21 Jul 2017 07:00
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR FORM PART OF AN OFFER OF OR INVITATION TO SELL OR ISSUE OR ANY SOLICITATION OF AN OFFER TO PURCHASE OR SUBSCRIBE FOR ANY SECURITIES IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS UNLAWFUL NOR SHALL THIS ANNOUNCEMENT (OR ANY PART OF IT) OR THE FACT OF ITS DISTRIBUTION FORM THE BASIS OF, OR BE RELIED UPON IN CONNECTION WITH, OR ACT AS AN INDUCEMENT TO ENTER INTO, ANY CONTRACT OR COMMITMENT TO DO SO. ANY FAILURE TO COMPLY WITH THESE RESTRICTIONS MAY CONSTITUTE A VIOLATION OF THE APPLICABLE SECURITIES LAWS IN SUCH JURISDICTIONS. THIS ANNOUNCEMENT DOES NOT CONSTITUTE A PROSPECTUS FOR THE PURPOSES OF THE PROSPECTUS RULES AND HAS NOT BEEN, AND WILL NOT BE, APPROVED BY OR FILED WITH THE FINANCIAL SERVICES AUTHORITY.
THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT IS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF REGULATION 596/2014.
Capital Raising Update - Proposed Funding up to £18.9 Million
Introduction
Koovs plc ("Koovs", the "Company" and, together with its subsidiary undertakings, the "Group") (AIM: KOOV.L), the fashion-forward business focused on the young Indian e-commerce market, today announces an update on its intention to raise capital as previously announced on 22 May 2017.
The Company announces that it proposes to raise up to £18.9 million via the issue of secured convertible loan notes (the "Convertible Loan Notes"), the key terms of which are described below.
The Company has entered into non-binding heads of terms under which certain investors have indicated interest in acquiring approximately £8.9 million of Convertible Loan Notes, including £7.4 million from Lord Waheed Alli, a director of the Company. The subscription by Lord Waheed Alli and a further investor will, subject to the agreement of the terms of the transaction, amount to related party transactions for the purposes of the AIM Rules for Companies. Further information will be announced in due course.
The Company has also received a strong indication of interest for a further £7.5 million of Convertible Loan Notes, which the Company will seek to finalise in due course, and has the potential to secure up to a further £2.5 million.
The Company will therefore seek shareholder approval for the issuance of the total £18.9 million of Convertible Loan Notes, and will likely issue the Convertible Loan Notes in two tranches.
The net proceeds of the total fundraising will be used by Koovs to fund the delivery of its strategic objectives and will primarily be invested in marketing to continue to build brand awareness and further enhance customer acquisition growth.
With the proposed initial funding, together with the positive gross margins now being generated by the Company, the Directors believe the Company has the resources to continue to execute its strategic plan and the time required to close its remaining funding requirement.
Lord Waheed Alli, Chairman of Koovs, commented:
"In a short space of time, Koovs has established a track record of superior growth in India's booming e-commerce market. The strong financial and operational progress the company has made to date means it is now better placed than ever to capitalise on the unique growth opportunity that India's fashion e-commerce market presents.
"I am therefore delighted to lend my support to this fundraising.
"I am extremely excited by Koovs' growth prospects and I am confident that its strategy, exceptionally talented team and the investments we are making, will enable the Company to further outperform the market in which we operate, delivering strong returns for all shareholders."
Mary Turner, Chief Executive Officer of Koovs, commented:
"Koovs has a unique and distinctive brand position, famous for affordable western fashion, targeting the aspirational, style-conscious young Indian consumer in a market that is forecast to grow five-fold to $3.5 billion by 2020.
"The additional capital will enable us to continue to build on the strong year on year growth of 87 per cent. achieved in FY17 and deliver our strategy to become India's number one western fashion destination by 2020."
Details of Fundraising
The Company (subject to applicable laws and regulations), has the flexibility to meet additional demand from invited subscribers (who are eligible (see section headed "Eligibility" below)) wishing to participate in the Convertible Loan Notes. The period to participate in the Convertible Loan Notes commences on the date of this announcement until 1.00 p.m. on Monday 24 July 2017 (the "Close Date"). The Company may choose to accept or reject applications, either in whole or in part, on the basis of allocations determined at its discretion and may scale down any applications for this purpose on such basis as it may determine or be directed.
The Company also reserves the right to meet demand for the total £18.9 million fundraising via a placing of ordinary shares of one penny each in the capital of the Company ("Ordinary Shares") through Peel Hunt, alongside the Convertible Loan Notes subscription (the "Placing"). The Placing could either be conducted on the timetable set out above for the initial tranche of the Convertible Loan Notes or in conjunction with a second tranche in due course.
Shortly following the Close Date, the Company expects to publish a shareholder circular in connection with the Convertible Loan Notes, seeking shareholder authority, among other things, to (i) allot or grant rights to subscribe for, or to convert security into, Ordinary Shares up to the full £18.9 million plus estimated accrued interest in connection with the issue of Convertible Loan Notes; and (ii) to disapply Shareholders' statutory pre-emption rights in connection therewith.
Eligibility
In order to ensure that the Convertible Loan Notes and the Placing fall within the prospectus exemption, both the Convertible Loan Notes and the Placing are only open to invited subscribers who are both Qualified Investors (as defined in the section headed "Important Notes" below) and persons to whom a financial promotion may lawfully be made. Persons who do not fall within these catergories will not be eligible to acquire either Convertible Loan Notes or Placing Shares. The Company and Peel Hunt LLP reserve the right to reject any applications received in respect of Convertible Loan Notes and/or Placing Shares from persons who are not both Qualified Investors and persons to whom a financial promotion may lawfully be made. For further details of eligibility please refer to the section headed "Important Notes" below.
Details on the Convertible Loan Notes
The key terms of the Convertible Loan Notes are as follows:
Maximum Nominal Amount of Convertible Loan Notes to be issued | GBP £18.9 million |
Term | 24 months from completion of the issue of the Convertible Loan Notes |
Conversion Price | The Convertible Loan Notes can be converted into Koovs Ordinary Shares at a conversion price of £0.40 per share |
Redemption
| The Convertible Loan Notes can be redeemed: · at the election of the noteholders following a material breach by the Company of the terms of the Convertible Loan Note instrument; · automatically on the occurrence of certain insolvency events; and · otherwise, automatically at the end of the two year term |
Conversion Rights | The Convertible Loan Notes can be fully converted at any time by the debenture holder giving to the Company 3 months' prior written notice |
Security | All amounts falling due under the Convertible Loan Notes will be secured by a debenture constituting a first-ranking fixed and floating charge over all the assets of the Company (the "Debenture") |
Coupon & Payment | 3 month sterling LIBOR + 6% per annum, calculated monthly and rolled up (but not compounded) with payment at the end of the Term unless previously converted, in which case accrued interest is paid in kind in Ordinary Shares at the Conversion Price or at the point of conversion. |
Conversion by the Company | The Company will have the right to require the holder to convert the Convertible Loan Notes into equity at the Conversion Price if: a) During the Term the 3 month volume weighted average price of Koovs Ordinary Shares is equal to, or in excess of, £0.75; or b) At the end of the Term if the 5 day volume weighted average price of Koovs Ordinary Shares is equal to, or in excess of, £0.45. |
"Most Favoured Nation" basis | Following the issue of the Convertible Loan Notes, if the Company proposes to issue any convertible debt securities or instruments ("New Convertibles") on terms as to either the Coupon or the Conversion Price that are more favourable to subscribers of the New Convertibles than to the holders of the Convertible Loan Notes, the holders of the Convertible Loan Notes shall have the right to require the Company to amend the terms of the Convertible Loan Notes so as to be at least equivalent in those aspects to the New Convertibles subject in all cases to all requisite approvals from shareholders and regulatory authorities. |
For further information please contact:
| |
Koovs plc Robert Pursell
| Tel: +44 (0)20 7151 0170 |
Peel Hunt LLP Dan Webster / George Sellar / Jock Maxwell Macdonald (ECM)
Headland Lucy Legh / Rob Walker
| Tel: +44 (0)20 7418 8900
Tel: +44 (0)20 3805 4822 |
IMPORTANT NOTICES
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE CAPITAL RAISING. THIS ANNOUNCEMENT IS DIRECTED ONLY AT PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM IN ACQUIRING, HOLDING, MANAGING AND DISPOSING OF INVESTMENTS (AS PRINCIPAL OR AGENT) FOR THE PURPOSES OF THEIR BUSINESS AND WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND ARE: (1) IF IN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA ("EEA"), QUALIFIED INVESTORS AS DEFINED IN ARTICLE 2(1)(e) OF DIRECTIVE 2003/71/EC AS AMENDED, INCLUDING BY THE 2010 PROSPECTUS DIRECTIVE AMENDING DIRECTIVE (DIRECTIVE 2010/73/EC) AND TO THE EXTENT IMPLEMENTED IN THE RELEVANT MEMBER STATE (THE "PROSPECTUS DIRECTIVE"); (2) IF IN THE UNITED KINGDOM, QUALIFIED INVESTORS WHO (A) FALL WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE "ORDER") (INVESTMENT PROFESSIONALS) OR (B) FALL WITHIN ARTICLE 49(2)(a) TO (d) (HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC.) OF THE ORDER (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS").
THIS ANNOUNCEMENT AND THE INFORMATION IN IT MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. PERSONS DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS ANNOUNCEMENT DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN KOOVS PLC.
THE PLACING SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR JURISDICTION OF THE UNITED STATES, AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THE PLACING SHARES ARE BEING OFFERED AND SOLD ONLY (I) OUTSIDE OF THE UNITED STATES IN "OFFSHORE TRANSACTIONS" WITHIN THE MEANING OF, AND IN ACCORDANCE WITH, REGULATION S UNDER THE SECURITIES ACT AND OTHERWISE IN ACCORDANCE WITH APPLICABLE LAWS, AND (II) IN THE UNITED STATES TO A LIMITED NUMBER OF "QUALIFIED INSTITUTIONAL BUYERS" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN TRANSACTIONS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT. NO PUBLIC OFFERING OF THE PLACING SHARES IS BEING MADE IN THE UNITED STATES OR ELSEWHERE.
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.
The distribution of this Announcement and/or the Placing and/or issue of the Placing Shares and/or the issue of Convertible Loan Notes in certain jurisdictions may be restricted by law. No action has been taken by the Company, Peel Hunt LLP or any of their respective affiliates, agents, directors, officers or employees that would permit an offer of the Placing Shares or Convertible Loan Notes or possession or distribution of this Announcement or any other offering or publicity material relating to such Placing Shares or Convertible Loan Notes in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by the Company and Peel Hunt to inform themselves about and to observe any such restrictions.
This Announcement or any part of it does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States (including its territories and possessions, any state of the United States and the District of Columbia (the "United States" or the "US")), Australia, Canada, Japan or the Republic of South Africa or any other jurisdiction in which the same would be unlawful. No public offering of the Placing Shares or Convertible Loan Notes is being made in any such jurisdiction.
All offers of the Placing Shares and Convertible Loan Notes will be made pursuant to an exemption under the Prospectus Directive from the requirement to produce a prospectus. In the United Kingdom, this Announcement is being directed solely at persons in circumstances in which section 21(1) of the Financial Services and Markets Act 2000 (as amended) does not apply.
The Placing Shares and Convertible Loan Notes have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission or other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the Placing or the accuracy or adequacy of this Announcement. Any representation to the contrary is a criminal offence in the United States. The relevant clearances have not been, nor will they be, obtained from the securities commission of any province or territory of Canada, no prospectus has been lodged with, or registered by, the Australian Securities and Investments Commission or the Japanese Ministry of Finance; the relevant clearances have not been, and will not be, obtained for the South Africa Reserve Bank or any other applicable body in the Republic of South Africa in relation to the Placing Shares and the Convertible Loan Notes, and the Placing Shares and the Convertible Loan Notes have not been, nor will they be, registered under or offered in compliance with the securities laws of any state, province or territory of Australia, Canada, Japan or the Republic of South Africa. Accordingly, the Placing Shares and the Convertible Loan Notes may not (unless an exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into Australia, Canada, Japan or the Republic of South Africa or any other jurisdiction outside the United Kingdom.
Persons (including, without limitation, nominees and trustees) who have a contractual right or other legal obligations to forward a copy of this Announcement should seek appropriate advice before taking any action.
This Announcement may contain and the Company may make verbal statements containing "forward-looking statements" with respect to certain of the Company's plans and its current goals and expectations relating to its future financial condition, performance, strategic initiatives, objectives and results. Forward-looking statements sometimes use words such as "aim", "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "seek", "may", "could", "outlook" or other words of similar meaning. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond the control of the Company, including amongst other things, United Kingdom domestic and global economic business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of governmental and regulatory authorities, the effect of competition, inflation, deflation, the timing effect and other uncertainties of future acquisitions or combinations within relevant industries, the effect of tax and other legislation and other regulations in the jurisdictions in which the Company and its respective affiliates operate, the effect of volatility in the equity, capital and credit markets on the Company's profitability and ability to access capital and credit, a decline in the Company's credit ratings; the effect of operational risks; and the loss of key personnel. As a result, the actual future financial condition, performance and results of the Company may differ materially from the plans, goals and expectations set forth in any forward-looking statements. Any forward-looking statements made in this Announcement by or on behalf of the Company speak only as of the date they are made. Except as required by applicable law or regulation, the Company expressly disclaims any obligation or undertaking to publish any updates or revisions to any forward-looking statements contained in this Announcement to reflect any changes in the Company's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.
Peel Hunt LLP is authorised and regulated by the Financial Conduct Authority (the "FCA") in the United Kingdom and is acting exclusively for the Company and no one else in connection with the Capital Raising, and Peel Hunt LLP will not be responsible to anyone (including any Placees) other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Capital Raising or any other matters referred to in this Announcement.
No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by the Peel Hunt LLP or by any of its affiliates or agents as to, or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefor is expressly disclaimed.
No statement in this Announcement is intended to be a profit forecast or estimate, and no statement in this Announcement should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.
The price of shares and any income expected from them may go down as well as up and investors may not get back the full amount invested upon disposal of the shares. Past performance is no guide to future performance, and persons needing advice should consult an independent financial adviser.
The Placing Shares to be issued pursuant to the Placing will not be admitted to trading on any stock exchange other than the London Stock Exchange.
The Convertible Loan Notes to be issued pursuant to the Capital Raising will not be admitted to trading on any stock exchange.
Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this Announcement.