Last checked at 14 Jul 2010 07:19
14 July 2010 Corero PLC ("Corero" or "the Company") £6.5 million fund raising, disposal and Directorate change
Corero (AIM: CORO), the specialist provider of software solutions to the education and banking and securities markets, today announces a number of interrelated transactions, including fund raisings to inject £6.5 million (before expenses) of new capital, the disposal of the Financial Markets division and the appointment of new directors.
Fund raising:
* £6.5 million raised by a Placing (£2.0 million) and Subscription (£4.5 million). * £2 million 8% convertible unsecured redeemable loan stock converted into ordinary shares. * the Company will be debt free post transactions.
Disposal:
* Financial Markets division sold to Brokerhorse Limited, a subsidiary of
Rivington Street Holdings plc - consideration is the assumption by
Rivington of £2 million of the Company's CULS.
Directorate change and management team:
* Appointment of Jens Montanana as non-executive director. * Appointment of Andrew Miller as executive director responsible for finance, operations and M&A. * New directors and management team have extensive experience in technology, sales, marketing, finance, acquisitions, business integration and operations. * Mark Robertson, Managing Director of the Financial Markets division will resign from the Company and transfer to run the business in Rivington. Peter Waller, Richard Last and Bernard Snowe will remain on the board.
Future strategy and prospects
* Invest and grow the Business Systems division
* Develop through a buy and build strategy a network security solutions
business.
* + Sector should continue to grow as security threats proliferate and the market demand for evolved security products increases.
* Focus on delivering high growth solutions (with related services providing
recurring income) to mid-market and larger customers as well as
telecommunications service providers.
A circular setting out full details of the Proposals and convening the General Meeting and the CULS Meeting will be posted to Shareholders today. The Proposals are conditional on Shareholders and CULS Holders approvals of the GM Resolutions and the CULS Resolutions respectively. On Admission, Jens Montanana and his associates will hold 56 per cent. of the Enlarged Issued Ordinary Share Capital and Jens Montanana, personally, will hold 32 per cent. of the Enlarged Issued Ordinary Share Capital. Admission is expected to become effective and dealings in the Enlarged Issued Ordinary Share Capital is expected to commence on AIM on 9 August 2010. Defined terms in this announcement are set out below.
Jens Montanana, proposed non-executive director, commenting on the transaction, said
"The network security market has witnessed sustained growth - this is set to continue as demand for evolved security products increases. Corerois ideally positioned to develop a network based internet security product business alongside the existing Business Systems division.
"Our strategy is to focus on mid to upper tier solutions targeting high growth segments and business critical applications - the support we received for the Placing is a clear demonstration of the interest in this sector of the software market".
Peter Waller, Chairman, commenting on the transaction, said
"Thesetransactions enable the Company to realise value from the sale of the Financial Markets division and the proposed conversion of the remaining loan stock to equity will mean the Company will be debt free.
"The injection of £6.5 million will allow the Company to invest in, grow and better optimise the Business Systems division as well as to focus on developing a network security solutions business.
"The Company has attracted a very experienced management team to execute the future strategy and I look forward to working with the team."
Enquiries:
Corero plc Peter Waller, Executive Chairman Tel: 020 7457 2047 Andrew Miller, proposed Executive Director Merchant Securities Limited (Nominated Adviser and Broker) John East / Simon Clements Tel: 020 7628 2200 finnCap Limited (Placing Agent) Tom Jenkins / Sarah Wharry Tel: 0207 600 1658 College Hill Matthew Smallwood/Adrian Duffield Tel: 020 7457 2047
Introduction
The Company announces that it had entered into a conditional sale and purchase agreement to dispose of the business and assets of the Financial Markets division of its trading subsidiary to Brokerhorse Limited, a wholly-owned subsidiary of Rivington Street Holdings plc. The Disposal is conditional upon, amongst other things, Rivington Street Ventures Limited assuming the liability of the Company for £2 million nominal of the CULS, as described below. In addition, the Company announced that, conditional upon Admission, it intends to raise £6.5 million (before expenses) by means of the Subscription and the Placing and that it is proposed that, subject to Admission and the CULS Resolution being passed by CULS Holders at the CULS Meeting, the rights of the CULS Holders be compromised and the liabilities and obligations of the Company be released in respect of the remaining £2 million nominal of CULS (which will not have been redeemed by the Company as part of the Disposal) in consideration for the issue to such CULS Holders of an aggregate of 4,444,444 Ordinary Shares.
The Concert Party has conditionally agreed to subscribe for the Subscription Shares. The Concert Party comprises a group of five individuals, certain of whom have extensive experience in the computer software industry. More information on the Concert Party is set in the circular to Shareholders which has been posted the Shareholders today. If Shareholders approve the GM Resolution numbered 1 at the GM and the Subscription Agreement becomes unconditional in all respects, the Concert Party will together hold 56.31 per cent. of the Enlarged Issued Ordinary Share Capital (assuming that none of the Placees default on their obligations pursuant to their placing letters) and will have a maximum potential interest in shares of 58.14 per cent. Since this would exceed 30 per cent. of the Enlarged Issued Ordinary Share Capital, the Concert Party would, in the absence of a waiver from the provisions of Rule 9 of the Code being granted by the Panel, be obliged to make a general offer for the Company. The Panel has agreed, subject to the GM Resolution numbered 1 being passed on a poll by Independent Shareholders at the GM, to waive this obligation.
Background to the Proposals
As set out in the chairman's statement which accompanied the financial results for the year ended 31 December 2009, it has been the Board's strategy since 2007 to reposition the Company for future profit growth. There has been a large reduction in central overheads and in overall costs since then, which has saved the Company approximately £2 million over the period. As a result the Company made operating profits in 2008 and 2009. The management has worked successfully to expand the Company's client base, focus on a return to profitability and maintain its share of key markets. Most notably, the Business Systems division has continued to win new business in City Academies and latterly the Financial Markets division has won several large orders for its Blue Curve research product. In addition, recurring revenues of the Company have grown to cover over 70 per cent. of the Company's operating costs.
The above cost savings and increasing new business underpins operational cash needs of the business but the Board believes that the Company requires additional investment in order to maintain its competitive position and to achieve substantial growth. The Company has to date been unable to identify a source of additional funds and the Board believes that this is, in large part, due to the £4 million of CULS making the Company appear unattractive to new equity or debt investors, because of the dilution which would arise on conversion or the perceived lack of sufficient funds to permit redemption. The Company has, therefore, been looking for ways to eliminate this debt and the Proposals allow the Company to realise value from the sale of the Financial Markets division and at the same time attract an injection of further capital which will, together with the CULS Compromise, facilitate the elimination of the CULS. The monies raised pursuant to the Subscription and the Placing will also allow the Board to focus on expanding the business through a combination of acquisitions and organic growth in the software sector and, specifically, the network security market.
The Concert Party, through its representatives, intends to invest in and expand the Business Systems division in the short term but will also look to develop a network security solutions business alongside it. The New Board supports this strategy.
The Concert Party identified Corero as an ideal vehicle through which to implement its strategy, as its members believe that the Company's management and Shareholders have a strong understanding of the technology and software sector and the benefits which could accrue from investment and suitable acquisitions.
Principal terms of the Disposal
Under the terms of the Business Transfer Agreement, Corero Systems, a subsidiary of the Company has agreed to dispose of the business and assets of the Financial Markets division to Brokerhorse, in consideration for the assumption by Rivington of the liability of the Company to £2 million nominal of the CULS. In the year ended 31 December 2009, as extracted from the audited financial statements of that date, the Financial Markets division made £350,000 of trading profit (2008: £10,000) and £150,000 profit before tax (2008: £ 706,000 loss). As at that date, the Financial Markets division had gross assets of £2,292,000 (2008: £2,482,000) and unaudited net assets of £2,000,000 (2008: £1,972,000).
The Disposal will be achieved by the Company making an offer (set out below) to the holders of the CULS to redeem £2 million nominal of the CULS in consideration for Rivington agreeing to issue to the CULS Holders up to £2 million new Rivington 8% loan stock and £127,781 nominal of non-interest bearing loan stock. The interest which accrues on the CULS which are the subject of the CULS Offer between 1 July 2010 and the date of the completion of the Disposal (both dates inclusive) and which would have otherwise been payable on 31 December 2010 will be paid to CULS Holders within 14 days after completion of the Disposal. The obligations of Brokerhorse in respect of the Rivington Stock have been guaranteed by its parent company, Rivington Street Holdings plc.
To the extent that any CULS Holder does not accept the CULS Offer, the Rivington Stock which would otherwise have been issued to such CULS Holder will be issued to the Company. This will enable the Company to meet its income obligations to the CULS Holders who will continue to hold CULS under the CULS Instrument and, following redemption of the Rivington Stock, to meet its capital repayment obligations.
The Business Transfer Agreement is conditional, inter alia, upon the passing of the GM Resolution numbered 2 in the notice of General Meeting.
Management arrangements
Mark Robertson will be receiving a bonus of £10,000 from Corero Systems upon the successful completion of the Disposal. In addition, Mr Robertson will be retained as a consultant to the Company for a period of two months to manage the smooth transition of the business. Mr Robertson will be receiving a fee of £20,000 (excluding VAT) for his services. Due to the significant nature of these arrangements with Mark Robertson, Independent Shareholders are being asked to approve these agreements, on a poll, in Resolution 3 in the notice of GM.
Mark Robertson has indicated that he intends to dispose of his entire shareholding in the Company, amounting to 153,049 Ordinary Shares, equivalent to 10.08 per cent. of the Existing Ordinary Shares (and 0.48 per cent. of the Enlarged Issued Ordinary Share Capital), potentially before the GM.
Any such disposal would be announced to the market in accordance with AIM Rule 17, without delay.
Proposals regarding the CULS
(a) CULS Offer
In respect of each holding of Convertible Unsecured Loan Stock held on the CULS Offer Record Date, the Company is offering to redeem, pursuant to the CULS Offer, one half of the principal amount comprising such holding on the basis of:
£1 nominal of 8% Rivington Stock and £0.0638905 Zero Coupon Rivington Stock for every £1 nominal of CULS
to the holders of such CULS and so in proportion for any other nominal amount of CULS held. In respect of each holding of CULS to which the CULS Offer relates, the CULS Offer must be accepted in whole, not in part. The Zero Coupon Loan Stock has been calculated on the basis of, and is intended to replicate payment of, the deferred interest which has accrued, and will continue to accrue, on the CULS the subject of the CULS Offer between 1 January 2009 and the date of the General Meeting. In addition, the interest accruing on the CULS, the subject of the CULS Offer, in respect of the period from 1 July 2010 to the date of completion of the Disposal (both dates inclusive) and which would have otherwise been payable on 31 December 2010, shall be paid in cash by the Company to such CULS Holders within 14 days after completion of the Disposal. Entitlements to Zero Coupon Rivington Stock shall be rounded down to the nearest £1.
Provided that the date of the Disposal occurs within 14 days of the date of the General Meeting, each holder of CULS that accepts the CULS Offer irrevocably agrees as a term of the CULS Offer to waive their entitlement to any deferred interest which accrues between the date of the General Meeting and the actual date of the Disposal.
The CULS Offer is conditional on approval of the CULS Resolution and completion of the Disposal. Any CULS Holders who do not accept the CULS Offer will remain holding CULS. On Admission, the listing of the CULS on AIM will be cancelled. If Admission does not occur the CULS will remain listed on AIM.
(b) CULS Compromise
In respect of the balance of each holding of Convertible Unsecured Loan Stock held on the CULS Offer Record Date, it is proposed that the rights of the CULS Holders shall be compromised and the obligations and liabilities of Corero shall be released pursuant to the CULS Compromise in consideration for:
the issue of one new Ordinary Share for every £0.45 nominal of CULS
to the holders of such CULS and so in proportion for any other nominal amount of CULS then held. In addition, all deferred interest which has accrued up to Admission and all interest (whether part deferred or otherwise) accruing on the CULS in respect of the period from 1 July 2010 to Admission (both dates inclusive) shall be paid in cash by the Company to such CULS Holders within 14 days after Admission.
Holders of CULS shall not be entitled to whole shares representing fractions and instead whole shares representing fractions shall be allotted to finnCap Limited who shall sell them and pay the net proceeds of sale to the Company. Such proceeds shall be distributed among the holders entitled thereto in proportion to their respective entitlements unless such proceeds amount to less than £2 in respect of any one holding in which case they will not be so distributed but will be retained for the benefit of the Company.
The CULS Compromise is conditional upon, amongst other things, Admission and the passing of the CULS Resolution. Upon the resolution relating to the CULS Compromise at the CULS Meeting becoming effective, the CULS Compromise will be binding on all CULS Holders. However the CULS Compromise will not apply to any CULS in respect of which the CULS Offer is made and any person who does not accept the CULS Offer will remain holding CULS in accordance with the terms of the CULS instrument and, on Admission, such CULS will not be listed.
(c) Irrevocable undertakings
Certain CULS Holders have given irrevocable undertakings to accept the CULS Offer and to vote in favour of the CULS Compromise at the CULS Meeting in respect of, in aggregate, £3,667,632 nominal of the CULS, representing approximately 91.7 per cent. of the CULS which are the subject of the CULS Offer and approximately 91.7 per cent. of the voting rights exercisable at the CULS Meeting to approve, inter alia, the CULS Compromise. The CULS Holders who have given the irrevocable undertakings have also entered into orderly market arrangements with the Company and finnCap Limited whereby, for a period of 12 months, they have each agreed only to dispose of the Ordinary Shares which they receive as a result of the CULS Compromise through finnCap Limited.
Settlement of the consideration under the CULS Offer
Loan stock certificates in respect of the 8% Rivington Stock and the Zero Coupon Rivington Stock will be despatched within 14 days after the completion of the Disposal.
The Placing
Under the terms of the Placing Agreement, finnCap Limited has conditionally placed, as placing agent to the Company, up to 8,000,000 Ordinary Shares (representing 25.03 per cent of the Enlarged Issued Ordinary Share Capital) at the Placing Price to raise up to £2 million (gross) for the benefit of the Company.
The Placing is conditional, inter alia, upon Admission taking place by 8.00a.m. on 9 August 2010 (or such later date, being not later than 31 August 2010, as the Company and finnCap Limited may agree).
The Placing Agreement contains provisions entitling finnCap Limited to terminate the Placing Agreement at any time prior to Admission in certain circumstances. If this right is exercised, the Placing will lapse.
The Placing Shares, when issued and fully paid, will rank equally in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after Admission.
It is expected that Admission will become effective and that dealings in the Placing Shares will commence on 9 August 2010.
The Placing is also conditional upon the passing of the GM Resolutions numbered 1 to 7 in the notice of General Meeting including the passing of an ordinary resolution (GM Resolution number 1) to approve the Rule 9 Waiver. Accordingly, the Company has convened the General Meeting.
The Subscription
Under the terms of the Subscription Agreement, the Subscribers have conditionally agreed to subscribe for 18,000,000 Ordinary Shares (representing 56.31 per cent of the Enlarged Issued Ordinary Share Capital) at the Placing Price, raising £4.5 million before expenses for the benefit of the Company.
The Subscription is conditional, inter alia, upon Admission of the Subscription Shares to trading on AIM and completion of the Disposal.
The Subscription Shares, when issued and fully paid, will rank equally in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the Admission.
It is expected that Admission will become effective and that dealings in the Subscription Shares will commence on 9 August 2010.
The Subscription is also conditional upon the passing of the GM Resolutions numbered 1 to 7 in the notice of General Meeting, including the passing of an ordinary resolution on a poll (GM Resolution numbered 1) to approve the Rule 9 Waiver.
Following Admission, the Company will have 31,963,434 Ordinary Shares in issue (assuming that none of the Placees default on their obligations pursuant to their placing letters).
Use of the proceeds
The Directors intend to use the net proceeds of the Placing and Subscription (amounting to an aggregate of approximately (£6.5 million (gross)) primarily to fund organic growth and working capital to execute the Company's strategy.
Proposed Directors and management
Conditional on Admission and on the passing of GM Resolution numbered 4 and 5 (as applicable), Jens Montanana will be appointed as a non-executive director of the Company and Andrew Miller will be appointed as an executive director responsible for finance, operations and M&A. Further information on Jens Montanana and Andrew Miller is set out below.
Jens Peter Montanana (proposed non-executive director), aged 49, is the founder and CEO of Datatec Limited, established in 1986. Between 1989 and 1993 Jens served as managing director and vice-president of US Robotics (UK) Limited, a wholly owned subsidiary of US Robotics Inc which was acquired by 3Com. In 1993 he co-founded US start up Xedia Corporation in Boston, an early pioneer of network switching and one of the market leaders in IP bandwidth management, which was subsequently sold to Lucent Corporation. In 1994 Jens became CEO of Datatec Limited. Datatec Limited listed on the Johannesburg Stock Exchange in 1994 and on AIM in 2006. Jens has previously served on the boards and sub-committees of various public companies.
Andrew Douglas Miller (proposed executive director responsible for finance, operations and M&A), aged 46, was with the Datatec Limited group in a number of roles between 2000 and 2009 including the Logicalis Group Limited ("Logicalis") Operations Director and Corporate Finance and Strategy Director. Andrew led the Logicalis acquisition strategy, acquiring and integrating 12 companies in the US, UK, Europe and South America. Prior to this, Andrew gained considerable corporate finance experience in London with Standard Bank, West Deutsche Landesbank and Coopers & Lybrand. Andrew trained and qualified as a chartered accountant and has a bachelor's degree in commerce from the University of Natal, South Africa.
A further announcement providing the details required in accordance with Schedule 2 (g) of the AIM Rules will be made following the Proposed Directors' appointments to the Board after Admission.
In addition, conditional on Admission, Andre Stewart and Stephen Turner will join the senior management team of the Company as vice president for sales and vice president of technology solutions and services, respectively. Further information on Andre Stewart and Stephen Turner is set out below.
Andre Luiz Alcantara Stewart (proposed vice president of sales), aged 40, has over 10 years' experience in the network security market, most recently at Fortinet, Inc. ("Fortinet") as VP Worldwide Sales and initially as VP EMEA sales and managing director of European operations. Before joining Fortinet, Andre was a Regional Director for Netscreen Technologies, Inc which was subsequently acquired by Juniper Networks, Inc. Prior to that Andre was a partner with Agora M&A focused on cross border M&A in the data communication market, and prior to that spent two years with European IT focused Executive Search firm, INS Group Ltd. Andre has a bachelor degree in political sciences and languages from Kingston University, England.
Stephen Derek Allan Turner (proposed vice president of technology solutions and services), aged 49, has over 20 years' experience in the IT networking and security market. From 2006 to 2008, Stephen was with Fortinet in the US, initially shaping the high-end appliance strategy, and subsequently as VP Customer Services and Support worldwide. Between 2002 and 2005 Stephen was founder and CEO of a wireless start-up company, Filfree Networks sarl, which developed and commercialised a patented mesh networking system. Prior to this Stephen ran a successful networking and security consultancy company for four years. Stephen's technology background was originally founded over a six year period as a technical support consultant within the European Area Field Support Group of Digital Equipment Corporation in France, and subsequently between 1993 and 1995 as a customer advocacy consultant with Cisco Systems in Belgium. Stephen has a bachelor degree in science (with Honours) - mechanical engineering from Portsmouth University.
Future strategy and prospects
The Company will continue to manage and expand the successful Business Systems division, which will continue to focus on the education sector where it has a strong market position. In addition, the Company intends, following completion of the Proposals, to enhance its existing business by embarking upon an acquisition strategy in the network security solutions market. The Proposed Directors believe that the Company presents an ideal opportunity to implement this acquisition strategy because the management and shareholders of Corero understand the technology and software sector and the benefits which could accrue from investment and suitable acquisitions.
The New Board intends to develop the Company through organic growth and strategic acquisitions in the network security market which, it believes, offers a compelling commercial opportunity. The New Board believes that the sector should continue to grow as security threats proliferate and the market demand for evolved security products increases. The intention is for the Company to move towards becoming a network security solutions vendor focused on delivering high growth solutions and related services, to mid-market and larger customers as well as telecommunications service providers through international channels.
The new management team is an experienced senior executive management team with extensive technology, sales, marketing, finance, acquisition, business integration and operations experience.
The network security market
In 2008, the worldwide network security market was a US$7.2 billion market (source: IDC). The European, Middle Eastern and African network security market is forecast to have the strongest growth in the period 2008 to 2013 of approximately 10.8 per cent. with revenues forecast to be approximately US$3.8 billion in 2013 (source: IDC).
Network security is a resilient area of IT spend and is often considered by organisations to be non-discretionary. There are a number of reasons for this:
* the rapid growth of the Internet has resulted in considerable growth of cyber crime, together with an increase in the threat of insider fraud and data theft. Security is a critical component of an organisation's IT infrastructure and the New Board believes can be considered non-discretionary, because of data theft issues and compliance requirements. * the security market is not at the point where existing solutions can protect against emerging or as yet unknown threats - the evolution of new threats demands continued security technological advances. * the security market is a constantly changing and evolving industry. There are several business drivers and IT trends which are forcing changes in security practices and related technology adoption: * the network perimeter, the boundary between private networks and the public domain, is rapidly dissolving as initiatives around external access to Internet connected corporate networks, cloud computing domains, consumer and social networking and software-as-a-service, are now making the notion of a secure network perimeter (the cornerstone of past security efforts) more irrelevant. In addition, organisations are increasingly making applications on their networks accessible to partners and customers. * virtualisation, a simulated computer environment, is disrupting traditional security models and causing a significant rethink of network security for many organisations. * the evolving Web is the new frontier for attacks - traditional Web protection practices such as URL filtering and antivirus protection at the gateway have failed to keep up with today's security issues. The exploitation of vulnerabilities on legitimate Web sites, phishing attacks, as well as Web 2.0 and social networking-based attacks are all forcing organisations to adopt real-time Web content analysis. * as a direct result of increasing cybercrime, new legislation is creating an always-changing compliance requirement for information security. Organisations in industry sectors such as healthcare, financial services and government, are required to comply with regulations such as Health Insurance Portability and Accountability Act (HIPAA), Sarbanes Oxley Act (SOX), and those from the Payment Card Industry (PCI).
The network security market is highly fragmented with no single company offering a solutions portfolio that spans the customer requirements spectrum. The top three network security vendors, Cisco Systems Inc, Check Point Software Technologies Limited and Juniper Networks Inc. represent 43 per cent. of the market. The next 55 companies represent 35 per cent. of the market (with the remaining 22 per cent. of the market represented by companies with revenues of less than US$3 million per annum) (source: IDC). The New Board is of the view that the larger security vendors generally lag behind the market in terms of innovation, whilst smaller innovative companies typically remain too small to compete effectively.
Strategy
Many smaller, albeit innovative, network security technology companies, especially in Europe, have stagnated and find it difficult to grow revenues due to a lack of scale, operational expertise and market credibility. These smaller companies institutional, venture capital and management shareholders could be positively disposed to a broader strategy and potential exit. The New Board is of the view that there is a significant opportunity to leverage the technology of these smaller innovative network security technology companies and bring selected products to market by:
* executing a buy and build strategy; * providing expertise and experience in sales, marketing, services and finance; and * building critical mass and market credibility.
The New Board have identified a number of appropriate potential acquisition opportunities for the Company and it is envisaged that the Company will make multiple acquisitions, although none have progressed beyond the stage of preliminary assessment at present. It is intended that the acquisitions will principally be funded from the issue of further equity.
Subsequent to the acquisitions, the primary focus will be to increase the revenues and market share of the acquired entities by developing and providing to them additional commercial activities in sales and marketing, technical support services, international business partners and distribution channels and leveraging the management team's knowledge and contacts within the security market industry. It is intended that sales, marketing and support teams will be assembled to augment the commercial capabilities of the acquired companies, with the initial geographic focus being Europe and the Middle East and then the Americas and Asia Pacific.
In addition, the Company will plan to:
* develop a strong recurring revenue offering, including both customer support services and security update services, with the objective of these services representing a significant portion (approximately 40 per cent.) of the overall revenues; * derive benefits from increased efficiencies and economies of scale as multiple companies and additional business streams are aggregated; and * implement appropriate management controls and disciplines supporting detailed forecasting, management reporting and internal and external metric benchmarking.
Circular, General Meeting and CULS Meeting
A circular to Shareholders, the notice of General Meeting and the notice of CULS Meeting will be posted to Shareholders and will be available from the Company's website www.corero.com later today. The General Meeting and the CULS Meeting have been convened for 10.00 a.m. and 10.05 a.m. (or at such later time as the General Meeting convened for 10.00 a.m. has been concluded or been adjourned), respectively, on 6 August 2010 at the offices of Merchant Securities Limited, 51-55 Gresham Street, London EC2V 7HQ.
Definitions
The following definitions apply throughout this announcement unless the context requires otherwise:
"8% Rivington Stock" the £2,000,000 nominal of 8% unsecured redeemable loan
stock of Rivington "Admission" the admission of the New Shares to trading on AIM becoming effective in accordance with the AIM Rules "AIM" the AIM Market of the London Stock Exchange "AIM Rules" the rules published by the London Stock Exchange relating to AIM, as amended from time to time "Brokerhorse" or "the Brokerhorse Limited, a subsidiary of RSH Purchaser" "Business Transfer the conditional agreement dated 13 July 2010 between Agreement" (1) Corero Systems, (2) the Purchaser, (3) Rivington and (4) RSH relating to the Disposal "Code" the City Code on Takeovers and Mergers "Company" or "Corero" Corero plc "Concert Party" Jens Montanana, Andrew Miller, Andre Stewart, Stephen Turner and Ezio Simonelli "Corero Systems" Corero Systems Limited "CREST" the system for paperless settlement of trades and the holding of uncertificated shares administered through Euroclear "CREST Manual" the compendium of documents entitled CREST Manual issued by Euroclear from time to time and comprising the CREST Reference Manual, the CREST Central Counterparty Service Manual, the CREST International Manual, CREST Rules, CCSS Operations Manual and the CREST Glossary of Terms "CULS Compromise" the proposed compromise of the rights of CULS Holders and the release of the obligations and liabilities of the Company in respect of an aggregate principal amount of £2,000,000 CULS "CULS Compromise the 4,444,444 Ordinary Shares to be issued pursuant to Shares" the CULS Compromise "CULS" or "Convertible the £4,000,000 nominal of 8% (Part Deferred)
Unsecured Loan Stock" convertible unsecured redeemable loan stock 2015
"CULS Holders" the persons whose names are for the time being entered as holders of the CULS in the register of CULS Holders "CULS Instrument" the instrument dated 8 September 2000 constituting the CULS (as amended) "CULS Meeting" the meeting of holders of CULS convened for 10.05 a.m. on 6 August 2010 (or such later time as the General Meeting convened for same day shall have concluded or been adjourned) "CULS Offer" the offer to holders of the CULS offering to redeem £2 million nominal of CULS and to repay £127,781 of deferred interest in consideration of the issue to such holders of Rivington Stock "CULS Offer Record 19 July 2010 Date" "CULS Resolution" the resolution set out in the notice of meeting of the holders of CULS "Directors" or "Board" the directors of the Company "Disposal" the proposed disposal of the Financial Markets division of the Company pursuant to the Business Transfer Agreement "Enlarged Issued the issued ordinary share capital of the Company Ordinary Share immediately following Admission (assuming that none of Capital" the Placees default on their obligations pursuant to their placing letters) "Euroclear" Euroclear UK & Ireland Limited, the operator of CREST "Existing Ordinary the 1,518,990 Ordinary Shares in issue at today's date Shares"
"Form of Acceptance" the form of acceptance for use by CULS Holders who hold
their CULS in certificated form in connection with the CULS Offer
"Form(s) of Proxy" the form(s) of proxy accompanying the Shareholder
circular for use in connection with the GM and/or the CULS Meeting, as appropriate
"GM" or "General the general meeting of the Company convened for 10.00 Meeting"
a.m. on 6 August 2010
"GM Resolutions" the resolutions set out in the notice of the General
Meeting "Group" the Company together with its subsidiary undertakings "Independent the Shareholders other than Mark Robertson Shareholders" "London Stock London Stock Exchange plc Exchange" "New Board" Peter Waller, Bernard Snowe, Richard Last, Jens Montanana and Andrew Miller "New Shares" together, the CULS Compromise Shares, the Placing Shares and the Subscription Shares
"Ordinary Shares" the ordinary shares of 1p each in the capital of the
Company "Panel" the Panel on Takeovers and Mergers "Placees" the subscribers for Placing Shares pursuant to the Placing "Placing" the conditional placing of the Placing Shares at the Placing Price pursuant to the Placing Agreement
"Placing Agreement" the conditional agreement dated 13 July 2010 between
the Company, Jens Montanana and finnCap Limited "Placing Price" 25p per Placing Share "Placing Shares" up to 8,000,000 Ordinary Shares which have been conditionally placed by finnCap Limited pursuant to the Placing "Proposals" the Disposal, Subscription, Placing, the Rule 9 Waiver, the CULS Compromise and Admission "Proposed Directors" Jens Montanana and Andrew Miller "Rivington" Rivington Street Ventures Limited, a subsidiary of RSH "Rivington Stock" the 8% Rivington Stock and the Zero Coupon Rivington Stock "RSH" Rivington Street Holdings plc "Rule 9 Waiver" the agreement by the Panel to waive the obligation on the Concert Party to make a general offer to all Shareholders pursuant to Rule 9 of the Code subject to approval, by way of a poll vote, of the GM Resolution numbered 1 in the notice of General Meeting "Shareholders" holders of Existing Ordinary Shares "Subscription" the conditional subscription for the Subscription Shares pursuant to the Subscription Agreement "Subscription the conditional agreement dated 13 July 2010 between Agreement" (1) certain members of the Concert Party (and/or entities which are wholly owned by members of the Concert Party) and (2) the Company relating to the Subscription
"Subscription Shares" the 18,000,000 Ordinary Shares to be issued pursuant to
the Subscription at the Placing Price "TTE instruction" transfer to escrow instruction (as defined in the CREST Manual) "Zero Coupon Rivington the £127,781 nominal of zero coupon unsecured Stock" redeemable loan stock of Rivington Expected timetable of events 2010 Record date for the CULS Offer 19 July Latest time for receipt of GM Forms of Proxy 10.00 a.m. on 14 August Latest time for receipt of CULS Forms of Proxy 10.05 a.m. on 14 August
Latest time and date for receipt of Forms of Acceptances and 1.00 p.m. on 5 TTE instructions under the CULS Offer
August Expected time and date of announcement of results of CULS 7.00 a.m. on 6Offer August General Meeting 10.00 a.m. on 6 August CULS Meeting 10.05 a.m. on 6 August Completion of the Disposal 9 August
Admission effective and dealings expected to commence in the 9 August New Shares
CREST accounts credited with New Shares 16 August
Share certificates in respect of the New Shares expected to 16 August be despatched by no later than
Share capital statistics Placing Price 25 pence Number of Placing Shares being issued by the Company* 8,000,000 Number of Subscription Shares being issued by the Company 18,000,000
Number of CULS Compromise Shares being issued by the Company 4,444,444
Number of Ordinary Shares in issue immediately following 31,963,434Admission* Percentage of Enlarged Issued Ordinary Share Capital 81.34 per cent.represented by the Placing Shares and the Subscription Shares *
Amount, after expenses, being raised under the Placing and £6,158,000 Subscription*
Market capitalisation of the Company at the Placing Price £7,990,858immediately following Admission*
*Assuming none of the Placees default on their obligations pursuant to their placing letters
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