Issue of Equity and Capital Reorganisation

RNS Number : 8953K

Mobile Tornado Group PLC

02 August 2013

 



2 August 2013

THIS ANNOUNCEMENT IS RESTRICTED AND NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA), AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA OR ANY OTHER STATE OR JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

Mobile Tornado Group plc

("Mobile Tornado" or the "Company")

Proposed Placing of 20,000,000 new Ordinary Shares and Capital Reorganisation

1.  Introduction

The Company announced today that it intends to raise £4.0 million (before fees and expenses) through an underwritten placing of 20,000,000 new Ordinary Shares with new institutional investors at a price of 20 pence per new Ordinary Share. The Placing Price represents an approximate 2.4 per cent. discount to the Closing Price of 20.5 pence per Existing Ordinary Share on 1 August 2013 (being the last Business Day prior to the announcement of the Placing).

The Placing is conditional, inter alia, upon the Company obtaining approval from its Ordinary Shareholders to grant the Board authority to allot the Placing Shares and to disapply statutory pre-emption rights which would otherwise apply to the allotment of the Placing Shares. The Placing, which has been fully underwritten by Investec, is also conditional upon Admission.

The Company also announced today a proposed reorganisation of certain of its capital under which, in aggregate, £4.0 million of funds payable to InTechnology will be capitalised into 20,000,000 new Ordinary Shares at a price of 20 pence per Ordinary Share (being the same price as the Placing Price) and a further amount of approximately £2.7 million of funds payable to InTechnology will be capitalised into Capital Reorganisation Preference Shares. In addition, it is proposed that the Existing Preference Shares have their rights amended to become Amended Preference Shares.

A notice convening a General Meeting of the Company to be held on 28 August 2013 at which the Resolutions necessary to implement the Proposals will be proposed is being sent to shareholders today as part of a circular (the "Circular"). The Directors and InTechnology intend to vote (or procure a vote) in favour of the Resolutions in respect of their own beneficial holdings totalling 44,636,615 and 92,200,000 Existing Ordinary Shares, respectively, representing approximately 74.0 per cent. of the Existing Ordinary Shares.

2.  Mobile Tornado overview

Mobile Tornado specialises in the provision of Instant Communications services for mobile devices, with a focus on enterprise workforce management. The Company's main applications are: Instant Talk (Push To Talk); Instant Locate; Instant Alert; and Instant Message.

Together, and individually, the Company's services are designed to improve productivity and performance as well as regulatory compliance whilst enabling departments and workers to connect one-to-one or one-to-many at the touch of a button.

The Company's customers, by equipping their workforce with conventional mobile devices and Mobile

Tornado's Instant Communication services, can communicate with one or many employees simultaneously, monitor employee locations, and immediately be alerted of major issues. At the touch of a button, customers can communicate with employees more efficiently and cost-effectively than would be possible through traditional mobile services or other PMR solutions. Mobile Tornado's suite of IP-based, OMA standards compliant services, provides instantaneous, 'always-on', bandwidth-efficient communications across a range of MNOs and devices, and has been configured to be compatible with forthcoming 4G/LTE mobile networks.

The market for value added services amongst mobile operators has increased significantly over the last two years, driven primarily by the emergence of smart devices and the transition to high speed 4G/LTE networks. The corporate market is traditionally the most profitable for operators, and the Directors believe that Mobile Tornado's application suite offering, which can be deployed across the whole workforce management sector will continue to be an attractive option for corporates looking for these types of devices.

3.  Trading update

Ahead of announcing its interim results for the six months ended 30 June 2013 on or about 27 September 2013, the Company has today published a trading update for the first half of the current financial year.

4.  Background to the Placing and Capital Reorganisation

The Board is proposing to raise £4.0 million (before fees and expenses) through an underwritten placing of 20,000,000 new Ordinary Shares with new institutional investors to provide sufficient funds to support the Company's growth.

The Board is also taking the opportunity to restructure the Company's balance sheet, converting £6.7 million total indebtedness to InTechnology into £4.0 million of Ordinary Shares (issued at the Placing Price) and approximately £2.7 million of Capital Reorganisation Preference Shares. Furthermore, the £3.0 million (nominal value) Existing Preference Shares held by InTechnology will become Amended Preference Shares by virtue of the amendments proposed to be made to the rights attaching to them.

The Directors believe that this balance sheet restructuring will allow the Company better to pursue its growth opportunities with a strengthened balance sheet, removing capital constraints and helping it in its contract negotiations with potential customers.

The Placing is conditional on the Capital Reorganisation taking place.

5.  Use of proceeds of the Placing

The Directors believe that, notwithstanding the increased levels of activity, it is essential that the Company continues to innovate around its technical platform. This requires investment in operational teams to manage its deployments with current and prospective customers, and skilled engineers to assist in the development of enhanced functionality for new products and markets. Mobile Tornado's initiatives within the Homeland Security market is a good example of this and taking account of the pressures within the global economy, where increased efficiency is being demanded at a lower cost, the Directors anticipate gaining traction in this area during the current financial year. The Board is focussed on strengthening the Company's position in its chosen markets and intends to recruit engineering and business development resources to develop this strategy. The Placing will assist this process.

The net proceeds of the Placing are expected to be approximately £3.7 million and the Directors intend to use such funds to continue to invest in its platform and further market penetration, as well as provide additional working capital to support existing contracts.

The Board strongly believes that raising equity finance using the flexibility provided by a non pre-emptive placing is the most appropriate and optimal structure for the Company at this time. This avoids the need for a prospectus, which is a costly and time consuming process.

6.  Capital Reorganisation

Introduction

As at 26 July 2013, the Company owed a principal amount of approximately £4.7 million to InTechnology. Of this, £3.0 million accrues interest at 5.0 per cent. per annum above the Bank of England base rate and as at the anticipated date of Capital Reorganisation Admission, being 29 August 2013, approximately £0.3 million of interest will have accrued. The remaining £1.7 million of principal (which does not accrue interest) relates to a current account payable to InTechnology. Accordingly, the Company owes InTechnology under these arrangements, in aggregate, approximately £5.0 million. Although InTechnology has confirmed in writing to the Company that it will not request repayment of these amounts during the 12 month period ending 18 April 2014 (thereafter the Existing InTechnology Loans being repayable on demand), the Company believes that the Existing InTechnology Loans represent a potential hindrance to the business' growth.

In addition, as at 26 July 2013 InTechnology held £3.0 million (at par) non-voting, redeemable preference shares with a cumulative coupon of 10.0 per cent. per annum (the "Existing Preference Shares"). At the anticipated date of Capital Reorganisation Admission, being 29 August 2013, the Existing Preference Shares will have accrued unpaid dividends and interest on such unpaid dividends totalling approximately £1.7 million. On written notification to the Company, the holder of the Existing Preference Shares is permitted to convert all or some of them (at the holder's option) into Ordinary Shares at a conversion price of 8.0 pence per Ordinary Share.

As set out below, as a result of the Capital Reorganisation, the aggregate of approximately £9.7 million of Existing Preference Shares and Existing InTechnology Indebtedness as at the anticipated date of Capital Reorganisation Admission will be converted into 20,000,000 Capital Reorganisation Ordinary Shares (with an aggregate value of £4.0 million based on the conversion price agreed as part of the Capital Reorganisation, which is the same as the Placing Price) and, in aggregate, 71,276,735 Amended Preference Shares and Capital Reorganisation Preference Shares (with an aggregate nominal value of approximately £5.7 million).

Capitalisation Agreement

The Company and InTechnology have today entered into the Capitalisation Agreement in order to document part of the Capital Reorganisation. The Capitalisation Agreement is conditional upon completion of the Placing, the passing of Resolutions 1 and 2 and Capital Reorganisation Admission. The Capital Reorganisation will become effective immediately following Admission.

Under the Capitalisation Agreement, InTechnology has agreed to convert an equivalent sum to the value of the gross funds raised in the Placing, being £4.0 million, of the Existing InTechnology Indebtedness into new Ordinary Shares at the Placing Price (the "Capital Reorganisation Ordinary Shares"). InTechnology has also agreed to convert on a pound for pound basis the balance of the Existing InTechnology Indebtedness of approximately £2.7 million (calculated up to the anticipated date of Capital Reorganisation Admission) (the "Capital Reorganisation Preference Shares") and the £3.0 million of Existing Preference Shares into non-convertible cumulative redeemable preference shares.

The Capital Reorganisation Preference Shares and the Amended Preference Shares , having an aggregate nominal value of approximately £5.7 million, will be redeemable at par value on 31 December 2018, or, at the Company's discretion, at any earlier date and will accrue interest at a fixed rate of 10 per cent. per annum on the amount paid up on such shares.

The Capital Reorganisation Preference Shares and the Capital Reorganisation Ordinary Shares will be issued credited as fully paid and will rank pari passu in all respects with the Amended Preference Shares and the Existing Ordinary Shares, respectively.

InTechnology's interests in Ordinary Shares

Immediately after completion of the Capital Reorganisation and the Placing:

·      the Company's indebtedness to InTechnology in respect of the Existing InTechnology Indebtedness will be £nil;

·      In Technology will directly hold 71,276,735 Amended Preference Shares; and

·      InTechnology will directly hold 112,200,000 Ordinary Shares (representing approximately 49.9 per cent. of the Enlarged Ordinary Share Capital). Accordingly, immediately before and immediately following completion of the Placing and the Capital Reorganisation, InTechnology's direct interest in the issued ordinary share capital of Company will remain constant at 49.9 per cent. Peter Wilkinson, the majority shareholder of InTechnology, will hold 11.0 per cent. of the Enlarged Ordinary Share Capital of the Company.

The Board believes that the Capital Reorganisation will allow the Company to better pursue its growth

opportunities with a strengthened balance sheet, removing capital constraints and helping it in its contract negotiations with potential customers.

The Board will continue to monitor the balance sheet and consider additional opportunities to manage its structure in the best interests of the Company.

7.  Placing

General

The Company has conditionally raised £4.0 million (before expenses) through the proposed issue of the Placing Shares at the Placing Price, which represents a discount of approximately 2.4 per cent. to the Closing Price of 20.5 pence per Existing Ordinary Share on 1 August 2013, being the last Business Day prior to the announcement of the Placing. The Placing Shares will represent approximately 8.9 per cent. of the Enlarged Ordinary Share Capital.

The Placing Shares will be issued as fully paid and will rank on Admission pari passu in all respects with the Existing Ordinary Shares. The Placing Shares are not being made available to the public and are not being offered or sold in any jurisdiction where it would be unlawful to do so.

The Placing Agreement

Pursuant to the terms of the Placing Agreement, Investec, as agent for the Company, has conditionally agreed to use its reasonable endeavours to procure subscribers for the Placing Shares. Investec has conditionally placed the Placing Shares with certain new institutional investors at the Placing Price. The Placing has been underwritten by Investec.

The Placing Agreement is conditional upon, inter alia, the Resolutions 1 and 2 being duly passed at the General Meeting and Admission becoming effective on or before 8.00 a.m. on 29 August 2013 (or such later time and/or date as the Company and Investec may agree, but in any event by no later than 8.00 a.m. on 27 September 2013).

The Placing Agreement contains warranties from the Company and the Executive Directors in favour of Investec in relation to, inter alia, the accuracy of the information in the Circular and other matters relating to the Company and its business. In addition, the Company and the Executive Directors have agreed to indemnify Investec in relation to certain liabilities it may incur in respect of the Placing. Investec has the right to terminate the Placing Agreement in certain circumstances prior to Admission, in particular, in the event of a material breach of the warranties given to Investec in the Placing Agreement, the failure of the Company to comply in any material respect with any of its obligations under the Placing Agreement, the occurrence of a force majeure event or a material adverse change affecting the condition, or the earnings or business affairs or prospects of the Group as a whole, whether or not arising in the ordinary course of business.

8.  Related party transaction

As described in paragraph 6 above, the Company and InTechnology have entered into the Capitalisation Agreement.

By virtue of its current interests in the Company, InTechnology is a "related party" of the Company (as defined under the AIM Rules) and accordingly its entry into the Capitalisation Agreement with the Company constitutes a related party transaction for the purposes of Rule 13 of the AIM Rules.

The Directors, having consulted with the Company's nominated adviser, Investec, consider the terms of the Capitalisation Agreement to be fair and reasonable insofar as Ordinary Shareholders are concerned.

9.  New Articles (including the variation of rights attaching to the Existing Preference Shares)

The Board considers it appropriate to ask Ordinary Shareholders to approve a number of amendments to the Current Articles, primarily to reflect the implementation of the provisions of the Act. To do this most efficiently, the Board proposes that the New Articles are adopted in place of the Current Articles.

In addition to the changes to reflect the implementation of the Act, the rights attaching to the Existing Preference Shares are proposed to be amended, reflecting the agreement reached between the Company and InTechnology, as the holder of the Existing Preference Shares, and the terms of the Capitalisation Agreement. The New Articles will set out those new rights. The variation of the rights attaching to the Existing Preference Shares shall be subject to the signing of the consent by the holders of three quarters in nominal value of the Existing Preference Shares in accordance with article 48 of the Current Articles. InTechnology, as the sole holder of the Existing Preference Shares, has irrevocably undertaken to sign such a consent.

An explanation of the main changes between the Current Articles and the New Articles will be set out in the Appendix to the Circular.

10.        General Meeting

Set out on pages 22 to 24 of the Circular will be a notice convening a General Meeting of the Company to be held at the offices of Walker Morris LLP at Kings Court, 12 King Street, Leeds LS1 2HL at 10.30 a.m. on 28 August 2013, at which the following Resolutions will be proposed.

InTechnology has irrevocably undertaken to vote in favour of the Resolutions in respect of its entire holding of Existing Ordinary Shares, being 92,200,000 Existing Ordinary Shares, representing approximately 49.9 per cent. of the Existing Ordinary Shares.

Both the Placing and the Capital Reorganisation are conditional upon, inter alia, the passing of the

Resolutions 1 and 2 (but not Resolution 3).

Resolution 1

A special resolution split into two parts authorising and empowering the Directors to allot the Placing Shares, the Capital Reorganisation Ordinary Shares and the Capital Reorganisation Preference Shares on a non-pre-emptive basis. If passed, this will be in addition to the like authority and power to allot Ordinary Shares which was given to the Directors pursuant to resolution 6 and resolution 7 at the annual general meeting of the Company on 26 June 2013.

Resolution 2

A special resolution split into two parts and which is conditional on (i) the passing of Resolution 1; (ii)

Admission; and (iii) Capital Reorganisation Admission:

a)   first, to delete certain provisions of the Current Articles; and

b)   second, to adopt the New Articles which, if adopted and amongst other things, will alter the rights attached to the Existing Preference Shares (so that they become Amended Preference Shares) and make certain changes to reflect the implementation of the Act. Under the New Articles, the Amended Preference Shares would be redeemable on 31 December 2018, or, at the Company's discretion, at any one or more earlier date(s). Members holding Amended Preference Shares shall continue to be eligible to receive a fixed cumulative preferential net cash dividend. The rate of such dividend shall be a fixed rate of 10 per cent. per annum of the amount paid up on such shares (which is the same as that applying to the Existing Preference Shares).

Resolution 3

A special resolution split into two parts and which is conditional on (i) the passing of Resolutions 1 and 2; (ii) Admission; and (iii) Capital Reorganisation Admission:

a)   first, to grant the Directors the authority to allot Shares for general purposes (pursuant to section 551 of the Act) and to grant rights to subscribe for or to convert any security into Shares up to an aggregate nominal value of £1,485,000 (which would represent approximately 33 per cent. of the Enlarged Ordinary Share Capital). If effective, this authority will be in addition to the like authority granted by Resolution 1 but in substitution for the authority to allot Ordinary Shares pursuant resolution 6 at the annual general meeting of the Company held on 26 June 2013; and

b)   second, to disapply statutory pre-emption rights in respect of the issue of Shares by the Company up to an aggregate nominal value of £450,000 (which would represent approximately 10 per cent. of the Enlarged Ordinary Share Capital). If effective, this power will be in addition to the like power granted by Resolution 1 but in substitution for the power to allot equity securities pursuant resolution 7 at the annual general meeting of the Company held on 26 June 2013.

The Directors have no current intention to utilise, if granted, either the authority or the power that would be conferred by Resolution 3, save in relation for the granting of options over Ordinary Shares in manner consistent with past practice.

11.        Admission, settlement and CREST

Application will be made to the London Stock Exchange for the admission of the Placing Shares and the Capital Reorganisation Ordinary Shares to trading on AIM. It is expected that Admission and Capital Reorganisation Admission will become effective on or around 29 August 2013 and that dealings in the Placing Shares and the Capital Reorganisation Ordinary Shares will commence at that time.

The Current Articles and the New Articles permit the Company to issue shares in uncertificated form. CREST is a computerised paperless share transfer and settlement system which allows shares and other securities to be held in electronic rather than paper form. The Ordinary Shares are already admitted to CREST and therefore the Placing Shares and the Capital Reorganisation Ordinary Shares will also be eligible for settlement in CREST. CREST is a voluntary system and Ordinary Shareholders who wish to retain certificates will be able to do so upon request. The Placing Shares and the Capital Reorganisation Ordinary Shares due to uncertificated holders are expected to be delivered in CREST on 29 August 2013.

12.        Action to be taken

Ordinary Shareholders will find enclosed with the Circular a Form of Proxy for use at the General Meeting. If you are an Ordinary Shareholder, whether or not you propose to attend the General Meeting in person, you are strongly encouraged to complete, sign and return your Form of Proxy in accordance with the instructions printed on it as soon as possible, but in any event so as to be received, by post or, during normal business hours only, by hand, at Capita Registrars, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU by no later than 10.30 a.m. on 23 August 2013 (or, in the case of an adjournment, not later than 48 hours before the time fixed for the holding of the adjourned meeting (excluding any part of a day that is not a Business Day)).

If you hold your Ordinary Shares in uncertificated form (that is, in CREST) you may vote using the CREST Proxy Voting service in accordance with the procedures set out in the CREST Manual (please also refer to the accompanying notes to the Notice of the General Meeting to be set out at the end of the Circular). Proxies submitted via CREST must be received by the Company's agent (ID: RA10) by no later than 10.30 a.m. on 23 August 2013 (or, in the case of an adjournment, not later than 48 hours before the time fixed for the holding of the adjourned meeting (excluding any part of a day that is not a Business Day)).

Appointing a proxy in accordance with the instructions set out above will enable your vote to be counted at the General Meeting in the event of your absence. The completion and return of the Form of Proxy or the use of the CREST Proxy Voting service will not prevent you from attending and voting at the General Meeting, or any adjournment thereof, in person should you wish to do so.

13.        Recommendation

The Directors consider the Proposals to be in the best interests of the Company and its Shareholders as a whole and accordingly unanimously recommend Shareholders to vote in favour of the Resolutions to be proposed at the General Meeting as they intend to do so in respect of their own beneficial holdings amounting, in aggregate, to 44,636,615 Existing Ordinary Shares, representing approximately 24.1 per cent. of the Existing Ordinary Shares.

14. Expected Timetable of Principal Events

Announcement of the Placing and the Capital Reorganisation and posting of Circular		2 August 2013
Latest time and date for receipt of Forms of Proxy		10.30 a.m. on 23 August 2013
General Meeting		10.30 a.m. on 28 August 2013
Admission of, and commencement of dealings in, the Placing Shares		8.00 a.m. on 29 August 2013
Completion of the Capital Reorganisation and Capital Reorganisation		8.00 a.m. on 29 August 2013
Admission of, and commencement of dealings in, the Capital Reorganisation Ordinary Shares		29 August 2013
Reorganisation Ordinary Shares Posting of share certificates in respect of the Placing Shares and by Capital Reorganisation Ordinary Shares (if required)		6 September 2013

All times and dates refer to London time and are subject to change by the Company (with the agreement of Investec), in which case details of the new times and dates will be notified to the London Stock Exchange and the Company will make an appropriate announcement through a Regulatory Information Service.

Enquiries:

Mobile Tornado Group plc		www.mobiletornado.com
Jeremy Fenn, Chief Executive		[phone]
Investec Bank plc (Nominated Adviser & Broker)		[phone]
Andrew Pinder, Dominic Emery, Carlton Nelson, Sebastian Lawrence
Walbrook PR Ltd	[phone] or [e-mail]
Paul McManus		[phone]
Paul Cornelius		[phone]

GLOSSARY OF TERMS

"4G"                                                fourth generation of wireless communication standards;

"Instant Alert"                                  enables users to raise alerts;

"Instant Communications"               services enabling users to communicate instantaneously at the

touch of a button. The four main services comprise - "Instant Talk (Push to Talk)", "Instant Locate", "Instant Alert" and "Instant Messaging";

"Instant Locate"                               monitors the location of users by schedule or request;

"Instant Messaging"                         transmission of text based messages between users;

"Instant Talk (Push to Talk)"             voice communication, one-to-one or one-to-many;

"Internet Protocol Radio Service"   technology enabling the provision of instant communications;

"IP"                                                  Internet Protocol;

"LTE"                                               Long Term Evolution is a standard for wireless communication of

high-speed data for mobile phones and data terminals;

"LTE network"                                  that infrastructure facilitating the provision of Long Term Evolution;

"MNO"                                              mobile network operator;

"OMA"                                                               Open Mobile Alliance - a standards body developing open standards

for creating interoperable services across the mobile phone industry; and

"PMR"                                              Private Mobile Radio.

DEFINITIONS

The following definitions apply throughout this announcement unless the context requires otherwise:

"£", "pound", "GBP", "pence" or "p" the lawful currency of the United Kingdom;

"Act"                                                the Companies Act 2006, as amended;

"Admission"                                     the admission of the Placing Shares to trading on AIM and such

admission becoming effective in accordance with the AIM Rules;

"AIM"                                               the AIM market of the London Stock Exchange;

"AIM Rules"                                      the AIM rules for companies published by the London Stock

Exchange;

"Amended Preference Shares"        the non-convertible, cumulative, 10 per cent., redeemable

preference shares of £0.08 in the capital of the Company having the rights set out in the New Articles;

"BIS"                                                the Department for Business, Innovation and Skills;

"Business Day"                                 any day on which banks are generally open in England and Wales

for the transaction of business, other than a Saturday, Sunday or public holiday;

"Capita Registrars"                          a trading name of Capita Registrars Limited;

"Capital Reorganisation"                 transactions relating to the reorganisation of certain indebtedness

of, and share capital in, the Company as contemplated by, amongst other things, the Capitalisation Agreement and as summarised in paragraph 6 of this announcement;

"Capital Reorganisation                  admission of the Capital Reorganisation Ordinary Shares to trading

Admission"                                      on AIM and such admission becoming effective in accordance with

the AIM Rules (expected to be the same date as Admission);

"Capital Reorganisation                  the 20,000,000 new Ordinary Shares to be allotted and issued to

Ordinary Shares"                             InTechnology under the Capitalisation Agreement;

"Capital Reorganisation                  the new 33,776,735 Amended Preference Shares to be allotted and

Preference Shares"                         issued to InTechnology under the Capitalisation Agreement;

"Capitalisation Agreement"             the agreement entered into, or about the date of the Circular,

between the Company and InTechnology in relation to the conversion of certain indebtedness due from the Company to InTechnology into the Capital Reorganisation Ordinary Shares and the Capital Reorganisation Preference Shares;

"Closing Price"                                the closing middle market quotation of an Ordinary Share as derived

from the AIM Appendix to the Daily Official List of the London Stock Exchange;

"Company" or "Mobile Tornado"       Mobile Tornado Group plc;

"CREST"                                           a relevant system (as defined in the CREST Regulations) in respect

of which Euroclear is the Operator (as defined in the CREST Regulations);

"CREST Regulations"                       the Uncertificated Securities Regulations 2001 (SI 2001/3755), as

amended;

"Current Articles"                             the current articles of association of the Company;

"Directors" or "Board"                       the directors of the Company from time to time;

"Enlarged Ordinary Share Capital" the 224,953,708 Ordinary Shares in issue immediately following Admission and Capital Reorganisation Admission (assuming completion of the Placing and the Capital Reorganisation and that no other Ordinary Shares are issued between the date of the Circular and Admission);

"Enlarged Share Capital"                the 224,953,708 Ordinary Shares and the 71,276,735 Amended

Preference Shares in issue immediately following Admission and Capital Reorganisation Admission (assuming completion of the Placing and the Capital Reorganisation and that no other Ordinary Shares or Existing Preference Shares are issued between the date of the Circular and Admission and Capital Reorganisation Admission);

"Euroclear"                                      Euroclear UK & Ireland Limited as operator of CREST;

"Executive Directors"                       Jeremy Fenn and Jorge Pinievsky;

"Existing InTechnology                   the amount of approximately £6.7 million (comprising the

Indebtedness"                                 outstanding principal (as at 26 July 2013) and accrued interest on     

            the Existing InTechnology Loans and unpaid dividends on the Existing Preference Shares and accrued interest on such unpaid dividends each as at the anticipated date of Capital Reorganisation Admission, being 29 August 2013);

"Existing InTechnology Loans"        the loans made available to the Company by InTechnology as at

26 July 2013 in the principal amount of, in aggregate, approximately £4.7 million (and that will have accrued interest of approximately £0.3 million as at the anticipated date of Capital Reorganisation Admission, being 29 August 2013);

"Existing Ordinary Shares"              the 184,953,708 Ordinary Shares in issue at the date of this

announcement;

"Existing Preference Shares"          the 37,500,000 existing preference shares of £0.08 each in the

capital of the Company in issue at the date of the Circular and having the rights set out in the Current Articles;

"FCA"                                               the UK Financial Conduct Authority;

"FSMA"                                            Financial Services and Markets Act 2000, as amended;

"Form of Proxy"                               the form of proxy for use in connection with the General Meeting;

"General Meeting"                           the general meeting of the Company to be held at 10.30 a.m. on

28 August 2013 at the offices of Walker Morris LLP at Kings Court, 12 King Street, Leeds LS1 2HL or any adjournment of the meeting, notice of which to be set out in the Notice of General Meeting at the end of the Circular;

"Group"                                            the Company and its subsidiaries;

"InTechnology"                                InTechnology plc, a company incorporated and registered in

England and Wales with registered number 03916586 and which has its registered office at Central House, Beckwith Knowle, Otley Road, Harrogate, North Yorkshire, HG3 1UG;

"Investec"                                        Investec Bank plc, a company incorporated and registered in

England and Wales with number 0489604 and which has its registered office at 2 Gresham Street, London EC2V 7QP;

"London Stock Exchange"               London Stock Exchange plc;

"Notice of General Meeting"            the notice convening the General Meeting to be set out at the  end of the Circular;

"Ordinary Shareholders"                 the holders of Ordinary Shares from time to time;

"Ordinary Shares"                           ordinary shares of £0.02 each in the share capital of the Company;

"New Articles"                                  the articles of association proposed to be adopted by the

Company pursuant to the Resolution 2(b);

"Placing Agreement"                       the conditional agreement dated 2 August 2013 between (1) the

Company, (2) the Directors and (3) Investec relating to the Placing, further details of which are set out in paragraph 7 of this announcement;

"Placing Price"                                20 pence per Placing Share;

"Placing"                                         the conditional placing of the Placing Shares at the Placing    Price

pursuant to the Placing Agreement;

"Proposals"                                      the Placing, the Capital Reorganisation and the adoption of the New Articles;

"Regulatory Information Service"    the regulatory information services approved by the London Stock Exchange for the distribution of AIM announcements;

"Resolutions"                                   the resolutions to be proposed at the General Meeting, details of

which are set out in the Notice of General Meeting, and each a "Resolution";

"Shareholders"                                the holders of shares in the capital of the Company from time to                     time;

"Shares"                                          shares in the capital of the Company from time to time; and

"uncertificated"                                an Ordinary Share recorded on a company's share register by  

or "in uncertificated form"                being held in uncertificated form in CREST and title to which, virtue of the                                                CREST Regulations, may be transferred by means of  CREST.

About Mobile Tornado Group Plc (www.mobiletornado.com)

Mobile Tornado Group PLC (AIM: MBT) specialises in the provision of Instant Communications services for mobile devices, with a focus on enterprise workforce management.  The Company's main applications comprise Instant Talk, Instant Locate, Instant Alert & Instant Message and are geared towards improving a business's productivity and performance by enabling organisations and workers to connect one-to-one or one-to-many at the touch of a button.

By equipping their workforce with conventional mobile handsets and Mobile Tornado's Instant Communication services, a company can communicate with one or many employees simultaneously, monitor employee locations, and immediately be alerted of major issues. At the touch of a button, they can communicate with employees more efficiently and cost-effectively than would be possible with traditional mobile services or other Private Mobile Radio (PMR) solutions.

Mobile Tornado's patented Internet Protocol Radio Service (IPRS™) technology has been successfully deployed on networks around the world. The suite of IP-based, OMA standards-compliant services provide instantaneous, 'always-on', bandwidth-efficient communications across a range of mobile networks and devices, including compatibility with forthcoming LTE (Long Term Evolution) 4G mobile networks. Both technical and cost performance is superior to many competing services and technologies, with proven success in the current marketplace.

IMPORTANT INFORMATION

This announcement has been issued by, and is the sole responsibility of, the Company.  This announcement is for information only and does not constitute an offer or invitation to underwrite, subscribe for or otherwise acquire or dispose of any securities or investment advice in any jurisdiction in which such an offer or solicitation is unlawful, including without limitation, the United States, the United Kingdom, Australia, Canada, the Republic of South Africa or Japan.

No prospectus or admission document will be made available in connection with the matters contained in this announcement.

Investec Bank plc, which is authorised by the Prudential Regulation Authority and regulated by the FCA and the Prudential Regulation Authority, is acting exclusively for the Company in relation to the Proposals and will not be acting for any other person or otherwise responsible to any person other than the Company under the FSMA, the rules of the FCA or otherwise for providing the protections afforded to its clients or for advising any other person in relation to the contents of this announcement, the Proposals or any matter, transaction or arrangement referred to in this announcement.  Apart from the responsibilities and liabilities, if any, which may be imposed on Investec Bank plc by the FSMA or the regulatory regime established thereunder, Investec Bank plc does not accept any responsibility whatsoever for the contents of this announcement, including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the Ordinary Shares or the Proposals. Investec Bank plc is not making any representation or warranty, express or implied, as to the contents of this announcement and disclaims all and any liability whether arising in tort, contract or otherwise (save as referred to above) in respect of this announcement.

FORWARD-LOOKING STATEMENTS

This announcement includes "forward-looking statements" which includes all statements other than statements of historical fact, including, without limitation, those regarding the Group's financial position, business strategy, plans and objectives of management for future operations, or any statements preceded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or similar expressions or negatives thereof.  Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Group's control that could cause the actual results, performance or achievements of the Group to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements and therefore undue reliance should not be placed on such forward-looking statements.  Such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which the Group will operate in the future.  These forward-looking statements speak only as at the date of this announcement.  The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Group's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based unless required to do so by applicable law or the AIM Rules.

NOTICE TO OVERSEAS PERSONS

The Placing Shares described in this announcement have not been, and will not be, registered under the US Securities Act of 1933, as amended (the "Securities Act") or under the securities laws of any state of the United States, and may not be offered, sold, resold, transferred or delivered, directly or indirectly, within the United States except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.  There will be no public offer of the Placing Shares in the United States.  The Placing Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the United States or any US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the Placing Shares or the accuracy or adequacy of this announcement.  Any representation to the contrary is a criminal offence in the United States. In addition, offers, sales or transfers of the Placing Shares in or into the United States for a period of time following completion of the Placing by a person (whether or not participating in the Placing) may violate the registration requirement of the Securities Act.  Furthermore, the Placing Shares have not been and will not be registered under the applicable laws of any of Australia, Canada, the Republic of South Africa or Japan and, subject to certain exceptions, may not be offered or sold to any national, resident or citizen thereof.

The distribution of this announcement in or into jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about, and observe such restrictions.  Any failure to comply with the applicable restrictions may constitute a violation of the securities laws of any such jurisdiction.  Subject to certain exceptions, this announcement is not for release, publication or distribution, directly or indirectly, in or into the United States, Australia, Canada, the Republic of South Africa, Japan or any jurisdiction where to do so might constitute a violation of local securities laws or regulations.

 

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