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LONDON (Alliance News) - IQE PLC Thursday became the latest AIM-listed company to clarify directors' share dealings and agreements with Equities First Holdings, saying its chief executive entered a share sale and repurchase agreement with the US stock loan company in order to finance the acquisition of shares and to meet tax and national insurance obligations on the exercise of options in October.
IQE's clarification follows similar moves earlier this week by Cloudbuy PLC, ANGLE PLC, and Quindell PLC to give more detail to the market regarding their own directors' agreements with Equities First. Although Quindell said three directors, Chairman Robert Terry, Finance Director Laurence Moorse and Non-Executive Director Steve Scott, agreed funding deals to pay for the acquisitions of the company's shares, its stock price has been under pressure, with about 35% of its value wiped in the last five days.
Meanwhile, Cloudbuy's chairman, Ronald Duncan entered the deal to secure funding in connection with moving house, while ANGLE also cited a house move as the reason for Chief Executive Andrew Newland's decision to arrange his financing deal with Equities First.
IGas Energy PLC, another company to have become associated with the issue, is yet to clarify a deal done by its chief executive earlier this year. On January 16, IGas said that Chief Executive Andrew Austin bought 300,000 shares in the company, funded with a loan from Equities First that was secured by some of his existing holdings. IGas was not immediately available for comment.
In a statement, IQE said that Drew Nelson entered the sale and repurchase agreement for a total of 18 million shares, raising GBP1.865 million before commissions of GBP55,944. On October 14, IQE had said directors "entered into loan agreements and have transferred a total of 18 million existing shares as security" and that they are "required to redeem the transferred shares at maturity when the loan is repaid at the end of the three year term".
Under the deal, Nelson must repurchase all the shares at the end of a three-year term, ending on October 10, 2017. According to IQE, the price at which he is required to repurchase the shares is 11.4 pence per share.
"The agreement provides that he has transferred all title and waives his voting rights in these shares," IQE said.
However, the company reiterated that Equities First is "prohibited from short selling or voting the shares" during the term of the agreement.
In addition, IQE said that Equities First will pay Nelson income from dividends paid by IQE during the entire period, as if Nelson had continued owning all the shares himself.
As part of the arrangement, IQE said, Finance Director Phillip Rasmussen and Operations Director Howard Williamns agreed to enter into separate loan agreements with Nelson by pledging 2.72 million shares each to him as security for money he has lent to them. According to IQE, Rasmussen has provided loans of GBP274,000 to each of them.
IQE said that about 52% of the money raised by the executive directors has already been used to fund the purchase of the shares and to meet income tax and National Insurance obligations following the exercise of share options announced by the company on October 10.
IQE said the directors opted to raise the money for income tax and National Insurance through the alternative arrangements instead of selling a portion of the shares acquired on exercising the options.
"In the case of the IQE directors, they have elected to raise the tax and NI monies through these arrangements in order to retain all of the exercised share options, thereby increasing their respective holdings in the company, in addition to purchasing additional shares. The remainder of the monies raised is intended to be used to fund further tax liabilities and NI due on the exercise of share options which are due to vest in early 2015, as well as fund further share purchases and cover any potential margin calls under the share sale and repurchase agreement," IQE said.
IQE noted that the share option exercises were part of the company's long-term incentive plan. It said the directors were under "no
time obligation to exercise such share options, but chose to do so at this time in order to maximise their respective shareholdings in the company".
Equities First hasn't responded to request for comment from Alliance News.
The following is a table provided by IQE on Thursday regarding the directors' share dealings and holdings:
|Name |No. of |Option |No. of |No. of |Ordinary |
| |Ordinary |Exercise |Ordinary |Ordinary |Shares as a|
| |Shares prior | |Shares |Shares after |% of ISC |
| |to | |purchased |exercise and | |
| |option | | |purchase | |
| |exercise | | | | |
+--------------+-------------+---------+------------+--------------+-----------+
|Dr. Drew |28,658,465 |4,800,753|1,800,000 |35,259,218 * |5.34% |
|Nelson, CEO | | | | | |
+--------------+-------------+---------+------------+--------------+-----------+
|Phillip |852,822 |1,870,535|750,000 |3,473,357 |0.53% |
|Rasmussen, CFO| | | | | |
+--------------+-------------+---------+------------+--------------+-----------+
|Dr. Howard |1,672,430 |1,870,535|750,000 |4,292,965 |0.65% |
|Williams, COO | | | | | |
| | | | | | |
|Totals** |31,183,717 |8,541,823|3,300,000 |43,025,540 |6.54% |
+--------------+-------------+---------+------------+--------------+-----------+
"*These include the 18 million shares that Dr Drew Nelson sold but retains the obligation to repurchase
"** In aggregate, using the share and repurchase agreement and associated inter-director loans, the directors
have increased their interests in the companys shares by a total of 11,841,823 shares or 38%," the company said.
IQE shares were down 1.5% at 16.25 pence on Thursday.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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