15 Sep 2014 07:00
London Capital Group Holdings plc
(the "Company")
Proposed entry into Software as a Service Agreement and Notice of General Meeting
Introduction
Further to the publication of the Financing Circular dated 17 June 2014, the Company announces the proposed entry into a software as a service agreement between the Company's subsidiary, LCG, and Algoweb pursuant to which Algoweb would grant a licence to LCG to use certain of its software and services.
As Charles-Henri Sabet, Executive Director, and his wife, together have a 50 per cent. shareholding in Algoweb, the approval of the Shareholders is required pursuant to section 190 of the Act, by virtue of LCG being granted the Licence, pursuant to the Agreement, from a person connected with one of its directors. Approval will also be required from LCG's sole shareholder, Tradex which, in turn, is a wholly owned subsidiary of the Company.
Background to and reasons for entry into the Agreement
Further to the Company's announcement on 17 June 2014, concerning the proposed financing to raise up to £17,500,000 through the issue of convertible loan notes to GLIO and certain institutional investors, Mr. Sabet was appointed as the Company's and LCG's Executive Chairman on 3 September 2014 following the relevant approvals being granted by the Financial Conduct Authority.
GLIO's subscription will be required to be made following the determination of the conversion price of the GLIO Convertible Loan Notes (assuming that there is no outstanding event of default and LCG's net assets are not less than £8.5 million) in accordance with the terms of the GLIO Convertible Loan Note Instrument. Further announcements will be made in due course following such determination and also with respect to the proposed subscription by certain institutional investors of the Institutional Investors Convertible Loan Notes.
Mr. Sabet and his wife, together have a 50 per cent. shareholding in Algoweb and, as stated in the Financing Circular, the Company has been in discussions (subject to contract) with Algoweb, in connection with the possible licensing to LCG of a straight-through processing (STP) trading solution. The Company has completed due diligence in connection with the proposed licensing and it is now proposed that following the issue of the GLIO Convertible Loan Notes, subject to the approval of Shareholders at the General Meeting, LCG will enter into the Agreement. Further details of the Agreement are set out below.
The Independent Directors consider that there is an urgent need for LCG to install the technology offered by Algoweb in the Agreement (including the Smarttrade and Algoweb add-ins) in order to improve LCG's execution capabilities. The Independent Directors believe that, in line with the Company's strategy, the Agreement offers access to international wholesale FX markets and presents an opportunity for the Company to significantly expand and diversify its customer base. The Independent Directors also believe that entering into the Agreement is in the best interests of the Company and its shareholders for the reasons set out below:
· the Licence will provide LCG with direct access to liquidity providers with aggregation and smart order routing features, enabling LCG to offer better pricing, tighter spreads and a greater depth for execution;
· the Licence will provide downstream users with a unified order book facilitating trading and allowing for aggregated pricing with centralised real-time spreads; and
· the Licence will provide full hardware and maintenance support 24 hours a day, 6 days a week, to ensure continuity of service.
Information on Algoweb
Algoweb is a company incorporated in Monaco which was founded by Mr. Sabet. Algoweb was founded to develop technology for use in the financial markets. Its platform is a full FX trading stack, providing direct access, low-latency aggregation and smart order routing services to a selection of liquidity providers.
Algoweb was incorporated on 18 July 2012. Mr. Sabet and his wife together hold 50% of the issued share capital of Algoweb. The sole director of Algoweb is Mr. Gerard Sistek.
The Agreement
The principal terms of the Agreement are follows:
Parties | Algoweb and LCG |
Services to be provided | Access to retail distribution platforms and software, and connectivity to post-trade services. The services are to be provided by Algoweb with reasonable skill and care and in accordance with the service levels specified in the Agreement. |
Exclusivity | The Licence is granted to LCG on an exclusive, non-transferable basis. |
Fees | The fees payable by LCG to Algoweb compromise:- · a fee of £780,000 payable on execution of the Agreement; and
· a fee of £300,000 payable in advance in respect of each financial quarter of the term beginning on 1 October 2014, which fee may be increased at the commencement of each renewal period in accordance with any increase in the Retail Price Index (All Items) as published by the Office of National Statistics (the "Quarterly Fees").
|
Term | The initial term of the Agreement commences on the date of the Agreement and expires on 30 September 2017, with automatic renewals for successive periods of 36 months, unless terminated by written notice from either party served at least 6 months prior to the expiry of the initial term or any such renewal period. The Agreement may be terminated, inter alia, by either party in the event that the other party commits a material breach of any term of the Agreement which is either incapable of being remedied or where such party has failed to remedy the relevant breach within a period of 30 days after being notified in writing of a request to do so. |
Liability | The liability of Algoweb in connection with the Agreement is limited, inter alia, to the aggregate of the Quarterly Fees paid during the twelve months immediately preceding the date on which the relevant claim arose. |
Assignment | Algoweb may assign, transfer, charge or sub-contract any of its rights and obligations under the Agreement. |
Law and Jurisdiction | The Agreement is subject to the laws of England and Wales and the parties have submitted to the exclusive jurisdiction of the courts of England and Wales. |
Licence | A licence to permit LCG and certain other authorised users to use the services and the documentation provided by Algoweb to LCG containing user instructions for the services during the term of the Agreement. |
Related Party Transaction
Mr. Sabet and his wife, together own 50 per cent. of the share capital in Algoweb. Under the AIM Rules, Mr. Sabet's interest in Algoweb and position as a Director means that the proposed entry into the Agreement by LCG is deemed to be a related party transaction for the purposes of Rule 13 of the AIM Rules. The Independent Directors of the Company consider, having consulted with Cenkos, that the terms of the proposed Agreement are fair and reasonable insofar as shareholders of the Company are concerned.
General Meeting
Set out in a circular posted to shareholders on 13 September 2014 (the "Circular") is a notice convening the General Meeting to be held at 2nd Floor, 6 Devonshire Square, London, United Kingdom, EC2M 4AB at 11.00 am on 30 September 2014 for the purposes of proposing, and if thought fit, passing the Resolution set out in the Notice.
Action to be taken
A Form of Proxy for use at the General Meeting accompanies the Circular. The Form of Proxy should be completed and signed in accordance with the instructions printed on it and returned to the Company's registrars, Capita Asset Services (PXS), 34 Beckenham Road, Beckenham, Kent, BR3 4TU as soon as possible and, in any event, so as to be received by no later than 11.00 am on 26 September 2014, being 48 hours (excluding non-working days) before the time appointed for holding the General Meeting.
Recommendation
The Independent Directors consider that the terms of the Agreement are fair and reasonable and that entry into the Agreement and the grant of the Licence are in the best interests of the Company and its Shareholders as a whole and accordingly unanimously recommend Shareholders to vote in favour of the Resolution to be proposed at the General Meeting as they intend to do in respect of their own beneficial holdings amounting, in aggregate, to 4,500,000 Existing Ordinary Shares, representing approximately 8.06 per cent. of the existing issued share capital of the Company.
For further information, please contact:
London Capital Group Holdings plc
Giles Vardey, Non-executive senior independent Director
020 7456 7000
Cenkos Securities plc
Nicholas Wells
020 7397 8900
Smithfield Consultants
John Kiely
020 7360 4900
Expected Timetable of Principal Events
Circular posted to Shareholders (by first class post) | 13 September 2014 |
Latest time and date for receipt of completed Forms of Proxy and electronic appointments of proxy | 11.00 a.m. on 26 September 2014 |
General Meeting | 11.00 a.m on 30 September 2014 |
Definitions
"Act" | the Companies Act 2006 (as amended); |
"Agreement" or "Software as a Service Agreement" | the software as a service agreement proposed to be entered into (subject to issue of the GLIO Convertible Loan Notes and the passing of the Resolution) between (1) Algoweb and (2) LCG pursuant to which Algoweb would grant LCG the Licence; |
"AIM" | AIM, a market operated by the London Stock Exchange; |
"AIM Rules" | the AIM Rules for Companies published by the London Stock Exchange from time to time; |
"Algoweb" | Algoweb S.A.R.L, a company incorporated and registered in Monaco with registration number 12S05761 whose registered office is at 7 BD du Jardin Exotique, 98000 Monaco; |
"Board" | the board of Directors of the Company for the time being, including a duly constituted committee of the Directors; |
"Business Day" | a day on which the London Stock Exchange is open for the transaction of business; |
"Capita" | Capita Asset Services; |
"Cenkos Securities" | Cenkos Securities plc; |
"Company" or "London Capital" | London Capital Group Holdings plc; |
"CREST" | the relevant system (as defined in the Uncertificated Securities Regulations 2001 SI 2001: No.3755 (as amended)) in respect of which Euroclear UK & Ireland Limited is the operator (as defined in those regulations); |
"Directors" | Charles-Henri Sabet, Giles Vardey and Frank Chapman; |
"Financing" | (a) the investment conditionally agreed to be made by GLIO and (b) the possible investment sought by the Company from certain investors, by way of the subscription for convertible loan notes and warrants; |
"Financing Circular" | the circular published on 17 June 2014 in connection with the Financing; |
"Form of Proxy" | the form of proxy for use at the General Meeting, which accompanies the Circular; |
"General Meeting" | the general meeting of the Company to be held at 2nd Floor, 6 Devonshire Square, London, United Kingdom, EC2M 4AB at 11.00 am on 30 September 2014; |
"GLIO" | GLIO Holdings Limited, a company registered in Jersey with company number 115389 and whose registered office is at First Island House, Peter Street, St Helier, Jersey; |
"GLIO Convertible Loan Notes" | the fixed rate convertible loan notes proposed to be issued by the Company at the Issue Price with the benefit and subject to the provisions of the GLIO Convertible Loan Note Instrument; |
"GLIO Convertible Loan Note Instrument" | the deed constituting the GLIO Convertible Loan Notes dated 17 June 2014 and executed by the Company and GLIO as described in the Financing Circular; |
"Group" or "London Capital Group" | the Company and its subsidiaries (as that term is defined in section 1159 of the Act); |
"Independent Directors" | the Directors other than Mr. Charles-Henri Sabet; |
"Institutional Investors Convertible Loan Notes" | has the meaning given in the Financing Circular; |
"LCG" | London Capital Group Limited, a subsidiary of the Company, registered in England and Wales with company number 03218125 and whose registered office is at 2nd Floor, 6 Devonshire Square, London, United Kingdom, EC2M 4AB; |
"Licence" | a licence to use certain software and services owned and provided by Algoweb proposed to be granted (subject to the issue of the GLIO Convertible Loan Notes and the passing of the Resolution) to LCG pursuant to the Agreement; |
"London Stock Exchange" | London Stock Exchange plc; |
"Notice of General Meeting" | the notice convening the General Meeting, which is set out at the end of the Circular; |
"Ordinary Shares" | ordinary shares of 10 pence each in the capital of the Company; |
"Prospectus Rules" | the Prospectus Rules issued by the FCA; |
"Regulatory Information Service" | one of the regulatory information services authorised by the United Kingdom Listing Authority to receive, process and disseminate regulatory information in respect of listed companies; |
"Shareholders" | persons who are registered as holders of Ordinary Shares from time to time; |
"Tradex" | Tradex Enterprises Limited, a company registered in England and Wales with company number 05333826 and a wholly owned subsidiary of the Company; |
"UK" or "United Kingdom" | the United Kingdom of Great Britain and Northern Ireland; and |
"United Kingdom Listing Authority" | the FCA, acting in its capacity as the competent authority for the purposes of Part IV of FSMA; |
All references to "£", "pence" or "p" are to the lawful currency of the United Kingdom | |
Notes to Editors:
London Capital Group Holdings plc (hereafter "LCGH plc" or "LCG" or "London Capital Group" or "the Group") is a financial services company offering online trading services.
London Capital Group Limited (LCG Ltd), a wholly owned trading subsidiary of LCGH plc, is authorised and regulated by the Financial Conduct Authority. Its core activity is the provision of spread betting and CFD products on the financial markets to retail clients under the trading names Capital Spreads, Capital CFDs and LCG MT. Its other division provides online foreign exchange trading services to institutional and professional clients. LCG Ltd is one of the leading providers of white label financial spread trading and CFD platforms and its white label partners include TD Direct Investing, Bwin.party, and Saxo Bank.
LCG Ltd has a European passport and is a member of the London Stock Exchange. LCG Ltd also has access to international markets through its global clearing relationships.
LCGH plc is listed on the London Stock Exchange's AIM market. LCG is included in the General Financial sector (8770) and Speciality Finance sub sector (8775) and has a RIC code of LCG.L.