TIDMPHRM
RNS Number : 6892N
Phorm Corporation Limited
01 February 2016
1 February 2016
Phorm Corporation Limited
("Phorm" or the "Company")
Subscription Update, Short Term Loan Agreement, New Subscription
and
Conversion of Existing Unsecured Term Loans
Phorm (AIM: PHRM), a leading advertising-technology company and
first party data platform provider, announces that, further to its
announcement of 18 January 2016 regarding a subscription to raise
approximately US$1 million (gross) (the "Subscription"), the sole
US based institutional subscriber (the "Subscriber") has to date
failed to transfer the requisite funds to settle the transaction as
required pursuant to the terms of a legally binding subscription
agreement entered into between the Company and the Subscriber (the
"Subscription Agreement").
The Subscriber has continued to provide assurances to the
Company that it will honour the terms of the Subscription Agreement
however, whilst productive dialogue continues between the
Subscriber and Phorm, there can be no guarantee that the
Subscription funds will be forthcoming and, accordingly, the
Company is taking appropriate legal advice with respect to
enforcing its rights under the terms of the Subscription Agreement.
A further announcement(s) will be made as and when appropriate.
Due to the Company's short term liquidity requirements arising
as a direct result of the delay in receiving the abovementioned
Subscription funds, including the need to make payments due to
certain creditors within the next week, and having obtained
appropriate legal advice, in order to avoid the Company becoming
insolvent and having to commence appropriate insolvency
proceedings, such as administration or liquidation, the Company has
today entered into an unsecured short term loan agreement with
Meditor European Master Fund Limited ("Meditor") for the provision
of a loan facility of up to US$2.75 million to be drawn down in
three tranches, dependent on certain conditions being satisfied as
set out below (the "Loan").
The Company has already served notice on Meditor in respect of
the immediate unconditional draw down of the first tranche of the
Loan amounting to US$250,000 ("Tranche 1"), whilst the second
tranche, amounting to a further US$250,000 ("Tranche 2") will be
provided on 4 February 2016, conditional on the Company completing
the Loan Conversion (as defined and set out below) and raising not
less than US$500,000 in equity with such funds to be received by no
later than 3 February 2016.
In this regard, the Company is pleased to announce that it has
received signed subscription agreements from FiveT Investment
Management Limited ("FiveT") and Arminius Verwaltung AG
("Arminius"), committing to invest US$250,000 each before expenses,
at a price of 1.2 pence per new ordinary share of nil par value
each in the capital of the Company ("Ordinary Shares") (the "Second
Subscription"), with such funds intended to be remitted to the
Company by 3 February 2016, thereby enabling the drawdown of
Tranche 2 of the Loan on 4 February 2016. A further announcement
will be made by the Company when the aforementioned funds in
respect of this Second Subscription are received. As part of the
Second Subscription, FiveT and Arminius will be granted warrants
("Warrants") over 25 per cent. of the amount invested in the Second
Subscription, with an exercise price of 1.5 pence per Ordinary
Share, which will be valid for a period of five years.
In addition, further to its announcement of 28 July 2015, the
Company announces that it has received notices from each of Mr
Michael Bigger and Arminius, pursuant to their options, electing to
receive repayment of the principal amount of their respective
existing unsecured term loans in full, together with accrued
interest thereon and the associated redemption fees, amounting to,
in aggregate, US$165,330 and US$413,325 respectively, by way of the
issue of 9,791,667 and 24,479,167 new Ordinary Shares to each of Mr
Bigger and Arminius respectively, at a revised exercise price of
1.2 pence per Ordinary Share (together the "Loan Conversion"). A
further announcement will be made by the Company in due course
following due processing of the option notices and allotment of the
new Ordinary Shares concerned.
Further to the receipt of funds pursuant to the draw down of
Tranche 1, Tranche 2 and the receipt of the proceeds of the Second
Subscription, the Board believes that the Company has adequate
working capital to support its activities until at least the end of
February 2016. In order to continue operating as a going concern
thereafter and in order to satisfy a condition to draw down of the
final US$2.25 million third tranche under the Loan ("Tranche 3"),
the Board will be seeking to secure further equity funding of at
least GBP2.5 million by 24 February 2016.
Principal Terms of the Loan
Meditor has agreed to provide Phorm with an unsecured term loan
of, in aggregate, up to US$2,750,000 principal amount. In
accordance with the terms of the Loan, Phorm shall pay interest on
the Loan amounts drawn down at a rate of 6 per cent. per annum. The
Loan, together with accrued interest thereon, is repayable 6 months
from the date of execution of the loan agreement although such
repayment date can be extended for a further 6 or 18 month period
by mutual agreement between the parties. Upon repayment, Phorm is
obliged to pay, at Meditor's sole election, either an additional
(i) 15 per cent. of the Loan principal amount drawn down; or (ii)
3.75 per cent. of the market value of the Ordinary Shares in issue,
calculated using the mid-market closing share price on the last
trading day prior to the repayment date, as a redemption fee (the
"Redemption Fee").
The Loan can be drawn down in up to three tranches, as
follows:
-- Tranche 1: US$250,000, for which a draw down notice has
already been served, incurring an arrangement fee of 4 million new
Ordinary Shares, to be issued to Meditor within one month of
drawdown (or such later date as agreed between the parties);
-- Tranche 2: US$250,000 to be drawn down on 4 February 2016,
subject to the completion of the abovementioned Loan Conversion and
the Company raising not less than US$500,000 in equity, at a price
at or around the prevailing market price, by 3 February 2016.
Meditor has advised the Company that the terms of the
abovementioned Second Subscription and the Loan Conversion are
sufficient to satisfy these conditions. Phorm will incur a further
arrangement fee of 4 million new Ordinary Shares, to be issued to
Meditor within one month of draw down (or such later date as agreed
between the parties); and
-- Tranche 3: US$2,250,000 to be drawn down on 24 February 2016,
subject to the Company having drawn down on Tranche 2 and the
Company raising a minimum of GBP2,500,000 via an equity raising, at
a price at or around the then prevailing market price, by 24
February 2016. Meditor may waive such conditions at its sole
discretion. This will incur a further arrangement fee of 30 million
new Ordinary Shares, to be issued to Meditor within one month of
draw down (or such later date as agreed between the parties).
In addition, Phorm has granted Meditor an option (the "Share
Option") such that it can elect that repayment of the principal
amount of the Loan, together with accrued interest thereon and the
Redemption Fee, be satisfied, in full or in part, by way of the
issue of new Ordinary Shares at a price which represents a 10 per
cent. discount to the lower of (i) the lowest price at which any
shares are issued by Phorm between the date of entering into the
Loan agreement and the date of repayment and (ii) the Company's
lowest closing share price in the preceding ten trading days ending
one week before the date of repayment. The Loan (including any
accrued interest thereon and the Redemption Fee) is capable of
early repayment by the Company in full without penalty.
Allotment of the new Ordinary Shares in respect of the
abovementioned share based arrangement fees and the Share Option,
if exercised, is subject to the mandatory takeover provisions of
the Singapore Takeover Code not being triggered or a waiver being
obtained as appropriate. The Company has committed to use its best
endeavours to seek appropriate waivers from the relevant
Singaporean authorities for such share based payments described
above, to the extent required. With respect to the arrangement
fees, should applicable waivers not be granted by 29 April 2016, to
the extent necessary, Phorm will be required to pay Meditor an
equivalent cash amount calculated by reference to the average
closing middle market price of an Ordinary Share for the five
trading days immediately preceding the relevant payment deadline
(the "Cash Equivalent Price"). With respect to the Share Option and
the Redemption Fee, should applicable waivers not be granted, to
the extent necessary, by the relevant repayment date, Phorm will be
required to pay Meditor an equivalent cash amount, by reference to
the Cash Equivalent Price.
Shareholders should note that, should the relevant waivers not
be forthcoming, to the extent required, and payments are required
to be made in cash, the Company may not have access to sufficient
funds at the appropriate time to be able to continue operating as a
going concern.
The Company intends to use the net proceeds from the Loan
tranches drawn down and from the Second Subscription for its
general working capital purposes.
Related Party Transactions
Meditor is currently interested in 233,556,251 Ordinary Shares,
representing approximately 22.7 per cent. of the Company's issued
ordinary share capital. In the event that Meditor was to convert in
full its pre-existing holding of GBP0.975 million (approximately
US$1.4 million) secured convertible loan notes, originally issued
in April 2013 and formally extended in July 2015, its shareholding
in the Company would increase to approximately 24.7 per cent.
February 01, 2016 10:49 ET (15:49 GMT)
Solely by virtue of Meditor currently being a substantial
shareholder in the Company, entering into the Loan constitutes a
related party transaction for the purposes of Rule 13 of the AIM
Rules for Companies. Accordingly, the directors of Phorm consider,
having consulted with Strand Hanson Limited, that the terms of the
Loan are fair and reasonable insofar as the Company's shareholders
are concerned.
In addition, pursuant to the abovementioned Second Subscription,
FiveT, a company associated with Mr Johannes Minho Roth, a
Non-Executive Director of the Company, is investing approximately
US$0.25 million for 14,618,750 new Ordinary Shares. This additional
investment will result in FiveT being interested, in aggregate, in
99,275,840 Ordinary Shares, representing approximately 9.7 per
cent. of the Company's issued ordinary share capital.
Mr Roth is the founding director, Chief Executive Officer and
majority shareholder of FiveT's parent company, FiveT Capital
Holding AG. The participation of FiveT in the Second Subscription
(including granting FiveT the Warrants) is therefore considered to
be a related party transaction for the purposes of Rule 13 of the
AIM Rules for Companies. Accordingly, the independent directors of
Phorm (being Messrs Smith, Fenwick, Alkin and Jieyuan) consider,
having consulted with Strand Hanson Limited, that the terms of
FiveT's participation in the Second Subscription are fair and
reasonable insofar as the Company's shareholders are concerned.
-Ends-
For further information please contact:
Phorm Corporation Limited
Timothy Smith (Chief Executive Officer) +44 (0) 20 3397 6001
Mirabaud Securities LLP (Broker) +44 (0) 20 7321 2508
Jason Woollard
Peter Krens
Strand Hanson Limited (Nominated Adviser) +44 (0) 20 7409 3494
James Harris Matthew Chandler James Dance
About Phorm:
Phorm is a leading advertising-technology and first party data
platform provider that enables brands and publishers to address
online users with personalised content and advertising. Phorm's
innovative platform delivers a more interesting online experience
for the user and addressable campaign results for marketers. For
more information, please visit: www.phorm.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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February 01, 2016 10:49 ET (15:49 GMT)
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