21 May 2010 07:00
21 May 2010
Brainspark plc
("Brainspark" or "the Company")
Proposed Share Consolidation
Proposed Amendments to Investing Policy
Adoption of New Articles of Association
and
Notice of General Meeting
Brainspark, a fast growing international investment company, announces that it posted a circular and notice of general meeting to its shareholders yesterday. The general meeting will be held at 11 a.m. on 14 June 2010, at the offices of Gordons Partnership LLP, 22 Great James Street, London, WC1N 3ES. A copy of the notice of general meeting will be available today on the Company's website, www.brainspark.com, and is available from the Company's registered office, The Lightwell, 12-16 Laystall Street, London, EC1R 4PF. Edited extracts from the circular are set out below.
For further information please contact:
| Brainspark plc | +39 335 296 573 |
| Francesco Gardin, Chairman |
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| Allenby Capital Limited | +44(0) 20 3328 5656 |
| Nick Athanas/James Reeve |
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| Leander PR | +44(0) 7795 168 157 |
| Christian Taylor-Wilkinson |
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EDITED EXTRACTS FROM THE CIRCULAR
"The Board of Brainspark is today writing to shareholders to convene a general meeting. At that meeting consent of members is being sought for five matters: (i) a 1:250 share consolidation; (ii) the granting of long term service arrangements for each of its directors; (iii) the approval of certain amendments to the Company's investing strategy; (iv) the adoption of new Articles of Association; and (v) authority to make on market purchases of shares.
Consolidation of Share Capital
Because the Company's share capital is divided into shares of one hundredth of one penny, its share price is very low and the Company trades as a "penny stock".
The Board believes that the market in its shares generally would be enhanced if its share price was higher and it was no longer a "penny stock".
Accordingly the Board proposes to undertake a share consolidation of every 250 of its existing ordinary shares of 0.01 pence each in the capital of the Company (the "Existing Ordinary Shares") into one new ordinary share of 2.5 pence each in the capital of the Company (the "New Ordinary Shares") (the "Share Consolidation"). This is dealt with in Resolution 1.
The Board considers that the Share Consolidation will be beneficial as it will reduce the size of the issued ordinary share capital of the Company, thereby making it more manageable and improve the attractiveness of the Company's shares to new investors.
As at the close of business on Wednesday 19 May 2010, the mid-market price of one Existing Ordinary Share was 0.50 pence. Once the Share Consolidation has taken place, the price of a New Ordinary Share would be expected to be 250 times that of an Existing Ordinary Share. You will have fewer shares, but each will be worth more.
The consolidation of the Existing Ordinary Shares into the New Ordinary Shares should not materially affect the overall value of the Company or the value of your shareholding in it.
It is proposed that the share consolidation will become effective from close of business on 14 June 2010 and that dealing in the New Ordinary Shares will, subject to approval of Resolution 1 at the GM, take effect from 8 a.m. on 15 June 2010.
Most shareholders will not hold a number of Existing Ordinary Shares that is exactly divisible by 250 and they will be left with fractional entitlements to the resulting Ordinary Shares if Resolution 1 is approved. These fractional entitlements will be aggregated and sold in the market on behalf of shareholders and, where the amount of the proceeds is £3.00 or more, the proceeds of the sale will be returned to them. Proceeds of less than £3.00 will be retained by the Company to offset the costs of undertaking the Share Consolidation. Shareholders should be aware that if they hold fewer than 250 Existing Ordinary Shares as at close of business on 14 June 2010 they would not be entitled to receive any New Ordinary Shares under the Share Consolidation and as a result would no longer have any interest in the Company.
It is intended to issue certificates in respect of the New Ordinary Shares by no later than 22 June 2010, at the same time as the dispatch of the fractional cheques or credit of CREST members' accounts in respect of fractional sale proceeds. New Ordinary Shares due to uncertificated shareholders will be credited to the relevant stock accounts on or around 15 June 2010.
Service contracts
Somewhat unusually, the executive directors have been working for the Company without written service contracts.
It is proposed that each of the two executive directors enter into written service contracts (the "Service Contracts") with the Company and that the three non-executive directors, being Edward Burman, Haresh Kanabar and Alessandro Malacart, enter into letters of appointment (the "Letters of Appointment" and, with the Service Contracts, the "Service Arrangements").
Under the Service Contracts, Alfredo Villa and Francesco Gardin, will be paid £150,000 per annum and £75,000 per annum respectively.
Under the Letters of Appointment, each of Edward Burman, Haresh Kanabar and Alessandro Malacart will each be paid £12,000 per annum.
Because the proposed Service Arrangements for each of the Directors provide that the 12 month notice period cannot be given during the first two years of the term of the relevant Service Arrangement, your formal approval of the Service Arrangements is required. This approval is sought in Resolution 2.
Due to the interests of the Directors in Resolution 2, each of the Directors will abstain from voting on Resolution 2 in respect of the 603,286,030 Existing Ordinary Shares held in aggregate by them representing 25.34 per cent. of the existing ordinary share capital of the Company.
The proposed new Service Arrangements will be available shortly for inspection on the Company's website (www.brainspark.com).
Investing strategy
The Company's investing strategy was approved by shareholders on 9 December 2009 and is set out on the Company's website.
The Board are recommending that, for the purposes of the AIM Rules for Companies, the Company's investing strategy be broadened to now include: (i) investments in the renewable energy sector as a whole; and (ii) investments in theme parks to be made on a worldwide basis, theme parks being a sub-sector within the entertainment sector of the Company's current investing strategy. The Board believe that broadening the Company's investing strategy for these specific matters is in the best interests of the Company and will widen the opportunities available.
Our proposed, revised investing policy is to primarily focus on the interactive media, leisure, entertainment, financial services and renewable energy sectors, mainly in Italy but also other European countries. Specifically within the entertainment sector the Company will also focus on investment opportunities in theme parks on a worldwide basis.
The Company may be either an active or passive investor and the Directors intend that the Company's proposed investments may range from a minority position with strategic influence up to a large controlling position. The Board intends that the Company will make investments in target businesses at all development stages.
It is the intention of the Company that the majority of investments will be made in unlisted companies; however pre-IPO and listed companies may, from time to time, be considered on a selective basis.
The Company intends on identifying and investing in investment opportunities which it believes show excellent growth potential on a stand-alone basis and which would add value to the Company's portfolio of investments through the expertise of the Board or through the provision of ongoing funding.
The Company believes that the broad collective experience of the Board together with its extensive network of contacts will assist them in the identification, evaluation and funding of investment targets. When necessary other external professionals will be engaged to assist in the due diligence of prospective targets. The Board will also consider, as it sees fit, appointing additional directors and/or key employees with relevant experience as part of any specific investment.
The Company may offer Shares as well as cash by way of consideration for prospective investments, thereby helping to preserve the Company's cash for working capital. The Company may, in appropriate circumstances, issue debt securities or borrow money to complete an investment.
Shareholders should also note that, should Resolution 4 be passed at the GM, there will be no borrowing limits in the Articles of Association of the Company.
The Company seeks your consent, in Resolution 3, to broaden its investing strategy.
Adoption of Articles
As the Company is holding a GM, the opportunity is being taken to update the Company's articles of association (the "Articles") to comply with the Companies Act 2006 (the "Act") which has now been fully implemented. This is dealt with in Resolution 4.
The Company's Articles have not been updated since 2000, when the Company listed on the Alternative Investment Market ("AIM"), so the opportunity is being taken to update the Articles generally in the light of custom and market practice amongst AIM listed companies as well as changes prompted by the Act.
I should draw your special attention to two matters:-
Firstly, the Company's existing Articles contain a restriction on the borrowing powers of Directors. The formula is complicated but is essentially "three times the Company's capital and reserves". The proposed new Articles contain no such restriction. The Company's ability to borrow will be limited solely by market forces.
Secondly, the Company proposes to adopt a formal policy of distributing 5 per cent. of its pre tax profits to charity. This policy is contained in Article 180 of the proposed new Articles. It is subject to the control of shareholders as detailed in Article 180 of the proposed new Articles.
The proposed new Articles and a copy of the existing Articles will be available shortly for inspection on the Company's website (www.brainspark.com).
Authority to buy back shares
Resolution 5 seeks authority for the Company to make market purchases of its own New Ordinary Shares and is proposed as a special resolution. If passed, the resolution gives authority for the Company to purchase up to 1 million New Ordinary Shares, representing approximately 11 per cent. of the Company's issued share capital as at the date of this letter.
The resolution specifies the minimum and maximum prices which may be paid for any New Ordinary Shares purchased under this authority. The minimum is the nominal value of the New Ordinary Share, namely 2.5 pence and the maximum is the market value. The authority will expire on the earlier of 30 June 2011 and the date of the Company's annual general meeting in 2011.
The directors do not currently have any intention of exercising the authority granted by this resolution. The directors will only exercise the authority to purchase New Ordinary Shares where they consider that such purchases will be in the best interests of shareholders generally and will result in an increase in earnings per share.
Recommendation
The Directors consider that the Resolutions are in the best interests of the Company and the Shareholders as a whole.
Accordingly, the Directors unanimously recommend shareholders to vote in favour of the Resolutions proposed for this GM as they intend to do in respect of their own holdings (otherwise than in respect of Resolution 2, in respect of which they intend to abstain as they are in a conflict of interest). "
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