DMTR.L Regulatory News (DMTR)

28 Mar 2007 13:44

Kanyon PLC28 March 2007 Kanyon Plc ("Kanyon" or "the Company") Acquisition of Solar Labs Plc Kanyon is pleased to announce today that the Company has entered into anagreement to acquire ("the Acquisition") the entire issued share capital ofSolar Labs Plc ("Solar Labs"), a start up business seeking to developeconomically viable solar energy solutions. The total consideration of £4,338,413 will be satisfied by the issue of433,841,307 new Ordinary Shares ("the Consideration Shares"). The new OrdinaryShares will be issued at 1 penny per share at a 3.75 pence discount to the midmarket closing price of 4.75 pence per Ordinary share on 27 March 2007. TheConsideration Shares will rank pari passu with the existing Ordinary Shares. The Acquisition is subject to: 1. The receipt of code waiver letters from the shareholder of Solar Labs Plc; and 2. The approval of all the resolutions at the EGM noted below: • as an ordinary resolution, to approve the Acquisition; and • as an ordinary resolution, to approve the ongoing investment strategy. The acquisition of Solar Labs is also a related party transaction for thepurposes of the AIM Rules for Companies. Shareholders will receive further information regarding the date of the EGM andissue of the related circular in further announcements. Information on Solar Labs Solar Labs was incorporated on 4 October 2006 with the objective of harnessing adiverse range of technologies to support the development of complete andeconomically viable solar energy solutions. This will be achieved through theacquisition, development and commercialisation of technologies in this solarenergy sector. Solar Labs will cover a full range of solar technologiesincluding solar photo-voltaics; solar thermal; solar lighting/air conditioning;solar water splitting and other solar chemical processes. The company may also acquire and in-licence technologies from related non-solar fields such asnanotechnology, energy storage, transport and methods of transforming energy. Solar Labs will evaluate the development of commercial solar energy around threetechnical areas of focus: 1. the conversion of solar radiation into controlled energy states. Inthis context the range of energy states comprise various energy forms (includingelectricity; temperature differentials; chemical; and light) as well as itstime, location and intensity; 2. the subsequent transition into other controlled energy states ofgreater economic value; and 3. the modification of energy consumption to exploit solar energysources that can be delivered efficiently through step 1 and 2 above. Solar energy has the theoretical potential to meet global energy requirementsmany times over. The energy reaching the earth's surface from the sun exceedshuman power consumption by over five thousand times. In maximising the captureof solar energy for human exploitation, the Directors see the potential for manyparallel solar-based energy industries to co-exist: each meeting differentenergy needs using tailored methods of capture, transition, delivery andconsumption. Solar Labs aims to become a leading developer and provider of technologysolutions to the solar energy industries. Solar Labs will leverage the ProposedDirectors' considerable experience in the development of collaboration withacademic research intuitions to commercialise intellectual property. Inevaluating, technologies, the company expects to benefit significantly from theexperience and expertise of its chief scientific adviser, Prof. Peter Dobson.Both the Directors and Proposed Directors (as described below) and theiradvisers benefit from a good access to academic institutions and industry. Trading The Company had net assets of £3.4 million as at 31 January 2007 representedalmost entirely by cash balances and Solar Labs had net assets of £60,000 at 31January 2007 also represented almost entirely by cash balances. The enlargedGroup will therefore have net assets of approximately £3.9 million aftertransaction costs to meet its ongoing investment strategy. The Directors andProposed Directors will continue to maintain a low cost structure for theCompany. The Acquisition Agreement Under the terms of the agreement dated 28 March 2007 made between the Company(1) and Ora Capital Partners plc ("Ora"), Richard Griffiths, Barnard NomineesLimited (on behalf of Elenora International Investment Limited), David Norwood,Alan Aubrey, James Ede Golightly, Michael Bretherton and Thames Investment Club(together "the Vendors") (2) ("the Acquisition Agreement") the Companyconditionally agreed to purchase the entire issued share capital of Solar Labs.The consideration, which is payable on admission of the Consideration Shares ("Admission"), is approximately £4.3m (which will be satisfied by the allotment bythe Company of 433,841,307 new Ordinary Shares to the Vendors credited as fullypaid at 1 penny per share). The Acquisition Agreement is conditional upon, inter alia, (i) the Resolutionsbeing passed; (ii) and Admission. The Company has a right to rescind theagreement if a material adverse change occurs in relation to the assets orfinancial position of Solar Labs prior to Admission. The Vendors have a right torescind the agreement if a material adverse change occurs in relation to theCompany prior to Admission. The Acquisition Agreement contains restrictive covenants from the Vendors andcertain warranties and indemnities from the Vendors (together "the Warrantors")to the Company ("the Seller Warranties"). Such warranties are given on a severalbasis. The Acquisition Agreement contains certain warranties and indemnitiesfrom the Company to the Warrantors ("the Buyer Warranties"). The AcquisitionAgreement contains a maximum liability of the Warrantors for breach of theSeller Warranties and a maximum liability of the Company for breach of the BuyerWarranties. The liability of the Warrantors under the Seller Warranties and of the Buyer under the BuyerWarranties shall cease three months after the publication of the auditedaccounts of the Group for a period ending not earlier than 30 September 2007. The entry by the Company into the Acquisition Agreement is a related partytransaction for the purpose of the AIM Rules for Companies. Michael Brethertonis a Vendor. The Directors (other than Michael Bretherton) confirm that, havingconsulted Zimmerman Adams International Limited, the Company's nominatedadvisor, they consider the terms of the Acquisition Agreement to be fair andreasonable insofar as the shareholders are concerned. Ongoing Investment Strategy The Directors and Proposed Directors intend to continue to identifyopportunities they believe fulfil the Company's original objectives ofinvesting, or acquire assets, businesses or companies in the energy andresources sectors including and specifically the hydrocarbon, mining explorationand development industries, but the focus will now be in the field of renewableenergies and solar energy solutions which are complementary to the Company'senlarged business. Acquisitions and investments may be funded with a combinationof equity and cash, although the Company may also utilise debt under certainconditions. It is still anticipated that any further acquisitions, other thanpure intellectual property transactions, will be structured through limitedliability vehicles. The Directors will continue to be active investors andmonitor any investments and/or acquisitions made by the Company. It is not the current intention of the Directors or Proposed Directors that theCompany will seek further funds from Shareholders. Amendment to Sutcliffe Option Under the terms of a deed of amendment dated 28 March 2007, Dr Matthew Sutcliffehas agreed that the option granted to him on 3 October 2006 be amended so thatit is an option to subscribe for 1,250,000 Ordinary Shares (not 5,000,000Ordinary Shares) and that it now is exercisable when the Company, or anysubsidiary, has acquired shares or other assets (in accordance with theCompany's ongoing investment strategy where the aggregate consideration paid bythe Company exceeds £3,000,000. Proposed Directors On completion of the Acquisition, the following directors are proposed to jointhe board of the Company. David Norwood, aged 38,(Proposed Non-executive Chairman) David Norwood is the founder and Executive Chairman of IP Group Plc , a companyfocused on the commercialisation of research and IP from universities. Davidgraduated in modern history from Keble College, Oxford following which he workedas a foreign exchange trader at Bankers Trust and then as an investment analystat Duncan Lawrie. In 1997 he joined Williams de Broe to advise quoted andunquoted technology companies. David founded IndexIT Partnership in 1999, atechnology advisory boutique which was subsequently acquired by Beeson GregoryGroup Plc at which time he joined the board of Beeson Gregory and was appointedchief executive at the beginning of 2001. David joined the board of The Evolution Group Plc following its merger with Beeson Gregory in July 2002 andthen became chief executive of IP Group Plc (formerly IP2IPO) when it floated onAIM in October 2003. In addition to IP Group, David is a director of severalother AIM listed companies. Alan Aubrey, aged 45 ,(Proposed Non-executive Director) Alan Aubrey is Chief Executive Officer of IP Group Plc and has extensiveexperience in IP commercialisation. Alan established Techtran Group Limited in 2002 and was itsCEO when the business was acquired by IP Group PLC (formerly IP2IPO Group) inJanuary 2005. Previously he was a partner in KPMG where he specialised incorporate finance advice to technology businesses. Alan joined the Board of IPGroup on its acquisition of Techtran Group and became Chief Executive Officer ofIP Group in January 2006. Alan is a member of the Institute of CharteredAccountants of England and Wales. Solar Labs will also be retaining the following adviser in a senior capacity: Prof. Peter Dobson, Consultant and Chief Scientific Adviser Prof. Peter Dobson has extensive experience in sustainable energies includingSolar. He was appointed to a university lectureship and college fellowship atQueen's College Oxford in 1988 and a Professorship in 1996. Prior to this helectured in Physics at Imperial College and was senior principal scientist atPhilips Research laboratories. At Oxford University, Prof. Dobson is responsiblefor setting up new interdisciplinary research institutes that combine Universityactivities with commercial R&D. One of these research institutes will be devotedto sustainable energy. Prof. Dobson has been responsible for two universityspinouts, Oxonica Plc and Oxford Biosensors Limited. Oxonica Plc is an AIMlisted company. He also serves on advisory committees of several companies thathave been "spun out" of Oxford University. Lock-Ins And Orderly Market Arrangements At Admission, the Vendors will, in aggregate, be interested in 433,841,307 newOrdinary Shares, representing approximately 49.1 per cent. of the enlarged sharecapital of the Company. Richard Griffiths, David Norwood, Alan Aubrey, BarnardNominees Limited (which holds Ordinary Shares on behalf of Elenora InternationalInvestment Limited) and Ora have agreed to undertake to the Company, ZimmermanAdams International and Hichens Harrison that they will not sell or dispose of,except in certain limited circumstances (as permitted by the AIM Rules forCompanies), any interest in Ordinary Shares held by them at any time before thefirst anniversary of Admission, save in certain limited circumstances and, forthe 12 months immediately following, will effect a sale only through the brokersfor the time being of the Company with a view to maintaining an orderly marketin the Ordinary Shares. In addition, Dolven Holdings Limited, Bainunah Trading Limited, MichaelBretherton, Byron Lloyd and Matthew Sutcliffe have all previously undertaken tothe Company, ZAI and Hichens Harrison that it will not sell or dispose of,except in certain limited circumstances (as permitted by the AIM Rules), any ofits interest in Ordinary Shares at any time before 10 October 2007 (being thefirst anniversary of the admission of the existing Ordinary Shares to trading onAIM) and, for the 12 months immediately following, will effect a sale onlythrough the brokers for the time being of the Company with a view to maintainingan orderly market in the Ordinary Shares. Controlling Shareholder On completion of the Acquisition, Ora will hold Ordinary Shares representingapproximately 42.94 per cent. of the enlarged issued share capital of theCompany. The Directors are satisfied that the Company is capable of carrying onits business independently of Ora and that all transactions and relationshipsbetween Ora and the Company are and will continue to be at arm's length and oncommercial terms. To ensure that Shareholders continue to be adequately protected in this regard,the Company and Ora have entered into a new relationship agreement which,conditional on approval of the Acquisition, will replace the relationshipagreement entered into with Ora on 3 October 2006) to reflect the fact that,following completion of the Acquisition, the Company will have new investmentinterests following its first acquisition. Pursuant to the RelationshipAgreement, Ora has given certain undertakings to the Company to the effect thatthe Board can amongst other things operate on an independent basis. Inconsidering any proposed arrangements or contracts between Ora and the Company,David Norwood, Byron Lloyd and Michael Bretherton are not considered to beindependent of Ora and will abstain from voting on any such arrangements orcontracts at any Board meeting of the Company. The Relationship Agreement is effective for so long as Ora, together with itsassociates, hold (whether directly or indirectly) in aggregate, shares in thecapital of the Company representing 25 per cent. or more of the Company's entireissued ordinary share capital. Kanyon Plc - Michael Bretherton 020 7099 7260Zimmerman Adams International - Nominated Adviser 020 7060 1760 Ray Zimmerman/Jonathan Evans This information is provided by RNS The company news service from the London Stock Exchange