RNS Number:2461T
IAF Group PLC
28 April 2008
28 April 2008
IAF Group Plc ("IAF" or the "Company")
#1 million Placing
Announcement of General Meeting
Trading Update
IAF, the AIM quoted corporate advisory and stock broking Group, has today
announced that it is raising #1 million, before expenses, by way of a Placing to
certain investors of 31,250,000 new Ordinary Shares at 3.2 pence per Placing
Share, with Warrants attached.
The Warrants may be exercised in whole or in part at any time in the 24 months
following Admission at an exercise price of 3.2 pence. The Warrants will not be
quoted on AIM or elsewhere and are not attached to the Placing Shares. If the
Warrants are exercised in full then the Company will receive a further #1
million.
The Placing is conditional upon the approval of certain waivers of Rule 9 of the
Takeover Code by Independent Shareholders at a general meeting. The Company
will today post a circular to Shareholders convening a General Meeting at 10.00
a.m. on 22 May 2008. The net proceeds of the Placing will be used to provide
the Group with additional working capital.
Following the re-organisation of the Group's activities in 2006, the Company has
refocused on its financial services business and is developing its wholly owned
subsidiary, IAF Securities Limited, as an FSA authorised firm offering corporate
finance, stock broking and wealth management services. IAFS is in a period of
growth and requires regular injections of capital from the Company to meet the
costs of its expansion, regulatory capital requirements, and to fund trading
losses to date.
In addition, the Board believes that there may be opportunities to enhance the
Group's operating capability through the acquisitions of teams or individuals
which would require additional financing.
As stated in the Company's unaudited interim results, which were announced on 25
February 2008, the delay in becoming registered as a nominated adviser, the
current volatility in the stock markets and the fact that recruitment of new
staff is taking longer than planned, means that while the overall medium term
prospects remain encouraging, it will take longer than anticipated for the Group
to become cash flow positive.
The Board is conscious of its responsibility to ensure that IAFS has sufficient
working and regulatory capital to manage and expand the business under the new
rules and closely monitor the Company's capital and cash flow to ensure
compliance with the relevant regulations.
The challenging trading conditions currently being experienced as a consequence
of the turbulence in financial markets makes it difficult to forecast future
revenues. A significant proportion of the Company's revenue derives from fees
on corporate finance transactions. The timing and certainty of a number of large
corporate finance projects currently under way is unclear at this time and the
outcome will materially affect overall results for the year. Broking
commissions have also been adversely affected by the instability in global stock
markets with dealing levels significantly below their peak of 2007.
In light of these factors, the Board believes that it is in Shareholders'
interests to strengthen the Company's balance sheet through the issue of
additional equity via a placing to certain directors, Shareholders and
employees.
Due to cost constraints and timing issues the Board has determined that it would
not be practical to issue a prospectus which would have permitted the
participation of all Shareholders. David Massie, a Director and, through the
Massie Concert Party, a holder of 29.75 per cent. of the issued share capital of
the Company and CF Group a holder of 29.75 per cent. of the issued share capital
of the Company are substantial shareholders and their participation in the
Placing constitutes a related party transaction under Rule 13 of the AIM Rules.
Having consulted with the Company's nominated adviser, Dowgate Capital Advisers
Limited, the Independent Directors consider that the terms of the transaction
are fair and reasonable in so far as Shareholders are concerned.
The Company has received placing letters from certain members of the Massie
Concert Party to subscribe, in aggregate, for 9,296,875 Placing Shares,
representing 29.75 per cent. of the Placing and equivalent to the current
interest of the Massie Concert Party in the Company. CF Group, as a member of
the CF Group Concert Party, has also agreed to subscribe for 9,296,875 Placing
Shares, similarly representing 29.75 per cent. of the Placing and equivalent to
the current interest of the CF Group Concert Party in the Company. These
placing letters are conditional upon the passing of certain of the Resolutions
by Independent Shareholders at the General Meeting and represent an aggregate of
18,593,750 Placing Shares representing 59.50 per cent. of the Placing.
Certain members of the Massie Concert Party and CF Group have agreed to
subscribe for further shares to the extent that other placees are not found for
the remaining 12,656,250 Placing Shares. If no other placees are found, this
would mean that certain members of the Massie Concert Party and CF Group, as
part of the CF Group Concert Party, would subscribe for an aggregate of 100 per
cent. of the Placing. In this event the aggregate subscriptions of the members
of the Massie Concert Party and the subscription of CF Group would equal
15,625,000 Placing Shares respectively, representing 50 per cent. of the Placing
in each case.
In no event would either members of the Massie Concert Party, in aggregate, or
the CF Group Concert Party be entitled or obliged to subscribe for more than
15,625,000 Placing Shares.
In the event that either members of the Massie Concert Party, in aggregate, or
CF Group, as a member of the CF Group Concert party, subscribe for more than
9,527,775 Placing Shares then the interest of the respective concert party in
the issued share capital of the Company would exceed 29.99 per cent. of the
voting rights of the Enlarged Share Capital. Exercise of the Warrants by either
party would further increase their respective holdings.
Under Rule 9 of the Takeover Code, when any person acquires, whether by a series
of transactions over a period of time or not, an interest in shares which (taken
together with shares in which he and persons acting in concert with him are
interested), carry 30 per cent. or more of the voting rights of a company
subject to the Takeover Code that person, and any persons acting in concert with
him, is normally required to make a general offer to all of the Company's
shareholders to acquire the remaining shares in that company not held by him and
his concert party.
Similarly, where any person, together with persons acting in concert with him,
is interested in shares which in aggregate carry not less than 30 per cent. of
the voting rights of a company, but does not hold shares carrying more than 50
per cent. of the voting rights of the company, a general offer is required if
any further interest in shares is acquired by any such person, or persons acting
in concert with him.
The Placing is therefore conditional upon the approval of the Independent
Shareholders of waivers from the obligations of Rule 9 of the Takeover Code for
either members of the Massie Concert Party or members of the CF Group Concert
Party to make a general offer for the outstanding issued share capital of the
Company.
Mr Massie and Mr Crawford have known each other socially since 1978 and have no
other joint or connected business interests other than their respective
shareholdings in IAF. The Massie Concert Party and the CF Group Concert Party
are not acting in concert as defined by the Takeover Code and each concert party
have signed letters to that effect.
In February 2006, Massie & Co. (a member of the Massie Concert Party) was
granted options over such number of Ordinary Shares equivalent to 1 per cent. of
the fully diluted share capital of the Company from time to time, exercisable at
14p per Ordinary Share for a period of 10 years, subject to certain performance
conditions (the "Option Award"). The option is also exercisable within 14 days
in the event of a change of control of IAF. At the time, David Massie, on
behalf of Massie & Co., separately undertook to the Company that it would not
exercise the Option Award in such a manner as will cause the shareholding of
David Massie (including any related parties) to exceed 29.99 per cent.
Exercise of the Option Award following participation of David Massie and his
related parties in the Placing could result in Massie & Co. incurring an
obligation to make a general offer under Rule 9 of the Takeover Code. Approval
is therefore being sought on a poll of Shareholders, other than members of the
Massie Concert Party, for a waiver of the obligations of Rule 9 of the Takeover
Code in respect of the Option Award. If this waiver is granted then the
undertaking outlined above will cease.
The resolutions to approve the various waviers from the obligations of Rule 9 of
the Takeover Code and a resolution to preserve the existing authorities granted
to the Directors pursuant to section 95 of the Companies 1985 at the Company's
Annual General Meeting which took place on 29 October 2007, will be proposed at
the General Meeting of the Company to be held at 10.00 a.m. on 22 May 2008 at
the Company's offices.
The Placing Shares will, if issued, rank pari passu with the existing Ordinary
Shares.
EXPECTED TIMETABLE
2008
Latest time and date for receipt of completed Forms of Proxy 10.00
a.m. on 20 May
General Meeting 10.00
a.m. on 22 May
Admission and commencement of dealings in the Placing Shares 8.00
a.m. on 23 May
on AIM
If any details contained in the timetable above should change, the revised times
and dates will be notified by means of an announcement through a Regulatory
Information Service.
PLACING STATISTICS
Number of Ordinary Shares in issue at the date of this document
65,470,760
Number of new Ordinary Shares to be issued pursuant to the Placing
31,250,000
Number of Ordinary Shares in issue following Admission of the Placing Shares
96,720,760
Number of Warrants to be issued pursuant to the Placing
31,250,000
Percentage of the Enlarged Share Capital represented by the Placing Shares
32.31 per cent.
Maximum percentage of the Fully Diluted Share Capital of the Massie Concert Party
45.70 per cent.
Maximum percentage of the Fully Diluted Share Capital of CF Group Concert Party
45.15 per cent.
Gross proceeds of the Placing
#1,000,000
Estimated net proceeds of the Placing
#935,000
Market capitalisation on completion of the Placing at the Placing Price
#3.1 million
The circular is available for viewing at the Company's offices and will be
published on the Company's web site at www.iafgroup.com.
For further information please contact:
IAF Group Plc
David Massie (Chairman and Chief Executive - IAF Group Plc)
Tel: 020 7747 8940
Dowgate Capital Advisers Limited
Tony Rawlinson - Chairman
Antony Legge - Associate Director
Tel: 020 7492 4777
Bishopsgate Communications Limited
Nick Rome / Nick Farmer
Tel: 020 7562 3350
nick@bishopsgatecommunications.com
The following definitions apply throughout this announcement, unless the context
otherwise requires:
DEFINITIONS
"Admission" the admission of the Placing Shares to trading on
AIM becoming effective
in accordance with the AIM Rules
"AIM" the market of that name, operated by the London
Stock Exchange
"AIM Rules" the AIM Rules for Companies published by the London
Stock Exchange
"Board" or "Director" the directors of the Company being Mr David Massie,
Mr Graham Ashley and
Mr Menno de Jager
"CF Group" CF Group Holding Limited, a company incorporated in
the British Virgin
Islands. Al the shares in CF Group are beneficially
owned by Mr Gordon
Crawford
"CF Group Concert Party CF Group and Mr Crawford
"Enlarged Share Capital" the 96,720,760 Ordinary Shares in issue immediately
following the Placing
"Fully Diluted Share Capital" the Enlarged Share Capital and the new Ordinary
Shares issued pursuant to
the Warrants and Options
"General Meeting" the general meeting of the Company, to be held at
the office of IAF at 117
Jermyn Street, London SW1Y 6HH at 10.00 a.m. on 22
May 2008
"Group" the Company and its subsidiaries at the date of this
announcement
"Independent Directors" Mr Menno de Jager and Mr Graham Ashley
"Independent Shareholders" the holders of Ordinary Shares, other than members
of the CF Group Concert
Party or members of the Massie Concert Party
"Issued Share Capital" the 65,470,760 Ordinary Shares in issue as at the date of
this
announcement
"IAFS" IAF Securities Limited, a subsidiary of the Company
"Massie Concert Party" Mr David Massie, DL Massie Family Settlement, Zibo
Services Limited,
Sandwood Limited, Curzon Nominees Limited, IAF (PS)
Nominees Limited, IZ
Trust and Massie &Co.,
"Ordinary Shares" the ordinary shares of 1 pence each in the share capital
of the Company
"Placing" the proposed placing of the Placing Shares and Warrants
"Placing Price" 3.2 pence per Placing Share
"Placing Shares" the 31,250,000 new Ordinary Shares to be issued under the
Placing
"Shareholders" the holder(s) of Ordinary Shares
"Takeover Code" The City Code on Takeovers and Mergers, published by the
Takeover Panel
"Warrants" the warrants to be issued pursuant to the Placing over
31,250,000 new
Ordinary Shares at an exercise price of 3.2 pence per
share
This information is provided by RNS
The company news service from the London Stock Exchange
END
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