Acquisition
Raven Capital Inc
19 September 2006
Not for release, publication or distribution in whole or in part in or into the
United States, Canada, Japan, Australia, the Republic of Ireland or the Republic
of South Africa
19 September 2006
Raven Capital Inc.
('Raven' or 'the Company')
Proposed acquisition of Upstream Asia Limited
Proposed placing of 2,500,000 ordinary shares of 0.25p each
at 20p per share
Proposed change of name
Notice of extraordinary general meeting and
Application for admission to trading on AIM
The Board is pleased to announce that it has today conditionally agreed to
acquire the entire issued share capital of Upstream Asia Limited ('Upstream'), a
leading Asia Pacific focused corporate and marketing communications services
network.
Certain definitions apply throughout this announcement and your attention is
drawn to the table at the end of this announcement where these definitions are
set out in full.
Highlights
• Raven has conditionally agreed to acquire the entire issued share
capital of Upstream through the issue of 79,675,002 new Ordinary Shares. At
the placing price of 20p per share, the Acquisition Shares value Upstream at
approximately £15.94 million.
• Upstream was named Asia's New PR Consultancy of the Year in 2001 by
Media magazine. Since then, Upstream has grown to include offices in
Beijing, Hong Kong, Shanghai, Singapore and Taipei, together with franchises
in Tokyo and Sydney.
• Upstream is well positioned to meet Asia's growing demand for branding
and communications services, especially in China where the next generation
of global brands is emerging and where it is imperative that multinationals
secure their market positioning.
• Upstream Group has provided selected services either on a retainer or
project fee basis to a blue chip client base including Alcatel, eBay, EDS,
02, Towngas and Hong Kong Science & Technology Parks.
• Proposed change of name to 'Upstream Marketing and Communications Inc.'.
• Placing of 2,500,000 new Ordinary Shares to raise £500,000 before
expenses ( approximately £175,000 net of expenses) at the Placing Price, the
net proceeds of which will be used to provide working capital for the
Enlarged Group.
• Dealings in the Existing Ordinary Shares were suspended from trading on
AIM on 3 April 2006 at a mid market price of 20.25p. This suspension has now
been lifted following the publication today of the Admission Document.
In view of its size, the Acquisition constitutes a reverse takeover under the
AIM Rules, and is conditional, inter alia, upon the approval of Shareholders at
an Extraordinary General Meeting to be held on 13 October 2006.
A copy of the Admission Document to be sent to Shareholders today is available
at www.corvus.com
Commenting, Graham Butt, Chairman of Raven said:
'Upstream has built a significant network with which to service the markets in
Greater China we believe that it now has the critical mass to achieve good
organic growth. In addition there are a number of opportunities to make
acquisitions to expand the reach of the network and continue to build value for
shareholders.'
Commenting, David Ketchum, CEO of Upstream said:
'Our listing will help expand the offering we can make to clients and give us
access to capital for accelerated growth. Upstream is in the right places, with
the right services, at the right time,' Ketchum said. 'We are well positioned to
capture market share in China and to create a unique holding company focused on
high growth markets and sectors, built through organic growth and by acquiring a
series of complementary public relations, communications, digital marketing and
advertising firms to integrate into the Upstream network.'
Enquiries:
Raven Capital Inc.
John Bick
Tel:(0870) 389 6999
Tel: 07917 649362
Strand Partners
James Harris/Angela Peace
Tel: 020 7409 3494
This summary should be read in conjunction with the full text of this
announcement set out below.
Strand Partners Limited, which is authorised and regulated in the United Kingdom
by the Financial Services Authority, is acting as nominated adviser to the
Company in connection with the proposed admission of the Enlarged Share Capital
to trading on AIM. Its responsibilities as the Company's nominated adviser under
the AIM Rules are owed solely to the London Stock Exchange and are not owed to
the Company or to any Director or to any other person in respect of his decision
to acquire shares in the Company in reliance on any part of this announcement.
Walker Crips Stockbrokers Limited, which is authorised and regulated in the
United Kingdom by the Financial Services Authority and is a member of the London
Stock Exchange, is acting as broker to the Company in connection with the
Placing and proposed admission of the Enlarged Share Capital to trading on AIM.
Strand Partners Limited and Walker Crips Stockbrokers Limited are not acting for
anyone else and will not be responsible to anyone other than the Company for
providing the protections afforded to their clients or for providing advice in
relation to the contents of this announcement or the Placing or the Admission of
the Enlarged Share Capital to trading on AIM. No representation or warranty,
express or implied, is made by either Strand Partners Limited or Walker Crips
Stockbrokers Limited as to the contents of this announcement, without limiting
the statutory rights of any person to whom this announcement is issued. Neither
Strand Partners Limited nor Walker Crips Stockbrokers Limited will be offering
advice, nor will they otherwise be responsible for providing customer
protections to recipients of this announcement or for advising them on the
contents of this announcement or any other matter. The information contained in
this announcement is not intended to inform or be relied upon by any subsequent
purchasers of Ordinary Shares (whether on or off exchange) and accordingly no
duty of care is accepted in relation to them.
Strand Partners Limited has approved the contents of this announcement solely
for the purpose of section 21 of the Financial Services and Markets Act 2000.
The principal place of business of Strand Partners Limited is 26 Mount Row,
London W1K 3SQ.
The Directors and Proposed Directors accept responsibility for the information
contained in this announcement. Subject as aforesaid, to the best of the
knowledge and belief of the Directors and Proposed Directors (who have taken all
reasonable care to ensure that such is the case), such information is in
accordance with the facts and does not omit anything likely to affect the import
of such information.
This announcement does not constitute, or form part of, an offer or an
invitation to purchase any securities.
Not for release, publication or distribution in whole or in part in or into the
United States, Canada, Japan, Australia, the Republic of Ireland or the Republic
of South Africa
19 September 2006
Raven Capital Inc.
('Raven' or 'the Company')
Proposed acquisition of Upstream Asia Limited
Proposed placing of 2,500,000 ordinary shares of 0.25p each
at 20p per share
Proposed change of name
Notice of extraordinary general meeting and
Application for admission to trading on AIM
Introduction
The Company today announces that it has conditionally agreed to acquire the
entire issued share capital of Upstream through the issue of 79,675,002 new
Ordinary Shares. At the placing price of 20p per share, the Acquisition Shares
value Upstream at approximately £15.94 million. The Company also proposes to
raise £500,000 before expenses (approximately £175,000 net of expenses) by way
of a placing of 2,500,000 new Ordinary Shares at the Placing Price, the net
proceeds of which will be used to provide working capital for the Enlarged
Group. Following completion of the Proposals, the Vendors will own approximately
59.66% of the Enlarged Share Capital.
The Company's Existing Ordinary Shares were suspended from trading on AIM on 3
April 2006 at a mid market price of 20.25p as a consequence of the Company not
having completed a reverse takeover or substantially implemented its investing
strategy in accordance with the timetable specified under AIM Rule 8 relating to
investing companies. This suspension has now been lifted following the
publication today of the Admission Document.
The Acquisition constitutes a reverse takeover of the Company under the AIM
Rules by virtue of its size and because it also results in a fundamental change
in the business of the Company from that of an investment company specialising
in the hedge fund sector to a company providing international corporate and
marketing communications services. As such, completion of the Acquisition is
conditional on receiving the approval of Shareholders. Such approval is to be
sought at the EGM. If the Resolutions are duly passed at the EGM, the Company's
existing trading facility on AIM will be cancelled and the Company will apply
for the Enlarged Share Capital to be admitted to trading on AIM.
Shareholders should note that the Proposals are inter-conditional. It is
expected that Admission will take place and dealings in the Enlarged Share
Capital will commence on 16 October 2006.
Irrevocable undertakings to vote in favour of the Resolutions have been received
from the Directors and certain of the Shareholders in respect of 34,166,112
Existing Ordinary Shares, representing approximately 77 per cent. of the
Company's existing issued share capital.
Shareholders should, however, be in no doubt as to the importance of the
Proposals to the future of the Company since the Directors believe that the
combination of the Acquisition and the Placing is an essential step towards
restoring the Company to a secure financial position. The Acquisition and the
Placing are each conditional upon the other proceeding. If the Acquisition and
the Placing do not proceed, for whatever reason, the Company would need to
attempt to raise further funds or seek alternative methods of financing, on
account of the fact that it will have incurred expenses in pursuit of the
Acquisition and would not have sufficient working capital for its present
requirements, that is for at least the next twelve months from the date of this
announcement. If such funds could not be raised or alternative methods of
financing secured, the Board would urgently have to consider alternative courses
of action, such as the initiation of insolvency procedures, in which event the
Company would be delisted from trading on AIM.
In addition, pursuant to Rule 41 of the AIM Rules, the London Stock Exchange
will cancel the admission to trading of a company's securities on AIM where they
have been suspended from trading for six months. As the Existing Ordinary Shares
have been suspended since 3 April 2006, if the Acquisition and Placing do not
proceed the Company will be delisted from trading on AIM in any event.
The Company and its investment strategy
The Company was incorporated on 19 November 2004 in the Cayman Islands and was
admitted to trading on the AIM market as a cash shell on 15 December 2004 when
it raised £400,000 before expenses through a placing of its Ordinary Shares. At
the time of the original AIM admission the Company stated that it was its
intention to build, largely through acquisition and joint venture transactions,
a group specialising in the hedge fund sector. Since then, the Directors have
explored a number of potential opportunities of that type, although none were
sufficiently attractive to merit being put before Shareholders.
In December 2005, the Board was approached by EP, an investment company based in
Singapore, with a proposal to invest additional funds into the Company and to
work with the Directors to source a suitable acquisition. On 13 January 2006,
discussions with EP were successfully concluded and the Company raised an
additional £150,000 gross through a placing of 13,300,000 Ordinary Shares with
EP, representing approximately 29.99% of the enlarged share capital of the
Company at that time.
Since the Ordinary Shares were suspended from trading on AIM, the Directors have
continued to evaluate a number of potential transactions and believe that the
Proposals are in the best interests of Shareholders.
Information on Upstream
Background
Upstream was founded in 2000 by David Ketchum. Since its establishment
Upstream's network has grown to include full service offices and affiliates
throughout the principal commercial markets in the Asia-Pacific region. Upstream
provides a range of corporate and marketing communications services to
multinational corporations and Asia-based clients throughout the Asia-Pacific
region, with a focus on Greater China and in 2001 was named Asia's new PR
consultancy of the year by Media Magazine.
Headquartered in Hong Kong, the Group has wholly owned offices in Beijing,
Shanghai, Taipei and Singapore. Upstream-branded offices currently operate in
Tokyo and Sydney. The Group also has cooperation agreements in place with
affiliated agencies across the Asia Pacific region, as well as being a member of
international networks.
The Group offers a full range of traditional and online communications
solutions, including strategic public relations counselling, corporate and
marketing communications, event management, digital marketing and web-based
communications services and works with clients primarily in three sectors:
technology/media/telecommunications; consumer/lifestyle/travel; and corporate
and financial.
To date, the Upstream Group has provided selected services either on a retainer
or project fee basis to a blue chip client base including Alcatel, eBay, EDS,
02, Towngas and Hong Kong Science & Technology Parks. Retainer fees are
generally from clients that sign agreements contracting a certain amount of work
to be completed over a certain period. Project fees arise from one-off
assignments for a pre-agreed fee.
The Directors and the Proposed Directors consider that the Upstream Group is
well positioned to capitalise on Asia's growing demand for branding and
communications services, particularly in China where the next generation of
global brands may be emerging and where the Directors and Proposed Directors
consider it important for multinationals to secure their market positioning. The
Directors and the Proposed Directors believe that new market sectors opened to
multinational companies by the World Trade Organisation (WTO) and the upcoming
2008 Olympics in Beijing are among the factors driving investment and demand for
marketing communications in China, as is the Chinese consumer's increasing
spending levels on luxury and branded goods and travel.
Upstream's 49 employees include an experienced management team based around the
Asia-Pacific region and a team of consulting staff with extensive experience in
the communications industry.
Services
The scope of services offered by the Upstream Group includes:
• Strategic branding and public relations consultancy
The Upstream Group provides strategic advice to senior client executives at the
CEO, managing director, marketing director and public affairs level on branding
and on marketing and corporate communications campaign planning. The scope of
services offered includes research, advice on how to best position the client
companies or their products in the marketplace, messaging to build awareness and
differentiation, creative development, media selection and budgeting.
• Corporate and marketing communications services
The Upstream Group offers a range of public relations services including
campaign development, advertising services, media relations, crisis and issues
communications, and media training. Particular activities undertaken by the
Upstream Group in respect of each of these services include creative services,
media buying, sponsorship arrangement, staging news conferences, preparing and
distributing news releases, arranging executive interviews, placing feature
stories, writing by-lined and editorial articles and media monitoring.
• Event management
Upstream aims to create innovative solutions for clients that help develop brand
awareness and sales. Specific services include arranging marketing partnerships,
organising special events and exhibitions, arranging speaking opportunities,
recommending sponsorships, creating brochures and other associated marketing
material and executing promotions and competitions.
• Web presence/digital marketing and e-distribution
Asia-Pacific now has the largest percentage of internet users worldwide (36% of
the global total), greater than each of the US and Europe. China's internet
population is already over 111 million and is forecast to increase
significantly, and approximately 65% of the world's broadband users are in the
Asia-Pacific region. Upstream advises clients on their web presence, digital
marketing campaigns, search and use of streaming video/webcasts in order to take
advantage of this marketing opportunity.
Market
The market for public relations and marketing and corporate communications
services in the Asia-Pacific region is already large and currently is
fragmented.
The Directors and Proposed Directors believe that China offers the Upstream
Group the greatest opportunity for growth driven primarily by the following two
factors:
• the internationalisation of large sectors of China's economy, leading to
vastly increased competitiveness, an environment in which marketing
communications can provide opportunities for competitive advantage; and
• the modernisation of business administration, leading to increased focus
on public relations and associated concepts.
The Directors and Proposed Directors believe that both of these factors will
drive increased demand for the multinational-standard communications consultancy
services in which the Upstream Group has proven capabilities which will provide
Upstream with a considerable opportunity to increase its market share in this
region.
China market entry support
Upstream has, since 2003 from its Hong Kong office, been providing services to
multinational companies seeking to expand their business into China, such as
messaging and branding consultancy, national and local market communications,
vertical trade market communications, promotions, media relations, preparation
of associated marketing materials and event management.
In early 2006, Upstream completed the establishment of its Wholly Foreign Owned
Enterprise (WFOE) in China, affording the Upstream Group legal status to provide
consulting services and issue invoices in China. This arrangement builds on
Upstream's previous presence in China via two representative offices and the
Directors and the Proposed Directors believe is an important step in
capitalising on the China opportunity.
Current Trading and Prospects
A financial summary for the Upstream Group for the three years ended 31 December
2005 is set out below:
Year ended Year ended Year ended
31 December 31 December 31 December
2003 2004 2005
£'000 £'000 £'000
Revenue 736 820 1,104
(Loss)/profit from operations
and before taxation (38) 8 20
Net assets 21 29 48
It is important that you do not rely solely on the key or summary financial
information shown above.
Since it was established in 2000 Upstream has achieved steady growth of the
business throughout the Asia-Pacific region, focusing on investing a
considerable proportion of profits generated into building the business,
employing additional professional staff, and creating new practices and lines of
business such as corporate and financial and travel, that offer significant
growth opportunities for the business. This investment in infrastructure has
resulted in the Upstream Group recording only minimal profits to date.
The Directors and Proposed Directors believe that the investment made to date
has enabled Upstream to establish a robust presence in China, which is expected
to account for a significant amount of the Enlarged Group's revenue growth in
both percentage and monetary terms. In addition the Directors and Proposed
Directors believe that the underlying growth in demand for public relations,
communications and marketing services, particularly in China, represents a
significant opportunity for the Enlarged Group.
Strategy
The Directors and Proposed Directors are confident that the Enlarged Group will
achieve significant revenue growth through the pursuit of four broad strategies:
• Capitalise on investments made to date
• Develop current relationships
• Drive new business development
• Expand through selective acquisitions
Capitalise on investments made to date
Since its establishment the directors of Upstream have focused on developing the
Upstream Group's network of offices and has now set up offices and teams in
place in each of its identified strategic markets. In addition, it has recruited
the requisite senior consulting and business development staff, as well as
establishing the necessary 'footprint' of network offices to take advantage of
the market opportunity, particularly in China. The Directors and Proposed
Directors believe that the platform is now in place to drive profitable growth
and that Upstream has the senior talent and resources to win and retain a range
of assignments that were previously inaccessible to the business.
Develop current relationships
The Upstream Group has an existing blue chip client list that the Directors and
Proposed Directors intend to develop in the following two ways:
• Increase share of client budgets: Current client budgets in China and
elsewhere indicate that Upstream is currently taking just a portion of its
client's total marketing and communications expenditure. The Directors and
Proposed Directors intend to focus on cross-selling supplementary campaigns
and services that will generate additional revenue for the business from its
existing client base. This effort will be complementary with the Enlarged
Group's strategy of making selective acquisitions, which should yield
further opportunities to cross-sell services.
• Extend existing relationships with Upstream clients into new markets,
such as China: Relationships with certain existing clients have already been
successfully expanded to China, and the Directors and Proposed Directors
believe that there remain numerous additional opportunities to do this
throughout the remainder of the region.
Business development in strategic sectors
The Upstream Group offers marketing and communications services primarily in the
following three sectors:
• Technology/Media/Telecoms;
• Corporate and Financial; and
• Consumer and travel.
The Directors and Proposed Directors will seek to continue to develop its client
base and service offering within these key sectors in order to drive additional
revenue growth for the business. In addition, the Group offers services such as
electronic news release distribution, which the Enlarged Group expects to be
able to drive accelerated growth.
Expand through selective acquisitions
The Proposed Directors are in the preliminary stages of seeking and evaluating
opportunities to consolidate and/or cooperate with small to medium sized
independent communications firms that are expected to add long term value and
service offerings to the Enlarged Group. The acquisition initiative may provide
economies of scale and improve operational efficiency.
Reasons for the Acquisition
The Directors and Proposed Directors believe that the Acquisition and associated
Admission will provide the Enlarged Group with a number of benefits which
include:
• exposure to the growing demand for public relations and event management
services in Hong Kong, China and the rest of Asia;
• the opportunity to raise new equity capital for the Enlarged Group
through AIM in the future; and
• the creation of a currency, in the form of publicly listed shares, that
can be used by the Enlarged Group in acquiring high value targets in the
marketing and public relations sectors.
Current trading and prospects for the Enlarged Group
Since its incorporation in November 2004, the Company's only significant
activities have been to obtain admission to trading on AIM, raising £400,000
before expenses, to place 13,300,000 Ordinary Shares with EP, raising £150,000,
and to enter into conditional agreements relating to the Acquisition.
The Directors and the Proposed Directors believe that the strategy that the
Enlarged Group intends to follow on completion of the Acquisition, focused on
profiting from the rising demand for branding and communications services in
China and throughout the Asia-Pacific region, gives the Board reason to be
optimistic as to the Enlarged Group's prospects.
The major shareholders of Upstream
The major shareholders of Upstream are David Ketchum, Jane McGuire Ketchum and
Techpacific who between them own approximately 76 per cent. of Upstream. David
Ketchum is married to Jane McGuire Ketchum, who is a financial editor with
extensive experience working with investment banks in Asia Pacific.
David Ketchum is the founder of Upstream which he established in 2000. David has
worked in the corporate and marketing communications industry for 23 years, and
has vast experience in building brands and companies, including international
experience with major multinational agency networks and with Calvin Klein in
Asia Pacific.
Techpacific is a wholly owned subsidiary of Techpacific Capital Limited which is
an independent merchant banking and asset management group listed on the Hong
Kong Stock Exchange's Growth Enterprise Market.
Directors and Proposed Directors
At the EGM, a Resolution will be proposed to appoint David Ketchum, Jane McGuire
Ketchum and Shahed Mahmood as directors of the Company. Graham Butt will
continue in his capacity as a director but will resign as Chairman of the Board.
It is intended that Shahed Mahmood will be appointed as a non-executive Chairman
and David Ketchum and Jane McGuire Ketchum will be appointed as executive
director and non-executive director, respectively. Assuming the Resolutions to
appoint the Proposed Directors are passed at the EGM, immediately following
Completion the Enlarged Board will comprise:
Directors
Graham Butt (Non-Executive Director)
Graham Butt, aged 45, is a director of Fulcrum Administration LLC and a member
of the Society of Estate and Trust Practitioners. Graham previously acted as an
administrator, trustee and director of The Castle Trust Co. Limited group of
companies for over 20 years, during which time he was actively investing in
structured funds and hedge funds to maximise returns for high net worth clients.
Graham is a director of Corvus Capital Inc., a company whose shares are traded
on AIM.
Joanna Barrett (Non-Executive Director)
Joanna Barrett, aged 40, has some 23 years' experience in the finance industry,
both in the money markets and metal exchanges. For the last ten years Joanna has
worked in the offshore financial services industry specialising in the
establishment and running of trust and fiduciary structures. This role involves
acting on behalf on high net worth clients in both equity and structured finance
investments. Joanna is also a director of Corvus Capital Inc.
Proposed Directors
David Ketchum (Chief Executive Officer)
David Ketchum, aged 45, has 23 years' experience in branding, marketing and
communications as vice president with global agency networks Hill and Knowlton,
Burson-Marsteller and Calvin Klein, where he served as senior vice president,
Marketing and Communications. He is chairman of the Asia Digital Marketing
Association; chairman of the Council of Public Relations Firms in Hong Kong; and
author of Big M, Little m Marketing New strategies for a New Asia.
Shahed Mahmood (Non-Executive Chairman)
Shahed Mahmood, aged 36, is a business consultant based on the Isle of Man, with
over 14 years of wide ranging experience in the economic development field. He
has previously given consultancy advice in both the business and human resource
sectors to numerous governmental organisations in the UK and the Isle of Man.
Shahed's past employment includes director of AIM listed Crosby Capital Partners
Inc. (formerly known as Skiddaw Capital Inc.), a leading independent, deal
focused, Asia-oriented merchant banking and asset management firm.
Jane McGuire Ketchum (Non-Executive Director)
Jane McGuire Ketchum, aged 43, is a financial editor with extensive experience
working with investment banks in Asia Pacific. Currently based in Hong Kong with
a Japanese securities firm, she has worked in Hong Kong and Japan with firms
such as Schroders, Barings and Deutsche Bank.
The Enlarged Board intends to make further appointments at executive level, as
the Enlarged Group's business progresses and suitable candidates are identified,
and will appoint a finance director following Completion.
Principal terms of the Acquisition
Pursuant to the Acquisition Agreement, the Company has conditionally agreed to
purchase the entire issued share capital of Upstream from the Vendors in
consideration for the allotment and issue to the Vendors of 79,675,002 new
Ordinary Shares equating to a value of £15,935,000 at the Placing Price.
The interests of each of the Vendors in Upstream prior to Completion and as they
are expected to be in the Company on Completion are set out in the table below:
Holder Shares in Acquisition Enlarged Share
Upstream Shares Capital %
David Ketchum 477,217 20,425,935 15.30
Jane McGuire
Ketchum 469,130 20,079,794 15.04
techpacific.com
(BVI)Investments
Limited 473,723 20,276,384 15.18
Jonathan Hakim 166,700 7,135,126 5.34
Peter
Kingsbury 95,300 4,079,049 3.05
Paul Adams 95,300 4,079,049 3.05
Paul Mottram 48,200 2,063,066 1.54
Sato Emi 12,100 517,907 0.39
Huang Lu
Hsiuo-Feng 6,100 261,093 0.20
North Rock Holdings
Limited 6,100 261,093 0.20
Christopher
Giacomelli 4,900 209,731 0.16
Thomas Frick 2,500 107,005 0.08
Jay Chang 2,500 107,005 0.08
Andrew Work 1,700 72,764 0.05
Total 1,861,470 79,675,002 59.66
On Completion, assuming that the Strand Warrant remains outstanding, the Vendors
will own 79,675,002 Ordinary Shares, representing approximately 59.66% of the
Enlarged Share Capital.
Under the Acquisition Agreement all the Vendors have given warranties as to
title and authority. David Ketchum, Jane McGuire Ketchum and Techpacific have
given warranties and indemnities, subject to certain limitations, relating to
the business and assets of Upstream, including its tax affairs. The Company has
given warranties and indemnities, subject to certain limitations, relating to
the Company's history. The Company has agreed to pay the Vendors' legal costs in
connection with the Acquisition up to a maximum of £59,000.
In addition to restrictive covenants contained in his service agreement which
will be renewed on Completion, David Ketchum has, under the Acquisition
Agreement, given non-compete and non-solicitation undertakings in respect of the
activities currently carried on by Upstream for periods of one and two years
respectively from Completion.
The Acquisition Agreement is conditional, inter alia, on:
1. the passing of those of the Resolutions at the EGM necessary to approve the
purchase of the shares in Upstream and to authorise the Company to issue the
Acquisition Shares, Placing Shares and Fee Shares;
2. the Company having cash resources of not less than £240,000 after payment of
transaction expenses; and
3. Admission.
Details of the Placing
The Company has conditionally placed 2,500,000 new Ordinary Shares at 20p per
share to raise £500,000 before expenses (approximately £175,000 net of
expenses). At the Placing Price, the Company would have a market capitalisation
of approximately £26.7 million based on the Enlarged Share Capital. The Placing
is conditional, amongst other things, upon the Re-Introduction Agreement
becoming effective on or before 16 October 2006, or such later time and date as
the Company, Strand Partners and Walker Crips may agree, but in any event not
later than 31 October 2006.
The net proceeds of the Placing will be used to provide the Enlarged Group with
additional funding for its ongoing working capital requirements. On completion
of the Placing the Company will pay to Penkenna a commission of five per cent.
of the gross proceeds of the Placing in consideration of introducing subscribers
for the Placing Shares.
The Placing Shares will represent approximately 1.87% of the Enlarged Share
Capital of the Company following Admission, will be fully paid upon issue and
will rank equally in all respects with the Existing Ordinary Shares, the
Acquisition Shares and the Fee Shares. On Completion, the Directors and Proposed
Directors will hold 30.74%, in aggregate, of the Enlarged Share Capital.
Fee Shares
On Completion, Silk Route Investments will receive 6,750,000 Ordinary Shares in
consideration of Silk Route Investments having introduced the Company to
Upstream and Strand Partners will receive 250,000 Ordinary Shares as part of its
fee arrangements with the Company.
The Commitment
At the time of the Company's admission to trading on AIM on 1 December 2004,
Shareholders who subscribed at 5p per Ordinary Share under the Original Placing
also committed to subscribe for an aggregate of 2,666,666 further Ordinary
Shares at a price of 15p per share, upon completion of the Company's first
acquisition within the hedge fund sector. The Acquisition is not in line with
the stated investment strategy and accordingly Original Placees will not be
called upon to meet the obligations under the Commitment.
Change of company name
To reflect the proposed changes to the Company, its management and operations as
a result of the Acquisition, it is proposed that conditional on Completion and
the passing of an appropriate Resolution at the EGM, the Company will change its
name to 'Upstream Marketing and Communications Inc.'.
Dividend policy
The Ordinary Shares rank equally for all dividends and other distributions
declared, paid or made in respect of the ordinary share capital of the Company.
The Company has not paid any dividends since incorporation.
The Directors and Proposed Directors expect that, in the short term, the
anticipated revenues generated by the business will be utilised by the Enlarged
Group for the development and growth of the Enlarged Group. The Directors and
Proposed Directors will review the dividend policy in light of the profits
generated by the Upstream business.
The declaration and payment by the Company of dividends will be dependent upon
the Company's financial condition, future prospects and other factors deemed to
be relevant at the time. This will take into account both the requirements of
the business and the expectations of the Shareholders.
Settlement, dealings and CREST
CREST is a paperless settlement procedure enabling securities to be evidenced
otherwise than by a certificate and transferred otherwise than by written
instrument. CRESTCo Limited is unable to take responsibility for the electronic
settlement of shares issued by companies in certain non-UK jurisdictions.
Depositary Interests allow paper stock in such non-UK jurisdictions to be
dematerialised and settled electronically. The paper-based stock is transferred
to a nominee company that then issues the Depositary Interests to the individual
shareholder's CREST account on a one-for-one basis and provides the necessary
custodial service. The Depositary Interest can then be traded and settlement
will be within the CREST system in the same way as any other CREST security.
The Company has adopted the Depositary Interest facility operated by its
registrar so that Shareholders have the choice of whether they want to hold
their Ordinary Shares in certificated or uncertificated form. Shareholders of
the Company who elect to hold their Ordinary Shares in uncertificated form
through the Depositary Interest facility will be bound by the terms of the Deed
Poll.
The Company's share register will show the nominee company, Capita IRG Trustees
Limited, as the holder of the Ordinary Shares but the beneficial interest will
remain with the Shareholders who will continue to receive all the rights
attaching to the Ordinary Shares as they would have if they had themselves been
entered on the register. The Depositary Interests will be traded and settled via
the CREST system. Shareholders can withdraw their Ordinary Shares back into
certificated form at any time using standard CREST messages.
Conversion into and transfers of Depositary Interests are subject to stamp duty
or stamp duty reserve tax, as appropriate, in the normal way.
CREST is a voluntary system and holders of Ordinary Shares who wish to receive
and retain share certificates will be able to do so. Placees that have asked to
hold their Ordinary Shares in uncertificated form will have their CREST accounts
credited with Depositary Interests on the day of Admission. Where Placees have
requested to receive their Ordinary Shares in certificated form, share
certificates will be despatched by first-class post within 14 days of the date
of Admission. No temporary documents of title will be issued. Pending the
receipt of definitive share certificates in respect of the Placing Shares (other
than in respect of those shares settled via Depositary Interests through CREST),
transfers will be certified against the register.
Application will be made for the Enlarged Share Capital to be admitted to AIM.
It is expected that Admission will take place and dealings in the Enlarged Share
Capital will commence on 16 October 2006.
Share Option Scheme
The Company has adopted the Share Option Scheme. On Completion, the Company
intends to grant options over 6,750,000 Ordinary Shares, at 20p per share, to
David Ketchum representing 5.05 per cent of the Enlarged Share Capital. Under
the rules of the Share Option Scheme, the number of shares under option is
limited to 15 per cent of the Company's issued share capital. The options to be
granted to Mr Ketchum vest three years after grant and are not subject to
performance conditions.
Lock-in agreements and orderly market arrangements
Subject to Admission, each of the Directors, David Ketchum and Jane McGuire
Ketchum have undertaken to the Company, Strand Partners and Walker Crips that,
except in certain limited circumstances, they will not dispose of any interest
in the Ordinary Shares held by them for a period of 12 months from the date of
Admission and, for the following 12 months, that they will only dispose of their
holdings with the consent of the Company's broker and nominated adviser from
time to time.
Techpacific and Corvus Capital Inc. have each similarly undertaken for a period
of 12 months from Admission that they will only dispose of their holdings with
the consent of the Company's broker and nominated adviser from time to time.
Jonathan Hakim, Peter Kingsbury and Paul Adams have each undertaken for a period
of six months from Admission that they will only dispose of their holdings with
the consent of the Company's broker and nominated adviser from time to time.
Non-applicability of the Takeover Code
As the Company is not resident in the UK, the Channel Islands or the Isle of Man
it is not subject to the Takeover Code. The Company has, however, endeavoured,
where appropriate, to prepare the Admission Document substantially in compliance
with the spirit of the Takeover Code. While the Company will seek to comply with
the provisions of the Takeover Code, third parties will not be obliged, and the
Company will not be able to compel them, to comply with the Takeover Code. As
such, investors should note, in particular, the paragraph below on Rule 9 of the
Takeover Code.
Rule 9 of the Takeover Code normally requires any person (or group of persons
acting in concert) that acquires shares which, taken together with shares
already held, carry 30% or more of the voting rights of a company to offer to
acquire the balance of the equity share capital. Rule 9 of the Takeover Code
also normally requires any person who, together with persons acting in concert
with him, holds between 30% and 50% of a company's voting rights and who
acquires additional shares which increases his holding of voting rights to make
such a mandatory offer. As the Company is not a company to which the Takeover
Code applies, investors should be aware that Shareholders are and will be
entitled to increase their holding of voting rights in the Company above 30%
without incurring any obligation to make a mandatory offer under the Takeover
Code as would normally arise were the Company subject to the provisions of the
Takeover Code.
If the Takeover Code did apply to the Company, then, by virtue of the percentage
of the Enlarged Share Capital represented by the Acquisition Shares, it would
have been required to seek competent independent advice that the Acquisition was
in the best interests of the Company and of its shareholders as a whole, as the
Directors believe it to be.
The terms of the Acquisition mean that the Vendors will, in aggregate, hold in
excess of 30% of the issued share capital of the Company. Under the terms of the
Takeover Code, such a holding would have obliged the Vendors to make a general
offer to the shareholders of the Company for the entire issued share capital of
the Company. The Takeover Code does, however, provide for the waiver of that
obligation by the Panel on Takeovers and Mergers, subject to the approval of the
Acquisition by a vote of independent shareholders on a poll at an extraordinary
general meeting.
As the Takeover Code does not apply, there is no obligation on the Vendors to
make a general offer.
Under the AIM Rules, the Acquisition is, however, subject to shareholder
approval at the EGM.
Irrevocable undertakings
The Company has received irrevocable undertakings from the Directors and certain
significant Shareholders to vote in favour of the Acquisition and the other
Resolutions in respect of, in aggregate, 34,166,112 Ordinary Shares representing
approximately 77 % of the Company's existing issued ordinary share capital.
Extraordinary General Meeting
In order to give effect to the Acquisition and to approve other elements of the
Proposals, an extraordinary general meeting of the Company will be convened. As
the Acquisition constitutes a reverse takeover, Shareholder approval will be
required under the AIM Rules.
Admission document
The Admission Document setting out details of the Proposals and including a
notice of the EGM, accompanied by a form of proxy (or form of direction as
applicable), will be posted to Shareholders today.
Copies of the Admission Document will be available to the public free of charge
from today at the offices of Fladgate Fielder at 25 North Row, London W1K 6DJ
during normal business hours on any weekday (other than Saturdays and public
holidays), until one month following the date of Admission.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Publication of the Admission Document 19 September 2006
Latest time and date for receipt of Forms of Direction 11 a.m. GMT on
10 October 2006
Latest time and date for receipt of Forms of Proxy 11 a.m. GMT on
11 October 2006
Payment to be received from the investors Noon GMT on 11
October 2006
xtraordinary General Meeting 16 October 2006
Admission effective and dealings expected to commence in the 16 October 2006
Enlarged Share Capital on AIM
Completion of the Acquisition 16 October 2006
CREST accounts expected to be credited in respect of Depositary 16 October 2006
Interests
Definitive share certificates for the New Ordinary Shares 30 October 2006
expected to be despatched (where applicable) by
ACQUISITION AND PLACING STATISTICS
Number of Existing Ordinary Shares 44,366,668
Number of Acquisition Shares 79,675,002
Placing Price 20p
Number of Placing Shares 2,500,000
Number of Fee Shares 7,000,000
Number of Ordinary Shares in issue on Admission 133,541,670
Percentage of the Enlarged Share Capital represented by the
Acquisition Shares* 29.33 %
Percentage of the Enlarged Share Capital represented by the
Placing Shares 1.87 %
Percentage of the Enlarged Share Capital held by the Directors
and Proposed Directors at Admission 30.74 %
Gross proceeds of the Placing £500,000
Proceeds of the Placing net of expenses £175,000
* excluding the interests of the Proposed Directors whose holdings are included
in the percentage represented by the Directors
The Placing is not being made, directly or indirectly, in or into the United
States, Canada, Japan, Australia, Republic of Ireland, Republic of South Africa
or any other jurisdiction in which such Placing or solicitation is unlawful.
Accordingly, this announcement is not being and should not be released or
otherwise distributed or sent in, into or from the United States, Canada, Japan,
Australia, Republic of Ireland, Republic of South Africa, or any other
jurisdiction where to do so would be in breach of any applicable law and/or
regulation. The new Ordinary Shares to be allotted pursuant to the Acquisition
and the Placing have not been and will not be registered under the Securities
Act or under the relevant securities laws of any state or other jurisdiction of
the United States, Canada, Japan, Australia, Republic of Ireland or Republic of
South Africa. Accordingly, the new Ordinary Shares to be allotted pursuant to
the Acquisition and the Placing may not (unless an exemption under the
Securities Act or other relevant securities laws is available) be offered, sold,
re-sold or delivered, directly or indirectly, in, into or from the United
States, Canada, Japan, Australia, Republic of Ireland, Republic of South Africa
or any other jurisdiction where this would constitute a violation of the
relevant laws of, or require registration thereof in, such a jurisdiction or to,
or for the account or benefit of, any US persons or a person in, or resident of
Canada, Japan, Australia, Republic of Ireland or Republic of South Africa.
Strand Partners Limited, which is authorised and regulated in the United Kingdom
by the Financial Services Authority, is acting as nominated adviser to the
Company in connection with the proposed admission of the Enlarged Share Capital
to trading on AIM. Its responsibilities as the Company's nominated adviser under
the AIM Rules are owed solely to the London Stock Exchange and are not owed to
the Company or to any Director or to any other person in respect of his decision
to acquire shares in the Company in reliance on any part of this announcement.
Walker Crips Stockbrokers Limited, which is authorised and regulated in the
United Kingdom by the Financial Services Authority and is a member of the London
Stock Exchange, is acting as broker to the Company in connection with the
Placing and proposed admission of the Enlarged Share Capital to trading on AIM.
Strand Partners Limited and Walker Crips Stockbrokers Limited are not acting for
anyone else and will not be responsible to anyone other than the Company for
providing the protections afforded to their clients or for providing advice in
relation to the contents of this announcement or the Placing or the Admission of
the Enlarged Share Capital to trading on AIM. No representation or warranty,
express or implied, is made by either Strand Partners Limited or Walker Crips
Stockbrokers Limited as to the contents of this announcement, without limiting
the statutory rights of any person to whom this announcement is issued. Neither
Strand Partners Limited nor Walker Crips Stockbrokers Limited will be offering
advice, nor will they otherwise be responsible for providing customer
protections to recipients of this announcement or for advising them on the
contents of this announcement or any other matter. The information contained in
this announcement is not intended to inform or be relied upon by any subsequent
purchasers of Ordinary Shares (whether on or off exchange) and accordingly no
duty of care is accepted in relation to them.
Definitions
The following definitions apply throughout this announcement, unless the context
requires otherwise:
+---------------+--------------------------------------------------------------+
|Acquisition |the proposed acquisition by the Company of the entire issued |
| |share capital of Upstream pursuant to the Acquisition |
| |Agreement |
+---------------+--------------------------------------------------------------+
|Acquisition |the conditional agreement dated 19 September 2006 between the |
|Agreement |Company and the Vendors relating to the Acquisition |
+---------------+--------------------------------------------------------------+
|Acquisition |the 79,675,002 new Ordinary Shares in the Company to be |
|Shares |allotted and issued to the Vendors pursuant to the Acquisition|
| |Agreement |
+---------------+--------------------------------------------------------------+
|Admission |the effective admission of the Enlarged Share Capital of the |
| |Company to trading on AIM in accordance with the AIM Rules |
+---------------+--------------------------------------------------------------+
|Admission |the admission document compiled in accordance with the |
|Document |Regulations and the AIM Rules |
+---------------+--------------------------------------------------------------+
|AIM |the AIM market operated by the London Stock Exchange |
+---------------+--------------------------------------------------------------+
|AIM Rules |the rules applicable to companies whose shares are traded on |
| |AIM published by the London Stock Exchange from time to time |
+---------------+--------------------------------------------------------------+
|CA 1985 |the Companies Act 1985, as amended |
+---------------+--------------------------------------------------------------+
|Combined Code |the corporate governance code issued by the Financial |
| |Reporting Council |
+---------------+--------------------------------------------------------------+
|Commitment |the obligation, made at the time of the Original Placing, of |
| |certain persons to subscribe for further Ordinary Shares |
+---------------+--------------------------------------------------------------+
|Company |Raven Capital Inc, incorporated and registered in the Cayman |
| |Islands with number 141920 |
+---------------+--------------------------------------------------------------+
|Completion |completion of the Proposals |
+---------------+--------------------------------------------------------------+
|CREST |the system for paperless settlement of trades and the holding |
| |of uncertificated securities administered by CRESTCo Limited |
+---------------+--------------------------------------------------------------+
|Deed Poll |the deed poll dated 1 December 2004 made by Capita IRG |
| |Trustees Limited dealing with the creation and issue of |
| |Depositary Interests |
+---------------+--------------------------------------------------------------+
|Depositary |interests in uncertificated form, representing Ordinary |
|Interests |Shares, that can be settled electronically through and held in|
| |CREST |
+---------------+--------------------------------------------------------------+
|Directors or |the existing directors of the Company |
|Board | |
+---------------+--------------------------------------------------------------+
|EGM or |the extraordinary general meeting of the Company to be held at|
|Extraordinary |11 a.m. GMT (noon CET) on 13 October 2006 at Quai Gustave - |
|General |Ador 30, 1207 Geneva, Switzerland |
|Meeting | |
+---------------+--------------------------------------------------------------+
|Enlarged |the Directors and the Proposed Directors |
|Board | |
+---------------+--------------------------------------------------------------+
|Enlarged |the Company as enlarged by the Acquisition |
|Group | |
+---------------+--------------------------------------------------------------+
|Enlarged Share |the issued ordinary share capital of the Company on Admission |
|Capital |as enlarged by the issue of the New Ordinary Shares |
+---------------+--------------------------------------------------------------+
|EP |EP (Singapore) Pte Limited |
+---------------+--------------------------------------------------------------+
|Existing |the 44,366,668 Ordinary Shares in issue at the date of this |
|Ordinary |announcement |
|Shares | |
+---------------+--------------------------------------------------------------+
|Fee Shares |the 7,000,000 new Ordinary Shares in the Company to be |
| |allotted and issued to Strand Partners and Silk Route |
| |Investments for services provided in relation to the |
| |Proposals |
+---------------+--------------------------------------------------------------+
|Form of |a Form of Direction for use by holders of Depositary Interests|
|Direction |to direct how Capita IRG Trustees Limited votes at the EGM |
+---------------+--------------------------------------------------------------+
|Form of Proxy |a Form of Proxy for use by Shareholders in relation to the |
| |EGM |
+---------------+--------------------------------------------------------------+
|HKD |Hong Kong dollar |
+---------------+--------------------------------------------------------------+
|Hong Kong |the Hong Kong Special Administrative Region of the PRC |
+---------------+--------------------------------------------------------------+
|London Stock |London Stock Exchange plc |
|Exchange | |
+---------------+--------------------------------------------------------------+
|New Ordinary |together the Acquisition Shares, the Fee Shares and the |
|Shares |Placing Shares |
+---------------+--------------------------------------------------------------+
|Official List |the official list of the United Kingdom Listing Authority |
+---------------+--------------------------------------------------------------+
|Option Scheme |the Company's share option scheme |
+---------------+--------------------------------------------------------------+
|Ordinary |ordinary shares of 0.25p each in the capital of the Company |
|Shares | |
+---------------+--------------------------------------------------------------+
|Original |the placing of 8,000,000 Ordinary Shares at a placing price of|
|Placing |5p per share which was effected at the time of the Company's |
| |admission to AIM on 15 December 2004 |
+---------------+--------------------------------------------------------------+
|Penkenna |Penkenna Limited of Palm Grove House, PO Box 438, Road Town, |
| |Tortola, British Virgin Islands |
+---------------+--------------------------------------------------------------+
|Placees |subscribers for Placing Shares |
+---------------+--------------------------------------------------------------+
|Placing |the proposed conditional placing by the Company of the Placing|
| |Shares at the Placing Price |
+---------------+--------------------------------------------------------------+
|Placing Price |20p per Placing Share |
+---------------+--------------------------------------------------------------+
|Placing |the 2,500,000 new Ordinary Shares which are proposed to be |
|Shares |issued pursuant to the Placing |
+---------------+--------------------------------------------------------------+
|PRC |the Peoples' Republic of China |
+---------------+--------------------------------------------------------------+
|Proposals |together the Acquisition, the allotment and issue of the New |
| |Ordinary Shares, the appointment of the Proposed Directors, |
| |the change of the Company's name, the Placing and Admission |
+---------------+--------------------------------------------------------------+
|Proposed |Shahed Mahmood, David Ketchum and Jane McGuire Ketchum |
|Directors | |
+---------------+--------------------------------------------------------------+
|Registrar |Capital IRG (Offshore) Limited of Victoria Chambers, |
| |Liberation Square, 1/3 The Esplanade, St Helier, Jersey JE4 |
| |0FF |
+---------------+--------------------------------------------------------------+
|Re-Introduction|the conditional agreement dated 19 September 2006 between the |
|Agreement |Company (1), the Directors (2), the Proposed Directors (3), |
| |Strand Partners (4) and Walker Crips (5) |
+---------------+--------------------------------------------------------------+
|Resolutions |the resolutions to be proposed at the EGM and reference to a |
| |'Resolution' is to the relevant resolution set out in the |
| |notice of EGM |
+---------------+--------------------------------------------------------------+
|RMB |Yuan Renminbi, the official currency of the PRC |
+---------------+--------------------------------------------------------------+
|SGD |Singaporean dollar |
+---------------+--------------------------------------------------------------+
|Share Dealing |the code on dealings in the Company's securities adopted by |
|Code |the Company, that complies with the AIM Rules |
+---------------+--------------------------------------------------------------+
|Shareholders |holders of Ordinary Shares |
+---------------+--------------------------------------------------------------+
|Strand |Strand Partners Limited, the Company's nominated adviser |
|Partners | |
+---------------+--------------------------------------------------------------+
|Strand |the warrant certificate dated 1 December 2004 in favour of |
|Warrant |Strand Partners for the right to subscribe for new Ordinary |
| |Shares |
+---------------+--------------------------------------------------------------+
|subsidiary and |have the meanings given to them by CA 1985 |
|subsidiary | |
|undertaking | |
+---------------+--------------------------------------------------------------+
|Takeover Code |the Takeover Code published by the Takeover Panel |
+---------------+--------------------------------------------------------------+
|Takeover |the Panel on Takeovers and Mergers |
|Panel | |
+---------------+--------------------------------------------------------------+
|Techpacific |techpacific.com (BVI) Investments Limited |
+---------------+--------------------------------------------------------------+
|UK or United |the United Kingdom of Great Britain and Northern Ireland |
|Kingdom | |
+---------------+--------------------------------------------------------------+
|UK Transfer |Capita Registrars of The Registry, 34 Beckenham Road, |
|Agents |Beckenham, Kent BR3 4TU |
+---------------+--------------------------------------------------------------+
|United Kingdom |the Financial Services Authority, acting in its capacity as |
|Listing |the competent authority for the purposes of Part VI of the |
|Authority |Financial Services and Markets Act 2000, as amended |
+---------------+--------------------------------------------------------------+
|Upstream |Upstream Asia Limited, a company incorporated in the British |
| |Virgin Islands with registered number 422581 whose registered |
| |office is at Trident Chambers, PO Box 146, Road Town, Tortola,|
| |British Virgin Islands |
+---------------+--------------------------------------------------------------+
|Upstream Group |Upstream and its subsidiary undertakings |
|or Group | |
+---------------+--------------------------------------------------------------+
|US or United |the United States of America, its territories and possessions,|
|States |any state of the United States of America and the district of |
| |Columbia and all other areas subject to its jurisdiction |
+---------------+--------------------------------------------------------------+
|US person |a citizen or permanent resident of the United States, as |
| |defined in Regulation S promulgated under the Securities Act |
| |1933 |
+---------------+--------------------------------------------------------------+
|Vendors |the existing shareholders in Upstream |
+---------------+--------------------------------------------------------------+
|Walker Crips |Walker Crips Stockbrokers Limited, the Company's broker |
+---------------+--------------------------------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
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