7 Aug 2009 15:16
For immediate release
7 August 2009
TOP LEVEL DOMAIN HOLDINGS LIMITED
("TLDH" or the "Company")
Acquisition of further interest in Minds+Machines LLC
On 27 May 2009 the Board of Top Level Domain Holdings Limited (AIM: TLDH) announced that the Company had conditionally subscribed for a fully diluted 35.11 per cent. interest in top level domain registry services provider Minds+Machines LLC ("Minds+Machines") for a cash consideration of US$501,000 (the "Initial Investment"). The subscription price paid by the Company was the same as the founder members of Minds+Machines. The Board is pleased to announce that it has today acquired the outstanding issued and to be issued share capital of Minds+Machines not already owned by the Company (the "Acquisition").
The Internet Corporation for Assigned Names and Numbers ("ICANN") announced its intention to allow qualified parties to apply to own and operate new generic top level domain ("gTLDs"). The Company's strategy is to take advantage of the opportunity created by this proposed change by investing in gTLD applicants and infrastructure technologies.
Minds+Machines, which was founded in 2008 by Antony Van Couvering, is a full-service consulting and registry services company that provides a complete registry solution for new gTLD applicants. Minds+Machines has secured an exclusive license to extend the CoCCA registry platform, currently deployed in over 20 countries, to new generic gTLDs. Minds+Machines' management team have previously launched or helped launch over 20 top-level domains, with business models ranging from small community gTLDs to large commercial enterprises. In addition, they have owned and operated ICANN-accredited registrars, managed reseller channels, developed domain name systems software and overseen global DNS roll-outs. As Minds+Machines is a start-up venture it has to date not prepared any financial statements.
The Board has been encouraged by the progress made by Minds+Machines since the Initial Investment in developing its portfolio of potential top gTLD applicants and the key executives' ability to secure gTLD partners through their network of contacts based on their track record of success in Internet businesses. The Board believes that the Acquisition should enable the Company to exploit the opportunity created by Minds+Machines and fully align the interests of the shareholders of the Company and Minds+Machines. In addition, the Board believes that the Acquisition should provide Minds+Machines with the necessary funds to demonstrate its financial viability in the forthcoming ICANN auction round and simplify the company proposition to facilitate discussions with potential top level domain partners and community leaders. There can be no assurance at this stage that the ICANN auction and application process for new TLDs will proceed as expected or that the Company will be successful in its applications.
Under the terms of the Acquisition agreement, the consideration for Minds+Machines comprises up to 25.15 million new TLDH ordinary shares (the "Consideration Shares") which will be issued in three tranches over a 12 month period. The Company has agreed that 30 per cent. of the Consideration Shares (7,545,000 new ordinary shares) will be issued as at the closing date of the Acquisition ("First Consideration Shares"), 30 per cent. (7,545,000 new ordinary shares) will be issued as at 1 February 2010 ("Second Consideration Shares"), and the remainder (10,060,000 new ordinary shares) will be issued as at 1 August 2010 ("Third Consideration Shares") with the issue of shares to each vendor in each tranche subject to the continuing employment of the relevant vendor by TLDH and/ or Minds+Machines (save in circumstances where the vendor has been dismissed without cause).
Following completion of the Acquisition and issue of the First Consideration Shares, the enlarged issued share capital of the Company will be 280,508,846 TLDH ordinary shares ("First Enlarged Share Capital"). On issue of the Second Consideration Shares and the Third Consideration Shares, subject to all shares being issued (due to all vendors remaining in employment) the enlarged share capital of the Company (excluding any exercise of options or warrants, or issue of new shares by the Company in the intervening period) will be 298,113,846 ordinary shares (the "Fully Enlarged Issued Share Capital"). The Consideration Shares, which will rank pari passu with the existing ordinary shares in issue, represent approximately 8.4 per cent. of the Fully Enlarged Issued Share Capital. Application will be made for the First Consideration Shares to be admitted to trading on AIM, which is expected to occur on 17 August 2009.
The vendors have also entered into lock-in agreements with the Company pursuant to which they have agreed not to dispose of or sell any interest in the TLDH ordinary shares beneficially held by them for a period of 24 months following completion of the Acquisition (the "Lock-In Agreements"). The restrictions set out in the Lock-In Agreements shall not apply to any sale, transfer, disposal or agreement to dispose of Ordinary Shares:
(i) by way of acceptance of any general offer made to shareholders of the Company to acquire the whole of the issued equity share capital of the Company (other than any equity share capital already held by the offeror and/or persons acting in concert with the offeror), a partial offer or a tender offer as contemplated by the City Code; or
(ii) in the execution of an irrevocable commitment to accept a general offer for the whole of the issued equity share capital of the Company (other than any equity share capital held by or committed to the offeror and/or persons acting in concert with the offeror), a partial offer or a tender offer as contemplated by the City Code;
(iii) pursuant to the sale to any actual Offeror or bona fide potential Offeror (as contemplated by the City Code; or
(iv) on death to personal representatives of the deceased shareholder, in the case of shares held on trust, to new trustees or to beneficiaries and to any connected person of a shareholder, provided in each case that the transferee agrees to comply with the lock-in restriction.
The Company has also agreed to award certain of the vendors and executives of Minds+Machines, in aggregate, warrants over a further 21.25 million new TLDH ordinary shares (the "Consideration Warrants") in consideration of the cancellation of their existing Minds+Machines share options. The Consideration Warrants will vest to the holders at the rate calculated as A/B over the next 30 months where A is the number of whole of months since the completion of the Acquisition and B is equal to 30 with the monthly vesting of the options subject to the ongoing employment of the respective individual. The exercise period for the Consideration Warrants shall be 36 months from 3 August 2009.
Fred Krueger, Antony Van Couvering and Clark Landry, directors of the Company, are founder shareholders of Minds+Machines and following the Initial Investment by the Company had a fully diluted interest of of 37.3 per cent., 14.1 per cent. and 6.9 per cent. respectively in Minds+Machines. Fred Krueger is the President of Minds+Machines, Antony Van Couvering is Chief Executive Officer and Clark Landry is Vice President, Business Development.
The proposed Acquisition is therefore a related party transaction for the purposes of Rule 13 of the AIM Rules. The Independent Directors of the Company (being David Weill, Guy Elliott and Michael Mendelson), having consulted with Beaumont Cornish Limited, the Company's nominated adviser, unanimously consider the terms of the proposed Acquisition are fair and reasonable insofar as the Company's Shareholders are concerned.
As described above the Consideration Shares will be issue in three tranches. Accordingly, the interests of Fred Krueger, Antony Van Couvering and Clark Landry, in the First Enlarged Issued Share Capital will be as follows:
| Director | Current holding of Ordinary Shares | First Consideration Shares | Enlarged holding of Ordinary Shares on completion of the Acquisition | Percentage interest in the First Enlarged Issued Share Capital |
| Fred Krueger | 75,108,560 | 6,795,000 | 81,903,560 | 29.2% |
| Antony Van Couvering | 0 | 15,000 | 15,000 | 0.005% |
| Clark Landry | 11,222,800 | 735,000 | 11,957,800 | 4.3% |
On completion of the Acquisition the interests of Fred Krueger, Antony Van Couvering and Clark Landry, in the Fully Enlarged Issued Share Capital and the Consideration Warrants (which vest over 30 months), will be as follows:
| Director | Current holding of Ordinary Shares | Total Consideration Shares | Enlarged holding of Ordinary Shares on completion of the Acquisition | Percentage interest in theFully Enlarged Issued Share Capital | Consideration Warrants received pursuant to the Acquisition |
| Fred Krueger | 75,108,560 | 22,650,000 | 97,758,560 | 32.8% | 4,000,000 |
| Antony Van Couvering | 0 | 50,000 | 50,000 | 0.02% | 10,000,000 |
| Clark Landry | 11,222,800 | 2,450,000 | 13,672,800 | 4.6% | 2,500,000 |
Further Information:
Top Level Domain Holdings Limited.
David Weill Tel: +44 (0) 20 7881 0180
Beaumont Cornish Limited
Roland CornishMichael Cornish Tel +44 (0) 20 7628 3396
Or visit the group's website at www.tldh.org
ENDS