Notice of General Meeting

RNS Number : 6222C

Brainspark PLC

17 November 2009

 



17 November 2009

Brainspark plc

("Brainspark" or "the Company")

Notice of General Meeting & Capital Reconstruction

Brainspark, the AIM-listed investment company, announces that it yesterday posted a circular and notice of general meeting to its shareholders. The general meeting will be held at 11 a.m. on 9 December 2009, at the offices of Gordons Partnership LLP, 22 Great James Street, London, WC1N 3ES. A copy of the notice of general meeting will be available today on the Company's website, www.brainspark.com, and is available from the Company's registered office, The Lightwell, 12-16 Laystall Street, London, EC1R 4PF. Extracts from the circular and notice of general meeting are set out below.

For further information please contact:

Brainspark plc	[phone]
Francesco Gardin, Chairman
Allenby Capital Limited	[phone]
Nick Athanas/James Reeve
Leander PR	[phone]
Christian Taylor-Wilkinson

Dear Shareholder

Brainspark plc ("Brainspark" or the "Company") is writing to convene a general meeting ("GM") of its members to consider the resolutions described in this circular (the "Resolutions").

Investing Policy

The Company's ordinary shares of 0.01 pence each ("Shares") are traded on the Alternative Investment Market ("AIM"), a market operated and regulated by LSE. For the purposes of the rules applicable to companies whose shares are listed on AIM (the "AIM Rules"), the Company is an "investing company" (i.e. a company whose business is to invest in other companies). The AIM Rules require that the Company adopt an "investing policy".

The Company has revised its investing policy in accordance with the transitional provisions of AIM Notice 33. These revisions are not considered by the Board to amount to a material change in the overall objective and risk profile of the existing investing policy, but rather a marginal change to the existing policy to bring the investing policy in line with the revised AIM Rules. Nevertheless the Board is taking this opportunity to seek the approval of shareholders for the Company's revised investing policy. It is the Company's intention to propose the approval of its investing policy by its members on an annual basis.

As outlined in both the Company's audited annual accounts for the period to 31 December 2008 (the "2008 Accounts") and the Company's unaudited accounts for the six months ended on 30 June 2009 (the "2009 Interim Accounts"), the Company's investing policy has been under review.

The Company's initial investing policy focused on internet service companies. Following the takeover by AISoftw@re in February 2002 and the acquisition of assets from Infusion SpA in October 2002, the policy has subsequently been based on the divestment of the existing portfolio and a focus on a geographical area rather than a specific industrial sector. Since 2006 the policy has been based on the positioning of the Company, via its wholly owned subsidiary, China IPO, in China. However an opportunistic acquisition of strategic positions in high growth and profitable businesses, mainly through the issue of Shares, remained a key target for the Board.

Our proposed investing policy is to primarily focus on the interactive media, leisure, entertainment and financial services sectors, mainly in Italy but also other European countries. The Company may be either an active or passive investor and the Directors intend that the Company's proposed investments may range from a minority position with strategic influence up to a large controlling position. The Board intends that the Company will make investments in target businesses at all development stages.

It is the intention of the Company that the majority of investments will be made in unlisted companies; however pre-IPO and listed companies may, from time to time, be considered on a selective basis.

The Company intends on identifying and investing in investment opportunities which it believes show excellent growth potential on a stand-alone basis and which would add value to the Company's portfolio of investments through the expertise of the Board or through the provision of ongoing funding.

The Company believes that the broad collective experience of the Board together with its extensive network of contacts will assist them in the identification, evaluation and funding of investment targets. When necessary other external professionals will be engaged to assist in the due diligence of prospective targets. The Board will also consider, as it sees fit, appointing additional directors and/or key employees with relevant experience as part of any specific investment.

The Company may offer Shares as well as cash by way of consideration for prospective investments, thereby helping to preserve the Company's cash for working capital. The Company may, in appropriate circumstances, issue debt securities or borrow money to complete an investment. 

Resolution 1 seeks your approval to the above revised investing policy.

Reappointment of Directors

Haresh Kanabar, Alessandro Malacart and Alfredo Villa have all been appointed to the Board, since the members last met at the 2009 annual general meeting ("AGM").  

The Company's Articles of Association require any person who has been co-opted to the Board to seek re-election at the next meeting of members.

Resolutions 2, 3 and 4 seek your approval to the re-appointment of these three directors.

Authority to issue Shares on a Non-Rights issue basis

The Company has an existing issued share capital of 330,697,003 Shares.

Unless authorised by its members to do otherwise, all new issues of Shares should be made on a "rights issue" basis, that is to each existing member pro rata to his or her shareholding.  It is conventional for a company to seek approval for issue of shares on a non-right issue basis. The Company has your permission, granted at this year's AGM, for the issue of up to 169,302,997 Shares.

The Company has identified and is considering the acquisition of a number of assets in line with its investing strategy. It is envisaged such acquisitions would be satisfied through the issue of Shares and cash raised through placing of Shares. This resolution provides the Company with the greater flexibility to issue Shares as consideration for acquisitions which are in line with the Company's revised investing strategy. Shareholders should be aware that they would suffer significant dilution to their existing holdings should the Company exercise their entire authorities under this resolution. However this resolution will allow the Company to potentially add a number of assets to the Company's portfolio which could materially increase the scale of Brainspark and, at the same time, improve the liquidity in Shares. Similarly this resolution will allow the Company to, at the appropriate time, consider strengthening its balance sheet and widening its shareholder base.

Resolution 5 seeks your approval for the authority to allot a further 5 billion Shares. Shareholders should be aware that this authority represents about fifteen times the Company's current issued share capital.

Electronic Communication

In common with many businesses, the Company seeks to reduce its carbon footprint and cut down on hard copy mailings by using modern methods of electronic communication, such as posting information on its website or e-mailing information.

If a company has the permission of its shareholders generally for electronic communication, it can write to each shareholder individually and seek the consent of that individual shareholder to communicate electronically. A shareholder who wishes to receive hard copy documentation can continue to do so.

However, the Company will be able to communicate electronically with shareholders who consent (expressly or impliedly) to electronic communication.  

Resolution 6 seeks your permission to start this process. If the resolution is passed, the Company will write to you again explaining how you can opt in or opt out of electronic communication.

Recommendation

The Directors consider that the Resolutions are in the best interests of the Company and its Shareholders. 

Resolutions 1 to 4 will be proposed as ordinary resolutions. Resolutions 5 and 6 will be proposed as special resolutions. Accordingly, the Directors unanimously recommend shareholders to vote in favour of the Resolutions proposed for this GM as they intend to do in respect of their own holdings which amount to 125,565,948 Shares, or approximately 37.97% per cent. of the issued ordinary share capital of the Company.  

Group Capital Reconstruction

I would also like to take the opportunity of this circular to update shareholders on a matter which is not a resolution for the GM to be held on 9th December 2009, this being the capital reconstruction of Brainspark which the Board has approved and is now being implemented.

The Company has been planning for some time to restructure the Group, as explained in the Chairman statements included in the 2008 Accounts and the 2009 Interim Accounts, to enable the Company to become more effective in achieving separate business models which are co-existing under the same Group: a) the development of the Chinese-focused investment and consulting operations, under China IPO; b) the divestment of certain existing European based assets, under Infusion 2002 and Brainspark Associates, with a view to the Company re-investing these proceeds; and c) acquisitions of European-based assets, mainly in the area of leisure and related interactive multimedia, including television, as detailed in the investing policy resolution described above. Following legal and tax advice on the best way to achieve the above, Brainspark has adopted the model of the Group Capital Reconstruction as the most effective way to implement the plan.

As announced on 30 September 2009, the Company appointed MacIntyre Hudson LLP to arrange the formal procedure of the capital reconstruction, this being subject to approval from HM Revenues & Customs ("HMRC"). A detailed Group Capital Reconstruction scheme was submitted to HMRC at the beginning of October 2009 and the Company has now obtained clearance from HMRC.

As a result of this reconstruction two new companies are being created: a) China IPO (2009) Limited, which will control 100% of China IPO Group and; b) Infusion (2009) Limited, which will control Infusion 2002 (comprising the Company's investment in ACS) and the Company's investment in Metapack. Infusion 2002 is owed $1,000,000 by Geosim Systems Limited, which sum is (i) due for payment by 30 June 2010 and (ii) guaranteed by Francesco Gardin (Chairman of Brainspark).

Francesco Gardin and Edward Burman will be appointed to the Board of China IPO (2009) Limited and Haresh Kanabar and Alessandro Malacart will be appointed to the Board of Infusion (2009) Limited. All four are Brainspark Directors. 

Shares of these two new companies will be assigned to current Brainspark shareholders pro rata: e.g. if today a Brainspark shareholder holds 10,000 shares, after the reconstruction the same shareholder will still hold these 10,000 Brainspark shares, plus 10,000 shares in China IPO (2009) Limited and 10,000 shares in Infusion (2009) Limited. The investments which remain within Brainspark are Geosim, Polarizonics and Mediapolis. Although the Group Capital Reconstruction is not a matter for the GM on 9th December 2009, and therefore there is no resolution required at the GM, it has been introduced in this circular for the sake of information for Shareholders. Following the completion of the Group Capital Reconstruction Brainspark shareholders will receive share certificates of the two new Holdings with a letter providing all the technical details of the transaction. 

The number of your current Brainspark shares is not affected by the Capital Reconstruction and continue to trade on AIM and PLUS as usual.

-ends-

 

END

 

 

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