365.L Regulatory News (365)

VPhase plc

("VPhase" or the "Company")

Placing, Rule 9 Waiver, Capital Reorganisation, Adoption of Investing Policy

 Change of Name, Board Changes, Adoption of New Articles of Association

Restoration of Trading

Further to the announcement dated 7 January 2014, the Company is pleased to announce that it has conditionally raised gross proceeds of approximately £150,000 through a conditional placing (the "Placing"), to fund the payment of creditors and for general working capital purposes.

It is expected that trading in the Company's existing ordinary shares of 0.25 pence each (the "Existing Ordinary Shares") (trading of which had been suspended), will be restored today at 7.30am.

Background to and Reasons for the Placing

On 7 January 2014, the Company announced its exit from administration (effective from 27 December 2013) and its entry into a company voluntary arrangement with its creditors and members.

Through a conditional Placing to Henderson Global Investors ("Henderson") of 5,000,000,000 new ordinary shares of 0.003 pence each (the "New Ordinary Shares"), the Company has conditionally raised £150,000 (approximately £119,000 net of expenses) to fund the payment of creditors and for general working capital purposes.

Subject to the Placing becoming unconditional, Henderson, which currently holds Ordinary Shares carrying approximately 25.8 per cent. of the voting rights of the Company, will increase its interest in the voting rights of the Company to approximately 83.9 per cent. Henderson's acquisition of New Ordinary Shares would normally, without a waiver by the Panel on Takeover and Mergers (the "Panel") of the obligations under Rule 9 of the Takeover Code, result in Henderson being required to make a general offer for the remaining New Ordinary Shares of the Company. The Panel has agreed to such a waiver, following written confirmations, consenting to such waiver being granted, being received from certain Independent Shareholders who hold in excess of 50 per cent. of the Company's existing voting shares (the "Consenting Independent Shareholders").

Adoption of an Investing Policy

Whilst the Company was in administration, it made certain disposals of its business and assets which represented a fundamental change to the business of the Company and which has resulted in the Company disposing of all of its tangible operating assets and business. The Company has, thereby, become an Investing Company under the AIM Rules and, as a consequence, Rule 15 of the AIM Rules requires the Company to obtain the approval of its Shareholders for its adoption of an Investing Policy.

The Company's proposed Investing Policy is to invest in businesses that typically have attributed to them some or all of the following criteria and characteristics:

• Strong management;

• An established entity or product in growth mode;

• A differentiated product or offering;

• A significant potential market opportunity; and

• The ability to generate strong cashflows in the future.

Further details of the proposed Investing Policy are set out in the additional information below ("Additional Information").

Other Corporate Actions

In connection with the Placing, the Board is also proposing that certain associated corporate actions be taken which would require the approval of Shareholders at the general meeting of the Company (the "General Meeting"), including the change of name of the Company to lafyds plc and the appointment of new directors to the Board, details of which are provided in the Additional Information below.

Application will be made for admission of the Placing Shares to trading on AIM ("Admission"). It is expected that, conditional, inter alia, on the passing of the resolutions (the "Resolutions") to be proposed at the General Meeting to be held at the offices of Panmure Gordon, One New Change, London, EC4M 9AF at 10am on 7 February 2014, Admission will become effective and dealings will commence at 8.00 a.m. on 10 February 2014.

Immediately following the Placing and Admission, the Company will have 6,389,756,800 New Ordinary Shares in issue and admitted to trading on AIM.

Recommendations and Irrevocable Undertakings

The Directors consider that the Placing and the Resolutions are in the best interests of the Company and its Shareholders as a whole.

The Directors unanimously recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting as they have irrevocably undertaken to do in respect of the 29,909,045 Ordinary Shares beneficially held by them, representing approximately 2.2 per cent. of the entire issued share capital of the Company.

Certain other Shareholders representing in aggregate 37.1 per cent. of the entire issued share capital of the Company have also irrevocably undertaken to vote in favour of the Resolutions to be proposed at the General Meeting. Therefore, in aggregate, Shareholders representing 39.3 per cent. of the entire issued share capital have irrevocably undertaken to vote in favour of the Resolutions.

A circular to Shareholders, including a notice convening the General Meeting (the "Circular"), will be dispatched shortly and will also be available on the Company's website at http://www.vphase.co.uk/Investor-Relations/Documents.

All capitalised terms in this announcement have the same meaning as defined in the Circular to Shareholders dated 22 January 2014 unless otherwise stated.

 For further information:

Additional Information

Further details of the Placing:

The Placing is conditional upon, inter alia, a Capital Reorganisation having taken effect. The Placing Shares will comprise New Ordinary Shares representing approximately 78.3 per cent. of the Enlarged Share Capital following Admission. The Placing Price will be at the nominal value of the New Ordinary Shares, the Capital Reorganisation having taken effect.

The Placing is conditional upon, inter alia, the Resolutions being duly passed atthe General Meeting and Admission becoming effective on or before 8.00 a.m. on 28 February 2014.

Henderson is a substantial shareholder in the Company and is therefore classified as a related party pursuant to the AIM Rules and the Placing is a related party transaction. The Directors consider, having consulted with the Company's nominated adviser, that the terms of the Placing are fair and reasonable insofar as its Shareholders are concerned.

The Placing Shares will, on Admission, rank pari passu in all respects with the remaining New Ordinary Shares and will rank in full for all dividends and other distributions declared, made or paid in respect of the New Ordinary Shares after Admission.

Capital Reorganisation

Prior to the proposed Capital Reorganisation, the subscription price being proposed by Henderson for subscription for new shares in the Company (i.e. the Placing Price), would have been less than the current nominal value of the Existing Ordinary Shares and, under the Companies Act 2006, a company cannot issue shares at a price below their nominal value.

Before the Placing becomes unconditional, the Directors propose, therefore that the Company effects a Capital Reorganisation on the basis that each of the Existing Ordinary Shares of 0.25 pence each will be subdivided into and reclassified as:

(a) one Redenominated Share (being an ordinary share in the capital of the Company with a nominal value of 0.003 pence each); and

(b) one Deferred Share (being a deferred share in the capital of the Company with a nominal value of 0.247 pence each).

The Deferred Shares will not be admitted to trading on AIM (or any other investment exchange). The Deferred Shares will have limited rights, and will be subject to the restrictions, as set out in the Company's new articles of association ("New Articles"), proposed to be adopted at the General Meeting.

Board Changes

The existing Directors of the Company have agreed immediately following, and conditional on, Admission, to resign as Directors of the Company. The Company is seeking, the approval of Shareholders for the appointment of Clive Carver and Colin Hutchinson (the "Proposed Directors") as the new Directors of the Company, brief biographies in respect of whom are set out below. Mr Carver and Mr Hutchinson have consented to joining the Board, conditional on Admission occurring.

Clive Carver, Proposed Non-Executive Director, FCA, MCT (dip), aged 53

Clive qualified as a chartered accountant in 1986 before spending 8 years in the corporate finance departments of Kleinwort Benson, Price Waterhouse and Shire Trust. He then spent 17 years in the corporate broking arena becoming successively head of corporate finance at Seymour Pierce, Williams de Broë and finnCap.

Since 2006 Clive has been chairman of AIM listed Roxi Petroleum, a Kazakh based oil & gas exploration and production company, becoming Executive Chairman in June 2012. He is also Non-Executive Chairman of Ascent Resources, an AIM listed company with gas interests in Slovenia.

Colin Hutchinson, Proposed Non-Executive Director, LLB, ACA, MBA, aged 37

Colin is a chartered accountant and holds an MBA from Warwick Business School. He has 15 years of international experience gained in commercially orientated finance roles with high growth organisations and start-ups. He has experience across a range of different sectors including telecoms, technology & energy. His most recent role has been as Group Financial Controller & Company Secretary of Ascent Resources plc.

Investing Policy

The Company's proposed Investing Policy is to invest in businesses that typically have attributed to them some or all of the following criteria and characteristics:

• Strong management;

• An established entity or product in growth mode;

• A differentiated product or offering;

• A significant potential market opportunity; and

• The ability to generate strong cashflows in the future.

The Company will initially focus on projects located in the United Kingdom but will also consider investments in other geographical regions in the future. The Company will consider all sectors, however, the Proposed Directors recognise that there are sectors which are unlikely to meet its investment criteria.

The Proposed Directors believe that their collective experience, together with their extensive network of contacts will assist it in the identification, evaluation and funding of suitable investment opportunities. When necessary, other external professionals will be engaged to assist in the due diligence of prospective opportunities. The Proposed Directors will also consider appointing additional directors with relevant experience if the need arises.

The objective of the Proposed Directors is to generate capital appreciation and any income generated by the Company will be applied to cover costs or will be added to the funds available to further implement the investment policy. In view of this, it is unlikely that the Proposed Directors will recommend a dividend in the early years. However, they may recommend or declare dividends at some future date depending on the financial position of the Company. Given the nature of the Company's Investing Policy, the Company does not intend to make regular periodic disclosures or calculations of net asset value.

The proposed investment to be made by the Company is likely to be in just one investment which may be deemed to be a reverse takeover under the AIM Rules, in which case shareholder approval will be required. Investments will be made with a view to yielding returns over the medium to long term.

As required by the AIM Rules, until the Investment Policy is substantially implemented, at each annual general meeting of the Company shareholder approval of its Investing Policy will be sought.

In order to avoid suspension of its securities from trading, AIM Rule 15 requires an investing company to make an acquisition which constitutes a reverse takeover under AIM Rule 14 or otherwise implement its investing policy to the satisfaction of the London Stock Exchange within twelve months of the disposal occurring.

Waiver of Rule 9 of the Takeover Code

Under Rule 9 of the Takeover Code ("Rule 9"), where any person acquires, whether by a series of transactions over a period of time or not, an interest in shares which (taken together with shares already held by that person and an interest in shares held or acquired by persons acting in concert with that person) carry 30% or more of the voting rights of a company which is subject to the Takeover Code, that person is normally required to make a general offer to all the holders of any class of equity share capital or other class of transferable securities carrying voting rights in that company to acquire the balance of their interests in the company.

Rule 9 also provides that, among other things, where any person who, together with persons acting in concert, is interested in shares which in aggregate carry not less than 30% but not more than 50% of the voting rights of a company which is subject to the Takeover Code, and such person, or any person acting in concert with them, acquires an additional interest in shares which increases the percentage of shares carrying voting rights in which he or she is interested, then such person is normally required to make a general offer to all the holders of any class of equity share capital or other class of transferable securities carrying voting rights of that company to acquire the balance of their interests in the company.

An offer under Rule 9 must be in cash (or with a cash alternative) and at the highest price paid within the preceding 12 months for any shares in the company by the person required to make the offer or any person acting in concert with him or her.

Rule 9 further provides, amongst other things, that where any person who, together with persons acting in concert with him or her holds over 50 per cent. of the voting rights of a company, acquires an interest in shares which carry additional voting rights, then they will not generally be required to make a general offer to the other shareholders to acquire the balance of their shares.

Following completion of the Placing, Henderson will have increased its interest in shares carrying voting rights of the Company from approximately 25.8 per cent. to approximately83.9 per cent. which, without a waiver of the obligations under Rule 9, would oblige Henderson to make a general offer to Shareholders for the remaining shares in the Company under Rule 9.

Dispensation from General Offer

Under Note 1 on the Notes on the Dispensations from Rule 9, the Takeover Panel will normally waive the requirement for a general offer to be made in accordance with Rule 9 (a "Rule 9 Offer") if, inter alia, the shareholders of the company who are independent of the person who would otherwise be required to make an offer and any person acting in concert with him or her (the "Independent Shareholders") pass an ordinary resolution on a poll at a general meeting (a "Whitewash Resolution") approving such a waiver. The Takeover Panel may waive the requirement for a Whitewash Resolution to be considered at a general meeting (and for a circular to be prepared in accordance with Section 4 of Appendix 1 to the Takeover Code) if Independent Shareholders holding more than 50 per cent. of the company's shares capable of being voted on such a resolution confirm in writing that they would vote in favour of the Whitewash Resolution, were such a resolution to be put to the shareholders of the company at a general meeting.

The Company has obtained such written confirmation from the Consenting Independent Shareholders and the Panel has accordingly waived the requirement for a Whitewash Resolution. Accordingly, by voting in favour of the Resolutions to be proposed at the General Meeting, the Placing will be effected without the requirement for Henderson to make a Rule 9 Offer.

Shareholders should note that, following the Placing, Henderson will control approximately 83.9 per cent. of the voting rights of the Company and will therefore be entitled to increase its interest in the voting rights of the Company without incurring a further obligation under Rule 9 to make a general offer.

Independent Shareholders

Independent Shareholders (who together are the beneficial owners of 542,602,157Ordinary Shares, representing 39.0 per cent. of the Company's issued share capital carrying voting rights as at 21 January 2014, being the last practical date prior to this announcement and 52.7 per cent. of the Company's issued share capital carrying voting rights eligible to give written consent) have written to the Takeover Panel confirming that they would vote in favour of a Whitewash Resolution were such a resolution to be put to the shareholders of the Company at a general meeting.

General Meeting

A notice convening the General Meeting of the Company at the offices of Panmure Gordon, One New Change, London, EC4M 9AF at 10am on 7 February 2014 is contained within the Circular which will be sent to all Shareholders.

The purposeof the General Meeting is (a) to consider, in accordance with section 656 of the Companies Act 2006, whether any, and if so what, steps should be taken to deal with the situation that the net assets of the Company currently represent less than half of its called-up share capital; and (b) to consider and, if thought fit, approve the Resolutions. The Resolutions to be proposed at the General Meeting are as follows:

· Resolution 1, which will be proposed as an ordinary resolution, seeks approval for the new Investing Policy of the Company;

· Resolution 2, which will be proposed as an ordinary resolution, seeks approval for the Capital Reorganisation;

· Resolution 3, which will be proposed as an ordinary resolution, seeks to grant the Directors of the Company authority to allot New Ordinary Shares in the capital of the Company pursuant to the Placing;

· Resolution 4, which will be proposed as an ordinary resolution, seeks to grant the Directors of the Company a further authority to allot shares in the capital of the Company (i.e. in addition to those allotments made pursuant to the Placing), up to an aggregate nominal amount of £63,897.57 (representing a further one third of the Enlarged Share Capital);

· Resolution 5, which will be proposed as an ordinary resolution, seeks approval to appoint Clive Carver to the Board, conditional, inter alia, on Admission, such appointment to take effect by no later than 28 February 2014;

· Resolution 6, which will be proposed as an ordinary resolution, seeks approval to appoint Colin Hutchinson to the Board, conditional, inter alia, on Admission, such appointment to take effect by no later than 28 February 2014;

· Resolution 7, which will be proposed an a special resolution, seeks the adoption of the New Articles;

· Resolution 8, which will be proposed as a special resolution, seeks to disapply applicable pre-emption rights in respect of the allotment for cash of equity securities in the Company pursuant to the Placing, conditional, inter alia, on the passing of Resolution 3;

· Resolution 9, which will be proposed as a special resolution, seeks to disapply applicable pre-emption rights in respect of an allotment of further shares in the capital of the Company, up to an aggregate nominal amount of £38,338.54 representing 20 per cent. of the Enlarged Share Capital, conditional, inter alia, on the passing of Resolution 4; and

· Resolution 10, which will be proposed as a special resolution, seeks approval to change the name of the Company to lafyds plc, conditional on the passing of Resolutions 1, 2, 3, 4, 5, 6 and 7.