TIDMCNS
RNS Number : 5850N
Corero Network Security PLC
10 May 2018
10 May 2018
Corero Network Security plc
("Corero," the "Company" or the 'Group')
Notice of Annual General Meeting
Capitalised terms in this announcement shall have the same
meaning as in the Circular that will be posted to shareholders
today.
Corero announces that it has posted a Notice of Annual General
Meeting to be held at 68 Lombard Street, London, EC3V 9LJ at
11.30am on 5 June 2018 (the "Meeting"). The Notice of Annual
General Meeting as well as the Annual Report and Accounts for the
year ended 31 December 2017 (which have also been posted to
shareholders) are available to view on the Company's website:
https://www.corero.com.
Alongside the ordinary course resolutions contained within the
Notice of Annual General Meeting that the Company is seeking
approval for at the Meeting, the Company is also proposing a
Whitewash Resolution to allow the cancellation and regrant of share
options to Jens Montanana and Andrew Miller. The requirement for a
Whitewash Resolution was previously announced on 9 June 2017 and 5
April 2018. The terms of the cancellation and regrant of options
for Jens Montanana and Andrew Miller are the same as those for the
cancellation and regrant of options to Corero employees and
directors as announced on 9 June 2017.
Further details on the Whitewash Resolution are set out
below.
1. Background to and reasons for the Whitewash Resolution
On 9 June 2017, the Company announced its intention to cancel
2,356,000 Existing CP Share Options granted to Andrew Miller and
425,000 Existing CP Share Options granted to Jens Montanana and to
grant an equal number of Regrant CP Share Options to each of them.
Andrew Miller and Jens Montanana are considered by the Takeover
Panel to be acting in concert for the purposes of the Takeover
Code
The Existing CP Share Options were granted to Mr. Miller on 10
August 2010, 6 September 2012, 3 April 2013, 12 May 2014, 24 April
2015 and 7 January 2016, and to Mr. Montanana on 10 August 2010, 21
March 2012, 3 April 2013 and 7 January 2016. Independent
Shareholders approved the future exercise of the Existing CP Share
Options by the Concert Party at a General Meeting on 24 April 2017.
The Concert Party will hold 2,781,000 Regrant CP Share Options. The
purpose of re-granting the Regrant CP Share Options is to put in
place a new, lower exercise price and to ensure that Corero share
options continue to act as an incentive and retention tool.
The Company has entered into deeds of cancellation and option
agreements with Andrew Miller and Jens Montanana which will
terminate and lapse if the Whitewash Resolution is not passed. The
Regrant CP Share Options will carry an exercise price of 13.6 pence
per Ordinary Share, being the weighted average price of the Company
fundraises from 2010 up to 9 June 2017 (being the date in which
certain share options of other directors and employees were
cancelled and regranted), and they will vest in equal proportions
on the first, second and third anniversaries of being granted. Any
Ordinary Shares issued pursuant to the exercise of the Regrant CP
Share Options may not be sold or otherwise transferred until the
second anniversary of the date of being granted. There are no
performance conditions associated to the vesting of the Regrant CP
Share Options.
The number of Regrant CP Share Options to be granted will be the
same as the number of Existing CP Share Options to be cancelled.
However, since the grant of the Regrant CP Share Options will be on
new terms, the increase in the percentage shareholding of the
Concert Party as a result of the exercise of any of the CP Share
Options without a waiver of the obligations under Rule 9 of the
Takeover Code (commonly referred to as a "Whitewash"), would oblige
the Concert Party to make a general offer to Shareholders under
Rule 9 of the Takeover Code in either circumstance. The Panel has
agreed to a waiver of this obligation, subject to the Whitewash
Resolution being approved at the Annual General Meeting (on a poll)
by Independent Shareholders who hold in excess of 50 per cent. of
the Independent Shares. The Rule 9 Waiver and the re-grant of
Regrant CP Share Options are therefore each conditional, inter
alia, upon Shareholders approving the Whitewash Resolution. If the
Whitewash Resolution is not approved by Independent Shareholders,
no Existing CP Share Options of the Concert Party will be cancelled
and no Regrant CP Share Options will be granted.
The Regrant CP Share Options to be granted to Andrew Miller will
be granted under the terms of the Corero Executive Enterprise
Management Incentive Plan. The current EU State Aid approval for
Enterprise Management Incentive ("EMI") options schemes expired on
6 April 2018 due to UK government oversight in making the
application for the renewal of EU State Aid. This means that EMI
share options granted in the period after 6 April 2018 up until EU
State Aid approval is received may not be eligible for the tax
advantages afforded to EMI option holders, and accordingly share
options granted in that period as EMI share options may therefore
be treated as non-tax advantaged employment-related securities
options.
The expectation is that this matter should be resolved within a
relatively short time and that EU State Aid approval will be
obtained. However, there is currently no certainty as to the manner
in which, or indeed if, this matter will be resolved. If EMI
options are granted in the period between 7 April 2018 and the date
on which EU State Aid is obtained it is likely that either: (i) EU
State Aid will be obtained with retrospective effect in which case
any EMI option grants would subsist as qualifying EMI options; or
(ii) EU State Aid will be obtained but without retrospective effect
in which case such EMI option grants would subsist as
non-qualifying options which would need to be cancelled and new
options granted in order to qualify as an EMI options. If EU State
Aid is not obtained, any such option grant would either remain as a
non-qualifying options or would need to be cancelled and a new
option grant made under a more tax efficient scheme.
In the event that either EU State Aid is obtained without
retrospective effect or is not obtained at all then, assuming that
the Whitewash Resolution is passed, the Company may cancel the
grant of the Regrant CP Share Options to Andrew Miller and instead
grant new options to Andrew Miller on the same terms as the Regrant
CP Share Options as regard to the number of share options granted,
the exercise price and the vesting. Therefore, if Shareholders vote
in favour of the Whitewash Resolution they will be approving both
the Regrant CP Share Options and the possible future grant and
exercise of 2,356,000 options over Ordinary Shares in the event
that the Regrant CP Share Options to Andrew Miller are
cancelled.
2. The Takeover Code
The Takeover Code is issued and administered by the Takeover
Panel. The Takeover Code applies, inter alia, to all public
companies which have their registered office in the United Kingdom
and are considered by the Takeover Panel to have their place of
operation in the United Kingdom. The Company is such a company and
Shareholders are therefore entitled to the protections afforded by
the Takeover Code.
Under Rule 9 of the Takeover Code, any person who acquires an
interest (as such term is defined in the Takeover Code) in shares
which, taken together with the shares in which he and persons
acting in concert with him are interested, carry 30 per cent. or
more of the voting rights in a company that is subject to the
Takeover Code, is normally required to make a general offer to all
of the remaining shareholders to acquire their shares. Similarly,
when any person, together with persons acting in concert with him
or her, is interested in shares which in aggregate carry not less
than 30 per cent. of the voting rights but does not hold shares
carrying more than 50 per cent. of the voting rights of such a
company, a general offer will normally be required if any further
interests in shares are acquired which increases the percentage of
shares carrying voting rights by any such person. Such an offer
would have to be made in cash at a price not less than the highest
price paid by him, or by any member of the group of persons acting
in concert with him, for any interest in shares in the company
during the 12 months prior to the announcement of the offer. The
Takeover Panel may agree to waive an obligation that would
otherwise arise to make a mandatory offer under Rule 9 of the
Takeover Code where that obligation arises as a result of an issue
of new shares and the waiver is approved by independent
shareholders.
Shareholders should be aware that if the Whitewash Resolution is
passed, Jens Montanana will hold an interest in Ordinary Shares
carrying more than 30 per cent., but not more than 50 per cent., of
the voting rights of the Company's voting share capital. As such,
for the purposes of the provisions of Rule 9 of the Takeover Code,
any further increase in Jens Montanana's interest in Ordinary
Shares will be subject to the provisions of Rule 9 of the Takeover
Code.
Shareholders should also be aware that if the Whitewash
Resolution is passed, the Concert Party will also hold an interest
in Ordinary Shares carrying more than 30 per cent., but not more
than 50 per cent., of the voting rights of the Company's voting
share capital. As a result, for as long as they continue to be
treated as acting in concert, any further increase in the Concert
Party's interest in Ordinary Shares will also be subject to the
provisions of Rule 9 of the Takeover Code.
The Concert Party
Under the Takeover Code, a concert party arises when persons,
pursuant to an agreement or understanding (whether formal or
informal), co-operate to obtain or consolidate control of, or
frustrate the successful outcome of an offer for the Company.
Control means an interest or interests in shares carrying in
aggregate 30 per cent. or more of the voting rights of a company
irrespective of whether the interest or interests give de facto
control.
The Company's largest Shareholder and Non-Executive Chairman,
Jens Montanana, together with Andrew Miller, Chief Financial
Officer, have an aggregate holding in the Company of 155,474,046
Ordinary Shares at the date of this announcement. As set out in a
circular issued by the Company dated 14 July 2010, a circular
issued by the Company dated 25 February 2013 and a circular issued
by the Company dated 6 April 2017, Jens Montanana and Andrew Miller
are considered by the Takeover Panel to be acting in concert for
the purposes of the Takeover Code. Both members of the Concert
Party are Directors and employees of the Company.
Should the Concert Party exercise their rights under their CP
Share Options in full, and assuming no other Ordinary Shares are
issued by the Company following the date of this announcement, then
the Concert Party would have an interest in the Company of
158,255,046 Ordinary Shares representing 41.27 per cent of the
Company's issued share capital at that date. Full details of the
Concert Parties interests on 9 May 2018 (being the last practicable
date prior to publication of this announcement) and potential
interest in Ordinary Shares if the members of the Concert Party
exercise their rights under the CP Share Options are set out
below:
Director Number of Existing Number of Number of Number of Resulting
Ordinary holding Existing Existing Regrant holding
Shares held as a CP Share CP Share CP Share as a
on 9 May percentage Options Options Options percentage
2018 (being of the held on to be to be granted of the
the last Existing 9 May 2018 cancelled conditionally Enlarged
practicable Share (being the on the passing Share
date prior Capital last of the Capital
to publication practicable Whitewash assuming
of this date prior Resolution the exercise
announcement) to publication of all
of this of the
announcement) CP Share
Options
and assuming
no further
issue
of Ordinary
Shares
Jens Montanana 154,382,609* 40.10% 1,419,000 425,000 425,000 39.87%
Andrew
Miller 1,091,437 0.28% 4,415,000 2,356,000 2,356,000 1.41%
Total 155,474,046 40.38% 5,834,000 2,781,000 2,781,000 41.27%
* of which 33,674,846 Ordinary Shares are held in the name of
JPM International Limited, which is wholly owned by Jens Montanana,
and 102,953,954 Ordinary Shares are held in the name of The New
Millennium Technology Trust.
Rule 9 Waiver
The Takeover Panel has agreed to waive the obligation on the
Concert Party to make a general offer that would otherwise arise as
a result of the exercise of Regrant CP Share Options, subject to
the approval of the Independent Shareholders, (to be taken on a
poll). Accordingly, the Whitewash Resolution is being proposed at
the General Meeting to approve the Rule 9 Waiver in respect of the
Concert Party for the future exercise of any of the Regrant CP
Share Options. Members of the Concert Party will not be entitled to
vote on the Whitewash Resolution.
3. Intentions of the Concert Party
The Concert Party has confirmed that, if the Whitewash
Resolution is passed by the Independent Shareholders on a poll,
there is no agreement, arrangement or understanding for the
transfer of their Ordinary Shares to any third party. Save as set
out below, the Concert Party is not intending to seek any changes
in respect of: (i) the composition of the Board, nor the Company's
plans with respect to the continued employment of employees and
management of the Company and its subsidiaries (including any
material change in conditions of employment); (ii) the Company's
future business and its strategic plans; (iii) the location of the
Company's place of business; (iv) employer contributions into any
of the Company's pension schemes, the accrual of benefits for
existing members, nor the admission of new members; (v)
redeployment of the Company's fixed assets; or (vi) the
continuation of the Ordinary Shares being admitted to trading on
AIM.
In the event that the Whitewash Resolution is passed by the
Independent Shareholders at the AGM, the Concert Party will not be
restricted from making an offer for the Company.
4. Current trading
On 5 April 2018, the Company released its annual audited results
for the year ended ending 31 December 2017. A copy of the annual
audited results for the year ended 31 December 2017 is available on
the Company's website at: www.corero.com/investors.
5. Independent advice provided to the Board
The Takeover Code requires the Board to obtain competent
independent advice regarding the merits of the Rule 9 Waiver which
is the subject of the Whitewash Resolution, the increase of the
Concert Party's controlling position on exercise of the CP Share
Options and the effect it will have on the Shareholders generally.
Accordingly, Cenkos, as the Company's financial adviser, has
provided formal advice to the Board regarding the Rule 9 Waiver.
Cenkos confirms that it is independent of Jens Montanana and Andrew
Miller, being the Concert Party, and has no commercial relationship
with them.
6. Recommendations
The Independent Directors consider the Whitewash Resolution to
be in the best interests of the Company and its Shareholders as a
whole. The Independent Directors, who have been so advised by
Cenkos, consider that the Rule 9 Waiver is fair and reasonable and
in the best interests of the Independent Shareholders and the
Company as a whole. In providing advice to the Independent
Directors, Cenkos has taken into account the Independent Directors'
commercial assessments.
The Independent Directors unanimously recommend that
Shareholders vote in favour of the Whitewash Resolution, as they
have undertaken to do in respect of their own beneficial holdings,
representing approximately 0.63 per cent. in aggregate of the
Existing Ordinary Shares. Jens Montanana and Andrew Miller, who are
members of the Concert Party, are not deemed to be independent for
the purpose of this recommendation.
The Directors believe that the Resolutions (excluding the
Whitewash Resolution) to be considered at the Annual General
Meeting are in the best interests of the Company and its
shareholders as a whole and unanimously recommend that you vote in
favour of each of the Resolutions, as the Directors who are
Shareholders intend to do in respect of their beneficial
shareholders representing, in aggregate, over 41.02 per cent. of
the current issued share capital of the Company.
Enquiries:
Corero Network Security plc Tel: 01895 876 382
Andrew Miller, CFO
Cenkos Securities plc Tel: 020 7397 8900
Mark Connelly - NOMAD
Michael Johnson - Sales
Vigo Communications Tel: 020 7830 9703
Jeremy Garcia / Ben Simons
corero@vigocomms.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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