TIDMTPOP
RNS Number : 7589Q
The People's Operator PLC
08 June 2018
The People's Operator plc
("TPO", the "Company" or the "Group")
Disposal of US Business,
Notice of General Meeting,
Trading Update and
2017 Results
Further to the announcement of 15 May 2018, The People's
Operator (AIM: TPOP), the cause-based commercial mobile virtual
network operator, announces that the Company has entered into a
conditional sale and purchase agreement ("SPA") to transfer the
subscribers of The People's Operator USA LLC, the Company's US
subsidiary ("TPO USA"), to Ting Inc. ("Ting"), a US based mobile
virtual network operator (the "Disposal").
The principal terms of the SPA involve the transfer of TPO USA
customers to Ting. No other assets or liabilities will be
transferred to, or assumed by, Ting. The key financial terms of the
Disposal are as follows:
-- Ting will pay US$75 for each customer of TPO USA which, prior
to an agreed date, has been migrated to Ting; and
-- The sums payable to TPO USA will be payable following an
agreed transition period during which migration of the customers
and customer balances will be agreed and monitored.
The SPA also contains certain customary provisions including (i)
non solicitation provisions preventing TPO USA from soliciting
migrated customers for their business for a three year period from
completion of the Disposal and (ii) representations, warranties,
undertakings and indemnities given by TPO USA with respect to
various matters including, inter alia, the migrated customers.
Although the overall amount to be paid by Ting pursuant to the
Disposal will depend upon the number of migrated customers, the
Board's current estimate of the maximum amount it could expect Ting
to pay is approximately US$700,000. The Board stresses that the
amount could be significantly lower, depending on the levels of
customer migration as defined on the basis set out in the SPA.
In accordance with the AIM Rules, completion of the Disposal is
conditional on shareholder approval. It is envisaged the various
sums held as deposits and assurances by the Company's US
counterparties will revert to the Company on completion of the
Disposal.
Further information on the Disposal
Following the Disposal, whilst the Company will retain its
licence to operate in the US, the remainder of the US operation,
including the small office in New York, the outsourced customer
service operation and the outsourced legal and compliance functions
will be closed. This will result in considerable cost savings, with
the overall monthly cash burn of the Company reducing by
approximately 30%. The Company will be left focused exclusively in
the UK and the target overall number of customers required to reach
profitability at the net level will fall significantly.
The Company has been in discussion with Barclays Bank plc
("Barclays"), its sole secured creditor, regarding the use of
proceeds from the Disposal and the extent to which such proceeds
will be required to repay amounts outstanding to them, which
currently stand at GBP1,000,000. The extent to which funds received
by the Company from the Disposal are not required to be used to
repay facilities will dictate the ongoing strategy of the
Company.
The Company's cash balance is approximately GBP535,000, outside
of amounts that are held on deposit to support its current
operations both in the UK and the US. If Barclays requires full
repayment from the proceeds of the Disposal then the Board will
need to consider alternative financing for the UK operation.
The Company's overall tax-deductible trading losses since
flotation will remain wholly within The People's Operator plc, as
will its UK customer base and existing wholesale agreements with
Three.
If the Disposal does not proceed for whatever reason or fails to
realise the expected proceeds or Barclays requires all of the
realised proceeds to be used in paying down their facility then the
Board would have to urgently seek alternative funding for the
Company and there is no guarantee that this would be available.
It is therefore of the utmost importance that shareholders vote
in favour of the Resolution. If the Resolution is not passed by
shareholders at the General Meeting and the Disposal does not
proceed, the Company will need to urgently seek alternative sources
of funding and given the recent attempts by the Company to secure
alternative financing , this outcome is unlikely to be successful
or favourable to shareholders as in the absence of any other source
of funding, there may be no alternative but to place the Company
into insolvency proceedings.
Current Trading
Levels of subscriber acquisition in the UK showed a considerable
improvement in May, with net new sign-ups at their highest level
this year and over 50% higher than the previous high watermark in
March. Average Revenues per Customer (ARPU) from new subscribers
has increased and churn remains consistently low.
Update on release of 2017 results
The Company will not be in a position to send its report and
accounts for 31 December 2017 to shareholders until it has
shareholder approval at the General Meeting to complete the
Disposal and has agreed with Barclays the quantum of its facility
that will be required to be repaid from the proceeds of the
Disposal. Based on the current timetable the Directors believe that
the Company's annual report and accounts for the year ended 31
December 2017 can still be sent to shareholders before 30 June
2018.
Posting of Circular and Notice of General Meeting
The Disposal is conditional on shareholder approval. Therefore
the Company is today publishing and sending to shareholders a
Circular giving notice of a General Meeting of the Company to be
convened for 11:00 a.m. on 25 June 2018 at Unit 53, The Chocolate
Studios, 7 Shepherdess Place, London N1 7LJ.
As a result of the market price of an Ordinary Share now being
below its nominal value of GBP0.0005, it is not currently possible
to issue new Ordinary Shares to raise finance as it is not possible
to issue a share for a subscription price which is at a discount to
its nominal value. The second resolution to be proposed at the
General Meeting seeks to approve the sub-division of each ordinary
share of GBP0.0005 into one ordinary share of GBP0.0001 ("New
Ordinary Shares") and one deferred share of GBP0.0004 ("Deferred
Shares").
As set out above the Board may be required to raise further
finance as a matter of urgency and the Board therefore wishers to
be able to allot further shares for cash including, if relevant, on
a non pre-emptive basis. The third resolution to be proposed at the
General Meeting seeks to approve the allotment of up to GBP300,000
nominal in aggregate of further New Ordinary Shares, representing
an amount equal to up to approximately 100 per cent. of the
Company's issued share capital at the date of this document. The
Board also proposes that, in order to have maximum flexibility, it
be authorised to allot all such New Ordinary Shares for cash on a
non pre-emptive basis and therefore the fourth resolution to be
proposed at the General Meeting seeks to approve the allotment of
those New Ordinary Shares on a non pre-emptive basis.
The Circular will be available on the Company's website at
https://www.thepeoplesoperator.com/documentcentre/.
Further announcements will be made in due course.
For further details, please contact:
The People's Operator plc
Nick Dashwood Brown, Head of Investor Relations 07710 511259
finnCap Ltd
Stuart Andrews / Simon Hicks 020 7220 0500
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
This information is provided by RNS, the news service of the
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END
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(END) Dow Jones Newswires
June 08, 2018 02:30 ET (06:30 GMT)
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