TOWER GATE CAPITAL LIMITED
FIRST DAY OF TRADING
The Directors of Tower Gate Capital Limited ("TGC" or "the Company") are pleased to announce that
the Company's entire ordinary share capital of 22,417,033 ordinary shares of 20 pence each have
today been admitted for trading on Plus Markets.
LISTING DETAILS
Admission Price of Ordinary Shares: 20 pence
Ordinary Shares in issue: 22,417,033
Warrants in issue: 1,783,937
Sector Classification: Investment and Advisory Services
Principal Activities: Holding Company
Corporate Adviser: Fisher Corporate Plc
TOWER GATE CAPITAL LIMITED
Tower Gate Capital is the holding company of the companies detailed below (together "the Group")
that provides advisory and investment services to institutions, corporates and entrepreneurs. The
Directors have decided to seek a PLUS Market trading facility for this company.
BACKGROUND
The Group was created in 2000 to be a venture capitalist and intellectual property exploitation
group. With the downturn in those markets at the start of this century, the Directors decided to
widen its scope to other products and services.
The Directors believe that their first-hand experience of growing and running companies in
challenging sectors has allowed the Group to build long-term relationships and sustainable
business models.
The Group is based in the City of London and operates within investment services, investing both
its own capital, investing third party capital and advising institutions and entrepreneurs.
GROUP STRUCTURE
The Company has the following four wholly owned subsidiaries:
* TGC Ventures Limited, incorporated on 11 February 2000. TGCV provides management and
investment services and is FSA regulated. Some of the activities within the Group require FSA
authorisation, and this company will continue to provide these services;
* TGC Investments Limited, incorporated on 5 July 2000. TGCIL is principally engaged in
investment in technology and media companies and holds the majority of the Group's investments;
* TGC Corporate Services Limited, incorporated on 11 February 2000. TGC Corporate Services
provides management and consultancy advisory services, within fields not requiring FSA approval;
and
* TGC SGP Limited, incorporated in Scotland on 15 February 2008. TGC SGP Limited provides
general partner services to the Group.
The Group also has control of the following entities:
* TG Far Blue II LP, a limited partnership, registered on 29 September 2004. The entity's
general partner is TGC Corporate Services Limited and its limited partner is TGC Investments
Limited. TG Far Blue II LP holds a number of the Group's investments;
* far blue LLP, a newly incorporated limited liability partnership. FB was set up to
continue to pursue the Group's activities within the very early stage TMT and IP area, and the
Group's "far blue" brand and associated assets within this area have recently been assigned to the
LLP;
* TGC (DA) LP, a limited partnership registered on 19 February 2008. The entity's general
partner is currently TGC Corporate Services Limited and its limited partner is currently TGC
Investments Limited. TGC (DA) LP holds part of the Group's investment in Data Art; and
* TGC (DA CAPITAL) SLP, a limited partnership registered in Scotland on 19 February 2008.
The entity's general partner is TGC SGP Limited and its limited partner is TGC Investments
Limited. TGC (DA CAPITAL) SLP holds part of the Group's investment in Data Art.
BUSINESS OVERVIEW AND GROUP STRATEGY
The Group's strategy is to continue building its business of providing investment and advisory
services.
The Group's activities fall into two areas:
* Investment - where the Group invests to produce investment returns. The Group currently
owns 14 investments, of which three are Listed, and eleven are Unlisted. A number of the Group's
previous investments have already been realised; and
* Advisory - where the Group provides advice and services for fees.
The Group has historically focussed on telecoms, media and technology, as well as company
creations, secondaries, private investment in public equity's and other creative products.
The Directors believe that the Group's niche lies in executing cutting edge opportunities and
structures. It operates within the broad venture and growth capital market.
The Group intends to continue to grow from an existing strength within emerging technologies, as
well as further develop its activities within emerging markets. In addition, the Group intends to
expand its activities (and consider new operating locations) after Admission.
In the past, shareholders in the Company have also been offered the opportunity to participate
directly through a co-investment scheme operated by the Group in numerous transactions.
Shareholders therefore have had the opportunity to benefit by helping promote the company in which
they are a shareholder, as well as participate directly in deals. It is intended to continue
offering Shareholders co-investment opportunities from time to time, subject to legal and
regulatory requirements.
TGC is a platform for European (with some US) activity. Certain parts of the Group's activities
are regulated and TGCV is authorised by the FSA to conduct certain regulated activities.
The Group's current investment strategy is to:
* invest from its balance sheet further sums within its current Group portfolio;
* seek to raise funds outside the Group structure that the Company can manage as a venture
capitalist;
* offer shareholders and others, investment deals for which the Company will take a fee and
carried interest;
* seek secondary opportunities (as the Company did when it purchased its stake in CRIL, the
Cambridge University spin-out fund) in a distressed VC market place;
* seek turn-around opportunities where the Company can earn fees and take equity. An
example of this was the Company's mandate with Telemetrix Inc. the NASDAQ listed company,
where the Company executed a PIPE;
* create new companies; and
* seek opportunistic transactions.
The Directors believe that there are great opportunities within the broad venture capital area -
both within private and public companies. It is likely that the Group's principal investment
activity will be within Europe, although it will continue to look at opportunities within the US
and increasingly exploit opportunities within emerging markets.
The Group's current advisory strategy is to:
* generate advisory and management fees (including carried interest) from investment activity;
* generate fees from the creation of products; and
* seek pure advisory mandates.
The Group's mandates are broad, geographically diverse (although the Group bridges well from North
America to Europe), and require a certain amount of business and markets knowledge.
REASONS FOR THE ADMISSION
The Directors believe that the benefits of the Admission include:
* raising the Company's profile;
* providing opportunities for raising equity finance; and
* giving the Company greater ability to take advantage of acquisition opportunities.
TOWER GATE CAPITAL LIMITED
INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2007
Audited Audited
6 Months Ended Year
30 September Ended
2007 31 March
2007
£ £
Turnover 105,500 621,839
Net profit/(loss) arising from fixed asset investments 218,546 (137,746)
GROSS PROFIT 324,046 484,093
Administrative expenses (273,829) (425,059)
PROFIT FROM OPERATIONS 50,217 59,034
Interest receivable and similar income 212 2,328
Interest payable and similar charges (32,271) (6,719)
PROFIT BEFORE TAX 18,158 54,643
Taxation - -
PROFIT FOR THE PERIOD 18,158 54,643
Past performance is no guide to future performance.
TOWER GATE CAPITAL LIMITED
BALANCE SHEET
AS AT 31 MARCH 2007
Audited Audited
as at as at
30 September 31 March
2007 2007
£ £
Fixed assets
Tangible - 5,846
Investments 2,296,824 2,131,168
2,296,824 2,137,014
Current assets
Debtors 259,406 206,851
Cash and cash equivalents 12,993 9,217
272,399 216,068
Creditors - amounts falling due within one year (417,882) (1,669,908)
Net current liabilities (145,483) (1,453,840)
Total assets less current liabilities 2,151,341 683,174
Creditors - amounts falling due after more than one year (1,345,962) -
Net Assets 805,379 683,174
Capital and reserves
Called up share capital 1,481,062 1,470,062
Share premium account 5,068,720 5,068,720
Revaluation reserve 455,374 388,189
Profit and loss account (6,199,777) (6,243,797)
SHAREHOLDERS' FUNDS 805,379 683,174
Past performance is no guide to future performance.
DIRECTORS AND PROPOSED DIRECTORS
Brief biographies of the Directors are as follows:
Matthew Hudson - Aged 46 - Non-Executive Chairman
Matthew is currently head of London at Proskauer Rose LLP, one of the World's larger law firms.
Previously he worked at O'Melveny & Myers LLP (where he was head of European Transactions), Coller
Capital (reported to be the largest dedicated private equity and venture capital secondaries
firm), CSFB (within a private equity division), and SJ Berwin (the European law firm), where he
helped found the now leading private equity and venture capital team.
Patrick Kealy - Aged 64 - Director
Patrick lives in New York, is a director of the Company and consults part time to the Group.
Patrick has 35 years of experience in international securities, including senior management
positions at Morgan Stanley, Credit Lyonnais and Wood Mackenzie. He has organised numerous buy-
outs during his career and been involved with over 100 IPO's and privatisations. Patrick's current
appointments include president, CEO and director of Star Energy Corporation and director of
Telemetrix Inc.
Piers Linney - Aged 36 - Director
Piers is a director of the Company and consults part time to the Group. He spends most of his time
outside the Group as a principal of a PIPE fund. Piers is a qualified lawyer who trained at the
leading venture capital firm SJ Berwin, where he gained private equity and corporate finance
experience. Piers left law to become an investment banker and specialised in cross border mergers
& acquisitions and leveraged buy outs at Barclays de Zoete and Credit Suisse. Piers has also been
involved in a number of venture capital backed start up ventures in the research and media
sectors.
Michael Wright - Aged 36 - CEO & CFO
Michael is a director of the Company and consults part time to the Group. He was voted one of the
top 100 Rising Stars in the capital markets under 40 years old by Financial News, Dow Jones in
November 2006 and November 2007. He splits his time between the Group, his own private equity
real estate business, Arch Atlantic, and Formosa Films. Michael is a qualified lawyer and has
worked with Matthew at O'Melveny & Myers, as well as at Clifford Chance, DLA and McDermott, Will &
Emery. Michael has also worked within the hotel industry at Rezidor where he was responsible for
EMEA business development and M&A.
DIRECTORS' AND OTHER INTERESTS (BASED ON EXTRACTS FROM THE ADMISSION DOCUMENT)
DIRECTORS
In the last five years, the directors have held the following directorships and partnerships:
Matthew Hudson
Present Previous
Arch Atlantic LLP Far Blue GP Limited
Nyssen Limited Far Blue Imaging Limited
Proskauer Rose LLP Far Blue Nominees Limited
TGC Corporate Services Limited Far Blue Scotland Limited
TGC (DA) LP FBNT Limited
TGC Investments Limited M J Hudson & Co Limited
TGC SGP Limited O'Melveny & Myers LLP
TGC Ventures Limited TGC Corporate Services Limited
TGC Investments Limited
Tower Gate FB Limited
Michael Wright
Present Previous
Arch Atlantic Capital Limited None
Arch Atlantic LLP
Formosa Films Clubbed plc
Formosa Films Twenty8k plc
Global F.E. Limited
TGC Corporate Services Limited
TGC Investments Limited
TGC SGP Limited
TGC Ventures Limited
Piers Linney
Present Previous
Genesis Communications Limited Aspartus plc
Genesis Communications Group Limited Doctorsworld plc
Interactive Media Developments Limited Doctorsworld.com Limited
Itchy Media Ltd Far Blue GP Limited
Key Real Estate Limited Far Blue Imaging Limited
Servelogic plc Far Blue Nominees Limited
TGC Ventures Limited FBNT Limited
TGC Securities Limited IMD Radio Ltd
Tower Gate Limited KRE Newco Limited
Trafalgar Capital Advisory Partners LLP Lalazar Limited
Plowman Limited
TGC Corporate Services Limited
Tower Gate FB Limited
Voxgate Limited
Patrick Kealy
Present Previous
Star Energy Corporation None
Telemetrix Inc.
DIRECTORS' INTERESTS AND SUBSTANTIAL SHAREHOLDERS UPON ADMISSION TO PLUS ARE DETAILED BELOW:
DIRECTORS
Name Number of Ordinary Shares % of the Enlarged Ordinary
on Admission Share Capital
following Admission
Matthew Hudson 18,698,134* 83.41
Katherine Hudson 1,500,000 6.69
Michael Wright 55,000 0.25
Piers Linney 171,272 0.76
Patrick Kealy and Inna 206,742 0.92
Piskareva
* Prior to Admission Matthew Hudson beneficially acquired 300,000 'E' Ordinary Shares and
5,050,000 'F' Ordinary Shares from Brett Smithard. This acquisition will legally complete
following Admission. Matthew's shareholding on Admission includes these shares.
SUBSTANTIAL SHAREHOLDERS
Name Number of Ordinary Shares % of the Enlarged Ordinary
on Admission Share Capital
following Admission
Matthew Hudson 18,698,134* 83.41
Katherine Hudson 1,500,000 6.69
* Prior to Admission Matthew Hudson beneficially acquired 300,000 'E' Ordinary Shares and
5,050,000 'F' Ordinary Shares from Brett Smithard. This acquisition will legally complete
following Admission. Matthew's shareholding on Admission includes these shares.
RISK FACTORS
The Ordinary Shares should be regarded as a speculative investment and an investment in Ordinary
Shares should only be made by those with the necessary expertise to fully evaluate the investment.
An investment in the Ordinary Shares involves a high degree of risk. In addition to the usual
risks associated with an investment in a business at an early stage of development, the Directors
believe that the specific risks referred to below as well as other information in this Document
should be considered carefully by investors before acquiring Ordinary Shares. Prospective
investors are advised to consult an independent adviser authorised under FSMA who specialises in
advising on investments of this kind before making any investment decision.
If any of the risks described in this Document actually occur, the Company may not be able to
conduct its business as currently planned and its financial condition, operating results and cash
flows could be seriously harmed. In that case, the market price of Ordinary Shares could decline
and all or part of an investment in the Ordinary Shares could be lost. No inference ought to be
drawn as to the order in which the following risk factors are presented as to their relative
importance or potential effect.
Additional risks and uncertainties may also have an adverse effect on the Company's business and
the information set out below does not purport to be an exhaustive summary of the risks affecting
the Company. There may be additional risks of which the Directors are not aware.
Information, opinions and quotations in the Document are as at the date of writing and may change
without notice. The Directors are under no obligation to ensure that such updates are brought to
the attention of any recipient of this material.
1. Suitability
A prospective investor should consider carefully whether an investment in the Company is suitable
in the light of his, her or its personal circumstances and the financial resources available to
him, her or it.
Investors are therefore strongly recommended to consult an investment advisor authorised under the
FSMA who specialises in advising on investments of this nature before making their decision.
2. Market Factors
Substantial future sales of Ordinary Shares could impact on their market price. There has been no
prior public market in the Ordinary Shares before and an active trading market may not develop or
be sustained in the future.
Marketability of shares
Investment in shares traded on PLUS carries a higher degree of risk than an investment in shares
quoted on the Official List. The share prices of public companies, particularly those operating in
high growth sectors, are often subject to significant fluctuations. Following Admission, the
market price of the Ordinary Shares may be volatile and an investor may receive less than the
amount originally invested on a sale of his Ordinary Shares in the market. The sale of the
Company's shares may be illiquid and it may be difficult for investors to ascertain a market value
and / or to sell their Ordinary Shares.
The Company's Ordinary Shares are primarily intended for capital growth and therefore may not be
suitable as a short-term investment. Consequently, the Company's Ordinary Shares may be difficult
to buy and sell and may be subject to greater fluctuations. Investors may therefore not realise
their original investment at all, or within the timeframe they had originally anticipated.
Furthermore, the market price of the Ordinary Shares may not reflect the underlying value of the
Company's assets.
PLUS trading facility
The Ordinary Shares are not included in the official UK list and not admitted to trading on a
"recognised stock exchange" (which does not include the PLUS-quoted market).
Notwithstanding the fact that an application will be made for the Ordinary Shares to be admitted
to the PLUS-quoted market, there is no assurance that an active trading market for the Ordinary
Shares will develop or, if developed, be sustained following their admission to the PLUS-quoted
market. If an active trading market is not developed or maintained, the liquidity and trading
price of the Ordinary Shares could be adversely affected. In addition, there is no guarantee that
the Company's application to PLUS Markets plc for its Ordinary Shares to be traded will be
successful. Acceptance of the Company's application to, and continued admission to trading on the
PLUS-quoted market are entirely at the discretion of PLUS Markets plc.
Any changes to the regulatory environment, in particular the PLUS Rules, could for example, affect
its ability to maintain a trading facility on PLUS. There is no guarantee that the market price
of an Ordinary Share will accurately reflect the underlying value of the Company's net assets or
operations.
3. Company Factors
Risks relating to investments by the Group
Many of the Group's current investments are in early stage companies. This might also be true of
any future investments made by the Company. The value of these investments may fall if these
companies do not meet expectations through not achieving business plans. The value of listed
investments may also fall irrespective of the underlying value of the assets of the company
concerned. This might have a material impact of the financial position of the Group.
The Group will be dependent upon the ability of the Directors to identify suitable investment
opportunities and implement the Group's strategy. If they fail to do so investors are unlikely to
realise any investment gains or make any profits.
The incurrence of unforeseen costs may also impact the implementation of the Group's continued
investment strategy.
The Group may be unable to effect an investment in an identified opportunity, as a consequence of
which resources might have been expended fruitlessly on investigative work and due diligence.
The Group may have minority interests in the companies, partnerships and ventures in which it
invests and may be unable to exercise control over the operations of such companies.
The management of targeted companies may not always welcome pro-active involvement and may be
resistant to change.
The Group may invest in jurisdictions where there may be a number of associated risks over which
it will have no, or limited, control. These may include economic, social or political instability
or change, hyperinflation, currency non-convertibility and changes of law.
Future operating losses and negative cash flows
The Company was incorporated on 11 February 2000 and has had profitable and unprofitable periods.
The Company may incur operating losses and experience negative cash flow in the future. There can
be no assurance that the Company will achieve the levels of revenues required to sustain its
operations, or achieve future profitability or positive cash flows. The Company's ability to do
so may be affected by various factors, including general economic conditions, specific economic
conditions within its target markets, a change in the substance or enforcement of compliance
regulations and the introduction of new financial products or services by the Company and/or its
competitors.
Past performance
The past performance of the Company is not a guide to future performance and no representation is
made or warranty given regarding future performance. The past performance of the Company will not
necessarily be repeated.
Proceeds of the private fundraising
The proceeds of the private fundraising have been designated for certain uses over a period of
approximately 12 months. However, the proceeds may be put to other uses should the Directors
consider this to be appropriate or necessary. The proceeds may not be sufficient for the full
development of the business objectives of the Company.
Future fundraising
It is likely that the Company will need to raise further funds in the future, either to complete
potential acquisitions or to raise further working or development capital for such acquisitions.
There is no guarantee that the then prevailing market conditions will allow for such a fundraising
or that new investors will be prepared to subscribe for Ordinary Shares at the same price as the
Admission Price, or higher. Any further issue of Ordinary Shares by the Company may materially
dilute Shareholders.
Competition
The Company has a wide range of competitors, which have established presences, financial products
and services in the markets in which the Company operates. Many have financial and other
resources that are substantially greater than those of the Company. Such competitors may
introduce competing products or services and the ability of the Company to compete effectively
will depend upon its ability to win new business and develop new products and services. It is
also possible that significant new competitors to the Company may emerge if the economic climate
improves.
Changes to regulations in the UK and elsewhere
The Company's profitability may be affected by additions, or changes, to the substance or
enforcement of regulations, rules, laws or other measures governing the development or provision
of financial services. Changes may occur to rules or regulations of which the Company has no
knowledge. Any failure or inability to comply with these rules or regulations could result in the
relevant Group company being unable to conduct its business and could have a material adverse
effect on the financial condition and results of the Company. In particular, TCGV is entirely
dependent on its authorisation by the Financial Services Authority to conduct its business.
Whilst the Directors intend to manage the business of the Group in compliance with the
requirements of the FSA, any withdrawal of authorisation would have a material adverse effect on
its businesses. Further the regulatory regime applicable to companies within the Group is under
regular review and future changes made by a regulatory body could impose a greater burden upon the
Group and the industry in terms of additional compliance costs. Any such changes may have an
adverse impact on the ability of the Company to generate sufficient revenues to cover its costs.
Dependence on skilled personnel and resources
The Company is dependent upon the Directors for its success. The Company has letters of
engagement, conditional upon Admission, with each of the Directors but the retention of their
services cannot be guaranteed. The loss of one or more of the Directors could result in
disruption to the Company's activities and is likely to have a material adverse effect on the
Company.
Investors should note that none of the Directors is in any way (other than by their normal duties
as company directors), by reason of their involvement with the Company, precluded from acting in
the management or conduct of the affairs of any other company. Should any conflicts of interest
be identified, they will be declared and dealt with appropriately.
Recruitment
The Company will need to recruit additional staff in order to develop its business. There can be
no assurance that the Company will be able to anticipate accurately, or recruit, the number of
skilled personnel that it may require to procure sales revenue. There can be no guarantee that
such individuals will be recruited by the Company within its preferred timetable or at cost levels
anticipated by the Company. Failure to recruit and retain a sufficient number of sufficiently
qualified and experienced personnel may have a significant adverse impact on the Company's
profitability.
Secured loan facility
The Company has a secured loan facility from Nyssen. It should be noted that such loan facility
has repayment and accelerated repayment terms.
Nyssen is a family vehicle and therefore depends upon the health and wealth of its members, in
particular Matthew Hudson and Katherine Hudson.
Dividends
There is no certainty that the Company will generate sufficient profits after tax to be able to
pay a dividend.
4. Other Factors
Legislation and tax
This Document has been prepared on the basis of current legislation, rules and practice and the
advisers' interpretation thereof. Such interpretation may not be correct and it is always possible
that legislation, rules and practice may change. Any changes in taxation legislation and rules,
and in particular any changes to bases of taxation, tax relief and rates of tax, may affect the
availability of reliefs. Changes in legislation affecting the Company's business may be introduced
at any time and may impact on the business operations and financial condition of the Company.
Lock-in and orderly market arrangements
The market price of Ordinary Shares could decline significantly as a result of any sales of
Ordinary Shares by certain Shareholders following expiry of the lock-in period (or otherwise).
Forward-looking statements
Forward-looking statements in this Document are no guarantee of future performance and only
reflect the views and assumptions as of the date of this Document and are subject to risks,
uncertainties, market conditions and other factors, some of which are beyond the control of the
Company and difficult to predict.
Investors should consider carefully whether investment in the Company is suitable for them in
light of the risk factors outlined above, their personal circumstances and the financial resources
available to them.
Currency risk
The Company may transact in currencies other than pounds Sterling. The Company's performance may
therefore be subject to exchange rate fluctuations with respect to currencies employed.
Possible adverse economic conditions
The financial operation of the Company may be adversely affected by general economic conditions.
The returns that are likely to be achieved may be materially affected by the political and
economic climate in those particular countries.
The directors of Tower Gate Capital Limited accept responsibility for this announcement.
- ends -
CONTACT DETAILS:
Tower Gate Capital Limited: Michael Wright Tel: 020 7643 2775
Fisher Corporate Plc: Carolyn Hazard Tel: 0207 388 7000
Copies of the Admission Document will be available free of charge to the public during normal
business hours on any weekday (Saturdays and public holidays excepted) until the date following
one month after the date of Admission at the registered office of the Company at Devonshire House,
1 Devonshire Street, London W1W 5DR and at the offices of Fisher Corporate at Acre House, 11-15
William Road, London, NW1 3ER.
Tower Gate Capital Limited
