TIDMFFG
RNS Number : 8589U
Freedom4 Group PLC
01 July 2009
1 July 2009
Freedom4 Group plc (the "Company")
Proposed acquisitions of Daisy and Vialtus for GBP123 million
Proposed placing of GBP83 million
Freedom4 Group plc, (FFG.L) has conditionally agreed to acquire Daisy, the SME
value-added reseller, and the assets of Vialtus, the mid-market managed
solutions provider, ("the Acquisitions"), in conjunction with a proposed Placing
to raise up to GBP83 million.
Summary of the Transactions
* Acquisition of the entire issued capital of Daisy for GBP30 million in cash and
the issue to Daisy Vendor and Optionholders of 63,750,000 Consolidated Ordinary
Shares (see below), valued at GBP51.0 million
* Acquisition of entire issued capital of Vialtus for GBP13 million in cash and
the issue of 36,250,000 Consolidated Ordinary Shares, valued at GBP29 million
* A proposed Placing by Freedom4 Group to raise up to GBP83 million (before
expenses) through the issue of Placing Shares to provide funding for the
Acquisitions and for possible future acquisitions
* Proposed share consolidation on the basis of 1 Consolidated Ordinary Share of
2.0p each for every 20 Unconsolidated Ordinary Shares of 0.1p
* Under AIM rules, the Acquisitions constitute a Reverse Takeover of the Company
and are therefore subject to shareholder approval
* Hard irrevocable undertakings have been received from 32% of the shareholder
base
* Liberum Capital Ltd is acting as nominated adviser and broker to the Company
Strategic Rationale
* The fragmented nature of UK SME and mid-market telecommunications market with
its current depressed valuations, present significant opportunities for the new,
enlarged group
* The strategy of the Enlarged Group is to create, through a combination of
further acquisitions and organic growth, one of the largest UK providers to the
SME and mid-market of telecommunications services and solutions
* Daisy and Vialtus will provide the right platform for potential further growth
through a combination of consolidation and integration expertise, critical mass,
customer scale, broad product offering and strong operational capability
* The senior management team have significant experience of creating shareholder
value in the telecoms sector through both organic and acquisitive growth
The Enlarged Group
* Following completion, the Group's market capitalisation will be approximately
GBP204.4 million
* Matthew Riley, CEO of Daisy, will be appointed Chief Executive Officer
* Freedom4 Group plc will be renamed Daisy Group plc
* The Enlarged Group intends to provide its SME and mid-market customers with a
converged product set including access, hosting, voice, mobile and managed
services
About Daisy
Daisy is a SME value-added reseller which provides voice and data access,
billing and wholesale managed services. Daisy's services delivery platform is
scalable and will be central to the Enlarged Group. Daisy has achieved great
success in terms of customer management with very low churn rates. Operating
from its UK-based call centre in Nelson, Lancashire, the company has in excess
of 30,000 customers and has 176 full time employees. The company also operates a
green policy and has taken steps to becoming a carbon neutral business by
offsetting its annual carbon expenditure.
About Vialtus
Vialtus is a mid-market managed solutions company providing voice and data
access, managed and complex hosting services, and core networks and hosting
facilities. The company offers its clients end-to-end solutions and has 5,270
customers and 177 employees.
Peter Dubens, Non-Executive Chairman of Freedom4 Group plc, commented:
"We are seeing an opportunity in the UK telecoms services market at the moment
where the fragmented nature and depressed valuations in the sector create
conditions which are well-suited for generating value through consolidation.
Our experience in making carefully chosen acquisitions and integrating them
properly gives us confidence in our ability to generate further value for our
shareholders. One of the major strengths of Daisy is the unified brand and
operating system which will be key to the Group's future success."
Matthew Riley, CEO of Daisy, added,
"Over the last 8 years, Daisy has grown to be a substantial provider of cost
effective communications services, with over 30,000 SME customers. With 24
acquisitions during this time, the management at Daisy has honed its
consolidation and integration skills, maintaining customer service levels and
creating a truly scalable operational platform.
"Daisy and Vialtus are two highly synergistic businesses; we believe that
together they will be able to provide SME and mid-market customers with an
effective and attractive one-stop-shop offer, and provide us with the solid
foundations for our plans for future growth."
This summary should be read in conjunction with the full text of the following
announcement.
For further details, contact:
+--------------------------------------------------+---------------------+
| Freedom4 Group plc | Tel: 020 7766 6909 |
| Peter Dubens, Non-Executive Chairman | |
| Stewart Porter, Chief Financial Officer | |
| | |
+--------------------------------------------------+---------------------+
| Daisy | Tel: 01282 608909 |
| Matthew Riley, Chief Executive Officer | |
| Katharine Butler, PR Executive | |
| | |
+--------------------------------------------------+---------------------+
| Liberum Capital Limited | Tel: 020 3100 2224 |
| Steve Pearce | |
| Tom Fyson | |
| | |
+--------------------------------------------------+---------------------+
| Financial Dynamics | Tel: 020 7831 3113 |
| Juliet Clarke / Ed Bridges / Erwan Gouraud | |
| | |
+--------------------------------------------------+---------------------+
EXPECTED TIMETABLE
+-------------------------------------------------------------------------+----------------------------+
| Latest time and date for receipt of Forms of Proxy for the General | 10.00 a.m. 18 July 2009 |
| Meeting | |
+-------------------------------------------------------------------------+----------------------------+
| | |
+-------------------------------------------------------------------------+----------------------------+
| General Meeting | 10.00 a.m. 20 July 2009 |
+-------------------------------------------------------------------------+----------------------------+
| | |
+-------------------------------------------------------------------------+----------------------------+
| Record Date for the Share Consolidation | 6.00 p.m. 20 July 2009 |
+-------------------------------------------------------------------------+----------------------------+
| | |
+-------------------------------------------------------------------------+----------------------------+
| Completion of the Acquisitions and Admission | 8.00 a.m. 21 July 2009 |
+-------------------------------------------------------------------------+----------------------------+
| | |
+-------------------------------------------------------------------------+----------------------------+
| Dealings in the Enlarged Share Capital to commence on AIM and CREST | 8.00 a.m. 21 July 2009 |
| accounts credited | |
+-------------------------------------------------------------------------+----------------------------+
| | |
+-------------------------------------------------------------------------+----------------------------+
| Definitive share certificates for the New Ordinary Shares in | 4 August 2009 |
| certificated form and replacement certificates for the Existing | |
| Ordinary Shares despatched by | |
+-------------------------------------------------------------------------+----------------------------+
Each of the dates in the above timetable is subject to change at the absolute
discretion of the
Company and Liberum
KEY STATISTICS
+---------------------------------------------------------------------------------+--------------------+
| Number of Unconsolidated Ordinary Shares in issue at the date of this document | 1,034,867,898 |
+---------------------------------------------------------------------------------+--------------------+
| | |
+---------------------------------------------------------------------------------+--------------------+
| Number of New Ordinary Shares being issued pursuant to the Acquisitions | 100,000,000 |
+---------------------------------------------------------------------------------+--------------------+
| | |
+---------------------------------------------------------------------------------+--------------------+
| as a percentage of the Enlarged Share Capital | 39.1 per cent. |
+---------------------------------------------------------------------------------+--------------------+
| | |
+---------------------------------------------------------------------------------+--------------------+
| Number of New Ordinary Shares being issued pursuant to the Placing | 103,750,000 |
+---------------------------------------------------------------------------------+--------------------+
| | |
+---------------------------------------------------------------------------------+--------------------+
| as a percentage of the Enlarged Share Capital | 40.6 per cent. |
+---------------------------------------------------------------------------------+--------------------+
| | |
+---------------------------------------------------------------------------------+--------------------+
| New Ordinary Shares as a percentage of the Enlarged Share Capital | 79.7 per cent. |
+---------------------------------------------------------------------------------+--------------------+
| | |
+---------------------------------------------------------------------------------+--------------------+
| Total number of Consolidated Ordinary Shares in issue immediately following | 255,493,395 |
| Admission | |
+---------------------------------------------------------------------------------+--------------------+
| | |
+---------------------------------------------------------------------------------+--------------------+
| Total number of New Warrants in issue immediately following Admission | 4,612,500 |
+---------------------------------------------------------------------------------+--------------------+
| | |
+---------------------------------------------------------------------------------+--------------------+
| Placing Price | 80p |
+---------------------------------------------------------------------------------+--------------------+
| | |
+---------------------------------------------------------------------------------+--------------------+
| Gross proceeds of the Placing | GBP83.0 million |
+---------------------------------------------------------------------------------+--------------------+
| | |
+---------------------------------------------------------------------------------+--------------------+
| Estimated net proceeds of the Placing receivable by the Company | GBP79.7 million |
+---------------------------------------------------------------------------------+--------------------+
| | |
+---------------------------------------------------------------------------------+--------------------+
| Market capitalisation of the Company at the Placing Price immediately following | GBP204.4 million |
| Admission | |
+---------------------------------------------------------------------------------+--------------------+
| | |
+---------------------------------------------------------------------------------+--------------------+
| ISIN number | GB00B61G9L20 |
+---------------------------------------------------------------------------------+--------------------+
| | |
+---------------------------------------------------------------------------------+--------------------+
| AIM symbol of Enlarged Group | DAY.L |
+---------------------------------------------------------------------------------+--------------------+
Proposed Share Consolidation, acquisitions of Daisy and the Vialtus Assets,
Placing,
and Admission of Enlarged Share Capital to AIM
1. Introduction
On 4 June 2009, the Company announced that it was in talks regarding the
possible acquisition of two businesses which may or may not lead to a
transaction which might constitute a reverse takeover under the AIM Rules. Those
talks culminated in the announcement today that Freedom4 has conditionally
agreed to acquire Daisy and the Vialtus Assets. Daisy and the Vialtus Business
are leading independent UK providers of telecommunications services and
solutions to the SME and midmarket. The Company's strategy is to create, through
a combination of acquisitions and organic growth, one of the largest UK
providers of telecommunications services and solutions to the SME and
mid-market, which will provide its customers with a combined product set
including access, hosting, voice, managed services and mobile telephony, all
from a single customer service and billing platform.
The Daisy Acquisition comprises the purchase of the entire issued capital of
Daisy. The consideration for the Daisy Acquisition is to be satisfied by GBP30
million in cash and the issue to the Daisy Vendor and to the Daisy Optionholders
of a total of 63,750,000 Consolidated Ordinary Shares in the Company (the Daisy
Completion Shares). At the Placing Price, the Daisy Completion Shares will be
valued at GBP51.0 million in aggregate.
The Vialtus Acquisition comprises the purchase of the Vialtus Assets in
consideration of the payment by the Company of GBP13.0 million in cash plus the
issue to the Vialtus Vendor of a total of 36,250,000 Consolidated Ordinary
Shares in the Company (the Vialtus Completion Shares). At the Placing Price, the
Vialtus Completion Shares will be valued at GBP29.0 million in aggregate.
In conjunction with the Acquisitions, the Company is proposing to raise not less
than GBP83.0 million (before expenses) through the issue of Placing Shares
pursuant to the Placing, to provide funding for the Acquisitions, and for
possible future acquisitions which will be undertaken as a part of the Enlarged
Group's consolidation strategy and for the repayment of certain indebtedness of
Daisy to Bank of Scotland plc.
Immediately following Completion and Admission, the Enlarged Group's market
capitalisation (at the Placing Price) will be approximately GBP204.4 million.
Under the AIM Rules, the Acquisitions constitute a Reverse Takeover of the
Company. Accordingly, the Acquisitions are conditional, inter alia, on the
approval by the Shareholders of the Resolutions at the GM.
The issue of the Placing Shares and the Completion Shares on completion of the
Placing and the Acquisitions will result in a dilution of the Existing Ordinary
Shares as a percentage of the Enlarged Share Capital. However, the Independent
Directors believe that the Proposals are justified given the potential for the
Enlarged Group to create long-term value for Shareholders.
The 103,750,000 New Ordinary Shares to be issued pursuant to the Placing, at a
Placing Price of 80 pence per new Ordinary Share, will represent approximately
40.6 per cent. of the Enlarged Share Capital. The 100,000,000 New Ordinary
Shares to be issued pursuant to the Acquisitions will represent approximately
39.1 per cent. of the Enlarged Share Capital. The aggregate 203,750,000 New
Ordinary Shares to be issued in connection with the Proposals will represent
approximately 79.7 per cent. of the Enlarged Share Capital.
It is also proposed that, conditional on Completion, the name of the Company
will be changed to Daisy Group plc and that the financial reporting year end of
the Company will be changed from 31 December to 31 March.
In addition, the Company is proposing to undertake a share capital
restructuring, through the Share Consolidation, to consolidate every 20
Unconsolidated Ordinary Shares of 0.1 pence into one Consolidated Ordinary Share
of 2 pence.
If the Resolutions are duly passed at the GM then it is expected that the
Enlarged Share Capital will be re-admitted to trading on AIM on 21 July 2009.
The purpose of this document is to provide you with details of the Proposals, to
explain why the Proposals are considered to be in the best interests of
Shareholders and to ask you to vote in favour of the Resolutions required to
implement the Proposals, which will be proposed at the GM convened for 20 July
2009, notice of which is set out at the end of this document.
2. Background to and reasons for the Acquisitions
Freedom4 was founded in 2002, following the reverse takeover of Zipcom plc by
shareholders of Transigent Limited. Between 2002 and 2007 Freedom4 successfully
consolidated 14 UK telecommunications/internet companies becoming one of the
leading providers of broadband and web hosting services in the UK.
In September 2007 Freedom4 sold certain of its subsidiaries carrying on a
broadband and voice business to Tiscali UK Limited for GBP210 million, on a cash
and debt free basis, before adjustments. In April 2008 Freedom4 sold its web
hosting and data solutions businesses, trading as Host Europe and consisting of
the Host Europe Group, to Oakley L.P. for GBP120 million (on a cash and debt
free basis). Following the sale of the Host Europe Group, which included certain
of the current subsidiaries of Vialtus, Freedom4's sole business activity was
the development of wireless communications solutions through its 52 per cent.
shareholding in Freedom4 Limited, the wireless telecommunications joint venture
between Freedom4 and Intel Capital. The joint venture's principal asset is
ownership of a national UK spectrum licence to provide WiMAX communications at
the 3.6 GHz frequency band.
After Freedom4's disposal of the web hosting and data solutions businesses, and
the return of GBP155 million to Shareholders, the Company had significant
reserves of cash and cash equivalents on its balance sheet, including the
GBP17.5 million loan notes owed by Host Europe Group Limited (a wholly owned
subsidiary of Oakley L.P.) to the Company pursuant to an arrangement under which
part of the consideration for the acquisition of the Host Europe Group was
deferred. The net cash and cash equivalents (including the Loan Notes receivable
and accrued interest) on the Freedom4 balance sheet at 31 December 2008 was
GBP23.2 million.
In March 2008 the Company stated that it was its intention to distribute to its
Shareholders the proceeds of the redemption of the Loan Notes. However, the
Existing Directors continue to see the potential for shareholder value creation
in Freedom4 Limited. They also believe that the substantial cash reserves and
cash equivalents of the Company leave it well positioned to undertake a
consolidation strategy in the telecommunications services market.
If the Resolutions are passed, cash received by the Company on the future
redemption of the Loan Notes will not be distributed to Shareholders.
If the Resolutions are not passed at the GM or Completion does not occur for any
other reason, the Existing Directors will consider other options for the future
of the Company which may include a distribution of capital to Shareholders on
redemption of the Loan Notes.
The Directors believe that the current fragmented nature of the UK SME and
mid-market telecommunications market, and the current depressed valuations of
some quoted and non-quoted operators, present significant consolidation
opportunities for the Enlarged Group. The Existing Directors have carried out a
detailed review of the UK business telecommunications market and the operators
within that market. They have identified Daisy and Vialtus as the platform for
potential further growth due to their combination of consolidation and
integration expertise, critical mass, customer scale, a broad product offering
and strong operational capability.
The UK telecommunications market focused on SME and mid-market customers is
fragmented and includes many smaller operators which are typically privately
owned. The Enlarged Group will have the benefit of being able to offer
Consolidated Ordinary Shares as consideration for acquisitions from private
owners and hence exposing them to the strategy and performance of the Enlarged
Group. In addition, equity participation is expected to assist with the
retention of ambitious management teams brought in from any future acquisitions.
The Directors believe that, given current economic conditions, acquisitions may
be available at advantageous prices.
In many cases, the Directors expect that any customer bases acquired will be
serviced largely from the existing operational platform of the Enlarged Group
enabling the Enlarged Group to benefit from cost efficiencies.
Following completion of the Acquisitions, the Directors believe that the
Enlarged Group will be well positioned to pursue a consolidation strategy. Their
intention is to acquire further SME and mid-market telecommunications operators,
funded by a combination of cash, debt and Consolidated Ordinary Shares.
3. Role of Peter Dubens in the Acquisitions and with the Vialtus Vendor
The holding entity of the Vialtus Vendor and Host Europe Seven Limited (being,
along with the Vialtus Vendor, a seller of shares in Vialtus, to the Company
pursuant to the First Vialtus Acquisition Agreements) is Oakley L.P., a private
equity fund which acquired certain current subsidiaries of Vialtus from Freedom4
as part of the acquisition of the Host Europe Group in April 2008.
In August 2007, OCIL raised GBP100 million in a placing and its shares were
admitted to trading on AIM. OCIL was established to provide investors with
exposure to the investment strategy being pursued by Oakley L.P.. In October
2007, OCIL committed EUR140 million to the first closing of Oakley L.P..
Peter Dubens, who is Non Executive Chairman of Freedom4, is a director of OCIL
(although he owns no shares in OCIL).
Peter Dubens is also interested in the Vialtus Vendor and Host Europe Seven
Limited by virtue of his personal commitment of EUR15 million to the first closing
of Oakley L.P. (representing approximately 6.07 per cent. of the total
commitments to Oakley L.P.).
Peter Dubens is a director of Oakley Capital (Bermuda) Limited, Oakley L.P.'s
investment manager, which is the entity responsible for making the investment
decision as to whether the Vialtus Assets are sold.
Peter Dubens has participated in the investment manager's discussions as to
whether to proceed with the disposal of the Vialtus Assets and on what terms.
Peter Dubens is a director of and shareholder in Oakley Capital Limited,
investment adviser to Oakley L.P.. Oakley Capital Limited provides investment
advice, arranges and negotiates investment transactions on behalf of Oakley L.P.
and Oakley Capital (Bermuda) Limited and generally represents Oakley Capital
(Bermuda) Limited in relation to various matters. Peter Dubens, along with
others, participates in Oakley L.P.'s profits by means of a carried interest (in
addition to his participation as a limited partner in Oakley L.P.).
The Company holds no shares in OCIL and has itself made no commitment to invest
in Oakley L.P.
Peter Dubens has not taken part in decisions of Freedom4 relating to the Vialtus
Acquisition.
Accordingly, an independent committee of the Board, comprising all of the
Independent Directors and chaired by Christina Kennedy, was established to
consider any proposals in relation to the Vialtus Acquisition. Peter Dubens has
therefore not taken part, inter alia, in the acquisition process relating to the
Vialtus Assets within the Company, the decision to propose the Resolution
relating to the approval of the Vialtus Acquisition, nor in the recommendation
given in relation to that Resolution. These matters have been dealt with by the
Independent Directors.
Peter Dubens, who owns 58,333,334 Unconsolidated Ordinary Shares, being
approximately 5.4 per cent. of the Existing Ordinary Shares of the Company, has
also undertaken to abstain from voting on the Resolution relating to the
approval of the Vialtus Acquisition.
It is proposed that Peter Dubens will be the Executive Chairman of the Enlarged
Group.
4. Information on Freedom4
Freedom4 is a provider of wireless telecommunications services in the UK.
Following the disposal of the group's broadband and voice divisions in 2007 and
the disposal of the web hosting and data solutions businesses in 2008,
Freedom4's remaining trading businesses focus on providing wireless broadband
services, and comprise a WiMAX joint venture with Intel (Freedom4 Limited), and
a WiFi aggregation business (Freedom4 WiFi Limited).
Freedom4 has a 52 per cent. share in Freedom4 Limited, which owns 84 MHz of
licensed spectrum in the 3.6 GHz frequency band. This is the largest block of
licensed spectrum in the UK which is designated for wireless broadband access,
and provides national coverage. Freedom4 Limited has built WiMAX networks,
comprising 42 base stations, of which 15 are live, in three initial target
cities (Manchester, Milton Keynes and Warwick). The 3.6 GHz spectrum licence
currently permits only fixed wireless broadband access, but Freedom4 Limited has
submitted a request to Ofcom for a variation in the licence to allow it to offer
mobile WiMAX services.
Under the same licence Freedom4 Limited also owns 84 MHz of licensed spectrum in
the 4.0 GHz frequency band, and four further licences provide ownership of 2x
112 MHz of licensed spectrum in the 28 GHz frequency band. These blocks of
spectrum also provide Freedom4 Limited with national coverage and are suitable
for provision of high capacity fixed link data traffic backhaul.
Freedom4 WiFi Limited has agreements with major WiFi operators which provide
access to over 4,000 "hot-spots" in the UK including hotel chains and airports.
In addition Freedom4 WiFi Limited has international roaming agreements which
provide access to approximately 55,000 WiFi "hotspots" worldwide. Freedom4 WiFi
Limited also has an agreement with a UK telecoms operator and at the end of 2008
launched a combined 3G and WiFi access service, to provide customers with the
best available data connection while on the move.
Freedom4's strategy is to focus on becoming a leading provider of wireless
broadband communications, providing a multi-technology mobile broadband service.
At the same time Freedom4 is closely aligning the financial profile of the
business of Freedom4 Limited to reflect the development of the market.
5. Information on the Daisy Group
Daisy was established in 2001 to provide cost-effective communication services
to business customers across the UK. Daisy's range of solutions includes fixed
and mobile voice, data and IP, standard and specialist non-geographic numbers,
line rental and broadband, anti-virus and antispam, laptops and utilities.
Daisy now has more than 30,000 SME customers and operates from Lancashire.
Daisy provides its services through two divisions: Daisy Communications and
Tempest, the Daisy billing and wholesale managed services division. Both are
supported in the UK by its call centre in Lancashire.
6. Information on the Vialtus Group
Vialtus is a provider of managed IP hosting and connectivity solutions to over
5,000 SME and midmarket companies in the UK. The Vialtus Business has been
operating as one of three distinct business divisions within the Host Europe
Group. The Host Europe Group was acquired from Freedom4 by Oakley L.P. in April
2008.
Vialtus operates an end to end "Data Centre to Device" service strategy,
offering a practical model for easily scalable and often virtualised resources
to be provided as a single service over the internet to mid-market companies.
7. Details of the Placing
The Company is expected to raise GBP83.0 million (gross) pursuant to the Placing
through the issue of the Placing Shares to new and existing institutional
investors at the Placing Price.
Under the Placing Agreement, Liberum has agreed, as agent for the Company,
conditional, inter alia, on Admission taking place not later than 1 August 2009
(or such later date as Liberum and the Company may agree, but not later than 31
August 2009) to use its reasonable endeavours to procure placees for the Placing
Shares, in each case at the Placing Price. The Placing Agreement contains
provisions entitling Liberum to terminate the Placing at any time prior to
Admission in certain circumstances. The Placing is not underwritten.
8. Details of the Acquisitions
The Acquisitions are inter-conditional, such that the Daisy Acquisition may not
complete unless the Vialtus Acquisition completes, and vice versa. In view of
the size of the Acquisitions, in relation to Freedom4, the Acquisitions
constitute a Reverse Takeover of Freedom4 under the AIM Rules. As such, the
Acquisitions are subject to the approval of Shareholders, which is being sought
at the General Meeting convened for 20 July 2009. Subject to such approval and
to satisfaction of the other conditions relating to the Acquisitions, completion
of the Acquisitions is expected to take place on 21 July 2009, the expected date
of Admission. Further details of each of the Acquisitions are as follows:
The Daisy Acquisition
Under the terms of the Daisy Acquisition Agreement, Freedom4 has conditionally
agreed to acquire all of the issued shares of Daisy at Completion. The Daisy
Acquisition Agreement is conditional on approval of the Resolutions,
satisfaction of each of the conditions to which the Placing Agreement and the
Vialtus Acquisition Agreements are respectively subject (other than any such
conditions relating to Admission or to the Daisy Acquisition Agreement having
become unconditional) and Admission occurring.
The Daisy Optionholders have elected to exercise the respective Daisy Options
held by them and thereby to acquire up to 5,734 new shares of Daisy. Matthew
Riley is currently interested in the entire issued share capital of Daisy. The
Daisy Optionholders will each enter into an Optionholder Agreement for the
purposes of selling to the Company the relevant shares in Daisy acquired by
them. Completion of the sale of shares in Daisy pursuant to the Optionholder
Agreements will take place immediately following the sale and purchase of shares
in Daisy pursuant to the Daisy Acquisition Agreement. The consideration payable
by the Company in connection with the acquisition of all of the issued shares of
Daisy shall be allocated as follows:
* Matthew Riley - GBP27.6 million in cash and 61,218,610 Daisy Completion Shares
* Daisy Optionholders - in aggregate, GBP2.4 million in cash and 2,531,390 Daisy
Completion Shares
The Vialtus Acquisition
Under the terms of the Vialtus Acquisition Agreements, further details of which
are set out in paragraph 19.1 of Part VIII of this document, Freedom4 has
conditionally agreed to acquire all of the issued shares of Vialtus and those
shares in Vialtus Solutions Limited not already owned by Vialtus at Completion.
The Company has also agreed to acquire, by way of assignment, debt owed by
Vialtus Solutions Limited to the Vialtus Vendor. The Vialtus Vendor and Host
Europe Seven Limited are continuing subsidiaries of Oakley L.P.. The Vialtus
Acquisition Agreements are conditional on approval of the Resolutions,
satisfaction of each of the conditions to which the Placing Agreement and the
Daisy Acquisition Agreement are respectively subject (other than any such
conditions relating to Admission or to the Vialtus Acquisition Agreements having
become unconditional) and Admission occurring. The consideration payable to the
Vialtus Vendor in connection with the sale of those shares in Vialtus Solutions
Limited not already owned by Vialtus and the assignment of GBP29.0 million of
the Vialtus Debt under the terms of the Second Vialtus Acquisition Agreement
comprises the Vialtus Completion Shares. The consideration due to the Vialtus
Vendor in connection with the assignment of the balance of GBP13.0 million of
the Vialtus Debt comprises GBP13.0 million in cash. The consideration payable to
the Vialtus Vendor and Host Europe Seven Limited in connection with the sale of
all of the issued shares of Vialtus is GBP2 in aggregate.
9. Share Capital Restructuring
The Board is proposing to undertake a restructuring of the share capital of the
Company. In order to consolidate the number of shares in issue and to allow the
Proposals to proceed at an appropriate pricing, it is proposed to carry out the
Share Consolidation. Under the Share Consolidation, it is proposed that the
issued and unissued Unconsolidated Ordinary Shares will be consolidated so that
every 20 Unconsolidated Ordinary Shares of 0.1p each will be consolidated into
one Consolidated Ordinary Share of 2p. Shareholders with a holding of
Unconsolidated Ordinary Shares which is not exactly divisible by 20 will have
their holdings rounded down to the nearest whole number of Consolidated Ordinary
Shares. Holders of fewer than 20 Unconsolidated Ordinary Shares will not be
entitled to receive any Consolidated Ordinary Shares following the Share
Consolidation. Any fractions arising from the Share Consolidation will be
aggregated and sold for the benefit of the Company.
All Existing Warrants and options (in each case, to the extent not terminated)
granted under the Share Option Scheme will be consolidated in the same way as
the Unconsolidated Ordinary Shares. The New Warrants will relate to Consolidated
Ordinary Shares.
The rights attaching to the Consolidated Ordinary Shares will be identical in
all respects to those of the Unconsolidated Ordinary Shares.
The Share Consolidation will mean that the Consolidated Ordinary Shares will
have a nominal value of 2p each. The total number of Existing Ordinary Shares
held by Shareholders on Admission will be [51,743,394] (although this number
could vary due to fractional entitlements which may arise as a result of the
Share Consolidation).
Authority for the Share Consolidation will be sought by the proposal of
Resolution 1 at the General Meeting.
Following the Share Consolidation, replacement share certificates will be
despatched to Shareholders in respect of newly denominated Existing Ordinary
Shares held in certificated form. Share certificates are expected to be
despatched by 4 August 2009. Existing certificates will be void. In respect of
Existing Ordinary Shares held in uncertificated form, CREST accounts will be
credited with the newly denominated Existing Ordinary Shares on the record date
for the Share Consolidation, being 20 July 2009.
The issue and allotment of the New Ordinary Shares will increase the issued
share capital of the Company by 394 per cent. In order to accommodate the New
Ordinary Shares and to give the Company flexibility to effect future allotments
of Consolidated Ordinary Shares (in accordance with the appropriate shareholder
authorities) it is proposed that the authorised share capital of the Company be
increased from GBP4,000,000 to GBP10,000,000 by the creation of 300,000,000
additional Consolidated Ordinary Shares. Authority for the increase in the
authorised share capital of the Company will be sought by the proposal of
Resolution 2 at the General Meeting.
10. Details of Admission and settlement
Application will be made to the London Stock Exchange for admission of the
Enlarged Share Capital to trading on AIM. It is expected that Admission will
become effective and that trading in the Enlarged Share Capital will commence on
21 July 2009.
If, for whatever reason, the Proposals are not approved or completed it is
anticipated that the current suspension of trading of the Existing Ordinary
Shares will be lifted, the Existing Ordinary Shares will thereafter continue to
trade on AIM and the Existing Directors will examine other options for the
Group's future.
The Articles permit the Company to issue shares in uncertificated form. CREST is
a computerized share transfer and settlement system which allows shares and
other securities to be held in electronic form rather than paper form.
Accordingly, settlement of transactions in Existing Ordinary Shares and the New
Ordinary Shares following Admission may take place within the CREST system if
the relevant Shareholder so wishes. Persons acquiring Consolidated Ordinary
Shares as part of the Placing may elect to receive Consolidated Ordinary Shares
in uncertificated form if, but only if, that person is a "system-member" (as
defined in the CREST Regulations) in relation to CREST. CREST is a voluntary
system and Shareholders can continue to hold their Ordinary Shares in
certificated form and to continue dealing based on share certificates and stock
transfer forms.
11. New Board and key employees
New Board
Peter Dubens - Executive Chairman (aged 42)
Peter Dubens is the founder of a privately owned asset management and advisory
group comprising private equity, fund of funds, corporate finance, capital
introduction and venture capital operations.
Peter is the Managing Director of Oakley Capital Limited, the investment adviser
to Oakley L.P., a European middle-market private equity fund specialising in
turnarounds, restructurings and consolidation opportunities. During the last 20
years Peter has acquired, restructured and consolidated public and private
companies. Most recently as executive chairman, he led the formation of two
public companies, being 365 Media Group plc and Pipex Communications plc (now
Freedom4 Group plc). The 365 Media platform consolidated 12 businesses within
the online sports information and gambling industry and the Pipex platform
consolidated 14 businesses within the telecoms and internet industries. 365
Media was sold for over GBP102 million to BSkyB and the main operating divisions
of Pipex were sold for approximately GBP330 million, on a cash and debt free
basis, before adjustments.
Peter Dubens is, at the date of this document, non executive chairman of the
Company. Following Admission, Peter will continue as chairman in an executive
capacity.
Matthew Riley - CEO (aged 35)
Matthew Riley established Daisy in 2001 and has led the company through rapid
growth to become one of the UK's leading business communication providers to the
SME and mid market. Daisy is regularly recognised for outstanding growth in
independent surveys and awards programmes.
Prior to establishing Daisy, Matthew began his career as a sales executive at FH
Brown, achieving rapid promotion to Regional Area Sales Manager and subsequently
Regional Manager in 1997. He then joined German telecoms company DeTeWe AG,
progressing to UK Sales Manager in 1999.
Matthew subsequently established and sold three start-up companies before
founding Daisy. Matthew's achievements with Daisy have been independently
recognised through the award of Ernst & Young's UK Young Entrepreneur of the
Year Award in 2007. In the same year he was also the inaugural winner of the
Bank of Scotland Entrepreneur Challenge, securing a GBP5 million interest free
loan from Bank of Scotland and mentoring from Sir Philip Green.
Stewart Porter - CFO & Company Secretary (aged 56)
Stewart Porter is a Chartered Accountant and holds a Bachelor of Science degree
in Electrical Engineering. Stewart was a founding director of Zipcom plc (now
Freedom4 Group plc) in 2000 and has been instrumental in the development of the
Group over this period.
Prior to this, Stewart spent eight years at Cable & Wireless in a number of
senior financial positions most recently as Finance Director for Global Markets,
the division of Cable & Wireless responsible for serving the Group's
multinational customers. Subsequently he was closely involved with a number of
telecommunications sector start-ups around Europe.
Mike Read - CEO - Freedom4 Wireless Broadband (aged 61)
Mike Read has over 30 years experience in the communications and internet
industry. He started his career in British Telecom where he focused mainly on
international activities. This culminated in him playing a key role in Concert,
the US-based joint venture between British Telecom and MCI, and later leading
all of British Telecom's global engineering and operational activities.
In the mid 1990s, Mike joined ANS (an AOL company) to lead sales, marketing and
product management in the rapidly expanding internet market, in advance of its
eventual sale to Worldcom. In 1999 he became President of OneMain.com, a US
NASDAQ-listed ISP roll-up, building the company to approximately 900,000
customers through organic growth and the purchase of 30 companies. OneMain was
sold to Earthlink in September 2000. Mike returned to the UK to lead XO Europe
as CEO. After a strategic review in October 2002, the business was sold and
became a cornerstone of Freedom4; Mike became CEO of the larger AIM-listed
company which was later renamed Pipex Communications plc.
Laurence Blackall (age 58)
Laurence Blackall has had a 30 year career in the information, media and
communication industries. After an early career that included Virgin and the
SEMA Group, Mr Blackall was appointed a director of Frost & Sullivan and a
vice-president of McGraw Hill. Mr Blackall was also CEO of AIM listed Internet
Technology Group, which he founded in 1995, and Chairman of Boat International
Publications. Mr Blackall was also instrumental in the creation of Pipex
Communication plc (now Freedom4). He is also a director of OCIL.
Mr Blackall has an MA in marketing and currently holds a number of directorships
in public and private UK companies.
Christina Kennedy - Independent Non Executive Director (aged 60)
Christina Kennedy has a Masters Degree in Business Administration and is a
Fellow of the Chartered Institute of Secretaries. Until a few years ago she
worked on a consultancy basis at board level acting as Company Secretary in a
variety of listed companies, including AIM, FTSE 250 and overseas companies with
a secondary listing. She has more recently held roles as a non executive
director.
Christina's industry experience is wide ranging and includes manufacturing,
leisure and service companies. She has worked in a consultancy capacity as
corporate governance Adviser for a major UK pension fund and therefore has a
good understanding of investors' governance requirements. Christina's experience
has involved her working with boards on acquisitions; restructuring; board
compositions and appointments; directors' service contracts and remuneration
issues; long term incentive schemes; share options and risk management issues
related to internal control requirements.
Ian McKenzie - Non Executive Director (aged 58)
Ian McKenzie has spent more than 40 years in the telecommunication and broadcast
industry working in various international markets. He initially worked with
British Telecom in a number of senior positions, leading divisions to
successfully target business and consumer markets with voice, data, broadband
and complex solution services, both in the UK and Europe. His final position was
as chief operating officer in the Asia Pacific Region. He then joined Kingston
Communications as chief operating officer, which he left in 2002.
Ian then worked as an advisor and consultant for various private equity
investors and took non executive chairman roles with a number of businesses,
including Karneval Media and executive chairman of Invitel in Hungary both of
which have been sold. He is currently non executive chairman of Daisy
Communications Ltd, Ceské Radiokomunikace in the Czech Republic and Multicom
Security AB in Sweden. He also works as a Senior Telecommunications Advisor to
GMT Communications Partners LLP.
Ian brings with him a wealth of experience from telecommunications, media and
broadcast sectors targeting business, small-medium enterprises and consumer
markets.
Key employees after Admission
Maria Cappella - Vialtus CEO (aged 42)
With more than 22 years of IT and telecoms experience as a transformation
manager, Maria has held senior positions in sales, marketing, merchandising,
purchasing and product management for a number of public and private
organisations. Part of the founding management team of the PC World superstore
chain, Maria entered the Service Provider market in the mid 1990's assisting in
the IPO of Internet Technology Group, and was instrumental in its sale to XO
Communications in 2000. Appointed Vialtus CEO in April 2008, Maria has a strong
strategy and leadership style based upon her extensive knowledge of the market
and its drivers.
Riki Kinnaird - Vialtus CFO (aged 38)
Riki Kinnaird holds a Bachelor of Commerce Degree and a Post Graduate Diploma in
marketing and management from the University of Otago, New Zealand. Riki was
appointed CFO of Vialtus in August 2008 having previously held the role of Head
of Strategic Planning at British Telecom Openreach. Riki has held senior
financial and commercial positions at a number of international
telecommunications companies including COLT and Equant/Orange Business Services
and has also provided consultancy services to Vodafone plc. Over his career Riki
has established a strong reputation for cost and profit transformation.
Anthony Riley - Daisy CFO (aged 41)
Anthony Riley is CFO of Daisy.
Anthony studied at the University of Sheffield, gaining a first class honours
degree in Economics. Following graduation he joined Deloitte in the audit and
assurance department, where he spent three years undertaking his Association of
Chartered Accountants qualification and a futher two years in supervisory and
management roles.
He has over 13 years experience of senior financial roles within industry.
Anthony joined JJB Sports plc in 1995 and was promoted to Associate Finance
Director in 1999. He played a key role for JJB in the integration of the Sports
Division business following its acquisition in 1998.
Anthony joined Homeserve Claims Management Limited as Finance Director in 2002.
He helped guide the company through a six year period of significant continued
growth.
Anthony was appointed CFO of Daisy in August 2008.
12. Financial Information for Freedom4 Group plc
The annual reports, including audited consolidated accounts (including their
respective audit reports), of Freedom4 for the financial years ending 31
December 2006, 31 December 2007 and 31 December 2008 are incorporated in this
document by reference. These accounts are available online at
www.freedom4group.com.
13. Current trading of Vialtus and Daisy and prospects of the Enlarged Group.
Vialtus unaudited revenue and EBITDA for the quarter ending 31 March 2009 were
GBP9.3 million and GBP1.4 million respectively. Daisy unaudited revenue for the
quarter ending 31 March 2009 was GBP13.6 million. Unaudited EBITDA for the same
period was GBP2.0 million which includes one off director bonuses and payments
of GBP0.9million. Both businesses are currently trading ahead of the quarter
ending 31 March 2009 run rate at unaudited EBITDA level.
The Directors are confident that there will be considerable opportunities for
the Enlarged Group to increase revenues across its core business streams in
particular from cross selling from the Enlarged Group's expanded suite of
services. It is also expected that the Enlarged Group will considerably improve
its group financial performance in the current financial year from identified
cost savings.
These savings are expected partly from reduction in duplicated functions and
partly from efficiencies created by the Acquisitions. The increased financial
strength and scale resulting from the Acquisitions and Placing will position the
Enlarged Group as an entity that can lead the consolidation opportunities that
exist within the markets in which it operates. Indeed, the Directors have
already identified a number of potential complementary acquisitions and will
seek to bring some of these to fruition during the course of this year.
14. Current market of the Enlarged Group
The UK business telecommunications market has grown consistently since 2002,
with a gradual decline in voice revenues being more than offset by the growth in
mobile and corporate data revenues. According to Ofcom, total UK revenues from
business telecoms were GBP13.2 billion in 2007, compared with GBP11.3 billion in
2002. In 2007 the combined business voice and data market segments accounted for
GBP6.5 billion of UK business telecoms revenues. Given the current concentration
of UK mobile revenues among the five major mobile network operators, the
Existing Directors believe that the fixed voice and corporate data segments
represent the Enlarged Group's addressable market.
British Telecom remains the UK's largest business telecommunications company
with a 61 per cent. share of the network access and call revenues market,
followed by Virgin Media, the second largest operator, with 4 per cent. (Ofcom
2008). Other operators account for the remaining 35 per cent. of the market,
with aggregate revenues of GBP1.2 billion in 2007. The Existing Directors
believe that this category provides a useful indication of the size of the
potential market consolidation opportunity for the Enlarged Group following
Admission.
The UK SME and mid-market telecommunications market is fragmented and includes
many smaller operators which are typically privately owned. Freedom4 estimates
that there are more than 25 licensed operators in the UK with revenues of
between GBP10 million and GBP100 million focusing on the business
telecommunications market. The Existing Directors also believe these smaller
operators have typically focused on a more limited product proposition than the
Enlarged Group's proposed offering. As a result, customers of acquired
businesses could, in many cases, not have been offered a fully converged access,
hosting, voice, managed services and mobile product offering on one bill and
from a single customer service platform.
15. Strategy of the Enlarged Group
The strategy of the Enlarged Group is to create, through a combination of
further acquisitions and organic growth, one of the largest UK providers to the
SME and mid-market of telecommunications services and solutions. The Enlarged
Group intends to provide its customers with a product set including access,
hosting, voice, managed services and mobile.
The Enlarged Group intends to provide a comprehensive portfolio of products from
a single operating platform and on a single bill. The Directors believe that,
with the exception of British Telecom, few, if any, other independent UK
business telecommunications operators currently provide such a comprehensive
offering to SME and mid-market customers.
In addition, the Enlarged Group will seek to cross-sell new products to existing
customers and to create a "one-stop-shop" for converged communications
solutions. The Directors believe that such an offering will also help to reduce
customer churn.
The Enlarged Group will pursue two strategies in order to seek to achieve
growth. Firstly, the Directors will seek to increase organic growth through a
combination of improved customer management to reduce churn; a focus on
cross-selling and up-selling to existing customers to encourage them to take
more products; and through a focus on direct and indirect sales channels.
Secondly, the Enlarged Group will seek to grow through targeted acquisitions,
designed to increase customer scale and expand the product portfolio. The
Directors believe that the Enlarged Group will benefit from acquisitions in two
ways: through cost efficiencies and through opportunities to cross-sell and
up-sell to new and existing customers. The Directors believe that several
independent quoted and unquoted telecommunications operators could be potential
acquisition targets and, given current economic conditions, such acquisitions
may be achievable at competitive prices.
The Directors are undertaking discussions which may lead to further acquisitions
soon after Admission. The Directors expect that these acquisitions will be
funded through the assumption of debt by the Enlarged Group and/or through the
issue of further new Consolidated Ordinary Shares (both to raise cash and as
consideration).
The Directors believe the size of the Enlarged Group could enable it to
negotiate improved supplier pricing and terms, the most important of which would
be network products including lines, call minutes and data circuits.
In the medium term the Enlarged Group will seek to create further growth
opportunities through the migration of customers onto Next Generation IP
products including hosted applications such as Voice over IP. The increased
scale of the combined revenue and customer bases of the Enlarged Group will, the
Directors believe, provide a stronger platform to take advantage of the take-up
of these Next Generation IP products and services.
16. Lock-in arrangements
Matthew Riley, Peter Dubens and the Vialtus Vendor have undertaken to the
Company and Liberum, subject to certain exceptions (including the ability to
accept a takeover offer for the Company and to give an irrevocable undertaking
to accept a takeover offer for the Company), not to dispose of or transfer any
Consolidated Ordinary Shares in which they are interested at Admission until one
month following publication of the Company's audited accounts for the period
ended 31 March 2010.
The aggregate number of Consolidated Ordinary Shares subject to such lock-in
arrangements is 100,385,276 representing approximately 39.0 per cent. of the
Enlarged Share Capital.
17. Dividend policy
The Directors intend to retain earnings in the short term to fund the
development and growth of the Enlarged Group's business. The Directors will
consider whether to pay a dividend at an appropriate time.
18. Corporate governance
The Directors recognise the value of the Combined Code. Following Admission, the
Enlarged Group will continue to endeavour to comply with the Combined Code, as
appropriate for a company of its size and resources. The Company has an audit
committee and a remuneration committee with formally delegated duties and
responsibilities.
Following Admission, the audit committee will be chaired by Laurence Blackall
and its other members will be Ian McKenzie and Christina Kennedy. The audit
committee receives and reviews reports from management and the Company's
auditors relating to the annual and interim accounts and the accounting and
internal control systems in use by the Company and its subsidiaries.
Following Admission, the remuneration committee will be chaired by Christina
Kennedy and its other members will be Laurence Blackall and Ian McKenzie. The
remuneration committee reviews the scale and structure of the Directors' and
senior managers' remuneration and the terms of their service contracts
(including the grant of options to such persons under the Share Option Scheme).
The remuneration and terms and conditions of appointment for the non executive
Directors will be a matter for the New Board.
The Company will take all reasonable steps to ensure compliance by the Directors
and employees with the provisions of the AIM Rules relating to dealings in
securities of the Company and the Company has adopted a share dealing code for
this purpose. The New Board will comply with Rule 19 of the AIM Rules relating
to directors' dealings and will take all reasonable steps to ensure compliance
by the Enlarged Group's "applicable employees" (as defined in the AIM Rules).
19. Share Options and Warrants
The Directors recognise the importance of ensuring that employees of the
Enlarged Group are well motivated and identify closely with the future success
of the Enlarged Group. The Company has an existing share option scheme, being
the Share Option Scheme, details of which are set out in paragraph 13 of Part
VIII of this document. Following Admission, the Company intends to introduce new
share based incentive arrangements for management and employees. The nature and
structure of such arrangements have yet to be determined and the Company is
currently taking advice on such matters. As at the date of grant of any options
or warrants, the total number of Ordinary Shares which have been or may be
issued under arrangements for the grant of warrants, the Share Option Scheme and
any new share based incentive arrangements pursuant to options and warrants
granted in the ten year period ending on the relevant date of grant may not
exceed 15 per cent. of the issued ordinary share capital of the Company at that
date.
Certain of the Existing Directors and others hold Existing Warrants to subscribe
for Unconsolidated Ordinary Shares of the Company. Details of the Existing
Warrants are set out in paragraph 19.1 of Part VIII of this document. The Board
has agreed with the Existing Directors who hold Existing Warrants that, subject
to Completion occurring, the Existing Warrants held by the Existing Directors
shall be cancelled and that the Existing Directors concerned shall be granted
New Warrants in respect of an aggregate 2,000,000 Consolidated Ordinary Shares.
In addition, the Board has agreed with Matthew Riley and with Ian McKenzie that,
subject to Completion occurring, they shall be granted New Warrants in respect
of 2,500,000 and 112,500 Consolidated Ordinary Shares respectively. Details of
the New Warrants are set out in paragraph 19.1 of Part VIII of this document.
Resolution 5 includes authority for the Directors to allot shares pursuant to
the New Warrants and Resolution 6 includes a waiver of statutory pre-emption
rights in connection with the issue of the New Warrants. Upon Completion
occurring, the outstanding options held by certain of the Existing Directors
will be cancelled and will not at that time be replaced. The New Warrants are
designed as an incentivisation related to the future performance of the
Company's share price. The Existing Warrants were granted at an early stage in
the process of establishing Freedom4 as a leading provider of broadband and web
hosting services. This process culminated in the sale by Freedom4 of its
subsidiaries carrying on a broadband and voice business to Tiscali UK Limited in
2007 and the sale of the Host Europe Group to Oakley L.P. in 2008. The
remuneration committee of the Company considers that, in the light of the
proposed Acquisitions and the Company's strategy to become one of the largest UK
providers of telecommunications services and solutions to the SME and midmarket,
it is appropriate for the Existing Warrants and options for certain Directors to
be cancelled and for the New Warrants to be issued at a time and on terms which
reflect the beginning of a new strategic direction for the Company and the
addition of new management to the Board.
Options have been granted under the Share Option Scheme in respect of 40,587,666
Unconsolidated Ordinary Shares. Following Admission and the cancellation of the
options held by the Existing Directors, options will remain outstanding under
the Share Option Scheme in respect of 10,500 Consolidated Ordinary Shares.
Existing Warrants have been granted under the Existing Warrant Instruments in
respect of 66,580,000 Unconsolidated Ordinary Shares. Following Admission and
the cancelation of the Existing Warrants held by the Existing Directors and the
grant of the New Warrants, Existing Warrants and New Warrants will remain
outstanding under respectively certain of the Existing Warrant Instruments and
the New Warrant Instruments in respect of 4,906,500 Consolidated Ordinary
Shares.
20. General Meeting
Set out at the end of this document is a notice convening the General Meeting of
the Company to be held at the offices of SJ Berwin LLP, 10 Queen Steet Place,
London, EC4R 1BE at 10.00 a.m. on 20 July 2009 at which the following
resolutions will be proposed as ordinary or special resolutions (as the case may
be):
1. to approve the Share Consolidation (ordinary resolution);
2. to increase the authorised share capital of the Company (ordinary resolution);
3. to approve the Daisy Acquisition (ordinary resolution);
4. to approve the Vialtus Acquisition (ordinary resolution);
5. to authorise the Directors generally to allot shares (including for the purposes
of the Placing, the Acquisitions and the issue of the New Warrants) (ordinary
resolution);
6. to waive statutory pre-emption rights in connection with the allotment of
Consolidated Ordinary Shares pursuant to the above authority (special
resolution); and
7. to change the name of the Company to Daisy Group plc (special resolution)
The attention of Shareholders is also drawn to the section entitled "Irrevocable
Undertakings" below and to the recommendations and voting intentions of the
Existing Directors as set out in the section entitled "Action to be taken"
below.
21. Irrevocable Undertakings
Irrevocable undertakings to vote in favour of the Resolutions to approve and
implement the Proposals have been received from the Existing Directors (other
than Peter Dubens) and their connected persons in respect of their entire
aggregate holding of 167,100 Unconsolidated Ordinary Shares (representing
approximately 0.02 per cent. of the Existing Ordinary Shares).
An irrevocable undertaking to vote in favour of the Resolutions (other than the
resolution numbered 4 to approve the Vialtus Acquisition in respect of which
Peter Dubens has agreed not to vote) has also been received from Peter Dubens in
respect of his entire holding of 58,333,334 Unconsolidated Ordinary Shares
(representing approximately 5.64 per cent. of the Existing Ordinary Shares).
Irrevocable undertakings to vote in favour of the Resolutions to approve and
implement the Proposals have also been received from certain other Shareholders
in respect of 272,194,968 Unconsolidated Ordinary Shares (representing
approximately 26.30 per cent. of the Existing Ordinary Shares).
In addition, non-binding letters of intent to vote in favour of the Resolutions
to approve and implement the Proposals have been received from certain other
Shareholders in respect of 162,634,005 Unconsolidated Ordinary Shares
(representing approximately 15.70 per cent. of the Existing Ordinary Shares).
Accordingly, irrevocable undertakings to vote in favour of the Resolutions
(other than the Resolution numbered 4 to approve the Vialtus Acquisition) to
approve and implement the Proposals have been received in respect of a total of
330,695,402 Unconsolidated Ordinary Shares (representing approximately 31.96 per
cent. of the Existing Ordinary Shares). Irrevocable undertakings and non-binding
letters of intent to vote in favour of the Resolutions (other than Resolution 4
to approve the Vialtus Acquisition) to approve and implement the Proposals have
been received in respect of a total of 493,329,407 Unconsolidated Ordinary
Shares (representing approximately 47.67 per cent. of the Existing Ordinary
Shares). Irrevocable undertakings to vote in favour of the Resolution numbered 4
to approve the Vialtus Acquisition have been received in respect of a total of
272,362,068 Unconsolidated Ordinary Shares (representing approximately 26.32 per
cent. of the Existing Ordinary Shares). Irrevocable undertakings and non-binding
letters of intent to vote in favour of Resolution 4 to approve the Vialtus
Acquisition have been received in respect of a total of 434,996,073
Unconsolidated Ordinary Shares (representing approximately 42.03 per cent. of
the Existing Ordinary Shares).
22. Taxation
If you are in any doubt as to your tax position, or are subject to tax in a
jurisdiction other than the United Kingdom, you should contact your professional
adviser immediately.
23. Treasury shares
On 30 June 2009 the Company cancelled 41,138,559 ordinary shares held in
treasury therefore the Company's total issued share capital at today's date is
1,034,867,898 ordinary shares of 0.1 pence each and holds no ordinary shares in
treasury.
24. Recommendation and voting intentions
Given the extent of his interests in the Vialtus Acquisition, Peter Dubens, the
Non Executive Chairman of the Company, has not participated in the Board's
deliberations with regard to the Vialtus Acquisition.
The Existing Directors consider that the Daisy Acquisition, the Placing and the
Share Consolidation are in the best interests of the Company and Shareholders as
a whole. The Independent Directors consider that the Vialtus Acquisition is in
the best interests of the Company and Shareholders as a whole.
Accordingly, the Independent Directors unanimously recommend that Shareholders
vote in favour of the Resolution numbered 4 to approve the Vialtus Acquisition
to be proposed at the General Meeting, as they have irrevocably undertaken to do
in respect of their own shareholdings, which in aggregate amount to 0.02 per
cent. of the Existing Ordinary Shares.
The Existing Directors unanimously recommend that Shareholders vote in favour of
the Resolutions (other than the Resolution numbered 4 to approve the Vialtus
Acquisition) to be proposed at the General Meeting, as they have irrevocably
undertaken to do in respect of their own shareholdings, which in aggregate
amount to 5.56 per cent. of the Existing Ordinary Shares.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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