TIDMINVU
RNS Number : 4118J
Invu plc
30 June 2011
30 June 2010
Invu plc
Proposed Capital Restructuring
General Meeting
and
Annual General Meeting
Invu plc ("the Company") today announces that it has entered
into conditional arrangements ("the Conversion and Subscription
Agreement") in relation to a proposed capital restructuring plan
(the "Proposed Capital Restructuring") intended to allow the
Company to meet its obligations to creditors and to continue as a
going concern, reducing current debt levels and maximising
shareholder value as a whole.
The Company has also today announced separately its preliminary
results for the year ended 31 January 2011. The full text of that
announcement is available on the Company's website,
http://www.invu.net/investor-relations.aspx.
The Proposed Capital Restructuring includes:
(a) the issue of 69,658,800 A Shares (described in more detail
below) ("the Subscription") to Cynthia Goldman ("CPG"), Magpie
Investments Limited ("Magpie") and Tyne & Wear Holdings Limited
("Tyne & Wear"), in each case at a price of GBP0.01 per share,
in order to raise approximately GBP696,588 before expenses, in
order to finance the payment of withholding taxes related to the
Loan Facility Agreements as defined below in b), the Company's
professional fees, costs and expenses in connection with the
Proposed Capital Restructuring, the repayment of the Secured Loan
Notes referred to in c) below, as well as for general working
capital purposes;
(b) the conversion to A Shares at GBP0.01 per share of an
aggregate sum (including interest) of GBP2,353,412 ("the
Conversion") owed to Tyne & Wear, Magpie and CPG under the loan
facility agreements entered into between: (i) the Company and Tyne
& Wear; (ii) the Company and Magpie; and (iii) the Company and
CPG, each dated 1 May 2010 ("the Loan Facility Agreements");
and
(c) the repayment of the GBP0.5 million of secured
non-convertible loan notes issued in August 2009 to Puma VCT plc,
Puma VCT II plc, Puma VCT III plc, Puma VCT IV plc and Puma VCT V
plc ("Puma") and guaranteed by CPG in accordance with their terms,
and the release of all related security, rights, obligations and
commitments under those agreements.
It is the opinion of the directors of the Company, excluding
Daniel Goldman, due to the nature of his family relationship to
Cynthia Goldman and by virtue of his relationship as an adviser to
Tyne & Wear and Magpie ("the Independent Directors"), that the
proposed restructuring of the Company's share capital which will
arise as a result of the Conversion and the Subscription, is in the
Company's best interests. In order to implement the proposals a
number of shareholder approvals will be required. These
include:
(a) amending the Company's articles of association to set out
the rights and restrictions attaching to the A Shares; and
(b) the approval of the allotment and issue of the 305,000,000 A
Shares, pursuant to the Subscription and the Conversion, each at
the nominal value of GBP0.01 per share and each on a non
pre-emptive basis.
The A Shares will not be publicly traded and are not
convertible. The A Shares will rank in priority to the issued
ordinary shares of GBP0.01 each in the capital of the Company
("Ordinary Shares") with respect to any distribution of assets of
the Company on a winding-up and will have no rights to attend or
vote at general meetings of the holders of Ordinary Shares
("Shareholders") but will otherwise rank pari passu in all respects
with the issued Ordinary Shares, including the right to receive all
dividends and other distributions declared, made or paid on the
Company's share capital. The terms of the A Shares are set out in
full below.
Background
During the financial year ending 31 January 2009, poor business
performance coupled with adverse market conditions resulted in the
Company and its subsidiaries incurring significant losses. By the
end of that financial year, the Company was in need of additional
finance which it decided to obtain by issuing additional shares for
cash and agreeing new loan facilities. In May 2009, the Company
negotiated a GBP500,000 funding facility with Tyne & Wear. In
August 2009, the Company issued 50 million new Ordinary Shares
raising GBP1 million (the "August 2009 Placing"). These new shares
were purchased by certain pre-existing Shareholders and their
affiliates. A further GBP1 million was raised simultaneously
through the issuance of: (i) GBP500,000 in Convertible Loan Notes
(described below); and (ii) GBP500,000 in Secured Loan Notes. Both
sets of loan notes are unlisted and have no voting rights
attached.
On 12 August 2009, the Company issued GBP500,000 in 7 per cent.
convertible loan notes (the "Notes") due 12 August 2014. The Notes
were issued at a principal amount of GBP1 each. Each Note may be
converted into 40 Ordinary Shares (at a conversion price of 2.5
pence per Share). The conversion occurs on the fifth anniversary or
earlier if a conversion notice is served (by the note holder) after
the third anniversary.
The Shareholders as a whole were informed of the August 2009
Placing in a circular dated 23 July 2009. The circular provided
details of the August 2009 Placing and the loan notes to be issued.
Subsequent to the August 2009 Placing and later in 2009, additional
debt funding of GBP500,000 was received from Tyne & Wear,
consisting of GBP400,000 in October and GBP100,000 in November. A
further GBP500,000 was received from Magpie in November 2009. These
additional loans were needed to help fund the business at that time
and were repaid in January 2010, being replaced with equivalent
facilities from the same lenders totalling GBP2,059,562, which
represented the previous facilities plus interest and an additional
loan of GBP500,000 from Cynthia Goldman. These loans were settled
on 1 May 2010 and replaced by further loans amounting to
GBP2,113,521 pursuant to the Loan Facility Agreements which under
the terms of the Conversion and Subscription Agreement become
immediately due and payable either immediately prior to completion
or, if the resolutions (the "Resolutions") to be proposed at the
general meeting of the Company to be held on 29 July 2011 at 3.00
p.m. (the "General Meeting") are not passed, upon the date of the
General Meeting. An additional GBP500,000 owed to Puma pursuant to
the Secured Loan Notes is due on 30 September 2011, which under the
terms of the Conversion and Subscription Agreement the Company has
agreed to repay on its due date using funds raised from the
Subscription. The aggregate sum outstanding on all these loans as
at 30 June 2011 was GBP2,941,765 inclusive of interest and
withholding taxes. Interest accrued from 30 June 2011 until
repayment of the various loans will, in the case of the Secured
Loan Notes, be repaid by the Company from its cash resources, and
in the case of the other loans will be due for payment on 31 July
2013, such interest being an aggregate gross amount of GBP23,373
assuming that completion of the Conversion and Subscription takes
place on 29 July 2011.
Shareholders should note that the Company has no means of
repaying these debts when they fall due if the Proposed Capital
Restructuring is not approved.
Revised financing strategy
The Company has been able to afford to finance its operations
over the last two years by issuing debt, solely because of the
exceptional terms upon which certain Shareholders have been willing
to provide loans in order to assist the Company. Those Shareholders
have now indicated that they are no longer prepared to provide debt
financing to the Company but have agreed to capitalise the debt on
the terms described below. The Independent Directors believe that
it would not be in the Company's best interests to seek alternative
sources of debt financing given the high level of borrowings that
would be required, the terms currently available in the open market
and the current financial performance of the Company. Instead, it
is in the interests of both the Company and Shareholders to
alleviate current debt levels by converting much of the outstanding
debt into equity. The results of this will be that:
(a) the Company will be able to meet its repayment obligations
in relation to the loans that remain after the Proposed Capital
Restructuring and continue as a going concern;
(b) the Company will no longer be burdened by high levels of
debt and will be less dependent on external borrowing;
(c) the injection of new equity will strengthen the Company's
capital reserves; and
(d) as a result of the creation and issue of non voting, non
convertible A Shares, the Proposed Capital Restructuring will not
in any way adversely affect the voting rights of existing holders
of Ordinary Shares, but will give the directors of the Company
("Directors") flexibility to seek further equity funding from the
holders of the A Shares (the "A Shareholders") in the future,
without the need for additional Shareholder approval or the need to
make a pre-emptive offer to Shareholders, in the event that
alternative sources of funding are unavailable (and assuming that
the A Shareholders agree to the terms offered by the
Directors).
The Proposed Capital Restructuring
The Company has entered into the Conversion and Subscription
Agreement under the terms of which, subject to certain conditions,
certain creditors of the Company have agreed:
(a) to convert to A Shares the aggregate sum of GBP2,353,412
owed by the Company under the Loan Facility Agreements (including
interest) at a price of GBP0.01 per share. The consideration for
the issue of these Conversion Shares will take the form of set-off
against the Company's debt; and
(b) to subscribe for 69,658,800 A Shares at a price of GBP0.01
per share in cash.
In aggregate therefore the Company is proposing to issue
305,000,000 A Shares (134,331,060, 83,810,940 and 86,858,000 to
Tyne & Wear, Magpie and CPG, respectively) at GBP0.01 per
share.
The issue of the A Shares pursuant to the Conversion the
Subscription is conditional, amongst other things, on the passing
of the Resolutions.
The Company has given customary warranties to the proposed
holders of the A Shares in the Conversion and Subscription
Agreement. Further details of the agreement are set out below.
As of the date of this announcement, the Company has 163,472,662
Ordinary Shares in issue. If the Proposed Capital Restructuring is
approved and completed this will increase to a total of 163,472,662
Ordinary Shares and 305,000,000 A Shares. The A Shares will not be
publicly traded and will not carry voting rights.
The Independent Directors are of the view that unless the
Proposed Capital Restructuring is put in place, the Company will
not be able to meet its obligations to creditors, in particular,
under its existing Loan Facility Agreements, the Secured Loan Notes
and the Convertible Loan Notes and will, in all likelihood, enter
insolvency proceedings and cease to continue as a going
concern.
Pursuant to the proposed rights and restrictions attaching to
the A Shares, the Board will have flexibility to seek further
equity funding from A Shareholders in the future, without the need
for additional Shareholder approvals or the need to make a
pre-emptive offer to Shareholders in the event that alternative
sources of funding are unavailable (and assuming that the A
Shareholders agree to the terms offered by the Board).
Shareholders should note in particular that the Proposed Capital
Restructuring is conditional upon the passing of the Resolutions.
Any failure to pass the Resolutions will result in the Proposed
Capital Restructuring not being able to proceed.
Terms of the A Shares
The rights and restrictions to attach to the A Shares are as
follows:
(A) the A Shares and the other Ordinary Shares in the capital of
the Company shall rank equally as if they were the same class of
share in all respects and the rights attaching to such shares shall
be identical, save to the extent set out in paragraphs (i) and (ii)
below:
(i) the holders of the A Shares shall not be entitled, in their
capacity as holders of such shares, to receive notice of any
general meeting of the Company nor to attend, speak or vote at any
such general meeting; and
(ii) on a distribution of assets on a winding up of the Company,
the holders of the A Shares shall be entitled, in priority to any
payment to the holders of every other class of shares in the
capital of the Company, to an amount equal to the nominal amounts
of capital paid up or credited as paid up on the A Shares held by
them or, if on such a winding up the amounts available for payment
are insufficient to cover in full the amounts payable on the A
Shares, the holders of such shares shall be entitled to their
pro-rata proportion of the amount to which they would otherwise be
entitled. In the event that, following such payments, there are
surplus assets of the Company available for distribution among the
members, payments shall be made on the following basis:
(a) first, to the holders of every class of shares in the
capital of the Company other than the A Shares, pari passu and
rateably among them, an amount equal to the nominal amounts of
capital paid up or credited as paid up on the shares held by them;
and
(b) second, to the holders of every class of shares in the
capital of the Company (including the A Shares), pari passu and
rateably among them, an amount in proportion to the nominal amounts
of capital paid up or credited as paid up on the shares held by
them;
(B) the Directors shall have a general and unconditional
authority pursuant to section 551 of the Companies Act 2006 to
allot further A Shares up to an aggregate nominal amount of
GBP2,000,000 for a period expiring on the fifth anniversary of the
date of the passing of the relevant resolution adopting the changes
to the Articles;
(C) the Company shall be able to, at any time before the expiry
of the proposed authority referred to in paragraph (C) above, make
an offer or agreement which would or might require relevant
securities to be allotted pursuant to it after the expiry of that
authority and the Directors may allot relevant securities in
pursuance of such offer or agreement as if the authority conferred
by it had not expired; and
(D) the Company shall not make any further allotments of A
Shares to a person on any terms unless it has first made an offer
to each of the A Shareholders to allot to him on the same or more
favourable terms a proportion of those securities that is as nearly
as practicable equal to the proportion in nominal value held by him
of the A Shares and the period during which any such offer may be
accepted has expired or the Company has received notice of the
acceptance or refusal of every such offer so made.
Details of the Conversion and Subscription Agreement
Under the Conversion and Subscription Agreement dated 29 June
2011, Tyne & Wear, Magpie and CPG have conditionally agreed
with the Company as follows:
(a) Tyne & Wear has agreed to subscribe for 134,331,060 A
Shares at a price of GBP0.01 per share with Tyne & Wear's
obligation to subscribe for such shares being satisfied by: (i) the
Company setting off the subscription price against GBP1,195,365.60
being the value of the debt (including interest) owed by the
Company to Tyne & Wear; and (ii) Tyne & Wear paying
GBP147,945 in cash as further consideration;
(b) Magpie has agreed to subscribe for 83,810,940 A Shares at a
price of GBP0.01 per share with Magpie's obligation to subscribe
for such shares being satisfied by: (i) the Company setting off the
subscription price against GBP584,292 being the value of the debt
(including interest) owed by the Company to Magpie; and (ii) Magpie
paying an additional GBP253,817.40 in cash as further
consideration;
(c) CPG has agreed to subscribe for 86,858,000 A Shares at a
price of GBP0.01 per share with CPG's obligation to subscribe for
such shares being satisfied by: (i) the Company setting off the
subscription price against GBP573,754.40 being the value of the
debt (including interest) owed by the Company to CPG under the Loan
Facility Agreements; and (ii) CPG paying an additional
GBP294,825.60 in cash as further consideration;
(d) to extend the due date for repayment of the amounts referred
to above to the earlier of either immediately prior to completion
of the Conversion and Subscription or (in the event of failure to
obtain Shareholder approval of the Resolutions) the date of the
General Meeting; and
(e) that accrued interest as a result of the extension referred
to in paragraph (d) above will be due for payment on 31 July 2013,
such interest being an aggregate gross amount of GBP23,373 assuming
completion takes place on 29 July 2011.
Each party's obligations under the Conversion and Subscription
Agreement are conditional, amongst other things, on the passing of
the Resolutions.
The Company has agreed to apply the proceeds of the Subscription
to finance the payment of withholding taxes related to the Loan
Facility Agreements, the Company's professional fees, costs and
expenses in connection with the Proposed Capital Restructuring and
the repayment of the Secured Loan Notes in accordance with their
terms.
Related party transactions
The Conversion and Subscription Agreement is an agreement
between the Company and CPG, Tyne & Wear and Magpie. As a
result of that agreement Tyne & Wear, Magpie and CPG will be
issued with an aggregate of 305,000,000 A Shares (134,331,060,
83,810,940 and 86,858,000 respectively), being the shares to be
issued as a result of the Conversion and the Subscription. In
addition, upon completion of the Conversion, the existing Loan
Facility Agreements will be terminated without further liability to
the Company, and the repayment of certain accrued interest from 30
June 2011 until completion of the Conversion and Subscription will
be repayable to CPG, Tyne & Wear and Magpie on 31 July 2013
(such interest being an aggregate gross amount of GBP23,373
assuming completion of the Conversion and Subscription takes place
on 29 July 2011). These transactions are classified as transactions
with a related party for the purposes of the AIM Rules.
In accordance with the AIM Rules, the Independent Directors,
having consulted with the Company's nominated adviser, Canaccord
Genuity, consider that the terms of these transactions are fair and
reasonable insofar as Shareholders are concerned.
The Independent Directors exclude Daniel Goldman due to the
nature of his family relationship with Cynthia Goldman and by
virtue of his relationship as an adviser to Tyne & Wear and
Magpie.
General Meeting
A circular, including a notice of the General Meeting which is
scheduled to take place at 3.00 p.m. on 29 July 2011 at the
Company's offices at The Beren, Blisworth Hill Farm, Stoke Road,
Blisworth, Northamptonshire, NN7 3DB, will be sent to Shareholders
shortly. The circular will provide Shareholders with full details
of the Proposed Capital Restructuring and explain why the
Independent Directors consider the proposals to be in the best
interests of the Company and its Shareholders as a whole and will
recommend that Shareholders vote in favour of the Resolutions
required to implement the proposals.
Annual General Meeting
The circular will also include notice of the Company's
forthcoming Annual General Meeting which is scheduled to take place
at 3.15 pm on 29 July 2011 at the Company's offices at The Beren,
Blisworth Hill Farm, Stoke Road, Blisworth, Northamptonshire, NN7
3DB. The circular will provide Shareholders with full details of
the resolutions to be proposed at the Annual General Meeting and
explain why the Directors consider the proposals to be in the best
interests of the Company and its Shareholders as a whole and will
recommend that Shareholders vote in favour of such resolutions.
Enquiries:
Invu plc 01604 859893
Colin Gallick, CEO
Ian Smith, CFO
Canaccord Genuity 020 7050 6500
Simon Bridges, Kit Stephenson
About Invu
Invu [LSE, AIM, Symbol: INVU] develops software that
incorporates document management, content management, workflow,
automation and collaboration specialising in solutions for the
mid-market and smaller businesses.
Also known as the paperless office, Invu typically gives a
return on investment in under six months, allowing companies to see
efficiency savings in terms of both money and time.
Invu's Open Search integration allows SharePoint users to
utilise fully the benefits of WSS or MOSS whilst retaining the
functions of specialist document and content management.
Invu's solutions enable automated scan, capture and management,
processing and output transformation. Invu also integrates with all
major accounting systems including ERP and CRM systems.
For more information about Invu: www.invu.net
This information is provided by RNS
The company news service from the London Stock Exchange
END
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