Falanx Group Limited Sale of Furnace and Directorate Change (5670X)
20 Dicembre 2019 - 8:00AM
UK Regulatory
TIDMFLX
RNS Number : 5670X
Falanx Group Limited
20 December 2019
19 December 2019
FALANX GROUP LIMITED
("Falanx", the "Group" or the "Company")
Sale of Furnace and Directorate Change
Falanx Group Limited (AIM: FLX), the global cyber security and
intelligence services provider, has sold its serverless stream
processing platform, Furnace ("Furnace"), to a team led by Falanx's
Chief Strategy Officer and Founder, John Blamire. As part of the
sale, John Blamire has resigned from the Board with immediate
effect. Following the sale, Falanx will continue to benefit from
Furnace technology through licensing and support agreements.
Background to the sale
Furnace allows users to span the rapidly growing array of Cloud
technology, increasingly used by business. Over the last few years,
Falanx has built a serverless platform to provide businesses of all
sizes and their in-house developers with the tools to build high
volume, data driven applications, such as required in Security
Monitoring, IoT, Marketing and Finance. Furnace aims to assist
enterprises in improving performance, visibility of risks and
reducing costs regardless of the location or type of data.
Whilst the Board remains of the view that there is a strong
potential market opportunity for Furnace, it has determined that
Furnace, which is pre-revenue and loss making, is non-core to
Falanx's cyber services market. Accordingly, the Board has resolved
to sell Furnace to a team led by Falanx's Chief Strategy Officer
and Founder, John Blamire and Falanx Technologies Chief Technology
Officer and Furnace's lead architect, Daniel Waite.
In the interim accounts to 30 September 2019, Falanx has
capitalised R&D costs of c.GBP1.2m relating to Furnace together
with goodwill on the balance sheet of c.GBP400k. For the first
eight months of the current financial year, Furnace made a loss of
GBP193,000 and received capital investment of GBP218,000.
The sale of Furnace will reduce Falanx's cash expenditure
requirements whilst providing mechanisms to protect not only its
investment to date but to ensure that Falanx benefits materially
from any increase in value. As part of the transaction, John
Blamire and Daniel Waite as well as certain external contractors
will be transferring with the business with immediate effect.
The transaction
Falanx is selling the business and assets of Furnace to Furnace
Technologies Limited (a company controlled by John Blamire and
Daniel Waite) for a sale price of GBP1.1m, to be funded by way of
an unsecured loan note, plus the issue and allotment to Falanx of
20% of the shares in Furnace Technologies Limited. The loan note
has a five year term and carries a 5% coupon. Furthermore, in the
event that Furnace is sold during the five years following the
initial sale by Falanx, Falanx would receive an additional 20% of
the proceeds of a sale in the first 12 months, amortising down to
zero over the remaining four years. Falanx also benefits from
certain accelerated loan repayment arrangements in the event of a
sale or change of control in Furnace. This will mean a
reclassification of Falanx's current R&D and other intangibles
to investments.
Related party transaction
The sale of Furnace to Furnace Technologies Limited, a company
in which John Blamire is a substantial shareholder and director, is
a related party transaction pursuant to rule 13 of the AIM Rules
for Companies. Accordingly, the Directors of Falanx (excluding John
Blamire) having consulted with the Company's nominated adviser,
Stifel, consider that the terms of the transaction are fair and
reasonable insofar as the Company's shareholders are concerned.
Mike Read, Chief Executive Officer of Falanx, commented:
"Whilst Furnace is an exciting platform with a potentially large
market opportunity, it is non-core to the Group's cyber focus. The
sale will reduce Falanx's cash expenditure whilst ensuring that
Falanx benefits materially from any increase in value. We believe
that through the management buy-out, John and his team will be able
to better focus and exploit its potential in addition to freeing
Falanx to progress its core Cyber services business. We wish John
and the team, who are business associates and good personal
friends, the best of luck with this project."
John Blamire, Chief Executive Officer of Furnace, commented:
"I am sad to be leaving Falanx which I brought to IPO in 2013
and would like to thank every member of the Falanx team for their
support, loyalty and hard work over the years. I am also
tremendously excited by the opportunity Furnace represents, not
only in continuing to support the growth of Falanx and its
technology requirements but also in its vast potential beyond the
realms of Cyber Security."
ends
Enquiries:
Falanx Group Limited Via IFC
Alex Hambro Chairman
Mike Read CEO
Ian Selby CFO
Stifel Nicolaus Europe Limited,
Nomad and Joint Broker
Alex Price / Fred Walsh / Neil Shah + 44 (0) 207 710 7600
Turner Pope International Limited,
Joint Broker
James Pope / Ben Turner +44 (0) 203 621 4120
IFC Advisory Ltd
Financial PR & IR
Graham Herring / Zach Cohen +44 (0) 203 934 663
About Falanx
Falanx Group Limited, is a global intelligence and cyber defence
provider working with blue chip and government clients. For more
information: http://www.falanx.com/
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END
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