Fundraising and Notice of EGM
Mobile Tornado Group PLC
28 September 2007
Mobile Tornado Group plc
('Mobile Tornado' or 'the Company')
Fundraising and Notice of Extraordinary General Meeting
The Company is pleased to announce that it has conditionally raised £2.3
million, before expenses, through a placing of 12,251,333 Ordinary Shares
currently held in treasury ('Treasury Shares') and 18,750,000 Non-Voting
Preference Shares (together the 'Placing').
Since the placing announced on 25 September 2006, the Company has made
substantial changes to the Group's technology platform and has worked closely
with Nortel Networks and InTechnology plc ('InTechnology') in order to develop
further and commercialise its product offering. The Board believes that the
Group will require further funds before it is able to achieve material revenues
within the business.
As such, InTechnology and Peter Wilkinson have conditionally agreed to acquire
the Treasury Shares from the Company at a price of 7p per Treasury Share.
InTechnology has also conditionally agreed to subscribe 18,750,000 Non-Voting
Preference Shares at a price of 8p per Non-Voting Preference Share.
Following the Proposals, the Company will have raised net proceeds of
approximately £2.2 million.
Use of Funds
The Directors intend to use the net proceeds of the Placing to continue
investing in the Group's technology platform and to establish the managed
services proposition with partners throughout Europe.
The Directors have considered the size of the funding required to sustain and to
further expand the Group's sales and development activities, the need for
sufficient working capital, and the current Share price. After careful
consideration, the Directors believe that the Proposals are in the best
interests of Shareholders as a whole.
The Subscription
Pursuant to a subscription agreement, InTechnology and Peter Wilkinson have
conditionally agreed to acquire 12,251,333 Treasury Shares at a price of 7p per
Treasury Share. The Treasury Shares represent approximately 6.64 per cent. of
the issued ordinary share capital of the Company. Peter Wilkinson is also a
55.26 per cent. shareholder in InTechnology.
In addition, InTechnology has agreed to subscribe for 18,750,000 Non-Voting
Preference Shares at a price of 8p per Non-Voting Preference Share. The
Non-Voting Preference Shares carry a cumulative annual coupon of 10 per cent.
and may be redeemed at the Subscription Price (together with any accrued but
unpaid coupon) at the option of the Company. If the Non-Voting Preference Shares
are not redeemed prior to 31 December 2009 or a third party acquires 75 per
cent. or more of the issued ordinary share capital of the Company, each
Non-Voting Preference Share will automatically convert into an Ordinary Share.
The Non-Voting Preference Shares will not be admitted to trading on AIM.
The subscription agreement is conditional on the Resolutions being passed at the
Extraordinary General Meeting ('EGM') on 26 October 2007. The agreement can be
terminated by InTechnology or Peter Wilkinson prior to the EGM on the occurrence
of certain events, including a material adverse change in the financial
condition or prospects of the Company.
Directors holdings
As part of the Placing Peter Wilkinson will be purchasing 51,333 Ordinary Shares
at 7p per Treasury Share. Following the Placing, Peter Wilkinson will be
interested in 24,962,725 Ordinary Shares, representing 13.53 per cent. of the
voting capital of the Company.
The EGM
An EGM will be held at the offices of Hammonds, 2 Park Lane, Leeds LS3 1ES at
10.00 a.m. on 26 October 2007 at which the following resolutions will be
proposed:
Resolution 1
The first resolution is an ordinary resolution and is required because the
investment constitutes a substantial property transaction involving Peter
Wilkinson and InTechnology for the purposes of section 320 of the Act
(substantial property transactions involving directors) and accordingly is
subject to approval by the Shareholders.
Resolution 2
The second resolution is a special resolution and relates to the increase in
authorised share capital and amendments to the Company's Articles of Association
necessary to create the Non-Voting Preference Shares, to implement the
Subscription and to provide flexibility for additional share issues in the
future.
If passed, the authorities granted by this Resolution will replace the prior
share issue authorities of the Company obtained at the last extraordinary
general meeting of the Company and will:
(1) increase the authorised share capital of the Company by the creation of
18,750,000 Non Voting Preference Shares;
(2) provide your Board with authority to allot Non-Voting Preference Shares in
connection with the Subscription;
(3) provide your Board with authority to allot equity securities for cash (or
sell equity securities which are, from time to time held by the Company in
treasury) without being required first to offer such securities to existing
shareholders in accordance with statutory pre-emption rights, provided that such
authority will be limited to:
(i) the issue of Shares pursuant to rights issues or open offers;
(ii) the issue of Shares pursuant to any share scheme adopted by the Company;
(iii) the sale of the Treasury Shares pursuant to the Proposals; and
(iv) (otherwise than pursuant to sub-paragraphs (i), (ii) and (iii)) up to an
aggregate nominal amount of £184,430.
Recommendation
The Placing constitutes a related party transaction for the purposes of the AIM
rules. The Independent Directors having been so advised by Blue Oar Securities,
the Company's nominated adviser, consider that the terms of the subscription
agreement are fair and reasonable insofar as Independent Shareholders are
concerned.
In providing advice to the Independent Directors, Blue Oar Securities has taken
into account the Directors' commercial assessments.
The Independent Directors recommend, for the reasons set out above, that you
vote in favour of the resolutions to be proposed at the EGM, as they intend to
do in respect of their own shareholding, which in aggregate amounts to
16,842,530 Ordinary Shares representing approximately 9.78 per cent. of the
issued voting share capital of the Company as at the date of this document.
For further details please contact:
Mobile Tornado Group plc
Jeremy Fenn, Chief Financial Officer Tel: +44 (0) 7734 475888
Blue Oar Securities Plc
Romil Patel / Rhod Cruwys Tel: +44 (0)20 7448 4400
Buchanan Communications
Charles Ryland / James Strong Tel: +44 (0)20 7466 5000
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