CPT.L Regulatory News (CPT)

Concepta PLC

("Concepta" or the "Company")

Placing and Subscription to raise £1.9 million

Issues of Convertible Loan Notes

Sub-division of Share capital

Notice of General Meeting

Concepta PLC (AIM: CPT), the innovative UK personalised healthcare company and developer of the proprietary self-test platform ("myLotus®"), the UK's most accurate home-use fertility tracking and pregnancy testing system, announces that it has conditionally raised gross proceeds of £1.9 million via a Placing and Subscription and issue of Convertible Loan Notes (the "Fundraise").

The net proceeds of c. £1,739,000 will be used to:

- strengthen and develop the digital marketing effort, and appointing of core marketing personnel;

- provide the additional working capital requirements of the Company to refine its manufacturing provision;

- target strategic commercial contracts to exploit the myLotus® product and technology nationally then internationally;

- invest in developing and extending the Concepta portfolio to capture and provide greater insight into fertility for women and couples to maximise their chance of conception; and

- continue to develop and improve its internal systems, controls and compliance including its digital 'app' developments, software, algorithms and data capture.

Highlights:

· £1.9 million (before expenses) to be raised at an Issue Price of 0.8p via:

- the conditional placing of 112,187,500 new Ordinary Shares with new and existing investors

- the conditional subscription of 112,687,500 new Ordinary Shares by funds managed by Mercia Asset Management PLC ("Mercia") and various Directors of the Company

- the conditional subscription for £101,000 of Convertible Loan Notes by Mercia

· The Fundraise will be subject to Concepta's shareholders approving resolutions to increase the Directors' authority to allot the Placing Shares, the Subscription Shares and the new Ordinary Shares that would be required to be allotted and issued upon the exercise in full of the Convertible Loan Notes; as well as Ordinary Shares up to the aggregate nominal value of £88,315.

· Novum Securities acted as Placing Agent to the fundraise

· Proposed sub-division of each Existing Ordinary Shares of 2.5p be sub-divided into one Ordinary Share of 0.1p and one Deferred Share of 2.4p.

· A Circular which sets out further details of the conditional Fundraise, the subdivision of share capital, and also includes a Notice of General Meeting, will be sent to shareholders later today (the "Circular"). The General Meeting is to be held at 52 Ninian Road, Cardiff CF23 5EJ at 11.00 a.m. on 24 April 2020.

· In light of the UK Government's public health advice in response to the COVID-19 outbreak, all Shareholders are encouraged to submit their form of proxy appointing the chairman of the General Meeting as proxy, and the Board requests that no Shareholders should attend the General Meeting. Only the formal business of the Resolutions will be carried out at the General Meeting and no update will be provided.

· To enable Shareholders to ask questions relating to the matters to be dealt with at the General Meeting, Shareholders are requested to email any questions to the Company (via concepta@walbrookpr.com) by no later than 6.00 p.m. on 22 April 2020. Answers will be posted on the Company's website by no later than 6.00 p.m. on 23 April 2020.

· To register for dial-in details and to submit any questions please contact Walbrook PR via email at concepta@walbrookpr.com or call +44 (0)20 7933 8787.

· Application will be made for the Placing Shares and the Subscription Shares to be admitted to trading on AIM, with dealings expected to commence on 27 April 2020, on the assumption that, inter alia, the Resolutions are passed.

Commenting on outlook and focus, Penny McCormick, Chief Executive Officer, commented:

"We are very grateful for the continuing support from our existing shareholders and welcome new investors who have participated in the Placing and Subscription, in particular the support shown by our largest shareholder Mercia.

"This fundraise provide us with a solid platform from which to drive the commercial success of our flagship self-test fertility test myLotus®. I remain confident that we have a business with substantial upside opportunity and these funds will allow us to deliver upon its potential."

The Circular, extracts of which are included below, will also be available later today via the Company's website at: 

https://conceptaplc.com/investors-dashboard/circulars

About Concepta PLC (www.conceptaplc.com)

Concepta PLC is an AIM-quoted pioneering UK healthcare company that has developed a proprietary product, myLotus®, targeted at the personalized mobile health market with a primary focus on hormone testing and increasing a woman's chances of naturally getting pregnant and to provide insight to unexplained infertility.

myLotus® is currently the only consumer product which allows both quantitative and qualitative home (self-test) test measurement of a woman's personal luteinizing hormone (LH) during ovulation and human chorionic gonadotropin (hCG) hormone level during pregnancy, facilitating higher conception rates and early diagnosis of fertility issues. The proposition of myLotus® is to empower women to better understand their hormone levels and menstrual cycle and help women conceive naturally by identifying their window of fertility and optimal time for conception.

The Company has received CE-mark certification for myLotus® and has launched its first product in the UK. The Company is preparing plans to roll-out across the core EU countries in 2020.

myLotus® is expected to be beneficial to users who have been unable to conceive after 6 months of trying. This highly motivated target group of women won't typically be offered medical intervention until after 12 months of unsuccessfully trying to conceive, with IVF not usually offered until after two years of trying to conceive. Research indicates couples start to take positive action ahead of this time typically with little medical support to help them do so.

The following has been extracted from the Circular:

1. Background to and reasons for the General Meeting

Today, 8 April 2020, the Company announced that it had conditionally raised gross proceeds of £1.9 million via (i) the conditional placing of 112,187,500 new ordinary shares of 0.1p each in the capital of the Company with new and existing investors of the Company at a price of 0.8 pence per Placing Share, (ii) the conditional subscription for 112,687,500 new ordinary shares of 0.1p each in the capital of the Company by certain subscribers (including Mercia GP and Mercia EIS and various Directors of the Company) at a price of 0.8 pence per Subscription Share; and (iii) the conditional subscription for £101,000 of Convertible Loan Notes by Mercia GP. The Placing was undertaken by Novum.

As such, the Board is seeking the authority to allot and issue the Placing Shares, the Subscription Shares and the new Ordinary Shares that would be required to be allotted and issued upon the exercise in full of the Convertible Loan Notes, as well as Ordinary Shares (and/or rights to subscribe to them) up to the aggregate nominal value of £88,315.

The Placing, the Subscription and the issue of the Convertible Loan Notes are subject to the requisite Shareholders' approval and, accordingly, the issue of the above mentioned new Ordinary Shares is conditional on, inter alia, the passing of certain resolutions by the Company's Shareholders at a duly convened general meeting of the Company.

In light of the public health advice in response to the COVID-19 outbreak, including to limit travel and public gatherings, the Company strongly encourages all Shareholders to submit their form of proxy, appointing the chairman of the General Meeting as proxy, rather than attend the General Meeting in person. Only the formal business of the Resolutions will be carried out at the General Meeting and no update will be provided.

2. The Placing

The Placing is conditional upon, inter alia:

· the Resolutions (as defined above) being duly passed at the General Meeting by 24 April 2020, and Admission becoming effective on or before 8.00 a.m. on 27 April 2020 or such later time and/or date as the Company, Novum and SPARK may agree, but in any event by no later than 8.00 a.m. on 4 May 2020;

· the Placing Agreement having become unconditional in all respects and not having been terminated; and

· completion of the Subscription.

The Placing is not being underwritten. The Placing Shares will be allotted on 24 April 2020, with Admission expected on 27 April 2020.

3. The Subscription

The Subscription is conditional upon, inter alia:

· the Resolutions (as defined above) being duly passed at the General Meeting by 24 April 2020; and

· Admission becoming effective on or before 8.00 a.m. on 27 April 2020 or such later time and/or date as the Company, Novum and SPARK may agree, but in any event by no later than 8.00 a.m. on 4 May 2020.

The Subscription Shares will be allotted on 24 April 2020, with Admission expected on 27 April 2020.

4. The Convertible Loan Notes

Mercia GP ("Lender") has agreed to subscribe for all the Convertible Loan Notes (being a cash sum of £101,000 ("Loan")) and such sum will be paid to the Company on or before 24 April 2020, conditional on Admission.

The Convertible Loan Notes have the following principal terms:

Maturity Date:  27 April 2023

Coupon: the interest rate on the Loan is 5%. In the event of default (i.e. redemption being triggered and the Loan failing to be repaid on time), interest at 5% will continue to be payable.

Security: the Loan is unsecured.

Repayment: The Company will redeem the full amount of the Loan together with all interest accrued and the Redemption Premium (to the extent not previously converted) on the Maturity Date.

The Loan may also fall due for redemption in certain circumstances including, inter alia, or in the event of the insolvency of the Company.

Redemption Premium: a redemption premium of 30% of the aggregate value of the Loan to be redeemed shall be payable on a redemption (but not a conversion) of the Loan.

Conversion: the whole of the Loan (but not part only) together with all interest accrued can be converted at the Conversion Price by the submission of a conversion notice ("Conversion Notice") by the Lender to the Company at any time until 20 business days prior to the Maturity Date.

The Loan together with all interest accrued may also convert on a change of control of Concepta (as defined in section 1124 of the Corporation Tax Act 2010), i.e. an offeror and any person or persons acting in concert (as defined in the City Code on Takeovers and Mergers) with him acquiring shares or voting rights enabling them to control the manner in which the Company is managed).

In the event of service of a Conversion Notice, all of the Loan must convert. However, to the extent that the total number of Shares to which the Lender is entitled upon such Conversion, when taken together with any other Shares held by the Lender and any concert party of the Lender, equals or exceeds 30% of the issued share capital of the Company at any time the amount of the Loan representing such excess shall be redeemed in cash by the Company.

Conversion Price: the conversion price will be 0.8p or, if lower, the average closing price on AIM of the Ordinary Shares for the five business days preceding the relevant conversion date.

The Convertible Loan Note has not been "whitewashed", therefore if Mercia were to convert the CLN at a point where its aggregate shareholding post conversion exceeded 30% of the issued share capital of the Company it would be subject to Rule 9 of the Takeover Code and be required to make an offer to acquire all the Ordinary Shares not owned by it.

5. Subdivision of share capital

The Act prohibits the Company from issuing shares at a price below their nominal value. As the price at which the Placing Shares and the Subscription Shares are proposed to be issued is below the current nominal value of 2.5p per ordinary share, it is proposed that each of the Existing Ordinary Shares of 2.5p be sub-divided into one New Ordinary Share of 0.1p and one Deferred Share of 2.4p, such Deferred Shares having the rights and being subject to the restrictions attached to them as set out in Resolution 3 in the Notice of General Meeting.

The Deferred Shares will not entitle their holders to receive notice of or to attend or vote at any general meeting of the Company, or to receive any dividend or other distribution. On a return of capital on a winding up or dissolution of the Company, the Deferred Shares will be entitled as a class to receive in aggregate the sum of £1 prior to any return on capital paid in respect of the Ordinary Shares. The holders of Deferred Shares are not entitled to any further right of participation in the assets of the Company. The Company shall have the right to purchase the Deferred Shares in issue at any time for an aggregate sum of £1. As such, the Deferred Shares effectively have no value. Share certificates will not be issued in respect of the Deferred Shares, and they will not be admitted to trading on AIM. The Company intends to buy the Deferred Shares back as soon as reasonably practicable but this would be subject to Shareholders' approval which the Company would look to obtain at the next general meeting to held by the Company following the General Meeting.

The Company's issued share capital currently consists of 264,946,675 Existing Ordinary Shares, and this number will not be changed by the Subdivision. The ISIN for the Existing Ordinary Shares is GB00BYZ2R301.

6. Use of Proceeds

The primary use of the net proceeds of £1.739 million will be to strengthen and develop the digital marketing effort, strengthen the core team and provide the additional working capital requirements of the Company to refine its manufacturing provision and to target strategic commercial contracts to exploit the myLotus product and technology nationally then internationally.

The Company will invest in developing and extending the Concepta portfolio to capture and provide greater insight into fertility for women and couples to maximise their chance of conception. 

The Company will also continue to develop and improve its internal systems, controls and compliance including its digital 'app' developments, software, algorithms and data capture.

7. Related Party Transactions

Mercia owns 72,036,395 shares, representing 27.19% of the current issued share capital of the Company, and Mercia is a "substantial shareholder" in the Company. Penny McCormick, Maddy Kennedy, Lyn Rees and Adam Reynolds are Directors of the Company.

Subscription

Each of Mercia GP, Mercia EIS, Penny McCormick, Maddy Kennedy, Lyn Rees and Adam Reynolds has agreed that they will participate in the Subscription as set out below.

*Half of the subscription by Maddy Kennedy will be made by her husband.

† Mercia's investment is split between Mercia GP (£99,000) and Mercia EIS (£500,000). Mercia's existing and post-Admission holding includes 12,699,967 shares held by Enterprise Ventures (General Partner FY Seedcorn) Limited as general partner of Finance Yorkshire Seedcorn LP.

All of the above parties are participating on the same terms as all other placees.

The participation in the Subscription by each of Mercia GP, Mercia EIS, Penny McCormick, Maddy Kennedy, Lyn Rees and Adam Reynolds, and the subscription by Mercia GP for the Convertible Loan Notes, constitute related party transactions under the AIM Rules for Companies.

Peter Dines, who is Chief Operating Officer at Mercia Asset Management PLC, Penny McCormick, Maddy Kennedy, Lyn Rees and Adam Reynolds who are Directors of Concepta, are not considered independent in relation to the consideration of these related party transactions under AIM Rule 13.

Therefore Neil Mesher, who is considered to be an independent director of the Company for this purpose, has considered the participation of Mercia GP, Mercia EIS, Penny McCormick, Maddy Kennedy, Lyn Rees and Adam Reynolds in the Subscription. Having consulted with SPARK Advisory Partners, the Company's nominated adviser, the independent director considers that the terms of each of Mercia GP's, Mercia EIS', Penny McCormick's, Maddy Kennedy's, Lyn Rees' and Adam Reynolds' participation in the Subscription are fair and reasonable insofar as Shareholders are concerned.

Convertible Loan Notes

In addition to its participation in the Subscription, Mercia GP has agreed to subscribe for the £101,000 of Convertible Loan Notes. The subscription by Mercia GP for the Convertible Loan Notes constitutes a related party transaction under the AIM Rules for Companies. Peter Dines is not considered independent in relation to the consideration of this related party transaction under AIM Rule 13.

When the Company commenced the fundraising process in early March 2020, at the outset Mercia agreed in principle to "cornerstone" up to £700,000 in the Subscription. This support from a longstanding and significant shareholder, together with participation from a number of the Directors in the Subscription, has been instrumental in assisting the Company's brokers in raising the balance of the funds required in the Subscription and Placing. However, during the course of the fundraising, it became apparent that if Mercia were to subscribe this amount in Ordinary Shares at the Issue Price, its aggregate shareholding (together with its connected funds) post Admission would exceed 30% of the share capital of the Company, and consequently under the City Code on Takeovers and Mergers would require them to either make an offer to all shareholders for the shares they do not hold or to seek a "whitewash" from the Panel on Takeovers and Mergers. To avoid this requirement, the Directors (other than Peter Dines) proposed that Mercia should invest £599,000 in the Subscription, being the maximum amount permissible to leave Mercia's holding (together with its connected parties) at less than 30%, and for Mercia to invest the balance of £101,000 via the Convertible Loan Notes ("CLN"), but for the CLN not to be subject to a "whitewash", which would take additional time to obtain. The independent Directors (ie other than Peter Dines) have been keen to conclude the fundraising given the volatility in the capital markets. Mercia agreed to this proposal, subject to the terms and conditions attached to the CLN. The independent Directors considered it appropriate, given general economic circumstances, to secure access to a further £101,000, which provides the Company with incremental headroom in its working capital budget. 

Therefore, all of the Directors (with the exception of Peter Dines), have considered the subscription by Mercia GP for the Convertible Loan Notes. Having consulted with SPARK Advisory Partners, the Company's nominated adviser, the independent Directors consider that the terms of Mercia GP's subscription for the Convertible Loan Notes, are fair and reasonable insofar as Shareholders are concerned. The issue of the CLNs to Mercia is subject to the approval of independent shareholders (i.e. excluding Mercia) at the General Meeting of Resolution 3.

8. Resolutions

A summary and brief explanation of the resolutions to be proposed at the General Meeting is set out below. Please note that this is not the full text of the Resolutions and you should read this section in conjunction with the Resolutions contained in the Notice at the end of this document. The following resolutions will be proposed at the General Meeting:-

Resolution 1, which will be proposed as an ordinary resolution, is to approve the Subdivision;

Resolution 2, - which will be proposed as a special resolution, and which is subject to the passing of Resolution 1, is to approve the amendment of the Articles of Association to include the rights attaching to the Deferred Shares;

Resolution 3, - which will be proposed as an ordinary resolution, and which is subject to the passing of Resolutions 1 and 2, is to approve the issue of the Convertible Loan Notes to Mercia GP;

Resolution 4 , which will be proposed as an ordinary resolution, and which is subject to the passing of Resolutions 1 and 2, is to authorise the Directors to allot the Placing Shares and the Subscription Shares and the shares subject to the Convertible Loan Notes, and further new Ordinary Shares up to an aggregate nominal value of £88,315; and

Resolution 5, which will be proposed as a special resolution and which is subject to the passing of Resolutions 1, 2, and 4, dis-applies statutory pre-emption rights, provided that such authority shall be limited to the Placing Shares and the Subscription Shares and the shares subject to the Convertible Loan Notes, and further Ordinary Shares having an aggregate nominal value of £48,982.

The authorities contained in the Resolutions replace those granted to Directors at the most recent Annual General Meeting.

9. General Meeting and COVID-19 measures

In light of the UK Government's public health advice in response to the COVID-19 outbreak, including to limit travel and public gatherings, the Company strongly encourages all Shareholders to submit their form of proxy appointing the chairman of the General Meeting as proxy. 

In addition, to comply with the above advice that physical gatherings should consist of no more than two persons in public, the Board requests that no Shareholders should attend the General Meeting. The Board has already made arrangements for two Shareholders to attend in person. These Shareholders will constitute the minimum quorum for the General Meeting to take place under the Articles and the requirements of the Act. Any Shareholders (other than the two Shareholders referred to above) that do attend will be refused entry. 

Shareholders should note that only the usual and formal business set out in the notice of the General Meeting will be considered at the General Meeting and no update will be provided. The General Meeting will be conducted swiftly, with no refreshments, no presentation by the directors and no question and answer session. The Company does value Shareholder participation and so, in order to enable Shareholders to ask questions relating to the matters to be dealt with at the General Meeting, Shareholders are requested to email any questions to the Company (concepta@walbrookpr.com) by no later than 6.00 p.m. on 22 April 2020. Answers will be posted on the Company's website by no later than 6.00 p.m. on 23 April 2020.

The Company also values the votes of Shareholders, so it would encourage all Shareholders to exercise their voting rights BUT ONLY by appointing the chairman of the General Meeting to be their proxy. Any form of proxy received appointing a person other than the chairman of the General Meeting as the Shareholder's proxy will be deemed to have appointed the chairman of the General Meeting as that Shareholder's proxy. Accordingly, Shareholders wishing to vote on any of the matters of business are urged to do so through completion of their form of proxy, which can be submitted to the Company's Registrar. Forms of proxy should be completed and returned in accordance with the instructions thereon.

10. Board Recommendations

All the Directors recommend that you vote in favour of Resolutions 1 and 2.

In relation to Resolution 3, as Mercia GP (whom Peter Dines represents on the board) is subscribing for the Convertible Loan Notes, Peter Dines is not considered independent and as such has not participated in the recommendation. All of the Directors (excluding Peter Dines) consider that the subscription for the Convertible Loan Notes by Mercia GP and Resolution 3 to be considered at the General Meeting are in the best interests of the Company and its shareholders as a whole. These Directors (excluding Peter Dines) recommend that you vote in favour of Resolution 3.

In relation to Resolutions 4 and 5,as Penny McCormick, Maddy Kennedy, Lyn Rees, and Adam Reynolds have participated in the Subscription, they are not considered independent and as such have not participated in the recommendation In addition, as Mercia GP and Mercia EIS (whom Peter Dines represents on the board), have participated in the Subscription, Peter Dines is not considered independent and as such has not participated in the recommendation either. Neil Mesher, as the only independent Director, considers that the Placing and the Subscription and Resolutions 4 and 5 are in the best interests of the Company and its shareholders as a whole. Neil Mesher recommends that you vote in favour of these resolutions.

DEFINITIONS USED IN THIS ANNOUNCEMENT AND IN THE CIRCULAR