Proposed Disposal & Notice of General Meeting

RNS Number : 2714G

Messaging International Plc

04 August 2016

 

4 August 2016 

Messaging International Plc

("MI" or the "Company")

Proposed disposal of TeleMessage Ltd.

and

Notice of General Meeting

The Company today announces that it has entered into a conditional sale and purchase agreement whereby certain holders of ordinary shares in MI, including Directors of MI, (the "Consortium") have agreed to acquire the wholly owned subsidiary of the Company, TeleMessage Ltd.  and to assume the Liabilities, on a Company value of £459,317. The Consideration will be satisfied via cash payment and the redesignation of New Ordinary Shares held by members of the Consortium into Deferred Shares with no rights attached.

The Disposal constitutes a fundamental change of business of the Company pursuant to Rule 15 of the AIM Rules. Accordingly, Completion is conditional, inter alia, on the approval of Shareholders at a general meeting of the Company (the "General Meeting"). On Completion, the Company will be deemed to be an "AIM Rule 15 cash shell" for the purpose of the AIM Rules and will have six months to make an acquisition or acquisitions which constitute a reverse takeover under Rule 14 of the AIM Rules or otherwise seek readmission as an "investing company" with the attendant requirement to raise at least £6 million on or immediately before such readmission.

The Company has also conditionally raised £500,000 at 0.24 pence per Subscription Share, through the subscription of 208,333,333 New Ordinary Shares. Subject to Shareholder approval admission of the New Ordinary Shares is expected on or around 23 August 2016. In addition, subject to Shareholder approval, the Company will undertake a subdivision of the Existing Ordinary Shares (further details of which are set out below) and will be renamed SigmaRoc Plc. The TIDM will be SRC.

Conditional upon the passing of the Resolutions and on Completion, it is proposed the Existing Directors will step down and that Max Vermorken will join the Board as Chief Executive Officer and David Barrett and Dominic Traynor will join the Board as Non-Executive Directors.  

The proposed strategy of SigmaRoc plc is to invest in and/or acquire companies and/or projects within the construction materials sector, which are either cash flow generative or show significant potential for growth and a profitable exit. The proposed new board has significant experience in the sector and with this business model, which presently shows significant potential in frontier and niche markets.

Further details of the above transactions are set out below and a further announcement will be made, as appropriate, in due course.

The Company is today therefore posting a circular to Shareholders convening the General Meeting (the "Circular").  The General Meeting will be held at the offices of Peterhouse Corporate Finance Limited, New Liverpool House, 15 Eldon Street, London, EC2M 7LD, at 12:00 p.m. on 22 August 2016.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

For further information, please contact:

For further information visit www.telemessage.com or contact: Guy Levit	Messaging International Plc	Tel: + 972 3 9225252
Eran Zucker	Peterhouse Corporate Finance	Tel: [phone]
David Foreman	Cantor Fitzgerald Europe	Tel: [phone]
Catherine Leftley	Cantor Fitzgerald Europe	Tel: [phone]

The following text has been extracted from the Circular.

Capitalised terms in the extracted text in this announcement shall have the same definition as in the Circular unless the context requires otherwise. 

Introduction

This Circular sets out a series of proposals, namely, the proposed Disposal of TeleMessage, the Subscription and associated capital reorganisation of the Company, the resignation of the Existing Directors on Completion of the Disposal and appointment of the Proposed Directors following Completion, the Company becoming an AIM Rule 15 cash shell and certain other related matters to be proposed at the General Meeting. The purpose of this Circular is to provide you with the background to and to explain why the Independent Director considers these proposals to be in the best interests of the Company and Shareholders as a whole and why he recommends that Shareholders should vote in favour of the Resolutions to be proposed at the General Meeting.  

A notice convening a General Meeting for 12:00 p.m. on 22 August, 2016, at the offices of Peterhouse Corporate Finance Limited, New Liverpool House, 15 Eldon Street, London, EC2M 7LD, to consider the Resolutions, is set out at the end of this Circular.

Background to the Proposals 

The Company was incorporated on 12 August 2004 as RTI Eighteen PLC. On 24 May 2005, it changed its name to TeleMessage International Plc and on 12 July 2005 changed its name to Messaging International Plc. On 20 July 2005, the Company acquired the entire issued share capital of TeleMessage through the issuance of 65,380,000 Existing Ordinary Shares in the Company at a price of 5 pence per share, together with 25,000,000 warrants to purchase ordinary shares in the Company at 5 pence per share.

The Company's shares were admitted to trading on AIM at 5 pence per share and has since witnessed the share price fall to 0.7 pence as of 3 August, 2016 (being less than fifteen per cent. of the original share price). This drop in the share price of the Company occurred notwithstanding the financial results which showed a gradual increase in revenues and fall in losses until 2010, when the Company showed a profit. Since 2010 the share price has continued its decline.

The Directors believe that TeleMessage requires additional funds to invest in its current and future products, including its secure enterprise mobile messaging platform developed to cater to the requirements of businesses and organisation. In an attempt to address the Group's working capital requirements and prior to considering the Proposals as set out in this Document, the Company took informal soundings from the market, which indicated negligible appetite for an equity fundraising by the Company if it remains listed on AIM. The Directors believe that this is mainly due to a lack of revenue visibility, historical and ongoing losses, working capital concerns, its small market capitalisation and the volatility of the Company's share price. Conversely, however, there appears to be interest from investors if the Company were to be unquoted.

The Board is therefore faced with a situation where, if the Company is to remain as an AIM listed company, it will unlikely be able to raise the requisite funds, without offering a prohibitively large discount to the current share price, to enable it to continue to trade, let alone invest in the development of its trading business.  Alternatively, the Board could propose to delist, but then there would effectively be no market in the Existing Ordinary Shares. Finally, and as proposed in this Document, the Board could dispose of the Business, introduce new funds, appoint new directors, and look to adopt a new Investing Strategy.

Having considered these alternatives at length with a number of its advisers, the Board has concluded that the best available option is to dispose of the Business, including the Subsidiary (and all of its Liabilities), to members of the Consortium (who are all directors or shareholders in the Company). 

Pursuant to the SPA, the Consortium has agreed to acquire the Business and to assume the Liabilities, on a Company value of £459,317, for a total consideration adjusted for the value of the cash shell calculated on the basis of an independent third-party valuation of the Subsidiary (the "Consideration"). The Consideration will be satisfied via a cash payment on closing of £38,400 and the redesignation of 84,760,943 Existing Ordinary Shares (169,521,886 New Ordinary Shares following the Share Capital Reorganisation) held by the members of the Consortium (whether held directly by the Consortium members or indirectly for their benefit) into Deferred Shares. The 169,521,886 New Ordinary Shares following the Share Capital Reorganisation held by members of the Consortium are worth £406,853 at the Subscription Price.

In addition, and to the extent not fully undertaken by the Subsidiary, the Consortium has agreed to assume responsibility for all obligations in relation to the Mizrahi Tefahot Loan. All outstanding loans by the Company to the Subsidiary and by the Subsidiary to the Company will be eliminated prior to the Disposal, including the Capital Note. Following the Disposal, the Company will be debt free, other than for liabilities incurred in connection with the Disposal and certain obligations to ongoing service providers.

In order to recapitalise the Company, Peterhouse has conditionally raised £500,000 at 0.24 pence per Subscription Share, through the subscription of 208,333,333 New Ordinary Shares representing 77 per cent of the Enlarged Share Capital following approval of the Share Capital Reorganisation and Completion. The Subscription Shares will be issued following and conditional upon the passing of the Resolutions. Additionally, conditional upon all Resolutions being passed and the Disposal being completed the 84,760,943 Existing Ordinary Shares (169,521,886 New Ordinary Shares following the Share Capital Reorganisation) of the Company currently held by the Consortium (whether held directly by the Consortium members or indirectly for their benefit) will be re-designated as 84,760,943 Deferred Shares (169,521,886 Deferred Shares following the Share Capital Reorganisation) with no rights at all, save for the repayment of nominal capital after (and only after) the weighted rights to repayment to all other Shareholders of their capital have been satisfied in full.

The net effect of the redesignation of the 169,521,886 New Ordinary Shares held by the members of the Consortium, is that shareholders currently holding the remaining 31,111,205 Existing Ordinary Shares (62,222,410 New Ordinary Shares following the Share Capital Reorganisation) which currently represent 26.85 per cent of the issued share capital in the Company, will hold 23 per cent of the issued share capital following the Subscription. The dilutive effect of the Proposals on these shareholders is therefore 3.85 per cent.

Following completion of the Proposals, the Company will be an AIM Rule 15 cash shell with cash of approximately £450,000.

In view of the Company's requirement for working capital, should the Resolutions not be approved at the General Meeting, the Board would have to consider delisting from AIM.

Conditional on the passing of the Resolutions and on Completion, the Existing Directors will resign as directors and it is proposed that Dominic Traynor, David Barrett and Max Vermorken will be appointed as directors of the Company. The Existing Directors confirm that they will remain on the board for a limited period following the General Meeting, subject to the Company's proposed replacement nominated advisor (as noted below) confirming the appropriateness of the proposed directors for providing continuous management of the Company and it is expected that this will occur shortly after the General Meeting.

Change of Nominated Adviser

Cantor has indicated its desire to step down as nominated adviser and joint broker to the Company as soon as practicable following the General Meeting. The Company and the Independent Director are in advanced discussion with a replacement nominated adviser and a further announcement will be made in due course.

Information on Messaging International plc

MI is the holding company of TeleMessage and TeleMessage Inc. (a wholly owned subsidiary of Telemessage). The Company is conducting its business through Telemessage and Telemessage Inc. MI via its trading name 'TeleMessage' offers a secure enterprise mobile messaging platform developed to cater to the requirements of businesses and organisations.

As mobile and text messaging becomes more popular in the workplace, companies are seeking a way for fast, secure and reliable communication-'TeleMessage' solves that problem. It is the alternative to common consumer messaging apps, providing a user-friendly experience, while protecting company data and ensuring reliable communication in real-time.

The 'TeleMessage' secure messaging solution is:

·      Secure - messages are encrypted end-to-end, allow time-limited messages, forward-locking, remote lock & wipe.

·      Managed - company administrator can control and enforce information transfer policies, archive messages, create companywide address book and generate reports.

·      Reliable - get delivery and read notifications, convert IP Push Notifications that are not received into a standard SMS message 99.9 per cent uptime guarantee.

·      IT-Ready - APIs to connect with any IT system and a Web portal and Outlook Plug to deliver Push Notifications, SMS, voice, fax and email messages.

Recent Developments - Operations

TeleMessage is transitioning from its legacy focus on mobile operators providing value added services such as text-to-landline, into its new focus on direct enterprise offerings including secure mobile messaging for enterprise solutions.

Revenues in the text-to-landline product have declined. Some customers have been lost due to market consolidation and one major customer changed its remuneration model so the revenue generated from this customer is now substantially lower, albeit with a higher gross margin percentage.

Since the end of 2013, TeleMessage has been focused on developing its new product line - secure mobile messaging for enterprise and believes this to be the future of the company.

As described in the Company's annual report, the business has been transitioning from its legacy Text-to-Landline product, to a new offering focused on the Secure Mobile Messaging for Enterprises and also the "Mass Messaging" solution for Enterprises.

Revenues in the Text-to-Landline product continued to decline in 2015. Some customers were lost due to market consolidation and, as announced on 27 March 2015, TeleMessage reached an agreement on a change of the Text-to-Landline business model with one of its key mobile carrier customers in North America (with which the company has contracts on a number of products not affected by this change). The change transitions the Text-to-Landline service from a standard SMS fee to a premium SMS fee resulting in a lower amount of transmitted messages with a corresponding decline in the revenue generated from the customer, albeit with a higher gross margin percentage.

More recently TeleMessage has been focused on developing its new product line - Secure Mobile Messaging for Enterprises. The huge success of mobile messaging services like iMessage, Facebook Messenger and WhatsApp for consumers in the USA and around the globe has identified unmet needs for enterprises. Similar capabilities can now be offered by enterprises to their employees, to enhance business communications, while ensuring company governance and controls required to meet more stringent standards, regulations and security needs. The TeleMessage solution provides tools that are managed, secure, reliable and IT Ready.

The Disposal and Related Party Transaction
 

The Disposal will take place in the form of the sale of the entire issued share capital of the Subsidiary (and its Liabilities) from the Company to the Consortium for a total consideration equal to the Consideration. The Consideration will be satisfied via a cash payment on closing of £38,400 and the redesignation of 84,760,943 Existing Ordinary Shares (169,521,886 New Ordinary Shares following the Share Capital Reorganisation) held by the members of the Consortium (whether held directly by the Consortium members or indirectly for their benefit) into Deferred Shares. 

The SPA contains basic warranties as to capacity and authority and title from the Company and no other warranties.   

In addition, the SPA requires the entry into a termination and release agreement between the Company and Mizrahi Bank for the termination and release of certain guarantees and agreements provided by the Company to Mizrahi Bank in connection with the Mizrahi Tefahot Loan. Further details of the Mizrahi Tefahot Loan are set out below. 

In accordance with AIM Rule 15, the Disposal constitutes a fundamental change of business of the Company. On Completion, the Company would cease to own, control or conduct all or substantially all, of its existing trading business, activities or assets and would therefore become an AIM Rule 15 cash shell. In addition the Disposal constitutes a substantial property transaction for the purposes of section 190 of the Companies Act, requiring the consent of Shareholders. 

The Disposal is also a related party transaction in accordance with AIM Rule 13 as each of Guy Levit, Horacio Furman and David Rubner form part of the Consortium, they are all Directors and, in the case of Horacio Furman, also a significant shareholder as he is currently interested in 59.38 per cent. of the existing issued share capital of MI. 

Resolution 2 to be proposed at the General Meeting seeks Shareholders' approval for the Disposal. 

The Independent Director considers, having consulted with Cantor (the Company's nominated adviser), that the terms of the Disposal are fair and reasonable insofar as the Company's Shareholders are concerned. The Independent Director has taken into account the following: 

1.   the Existing Directors having obtained the support of the Consortium representing 73.1 per cent of the issued share capital for the Proposals;

2.   the lack of alternative options for the provision of future working capital for the Company's Business given the poor liquidity and lack of investor interest in the Company's shares;

3.   the very real prospect given the support of the Consortium to the Proposals and the lack of alternatives, that the Existing Directors (other than the Independent Director) decide to procure the cancellation of the admission of the Company's shares to trading on AIM;

4.   the steady decline in the Company's sales and risks associated with the need of the Company to invest heavily in R&D in order to update its technology offering; and

5.   the independent third-party valuation. 

Following completion of the Disposal, the Company will become an AIM Rule 15 cash shell and as such will be required to make an acquisition or acquisitions which constitutes a reverse takeover under AIM Rule 14 (including seeking re-admission as an investing company (as defined under the AIM Rules)) on or before the date falling six months from completion of the Disposal or be re-admitted to trading on AIM as an investing company under the AIM Rules (which requires the raising of at least £6 million) failing which, the Company's New Ordinary Shares would then be suspended from trading on AIM pursuant to AIM Rule 40. Admission to trading on AIM would be cancelled six months from the date of suspension should the reason for the suspension not have been rectified.

The Capital Note and Intercompany Debts

In June 2014, the Company issued to TeleMessage, a five year US dollar denominated capital note for $2,251,713 which was then equivalent to £1,332,845, to be repaid at the end of the five year term at the option of TeleMessage. The loan was provided interest free and can only be assigned with the approval of both the Company and TeleMessage. As of 31 December 2015 the carrying value of the capital note was £1,518,780 giving rise to a foreign exchange translation gain of £185,935 reflected in the Company's reserves. 

In addition, the Company and Subsidiary entered into a loan agreement and promissory note dated 14 August 2007, pursuant to which as at the date of the General Meeting the Subsidiary will owe the Company an amount of £330,560 in principal and interest ("Loan and Promissory Note") and a further inter-company balance is due from the Company to the Subsidiary which will amount to £84,334 as at the date of the General Meeting ("Inter-Company Balance").  

The Subsidiary has agreed, conditional upon approval of the Resolutions at the General Meeting, to release and discharge the Company from any and all of its outstanding obligations under the Inter-Company Balance; and the Company has also agreed, conditional upon approval of the Resolutions at the General Meeting, to release and discharge the Subsidiary from any and all of its outstanding obligations under the Capital Note and Loan and Promissory Note, as well as to terminate the Capital Note and Loan and Promissory Note so that they shall have no further effect.  In consideration for the release and discharge of the amounts due from TeleMessage to the Company under the Capital Note and Loan and Promissory Note, the Subsidiary will issue 19,301,575 ordinary shares of NIS 0.01 par value each to the Company.

Mizrahi Tefahot Loan and Warrant
 

In January 2015, TeleMessage signed an agreement for a venture loan of US$1,000,000 from Mizrahi Bank. Under the terms of the agreement, repayments are over 36 equal monthly instalments with an interest rate based on the London Interbank Offered Rate plus 6 per cent (the "Mizrahi Tefahot Loan").  

In June 2012, as part of a previous agreement (which was subsequently replaced by the Mizrahi Tefahot Loan), the Company granted to Mizrahi Bank 3,896,804 warrants exercisable at any time from grant until June 2017. The warrants are exercisable at a price of 0.61 pence per share, although in certain circumstances the exercise price might be subject to adjustment. In January 2015, the Company granted an additional 4,500,000 warrants to Mizrahi Bank exercisable at any time from grant to 24 January 2020 and exercisable at a price of 0.91 pence per share representing the average closing price of an ordinary share in the capital of the Company (as derived from the AIM appendix to the daily official list of the London Stock Exchange) during the 30 days immediately prior to the signing of such warrant (but not including). The exercise of the previously issued warrants was extended to January 2020 as part of the agreement of the Mizrahi Tefahot Loan. 

The Mizrahi Tefahot Loan will remain with TeleMessage subsequent to the completion of the Disposal pursuant to the terms of the SPA and, conditional upon the completion of the Disposal, the abovementioned warrants will be cancelled and re-issued to Mizrahi Bank by TeleMessage. 

Employee and Other Option Holders Share Options 

Subject to the Disposal, it is expected that all current employees and other option holders of the Subsidiary and Telemessage Inc. will waive all of the existing 32,452,564 options in the Company held by them, in consideration for the receipt of new options in the Subsidiary on substantially the same terms, such that no options to acquire shares in the Company will remain in effect immediately following the Disposal. 

Amendments to Articles of Association and Memorandum of Association

Subject to passing resolution 3 at the General Meeting, the Company will amend its articles of association and memorandum of association by including the terms of the new class of Deferred Shares with such rights and restrictions as further detailed in resolution 3 of the notice of General Meeting at the end of this Document and removing references to a limited authorised share capital.

Share Capital Reorganisation

The Existing Ordinary Shares have a current nominal value of £0.005 per share. The Company will not be able to raise funds via an issue of shares at the current trading price. The AIM Rules provide that a company cannot have more than one class of shares admitted to trading. The Company is therefore proposing to undertake the Share Capital Reorganisation so that it can raise further equity capital at a price of £0.0024 per share.

Under the Share Capital Reorganisation, it is proposed that each Existing Ordinary Share of £0.005 is sub-divided into two New Ordinary Shares of £0.001 each and three Deferred Shares of £0.001 each. This would result in the Company having 231,744,296 New Ordinary Shares, and 347,616,444 Deferred Shares being in issue immediately following the Share Capital Reorganisation. As such, following the Share Capital Reorganisation, each shareholder with a holding of an Existing Ordinary Share will have twice as many New Ordinary Shares as Existing Ordinary Shares held before the Share Capital Reorganisation.

The rights attaching to the New Ordinary Shares will be identical in all respects to those of the Existing Ordinary Shares. The Deferred Shares will have no voting rights, no entitlement to attend general meetings of the Company and will carry only the right to participate in any return of capital to the extent of the amount paid up or credited as paid up on each Deferred Share after the holders of New Ordinary Shares have received repayment of their capital paid up on each New Ordinary Share together with the payment of £10,000,000 on each such New Ordinary Share. Accordingly, the Deferred Shares will, for all practical purposes, be valueless and the Proposed Directors', will consider bringing a resolution before the Shareholders' at the next Shareholder meeting, requesting approval for the Company to repurchase such shares following which they will be cancelled. 

Further to the above and conditional upon all Resolutions being passed, and the Disposal and Share Capital Reorganisation being completed, the 169,521,886 New Ordinary Shares (84,760,943 Existing Ordinary Shares) of the Company held by the Consortium will be re-designated as 169,521,886 Deferred Shares. This would result in the Company having 62,222,410 New Ordinary Shares, and 517,138,330 Deferred Shares being in issue. The net effect of the redesignation of the 169,521,886 New Ordinary Shares held by the members of the Consortium, is that shareholders currently holding the remaining 31,111,205 Existing Ordinary Shares (62,222,410 New Ordinary Shares following the Share Capital Reorganisation) which currently represent 26.85 per cent of the issued share capital in the Company, will hold 23 per cent of the issued share capital following the Subscription. The dilutive effect of the Proposals on these shareholders is therefore 3.85 per cent.

If the Proposals are approved, the New Ordinary Shares will trade under the new name of the Company, and under the new TIDM. New share certificates will be issued to Shareholders holding share certificates as a result of the Company's name change and Share Capital Reorganisation. Share certificates will be sent by first class post at the risk of the Shareholder.

The Subscription

Conditional upon the approval of the Proposals at the General Meeting, Peterhouse has placed 208,333,333 New Ordinary Shares at a price of £0.0024 raising £500,000 before expenses of approximately £50,000. It is expected that the New Ordinary Shares will be admitted to trading on AIM on or around 23 August 2016. It is intended that a total of £0.01 of the proceeds raised from the Subscription will be applied to redeeming all or part of the Deferred Shares of the Company including all of the Deferred Shares held by the members of the Consortium.

Additionally, conditional on the Proposals being approved by Shareholders at the General Meeting, the Company has agreed to issue Peterhouse warrants to subscribe for New Ordinary Shares at the placing price equal to 3 per cent of the Enlarged Share Capital of the Company, exercisable at the Subscription Price for up to 5 years.

Use of Proceeds

The proceeds of the Subscription will be used to cover the costs of the Disposal and to provide the Company with sufficient working capital for at least 12 months from the date the Company becomes an AIM Rule 15 cash shell.

Sale of Existing Ordinary Shares to Peterhouse

Should Shareholders wish to divest their investment in the Company, such Shareholders may, conditional on the Proposals being approved by Shareholders at the General Meeting, do so by notifying Peterhouse within seven calendar days of the date of this Circular. Peterhouse has agreed to arrange, on a best endeavours basis, the execution of a sale of any Existing Ordinary Shares held by Shareholders wishing to sell the same to its clients for £0.0024 per Existing Ordinary Share. This sale facility effectively values the whole of the issued Existing Ordinary Shares, prior to the Subscription but following the Share Capital Reorganisation and redesignation of the 169,521,886 New Ordinary Shares held by the members of the Consortium into Deferred Shares, at approximately £149,334.

Alternatively, Shareholders are free to retain their Existing Ordinary Shares or sell them in the market as they see fit. Shareholders wishing to take advantage of the above sale facility should contact Peterhouse directly on 020 7469 0934 or 020 7469 0936.

Dis-application of pre-emption rights and authority to allot shares

In order to facilitate the Subscription, as described above and to enable the Company to raise further funds to implement its intended Investing Strategy with minimal limitations, it is necessary for the Directors to seek authority from Shareholders at the General Meeting pursuant to the Companies Act to, inter alia, issue the Subscription Shares and to issue further shares for cash. The Directors may seek further funding for the Company following the General Meeting, subject to any necessary resolutions being approved by Shareholders. 

Full details of the authorities the Directors are seeking at the General Meeting are set out in the attached notice of General Meeting.

Change of Name

Subject to Shareholders' approval of the Proposals, it is proposed that the name of the Company be changed to SigmaRoc Plc. The TIDM will be SRC.

Proposed Directors Upon Completion of the Disposal

Subject to the Resolutions being passed, it is proposed that Max Vermorken will join the Board as Chief Executive Officer and David Barrett and Dominic Traynor will join the Board as Non-Executive Directors. All of the Existing Directors will resign from office upon completion of the Proposals with no compensation for loss of office, and will waive all claims against the Company under their appointment letters.

Dominic Traynor - Non Executive Director

Dominic is a corporate lawyer specialising in listings and takeovers, M&A and corporate finance. Dominic has acted on more than 20 AIM-admissions as well as numerous reverse takeovers, other acquisitions, joint ventures and secondary fundraisings with a particular focus on the mining and oil and gas sectors. Dominic graduated from Durham University in 1997 with a degree in Law and, after completing the LPC at the College of Law in York, joined Ronaldsons as a trainee in 1998 qualifying in 2000.

David Barrett - Non Executive Director

David co-founded London Concrete in 1997, subsequently building the business from one concrete plant in London to over a dozen plants around the capital. London Concrete was sold to Aggregate Industries and is currently the number one concrete supplier in London, with flagship projects such as the London Olympics, the Shard, the US embassy and the new Bloomberg building. Having previously worked with Pioneer, David retired from London Concrete in 2015 and is widely considered an expert in the industry.

Max Vermorken - CEO

Max was most recently a strategic advisor with the world's biggest construction materials group LafargeHolcim. His last job for the company was to manage the hive-down and integration of two large asset portfolios - a mix which included two cement plants and a multitude of down-stream aggregates and construction materials assets - in the context of the global LafargeHolcim merger. Prior to working for LafargeHolcim Max worked with Luxembourg-headquartered Private Equity group Genii were he reported directly to its founding principals. Max holds a PhD in Financial Economics and Bachelor and Master degrees in both Civil Engineering and Economics.

Proposed Directors Remuneration Package

In addition, as set out below, subject to completion of the Proposals and the adoption of a share option plan, it is proposed that each of the Proposed Directors enter into a letter of appointment with the Company pursuant to which they will each be appointed as non-executive directors of the Company for an initial term of one year and that they will each be paid £12,000 per annum, monthly in arrears; other than Max Vermorken who will be appointed as an executive director for an initial term of one year and will be paid £129,996 per annum, monthly in arrears. In addition, it is intended that, subject to Completion of the Proposals and any approvals required for the adoption thereof being obtained, the Company will adopt a share option plan over, in aggregate, 15 per cent of the issued share capital of the Company at the time of the issue, exercisable at the Subscription Price at any time following the completion of a reverse take-over under the AIM Rules, for a period of five years, subject to the approval of the Company's nominated adviser from time to time. The share option plan will be put in place in order to incentivise the directors of the company and certain key staff and individuals. 

Investing Strategy

The Company's proposed strategy, following the Disposal, will be to invest in and/or acquire companies and/or projects within the construction materials sector, including but not limited to exploration, production, treatment and trading activities, which are either cash flow generative or show significant potential for growth and a profitable exit. It is anticipated that the geographical focus will primarily be frontier and niche markets, where the Company's smaller size and added nimbleness will present a competitive advantage in a sector dominated by major industry players. These markets are therefore primarily situated in Africa and the Middle East as well as certain European regions. The Company may also pursue targets which leverage its entrepreneurial nature, in regions and subsectors where established majors are facing a difficult time.

In selecting investment and/or acquisition opportunities, the Proposed Directors will focus on three types of business:

·      businesses, assets and/or projects in markets where anticipated structural change can lead to growth or consolidation within the construction materials sector;

·      businesses which present a steady cash flow opportunity allowing the Company to build a baseline income to sustain its further expansion projects; and

·      businesses or projects which present a clear opportunity for the Company to take advantage of cyclical weakness within established production majors.

Key to the identification of the right assets is not just obtaining attractive valuations, but also the competitive advantage that can be secured in the local market as construction materials are a local product. In identifying the right assets the Proposed Directors will leverage the skills represented on the board and at management level as well as its significant industry relationships. The investments will therefore be actively managed utilising the local knowledge present within the management and their networks.

There is no limit on the number of projects into which the Company may invest, and the Company's financial resources may be invested in a number of propositions or in just one investment, which may be deemed to be a reverse takeover under the AIM Rules. The Proposed Directors intend to mitigate risk by appropriate due diligence and transaction analysis. Any transaction constituting a reverse takeover under the AIM Rules will also require Shareholder approval. The Proposed Directors consider that as investments are made, and new promising investment opportunities arise, further funding of the Company may also be required.

The Company will always seek to optimise the funding of any investment through a combination of debt and equity, systematically aiming to maximise shareholder value. Investments in early stage assets are expected to be mainly in the form of equity, with debt potentially being raised later to fund the development of such assets. Investments in later stage assets are more likely to include an element of debt to equity gearing. The Proposed Directors may also offer additional New Ordinary Shares by way of consideration as well as cash, thereby helping to preserve the Company's cash for working capital and as a reserve against unforeseen contingencies including, for example, delays in collecting accounts receivable, unexpected changes in the economic environment and operational problems.

General Meeting

The Notice convening the General Meeting to be held at the offices of Peterhouse Corporate Finance Limited, New Liverpool House, 15 Eldon Street, London, EC2M 7LD, at 12:00 p.m. on 22 August, 2016 at which the Resolutions will be proposed is set out at the back of the Circular.

Action to be taken

Shareholders will find a Form of Proxy enclosed for use at the General Meeting. Whether or not you intend to be present at the General Meeting, you are requested to complete and return the Form of Proxy in accordance with the instructions printed thereon as soon as possible. To be valid, completed Forms of Proxy must be received by Share Registrars Limited, The Courtyard, 17 West Street, Farnham, Surrey, GU9 7DR, not later than 12:00 p.m. on 20 August, 2016, being 2 days before the time appointed for holding the General Meeting. You are entitled to appoint a proxy to attend and to exercise all or any of your rights to vote and to speak at the General Meeting instead of you. Completion of the Form of Proxy will not preclude you from attending and voting at the General Meeting in person if you so wish. Your attention is drawn to the notes to the Form of Proxy.

Recommendation

The Independent Director, after consultation with Cantor Fitzgerald Europe, the Company's Nominated Adviser, considers the terms of the Disposal to be fair and reasonable insofar as the Shareholders are concerned and recommends Shareholders to vote in favour of the Resolutions.

The Board, and certain other Shareholders, intend to vote in favour of the Resolutions in respect of their shareholdings which in aggregate amount to 84,760,943 Existing Ordinary Shares representing 73.2 per cent. of the existing issued ordinary share capital.

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

"AIM Rules"	the AIM Rules for Companies;
"AIM"	the market of that name operated by the London Stock Exchange;
"Articles of Association" or "Articles"	the articles of association of the Company;
"Board" or "Directors"	the directors of the Company at the date of this Document whose names are set out on page 8 of this Document;
"Corporate Finance Warrants"	the warrants to be granted to Peterhouse to subscribe for 3 per cent of the Enlarged Share Capital of the Company, at the time of issue, exercisable at the Subscription Price for up to 5 years;
"Business"	the business operated by the Subsidiary, as further described in Part I of this Document;
"Cantor Fitzgerald Europe" or "Cantor"	Cantor Fitzgerald Europe, Company's nominated adviser and joint broker, incorporated in England and Wales with company number 02505767 (authorised by the FCA with firm reference number 149380);
"Capital Note"	the capital note issued in June 2014 by Messaging International Plc to the Subsidiary for $2,251,713 which was equivalent to £1,332,845 to be repaid at the end of the five year term or, after such time, in instalments at the option of the Subsidiary;
"Circular" or "Document"	this document dated 4 August 2016;
"Companies Act"	the Companies Act 2006, as amended from time to time;
"Company" or "MI"	Messaging International plc, a company registered in England and Wales with registered number 5204176;
"Completion"	completion of the Disposal expected to occur on or about 22 August, 2016;
"Consortium"	certain holders of shares in MI including Directors of MI, details of whom can be found in Part I of this Document;
"Deferred Shares"	the deferred shares of £0.001 each in the capital of the Company to be created upon adoption of resolution 3 at the General Meeting;
"Disposal"	the proposed sale of TeleMessage, to the Consortium, pursuant to the terms of the SPA;
"EBITDA"	earnings before interest, tax, depreciation and amortisation;
"Enlarged Share Capital"	the New Ordinary Shares and the Subscription Shares in issue immediately following the Subscription and Share Capital Reorganisation;
"Existing Directors"	Irvin Fishman, Horacio Furman, Guy Levit, and David Rubner;
"Existing Ordinary Shares"	ordinary shares of £0.005 each in the share capital of the Company outstanding prior to the proposed Share Capital Reorganisation;
"FCA"	the Financial Conduct Authority;
"Form of Proxy"	the form of proxy accompanying the Circular for use at the General Meeting;
"General Meeting"	the General Meeting of Shareholders to be held at 12:00 p.m. on 22 August, 2016 at the offices of Peterhouse Corporate Finance Limited, New Liverpool House, 15 Eldon Street, London, EC2M 7LD;
"Group"	the Company and the Subsidiary;
"Independent Director"	Irvin Fishman;
"Investors"	the subscribers for the Subscription Shares under the Subscription;
"Liabilities"	all outstanding liabilities in relation to the Business;
"London Stock Exchange"	the London Stock Exchange PLC;
"Memorandum of Association"	the memorandum of association of the Company;
"Mizrahi Bank "	Mizrahi Tefahot Bank Ltd., incorporated and registered in Israel with company number 520000522;
"Mizrahi Tefahot Loan"	as defined on page 13;
"New Ordinary Shares"	new ordinary shares of £0.001 each in the capital of the Company following the Share Capital Reorganisation;
"Peterhouse"	Peterhouse Corporate Finance Limited, the Company's joint broker, incorporated in England and Wales with company number 02075091 (authorised by the FCA with firm reference number 184761);
"Proposals"	the proposals set out in this Circular, whereby Shareholders are being asked to consider and, if thought fit, approve (i) the terms of the Disposal, (ii) the change of name of the Company to SigmaRoc Plc, (iii) the authority to allot New Ordinary Shares, (iv) the dis-application of pre-emption rights, and (v) amendment of the Articles and of the Memorandum of Association;
"Proposed Directors"	Dominic Traynor, David Barrett and Max Vermorken;
"Resolutions"	the resolutions set out in the notice of General Meeting contained within the Circular;
"Shareholders"	holders of Existing Ordinary Shares in the Company from time to time;
"Share Capital Reorganisation"	the proposed reorganisation of the share capital of the Company pursuant to the Share Split;
"Share Spilt"	the subdivision of each Existing Ordinary Share into two New Ordinary Shares of £0.001 each and three Deferred Shares of £0.001 each;
"SPA"	the conditional share sale and purchase agreement dated 4 August, 2016 between the Consortium and the Company in respect of the Disposal;
"Subscribers"	the subscribers subscribing for the Subscription Shares;
"Subscription"	the conditional subscription of the Subscription Shares at the Subscription Price;
"Subscription Price"	£0.0024 or 0.24 pence;
"Subscription Shares"	the 208,333,333 New Ordinary Shares to be issued by the Company pursuant to the Subscription;
"Subsidiary"	the wholly-owned subsidiary of the Company, being, TeleMessage;
"TeleMessage"	TeleMessage Ltd., a company registered in Israel with registered number 512791120;
"UK" or "United Kingdom"	the United Kingdom of Great Britain and Northern Ireland; and
"US" or "United States"	the United States of America, its territories and possessions, any states of the United States of America and the District of Columbia and all other areas subject to its jurisdiction.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Publication of this Document	4 August, 2016
Latest time and date for receipt of Forms of Proxy in respect of the General Meeting	12:00 p.m. on 20 August, 2016
General Meeting	12:00 p.m. on 22 August, 2016
Expected date of Completion of the Disposal	22 August, 2016
Record date for the Share Capital Reorganisation	22 August, 2016
Admission of the New Ordinary Shares to AIM	23 August, 2016
Expected issue of the Subscription Shares and admission of these shares to trading on AIM	23 August, 2016
CREST stock accounts credited with New Ordinary Shares and Subscription Shares in uncertificated form	23 August, 2016
Dispatch of share certificates for New Ordinary Shares and Subscription Shares in certificated form by no later than	31 August, 2016

Notes

1.          References to times in this Document are to London time unless otherwise stated.

2.          If any of the above times or dates should change, the revised times and/or dates will be notified to Shareholders by an announcement on an RNS (and posted on the Company's website).

3.          All events in the above timetable following the General Meeting are conditional upon approval by the Shareholders of the Resolutions.

 

END

 

 

MSCSSSFSLFMSESA