Mobile Tornado Regulatory News (MBT)

9 Feb 2006 11:15

TMT Group PLC09 February 2006 Not for publication or release or dissemination in the United States, Canada,Australia or Japan. This announcement shall not constitute or form any part of any offer orinvitation to subscribe for, underwrite or otherwise acquire, or anysolicitation of any offer to purchase or subscribe for, securities including inthe United States. This announcement does not constitute an offer of securities for sale in theUnited States of America. Neither this announcement nor any copy of it may betaken or distributed into the United States of America or distributed orpublished, directly or indirectly, in the United States of America. Any failureto comply with this restriction may constitute a violation of US securities law.The securities referred to herein have not been and will not be registered underthe US Securities Act of 1933, as amended (the "Securities Act"), and may not beoffered or sold in the United States unless they are registered under theSecurities Act or pursuant to an available exemption there from. No publicoffering of securities of is being made in the United States. TMT Group plc ("TMT" or the "Company") Proposed Acquisition of Mobile Tornado Limited Waiver of Rule 9 of the City Code Conditional Placing of new ordinary shares at a price of 16p per share to raise £870,000 (before expenses) Proposed change of name to Mobile Tornado Group plc Publication of Admission Document and Re-Admission to Trading on AIM The Company today announces that is has conditionally agreed to acquire MobileTornado. Mobile Tornado, which has grown rapidly since its establishment inearly 2004, is a provider of next generation instant messaging solutions whichserve the market of mobile data services in the mobile communication industry. Defined terms used in this announcement have the meanings given to them as setout in the appendix to this announcement. The consideration for the Acquisition is to be satisfied by the issue of NewOrdinary Shares in the Company to the Vendors, credited as fully paid, valuingMobile Tornado at £12.8 million at the Placing Price of 16p and £17.4 million atthe price at which the Company's shares were suspended on 19 August 2005, being21.75p. In connection with the Acquisition, the Company has raised, pursuant to theplacing through Corporate Synergy Plc, the Company's nominated adviser andbroker, £870,000 (before expenses) through the conditional allotment of5,437,500 Placing Shares to certain institutional and other investors. Theproceeds of the Placing will be used to provide the Enlarged Group withadditional working capital and, to the extent that in excess of £870,000 israised (before expenses), the balance would be applied towards the accelerationof the implementation of Mobile Tornado's strategy. The size of Mobile Tornado in relation to the Company and the new direction ofthe business of the Enlarged Group, means that the Acquisition is considered tobe a ''reverse takeover'' for the purposes of the AIM Rules. In addition, theissue of the Consideration Shares will require a waiver of Rule 9 of the CityCode as certain of the Vendors are deemed to be acting in concert for thepurposes of the City Code and would otherwise be required to make a mandatorybid for the entire issued share capital of the Company. Accordingly, theAcquisition and the waiver by the Panel of the application of Rule 9 require theapproval of the independent shareholders of TMT. In addition, the Directors willseek shareholders' approval to change the Company's name on Completion to ''Mobile Tornado Group plc'' to reflect the effect on the Company of theAcquisition. Christopher Akers, Non-executive Chairman, commented: "We are pleased to announce the acquisition of Mobile Tornado Limited which isvery much the sort of acquisition we were hoping to secure when we took TMT toAIM in July 2004. I look forward to working with the Mobile Tornado team andassisting in maximising the growth opportunities available to the business." John Swingewood, Proposed Executive Chairman of Mobile Tornado Group plc, said,"Our proven technology, global distribution arrangements and growing number ofdeployments place us at the forefront of a potentially enormous global market." Timetable of Principal Events Publication of the Admission Document 9 February 2006 Extraordinary General Meeting 11.00 a.m. on 6 March 2006 Completion of the Acquisition 7 March 2006 Admission effective and commencement of dealings on AIM in the New Ordinary Shares 7 March 2006 For further information please contact: Chris Akers, Non-Executive Chairman, TMT: 0207 399 4250 John Swingewood, Proposed Chairman, Mobile Tornado: 0208 104 1961 Tom Allison, Alex Money, The Company Agency: 0207 670 7400 John Prior, Romil Patel, Corporate Synergy Plc: 0207 448 4400 Introduction and Background TMT Group plc was established in May 2004 to acquire one or more businesses orinterests in businesses within the technology, media and telecommunicationssector. In July 2004, the Company raised £1.1 million through a placing of 3,437,500Ordinary Shares to allow the Directors to carry out due diligence on potentialacquisition targets, meet the professional costs associated with any acquisitionand fund the initial working capital requirements of the Company. The Company'sOrdinary Shares were admitted to trading on AIM on 16 July 2004. The Directors believe that Mobile Tornado is a suitable acquisition for theCompany and falls within the Company's strategy outlined at the time of itsadmission to AIM. Following Admission, the Company's business will become thatof Mobile Tornado. Reasons for the Acquisition Mobile Tornado is a provider of next generation instant messaging solutions tomobile operators and enterprises. Mobile Tornado's proprietary technology allowsmobile operators to offer "walkie-talkie" and instant messaging services totheir customers. These services have proved highly popular in the US, whereSprint/Nextel leads the way. Mobile Tornado's technology supports similarservices on GSM, CDMA,WiFi and internet networks worldwide and is distributedby Nortel Networks Limited and Alcatel CIT amongst others. To date thetechnology has been sold to 10 networks around the world, including Chinesemobile operators. The Directors and the Proposed Directors therefore believe that the Acquisitionrepresents an opportunity to acquire a business which has the potential to growsignificantly in the future. Details of the Acquisition The Company has conditionally agreed to acquire the entire issued and to beissued share capital of Mobile Tornado (other than the shares in Mobile Tornadowhich the Company will own prior to completion as a result of the conversion ofits loan stock holding) pursuant to the Acquisition Agreement. The totalconsideration to be paid to the Vendors will be satisfied by the allotment andissue of the Consideration Shares at Completion. The Consideration Shares will rank pari passu in all respects with the ExistingOrdinary Shares. The Acquisition is conditional, inter alia, on: • the passing at the EGM of the Resolutions numbered 1 and 2 in the notice of EGM, with Resolution 2 to be taken on a poll by the independent shareholders of the Company; • the Placing Agreement becoming unconditional (save for the condition relating to Admission) and not having been terminated in accordance with its terms prior to Admission; and • Admission. Change of Name In order to reflect the new trading business of the Company following completionof the Acquisition, it is proposed to change the name of the Company to MobileTornado Group plc. This proposal will be put to Shareholders at the EGM. Details of the Placing The Placing comprises up to 20,312,500 New Ordinary Shares. As at the date ofthis announcement Corporate Synergy has conditionally placed 5,437,500 NewOrdinary Shares on behalf of the Company at the Placing Price to raise £870,000before expenses. These 5,437,500 New Ordinary Shares, represent the minimum thatis required to be raised under the Placing and the Placing is not conditional onany further New Ordinary Shares being issued. The minimum amount to be raised under the Placing will be used to finance theworking capital commitments of the Enlarged Group. To the extent any furthersums are raised in the Placing these will be used to further augment workingcapital and accelerate the implementation of Mobile Tornado's strategy. The Placing Shares will rank pari passu with the Existing Ordinary Shares andthe Consideration Shares including the right to receive all dividends and otherdistributions declared, paid or made after the date of their issue. The Placing is conditional on, inter alia: • the passing of the Resolutions numbered 1 and 2 set out in the notice of EGM; • the Placing Agreement becoming unconditional (save for any condition relating to Admission) and not being terminated in accordance with its terms prior to Admission; and • Admission becoming effective no later than 8 a.m. on 7 March 2006 (or such later time and date being not later than 8 a.m. on 14 March 2006 as Corporate Synergy and the Company may agree). Loan Facility and Warrants The Company has entered into the Loan Facility with Peter Wilkinson, JohnSwingewood and Jeremy Fenn (the ''Lenders''), all of whom are currentlyShareholders in Mobile Tornado and will therefore be issued New Ordinary Sharespursuant to the Acquisition. Pursuant to the Loan Facility, which is conditional upon Admission the Lendershave, together committed to providing the Company with a loan of up to £400,000for working capital purposes. In connection with the Facility Agreement, theCompany will grant to the Lenders, conditionally upon Admission, Warrants over 2million Ordinary Shares, exercisable at 20 pence per share at any time in thethree years following Admission. Admission to AIM Application will be made to the London Stock Exchange for all of the ExistingOrdinary Shares, the Placing Shares and the Consideration Shares to be admittedto trading on AIM. Admission is expected to become effective and trading in theOrdinary Shares to commence on 7 March 2006. Copies of the Admission document will be on display and are available from theoffices of Corporate Synergy Plc, 30 Old Broad Street, London EC2N 1HT, from thedate of this announcement to the date ending two months from the date ofAdmission. APPENDIX Directors and Proposed Directors On Admission, Rodger Sargent will resign as a Director and Company Secretary andthe Proposed Directors will be appointed. Christopher Akers will stand down asChairman but will continue to be a Non-Executive Director. Mark Hughes will alsobecome Company Secretary at Admission. Details of the Proposed Directors are setout below: Proposed Directors: John Swingewood (Proposed Executive Chairman), aged 50, co-founded both DigitalInteractive Television Group Limited and The Gaming Channel Limited in 2001 bothof which were sold to YooMedia plc in December 2004. John is currently deputychairman of YooMedia plc. Previously, John was responsible for launchinginteractive TV sports betting whilst director of New Media at BSkyB plc. Beforejoining Sky, he held a number of positions at British Telecommunications plcincluding director of Internet and Multimedia, and general manager, Broadcast TVServices. John was previously a director and chief technology officer ofInTechnology plc. On 9 February 2006 John Swingewood entered into a consultancyagreement with the Company which conditional on Admission, provides for him toact as Executive Chairman of the Company on a part-time basis for a salary of£120,000 per annum which may be terminated by either party giving 12 months'notice. Jorge Pinievsky (Proposed Chief Operating Officer), aged 46, is the originaldeveloper of the Mobile Tornado technology and brings over 20 years ofmanagement and marketing experience to Mobile Tornado. His extensive experienceincludes previously serving as general manager at Terayon Communications, vicepresident of business development at BATM Advanced Communications Limited, salesdirector at NICE Systems, vice president of sales and marketing at Medilog, andresearch and development engineer for Israel Aircraft Industries. Jorge joinedMobile Tornado in February 2001. Jorge Pinievsky is employed by MT Labs Limited,a wholly owned subsidiary of Mobile Tornado for an annual salary of £72,492. On9 February 2006 Jorge Pinievsky entered into a letter of appointment with theCompany which, conditional on Admission, provides for him to act as ChiefOperating and Executive Director of the Company for no additional remunerationand may be terminated by either party giving 12 months' notice. Mark Hughes (Proposed Finance Director), aged 47, was commercial director ofboth Digital Interactive Television Group Limited and The Gaming Channel Limitedwhen they were sold to YooMedia plc in 2001. Previously, he was commercialdirector at New Media at BSkyB plc. Before joining Sky, he held a number ofgeneral management positions at British Telecommunications plc during which timehe negotiated their involvement in the interactive television joint venture withBSkyB plc and others. He is qualified as a chartered management accountant andhas held a number of financial controller positions whilst at BritishTelecommunications plc. On 9 February 2006 Mark Hughes entered into a serviceagreement with the Company which conditional on Admission, provides for him toact as Finance Director for a salary of £120,000 per annum which may beterminated by either party giving 6 months' notice. Regarding disclosures for the Proposed Directors no further details are requiredas per Schedule 4 of the AIM Rules. Definitions ''Acquisition'' the proposed acquisition by the Company of Mobile Tornado pursuant to the Acquisition Agreement ''Acquisition the conditional agreement dated 9 February 2006 between the Company (1), theAgreement'' Vendors (2) and Corporate Synergy relating to the Acquisition, a summary of the principal terms and conditions of which is set out in paragraph 16.1.4 of Part VIII of the Admission Document ''Admission'' admission of the Enlarged Share Capital to trading on AIM becoming effective in accordance with Rule 6 of the AIM Rules "Admission Document" the admission document of the Company dated 9 February 2006 published in relation to the Proposals ''AIM'' the market of that name operated by the London Stock Exchange ''Board'' the board of directors of the Company from time to time ''CDMA'', ''CDMA 2000'' Code Division Multiple Access, an IS-95 based digital technology for delivering''CDMA 1x'', and ''CDMA mobile telephone services; it operates in the 800 and 1900 MHz frequency bands with1xEVDO'' primary markets in the Americas and Asia; CDMA 2000 (also known as IS-2000) is a 3G technology; the first phase of CDMA 2000 is also referred to as CDMA 1x; CDMA 1xEVDO (Evolution-Data Optimized) supports downlink (Forward Link) data rates up to 3.1 Mbit/s and uplink (Reverse Link) rates up to 1.8 Mbit/s in a radio channel dedicated to carrying high speed packet data "City Code" The City Code on Takeovers and Mergers ''Completion'' completion of the Acquisition and the Placing ''Consideration Shares'' the 78,130,096 New Ordinary Shares to be issued pursuant to the Acquisition ''Corporate Synergy'' Corporate Synergy Plc, nominated adviser and broker to the Company ''Directors'' the existing directors of the Company at the date of this document, whose names are set out on page 5 of the Admission Document ''Enlarged Group'' the Company and its subsidiaries, including Mobile Tornado following Completion ''Existing Ordinary the Ordinary Shares in issue on the date of the Admission DocumentShares'' ''Extraordinary General the extraordinary general meeting of the Company (or any adjournment thereof)Meeting'' or ''EGM'' convened for 11 a.m. on 6 March 2006 to be held at the offices of Norton Rose by the notice which is set out at the end of the Admission Document ''Loan Facility'' the loan facility agreement between the Company, Peter Wilkinson, John Swingewood and Jeremy Fenn further described in paragraph 16.1.6 of Part VIII of the Admission Document ''GSM'' and ''GSM EDGE'' Global System for Mobile Communications, a leading digital cellular system, which uses narrowband TDMA; it offers high voice quality, where 8 simultaneous calls can occupy the same radio frequency; originally a European standard for digital mobile telephony, GSM has become the world's most widely used system; networks operate on the 900 MHz and 1800 MHz waveband in Europe, Asia and Australia and on the MHz 1900 waveband in North America and in parts of Latin America and Africa; GSM EDGE is a digital mobile phone technology which acts as a bolt-on enhancement to GSM networks. EDGE is a superset to GPRS and can function on any network with GPRS deployed on it (provided the carrier implements the necessary upgrades) ''London Stock London Stock Exchange plcExchange'' ''Mobile Tornado'' Mobile Tornado International Limited, a company registered in Ireland with registered number 376578 ''Mobile Tornado the entire issued and to be issued share capital of Mobile Tornado, to be purchasedShares'' by the Company pursuant to the Acquisition Agreement ''New Ordinary Shares'' the Consideration Shares and the Placing Shares ''Ordinary Shares'' ordinary shares of 2p each in the capital of the Company ''Panel'' The Panel on Takeovers and Mergers ''Placing'' the conditional placing by Corporate Synergy on behalf of the Company of the Placing Shares pursuant to the Placing Agreement ''Placing Agreement'' the conditional agreement dated 9 February 2006 between the Company (1), the Directors and Proposed Directors (2), and Corporate Synergy (3) relating to the Placing, details of which are set out in paragraph 16.1.5 of Part VIII of the Admission Document ''Placing Price'' 16p per Placing Share ''Placing Shares'' the up to 20,312,500 New Ordinary Shares to be issued pursuant to the Placing ''Proposals'' together the Acquisition, the Placing, the Waiver, the change of name of the Company, the adoption of the New Share Option Plan and Admission ''Proposed Directors'' the proposed directors of the Company whose names are set out on page 5 of the Admission Document ''Resolutions'' the resolutions of the Company set out in the Notice of Extraordinary General Meeting at the end of the Admission Document ''Shareholders'' holders of Ordinary Shares ''UK'' the United Kingdom of Great Britain and Northern Ireland ''Vendors'' the vendors of Mobile Tornado including those persons who may become shareholders of Mobile Tornado following the date of the Acquisition Agreement as a result of the conversion of any convertible securities in Mobile Tornado ''Waiver'' the conditional waiver by the Panel of the obligation of the Concert Party that may otherwise arise under Rule 9 of the City Code to make a mandatory cash offer for the issued Ordinary Shares not already owned by the Concert Party on Completion as set out in Part I of the Admission Document ''Warrants'' the warrants to subscribe for 2,000,000 Ordinary Shares at 20p per share to be issued to the providers of loan finance pursuant to the Loan Facility, details of which are set out in paragraph 16.1.7 of Part VIII of the Admission Document - end - This information is provided by RNS The company news service from the London Stock Exchange