TIDMNAPS
RNS Number : 4074U
Napster Group PLC
02 December 2021
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
IN OR INTO THE UNITED STATES, AUSTRALIA, NEW ZEALAND, JAPAN OR THE
REPUBLIC OF SOUTH AFRICA OR IN ANY OTHER JURISDICTION IN WHICH SUCH
RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN
OFFER OF SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL UNDER THE SECURITIES LAWS OF
ANY SUCH JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014 AS IT
FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION
(WITHDRAWAL) ACT 2018 ("MAR"), AND IS DISCLOSED IN ACCORDANCE WITH
THE COMPANY'S OBLIGATIONS UNDER ARTICLE 17 OF MAR.
2 December 2021
Napster Group PLC
("Napster", the "Company" or the "Group")
Proposed disposal of the Assets, Share Consolidation, Capital
Reduction,
De-Listing and Re-Registration and Notice of General Meeting
The Board of Napster is pleased to announce the proposed
disposal of Rhapsody (a subsidiary of the Company containing almost
all of the Group's assets and liabilities) to NM Inc for US$45.6
million.
Background to the proposals
Following the acquisition of the Napster business in December
2020, Napster has become more US centric with approximately 42 per
cent. of its revenues generated in North America during the rst
half of 2021. Its major stakeholders which include rights holders,
investors, artists, consumers and a growing employee base are now
predominantly concentrated in the US.
As such, the Directors believe that a listing in the US is
appropriate for the Napster Business and most bene cial for all
stakeholders. Having already considered the opportunity with a
number of nancial institutions and with a leading full service US
investment bank having been engaged, the Directors also believe
that a US listing would provide not only the appropriate access to
capital, but a valuation more aligned to the metrics which have
been attributed to some of our music competitors and peers and
consequently less dilutive to the existing shareholder base.
Once the Proposals have been completed, NM Inc will focus on the
launch of the new music service without the regulatory burden of a
listing on the LSE whilst also distancing itself from the Company's
current public valuation. Furthermore, as a private company, the
Directors believe that the Napster business will have greater
access to growth capital than it would have if it remained quoted
in the UK. It is anticipated that any listing of NM Inc in the US
would be completed during 2023 in conjunction with the launch of
the new platform and an anticipated period of subscriber growth
following an extensive awareness campaign. The Board believes that
this should help secure a listing in the US for NM Inc at an
enhanced valuation to that of the Company which is ultimately in
all Shareholders' interests.
Assuming completion of the Disposal and subject to shareholder
approval at the General Meeting, it is proposed that the Company
will cancel its admission to trading on AIM of the New Ordinary
Shares and re-register as a private company limited by shares as
part of a process of collapsing the existing corporate structure.
Furthermore, as a result of the Capital Reduction Demerger, the
Company will retain certain assets and liabilities, of which the
liabilities will be discharged prior to a dissolution of the
Company which will be carried out in due course.
NM Inc and the Disposal
NM Inc is a corporation incorporated in the State of Delaware
and having its registered office at 251 Little Falls Drive, City of
Wilmington, County of New Castle, 19808, United States. The company
was incorporated on 12 November 2021 for the purpose of completing
the Disposal.
Subject to the Capital Reduction being approved by Shareholders
at the General Meeting, on completion of the Disposal, NM Inc will
issue Consideration Shares to the holders of New Ordinary Shares so
that they will hold one NM Inc Share for every one New Ordinary
Share held by them in the Company as at the Disposal Record Time
which is expected to be 6.00 p.m. on 27 January 2022. Shareholders
on the Register at this time will participate in the Disposal and
will receive Consideration Shares. The Disposal is expected to
occur at 11.59 p.m. on 27 January 2022.
At this time the Share Purchase Agreement will complete:
(i) the Company will transfer Rhapsody to NM Inc; and
(ii) NM Inc will issue the Consideration Shares to Shareholders
on the register at the Disposal Record Time.
NM Inc's directors have the power to issue the Consideration
Shares. The Consideration Shares will not be freely tradable and
will be restricted until NM Inc lists on Nasdaq, which cannot be
guaranteed to occur. It is anticipated that NM Inc will seek to
secure a listing on Nasdaq during the rst half of 2023, once
appropriate disclosure documents have been prepared and audited
nancial statements for NM Inc for the year ended 31 December 2022
have been prepared.
Following a valuation exercise, it has been determined that the
fair market value of the invested capital of NM Inc on a pro forma
basis is US$46.6 million as at 31 August 2021 on the basis that the
Disposal occurred as at that date and the only assets and
liabilities within NM Inc are those that form part of the
Disposal.
Set out within the Circular are:
-- A pro forma balance sheet (as at 31 August 2021) for the
Company showing its expected assets immediately following
completion of the Capital Reduction and Disposal; and
-- A pro forma balance sheet (as at 31 August 2021) for NM Inc
showing its expected assets immediately following completion of the
Disposal.
Issue of Consideration Shares
It is proposed that NM Inc will engage the Transfer Agent to
issue the Consideration Shares on NM Inc's behalf upon completion
of the Disposal. The Transfer Agent will be provided with the
relevant details for each Shareholder by the Registrar. As NM Inc
is a US entity, Shareholders will not be able to hold NM Inc Shares
in CREST so the issue of the Consideration Shares shall be recorded
in book form by the Transfer Agent. No stock certi cates will be
issued to Shareholders in respect of the NM Inc Shares. Should a
Shareholder wish to receive a stock certi cate in respect of their
NM Inc Shares, this can be requested by contacting the Company on
the following email address transfers@napster.com.
Share consolidation
As part of the transaction, it is proposed that the Company's
existing share capital be re-organised such that:
Every 750 Existing Ordinary Shares be consolidated
into 1 New Ordinary Share of GBP7.50
As all of the Existing Ordinary Shares are proposed to be
consolidated, the proportion of issued ordinary shares holdings in
the Company held by each Shareholder immediately before and
immediately after the Share Consolidation will, save for fractional
entitlements (the treatment of which is described below), remain
unchanged.
De-Listing
The Directors have for some time been reviewing the merits or
otherwise of the Ordinary Shares continuing to be admitted to
trading on AIM and remaining a public limited company in the UK.
The following key factors have been taken into account by the
Directors in reaching the conclusion that, assuming completion of
the Disposal, the De-Listing is in the best interests of the
Company and its Shareholders as a whole:
-- following completion of the Disposal, there will be
negligible assets remaining within the Group which would not
justify the costs associated with remaining as a listed business;
and
-- as a cash shell, the Directors believe that the Company would
not be of suf cient scale to attract any interest from
institutional and other investors and would consequently suffer
from a lack of liquidity in its Ordinary Shares.
The Directors strongly believe that for the reasons referred to
above, should the Disposal be completed, the Company should seek
the cancellation of the admission of its Ordinary Shares to trading
on AIM and re-register as a private limited company.
In the event that the Disposal is completed and the De-Listing
does not occur and, as an AIM Rule 15 cash shell, the Company does
not make an acquisition or acquisitions constituting a reverse
takeover under the AIM Rules within twelve months of becoming an
AIM Rule 15 cash shell, then the Company's New Ordinary Shares
would be suspended from trading on AIM.
Notice of General Meeting
The Disposal is of sufficient size relative to that of the Group
to constitute a disposal resulting in a fundamental change of
business pursuant to Rule 15 of the AIM Rules and Completion is,
therefore, conditional upon the approval of Shareholders at a
general meeting of the Company. In addition, Shareholder approval
is required to effect the share consolidation and the Capital
Reduction as well as the proposed De-Listing.
Accordingly, Shareholder approval of the Proposals will be
sought at the General Meeting expected to be held at 11.00 a.m. on
20 December 2021. The notice convening the General Meeting and
setting out the Resolutions to be considered at it will be set out
in a circular which is expected to be posted to Shareholders
shortly, extracts of which can be found in the appendix to this
announcement.
Irrevocable Undertakings
The Company has received irrevocable undertakings from the
Directors and certain other Shareholders to vote in favour of the
Resolutions in respect of, in aggregate, 1,357,616,962 Ordinary
Shares representing approximately 45.8% of the Company's issued
share capital as at the date of this announcement.
Recommendation
The Directors believe that the Proposals are in the best
interests of the Company and the Shareholders as a whole. They are
therefore unanimously recommending that Shareholders vote in favour
of all of the Resolutions to be proposed at the General Meeting, as
they have irrevocably undertaken to do (or procured to be done) in
respect of their own beneficial holdings (or shareholdings they
control) which, in aggregate, amount to 633,167,326 Ordinary Shares
(representing approximately 22.4 per cent. of the current Ordinary
Shares in issue).
Commenting on the Proposals, Anthony Matchett, Group CEO,
said
"I am delighted by the support we have received from our major
shareholders for this proposed transaction in advance of the launch
of our new music entertainment platform in February next year. I
believe, in particular, that the possibility of a listing of NM Inc
in the US will mark the start of an important new chapter in
restoring value to our shareholder base. With one of the US West
Coast's leading full-service investment banks having been engaged,
we are confident in NM Inc's proposed strategy to access near term
funding to support the launch of our new platform but ultimately,
in its ability to secure a listing in the US at a valuation that is
consistent with the metrics of those of our peers."
Capitalised terms in this announcement, unless otherwise
defined, have the same meaning as will be set out in the circular
to be posted to Shareholders shortly.
For further information please contact:
Napster Group PLC email@napster.group
Anthony Matchett, Group CEO
finnCap Ltd ( Nominated Adviser and Broker) Tel: +44 (0) 20 7220
Corporate Finance: Marc Milmo, James Thompson, 0500
Milesh Hindocha
ECM: Tim Redfern, Sunila de Silva
Equitory (Investor Relations) napster@equitory.com
Clara Melia/Geoff Callow
APPIX I - EXTRACTS FROM THE CIRCULAR TO SHAREHOLDERS
TO BE POSTED SHORTLY
1. INTRODUCTION
The Company is pleased to announce that it and its relevant
subsidiaries have entered into the Transaction Documents pursuant
to which the Group will sell Rhapsody to NM Inc for US$46.6
million.
The Circular: (a) sets out the background to and reasons for the
Company's entry into the Transaction Documents; (b) explains why
the Directors consider the Proposals to be in the best interests of
the Company and its Shareholders; (c) provides details of the
General Meeting and the Resolutions to be proposed at that General
Meeting; and (d) explains why the Directors unanimously recommend
that you vote in favour of the Resolutions to be proposed at the
General Meeting, as they have irrevocably undertaken to do in
respect of their own bene cial interests in the Existing Ordinary
Shares.
I am writing to you to invite you to support the next steps
required for the Group to implement those plans and enable
Shareholders to hold shares, immediately following the Disposal, in
NM Inc in the same proportions as they hold New Ordinary Shares in
the Company immediately prior to the Disposal.
2. B ACKGROUND
The Directors believe that one of the most signi cant challenges
faced by the Company is its ability to secure the required access
to capital that is appropriate to a business seeking to launch a
new music platform on a global scale. Following the acquisition of
the Napster business in December 2020, Napster has become more US
centric with approximately 42 per cent. of its revenues generated
in North America during the rst half of 2021. Its major
stakeholders which include rights holders, investors, artists,
consumers and a growing employee base are now predominantly
concentrated in the US. As such, the Directors believe that a
listing in the US is appropriate for the Napster Business and most
bene cial for all stakeholders. Having already considered the
opportunity with a number of nancial institutions and with a
leading full service US investment bank having been engaged, the
Directors also believe that a US listing would provide not only the
appropriate access to capital, but a valuation more aligned to the
metrics which have been attributed to some of our music competitors
and peers and consequently less dilutive to the existing
shareholder base.
Once the Proposals have been completed, NM Inc will focus on the
launch of the new music service without the regulatory burden of a
listing on the LSE whilst also distancing itself from the Company's
current public valuation. Furthermore, as a private company, the
Directors believe that Napster will have greater access to growth
capital than it would have if it remained quoted in the UK. It is
anticipated that any listing of NM Inc in the US would be completed
during 2023 in conjunction with the launch of the new platform and
an anticipated period of subscriber growth following an extensive
awareness campaign. The Board believes that this should help secure
a listing in the US for NM Inc at an enhanced valuation to that of
the Company which is ultimately in all Shareholders' interests.
The Board has concluded that the optimal solution to maximise
shareholder value is to transfer substantially all of the Group's
assets and liabilities of value to NM Inc, a new company which will
(immediately following completion of the Disposal) be owned by
Shareholders in exactly the same proportions in which they hold New
Ordinary Shares in the Company following the Share Consolidation
and immediately prior to the Disposal. The Board believes that NM
Inc will be able to offer Shareholders a greater return on their
investment than the Company is currently able to offer.
Having already held discussions with a number of nancial
institutions based in the US prior to engaging a leading full
service California based investment bank, the Board and its
advisors believe that completing the Proposals will allow NM Inc to
secure additional funding from investors with a strong knowledge of
the Company's core markets that would be unlikely to be forthcoming
were the Proposals not effected. It is anticipated that following
completion of the Proposals and prior to a listing in the US, NM
Inc, in conjunction with the appointed investment bank, will seek
to secure appropriate further funding for NM Inc to provide it with
the capital it needs to not only complete the development of the
new music platform but importantly, to provide it with the funding
needed to aggressively market the new platform to help drive
subscriber growth.
Assuming completion of the Disposal and subject to Shareholder
approval at the General Meeting, it is proposed that the Company
will cancel its admission to trading on AIM of the New Ordinary
Shares and re-register as a private company limited by shares as
part of a process of collapsing the existing corporate structure.
Furthermore, as a result of the Capital Reduction Demerger, the
Company will retain certain assets and liabilities, of which the
liabilities will be discharged prior to a dissolution of the
Company which will be carried out in due course.
NM Inc
NM Inc is a corporation incorporated in the State of Delaware
and having its registered of ce at 251 Little Falls Drive, City of
Wilmington, County of New Castle, 19808, United States. The company
was incorporated on 12 November 2021 for the purpose of completing
the Disposal. There are currently NM Inc Shares in issue. The sole
incorporator and sole director of NM Inc is Daniel Sallus.
It is anticipated that, following completion of the Disposal, NM
Inc will hold cash of approximately GBP6.0 million (US$7.9 million)
and, as a result of the Asset Transfer, will retain the investment
currently held by the Company and MVR in Rhapsody. NM Inc will also
hold the Assets and Liabilities. As noted above, following
completion of the Proposals, NM Inc will seek to raise an
appropriate level of funding to help fund the completion of the new
platform and the funding required for its sales and marketing
following the launch of the new platform.
Following completion of the Disposal, it is intended that NM Inc
will seek to list the NM Inc Shares on Nasdaq within the next two
years. The Directors believe that seeking a Nasdaq listing for NM
Inc following the Disposal would provide the business with access
to a signi cantly larger investment community, greater opportunity
for institutional support and the bene ts of the heightened pro le
of being listed on a globally recognised investment exchange with
valuation metrics consistent with many of its industry peers.
Shareholders should note that there is no guarantee that the
interim funding to be sought by NM Inc or the listing on Nasdaq
will be completed or be successful.
3. SHARE CONSOLIDATION
As at 1 December 2021, the Company had 2,962,945,547 Existing
Ordinary Shares in issue. The number of Existing Ordinary Shares in
issue may increase if, prior to the Consolidation Record Time, the
Company issues any additional shares or if any outstanding warrants
in the capital of the Company are exercised. It is also proposed
that the Company will issue to the Registrar prior to the
Consolidation Record Time the required number of Ordinary Shares to
ensure the entire issued share capital of the Company is exactly
divisible by 750. Shareholders' interests in NM Inc following
completion of the Disposal will be identical to their holding in
the Ordinary Shares at the Disposal Record Time.
It is proposed that the Existing Ordinary Shares be re-organised
such that:
every 750 Existing Ordinary Shares be consolidated into 1 New
Ordinary Share of GBP7.50.
The 750:1 consolidation is intended to reflect a US$10.00 share
in NM Inc when the par value of US$0.0001 is combined with the
share premium of an NM Inc Share.
As all of the Existing Ordinary Shares are proposed to be
consolidated, the proportion of issued ordinary shares in the
Company held by each Shareholder immediately before and immediately
after the Share Consolidation will, save for fractional
entitlements (the treatment of which is described below), remain
unchanged.
Shareholder approval of the Share Consolidation is being sought
pursuant to Resolution 1 and is conditional on Shareholder approval
of the Disposal at the General Meeting.
Issue of additional Ordinary Existing Ordinary Shares
In anticipation of Resolution 1 being passed by shareholders,
the Company intends, immediately prior to the General Meeting, to
issue such number of additional Existing Ordinary Shares (being up
to 749 Existing Ordinary Shares) as will result in the total number
of Ordinary Shares in issue being exactly divisible by 750. Since
these additional Ordinary Shares will only represent a fraction of
a New Ordinary Share, this fraction will be combined with other
fractional entitlements and sold pursuant to the arrangements for
fractional entitlements described below.
Fractional entitlements
It is likely that the consolidation will result in fractional
entitlements to a New Ordinary Share where any holding is not
precisely divisible by 750. No certi cates will be issued for
fractional entitlements to New Ordinary Shares.
Accordingly, following the implementation of the Share
Consolidation, any Shareholder who as a result of the Share
Consolidation has a fractional entitlement to any New Ordinary
Share, will not have a resultant proportionate shareholding of New
Ordinary Shares exactly equal to their proportionate holding of
Existing Ordinary Shares.
Furthermore, any Shareholder who holds fewer than 750 Existing
Ordinary Shares as at the Consolidation Record Time will cease to
be a Shareholder. The minimum threshold to receive New Ordinary
Shares will be 750 Existing Ordinary Shares.
The Articles permit the Directors to sell shares representing
fractional entitlements arising from the proposed consolidation.
Any New Ordinary Shares in respect of which there are fractional
entitlements will therefore be aggregated and sold in the market
for the best price reasonably obtainable on behalf of shareholders
entitled to fractions. The Company will distribute the proceeds of
sale in due proportion to any such Shareholders in accordance with
the Articles (subject to the minimum threshold referred to in the
next paragraph).
In accordance with the Articles, in the event that the net
proceeds of sale to be distributed to any relevant shareholder
amount to GBP3 or less, the proceeds of sale are to be retained for
the bene t of the Company.
For the avoidance of doubt, the Company is only responsible for
dealing with fractions arising on registered holdings. For
Shareholders whose shares are held in the nominee accounts of UK
stockbrokers, the effect of the Share Consolidation on their
individual shareholdings will be administered by the stockbroker or
nominee in whose account the relevant shares are held.
The effect is expected to be the same as for shareholdings
registered in bene cial names however, it is the responsibility of
the stockbroker or nominee to deal with fractions arising within
their customer accounts, and not the responsibility of the
Company.
Following the Share Consolidation, current share certi cates in
regards to the Existing Ordinary Shares will become invalid and if
required, new share certi cates in regards to the New Ordinary
Shares will be issued to Shareholders.
4. PROPOSALS
Through the Transaction Documents, NM Inc has conditionally
agreed to acquire Rhapsody. The Disposal will be effected through a
series of steps which are set out in detail below.
The Disposal is subject to the ful lment of conditions
including, among others, the approval of the Shareholders to the
Share Consolidation being granted at the General Meeting and the
agreement by certain third parties to the novation of the relevant
assets. On completion of the Disposal, which is expected to occur
on or around 27 January 2022, subject to the Court's availability,
Shareholders will receive shares in NM Inc in exactly the same
proportions in which they will hold New Ordinary Shares (as at the
Disposal Record Time) such that their percentage shareholding in NM
Inc will be identical to their percentage shareholding in the
Company.
4.1 Asset Transfer to NewCo
On 1 October 2021, Rhapsody incorporated NewCo. Pursuant to the
Asset Purchase Agreements, NewCo has conditionally agreed to
acquire the Assets and Liabilities from the Company and MVR. In
consideration for the transfer, certain loan balances will be
created between NewCo and the Company and MVR, respectively, such
balances being equal to the net book values of the Assets and
Liabilities transferred by each of the Company and MVR.
On 2 December 2021, NewCo entered into the Asset Purchase
Agreements with the Company and MVR, respectively. Under the terms
of the Asset Purchase Agreements, the Company and MVR each agreed
to sell the Assets with full title guarantee to NewCo. Completion
of the transfer of the Assets is conditional on the Disposal being
approved at the General Meeting. The transfer of the Assets is also
subject to receipt of the necessary third party consents which will
be sought by the Company prior to completion of the Disposal. The
consideration due to NewCo shall be the sum of approximately
GBP13.6 million in respect of the transfer from the Company and the
sum of approximately GBP1.0 million in respect of the transfer from
MVR. The amount of the consideration shall be satis ed by an
inter-company interest free loan equal to the net market value of
the Assets owing by the Company and MVR to NewCo.
4.2 Transfer of Rhapsody by MVR US
On 2 December 2021, the Company entered into the Intragroup SPA.
Under the terms of the Intragroup SPA, the Company has
conditionally agreed to acquire the entire issued common stock in
Rhapsody from MVR US. Completion of the Intragroup SPA is subject
to and conditional on completion of the Asset Purchase Agreements
(as detailed above) prior to 28 February 2022. The consideration
for the transfer of the common stock in Rhapsody shall be the sum
of US$46.6 million which shall be satis ed by the Company by way of
discharge (in part) of loans owed by MVR US to the Company
equalling the market value of the shares in Rhapsody. The
Intragroup SPA contains customary representations and warranties
from both MVR US and the Company which terminate upon completion of
the Intragroup SPA.
4.3 Capital Reduction and Transfer of Rhapsody to NM Inc
Following completion of the Asset Purchase Agreements and the
Intragroup SPA, the Company has conditionally agreed to sell the
entire issued share capital of Rhapsody to NM Inc, pursuant to the
terms of the Share Purchase Agreement. Rhapsody is being sold to NM
Inc for a total consideration of US$46.6 million payable in NM Inc
Shares. Following completion of the Share Purchase Agreement, NM
Inc will own the Assets and Liabilities, via Rhapsody. The
Shareholders' ownership structure (as at the Disposal Record Time)
will be mirrored in NM Inc. Details of the NM Inc Shares to be
received by Shareholders pursuant to the terms of the Share
Purchase Agreement are set out at paragraph 6 below.
It is envisaged that the distribution of the NM Inc Shares will
be structured as a capital reduction demerger involving a reduction
of capital, which is a process requiring Court approval under the
Act. Under the scheme of reconstruction, the following steps will
take place:
a) the Company will reduce its share premium by an amount at
least equal to the market value of the NM Inc Shares to be issued
pursuant to the step set out in sub-paragraph (b) below;
b) the Company will make a repayment of capital (which shall be
equal to the market value of the NM Inc Shares to be issued as
described in this paragraph) to the Shareholders, which will be
satis ed by the Company transferring its entire shareholding in
Rhapsody (pursuant to the Share Purchase Agreement) to NM Inc in
consideration for NM Inc issuing shares in itself to those
Shareholders in respect of and in proportion to their holdings of
New Ordinary Shares in the Company; and
c) the Company will retain any balance from the Capital
Reduction following the repayment of capital and will transfer that
balance to its reserves to support any future distributions and for
other purposes.
The resolutions required to be passed to effect the Capital
Reduction are set out in the Notice of General Meeting.
As set out at paragraph 8 of Part 1 of the Circular, the
Disposal is of su cient size relative to that of Company to
constitute a disposal resulting in a fundamental change of business
pursuant to Rule 15 of the AIM Rules. Completion is, therefore,
conditional upon (amongst other things) the approval of
Shareholders at a General Meeting of the Company.
Subject to all the Resolutions (other than the Resolutions
regarding the De-Listing and Re-Registration) being passed at the
General Meeting, the Disposal will be completed as soon as the
Capital Reduction has been registered by the Registrar of
Companies. This is expected to occur within four weeks of the
passing of the Resolutions, subject to Court availability.
The Disposal cannot complete as described above unless the
Resolutions regarding the Share Consolidation and Disposal are
approved by Shareholders at the General Meeting. The Capital
Reduction cannot be implemented unless the Capital Reduction is
approved by Shareholders at the General Meeting and is subsequently
registered with the Registrar of Companies. The De-Listing is
subject to the approval of the De-Listing Resolution.
5. CAPITAL REDUCTION
5.1 Approval and Consent of Shareholders
In order to effect the Capital Reduction, the Company requires
the approval of its Shareholders in the manner described below. The
Capital Reduction cannot be effected unless the Company receives
the approval by the requisite majority of Shareholders.
The Shareholders are entitled to receive notice of, attend,
speak and vote at the General Meeting. The votes of the
Shareholders will be added together at the General Meeting and the
Resolutions to approve the Capital Reduction, which will be
proposed as special resolutions, require a majority in favour of at
least 75 per cent. of those Shareholders attending and voting in
person or by proxy in order to be passed.
It should be noted that if the Capital Reduction is not approved
by Shareholders at the General Meeting prior to the Longstop Date,
the Consideration Shares will be issued to the Company, rather than
the Shareholders, and NM Inc will become a subsidiary of the
Company. In such an event, Shareholders will not receive their
Consideration Shares until the Company's assets are distributed to
Shareholders in connection with the liquidation of the Company
pursuant to relevant legislation.
5.2 Court Approval
In addition to the approval by the Shareholders of the
Resolutions regarding the Capital Reduction, the Capital Reduction
requires the approval of the Court. Accordingly, following the
General Meeting, an application will be made to Court in order to
con rm and approve the Capital Reduction.
In providing its approval to the Capital Reduction, the Court
may require protection for the creditors (including contingent
creditors) of the Company whose debts remain outstanding on the
relevant date, except in the case of creditors which have consented
to the Capital Reduction. Any such creditor protection may include
seeking the consent of the Company's creditors to the Capital
Reduction or the provision by the Company to the Court of an
undertaking to deposit a sum of money into a blocked account
created for the purpose of discharging the non-consenting creditors
of the Company.
It is anticipated that the initial directions hearing in
relation to the Capital Reduction will take place as soon as
reasonably possible after the General Meeting, with the nal Court
Hearing taking place around mid-January 2022. The Capital Reduction
will become effective following the necessary registration of the
Court Order at Companies House.
The Board reserves the right to abandon or to discontinue (in
whole or in part) the application to the Court in the event that
the Board considers that the terms on which the Capital Reduction
would be (or would be likely to be) con rmed by the Court would not
be in the best interests of the Company and/or its Shareholders as
a whole. The Board has undertaken a thorough and extensive review
of the Company's liabilities (including contingent liabilities) and
considers that the Company will be able to satisfy the Court that,
as at the date (if any) on which the Court Order relating to the
Capital Reduction and the statement of capital in respect of the
Capital Reduction have both been registered by the Registrar of
Companies at Companies House and the Capital Reduction will
therefore become effective, the Company's creditors will be suf
ciently protected.
6. NM INC AND THE DISPOSAL
Subject to the Capital Reduction being approved by Shareholders
at the General Meeting, on completion of the Disposal, NM Inc will
issue Consideration Shares to the holders of New Ordinary Shares so
that they will hold one NM Inc Share for every one New Ordinary
Share held by them in the Company as at the Disposal Record Time
which is expected to be 6.00p.m. on 27 January 2022. Shareholders
on the Register at this time will participate in the Disposal and
will receive Consideration Shares. The Disposal is expected to
occur at 11.59p.m. on 27 January 2022. At this time the Share
Purchase Agreement will complete: (i) the Company will transfer
Rhapsody to NM Inc; and (ii) NM Inc will issue the Consideration
Shares to Shareholders on the register at the Disposal Record Time.
NM Inc's directors have the power to issue the Consideration
Shares. The Consideration Shares will not be freely tradable and
will be restricted until NM Inc lists on Nasdaq, which cannot be
guaranteed to occur. It is anticipated that NM Inc will seek to
secure a listing on Nasdaq during the rst half of 2023, once
appropriate disclosure documents have been prepared and audited
nancial statements for NM Inc for the year ended 31 December 2022
have been prepared.
Following a valuation exercise, it has been determined that the
fair market value of the invested capital of NM Inc on a pro forma
basis is US$46.6 million as at 31 August 2021 on the basis that the
Disposal occurred as at that date and the only assets and
liabilities within NM Inc are those that form part of the Disposal.
Please see Part 4 of the Circular for further detail.
NM Inc attaches great importance to the skills, expertise and
experience of the existing management and employees of the Group
and believes they will be an important factor in maximising the
opportunities and benefits of NM Inc post Completion and in the
deliverability of NM Inc's strategic objectives of a listing in the
US. Accordingly, in connection and as part of the Disposal certain
existing contracts of the Board together with all management and
employees, will transfer on the same terms across to NM Inc. It is
intended that Lansing Davis will step down from the Board at the
General Meeting.
Issue of Consideration Shares
It is proposed that NM Inc will engage the Transfer Agent to
issue the Consideration Shares on NM Inc's behalf upon completion
of the Disposal. The Transfer Agent will be provided with the
relevant details for each Shareholder by the Registrar. As NM Inc
is a US entity, Shareholders will not be able to hold NM Inc Shares
in CREST so the issue of the Consideration Shares shall be recorded
in book form by the Transfer Agent. No stock certi cates will be
issued to Shareholders in respect of the NM Inc Shares. Should a
Shareholder wish to receive a stock certi cate in respect of their
NM Inc Shares, this can be requested by contacting the Company on
the following email address transfers@napster.com.
It should be noted that the Consideration Shares issued upon
completion of the Disposal will be "restricted" under US securities
laws and will be marked as such on the register held by the
Transfer Agent and on any share certi cate which is issued. Subject
to certain limited exemptions pursuant to the US securities laws,
and certain exceptions, the stock cannot be transferred in the
United States or to US persons until speci ed information is made
available to shareholders, and transfers outside the US will need
to be made in compliance with Rule 904 of Regulation S). This will
mean that the Consideration Shares will not be as readily tradeable
as the Ordinary Shares have been and some Shareholders may not be
able trade their Consideration Shares at all for a period following
their issue. However, as noted above, following completion of the
Disposal it is intended that NM Inc will seek to list the NM Inc
Shares on Nasdaq within the next 18 months.
7. INVESTMENT INTO NM INC
The ongoing success of the business is dependent upon securing
an appropriate level of funding to support a successful launch of
the business' new music platform. NM Inc has engaged the services
of an investment bank headquartered in California (the 'Investment
Bank') who will sponsor and co-ordinate the process of listing NM
Inc on Nasdaq assuming the Disposal completes. It is anticipated
that immediately following the Disposal, the Investment Bank will
also assist NM Inc in seeking to secure initial interim funding for
NM Inc (the "Placement"), the proceeds of which will be used to
support the launch of the new music service and fund NM Inc's
operations prior to its intended listing in the US. As such, on 2
December 2021, an agreement to appoint the Investment Bank was
entered into and following the Disposal, the investment bank will
act as NM Inc's sole placement agent in connection with the
Placement. Pursuant to the Placement, NM Inc will seek to secure
initial interim funding of up to US$50 million.
Subject to a successful launch, and a period of subsequent
growth in which the business is able to demonstrate appropriate
traction in terms of user engagement and revenue generation, NM Inc
will seek to secure a listing on Nasdaq. It is anticipated that NM
Inc will seek to secure such a listing during the course of the rst
half of 2023, once audited results for NM Inc for the year ended 31
December 2022 have been prepared.
A pro forma balance sheet (as at 31 August 2021) for the Company
showing its expected assets immediately following completion of the
Capital Reduction and Disposal is set out in Part 4 of the
Circular.
A pro forma balance sheet (as at 31 August 2021) for NM Inc
showing its expected assets immediately following completion of the
Disposal is set out in Part 4 of the Circular.
8. AIM RULE 15
In accordance with AIM Rule 15, the Disposal constitutes a
fundamental change of business of the Company and in order to
effect the Disposal the Company requires the approval of its
Shareholders in the manner described below. The Disposal cannot be
effected unless the Company receives the approval by the requisite
majority of Shareholders.
The votes of the Shareholders will be added together at the
General Meeting and the Resolutions to approve the Disposal, which
will be proposed as an ordinary resolution, therefore requiring a
majority in favour of more than 50 per cent. of those Shareholders
attending and voting in person or by proxy in order to be
passed.
Subject to the requisite Shareholder approval being received at
the General Meeting, on completion of the Disposal, the Company
would cease to own, control or conduct substantially all of its
existing trading business, activities or assets. Following
completion of the Disposal therefore, the Company will become an
AIM Rule 15 cash shell. It is the Company's intention that once it
becomes an AIM Rule 15 cash shell, subject to Shareholder approval
of the De- Listing Resolution at the General Meeting, the Company
will pursue the De-Listing and Re- Registration.
9. DE-LISTING
The Directors have for some time been reviewing the merits or
otherwise of the Ordinary Shares continuing to be admitted to
trading on AIM and remaining a public limited company in the UK.
The following key factors have been taken into account by the
Directors in reaching the conclusion that, assuming completion of
the Disposal, the De-Listing is in the best interests of the
Company and its Shareholders as a whole:
-- following completion of the Disposal, there will be
negligible assets remaining within the Group which would not
justify the costs associated with remaining as a listed business;
and
-- as a cash shell, the Directors believe that the Company would
not be of suf cient scale to attract any interest from
institutional and other investors and would consequently suffer
from a lack of liquidity in its Ordinary Shares.
The Directors strongly believe that for the reasons referred to
above, should the Disposal be completed, the Company should seek
the cancellation of the admission of its Ordinary Shares to trading
on AIM and re-register as a private limited company.
In the event that the Disposal is completed and De-Listing does
not occur and, as an AIM Rule 15 cash shell, the Company does not
make an acquisition or acquisitions constituting a reverse takeover
under the AIM Rules within twelve months of becoming an AIM Rule 15
cash shell, then the Company's New Ordinary Shares would be
suspended from trading on AIM.
9.1 Effect of De-Listing
The principal effects that the completion of the Disposal and
the De-Listing would have on Shareholders are as follows:
9.1.1. the Company would no longer be subject to the AIM Rules
(and accordingly Shareholders will no longer be afforded the
protections given by the AIM Rules). Such protections include:
(a) the Company will not be bound to make any public
announcements of material events, or to announce interim or nal
results, announce substantial transactions and related party
transactions, or comply with the requirement to obtain shareholder
approval for reverse takeovers and fundamental changes in the
Company's business; and
(b) nnCap will cease to be the Company's nominated adviser and
broker and the Company will cease to be required to retain a
nominated adviser and broker;
9.1.2. the Company would no longer be subject to the DTRs and
would therefore no longer be required to speci cally disclose major
shareholdings in the Company;
9.1.3. the Company will no longer be subject to MAR regulating inside information; and
9.1.4. the Company would no longer be required to comply with
any of the additional corporate governance requirements applicable
to companies admitted to trading on AIM.
Shareholders should note that the Code will continue to apply to
the Company following the De-Listing and Re-Registration for a
period of ten years, provided the Company continues to have its
place of central management and control in the UK, the Channel
Islands or the Isle of Man. The Company will also continue to be
bound by the Act (which requires Shareholder approval for certain
matters) following the De-Listing. In addition, Shareholders should
note that they may find it difficult to sell their Ordinary Shares
after De-Listing and that there is no guarantee any purchaser would
be willing to purchase Ordinary Shares and that price offered may
not reflect the underlying value of the Company.
The above considerations are not exhaustive, Shareholders should
seek their own independent advice when assessing the likely impact
of the Disposal and De-Listing on them.
Shareholders who receive NM Inc Shares will receive certain
protections at such future time if and when NM Inc is successful on
listing on Nasdaq (or another stock exchange), for example:
i. NM Inc will become subject to US securities reporting
requirements pursuant to the US Securities Exchange Act of 1934, as
amended. This will, among other things, require ling quarterly and
annual reports, as well as interim reports for material events;
and
ii. NM Inc will become subject to Nasdaq's corporate governance
requirements, which, among other things, would require that the
directors of NM Inc to include a majority of 'independent'
directors (as de ned in the relevant Nasdaq rules), and require NM
Inc to obtain the approval of stockholders for material
transactions.
However, until such time as NM Inc is listed on Nasdaq (or
another stock exchange), there would not be a formal mechanism
enabling Shareholders to trade their NM Inc Shares through the
public market. Furthermore, as noted in paragraph 6 above, the NM
Inc Shares issued upon completion of the Disposal will be
"restricted" under US securities laws and will be marked as such on
the register held by the Transfer Agent and on any stock certi cate
which is issued. Accordingly, the NM Inc Shares will not be able to
be transferred (subject to certain exemptions) and thereafter,
should the listing on Nasdaq (or another stock exchange) not occur,
the NM Inc Shares may be more dif cult to sell compared to shares
of companies admitted to trading on AIM (or any other recognised
market or trading exchange).
9.2 De-Listing Process
The AIM Rules require an AIM company wanting the LSE to cancel
admission of its shares to trading on AIM to notify the LSE of the
intended cancellation and, separately, inform the LSE of its
preferred cancellation date at least 20 Business Days prior to such
date. The cancellation is conditional upon the consent of not less
than 75 per cent. of votes cast by Shareholders given in a general
meeting.
The Notice of General Meeting contains a special resolution
which proposes that the Company's admission to trading on AIM is
cancelled.
Subject to the passing of the De-Listing Resolution it is
expected that the last day of dealings in Ordinary Shares on AIM
will be 27 January 2022 and that De-Listing will be effective from
7.00 a.m. on 28 January 2022.
9.3 Re-Registration
Following the De-Listing there will be no need for the Company
to remain as a public limited company, which has additional
requirements over and above those imposed on a private limited
company by the Act. As a result, following the De-Listing the
Company will seek to re-register as a private company. In order for
the Company to effect the Re- Registration, Shareholders will be
asked to pass the special resolution set out in the Notice of
General Meeting which will be conditional on the approval of the
De-Listing Resolution and the De-Listing taking effect.
If the Resolution to approve the Re-Registration is passed, upon
the De-Listing taking effect, the Company will le the requisite
documents with the Registrar of Companies along with the relevant
fee for re-registration. The Re-Registration will become effective
upon the Registrar of Companies issuing a certi cate of
incorporation as a private limited company, which will be issued
once the Registrar is satis ed that no valid application can be
made to cancel the Resolution approving the Re-Registration.
If the Resolution to approve the Re-Registration is not passed,
the Company will still proceed with the De-Listing and the collapse
of the existing corporate structure.
10. THE CODE
The Code will continue to apply to the Company and Shareholders
will remain entitled to the protections afforded to them by the
Code until the tenth anniversary of the date on which admission of
the Ordinary Shares to trading on AIM is cancelled.
If the Disposal and the Capital Reduction are implemented,
substantially all of the Company's assets will be transferred to NM
Inc, which will, at the time of completion of the Disposal, be a
foreign entity to which the Code will no longer apply.
11. GENERAL MEETING
Set out at the end of the Circular is a notice convening the
General Meeting which is to be held at Reed Smith LLP at The
Broadgate Tower, 20 Primrose Street, London, England EC2A 2RS at
11.00 a.m. on 20 December 2021. At the General Meeting:
-- ordinary resolutions will be proposed to approve:
o the Share Consolidation (subject to the approval of the
Disposal); and
o the Disposal;
-- special resolutions of the Company will be proposed to:
o extinguish the amount standing to the credit of the Share
Premium Account;
o approve the De-Listing (subject to the approval of the
Disposal); and
o approve the Re-Registration (subject to the approval of the
De-Listing).
Completion of the Share Consolidation is conditional on
Resolution 1 being duly passed at the General Meeting. The Disposal
is conditional, amongst other things, on Resolution 2 being duly
passed at the General Meeting. The Capital Reduction is conditional
on Resolution 3 being duly passed at the General Meeting and upon
the Registrar of Companies subsequently registering the Capital
Reduction in accordance with the Act. Completion of the De-Listing
is conditional on the Disposal Resolution and the De-Listing
Resolution being duly passed at the General Meeting.
12. IRREVOCABLE UNDERTAKINGS
The Company has received irrevocable undertakings from
Shareholders other than the Shareholder Directors to vote in favour
of the Resolutions, in respect of their entire holdings of
724,449,636 Existing Ordinary Shares in aggregate, representing
approximately 24.5 per cent. of the Company's issued share capital
at the date of this announcement.
In addition, the Company has received irrevocable undertakings
from the Shareholder Directors to vote in favour of the
Resolutions, in respect of their own beneficial holdings (or
shareholdings they control) of, in aggregate, 633,167,326 Existing
Ordinary Shares, representing approximately 21.4 per cent. of the
Company's issued share capital at the date of this
announcement.
In aggregate, therefore, the Company has received irrevocable
undertakings to vote in favour of the Resolutions in respect of
1,357,616,962 Ordinary Shares representing approximately 45.8% of
the Company's issued share capital as at the date of this
announcement.
APPIX II
Expected Timetable of Events
2021
Anticipated date of posting of the Circular 3 December
and Proxy Form to Shareholders
-------------------------
Latest time and date for receipt of Proxy 11.00 am on 16 December
Forms for the General Meeting and record
date for the General Meeting
-------------------------
General Meeting 11.00 am on 20 December
-------------------------
Announcement of results of General Meeting, 20 December
including
Announcement of De-Listing
-------------------------
2022
-------------------------
Expected date that the Capital Reduction 26 January
will become effective
-------------------------
Record date in respect of the Share Consolidation 5.00 p.m. on 26 January
-------------------------
Expected date and time that the Share 8.00 a.m. on 26 January
Consolidation will become effective
-------------------------
Record date and time in respect of the 6.00 p.m. om 27 January
Disposal
-------------------------
Expected date and time for completion 11.59 p.m. on 27 January
of the Disposal and issue of Consideration
Shares
-------------------------
Earliest date of De-Listing / cancellation With effect from7.00
of admission of New Ordinary Shares from a.m. on 28 January
AIM
-------------------------
Expected date by which NM Inc will list By mid- 2023
on a recognised stock exchange in the
United States
-------------------------
1) If any of the above times and/or dates change, the revised
times and/or dates will be noti ed to Shareholders through a
Regulatory Information Service.
2) All references to time in this announcement are to London time, unless otherwise stated.
3) Any dates following the General Meeting are dependent on the
Resolutions being approved by Shareholders and are subject to court
availability in respect of the Capital Reduction
This information is provided by RNS, the news service of the
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END
MSCFLFLVFLLFIIL
(END) Dow Jones Newswires
December 02, 2021 08:14 ET (13:14 GMT)
Grafico Azioni Napster (LSE:NAPS)
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Da Dic 2024 a Gen 2025
Grafico Azioni Napster (LSE:NAPS)
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Da Gen 2024 a Gen 2025
