TIDMAVP
RNS Number : 4652W
Armstrong Ventures PLC
27 April 2016
For immediate release 27 April 2016
Armstrong Ventures plc
('Armstrong' or the 'Company')
PROPOSED ACQUISITION OF MELODYVR LTD
APPROVAL OF WAIVER OF OBLIGATIONS UNDER RULE 9 OF THE TAKEOVER
CODE
CHANGE OF NAME TO EVR HOLDINGS PLC
SHARE CONSOLIDATION
ADMISSION OF THE ENLARGED SHARE CAPITAL TO TRADING ON AIM
AND
NOTICE OF GENERAL MEETING
Armstrong Ventures plc (AIM:AVP), the AIM listed company
investing in the media, technology and healthcare sectors,
announces today that it has conditionally agreed to acquire
MelodyVR Ltd, a company which has developed technologies, products
and services that enable users to consume immersive virtual reality
("VR") music experiences, for a total consideration of GBP5.12
million to be satisfied by the issue of New Ordinary Shares at 1.1p
each. The Acquisition, if completed, will constitute a reverse
takeover under the AIM Rules and as such is subject to the approval
of Shareholders at the General Meeting of the Company to be held on
13 May 2016, notice of which is set out at the end of the Admission
Document, which will be posted to Shareholders today and is
available on the Company's website: www.armstrongventures.com.
Key Highlights
-- The consideration for the Acquisition of GBP5.12
million is to be satisfied by the issue of
465,702,743 New Ordinary Shares at a price
of GBP0.011 per share, which values the Existing
Share Capital at GBP2.6 million.
-- It is proposed that the Company changes its
name to EVR Holdings plc ("EVR") following
a General Meeting to be held on 13 May 2016.
-- Proposed Share Consolidation whereby every
100 Existing Shares of GBP0.0001 are converted
into 1 New Ordinary Share of GBP0.01.
-- If the Resolutions are approved by Shareholders,
it is expected that Admission will become
effective and dealings in the Enlarged Ordinary
Share Capital will commence on AIM on or around
16 May 2016.
-- The focus of the Company will be to provide
consumers, via a number of monetised distribution
channels, audiovisual and interactive material
intended for use with virtual reality devices.
Sean Nicolson, Chairman of Armstrong Ventures plc, said: "We are
delighted to announce the proposed acquisition of MelodyVR, a
business which is well positioned to benefit from the rapidly
expanding VR sector. With a number of recognised global
manufacturers having recently entered the market with new head
mounted display VR headsets, the interest of consumers and
investors alike has been reignited. Cumulative sales of VR headsets
is forecast to reach 83.3 million by 2018 with the global market
for recorded videos and live events alone potentially reaching
US$7.3 billion of sales by 2025 with over 175 million users.
"We believe that MelodyVR's proposition will appeal to many
music fans who have embraced the latest VR technology. MelodyVR
offers an immersive music experience to fans who are unable to
attend a live event due to geographical or financial constraints,
age restrictions or simply to an event being sold out. It also
gives music fans the opportunity to access recorded content.
"Following completion of the Acquisition, I am pleased to
announce that Anthony Matchett and Steven Hancock of MelodyVR will
join the Board together with Simon Cole, the current CEO of
7Digital Group plc. We look forward to welcoming them to the
Board."
- Ends -
For further information:
Armstrong Ventures plc
Sean Nicolson, Chairman Tel: +44 (0) 20 7466
5000
Peter Read, Director www.armstrongventures.com
SPARK Advisory Partners Limited (Nominated
Adviser)
Neil Baldwin / Sean Wyndham-Quin Tel: +44 (0) 203 368
3550
www.sparkadvisorypartners.com
Peterhouse Corporate Finance Limited (Broker) Tel: +44 (0) 20 7469
0930
Eran Zucker / Lucy Williams www.pcorpfin.com
Media enquiries:
Buchanan
Henry Harrison-Topham / Sophie Tel: +44 (0) 20 7466
Cowles / Catriona Flint 5000
EVR@buchanan.uk.com www.buchanan.uk.com
The following information has been extracted without material
adjustment from the Admission document incorporating, inter alia, a
circular to Armstrong shareholders (the "Circular") dated 27 April
2016. Copies of the Circular will be available at the offices of
SPARK Advisory Partners, 5 St John's Lane, Farringdon, London EC1M
4BH.
PROPOSED ACQUISITION OF MELODYVR LTD
APPROVAL OF WAIVER OF OBLIGATIONS UNDER RULE 9 OF THE TAKEOVER
CODE
CHANGE OF NAME TO EVR HOLDINGS PLC
SHARE CONSOLIDATION
ADMISSION OF THE ENLARGED SHARE CAPITAL TO TRADING ON AIM
AND
NOTICE OF GENERAL MEETING
1. INTRODUCTION
The Company announced earlier today that it has agreed terms in
respect of the acquisition of MelodyVR. As a result, a number of
proposals are to be put to Shareholders at the General Meeting.
This announcement sets out the details of, and reasons for, the
Proposals.
The Acquisition, if completed, will constitute a reverse
takeover under the AIM Rules and therefore is subject to the
approval of Shareholders at the General Meeting. Further details of
the General Meeting are set out in paragraph 22 of this
announcement. Further details of the terms and conditions of the
Acquisition are set out in paragraph 6 of this announcement.
The consideration for the Acquisition of GBP5.12 million is to
be satisfied by the issue of 465,702,743 New Ordinary Shares at a
price of GBP0.011 per share, which values the Existing Share
Capital at GBP2.6 million.
Following implementation of the Proposals, certain Shareholders
of the Company and others who are deemed to be acting in concert,
the Concert Party, will hold 489,811,833 New Ordinary Shares,
representing approximately 68.18 per cent. of the Enlarged Ordinary
Share Capital. If all Warrants held by members of the Concert Party
were exercised, the Concert Party would hold a total of 514,762,282
New Ordinary Shares representing 69.25 per cent. of the Company's
then issued share capital. Under Rule 9 of the Takeover Code, the
Concert Party would normally be obliged to make an offer to all
Shareholders (other than the Concert Party) to acquire their New
Ordinary Shares. Following an application by the Concert Party to
the Panel, the Panel has agreed to waive this obligation, subject
to the approval of the Independent Shareholders (on a poll) at the
General Meeting. Shareholder's attention is drawn to the Rule 9
Waiver section contained in paragraph 8 of this announcement.
The Directors believe that it is appropriate, should the
Acquisition be approved by Shareholders at the General Meeting and
the Acquisition completed, that the name of the Company be changed
to EVR Holdings plc.
The Directors are proposing the Share Consolidation (whereby
every 100 Existing Shares of GBP0.0001 are converted into 1 New
Ordinary Share of GBP0.01) as they consider that it is in the best
interests of the Company's long term development as a public quoted
company to have a lower number of shares in issue and a higher
nominal value such that Ordinary Shares are traded in pence rather
than fractions of a penny.
The purpose of this announcement is to provide Shareholders with
further information regarding the matters described above and to
seek your approval of the Resolutions, which include the Rule 9
Waiver, at the General Meeting. The notice of General Meeting is
set out at the end of this announcement. The Proposals are
conditional, among other things, on the passing of the Resolutions
(save for Resolution 8) and Admission. If the Resolutions are
approved by Shareholders, it is expected that Admission will become
effective and dealings in the Enlarged Ordinary Share Capital will
commence on AIM on or around 16 May 2016. The General Meeting of
the Company at which the Resolutions will be proposed has been
convened for 11.00 a.m. on 13 May 2016 at the offices of
Fieldfisher LLP, 9(th) Floor, Riverbank House, 2 Swan Lane, London
EC4R 3TT.
Shareholders should read the whole of the Circular and not just
rely on the information contained in this announcement. In
particular, Shareholders should consider carefully the "Risk
Factors" set out in Part II of the Circular. Your attention is also
drawn to the information set out in Parts III to VII of the
Circular.
2. BACKGROUND TO AND REASONS FOR THE ACQUISITION
The Company has been an investing company since August 2012, and
has since then been seeking suitable acquisitions that fit within
its investing policy, which policy covered activities in resources
and energy sectors between 2012 and 2015. In July 2015 shareholders
approved a change to the Company's investing policy to focus on
opportunities in the media, technology and healthcare sectors.
The Existing Directors believe that the acquisition of MelodyVR
fits within that policy, and that the Acquisition presents the
Company and its Shareholders with an exciting opportunity to
benefit from a business with significant potential in a developing
technological sector.
Accordingly, the Directors propose that, subject to approval of
the Resolutions by the Shareholders at the General Meeting, the
Company should acquire the entire issued share capital of MelodyVR.
The Enlarged Group's operations would thereafter constitute
exclusively those of the MelodyVR Group, which is a group
developing a premium music service and which specialises in
creating immersive virtual reality music experiences. Details of
the business and operations of MelodyVR are set out in paragraph 3
below.
(MORE TO FOLLOW) Dow Jones Newswires
April 27, 2016 02:01 ET (06:01 GMT)
3. INFORMATION ON MELODYVR
3.1 Virtual Reality
Virtual Reality ("VR") has seen a resurgence over the last three
years since the initial technology became available in the 1980s.
Consumer and investor interest in VR was reignited by Palmer
Luckey's Kickstarter campaign for the Oculus Rift (DK1). On 1
August 2012, the Kickstarter campaign set out to raise US$250,000
with the goal of developing an up to date VR headset capable of
providing a comfortable and immersive experience when playing
computer games. Luckey's campaign closed a month after launch
having raised US$2.4 million in funding. Palmer Luckey's garage
start-up, Oculus VR LLC, was subsequently acquired by Facebook Inc.
for US$2 billion two years later in 2014. Oculus's first consumer
product, the Oculus Rift, launched on 28 March 2016.
Google released its own Head-Mounted Display ("HMD"), the Google
Cardboard, in 2014. Google announced that, in the year and a half
since its release, 5 million headsets have been sold, along with
over 25 million downloads of VR enabled apps from its store.
Other manufacturers have also entered the market. Samsung's
headset, the Gear VR (which utilises Oculus technology) works with
the latest generation of Samsung smartphones and is now being
shipped free of charge with all pre-orders of their flagship
smartphone, the Galaxy S7. HTC released its own Oculus Rift
competitor, the HTC Vive, in early April 2016. HTC stated more than
15,000 units were sold in the first 10 minutes when pre-orders for
the Vive opened on 29 February 2016. Sony has announced that it
will release its headset, the PlayStation VR, in October 2016.
The Directors believe that the principal driver of the VR market
is going to be the rate at which HMD devices are sold to consumers.
Consequently, they expect the VR market to see a surge in growth in
2016 as the aforementioned manufacturers are expected to release a
variety of products onto the market.
Market research indicates that, following the launch of HMD
devices, the market is likely to expand rapidly. According to Kzero
Worldwide's VR Market Sizing report (Q3 2014), HMD unit sales are
forecast to grow from 200,000 in 2014 to 38.8 million in 2018 with
cumulative unit sales estimated to reach 83.1 million by 2018. This
report states that HMD revenues are estimated to grow from US$70
million to US$3.8 billion annually over the same period. Goldman
Sachs has predicted that the market for recorded videos and live
events alone could reach US$7.3 billion by 2025 with over 175
million users. According to the Virtual Reality Consumer Survey
published by Greenlight VR and Touchstone Research in October 2015,
85 per cent. of gaming enthusiasts across all gaming platforms
(mobile, PC, game systems and consoles), are expected to try
VR.
The Directors believe that the market research and significant
investment from some of the world's leading technology businesses
are reasonable indicators of the potential scale of the VR market
over the coming years. The gaming industry is predicted to be one
of the biggest beneficiaries of the growth in VR.
According to a report by SuperData Research, published in
January 2016, people who play video games are predicted to spend
US$5.1 billion on VR gaming hardware, accessories and software in
2016. Whilst gaming is expected to be the primary driver of HMD
device sales, other entertainment applications are expected to
become widespread. These applications are anticipated to include
live entertainment, immersive cinema and social experiences.
According to Kzero Worldwide's VR Market Sizing report, VR software
revenues are estimated to grow from US$960,000 in 2014 to US$4.6
billion annually by 2018. VR can bring live entertainment fans a
new, immersive experience that is an alternative to being
physically present at a live event. The survey, published by
Greenlight VR and Touchstone Research in October 2015,found that in
response to the question of whether or not the respondents would
like to try a specific type of VR experience, ranging from
"definitely would" to "definitely would not", 59 per cent.
responded that they definitely, or probably, would be interested in
experiencing a VR live event. The survey found that live music
events were in the top four experiences most wanted to be tried by
three out of the four age group categories surveyed.
The sporting industry has already combined VR with live events
(for example, the US Open Golf Tournament in 2015 and the opening
game of the NBA's 2015-2016 season). The Directors believe the
music industry will follow this trend.
3.2 Background to MelodyVR
MelodyVR was incorporated on 22 April 2015 by Anthony Matchett
and Steven Hancock. MelodyVR was formed to capitalise on the
expected wave of virtual reality hardware scheduled for release
during 2015 and 2016. Recognising that a significant investment had
been made in VR hardware, but that there was only a limited amount
of forthcoming VR content in late 2014, the founders began building
an end-to-end virtual reality content production and distribution
business.
The founders' vision and consumer proposition is to allow music
fans to experience a recorded music event or concert, via virtual
reality.
The Directors believe that their proposition will appeal to many
music fans that are unable to attend a live event due to
geographical or financial constraints, age restrictions or simply
to an event being sold out.
3.3 Description of the MelodyVR business
MelodyVR has developed technologies, products and services that
enable users to consume immersive VR music experiences. The
directors have developed, using commercially available parts, 360
degree cameras that record audio-visual material for the purposes
of capturing the performances which occur at live music events.
This includes the live performances themselves, as well as
additional backstage and interview content.
MelodyVR currently holds a number of contracts with music brands
and event partners granting MelodyVR exclusive rights to create and
exploit 360 degree/virtual reality content for a period of five
years or more, described in paragraph 3.6.
MelodyVR has developed a proprietary post-production workflow
that enables the aforementioned recorded material to be processed
into MelodyVR 360 degree panoramic video content. It is intended
that this material will then be exploited via various distribution
channels and monetisation models, including through the MelodyVR
App which has been designed by the team at Immersive, MelodyVR's
subsidiary undertaking, described in paragraph 3.7.
The Directors believe that MelodyVR's USP will lie in its
ability to offer an end-to-end, integrated offering, taking an
artist's performances, repackaging them within an immersive VR
format, and then distributing such performances to the end
consumer.
3.4 Filming
MelodyVR has developed 360 degree cameras that the team use to
capture music events in 4K video quality. These cameras can be
placed in strategic positions throughout the venue which enables
the VR viewer to view the performance from multiple positions,
whether in the audience or on stage with the artist/performer. The
Directors believe these usually inaccessible locations/experiences
to be a core driver of user conversion/adoption.
Once an event has been recorded and produced, MelodyVR obtains
final approval from the rights' holders to enable it to release the
material. This includes consent from the performer that they are
satisfied with their performance, in keeping with standard music
industry practice. Further details of these rights, permissions and
clearances are set out in paragraph 3.6.
3.5 Content
All the experiences captured by MelodyVR are interactive, in
that viewers have the freedom to move between different camera
locations/viewpoints and/or to look around the event in any
direction during the playback of recorded content as if they were
actually present in person.
The audio is usually provided in a binaural format compatible
with head tracking which lends to a more immersive experience.
There is also often an option for consumers to select the "clean"
audio which has been recorded directly from the sound/mixing
desk.
Once the MelodyVR App has been launched, the available content
will consist of three distinct offerings:
Recorded music:
From its current catalogue, comprising over 255 artists,
MelodyVR intends to license and curate a library of content that
consumers will be able to browse and purchase via the MelodyVR App.
Content will be available in the form of VR experiences, which will
either contain a performance of an individual song or a segment of
a live event or concert.
Live streams:
The Directors intend to launch live streamed VR experiences in
2016. Live experiences will offer consumers the ability to watch a
concert or event as it happens in real time.
The Directors believe that live streaming and "VR tickets" to
events could develop into a significant revenue stream over the
coming years.
Interactive experiences:
The Directors intend to develop a number of highly interactive
music experiences. These experiences will react to a user's inputs
and movements in real time, and are expected to take the form of a
short video game/CGI music video. The Directors believe that these
experiences, which are to be developed in close partnership with
artists, will provide an even greater degree of interaction and
consumer engagement than recorded content and will therefore
warrant a higher retail price than recorded content.
3.6 Rights, permissions and waivers
(MORE TO FOLLOW) Dow Jones Newswires
April 27, 2016 02:01 ET (06:01 GMT)
MelodyVR operates a business which, among other things: (i)
records and produces audiovisual material and footage capturing the
activities and performances which may occur at live music events
(including, where applicable, additional back-stage and interview
content); (ii) edits and creates footage intended for or capable of
being used to create 360 degree panoramic images or to create
content intended for use on virtual reality devices ("footage");
and (iii) exploits the footage by means of various distribution
channels and monetisation models.
In order to facilitate this there are a number of rights,
permissions and clearances which may need to be considered. These
include:
(i) Performing artists: performers (includes singers, backing
singers, musicians and dancers) are entitled to certain rights in
their live performances. Performers' rights can be divided into two
distinct categories: property rights, which are assignable, and
non-property rights, which are non-assignable but may be
waived.
-- Performers' property rights: these rights
include: (i) the right to make a copy of a
recording of a performance; (ii) the right
to issue copies of such recording to the public;
and (iii) the right to make available a recording
of a performance to the public over the internet.
It is necessary to obtain a licence or assignment
over these performers' rights to exploit the
Footage.
-- Performers' non-property rights: a performer's
consent is required for the recording and
exploitation of their performances. It is
necessary to obtain consent from a performer
to produce the Footage.
-- Equitable remuneration: performers also have
a right to equitable remuneration (payment)
when: (i) a sound recording embodying the
performer's performance is broadcast or otherwise
communicated to the public (other than by
on-demand exploitation); and (ii) where the
performer's rental right in a film or sound
recording is transferred to its producer.
It is necessary to ensure that performers
are paid for their performances and for such
payments to be categorised as fulfilling the
requirement for performers to be paid "equitable
remuneration".
-- Moral rights: performers are also entitled
to exercise moral rights in relation to their
performance (the right to be identified as
the performer of a performance, and the right
to object to derogatory treatment of a performance).
It is prudent to obtain relevant waivers from
performers in respect of their moral rights.
-- Image rights: although English law generally
does not recognise an "image right", it is
considered good practice to obtain from performing
artists consent to use those artists' name,
likeness, image and biography in connection
with exploitation of the Footage.
Generally, performers' rights are controlled by the performers
themselves, meaning that the requisite consents and rights must be
obtained from the performers directly by means of a standard form
of release. However, if a performing artist is subject to an
exclusive recording agreement with a record label then the
performers' property rights will need to be obtained from the label
instead.
(ii) Venues: it is necessary to obtain: (i) access rights for
permission to use the venue for recording; and (ii) licences to use
any logos, names and other branding displayed in and around the
venue which may be captured by the Footage.
(iii) Members of the public: it is considered good practice to
obtain consents from members of the public who attend events which
are to be recorded. Often this is done by means of the venue's
ticket terms and conditions, or through prevalent signage at the
venue explaining that recording will occur in the area.
(iv) Musical compositions: to the extent that performances of
musical compositions are embodied in the Footage, it is necessary
to obtain a:
-- Performers' property rights: these rights
include: (i) the right to make a copy of a
recording of a performance; (ii) the right
to issue copies of such recording to the public;
and (iii) the right to make available a recording
of a performance to the public over the internet.
It is necessary to obtain a licence or assignment
over these performers' rights to exploit the
Footage.
-- reproduction licence: to cover both the initial
fixation of the performance of the compositions
in the Footage, and the subsequent reproduction
of such Footage;
-- communication to the public licence: to cover
the transmission, performance and other exploitation
of the compositions (as embodied in the Footage);
and
-- waiver of moral rights: similarly to performers'
moral rights, composers are entitled to exercise
so-called "moral rights" (the right to be
identified as the author, the right to object
to derogatory treatment, and the right not
to suffer false attribution). It is therefore
prudent to obtain a waiver of such rights
(or to procure that the rightsholder obtains
such waiver from the composer) or to ensure
that the exploitation of the Footage is undertaken
in a manner which does not infringe such moral
rights.
Musical compositions are likely to be controlled by either: (i)
the original composer (to the extent the composer is not affiliated
with a music publisher or a collection society); (ii) a music
publisher representing the original composer; or (iii) a collection
society representing the original composer or their music
publisher. It is therefore necessary to establish which entity
controls these rights and to obtain the necessary licences. It
should be noted that some musical compositions have more than one
composer and can therefore be controlled by multiple entities.
(v) Sound recordings: to the extent that sound recordings are
embodied in the Footage (which is less likely since the
performances are being given live, but may still be relevant in the
case of DJs), it is necessary to obtain a:
-- reproduction licence: to cover both the initial
fixation of the performance of the sound recordings
in the Footage, and the subsequent reproduction
of such Footage; and
-- communication to the public licence: to cover
the transmission, performance and other exploitation
of the sound recordings (as embodied in the
Footage).
Sound recordings are likely to be controlled by either: (i) the
initial producer of the sound recording; or (ii) a record label to
which the artist is signed. It is therefore necessary to establish
which entity controls these rights and to obtain the necessary
licences.
(vi) Lighting design and choreography: to the extent that the
Footage includes recordings of a light sequence, choreographed
movement, sound design, set design or creative direction in which
copyright subsists, then it may also be necessary to obtain a
licence and permissions from the relevant copyright owners (i.e.
lighting designers, choreographers, sound designers, set designers,
and directors). However, in our experience, such peripheral
clearances are rarely obtained, unless more high-profile venues and
artists are involved.
(vii) Footage: under English copyright law, the automatic first
owner of the copyright in a film is the producer and principal
director (or their employer (where applicable)). Unless there is an
employment relationship between the producer, director and the
ultimate operating business, it is necessary to obtain an express,
written assignment from whoever produces the recordings to transfer
ownership of copyright. Furthermore, it is good practice to obtain
an acknowledgement from certain parties (such as the performing
artists and the venues) that ownership in the recordings does not
transfer to them.
It should also be noted that, with respect to major labels in
particular, it is common for such rightsholders to insist that
recordings made of their artists are assigned to and owned by the
applicable label - it is then usual practice for the record label
to license back such recording on an exclusive basis for a
particular period (say three years), after which time the licence
becomes non-exclusive and the label is free to use the recording
for its own purposes.
MelodyVR has entered into a number of agreements with artists,
venues and promoters regarding the necessary rights, permissions
and artist waivers to exploit recorded and live content.
Agreements with Artists
MelodyVR has entered into various agreements with featured
performing artists. The artist agreements comprise, among other
things, the artists' consent for certain performances being filmed
by MelodyVR for the purposes of producing 360 degree VR footage,
and exclusive ownership by MelodyVR of all footage, subject to any
separate agreement between MelodyVR and the artists' record label
(if any). The Directors believe that over 50 per cent. of the
footage currently captured features artists who are not party to an
exclusive recording contract with a record label.
Negotiations with Music Rights Holders
MelodyVR is in active negotiations with various major and
independent music labels and publishers, with a view to formalising
on-going relationships to build and exploit content featuring
established artists and music content.
Partnership Agreements
MelodyVR has agreements with nine companies specialising in
event promotion and venues, including Ibiza Rocks Group Limited and
Broadwick Live Limited. These agreements provide for a period of
exclusivity to capture and create VR or 360 degree content of
events organised or hosted by the partner, ownership by MelodyVR of
all VR content filmed by MelodyVR and consent to include venue
branding in such content.
(MORE TO FOLLOW) Dow Jones Newswires
April 27, 2016 02:01 ET (06:01 GMT)
MelodyVR's VR music experiences will provide an additional
revenue stream to event promoters and venues as MelodyVR will
enable such promoters and venues to make their events available
beyond the capacity of the venue to a significant number of users
at any given time through immersive VR footage accessible via the
users' smart phones. The Directors believe that this will be of
particular interest to promoters and venues that typically host
sold out performances.
3.7 The MelodyVR App
MelodyVR has developed an app, called MelodyVR. Once launched,
it will be able to be downloaded free of charge and it is expected
to be available in stores accessible by most current generation
smart phones (i.e., it is not pre-installed on smart phones) and/or
VR devices. Customers will then be able to browse through
performances, exclusively created by MelodyVR, and purchase content
via in-app purchases comparable to that currently utilised by
iTunes/Google Play.
MelodyVR's subsidiary, Immersive, developed the software,
including the MelodyVR App and has assigned all rights in and to
the software that Immersive developed to MelodyVR.
The directors of MelodyVR have consulted with Facebook/Oculus
and HTC on the development of the MelodyVR App and expect that the
MelodyVR App will feature in the devices' relevant app stores.
3.8 Competition
The Directors are aware of a number of content creation VR
companies that may potentially compete with MelodyVR. These
include:
-- JauntVR, which is involved in the capture,
post production and distribution of VR related
media.
-- NextVR, which states that it focuses on live
VR experiences in both music and sports.
-- Immersive Media, which claims to have introduced
the first 360 degree full digital camera in
2004 and supplied the cameras and drivers
for Google Street View.
The Directors are not currently aware that any of these
companies have publicly announced their intention to launch a
comparable music platform to MelodyVR's.
4. FUTURE STRATEGY OF THE ENLARGED GROUP
Investing in supply
The Enlarged Group intends to continue to invest in recording
and post production equipment and staff, to record and capture
content. As part of this investment, the Enlarged Group will
supplement its camera inventory with further hardware enabling the
Enlarged Group to capture more content in multiple locations,
simultaneously. The Enlarged Group also intends to enhance its
post-production capacity enabling faster and more efficient content
turnaround and delivery. The Directors believe that investing in
capture and postproduction will enable the Enlarged Group to
exploit its first mover advantage within the music industry and to
further increase the value of its content library.
In the future, the Enlarged Group may seek to explore new
content verticals such as sport, theatre and education and is
interested in pursuing opportunities to deploy its existing
technology as a white label SaaS solution, enabling broadcasters to
launch their own VR platforms and channels.
5. EXISTING DIRECTORS, PROPOSED DIRECTORS, SENIOR MANAGEMENT AND
ADVISORY BOARD
Brief biographical details of the Existing Directors, Proposed
Directors, senior management and members of the Advisory Board are
set out below:
5.1 Existing Directors
The current composition of the Board of the Company is as
follows:
Sean Nicolson (Non-executive Chairman) aged 50
Sean is an Executive Director of e-Therapeutics plc, an AIM
quoted drug discovery and development company. He has over 20
years' experience as a corporate finance lawyer and was previously
an equity partner in the corporate team of Bond Dickinson. Sean has
many years' experience of advising companies in the media,
technology and healthcare sectors on flotations, venture capital
and private equity fundraisings, mergers and acquisitions,
takeovers, joint ventures and corporate governance matters.
Peter Read, FCA (Non-executive Director) aged 59
Peter began his career with KPMG in 1976, becoming a partner in
1990 and Head of Transaction Services for the telecoms, media,
technology (TMT) practice in 1998 and Head of the TMT practice in
2003. In 2008, Peter was appointed Chairman of KPMG's TMT practice
and Chairman (EMA) of the global Japanese practice. He held these
positions until retiring from KPMG in 2013. Over this six year
period he was also the lead partner for key TMT clients including
WPP, IBM, Informa and DMGT and European sub-groups of Japanese
clients, including Sony, Sumitomo, Mazda and Hitachi.
5.2 Proposed Directors
On Admission the following individuals will be appointed to the
Board:
Anthony Matchett (Chief Executive Officer) aged 27
Anthony is the Chief Executive Officer of MelodyVR. He has
extensive music industry experience and began his career as an
audio engineer before moving on from the music industry to the
world of post-production for advertising. In 2011, Anthony was
tasked with founding Wave Recording Studios' first interactive
division, focused on servicing the audio requirements of game
developers and publishers. During his time at Wave, he secured
clients such as Microsoft Studios, Sony Computer Entertainment,
King.com and Ubisoft, and spearheaded numerous projects on their
behalf. In 2015, Anthony's background and passion for music and
technology inspired him to create Melody MelodyVR, together with
Steven Hancock.
Steven Hancock (Chief Operations Officer) aged 33
Steven is the Chief Operations Officer of MelodyVR. Prior to
this, Steven gained over 15 years' experience at senior management
level, within events management where he worked with music artists
around the globe and also numerous FTSE 100 companies, managing
more than 150 staff on a daily basis. More recently, Steven was the
Commercial Manager at Ibiza Rocks, one of the fastest growing youth
lifestyle brands in Europe, where he oversaw sales and marketing.
In 2015, Steven joined forces with Anthony Matchett to create
MelodyVR.
Simon Cole (Non-executive director) aged 57
Following spells at the BBC and at Piccadilly Radio, where he
helped establish PPM Radiowaves, an independent production company,
in 1989 Simon founded The Unique Broadcasting Company ("Unique").
Unique became a market leader in both the production of network
radio programmes for commercial radio throughout the UK and BBC
Radio. In 2000, Unique floated on the London Stock Exchange as part
of UBC Media Group plc ("UBC"), (now called 7Digital Group plc),
with Simon as Chief Executive. UBC were leaders in content
production and software development for the global radio and online
communities. Simon has overseen the acquisition of several
production companies in both London and Manchester and driven UBC's
move into new online platforms. He was formerly a non-executive
director of AIM quoted Audioboom Holdings plc.
5.3 Senior Management
In addition to the Board, details of key senior management
personnel within the Enlarged Group are set out below:
Sebastian Theron (Chief Financial Officer) aged 34
Conditional upon Admission, Sebastian Theron has agreed to join
the Company as Chief Financial Officer with effect from 1 May 2016.
Sebastian Theron is a chartered accountant who most recently held
the position of Finance Director of Affectv Ltd, ranked number 11
in the Sunday Times Tech Track 100, where he successfully raised
significant funding and restructured the business to scale
efficiently. Prior to this he was Group Financial Controller and
Board Secretary of Interactive Investor plc, a leading retail
execution only stockbroker.
5.4 Advisory Board
The Advisory Board comprises the following individuals:
Christopher Gilbert aged 64
Chris has developed a number of successful businesses, with
specific responsibility for fundraising, executive business
management and their subsequent disposals. Chris co-founded
Infectious Records, an independent record company which grew to be
one of the most successful independent record companies in the UK
until it was sold to News Corporation in 1999. Following this he
founded Auriga Networks, a satellite transmission company which has
developed a technology to deliver mpeg 3 video over VSAT networks
and numbers among its clients NATO, the British and US Army, BBC,
Fox Television and CBS News. In addition, Chris co-founded DarkStar
Technologies, a hi-tech start up providing internet security and
data management services to the entertainment industry with such
clients as EMI, Sony, BMG, Warner Brothers Pictures and
Universal-NBC, which was subsequently sold in 2010. In 2005, Chris
co-founded Crosstown Songs, a buy & build music publishing
venture funded by Cargill which became a major independent music
publishing company which was sold to KKR/Bertelsmann in 2009. Chris
is currently Chief Executive Officer of AIM quoted Fox Marble
Holdings plc.
Annie MacManus aged 37
Dublin born, Annie Mac has spent the last decade carving out a
career as broadcaster, tastemaker, talent-finder and international
DJ. Radio 1's champion of new music, the successor to Zane Lowe and
John Peel, Annie Mac now presents the primetime weekday evening
show from Monday to Thursday as well as her primetime specialist
Friday night Dance Show, while maintaining huge success as a live
DJ in demand from stadiums to major clubs. Her own Annie Mac
Presents brand ("AMP") not only hosts events with stellar line-ups
personally curated by Annie at venues and festivals worldwide
(including the 2015 launched brand new AMP Lost & Found
Festival in Malta, which sold out in just a few days); but also
delivers the highly anticipated annual compilation series which
have topped the UK iTunes album charts for the past three years
running.
Spencer Hyman aged 52
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Spencer Hyman is an entrepreneur and investor in internet
technology, media and consumer products. He is currently launching
Cocoarunners.com, a service that aims to bring the world's best
chocolate bars to its customers' doors. Prior to this, he founded
and was Chief Executive Officer of Artfinder, Chief Operations
Officer of Last.fm, and General Manager of technology products for
Amazon in Europe, where he launched Amazon's Software, Video games,
Electronics and Toy stores. He currently sits on the board/advisory
boards of a number of other institutions including Lux Fix, the
Pigeon Hole, Flixmedia and the Foundling Museum.
6. PRINCIPAL TERMS OF THE ACQUISITION
The Company has entered into the Acquisition Agreement, pursuant
to which it has conditionally agreed to acquire the entire issued
share capital of MelodyVR for a consideration of GBP5.12 million,
to be satisfied by the issue of the Consideration Shares. The
Acquisition Agreement is conditional, among other things, on the
passing of the Resolutions (save for Resolution 8) and Admission
becoming effective on or before 10 June 2016. The Company and each
of the Vendors have given certain customary warranties pursuant to
the Acquisition Agreement.
Further details of the Acquisition Agreement are set out in
paragraph 15.1 of Part VII of the Circular.
7. FINANCIAL INFORMATION
Historical financial information on the Company and on MelodyVR
is set out in Parts III and IV respectively of the Circular. An
unaudited pro forma net assets statement showing the hypothetical
net assets of the Enlarged Group after the Acquisition and the
Share Consolidation is set out in Part V of the Circular.
8. IMPLICATIONS OF THE PROPOSALS UNDER THE CODE
Background to the Concert Party
The Vendors and their connected advisers (see below) are deemed
under the Code to be acting in concert in relation to the Proposals
and where relevant are referred to as the Concert Party throughout
this announcement. Further details of the Concert Party are set out
in Part VI of the Circular. Persons acting in concert include
persons who, pursuant to an agreement or understanding (whether
formal or informal), co-operate, to obtain or consolidate control
of that company. Under the Code a concert party arises, among other
things, when persons acting together pursuant to an agreement or
understanding (whether formal or informal), co-operate to obtain or
consolidate control of, or frustrate the successful outcome of an
offer for, a company to which the Code applies. Control means an
interest or interests in shares carrying an aggregate of 30 per
cent. or more of the voting rights of the company irrespective of
whether the holding or holdings give de facto control.
SRG, Chris Akers, Russell Backhouse and Rodger Sargent are
"connected advisers", in their capacity as financial advisers to
MelodyVR, and as such are treated as members of the Concert Party.
SRG, Chris Akers, Russell Backhouse and Rodger Sargent each have no
relationship to the other Concert Party members, other than in this
professional capacity.
Concert Party
The Concert Party's existing shareholdings in the Company and
its proposed interest in the Enlarged Group immediately following
Admission are set out in the table below.
Proposed interest in the
Enlarged Group post
Admission (and assuming
all Warrants held by
Concert Party members are
exercised)(1)
Current interest % of
in the Company issued
Enlarged
Ordinary
Share
Capital
(assuming
Warrants
have
been
exercised)
Number of % of Number
Existing the Existing Number of of New
Name Ordinary Ordinary New Ordinary Ordinary
Shares Share Shares Shares
Capital under
Warrant(1)
Anthony Matchett - - 215,357,796 11,537,725 30.52%
Steven Hancock - - 176,876,784 11,537,725 25.35%
Mark Newton - - 48,525,867 - 6.53%
Stefan Glaenzer - - 24,262,933 - 3.26%
Alex Pearce - - 679,362 - 0.09%
Chris Akers(2) 300,000,000 1.29% 9,969,697 625,000 1.43%
Russell Backhouse(2) 20,000,000 0.09% 7,169,697 416,666 1.02%
Rodger Sargent(2) - 6,969,697 833,333 1.05%
------------ --------------- --------------- ------------- ------------
Total 320,000,000 1.38% 489,811,833 24,950,449 69.25%
------------ --------------- --------------- ------------- ------------
(1) The Warrants held by Messrs Matchett and Hancock may be
exercised at a price of GBP0.011 per New Ordinary Share, and those
held by Messrs Akers, Backhouse and Sargent at a price of GBP0.014
per New Ordinary Share (in each case at any time after Admission),
further details of which are set out in paragraph 2.3 (b) of Part
VI of the Circular.
(2) SRG, who is a connected adviser to the Concert Party under
the Code, has received a financial advisory fee in relation to the
Acquisition, as set out in paragraph 15.16 of Part VII of the
Circular. This fee is to be settled by the issue of 20,909,091 New
Ordinary Shares in the Company ("Adviser Shares") at GBP0.011 per
share, being the closing mid-market price of Existing Ordinary
Shares (adjusted for the Share Consolidation) at 25 April 2016.
These shares are included in the table above - with 6,969,697 New
Ordinary Shares each to Chris Akers, Russell Backhouse and Rodger
Sargent respectively.
In aggregate, the Concert Party will be interested in
489,811,833 New Ordinary Shares, representing a maximum of 68.18
per cent. of the Enlarged Share Capital following Admission
assuming: (a) no exercise of any outstanding warrants; and (b) no
other share issues.
Maximum Potential Controlling Position
As at the date of this document, the members of the Concert
Party are interested in 320,000,000 Existing Ordinary Shares.
Immediately following Admission, the Concert Party will hold in
aggregate 489,811,833 New Ordinary Shares, representing 68.18 per
cent. of the Enlarged Ordinary Share Capital which, without a
waiver of the obligations under Rule 9 of the Takeover Code, would
oblige the Concert Party to make a general offer to Shareholders
under Rule 9 of the Takeover Code. Assuming only the Warrants held
by members of the Concert Party are exercised, the Concert Party
will hold 514,762,282 New Ordinary Shares representing 69.25 per
cent. of the Ordinary Share Capital.
The issue of the Consideration Shares and the Adviser Shares to
the Concert Party would ordinarily incur an obligation under Rule 9
of the Code for the Concert Party to make a general offer for the
remainder of the entire issued share capital of the Company.
Additionally, the exercise of Warrants (if the aggregate holding of
the Concert Party at that time was below 50 per cent.) would also
ordinarily incur an obligation under Rule 9 of the Code for the
Concert Party to make a general offer for the remainder of the
entire issued share capital of the Company. However, the Panel has
agreed to waive these obligations subject to the approval of the
Independent Shareholders voting on a poll at the General
Meeting.
Further details regarding the provisions of the Code, the
Whitewash Resolution and the interests of the Concert Party in the
Company are set out below in the Section headed "Waiver of Rule 9
of the Code" of this announcement and in Part VI of the
Circular.
Intentions of the Concert Party
At present the Company is an "investing company" with no trading
business. The Company's objective has been to acquire a trading
business, and the Existing Directors believe that the acquisition
of MelodyVR fulfils this objective. The Concert Party has confirmed
that following completion of the Proposals its intention is that
the business of the Company be changed to that of developing the
MelodyVR business as described under "Future Strategy of the
Enlarged Group" above.
Following the Acquisition, the future business of the Group will
change as set out in "Future Strategy of the Enlarged Group" in
paragraph 4 above.
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Other than this, the Concert Party has confirmed that no changes
will be made regarding:
-- the location of the Company's places of business;
-- the continued employment of the Company's
employees and management, including any material
changes in employment;
-- employer contributions into the Company's
pension schemes, the accrual of benefits for
existing members and the admission of new
members; or
-- the maintenance of any existing trading facilities
for the Ordinary Shares (i.e., the trading
of the Company's shares on AIM), nor will
there be any redeployment of the fixed assets
of the Company as result of the Proposals.
Waiver of Rule 9 of the Code
The Code is issued and administered by the Panel. The Company is
a company to which the Code applies and its Shareholders are
entitled to the protections afforded by the Code. Under Rule 9 of
the Code, any person who acquires an interest (as defined in the
Code) in shares which, taken together with shares in which he is
already interested and in which persons acting in concert with him
are interested, carry 30 per cent. or more of the voting rights of
a company which is subject to the Code, is normally required to
make a general offer to all the remaining shareholders to acquire
their shares.
Rule 9 of the Code further provides that where any person,
together with persons acting in concert with him, is interested in
shares which in aggregate carry not less than 30 per cent. of the
voting rights of a company but does not hold shares carrying more
than 50 per cent. of such voting rights and such person, or any
such person acting in concert with him, acquires an interest in any
other shares which increases the percentage of shares carrying
voting rights in which he is interested, such person or persons
acting in concert with him will normally be required to make a
general offer to all remaining shareholders to acquire their
shares.
Rule 9 of the Code further provides, among other things, that
where any person who, together with persons acting in concert with
him holds over 50 per cent. of the voting rights of a company, then
they will not generally be required to make a general offer to the
other shareholders to acquire the balance of their shares, although
individual members of the concert party will not be able to
increase their percentage interest in shares through or between a
Rule 9 threshold, without Panel consent.
An offer under Rule 9 of the Code must be made in cash at the
highest price paid by the person required to make the offer, or any
person acting in concert with him, for any interest in shares of
the company during the 12 months prior to the announcement of the
offer.
The Company has applied to the Panel for a waiver of Rule 9 of
the Code in order to permit the Acquisition without triggering an
obligation on the part of the Concert Party to make a general offer
to Shareholders. Subject to the approval of the Independent
Shareholders taken on a poll in the General Meeting, the Panel has
agreed to waive the obligation to make a general offer for the
entire issued share capital of the Company that would otherwise
arise as a result of the issue of the Consideration Shares and
Adviser Shares in connection with the Acquisition, or any
subsequent exercise of Warrants. Accordingly, the Whitewash
Resolution being proposed at the General Meeting will be taken by
means of a poll of Independent Shareholders attending and voting at
the General Meeting. None of the members of the Concert Party (nor
any adviser connected to them) are permitted to exercise their
voting rights in respect of the Whitewash Resolution but may
exercise their voting rights in respect of the remainder of the
Resolutions.
The waiver to which the Panel has agreed under the Code will be
invalidated if any purchases are made by any member of the Concert
Party, or any person acting in concert with it, in the period
between the date of this document and the General Meeting.
Furthermore, other than as set out in paragraph 2.3(a) of Part VI
of the Circular no member of the Concert Party, nor any person
acting in concert with it, has purchased Ordinary Shares in the 12
months preceding the date of this announcement.
The Concert Party will not be restricted from making an offer
for the Ordinary Shares in the Company which it will not own
post-Admission.
In each case above it is assumed that no other person has
converted any convertible securities or exercised any option or any
other right to subscribe for shares in the Company following the
date of this announcement.
Independent Advice
SPARK Advisory Partners has provided advice to the Existing
Directors in respect of the Proposals as required under Rule 3 of
the Code.
9. CHANGE OF NAME
Subject to Shareholders' approval of Resolution 10 as a special
resolution, the name of the Company will be changed to EVR Holdings
plc.
The Directors believe the Company's name should be changed to
EVR Holdings plc to better represent the operations of the Enlarged
Group.
If the special resolution to approve the change of name of the
Company is passed at the General Meeting, the Company's AIM symbol
will be changed to EVRH and its website address will be changed to
www.EVRHoldings.com following the General Meeting.
10. SHARE CONSOLIDATION
The Admission is conditional upon the approval and completion of
the Proposals, including the Share Consolidation. The Company's
Existing Ordinary Share Capital comprises 23,175,034,357 Existing
Ordinary Shares.
The Share Consolidation, which is expected to take place after
close of business on the Record Date, will involve every 100
Existing Ordinary Shares being consolidated into 1 New Ordinary
Share. Accordingly, subject to the passing of Resolution 3 at the
General Meeting, Shareholders will receive one New Ordinary Share
in exchange for every 100 Existing Ordinary Shares held. The rights
attached to the New Ordinary Shares will be the same as the rights
attaching to the Existing Ordinary Shares and the new Ordinary
Shares will trade on AIM in place of the Existing Ordinary
Shares.
Following the Share Consolidation, Shareholders will own the
same proportion of Ordinary Shares in the Company as they did
previously (subject to fractional entitlements) but will hold fewer
New Ordinary Shares than the number of Existing Ordinary Shares
currently held. The Share Consolidation will result in an issued
ordinary share capital of 231,750,344 New Ordinary Shares. The
Deferred Shares will not be affected by the Share
Consolidation.
In order to ensure that a whole number of New Ordinary Shares is
created, it is proposed that the Company may issue Existing
Ordinary Shares to the Registrar. The number of Existing Ordinary
Shares to be issued will be 43 which will result in the total
number of Existing Ordinary Shares being exactly divisible in
accordance with the consolidation ratio.
No Shareholder will be entitled to a fraction of a New Ordinary
Share and where, as a result of the Share Consolidation, any
Shareholder would otherwise be entitled to a fraction only of a New
Ordinary Share in respect of their holding of Existing Ordinary
Shares on the date of the General Meeting (a "Fractional
Shareholder"), such fractions will, in so far as possible, be
aggregated with the fractions of New Ordinary Shares to which other
Fractional Shareholders of the Company would be entitled so as to
form full New Ordinary Shares ("Fractional Entitlement Shares").
These Fractional Entitlement Shares shall be sold on behalf of the
relevant Fractional Shareholders in accordance with article 49 of
the Articles. The net proceeds of the sale shall be retained for
the benefit of the Company.
The provisions set out above mean that any such Fractional
Shareholders will not have a resultant proportionate shareholding
of New Ordinary Shares exactly equal to their proportionate holding
of Existing Ordinary Shares, and as noted above, Shareholders with
only a fractional entitlement to a New Ordinary Share (i.e., those
Shareholders holding a total of fewer than 100 Existing Ordinary
Shares at the Record Date) will cease to be a Shareholder of the
Company. Accordingly, Shareholders currently holding fewer than 100
Existing Ordinary Shares who wish to remain a Shareholder of the
Company following the Share Consolidation would need to increase
their shareholding to at least 100 Existing Ordinary Shares prior
to the Record Date. Shareholders in this position are encouraged to
obtain independent financial advice before taking any action.
The Company will issue new share certificates to those
Shareholders holding shares in certificated form to take account of
the Change of Name and the Share Consolidation. Following the issue
of new share certificates, share certificates in respect of
Existing Ordinary Shares will no longer be valid. Shareholders will
still be able to trade in Ordinary Shares during the period between
the passing of the Resolutions and the date on which Shareholders
receive new share certificates.
11. ADMISSION TO AIM AND DEALINGS IN NEW ORDINARY SHARES
If all of the Resolutions are passed at the General Meeting,
application will be made for the Enlarged Ordinary Share Capital to
be admitted to trading on AIM. It is expected that Admission will
become effective and dealings in the New Ordinary Shares will
commence on 16 May 2016. No application has been or will be made
for any Warrants to be admitted to trading on AIM.
If any of the Resolutions, save for Resolution 8, are not passed
at the General Meeting, the Acquisition will not proceed and the
Directors will consider alternative options for the Company.
SPARK Advisory Partners and Peterhouse have been retained as the
Company's nominated adviser and broker respectively in relation to
Admission. Further details of SPARK Advisory Partners' and
Peterhouse's engagements are set out at paragraphs 15.10, 15.11 and
15.4 respectively of Part VII of the Circular.
12. LOCK-INS AND ORDERLY MARKET ARRANGEMENTS
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The Locked-in Persons have undertaken to the Company and SPARK
Advisory Partners that they will not dispose of any interest they
hold in New Ordinary Shares for a period of 12 months following
Admission. The Locked-in Persons have undertaken that, for a
further period of 12 months thereafter, they shall only dispose of
an interest in New Ordinary Shares having first notified SPARK
Advisory Partners. For this further period, all the Locked-In
Persons will only dispose of any interest on an orderly market
basis through the Company's then broker.
Further details of the lock-in and orderly market arrangements
are set out in paragraph 15.3 of Part VII of the Circular.
13. WARRANTS
At the date of this document, the Company has Existing Warrants
in issue in respect of 5,046,351,364 Existing Ordinary Shares.
Following the Share Consolidation the holders of such Warrants will
be entitled to subscribe for 50,463,513 New Ordinary Shares.
Subject to Admission, the Board proposes to issue New Warrants
to subscribe for up to 52,594,234 New Ordinary Shares at an
exercise price of GBP0.011 per share to Existing Directors,
Proposed Directors, members of the Advisory Board and certain key
employees and consultants.
This issue includes the following awards of New Warrants to
Existing Directors and Proposed Directors:
Mr Peter Read 4,615,090
Mr Sean Nicolson 4,615,090
Mr Anthony Matchett 11,537,725
Mr Steven Hancock 11,537,725
Mr Simon Cole 4,615,090
In addition, the Company has agreed to issue New Warrants to
subscribe for 7,183,622 New Ordinary Shares at GBP0.011 to SPARK
Advisory Partners on Admission.
These New Warrants are exercisable at any time up to the third
anniversary of Admission, at which time they will lapse.
Further details of the Existing Warrants and the New Warrants
are set out in paragraphs 10.1, 11.1, paragraphs 15.6 to 15.8 and
paragraph 15.13 of Part VII of the Circular.
Resolution 8 at the General Meeting will seek Shareholders'
approval of the issue of New Warrants to the Existing Directors:
Peter Read and myself. The Existing Directors will not vote their
Existing Ordinary Shares on this Resolution.
14. OPTIONS
At the date of this document, the Company has no options
outstanding.
It is proposed that following Admission the Company will
establish the New Share Option Scheme to incentivise the directors
and employees and to align their interests with the interests of
Shareholders. The total number of options which may be granted
under the scheme is capped at 10 per cent. of the Company's issued
share capital from time to time.
Further details of the New Share Option Scheme are set out in
paragraph 11.4 of Part VII of the Circular.
15. DIVIDEND POLICY
The nature of the Enlarged Group's business means that it is
unlikely that the Directors would be in a position to recommend a
dividend in the early years following Admission. The Directors
believe that the Enlarged Group should seek to generate capital
growth for its Shareholders but may recommend distributions at some
future date, depending upon the generation of sustainable profits,
if and when it becomes commercially prudent to do so. There can be
no assurance that the Company will declare and pay, or have the
ability to declare and pay, any dividends in the future.
16. CORPORATE GOVERNANCE AND INTERNAL CONTROLS
The Directors and Proposed Directors recognise the importance of
sound corporate governance and the Enlarged Group will comply with
QCA Code, as published by the Quoted Companies Alliance, to the
extent they consider appropriate in light of the Enlarged Group's
size, stage of development and resources.
The Enlarged Group will hold board meetings periodically as
issues arise which require the attention of the Board. The Board
will be responsible for the management of the business of the
Enlarged Group, setting the strategic direction of the Enlarged
Group and establishing the policies of the Enlarged Group. It will
be the Board's responsibility to oversee the financial position of
the Enlarged Group and monitor the business and affairs of the
Enlarged Group on behalf of the Shareholders, to whom the Directors
are accountable. The primary duty of the Board will be to act in
the best interests of the Enlarged Group at all times. The Board
will also address issues relating to internal control and the
Enlarged Group's approach to risk management.
The Enlarged Group has also established a remuneration committee
(the "Remuneration Committee") and an audit committee (the "Audit
Committee") with formally delegated duties and
responsibilities.
The Remuneration Committee, which will comprise Simon Cole as
Chairman, Sean Nicolson and Peter Read, will meet not less than
twice each year. The committee will be responsible for the review
and recommendation of the scale and structure of remuneration for
senior management, including any bonus arrangements or the award of
share options with due regard to the interests of the Shareholders
and the performance of the Enlarged Group.
The Audit Committee, which will comprise Peter Read as Chairman
and Simon Cole will meet not less than twice a year. The committee
will be responsible for making recommendations to the Board on the
appointment of auditors and the audit fee and for ensuring that the
financial performance of the Enlarged Group is properly monitored
and reported. In addition, the Audit Committee will receive and
review reports from management and the auditors relating to the
interim report, the annual report and accounts and the internal
control systems of the Enlarged Group.
The Enlarged Group has adopted and will operate a share dealing
code governing the share dealings of the directors of the Company
and applicable employees with a view to ensuring compliance with
the AIM Rules.
17. TAXATION
General information regarding UK taxation is set out in
paragraph 21 of Part VII of the Circular. These details are
intended only as a general guide to the current tax position under
UK taxation law. If an investor is in any doubt as to his tax
position he should consult his own independent financial adviser
immediately.
Investors subject to tax in other jurisdictions are strongly
urged to contact their tax advisers about the tax consequences of
holding Ordinary Shares.
18. CREST
CREST is a paperless settlement system enabling securities to be
evidenced otherwise than by a certificate and transferred otherwise
than by written instrument in accordance with the CREST
Regulations.
The New Ordinary Shares will be eligible for CREST settlement.
Accordingly, following Admission, settlement of transactions in the
New Ordinary Shares may take place within the CREST system if a
Shareholder so wishes. CREST is a voluntary system and Shareholders
who wish to receive and retain share certificates are able to do
so.
For more information concerning CREST, Shareholders should
contact their stockbroker or Euroclear UK & Ireland Limited at
33 Cannon Street, London EC4M 5SB or by telephone on +44 (0) 20
7849 0000.
19. BRIBERY ACT 2010
The government of the United Kingdom has issued guidelines
setting out appropriate procedures for companies to follow to
ensure that they are compliant with the UK Bribery Act 2010 which
came into force with effect from 1 July 2011. The Company has
conducted a risk review into its operational procedures to consider
the impact of the Bribery Act 2010 and has drafted and implemented
an anti-bribery policy as adopted by the Board and also implemented
appropriate procedures to ensure that the Directors, employees and
consultants comply with the terms of the legislation.
20. RISK FACTORS
Shareholders and other prospective investors in the Company
should be aware that an investment in the Company involves a high
degree of risk. Shareholders attention is drawn to the risk factors
set out in Part II of the Circular.
21. FURTHER INFORMATION
Shareholders should read the whole of the Circular, which
provides additional information on the Company, MelodyVR and the
Proposals, and should not rely on summaries of, or individual parts
only of, this announcement. Your attention is drawn, in particular,
to Parts II to VII of the Circular.
22. GENERAL MEETING
You will find set out at the end of this document a notice
convening the General Meeting of the Company to be held at 11.00
a.m. on 13 May 2016 at the offices of Fieldfisher LLP, 9(th) Floor,
Riverbank House, 2 Swan Lane, London EC4R 3TT, at which the
following Resolutions will be proposed:
Resolution to approve the Whitewash Resolution;
1:
Resolution to approve the Acquisition;
2:
Resolution to approve the Share Consolidation;
3:
Resolution to appoint Anthony Matchett as a director
4: of the Company;
Resolution to appoint Steven Hancock as a director
5: of the Company;
Resolution to appoint Simon Cole as a director
6: of the Company;
Resolution to authorise the Directors to allot
7: New Ordinary Shares;
Resolution to approve the issue of New Warrants
8: to Peter Read and Sean Nicolson;
Resolution to dis-apply statutory pre-emption provisions
9: to enable the Directors in certain circumstances
to allot New Ordinary Shares for cash
other than on a pre-emptive basis; and
Resolution to approve the Change of Name.
10:
23. ACTION TO BE TAKEN
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A Form of Proxy is enclosed for use by Shareholders at the
General Meeting. Whether or not Shareholders intend to be present
at the General Meeting, they are asked to complete, sign and return
the Proxy Form by post or by hand to the Company's Registrars,
Neville Registrars Limited, Neville House, 18 Laurel Lane,
Halesowen, B63 3DA, as soon as possible but in any event so as to
arrive no later than 48 hours before the General Meeting. The
completion and return of a Form of Proxy will not preclude a
Shareholder from attending the General Meeting and voting in person
should he or she wish to do so.
24. RECOMMENDATION
The Board is of the opinion that the Resolutions numbered 2 to 7
and 9 to 10 (inclusive) are in the best interests of the Company
and its Shareholders as a whole. Accordingly, the Existing
Directors unanimously recommend that Shareholders vote in favour of
each of these Resolutions, as the Existing Directors intend to do
in respect of their own beneficial shareholdings, which amount in
aggregate to 737,187,499 Existing Ordinary Shares, representing
approximately 3.18 per cent. of the Existing Ordinary Share
Capital.
None of the Existing Directors are able to give any
recommendation in respect of the Whitewash Resolution (Resolution
1), given that they will receive New Warrants as set out in
paragraph 13 above following Admission. SPARK Advisory Partners, as
Rule 3 Adviser under the Code, believe that the Proposals are fair
and reasonable and in the best interests of the Independent
Shareholders.
Accordingly, SPARK Advisory Partners recommends that Independent
Shareholders vote in favour of Resolution 1. The Existing Directors
are unable to vote their Shares on Resolution 1, nor are members of
the Concert Party.
In respect of Resolution 8, which proposes the issue of New
Warrants to the Existing Directors, the Existing Directors will not
vote their shares on this Resolution, and do not make any
recommendation on this Resolution to Shareholders.
EXPECTED TIMETABLE
2016
Publication of this document 27 April
Latest time and date for receipt 11.00 a.m.
of CREST voting intentions on 11 May
Latest time and date for receipt 11.00 a.m.
of Forms of Proxy for the General on 11 May
Meeting
Time and date for the General Meeting 11.00 a.m.
on 13 May
Last day of dealings in the Existing 13 May
Ordinary Shares
Record time and date for the Share 5.00 p.m. on
Consolidation 13 May
Change of Name effective 16 May
Completion of the Proposals and
commencement of dealings of the 8.00 a.m. on
Enlarged Ordinary Share Capital 16 May
on AIM
CREST accounts expected to be credited As soon as
with the New Ordinary Shares practicable
after
8.00 a.m. on
16 May
Despatch of definitive share certificates
in respect of the New Ordinary 23 May
Shares by
Note: All references to times in this timetable are to London
times. The times and dates may be subject to change.
DEFINITIONS
The following definitions apply throughout this announcement
unless the context otherwise requires:
"Acquisition" the proposed acquisition by
the Company of the entire issued
share capital of MelodyVR, pursuant
to the terms of the Acquisition
Agreement;
"Acquisition Agreement" the conditional acquisition
agreement dated 26 April 2016
between the Company and the
Vendors in relation to the sale
and purchase of the entire issued
share capital of MelodyVR, further
details of which are set out
in paragraph 15.1 of Part VII
of the Circular;
"Act" the Companies Act 2006, as amended;
"acting in concert" has the meaning given to it
in the Takeover Code;
"Admission" the admission of the Enlarged
Ordinary Share Capital to trading
on AIM becoming effective in
accordance with the AIM Rules
for Companies;
"Admission Agreement" the conditional agreement dated
26 April 2016 between the Company,
the Existing Directors, the
Proposed Directors, SPARK Advisory
Partners and Peterhouse relating
to Admission, details of which
are set out at paragraph 15.2
of Part VII of the Circular;
"Adviser Shares" 20,909,091 New Ordinary Shares
to be issued to SRG in satisfaction
of fees due to them in connection
with services provided by SRG
to MelodyVR, details of which
are set out at paragraph 15.17
of Part VII of the Circular;
"Advisory Board" the Company's advisory board,
details of which are set in
paragraph 5.4 of Part I of this
announcement;
"AIM" the market of that name operated
by the London Stock Exchange;
"AIM Rules" the AIM Rules for Companies
and the AIM Rules for Nominated
Advisers;
"AIM Rules for the rules which set out the
Companies" obligations and responsibilities
in relation to companies whose
shares are admitted to AIM as
published by the London Stock
Exchange from time to time;
the rules which set out the
eligibility, obligations and
certain disciplinary matters
in relation to nominated advisers
as published by the London Stock
Exchange from time to time;
"Articles" the articles of association
of the Company from time to
time;
"Board" the directors of the Company
from time to time;
"Business Day" a day (other than Saturday,
Sunday or a public holiday),
on which banks in the City of
London are open for business
generally; a share or other
security recorded on the relevant
register of the relevant company
as being held in certificated
form and title to which may
be transferred by means of a
stock transfer form;
"Chairman" Sean Nicolson, The non-Executive
Chairman of the Company;
"Change of Name" the proposed change of name
of the Company to EVR Holdings
plc, further details of which
are set out in paragraph 9 of
Part I of this announcement;
"Company" Armstrong Ventures plc, a company
registered in England and Wales
with registered number 05628362;
"Concert Party" Anthony Matchett, Steven Hancock,
the other Vendors, together
with SRG, Chris Akers, Russell
Backhouse and Rodger Sargent
(as connected advisers under
the Code) as more fully described
in paragraph 1 of Part VI of
the Circular;
"Consideration the 465,702,743 New Ordinary
Shares" Shares (following the Share
Consolidation) to be issued
to the Vendors at the Issue
Price in consideration for the
transfer of the entire issued
share capital of MelodyVR as
set out in the Acquisition Agreement;
"Corporate Governance the Corporate Governance Code
Code" published by the Financial Reporting
Council, as amended;
"CREST" the computerised settlement
system to facilitate the transfer
of title of shares in uncertificated
form operated by Euroclear UK
& Ireland Limited;
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"CREST Regulations" the Uncertificated Securities
Regulations 2001 (SI 2001 No.
3755), as amended;
"Deferred Shares" the Initial Deferred Shares
and the Subsequent Deferred
Shares;
"Directors" the Existing Directors and/or
the Proposed Directors, as the
context requires;
"DTRs" or "Disclosure the rules and regulations made
and by the FCA in its capacity as
Transparency Rules" the UKLA under Part VII of FSMA,
and contained in the UKLA publication
of the same name, as amended;
"EMI Options" Enterprise Management Incentive
options granted to employees
pursuant to the Income Tax (Earnings
and Pensions) Act 2003;
"Enlarged Group" the Company, MelodyVR and its
subsidiary undertaking, Immersive,
upon completion of the Acquisition;
"Enlarged Ordinary the share capital of the Company
Share Capital" upon Admission, comprising the
Existing Ordinary Share Capital
(following the Share Consolidation),
the Consideration Shares and
the Adviser Shares;
"Existing Directors" Sean Nicolson and Peter Read;
"Existing Ordinary ordinary shares of GBP0.0001
Shares" each in issue as at the date
of this announcement;
"Existing Ordinary the ordinary share capital of
Share Capital" the Company as at the date of
this announcement, comprising
23,175,034,357 Existing Ordinary
Shares;
"Existing Warrants" the warrants in existence as
at the date of this announcement
to subscribe for a total of
5,046,351,364 Existing Ordinary
Shares;
"Form of Proxy" the form of proxy enclosed with
or "Proxy Form" this document for use by Shareholders
in connection with the GM;
"FSMA" the Financial Services and Markets
Act 2000, as amended;
"General Meeting" the general meeting of the Company,
or "GM" convened for 11.00 a.m. on 13
May 2016, and any adjournment
thereof, notice of which is
set out at the end of the Circular;
the Company's historical financial
information for the three years
ended 31 December 2013, 31 December
2014 and 31 December 2015; MelodyVR's
historical financial information
for the period from incorporation
on 22 April 2015 to 31 December
2015;
"HMRC" Her Majesty's Revenue & Customs;
"IFRS" International Financial Reporting
Standards as adopted by the
European Union;
"Immersive" Immersive Construction Limited,
a company registered in England
and Wales with registered number
09726159, a subsidiary undertaking
of MelodyVR;
"Independent Shareholders" shareholders entitled to vote
on the Whitewash Resolution,
being all Shareholders except
for members of the Concert Party;
"Initial Deferred the deferred shares of GBP0.0095
Shares" each in the capital of the Company;
"IPR" intellectual property rights;
"Issue Price" GBP0.011 being the price at
which the Consideration Shares
and the Adviser Shares are to
be issued;
"ITEPA" the Income Tax (Earnings and
Pensions) Act 2003;
"Lock-in Agreements" the lock-in agreements entered
into by the Locked-in Persons,
described in paragraph 12 of
Part I and paragraph 15.3 of
Part VII of the Circular;
"Locked-in Persons" the Directors and the Proposed
Directors;
"London Stock the London Stock Exchange plc;
Exchange"
"MelodyVR" MelodyVR Ltd, a company registered
in England and Wales with registered
number 09555357;
"MelodyVR Group" MelodyVR and its subsidiary
undertaking, Immersive;
"New Ordinary ordinary shares of GBP0.01 each
Shares" in the capital of the Company
following the Share Consolidation;
"New Share Option the proposed new share option
Scheme" scheme of the Company to be
adopted following Admission,
further details of which are
set out in paragraph 11.4 of
Part VII of the Circular;
"New Warrants" the warrants to subscribe for
New Ordinary Shares in the Company
granted to (i) the Existing
Directors, Proposed Directors,
members of the Advisory Board,
consultants to the Company,
and (ii) SPARK Advisory Partners,
in each case on the terms set
out in paragraphs 15.6 and 15.13
of Part VII of this document;
"Notice" the notice of the General Meeting
set out at the end of the Circular;
"Official List" the definitive record of whether
a company's securities are officially
listed in the United Kingdom
maintained by the FCA pursuant
to Part VI of FSMA;
"Ordinary Shares" ordinary shares in the issued
share capital of the Company
from time to time;
"Panel" the Panel on Takeovers and Mergers;
"Peterhouse" Peterhouse Corporate Finance
Limited, the Company's broker
at the date of this announcement;
"Proposals" the Acquisition, the Change
of Name, the Rule 9 Waiver,
the Share Consolidation, the
renewal of share authorities,
the General Meeting and Admission;
"Proposed Directors" the persons to be appointed
directors pursuant to the GM,
whose names are set out in paragraph
5.2 of this announcement;
"QCA Code" the Corporate Governance Code
for Small and Mid-Size Quoted
Companies published by the Quoted
Companies Alliance;
"Record Date" 13 May 2016;
"Registrar" Neville Registrars Limited;
"Relationship the agreement dated 26 April
Agreement" 2016 between the Company, the
Proposed Directors and SPARK
Advisory Partners, details of
which are set out in paragraph
15.5 of Part VII of the Circular;
"Resolutions" the resolutions to be proposed
at the General Meeting, details
of which are set out in the
Notice;
"Rule 9 Waiver" the waiver of the obligations
of the Concert Party to make
a general offer for the Enlarged
Group under Rule 9 of the Takeover
Code which may otherwise arise
as a consequence of the issue
of the Consideration Shares
to the Concert Party, granted
by the Panel conditional upon
approval of the Independent
Shareholders voting on a poll,
further details of which are
set out in paragraph 8 of Part
I of this announcement;
"Share Consolidation" the proposed consolidation of
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every 100 Existing Ordinary
Shares into 1 New Ordinary Share;
"Shareholders" the persons who are registered
as holders of the Ordinary Shares
from time to time;
"Share Options" options to subscribe for Ordinary
Shares to be granted under the
New Share Option Scheme;
"SPARK Advisory SPARK Advisory Partners Limited,
Partners" the Company's nominated adviser
at the date of this announcement;
"SRG" Sports Resource Group Limited,
2nd Floor, 18 Buckingham Gate,
London, SW1E 6LB, a company
registered in England and Wales
with registered number 04046907;
"Sterling" or the legal currency of the UK;
"GBP" or "p" or
"pence"
"Subsequent Deferred the deferred shares of GBP0.0024
Shares" each in the capital of the Company;
"Takeover Code" the City Code on Takeovers and
or "Code" Mergers;
"UK" or "United the United Kingdom of Great
Kingdom" Britain and Northern Ireland;
"UKLA" the United Kingdom Listing Authority,
being the FCA acting in its
capacity as the competent authority
for the purposes of Part VII
of FSMA; a share or other security
recorded on the relevant register
of the relevant company concerned
as being held in uncertificated
form in CREST and title to which,
by virtue of the CREST Regulations,
may be transferred by means
of CREST;
"Unapproved Options" options granted to employees
which do not qualify as EMI
Options;
"US" or "United the United States of America,
States" its territories and possessions,
any states of the United States
of America and the District
of Columbia and all other areas
subject to its jurisdiction;
"US$" the legal currency of the United
States;
"VAT" value added tax;
"Vendors" the shareholders of MelodyVR,
being Anthony Matchett, Steven
Hancock, Mark Newton, Stefan
Glaenzer and Alex Pearce, further
details of whom are set out
in paragraph 1 of Part VI of
the Circular;
"Warrants" the Existing Warrants and the
New Warrants; and
"Whitewash Resolution" the Resolution numbered 1 in
the Notice.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCDMGZDKNLGVZG
(END) Dow Jones Newswires
April 27, 2016 02:01 ET (06:01 GMT)
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