TIDMMVR
RNS Number : 9944H
MelodyVR Group PLC
09 December 2020
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF
AMERICA, AUSTRALIA, CANADA, JAPAN, JERSEY OR SOUTH AFRICA OR ANY
OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DISTRIBUTE THIS
ANNOUNCEMENT
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT
CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMATION,
OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE
OR DISPOSE OF ANY SECURITIES IN MELODYVR GROUP PLC OR ANY OTHER
ENTITY IN ANY JURISDICTION. NEITHER THIS ANNOUNCEMENT NOR THE FACT
OF ITS DISTRIBUTION, SHALL FORM THE BASIS OF, OR BE RELIED ON IN
CONNECTION WITH ANY INVESTMENT DECISION IN RESPECT OF MELODYVR
GROUP PLC.
This announcement contains inside information.
9 December 2020
MelodyVR Group PLC
("MelodyVR Group" or the "Company")
Subscription of 201,349,772 Subscription Shares at 3.75 pence
per Ordinary Share
Davis Capital Loan Facility and Bridge Facility
Publication of Admission Document and restoration of trading on
AIM
Notice of General Meeting
Further to the announcement of 25 August 2020 of the conditional
acquisition of Rhapsody International Inc., a Delaware corporation
trading as Napster ("Napster"), MelodyVR Group (AIM: MVR), one of
the leading creators of virtual reality content, announces that
yesterday it posted to Shareholders the Admission Document,
including a notice of General Meeting, which is now available on
the Company's website.
The Company also announces that it has conditionally raised $10
million by way of the Subscription and entered into a binding
commitment letter setting out t he terms in respect of a $25
million delayed draw term loan facility from Davis Partnership,
LP
Details of the Subscription
The Company is proposing to issue 201,349,772 Subscription
Shares at a price of 3.75 pence per share to subscribers.
The Subscription Shares will represent approximately 8.2 per
cent of the Enlarged Ordinary Share Capital. The Subscription
Shares will have the effect of diluting the Existing Ordinary
Shares by approximately 9.8 per cent. and on Admission, the Company
will have an implied market capitalisation of approximately GBP92.4
million at the Issue Price.
Certain Directors of the Company have subscribed for an
aggregate of 26,619,279 Subscription Shares through the
Subscription. It is expected that the subscribing Directors'
interests on Admission will be as follows:
Director No. of New Aggregate Resulting % of enlarged
Ordinary Shares value at Issue holding following issued voting
to be acquired Price Admission share capital
pursuant to
the Subscription
Anthony Matchett 3,333,333 GBP125,000 158,482,796 6.4%
------------------ ---------------- ------------------- ---------------
Steven Hancock 3,333,333 GBP125,000 120,884,136 4.9%
------------------ ---------------- ------------------- ---------------
Grant Dollens 19,952,613 GBP748,223 121,616,725 4.9%
------------------ ---------------- ------------------- ---------------
Assuming 200 million Consideration Shares issued
The issue of the Subscription Shares is subject to Shareholder
approval of the Authority Resolutions at the General Meeting.
The Subscription Shares will be issued fully paid, and following
allotment, will rank in full for all dividends or other
distributions hereafter declared, made or paid on the Ordinary
Shares of the Company and will rank pari passu in all other
respects with all other Ordinary Shares in issue on Admission. The
rights attaching to such Ordinary Shares are set out in paragraph
10 of Part VI of the Admission Document.
Key Terms of the Davis Capital Loan Facility
On 8 December 2020, Rhapsody entered into a binding commitment
letter setting out the terms in respect of a $25 million delayed
draw term loan facility (the "Loan Facility") from Davis
Partnership, LP. The Loan Facility will be closed between the date
of publication of this announcement and Admission. The repayment
date of the loan will be 20 months from the date of closing the
Loan Facility and Rhapsody may drawdown in minimum tranches of $5
million at an interest rate of 10 per cent per annum calculated
daily from the date of drawdown until the date of repayment
(inclusive). Rhapsody will also be subject to a 2 per cent draw fee
in connection with each draw upon the Loan Facility. The Loan
Facility will be secured by a first priority lien on all of the
assets of Rhapsody and its domestic and certain foreign
subsidiaries, including on receivables of Rhapsody and certain
subsidiaries, subject to certain exceptions. The Loan Facility will
include customary affirmative and negative covenants for
transactions of this nature and a covenant that requires Rhapsody
to maintain a minimum of US$2 million of liquidity. In
consideration for the Loan Facility, Davis Partnership, LP will
receive warrants granting the ability to invest $20 million in the
Company within a period of 10 years, at the Issue Price. It is a
condition of the Loan Facility that the Company will use
commercially reasonable efforts to install Lancing Davis as a
director of the Company as soon as practicable.
Key Terms of the Davis Capital Bridge Facility
Ahead of signing the Loan Facility, the Company intends to enter
into a secured bridge facility agreement and debenture with Davis
Partnership, LP (the "Bridge Facility"). The Bridge Facility will
be for the principal amount of US$5 million and will bear interest
at a rate 15 per cent per annum, which interest is due and payable
on the maturity date of 31 March 2021. The Company will repay and
terminate the Bridge Facility with proceeds from a subsequent
equity offering or by drawing on the Loan Facility prior to the
maturity date. While any amounts are outstanding under the Bridge
Facility, the Loan Facility will be decreased by such corresponding
amount.
Related Party Transactions
The loan by Davis Partnership, LP constitutes a related party
transaction for the purposes of the AIM Rules by virtue of Davis
Capital Partners, LLC being a substantial shareholder of the
Company. The commitment letter, and subsequent Loan Facility, has
been entered into in order to ensure suf cient working capital
immediately following the Acquisition and support the strategy for
the Enlarged Group. The Directors are entering into the Loan
Facility having considered the availability to the Company of
alternate sources of nance including equity and debt nancing. The
Directors therefore consider, having consulted with the Company's
nominated adviser, Arden, that the terms upon which Davis
Partnership, LP is providing the Loan Facility to the Company are
fair and reasonable insofar as the Company's shareholders are
concerned.
The Bridge Facility by Davis Partnership, LP constitutes a
related party transaction for the purposes of the AIM Rules by
virtue of Davis Capital Partners, LLC being a substantial
shareholder of the Company. The Bridge Facility has been entered
into in order to ensure sufficient capital is available to the
Company until it is able to draw down on the Loan Facility. The
Directors are entering into the Bridge Facility having considered
the Company's immediate working capital requirements and no
alternate sources of finance being immediately available. The
Directors therefore consider, having consulted with the Company's
nominated adviser, Arden, that the terms upon which Davis
Partnership, LP is providing the Bridge Facility to the Company are
fair and reasonable insofar as the Company's shareholders are
concerned.
Anthony Matchett, Steven Hancock and Grant Dollens, (being
current Directors of the Company) are related parties for the
purposes of the AIM Rules and have agreed to subscribe for New
Ordinary Shares pursuant to the Subscription. Simon Cole and Andrew
Botha, being the Directors not participating in the Subscription,
are considered to be independent directors of the Company for the
purposes of AIM Rule 13 in connection with the Subscription. They
consider, having consulted with the Company's nominated adviser,
Arden, that the terms of the Subscription by Anthony Matchett,
Steven Hancock and Grant Dollens are fair and reasonable insofar as
the Company's shareholders are concerned.
Key terms of the acquisition
Under the terms of the Merger Agreement, a wholly-owned
subsidiary of the Company will be merged with and into Napster
(with Napster being the surviving entity). Upon completion of the
transaction, Napster will be a wholly-owned 2nd-tier subsidiary of
the Company.
The Company has already advanced the sum of $12 million by way
of cash deposits which have been placed into escrow. At any time
prior to Completion, Napster may request funds to be released from
the deposit in order to pay certain identi ed rights holder
obligations. Any such requests must be approved by the Company. In
the event that the Acquisition fails to complete due to Napster
being unable to meet the closing conditions of the Acquisition, the
deposit will be refunded to the Company and Napster must repay any
advances to the Company within six months of Completion. In the
event that the Company fails to ful l certain closing obligations
under the Merger Agreement, the deposit may be forfeited. At
Completion, the deposit will be released to certain of Napster's
debt-holders and shareholders, and a further $3m will be deposited
by the Company into an escrow account. This amount will be used to
secure certain indemnity obligations of Napster's shareholders and
unless used pursuant to those indemnity obligations, will be
released to the former Napster shareholders 18 months after
closing.
As further consideration for the Acquisition, the Company will
issue at least 200 million Consideration Shares to Napster's
debt-holders and shareholders at Completion. The number of
Consideration Shares may increase as result of any decline in the
Company's share price below 4.30 pence between signing of the
Merger Agreement and Completion, pursuant to the terms of the
Merger Agreement. As such, the nal number of Consideration Shares
to be issued will not be con rmed until Completion.
As part of the Acquisition, it has been agreed that $30 million
of shareholder loans that would otherwise be repayable by the
Enlarged Group will be written off in full upon Completion of the
Acquisition. Therefore this liability will be extinguished and no
further amounts will be due following Completion.
Publication of Admission Document, General Meeting and
Admission
The Ordinary Shares were suspended from trading on AIM on 25
August 2020 pending publication of an AIM admission document,
following the announcement of the conditional Acquisition,
classified as a reverse takeover under the AIM Rules. With the
publication of the Admission Document, trading in the Company's
Ordinary Shares on AIM will be restored at 07.30 a.m. today.
The General Meeting to approve the Resolutions in relation to
the Acquisition and the Subscription will be held virtually at
10.00 a.m. on 24 December 2020. A summary of the action
Shareholders should take is set out in the Admission Document, and
in the accompanying Form of Proxy.
Application will be made to the London Stock Exchange for the
Enlarged Ordinary Share Capital to be admitted to trading on AIM.
Admission of the Enlarged Share Capital to trading on AIM, subject
to the passing of the Resolutions and the satisfaction of all other
conditions, expected to take place on or around 29 December
2020.
Notice of General Meeting
A notice convening the General Meeting is set out in the
Admission Document, which is to be held virtually at 10.00 a.m. on
24 December 2020, for the purpose of considering, and if thought t,
passing the Resolutions which seek to do the following:
-- approve the Acquisition and authorise the Directors to issue
the Consideration Shares for the purposes of the Acquisition;
-- authorise the Directors to issue the Consideration Shares and
disapply pre-emption rights in respect of the Consideration
Shares.
-- authorise the Directors to issue, grant rights to subscribe
for, or convert any security into shares in the Company up to an
aggregate nominal amount of GBP10,309,229.95, being approximately
50 per cent. of the Existing Issued Share Capital and to disapply
pre-emption rights in respect of an aggregate nominal amount of
GBP10,309,229.95, being approximately 50 per cent. of the Existing
Issued Share Capital.
The Acquisition Resolution will be proposed as an ordinary
resolution (Resolution 1). The Authority Resolutions will be
proposed as ordinary resolutions (Resolutions 2 and 3) and as
special resolutions (Resolutions 4 and 5). An ordinary resolution,
in order to be passed, requires the approval of a simple majority
of those voting in person or on a proxy or on a poll, and a special
resolution requires the approval of 75 per cent. of those voting in
person or on a proxy or on a poll.
It is a condition to completion of the Acquisition that the
Acquisition Resolution is approved by Shareholders.
Expected timetable of principal events
2020
Posting of the Admission Document and the 8 December
Form of Proxy to Shareholders
Latest time and date for receipt of completed 10.00 a.m. on 22
Forms of Proxy and receipt of electronic December
proxy appointments via the CREST system
Time and date of the General Meeting 10.00 a.m. on 24
December
Announcement of the result of the General 24 December
Meeting
Completion of the Acquisition 29 December
Admission and commencement of dealings in 29 December
the Enlarged Ordinary Share Capital on AIM
CREST accounts credited in respect of the 29 December
Subscription Shares (where applicable)
Dispatch of de nitive share certi cates within 5 business
in respect of the Subscription Shares (where days of Admission
applicable) by
Key Statistics
Existing share capital at the date of the Admission
Document
Number of Existing Ordinary Shares 2,061,845,991
Subscription and Acquisition
Issue Price 3.75 pence
Number of Subscription Shares 201,349,772
Gross proceeds of the Subscription (receivable
by the Company) $10.1 million
Estimated net proceeds of the Subscription
available to Company $8.4 million
Costs of the Subscription and Admission $1.7 million
Number of Consideration Shares At least 200,000,000
Upon Admission
Number of Ordinary Shares in issue upon Admission
before additional Consideration Shares 2,463,195,763
Percentage of Enlarged Ordinary Share Capital
represented by the New Ordinary Shares 16.3%
Estimated market capitalisation of the Company GBP92.4 million
at Admission at the Issue Price
TIDM MVR
ISIN number GB00BD2YHN21
LEI 213800B2AKGQC3D2R751
Capitalised terms in this Announcement shall have the meanings
given to such terms in the Company's Admission Document published
today.
S
For further information, please contact:
MelodyVR Group PLC
Anthony Matchett , Executive Chairman & CEO www.melodyVR.group
Arden Partners plc: Nominated Adviser and Tel: +44 (0) 20 7614
Broker 5900
Corporate Finance: Ruari McGirr / Benjamin
Cryer / Daniel Gee-Summons
Corporate Broking: Simon Johnson
Notes to Editors:
MelodyVR Ltd ("MelodyVR") is a wholly owned subsidiary of
MelodyVR Group PLC, a company that is listed on the AIM market of
the London Stock Exchange under the ticker MVR.L. MVR, a creator of
virtual reality content, joined AIM on 16 May 2016 following a
reverse takeover of Armstrong Ventures plc. Further information can
be viewed at www.melodyvr.com.
Prior to its publication, certain information contained within
this announcement was deemed to constitute inside information for
the purposes of Article 7 of EU Regulation 596/2014 ("MAR"). In
addition, market soundings (as defined in MAR) were taken in
respect of the Acquisition with the result that certain persons
became aware of inside information (as defined in MAR), as
permitted by MAR. This inside information is set out in this
announcement and such information is now considered to be in the
public domain. Accordingly, those persons that received inside
information in a market sounding are no longer in possession of
such inside information relating to the Company and its
securities.
This Announcement should be read in its entirety. In particular,
you should read and understand the information provided in the
"Important Notices" section of this Announcement.
Important Notices
The Ordinary Shares of the Company have not been and will not be
registered under the US Securities Act of 1933, as amended.
The Subscription Shares have not been and will not be registered
under the United States Securities Act of 1933, as amended (the
"Securities Act"), or with any securities regulatory authority of
any state or jurisdiction of the United States, and may not be
offered, sold or transferred, directly or indirectly, in the United
States except pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act
and in compliance with any applicable securities laws of any state
or other jurisdiction of the United States.
Arden is regulated in the United Kingdom by the Financial
Conduct Authority (the "FCA"). Each of Arden and Beech Hill
Securities is acting exclusively for the Company and no one else in
connection with the Subscription and Admission, and Arden and Beech
Hill Securities will each not be responsible to anyone other than
the Company for providing the protections afforded to its clients
or for providing advice in relation to the Subscription or
Admission or any other matters referred to in this
Announcement.
Forward-looking statements
This announcement contains statements about the Company that are
or may be deemed to be "forward-looking statements".
All statements, other than statements of historical facts,
included in this announcement may be forward-looking statements.
Without limitation, any statements preceded or followed by, or that
include, the words "targets", "plans", "believes", "expects",
"aims", "intends", "will", "may", "should", "anticipates",
"estimates", "projects", "would", "could", "continue" or words or
terms of similar substance or the negative thereof, are
forward-looking statements. Forward-looking statements include,
without limitation, statements relating to the following: (i)
future capital expenditures, expenses, revenues, earnings,
synergies, economic performance, indebtedness, financial condition,
dividend policy, losses and future prospects and (ii) business and
management strategies and the expansion and growth of the
operations of the Company.
These forward-looking statements are not guarantees of future
performance. These forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of any such person, or
industry results, to be materially different from any results,
performance or achievements expressed or implied by such
forward-looking statements. These forward-looking statements are
based on numerous assumptions regarding the present and future
business strategies of such persons and the environment in which
each will operate in the future. Investors should not place undue
reliance on such forward-looking statements and, save as is
required by law or regulation (including to meet the requirements
of the AIM Rules, MAR, the Prospectus Rules and/or the FSMA), The
Company does not undertake any obligation to update publicly or
revise any forward-looking statements (including to reflect any
change in expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based).
All subsequent oral or written forward-looking statements
attributed to the Company or any persons acting on their behalf are
expressly qualified in their entirety by the cautionary statement
above. All forward-looking statements contained in this
announcement are based on information available to the Directors of
the Company at the date of this announcement, unless some other
time is specified in relation to them, and the posting or receipt
of this announcement shall not give rise to any implication that
there has been no change in the facts set forth herein since such
date.
Information to Distributors
Solely for the purposes of the product governance requirements
contained within: (a) EU Directive 2014/65/EU on markets in
financial instruments, as amended ("MiFID II"); (b) Articles 9 and
10 of Commission Delegated Directive (EU) 2017/593 supplementing
MiFID II; and (c) local implementing measures (together, the "MiFID
II Product Governance Requirements"), and disclaiming all and any
liability, whether arising in tort, contract or otherwise, which
any "manufacturer" (for the purposes of the MiFID II Product
Governance Requirements) may otherwise have with respect thereto,
the Subscription Shares have been subject to a product approval
process, which has determined that the Subscription Shares are: (i)
compatible with an end target market of retail investors and
investors who meet the criteria of professional clients and
eligible counterparties, each as defined in MiFID II; and (ii)
eligible for distribution through all distribution channels as are
permitted by MiFID II (the "Target Market Assessment").
Notwithstanding the Target Market Assessment, Distributors
should note that: the price of the Subscription Shares may decline
and investors could lose all or part of their investment;
Subscription Shares offer no guaranteed income and no capital
protection; and an investment in Subscription Shares is compatible
only with investors who do not need a guaranteed income or capital
protection, who (either alone or in conjunction with an appropriate
financial or other adviser) are capable of evaluating the merits
and risks of such an investment and who have sufficient resources
to be able to bear any losses that may result therefrom. The Target
Market Assessment is without prejudice to the requirements of any
contractual, legal or regulatory selling restrictions in relation
to the Subscription.
For the avoidance of doubt, the Target Market Assessment does
not constitute: (a) an assessment of suitability or appropriateness
for the purposes of MiFID II; or (b) a recommendation to any
investor or group of investors to invest in, or purchase, or take
any other action whatsoever with respect to Subscription
Shares.
Each distributor is responsible for undertaking its own target
market assessment in respect of the Subscription Shares and
determining appropriate distribution channels.
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END
PDIUWAORRRUURUA
(END) Dow Jones Newswires
December 09, 2020 02:00 ET (07:00 GMT)
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