PPG.L Regulatory News (PPG)

28 December 2012

IPSO VENTURES PLC ("IPSO" or "the Company")

  Proposed Demerger and Subscription

INTRODUCTION

On 10 October 2012, the Board announced that trading in the Company's Ordinary Shares was being suspended and that they were looking at all the options including a de-listing of the Company's Ordinary Shares from trading on AIM to save significant costs and allow the sale of its asset portfolio on a more measured basis. Since that date the Board has received a number of proposals and looked at other alternatives that might help to deliver value to Shareholders.

On 12 November 2012, having investigated all the options available to it, the Board announced a series of proposals which, if implemented, would result in the Company becoming an Investing Company. The Board also announced that they had granted one party a period of exclusivity to enable this party to finalise its due diligence process on IPSO.

Following on from the announcement on 12 November 2012, the Company has now entered into a conditional agreement with the Subscribers to raise £360,000 for the Company and also to demerge the Company and IPSO Management, including the IPSO Investment Portfolio. The effect of this will be that each holder of one Ordinary Share will, post the approval of the Proposals, hold:

·; one ordinary share in IPSO Management - this will own the IPSO Investment Portfolio; and

·; one Ordinary Share in IPSO Ventures plc - this will be an Investment Company managed by the Proposed Director and Proposed Senior Management.

As part of the Proposals, the Company and IPSO Management have entered into a demerger run-off agreement whereby (i) they have agreed how to apportion their creditors between themselves, (ii) the Company will apply up to £60,000 of the proceeds of the Subscription to pay up 38,245,412 IPSO Management Shares to be issued and allotted following the date of this announcement, and therefore there will be the same number of IPSO Management Shares and Existing Ordinary Shares in issue, and (iii) in consideration for the Demerger and the subscription for the 38,245,412 IPSO Management Shares, IPSO Management has agreed to hold the Company harmless from all claims relating to the Company and the IPSO Investment Portfolio. The Demerger will allow Shareholders to hold shares in two distinct entities with separate strategic, capital and economic characteristics and management teams.

Under Rule 15 of the AIM Rules, the Demerger will constitute a fundamental change in the business of the Company which requires the approval of the Shareholders. Following the Demerger, it is intended that the Company will become an Investing Company and Shareholders' approval of its proposed Investing Policy will be sought at the GM. Further details of the Investing Policy are set out in the section entitled "Proposed Investing Policy" below.

Following approval of the Investing Policy by Shareholders, the Company will be under an obligation to make an acquisition or acquisitions which constitute a reverse takeover under the AIM Rules or otherwise to implement its Investing Policy, in each case within twelve months of becoming an Investing Company, failing which trading in the Company's Ordinary Shares on AIM will be suspended. If the Company's investing policy has not been implemented within 18 months of it becoming an Investing Company then admission of the Company's Ordinary Shares to trading on AIM would be cancelled.

Pursuant to the Subscription, the Subscribers could increase their stake, in the event of full conversion of the Convertible Loan Notes, to 78.5 per cent. of the voting rights of the Company which, without a waiver of the obligations under Rule 9 of the Code, would require the Subscribers to make a Rule 9 Offer to acquire all of the Ordinary Shares not already owned by it. The Panel has approved a waiver of the obligations of the Subscribers to make a Rule 9 Offer without the requirement for the waiver to be approved by the Independent Shareholders at a general meeting following receipt of written confirmations agreeing to such waiver given by the Majority Shareholders, as Shareholders holding, in aggregate, in excess of 50 per cent. of the shares of the Company capable of being voted at a general meeting of the Independent Shareholders.

It is expected, following the publication today of the Company's Report & Accounts for the financial year ended 30 April 2012, that the Company's Ordinary Shares will be restored to trading on AIM with effect from 8.00 a.m. on 31 December 2012.

BACKGROUND TO THE IPSO INVESTMENT PORTFOLIO

IPSO was set up to commercialise the IP of universities and other research institutes through the establishment of spin-out companies and/or licencing agreements with the intention of capitalising on the high quality research and IP that is generated by UK universities and other research institutes, particularly in the areas of life sciences, environmental sciences and technology. The Company's Ordinary Shares were admitted to trading on AIM on 7 March 2007.

Since that date, IPSO has made a number of investments and, as at the date of this announcement, IPSO Management has interests in the following companies which together make up the IPSO Investment Portfolio:

·; Axilica provides a unique behavioural synthesis tool in the ESL (electronic system level) design automation market. The advanced section of the ESL market has been dominated by small technology vendors and start-ups offering synthesis tools focused on translating programming languages (C, C++) into hardware (FPGA, ASIC). IPSO's shareholding is 45 per cent.

·; Biocroí has designed and developed a range of unique advanced microplates using gel-based buffering systems surrounding the wells which leads to better control of the microplate environment, which in turn improves quality, accuracy and uniformity of results. Biocroí's advanced microplate designs enable users to reduce costs, shorten development times and increase data quality. IPSO's shareholding is some 6 per cent.

·; Cambridge Meditech's novel patented wound infection technology gives a visual indication of infection. Wound infection can be detected without unnecessary disruption to a dressing and appropriate intervention can be made immediately. It is anticipated that the products will have multiple applications in various settings. Cambridge Meditech is 100 per cent. owned by IPSO.

·; IPSol Energy is a service business providing testing, certification and other services to the solar photovoltaic ("PV") industry. IPSO's shareholding is 23 per cent.

·; Medermica is a technology development company, focused on diagnostic and sensor technologies for laboratory and healthcare applications and is 75 per cent. owned by IPSO.

·; Polyfect's novel process enables cost savings and quality improvements to a range of plastics through the highly efficient incorporation of functional fillers (which give polymers certain characteristics and properties). IPSO's shareholding is 22 per cent.

·; Therakind is a paediatric healthcare company. It takes known adult drugs and creates a version for children which can be protected by EU legislation. The revenue model is to generate royalties on product sales. IPSO's shareholding is 35 per cent.

·; Wildknowledge creates mobile applications that engage audiences with their heritage (i.e. the environment, wildlife, archaeology and history). Its offering includes data gathering applications; location based content and engaging games. IPSO's shareholding is 9 per cent.

Notwithstanding having built up what the Board believes to be an attractive investment portfolio, the Company has for some time been capital constrained. This has prevented the Company from making further investments in its portfolio, thereby restricting those companies' growth potential and also in making investments in other businesses. On 23 January 2012, the Company announced that, whilst it had no bank debt and that significant cost savings had been implemented by the IPSO board, there was only sufficient working capital to take the Company into the third quarter of 2012.

On 10 October 2012, it was announced that the Company had been unable to raise additional capital or sell any assets and, whilst the IPSO board believed that the Company continued to be able to trade solvently, it had insufficient cash to satisfy all of its creditor obligations. Due to this uncertainty, the IPSO board also believed that the Company was not going to be in a position to publish its report and accounts for the financial year ended 30 April 2012, by 31 October 2012 in accordance with AIM Rule 19.

As referred to above, on 12 November 2012 the Board announced that it had received a number of credible proposals from certain parties and that it had decided to grant one party a period of exclusivity to enable this party to finalise its due diligence on the Company. That party was the current investor consortium and having finalised their due diligence on the Company and reconfirmed their willingness to inject capital into the Company as well as transfer the IPSO Investment Portfolio, the Board have resolved to pursue the proposals outlined in this announcement.

PROPOSED DEMERGER

As a part of the Proposals, the Board sought to preserve the IPSO Investment Portfolio and provide Shareholders with an opportunity to maintain their interest in the IPSO Investment Portfolio but without the significant burden of the costs of being traded on AIM. The Demerger will allow this to happen. The Demerger will be effected by taking the following steps:

·; 38,245,412 IPSO Management Shares will be issued to the Company;

·; a bonus issue of IPSO B Ordinary Shares to Shareholders on a one for one basis; and

·; following a reduction in IPSO's share capital (in accordance with the Act) Shareholders who are on the share register on the Record Date will receive:

One IPSO Management Share for each IPSO B Ordinary Share

Following the Demerger, each holder of 1 Ordinary Share will hold:

·; 1 ordinary share in IPSO Management - this will own the IPSO Investment Portfolio; and

·; 1 Ordinary Share in IPSO Ventures plc - this will be an Investment Company managed by the Proposed Director and Proposed Senior Management.

The Demerger is conditional, inter alia, on:

·; the approval of Shareholders of the Resolutions at the General Meeting to be held on 14 January 2013; and

·; the confirmation of the Reduction of Capital by the Court.

The Demerger is not subject to the Code.

Immediately after the Demerger becoming effective the board of IPSO Management will finalise a strategy for that company which seeks to minimise costs and realise value over an appropriate timescale. This strategy will be presented for discussion at a meeting of the shareholders of IPSO Management not less than 30 days after the effective date of the Demerger.

Bonus Issue

There will be a bonus issue out of the Share Premium Account of IPSO B Ordinary Shares on the basis of one IPSO B Ordinary Share for every one Existing Ordinary Share held by a Shareholder on the register of members on the Record Date.

The Bonus Issue is being effected so that the IPSO Management Shares may be transferred to Shareholders as a repayment of capital.

The aggregate nominal value of all the IPSO B Ordinary Shares to be issued pursuant to the Bonus Issue will be up to £1,379,765.87, being equal to or greater than the approximate market capitalisation of the Company which represents the value of IPSO Management, as at the close of business on 27 December 2012, being the latest practicable date prior to the date of this announcement.

The IPSO B Ordinary Shares will then be cancelled pursuant to the Reduction of Capital and the capital thereon repaid to Shareholders by the transfer of the IPSO Management Shares. The IPSO B Ordinary Shares will not be listed or admitted to trading on AIM or any other investment exchange or trading platform and cannot be held in CREST. No share certificates will be issued in respect of the IPSO B Ordinary Shares nor will any such shares exist after the Demerger, as explained below.

Reduction of Capital

In order to effect the Demerger, the Company is proposing to cancel all of the IPSO B Ordinary Shares issued pursuant to the Bonus Issue by reducing the Company's share capital in accordance with the provisions of the Act. This will involve the cancellation of part of the Company's Share Premium Account.

The cancellation of the part of the Share Premium Account will only take effect if sanctioned by the Shareholders at the General Meeting and confirmed by the Court and upon the appropriate documents being filed and registered with the Registrar of Companies.

The Hearing Date is expected to be 30 January 2013 and the Reduction of Capital is expected to become effective on or around 31 January 2013.

The Company has been advised that the Court may require the Company to give an undertaking or put in place another mechanism for the protection of the Company's existing creditors. If required, the Company will provide such undertakings to the Court for the protection of creditors as it is advised by counsel are appropriate to be given. Subject to the Company putting in place satisfactory provision for the protection of creditors, the Company has been advised that there are good prospects of the proposed cancellation of part of the Share Premium Account being confirmed by the Court.

It should be noted that, although it is currently the Company's intention that the Demerger should be concluded, the Company is entitled to decide not to proceed with the Demerger at any time prior to the Reduction of Capital becoming effective if it determines that it would not be in the best interests of Shareholders as a whole.

Following completion of the Proposals the Company will no longer hold any operating assets and will be an Investing Company with the risks associated therewith.

PROPOSED BOARD CHANGES

Upon Admission, Nicholas Lee will join the Board in the role of Non-Executive Director and Nick Rodgers and John Kelly will step down from the Board. Craig Rochford will remain on the board as a Non-Executive Director. In addition, Nick Rodgers and John Kelly will cease to be employees of the Company. A summary biography of Mr Lee, as a new appointee to the Board, is set out below.

Nicholas Lee, Proposed Non-Executive Director

Nicholas Lee read Engineering at St. John's College, Cambridge and began his career at Coopers & Lybrand where he qualified as a chartered accountant. He then joined Dresdner Kleinwort where he worked in their corporate finance department advising a range of companies across a number of different sectors and most recently was a Managing Director and Head of Investment Banking for Dresdner Kleinwort's hedge fund/alternative asset manager clients. Nicholas is currently Chairman of AIM quoted Paternoster Resources plc and a director of a number of AIM listed companies.

Nicholas Lee, aged 49, is or has been a director or partner of the following companies during the previous five years:

Save as set out above there are no other disclosures in respect of the appointment of Nicholas Lee that fall to be made under Rule 17 or paragraph (g) of Schedule Two of the AIM Rules for Companies.

PROPOSED NEW SENIOR MANAGEMENT

Upon Admission, Charles Tatnall and James Longley, both of whom are Subscribers, will join the Company in non-Board capacities with James Longley acting as Chief Financial Officer and Company Secretary and Charles Tatnall acting as a consultant to the Company.

James Longley, Chief Financial Officer and Company Secretary

James Longley read accountancy before being articled with Finnie & Co, in Leeds, UK. Post qualification he joined Andersen's in London. Subsequently, James worked in the Merchant Banking/Venture Capital Division of Creditanstalt-Bankverein before joining Touche Ross Corporate Finance as a Senior Manager. In 1989 he co-led the £10.5 million MBI of The Wilcox Group Ltd, a leading UK trailer manufacturer. In 1991 James founded Dearden Chapman, Chartered Accountants and Consultants where he has acted and continues to act for many small to medium clients with consultancy and non-executive director roles.

He was also co-founder and chief financial officer of BioProgress Technology International, Inc., a VMS and drug delivery system developer using proprietary films, processes and formulations. The company was a NASDAQ quoted and regulated company from 1997 to 2002 and was subsequently listed on AIM. James was a director, Chief Financial Officer and co-founder of PhotoBox Limited from 2000 to 2006, a company which merged with its French counterparts, Photoways to create Europe's Number 1 online photo-finishing business. Private equity investors include Highland Capital Partners and Index Ventures. It acquired Moonpig.com in 2011 for circa £120 million.

Charles Tatnall, Consultant

Charles Tatnall is primarily involved in advising and raising funds for SMEs with varying business activities ranging from advising investment and family wealth companies to reviewing investments and business opportunities together with the management of personal investments. Until 2005 he was consultant to Bolton Group PLC, a UK listed investment company, identifying and conducting due diligence on potential investment and acquisition opportunities from a broad range of industry sectors. These included natural resources, both exploration and production, electronic hardware and software, and biotechnology.

Previously he held a number of positions with public companies in North America and Canada, he was a director and founder of several micro-cap North American listed companies being responsible for general corporate governance and all finance areas in a variety of resource and non resource businesses. Charles was a co-founder and principal of BioProgress Technology Ltd which listed on NASDAQ OTC and later migrated to AIM. Charles held the licence for the North American business of BioProgress though a listed vehicle in North America. Earlier, Charles founded Maceworth Ltd in 1985, one of the largest corporate entertainment companies in the UK in the areas of running sporting event tented corporate villages, marquee hire, corporate sponsorship and conferences.

PROPOSED INVESTING POLICY

On completion of the Proposals, the Company will have disposed of all of its trading businesses and therefore under Rule 15 of the AIM Rules it will be re-classified as an Investing Company and will be required to adopt an Investing Policy, which must be approved by Shareholders.

The Company's proposed Investing Policy is as follows:

The Directors intend initially to seek to acquire a direct and/or an indirect interest in projects and assets in the oil and gas sector and within the wider natural resources sector. The Company will focus on opportunities in Europe, North America and Africa but will consider possible opportunities anywhere in the world.

The Company may invest by way of purchasing equity, debt, convertible or other instruments in listed or unlisted companies, outright acquisition or by the acquisition of assets, including the intellectual property, of a relevant business, or by entering into partnerships or joint venture arrangements. Such investments may result in the Company acquiring the whole or part of a company or project (which, in the case of an investment in a company, may be private or listed on a stock exchange, and which may be pre-revenue) and such investments may constitute a minority stake in the company or project in question. The Company will not have a separate investment manager.

The Company may be both an active and a passive investor depending on the nature of the individual investments. Although the Company intends to be a medium to long-term investor, the Directors will place no minimum or maximum limit on the length of time that any investment may be held and therefore shorter term disposal of any investments cannot be ruled out.

There will be no limit on the number of projects into which the Company may invest, and the Company's financial resources may be invested in a number of propositions or in just one investment, which may be deemed to be a reverse takeover pursuant to Rule 14 of the AIM Rules. The Company will carry out an appropriate due diligence exercise on all potential investments and, where appropriate, with professional advisers assisting as required. The Board's principal focus will be on achieving capital growth for Shareholders.

Investments may be in all types of assets and there will be no investment restrictions.

The Company may require additional funding as investments are made and new opportunities arise. The Directors may offer new Ordinary Shares by way of consideration as well as cash, thereby helping to preserve the Company's cash resources for working capital. The Company may, in appropriate circumstances, issue debt securities or otherwise borrow money to complete an investment. The Directors do not intend to acquire any cross-holdings in other corporate entities that have an interest in the Ordinary Shares.

DISAPPLICATION OF PRE-EMPTION RIGHTS

Shareholders' approval is being sought for the authority of the Directors to allot new equity securities, and to grant rights to subscribe for new equity securities for cash, such authority to expire at the conclusion of the next annual general meeting of the Company or 15 months from the date of passing of the Resolutions, whichever is the earlier.

The authority of the Directors to allot new equity securities on a non-pre-emptive basis covers:

·; the Subscription Shares;

·; new Ordinary Shares issued upon the conversion of the Convertible Loan Notes;

·; equity securities issued upon the exercise of share options granted to management and employees of the Company, representing 10 per cent. of the nominal value of the issued ordinary share capital of the Company at Admission; and

·; equity securities issued for cash representing 50 per cent. of the nominal value of the issued ordinary share capital of the Company at Admission.

Assuming the allotment of the equity securities referred to above and the 'B' Ordinary Shares takes place, the Directors will have authority to issue Relevant Securities up to an aggregate nominal amount of £143,421.88 on a pre-emptive basis to Shareholders or on a non-pre-emptive basis if Relevant Securities are, or are to be, wholly or partly paid up otherwise than in cash. This represents 100 per cent. of the nominal value of the issued ordinary share capital of the Company at Admission.

THE SUBSCRIPTION

The Board is pleased to advise that, subject to Shareholders' approval of the Proposals at the forthcoming GM, the Company has conditionally raised £360,000 (before expenses) through a subscription for 104,000,000 new Ordinary Shares at a subscription price of 0.25p per Ordinary Share and the issue of £100,000 of Convertible Loan Notes convertible into 40,000,000 new Ordinary Shares. The Subscription Price represents a discount of approximately 83.8 per cent. to the closing mid-market price of 1.55 pence per Ordinary Share on 10 October 2012, being the day on which the Company's Ordinary Shares were suspended from trading on AIM.

The Subscription Shares will represent approximately 72.5 per cent. of the enlarged share capital of the Company on Admission. If the Convertible Loan Notes are converted then, together with the Subscription Shares, they would represent approximately 78.5 per cent. of the enlarged issued share capital of the Company.

Pursuant to the Subscription, Paternoster Resources plc, an AIM quoted natural resources investing company, has subscribed for 40,000,000 Subscription Shares at the Subscription Price and on Admission will be interested in 40,000,000 new Ordinary Shares representing 27.9 per cent. of the enlarged issued share capital of the Company on Admission.

Pursuant to the instrument creating the Convertible Loan Notes, the Company created unsecured loan notes for the principal sum of £100,000. The loan note instrument sets out the terms and conditions upon which the Convertible Loan Notes are to be issued pursuant to such instrument. Interest is to accrue at the rate of 10 per cent. per annum.

Paternoster Resources plc has conditionally subscribed for £100,000 of the Convertible Loan Notes which are convertible into 40,000,000 new Ordinary Shares at a price of 0.25p per Ordinary Share at the election of Paternoster Resources plc. The subscription is conditional, inter alia, upon the Resolutions being passed at the General Meeting, the Reduction of Capital becoming effective and Admission.

The cumulative interest is repayable with the principal sum of £100,000 on the second anniversary of the date of the instrument unless the Convertible Loan Notes, together with accrued interest, have been converted.

Nicholas Lee (Proposed Director) is Chairman of Paternoster Resources plc.

The Subscription is conditional, inter alia, upon the Resolutions being passed at the General Meeting, the Reduction of Capital becoming effective and Admission occurring on or before 8.00 a.m. on 28 February 2013 (or such later date as the Company and the Subscribers may agree in writing).

Application will be made to the London Stock Exchange for the Subscription Shares to be admitted to trading on AIM and dealings are expected to commence at 8.00 a.m. on 1 February 2013.

The proceeds of the Subscription receivable by the Company are £360,000. Of the sum raised, up to £60,000 will be paid in cash to IPSO Management in payment of IPSO Management Shares issued to the Company. As a part of the Proposals, the Directors are also seeking the ability to issue further new Ordinary Shares in the future to enable them to raise sufficient funds, if required, to provide additional working capital for the Company and to implement its proposed Investing Policy. The Company may require additional working capital following Admission to enable the Company to implement its proposed Investing Policy.

THE TAKEOVER CODE

The Subscription gives rise to certain considerations under the Code. Brief details of the Panel, the Code and the protections they afford are described below.

The Code is issued and administered by the Panel. The Code applies to all takeover and merger transactions, however effected, where the offeree company is, amongst other things, a listed or unlisted public company resident in the United Kingdom (and to certain categories of private limited companies). The Company is a listed public company and its Shareholders are entitled to the protections afforded by the Code.

Under Rule 9 of the Code, where any person acquires, whether by a series of transactions over a period of time or not, an interest in shares which (taken together with shares already held by him and an interest in shares held or acquired by persons acting in concert with him) carry 30 per cent. or more of the voting rights of a company which is subject to the Code, that person is normally required to make a general offer to all the holders of any class of equity share capital or other class of transferable securities carrying voting rights in that company to acquire the balance of their interests in the company.

Rule 9 of the Code also provides that, among other things, where any person who, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30 per cent., but not more than 50 per cent. of the voting rights of a company which is subject to the Code, and such person, or any person acting in concert with him, acquires an additional interest in shares which increases the percentage of shares carrying voting rights in which he is interested, then such person is normally required to make a general offer to all the holders of any class of equity share capital or other class of transferable securities carrying voting rights of that company to acquire the balance of their interests in the company.

An offer under Rule 9 of the Code must be in cash (or with a cash alternative) and at the highest price paid within the preceding 12 months for any shares in the company by the person required to make the offer or any person acting in concert with him.

Under the Code, a concert party arises when persons who, pursuant to an agreement or understanding (whether formal or informal), co-operate through the acquisition by any of them of shares in a company in order to obtain or consolidate control of that company. Under the Code, control means an interest or interest in shares carrying in aggregate 30 per cent. or more of the voting rights of a company, irrespective of whether such interest or interests give de facto control.

Rule 9 of the Code further provides, amongst other things, that where any person who, together with persons acting in concert with him holds over 50 per cent. of the voting rights of a company, acquires an interest in shares which carry additional voting rights, then they will not generally be required to make a general offer to the other shareholders to acquire the balance of their shares.

Pursuant to the Subscription, the Subscribers could increase their stake, in the event of conversion of the Convertible Loan Notes, to 78.5 per cent. of the voting rights of the Company. Without a waiver of the obligations under Rule 9 of the Code, this would oblige the Subscribers to make a general offer to Shareholders under Rule 9 of the Code.

Dispensation from General Offer

Under Note 1 on the Notes on the Dispensations from Rule 9 of the Code, the Panel will normally waive the requirement for a Rule 9 Offer if, amongst other things, the shareholders of a company who are independent of the person who would otherwise be required to make an offer and any person acting in concert with him pass an ordinary resolution on a poll at a general meeting approving such a waiver. The Panel may waive the requirement for a resolution to be considered at a general meeting (and for a circular to be prepared in accordance with Section 4 of Appendix 1 to the Code) if independent shareholders holding more than 50 per cent. of the company's shares capable of being voted on such a resolution confirm in writing that they would vote in favour of the waiver were such a resolution to be put to the shareholders of the company at a general meeting.

The Company has obtained such written confirmation from the Majority Shareholders who are Independent Shareholders and the Panel has accordingly waived the requirement for a resolution to be put to a meeting of Independent Shareholders. Accordingly, the Subscription may be effected without the requirement for the Subscribers to make a Rule 9 Offer.

CHANGE OF NAME

It is proposed that the Company shall change its name to Plutus Resources plc to reflect the Company's Investing Policy and the proposed change in the Company's business to one of investment in the natural resources sector.

The Company will also change its ticker to PLR conditional on the Proposals being approved by Shareholders.

GENERAL MEETING

A Notice of General Meeting to be held at the offices of DMHStallard LLP, 6 New Street Square, New Fetter Lane, London EC4A 3BF at 11.00 a.m. on 14 January 2013 is today being posted to Shareholders. The following resolutions will be proposed at the General Meeting:

Ordinary Resolutions

1. That the Investing Policy set out in the circular to be sent to Shareholders dated 28 December 2012 be approved and the Directors of the Company be empowered to carry the same into effect.

2. That the Directors be authorised to allot and issue up to an aggregate nominal amount of £1,753,765.87 of Relevant Securities.

Special Resolutions

3. That the Bonus Issue and the Reduction of Capital be approved.

4. That the name of the Company be changed to Plutus Resources plc.

5. That the Articles be amended.

6. That conditional upon the passing of resolution 2 above, the Directors be authorised to issue up to 229,842,188 new Ordinary Shares on a non-pre-emptive basis to cover the allotment of:

·; the Subscription Shares;

·; new Ordinary Shares issued upon the conversion of the Convertible Loan Notes;

·; equity securities issued upon the exercise of share options granted to management and employees of the Company, representing 10 per cent. of the nominal value of the issued ordinary share capital of the Company at Admission; and

·; equity securities issued for cash representing 50 per cent. of the nominal value of the issued ordinary share capital of the Company at Admission.

IRREVOCABLE UNDERTAKINGS

The Company has received irrevocable undertakings from the holders of Ordinary Shares (including the Board) totalling 20,047,591 Ordinary Shares representing approximately 50.9 per cent. of the Company's issued share capital, to vote in favour of the Resolutions.

Should the Resolutions not be passed at the General Meeting and/or the Court Order and the Proposals not be implemented, the Company would have insufficient working capital available to it to continue to trade and would need to be refinanced immediately to enable it to continue trading. There can be no assurance that such refinancing would be forthcoming and in these circumstances the Board will be forced to take steps to protect the interests of creditors which may include placing the Company into administration or receivership.

RECOMMENDATION

Having consulted with the Company's advisers, the Directors consider that the passing of the Resolutions would be in the best interests of the Company and of the Shareholders and therefore unanimously recommend Shareholders to vote in favour of the Resolutions, as they intend to do or procure to be done in respect of their own legal and beneficial shareholdings, which in aggregate amount to 9,544,258 Ordinary Shares, representing approximately 24.2 per cent. of the issued share capital of the Company.

Enquiries:

DEFINITIONS

The following definitions apply throughout this announcement, unless the context requires otherwise:

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Notes:

If any of the above times and/or dates change, the revised times and/or dates will be notified to Shareholders by announcement through a regulatory information service.

All times shown in this announcement are UK times unless otherwise stated.

These times and dates are indicative only and will depend, among other things, on the date in which the Court sanctions the Reduction of Capital.