DMTR.L Regulatory News (DMTR)

12 Dec 2007 18:31

Kanyon PLC12 December 2007 12 December 2007 Kanyon Plc (the "Company") Proposed acquisition of Oxford Advanced Surfaces Limited Proposed 1 for 10 Share Consolidation ("Share Consolidation") Proposed subscription by Ora Capital Partners plc ("Ora") for 12,000,000 New Ordinary Shares of £0.01 each at 25 pence per share ("the Subscription") Change of name to Oxford Advanced Surfaces Group Plc Application for Admission to AIM Adoption of New Articles of Association and Notice of General Meeting Kanyon Plc (the "Company") has today announced that terms have been agreed forthe conditional acquisition of Oxford Advanced Surfaces Limited ("OAS") (the "Acquisition"), a company engaged in the development and commercialisation oftechnology which enables the modification of the surface properties of a broadrange of materials. The aggregate consideration for the Acquisition isapproximately £19.4 million to be satisfied by the payment of £50,000 in cashand the allotment of 77,539,907 New Ordinary Shares of 1 pence each (the "Consideration Shares") to be issued and credited as fully paid at 25 pence perNew Ordinary Share of 1 pence each ("New Ordinary Share"). The Company alsoproposes to consolidate its existing share capital on the basis of 1 NewOrdinary Share for every 10 existing ordinary shares of 0.1 pence each, creating1 pence shares in place of the existing 0.1 pence shares ("the ShareConsolidation"). The Company has also today announced that it has conditionally raised £3 million(before expenses) by way of a conditional subscription for 12,000,000 NewOrdinary Shares by Ora Capital Partners Plc (the "Subscription"). The funds fromthe Subscription will be used to meet the costs of the Acquisition, Subscriptionand General Meeting and to provide additional working capital for the EnlargedGroup (comprising the Company, Solar Labs plc and OAS). By reason of the size of OAS in proportion to the Company, the Acquisition isclassified as a reverse take-over under the AIM Rules and is thereforeconditional, inter alia, on the approval of the Company's shareholders (the "Shareholders") at the Company's General Meeting proposed to be held on shortnotice at 10.00 a.m. on 21 December 2007 (or, if the meeting cannot be held onshort notice, at 10.00am on 7 January 2008), in either case at the offices ofFasken Martineau Stringer Saul LLP, 17 Hanover Square, London, W1S 1HU (the "GM"). The Acquisition will also constitute a related party transaction under the AIMRules by reason of both David Norwood and Alan Aubrey being directors andshareholders of the Company, directors and shareholders of IP Group Plc (which,through its wholly owned subsidiary IP2IPO Limited, holds at the date of thisannouncement, 38.05 per cent of OAS and will, on Admission, hold 36.1 per centof OAS) and holders of the beneficial interest in certain of the shares held byIP2IPO Nominees Limited in OAS. Furthermore, by reason of the relationships that David Norwood and Alan Aubreyhave as set out above, Section 190 of the Companies Act 2006 ("CA 2006") willalso apply to the Acquisition as the transaction amounts to a substantialproperty transaction involving a director of the Company. Section 190 of the CA2006 provides that the Acquisition cannot be completed without the priorapproval of Shareholders. The Company will seek this approval at the GM, atwhich the Shareholders will be asked to approve the Acquisition and thecompletion of the agreement relating to the Acquisition (the "AcquisitionAgreement") for the purposes of Section 190 of the CA 2006. Matthew Sutcliffe and Byron Lloyd ("the Independent Directors") confirm that,having consulted Zimmerman Adams International Limited, the Company's nominatedadviser ("ZAI"), which, in providing advice to the Independent Directors, hastaken into account the information supplied by and the commercial assessment ofthe Independent Directors, they consider the terms of the Acquisition Agreementto be fair and reasonable insofar as the Shareholders are concerned. BACKGROUND TO AND REASONS FOR THE PROPOSALS The Company's Ordinary Shares of 0.1 pence each were admitted to AIM on 10October 2006. At the same time, the Company outlined a strategy of investing in,or acquiring assets, businesses or companies in the energy and resourcessectors. In April 2007, the Company completed the acquisition of the entireissued share capital of Solar Labs plc ("Solar Labs") with the objective ofharnessing a diverse range of technologies to support the development ofeconomically viable solar energy solutions. The Acquisition therefore constitutes a further broadening of the Company'sstrategy from that set out above as OAS is a company whose principal business isthat of developing and commercialising a portfolio of technologies which enablethe development of advanced materials through the modification of the surfaceproperties of a range of materials. A resolution to approve the change of the investment strategy of the Company isbeing proposed at the GM. The principal reasons for this change in strategy and for undertaking theAcquisition are as follows: • the Directors believe that the Acquisition presents an opportunity toacquire a company that has the potential to significantly increase shareholdervalue; • OAS's platform technology (the "Technology") can be used to deliveradvanced materials and technology solutions across a range of markets; and • the Directors believe that OAS' Technology can be further developed todeliver solutions in photovoltaics which are complementary to the business ofSolar Labs. INFORMATION ON OAS OAS was incorporated in June 2006 to develop and commercialise technology whichenables the modification of the surface properties of a range of materials inorder to increase and diversify their applications and functions. The Technologyis based on research that commenced over ten years ago at the Department ofChemistry at the University of Oxford which has led to the platform ofintellectual property rights which, together with further know-how developedsince this time, comprise the Technology. The Technology is capable of beingapplied to modify the surface properties of materials such as natural andsynthetic polymers, as well as inorganic surfaces such as glass and diamonds.Initial applications for the Technology include colouration, adhesion,bio-activity and tailored wetting properties. OAS commenced commercialoperations in September 2006. STRATEGY OF THE ENLARGED GROUP The Enlarged Group's strategy is to become an advanced materials and technologysolutions company with business units across a range of markets. The Board ofDirectors of the Company as it will be following completion of the Acquisitionand as further detailed below (the "Continuing Board") have identified threepriority markets for the application of the Technology, which are: 1. Electronics (including printed circuit boards, plastic electronics,electromechanical devices and flat displays); 2. Industrial specialties (including specialty fibres, textiles, laminates andcomposites); and 3. Life sciences/health care markets (including sterile surfaces, separationmedia and microarrays). The Continuing Board's intention is that Solar Labs will continue as a distinctbusiness unit to cover a full range of solar technologies including solarphotovoltaics, solar thermal, solar lighting/air conditioning, solar watersplitting and other solar chemical processes. Solar Labs objective is intendedto be achieved through the acquisition, development and commercialisation oftechnologies in the solar energy sector and it will initially seek to developand commercialise opportunities leveraging the Technology. The ContinuingBoard's focus will be on both exploiting the Technology in the markets describedabove as well as developing further applications of the Technology in areas suchas photovoltaics through Solar Labs, biomedical materials and specialisedfiltration media. The Continuing Board plans to establish three distinct business units in theabove markets within OAS and to recruit commercial directors to run and developthese business units. In addition, it is the intention of the Continuing Boardto continue to seek to establish opportunities in-house or through externalcollaborations in markets such as photovoltaics and membranes for separation andfiltration processes. It is expected that the Enlarged Group will initially generate development feesfrom these partnerships before ultimately licensing its Technology forcommercial use. The Continuing Board believe such partnering arrangements willenable OAS to leverage the relevant partners expertise in particular sectors aswell as their market access resulting in lower risk for OAS and a faster routeto market. The Enlarged Group does not, however, intend to manufacture chemicalsor materials on a large scale itself. Instead, its strategy will be to enter into co-development arrangements withleading companies with applications in high value markets as well as leadingspeciality chemical companies. Where appropriate, OAS will enter into contractmanufacturing arrangements. To support the Enlarged Group's business and technology development needs, it isthe Continuing Board's intention to establish a base research and designcapability with both an organic chemistry synthesis team and several focusedapplication development teams in electronics, speciality industrials and lifesciences. The Enlarged Group will also explore opportunities to establish various externalcollaborations with academics both at the University of Oxford and elsewhere todevelop further intellectual property rights in these areas. The Enlarged Groupwill use the experience of the Continuing Board in the development ofcollaborations with academic research institutions to commercialise intellectualproperty. DETAILS OF THE ACQUISITION Under the terms of the Acquisition Agreement, the Company has conditionallyagreed to acquire the entire issued share capital of OAS. The consideration forthe Acquisition, which is payable on AIM Admission, is to be satisfied by theallotment and issue by the Company to the vendors of OAS (the "OAS Vendors") ofthe Consideration Shares, credited as fully paid up at 25 pence perConsideration Share and the payment of £50,000 in cash. The Consideration Shareswill, when issued, represent 43.58 per cent. of the issued share capital of theCompany on Admission (the "Enlarged Issued Share Capital") and will rank paripassu in all respects with the New Ordinary Shares then in issue, including allrights to receive all dividends and other distributions declared, made or paidfollowing Admission. Application will be made for the admission of theConsideration Shares to trading on AIM and dealings are expected to commencefollowing completion of the Acquisition. CURRENT TRADING AND PROSPECTS Historical unaudited financial information of the Kanyon Group (comprising theCompany and Solar Labs) for the six months to 31 July 2007 discloses a profitbefore tax of £22,000 for the period. Net equity attributable to shareholders at31 July 2007 was £7.75 million inclusive of cash and cash equivalent balances of£3.91 million. The Kanyon Group has, subsequent to 31 July 2007, traded in linewith expectations. The audited financial statements of OAS for the period from incorporation on 14June 2006 to 31 July 2007 disclose a loss before tax of £142,000 for the periodcoupled with net equity attributable to shareholders at the period end of £0.55million. Since the start of its current financial year commencing 1 August 2007,OAS has traded in line with expectations. Following completion of theAcquisition and the Subscription, the Continuing Board will continue to evaluatea number of opportunities arising for the further development of both new andexisting businesses. FINANCIAL EFFECTS OF THE ACQUISITION AND SUBSCRIPTION The Acquisition and the Subscription are expected to strengthen the Company'sbalance sheet and provide the Enlarged Group with funding to pursue its proposedstrategy as outlined above. BOARD CHANGES The directors of the Company as at the date of this announcement are MatthewSutcliffe, Michael Bretherton, Byron Lloyd, Alan Aubrey and David Norwood(together the "Directors"). It is proposed that, with effect from Admission,Matthew Sutcliffe, Byron Lloyd and Alan Aubrey will resign from the Board andMarcelo Bravo, Jeremy Scudamore, Dr Mark Moloney and Dr Andrew Naylor (togetherthe "Proposed Directors") will join the Company's Board as Chief ExecutiveOfficer, Non-Executive Chairman and Non-Executive Directors respectively. CITY CODE ON TAKEOVERS AND MERGERS ("CITY CODE") The terms of the Acquisition give rise to certain considerations andconsequences under the City Code. Brief details of the Takeover Panel (the "Panel"), the City Code and the protections they afford to Shareholders aredescribed below. The Panel is an independent body. It has been designated as the supervisoryauthority to carry out certain regulatory functions in relation to takeoverspursuant to the Directive on takeover bids. Its statutory functions are set outin and under Chapter 1 of Part 28 of the Companies Act 2006. Under Rule 9 of the City Code when (i) any person acquires an interest in shareswhich, when taken together with shares in which he is already interested in orshares acquired by persons acting in concert with him, carry 30 per cent or moreof the voting rights of a company subject to the City Code or (ii) any personwho, together with persons acting in concert with him, has an interest of morethan 30 per cent. but less than 50 per cent. of the voting rights of a companysubject to the City Code, and such person, or persons acting in concert withhim, acquires any additional shares which increases his percentage of votingrights, that person is normally obliged to make a general offer in cash to allshareholders to purchase their shares at the highest price paid by him, or anyperson acting in concert with him, within the preceding 12 months. Furthermore,when any person who, together with persons acting in concert with him, holdsmore then 50 per cent. of the voting rights of a company subject to the CityCode, that person, together with persons acting in concert with him, may acquireadditional shares in the company without triggering the requirement to make ageneral offer in cash to all shareholders under Rule 9 of the City Code.However, individual members of such a concert Party will not be able to increasetheir percentage shareholdings through a Rule 9 threshold without Panel consent. Immediately following completion of the Acquisition, the Subscription, theGeneral Meeting and Admission ("Completion"), there will be three seperate newconcert parties (the "New Concert Parties" and each a "New Concert Party") whowill be interested in the following number of New Ordinary Shares: Oxford University Concert Party Concert Party Number of New Percentage of Number of New Maximum percentage Ordinary Shares Enlarged Issued Ordinary Shares Share Capital under following in Enlarged Group on Completion a fully diluted following the exercise of the options held by the Oxford University Concert PartyOxford University 17,264,429 9.70 Nil 9.70Concert Party IP Group and Kanyon Concert Party IP2IPO Limited, IP2IPO Nominees Limited and Dr Andrew Naylor are deemed to beacting in concert (the "IP Group Concert Party"). In turn, the IP Group ConcertParty has been deemed to be acting in concert with the existing Kanyon concertparty which includes James Ede-Golightly (the "Kanyon Concert Party"). The IPGroup Concert Party and the Kanyon Concert Party shall together be referred toas the "Kanyon/IP Concert Party". David Norwood and Alan Aubrey are members ofthe Kanyon Concert Party. They are also directors and shareholders of IP Groupplc (the parent company of IP2IPO Limited and IP2IPO Nominees Limited). Inaddition, IP2IPO Nominees Limited holds shares in OAS as nominee for both DavidNorwood and Alan Aubrey. IP2IPO Limited and IP2IPO Nominees Limited are bothmembers of the IP Group Concert Party. The IP Group Concert Party was formed onthe date of this announcement The total interest of the Kanyon/IP Concert Party is as follows: Concert Party Holding of New Percentage in Number of New in Maximum percentageMembers Ordinary Shares Enlarged Group Ordinary Shares under following Completion following Completion option following in Enlarged Group on Completion a fully diluted basisIP2IPO Limited 27,995,045 15.73 Nil 15.73IP2IPO Nominees 5,938,487 3.34 Nil 3.34Limited *Andrew Naylor Nil Nil 848,219 0.47ORA 49,950,002 28.07 Nil 28.07Richard Griffiths 10,075,003 5.66 Nil 5.66David Norwood 9,075,003 5.10 Nil 5.10Barnard Nominees Ltd 9,024,998 5.07 Nil 5.07Bainunah Trading Ltd 6,000,000 3.37 Nil 3.37Alan Aubrey 1,425,000 0.80 Nil 0.80Robert Quested 550,000 0.31 Nil 0.31 Michael Bretherton 435,000 0.24 Nil 0.24James Ede Golightly 535,000 0.30 Nil 0.30Total 121,003,538 67.99% 848,219 68.46 * This includes 848,219 New Ordinary Shares held on behalf of Andrew Naylor The Kanyon/IP Concert Party will immediately following Admission, hold more than50 per cent. of the Company's voting share capital and (for so long as itsmembers continue to be treated as acting in concert) may accordingly be able toincrease its aggregate shareholding without incurring any obligation under Rule9 of the City Code to make a general offer. However, individual members of theKanyon/IP Concert Party will not be able to increase their percentageshareholdings through a Rule 9 threshold without Panel consent. Other Vendors Concert Party Members of the Holding of New Ordinary Percentage in Number of New in MaximumConcert Party Shares following Enlarged Group Ordinary Shares percentage Completion following under option Completion following in Enlarged Completion Group on a fully diluted basis Mark Moloney 10,120,527 5.69% 848,219 6.14 Jon-Paul 10,120,527 5.69% Nil 5.69Griffiths Jeremy Scudamore 714,390 0.40% 3,886,282 2.53 Marcelo Bravo 5,386,502 3.03% 5,386,502 5.88 Total 26,341,946 14.81% 10,121,003 20.24 These three New Concert Parties are separate concert parties, for the purposesof the City Code but are not acting in concert with each other. Accordingly, immediately following Completion, none of the Oxford UniversityConcert Party nor the Other Vendors Concert Party will hold more than 30 percent. of the Enlarged Issued Share Capital. Therefore, so long as the interests of each of the separate Oxford UniversityConcert Party the Other Vendors Concert Party (as outlined above) does not reachor exceed 30 per cent or more of the voting rights of the Company, theindividual members of each such New Concert Party may acquire and dispose of NewOrdinary Shares without triggering a Rule 9 obligation. INFORMATION ON THE CONTINUING BOARD Details of the Continuing Board are set out below. Existing Directors Michael Bretherton (Aged 52) Executive Director Michael Bretherton graduated with a first class degree in Economics fromUniversity of Leeds in 1978. He worked as an accountant and manager withPriceWaterhouse for seven years in both London and the Middle East beforejoining The Plessey Company Plc in 1985 as a corporate financial manager.Michael was appointed finance director of the fully listed Bridgend Group Plc in1988 where he was involved in the strategic evaluation and commercialimplementation of a broad range of business initiatives over a twelve yearperiod, including acquisitions, disposals and company restructurings. Hesubsequently worked at the property and services company, Mapeley Limited, as financial operations directoruntil he was recruited to the entertainment software games developer, LionheadStudios Limited, in 2002 where he helped to complete a venture capital syndicatefunding and also a trade sale of the business to Microsoft in 2006. MichaelBretherton is currently a director of Ora. David Norwood (Aged 39) Non Executive Chairman David Norwood is the founder and special projects director of IP Group plc, acompany focused on the commercialisation of research and intellectual propertyfrom universities. David graduated in modern history from Keble College,University of Oxford following which he worked as a foreign exchange trader atBankers Trust and then as an investment analyst at Duncan Lawrie. In 1997 hejoined Williams de Broe to advise quoted and unquoted technology companies.David founded IndexIT Partnership in 1999, a technology advisory boutique whichwas subsequently acquired by Beeson Gregory Group Plc, at which time he joinedthe board of Beeson Gregory and was appointed chief executive at the beginningof 2001. David joined the board of The Evolution Group Plc following its mergerwith Beeson Gregory in July 2002 and then became chief executive (now specialprojects director) of IP Group Plc (formerly IP2IPO Group plc) when it wasadmitted to AIM in October 2003 and subsequently transferred to the OfficialList. Finally, David is a currently a director of several other AIM quotedcompanies. Proposed Directors Marcelo Bravo (Aged 48) Chief Executive Officer Marcelo Bravo has a background in chemistry and chemical engineering andbusiness development experience with major blue-chip companies. Marcelo workedfor the Procter & Gamble company for 16 years commencing in 1983 andsubsequently with Boots (now Boots Alliance Plc) for three years commencing in2000 in various operational and strategic roles and has significant experiencein developing, launching and growing new products and services across a range ofboth geographic and product markets. Marcelo is also an experienced entrepreneurhaving founded two start up businesses in the past 15 years. He is currently adirector of Super Foods Ltd, a company he founded. Marcelo holds a B.A. inChemistry from the College of Wooster, USA and a B.Sc. in Chemical Engineeringfrom Case Western Reserve University, USA and M.Sc. in Management from theLondon Business School. Jeremy Scudamore (Aged 60) Non Executive Chairman Jeremy Scudamore worked for ICI, Zeneca, AstraZeneca, and Avecia for 35 years ina number of senior positions, latterly as chairman and chief executive of theAvecia Group and previously as chief executive of Zeneca Specialties, managingdirector of Zeneca Seeds, business director of Zeneca Agrochemicals, and hasheld various general manager and international roles including Zeneca Groupregional executive for Eastern Europe and general manager in Brazil. Jeremy waseducated at Nottingham University and INSEAD, France. Currently Jeremy is nonexecutive chairman of SkyePharma plc, non executive director of Oxford CatalystsGroup plc, Stem Cell Sciences plc, and ARM Holdings plc, director of The BoardLink Group, chairman of England's North West Science Council and board member ofManchester Knowledge Capital. Dr Mark Moloney (Aged 48) Non Executive Director Dr Mark Moloney, one of the founders, provides technical counsel on aconsultancy basis and is a Non-executive Director. Mark is an internationallyrecognised lecturer in organic chemistry at the University of Oxford where hewas appointed in 1990, and he was promoted to Reader in Chemistry in 2006. Markhas over 115 publications, including research articles, books and patents, andhas been involved in organic synthesis research for twenty-five years. His mainareas of interest are the synthesis of chemical compounds with antibiotic,cytotoxic or neuroexcitatory activity; the development of new chemicalmethodology; and the surface modification of polymers. Much of Mark's researchwork has been conducted in collaboration with industry, includingGlaxoSmithKline, AstraZeneca, Merck, Sharp and Dohme and Associated Octel. Dr Andrew Naylor (Aged 35) Non Executive Director Dr Andrew Naylor has had extensive experience with university spin-out companiesin a number of roles. Andrew is currently Chief Executive Officer of PembrokeHouse Technologies Limited, an intellectual property commercialisation companybased in Oxford. Andrew was with IP Group plc from 2001 to 2007 and prior tothat he was with IndexIT Partnership Limited and Beeson Gregory. Andrew receiveda first class degree and PhD in Physics from the University of Nottingham. INFORMATION ON SENIOR MANAGEMENT OF THE ENLARGED GROUP Prof. Peter Dobson (Aged 65) Consultant and Chief Scientific Adviser to SolarLabs Prof. Peter Dobson has extensive experience in sustainable energies includingsolar energy. He was appointed to a university lectureship and collegefellowship at Queen's College, University of Oxford in 1988 and a Professorshipin 1996. Prior to this he lectured in Physics at Imperial College and was seniorprincipal scientist at Philips Research laboratories. At the University ofOxford, Prof. Dobson is responsible for setting up new interdisciplinaryresearch institutes that combine University activities with commercial R&D. Oneof these research institutes will be devoted to sustainable energy. Prof. Dobsonhas been responsible for two university spinouts, Oxonica Plc and OxfordBiosensors Limited. Oxonica Plc is an AIM listed company. He also serves onadvisory committees of several companies that have been "spun out" of theUniversity of Oxford. Dr Jon-Paul Griffiths (Aged 29) Chief Technical Officer to the Company Dr Jon-Paul Griffiths is a co-founder of OAS and is a key employee of OAS.Jon-Paul, has a background in organic materials and has researched the coatingof polymers for approximately three years with Dr Mark Moloney at Oxford.Jon-Paul obtained his Masters degree in Chemistry at The Nottingham TrentUniversity in 2000. He completed a Ph.D. in novel organic materials at TheNottingham Trent University in 2005. Jon-Paul received a university merit awardat the University of Oxford in recognition of outstanding performance and is amember of the Royal Society of Chemistry. DETAILS OF THE PROPOSED DIRECTORS' SERVICE CONTRACTS AND LETTERS OF APPOINTMENT Marcelo Bravo has entered into a service agreement with the Company, dated 12December 2007, under which he agrees, subject to and with effect from Admission,to act as Chief Executive Officer of the Company. The service agreement may beterminated on not less than twelve months notice given by either party to theother at any time. The service agreement contains provisions for earlytermination, inter alia, in the event of a breach by Marcelo Bravo, payment inlieu of notice and garden leave. Confidentiality provisions and post terminationrestrictions are also included. Restrictions regarding non-solicitation of andnon-dealing with customers are for a period of 12 months, and restrictionsregarding non competition and non solicitation of staff are for 6 months.Marcelo Bravo will be paid an annual salary of £70,000 to be reviewed annually(without any obligation to increase the same). Jeremy Scudamore has entered into a letter of appointment with the Company,dated 12 December 2007. His appointment, which is subject to Admission, is foran indefinite period and may be terminated on not less than three months noticegiven by either party to the other at any time. The letter of appointmentcontains provisions for early termination, inter alia, in the event of a breachby Jeremy Scudamore. The basic fee payable to Jeremy Scudamore is £25,000 perannum to be reviewed annually (without any obligation to increase the same). Dr Mark Moloney has entered into a letter of appointment with the Company, dated12 December 2007. His appointment, which is subject to Admission, is for anindefinite period and may be terminated on not less than three months noticegiven by either party to the other at any time. The letter of appointmentcontains provisions for early termination, inter alia, in the event of a breachby Mark Moloney. The basic fee payable to Mark Moloney is £22,000 per annum tobe reviewed annually (without any obligation to increase the same). Andrew Naylor has entered into a letter of appointment with the Company, dated12 December 2007. His appointment, which is subject to Admission, is for anindefinite period and may be terminated on not less than three months noticegiven by either party to the other at any time. The letter of appointmentcontains provisions for early termination, inter alia, in the event of a breachby Andrew Naylor. The basic fee payable to Andrew Naylor is £25,000 per annum tobe reviewed annually (without any obligation to increase the same LOCK IN AGREEMENTS The OAS Vendors who following Admission, will be interested, in aggregate, in77,539,907 New Ordinary Shares, representing 43.58 per cent. of the EnlargedIssued Share Capital, have each undertaken to the Company and ZAI that they willnot, save in certain limited circumstances, (namely (a) as permitted by the AIMRules and (b) in order to meet warranty claims under the Acquisition Agreement),sell or dispose of any interest in New Ordinary Shares held by them on Admissionfor a period of fifteen months following Admission, and that, for a furtherperiod of nine months, they will only dispose of any interest in such NewOrdinary Shares through Hichens Harrison & Co. Plc ("Hichens") (or the Company'sbroker from time to time) in accordance with Hichens' (or the relevant broker's)requirements for the maintenance of an orderly market in the New OrdinaryShares. In addition, each of Ora Capital Partners plc ("Ora"), David Norwood, RichardGriffiths and Alan Aubrey who will, on Admission, be interested, in aggregate,in 70,525,008 New Ordinary Shares (including the New Ordinary Shares subscribedby Ora pursuant to the Subscription), representing 39.64 per cent. of theEnlarged Issued Share Capital of the Company, have each undertaken to theCompany and ZAI not to dispose of the same for a period of (a) fifteen monthsfollowing Admission save as permitted by the AIM Rules and (b) then for afurther nine months thereafter only in accordance with Hichens' (or the relevantbroker's) requirements for the maintenance of an orderly market in the NewOrdinary Shares. Finally, each of the Michael Bretherton and Andrew Naylor (as those members ofthe Continuing Board, Directors and Proposed Directors who are not listed in theabove two paragraphs), who will, on Admission, be interested, in aggregate, in1,283,219 New Ordinary Shares (including those shares which may be issued on theexercise of options over New Ordinary Shares to be granted at Admission),representing 0.72 per cent. of the Enlarged Issued Share Capital of the Company,have each undertaken to the Company and ZAI not to dispose of the same for aperiod of (a) fifteen months following Admission save as permitted by the AIMRules and (b) then for a further nine months thereafter only in accordance withHichens' (or the relevant broker's) requirements for the maintenance of anorderly market in the New Ordinary Shares. DETAILS OF THE SUBSCRIPTION Ora has conditionally agreed to subscribe for a total of 12,000,000 New OrdinaryShares (the "Subscription Shares") at 25 pence per Subscription Share to raise£3 million, before expenses of approximately £0.4 million. The SubscriptionShares will represent, in aggregate, approximately 6.74 per cent. of theEnlarged Issued Share Capital. The Subscription Shares will be issued creditedas fully paid and will, upon issue, rank pari passu in all respects with the NewOrdinary Shares then in issue, including all rights to receive all dividends andother distributions declared, made or paid following Admission. The Subscriptionhas not been underwritten or guaranteed. The Subscription is conditional, inter alia, on the Introduction Agreementbetween the Directors, the Proposed Directors and ZAI dated 12 December 2007becoming unconditional (save for any condition as to Admission) on or before 31December 2007 (ors such later time as Ora and the Company may agree, subject tothe date for completion of the Introduction Agreement also being extended bysuch similar period). USE OF PROCEEDS The proceeds of the Subscription will be used to provide the funds needed by theEnlarged Group in order to develop and grow the existing businesses and providefunding for future businesses in line with its revised business and investmentstrategy. WORKING CAPITAL The Directors and Proposed Directors, having made due and careful enquiry andtaking into account the proceeds of the Subscription and existing cash resourcesavailable to the Enlarged Group, are of the opinion that the Enlarged Group willhave sufficient working capital available to it for its present requirements,being for at least 12 months from Admission. SHARE CONSOLIDATION The Company proposes to consolidate its existing share capital on the basis of 1(one) New Ordinary Share of 1 pence each for every 10 (ten) existing OrdinaryShares of 1 pence each ("Existing Ordinary Shares"). Shareholders on theregister of members of the Company at the close of business on the date of theGM (the "Record Date") shall receive 1 (one) New Ordinary Share for every 10(ten) Existing Ordinary Shares. The Share Consolidation is to become effectiveon the Record Date. The Directors and Proposed Directors believe that the Share Consolidation willbe beneficial to the Company as it may facilitate trading in, increase liquidityand potentially reduce the volatility of the price of the New Ordinary Shares onAIM. Other than the change in nominal value, the New Ordinary Shares arising onimplementation of the Share Consolidation will have the same rights as theExisting Ordinary Shares, including voting, dividend and other rights. No shareholder of the Company shall be entitled to receive a fraction of a NewOrdinary Share and where, as a result of the Share Consolidation, anyShareholder is entitled to a fraction of a New Ordinary Share in respect oftheir holding of Ordinary Shares at the Record Date (a "Fractional Shareholder")such fractions shall be aggregated with the fractions of New Ordinary Shares towhich other Fractional Shareholders of the Company may be entitled so as to formfull New Ordinary Shares and shall be sold for the benefit of the FractionalShareholder. Any shareholder of the Company not holding a number of Existing Ordinary Shareswhich is exactly divisible by 10 on the Record Date will be entitled to receivethe proceeds of this sale in respect of his fractional entitlement. TheContinuing Board shall be authorised to sell New Ordinary Shares arising fromfractional shareholdings on behalf of the Fractional Shareholders in the marketas soon as reasonably practicable following the passing of relevant resolutionat the GM for the best price then reasonably available for such shares. The proceeds of such sale (net of all costs and expenses) will then bedistributed to the Fractional Shareholders in proportion to the fractions of NewOrdinary Shares held by each of them. However, any cash proceeds of less than £3will not be distributed to Fractional Shareholders but will be retained for thebenefit of the Company. In view of the current share price, the Directors andProposed Directors do not believe that the due proportion of the proceeds of thesale of any fractional entitlements will amount to £3 and consider it unlikelythat any sums will be paid to the Shareholders concerned. Furthermore, the Directors and Proposed Directors have calculated that two NewOrdinary Shares will be derived from the Share Consolidation, and have madearrangements for Ora to acquire those shares, under the Fractional EntitlementPurchase, at 25p per share. If a shareholder holds a share certificate in respect of an Existing OrdinaryShare, the certificate will no longer be valid from the time the proposed ShareConsolidation becomes effective. If a shareholder holds 10 or more ExistingOrdinary Shares at the Record Date, such shareholder shall be sent a new sharecertificate evidencing the New Ordinary Shares that such shareholder is entitledto under the Share Consolidation. Such certificates are expected to bedespatched no later than 7 days after Admission. Upon receipt of the newcertificate, shareholders should destroy any old certificates. Pending thedespatch of new certificates, transfers of certificated New Ordinary Shares willbe certified against the Company's share register. CHANGE OF NAME It is proposed that the name of the Company be changed to Oxford AdvancedSurfaces Group Plc. A special resolution will be proposed at the GM in order toapprove this. DIVIDEND POLICY OF THE ENLARGED GROUP It is the intention of the Continuing Board to achieve shareholder capitalgrowth. In the short term, the Continuing Board intends to reinvest any futureprofits in the Company and, accordingly, are unlikely to declare dividends inthe foreseeable future. However, the Continuing Board will consider the paymentof dividends out of distributable profits of the Company when they consider itis appropriate to do so. Contact Michael Bretherton - Kanyon Plc 020 7099 7262 David Galan/Jonathan Evans - Zimmerman Adams International (Nominated 020 7060 1760Adviser) This information is provided by RNS The company news service from the London Stock Exchange