TIDMFAL
RNS Number : 6010P
Falcon Media House Limited
30 May 2018
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, WITHIN, INTO OR IN THE UNITED STATES, AUSTRALIA, CANADA
OR JAPAN.
30 May 2018
Falcon Media House Limited
("Falcon" or the "Company")
Delisting
Falcon Media House (LSE:FAL), the global digital media group
focused on the over-the-top ('OTT') market, announces today that it
intends to apply to the FCA to seek a cancellation of the listing
of its ordinary shares on the standard segment of the Official List
and to trading on the London Stock Exchange's Main Market
("Delisting" or "Cancellation"). It is anticipated that the
effective date of the cancellation will be on or around 27 June
2018.
Background to and reasons for the Delisting
On 27 March 2017 the ordinary shares of the Company of GBP0.01
each ("Shares") were readmitted to the standard listing segment of
the Official List and to trading on the Main Market (the
"Readmission") and offered to institutional investors at an initial
offer price of 25p per Share. This implied a market capitalisation,
as at such date, of the share capital of the Group of approximately
GBP13.9 million. As at 29 May 208, the closing trading price of the
Shares was GBP0.027, implying a market capitalisation of the share
capital of the Group of approximately GBP1.5 million, a decrease of
89% from the offer price at Readmission.
The Company is focussed on the commercialisation of its
proprietary and patented Q-Flow technology and the Q-OTT platform
to drive the Company's primary business focus. The offering
provides significant potential and a clear path to market for
global brands, operators and rights-holders that are underserved by
existing providers. The Company recognises that the best returns in
the video streaming market will come from accelerating the
development of the core Quiptel technology, which has already
generated significant interest from potential customers, subject to
the Company's delivery of such with a robust service approach.
However, delays in revenue generation due to contracts taking
longer to sign than originally anticipated led to a funding gap,
which the Company sought to initially address with the issue of a
convertible loan note in October 2017 ("Note"). Since then, the
Board has been working to identify and execute an additional
financing that will allow the Company to move to a position of
financial stability. Over the last weeks the Board has managed to
secure additional funding into the convertible loan note from
existing shareholders as an interim measure, but additional
liquidity is still required by the Company.
The Board has given careful consideration to the best way to
raise capital and provide financial stability to the business and
finds that the continued listing of the Shares incurs significant
cost while presenting an obstacle to potential sources of
funding.
Based on extensive and careful consideration, including
consulting with the Company's legal and financial advisers, the
Board has concluded that it is in the best interest of all
stakeholders (including but not limited to the shareholders) to
proceed with the Delisting for the following reasons:
-- Building a realistic valuation for a small company
The Board believe that the market is not well placed to value an
early stage company such as Falcon - a fact which is exacerbated by
the low liquidity of the Shares. The Board has given serious
consideration to the poor Share trading performance, low liquidity
and low market capitalisation of the Shares and has worked as
effectively as possible trying to find the best way forward.
Financial analysis and valuations from the industry have been
considered as part of this process. These analyses provide further
support to the Board's view that the on-going market capitalisation
of the Company (as implied by the trading price of the Shares) and
subsequent funding restrictions limit the exploration of its
potential value and the value of its unique patented technology in
a fast-paced and dynamic video distribution and streaming
market.
The Board has carefully considered the strategic options
available to the Company to address the additional funding needed
to capture the true value of the Company. The Board has concluded
that as an unlisted company, the Company would be in a better
position to maximise potential shareholder value while still
meeting its operational and financial objectives.
-- Reducing costs to protect cash
The cost of maintaining the systems, procedures, staff and
advisers to comply with listed company requirements is not the
optimal use of the Company's financial resources. The Board believe
that cash can be more usefully utilised in business-facing
activities aimed at generating income and providing more cash
headroom to enable the business to execute.
-- Maximising the potential to raise funding in the immediate term
The Company is restricted from issuing equity or converting
Notes that would result in Falcon issuing more than 20% of its
current Shares in issue in any 12-month period - without a
prospectus being prepared. This restricts the amount that can be
raised at the current share price to less than GBP300,000 without a
prospectus or would require the Company to incur significant legal
cost associated with the preparation of such a document, without
the certainty of raising funds from such effort. The Board does not
believe that preparing a prospectus would be a sensible use of
Company resources at this time, given other competing demands on
the funds and capabilities of the business.
-- Potential suspension of trading
In addition, should the Company secure funding, it is highly
likely that it will no longer meet the free float requirements of
the London Stock Exchange. In this case, the Shares would likely be
suspended from trading before the end of July 2018.
Update on Position of the Company
Substantial steps have been taken since November 2017 to reduce
the costs of the Company, including:
-- Closing the development office in Shenzhen, China.
Development work and core technology as well as IT administration
has been moved to a small team in Cambridge and final arrangements
are being taken to close the China office. Focus has been on
maintaining support for existing clients in this process, ensuring
a professional and proper process for the dedicated team in China
and finding the best options for them in taking on new
assignments;
-- Reducing personnel and overhead costs in the London office to
reflect the focus on technology, including salary adjustments for
key personnel including the CEO;
-- The earlier-reported closing down of development activities in Pakistan and Vietnam; and
-- Closing of the Company's office in Zurich and move of the finance function to London.
As disclosed above, the Company has generated significant
interest in its proprietary technology and is currently commencing
on the first proof of concept trials in the US and India. When
successfully closed, these proof of concept data points could
stimulate further customer interest and revenue creation.
The Company is currently focused on deploying its services in
two main jurisdictions - India and the US. The Company is, in
parallel with delivering the first proof of concepts in those
markets, in the process of building up a pipeline of potential
customers.
The Board has discussed different financing options and believe
that a delisting will provide access to investor groups not likely
to invest in public companies. The Board intends to continue these
discussions once the Company is delisted.
Effect of the Delisting
Following the Delisting, the Shares will no longer be traded on
a regulated market. As a result, a holder of Shares will not be
able to trade its Shares on the LSE and, consequently, the
opportunity for holders of Shares to sell their interest in the
Company will be limited and there will be no public valuation of
Shares. Following Cancellation, holders of Shares will continue to
be entitled to transfer such Shares in accordance with the
requirements of the Articles and Guernsey law.
The shares will continue to be settled through CREST, or
shareholders can request they be converted into certificated
form.
The Company believes that the delisting will ultimately produce
a more realistic valuation of the Company, which will accrue to the
benefit of the shareholders of the private company.
Following the Delisting, the Company will no longer be subject
to the regulatory and statutory regime which applies to Guernsey
companies admitted to the standard segment of the Official List and
traded on the Main Market. As a result:
i. holders of Shares will no longer be afforded the protection
given by the Listing Rules and the Disclosure Guidance and
Transparency Rules, such as the Company will not be required
to:
a. publish all circulars, notices, reports or other documents to
which the Listing Rules apply or any resolutions passed by the
Company other than in the ordinary course;
b. publish information relating to any proposed change in the
Company's capital structure other than the required filings and
publication thereof upon the increase or decrease of the share
capital of the Company in general;
c. publish its annual financial report within four months of the
Company's financial year end (but will be required to file such
information with the Guernsey Registry ultimately within 12 months
of the financial year end). However, please see the Board's
proposal, below;
d. include a corporate governance statement in its annual report; and
e. publish its semi-annual financial report within two months of
the first six months of its financial year;
ii. the Company will no longer be subject to the Market Abuse Regulation, such as:
a. the Company will not be required to notify the public of
inside information which concerns the Company;
b. persons discharging managerial responsibilities within the Company (including members of the administrative, management or supervisory board of the Company) (the "PDMRs") will not be required to notify the Company and the public of every transaction on their own account in the Shares; and
c. PDMRs will not be required to refrain from dealing (directly
or indirectly) in the Shares during the period 30 days before
announcement of the Company's annual financial statements.
The City Code on Takeovers & Mergers ("Takeover Code") will
continue to apply to the Company and its shareholders following the
Delisting.
Following the Delisting, the Company intends to implement the
following corporate governance steps:
-- Provide the Annual Report and an Interim statement to shareholders on a regular basis; and
-- Hold its AGM in the UK, providing shareholders with the
opportunity to meet the Board and discuss progress.
Owing to its current financial position, the Company is not able
to provide investors that do not want to remain as shareholders of
a private company with a cash alternative. However, the Board
believes that any such cash alternative based on the current
trading price of the shares would significantly undervalue the
Shares in any event.
**ENDS**
For more information visit www.falconmediahouse.com or enquire
to:
Falcon Media House Limited info@falconmediahouse.com
Gert Rieder
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCFMGZKGLDGRZZ
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May 30, 2018 02:01 ET (06:01 GMT)
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