Iq-ai Ltd Regulatory News (IQAI)

Flying Brands Limited

Board Changes, Conditional Placing of Convertible Loan Notes, Publication of Circular and Notice of Extraordinary General Meeting

Flying Brands Limited (the "Company" or "Flying Brands") announces that following a meeting of the Board, Trevor Brown and Michael Murphy have been appointed to the Board of the Company (the "New Directors") and the resignation of Stephen Cook and Paul Davidson, all effective immediately.

Peterhouse Corporate Finance Limited has conditionally raised £300,000 before expenses by way of the issue of Convertible Loan Notes convertible into Units at a price of £0.011 per Unit. The issue of the Convertible Loan Notes are conditional on the passing of the necessary Resolutions at an Extraordinary General Meeting ("EGM") of the Company on 11 March 2015.

The proceeds of the Convertible Loan Notes will be used to provide the Company with working capital to allow it to continue to review and implement its ongoing strategy.

Further details of the rights attaching to the Convertible Loan Notes are set out in the Circular to Shareholders below, the text of which is set out below and forms part of this announcement.

Background

On 31 December 2014, the Company announced that it was in discussions with a number of third parties regarding the best use of the sale proceeds of Retreat Farm. The Board have decided it is in the best interests of Shareholders to bring in the New Directors, with a view to taking the Company in a new direction in 2015.

The New Directors first role will be to review the on-going strategy of the Company, with a view to creating value for Shareholders in the future. The New Directors therefore announce that they have published a circular to shareholders (the "Circular") convening an EGM to be held at 10:00 a.m. on 11 March 2015 at Jersey Bowl, Airport Road, St. Peter, Jersey, Channel Islands, Jersey to consider the resolutions set out at the end of the Circular.

In accordance with the Listing Rules, there are no additional matters that would require disclosure under LR 9.6.13 R (1) to (6) in relation to this appointment.

Further to the announcement by the Company of 31 December 2014, and following today's changes to the Board, the Company expects to make a further announcement regarding its future direction shortly.

New Directors

Michael Murphy has been appointed Non-Executive Chairman of Flying Brands. Mike started in the City of London in 1987. He worked at Citigroup and Robert Flemings as a Trader in UK Equities before going on to become a Director in the Equity departments of both Barclays de Zoete Wedd and then Lehman Brothers. After leaving Lehman in 1997 Mike set up his own broking business, MSM Global Services Ltd, which worked in partnership with Shore Capital and Kyte Securities respectively, before merging with the latter in 2001 to form Eden Financial. Mike was bought out of Eden in 2003 by Lehman and then went on to set up and manage GM Capital Markets, the Equities subsidiary of GFI (one of the world's most successful Inter Dealing Brokerages). In 2005 Mike founded, and is still the Chairman and CEO, of Novus Capital Markets Limited. This small boutique of approximately 15 personnel specialises in Cash Equity Broking, Structured Products Broking and Corporate Finance/Broking.

In accordance with the Listing Rules, there are no additional matters relating to Michael Murphy that would require disclosure under LR 9.6.13 R (1) to (6) in relation to his appointment.

Trevor Brown has been appointed Chief Executive Director of Flying Brands. Trevor has been a strategic investor in equities and real estate for more than 30 years. He is currently a Non-executive Director of Feedback PLC, Braveheart Group PLC and Peterhouse Corporate Finance. Until recently, Trevor was a director of Advanced Oncotherapy plc where he was involved in the strategy of transition to the provision of advanced cancer treatment services.

In addition to his directorship of the Company, Trevor Brown holds or has held the following public quoted directorships in the five years prior to the date of this announcement: 

Save as disclosed above, there are no additional matters relating to Trevor Brown that would require disclosure under the Listing Rules LR 9.6.13 R (1) to (6) in relation to his appointment.

The letter from the new Chairman of Flying Brands is contained within the Circular and is copied below. References within it have the same meanings as defined in the Circular.

Enquiries:

Flying Brands Limited

Michael Murphy/Trevor Brown

Tel: 0207 469 0930

Letter from the Chairman of Flying Brands Limited

(Incorporated under the Companies (Jersey) Law 1991 and registered in Jersey with registration number 2044)

13 February 2015

To Shareholders

Introduction

Today, Flying Brands announced the appointment of Trevor Brown and Michael Murphy to the Board of the Company and the resignation of Stephen Cook and Paul Davidson. The purpose of this letter is to provide you with a background to, and the reasons for the Board changes and for calling the EGM. In addition, the letter explains why the Directors consider the Proposals to be in the best interests of the Company and Shareholders as a whole and why they recommend that Shareholders should vote in favour of the Resolutions to be proposed at the EGM.

On 7 November 2014, the Company announced the sale of Retreat Farm and that it was considering the best use for the net proceeds of this sale. The Board has concluded that effecting the issue of the Convertible Loan Notes to raise funds for working capital purposes (the "Proposals") offers the Company the greatest prospects for the creation of additional value for Shareholders.

Peterhouse Corporate Finance Limited has conditionally raised £300,000 before expenses by way of the issue of Convertible Loan Notes. The maximum number of Units that could be issued pursuant to the Convertible Loan Note holders (assuming full conversion) is 32,795,455 new Units. The issue of the Convertible Loan Notes is conditional on the passing of the Resolutions.

The proceeds of the Convertible Loan Notes will be used to provide the Company with working capital to allow it to continue to review and implement its ongoing strategy.

A notice convening an Extraordinary General Meeting for 10am on 11 March 2015, at Jersey Bowl, Airport Road, St. Peter, Jersey, Channel Islands, Jersey, is set out at the end of this Circular.

Background to the Proposals

During 2011, the Company proposed the disposal of all of its trading businesses.

In 2012, the Company completed the disposal of its Gifts Business, the trade assets of Garden Bird Supplies, Garden Centre Online and Listen 2 and Gardening Direct, which led to the closure of the growing and live-despatch business based in Jersey.

On 7 November 2014, the Company announced that it disposed of its freehold property at Retreat Farm. The proceeds of this sale have been used to repay the loan of £1.01m from Acorn Finance and to pay the agreed settlement amount of £0.15m to Flying Flowers Pty Ltd, an Australian company, arising from matters relating to the disposal of the Group's Gifts Business. The Company has also paid all outstanding creditors, leaving Flying Brands debt free to the extent that the Directors have been made aware. The Company's only remaining asset is £60,000 cash.

A number of Board changes were effected today, with a view to taking the Company in a new direction in 2015. The Directors first role will be to review the on-going strategy of the Company, with a view to creating additional value for Shareholders in the future.

The Subscription

Peterhouse Corporate Finance has conditionally raised £300,000 before expenses through the Subscription of the Convertible Loan Notes. The Subscription is conditional on approval of the Resolutions. The net proceeds of the Subscription are estimated at £290,000.

The proceeds of the Subscription will be used to provide the Company with working capital, to allow it to continue to review and implement its on-going strategy.

If the maximum number of Units that could be issued upon conversion of the Convertible Loan Notes is issued, the Subscribers will, in aggregate, hold approximately 53.88 per cent. of the Fully Enlarged Unit Capital.

Any conversion of the Convertible Loan Notes is conditional on the number of Units to be issued to Subscribers on conversion not resulting in such holder (when aggregated with any interests the Subscriber may hold in existing issued Units and any persons acting in concert with it), being required to make a mandatory bid for all of the Units in the Company under the rules set out in the City Code on Takeovers and Mergers and most particularly under Rule 9 of the City Code on Takeovers and Mergers or any equivalent provision which amends or replaces Rule 9 of the City Code on Takeovers and Mergers.

Unless previously converted, the final maturity date of the Convertible Loan Notes is the third anniversary of the date of the issue of the Convertible Loan Notes.

If approval for the issue of Convertible Loan Notes is granted, the Company's assets will comprise cash of approximately £350,000.

Peterhouse Corporate Finance will be issued with a warrant which is exercisable over 3 per cent of the Company's Fully Enlarged Unit Capital from time to time at the Conversion Price for a period of 3 years from the date of issue, as payment for the introduction of the incoming Subscribers. The warrant is conditional on the Resolutions being approved by Shareholders at the EGM.

The Convertible Loan Notes

The Subscribers will, conditional on the passing of the Resolutions, subscribe for the Convertible Loan Notes in an aggregate principal amount of £300,000. 

The Convertible Loan Notes and interest accrued are convertible into new Units at the Conversion Price. The Convertible Loan Notes will be issued in multiples of £1.00.

Mr. Trevor Brown, a director of the Company, will be interested in £150,000 of the Convertible Loan Notes.

The principal terms of the Convertible Loan Note Instruments are, inter alia, as follows:

Status/Security

The Convertible Loan Notes will be unsecured and shall be rank pari passu with all other unsecured liabilities of the Company.

The Convertible Loan Notes are freely transferrable.

Interest

Until the Convertible Loan Notes are redeemed or converted in accordance with the provisions of the Convertible Loan Note Instrument, interest shall accrue on the principal amount of the Convertible Loan Notes, which are outstanding at 6.75% per annum (the "Interest Rate") and be convertible into Units at the Conversion Price upon conversion or redemption. 

No interest under the Convertible Loan Note Instrument shall be payable by the Company in cash.

Redemption

Unless converted, the Convertible Loan Notes will be redeemed in full on the Maturity Date or, in the event of insolvency of the Company (as defined in section 123 of the UK Insolvency Act 1986), at the election of the Subscribers. On redemption in full or in part in cash, all accrued interest shall be capitalised and converted at the Conversion Price into new Units. When the Convertible Loan Notes become payable, the Company shall pay to the Subscribers the full principal amount of the Convertible Loan Notes to be repaid.

Conversion

Each Convertible Loan Note (and any interest) will be convertible at the election of the Company at any time upon 10 Business Days' notice before the Maturity Date into new Units at the Conversion Price, provided that any such conversion is effected in respect of not less than 1,000 Units.

The Convertible Loan Notes are convertible into new Units at the Conversion Price, to the extent that, immediately following such conversion, the Units to be issued to each Subscriber on such conversion would not together with persons Acting in Concert (as defined in the Takeover Code) with the Subscribers, carry 30% or more of the voting rights of the Company, unless such conversion:

· is effected as part of a sale of the entire issued unit capital of the Company;

· is with Takeover Panel approval; or

· is part of a mandatory offer for the remaining units in the Company, under Rule 9 of the Takeover Code.

Share Capital

Each Ordinary Share of £0.01 in the Company is attached to an "A" Ordinary Share of £0.005 in Flying Brands Holdings (UK) PLC to form a Unit. The Units are listed and traded on the Standard Market. Consequently all Shareholders hold in addition to their shares in Flying Brands Limited an equivalent number of shares in Flying Brands Holdings (UK) PLC. The "A" Ordinary Shares do not have the right to attend or vote at general meetings of Flying Brands Holdings (UK).

The Company is seeking authorisation to allot additional equity securities on a non pre-emptive basis up to 35,838,914 Ordinary Shares to enable the Proposals to be implemented, including the maximum number of Units that could be issued pursuant to the Convertible Loan Notes (assuming full conversion), to allow the Convertible Loan Notes to become unconditional. The balance of approximately 3,043,459 Ordinary Shares, to be used for the issue of and for anyallotment of equity securities for cash.

The Company's previous authorities to issue Ordinary Shares have expired. Full details of the authorities the Directors are seeking at the EGM are set out in the attached notice of the EGM.

Varying the Number of Directors

Under Article 22.1, the Board shall have not less than three directors. Article 22.1 allows the Company to vary the minimum number of Directors by Ordinary Resolution. The Board is seeking authorisation to amend the minimum number of Directors to two to enable the Company to conserve costs.

Extraordinary General Meeting

The Notice convening the EGM to be held at Jersey Bowl, Airport Road, St. Peter, Jersey, Channel Islands, Jersey at 10a.m. on 11 March 2015 at which the Resolutions will be proposed is set out at the end of this Document. 

Sale of Units

In the event that all Resolutions are passed, any Shareholder wishing to divest itself of its Units in the Company following the EGM may do so by notifying Peterhouse Corporate Finance within 15 days of the published results of the EGM. Peterhouse Corporate Finance has agreed to use its reasonable endeavours, to arrange the execution of a sale of any Units held by any existing Shareholder wishing to sell the same to its clients for £0.011 per Unit. This sale facility effectively values the whole of the Units at approximately £308,811.

Alternatively, Shareholders are free to retain their Units or sell them in the market as they see fit.

Any Shareholder wishing to take advantage of the above sale facility should contact Peterhouse Corporate Finance directly on 020 7469 0933.

Action to be taken

Shareholders will find a Form of Proxy enclosed for use at the EGM. Whether or not you intend to be present at the EGM, you are requested to complete and return the Form of Proxy in accordance with the instructions printed thereon as soon as possible. To be valid, completed Forms of Proxy must be received by 9 March 2015, no later than 48 hours before the time appointed for holding the meeting. You are entitled to appoint a proxy to attend and to exercise all or any of your rights to vote and to speak at the EGM instead of you. Completion of the Form of Proxy will not preclude you from attending and voting at the EGM in person if you so wish. Your attention is drawn to the notes to the Form of Proxy.

Recommendation

The Directors consider the Proposals to be in the best interests of the Company and the Shareholders as a whole. The Directors therefore recommend that you vote in favour of the Resolutions.

Stephen Cook and West Coast Capital Limited, who are the beneficial owners of an aggregate of approximately 38.28 per cent of the Current Issued Unit Capital of the Company, have signed irrevocable agreements to instruct the record owner of such Units to vote in favour of the Resolutions to be proposed at the EGM, notice of which is set out in the Circular.

Yours faithfully,

For and on behalf of the Board

Michael Murphy

Chairman

FLYING BRANDS LIMITED

(Incorporated under the Companies (Jersey) Law 1991 and registered in Jersey with registration number 2044)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of the members of the Company will be held at the Jersey Bowl, Airport Road, St. Peter, Jersey, Channel Islands, Jersey, at 10 a.m. on 11 March 2015 to consider and, if thought fit, pass the following resolutions, resolutions 1 and 2 being proposed as special resolutions and resolution 3 as an ordinary resolution, but so that neither of the special resolutions and ordinary resolution shall be passed unless all are passed.

This Notice concerns matters described in a circular to shareholders of the Company dated 13 February 2015 (the "Circular"). Words and expressions defined in the Circular have the same meaning in this Notice.

SPECIAL RESOLUTIONS

1. The authorised share capital of the Company is increased to GBP 700,000.

2. The Directors be and they are hereby generally and unconditionally authorised in accordance with Article 4.16 of the Company's Articles of Association, to allot without rights of pre-emption up to 35,838,914 Ordinary Shares of 1p each as they in their absolute discretion see fit in any number of tranches, such authority unless otherwise varied, renewed or revoked to expire at the conclusion of the annual general meeting of the Company in 2015, except that the Company may, at any time prior to the expiry of such authority, make an offer or enter into an agreement which would or might require Ordinary shares to be allotted after the expiry of such power and the Directors of the Company may allot Ordinary Shares in pursuance of such an offer or agreement as if such power had not expired.

ORDINARY RESOLUTION

3. Authorisation to amend the minimum number of Directors as stated in Article 22.1 to two directors.

Date: 13 February 2015

End

The Directors of the Company are responsible for the contents of this announcement.