Last checked at 20 Apr 2017 07:00
THIS ANNOUNCEMENT (AND THE INFORMATION CONTAINED HEREIN) IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, WITHIN, IN OR INTO THE UNITED STATES (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA), CANADA, AUSTRALIA, JAPAN, NEW ZEALAND AND SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.
This announcement does not constitute an offer of, or a solicitation to subscribe for or purchase, any securities in any jurisdiction including in the United States.
Securities may not be offered or sold in the United States absent registration under the United States Securities Act of 1933, as amended (the "Securities Act"), or an exemption from, or in a transaction not subject to, registration. The Company has not and does not intend to register any securities under the Securities Act, and does not intend to offer any securities to the public in the United States unless registered under the Securities Act or an exemption from such registration is available. No public offering of securities of the Company is being made in the United States.
No communication or information relating to the issue and offering of securities may be disseminated to the public in jurisdictions other than the UK where prior registration or approval is required for that purpose. No action has been taken that would permit an offer of securities in any jurisdiction where action for that purpose is required, other than in the UK.
20 April 2017
SHEARWATER GROUP PLC
("Shearwater" or the "Company")
Proposed Acquisition of SecurEnvoy Limited
Proposed Placing of up to 200,000,000 Ordinary Shares at £0.04 per share
Proposed Open Offer of up to 25,488,108 Ordinary Shares at £0.04 per share
Admission of the Enlarged Share Capital to trading on AIM
and
Notice of General Meeting
Shearwater Group plc (AIM: SWG), is pleased to announce that it has conditionally agreed to acquire the entire issued share capital of SecurEnvoy Limited, a leading UK based provider of multifactor authentication software solutions.
Highlights
· £20 million consideration satisfied by the payment of £10 million in cash and £10 million through the issuance of 200 million Ordinary Shares of the Company at a price of 5 pence per share;
· Placing to raise gross proceeds of up to £8 million to be used to part fund the Acquisition and further near term growth opportunities;
· Open Offer to permit shareholders to subscribe for up to approximately £1 million of New Ordinary Shares;
· SecurEnvoy is a leading UK based provider of multifactor authentication software solutions used by over 1,000 end users across five continents;
· Initial acquisition under the Company's transformation strategy, establishing the Company's presence within the large and growing identity and access management sector;
· For the twelve months ended 31 December 2016, SecurEnvoy recorded sales of £3.2 million, generating EBITDA of £2.2 million, representing a historic EBITDA acquisition multiple of 9.3x; and
· SecurEnvoy Founders to remain with the Company on new employment contracts to drive further growth in the business.
The Acquisition will constitute a reverse takeover pursuant to Rule 14 of the AIM Rules for Companies and as such will require the approval of Shareholders. An admission document is being posted today to Shareholders (the "Admission Document"), which sets out in more detail the background to and reasons for the Acquisition, the Placing and the Open Offer and their respective terms and includes the Notice of General Meeting.
The Chairman, David Williams, said: "I am delighted we have reached agreement to acquire SecurEnvoy. It is an example of a great British business with a fantastic history of innovation under Andy and Steve's stewardship and we are thrilled they have agreed to join Shearwater Group. For us, this represents a very important first step in our ambitious growth plans, and is an excellent example of the type of business and team we wish to partner with."
"Companies of all sizes are needing to evaluate their digital resilience capabilities, and authenticating the user is fundamentally important in protecting a company's information assets. The acquisition of SecurEnvoy establishes our presence within the large and growing identity and access management sector, and is the first of what we hope to be many transactions in support of our strategic aim of building a UK based digital resilience group."
Andy Kemshall and Steve Watts, Co-Founders of SecurEnvoy, said: "We are thrilled to be joining David, Mo and the team at Shearwater Group. For us, it was vital that we found a partner that shared our vision for the business and could support us on the next stage of our journey. Their strategy for building a digital resilience group resonated well with us and we are excited about our future as part of Shearwater Group."
The Issue Price represents a discount of approximately 17.95 per cent. compared with the mid-market price of 4.875 pence per share at which the Ordinary Shares were traded on AIM as at close of trading on 19 April 2017, the last trading day prior to this announcement.
The Acquisition, the Placing and the Open Offer are conditional, inter alia, upon the passing of the resolutions proposed at the General Meeting. A General Meeting of the Company is therefore being convened for 10:00 a.m. on 8 May 2017 at the offices of Mayer Brown International LLP, 201 Bishopsgate, London EC2M 3AF. The Admission Document will be posted today to Shareholders. The Admission Document includes the Notice of General Meeting and sets out in more detail the background to and reasons for the Acquisition, the Placing and the Open Offer. The Admission Document will be available on the Company's website: www.theshearwatergroup.co.uk.
This announcement includes inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.
Contacts: | |
Shearwater Group plc | www.theshearwatergroup.co.uk |
David Williams Michael Stevens | +44 (0) 797 014 8016 +44 (0) 780 171 2582 |
WH Ireland Limited - Nominated Adviser & Broker | www.whirelandplc.com |
Mike Coe, Ed Allsopp | +44 (0) 117 945 3470 |
Powerscourt - Financial PR | shearwater@powerscourt-group.com |
Ben Griffiths, Andy Jones | +44 (0) 20 7250 1446 |
1. Introduction
The Company is pleased to announce that it has conditionally agreed to acquire the entire issued share capital of SecurEnvoy, a leading multifactor authentication ("MFA") software company headquartered in the UK with operations in the US, Europe and Australia, for a total consideration of £20 million. The Consideration will be satisfied on Completion by the payment of £10 million in cash (subject to certain customary adjustments) and the issue of the Consideration Shares which have an aggregate value of £10 million.
The Company also announces that it proposes to undertake the Placing and the Open Offer, pursuant to which it proposes to raise, subject to certain conditions (i) up to £8 million (before expenses) by the conditional placing of 200,000,000 New Ordinary Shares at a price of 4 pence per Ordinary Share (a discount of 17.95 per cent. to the closing mid-market price of 4.875 pence per share as at 19 April 2017), to certain institutional and other investors; and (ii) up to approximately £1 million (before expenses) by way of an Open Offer made to Qualifying Shareholders of up to 25,488,108 New Ordinary Shares at a price of 4 pence per Ordinary Share (a discount of 17.95 per cent. to the closing mid-market price of 4.875 pence per share as at 19 April 2017). The Placing and the Open Offer are conditional, inter alia, upon the passing of certain resolutions in order to ensure that the Directors have the necessary authorities and powers to allot the new Ordinary Shares.
Following the previously announced strategic review of the Company's legacy mining assets, the Directors have been implementing a transformational strategy focused on building a UK based group providing digital resilience solutions to private and public sector organisations. The Company's recently appointed Directors and management team have substantial experience operating within the high technology, cyber, information security, digital and communication sectors, and a track record of delivering shareholder value through accelerated buy and build processes. The Directors believe that there is an opportunity to build a UK based group providing digital resilience solutions through a combination of acquisition and organic growth and, following the review of a number of potential acquisition targets within the digital resilience sector, the Directors believe that SecurEnvoy fits the Company's target profile and will provide for a compelling first acquisition.
The Acquisition will constitute a reverse takeover pursuant to Rule 14 of the AIM Rules for Companies and as such will require the approval of Shareholders which will be sought at the General Meeting convened for 10:00 a.m. on 8 May 2017 at the offices of Mayer Brown International LLP, 201 Bishopsgate, London EC2M 3AF.
Application will be made to the London Stock Exchange for the Enlarged Share Capital to be admitted to trading on AIM and trading is expected to commence in the New Ordinary Shares, and recommence in the Existing Ordinary Shares at 8:00 a.m. on 9 May 2017.
2. Summary information on SecurEnvoy
SecurEnvoy is a leading provider of MFA software solutions, which are used by over 1,000 end users across the UK, US, Europe, Asia and Australia.
SecurEnvoy's core product is SecurAccess, which provides mobile phone based tokenless® MFA for access to Virtual Private Network ("VPN"), remote desktop, WiFi, web portals and laptop encryption. The business' authentication apparatus enables a user to leverage their existing personal device to authenticate their identity as an incremental layer of security in addition to a traditional password.
The Founders of SecurEnvoy are pioneers in developing SMS authentication and in 2003 commercialised mobile based tokenless® two factor authentication technology through the establishment of SecurEnvoy. SecurEnvoy's tokenless® authentication software creates and delivers 'soft' tokens to users. The Founders will remain with the business of SecurEnvoy following Completion and have agreed to enter into new service agreements with the Company.
Alongside SecurAccess, SecurEnvoy has a number of other complementary authentication products which can also be implemented as an on-premise software solution, hosted as a managed service or through the cloud.
In 2011 and 2014 the business was awarded the Queen's Award for Innovation and International Trade respectively. SecurEnvoy is also included within Gartner's Magic Quadrant for User Authentication.
The Founders currently hold 87.2 per cent. of the fully diluted share capital of SecurEnvoy with the remaining share capital held by various individual shareholders. Three employees of SecurEnvoy hold options in respect of shares in SecurEnvoy which will be acquired by the Company on Completion.
The table below sets out SecurEnvoy's summary audited financial information for the periods indicated, prepared in accordance with IFRS.
Summary historical financial information of SecurEnvoy
Year ended 31 December 2014 £'000 | Year ended 31 December 2015 £'000 | Year ended 31 December 2016 £'000 | |
Revenue | 2,766 | 3,072 | 3,224 |
EBITDA¹ | 1,757 | 1,959 | 2,163 |
EBITDA margin | 63.5% | 63.8% | 67.1% |
Operating cash flow | 1,459 | 1,602 | 2,092 |
Operating cash conversion² | 83.0% | 81.8% | 96.7% |
¹Calculated as operating profit or loss excluding amortisation of intangibles, depreciation and impairment and share-based payments charge
²Calculated as operating cash flow divided by EBITDA
3. Background to and reasons for the Acquisition
In line with the Company's previously announced transformation strategy, the Board continues to evaluate investment and / or acquisition opportunities within the information and cyber security sectors which the Directors believe have the potential to deliver enhanced value to Shareholders. Specifically, the Directors are seeking to identify those investment and / or acquisition opportunities where the target company has a leading product, solution, service or consulting capability whose potential can be unlocked through active management and capital investment.
In SecurEnvoy, the Directors believe they have identified a business which meets these criteria and will provide a compelling first acquisition as part of the Company's growth strategy. In particular, the Directors believe the Acquisition is in the best interests of the Company and Shareholders for the following reasons:
● SecurEnvoy is a leading UK based provider of award-winning MFA solutions, with a track record of innovation;
● SecurEnvoy operates within a large, high growth market underpinned by strong macro dynamics;
● SecurEnvoy has strong relationships with distributors and channel partners, through which it can access multiple end user corporate customers across a variety of industry verticals, whilst maintaining an efficient operating structure;
● founded in 2003, SecurEnvoy is an established business with strong financial performance year-on-year, high levels of recurring revenue and operating cash flow generation; and
● alongside SecurEnvoy's core product, SecurAccess, the business has a number of complementary authentication products with low market penetration, which provide opportunities for growth incremental to geographical expansion into the US.
4. Further growth opportunities and strategy of the Enlarged Group
On Completion, SecurEnvoy will represent the Company's first acquisition as part of its growth strategy of building a UK based group providing digital resilience solutions.
As a leading provider of MFA software, SecurEnvoy has a strong, stable base from which the Directors believe they and the Founders can drive further growth opportunities within the identity and access management sector. Specifically, these include the following growth objectives:
● establishing further international distribution and reseller relationships, particularly within the US to capitalise on significant growth opportunities within this international territory;
● increasing cloud-based implementations of SecurEnvoy's authentication products and the provision of AaaS;
● greater SecurEnvoy product penetration across all end user markets, including increasing the sales of additional authentication software products alongside SecurEnvoy's core product, SecurAccess; and
● evaluation of select, complementary acquisition growth opportunities which could enhance SecurEnvoy's overall user authentication product offering or support the implementation and / or roll out of its authentication products.
The Directors intend to identify further acquisition targets which have a leading product, solution, service or consulting capability whose full potential can be unlocked through active management and capital investment. The Company has identified other acquisition opportunities which the Directors believe fit this profile and provides a broad mix of capabilities across complementary end user markets. However, there is no guarantee that any of these opportunities will progress to a definitive transaction.
The Directors will seek to deploy the Company's "buy, focus, grow" strategy to create an environment through which to drive enhanced value from any acquisition which it makes.
5. Principal terms of the Acquisition
On 20 April 2017, the Company entered into the Acquisition Agreements with the Founders and the Minority Sellers pursuant to which the Company has conditionally agreed to acquire the entire issued share capital of SecurEnvoy. The Sellers comprise (i) the Founders; (ii) the Minority Sellers (who are individual shareholders); and (iii) the Option Holders (who are certain employees of SecurEnvoy that have been granted options over shares in SecurEnvoy).
The Company entered into the SPA with the Founders on 20 April 2017 and the Minority SPA with the Minority Sellers on 20 April 2017. Pursuant to the terms of the SPA and an undertaking and power of attorney entered into by the Option Holders on 20 April 2017, the options held by the Option Holders will be exercised and the shares issued as a result of that exercise shall be acquired by the Company on Completion pursuant to the Option Holder SPA, which will be entered into by the Company and the Option Holders on Completion.
The total Consideration for the Acquisition is £20 million, which will be satisfied on Completion by the payment by the Company of £10 million in cash and £10 million through the issue of 200,000,000 Ordinary Shares at a price of 5 pence per Ordinary Share, in each case to the Sellers pro rata to their shareholding in SecurEnvoy.
SecurEnvoy is being acquired on a cash free and debt free basis. The Cash Consideration is subject to customary working capital and cash adjustments following Completion.
Completion of the Acquisition Agreements is conditional on the approval of the Resolutions at the General Meeting, Admission occurring and no material adverse change having occurred in respect of SecurEnvoy prior to Completion.
Pursuant to the Acquisition Agreements, the Founders have also agreed to enter into new service agreements with the Company and have entered into the Restrictive Covenants and the Lock-in Deeds.
6. Financing of the Acquisition
The Company will utilise its existing cash resources along with the proceeds of the Placing to fund the Cash Consideration and will issue the Consideration Shares to fund the remainder of the Consideration payable to the Sellers pursuant to the Acquisition Agreements.
7. Details of the Placing
Subject to Admission, WH Ireland has, as agent for the Company, conditionally placed 200,000,000 Placing Shares at the Issue Price with institutional and other investors in accordance with the terms of the Placing Agreement, further details of which are set out at paragraph 15.1(b)(iii) (Placing Agreement) of Part X (Additional Information) of the Admission Document.
The Placing is expected to raise £8 million (before expenses). After the expenses of the Placing, the Acquisition and Admission, estimated to be £1.6 million (excluding VAT) in total, the Company is expected to received approximately £6.4 million from the Placing.
Schroder Investment Management Limited ("Schroders") has subscribed for 30,000,000 Placing Shares. Under the AIM Rules for Companies, Schroders' participation constitutes a related party transaction as it currently holds more than ten per cent. of the Existing Ordinary Shares and is therefore a "substantial shareholder". Chris Eadie is an independent Director for the purposes of this transaction, and considers, having consulted with WH Ireland, that the terms of Schroders' subscription are fair and reasonable insofar as the Shareholders are concerned.
The Directors (other than Chris Eadie) intend to subscribe for up to 15,000,000 New Ordinary Shares (a total aggregate amount of £600,000 at the Issue Price), as part of the Placing. This intention is not legally binding and any subscriptions by Directors pursuant to the Placing will be announced through a Regulatory Information Service.
The Placing Shares to be issued pursuant to the Placing will to represent approximately 20.82 per cent. of the Enlarged Share Capital (assuming full take up under the Open Offer). The Placing Shares will, following Admission, rank in full for all dividends and pari passu in all other respects with the Existing Ordinary Shares and will have the right to receive all dividends and distributions declared, made or paid in respect of the issued Ordinary Share capital of the Company after Admission.
The Ordinary Shares have not been, and will not be registered under the Securities Act or with any regulatory authority of any state or other jurisdiction of the US and may not be offered or sold within the US.
8. Details of the Open Offer
The Company considers it important that, where reasonably practicable, Shareholders have an opportunity to participate in its equity fundraisings. Accordingly, the Company is proposing to raise up to approximately £1 million (before expenses) by way of the Open Offer. This will provide Qualifying Shareholders with an opportunity to participate in the proposed issue of Open Offer Shares on a pre-emptive basis whilst providing the Company with additional capital to invest in its business.
Subject to the terms and conditions of the Open Offer, the Company is inviting Qualifying Shareholders, being only Shareholders who are resident in the United Kingdom on the Ex-Entitlement Date, to apply for their Basic Entitlement of Open Offer Shares at the Issue Price. Each Qualifying Shareholder's Basic Entitlement has been calculated on the basis of:
1 Open Offer Share for every 21 Existing Ordinary Shares held at the Record Date.
Qualifying Shareholders are also invited to apply for additional Open Offer Shares in accordance with the Excess Entitlement. Any Open Offer Shares not issued to a Qualifying Shareholder pursuant to their Basic Entitlement will be apportioned between those Qualifying Shareholders who have applied for the Excess Entitlement at the sole discretion of the Board, provided that no Qualifying Shareholder shall be required to subscribe for more Open Offer Shares than he or she has specified on the Application Form or through CREST.
Entitlements to apply to acquire Open Offer Shares will be rounded down to the nearest whole number and any fractional entitlement to Open Offer Shares will be disregarded in calculating the Basic Entitlement.
The Directors who intend to participate in the Placing do not intend to subscribe for their Basic Entitlement pursuant to the Open Offer, which in aggregate amounts to 6,599,236 Open Shares, representing 25.89 per cent. of the aggregate Open Offer Shares and which will therefore be available for Shareholders who wish to subscribe for Open Offer Shares pursuant to their Excess Entitlements.
9. Current trading and future prospects
(a) The Existing Group
The Company is currently undergoing its transformation strategy through which it will focus on building a UK based group providing digital resilience solutions. At the date of the Admission Document, the Existing Group is not revenue generating. The Company's interim results for the six months ended 30 September 2016, which were announced on 28 December 2016, showed that the Company had net assets of £1,115,000. Since 30 September 2016, the Company has completed two placings raising gross proceeds totalling approximately £7 million, and has incurred expenditure in line with the Directors' expectations.
(b) SecurEnvoy
Since 31 December 2016, being the financial year end for SecurEnvoy and the date of the latest financial information included in the Admission Document, SecurEnvoy has continued to trade in line with the Founders' expectations.
(c) The Enlarged Group
The Directors believe that the Acquisition will provide the Enlarged Group with considerable growth opportunities and that it initiates the broader growth strategy of the Company. The Directors look forward to focusing on delivery of the Company's strategy of building a UK based group providing digital resilience solutions.
10. Lock-in and orderly market arrangements
(a) Sellers
The Company, WH Ireland and the Sellers have entered into the Lock-in Deeds, pursuant to which the Sellers have agreed that subject to certain customary exceptions, (i) for a period of 12 months from the date of Completion, neither they nor their connected persons shall transfer or dispose of the Consideration Shares or shares which they hold upon exercise of any options over Ordinary Shares granted to them; and (ii) for a further period of 12 months, the Sellers shall only be able to transfer or dispose of Ordinary Shares in which they have a beneficial interest through the Company's broker in order to maintain an orderly market in the Ordinary Shares. The Founders are permitted to dispose of their Consideration Shares in order to satisfy certain claims under the SPA provided that the Founders must first settle their liability relating to such claims from their own cash resources up to certain agreed levels.
(b) Directors
The Directors have entered into the Orderly Market Deeds, pursuant to which the Directors have agreed that subject to certain customary exceptions, for a period of 12 months from the date of Admission, the Directors shall only be able to transfer or dispose of Ordinary Shares in which they have a beneficial interest through the Company's broker in order to maintain an orderly market in the Ordinary Shares.
11. Share incentives
The Directors believe that the success of the Company will depend to a high degree on the future performance of key employees in executing the Company's growth strategy. The Company has therefore established equity-based incentive arrangements which are, and will continue to be, an important means of retaining, attracting and motivating key employees and contractors, and also for aligning the interests of the management team with those of Shareholders.
(a) New Option Schemes
On 19 April 2017, the Company established the New Option Schemes which comprise the Employee Option Plan and the Non-Employee Option Plan.
The Employee Option Plan, which is an option scheme for directors and employees of the Company through which it will entitle option scheme participants the right to acquire Ordinary Shares. The exercise price of any options granted under the Employee Option Plan will be at the market price of the Ordinary Shares at the time of grant, and will be subject to certain and time and performance vesting criteria over a five year period. It is anticipated that certain employees of SecurEnvoy, including the Founders, will be granted options on Completion pursuant to the Employee Option Plan.
The Non-Employee Option Plan, which is an option scheme for consultants to the Company through which it will entitle option scheme participants the right to acquire Ordinary Shares. The exercise price of any options granted under the Non-Employee Option Plan will be at the market price of the Ordinary Shares at the time of grant, and will be subject to certain and time and performance vesting criteria over a three year period.
(b) Subsidiary Incentive Scheme
On 18 January 2017, the Subsidiary established the Subsidiary Incentive Scheme for certain employees and consultants to the Company in order to align the interest of the scheme participants directly with those of Shareholders. Under the Subsidiary Incentive Scheme, participants are only rewarded if shareholder value is created over a three to five-year period, which is calculated by reference to the growth in market capitalisation of the Company, adjusted for the issue of new Ordinary Shares, and taking into account dividends and capital returns. Participants will be entitled to 16 per cent. of the shareholder value created, only in the event that the Company's market capitalisation has grown at 12.5 per cent. per annum compounded over a period of between three and five years. The Subsidiary Incentive Scheme is now closed, and the Directors do not anticipate making any further grants under the Subsidiary Incentive Scheme.
(c) Existing Option Deeds
Between 3 October 2016 and 27 February 2017, the Company entered into the Existing Option Deeds with various current and former Directors and the Chairman of the Advisory Panel. The exercise price of the options granted under three of the Existing Option Deeds is £0.01, while the options granted under the other two are exercisable at nil cost. The Directors do not intend to grant any further options under the Existing Option Deeds.
12. Dividend policy
As the Company is in the early stages of executing its growth plan, the Directors intend to retain any future earnings for the foreseeable future to finance the growth of the Enlarged Group and to provide capital growth for Shareholders. The Directors will however consider the payment of dividends when it becomes commercially prudent to do so in accordance with applicable laws and subject always to the Enlarged Group having sufficient cash and distributable reserves for this purpose.
13. General Meeting and Resolutions
The Admission Document will contain a notice convening a General Meeting of the Company to be held at 10:00 a.m. on 8 May 2017 at the offices of Mayer Brown International LLP, 201 Bishopsgate, London EC2M 3AF, at which resolutions will be proposed to, inter alia, approve the authorities required in order to effect the Acquisition, Admission, the Placing and the Open Offer and certain other shareholder authorities.
14. Recommendation
The Directors consider that the Acquisition, Admission, the Placing and the Open Offer are in the best interests of the Company and its Shareholders as a whole and accordingly unanimously recommend that all Shareholders vote in favour of the Resolutions, as the Directors intend to do, or procure, in respect of their own legal and/or beneficial shareholdings, which comprise a total of 143,708,995 Ordinary Shares, representing approximately 26.85 per cent. of the Existing Issued Share Capital.
ADMISSION AND PLACING AND OPEN OFFER STATISTICS
Number of Existing Ordinary Shares in issue at the date of the Admission Document | 535,250,286 | |
Number of Placing Shares | 200,000,000 | |
Maximum number of Open Offer Shares to be offered by the Company | 25,488,108 | |
Number of Consideration Shares | 200,000,000 | |
Open Offer Entitlement under the Open Offer | 1 Open Offer Share for every 21 Existing Ordinary Shares | |
Issue Price | £0.04 | |
Enlarged Share Capital following issue of the Consideration Shares, the Placing Shares and the Open Offer Shares* | 960,738,394 Ordinary Shares | |
Placing Shares as a percentage of the Enlarged Share Capital* | 20.82 per cent. | |
Consideration Shares as a percentage of the Enlarged Share Capital* | 20.82 per cent. | |
Open Offer Shares as a percentage of the Enlarged Share Capital* | 2.65 per cent. | |
Gross proceeds of the Placing | £8.0 million | |
Proceeds of the Placing (net of expenses) | £6.4 million | |
Gross proceeds of the Open Offer** | £1,019,524 | |
Anticipated market capitalisation of the Company on Admission* | Approximately £38.4 million | |
TIDM | SWG | |
ISIN of the Ordinary Shares | GB00B00T3528 | |
ISIN of the Basic Entitlements | GB00BDD97259 | |
ISIN of the Excess Entitlements | GB00BDD97473 | |
SEDOL | B00T352 |
* Assuming full take up under the Open Offer and the Placing
**Assuming full take up under the Open Offer and at the Issue Price
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Announcement of the Acquisition, the Placing and the Open Offer | 7:00 a.m. on 20 April 2017 | |
Record Date for entitlements under the Open Offer | 6:00 p.m. on 19 April 2017 | |
Publication and posting of the Admission Document (including Notice of General Meeting), Application Form (if applicable) and Form of Proxy | 20 April 2017 | |
Ex-Entitlement Date for the Open Offer | 8:00 a.m. on 20 April 2017 | |
Open Offer Entitlements credited to stock accounts in CREST of Qualifying CREST Shareholders | as soon as practicable from 8:00 a.m. on 21 April 2017 | |
Recommended latest time and date for requesting withdrawal of Open Offer Entitlements from CREST | 4:30 p.m. on 28 April 2017 | |
Latest time and date for depositing Open Offer Entitlements into CREST | 3:00 p.m. on 2 May 2017 | |
Latest time and date for splitting of Application Forms (to satisfy bona fide market claims only) | 3:00 p.m. on 2 May 2017 | |
Latest time and date for receipt of completed Application Forms and payment in full under the Open Offer and settlement of relevant CREST instructions (as appropriate) | 11:00 a.m. on 5 May 2017 | |
Latest time and date for receipt of Forms of Proxy and receipt of electronic proxy appointments via the CREST system | 10:00 a.m. on 6 May 2017 | |
Announcement of the results of the Open Offer | 8 May 2017 | |
General Meeting | 10:00 a.m. on 8 May 2017 | |
Admission effective and trading in the Enlarged Share Capital expected to commence on AIM | 8:00 a.m. on 9 May 2017 | |
Completion of the Acquisition expected | 8:00 a.m. on 9 May 2017 | |
Expected date for CREST accounts to be credited (where applicable) | 8:00 a.m. on 9 May 2017 | |
Despatch on definitive share certificates (where applicable) in respect of Consideration Shares, Placing Shares and Open Offer Shares to be held in certificated form | within ten business days of Admission |
Notes:
Each of the dates and times in the above timetable are subject to change at the absolute discretion of the Company and WH Ireland. In the Admission Document all references to times and dates are in reference to those observed in London, United Kingdom.
DEFINITIONS
"£" or "UK pounds sterling" | the lawful currency of the United Kingdom |
"Acquisition" | the proposed acquisition by the Company of the entire issued share capital of SecurEnvoy pursuant to the Acquisition Agreements |
"Acquisition Agreements" | the SPA and the Minority SPA, the terms of which are summarised in paragraphs 15.1(b)(vi) (SPA) and (vii) (Minority SPA) of Part X (Additional Information) of the Admission Document |
"Admission" | the admission of all the Existing Ordinary Shares, the Consideration Shares, the Placing Shares and the Open Offer Shares to trading on AIM and that admission becoming effective in accordance with the AIM Rules for Companies |
"Advisory Panel" | the advisory panel of the Company, as described in paragraph 2 (Advisory Panel) of Part IV (Directors) of the Admission Document |
"AIM" | AIM, the market of that name operated by the London Stock Exchange |
"AIM Rules for Companies" | the rules and guidance for companies whose shares are admitted to trading on AIM entitled "AIM Rules for Companies" published by the London Stock Exchange as amended from time to time |
"Application Form" | the personalised application form accompanying the Admission Document on which Qualifying Non-CREST Shareholders may apply for Open Offer Shares under the Open Offer |
"Basic Entitlement" | entitlement to subscribe for Open Offer Shares, allocated to a Qualifying Shareholder pursuant to the Open Offer as described in Part IX (Terms and conditions of the Open Offer) of the Admission Document |
"Board" | the board of directors of the Company |
"Cash Consideration" | the cash element of the Consideration payable by the Company to the Sellers pursuant to the Acquisition Agreements, being £10,000,000 as adjusted pursuant to the terms of the Acquisition Agreements |
"certificated" or "in certificated form" | Ordinary Shares which are evidenced by the issue of share certificates and are recorded on the register as being held in certificated form |
"Company" | Shearwater Group plc, a public limited company incorporated in England and Wales with registered number 05059457 and with its registered office at 22 Great James Street, London WC1N 3ES |
"Completion" | completion of the Acquisition in accordance with the Acquisition Agreements and the Option Holder SPA |
"Consideration" | the Cash Consideration and the Consideration Shares |
"Consideration Shares" | the 200,000,000 New Ordinary Shares to be allotted and issued to the Sellers pursuant to the Acquisition Agreements |
"CREST" | the electronic system for the holding and transferring of shares and other securities in paperless form operated by Euroclear UK & Ireland Limited |
"CREST Regulations" | the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755) (as amended) |
"Directors" | the directors of the Company, whose names are set out on page 8 of the Admission Document and "Director" shall mean any one of them |
"Employee Option Plan" | the share option scheme (incorporating enterprise management incentive options) as governed by the rules to the scheme dated 19 April 2017, as more fully described in paragraph 11.4 (Employee Share Option Plan) of Part X (Additional Information)) of the Admission Document |
"Enlarged Group" | the Existing Group and, subject to Completion, SecurEnvoy |
"Enlarged Share Capital" | the issued share capital of the Company on Admission, comprising the Existing Ordinary Shares and the New Ordinary Shares |
"Excess Entitlement" | Open Offer Shares in excess of the Basic Entitlement, but not in excess of the total number of Open Offer Shares, allocated to a Qualifying Shareholder pursuant to the Open Offer as described in Part IX (Terms and conditions of the Open Offer) of the Admission Document |
"Ex-Entitlement Date" | the date on which the Ordinary Shares are marked 'ex' for entitlement by the London Stock Exchange under the Open Offer, being 20 April 2017 |
"Existing Issued Share Capital" or "Existing Ordinary Shares" | the Ordinary Shares in issue as at the date of the Admission Document being 535,250,286 Ordinary Shares |
"Existing Option Deeds" | the option deeds entered into between the Company and various current and former Directors and Lord Reid, as more fully described in paragraph 11.2 (Existing Option Deeds) of Part X (Additional Information) of the Admission Document |
"Existing Group" | the Company and the Subsidiary |
"Founders" | Andrew Kemshall and Stephen Watts |
"FCA" | the Financial Conduct Authority |
"Form of Proxy" | the form of proxy accompanying the Admission Document for use in connection with the General Meeting |
"FSMA" | the Financial Services and Markets Act 2000 (as amended) |
"General Meeting" | the general meeting of the Company to be held at the offices of Mayer Brown International LLP, 201 Bishopsgate, London EC2M 3AF on 8 May 2017 at 10:00 a.m., notice of which is set out at the end of the Admission Document |
"IFRS" | International Financial Reporting Standards, as adopted by the European Union |
"Issue Price" | £0.04 per Ordinary Share issued pursuant to the Placing and the Open Offer |
"Lock-in Deeds" | the lock-in deeds entered into between the Company, WH Ireland and each of the Sellers, the terms of which are summarised in paragraph 15.1(b)(v) (Lock-in Deeds) of Part X (Additional Information) of the Admission Document |
"London Stock Exchange" | London Stock Exchange plc |
"Market Abuse Regulation" | Market Abuse Regulation (Regulation 596/2014), which repealed and replaced the Market Abuse Directive (2003/6/EC) and its implementing legislation with effect from 3 July 2016 |
"Minority Sellers" | various individual minority shareholders in SecurEnvoy who have entered into the Minority SPA |
"Minority SPA" | the conditional agreement dated 19 April between (1) the Minority Sellers; and (2) the Company, the terms of which are summarised in paragraph 15.1(b)(viii) (Minority SPA) of Part X (Additional Information) of the Admission Document |
"New Articles" | the new articles of association to be adopted by the Company pursuant to Resolution 6 of the General Meeting, as described in paragraph 5.4 of Part X (Additional Information) of the Admission Document |
"New Option Schemes" | the Employee Option Plan and the Non-Employee Option Plan |
"New Ordinary Shares" | the Placing Shares, the Open Offer Shares and the Consideration Shares |
"Non-Employee Option Plan" | the share option scheme as governed by the rules to the scheme dated 19 April 2017, as more fully described in paragraph 11.5 (Non-Employee Option Plan) of Part X (Additional Information) of the Admission Document |
"Notice of General Meeting" | the notice convening the General Meeting, set out on pages 142 to 145 of the Admission Document |
"Open Offer" | the conditional offer made by the Company to Qualifying Shareholders inviting them to apply for the Open Offer Shares at the Issue Price on the terms and subject to the conditions set out in the Admission Document and, in the case of Qualifying Non-CREST Shareholders, in the Application Form |
"Open Offer Entitlements" | entitlements to subscribe for shares pursuant to the Basic Entitlement and Excess Entitlement |
"Open Offer Shares" | up to 25,488,108 new Ordinary Shares to be issued pursuant to the Open Offer |
"Option Holder SPA" | the agreement to be entered into on Completion between (1) the Option Holders and (2) the Company |
"Option Holders" | certain employees of SecurEnvoy who hold options over shares in the capital of SecurEnvoy |
"Orderly Market Deeds" | the orderly market deeds entered into between the Company, WH Ireland and the Directors, the terms of which are summarised in paragraph 15.1(b)(vi) (Orderly Market Deeds) of Part X (Additional Information) of the Admission Document |
"Ordinary Shares" | the ordinary shares of £0.01 each in the capital of the Company |
"Ormonde" | Ormonde Mining plc |
"Placing" | the conditional placing by WH Ireland of the Placing Shares with investors at the Issue Price pursuant to the Placing Agreement |
"Placing Agreement" | the agreement dated 20 April between (1) the Company and (2) WH Ireland relating to the Placing, the terms of which are summarised in paragraph 15.1(b)(iv) (Placing Agreement) of Part X (Additional Information) of the Admission Document |
"Placing Shares" | 200,000,000 new Ordinary Shares to be issued pursuant to the Placing at the Issue Price |
"Qualifying CREST Shareholders" | Qualifying Shareholders whose Existing Ordinary Shares are held in uncertificated form |
"Qualifying Non-CREST Shareholders" | Qualifying Shareholders whose Existing Ordinary Shares are held in certificated form |
"Qualifying Shareholders" | Shareholders on the Record Date that are not resident in a Restricted Jurisdiction |
"Record Date" | 6:00 p.m. on 19 April 2017 being the latest time by which transfers of Existing Ordinary Shares must be received for registration by the Company in order to allow transferees to be recognised as Qualifying Shareholders |
"Resolutions" | the resolutions to be proposed at the General Meeting, each a "Resolution", as described in paragraph 17 (General Meeting and Resolutions) of Part I (Letter from the Chairman) of the Admission Document |
"Restrictive Covenant" | the restrictive covenant entered into between the Company and the Founders, the terms of which are summarised in paragraph 15.1(b)(ix) (Restrictive Covenant) of Part X (Additional Information) of the Admission Document
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"Restricted Jurisdiction" | any jurisdiction except the United Kingdom. Jurisdictions outside the United Kingdom include, but are not limited, to the United States, Australia, New Zealand, the Republic of South Africa and Japan |
"SecurEnvoy" | SecurEnvoy Limited, a company incorporated in England and Wales with registered number 04866711 and with its registered office at 1 Commerce Park, Brunel Road, Theale, Reading, Berkshire RG7 4AB |
"Sellers" | the Founders, the Minority Sellers and the Option Holders |
"Shareholders" | holders of Ordinary Shares, each individually being a "Shareholder" |
"SPA" | the conditional agreement dated 20 April 2017 between (1) the Founders and (2) the Company, as more fully described in paragraph 15.1(b)(vii) (SPA) of Part X (Additional Information) of the Admission Document |
"Subsidiary" | Shearwater Subco Limited, a company incorporated in England and Wales with registered number 10353003 |
"Subsidiary Incentive Scheme" | the incentive scheme operated by the Subsidiary, as more fully described in paragraph 11.3 (Subsidiary Incentive Scheme) of Part X (Additional Information) of the Admission Document |
"uncertificated" or "in uncertificated form" | recorded on a register of securities maintained by Euroclear UK & Ireland Limited in accordance with the CREST Regulations as being in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST |
"Uncertificated Securities Regulations" | the Uncertificated Securities Regulations 2001 (as amended) |
"United Kingdom" or "UK" | the United Kingdom of Great Britain and Northern Ireland |
"US Securities Act" | the United States Securities Act of 1933 (as amended) |
"WH Ireland" | WH Ireland Limited, a company incorporated in England and Wales with registered number 02002044 and with its registered office at 24 Martin Lane, London EC4R 0DR |
GLOSSARY
"Authentication as a Service" or "AaaS" | delivery of authentication services to any application, from any device, anywhere |
"Cyber security" | preventative methods used to protect information from being stolen, compromised or attacked |
"Multifactor authentication" or "MFA" | a method of computer access control in which a user is granted access only after successfully presenting several separate pieces of evidence to an authentication mechanism |
"Soft tokens" | software-based security tokens that generate a single-use login PIN |
"SMS" | a text messaging service which uses standardised communication protocols to enable mobile phone devices to exchange short text messages |
"Virtual Private Network" or "VPN" | a virtualised extension of a private network across a public network enabling safe access anywhere in the world |
FORWARD LOOKING STATEMENTS
This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "forecasts", "plans", "prepares", "anticipates", "projects", "expects", "intends", "may", "will", "seeks", or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the Company's and the Directors' intentions, beliefs or current expectations concerning, amongst other things, the Enlarged Group's prospects, growth and strategy.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. The Enlarged Group's actual performance, achievements and financial condition may differ materially from those expressed or implied by the forward-looking statements in this announcement. In addition, even if the Enlarged Group's results of operations, performance, achievements and financial condition are consistent with the forward-looking statements in this announcement, those results or development may not be indicative of results or developments in subsequent periods.
Any forward-looking statements that the Company makes in this announcement speak only as of the date of such statement, and none of the Company, the Directors or WH Ireland undertakes any obligation to update such statements unless required to do so by applicable law. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.
IMPORTANT INFORMATION
WH Ireland Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for the Company in relation to the Fundraising and will not be responsible to any person other than the Company under the Financial Services and Markets Act 2000, the rules of the Financial Conduct Authority or otherwise for providing the protections afforded to its clients or for advising any other person in relation to the contents of this announcement, the Placing or any matter, transaction or arrangement referred to in this announcement. WH Ireland Limited is not making any representation or warranty, express or implied, as to the contents of this announcement.