Duke Capital Regulatory News (DUKE)

28 May 2015

Praetorian Resources Limited

("Praetorian Resources" or the "Company")

Notice of EGM, proposed board changes and new investment mandate

Praetorian Resources today announces that a circular (the "Circular") will be sent to shareholders later today which provides notice of an extraordinary general meeting (the "EGM") to seek shareholder approval in respect of certain important proposals in relation to the Company.

The EGM will be held at the offices of R&H Fund Services (Guernsey) Limited, Suite B, Trafalgar Court, 3rd Floor, West Wing, St Peter Port, Guernsey GY1 2JA on 16 June 2015 at 10 a.m. (Guernsey time).

The Proposals relate to amending the Company's current investing policy, changing its subscription share terms and cancelling its subscription shares from trading on AIM, changing its name to Duke Royalty Limited, appointing a new board of directors, amending its articles of incorporation, and undertaking a share consolidation. Further details of the Proposals are set out below.

Expected timetable of principal events

All references to time in this announcement are to London time and the dates and times given are based on the Company's current expectations and may be subject to change. Any changes to the expected timetable will be announced via a Regulatory Information Service.

All references to time in this announcement are to UK time. Capitalised terms in this announcement (unless otherwise defined) have the same meanings as set out in the Circular.

Copies of the Circular will shortly be available on the Company's website www.praetorianresources.com.

Enquiries:

Proposed New Investing Policy

Following a detailed strategic review of the Company, its existing investing policy, and the outlook for the sector, the Board is recommending a change of the Company's investing policy (the "New Investing Policy"),which will see the Company become a diversified royalty finance company, that will provide alternative financing to a diversified range of profitable, well-managed businesses ("Company Partners").

Under the New Investing Policy, as described in further detail in the Circular, the Company will use an innovative financing structure that allows it to provide capital in a manner that is intended to maximise valuations of Company Partners, be tax efficient and allow existing owners of the Company Partners to retain control of their businesses. The primary objective is to generate predictable, stable cash flows from the Company Partners to allow the Company to provide an attractive, yet stable, yield as well as liquidity to Shareholders.

It is proposed that the Company's new Investing Policy be as follows:

"To build a stable and reliable income for Shareholders by seeking to invest in, without limitation and restrictions (including geographic restrictions):

(i) long-term, revenue-based royalties in private and/or public companies; and/or

(ii) other alternative asset classes and/or financing instruments from time to time that bear similar risk and return characteristics to the investments in paragraph (i)"

Together, these comprise the "New Investing Policy".

Royalty financing

Royalty financing offers an alternative to regular debt financing, such as loans and trade credit, and equity financing, typically venture capital, private equity, IPO and share sales.

In a royalty financing arrangement, a business receives a specific amount of money from an investor or group of investors (in this case, the Company). The money might be put toward launching a new product, making an acquisition, recapitalising the balance sheet or expanding the Company Partner's marketing efforts, among other alternatives. In exchange, the investor receives a percentage of the company's future revenues or cash flow, either in perpetuity or over a certain period of time. The investment can be considered an "advance" to the company, and the periodic percentage payments can be considered "royalties" to the investor.

The Board believes that royalties offer the following compelling advantages to prospective Company Partners:

· A royalty financing is non-dilutive and, therefore, preserves equity ownership for founders and early investors;

· Royalty payments are normally structured to fluctuate with revenue and do not carry the risk of default or negative covenants associated with traditional debt;

· Royalty financings are highly flexible and can be structured to meet the unique requirements of each Company Partner;

· Royalties can be structured with less documentation compared to more complex equity and debt instruments;

· A royalty does not require a Company Partner's equity to be valued. This preserves the Company Partner's ability to defer pricing its equity to a more favourable time for its existing shareholders;

· Royalty holders are long-term investors and have better alignment with founders and existing investors than debt providers - the royalty holder wins when management wins, and loses when management loses;

· Royalties work well as multi-step investments where capital can be deployed over time as risk and opportunity change; and

· Royalties integrate well with multi-component financing structures where a combination of royalty, debt and equity are used to optimise the cost of capital for the Company Partner.

The Company intends to acquire royalty interests in the revenue streams generated primarily by industrial and commercial businesses with demonstrable competitive advantages (for example, pharmaceuticals and other intellectual property-rich businesses). The Company believes it has identified a large and underserviced finance market for companies which are well-managed and generating improving cash flow, but face difficulty in obtaining finance from traditional sources of debt and equity.

Change to terms of the Subscription Shares, and cancellation of Subscription Shares from trading on AIM

At the time of its initial public offering on AIM, those shareholders who subscribed for Ordinary Shares in the Company were also issued with Subscription Shares, which were attached to the Ordinary Shares on a 1-for-2 basis. Subscription Shares were also issued pursuant to the Share Exchange Agreements.

The Subscription Shares conferred upon each Subscription Shareholder a right (but not an obligation) to subscribe for one new Ordinary Share upon exercise of each Subscription Right, and payment of the Subscription Price of £0.70.

The Subscription Rights lapse on Friday 31 July 2015 (the "Final Subscription Date").

Given the large disparity between the Company's current trading price (£0.040 as at the Latest Practicable Date) and the Subscription Price of £0.70, the Board considers it unlikely that any Subscription Rights will be exercised prior to the Final Subscription Date.

As a result, and in order to simplify the Company's capital structure following the proposed change of its Investing Policy, the Directors are proposing to bring forward the Final Subscription Date to 16 June 2015, following which all outstanding Subscription Shares (that is, those that have not converted into Ordinary Shares following the exercise of a Subscription Right) will be cancelled.

On this basis, and in light of the change to the Final Subscription Date, the Company intends to complete the Share Consolidation, as discussed in further detail below, without also adjusting the Subscription Shares (and Subscription Price) under Article 45.

Inaccordance with Rule 41 of the AIM Rules for Companies, the Company is hereby notifying the intended cancellation of the Subscription Shares' admission to trading on AIM on 26 June 2015, giving at least 20 business days' notice thereof. Under the AIM Rules for Companies, it is also a requirement that the relevant cancellation resolution (the "Cancellation Resolution") must be approved by not less than 75 per cent. of those present and entitled to vote or voting by proxy in a general meeting.

Subject to the Cancellation Resolution being passed by the requisite majority at the Meeting, and following a further seven business days (which must pass following approval by the Subscription Shareholders in accordance with the AIM Rules for Companies), it is expected that trading on AIM in the Subscription Shares will cease at the close of business on 25 June 2015 with the cancellation becoming effective at 7.00am on 26 June 2015.

Provided always that the relevant resolutions (including the Cancellation Resolution) are passed at the Meeting, for those Subscription Shareholders who wish to exercise their Subscription Rights, they must do so prior to 16 June 2015, following which their Subscription Rights will lapse.

Change of name to Duke Royalty Limited

On the basis that Shareholders agree to implement the proposal and approve the Company's New Investing Policy, the Directors believe that the name of the Company should also change to reflect the New Investing Policy, and new overall direction for the business. It is proposed that the Company's name will be changed to Duke Royalty Limited. This will give the Company a new, clear and refreshed identity, and properly distinguish it from both Praetorian Resources Limited, and the Existing Investing Policy.

Directorate Changes

Should shareholders pass the requisite resolutions, the current directors (other than Robert King), being Nathan Steinberg and Kaare Foy intend to resign from the board and new directors be appointed. The new directors comprise Mr Neil Johnson, Mr Charles Cannon-Brookes, Mr Nigel Birrell and Mr James Ryan (the "New Directors"). Mr Robert King is expected to remain as a director on an interim basis following the Meeting to ensure an orderly transition of directors, and implementation of the New Investing Policy.

As the Resolutions are all inter-conditional, if any of them are not passed, then they will all be treated as not passed, and the current Directors will remain as directors of the Company.

Background to each proposed director

Mr Neil Johnson (aged 45), CFA - Executive Director

Neil Johnson has over 20 years of experience in merchant banking, investment banking and research analysis in both the Canadian and UK capital markets. He began his career as a Research Analyst at Canaccord Genuity in 1993 with a focus on software and pioneering internet companies. Mr Johnson became an Investment Banker in 1996 and in 1999 moved to the new London, UK office of Canaccord which had formerly been T. Hoare & Co, a natural resource focused broker.

During his 10 years with Canaccord in London, Mr Johnson became Head of Corporate Finance (Europe), Global Head of Technology, and on the Global Executive Committee. The European operations grew during his tenure from 20 employees to approximately 150, with revenues growing from £5 million to over £50 million. Mr Johnson was instrumental in the firm becoming authorized as a nominated adviser for AIM and regulated in the UK and London Stock Exchange Main Market listings, spearheaded the firms diversification into the UK technology sector, and led Canaccord's initiative to attract North American firms to list in London. Due to these initiatives, Canaccord became one of the largest stockbroking firms in the UK and raised in excess of £3 billion for North American companies listed on the London Stock Exchange or AIM. Canaccord also became the largest lead underwriter for technology IPOs in Canada during his tenure as Global Head of Technology.

Mr Johnson transferred with Canaccord to Toronto in January 2010, and focused on technology, cleantech and other non-resource industries.

Mr Johnson left Canaccord in May 2012 to co-found and become Chief Executive Officer of Difference Capital Financial, a Canadian publicly-listed merchant bank which raised over £100 million by mid-2013. Mr Johnson's responsibilities included developing and implementing the company's business model and capital raising from institutional and private client investors. Difference Capital Financial's capital was used to make equity, debt and derivative investments in growth companies in non-resource industries.

Mr Johnson is a graduate of the Richard Ivey School of Business at the University of Western Ontario, and received his Chartered Financial Analyst (CFA) designation in 1997.

Mr Charles (Charlie) Cannon-Brookes (aged 39) - Executive Director

Charlie Cannon-Brookes is the Investment Director of Arlington Group Asset Management Limited and has been active in a variety of investment management and corporate finance transactions since its acquisition in 2005. For the previous five years (2000 - 2005), he ran Arlington Group Plc's proprietary trading book, managing all of its public equity exposure.

He has extensive fund management experience and has advised and sat on the board of a number of other funds, trusts and companies in a non-executive capacity.

Mr Nigel Birrell (aged 52) - Non-executive Director

Mr Birrell was until recently Group Director on the Executive Board at bwin.party digital entertainment plc, the world's leading listed on-line gaming business, where he was responsible for all its mergers and acquisitions, business development and managing its investment portfolio.

While at bwin.party Mr Birrell led the acquisitions of Gamebookers, Empire On-line and IOG's casino operations, Cashcade, the World Poker Tour and Orneon. He was instrumental in devising, negotiating and transacting the merger between PartyGaming and Bwin, the largest online gaming deal in history. He has also led all its disposals including Ongame's sale to Amaya.

Prior to bwin.party, Mr Birrell was a director of the FTSE 250 media group HIT Entertainment. Mr Birrell graduated in law from the University of London (Queen Mary College) and qualified as a solicitor of the Supreme Court. He also worked as an investment banker with Donaldson, Lufkin & Jenrette and Dresdner Kleinwort Benson.

Since leaving bwin.party Mr Birrell has joined the Board of LottoLand Limited, a Gibraltar regulated fast growing gaming group as its Managing Director having previously been its only Non-Executive Director. He is also a Director of Delta Management Limited, the Fund Manager that is responsible for the investments of the Gibraltar FSC regulated property fund Temple Rock PCC and is a Non-Executive Director of Southern Rock Insurance Company Limited a Gibraltar FSC regulated insurance underwriter.

Mr James (Jim) Ryan (aged 53) - Non-executive Director

Jim Ryan joined Pala Interactive, LLC in July 2013 as CEO, bringing with him several years of executive experience in the online gaming industry. 

Prior to joining Pala Interactive, LLC, Mr Ryan served as a Co-Chief Executive Officer of bwin.party digital entertainment plc from March, 2010 to January, 2013. Prior to the merger of PartyGaming and bwin, Mr Ryan served as the Chief Executive Officer of PartyGaming plc from May, 2008 to March, 2010.

Mr Ryan has also held executive positions with a number of online gaming companies which include Chief Executive Officer of St. Minver Limited (Jan 2006 to May 2008), Chief Executive Officer of Excapsa Software Limited (January 2005 to November 2006) and the Chief Financial Officer of Cryptologic Software Limited (January 2001 to May 2004).

In addition to his role of CEO and board member of Pala Interactive, LLC, Mr Ryan also currently sits on the Boards of Gaming Realms plc and WG Limited. Mr Ryan obtained professional qualifications as a Chartered Accountant from the Canadian Institute of Chartered Accountants and degree in business from the Goodman School of Business at Brock University.

Appointment of Chief Executive Officer

It is also proposed that, once the New Directors are appointed to the Board of the Company, Mr Neil Johnson will be appointed as its Chief Executive Officer.

In addition to the information above, the information required by Schedule 2 paragraph (g) in relation to each of the New Directors is as follows:

Save as disclosed above, there are no further disclosures required to be made in respect of the appointments under Schedule 2(g) of the AIM Rules for Companies.

Amendments to the Company's Articles of Incorporation

In order to implement the Proposals listed in the Circular, it is necessary to make certain administrative amendments to the Company's Articles of Incorporation, including to give effect to the change of the Company's name, as well as amendments to ensure the continued tax residency in Guernsey after approval of the New Investing Policy. Other amendments are proposed in order to bring certain provisions in the Articles of Incorporation in line with current market practice.

Copies of the Memorandum and Articles of Incorporation of the Company, as proposed to be amended as part of Proposal 5 at the Meeting are available for viewing on the Company's website (www.praetorianresources.com), or available from the Company upon request. A summary of the proposed amendments is set out in Appendix C in the Circular.

Share consolidation on a 20-for-1 basis

The Company is proposing to undertake a share consolidation of 1 New Ordinary Share for every 20 Existing Ordinary Shares (the "Share Consolidation"), with the fractional entitlements arising from the Share Consolidation being aggregated and sold in the market for the benefit of the Company. Following the Share Consolidation, Shareholders will still hold the same proportion of the Company's ordinary share capital as before the Share Consolidation (save in respect of fractional entitlements). Other than a change in nominal value, the New Ordinary Shares will carry equivalent rights under the Articles of Incorporation to the Existing Ordinary Shares.

Application will be made to the London Stock Exchange for the New Ordinary Shares arising out of the Share Consolidation to be admitted to trading on AIM ("Admission"). On the assumption that, inter alia, the Resolution in the Notice of Extraordinary General Meeting is passed at the Meeting, it is expected that Admission of 6,794,126 New Ordinary Shares will become effective on 17 June 2015.

Important note for Shareholders

As the current Directors, with the exception of Rob King, intend to resign immediately following the passage of the various resolutions listed in the Notice of EGM, they make no recommendation as to how Shareholders should cast their vote at the Meeting.

Should Shareholders vote against the Proposals, the current Directors will remain in place and consult with Shareholders and advisers to determine what measures the Company should take next.