Corero Network Regulatory News (CNS)

7 Aug 2006 07:01

Mondas PLC07 August 2006 Mondas plc ("Mondas" or "the Company") Proposed amendment to 8.75% convertible loan stock 2007 ("CULS") and Placing. Mondas plc, the AIM listed Financial Markets software specialist, has todayannounced details of a proposed amendment to the terms of its existing CULS toextend its redemption date, enhance the conversion rights and reduce the annualcoupon payable. At the same time the company has announced details to raise£1,000,000 through a placing of additional CULS on the amended terms Background and reasons for the Proposed Amendments and the Placing The CULS are due for redemption on 31 October 2007. Although the Company istrading well, following improving trading conditions in the financial marketsand the recent acquisitions of Eclipse and Blue Curve, the Mondas directorsbelieve that the Company may not have the necessary financial resourcesavailable to redeem the CULS in 15 months' time. It is clearly desirable toeliminate any uncertainty caused by this situation and, accordingly, the Mondasdirectors propose to amend the terms of the CULS as set out below. The Mondasdirectors believe that this, together with the proposed placing, will strengthenthe Company's financial position, particularly when it are being evaluated as avendor of large and complex systems to the financial sector. The proposedamendments to the terms of the CULS, together with the net proceeds of theplacing of Additional CULS, which amount to approximately £0.92 million afterexpenses, will allow the Company to expand its sales and marketing capability,to continue product development, to provide working capital and to takeadvantage of the growth opportunities presented to it. Current trading and reasons for funding The return of confidence in the financial markets has increased demand forMondas's products. This has been demonstrated by an increased level ofcontracts with new and existing customers, a shortening of sale cycles and asales pipeline which is both growing in value and increasing in quality. Sincethe start of January, Mondas has sold new systems to Panmure Gordon, JM Finn,and Brewin Dolphin Securities. More recently, the Company has announced asignificant contract with a major global bank based in the UK. Furthermore, ithas made its first US sale to Ferris Baker Watts, for an application serviceprovider ("ASP") model of its Blue Curve research management product. Thissystem went into live production in June 2006. The Business Systems Division, which sells applications to the education sector,has concluded contracts with three colleges and nine schools as new users forits Resource 32000 accounting software solution, which add to its existing userbase of approximately 150 education sector users. This represents approximately25 per cent. of Colleges of Further Education in the UK. This division benefitsfrom approximately £1.4m of contracted recurring support revenue and hastraditionally enjoyed strong cash flows. These improving trading conditions and profitability across all divisions haveenabled Mondas to make a small profit in the six month period ended 30 June 2006after interest. The Company continues to trade broadly in line with internalexpectations. Mondas directors have identified opportunities for growth which they cannotcurrently fully exploit due to financial resource constraints. These include butare not limited to: • the delivery of further financial sector products through the ASPmodel. This delivery model should allow the Company to address new markets withboth existing and future products; • local resources to take advantage of the strengthening US pipeline ofbusiness both from new and existing customers. The US market has shown itself tobe receptive to Mondas' financial sector products and appears to have growthpotential; and • an increasing customer requirement for web-based technology within theBusiness Systems Division, which demands further investment in this area toremain competitive and to build on the increasing market share established bythis division. Furthermore, the Company is committed to growth, not only organically, but byacquisition. In order to deliver this growth, the Mondas directors believe thatinvestment in repositioning and rebranding the company as an acquirer anddeveloper of software businesses will support that commitment. As the Company grows through the success of its existing divisions and thesuccessful acquisition of further businesses, it needs to invest ininfrastructure and programs to support that growth. The Proposed Amendments to the terms of the CULS The principal amendments are as follows: 1. the amendment of the redemption date of the CULS from 31 October2007 to 31 October 2011; 2. the amendment, with effect from but not including, 31 August2006, of the rate of the interest from 8.75 per cent. to 8 per cent.; and 3. the enhancement of the conversion rights from two ordinary sharesfor every £1 nominal of CULS to four ordinary shares for every £1 nominal ofCULS and the inclusion of appropriate adjustments to the conversion rights inthe event of a bonus issue or rights issue. The Placing The Company has conditionally raised £1,000,000 (before expenses) by the issueof a tranche of additional CULS which have been placed by Teather & Greenwood ata price of 100p per £1 nominal of additional CULS. The additional CULS have thesame terms as those of the CULS as amended by the proposed amendments. The CULSbear interest at an annual rate of 8 per cent., payable in half yearlyinstallments on 30 June and 31 December in each year, are redeemable, if notconverted, on 31 October 2011 and are convertible into fully paid OrdinaryShares on the basis of four Ordinary Shares for every £1 nominal of CULS. If the mean average of the closing bid price of an Ordinary Share as shown inthe Daily Official List of the London Stock Exchange for a period of at least 30consecutive days is 100p or more, the Company is entitled to require a holder ofCULS to convert all or part of his holding of CULS into fully paid OrdinaryShares on the basis set out above. The Placing is not being underwritten. Application will be made for the Additional CULS to be admitted to trading onAIM. It is expected that Admission will become effective and that trading in theAdditional CULS will commence on AIM on 31 August 2006. In addition to the placing of Additional CULS described in this document, theCompany proposes to issue, conditional, inter alia, on the passing of theresolutions at the EGM and on Admission, the 406,250 new ordinary shares at 16pper share, which will raise £65,000 for the Company before expenses. These arebeing issued to certain subscribers of additional CULS, to enable theirsubscriptions to qualify under the Venture Capital Trust Scheme. The newordinary shares are being issued under the Company's existing authority underSection 89 of the Companies Act 1985. Application will be made for the new ordinary shares to be admitted to tradingon AIM and it is expected that admission of the new ordinary shares and tradingin them will commence on AIM on 31 August 2006. City Code Foresight Technology VCT plc has undertaken not to convert any number of CULS tothe extent that to do so would create any obligation on it or any member of theconcert party (comprising itself, Trivest VCT plc, Mark Robertson and JohnMacdonald) to make an offer for the Company under Rule 9 of the Takeover Code. Taxation Confirmation has been received from HM Revenue and Customs ("HMRC") that forVenture Capital Trust Scheme purposes, after the issue of the Additional CULS,they will comply with the requirements of Schedule 28B ICTA 1988. HMRC has alsoconfirmed that the shares to be issued on conversion will be eligible shares andthe Additional CULS to be issued will be qualifying loan stock for VCT purposes. HMRC has further confirmed that for Enterprise Investment Scheme purposes itwould be able to authorise the Company to issue the requisite certificates toShareholders in respect of shares to be issued upon receipt of a satisfactorilycompleted form EIS 1. It is understood that the proposed amendment to the conversion rights may resultin any shares obtained as a consequence of the conversion of the CULS notconstituting a qualifying holding of a Venture Capital Trust. 7 August, 2006 ENQUIRIES: Mondas PLC Tel: 020 7392 1300Jarlath McGee College Hill Tel: 020 7457 2020Alex WaltersMatthew Smallwood Mondas Plc: Mondas' Financial Markets Division focuses on delivering asset-servicingsolutions for global corporate actions processing, financial research and clientreporting and the management of new issues and placings. Its key productsinclude Radica CAPS, Signal and Venture and the Blue Curve suite of products. Blue Curve Blue Curve designs, builds and deploys enterprise solutions which improve theproduction and distribution of complex financial documents. Founded in London in1995 and acquired by Mondas in 2005, the company now has offices in the UK andthe US and serves customers throughout Europe, Africa and North America. BlueCurve is the recognised leader in software applications which improve theproduction and distribution of investment research, and is a major operator inthe growing investment management research and client reporting markets. Formore information, see http://www.bluecurve.net This information is provided by RNS The company news service from the London Stock Exchange