Proposed Placing, Acquisition and Name Change

RNS Number : 4188C

Dorcaster PLC

13 April 2017

 

NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA, NEW ZEALAND, JAPAN OR ANY JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.

This announcement does not constitute an offer of securities for sale or subscription in any jurisdiction. Investors should not subscribe for or purchase any securities referred to in this announcement except in compliance with applicable securities laws on the basis of information contained in the Admission Document (as defined below) in connection with the Placing (as defined below) and the proposed re-admission of the Company's ordinary shares to trading on AIM, a market operated by the London Stock Exchange. Copies of the Admission Document are available from the Company's website at www.dorcasterplc.com.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

Proposed Acquisition of Experiential Ventures Ltd

Proposed change of name to Escape Hunt plc

Proposed placing of 10,370,370 Placing Shares of 1.25 pence each

at 135 pence per share

Proposed authorities to allot relevant securities and dis-apply pre-emption rights

Amendment to the Articles

Proposed Share Buy-Back

Admission of the Enlarged Share Capital to AIM and Notice of General Meeting

1. INTRODUCTION

The Company announces that it has conditionally agreed to purchase the entire issued share capital of Experiential Ventures Ltd for a consideration of £12 million on a cash free and debt free basis, with a normalised level of working capital. Experiential Ventures Ltd is the holding company of the Escape Hunt Group. The consideration (following adjustments for cash/debt and working capital) would be funded by a payment of £7.2 million in cash on Completion and by the issue to the Sellers of the Consideration Shares.

In order to fund the cash consideration payable pursuant to the Acquisition and associated costs and expenses, as well as working capital, the Company has also today announced the conditional placing of 10,370,370 Placing Shares at 135 pence per share to raise £14 million (£10.8 million net of expenses (including VAT)). The Acquisition constitutes a reverse takeover of the Company for the purposes of the AIM Rules for Companies and accordingly requires Shareholder approval.

At the same time as the Acquisition and the Placing, the Directors are making other consequential proposals comprising the change of the Company's name to Escape Hunt plc, seeking new authorities to allot relevant securities and to dis-apply pre-emption rights which are appropriate in light of the Enlarged Share Capital which would be in issue following completion of the Proposals, to amend the Articles and to approve the Share Buy-Back.

The Proposals are conditional, amongst other things, upon the passing of the Resolutions at a General Meeting to be held at the offices of Eversheds Sutherland (International) LLP, One Wood Street, London EC2V 7WS at 9.30 a.m. on 2 May 2017, and Admission taking place. It is expected that Admission will become effective, and that dealings in the Enlarged Share Capital will commence on AIM, on 3 May 2017.

An admission document in respect of the admission of the Enlarged Share Capital (the "Admission Document") has been posted to Shareholders on 13 April 2017. In addition, copies of the Admission Document will be available from the offices of Peel Hunt LLP ("Peel Hunt") at Moor House, 120 London Wall, London EC2Y 5ET from the date of the Admission Document until the date falling one month from Admission, and on the Company's website at www.dorcasterplc.com.

The Admission Document contains detailed information about the Escape Hunt Group, the Acquisition and the Placing and explains why the Directors consider the Proposals (excluding the Share Buy-Back on which they cannot make a recommendation) to be in the best interests of the Company and its Shareholders as a whole, and recommend that you vote in favour of the Resolutions to be proposed at the General Meeting, notice of which is set out at the end of the Admission Document.

All capitalised terms in this announcement are defined within the Admission Document.

Important information:

Peel Hunt, which is a member of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority in the United Kingdom is acting exclusively for the Company as nominated adviser, joint corporate broker and joint bookrunner in connection with the Placing and Admission and will not be acting for or otherwise responsible to anyone other than the Company for providing the protections afforded to customers of Peel Hunt or for advising any such person in connection with the Placing or Admission.

Stockdale Securities Limited ("Stockdale Securities"), which is a member of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority in the United Kingdom is acting exclusively for the Company as joint corporate broker and joint bookrunner in connection with the Placing and Admission and will not be acting for or otherwise responsible to anyone other than the Company for providing the protections afforded to customers of Stockdale Securities or for advising any such person in connection with the Placing or Admission.

Peel Hunt's responsibilities as the Company's nominated adviser under the AIM Rules for Nominated Advisers are owed solely to the London Stock Exchange and are not owed to the Company or to any Director, any Proposed Director or to any other person in respect of his decision to acquire Placing Shares in reliance on the Admission Document or any other information.

Forward-looking statements

Some of the statements in this announcement include forward looking statements which reflect the Directors' current views with respect to financial performance, business strategy, plans and objectives of management for future operations (including development plans relating to the Group's products and services).  These statements include forward looking statements both with respect to the Group and with respect to the sectors and industries in which the Group operates.  Statements which include the words "expects", "intends", "plans", believes", "projects", "anticipates", "will", "targets", "aims", "may", "would", "could", "continue" and similar statements are of a forward looking nature.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and therefore are based on current beliefs and expectations about future events. Forward-looking statements are not guarantees of future performance and the Group's actual operating results and financial condition, and the development of the industry in which it operates may differ materially from those made in or suggested by the forward-looking statements contained in this announcement. In addition, even if the Group's operating results, financial condition and liquidity, and the development of the industry in which the Group operates are consistent with the forward looking statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods. Accordingly, prospective investors should not rely on these forward-looking statements.

These forward looking statements speak only as of the date of this announcement.  The Company undertakes no obligation to publicly update or review any forward looking statement, whether as a result of new information, future developments or otherwise, unless required to do so by applicable law or the AIM Rules for Companies.  All subsequent written and oral forward looking statements attributable to the Group or individuals acting on behalf of the Group are expressly qualified in their entirety by this paragraph.  Prospective investors should specifically consider the factors identified in this announcement which could cause actual results to differ from those indicated or suggested by the forward looking statements in this announcement before making an investment decision.

Important information

Neither this announcement nor any copy of it may be made or transmitted into the United States of America (including its territories or possessions, any state of the United States of America and the District of Columbia) (the "United States"), or distributed, directly or indirectly, in the United States. Neither this announcement nor any copy of it may be taken or transmitted directly or indirectly into Australia, Canada, the Republic of South Africa, New Zealand, Japan or to any persons in any of those jurisdictions, except in compliance with applicable securities laws. Any failure to comply with this restriction may constitute a violation of United States, Australian, Canadian, South African, New Zealand or Japanese securities laws or the securities laws of any other jurisdiction (other than the United Kingdom). The distribution of this announcement in other jurisdictions may be restricted by law and persons into whose possession this announcement comes should inform themselves about, and observe any such restrictions. This announcement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for securities in the United States, Australia, Canada, the Republic of South Africa, New Zealand, Japan or in any jurisdiction to whom or in which such offer or solicitation is unlawful.

The securities to which this announcement relates have not been, and will not be, registered under the US Securities Act of 1933, as amended (the "Securities Act") or with any regulatory authority or under any applicable securities laws of any state or other jurisdiction of the United States, and may not be offered or sold within the United States unless registered under the Securities Act or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with applicable state laws. There will be no public offer of the securities in the United States.

The securities referred to herein have not been registered under the applicable securities laws of Australia, Canada, the Republic of South Africa, New Zealand or Japan and, subject to certain exceptions, may not be offered or sold within Australia, Canada, the Republic of South Africa, New Zealand or Japan or to any national, resident or citizen of Australia, Canada, the Republic of South Africa, New Zealand or Japan.

No representation or warranty, express or implied, is made by the Company, Peel Hunt or Stockdale Securities as to any of the contents of this announcement, including its accuracy, completeness or for any other statement made or purported to be made by any of them, the Directors or any other person, in connection with the Placing and Admission, and nothing in this announcement shall be relied upon as a promise or representation in this respect, whether as to the past or the future (without limiting the statutory rights of any person to whom this announcement is issued). Neither Peel Hunt nor Stockdale Securities accepts any liability whatsoever for the accuracy of any information or opinions contained in this announcement or for the omission of any material information from this announcement for which the Company and the Directors are solely responsible.

Enquiries
Dorcaster Alistair Rae, Company Secretary	Tel: [phone]
Peel Hunt Nominated adviser, joint bookrunner and joint corporate broker to Dorcaster Adrian Trimmings George Sellar Alex Lomax Al Rae (ECM)	Tel: [phone]
Stockdale Securities Joint bookrunner and joint corporate broker to Dorcaster Daniel Harris	Tel: [phone]

2. BACKGROUND ON THE COMPANY

The Company was admitted to AIM on 8 July 2016. The Company was formed by Richard Rose, Karen Jones and Hubert van den Bergh to create value for its investors through the acquisition and subsequent development of target businesses.

The Company's investment policy is to acquire controlling stakes in one or more quoted or unquoted businesses or companies (in whole or in part) in the consumer and leisure sectors.

3. SUMMARY INFORMATION ON THE ESCAPE HUNT GROUP

The Escape Hunt Group is a global provider of live 'escape the room' experiences. The first Escape Hunt branch was opened in 2013 in Bangkok, Thailand. The business has grown quickly, becoming a franchised global network (including one owner-operated branch) of 38 branches operating 214 rooms across 20 countries (as at 28 February 2017).

In FY16, the Escape Hunt Group generated revenue of approximately £1.1 million revenue and profit before tax of approximately £0.3 million. As at 31 December 2016, the Escape Hunt Group had net liabilities of approximately £0.4 million.

Detailed information on the Escape Hunt Group is set out in Part 3 of the Admission Document and historical financial information on the Escape Hunt Group can be found in Part 5 of the Admission Document.

4. REASONS FOR THE ACQUISITION

In line with its investing policy, the Company's stated strategy is to acquire controlling stakes in one or more quoted or unquoted businesses or companies (in whole or in part) in the consumer and leisure sectors.

The Directors and Proposed Directors consider that the opportunity represented by the Acquisition is aligned to this strategy and in the best interests of the Company and Shareholders because Escape Hunt:

-      is a global leader in a fragmented market enjoying explosive growth;

-      has a timely opportunity for further expansion;

-      has a successful worldwide offering;

-      has a clear growth plan with multiple revenue streams;

-      has attractive site economics; and

-      has an experienced management team.

Furthermore, the existing Escape Hunt Group is highly profitable with high levels of cash generation, achieving an Adjusted EBITDA margin of 35 per cent. and operating cash conversion of 131 per cent. in FY16.

5. MARKET OPPORTUNITY AND GROWTH STRATEGY FOR THE ENLARGED GROUP

The Directors and Proposed Directors believe that Escape Hunt, as a leading brand in the escape game market, has a global platform from which to accelerate growth. 

Escape Hunt's strategy is to initially open owner-operated branches in the UK and another European jurisdiction, where it is considered there are significant opportunities to launch Escape Hunt branches. In addition, Escape Hunt intends to continue to open further franchise branches across the globe. In 2017, the Directors and Proposed Directors plan to open 8 owner-operated branches and 18 franchise branches. In the medium term, the Directors and Proposed Directors are targeting over 100 owner-operated branches and 150 franchise branches.

6. CURRENT TRADING AND PROSPECTS

Dorcaster

Dorcaster is currently an investing company and does not trade. Since the Company's admission to AIM in July 2016, the Company has incurred expenditure in line with the Directors' expectations in exploring potential acquisitions in accordance with its investing policy.

Following completion of the Proposals, Dorcaster would no longer be an investing company for the purposes of the AIM Rules for Companies.

The Escape Hunt Group

Since 31 December 2016, the date to which the latest financial information included in the Admission Document has been prepared, the Escape Hunt Group has continued to trade in line with the Directors' and Proposed Directors' expectations.

7. DIRECTORS AND PROPOSED DIRECTORS

Directors

The Board currently comprises the following Directors:

Richard Rose, Non-executive Chairman

Richard has a wealth of experience chairing high profile boards. He has been Non-executive Chairman of Watchstone Group plc since May 2015, Crawshaw Group plc since 2006 and Anpario plc since 2005. Previously he has held a number of positions in organisations such as AC Electrical Wholesale, where he was Chairman from 2003 to 2006 and Whittard of Chelsea plc, where he was Chief Executive Officer and then Executive Chairman from 2004 to 2006. In accordance with best practice under the UK Corporate Governance Code, he stepped down as Non-executive Chairman of Booker Group plc in July 2015 having served three terms of three years each. In July 2016, Richard retired as Chairman of AO World plc after eight years. Richard is also Non-executive Chairman of CurrencyFair Limited.

Hubert van den Bergh, Non-executive Director

Hubert formerly worked for six years at Merrill Lynch Investment Managers as a fund manager investing in UK equities (1998 - 2004). Since then, he has worked at other investment management firms. Hubert was educated at Oxford University where he received a BA in Modern Languages. Given the proposed appointment of an additional Non-executive Director to the Board, it has been agreed that Hubert will resign from the Board on Completion.

Karen Jones has resigned from the Board in order to allow for the appointment of an additional Non-executive Director with relevant financial experience to become audit committee chair. The Board would like to thank Karen for all of her assistance to date in sourcing and reviewing potential acquisition opportunities for the Company.

Proposed Directors

On Admission, it is proposed that the following will be appointed as directors of the Company:

Richard Harpham, Proposed Chief Executive Officer

Richard has recently worked with the Escape Hunt management team, getting to know the business. Richard's prior role was with Harris + Hoole, having been Chief Financial Officer and then Managing Director, responsible for its turnaround. Before this Richard spent over four years at Pret A Manger as Global Head of Strategy. Richard has also held a number of strategic and financial positions at companies including Constellation Brands, Shire Pharmaceuticals and Fujitsu Siemens Computers.

Alistair Rae, Proposed Chief Financial Officer

Alistair started his career at KPMG in 1979. Since then, he has worked in advisory roles at other financial services firms including Touche Ross (now part of Deloitte), Cazenove & Co. (now part of JP Morgan Cazenove) and HSBC. In addition, he has held financial, strategic and executive roles at Jarvis PLC, Imagelinx plc, Range Resources, DCCL, Motortrak Ltd, Simigon Ltd and Refresh Group Ltd. Alistair is a Chartered Accountant.

Adrian Jones, Proposed Non-executive Director

Adrian has served as a non-executive director of Escape Hunt since its incorporation in 2014 and has advised Paul Bartosik, the Escape Hunt founder, on the international expansion and day-to-day operations of the business. Early in his career, Adrian was the creator of WinMail, a leading email product in the early 1990s. Subsequently he has founded or managed multiple IT, sports and media companies. Adrian is the founder and executive director of the Witness Collection, one of the largest collections of Vietnamese art in the world.

Karen Bach, Proposed Non-executive Director

Karen is an entrepreneur and non-executive director with strong technology, international and transactional expertise. Karen was the Chief Financial Officer. at growing technology businesses IXEurope Plc, ACS Plc and Kewill Plc prior to founding KalliKids.com in 2012 where she is Chief Executive Officer. Karen gained much experience internationally and in finance with blue chip multi-nationals including EDS France, MCI WorldCom, General Motors and Ernst & Young. Karen is also a non-executive director of IXCellerate, a Russian datacentre business, and of Amino plc, a provider of digital entertainment solutions for internet television, and has been Trustee of the eLearning Foundation (supporting technology in education) and a nonexecutive director of Belvoir Lettings Plc.

Details of the service contracts of the Directors and Proposed Directors are contained in the Admission Document.

Senior Board Support

The Board will be supported by Paul Bartosik and Andrew Jacobs who both have significant industry experience:

Paul Bartosik, Founder and Chief Creative Officer

Paul founded Escape Hunt in 2013 and has grown it to the leading global brand it is today. Paul began his career in various sales and marketing roles. In 1994, Paul was awarded an MA degree in Modern Languages & Psychology from Cambridge University. Subsequently Paul had a career in sales, marketing, corporate management and strategic consulting, before turning to entrepreneurial ventures and eventually founding Escape Hunt. Today, Paul focuses more and more on the creative side of Escape Hunt's game design and the customer experience. Paul has always had a passion for puzzles, games and problem-solving.

Andrew Jacobs, Property Director

Andrew has been working with Escape Hunt in the UK since 13 October 2016, primarily consulting on potential sites for Escape Hunt branches in the UK. In 1998, Andrew co-founded the Giraffe restaurant chain, growing the business to approximately 50 sites before selling it to Tesco plc in March 2013.

8. PRINCIPAL TERMS AND CONDITIONS OF THE ACQUISITION

On 13 April 2017, the Company, and its subsidiary Escape Hunt Group Limited, entered into the Acquisition Agreement with the Sellers pursuant to which Escape Hunt Group Limited has conditionally agreed to acquire the entire issued share capital of Escape Hunt for a consideration of £12 million, on a cash free and debt free basis, with a normalised level of working capital. The consideration payable to the Sellers (following adjustments for cash/debt and working capital) will be satisfied by the payment of £7.2 million in cash and by the issue of the Consideration Shares to the Sellers.

Completion of the Acquisition Agreement is conditional, amongst other things, upon:

-      the Placing Agreement having become unconditional in all respects;

-      Shareholder approval of the Resolutions; and

-      Admission.

The Company will use its existing cash resources and the proceeds of the Placing to satisfy the cash consideration for the Acquisition and associated costs and expenses.

9. THE PLACING

In order to fund the cash consideration for the Acquisition, the related costs and expenses of the Proposals and for general working capital purposes, the Company is seeking to raise £14 million (gross) (£10.8 million net of expenses (including VAT)) pursuant to the Placing through the issue of the Placing Shares at the Placing Price. The Placing Shares will represent approximately 51.2 per cent. of the Enlarged Share Capital immediately following Admission.

The VCT Placing Shares will be allotted and issued before the Placing Shares (excluding the VCT Placing Shares) with the intention that VCT Placees investing as part of the VCT Placing will be able to benefit from tax advantages pursuant to the rules of the VCT Scheme. For more detail see paragraph 19 later in this announcement.

Further details of the Placing Agreement, which (together with Part 7 of the Admission Document) contains the terms and conditions upon which the Placing is being undertaken, are described in paragraph 9 of Part 8 of Admission Document. The Placing is being conditionally underwritten by Peel Hunt and Stockdale Securities.

The obligations of the Joint Bookrunners under the Placing Agreement (and, therefore, completion of the Placing) are conditional, among other things, on:

(a)          the Company allotting and issuing the Placing Shares prior to and, save in respect of the VCT Placing Shares, conditional only on Admission, in accordance with the terms of the Placing Agreement;

(b)          the Acquisition Agreement having become unconditional in accordance with its terms and conditions, save as to any condition relating to Admission having occurred;

(c)          Admission taking place not later than 8.00 a.m. (London time) on 3 May 2017 (or such later time and/or date as the Company and the Joint Bookrunners may agree, being not later than 17 May 2017; and

(d)          the Placing Agreement otherwise becoming unconditional and not having been terminated, in accordance with its terms, prior to Admission.

Following Admission, the Placing Shares will rank pari passu with the Existing Ordinary Shares. Application will be made for the admission of the Enlarged Share Capital to trading on AIM, which Admission is expected to occur on 3 May 2017.

Admission will also enable the Sellers to realise, in part, their investment in the Escape Hunt Group and provide the Escape Hunt Group with funding to implement its roll-out strategy.

10. INCENTIVISATION ARRANGEMENTS

In order to align the interests of Shareholders and employees of the Group following Admission, the Company is proposing to establish, on or prior to Admission, the Share Incentive Plans, further details of which are set out in paragraph 5 of Part 8 of the Admission Document.

The Company intends to issue invitations pursuant to the Executive Growth Share Plan ("EGSP") on or shortly after Admission to certain members of the Enlarged Group's senior executive team. Further to such invitation, each relevant individual concerned may (at their election) subscribe for the number of G Shares specified in the invitation. Details of the proposed invitations intended to be made under the EGSP on or shortly after Admission and the number of G Shares that may be subscribed for pursuant to such invitations are set out in paragraph 6(b) of Part 8 of the Admission Document. Furthermore, the principal rights attaching to the G Shares are summarised at paragraph 5 of Part 8 of the Admission Document. It should be noted that other than the invitations detailed in paragraph 6(b) of Part 8 of the Admission Document, it is intended that no further invitations are issued under the EGSP.

The Company Share Option Plan ("CSOP") shall afford the Company the ability to grant options over Ordinary Shares to eligible employees of the Group and for those options to be exercised in a tax efficient manner subject to the requisite statutory conditions being satisfied. The CSOP therefore gives the Company the ability to reward and incentivise its employees in a manner which is tax efficient for both the employees concerned and the Company. There is no present intention to grant options under the CSOP to any identified employees of the Group at Admission. Instead it is intended that the CSOP shall be used to grant options to eligible employees of the Group, as and when such eligible employees have been identified following Admission. Further details of the CSOP, including the limit on the number of Ordinary Shares that may be made subject to options granted under the CSOP, are set out in paragraph 5 of Part 8 of the Admission Document.

11. SHARE BUY-BACK AGREEMENTS

It has been agreed that following the Placing, the 4,000,000 Ordinary Shares in aggregate held by Karen Jones, Hubert van den Bergh, Dominic Rose, Jessica Rose and Jaime Sarah Rose Scudamore prior to the Company's admission to AIM on 8 July 2016 ("Pre-IPO Shares") will have a value, at the Placing Price, of £450,000. It is therefore proposed that Shareholders approve a Company share buy-back at the General Meeting which will have the effect of reducing their combined holding so that the aggregate value, at the Placing Price, of the Pre-IPO Shares (following the Share Buy-Back) equates to £450,000. It is proposed that an aggregate of 3,666,667 Ordinary Shares (which equates to 18.1 per cent. of the Enlarged Share Capital) will be acquired by the Company from Karen Jones, Hubert van den Bergh, Dominic Rose, Jessica Rose and Jaime Sarah Rose Scudamore at par value (£0.0125 per Ordinary Share) in cash.

The Company and each of Karen Jones, Hubert van den Bergh, Dominic Rose, Jessica Rose and Jaime Sarah Rose Scudamore have entered into a share buy-back agreement which is conditional upon Admission and, as this is an "off-market" share purchase, approval by Shareholders is required by the 2006 Act. Further details on the Share Buy-Back agreements are in contained in paragraph 10(a)(v) of Part 8 of the Admission Document.

12. RELATED PARTY TRANSACTIONS

The Share Buy-Back constitutes a related party transaction for the purposes of Rule 13 of the AIM Rules for Companies in respect of both of the Directors and neither of the Directors are considered independent for the purpose of making a recommendation to Shareholders in respect of it.

Accordingly Peel Hunt, in its capacity as the Company's nominated adviser, confirms that it considers that the terms of the Share Buy-Back are fair and reasonable insofar as independent Shareholders are concerned. At the General Meeting convened for 9.30 a.m. on 2 May 2017, Resolution 3 will be proposed to approve the Share Buy-Back.

13. LOCK-INS AND ORDERLY MARKET PROVISIONS

Lock-in and orderly market deeds were entered into on 13 April 2017 between (1) Peel Hunt, (2) Stockdale Securities, (3) the Company and (4) each of the Locked-in Shareholders. Pursuant to the deeds, each of the Locked-in Shareholders has undertaken to the Company and Peel Hunt that, subject to certain limited exceptions permitted by Rule 7 of the AIM Rules for Companies, they will not dispose of Ordinary Shares held by them for a period following Admission. In the case of Paul Bartosik, Adrian Jones, Hubert van den Bergh, Richard Rose, Alistair Rae, Richard Harpham and Karen Bach, this period is 12 months following Admission and in the case of Dominic Rose, Jessica Rose and Jaime Sarah Rose Scudamore, this period is 6 months following Admission (the relevant Locked-in Shareholder's "Hard Lock-in Period"). Each of Paul Bartosik, Adrian Jones, Hubert van den Bergh, Richard Rose, Alistair Rae, Richard Harpham and Karen Bach has also undertaken that for the period of 6 months following the expiry of their Hard Lock-in Period, they will only dispose of Ordinary Shares held by them on an orderly market basis through Peel Hunt or Stockdale Securities, if they shall at the relevant time remain the Company's corporate broker. Adrian Jones also has a derogation from these orderly market provisions to dispose of up to half of his holding of Consideration Shares to the extent necessary in order to satisfy any liabilities owing by Adrian Jones under the terms of the Acquisition Agreement and/or Placing Agreement.

The lock-in and orderly market agreement dated 5 July 2016 made between (1) Peel Hunt, (2) the Company and (3) Karen Jones referred to in the Company's AIM admission document of the same date shall remain in force. Pursuant to this agreement Karen Jones undertook to the Company and Peel Hunt that, subject to certain limited exceptions permitted by Rule 7 of the AIM Rules for Companies, she would not dispose of Ordinary Shares held by her for a period of 12 months from the date of original admission of the Company's Ordinary Shares to AIM, 8 July 2016 ("Initial Period") and that for a period of 6 months following the expiry of the Initial Period, she would only dispose of Ordinary Shares held by her on an orderly market basis through Peel Hunt, if Peel Hunt shall at the relevant time remain the Company's nominated adviser and corporate broker.

14. DIVIDEND POLICY

Given the nature of the business and its growth strategy, it is unlikely that the Board will recommend a dividend in the early years following Admission. The Directors and Proposed Directors believe the Company should seek to re-invest profits to fund its growth strategy over the medium term.

The ability of the Company to pay dividends is dependent on a number of factors and there is no assurance that the Company will pay dividends or, if a dividend is paid, what the amount of such dividend would be. See Part 4 of the Admission Document headed "Risk Factors" for further details. Consequently, Shareholders may not receive any return on their investment unless they sell their Ordinary Shares for a price greater than that which they paid for them.

15. CHANGE OF NAME

The Resolutions include a resolution to change the name of the Company to Escape Hunt plc. Upon the change of name being registered at Companies House, the Company's AIM ticker symbol will be changed to ESC. The Company's website address will be changed to www.escapehunt.com.

16. AMENDMENT TO THE ARTICLES OF ASSOCIATION

Given that the Company has, to date, been an investing company, the Articles do not currently contain either a cap on Non-executive Director fees or a cap on the Company's borrowing powers. The Board considers that the inclusion of such provisions in the Articles is appropriate and therefore the Resolutions include proposed amendments to the Articles to include a cap on Non-executive Director fees of £250,000 per annum and a cap on borrowing powers of two times "Adjusted Capital and Reserves" (as such term is defined in the proposed new Article 102.3 as set out in Resolution 7 in the notice of General Meeting attached to the Admission Document).

17. GENERAL MEETING

Set out at the end of the Admission Document is a notice convening the General Meeting to be held at the offices of Eversheds Sutherland (International) LLP, One Wood Street, London EC2V 7WS at 9.30 a.m. on 2 May 2017. The full terms of the Resolutions are set out in that notice and are summarised below:

-      The Acquisition constitutes a 'reverse takeover' under the AIM Rules for Companies by virtue of the size of the Escape Hunt Group relative to the size of the Company, and is therefore subject to the approval of Shareholders. Such approval is being sought by way of Resolution 1 to be proposed at the General Meeting.

-      Resolution 2 seeks approval for the Directors to allot the Placing Shares and to provide general authority for the Directors to allot Ordinary Shares, up to an aggregate nominal value equal to one-third of the nominal value of the Enlarged Share Capital.

-      Resolution 3 approves the agreements to effect the Share Buy-Back.

-      Resolution 4 seeks approval for the Directors to disapply pre-emption rights in relation to the allotment of the Placing Shares and generally in connection with rights issues and the issue of other Ordinary Shares, up to an aggregate nominal value equal to 5 per cent. of the nominal value of the Enlarged Share Capital.

-      Resolution 5 authorises the Company to purchase certain of the Ordinary Shares in issue from time to time, up to an aggregate nominal value equal to 10 per cent. of the nominal value of the Enlarged Share Capital.

-      Resolution 6 seeks approval for the proposed change of name of the Company.

-      Resolution 7 seeks approval to amend the Articles to include a cap on borrowing powers and fees payable to Non-executive Directors.

Resolutions 1-3 will be proposed as ordinary resolutions and Resolutions 4-7 will be proposed as special resolutions. Certain of the Resolutions are conditional upon Admission. If Resolution 6 is passed, the share certificates held by the existing Shareholders will continue to be valid, notwithstanding the change of name which will occur on Admission.

18. TAXATION

Your attention is drawn to the information regarding taxation which is set out in paragraph 11 of Part 8 of the Admission Document. That information is intended only as a general guide to the current tax position under UK taxation law. If you are in any doubt as to your tax position, you should contact your independent professional adviser.

19. VCT INVESTORS

Advance assurance has been obtained from HM Revenue and Customs that a subscription for Ordinary Shares in the Company is a "qualifying holding" for the purpose of investment by VCTs. The continuing status of the Ordinary Shares as a qualifying holding for VCT purposes will be conditional, inter alia, on the Ordinary Shares being held as a "qualifying holding" for VCT purposes throughout the period of ownership.

Neither the Company nor the Directors nor the Proposed Directors nor the Company's advisers (including the Joint Bookrunners) give any warranty, representation or undertaking that any VCT investment in the Company will remain a qualifying holding. The Company cannot guarantee or undertake to conduct its business following Admission, in a way to ensure that the Company will continue to meet the requirements of a VCT Scheme. VCTs considering making a qualifying VCT investment are recommended to seek their own professional advice in order that they may fully understand how the relief legislation may apply in their individual circumstances.

20. ADMISSION AND CREST SETTLEMENT

As the Acquisition constitutes a reverse takeover of the Company under the AIM Rules for Companies, Shareholder consent to the Acquisition is required at the General Meeting. If the Resolutions are duly passed at the General Meeting and assuming that the Placing Agreement becomes unconditional in accordance with its terms, the Enlarged Share Capital will be admitted to trading on AIM.

Application will be been made to London Stock Exchange for the Enlarged Share Capital to be admitted to trading on AIM. Admission is expected to take place at 8.00 a.m. on 3 May 2017.

The Placing Shares are eligible for CREST settlement. CREST is a paperless settlement procedure enabling securities to be evidenced otherwise than by a certificate and transferred otherwise than by a written instrument in accordance with the requirements of CREST. The Articles permit the holding and transfer of Ordinary Shares to be evidenced in uncertificated form in accordance with the requirements of CREST.

Accordingly, following Admission, settlement of transactions in Ordinary Shares may take place within the CREST system if the relevant Shareholder so wishes. CREST is a voluntary system and Shareholders who wish to receive and retain share certificates will be able to do so.

Settlement of the Placing will, at the option of Placees, be within CREST and Ordinary Shares will be allotted and issued in certificated form to the VCT Placees at 7.30 a.m. on 3 May 2017 and delivered into the CREST account for all other Placees of the Placing Shares (excluding the VCT Placing Shares) at 8.00 a.m. on 3 May 2017. As soon as possible after 8.00 a.m. on 3 May 2017 the VCT Placing Shares will be dematerialised into CREST. No other temporary documents of title will be issued. Definitive share certificates for Placees not settling through CREST will be despatched by the Registrars on or before 10 May 2017. Prior to the despatch of such certificates, transfers will be certified against the register of members of the Company held by the Company's registrar.

22. FURTHER INFORMATION

Your attention is also drawn to the Admission Document, which contains further information on the Company, the Escape Hunt Group and the Proposals.

22. ACTION TO BE TAKEN

An Admission Document has been posted to Shareholders on 13 April 2017. You will find accompanying the Admission Document a Form of Proxy for use in connection with the General Meeting. Whether or not you intend to be present at the General Meeting, you are asked to complete the Form of Proxy in accordance with the instructions printed on it so as to be received by the Company's registrars, Equiniti Limited, as soon as possible but in any event not later than 9.30 a.m. on 30 April 2017. Completion of the Form of Proxy will not preclude you from attending and voting at the General Meeting should you so wish.

23. RECOMMENDATION

The Directors consider, for the reasons set out above, that the Proposals are in the best interests of the Company and Shareholders as a whole. Accordingly, the Directors recommend that you vote in favour of the Resolutions at the General Meeting. For the reasons set out above, no recommendation is made in relation to Resolution 3 as this Resolution relates to the Share Buy-Back, which concerns the Directors amongst others.

 

END

 

 

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