RNS Number:4658K
Argentvive PLC
21 December 2007
21 December 2007
ArgentVive plc
Acquisition of Solcara Limited
and
Proposed Placing of up to 8,365,291 Placing Shares at 50 pence per share
ArgentVive, the AIM-quoted e-commerce group announces the acquisition of the
entire issued share capital of Solcara Limited ("Solcara") for a total
consideration of �4.475 million comprising approximately �1.62 million in cash
and 4.76 million Consideration Shares. The Company also announces that it has
raised approximately �4.2 million through a placing of up to 8,365,291 shares at
50 pence per share.
HIGHLIGHTS
- The acquisition of Solcara, with its market leading technologies,
experienced management and blue chip client base, represents an attractive
opportunity for ArgentVive to extend its portfolio and to accelerate its growth
- Solcara has developed cutting edge core technologies to enable the rapid
search, identification and analysis of ever expanding volumes of information
- Solcara has built a strong customer base with over 100 major clients
including a number of blue chip customers across government, professional
services, pharmaceuticals and media sectors
- The Acquisition enables ArgentVive to expand its B2B presence within the
UK and international markets, adding value to existing services and enriching
both companies' content offerings to customers
- ArgentVive will benefit further through the strengthening of its Group
management team and access to a skilled development resource
- Consideration will be satisfied by �1.62 million payable in cash on
completion and up to 4.76 million consideration shares, 4.26 million of which
shall be issued at Completion
- Placing of up to 8.4 million new ordinary shares to raise approximately
�4.2 million, which shall be used to finance the Solcara acquisition and for
working capital to accelerate growth through an increased investment in selling
and marketing expenditure
Kevin Fleming, Finance Director of ArgentVive, commented:
"This is a landmark acquisition for ArgentVive. The acquisition of Solcara
strengthens significantly our own management expertise, provides us with an
impressive list of blue chip clients for our B2B division, and gives us access
to valuable development resources, intellectual property and expertise. We
believe this acquisition gives the Group a solid infrastructure enabling us to
scale the business through both the development of Solcara in its own right and
the exploitation of Solcara's leading technology for the benefit of other Group
companies."
Ray Jackson, Chief Executive of Solcara said:
"We are delighted to be joining the ArgentVive Group and believe this will
enable Solcara to maximise its potential. We have an exciting opportunity to
exploit vertical and international markets and with the combined knowledge
across the group we shall be able to evolve new models delivering software as a
service over the Internet through hosted sites."
Enquiries:
ArgentVive plc Tel: 01932 569 912
Kevin Fleming, Finance Director
Charles Stanley Securities Tel: 020 7149 6000
Nominated Adviser and Joint Broker
Russell Cook/Carl Holmes
IAF Securities Tel: 020 7747 7400
Financial Adviser and Joint Broker
Gary Pinkerton
College Hill Tel: 020 7457 2020
Mark Garraway/Kate Rock
21 December 2007
ArgentVive plc
Acquisition of Solcara Limited
and
Proposed Placing of up to 8,365,291 Placing Shares at 50 pence per share
The Company has today posted a circular to Shareholders containing proposals to
acquire Solcara for a consideration of �4.5 million, comprising approximately
�1.62 million in cash and 4.76 million Consideration Shares (being an effective
subscription price of 60 pence per Consideration Share) The Acquisition
Consideration payable on Completion will comprise �1.62 million payable in cash
(including the repayment of a �125,000 shareholder loan) and the issue of
4,260,000 Consideration Shares. A further 500,000 Retention Shares shall be
issued, subject certain limited conditions, on or before 21 January 2009.
The Company is also seeking to raise approximately �4.2 million through the
issue of up to 8,365,291 Placing Shares at a price of 50 pence per Placing
Share.
A General Meeting has been convened to seek authority from Shareholders, inter
alia, to enable the Directors to allot and issue the New Ordinary Shares. The
Acquisition does not require the approval of Shareholders. However, the
Acquisition is conditional, inter alia, upon admission of the Consideration
Shares (excluding the Retention Shares) to trading on AIM.
Reasons for and details of the Placing and use of proceeds
The Placing will raise approximately �4.2 million before expenses. Of this
amount �1.62 million will be used to fund the cash element of the Acquisition
Consideration, with the balance being used to defray the costs and expenses of
the Placing and the Acquisition and to provide additional working capital.
Under the terms of the Placing Agreement, Charles Stanley, as agent for
ArgentVive, has conditionally agreed to use all reasonable endeavours to procure
subscribers for the Placing Shares at the Placing Price.
The Placing is not a rights issue or open offer and the Placing Shares are not
being offered to Shareholders on a pre-emptive basis or otherwise. The Board
concluded that it was not in the best interests of the Company to make such a
pre-emptive offer due to the time and cost involved and the necessity to
complete the Acquisition successfully in a timely manner.
Accordingly, the Board considers that it is in the best interests of the Company
and Shareholders as a whole, for the funds to be raised by the Placing.
The participation of Charles Denton in the Placing is a related party
transaction for the purposes of the AIM Rules. In the opinion of the Directors,
other than Mr Denton, having consulted with Charles Stanley, the terms of the
Placing are fair and reasonable insofar as Shareholders are concerned. The
Placing Price of 50 pence per Placing Share represents a discount of 18.7 per
cent to the closing mid market price on 20 December 2007 (being the latest
practicable date prior to the posting of this document) of 61.5 pence per
Ordinary Share.
The Acquisition Agreement
Pursuant to the Acquisition Agreement, the Company has agreed (conditionally
upon (i) Resolutions 2 and 3 having been passed at the General Meeting, (ii) the
Consideration Shares, other than the Retention Shares, having been admitted to
trading on AIM and (iii) the Vendors complying with the Completion requirements
contained within the Acquisition Agreement) to purchase the entire issued share
capital of Solcara, which comprises 15,000 'A' ordinary shares of 10p each,
200,000 preference shares of �1 each and 85,000 ordinary shares of 10p each.
The Acquisition Consideration shall comprise (i) �1.495 million, which will be
paid in cash at Completion, and apportioned as to �625,000 to The Capital Fund
No 1 LP and �870,000 to the other vendors (the "Management Vendors"); (ii)
�125,000, which will be advanced to Solcara to enable it to repay, in full, a
convertible loan made to it by The Capital Fund No 1 LP; and (iii) the balance,
which will be satisfied by the issue of up to 4,760,000 Consideration Shares to
the Management Vendors. The Acquisition Agreement provides that the Purchaser
is not obliged to issue the Retention Shares until after the expiry of a 12
month period commencing on the date of Completion of the Acquisition.
The Acquisition Agreement contains customary warranties and there is a separate
tax deed. Under the Acquisition Agreement, liability of the Vendors under the
warranties has been limited to two years for general matters and six years for
tax matters. The maximum recoverable amount in respect of a breach or breaches
of the warranties is capped at 90 per cent. of the Acquisition Consideration.
The warranties in the Acquisition Agreement are given by the Management Vendors
only, who between them hold approximately 95 per cent. of the ordinary share
capital of Solcara.
Under the Acquisition Agreement the Management Vendors undertake, subject to
certain exceptions, that for a period of 12 months commencing on Completion they
will not dispose of any of the Consideration Shares and that for the period of
24 months commencing on Completion they will only dispose or agree to dispose of
any of the Consideration Shares allotted to them through Charles Stanley.
Reasons for the Acquisition
One of the key investment strategies for ArgentVive is to target businesses that
have people, IP and technologies which the Directors believe are exceptional and
which the Directors believe have the potential to provide synergies across the
Group but which have failed to reach their full potential as a result of
insufficient working capital or insufficient infrastructure.
The Directors believe that the acquisition of Solcara with its market leading
technologies, experienced management and blue chip client base represents an
attractive opportunity for ArgentVive to extend its portfolio and to accelerate
its growth.
Solcara is a market leading search and information management company that has
developed core technologies that enable the development of software
applications, which address the need to search, identify and analyse ever
expanding volumes of information. Solcara currently has four product offerings,
covering legal and professional firms, information access, media relations and
crisis management. As an illustration of its technological capabilities,
Solcara has been selected as the sole UK technology provider for the EU Project
X-Media which is tasked with addressing the issue of knowledge management in
complex distributed environments.
To date, sales have been won primarily from the direct sales operation focused
on markets such as professional services, government, pharmaceuticals and media
sectors. The directors of Solcara are of the opinion that the lack of working
capital to invest in sales and marketing has been the main factor restricting
its growth. With financing from ArgentVive, the Directors believe this
additional resource may be used to address other markets, both vertically and
geographically through the expansion of its in-house sales and marketing
resource and via sales partners (value-added resellers and original equipment
manufacturers). Solcara's product offerings are not sector specific and the
Directors believe there exist opportunities to sell other products from its
portfolio to existing clients. Solcara has recently appointed partners in
Belgium, the Netherlands, Sweden, and Northern Ireland and currently has
partners in ten European countries.
Sales in the year ended 31 March 2007 were approximately �1.33m (2006: �1.14m),
generating a profit before interest and tax of �85,057 (2006: loss �254,554).
As at 31 March 2007 Solcara had net liabilities of �874,911 (2006: �888,335).
Solcara has an experienced management team which the Directors expect will
enhance and strengthen the structure within ArgentVive. Mr Ray Jackson is
currently Managing Director of Solcara and on Completion it is anticipated that
he will become Interim Managing Director of ArgentVive with responsibility for
the integration of acquisitions and day-to-day running of the Group. The terms
of Mr Jackson's service contract have not yet been finalised but will, once
finalised, be announced by the Company.
In addition, Mr Simon Hargreaves (currently Operations Director of Solcara) will
have responsibility for ArgentVive Group Operations. Mr Rob Martin (currently
Head of the Information Management Division of Solcara) will be promoted to
Managing Director of Solcara and a structured handover will take place from Mr
Jackson, who will become Chairman of Solcara.
Interests in the Company's Share Capital
As at the date of this announcement and following completion of the Placing and
the Acquisition, the Directors will have the following interests in the Ordinary
Shares:
Name of Director Existing Percentage of the Placing Shares Shareholding Percentage of
shareholding issued ordinary subscribed following the fully diluted
share capital Placing share capital
following the
Placing and
Acquisition
Charles Denton 15,540,503 54.40% 1,528,291 17,068,794 41.44%
David Mahony 400,000 1.40% - 400,000 0.97%
Kevin Fleming - - - - -
Other than the Directors referred to above, as at the date of this announcement
and following completion of the Placing and the Acquisition, the Directors are
aware of the following interests that are or will be held directly or indirectly
in 3 per cent. or more of the issued ordinary share capital of the Company:
Name of Shareholder Existing Percentage of the Placing Shares Shareholding Percentage of
shareholding issued ordinary subscribed following the fully diluted
share capital Placing share capital
following the
Placing and
Acquisition
Mr S Van Tran 1,618,980 5.67% - 1,618,980 3.93%
Mr A Swanston 1,100,000 3.85% - 1,100,000 2.67%
Mr M Millet 900,000 3.15% - 900,000 2.18%
Options and Warrants
It is the intention of the Board to reward and retain key management through the
issue of share options and the Board is finalising documentation in relation to
an Enterprise Management Investment scheme, a share save scheme and an
unapproved share option scheme. It is also the intention of the Board to grant
warrants to subscribe for Ordinary Shares in the Company to professional service
providers for value-added services they have undertaken on behalf of the
Company. At the General Meeting, the Board is seeking sufficient authority to
allot up to 15 per cent. of the issued share capital in total under any share
option scheme or warrant instrument.
Increase in authorised share capital, section 80 authority and section 95
authority
As communicated to Shareholders recently at the Annual General Meeting, it is
the intention of the Company to acquire and develop Internet-based businesses.
To enable the Company to complete the Acquisition and to continue its
acquisition strategy the Board is seeking authority from Shareholders to do each
of the following, which will enable the Directors to offer consideration in the
form of Ordinary Shares in the Company, as well as in cash:
1. To increase the authorised share capital of the Company by �1,500,000
by the creation of 15,000,000 new Ordinary Shares. The authorised share capital
of the Company is currently �6,317,330, which shall reduce to �5,000,000 on
completion of the court capital reduction in relation to the Company's ordinary
non-voting shares, as set out in the circular dated 17 August 2007.
2. To grant authority to the Directors to issue and allot up to �3,000,000
of share capital, comprising 30,000,000 Ordinary Shares, and representing
approximately 71.9 per cent. of the Enlarged Share Capital.
3. To grant authority to the Directors to issue and allot the following
Ordinary Shares on a non-pre emptive basis in accordance with section 95 of the
Act: (i) by way of rights to holders of shares in proportion to their respective
holdings; (ii) the Placing Shares; (iii) up to �620,000 comprising 6,200,000
Ordinary Shares pursuant to option schemes and warrant instruments; and (iv) up
to a further �310,000 comprising 3,100,000 Ordinary Shares which represent
approximately 7.5 per cent. of the Enlarged Share Capital on a non-pre-emptive
basis.
Amendment to the Company's Articles of Association
It is proposed that the Company takes advantage of the provision implemented by
Part 13 of the Companies Act 2006 on 1 October 2007 which permits the reduction
of the notice period required for general meetings of the Company (other than
annual general meetings) to 14 days, regardless of the type of resolution
proposed to be passed at the general meeting. If the Resolution is passed, the
notice period for general meetings of the Shareholders (other than annual
general meetings) where it is proposed that a special resolution be passed will
be reduced from 21 days (as is currently the case), to 14 days.
VCT and EIS Qualifying Holding Status
The Company has received provisional assurances from HM Revenue & Customs that
ArgentVive will comply with the requirements of Chapter 4 of Part 6 of the
Income Tax Act 2007 in respect of monies raised by a VCT by an issue of shares
or securities prior to 6th April 2007 and that the Ordinary Shares will
constitute qualifying holdings for the purposes of Schedule 28B Income and
Corporation Taxes Act 1988. The continuing status of such shares as a
qualifying holding for VCT purposes will be conditional, inter alia, upon the
Company and the VCT continuing to satisfy the relevant requirements.
Neither the Company nor the Directors make any warranty or give any undertaking
that relief will be available in respect of any investment in the Placing
Shares, nor do they warrant or undertake that the Company will keep its
qualifying status throughout the relevant period or that, once given, such
relief will not be withdrawn.
The Directors believe that the Company will be a qualifying company for the
purposes of the EIS legislation however they can offer no certainty in this
regard. The Company's advisers have obtained provisional clearance from HM
Revenue & Customs that the proposed issue of the Placing Shares will be a
qualifying investment for the purposes of EIS investors.
The continuing availability of EIS relief will be conditional, inter alia, on
the Company continuing to satisfy the requirements for a qualifying company
throughout the period of three years from the date of the investor making his
investment.
Settlement and dealings
Application will be made to the London Stock Exchange for the New Ordinary
Shares to be admitted to trading on AIM. It is expected that the New Ordinary
Shares will be admitted to trading on 16 January 2008.
The New Ordinary Shares will, when issued, rank pari passu in all respects with
the Existing Ordinary Shares including the right to receive dividends and other
distributions declared following Admission.
Following Admission the enlarged issued share capital of the Company will be
41,191,307 Ordinary Shares.
The Placing
Under the terms of the Placing Agreement, which was entered into on 20 December
2007, Charles Stanley has agreed to use its reasonable endeavours to place, as
agent for the Company, the Placing Shares.
The Placing is conditional, inter alia, upon:
- the Placing Agreement not being terminated in accordance with its terms;
- the Acquisition Agreement having been completed in escrow, subject only to
Admission (subject to payment); and
- the approval at the General Meeting of the necessary Resolutions to allot
and issue the Placing Shares and Admission of the Placing Shares occurring by 16
January 2008 (or such later date as Charles Stanley and the Company may agree
being not later than 31 January 2008.
The Placing Shares when issued and fully paid will rank equally in all respects
with the Existing Ordinary Shares, including the right to receive all dividends
and distributions declared, made or paid after Admission.
The Placing Agreement contains certain warranties given by the Company with
respect to the Company's business and certain matters connected with the
Placing. In addition, the Company has given indemnities to Charles Stanley in
connection with the Placing and Charles Stanley's performance of services in
relation to the Placing.
The Placing Agreement may be terminated by Charles Stanley at any time before
Admission for, inter alia, a material breach by the Company of the terms of the
Placing Agreement or the warranties contained in it, or on the occurrence of
certain specified events.
General Meeting
The proposals set out above require shareholder approval which will be sought at
a General Meeting of the Company to be held at the offices of Charles Stanley
Securities, 25 Luke Street, London EC2A 4AR at 11.00 a.m. on 15 January 2008.
Recommendation
The Board believes that the Acquisition, the Placing and the approval of the
Resolutions set out in the Notice of General Meeting are in the best interests
of the Company and Shareholders as a whole.
Accordingly, the Directors, with the exception of Mr Denton who, as a Related
Party to the Placing is prevented from expressing an opinion to Shareholders,
recommend that Shareholders vote in favour of the Resolutions as they have
irrevocably undertaken to do in respect of their beneficial holdings of 400,000
Ordinary Shares, representing approximately 1.40 per cent. of the existing
ordinary share capital of the Company.
Although Mr Denton is unable to recommend that Shareholders vote in favour of
the Resolutions, he confirms that he intends to vote in favour of the
Resolutions in respect of his own beneficial holding of Ordinary Shares
amounting, in aggregate, to 15,540,503 Ordinary Shares representing
approximately 54.40 per cent. of the existing ordinary share capital of the
Company.
Enquiries:
ArgentVive plc Tel: 01932 569 912
Kevin Fleming, Finance Director
Charles Stanley Securities Tel: 020 7149 6000
Nominated Adviser and Joint Broker
Russell Cook/Carl Holmes
IAF Securities Tel: 020 7747 7400
Financial Adviser and Joint Broker
Gary Pinkerton
College Hill Tel: 020 7457 2020
Mark Garraway/Kate Rock
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Latest time and date for receipt of Forms of Proxy 11.00 a.m. on 13 January 2008
General Meeting 11.00 a.m. on 15 January 2008
Expected date on which the New Ordinary Shares will be admitted
to trading on AIM 8.00 a.m. on 16 January 2008
DEFINITIONS
The following definitions apply throughout this announcement unless the context
requires otherwise:
"Act" the Companies Act 1985, as amended and any statutory modification or
re-enactment thereof for the time being in force (including, without
limitation, any provisions of the Companies Act 2006 for the time being
in force)
"Acquisition" the proposed acquisition of the entire issued share capital of Solcara by
the Company, which is subject to the passing of the Resolutions
"Acquisition Agreement" the conditional agreement entered into on 20 December 2007 between the
Vendors (1) and the Company (2) to effect the Acquisition
"Acquisition Consideration " the consideration due in accordance with the Acquisition Agreement,
comprising �1.62 million in cash and the issue of up to 4.76 million
Consideration Shares
"Admission" admission of the Placing Shares and the Consideration Shares to trading
on AIM and such admission becoming effective in accordance with the AIM
Rules
"AIM" the AIM market regulated by the London Stock Exchange
"AIM Rules" the rules, published by the London Stock Exchange governing the admission
to and operation of companies admitted to AIM
"ArgentVive" or the "Company" ArgentVive plc
"Capita Registrars" a trading name of Capita IRG plc, the Company's Registrar
"Charles Stanley" Charles Stanley Securities, a division of Charles Stanley & Co. Limited,
the Company's Nominated Adviser for the purposes of the AIM Rules
"Completion" completion of the Acquisition
"Consideration Shares" up to 4, 760,000 new Ordinary Shares to be issued as part of the
consideration in accordance with the terms of the Acquisition Agreement
to the Vendors of the entire issued share capital of Solcara
"Directors" or "Board" the directors of the Company
"Enlarged Share Capital" the Company's issued share capital immediately after the completion of
the Placing and the Acquisition (excluding the Retention Shares)
"Existing Ordinary Shares" 28,566,016 Ordinary Shares in issue
"FSA" the Financial Services Authority
"Form of Proxy" the form of proxy for use at the General Meeting
"GM" or "General Meeting" the General Meeting of the Company convened by the GM Notice
"Group" ArgentVive and its subsidiaries on the date hereof
"London Stock Exchange" London Stock Exchange plc
"New Ordinary Shares" up to 12,625,291 newly created Ordinary Shares comprising the Placing
Shares and the Consideration Shares (excluding the Retention Shares)
"Ordinary Shares" ordinary shares having a nominal value of 10p each in the capital of the
Company
"Placing" the proposed conditional placing of the Placing Shares pursuant to the
Placing Agreement
"Placing Agreement" the conditional placing agreement relating to the Placing between the
Company and Charles Stanley dated 20 December 2007
"Placing Price" 50 pence per Placing Share
"Placing Shares" up to 8,365,291 new Ordinary Shares to be placed by the Company pursuant
to the Placing
"Retention Shares" the 500,000 Consideration Shares to be issued within 12 months of
Completion in accordance with the terms of the Acquisition Agreement
"Shareholders" holders of Ordinary Shares
"Solcara" Solcara Limited, the intended target of the Acquisition
"VCT" venture capital trust
"Vendors" the shareholders of Solcara at the time of the Acquisition
This information is provided by RNS
The company news service from the London Stock Exchange
END
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