STP.L Regulatory News (STP)

30 Apr 2008 07:01

Spiritel PLC30 April 2008 30 April 2008 Spiritel plc PUBLICATION OF CIRCULAR RE BALANCE SHEET RESTRUCTURING CONVERSION OF LOAN FACILITIES AND PREFERENCE SHARES AMENDMENT TO THE TERMS OF THE PREFERENCE SHARES APPROVAL OF WAIVER TO BE GRANTED BY THE PANEL ON TAKEOVERS AND MERGERS NOTICE OF EXTRAORDINARY GENERAL MEETING The Board of Spiritel plc ("the Company", AIM: STP) the telecommunicationsservices company, is pleased to declare that, further to the announcement dated25 February 2008, the Circular detailing the particulars of Penta's proposedconversion and convening an Extraordinary General Meeting to seek shareholderapproval for the proposals and the waiver granted by the Panel on Takeovers andMergers has been posted to shareholders. Spiritel plc announced on 4 April 2007 proposals to enable the Concert Party toconvert £2,000,000 of the Loan Facilities into 115,222,222 Ordinary Shares andamend the terms of the Preference Shares concerning their rights to convert intoOrdinary Shares and, in respect of £500,000 of the Loan Facilities, to introducea redemption premium of 35 per cent. of the nominal amount redeemed inconsideration for the waiving of interest with effect from 1 May 2005 ("theOriginal Proposals"). Resolutions approving the Original Proposals were dulypassed at an Extraordinary General Meeting of the Company held on 27 June 2007.The Concert Party has not, however, exercised any of the rights of conversion inrespect of the Loan Facilities and the Preference Shares under the OriginalProposals. Further Loan Facilities were provided by members of the Concert Party on 2 March2007 and 27 July 2007, as set out in Part IV of the circular. Of the FurtherLoan Facilities £1,550,000 is convertible into Ordinary Shares at 2p perOrdinary Share. As at 31 October 2007 the aggregate accumulated unpaid interestand redemption premiums on the Further Loan Facilities amounts to approximately£460,000. Interest currently accrues under the terms of the Further LoanFacilities at the rate of £66,500 per month. All of the Preference Shares in which the Concert Party is currently interestedwere acquired at the time of the Company's admission to AIM on 28 July 2004. Ofthe Ordinary Shares in which the Concert Party is currently interested,11,827,592 were acquired on 28 July 2004 and 27,586,207 upon conversion of LoanNotes of the Company held by the Concert Party on 3 March 2006. On 25 February 2008, the Company announced new proposals ("New Proposals") sothat, conditional on the approval of the Independent Shareholders at an EGM and,subject to the Panel on Takeovers and Mergers agreeing to waive the obligationon the Concert Party to make a general offer to the Company's Shareholders underRule 9 of the City Code: (i) all of the Concert Party's current rights to convert the Company'sindebtedness into Ordinary Shares of the Company under the terms of thePreference Shares and the Loan Facilities as outlined in the Original Proposalsand under the terms of the Further Loan Facilities shall lapse from the date ofthe EGM; (ii) the Concert Party has agreed, immediately after the EGM, to convert such ofthe Company's indebtedness pursuant to the Loan Facilities, the Further LoanFacilities and the Preference Shares into Ordinary Shares at the price of 1.1pper Ordinary Share so that, following the said conversion, the Concert Party'saggregate interests in shares carrying voting rights shall be 49.99 per cent.(the "Initial Conversion"); (iii) following the Initial Conversion set out in paragraph (ii) above, theConcert Party shall have the right to convert in whole or in part theoutstanding indebtedness in respect of the Loan Facilities, the Further LoanFacilities and Preference Shares into Ordinary Shares at a price per OrdinaryShare which is the higher of (i) the then most recent placing price of OrdinaryShares and (ii) 1.5p per Ordinary Share (the "Subsequent Conversions"). However,the Concert Party has undertaken to limit its rights to convert into OrdinaryShares so that after any Subsequent Conversions and/or the exercise of theOption the aggregate holding of Ordinary Shares of the Concert Party shall beless than 50 per cent. of the issued Ordinary Shares; (iv) any interest and redemption premium payable in respect of the LoanFacilities, the Further Loan Facilities and the Preference Shares shall befrozen as at 31 October 2007 and the Company shall not be liable to make anyinterest or redemption premium payments in respect thereof to the Concert Partyfrom such date; (v) with effect from 1 May 2010 any amount outstanding under the LoanFacilities, the Further Loan Facilities or the Preference Shares that has notbeen redeemed or converted will accrue interest in respect of any month at therate of 8 per cent. per annum if, for that month, the average closing mid-marketprice of the Ordinary Shares is below 1.5p per Ordinary Share. If the averageclosing mid-market price of the Ordinary Shares for that month is above 1.5p theCompany shall have no liability for interest. The Company, however, shall onlybe liable to pay such interest on redemption of the indebtedness to which itrelates. Any such interest accrued shall be convertible into Ordinary Shares atthe same rate as the principal to which it relates; and (vi) in the event that there is any adjustment to the nominal value of theOrdinary Shares then such adjustments shall be made to the prices stated in theCircular so that there is the same economic effect. The New Proposals require the amendment of the Company's Articles of Associationand hence need the approval of Shareholders in general meeting. Furthermore, theNew Proposals require the granting by the Independent Shareholders of a waiverfrom the application of Rule 9 of the City Code, as described in further detailbelow. The Board believes that the New Proposals will have a number of advantages forthe Company; leaving the Company with a stronger balance sheet and without theburden of the interest on the Further Loan Facilities, making it more attractiveto providers of finance which will enable the Company to further develop. After the EGM, the Company will seek to raise external finance in support of itsM&A programme as and when suitable M&A opportunities arise and when marketconditions allow and to provide working capital to expand its operations throughorganic growth. It is anticipated that as new placings take place, the ConcertParty will periodically increase its shareholding of Ordinary Shares byundertaking Subsequent Conversions and/or the exercise of the Option (whilstlimiting its holding to under 50 per cent. of the then enlarged issued OrdinaryShares). The consequent reduction in outstanding debt and increase in marketcapitalisation of the Company are expected to enhance its attractiveness topotential future investors, thus facilitating the Company's strategic plans forexpansion. The Company is, therefore, requesting Shareholders' support for the Resolutionsrequired to implement the New Proposals, which will be proposed at anExtraordinary General Meeting to be held at 10.00 a.m. on 22 May 2008. City Code The Concert Party currently holds 12.5 per cent. of the Ordinary Shares.Following the Initial Conversion the Concert Party will have 276,819,845Ordinary Shares representing approximately 49.99 per cent. of the issuedOrdinary Shares of the Company. The Initial Conversion will reduce the aggregateof the Loan Facilities, Further Loan Facilities and Preference Shares by£2,611,467 and leave a remaining balance of £8,405,809 available for conversionat a later date. The Concert Party has, however, undertaken that it will notundertake any Subsequent Conversions or exercise of the Option if, in doing soit would result in it holding 50 per cent. or more of the then enlarged issuedOrdinary Shares. Following the Initial Conversion the Concert Party's shareholding will be asfollows: Penta Fund 1 Penta Fund 1 Limited S P Limited Penta Funds Partnership Per cent.* Partnership Per cent.* Total Per cent.*Currentholding ofOrdinaryShares 39,167,932 12.4 245,867 0.1 39,413,799 12.5 OrdinaryShares issued pursuant tothe Initial Conversion 235,925,085 - 1,480,961 - 237,406,046 -===================================================================================================Total holdingof OrdinarySharesimmediatelyfollowing theInitialConversion 275,093,017 49.68 1,726,828 0.31 276,819,845 49.99--------------------------------------------------------------------------------------------------- * The percentage relates to the Ordinary Share capital of the Company at thetime stated. Following the Initial Conversion the Concert Party will still retain rights(subject always to the above restriction on conversion) to the following maximuminterests: Penta Fund 1 Penta Fund 1 Penta Funds Per cent.** Limited Limited Total Partnership Per cent.** Partnership SP Per cent.** OutstandingPreferenceShares convertible intoOrdinary Shares 166,523,588 14.95 1,045,311 0.09 167,568,899 15.04 OrdinaryShares issuedupon conversion of the LoanFacilities 225,196,862 20.21 320,181 0.03 225,517,043 20.24 OrdinaryShares issuedupon conversion of theFurther Loan Facilities 167,301,370 15.02 - - 167,301,370 15.02-------------------------------------------------------------------------------------------------------------------- 559,021,820 50.18 1,365,492 0.12 560,387,312 50.30 OrdinaryShares issuedunder Option 100,000 0.01 - - 100,000 0.01--------------------------------------------------------------------------------------------------------------------Total maximumretainedconversionrights 559,121,820 50.19 1,365,492 0.12 560,487,312 50.31 OrdinaryShares heldpost theInitialConversion 275,093,017 24.69 1,726,828 0.15 276,819,845 24.84--------------------------------------------------------------------------------------------------------------------Maximumholding ofOrdinaryShares 834,214,837 74.88 3,092,320 0.27 837,307,157 75.15-------------------------------------------------------------------------------------------------------------------- ** In each case the percentage relates to the enlarged Ordinary Share capital ofthe Company following the conversion of all of the Loan Facilities, the FurtherLoan Facilities, the Preference Shares and the Option. Rule 9 of the City Code ("Rule 9") is designed to prevent the acquisition orcontrol of a company to which the City Code applies without a general cash offerbeing made to all shareholders of that company. Under Rule 9 when any person acquires, whether by a series of transactions overa period of time or not, an interest in shares which (together with shares inwhich persons acting in concert with him are interested) carry 30 per cent. ormore of the voting rights of a company or when a person, together with personsacting in concert with him, is interested in shares which in aggregate carry notless than 30 per cent. of the voting rights of a company but does not holdshares carrying more than 50 per cent. of such voting rights and such person, orany person acting in concert with him, acquires an interest in other shareswhich increases the percentage of shares carrying voting rights in which he isinterested, that person, or persons acting in concert with him, is normallyobliged to make a general offer to all shareholders at not less than the highestprice paid by him, for shares of that class within the preceding 12 months. Following the Initial Conversion the Concert Party would collectively holdapproximately 49.99 per cent. of the Ordinary Shares. Accordingly, the InitialConversion and any Subsequent Conversion and/or the exercise of the Option wouldnormally give rise to an obligation on the Concert Party to make a general offerto all Shareholders. The Panel has agreed, however, subject to the passing on a poll by theIndependent Shareholders of the Company of the Whitewash Resolution, to waivethe obligation on the Concert Party (both individually and collectively) to makea general offer to Shareholders under Rule 9 which would otherwise arise as aresult of the Initial Conversion and any Subsequent Conversion and/or theexercise of the Option. Shareholders should note that, following the Initial Conversion, the ConcertParty (for so long as members are treated as acting in Concert with each other)will only be able to increase its aggregate percentage interests in sharescarrying voting rights through a Rule 9 threshold without triggering anobligation to make a mandatory offer if: (i) this increase occurs through a Subsequent Conversion or the exercise of theOption; and (ii) the Concert Party would not thereby come to be interested in more than49.99 per cent. of the Company's issued share capital carrying voting rights. Therefore, if, following the Initial Conversion, the Concert Party's aggregatepercentage interests in shares carrying voting rights is at any time diluted orreduced to below 49.99 per cent, the Concert Party will then be able, withouttriggering an obligation to make a mandatory offer under Rule 9, to undertakesuch Subsequent Conversions and/or exercise the Option as would ensure that itsaggregate interest in shares carrying voting rights did not then amount to morethan 49.99 per cent. The waiver, which the Panel has agreed to provide, subject to the WhitewashResolution being passed on a poll by Independent Shareholders at the EGM, willbe invalidated if any purchases or exercise of options of Ordinary Shares aremade by any member of the Concert Party or any person acting in concert with anyof them in the period between the date of the circular and the EGM. Each memberof the Concert Party has undertaken to the Company that they will not make anysuch purchases or exercise any option of Ordinary Shares between the date of thecircular and the date of the EGM. Extraordinary General MeetingSet out at the end of the Circular is a notice convening the EGM to be held at10.00 a.m. on 22 May 2008 at the offices of Lane & Partners LLP, 15 BloomsburySquare, London WC1A 2LS, at which resolutions will be proposed to: Resolution 1(a) increase the authorised share capital of the Company from £19,100,000 to£24,100,000 by the creation of 500,000,000 Ordinary Shares; (b) grant the Directors authority pursuant to Section 80 of the Act to allotrelevant securities (within the meaning of Section 80(2) of the Act) up to amaximum nominal amount of £15,000,000; (c) authorise the Directors to allot relevant equity securities for cash outsidethe Shareholders' statutory pre-emption provisions up to an aggregate nominalamount of £8,000,000 for the purposes of the New Proposals and up to anaggregate nominal amount of £5,750,000 generally; and (d) amend the terms of the Preference Shares; and Resolution 2 Approve the waiver of the obligations on the Concert Party under Rule 9 for theInitial Conversion and any Subsequent Conversions and/or exercise of the Optionthat may be effected by the Concert Party (this resolution requires voting on apoll by Independent Shareholders). Action to be taken by Shareholders Whether or not you propose to attend the EGM in person, you are asked tocomplete the Proxy Form appended to the Circular and return it in the enclosedpre-paid envelope to Neville Registrars, Neville House, 18 Laurel Lane,Halesowen, West Midlands B63 3DA so as to arrive as soon as possible but in anyevent no later than 10.00 a.m. on 20 May 2008. Completion and return of theProxy Form will not preclude you from attending the EGM and voting in personshould you so wish. Admission, settlement and dealingsApplication will be made to the London Stock Exchange for the New SpiritelShares to be admitted to trading on AIM upon the approval of the Resolutionsproposed at the EGM. It is expected that Admission will become effective and dealings will commencein the New Spiritel Shares on 23 May 2008. No application has or will be madefor the enlarged share capital to be admitted to trading or to be listed on anyother stock exchange. No temporary documents of title will be issued in respect of the New SpiritelShares and, pending dispatch of the definitive share certificates, instrumentsof transfer will be certified against the register of members of the Company. Further informationShareholders' attention is drawn to the circular which provides additionalinformation on the matters referred to above. Further information on the ConcertParty is included in Part IV of the circular. In accordance with the AIM Rules, a copy of the circular is available onSpiritel's website www.spiritelplc.com RecommendationThe New Proposals, if implemented, will have a number of advantages for theCompany. It will mean that the Company will have a stronger balance sheet,assuming a constant share price, the greater number of shares in issue willresult in a higher market capitalisation and the Company will not be liable forinterest on the Further Loan Facilities. Subject to the Company's share priceremaining above 1.5p per Ordinary Share after 1 May 2010 the Company will not beliable for interest on any indebtedness remaining outstanding after that dateunder the Loan Facilities, the Further Loan Facilities and the PreferenceShares. The Board believes that implementation of the New Proposals will makethe Company more attractive to providers of finance which will enable theCompany to further develop. Resolution 1The Directors consider the authorisation to allow the Directors to undertake theNew Proposals, in the manner referred to in Resolution 1, to be fair andreasonable and, in the best interests of Shareholders as a whole, andunanimously recommend Shareholders to vote in favour of Resolution 1, as theyintend to do in respect of their shares totalling 88,580,732 Ordinary Shares,being 28.0 per cent. of the issued Ordinary Share capital of the Company. Resolution 2In light of his relationship with the Penta Funds described in paragraph 2.2 ofPart IV of the circular, Steven Scott has not been deemed independent for thepurposes of recommending Shareholders to vote on Resolution 2, and he hasaccordingly, not taken part in the Board's decision to recommend thisResolution. The Independent Directors, who have been so advised by Daniel Stewart, considerthe New Proposals and also the waiver of the obligations which would arise underRule 9 of the Code as a result of the New Proposals, both for the InitialConversion and any Subsequent Conversions and/or the exercise of the Option madepossible through the dilution or reduction of the Concert Party's aggregatepercentage interests in shares carrying voting rights to be fair and reasonableand in the best interests of the Shareholders as a whole and unanimouslyrecommend Independent Shareholders to vote in favour of Resolution 2, as theyintend to do in respect of their shares totaling 49,166,933 Ordinary Shares,being 15.5 per cent. of the issued Ordinary Share capital of the Company. For further information please contact: Spiritel plc Tel.020 7160 0100Alastair Mills CEO Daniel Stewart & Company plc Tel. 020 7776 6550Simon Leathers / Stewart Dick Tavistock Communications Tel. 020 7920 3150Simon Hudson / Clemie Carr EXPECTED TIMETABLE OF PRINCIPAL EVENTSCircular publication date 28 April 2008 Last time and date for receipt of Forms of Proxy 10.00 a.m. on 20 May 2008 Extraordinary General Meeting of Spiritel plc 10.00 a.m. on 22 May 2008 Conversion of debt and allotment of Ordinary Shares to the Concert Party 22 May 2008 Admission of New Spiritel Shares to trading on AIMand commencement of dealings in New Spiritel Shares on AIM 23 May 2008 SHARE CAPITAL STATISTICSNumber of Spiritel Ordinary Shares in issue 316,233,646 Current holding of the Concert Party 39,413,799 Percentage of issued Ordinary Share capital held by the Concert Party 12.5 percent. Ordinary Shares to be issued pursuant to the Initial Conversion 237,406,046 Total number of Ordinary Shares in issue following the Initial Conversion 553,639,692 Holding of the Concert Party following the Initial Conversion 276,819,845 Percentage of issued Ordinary Share capital held by the Concert Party following the Initial Conversion 49.99 per cent. * Further share capital statistics are set out in Part I of the Circular. DEFINITIONSThe following words and expressions shall have the following meanings in thecircular unless the context otherwise requires: "Act" the Companies Act 1985 as amended by the Companies Acts 1989 and 2006 "AIM" AIM, a market operated by the London Stock Exchange "AIM Rules" the current rules published by the London Stock Exchange governing the operation of AIM "Circular" the circular dated 28 April 2008, a copy of which is available on Spiritel's website www.spiritelplc.com "City Code" the City Code on Takeovers and Mergers published by the Panel on Takeovers and Mergers (as amended from time to time) "Company" or "Spiritel" Spiritel plc "Concert Party" together the Penta Funds "Concert Party Director" Steven Scott "Daniel Stewart" Daniel Stewart & Company Plc, a company registered in England and Wales with company number 2354159 whose registered office is at Becket House, 36 Old Jewry, London EC2R 8DD "Directors" or "Board" the Directors of the Company, whose names are set out on page 2 of the circular "Existing Shares" 316,233,646 Ordinary Shares in issue at the date of the circular "Extraordinary General Meeting" or "EGM" the extraordinary general meeting of the Company to be held at the offices of Lane & Partners LLP, 15 Bloomsbury Square, London WC1A 2LS at 10.00 a.m. on 22 May 2008 or any adjournment thereof, notice of which is set out at the end of the circular "FRS" a Financial Reporting Standard issued by the Accounting Standards Board "Further Loan Facilities" the loan facilities in the amount of £2,050,000 entered into by the Company with Penta Fund 1 Limited Partnership as referred to in paragraph 4.2 (xv) and (xxiv) of Part IV of the circular. "Group" Spiritel and its subsidiary undertakings "Independent Directors" the Directors apart from Steven Scott "Independent Shareholders" the Shareholders apart from the Penta Funds "Initial Conversion" the conversion, immediately following the EGM, of such of the Company's indebtedness pursuant to the Loan Facilities, Further Loan Facilities and Preference Shares into Ordinary Shares at the price of 1.1p per Ordinary Share so that, following the said conversion, the Concert Party's aggregate per cent. interests in shares carrying voting rights shall be 49.99 per cent. "Loan Facilities" the loan facilities in the amount of £2,500,000 entered into by the Company with Penta Fund 1 Limited Partnership "Loan Notes" the £2.5 million Loan Notes issued to the Penta Funds on 28 July 2004 "London Stock Exchange" London Stock Exchange plc "New Proposals" the conversion of £11,017,276 of the Loan Facilities, the Further Loan Facilities and the Preference Shares and the amendment of the terms of the Preference Shares as set out in the introduction at page 3 of the Circular "New Spiritel Shares" the new Ordinary Shares to be issued to the Concert Party as a consequence of the Initial Conversion "Option" the Option dated 28 November 2005 pursuant to which Penta Fund 1 Limited Partnership was granted an option to acquire 100,000 Ordinary Shares at 7.5p per Ordinary Share "Ordinary Shares" ordinary shares of 1p each in the capital of the Company "Penta Capital" Penta Capital Partners Limited, the investment manager for the Penta Funds "Penta Funds" together Penta Fund 1 Limited Partnership and Penta Fund 1 SP Limited Partnership "Preference Shares" the £4,100,000 Preference Shares of £1 each in the Company "Proxy Form" the proxy form for use at the Extraordinary General Meeting appended to the Circular "Resolutions" the resolutions to be proposed at the EGM as set out in the Notice of EGM at the end of the Circular "Shareholders" holders of Ordinary Shares "Subsequent Conversion" the subsequent conversion, of part or all, of the remaining balance of the Loan Facilities, Further Loan Facilities and Preference Shares after the Initial Conversion "Whitewash Resolution" the resolution set out in the notice of EGM as resolution 2 (to be approved by Independent Shareholders voting on a poll) to approve the waiver of the obligations on the Concert Party that would otherwise arise to make a mandatory cash offer for the Existing Shares not owned by the Concert Party "WN1" WN1 Limited This information is provided by RNS The company news service from the London Stock Exchange