Fundraising and Notice of EGM

28 Sep 2007 07:06

Mobile Tornado Group PLC28 September 2007 Mobile Tornado Group plc ("Mobile Tornado" or "the Company") Fundraising and Notice of Extraordinary General Meeting The Company is pleased to announce that it has conditionally raised £2.3million, before expenses, through a placing of 12,251,333 Ordinary Sharescurrently held in treasury ("Treasury Shares") and 18,750,000 Non-VotingPreference Shares (together the "Placing"). Since the placing announced on 25 September 2006, the Company has madesubstantial changes to the Group's technology platform and has worked closelywith Nortel Networks and InTechnology plc ("InTechnology") in order to developfurther and commercialise its product offering. The Board believes that theGroup will require further funds before it is able to achieve material revenueswithin the business. As such, InTechnology and Peter Wilkinson have conditionally agreed to acquirethe Treasury Shares from the Company at a price of 7p per Treasury Share. InTechnology has also conditionally agreed to subscribe 18,750,000 Non-VotingPreference Shares at a price of 8p per Non-Voting Preference Share. Following the Proposals, the Company will have raised net proceeds ofapproximately £2.2 million. Use of Funds The Directors intend to use the net proceeds of the Placing to continueinvesting in the Group's technology platform and to establish the managedservices proposition with partners throughout Europe. The Directors have considered the size of the funding required to sustain and tofurther expand the Group's sales and development activities, the need forsufficient working capital, and the current Share price. After carefulconsideration, the Directors believe that the Proposals are in the bestinterests of Shareholders as a whole. The Subscription Pursuant to a subscription agreement, InTechnology and Peter Wilkinson haveconditionally agreed to acquire 12,251,333 Treasury Shares at a price of 7p perTreasury Share. The Treasury Shares represent approximately 6.64 per cent. ofthe issued ordinary share capital of the Company. Peter Wilkinson is also a55.26 per cent. shareholder in InTechnology. In addition, InTechnology has agreed to subscribe for 18,750,000 Non-VotingPreference Shares at a price of 8p per Non-Voting Preference Share. TheNon-Voting Preference Shares carry a cumulative annual coupon of 10 per cent.and may be redeemed at the Subscription Price (together with any accrued butunpaid coupon) at the option of the Company. If the Non-Voting Preference Sharesare not redeemed prior to 31 December 2009 or a third party acquires 75 percent. or more of the issued ordinary share capital of the Company, eachNon-Voting Preference Share will automatically convert into an Ordinary Share.The Non-Voting Preference Shares will not be admitted to trading on AIM. The subscription agreement is conditional on the Resolutions being passed at theExtraordinary General Meeting ("EGM") on 26 October 2007. The agreement can beterminated by InTechnology or Peter Wilkinson prior to the EGM on the occurrenceof certain events, including a material adverse change in the financialcondition or prospects of the Company. Directors holdings As part of the Placing Peter Wilkinson will be purchasing 51,333 Ordinary Sharesat 7p per Treasury Share. Following the Placing, Peter Wilkinson will beinterested in 24,962,725 Ordinary Shares, representing 13.53 per cent. of thevoting capital of the Company. The EGM An EGM will be held at the offices of Hammonds, 2 Park Lane, Leeds LS3 1ES at10.00 a.m. on 26 October 2007 at which the following resolutions will beproposed: Resolution 1 The first resolution is an ordinary resolution and is required because theinvestment constitutes a substantial property transaction involving PeterWilkinson and InTechnology for the purposes of section 320 of the Act(substantial property transactions involving directors) and accordingly issubject to approval by the Shareholders. Resolution 2 The second resolution is a special resolution and relates to the increase inauthorised share capital and amendments to the Company's Articles of Associationnecessary to create the Non-Voting Preference Shares, to implement theSubscription and to provide flexibility for additional share issues in thefuture. If passed, the authorities granted by this Resolution will replace the priorshare issue authorities of the Company obtained at the last extraordinarygeneral meeting of the Company and will: (1) increase the authorised share capital of the Company by the creation of18,750,000 Non Voting Preference Shares; (2) provide your Board with authority to allot Non-Voting Preference Shares inconnection with the Subscription; (3) provide your Board with authority to allot equity securities for cash (orsell equity securities which are, from time to time held by the Company intreasury) without being required first to offer such securities to existingshareholders in accordance with statutory pre-emption rights, provided that suchauthority will be limited to: (i) the issue of Shares pursuant to rights issues or open offers; (ii) the issue of Shares pursuant to any share scheme adopted by the Company; (iii) the sale of the Treasury Shares pursuant to the Proposals; and (iv) (otherwise than pursuant to sub-paragraphs (i), (ii) and (iii)) up to anaggregate nominal amount of £184,430. Recommendation The Placing constitutes a related party transaction for the purposes of the AIMrules. The Independent Directors having been so advised by Blue Oar Securities,the Company's nominated adviser, consider that the terms of the subscriptionagreement are fair and reasonable insofar as Independent Shareholders areconcerned. In providing advice to the Independent Directors, Blue Oar Securities has takeninto account the Directors' commercial assessments. The Independent Directors recommend, for the reasons set out above, that youvote in favour of the resolutions to be proposed at the EGM, as they intend todo in respect of their own shareholding, which in aggregate amounts to16,842,530 Ordinary Shares representing approximately 9.78 per cent. of theissued voting share capital of the Company as at the date of this document. For further details please contact: Mobile Tornado Group plcJeremy Fenn, Chief Financial Officer Tel: +44 (0) 7734 475888 Blue Oar Securities PlcRomil Patel / Rhod Cruwys Tel: +44 (0)20 7448 4400 Buchanan CommunicationsCharles Ryland / James Strong Tel: +44 (0)20 7466 5000 This information is provided by RNS The company news service from the London Stock Exchange