Last checked at 30 Jul 2010 07:00
AIM: WATR 30 July 2010
Water Intelligence plc
(formerly Qonnectis plc)
("Water Intelligence" or the "Company")
Admission to trading on AIM - First Day of Dealings
Water Intelligence, a leading provider of leakdetection and other water related services, is pleasedto announce the admission of its share capital to trading on the AIM market of theLondon Stock Exchange and the first day of dealings in its ordinary shares underticker symbol "WATR" at 8.00 am today ("Admission"), following the completionof the reverse takeover announced on 7 July 2010 and anopen offer to raise £0.8 million (before expenses). Qonnectis plc ("Qonnectis")has now been renamed Water Intelligence plc.
At Admission, the Company will have 8,987,053ordinary shares admitted to trading on AIM, equating to a market capitalisation of£6.75 million based on the issue price of 75 pence per share.
Merchant Securities Limited is the nominated adviserand broker to the Company.
Highlights
· Acquisition of91.57 per cent. of the issued capital of American Leak Detection Holding Corp. ("ALDHC"),which owns the entire issued share capital of American Leak Detection Inc. ("ALD")
· £0.8 million (before expenses) raised under OpenOffer
· Water Intelligencewill focus on the accurate, non-destructive detection of all types of leaks includinghidden water and sewer leaks, together with repair and other related services, includingexpanding the sales channel for existing Qonnectis products
· The Company willcontinue to trade through the established ALD brand, which operates through 114 franchisesoperating multi service vehicles established in the US and a further 15 franchisesoutside the US (2009 total revenue c.$5.5 million)
· Net proceedsof Open Offer will be used to establish UK operation, maximise ALD's franchise andcorporate run opportunities and drive product innovation
· Significant opportunityto use ALD's established consumer base to grow the products and services to be offeredby the Enlarged Group
· Strong managementteam in place with Directors confident of future prospects
Commenting on Admission, Patrick DeSouza, Executive Chairman of WaterIntelligence, said:
"We are delighted tohave completed this transaction which will provide ALD with a platform to grow itsalready established core business and provide the Enlarged Group with an opportunityto address significant opportunities in the key water management sector. The integrationof products and services across the group should deliver improved service levelsand new opportunities across our customer base which will drive Water Intelligence'sgrowth.
"I would like to thank those Qonnectis shareholderswho supported the Open Offer and welcome our new investors. We have a strong Boardand management team and are working hard on the early achievement of milestones thatwe have set for ourselves. We look forward to taking the Company to its next stageof development and extending our market share."
Copies of the Admission Document are availableon the Company's new website (www.waterintelligence.co.uk) or from the offices of Merchant Securities Limited at 51-55 GreshamStreet, London EC2V 7HQ.
FURTHER ENQUIRIES:
| Water Intelligence plc |
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| Patrick DeSouza, Executive Chairman | Tel: +1 203 654 5426 |
| Stanford Berenbaum, Chief Executive Officer | Tel: +1 760 969 6830 |
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|
|
| Merchant Securities Limited |
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| Bidhi Bhoma/David Worlidge | Tel: +44 20 7628 2200 |
Defined terms used in this announcement, unlessexpressly stated otherwise, shall have the same meaning as in the Admission Document.
Background
On 7 July 2010, the Company announced that itswholly owned subsidiary, Qonnectis Acquisition Co., had entered into the AcquisitionAgreements conditional, amongst other things, on Admission, to acquire 91.57 percent. of the issued share capital of ALDHC, which owns the entire issued share capitalof ALD. Now that the Acquisition Agreement is completed, Qonnectis Acquisition Co.may elect to enter into the Merger under the law of the State of Delaware which wouldresult in the compulsory acquisition of any remaining shares of ALDHC. The EnlargedGroup has been renamed Water Intelligence plc. ALD will continue to operate in itscurrent territories under its existing brand. In addition, the Company also announcedthat it intended to raise up to approximately £1 million to fund future growth ofthe Enlarged Group by way of an Open Offer of 1,332,946 New Ordinary Shares at 75pper share, following the implementation of the Capital Reorganisation, the termsof which are set out in the Admission Document.
Information on ALD
ALD focuses on the accurate, non-destructive detectionof all types of leaks including hidden water and sewer leaks, together with repairand other related services. ALD's service technicians utilize proprietary trainingand specialist equipment such as infrared cameras and acoustic devices to pinpointleaks, employing less invasive methods to find the source of a leak compared withbreaking or drilling holes in walls and floors. Because leaking water can travelalong water lines or leaks may be pinhole size in various places along a water pipe,in many instances, ALD's service offerings have the potential to reduce the repaircosts for the consumer compared with typical plumbing solutions as they do not relyon a 'trial-and-error' method of exposing whole sections of pipe to locate leaks.
In addition to the four corporate territoriesdirectly owned and controlled by ALD, ALD operates a franchise structure, with approximately129 franchise agreements executed with franchisees established in the US and sevenother regions internationally, including Canada, Australia, Brazil, Venezuela andthe EU. Further details on the franchise system are set out below. In 2009, ALDand its franchises had in excess of $50 million of franchise system-wide sales. It is a US brand leader in the leak detection market.
Capital Reorganisation
A share reorganisation was effected immediatelyprior to Admission on the basis of one New Ordinary Share and one B Deferred Sharefor every 1,200 Existing Ordinary Shares.
The rights attaching to the New Ordinary Sharesare identical in all respects to those of the Existing Ordinary Shares. The B DeferredShares carry no voting rights and do not carry any entitlement to attend generalmeetings of the Company; nor are they admitted to AIM or any other market. They carryonly a priority right to participate in any return of capital to the extent of £1in aggregate over the class. In addition, they carry only a priority right to participatein any dividend or other distribution to the extent of £1 in aggregate over the class.In each case, a payment to any one holder of B Deferred Shares shall satisfy thepayment required. The Company is authorised at any time to effect a transfer of theB Deferred Shares without reference to the holders thereof and for no consideration.
Accordingly, the B Deferred Shares are, for allpractical purposes, valueless and it is the Board's intention, at an appropriatetime, to have the B Deferred Shares cancelled, whether through an application tothe Companies Court or otherwise. No certificates are to be issued in respect ofthe B Deferred Shares.
The ISIN of the New Ordinary Shares is GB00B3PFSR32.
Board
Harry Offer remains on the board of the Companyas a non-executive director. As of today, Patrick DeSouza and Stanford Berenbaumhave assumed the roles of Chairman and Chief Executive Officer, respectively, andBarbara Spurrier has stepped down as Interim Finance Director. The Board would liketo thank Barbara for her contribution to the Company. In addition, Ric Piper, MichaelReisman and Stephen Leeb have been appointed as Non-Executive Directors.
Brief details on the Board are set out below:
PatrickJ. DeSouza (aged51), Executive Chairman
Dr DeSouza is President and Chief Executive Officerof Plain Sight and is a graduate of Columbia College, the Yale Law School and StanfordGraduate School. He has 18 years of operating and advisory leadership experiencewith both public and private companies in the defence, software/Internet and assetmanagement industries. Over the course of his career, Mr DeSouza has had significantexperience in corporate finance and cross-border mergers and acquisition transactions.He has practised corporate and securities law as a member of the New York and Californiabars. Mr DeSouza has also worked at the White House as Director for Inter-AmericanAffairs on the National Security Council. He is the author of Economic Strategy andNational Security (2000) and has been a visiting lecturer at Yale Law School.
StanfordP. Berenbaum (aged43), Chief Executive
Mr Berenbaum is President and Chief ExecutiveOfficer of ALD. He earned his Doctor of Jurisprudence degree, cum laude, from WayneState University. He was formerly partner in the Antitrust, Trade Regulation andFranchising Department of the Detroit-based law firm Honigman Miller, as well asVice President and General Counsel of Little Caesar Enterprises, Inc., an internationalpizza restaurant operator and franchisor. Mr Berenbaum, licensed to practice beforethe US Supreme Court, is a member of the California and Michigan state bars and isalso an International Franchise Association Certified Franchise Executive.
HarryOffer (aged 48),Non-executive Director
Mr Offer is a Director of the Offer Group Ltdand sold his interest in Screenedata Limited, a start up business in which he wasa 50 per cent. shareholder and director in a trade sale in 2007. Harry has an MAfrom Cambridge and gained an MBA from Cranfield in 1993 in addition to his MRICSqualification in 1990 and is currently a trustee of The Richmond Charities' Almhouses.
RicPiper (aged 57),Non-executive Director
Mr Piper qualified as a Chartered Accountant in1977. He was appointed Finance Director of Logica (UK) in 1990 and was Group FinanceDirector of WS Atkins from 1993 to 2002. Since 2003, he has held the role of Chairmanor Non-executive Director for several AIM and privately owned businesses. Mr Piperhas been a partner with Restoration Partners Limited, which advises technology businesses,since 2006. Mr Piper is an Audit Committee member of the Science and TechnologiesFacilities Council (and its predecessor, the Particle Physics & Astronomy ResearchCouncil), and is a member of the Financial Reporting Review Panel. Currently he isa Non-executive Director with Matchtech Group plc, an AIM listed technical and professionalrecruitment company, and with Turbo Power systems Inc, the Toronto Stock Exchangeand AIM listed power generation and conditioning equipment supplier.
MichaelReisman (aged70), Non-executive Director
Prof. Reisman is a director of Plain Sight andcurrently serves as Myres S. McDougal Professor of International Law at the YaleLaw School, where he has been on the faculty since 1965 and has previously been avisiting professor in Tokyo, Berlin, Basel, Paris, Geneva and Hong Kong. He is aFellow of the World Academy of Art and Science and a former member of its ExecutiveCouncil, the President of the Arbitration Tribunal of the Bank for InternationalSettlements, a member of the Advisory Committee on International Law of the Departmentof State, Vice-Chairman of the Policy Sciences Center, Inc., and a member of theBoard of The Foreign Policy Association.
He has published widely in the area of internationallaw and served as arbitrator and counsel in many international cases. He was alsoPresident of the Inter-American Commission on Human Rights of the Organization ofAmerican States, Vice-President and Honorary Vice-President of the American Societyof International Law and Editor-in-Chief of the American Journal of InternationalLaw. He has served as arbitrator in the Eritrea/Ethiopia Boundary Dispute and inthe Abyei (Sudan) Boundary Dispute.
StephenLeeb (aged 63),Non-executive Director
Dr Leeb has been a director of Plain Sight since2008 and acts as chairman of Leeb Capital Management, Inc., a registered investmentadvisory firm based in the New York. In his role as
chairman, Dr Leeb guides the company's investmentdecisions which are then implemented within the portfolios under the firm's management.
He is also a member of the advisory boards ofa number of private US companies and founded the Leeb Group, a publisher of financialnewsletters. Dr Leeb has written seven published books on investments and financialtrends.
Dr Leeb received his bachelor's degree in Economicsfrom the University of Pennsylvania's Wharton School of Business and earned hismaster's degree in Mathematics and Ph.D. in Psychology from the University of Illinois.
The City Code
The issue of the Consideration Shares to the ConcertParty gave rise to certain considerations under the Code which are set out in theAdmission Document.
The members of the Concert Party are deemed tobe acting in concert for the purposes of the Takeover Code. The Concert Party, detailsof whom are also set out in the AIM Admission Document, are interested in 6,747,324New Ordinary Shares, representing 75.08 per cent. of the Company's enlarged issuedvoting capital.
A table showing the interests in the Company'sNew Ordinary Shares held by the members of the Concert Party on Admission is setout below. It should be noted that this table replaces and supersedes the tableset out on page 21 of the Admission Document.
|
Concert Party Member | Number of Consideration Shares received pursuantto the Acquisition |
Number of Open Offer Shares Subscribed for |
Percentage of the Enlarged Share Capital |
|
|
|
|
|
| Patrick DeSouza* | 2,691,607 | - | 29.95 |
| Plain Sight | 1,866,380 | 40,000 | 21.21 |
| Stanford Berenbaum* | 1,070,926 | - | 11.92 |
| Ronald Coifman* | 219,962 | - | 2.45 |
| Michael Reisman* | 147,378 | - | 1.64 |
| Frederick Warner* | 120,543 | - | 1.34 |
| Andreas Coppi* | 120,543 | - | 1.34 |
| Komodo Trust for Health and Education | 73,689 | - | 0.82 |
| Stephen Leeb* | 73,689 | - | 0.82 |
| Bryan DeSouza | 73,689 | - | 0.82 |
| Todd Carter* | 68,015 | - | 0.76 |
| James Bass* | 36,844 | - | 0.41 |
| Jeffrey Greenberg | 29,475 | - | 0.33 |
| Laura Hills* | 29,475 | - | 0.33 |
| Eric Remole | 29,475 | - | 0.33 |
| Nicholas Black* | 26,159 | - | 0.29 |
| David Sandell | 14,738 | - | 0.16 |
| Lana Gayevsky | 7,369 | - | 0.08 |
| Steven Fishman | 7,368 | - | 0.08 |
|
| 6,707,324 | 40,000 | 75.08 |
Additional information
Summary of Directors interests and other notifiableinterests:
|
Director/Shareholder | Number of Ordinary Shares held on Admission | Percentage of New Ordinary Shares in issue |
| Patrick DeSouza | 2,691,607 | 29.95 |
| Plain Sight Systems, Inc.* | 1,906,380 | 21.21 |
| Stanford Berenbaum | 1,070,926 | 11.92 |
| Bluehone Investors LLP | 477,777 | 5.32 |
| Michael Riesman | 147,378 | 1.53 |
| Stephen Leeb | 73,689 | 0.77 |
| Harry Offer | 45,228 | 0.50 |
| Ric Piper | - | - |
* Patrick DeSouza isChief Executive Officer of Plain Sight Systems, Inc.
Under Schedule 2, paragraph (g) of the AIM Rules,the following additional information is disclosed:
Directorships
Directorships held by MessrsPiper, Reisman and Leeb in thepast five years:
|
Director | Current Directorships/Partnerships | Past Directorships/Partnerships |
| Richard 'Ric' Piper | Matchtech Group Plc Turbo Power Systems Inc. | Airbase Interiors Limited Cornwell Management Consultants Plc Euphony Holdings Limited Granby Oil And Gas Limited HLBBShaw Group Plc HLBBShaw (Trustee) Limited HLBBShaw Holdings Limited Off The Streets And Into Work Subsea Resources Plc SGL Vietnam Development Limited Xploite Plc
|
| Michael Reisman
| Foreign Policy Association New Haven Press Plain Sight Systems, Inc Policy Sciences Center, Inc
| None |
| Stephen Leeb | Emerging Advisory LLC Leeb & Co. Leeb Capital Management Inc Leeb Index Trader LLC Leeb IPO Advisory LLC Leeb Research Consultants, Inc Natural Resources Advisory LLC Plain Sight Systems, Inc TCI Enterprises LLC | None |
Ric Piper has been a director of Subsea ResourcesPlc which was put into administration on 11 April 2008 which administration becamea creditors voluntary liquidation on 30 March 2009.
Stephen Leeb and entities associated with himhave previously been censured by the US Securities and Exchange Commission (SEC)following alleged violations of SEC requirements. In 1995, Dr. Leeb and the associatedLeeb Capital Management Inc. ("Leeb Capital") entered into an agreement with theSEC following allegations of administrative record keeping violations. Leeb CapitalManagement was required to pay a fine of $15,000. In 1996, Dr. Leeb and the associatedLeeb Investment Advisors, and certain other parties with whom neither Dr. Leeb orLeeb Capital are now associated, were censured by the SEC following allegations thatthey had failed to ensure the accuracy of an advertisement. Both were required topay of fine of $60,000. As the penalties imposed in these cases were part of a settlement,the allegations were not proved in either case and are still denied by Dr. Leeb andthe associated entities. Leeb Capital, of which Stephen Leeb is Chief Executive Officer,remains a federally registered investment advisor firm with the SEC and since 1996,there have been no violations committed or alleged.
Messrs Piper, Riesmanand Leeb have confirmed there is no additional informationunder Schedule 2, paragraph (g) of the AIM rules which needs to be disclosed.