acquiring the Placing Shares for an account with respect to which it exercises sole investment discretion and has the authority to make and does make the representations, warranties, indemnities, acknowledgements, undertakings and agreements contained in this announcement;
5. it understands (or if acting for the account of another person, such person has confirmed that such person understands) the resale and transfer restrictions set out in this Appendix; and
6. except as otherwise permitted by the Company and subject to any available exemptions from applicable securities laws, it (and any account referred to in paragraph 4 above) is outside the United States acquiring the Placing Shares in offshore transactions as defined in and in accordance with Regulation S under the Securities Act.
Application for admission to trading
An application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM.
It is expected that Admission will take place on or around 8:00 a.m. on 9 July 2021 (or such later date as the Company, finnCap and Canaccord may agree in writing, in any event being not later than the Long Stop Date) and that dealings in the Placing Shares on AIM will commence at the same time.
It is expected that investors who wish to hold their Placing Shares in CREST will be credited with their Placing Shares in CREST on or around 9 July 2021.
Principal terms of the Placing
finnCap is acting as nominated adviser and joint broker to the Placing, as agent for and on behalf of the Company. finnCap is authorised and regulated in the United Kingdom by the FCA and is acting exclusively for the Company and no one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to the customers of finnCap or for providing advice in relation to the matters described in this announcement.
Canaccord is acting as joint broker to the Placing, as agent for and on behalf of the Company. Canaccord is authorised and regulated in the United Kingdom by the FCA and is acting exclusively for the Company and no one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to the customers of Canaccord or for providing advice in relation to the matters described in this announcement.
Participation in the Placing will only be available to persons who may lawfully be, and are, invited by finnCap or Canaccord to participate. finnCap and Canaccord and any of their respective affiliates are entitled to participate in the Placing as principal.
The price per Placing Share (the "Placing Price") is fixed at 340 pence and is payable to finnCap or Canaccord (as applicable) by all Placees (as agent of the Company in each case).
Each Placee's allocation will be determined by finnCap and Canaccord in their discretion following consultation with the Company.
Each Placee's commitment will be confirmed in and evidenced by either (i) a recorded telephone call or (ii) email correspondence, in either case between representatives of finnCap or Canaccord (as applicable) and the relevant Placee (a "Recorded Commitment"). The terms and conditions set out in this Appendix will be deemed incorporated into the contract which is entered into by way of the Recorded Commitment and will be legally binding on the relevant Placee(s) on behalf of whom the commitment is made and, except with (as applicable) finnCap or Canaccord's prior written consent, will not be capable of variation or revocation after such time. Without prejudice to the foregoing, a contract note recording each Placee's commitment will be sent to them following the Recorded Commitment.
Once they have made a Recorded Commitment each Placee will have an immediate, separate, irrevocable and binding obligation, owed to finnCap or Canaccord (as applicable, as agent for the Company in either case), to pay to it (or as it may direct) in cleared funds an amount equal to the product of the Placing Price and the number of Placing Shares such Placee has agreed to acquire and the Company has agreed to allot and issue to that Placee.
Irrespective of the time at which a Placee's allocation(s) pursuant to the Placing is/are confirmed, settlement for all Placing Shares to be acquired pursuant to the Placing will be required to be made at the same time on the basis explained below under "Registration and Settlement".
All obligations of finnCap and/or Canaccord under the Placing will be subject to fulfilment of the conditions referred to below under "Conditions of the Placing" and to the Placing not being terminated on the basis referred to below under "Termination of the Placing".
By participating in the Placing, each Placee will agree that its rights and obligations in respect of the Placing will terminate only in the circumstances described below and will not be capable of rescission or termination by the Placee.
To the fullest extent permissible by law and applicable FCA rules, none of (a) finnCap, (b) Canaccord, (c) any of finnCap's or Canaccord's respective affiliates, or (d) any person acting on behalf of finnCap or Canaccord, shall have any liability (including to the extent permissible by law, any fiduciary duties) to Placees or to any other person whether acting on behalf of a Placee or otherwise. In particular, none of finnCap or Canaccord nor any of their respective affiliates shall have any liability (including, to the extent permissible by law, any fiduciary duties) in respect of their conduct of the Placing or of such alternative method of effecting the Placing as finnCap, Canaccord and the Company may agree.
Registration and settlement
If Placees are allocated any Placing Shares in the Placing, as soon as reasonably practicable following their entry into a Recorded Commitment they will be sent a contract note by finnCap or Canaccord which will confirm the number of Placing Shares allocated to them, the Placing Price, the aggregate amount owed by them to finnCap or Canaccord (as applicable) and settlement instructions.
Each Placee will be deemed to agree that it will do all things necessary to ensure that delivery and payment is completed as directed by finnCap or Canaccord (as applicable) in accordance with either the standing CREST or certificated settlement instructions which they have in place with finnCap or Canaccord (as applicable).
Settlement of transactions in the Placing Shares (ISIN: GB00BF1HPD20) following Admission will take place within the CREST system, subject to certain exceptions. Settlement through CREST is expected to take place on 9 July 2021 unless otherwise notified by finnCap or Canaccord (as applicable) and Admission is expected to occur no later than 8:00 a.m. on 9July 2021. Settlement will be on a delivery versus payment basis. However, in the event of any difficulties or delays in the admission of the Placing Shares to CREST or the use of CREST in relation to the Placing, the Company and finnCap and/or Canaccord may agree that the Placing Shares should be issued in certificated form. finnCap and Canaccord reserve the right to require settlement for the Placing Shares, and to deliver the Placing Shares to Placees, by such other means as they deem necessary if delivery or settlement to Placees is not practicable within the CREST system or would not be consistent with regulatory requirements in a Placee's jurisdiction.
Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above, in respect of either CREST or certificated deliveries, at the rate of 2 percentage points above the prevailing sterling overnight index average rate (SONIA) as determined by finnCap or Canaccord (as applicable).
Each Placee agrees that, if it does not comply with these obligations, finnCap or Canaccord (as applicable) may sell, charge by way of security (to any funder of finnCap or Canaccord (as applicable)) or otherwise deal with any or all of their Placing Shares on their behalf and retain from the proceeds, for finnCap's or Canaccord's (as applicable) own account and benefit, an amount equal to the aggregate amount owed by the Placee plus any interest due and any costs and expenses properly incurred by finnCap or Canaccord (as applicable) as a result of the Placee's failure to comply with its obligations. The relevant Placee will, however, remain liable for any shortfall below the amount owed by it and for any stamp duty or stamp duty reserve tax (together with any interest or penalties) which may arise upon the sale of their Placing Shares on their behalf. Legal and/or beneficial title in and to any Placing Shares shall not pass to the relevant Placee until such time as it has fully complied with its obligations hereunder.
If Placing Shares are to be delivered to a custodian or settlement agent, Placees must ensure that, upon receipt, the contract note is copied and delivered immediately to the relevant person within that organisation. Insofar as Placing Shares are registered in a Placee's name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below, be so registered free from any liability to United Kingdom stamp duty or stamp duty reserve tax. Placees will not be entitled to receive any fee or commission in connection with the Placing.
Conditions of the Placing
The Placing is conditional upon the Placing Agreement becoming unconditional and not having been terminated in accordance with its terms.
The obligations of finnCap and Canaccord under the Placing Agreement are, and the Placing is, conditional upon, inter alia:
(a) the Acquisition Agreements (as such term is defined in the Placing Agreement) having been completed in accordance with their terms;
(b) none of the warranties given by the Company in the Placing Agreement being or having become untrue, inaccurate or misleading in any respect at any time before Admission, and no fact or circumstance having arisen before Admission which would constitute a breach of any of the warranties or undertakings of the Company provided in the Placing Agreement;
(c) the Company having fully performed its obligations under the Placing Agreement to the extent that they fall to be performed prior to Admission;
(d) neither finnCap nor Canaccord having exercised their right to terminate the Placing Agreement prior to Admission; and
(e) Admission having become effective at or around 8.00 a.m. on 9 July 2021 or such later time as finnCap and Canaccord may agree with the Company but in any event no later than the Long Stop Date,
(all conditions to the obligations of finnCap and Canaccord included in the Placing Agreement being together, the "conditions").
If any of the conditions set out in the Placing Agreement are not fulfilled or, where permitted, waived in accordance with the Placing Agreement within the stated time periods (or such later time and/or date as the Company, finnCap and Canaccord may agree, provided that the time for satisfaction of the condition set out in (e) above shall not be extended beyond the Long Stop Date), or the Placing Agreement is terminated in accordance with its terms, the Placing will lapse and the Placee's rights and obligations shall cease and terminate at such time and each Placee agrees that no claim can be made by or on behalf of the Placee (or any person on whose behalf the Placee is acting) in respect thereof.
By participating in the Placing, each Placee agrees that its rights and obligations cease and terminate only in the circumstances described above and under "Termination of the Placing" below and will not be capable of rescission or termination by it.
Certain conditions may be waived in whole or in part by finnCap and Canaccord (acting together), in their absolute discretion by notice in writing to the Company, finnCap and Canaccord may also agree in writing with the Company to extend the time for satisfaction of any condition. Any such extension or waiver will not affect Placees' commitments as set out in this announcement.
finnCap or Canaccord may terminate the Placing Agreement in certain circumstances, details of which are set out below.
None of finnCap, Canaccord or the Company nor any of their respective affiliates shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision any of them may make as to whether or not to waive or to extend the time and/or date for the satisfaction of any condition to the Placing nor for any decision any of them may make as to the satisfaction of any condition or in respect of the Placing generally and by participating in the Placing each Placee agrees that any such decision is within the absolute discretion of finnCap and/or Canaccord
On the assumption that the conditions set out in the Placing Agreement are satisfied (or waived) and that the Placing Agreement does not lapse and is not terminated in accordance with its terms, each Placee will be required to pay to finnCap or Canaccord (as applicable) , on the Company's behalf in either case, the Placing Price for each Placing Share agreed to be acquired by it under the Placing in accordance with the terms set out herein.
Upon making a Recorded Commitment each Placee's obligation to acquire and pay for Placing Shares under the Placing will be owed to the Company and either finnCap and/or Canaccord. Each Placee has an immediate, separate, irrevocable and binding obligation, owed to finnCap or to Canaccord (as applicable), to pay to it (or as it may direct) in cleared funds an amount equal to the product of the Placing Price and the number of Placing Shares that such Placee has agreed to subscribe.
Termination of the Placing
finnCap or Canaccord may terminate the Placing Agreement, in accordance with its terms, at any time prior to Admission if, inter alia:
(a) any statement contained in this announcement or any other document or announcement issued or published by or on behalf of the Company in connection with the Placing ("Placing Documents") has become untrue, incorrect or misleading in any material respect or there has arisen or been noted any material new factor, mistake or inaccuracy relating to the information in the Placing Documents;
(b) any of the warranties given by the Company in the Placing Agreement was untrue, inaccurate or misleading when made and/or that any of such warranties has ceased to be true or accurate or has become misleading at any time prior to Admission, in each case by reference to the facts and circumstances subsisting at that time;
(c) any matter has arisen which gives rise to a material claim under the indemnity contained in the Placing Agreement;
(d) the Company has failed or will in the opinion of either finnCap or Canaccord be unable to comply with any of its obligations under the Placing Agreement or otherwise relating to the Placing, and which is material in the context of the Placing;
(e) any of the conditions shall have become incapable of fulfilment before the latest time provided; or
(f) there has occurred any change in national or international financial, monetary, economic, industrial, political, legal or market conditions or there has occurred or been a material worsening of any international or national crisis, act of terrorism or outbreak of hostilities which, in the opinion of either finnCap or Canaccord (acting in good faith), makes it impractical or inadvisable to proceed with the Placing.
If the Placing Agreement is terminated in accordance with its terms, the rights and obligations of each Placee in respect of the Placing as described in this announcement shall cease and terminate at such time and no claim can be made by any Placee in respect thereof.
By participating in the Placing, each Placee agrees with the Company, finnCap and Canaccord that the exercise by the Company, finnCap or Canaccord of any right of termination or any other right or other discretion under the Placing Agreement shall be within the absolute discretion of the Company, finnCap or Canaccord and that none of the Company, finnCap or Canaccord need make any reference to such Placee and that none of finnCap, Canaccord or the Company, nor any of their respective affiliates shall have any liability to such Placee (or to any other person whether acting on behalf of a Placee or otherwise) whatsoever in connection with any such exercise.
By participating in the Placing, each Placee agrees that its rights and obligations terminate only in the circumstances described above and under the "Conditions of the Placing" section above and will not be capable of rescission or termination by it at any time after its entry into a Recorded Commitment with either finnCap or Canaccord (as applicable).
Representations, warranties and further terms
By participating in the Placing, each Placee (and any person acting on such Placee's behalf) irrevocably represents, warrants, acknowledges, undertakes and agrees (for itself and for any such prospective Placee) that in each case as a fundamental term of such Placee's application for Placing Shares (save where finnCap and Canaccord expressly agree in writing to the contrary):
1. it has read and understood this announcement in its entirety (including the Appendix) and that its acquisition of the Placing Shares is subject to and based upon all the terms, conditions, representations, warranties, indemnities, acknowledgements, agreements and undertakings and other information contained herein and that it has not relied on, and will not rely on, any information given or any representations, warranties or statements made at any time by any person in connection with Admission, the Placing, the Company, the Placing Shares or otherwise, other than the information contained in this announcement and the Publicly Available Information;
2. its obligations are irrevocable and legally binding and shall not be capable of rescission or termination by it in any circumstances;
3. it has not received a prospectus or other offering document in connection with the Placing and acknowledges that no prospectus or other offering document: (a) is required under the UK Prospectus Regulation; and (b) has been or will be prepared in connection with the Placing;
4. the Ordinary Shares are admitted to trading on AIM, and that the Company is therefore required to publish certain business and financial information in accordance with the AIM Rules and the Market Abuse Regulation (EU Regulation No. 596/2014 as it forms part of domestic law pursuant to the European Union (Withdrawal) Act 2018) ("UK MAR"), which includes a description of the nature of the Company's business and the Company's most recent balance sheet and profit and loss account and that it is able to obtain or access such information without undue difficulty, and is able to obtain access to such information or comparable information concerning any other publicly traded company, without undue difficulty;
5. it has made its own assessment of the Placing Shares and has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Placing and none of finnCap, Canaccord or the Company or any of their respective affiliates, or any person acting on behalf of any of them has provided, and will not provide, it with any material regarding the Placing Shares or the Company or any other person other than the information in this announcement, or the Publicly Available Information; nor has it requested of any of finnCap, Canaccord, the Company or any of their respective affiliates or any person acting on behalf of any of them to provide it with any such information;
6. none of finnCap or Canaccord or any person acting on behalf of either of them or any of their respective affiliates has or shall have any liability for any Publicly Available Information, or any representation relating to the Company, provided that nothing in this paragraph excludes the liability of any person for fraudulent misrepresentation made by that person;
7. the only information on which it is entitled to rely and on which it has relied in committing to subscribe for the Placing Shares is contained in the Publicly Available Information, such information being all that it deems necessary to make an investment decision in respect of the Placing Shares and it has made its own assessment of the Company, the Placing Shares and the terms of the Placing based on Publicly Available Information; (b) none of finnCap, Canaccord or the Company or any of their respective affiliates has made any representation or warranty to it, express or implied, with respect to the Company, the Placing or the Placing Shares or the accuracy, completeness or adequacy of the Publicly Available Information; (c) it has conducted its own investigation of the Company, the Placing and the Placing Shares, satisfied itself that the information is still current and relied on that investigation for the purposes of its decision to participate in the Placing; and (d) has not relied on any investigation that finnCap or Canaccord or any person acting on behalf of either of them may have conducted with respect to the Company, the Acquisitions, the Placing or the Placing Shares;
8. the content of this announcement and the Publicly Available Information has been prepared by and is exclusively the responsibility of the Company and that neither finnCap nor Canaccord nor any persons acting on behalf of either of them is responsible for or has or shall have any liability for any information, representation, warranty or statement relating to the Company contained in this announcement or the Publicly Available Information nor will they be liable for any Placee's decision to participate in the Placing based on any information, representation, warranty or statement contained in this announcement, the Publicly Available Information or otherwise. Nothing in this Appendix shall exclude any liability of any person for fraudulent misrepresentation;
9. the Placing Shares have not been registered or otherwise qualified, and will not be registered or otherwise qualified, for offer and sale nor will a prospectus be cleared or approved in respect of any of the Placing Shares under the securities laws of the United States, or any state or other jurisdiction of the United States, the Republic of Ireland, Australia, Canada, Republic of South Africa or Japan and, subject to certain exceptions, may not be offered, sold, taken up, renounced or delivered or transferred, directly or indirectly, within the United States, the Republic of Ireland, Australia, Canada, South Africa or Japan or in any country or jurisdiction where any such action for that purpose is required;
10. it and/or each person on whose behalf it is participating:
10.1 is entitled to acquire Placing Shares pursuant to the Placing under the laws and regulations of all relevant jurisdictions;
10.2 has fully observed such laws and regulations;
10.3 has capacity and authority and is entitled to enter into and perform its obligations as an acquirer of Placing Shares and will honour such obligations;
10.4 has obtained all necessary consents and authorities (including, without limitation, in the case of a person acting on behalf of a Placee, all necessary consents and authorities to agree to the terms set out or referred to in this Appendix) under those laws or otherwise and complied with all necessary formalities to enable it to enter into the transactions contemplated hereby and to perform its obligations in relation thereto and, in particular, if it is a pension fund or investment company it is aware of and acknowledges it is required to comply with all applicable laws and regulations with respect to its subscription for Placing Shares; and
10.5 has not taken any action which will or may result in the Company, finnCap or Canaccord or any of their respective directors, officers, employees or agents acting in breach of any regulatory or legal requirements of any territory in connection with the Placing or its acceptance of Placing Shares;
11. unless otherwise agreed in writing with the Company, finnCap or Canaccord, it was not located in the United States at the time the buy order was originated and it represents that no directed selling efforts (as defined in Regulation S under the Securities Act) were made in connection with the Placing;
12. it is not, and any person who it is acting on behalf of is not, and at the time the Placing Shares are subscribed will not be, a resident of, or with an address in, or subject to the laws of, Australia, Canada, Japan, the Republic of Ireland, the Republic of South Africa or any state or other jurisdiction of the United States, and it acknowledges and agrees that the Placing Shares have not been and will not be registered or otherwise qualified under the securities legislation of Australia, Canada, Japan, the Republic of Ireland, the Republic of South Africa or (save as otherwise agreed in writing with finnCap or Canaccord) any state or other jurisdiction of the United States and may not be offered, sold, or acquired, directly or indirectly, within those jurisdictions;
13. the Placing Shares have not been, and will not be, registered under the Securities Act and may not be offered, sold or resold in or into or from the United States except pursuant to an effective registration under the Securities Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in accordance with applicable state securities laws; and no representation is being made as to the availability of any exemption under the Securities Act for the reoffer, resale, pledge or transfer of the Placing Shares;
14. unless otherwise agreed in writing with the Company, finnCap or Canaccord, it and the beneficial owner of the Placing Shares is, and at the time the Placing Shares are acquired will be, outside the United States and acquiring the Placing Shares in an "offshore transaction" as defined in, and in accordance with, Regulation S under the Securities Act;
15. it (and any account for which it is purchasing) is not acquiring the Placing Shares with a view to any offer, sale or distribution thereof within the meaning of the Securities Act;
16. it will not distribute, forward, transfer or otherwise transmit this announcement or any part of it, or any other presentational or other materials concerning the Placing in or into or from the United States (including electronic copies thereof) to any person, and it has not distributed, forwarded, transferred or otherwise transmitted any such materials to any person;
17. if required by applicable securities laws or as otherwise reasonably requested by the Company, the Placee will execute, deliver and file and otherwise assist the Company in filing reports, questionnaires, undertakings and other documents with respect to the issue of the Placing Shares;
18. none of finnCap or Canaccord or their respective affiliates or any person acting on behalf of any of them is making any recommendations to it, advising it regarding the suitability of any transactions it may enter into in connection with the Placing and that participation in the Placing is on the basis that it is not and will not be a client of finnCap or Canaccord and neither finnCap nor Canaccord has any duties or responsibilities to it for providing the protections afforded to their respective clients or for providing advice in relation to the Placing nor in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement nor for the exercise or performance of any of its rights and obligations thereunder including any rights to waive or vary any conditions or exercise any termination right;
19. it has the funds available to pay for the Placing Shares for which it has agreed to subscribe and acknowledges and agrees that it will make payment to finnCap or Canaccord (as applicable) for the Placing Shares allocated to it in accordance with the terms and conditions of this announcement on the due times and dates set out in this announcement, failing which the relevant Placing Shares may be placed with others on such terms as finnCap or Canaccord (as applicable) may, in either case, in their absolute discretion determine without liability to the Placee and it will remain liable for any shortfall below the net proceeds of such sale and the placing proceeds of such Placing Shares and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties due pursuant to the terms set out or referred to in this announcement) which may arise upon the sale of such Placee's Placing Shares on its behalf;
20. no action has been or will be taken by any of the Company, finnCap, Canaccord or any person acting on their behalf that would, or is intended to, permit a public offer of the Placing Shares in the United States or in any country or jurisdiction where any such action for that purpose is required;
21. the person who it specifies for registration as holder of the Placing Shares will be: (a) the Placee; or (b) a nominee of the Placee, as the case may be. None of finnCap, Canaccord or the Company will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement. Each Placee and any person acting on behalf of such Placee agrees to acquire Placing Shares pursuant to the Placing and agrees to pay the Company and either finnCap or Canaccord (as applicable) in respect of the same (including any interest or penalties) on the basis that the Placing Shares will be allotted to a CREST stock account of finnCap or Canaccord (as applicable) or transferred to a CREST stock account of finnCap or Canaccord (as applicable) who will hold them as nominee on behalf of the Placee until settlement in accordance with its standing settlement instructions with it;
22. it is acting as principal only in respect of the Placing or, if it is acting for any other person, (a) it is duly authorised to do so and has full power to make the acknowledgments, representations and agreements herein on behalf of each such person and (b) it is and will remain liable to the Company and either finnCap or Canaccord (as applicable) for the performance of all its obligations as a Placee in respect of the Placing (regardless of the fact that it is acting for another person);
23. the allocation, allotment, issue and delivery to it, or the person specified by it for registration as holder, of Placing Shares will not give rise to a stamp duty or stamp duty reserve tax liability under (or at a rate determined under) any of sections 67, 70, 93 or 96 of the Finance Act 1986 (depository receipts and clearance services) and that it is not participating in the Placing as nominee or agent for any person or persons to whom the allocation, allotment, issue or delivery of Placing Shares would give rise to such a liability;
24. it and any person acting on its behalf (if within the United Kingdom) falls within Article 19(5) and/or 49(2) of the Order and undertakes that it will acquire, hold, manage and (if applicable) dispose of any Placing Shares that are allocated to it for the purposes of its business only;
25. it will not make an offer to the public of the Placing Shares and it has not offered or sold and will not offer or sell any Placing Shares to persons in the United Kingdom or elsewhere in the EEA except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise than in circumstances which have not resulted and which will not result in an offer to the public in the United Kingdom within the meaning of section 85(1) of the FSMA or an offer to the public in any other member state of the EEA within the meaning of the UK Prospectus Regulation, or an offer to the public in any Relevant State within the meaning of the EU Prospectus Regulation;
26. if it is within the United Kingdom, it is a Qualified Investor as defined in Article 2(e) of the UK Prospectus Regulation and if it is within a Relevant State, it is a Qualified Investor as defined in Article 2(e) of the EU Prospectus Regulation;
27. it has only communicated or caused to be communicated and it will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) relating to Placing Shares in circumstances in which section 21(1) of the FSMA does not require approval of the communication by an authorised person and it acknowledges that this announcement is not being issued by finnCap or Canaccord as an authorised person under section 21 of FSMA and therefore is not subject to the same controls applicable to a financial promotion made by an authorised person;
28. it has complied and it will comply with all applicable laws with respect to anything done by it or on its behalf in relation to the Placing Shares (including all relevant provisions of the FSMA and the UK MAR in respect of anything done in, from or otherwise involving the United Kingdom);
29. if it is a financial intermediary, as that term is used in Article 5(1) of the UK Prospectus Regulation (including any relevant implementing measure in any member state), the Placing Shares acquired by it in the Placing will not be acquired on a non-discretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in a member state of the EEA other than Qualified Investors, or in circumstances in which the express prior written consent of finnCap or Canaccord (as applicable) has been given to the offer or resale;
30. it has neither received nor relied on any confidential price sensitive information about the Company in accepting this invitation to participate in the Placing;
31. if it has received any confidential price sensitive information about the Company in advance of the Placing, it has not (i) dealt in the securities of the Company, (ii) encouraged or required another person to deal in the securities of the Company, or (iii) disclosed such information to any person, prior to the information being made publicly available;
32. neither finnCap nor Canaccord, nor any of their respective affiliates, nor any person acting on behalf of any of them has or shall have any liability for any information, representation or statement contained in this announcement or for any information previously published by or on behalf of the Company or any other written or oral information made available to or publicly available or filed information or any representation, warranty or undertaking relating to the Company, and will not be liable for its decision to participate in the Placing based on any information, representation, warranty or statement contained in this announcement or elsewhere, provided that nothing in this paragraph shall exclude any liability of any person for fraud;
33. none of finnCap, Canaccord or the Company, or any of their respective affiliates, or any person acting on behalf of finnCap, Canaccord, the Company or their respective affiliates, is making any recommendations to it, advising it regarding the suitability of any transactions it may enter into in connection with the Placing nor providing advice in relation to the Placing nor in respect of any representations, warranties, acknowledgements, agreements, undertakings, or indemnities contained in the Placing Agreement nor the exercise or performance of finnCap's and/or Canaccord's rights and obligations thereunder including any rights to waive or vary any conditions or exercise any termination right;
34. finnCap and/or Canaccord may, in accordance with applicable legal and regulatory provisions, engage in transactions in relation to the Placing Shares and/or related instruments for their own account for the purpose of hedging their underwriting exposure or otherwise and, except as required by applicable law or regulation, neither finnCap nor Canaccord will make any public disclosure in relation to such transactions;
35. finnCap and/or Canaccord and each of their respective affiliates, each acting as an investor for its or their own account(s), may bid or subscribe for and/or purchase Placing Shares and, in that capacity, may retain, purchase, offer to sell or otherwise deal for its or their own account(s) in the Placing Shares, any other securities of the Company or other related investments in connection with the Placing or otherwise. Accordingly, references in this announcement to the Placing Shares being offered, subscribed, acquired or otherwise dealt with should be read as including any offer to, or subscription, acquisition or dealing by finnCap or Canaccord and/or any of their respective affiliates, acting as an investor for its or their own account(s). None of finnCap, Canaccord or the Company intend to disclose the extent of any such investment or transaction otherwise than in accordance with any legal or regulatory obligation to do so;
36. it has complied with its obligations in connection with money laundering and terrorist financing under the Proceeds of Crime Act 2002, the Terrorism Act 2000, the Terrorism Act 2006 and the Money Laundering Regulations 2017 (together, the "Regulations") and, if making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations;
37. it is aware of the obligations regarding insider dealing in the Criminal Justice Act 1993, FSMA, the UK MAR and the Proceeds of Crime Act 2002 and confirms that it has and will continue to comply with those obligations;
38. in order to ensure compliance with the Money Laundering Regulations 2017, finnCap and/or Canaccord (in either case for themselves and as agents on behalf of the Company) or the Registrar may, in their absolute discretion, require verification of its identity. Pending the provision to finnCap, Canaccord or the Registrar, as applicable, of evidence of identity, definitive certificates in respect of the Placing Shares may be retained at finnCap's or Canaccord's (as applicable) absolute discretion or, where appropriate, delivery of the Placing Shares to it in uncertificated form may be delayed at finnCap's, Canaccord's or the Registrar, as the case may be, absolute discretion. If within a reasonable time after a request for verification of identity finnCap and/or Canaccord (in either case for themselves and as agent on behalf of the Company) or the Registrar have not received evidence satisfactory to them, finnCap and/or Canaccord and/or the Company may, at their absolute discretion, terminate its commitment in respect of the Placing, in which event the monies payable on acceptance of allotment will, if already paid, be returned without interest to the account of the drawee's bank from which they were originally debited;
39. its commitment to acquire Placing Shares on the terms set out in this announcement will continue notwithstanding any amendment that may in future be made to the terms and conditions of the Placing and that Placees will have no right to be consulted or require that their consent be obtained with respect to the Company's, finnCap's or Canaccord's conduct of the Placing;
40. it has knowledge and experience in financial, business and international investment matters as is required to evaluate the merits and risks of subscribing for the Placing Shares. It further acknowledges that it is experienced in investing in securities of this nature and is aware that it may be required to bear, and is able to bear, the economic risk of, and is able to sustain, a complete loss in connection with the Placing. It has relied upon its own examination and due diligence of the Company and its affiliates taken as a whole, and the terms of the Placing, including the merits and risks involved;
41. it irrevocably appoints any duly authorised officer of finnCap or Canaccord (as applicable) as its agent for the purpose of executing and delivering to the Company and/or its Registrar any documents on its behalf necessary to enable it to be registered as the holder of any of the Placing Shares for which it agrees to subscribe or purchase upon the terms of this announcement;
42. the Company, finnCap, Canaccord and others (including each of their respective affiliates, agents, directors, officers or employees) will rely upon the truth and accuracy of the foregoing representations, warranties, acknowledgements and agreements, which are given to each of finnCap and Canaccord, on their own behalf and on behalf of the Company and are irrevocable;
43. if it is acquiring the Placing Shares as a fiduciary or agent for one or more investor accounts, it has full power and authority to make, and does make, the foregoing representations, warranties, acknowledgements, agreements and undertakings on behalf of each such accounts;
44. time is of the essence as regards its obligations under this Appendix;
45. any document that is to be sent to it in connection with the Placing will be sent at its risk and may be sent to it at any address provided by it to finnCap or Canaccord;
46. the Placing Shares will be issued subject to the terms and conditions of this Appendix;
47. the basis of allocation will be determined by finnCap and Canaccord (after consultation with the Company) at their absolute discretion. The right is reserved to reject in whole or in part and/or scale back any participation in the Placing; and
48. these terms and conditions in this Appendix and all documents into which this Appendix is incorporated by reference or otherwise validly forms a part and/or any agreements entered into pursuant to these terms and conditions and all agreements to acquire shares pursuant to the Placing will be governed by and construed in accordance with English law and it submits to the exclusive jurisdiction of the English courts in relation to any claim, dispute or matter arising out of any such contract, except that enforcement proceedings in respect of the obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by the Company, finnCap or Canaccord in any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange.
By participating in the Placing, each Placee (and any person acting on such Placee's behalf) agrees to indemnify and hold the Company, finnCap, Canaccord and each of their respective affiliates harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings given by the Placee (and any person acting on such Placee's behalf) in this Appendix or incurred by finnCap, Canaccord or the Company or each of their respective affiliates arising from the performance of the Placee's obligations as set out in this announcement, and further agrees that the provisions of this Appendix shall survive after the completion of the Placing.
The agreement to allot and issue Placing Shares to Placees (or the persons for whom Placees are contracting as agent) free of stamp duty and stamp duty reserve tax in the United Kingdom relates only to their allotment and issue to Placees, or such persons as they nominate as their agents, direct by the Company. Such agreement assumes that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to transfer the Placing Shares into a clearance service. If there are any such arrangements, or the settlement related to any other dealings in the Placing Shares, stamp duty or stamp duty reserve tax may be payable. In that event, the Placee agrees that it shall be responsible for such stamp duty or stamp duty reserve tax and none of the Company, finnCap or Canaccord shall be responsible for such stamp duty or stamp duty reserve tax. If this is the case, each Placee should seek its own advice and they should notify finnCap or Canaccord (as applicable) accordingly. In addition, Placees should note that they will be liable for any capital duty, stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the United Kingdom by them or any other person on the acquisition by them of any Placing Shares or the agreement by them to acquire any Placing Shares and each Placee, or the Placee's nominee, in respect of whom (or in respect of the person for whom it is participating in the Placing as an agent or nominee) the allocation, allotment, issue or delivery of Placing Shares has given rise to such non-United Kingdom stamp, registration, documentary, transfer or similar taxes or duties undertakes to pay such taxes and duties, including any interest and penalties (if applicable), forthwith and to indemnify on an after-tax basis and to hold harmless the Company, finnCap and Canaccord in the event that either the Company and/or finnCap and/or Canaccord has incurred any such liability to such taxes or duties.
The representations, warranties, acknowledgements and undertakings contained in this Appendix are given to finnCap and to Canaccord in either case for itself and on behalf of the Company and are irrevocable.
Each Placee and any person acting on behalf of the Placee acknowledges that neither finnCap nor Canaccord owes any fiduciary or other duties to any Placee in respect of any representations, warranties, undertakings, acknowledgements, agreements or indemnities in the Placing Agreement.
Each Placee and any person acting on behalf of the Placee acknowledges and agrees that finnCap and/or Canaccord may (in either case at their absolute discretion) satisfy their obligations to procure Placees by itself agreeing to become a Placee in respect of some or all of the Placing Shares or by nominating any connected or associated person to do so.
When a Placee or any person acting on behalf of the Placee is dealing with finnCap or Canaccord, any money held in an account with or on behalf of finnCap or Canaccord on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the relevant rules and regulations of the FCA made under FSMA. Each Placee acknowledges that the money will not be subject to the protections conferred by the client money rules: as a consequence this money will not be segregated from finnCap's money or Canaccord's money (as applicable) in accordance with the client money rules and will be held by it under a banking relationship and not as trustee.
References to time in this announcement are to London time, unless otherwise stated.
All times and dates in this announcement may be subject to amendment by finnCap and Canaccord. Other provisions of these terms and conditions may be varied, waived, supplemented or modified as regards specific Placees or on a general basis by finnCap and Canaccord provided always that such variation, waiver or modification is not materially prejudicial to the interests of the Company. References to time in this announcement are to London time, unless otherwise stated.
In the case of a joint agreement to acquire Placing Shares, references to a "Placee" in these terms and conditions are to each of such Placees and such joint Placees' liability is joint and several.
No statement in this announcement is intended to be a profit forecast, and no statement in this announcement should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.
The price of shares and any income expected from them may go down as well as up and investors may not get back the full amount invested upon disposal of the shares. Past performance is no guide to future performance, and persons needing advice should consult an independent financial adviser.
The Placing Shares to be issued or sold pursuant to the Placing will not be admitted to trading on any stock exchange other than the AIM market of the London Stock Exchange.
Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this announcement.
DEFINITIONS
The following defined terms will have the following meanings in this Appendix. Save as otherwise defined below, terms defined in the main body of this announcement shall have the same meanings when used in this Appendix.
"Admission" the admission of the Placing Shares to trading on AIM becoming effective in accordance with the AIM Rules
"affiliate" means, as regards any person or entity, their agents, directors, officers, employees or consultants and any other person connected with them as defined in FSMA
"CREST" the relevant system (as defined in the CREST Regulations) in respect of which Euroclear is the Operator (as defined in the CREST Regulations)
"CREST Member" a person who has been admitted to Euroclear as a system-member (as defined in the CREST Regulations)
"CREST Regulations" The Uncertificated Securities Regulations 2001 (SI 2001/3755) (as amended)
"EU" the European Union
"Euroclear" Euroclear UK & Ireland Limited, the operator of CREST
"Existing Ordinary Shares" the Ordinary Shares in issue at the date of this document, all of which are admitted to trading on AIM and being the entire issued ordinary share capital of the Company
"ISIN" International Securities Identification Number
"Long Stop Date" means 8.00 a.m. on 23 July 2021
"Money Laundering Regulations" the Money Laundering Regulations 2017, the money laundering provisions of the Criminal Justice Act 1993, Part VIII of FSMA (together with the provisions of the Money Laundering Sourcebook of the FCA and the manual of guidance produced by the Joint Money Laundering Steering Group in relation to financial sector firms), the Terrorism Act 2000, the Anti Terrorism Crime and Security Act 2001, the Proceeds of Crime Act 2002 and the Terrorism Act 2006
"Ordinary Shares" ordinary shares of 1 penny each in the capital of the Company
"Placee" any person who with whom Placing Shares are placed by finnCap or Canaccord pursuant to the Placing
"Placing" the conditional placing of the Placing Shares at the Placing Price pursuant to the Placing Agreement
"Placing Agreement" the agreement between the Company, finnCap and Canaccord dated 7 July 2021 in connection with the Placing
"Placing Shares" up to 2,941,934 new Ordinary Shares to be issued in connection with the Placing
"Registrar" Computershare Investor Services plc of The Pavilions, Bridgwater Road, Bristol BS13 8AE
"Shareholders" holders of Ordinary Shares
"UK MAR" the Market Abuse Regulation (EU Regulation No. 596/2014 as it forms part of domestic law pursuant to the European Union (Withdrawal) Act 2018)
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