28 Nov 2016 12:49
The People's Operator plc
("TPO" or the "Company")
Subscription and Notice of General Meeting
Further to the announcements of 30 September 2016 and 14 November 2016, The People's Operator plc (AIM: TPOP), the cause-based commercial mobile virtual network operator, is pleased to announce a conditional subscription to raise gross proceeds of approximately £1.7 million (before expenses) (the "Subscription"). The Company has received conditional subscription letters for 34,001,900 new ordinary shares of £0.0005 each ("Ordinary Shares") at a price of 5 pence per Ordinary Share (the "Issue Price") with certain institutional and other investors.
As part of the Subscription, Juliet Rosenfeld, Jimmy Wales, Mark Epstein and Tom Gutteridge (together, the "Concert Party") have subscribed for new Ordinary Shares at the Issue Price as follows:
Concert Party | Current interest in Ordinary Shares | Ordinary Shares subscribed for | Maximum interest in Ordinary Shares following Admission | ||
Number | % | Number | % | ||
Juliet Rosenfeld | 21,639,133 | 27.82 | 15,500,000 | 37,139,133 | 32.58 |
Mark Epstein | 6,648,105 | 8.55 | 2,000,000 | 8,648,105 | 7.59 |
Jimmy Wales | 6,086,760 | 7.82 | 500,000 | 6,586,760 | 5.78 |
Tom Gutteridge | 2,645,105 | 3.40 | 2,000,000 | 4,645,105 | 4.07 |
TOTAL | 37,019,103 | 47.59 | 20,000,000 | 57,019,103 | 50.02 |
As at 31 October 2016 the Company had £2.0 million of cash, which includes £1.0 million that has been drawn down from Barclays pursuant to the Company's debt facilities. The proceeds of the Subscription will be used to strengthen the Company's balance sheet and to allow the Company to pursue further growth in the USA.
Chairman, Jimmy Wales said,
"The Board is delighted with the level of support that has been shown for TPO. The funds raised will enable the Company to continue with its planned strategy. TPO is currently trading in line with expectations and since the update on current trading issued alongside the Company's interim results, the Company has continued to develop its business and brand in both the UK and the USA. The Board is encouraged by the continued progress shown and is excited about TPO's future prospects."
Notice of General Meeting
A circular will be sent to shareholders (the "Circular") giving notice of a general meeting of the Company to be held at 11.00 a.m. on 16 December 2016 at Olswang LLP, 90 High Holborn, London WC1V 6XX (the "General Meeting"). A copy of the circular will be available on the Company's website: https://www.thepeoplesoperator.com/investorrelations.com
The Takeover Code
The participation of the Concert Party in the Subscription gives rise to certain considerations under the Takeover Code. Brief details of the Panel, the Takeover Code and the protections they afford are described in the Circular.
Irrevocable undertakings
The Company has received irrevocable undertakings from shareholders holding 56,658, 236 Ordinary Shares to vote in favour of the Resolutions to be proposed at the General Meeting, representing in aggregate approximately 72.8 per cent. of the Company's issued share capital as at the date of this announcement.
Related Party Transactions
The participation of Jimmy Wales and Mark Epstein, as Directors of the Company and Juliet Rosenfeld, as a substantial shareholder in the Company, in the Subscription constitute related party transactions pursuant to AIM Rule 13 (the "Related Party Transactions"). The independent Directors (being Marisa Cassoni and Christian Hernandez Gallardo) consider, having consulted with finnCap Ltd ("finnCap"), the Company's nominated adviser, that the terms of the Related Party Transactions are fair and reasonable insofar as shareholders of the Company are concerned.
Admission
Application will be made to the London Stock Exchange for the 34,001,900 Ordinary Shares to be admitted to trading on AIM in relation to the Subscription (the "Subscription Shares"). In addition, finnCap has agreed that it will apply its advisory fees and commissions to subscribe for 2,200,095 new Ordinary Shares at a price of 5 pence per Ordinary Share (the "Advisory Shares").
Application will be made for the Subscription Shares and the Advisory Shares to be admitted to trading on AIM. It is expected that the admission of the Subscription Shares and the Advisory Shares will become effective and dealings in the Subscription Shares and the Advisory Shares will commence at 8.00 a.m. on 19 December 2016 ("Admission").
Following Admission, and assuming the issue of the Subscription Shares and the Advisory Shares, the Company will have 113,995,339 Ordinary Shares in issue with each Ordinary Share carrying the right to one vote.
Unless otherwise defined herein, capitalised terms used in this announcement shall have the same meanings as defined in the Circular containing notice of the General Meeting, a copy of which will shortly be available on the Company's website.
For further information
The People's Operator plc Nick Dashwood Brown, Head of Investor Relations
| 07710 511259 |
finnCap Ltd Stuart Andrews / Christopher Raggett / Simon Hicks
| 020 7220 0500 |
The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
The following text is extracted from the Circular:
Notice of General Meeting
I am writing to you with details of a general meeting ("General Meeting") of The People's Operator plc (the "Company") to be held at the offices of Olswang LLP at 90 High Holborn, London WC1V 6XX on 16 December 2016 at 11.00 a.m.. The purpose of the General Meeting is to consider and if thought fit approve resolutions of the Company which will permit the directors to allot ordinary shares of £0.0005 in the Company ("Ordinary Shares") on the basis described below. Formal notice of the General Meeting is set out in the Circular.
If you would like to vote on the resolutions, but cannot come to the General Meeting, please fill in the proxy form sent to you with this notice and return it to our registrars as soon as possible. Alternatively, if you hold your shares in CREST, you may appoint a proxy electronically through the CREST system. The registrars must receive your proxy appointment by no later than 11.00 a.m. on 14 December 2016.
Background to the proposed share issue
On 30 September 2016, when the Company announced its interim results for the period to 30 June 2016, the following was stated:
"The Company constantly reviews its cash position with respect to its growth aspirations and, given the confidence of the Directors in the current progress in the US, the Board has given some thought to increasing the funds available to the Company. As such the Board is delighted to announce that Mrs Juliet Rosenfeld, Jimmy Wales, Executive Chairman and Mark Epstein, Chief Executive Officer have indicated that they are prepared to subscribe for £1,000,000 of equity at a price of 16.7p per share.
These indications are based on further equity in the amount of £1,000,000 being made available to the Company by other shareholders at the same price. If such an amount cannot be raised then it is the intention of Mrs Rosenfeld, Mr Wales and Mr Epstein to make their pledged funds available as a loan on terms to be agreed with the Board."
On 14 November 2016, following a significant move in the price at which Ordinary Shares were trading, the following announcement was made:
"The Company notes the significant decline in its share price this morning. As set out in the Company's interim results….. the Board is considering further funding options and its major shareholders had stated their intention to provide further funds for growth. It was stated that these funds would be invested as to £1m equity at a price of 16.7p per share if other shareholders were also prepared to invest £1m at the same price or in the alternative the funds would be made available as a loan on terms to be agreed with the Board. The Board does not believe that £1m is available from other shareholders at 16.7p per share but has been exploring an equity raise at a significant discount to the current share price as a preference to debt financing."
As announced on 28 November 2016, the Company has now entered into subscription agreements with a number of existing shareholders, pursuant to which those existing shareholders have agreed to subscribe for, in aggregate, 34,001,900 Ordinary Shares at a price of 5 pence per Ordinary Share (the "Subscription"). The proceeds of the Subscription (net of expenses) will be approximately £1.7 million.
The shareholders who have committed to subscribe for Ordinary Shares include the following:
Shareholder | Aggregate subscription amount | Ordinary Shares subscribed for: |
Mark Epstein | £100,000 | 2,000,000 |
Tom Gutteridge | £100,000 | 2,000,000 |
Juliet Rosenfeld | £775,000 | 15,500,000 |
Jimmy Wales | £25,000 | 500,000 |
Shareholders have undertaken to subscribe for Ordinary Shares subject to:
(a) resolutions authorising the issue of up to 40,000,000 Ordinary Shares on a non-pre-emptive basis being passed by shareholders at the General Meeting (the "Resolutions");
(b) the Company receiving subscription commitments for Ordinary Shares for an aggregate subscription amount of not less than £1.6 million; and
(c) admission of the new Ordinary Shares to trading on AIM.
Although it had been the Board's initial intention to seek to borrow up to £1 million from Juliet Rosenfeld, Jimmy Wales and Mark Epstein, after taking in to account the Group's balance sheet and the terms of the Group's existing debt facility, the Board concluded that the Company should proceed to raise additional capital by way of an issue of Ordinary Shares.
THE TAKEOVER CODE
The proposed issue of the new Ordinary Shares gives rise to certain considerations under the Takeover Code. Brief details of the Panel, the Takeover Code and the protections they afford are described below.
The Takeover Code is issued and administered by the Panel. The Takeover Code applies to all takeover and merger transactions, however effected, where the offeree company is, inter alia, a company with a registered office in the United Kingdom and whose securities are admitted to trading on either a regulated market or a multilateral trading facility in the United Kingdom. The Company's shares are admitted to trading on AIM and its shareholders are, therefore, entitled to the protections afforded by the Takeover Code.
Rule 9 of the Takeover Code
Under Rule 9 of the Takeover 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 any interest in shares already held by that person and any interest in shares held or acquired by persons acting in concert with him or her) carry 30 per cent. or more of the voting rights of a company which is subject to the Takeover 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 Takeover Code also provides that, among other things, where any person who, together with persons acting in concert with him or her, 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 Takeover Code, and such person, or any person acting in concert with him or her, acquires an additional interest in shares which increases the percentage of shares carrying voting rights in which he or she 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 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 or her.
Persons acting in concert comprise persons who, pursuant to an agreement or understanding (whether formal or informal), co-operate to obtain or consolidate control of a company or to frustrate an offer for a company. The concert party comprises of Juliet Rosenfeld, Jimmy Wales, Mark Epstein and Tom Gutteridge (the "Concert Party") and details of their current interest in the Ordinary Shares and in the share capital as enlarged by the issue of the new Ordinary Shares immediately following Admission are set out below:
Concert Party
| Current interest in Ordinary Shares | Ordinary Shares subscribed for | Maximum interest in Ordinary Shares following Admission | ||
Number | % | Number | % | ||
Juliet Rosenfeld | 21,639,133 | 27.82 | 15,500,000 | 37,139,133 | 32.58 |
Mark Epstein | 6,648,105 | 8.55 | 2,000,000 | 8,648,105 | 7.59 |
Jimmy Wales | 6,086,760 | 7.82 | 500,000 | 6,586,760 | 5.78 |
Tom Gutteridge | 2,645,105 | 3.40 | 2,000,000 | 4,645,105 | 4.07 |
TOTAL | 37,019,103 | 47.59 | 20,000,000 | 57,019,103 | 50.02 |
Following completion of the Subscription, the Concert Party will hold in aggregate 57,019,103 Ordinary Shares, representing 50.02 per cent. of the share capital as enlarged by the issue of the Ordinary Shares and Juliet Rosenfeld individually will hold 37,139,133 Ordinary Shares, representing 32.58 per cent. of the share capital as enlarged by the issue of the Ordinary Shares which, without a waiver of the obligations under Rule 9 of the Takeover Code, would oblige the Concert Party to make a general offer to shareholders of the Company for the remaining Ordinary Shares in the Company under Rule 9 of the Takeover Code.
Dispensation from General Offer
Under Note 1 on the Notes on the dispensations from Rule 9 of the Takeover Code, the Panel will normally waive the requirement for a general offer to be made in accordance with Rule 9 of the Takeover Code (a "Rule 9 Offer") if, inter alia, the shareholders of the company who are independent of the person who would otherwise be required to make an offer and any person(s) acting in concert with him or her (the "Independent Shareholders") pass an ordinary resolution on a poll at a general meeting (a "Whitewash Resolution") approving such a waiver.
The Takeover Panel may waive the requirement for a Whitewash 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 Takeover 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 Whitewash Resolution, were such a resolution to be put to the shareholders of the company at a general meeting.
As detailed further below, the Company has obtained such written confirmation from James Rosenfeld, Matthew Rosenfeld, Joanna Rosenfeld and Naomi Rosenfeld, being Independent Shareholders holding 27.8 per cent. of the existing Ordinary Shares in issue and 53.1 per cent. of the existing Ordinary Shares able to be voted on a Whitewash Resolution, and the Panel has accordingly waived the requirement for a Whitewash Resolution.
Accordingly, by voting in favour of the Resolutions to be proposed at the General Meeting, the issue of the new Ordinary Shares will be effected without the requirement for the Concert Party to make a Rule 9 Offer. Shareholders should note that, on Admission, the Concert Party will control approximately 50.02 per cent. of the share capital as enlarged by the issue of the new Ordinary Shares and (for so long as they continue to be treated as acting in concert) any further increase in that interest in Ordinary Shares will be subject to Note 4 of the provisions from Rule 9 of the Takeover Code.
Confirmations and Acknowledgements
The Company has obtained from James Rosenfeld and Matthew Rosenfeld (on behalf of himself and his sisters, Joanna Rosenfeld and Naomi Rosenfeld) confirmation that:
1. between them they beneficially own 21,639,133 Ordinary Shares and that they have absolute discretion over the manner in which these Ordinary Shares are voted.
2. the 21,639,133 Ordinary Shares held by them in aggregate are held free of liens, pledges, charges and encumbrances;
3. (a) there is no connection between themselves and any member of the Concert Party save that Juliet Rosenfeld was married to their late father, (b) they do not have an interest or potential interest, whether commercial, financial or personal, in the outcome of the Subscription, and (c) that they are Independent Shareholders of the Company; and
4. in connection with the Subscription:
a. they consent to the Panel granting a waiver from the obligation for the Concert Party to make a Rule 9 offer to the shareholders of the Company;
b. they consent to the Panel dispensing with the requirement that the waiver from the obligation for the Concert Party to make a Rule 9 offer be conditional on a Whitewash Resolution being approved by Independent Shareholders of the Company at a general meeting; and
c. they would vote in favour of a Whitewash Resolution to waive the obligation for the Concert Party to make a Rule 9 offer were one to be put to the Independent Shareholders of the Company at a general meeting.
James Rosenfeld and Matthew Rosenfeld (on behalf of himself and his sisters, Joanna Rosenfeld and Naomi Rosenfeld) have confirmed that in giving the confirmations referred to above, they understand:
1. that, if the Panel receives such confirmations from Independent Shareholders of the Company holding more than 50 per cent. of the shares capable of being voted on a Whitewash Resolution, the Panel will approve the waiver from the obligation for the Concert Party to make a Rule 9 offer without the requirement for the waiver having to be approved by Independent Shareholders of the Company at a general meeting;
2. that if no general meeting is held to approve the Whitewash Resolution to waive the obligation for the Concert Party to make a Rule 9 offer:
a. there will not be an opportunity for any other person to make any alternative proposal to the Company conditional on such Whitewash Resolution not being approved by Independent Shareholders of the Company;
b. there will not be an opportunity for other shareholders in the Company to make known their views on the Subscription; and
c. there will be no requirement for the Company either (i) to obtain and make known to its shareholders competent independent advice under Rule 3 of the Code on the Proposed Transaction and the waiver of the obligation for the Concert Party to make a Rule 9 offer or (ii) to publish a circular to shareholders of the Company in compliance with Appendix 1 of the Code in connection with this matter;
3. that they have had the opportunity to take independent financial advice; and
4. that that they will not sell, transfer, pledge, charge, or grant any option or other right over, or create any encumbrance over, or otherwise dispose of the Ordinary Shares in which they are interested until after the conclusion of the proposed General Meeting.
About the Concert Party
Juliet Rosenfeld
Juliet Rosenfeld is a psychoanalytic psychotherapist and corporate psychology consultant. She previously worked as an advisor to the Permanent Secretary on Marketing and Government Communications in the Cabinet Office and prior to that in advertising for St Luke's Advertising and J Walter Thompson. Juliet is the widow of the late Andrew Rosenfeld, co-founder of the Company.
Jimmy Wales
Jimmy Wales is the founder of the free online encyclopaedia Wikipedia, which is read by more than 500 million users every month and has 18 billion page views. He is a board member of the Wikimedia Foundation, a non-profit charitable organisation. Jimmy holds a degree in finance from Auburn University and a Masters in finance from the University of Alabama. Jimmy currently acts as Executive Chairman of TPO.
Mark Epstein
Prior to co-founding TPO, Mark Epstein co-founded and ran Mass1, where he built the business into a leading UK campaign agency, working with organisations including Channel 4, and charities such as DEC (Disasters Emergency Committee). Before starting Mass1, Mark held senior management positions in the mobile and creative industries. Mark is CEO of TPO.
Tom Gutteridge
Tom Gutteridge is co-founder of TPO, and co-founded Mass1 alongside Mark Epstein. At TPO he is responsible for the creative direction, brand development and is working with Jimmy Wales to develop the TPO online community.
Current trading
Since the update on current trading issued alongside the Company's interim results for the six months ended 30 June 2016, released via RNS on 30 September 2016, the Company has continued to develop its business and brand in both the UK and the USA. Operations in the US remain encouraging and progress since launching with T-Mobile in April continues. The Company has continued its focus on profitable subscribers and users rather than on absolute subscriber numbers and the Board is encouraged by continued progress. As at 31 October 2016 the Company had £2 million of cash, which included £1 million that has been drawn down from Barclays pursuant to the Company's debt facilities. The proceeds of the Subscription will be used to strengthen the balance sheet and to allow the Company to pursue further growth in the USA.
Related Party Transactions
The participation of Jimmy Wales and Mark Epstein, as directors of the Company and Juliet Rosenfeld, as a substantial shareholder in the Company, in the Subscription constitute related party transactions pursuant to AIM Rule 13 (the "Related Party Transactions"). The independent Directors (being Marisa Cassoni and Christian Hernandez Gallardo) consider, having consulted with finnCap Ltd ("finnCap"), the Company's nominated adviser, that the terms of the Related Party Transactions are fair and reasonable insofar as shareholders of the Company are concerned.
Admission
Application will be made to the London Stock Exchange for the 34,001,900 Ordinary Shares to be admitted to trading on AIM in relation to the Subscription (the "Subscription Shares"). In addition, finnCap has agreed that it will apply its advisory fees and commissions to subscribe for 2,200,095 new Ordinary Shares at a price of 5 pence per Ordinary Share (the "Advisory Shares").
Application will be made for the Subscription Shares and the Advisory Shares to be admitted to trading on AIM. It is expected that the admission of the Subscription Shares and the Advisory Shares will become effective and dealings in the Subscription Shares and the Advisory Shares will commence at 8.00 a.m. on 19 December 2016 ("Admission").
Following Admission, and assuming the issue of the Subscription Shares and the Advisory Shares, the Company will have 113,995,339 Ordinary Shares in issue with each Ordinary Share carrying the right to one vote.
Business of the meeting
As noted above, the proposed subscriptions for Ordinary Shares are conditional upon resolutions authorising the issue of Ordinary Shares on a non-pre-emptive basis being passed at the General Meeting.
Resolution 1 will give the directors the authority to allot up to 40,000,000 Ordinary Shares (representing approximately 51.4 per cent. of the share capital in issue as at the date of this document). Resolution 1 will be proposed as an ordinary resolution. This means that for this resolution to be passed, more than half of the votes cast must be in favour of the resolution.
Under section 561 of the Companies Act 2006, when new shares are allotted or treasury shares are sold for cash, they must first be offered to existing shareholders pro rata to their holdings. Resolution 2 is proposed so as to permit the directors to allot up to 40,000,000 Ordinary Shares (representing approximately 51.4 per cent. of the share capital in issue as at the date of this document) as if the pre-emption rights set out in section 561 did not apply. Resolution 2 will be proposed as a special resolution. This means that for this Resolution to be passed, at least 75 per cent. of the votes cast must be in favour of the resolution.
Action to be taken
If you would like to vote on the Resolutions to be proposed but cannot come to the General Meeting, please complete the proxy form enclosed with this document and return it to Capita Asset Services, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU as soon as possible. Alternative methods by which Shareholders may appoint proxies are set out in the notes to the Notice of the General Meeting at the end of this document. All proxy instructions, whether in hard copy or by electronic means, must be received by Capita Asset Services at the address above no later than 11.00 a.m. on 14 December 2016.
Recommendation
The Board considers that each of the Resolutions to be put to the Meeting are in the best interests of the Company and its Shareholders as a whole. Accordingly, the Board unanimously recommends Shareholders to vote in favour of each of the Resolutions to be put to the Meeting, as they intend to do in respect of their own beneficial shareholdings in the Company.
Irrevocable undertakings have been received from certain shareholders and directors holding between them 56,658,236 Ordinary Shares, representing approximately 72.8 per cent. of the issued Ordinary Shares, to vote in favour of the Resolutions at the General Meeting.