KOOV.L Regulatory News (KOOV)

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.

THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT IS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF REGULATION 596/2014.

Authorisation to issue up to £18.9 million nominal principal amount of Convertible Loan Notes

with an initial issue of £8.9 million nominal principal amount of Convertible Loan Notes

and

Notice of General Meeting

Introduction

The board of Koovs plc ("Koovs" or the "Company") announces today that it proposes to raise gross proceeds of up to £18.9 million through the issue of up to £18.9 million nominal principal amount convertible loan notes (the "Convertible Loan Notes") (the "Capital Raising") of which subscriptions for an aggregate of £8.9 million have been received as at today's date from certain Directors and other investors (the "Initial CLN Issue").

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 issue of the Convertible Loan Notes is conditional upon the passing of resolutions 1 and 2 (the "Resolutions") at the general meeting of the Company (the "General Meeting") convened by the circular (the "Circular") sent to the Company's shareholders today. The General Meeting will be held on 14 August 2017 at the offices of Peel Hunt at 120 London Wall, London EC2Y 5ET at 11.00 a.m., at which the Resolutions will be proposed.

The Company is therefore seeking shareholder approval in relation to the issuance of the total £18.9 million of Convertible Loan Notes, and will likely issue the Convertible Loan Notes in two tranches. Subject to shareholder approval being obtained at the General Meeting, completion of the Initial CLN Issue is expected to occur on 15 August 2017.

The proceeds of the Initial CLN Issue will be used to fund the delivery of the Company's strategic objectives and will primarily be invested in marketing and product expansion to continue to build brand awareness, increase conversion 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.

Participation in the Capital Raising will be for invited subscribers only and members of the public are not eligible to take part in the Capital Raising. The details of the Capital Raising contained in the Circular are for information purposes only and do not constitute an offer to sell or issue, or the solicitation of an offer to buy or subscribe for Convertible Loan Notes or shares in the capital of the Company. No public offer of securities of the Company is being made in the United Kingdom, the United States or elsewhere.

Further details of the Convertible Loan Notes are set out in the Circular published today in connection with the Capital Raising. The Circular can be found on the Company's website www.koovs.com/corporate.

Related Party Transactions

Lord Waheed Alli, a director of the Company, and Silvergate Investments Limited (which is a company wholly owned by Lord Waheed Alli), together hold a total of 33,699,218 existing ordinary shares in the capital of the Company ("Existing Ordinary Shares") representing 19.2 per cent. of the Existing Ordinary Shares. Lord Waheed Alli and his connected persons have conditionally agreed to subscribe for £7,400,000 in nominal principal amount of the Convertible Loan Notes in the Initial CLN Issue. 

Michinoko Limited holds a total of 19,617,805 Existing Ordinary Shares representing 11.2 per cent. of the Existing Ordinary Shares. Michinoko Limited has conditionally agreed to subscribe for £1,500,000 in nominal principal amount of the Convertible Loan Notes in the Initial CLN Issue.

Lord Waheed Alli and Silvergate Investments Limited and Michinoko Limited will in each case be treated as a "related party" for the purposes of Rule 13 of the AIM Rules in relation to the participation by them (or their associates) in the Capital Raising.

The directors of the Company (excluding Lord Waheed Alli), having consulted with Peel Hunt LLP in its capacity as the Company's nominated adviser for the purposes of the AIM Rules for Companies, consider the terms on which Lord Waheed Alli and Silvergate Investments Limited and Michinoko Limited will subscribe for Convertible Loan Notes pursuant to the Initial CLN Issue to be fair and reasonable insofar as shareholders are concerned.

Current trading and prospects

The board of the Company is confident that the Company will make further progress during the rest of this year with results in line with market expectations.

This Announcement should be read in its entirety. In particular, you should read and understand the information provided in the "Important Notices" section of this Announcement.

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.

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 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 Convertible Loan Notes or possession or distribution of this Announcement or any other offering or publicity material relating to such 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 Convertible Loan Notes is being made in any such jurisdiction.

All offers of the 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 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 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 Convertible Loan Notes, 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 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 subscribers for the Convertible Loan Notes) 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 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.