ICU IN Cup

RNS Number:6902G
In Cup Plus PLC
25 July 2006



             Placing and Notification of Related Party Transaction

Highlights

In Cup Plus plc ("In Cup" or the "Company") announces today that it has
conditionally raised up to #1.49 million before expenses.  The funds are to be
raised over the next 18 months from the following sources;



* the placing of 37,333,333 million Placing Shares at a price of 2.25p per
  share raising gross proceeds of approximately #840,000 (the "Placing");

* #250,000 through option arrangements between the Company and Barry Marks
  (the "BM Option Agreement");

* #400,000 through option arrangements between Pacific Continental
  Securities (UK) Limited ("Pacific Continental") and the Company (the "PacCon
  Option Agreements").

The Board still firmly believe that the business model presented to investors at
the time of the Company's admission to AIM will ultimately be successful and;

* is encouraged by the strongest level of interest in its products since
  the Company's IPO;

* despite sales being lower than forecast for the 6 months to 30 June
  2006, is confident that the full year forecasts in the market are still
  achievable;

* believes that the revised sales and marketing strategy is working and is
  creating a sustainable platform for future growth.

Overview

At the time of the announcement of the results of the Group for the period to 31
December 2005 on 30 March 2006, your Board explained that it was probable that
the Group would need additional financing in the future and would take steps to
satisfy this requirement when necessary.

The Company is seeking to raise a total of #1.49 million before expenses to
fulfil its short and medium term working capital requirements.  The funds are to
be raised from three sources over the next 18 months:

* the placing of 37,333,333 million Placing Shares at a price of 2.25p per
  share raising gross proceeds of approximately #840,000;

* the entering into of the BM Option Agreement between the Company and
  Barry Marks in respect of new Ordinary Shares for a subscription price 
  totalling up to #250,000;

* the entering into of the PacCon Option Agreements between Pacific Continental 
  and the Company in respect of new Ordinary Shares for a subscription price 
  totalling #400,000.

Accordingly, the Board intends to seek approval from Shareholders at an
Extraordinary General Meeting of the Company to be held on 17 August 2006 (the "
EGM") to the issue of the Placing Shares and the entering into of the BM Option
Agreement and PacCon Option Agreements (together the "Option Agreements") and
the subsequent issue of the Ordinary Shares that will be issued under the Option
Agreements.  The equity fundraising is being executed through a placing as the
Board believes that this is the most cost and time efficient method of raising
new equity.

The Board appreciates that the opportunity to participate in the fundraising
would ideally be made available to all existing Shareholders.  However, the
process and timescale of an open offer or rights issue would substantially
increase the cost to the Group of completing such a fundraising.  The Directors
have concluded that seeking general authority from Shareholders to issue
Ordinary Shares other than on a pre-emptive basis is the most flexible and cost
effective method available to the Company.

As a result of Barry Marks' position on the Board of the Company, the BM Option
Agreement is a "related party" transaction under the AIM Rules.  As such this
announcement contains the details the Company is required by the AIM Rules to
notify to Shareholders.

Further information on the Placing, the Option Agreements, as well as the
intended utilisation of the proceeds thereof and details of the resolutions to
be proposed at the EGM authorising the Directors to allot the Placing Shares and
to allot shares under the Option Agreements is set out below 
(the "Resolutions").

A circular providing further detail and the details of the proposed EGM of the
Company has been sent to shareholders today (the "Shareholder Circular").
Copies of the Shareholder Circular are available free of charge from the
Company's registered office during normal business hours on any weekday
(Saturdays, Sundays and public holidays excepted) until the date which is one
month from the date of the document.

The Placing

Pacific Continental has procured placing commitments for a total of 37,333,333
Placing Shares for cash at a price of 2.25p each (the "Placing Price").  The
Placing Price is at a discount of 10.0 per cent. to the closing bid share price
of 2.5p per Ordinary Share on 24 July 2006.  The Placing, if completed in full,
will result in the interests of existing Shareholders in the share capital of
the Company being reduced to approximately 72.31 per cent. of the Enlarged Share
Capital.

The allotment and issue of the Placing Shares for cash at the Placing Price is
conditional upon the passing of the Resolutions at the EGM and on Admission.
Application will be made for the Ordinary Shares, issued pursuant to the
Placing, to be admitted to trading on AIM.  Subject to Shareholder approval of
the Resolutions and Admission, it is expected that the Placing Shares will
commence trading on AIM on 21 August 2006.

The Placing Shares will rank pari passu in all respects with the existing issued
share capital of the Company with regard to dividend entitlements, interests and
all other rights and obligations attaching to the Ordinary Shares, and may be
held in certificated form, represented by definitive share certificates or in
uncertificated form, i.e in CREST.

Following the completion of the Placing, the interest of Barry Marks in the
share capital of the Company will be reduced from approximately 44.45 per cent.
to 32.14 per cent. of the enlarged share capital of the Company.

Placing Agreement

Pursuant to the Placing Agreement, Pacific Continental has agreed to use its
reasonable endeavours to place up to 37,333,333 Placing Shares on a
non-underwritten basis at the Placing Price.

Pursuant to the Placing Agreement, the Company will pay to Pacific Continental a
commission at a rate of 5 per cent. of the aggregate value at the Placing Price
of the Placing Shares placed with the placees procured by Pacific Continental.
The commission will be payable only if Admission takes place.

The Placing Agreement contains certain representations and warranties by the
Directors and an indemnity by the Company and the Directors which are customary
for an agreement of this nature.

The Placing Agreement is conditional on, among other things, Admission becoming
effective at or before 8.00 a.m. on or about 21 August 2006. The Placing
Agreement confers on Pacific Continental or Deloitte & Touche LLP the right,
among other things, to terminate their obligations prior to Admission in the
event of a breach of warranty and/or certain "force majeure" events relating to
the occurrence of adverse market conditions or political or economic events.

PacCon Option Agreements

Pursuant to the PacCon Option Agreements the Company has, conditional on the
passing of the Resolutions, granted to Pacific Continental three call options to
subscribe in cash for (i) such number of Ordinary Shares that result from
dividing #200,000 by the Subscription Price (as defined below) ("the First
Option Shares") during the period from 1 September 2006 to 31 March 2007, (ii)
such number of Ordinary Shares that result from dividing #100,000 by the
Subscription Price ("the Second Option Shares") during the period from 1
September 2006 to 30 June 2007, and (iii) such number of Ordinary Shares that
result from dividing #100,000 by the Subscription Price ("the Third Option
Shares") during the period from 1 September 2006 to 31 August 2007.

In addition the Company can, conditional on the passing of the Resolutions,
oblige Pacific Continental pursuant to put options in the PacCon Option
Agreements to subscribe in cash for (i) the First Option Shares during the
period from 1 April to 30 April 2007, (ii) the Second Option Shares during the
period from 1 July to 31 July 2007, and (iii) the Third Option Shares during the
period from 1 September to 30 September 2007.

The Subscription Price for each Ordinary Share under both the call options and
the put options shall be the sum equivalent to 70 per cent. of the average of
the market bid price per Ordinary Share published by the London Stock Exchange
for the period from the date the notice of exercise of the relevant option is
given to the earlier of the trading day immediately before the 21st day after
exercise of such option or the trading day immediately before payment of the
subscription price, if earlier, subject to a minimum of 1p per Ordinary Share.

The PacCon Option Agreements contain undertakings by the Company in favour of
Pacific Continental which are of a customary nature.

The PacCon Option Agreements contain similar provisions to those in the BM
Option Agreement regarding PacCon not being obliged to acquire the full amount
of Ordinary Shares pursuant to any exercise of the options if that would result
in a holding of 30 per cent. of the issued share capital of the Company
requiring Pacific Continental to make a mandatory offer for the Company.  As
with the BM Option Agreement, Pacific Continental shall be required to subscribe
for such maximum number of Ordinary Shares as would not constitute a holding of
30 per cent. or result in it having to make a mandatory offer and Pacific
Continental shall use its reasonable endeavours to sell as soon as reasonably
practicable such number of Ordinary Shares held by it as will enable it to
subscribe in full for the Ordinary Shares required of it, failing which the
Company and Pacific Continental shall use their reasonable endeavours to procure
that a whitewash is obtained pursuant to the Takeover Code.  Unlike Mr Marks in
the BM Option Agreement, Pacific Continental shall not be obliged to make a loan
to the Company in the event a whitewash is not procured.

BM Option Agreement and Related Party Transaction

Pursuant to put options in the BM Option Agreement the Company can, conditional
on the passing of the Resolutions, oblige Barry Marks to subscribe in cash for
(i) 4,444,444 Ordinary Shares at 2.25p resulting in gross proceeds of
approximately #100,000, (ii) 4,444,444 Ordinary Shares at 2.25p resulting in
gross proceeds of approximately #100,000, and (iii) 2,222,223 Ordinary Shares at
2.25p resulting in gross proceeds of approximately #50,000, all of such put
options to be exercisable by the Company from 1 October to 31 December 2007
provided that at the time of the exercise of such put options all the options
under PacCon Option Agreements have been exercised in full.

The BM Option Agreement contains undertakings by the Company in favour of Mr
Marks which are of a customary nature.

Under the BM Option Agreement the Company can oblige Mr Marks to acquire
11,111,111 Ordinary Shares at a price of 2.25p per Ordinary Share.  Due to the
pricing terms and the timing of the PacCon Option Agreements, it is not possible
at this time to calculate Mr Marks' percentage stake in the Company after the
exercise of the PacCon Option Agreements.  However, if the BM Option Agreement
is exercised in full, Mr Marks will hold a total of 54,440,834 Ordinary Shares
of the Company.

The BM Option Agreement is conditional on the passing of the Resolutions at the
EGM.  Under the terms of the BM Option Agreement it is possible that Mr Marks'
shareholding, diluted from the exercise of the PacCon Option Agreements, could
consequently breach 30 per cent. of the issued share capital of the Company.  If
this were to occur, Mr Marks would not be required to make a mandatory offer for
the shares in the Company pursuant to the provisions of the City Code on
Takeovers and Mergers (the "Takeover Code") but shall be required to subscribe
for such maximum number of Ordinary Shares as would not constitute such a breach
or result in him having to make a mandatory offer.  In the case of a
subscription which would result in a mandatory offer the Company and Mr Marks
shall use their reasonable endeavours to procure that a whitewash is obtained
pursuant to the Takeover Code to enable Mr Marks to subscribe for the balance of
the Ordinary Shares.

To the extent that Mr Marks is unable to procure such a whitewash, Mr Marks
shall make available to the Company, on an arms length basis, a loan up to an
amount equivalent to the outstanding subscription price which would have been
payable to the Company on exercise of the outstanding options had a whitewash
been obtained.

The BM Option Agreement is a "related party" transaction under the AIM Rules.
As such this document contains the details the Company is required by the AIM
Rules to notify to Shareholders.

Current Trading and Use of Proceeds

At the time of the Company's Annual General Meeting in March of this year, the
Directors reported that trading for the current financial year was in line with
market expectations.  Since that time sales (which represent machines installed
in customers' premises) have been lower than forecast such that current year
trading is now lower than expected against budget.  The Company's current
forecast for machine sales in the 2006 financial year is 107.  However, the
Board believes that the revised sales and marketing strategy is working and is
creating a sustainable platform for future growth and the Board is confident on
the basis of this, and the current order pipeline, that the shortfall can be
addressed and that the full year forecasts are still achievable.  This view is
supported by the Company having as at 24 July 2006 proposals out for
consideration with 39 potential customers in relation to 185 machines.

The Board still firmly believe that the business model presented to investors at
the time of the Company's admission to AIM will ultimately be successful and are
encouraged by the strongest level of interest in its products since the
Company's IPO.

The proceeds of the Placing and the Option Agreements, amounting to #1.49
million before expenses, will be used to sustain the ongoing working capital
requirements of the Group.  Should the Resolutions not be passed by Shareholders
at the Extraordinary General Meeting, and, as a consequence the Placing not take
place, the Board will need to assess other available sources of finance as a
matter of urgency. There can be no guarantee that other sources of finance will
be available to the Company.

Extraordinary General Meeting

The Extraordinary General Meeting of the Company will be held at the offices of
Maclay Murray & Spens LLP, One London Wall, London, EC2Y 5AB at 9 a.m. on 17
August 2006. At this meeting resolutions will be proposed inter alia, to grant
the directors of the Company power to allot and issue the Placing Shares and
Ordinary Shares to be issued under the Option Agreements on a non-pre-emptive
basis, i.e without first offering such shares to existing Shareholders as
required by the statutory pre-emption rights conferred by section 89 of the Act.

Recommendation

With the exception of Barry Marks who has abstained from voting in view of his
interest in the BM Option Agreement, the Directors consider the passing of the
Resolutions and completion of the Placing to be in the best interests of the
Company and its Shareholders as a whole and that, in particular and having
consulted with Deloitte Corporate Finance, the terms of the BM Option Agreement
are fair and reasonable insofar as the Shareholders are concerned.  In providing
its advice to the Directors, Deloitte Corporate Finance has taken into account
the Directors' commercial assessment of the BM Option Agreement.

Accordingly with the exception of Barry Marks for the reason set out above, the
Directors unanimously recommend that you vote in favour of the Resolutions as
all the Directors (including Barry Marks) intend to do in respect of their own
beneficial holdings, being in aggregate 43,583,573 Ordinary Shares, representing
approximately 44.71 per cent. of the Existing Issued Share Capital.


Enquiries:
In Cup Plus
Martin Colenutt              0870 7461 8888

Pacific Continental
David Morgan                 020 7653 1912
Glynn Reece

Deloitte Corporate Finance
Jonathan Hinton              020 7936 3000
James Lewis


Certain capitalised terms and definitions used in this announcement are defined
in the Shareholder Circular.  Unless otherwise stated these terms and
definitions carry the same meanings unless the context otherwise requires or
unless otherwise provided.

Pacific Continental is acting as broker to In Cup Plus plc and for no-one else
in connection with the Placing and will not regard any other person as its
client nor be responsible to anyone other than In Cup Plus plc for providing the
protections afforded to clients of Pacific Continental nor for providing advice
in relation to the Placing or any matter referred to herein. Pacific Continental
is authorised and regulated by the Financial Services Authority in respect of
regulated activities.

Deloitte Corporate Finance is acting as nominated adviser to In Cup Plus plc and
for no-one else in connection with the Placing and will not regard any other
person as its client nor be responsible to anyone other than In Cup Plus plc for
providing the protections afforded to clients of Deloitte Corporate Finance nor
for providing advice in relation to the Placing or any matter referred to
herein. Deloitte Corporate Finance is a division of Deloitte & Touche LLP, which
is authorised and regulated by the Financial Services Authority in respect of
regulated activities.


                      This information is provided by RNS
            The company news service from the London Stock Exchange
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