TIDMCICC
RNS Number : 2229A
CIC Capital Ltd
17 February 2014
CIC CAPITAL LTD.
("CIC" or the "Company")
Reasons for suspension of Company shares
Variation of agreements to dispose of interests in investments
to third parties
CIC (AIM: CICC), the consulting and advisory firm operating
primarily in the mining and energy infrastructure sectors, is
pleased to provide an update on the reason for the suspension of
the Company's shares from trading on AIM on 4 February 2014 and
various other corporate transactions that are in progress. Trading
in the Company's shares will resume at 12:00 today.
Reason for suspension
The Company has been contemplating a number of transactions as
which, until completed, give rise to material uncertainty as to the
Company's value, in particular the variation of the agreements to
dispose of interests in investments to third parties. The Board is
pleased to announce that an agreement has been reached and it is
now able to comment on the implications on the valuation of these
investments.
The Board has also previously announced that it is unable for
technical reasons to issue new shares into CREST. It is working to
resolve these issues as explained below.
a) the Board has in October 2013 held a special shareholder
meeting to allow the transfer of its share register outside Canada
thus avoiding The Depository Trust Company ("DTC") and to change
the Canadian status from Federal to Provincial Company.
b) appointed Gowlings (UK and Canada) and Pinsent Mason to act
as legal council to provide opinions and guidance to the share
registrar.
The Company advises that significant issues in relation to the
DTC have now been overcome and it continues to make every effort to
finally resolve this issue imposed on the Company.
DTC by which shares flow through to CREST imposed a chill on the
securities following the Company's name change without notice in
accordance with new regulations imposed by regulators.
Existing shares in CREST are trading normally and the DTC
"chills" only effect new securities issued by the company being
delivered into CREST.
The Company hopes to make a further announcement in the near
future.
Background to the variation of agreements to dispose of
interests in investments to third parties
On 31 July 2013 included in the announcement of its final
results for the year ended 31 January 2013, the Company announced
that Mr Dell Balfour ("Balfour") and Jarada Equities Limited
("Jarada") had agreed to advance to 31 December 2013 their
respective payments of GBP1,350,000 and GBP1,350,000 to acquire
shares in CIC Fuels Limited ("CICF") and their respective payments
of US$2,700,000 and GBP1,350,000 to acquire shares in CIC Gold
Limited ("CICG") from CIC (collectively the "Balance Purchase
Price"). Such amounts represent 90 per cent of the purchase price
of the securities to be sold by the Company to Balfour and Jarada,
the initial 10 per cent of the purchase price having been
previously received by the Company (the "Initial Purchase Price").
CICF and CICG transferred all of the shares and warrants to Balfour
and Jarada at the time of the initial transactions on 21 May
2012.
On the 17 December 2013 the Company announced that in order to
facilitate these receipts and as a tax planning measure, a new
offshore company had been established in the Republic of
Seychelles. It is intended for the new bank and treasury facilities
to be put in place in Hong Kong with HSBC alongside the Company's
existing bank facilities.
The Company had agreed with Jarada and Balfour that their
remittances would be delayed until this matter had been
resolved.
Establishment of new bank and treasury facilities with HSBC in
Hong Kong and CIC Capital Limited (Republic of Seychelles)
The Board is currently unclear as to the timing of the opening
of the bank and treasury facilities with HSBC in Hong Kong, as it
is reliant on HSBC completing its internal procedures. This will
need to be in place before the Balfourand Jarada transactions can
be concluded and the monies will then need to be deposited by
Balfour and Jarada. A further announcement will be made in due
course.
Variation of Balfour and Jarada agreements
CIC has agreed with Balfour and Jarada that the agreements
entered into with CIC relating to the purchase of securities in
CICF and CICG shall be varied to the effect that 50% of the shares
will be returned to the Company and the Balance Purchase Price
adjusted accordingly. Therefore 40% of the original purchase price
is payable upon conclusion of the HSBC bank and treasury facility
in Hong Kong, as referred to above. The original agreement had
issued Balfour and Jarada 100% of the shares for a 10% deposit and
90% being payable, therefore following this variation, 50% of the
shares will be returned.
The Company believes that it is in the shareholders best
interests to amend the transaction as potential valuations that may
be reflected in any future listing of CICG or CICF could be
materially different than what is currently being reflected in
CIC's last audited financial statements.
Financial impact on CIC
The Company's investments in CICG and CICF were held in its
balance sheet dated 31 July 2013 as Non-current investments with a
carrying value of CAD$34.13m in the case of CICG and CAD$14.02m in
the case of CICF. Following the transactions described above, CIC
will own 77,560,000 shares in CICG representing 64.63% of CICG's
current issued share capital, and 34,500,000 shares in CICF,
representing 56.56% of CICF's current issued share capital.
Warrants attached to each share returned to the Company will be
cancelled.
It is the opinion of the Board of Directors, the variation
agreements with Balfour and Jarada, as described above, will not
affect the Company's choice of valuation technique selected to
measure fair value.
Therefore the Company will continue to follow IFRS 7 and the
fair value of these investments will be established using "Level 3"
inputs as defined in the established fair value hierarchy. This
classification of level 3 refers to inputs for the asset or
liability that are not based on observable market data
(unobservable inputs).
The determination of the valuation technique to be used requires
significant judgment and is dependent on the specific
characteristics of the asset or liability being measured and the
market in which market participants would transact to sell,
transfer or settle the asset or liability. An asset or liability
that is not traded with a quoted price in an active market may
require more than one input to determine its fair value. The
valuation technique applied is therefore the most appropriate in
the circumstances in the opinion of the Directors.
The Directors advise that revenue has been recognised in full on
100% of the shares sold to Balfour and Jarada, and the appropriate
amount recognised within receivables. As at 31 January 2013 and 31
July 2013, receivables of CAD$10.18 million were included in the
statement of financial position in relation to these sales.
Following the variation agreements with Balfour and Jarada,
described above, revenue and receivables will be materially
adjusted to reflect the reduction in the amount payable following
50% of the shares being returned.
Yorkville US$2,000,000 Loan Facility
On the 2 January 2014 the Company announced a loan facility and
drew down US$500,000. On the 2 February 2014 the company made its
required monthly loan repayment of US$55,095.89 in accordance with
the loan facility agreement.
Share exchange transaction with another AIM quoted company
The Company announced on 2 January 2014 that it was in early
stage discussions with regard to a possible share exchange with
another quoted company which would, if the transaction completes,
result in CIC owning a substantial shareholding in that company.
Agreements have been drafted but can only be finalized when the
Company is able to issue new shares, this is expected to be
resolved shortly and is explained further below. However, there is
no certainty that such share exchange transaction will proceed and
further announcement(s) may be made in due course as appropriate in
connection with this matter.
Issue of new shares
On 9 August 2013 the Company announced the conversion of the
Special Series B Class Non-Voting Shares issued to registered
shareholders on 31 July 2012 into 1,242,419 new common shares.
These shares were admitted to trading on AIM on 3 October 2013.
Due to unforeseen technical reasons relating to the Company's
change of name in May 2013 and restrictions subsequently imposed on
the Company's new ISIN in the US by DTC which have resulted in the
Company being unable to register new common shares issued into
CREST since May 2014, the Company has as yet been unable to credit
the allotted new common shares into relevant CREST accounts nor
been able to register them in the names of the shareholders.
The Company remains very concerned to resolve these technical
difficulties and, to this end, it is working with its advisers to
establish a new DI facility in the UK. As explained above in this
announcement, the process is progressing and the Company intends to
complete the process as soon as possible.
Pending Change of Company's Nominated Adviser
The Board also announces that Cairn Financial Advisers LLP, the
Company's Nominated Adviser, has given notice to the Company and
will cease to act as the Company's Nominated Adviser on 24 March
2014. If a replacement Nominated Adviser is not appointed by 24
March 2014, the Company's shares will be suspended on that date
pursuant to AIM Rule 1. If within one month from 24 March 2014 the
Company has not appointed a replacement Nominated Adviser the
Company's shares will be cancelled from trading on AIM.
Enquiries
CIC Capital Ltd Nominated Adviser
Stuart J. Bromley Cairn Financial Advisers
Tel: +86 136 0113 1912 LLP
bromley@CICCapital.com Tony Rawlinson / Liam Murray
Tel: +44 (0) 207 148 7900
CIC Capital Ltd
The Company is a consulting and advisory company, operating
primarily in the mining and energy infrastructure sectors. The
Company seeks to provide consulting and advisory services to
entities operating at various stages of resource development, and
the exclusive right to control the public listing process of any
client company if the client company is an unlisted company.
The core services provided by CIC Capital Ltd. are: the Advisory
Service which provides a range of technical, project management,
strategic and commercial services; the Strategic Investment Service
which helps companies source investment from industry partners for
which the Company will typically receive an equity interest; and
Advice on Listings where the Company helps the client realise value
by listing on a Stock Exchange www.CICCapital.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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