FJET.L Regulatory News (FJET)

RUBICON SOFTWARE GROUP PLC

(AIM: RUBI)

Disposal of Rubicon Software Limited

Adoption of Investing policy and

Change of name

Rubicon Software Group Plc today announced that it has entered into an agreement for the sale, subject to Shareholder approval, of the entire issued share capital of its trading subsidiary, RSL to iAccel Limited, a company controlled by Alistair Hancock and that it is also proposing to effect a related Capital Reorganisation, adopt an Investing Policy, request a shareholder approval of a waiver of obligations under Rule 9 of The City Code and change the name of the Company.

Background

Since the Company floated in September 2006, the Company has struggled to achieve satisfactory levels of trading and associated revenues. The Company has never achieved a pre-tax profit and has therefore not been in a position from which to pay dividends. Further to the publication of the interim results for the six months to 31 December 2010, the trading performance of the group has reflected the current difficult trading environment and the Group has not closed the new business that it anticipated.

Given the continuing uncertainties in the software sector, the Board is unable to predict the future growth opportunities and ongoing funding requirements necessary for this business with any degree of certainty and the prospects of any improvement in levels of shareholder return appear to the Directors to be small.

Without the prospect of an improvement in the financial position or trading performance of the Company, the Directors have decided to seek alternative options for the future direction of the Company. In addition, the Board considers that the underlying trading business of the Company may be better suited to operating exclusively within the private sector without the operational and financial constraints of having a publicly listed parent. To this end, the disposal by the Company of its trading subsidiary, RSL, would enable the Company to embark on a new strategic course as an investment company with a view to creating increased shareholder value through diversifying into a new market sector or sectors offering more visible growth potential.

The Disposal

The Company has entered into, subject to Shareholder approval, the Sale Agreement in relation to the sale of the entire issued share capital of RSL for a cash consideration of £140,000 (less the outstanding inter-company loan made by the Company to RSL and plus the reasonable professional fees of Thomas Eggar LLP, WH Ireland Limited incurred by the Company in respect of the Proposals) to be paid on completion of the Disposal, by iAccel Limited, a company controlled by Alistair Hancock, following its offer for the shares of RSL to the Company.

As completion deliverables under the Sale Agreement:

the Company will:

- grant an option to Alistair Hancock to subscribe for up to 750,000 Ordinary Shares at par (the "AH Option"), which will be exercisable in restricted circumstances linked to the exercise of the call option granted by Alistair Hancock to Rupert Green in respect of up to 1,000,000 Ordinary Shares (the AH Option will also be co-terminus with the call option granted by AH to Rupert Green); and

- transfer its 41 per cent shareholding in Virtual Sonar Limited to RSL [for nil consideration].

iAccel Limited will:

- procure that RSL repays in full the inter-company loan advanced from the Company to RSL.

Additionally and assuming Shareholder approval is given and the Disposal is completed then 9,312,576 of Alistair Hancock's 11,038,572 holding of Ordinary Shares will be re-designated as 9,312,576 Deferred Shares with no rights at all, save for the repayment of nominal capital after (and only after) the weighted rights to repayment of all other shareholders of their capital have been satisfied in full. Following this re-designation, Alistair Hancock would hold an interest of 5 per cent. in the Ordinary Shares of the Company. The effect of the re-designation (to be effected by the Capital Reorganisation) will be to increase the pro rata share of all shareholders other than Alistair Hancock in the Ordinary Shares by approximately 20.2 per cent. In particular, the shareholding of Richard Blakesley, a non-executive director, will increase to approximately 33.46 per cent of the Ordinary Shares. The mid-market closing price of an Ordinary Share, as at 11 July 2011, the latest practicable date before the posting of this document, was 0.65p at which price the value of the redesignated shares is approximately £60,532 The aggregate consideration payable in respect of the sale of RSL therefore amounts to approximately £197,000, representing £140,000 less the inter-company loan and payment of professional advisers' fees and the redesignation of 9,312,576 of Alistair Hancock's shares into shares of no economic value.

The Disposal is deemed under the AIM Rules for Companies to be a disposal resulting in a fundamental change of business for the purpose of AIM Rule 15 and therefore is conditional on consent from the Shareholders. In addition, as Alistair Hancock is a director of each of the Company and of iAccel Limited and is interested in the Disposal, the transaction is a related party transaction for the purposes of AIM Rule 13 and a substantial property transaction for the purposes of section 190 of the Act and also requires the consent of Shareholders in this regard. Under AIM Rule 13, the Directors (excluding the director who is involved in the transaction as a related party) are required to make a statement that they consider, having consulted with the Company's nominated adviser, that the terms of the transaction are fair and reasonable insofar as its shareholders are concerned.

Investing Policy and Cash Resources

Following the Disposal, the Company will have no trading business and, therefore, under AIM Rule 15 it will be required to adopt an investing policy, which must also be approved by its Shareholders.

The Directors' proposed investing policy is to focus on making an acquisition or acquisitions which would result in the expectation of enhanced shareholder value (the "Investing Policy"). The Directors believe it is likely that such an acquisition or acquisitions would constitute a reverse takeover under AIM Rule 14, requiring the approval of Shareholders and a new admission document to be prepared in due course. The Directors intend to retain the flexibility to make investments which do not constitute a reverse takeover under AIM Rule 14 where shareholder value can be enhanced.

Information on Richard Blakesley

Richard Blakesley, a Non-Executive Director of the Company currently holds 11,550,041 Ordinary Shares representing approximately 26.35 per cent. of the entire issued share capital of the Company as at the date of this document. In the event that the Proposals set out in this document are approved by the Shareholders, the number of Ordinary Shares in issue will be reduced by virtue of the re-designation of a proportion of Alistair Hancock's Ordinary Shares as Deferred Shares. The effect of this re-designation would be to increase the Ordinary Share percentage shareholding of Richard Blakesley from approximately 26.35 per cent. to approximately 33.46 per cent. as shown below:

Prior to re-designation of a proportion of Alistair Hancock's ordinary shares

Total number of issued Ordinary Shares: 43,832,495

Number of ordinary shares held % of issued ordinary share capital

Richard Blakesley 11,550,041 26.35

Alistair Hancock 11,038,572 25.18

After re-designation of a proportion of Alistair Hancock's ordinary shares

Total number of issued Ordinary Shares: 34,519,919

Number of ordinary shares held % of issued ordinary share capital

Richard Blakesley 11,550,041 33.46

Alistair Hancock 1,725,996 5.0

Richard has fifteen years of European and United States investment banking experience, working as a mergers and acquisitions specialist for Lehman Brothers, Chase Manhattan and JP Morgan. Latterly he was managing director in charge of mergers and acquisitions for the Telecoms, Media and Technology sectors in Europe for JP Morgan.

On leaving the banking sector in 2003 Richard co-founded a telecommunications service provider, AdEPT Telecom, which was admitted to trading on AIM in February 2006. He is also a director of two private companies.

Richard joined the Company as a Director on 30 May 2006.

Rule 9 of the City Code

Under Rule 9 of the City Code, any person who acquires an interest (as such term is defined in the City Code) in shares which, taken together with the shares in which he and persons acting in concert with him are interested, carry 30 per cent. or more of the voting rights in a company which is subject to the City Code, is normally required to make a general offer to all of the remaining shareholders to acquire their shares. Similarly, when any person, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30 per cent. of the voting rights but does not hold shares carrying more than 50 per cent. of the voting rights of such a company, a general offer will normally be required if any further interests in shares are acquired by any such person. Such an offer would have to be made in cash at a price not less than the highest price paid by him, or by any member of the group of persons acting in concert with him, for any interest in shares in the company during the 12 months prior to the announcement of the offer. Under Rule 37 of the City Code, any increase in the percentage holding of a shareholder which results from a company buying back its own shares will also be treated as an acquisition for the purpose of Rule 9 of the City Code. Because the Company is unable to buy back its own shares, it is proposed that the Capital Reorganisation be implemented to reduce Alistair Hancock's holding in Ordinary Shares as part of the consideration for the transaction. The Panel has confirmed that it regards the Capital Reorganisation as having an equivalent effect to a buyback by the Company of its own shares. A shareholder will, in such circumstances, incur an obligation to make a mandatory offer unless the consent of the Panel to a waiver of such an obligation is obtained.

Waiver of the obligation to make a mandatory offer under Rule 9 of the City Code

The Panel has agreed, subject to the Whitewash Resolution being passed on a poll by the Independent Shareholders at the General Meeting, to waive the requirement under Rule 9 of the City Code for Richard Blakesley to make a mandatory offer for the Ordinary Shares not already owned by him, as would otherwise arise were the Company to obtain Shareholder consent to re-designate a proportion of the Ordinary Shares held by Alistair Hancock as Deferred Shares. For the avoidance of doubt, this waiver applies only in respect of increases in the shareholding of Richard Blakesley resulting solely from the Capital Reorganisation. Assuming the Capital Reorganisation is fully implemented, Richard Blakesley will be interested in Ordinary Shares carrying 30 per cent. or more of the voting rights in the Company but will not hold shares carrying more than 50 per cent. of such voting rights and any further increase in that interest in shares will be subject to the provisions of Rule 9.

The Rule 9 Independent Directors believe that it is in the best interests of the Company that the Whitewash Resolution be passed. Please note that in addition to Richard Blakesley, Alistair Hancock is also not considered to be independent because of the Disposal in which he is interested by virtue of being sole shareholder in iAccel Limited. Alistair Hancock is therefore unable to vote in relation to the whitewash waiver and on the terms of the Disposal.

Intentions of Richard Blakesley

Richard Blakesley is not intending to seek any changes to the Board and has confirmed that it would be his intention following completion of the Disposal and the increase in his proportionate shareholding as a result of the Capital Reorganisation, that the business of the Company would be continued in substantially the same manner as proposed by this document. As a member of the board, Richard will therefore look with the other directors to source appropriate acquisition opportunities to utilise the Company's AIM dealing facility. Such an acquisition is likely to constitute a "reverse takeover" under the AIM Rules and as such would be subject to shareholders' approval. Following the Disposal, the Company will have no employees and the Board will comprise Rob Burnham and Richard Blakesley as non-executive directors. Richard Blakesley has no present intention to redeploy the Company's fixed assets and intends that the Company will be run on a "care and maintenance " basis in order to minimise costs while an appropriate acquisition opportunity is found.

Current trading and prospects

As noted, the Company's trading performance since admission to AIM has not resulted in satisfactory levels of shareholder return and the Directors consider it appropriate to consider other opportunities.

There have been no changes in the Company's financial or trading position since 31 December 2010, the date to which the latest interim accounts of the Company have been prepared. The interim accounts are available on the Company's website at www.rubiconsoftware.com/investor-relations.

Further information relating to the location of financial information on the Company may be found in Part II of this document.

Change of Name

It is proposed that the Company change its name to "Rubicon Diversified Investments Plc" to reflect the proposed change in the company's business from one of software design and development to investment.

A Circular including Notice of a General meeting convened to be held on 5 August has today been sent to shareholders and is available on the Company's website at www.rubiconsoftware.com

Recommendations

As the Disposal is deemed to be a related party transaction pursuant to the AIM Rules, the Disposal Independent Directors (who exclude Alistair Hancock who is deemed to be interested in the transaction), having consulted with the Company's nominated advisor, W. H. Ireland Limited, consider that the terms of the transaction are fair and reasonable insofar as Shareholders are concerned.

The Disposal Independent Directors unanimously recommend that you vote in favour of Resolutions 1, 2, 4, 5, to be proposed at the General Meeting, as they intend to do in respect of their own beneficial holdings in the ordinary share capital of the Company.

In addition, the Rule 9 Independent Directors (who exclude Alistair Hancock and Richard Blakesley who are deemed to be interested in the Capital Reorganisation) who have been so advised by WH Ireland, consider the Proposals to be fair and reasonable and in the best interest of the independent shareholders  and unanimously recommend that you vote in favour of Resolution 3 to be proposed and held on a poll at the General Meeting, as they intend to do in respect of their own beneficial holdings in the ordinary share capital of the Company.

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