1 Dec 2015 07:00
1 December 2015
Eco City Vehicles PLC
("ECV" or the "Company")
Notice of General Meeting and Issue of Equity
The board of directors of ECV announces that a notice of a General Meeting of the Company to be held at the offices of Allenby Capital at 3 St Helen's Place, London, EC3A 6AB on Wednesday 23 December, 2015 at 10.30 am was posted to shareholders yesterday. The purpose of the General Meeting is to approve a subscription for new Ordinary Shares.
A copy of the circular accompanying the notice of the General Meeting can be found on the Company's website at www.ecocityvehicles.co.uk and the material information contained in that circular is set out below.
The website www.ecocityvehicles.co.uk is the Company's website for the purposes of Rule 26 of the AIM Rules for Companies.
Enquiries:
Eco City Vehicles plc
John Swingewood, Director +44 1444 440 359
Allenby Capital (Nomad and Broker)
Nick Harriss/John Depasquale +44 20 3328 5656
Letter from the Directors
Dear Shareholder,
1. BACKGROUND TO THE SUBSCRIPTION
As you are aware, last year Eco City Vehicles plc (the "Company") effected a capital reorganization, including a company voluntary arrangement ("CVA"), that achieved the solvent restructuring of the Company and the re-admission of the Company's ordinary shares of 1p each (the "Ordinary Shares") to the AIM market operated by the London Stock Exchange ("AIM"), following suspension from trading on AIM on 19th September 2014. The purpose and effect of the CVA was to bind all the historical unsecured creditors of the Company and clear its historical debts, including preferential debts. The CVA was fully implemented as of 12th November 2015.
A further material subscription of £5,000,000 (before expenses) for 409,836,066 new Ordinary Shares (the "Subscription Shares") at a price of 1.22p per share (the "Subscription Price") has been arranged from two significant shareholders, a new institutional investor and advisor, MXC Capital Limited ("MXC"), and certain other new investors (together the "Subscribers") to enable the Company better to pursue its investing policy approved by shareholders earlier this year. That policy is to invest in and/or acquire companies and/or assets in the telecommunications, media and technology sectors where the board of directors of the Company (the "Board") believes there are opportunities for growth which, if achieved, will be earnings enhancing for shareholders. MXC is being retained, through its regulated subsidiary MXC Capital Markets LLP ("MXCCM"), under an engagement letter pursuant to the terms of which MXCCM agrees, among other things, to assist the Company to identify suitable acquisitions.
The Company has also agreed to issue to MXC (or to such other company within the MXC group of companies as MXC may direct) warrants ("Warrants") to subscribe for 5% of the issued ordinary share capital of the Company from time to time; a summary of the terms of the Warrants is set out in paragraph 3 below.
As an investing company, the Company will be required to make an acquisition which constitutes a reverse takeover under the rules for AIM companies as published by the London Stock Exchange from time to time (the "AIM Rules") or otherwise implement its proposed investing policy on or before the date falling 12 months from 20th January 2015, the date of the adoption of the investing policy, failing which the Ordinary Shares would then be suspended from trading on AIM. In the event that the Ordinary Shares (which would include the Subscription Shares) are so suspended and the Company fails to undertake a transaction that constitutes a reverse takeover under the AIM Rules, the admission to trading on AIM would be cancelled six months from the date of suspension.
2. THE SUBSCRIPTION
A total of 409,836,066 Subscription Shares will be issued to the Subscribers, who have indicated that they will subscribe conditional on the resolutions contained in the Notice of General Meeting which appears on page 5 being passed. The Subscription is not underwritten.
On the assumption that all the Subscription Shares will be subscribed for, it is expected that immediately following completion of the Subscription ("Completion"), the persons who will hold 3% or more of the issued share capital of the Company will be as set out in paragraph 4.
As an ancillary but integral part of the Subscription, MXCCM has been appointed, conditional on Completion, as financial advisor to assist in identifying, evaluating and, together with the Company's other professional advisers, executing potential acquisition opportunities. MXCCM will be paid an annual retainer fee of £30,000 increasing to £50,000 on the earlier of the Company completing its second acquisition and it achieving a market capitalization of more than £30,000,000 for 10 consecutive business days. In addition MXCCM will receive a corporate finance fee equal to 2.5% of the enterprise value of any corporate transactions concluded by the Company. MXCCM has also been granted the right, conditional on Completion, to appoint a director to the Board.
In addition to the Subscription, the directors of the Company (the "Directors") between them are subscribing for 3,278,688 new Ordinary Shares at the Subscription Price in lieu of receiving unpaid Directors' fees of £40,000.
3. MATERIAL TERMS OF THE WARRANTS
The Company will, at Completion, grant to MXC (or to such other company within the MXC group of companies as MXC may direct) Warrants to subscribe on an ongoing basis for Ordinary Shares in the capital of the Company equating to 5% of the fully diluted issued ordinary share capital of the Company from time to time.
Additional Warrants will be deemed to have been granted at the then current placing price by the Company to MXC on the allotment and issue of new shares in the Company to any person, such that the number of Warrants held by MXC is at all times equal to 5% of the Company's fully diluted issued share capital.
This "evergreen" element shall be suspended should MXC no longer hold 5% or more of the issued share capital of the Company provided that, if MXC acquires further shares to bring its holding to 5% or more, the "evergreen" Warrant subscription rights shall be reinstated. The exercise of the Warrants is linked to the growth in share price of the Company. If not otherwise exercised, the Warrants shall lapse after seven years.
4. EFFECT OF THE SUBSCRIPTION
The following table sets out the names of the Subscribers who will have an interest in 3 per cent or more of the issued share capital of the Company immediately following Completion of the Subscription (ignoring the Warrants).
Name Of Subscriber | Amount Subscribed | Number Of Subscription Shares | % of Enlarged Share Capital | |
MXC | £1,333,334 | 109,289,672 | 24.7 | |
Euroblue Investments Ltd. | £1,333,333 | 109,289,590 | 26.0 | |
Henderson Global Investors Ltd. | £1,333,333 | 109,289,590 | 26.0 | |
Hargreave Hale Ltd. | £500,000 | 40,983,607 | 9.3 | |
Livingbridge VC LLP | £250,000 | 20,491,803 | 4.6 | |
Harwood Capital LLP | £250,000 | 20,491,803 | 4.6 | |
Total | £5,000,000 | 409,836,066 | 95.2 |
Save as disclosed above, no other shareholder will have an interest in 3 per cent or more of the issued share capital of the Company immediately following Completion of the Subscription.
John Swingewood currently has an interest in 5,099,493 Ordinary Shares representing 17.7% of the existing share capital of the Company. Following the Subscription and his subscribing for 1,639,344 new Ordinary Shares. John Swingewood will have an interest in 6,738,837 Ordinary Shares representing 1.5% of the enlarged issued share capital of the Company.
5. RESOLUTIONS AND NOTICE OF GENERAL MEETING
A Meeting of the holders of the Ordinary Shares (the "General Meeting") is being convened to be held at the offices of Allenby Capital at 3 St Helen's Place, London, EC3A 6AB on Wednesday 23rd t December, 2015 at 10.30 am to consider, and if thought fit, to approve the following resolutions (the "Resolutions"):
Resolution 1, which is an ordinary resolution, to authorise the Company to allot and issue up to £5,032,800 of new Ordinary Shares pursuant to Section 551 Companies Act 2006 ("2006 Act"); and
Resolution 2, which is a special resolution, to permit the allotment and issue of up to £5,032,800 of new Ordinary Shares on a non-pre-emptive basis as if section 561(1) of the 2006 Act did not apply to such allotment.
6. FORM OF PROXY
Please follow the directions in the form of proxy supplied. Whether or not you propose to attend the General Meeting, please complete and submit a form of proxy in accordance with the instructions printed on the enclosed form. The form of proxy must be received by no later than 48 hours before the time of the holding of the General Meeting. A proxy need not be a member.
7. RELATED PARTY TRANSACTION
The entire Board's participation in the Subscription, as outlined above, will constitute a related party transaction for the purposes of Rule 13 of the AIM Rules. In addition, the participation in the Placing by Henderson Global Investors Limited and Euroblue Investments Limited also constitutes a related party transaction, as Henderson Global Investors Limited and Euroblue Investments Limited are deemed substantial shareholders pursuant to the AIM Rules. As there are no independent Directors for the purposes of providing the fair and reasonable statement required under Rule 13 of the AIM Rules, Allenby Capital, the Company's nominated adviser, considers that the terms of these related party transactions are fair and reasonable insofar as Shareholders are concerned.
8. INTENTIONS OF THE DIRECTORS
Your Board intends to vote in favour of the Resolutions in respect of their aggregate holdings of 5,099,493, Ordinary Shares between them (all owned by John Swingewood), representing 17.7 % of the issued share capital of the Company.
Yours sincerely,
John Swingewood
Chairman
on behalf of the Board