TIDMTRAF
RNS Number : 0042R
Trafalgar Property Group PLC
25 June 2020
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the
publication of this announcement via a Regulatory Information
Service, this inside information is now considered to be in the
public domain.
25 June 2020
TRAFALGAR PROPERTY GROUP PLC
("Trafalgar" or the "Company")
GBP750,000 Conditional Placing and Subscription
Debt Conversion and Issue of Convertible Loan Notes
Notice of General Meeting
Highlights
-- Proposed GBP750,000 placing and subscription at 0.08p per share (the "Placing");
-- Net proceeds will allow the part repayment of existing
indebtedness and position the Company to take advantage of new
opportunities;
-- The Placing and Subscription Shares will represent
approximately 65.78 per cent of the issued share capital of the
Company, as enlarged by the issue of the Placing and Subscription
Shares;
-- Issuance of new Convertible Loan Notes ("CLNs"), convertible
at 0.2p per share, 2.5 times the Placing Price;
-- Conversion and part repayment of debt to convertible loan notes;
-- Placing and Subscription is conditional, inter alia, on the
approval of shareholders at a general meeting of the Company to be
held on 13 July 2020 (the "GM") of resolutions to, inter alia,
effect a Share Reorganisation;
-- Warrants over ordinary shares will be issued on the basis of
one for every Placing and Subscription Share and upon conversion of
the CLN, exercisable at 0.2p for 2 years, conditional, inter alia,
on all resolutions being passed at the General Meeting
Paul Treadaway, Chief Executive Officer of Trafalgar, said : "
The funds raised and the substantial readjustment in the PLC's debt
profile, further strengthens our financial position as we have a
stronger balance sheet and far better placed to ensure that
Trafalgar can take advantage of the increasing opportunities that
we see ahead. I'm pleased that in this extremely challenging time
our existing investors, as well as new investors, have shown
their support for this fundraise, our strategy and our future. "
1. Introduction
The Company announces that it is posting a circular to
shareholders today containing details of a conditional placing and
subscription with investors and Directors, to raise GBP750,000
before expenses through the issue of 937,500,000 New Ordinary
Shares at the Issue Price (the "Placing and Subscription
Shares").
The purpose of the circular is to provide details of the Placing
and Subscription, to explain the background to and the reasons for
the Placing and Subscription and why the Directors recommend that
Shareholders vote in favour of the Resolutions to be proposed at
the General Meeting. As the Issue Price is below the nominal value
of the Company's Existing Ordinary Shares, the Company needs to
effect the Share Reorganisation to facilitate the Placing and
Subscription, and further details of the Share Reorganisation are
set out in paragraph 5 below. In addition, the Company has agreed
to convert GBP600,000 of its intercompany debt into a CLN, and
further details of the CLN are set out in paragraph 4 below.
The Proposals are each conditional, inter alia, on the passing
of the Resolutions by Shareholders at the General Meeting, notice
of which is set out at the end of the circular. If the Resolutions
are passed, admission of the Placing and Subscription Shares to
trading on AIM is expected to occur at 8.00 a.m. on 14 July
2020.
2. Background to and reasons for the Placing and Subscription
The Directors believe that it is prudent for the Company to seek
further capital at this time to fund the Group's business. The use
of proceeds of the Placing and Subscription are set out in
paragraph 6 below.
The Directors believe the Placing and Subscription to be the
most appropriate way to provide the capital necessary to meet the
Company's future requirements. As at 23 June 2020, the Company held
cash and cash equivalents of approximately GBP114,338 (unaudited),
and all bank debt is held within its subsidiaries, there is
therefore is no bank debt at the PLC level.
3. Details of the Placing and Subscription
3.1. Placing and Subscription
Peterhouse has conditionally raised GBP750,000 before expenses
through the Placing and Subscription. All Placees and the
Subscriber will receive a one for one warrant exercisable at 0.2p
until the second anniversary of issue. Application will be made to
the London Stock Exchange for the New Ordinary Shares, including
the Placing Shares and the Subscription Shares, to be admitted to
trading on AIM and it is expected that Admission will become
effective and that dealings in the New Ordinary Shares, will
commence on AIM at 8.00 a.m. on 14 July 2020. Assuming no options
or warrants are exercised prior to Admission, the Placing and
Subscription Shares will represent approximately 65.78 per cent of
the ordinary share capital of the Company in issue immediately
following Admission.
Conditional on the Resolutions being approved by Shareholders at
the General Meeting, the Company has agreed to issue Peterhouse
Capital Limited a warrant which is exercisable over 3 per cent. of
the Company's issued share capital from time to time. This warrant
will be exercisable at the Issue Price until the second anniversary
of issue.
3.2. General
All Placing and Subscription Shares will be issued credited as
fully paid and will rank pari passu in all respects with the
Ordinary Shares in issue from time to time, including the right to
receive all dividends and other distributions declared on or after
the date on which they are issued.
For details as to the expected date and times by which certain
events (e.g. Admission, the crediting of CREST accounts and the
dispatch of share certificates) are expected to happen in relation
to the Placing and Subscription Shares and the Share
Reorganisation, please refer to the information on page 4 (Expected
Timetable of Principal Events) of the circular.
4. The CLN
The Company has an intercompany debt of GBP758,000 which is owed
to TNH. To clear this outstanding debt, the Company has entered
into an agreement under which, conditional upon the passing of the
resolutions at the General Meeting and completion of the Placing
and Subscription, TNH has agreed with the Company to write off
GBP600,000 of this debt in consideration for the Company agreeing
to issue a convertible loan note for GBP600,000 to Mr Johnson, in
consideration for which Mr Johnson agrees to write off GBP600,000
of his outstanding loans to TNH.
The CLN is convertible into 300,000,000 New Ordinary Shares at
0.2p per ordinary share for a period of two years and, upon
conversion a one for one warrant will be issued exercisable at 0.2p
until the second anniversary of issue. The CLN is unsecured with
nil coupon and can be converted at any time by Mr Johnson, subject
to his entire holding being less than 29.99 per cent. Should Mr
Johnson convert the entire CLN, his holding would increase to 28.22
per cent. of the Fully Enlarged Share Capital.
The balance of this intercompany debt, being GBP158,000, will be
paid in cash from the Placing and Subscription Proceeds to TNH, who
will pay this directly to Mr Johnson. Following these steps, Mr
Johnson will still be owed approximately GBP1,415,000 by Trafalgar
New Homes Limited.
5. Share Reorganisation
5.1. General
The nominal value of the Existing Ordinary Shares is currently
0.1p per share. As a matter of English law, the Company is unable
to issue the Placing and Subscription Shares at an issue price
which is below their nominal value. It is therefore proposed to
sub-divide the entire existing share capital, consisting of
487,690,380 Ordinary Shares of 0.1p nominal value each, into
487,690,380 Ordinary Shares of 0.01p nominal value each and
487,690,380 Deferred Shares of 0.09p nominal value each, thus
enabling the Company to lawfully implement the Placing and the
Subscription at the Issue Price. The Deferred Shares would be
consolidated into 48,769,038 New Deferred Shares of 0.9p and will
rank pari passu with the Existing Deferred Shares.
Each New Ordinary Share resulting from the Share Reorganisation
will have the same rights (including voting and dividend rights and
rights on a return of capital) as each Existing Ordinary Share
except that they will have a nominal value of 0.01 pence each.
The New Deferred Shares will, as their name suggests, have very
limited rights which are deferred to the Ordinary Shares and will
effectively carry no value as a result. Accordingly, the holders of
the New Deferred Shares will not be entitled to receive notice of,
attend or vote at general meetings of the Company, nor be entitled
to receive any dividends or any payment on a return of capital
until at least GBP100,000 has been paid on each Ordinary Share. No
application will be made for the New Deferred Shares to be admitted
to trading on AIM.
The Company will also be given power to arrange for all the New
Deferred Shares to be transferred to a custodian or to be purchased
for nominal consideration only without the prior sanction of the
holders of the Deferred Shares. No share certificates for the New
Deferred Shares will be issued.
No new certificates for the Existing Ordinary Shares will be
dispatched if the Share Reorganisation becomes effective.
A request will be made to the London Stock Exchange to reflect
on AIM the sub-division of the Existing Ordinary Shares into New
Ordinary Shares of 0.01 pence each. Each Existing Ordinary Share
standing to the credit of a CREST account will be subdivided into
one New Ordinary Share of 0.01 pence each and one Deferred Share of
0.9 pence each at 6.00 p.m. on 13 July 2020.
Following the Share Reorganisation, the ISIN code for the
Ordinary Shares will remain unchanged.
The Directors intend to seek a share consolidation at the next
Annual General Meeting to reduce the overall number of ordinary
shares in issue.
5.2. Taxation
Any person who is in any doubt as to his tax position or who is
subject to tax in a jurisdiction other than the United Kingdom is
strongly recommended to consult his professional tax adviser
immediately.
6. Use of Proceeds
The Company is raising funds for working capital, to pay the
balance of the loan outstanding with TNH and seeking other
acquisition opportunities.
7. Shareholder Approval
For the Proposals to proceed, Shareholder approval is required
to:
(a) effect the Share Reorganisation; and
(b) give the Directors the authority to allot the Placing and
Subscription Shares and to dis-apply statutory pre-emption rights
in respect thereof, and to provide headroom up to an aggregate
nominal amount of GBP500,000 for future share issues including upon
any conversion of the CLN and/or warrants.
In order to obtain the necessary Shareholder approval, a General
Meeting of the Company is to be held at which the Resolutions will
be proposed. Further information regarding the General Meeting is
set out in paragraph 9 below.
The Directors believe the Placing and Subscription to be the
most appropriate way to provide the capital necessary to meet the
Company's future requirements. Should the Placing and Subscription
not proceed for any reason, the Company would need to find
alternative funding and face future uncertainty. The Directors urge
Shareholders to vote in favour of the Resolutions set out in the
Notice.
8. Related Party Transaction
Paul Treadaway , who is a Director, will subscribe for 81,2
50,000 Subscription Shares and be given a one for one warrant as
part of his subscription . In addition, Christopher Johnson, who is
a substantial shareholder, has agreed to convert GBP600,000 of his
outstanding loan with TNH into GBP600,000 CLNs convertible at 0.2p
and a one for one warrant exercisable at 0.2p until the second
anniversary of issue. The Subscription and the issue of the CLN ,
which are conditional on the passing of the Resolutions and
Admission, constitute related party transaction s under Rule 13 of
the AIM Rules for Companies. The Independent Director s , being
Norman Lott and James Dubois consider, having consulted with SPARK,
the Company's Nominated Adviser, that the terms of Subscription and
the issue of the CLN are fair and reasonable insofar as the
Company's Shareholders are concerned.
Following the issue of the Placing and Subscription Shares, Paul
Treadaway's holding will increase to 187,734,658 New Ordinary
Shares which represents approximately 13.13 per cent of the
Enlarged Issued Share Capital.
9. General Meeting
A notice convening the General Meeting to be held at the offices
of Peterhouse Capital Limited, 3(rd) Floor, 80 Cheapside, London
EC2V 6EE at 9.00 a.m. on 13 July 2020 is set out at the end of the
circular. Due to current restrictions on public gatherings, it will
not be possible for shareholders to attend the General Meeting in
person unless both the coronavirus (COVID-19) situation and the
applicable guidance have changed by the date of the meeting. The
Company will provide any status update on its website at
www.trafalgarproperty.group, but Shareholders should assume that
they will not be permitted entry if they turn up at the General
Meeting.
10. Recommendation
The Directors consider that the Proposals will promote the
success of the Company for the benefit of its members as a whole.
Accordingly, the Directors unanimously recommend Shareholders to
vote in favour of the Resolutions at the General Meeting as they
intend to do in respect of their own beneficial holdings of
110,984,658 Ordinary Shares representing approximately 22.76 per
cent. of the Existing Ordinary Shares in issue as at the last
practicable date before publication of the circular.
Enquiries:
Trafalgar Property Group Plc
James Dubois +44 (0) 1732 700 000
Spark Advisory Partners Ltd -AIM Nominated
Adviser
Matt Davis +44 (0) 20 3368 3550
Peterhouse Capital Limited - Broker
Duncan Vasey/Lucy Williams +44 (0) 20 7409 0930
GLOSSARY
The following definitions apply throughout this document unless
the context otherwise requires:
"Act" the Companies Act 2006;
"Admission" the admission of the Placing Shares to
trading on AIM having become effective
in accordance with the AIM Rules;
"AIM" the AIM Market, a market operated by the
London Stock Exchange;
"AIM Rules" together, the rules published by the London
Stock Exchange governing the admission
to, and the operation of, AIM, consisting
of the AIM Rules for Companies (including
the guidance notes thereto) and the AIM
Rules for Nominated Advisers, published
by the London Stock Exchange from time-to-time;
"Articles" the articles of association of the Company
(as amended from time to time);
"Board" or "Directors" the board of directors of the Company,
as at the date of this document, whose
names are set out on page 9 of this document
;
"Circular" or "this this document, including the Notice at
Document" the end of this document and the Form of
Proxy;
"City Code" City Code on Takeover and Mergers;
"CLN" the GBP600,000 convertible loan note between
the Company and Christopher Johnson;
"CLN Shares" 300,000,000 New Ordinary Shares to be issued
to Christopher Johnson upon conversion
of the CLN into New Ordinary Shares;
"Company" or "Trafalgar" Trafalgar Property Group Plc, incorporated
and registered in England & Wales under
the Companies Act 1985, registered number
04340125 and having its registered office
at Chequers Barn, Chequers Lane, Bough
Beech, Edenbridge, Kent, TN8 7PD;
"CREST" the relevant system for paperless settlement
of share transfers and the holding of shares
in uncertificated form, which is administered
by Euroclear UK & Ireland Limited;
"CREST Regulations" the Uncertificated Securities Regulations
2001 (S.I. 2001/3755), as amended from
time to time;
"Effective Time" 6.00 p.m. on 13 July 2020 (or, if the General
Meeting is adjourned, 6.00 p.m. on the
date of the adjourned General Meeting);
"Enlarged Deferred the 287,144,228 New Deferred Ordinary Shares
Share Capital" in issue following the Share Reorganisation;
"Enlarged Share the 1,425,190,380 New Ordinary Shares in
Capital" issue following the Placing and the Subscription;
"Existing Deferred the 238,375,190 ordinary shares of 0.9p
Shares" each in issue at the date of this document;
"Existing Ordinary the 487,690,380 ordinary shares of 0.1p
Shares" each in issue at the date of this document;
"FCA" the Financial Conduct Authority;
"Form of Proxy" the form of proxy for use by the Shareholders
in connection with the General Meeting
"Fully Enlarged the 1,725,190,380 New Ordinary Shares in
Share Capital" issue following the Placing, Subscription
and the CLN Shares;
"General Meeting" the General Meeting of the Shareholders
or "GM" of the Company to be held at 13 July 2020
at 9.00 a.m.;
"Group" the Company together with its subsidiaries,
both directly and indirectly owned;
"Issue price" 0.08 pence per Placing and Subscription
Share;
"London Stock Exchange" London Stock Exchange plc;
"New Deferred Shares" 48,769,038 deferred shares of 0.9 pence
each in the capital of the Company following
the passing of the Resolutions;
"New Ordinary Shares" the ordinary shares of 0.01 pence each
in the capital of the Company upon the
Share Reorganisation becoming effective
at the Effective Time;
"Notice" the notice of the General Meeting, which
is set out at Part II of this document;
"Ordinary Shares" ordinary shares in the capital of the Company
having a nominal value of 0.1p each prior
to the Share Reorganisation becoming effective
at the Effective Time and having a nominal
value of 0.01 pence upon the Share Reorganisation
becoming effective at the Effective Time;
"Peterhouse" Peterhouse Capital Limited, the Company's
Broker;
"Placee" a subscriber for Placing Shares under the
Placing;
"Placing" the conditional placing of the Placing
Shares by Peterhouse with certain institutional
and other investors at the Issue Price;
"Placing Shares" the 856,250,000 New Ordinary Shares to
be issued pursuant to the Placing;
"Proposals" the Placing, the Subscription, the issue
of the CLN and the Share Reorganisation;
"Resolutions" the resolutions to approve the Proposals,
which are set out in the Notice at the
end of this document;
"Share Reorganisation" the proposed subdivision of each Existing
Ordinary Share with a nominal value of
0.1p into one New Ordinary Share with a
nominal value of 0.01p and one Deferred
Share with a nominal value of 0.09p. Those
Deferred Shares are then consolidated with
a nominal value of 0.9p, further details
of which are set out in paragraph 5 of
the Letter from the Chairman in this document;
"Shareholder(s)" holder(s) of the Ordinary Shares;
"SPARK" SPARK Advisory Partners Limited, the Company's
Nominated Adviser;
"Subscriber" Paul Treadaway;
"Subscription" the conditional subscription of 81,250,000
New Ordinary Shares by Paul Treadaway at
the Issue Price;
"TNH" Trafalgar New Homes Limited, a wholly owned
subsidiary of the Company;
"United Kingdom" the United Kingdom of Great Britain and
or "UK" Northern Ireland; and
"Uncertificated" recorded on the register of Ordinary Shares
or "in Uncertificated as being held in uncertificated form in
Form" CREST, entitlement to which by virtue of
the CREST Regulations, may be transferred
by means of CREST.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCFZGZVLDNGGZM
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