TIDMSEFA
RNS Number : 2989A
Shefa Gems Ltd
01 June 2021
B"H
1 June 2021
Shefa Gems Ltd.
("Shefa Gems" or the "Company")
Proposed Combined Transaction that includes:
(a) Proposed disposal of Mining Business to shareholders
(b) Proposed Changes of the Board
(c) Creation of a cash shell and Subscription to raise new capital
(d) Future Acquisition Strategy, Share Consolidation and
Proposed Change of Name
Shefa Gems (LSE: SEFA), a company focused on advanced
exploration and development of multi-gemstone mining projects in
Northern Israel, is pleased to announce that it has entered into an
Agreement ("Agreement") with a group of investors (the "Shany
Group") to distribute the Company's current mining business to all
of the Company's existing shareholders via a dividend in specie
("Proposed Distribution"), undertake a share consolidation, raise
new funds for the Company, change the Company's name, make certain
changes to the board and change the Company's focus of activity as
a cash shell by seeking an acquisition in the web technology and
software space (together "the Proposals").
Since the Proposed Distribution and all other Proposals under
this announcement depend in part on each other - they will be
defined hereinafter together as "the Proposed Combined Transaction
".
As the Proposed Combined Transaction will constitute a
fundamental change of business in the Company under Israeli law, it
will require the approval of shareholders at a Special General
Meeting ("SGM"). The Company intends to publish a circular to
Shareholders ("Circular") for the SGM in the next few days.
Conditional upon the Proposed Combined Transaction being
approved by Shareholders at the SGM, and upon completion of the
Proposed Distribution, the Company proposes:
a) To undertake a share consolidation on the basis of 100
ordinary shares of NIS 0.1 each ("Ordinary Shares") for 1 Ordinary
Consolidated Share of NIS 10.0 each ("Ordinary Consolidated Share")
(the "Share Consolidation") and after the consolidation above, to
approve the increase of the registered capital of the Company to
1,000,000,000 ordinary shares of NIS 10 each;
b) To approve the cancelation of the 'par value' of the Ordinary
Shares of the Company in the Israeli Registrar of Companies.
c) To appoint new directors and to terminate the tenure of some
of the current directors of the Board;
d) After the completion of all the actions described above, to
undertake an equity subscription of New Ordinary Consolidated
Shares at a price of 0.0353 GBP per New Ordinary Consolidated Share
to raise a total of USD 1,050,000 (GBP: 756,000) from members of
the Shany Group and other unrelated parties ("the
Subscription").
e) to change the name of the Company to Alef Bet Advanced Technologies (2021) Limited ; and
f) After performing the above steps, which will provide the
Company with cash but no other assets - to advance the change in
the Company's focus of activity by seeking acquisition
opportunities in the web technology and software space.
Further details of the Proposals are set out below and will be
outlined in the Circular which is expected to be sent to
shareholders in the next few days and will also be made available
for download from the Company's website at www.shefagems.com. The
Circular containing a notice of SGM (the "Notice"), will seek
approval from Shareholders to the Proposed Combined
Transaction.
Tali Shalem, CEO of Shefa Gems, commented:
"This combined transaction we are asking shareholders to approve
(as detailed in this RNS and which will be outlined in more detail
in the Circular of the SGM), is the result of lengthy negotiations,
which were carried out under a number of key objectives, including
both the benefits for the Company and its Shareholders (including,
promoting profitability and new opportunities in a rising sector
using the Israeli innovation opportunities, closing burdensome
liabilities, cutting costs, and also preserving the shareholders'
holdings in the gem mining in Israel (the Company's original field
of activity)."
The Proposed Distribution of the Company's Mining Business
The Company currently operates multiple exploration sites
located across the Kishon River catchment area of Haifa and Mt
Carmel in Northern Israel, covering a total area of 615 km(2) ,
some 85 km north of Tel Aviv.
Since the Company's financial results show a significant
increase in exploration expenses and in light of new information on
the complexity of the regulatory procedures in relation to
licensing of the commercial gem mining in Israel, which became
clearer to the Company through the promotion of the regulatory
procedures for the mining license in the Kishon area - the Company
commenced an internal strategic review of its business
activities.
Following this review, the board commissioned an independent
review of the value of the mining assets carried in the financial
statements. Since it is now apparent that due to recent regulatory
changes the exploitation of these assets is likely to take longer
than previously anticipated and in addition may require further
funding as a result . While in the longer term it is hoped that the
eventual value of the mining assets will prove to be attractive the
present day value of these assets needs to be impaired to reflect
the current uncertainties on the timing of eventual exploitation
and accordingly it is proposed to imper that value to a more
adjusted level.
The Company also re-examined the share trading capacity when it
is based solely on gemstone exploration activity (pre-profitable
mining), both by observing the Company's stock trading in recent
years, , and also by observing the stock trading of other
exploration companies in the world - showing that the development
of the mining projects does not justify the additional costs of a
listed company and that any future funds raised on the basis of
these mining prospects, should be entirely focussed on the
development of these further mining opportunities.
Accordingly, it was first decided to transfer all the Company's
exploration and mining assets to the Company's fully owned (100%)
subsidiary, Shefa in Israel (G.M.) Ltd. (a private company
registered in Israel - the "Subsidiary") - with the intention that,
following Shareholder approval, the Company will distribute the
ownership of the Subsidiary from the Company to all of the
Company's existing Shareholders via a dividend in specie. Each
Shareholder, holding Ordinary Shares in the Company at the date of
this announcement (the "Record Date"), will receive their
proportionate consideration in the Subsidiary shares in accordance
with their current percentage holding in the Company. The shares in
the Subsidiary will be unlisted but the Company will use its
reasonable endeavours to enable those shareholders wishing to
dispose of their holdings to find suitable purchasers.
Since the Subsidiary is an Israeli private company, the
registration of the Subsidiary shares in the name of each
shareholder will be formally registered, as required by Israeli
Companies Law.
Details of the Subsidiary's Management, plans for further
development and financing of the gem exploration operations in
Israel will be detailed in the Circular.
It should be clarified that the existing warrants, and all
additional rights arising from investment agreements entered into
by the Company to date (before the current transaction) - remain as
they were and without change (i.e. do not pass to the subsidiary) -
and the public company remains committed to them also after the
approval
of this combined transaction.
It should also be emphasized that all the financing costs and
the ongoing costs of the subsidiary as well as all the costs of the
procedures that will be required for the purpose of distributing
via a dividend in specie, will be at the expense of the
subsidiary.
Share consolidation, increase in the registered capital and
cancelation of the par value
The Company proposes to undertake a share consolidation on the
basis of 100 Ordinary Shares for 1 Ordinary Consolidated Share.
Shareholders should divide their existing ordinary shares by 100
to get their number of Ordinary Consolidated Shares. As all
ordinary shareholdings in the Company will be consolidated, the
number of Ordinary Shares held by each Shareholder will reduce, but
the proportion of the total issued share capital of the Company
held by each Shareholder immediately before and following the Share
Consolidation will remain unchanged. Apart from having a different
nominal value, each Ordinary Consolidate Share will carry the same
rights as set out in the Company's Articles of Association that
currently attach to the Existing Ordinary Shares.
Subsequent to the Share Consolidation, the Board further
proposes to increase the registered share capital of the Company to
1 billion Ordinary Consolidated Shares in the capital of the
Company and to cancel the par value of the Ordinary Shares.
Shareholder approval will also be sought to approve an amendment of
the Company's Articles of Association in accordance with the
updated composition of the share capital of the Company.
The Share Consolidation will become effective after the approval
of Shareholders at the SGM, and trading in the New Ordinary
Consolidated Shares will commence shortly thereafter as detailed in
the Circular.
Technical changes such as ISINs, CREST Accounts and new share
certificates, will be detailed in the Circular.
Subscription
As part of the Proposals, the Company intends to undertake an
equity subscription of New Ordinary Consolidated Shares at a price
of 0.0445 per New Ordinary Consolidated Share ("Subscription
Shares") to raise a total of USD 1,050,000 (GBP: 756,000) from the
Shany Group and other unrelated parties.
The Subscription Shares will, in aggregate, represent
approximately 85% of the Company's issued share capital. The
Subscription Shares will be fully paid and rank pari passu in all
respects with the Company's Existing Ordinary Shares.
Following the Subscription, existing Shareholders will be
diluted by 85% and will hold approximately 15% of the Enlarged
Issued Share Capital of the Company. Members of the Shany Group
will hold approximately no more than 70% of the Enlarged Issued
Share Capital. The free float of the Company is expected to be
approximately 30%.
The issue of the Subscription Shares will trigger the
requirement for a prospectus to be published in respect of those
shares. In implementing the Proposals, and specifically the
Subscription, the Company intends at all times to comply with
Listing Rule 14. Specifically:
a) the free float distributed to the public will remain above 25% (LR 14.2.2); and
b) following allotment of the Subscription Shares, a prospectus
will be prepared to enable those shares to be admitted to trading
on the Main Market of the London Stock Exchange (LR 14.3.4).
Use of Proceeds
The gross proceeds receivable by the Company pursuant to the
Subscription will be USD 1,050,000 (GBP 756,000), before
expenses.
Funds raised will be used to close all of the Company's
outstanding financial liabilities at the date of signing of the
Agreement.
The remaining balance will be used for general working capital
purposes by the Company in pursuance of its new acquisition
strategy as outlined in more detail below.
As a result of commitments made by the Shany Group to support
the Company, and taking in to account the Subscription proceeds
under the Combined Transaction, the Directors are confident that,
following the Subscription, the Company will have sufficient
working capital for its present requirements, that is for at least
the next 12 months following completion of the Proposals.
Proposed Board Changes
As part of the Proposals, the Company wishes to announce a
number of changes to its Board composition: Michael Rosenberg OBE,
will be stepping down as the Company's Chairman and the Existing
Directors, David Nachshon, Gershon Frenkel, Zvi Nemeth and James
Campbell will be stepping down as Independent Non-Executive
Directors immediately after Shareholders' approval at the SGM. Ms.
Nathalie Schwarz (Independent Non-Executive Director) will continue
in her current position. Mr. Yosef Taub (Executive Director) will
continue in his current position until the completion of the
Proposed Disposal, after which he will also be stepping down from
the Company's Board of Directors.
The New Directors: Mr. Alon Shany will join the Board as
Executive Director at the date of signing the Agreement and after
the approval of the General Meeting he will be appointed as
Chairman. Mr. Jacques Abitbol will join the Board as Non-Executive
Director after the approval of the SGM. Ms. Eva Abittan will join
the Board as Non-Executive Director after the approval of the
SGM.
Following full completion of the Proposals, the Board will
comprise of:
-- Mr. Alon Shany - Executive Chairman
-- Mr. Jacques Abitbol - Non-Executive Director
-- Ms. Eva Abittan - Non-Executive Director
-- Ms. Nathalie Schwarz - Independent Non-Executive Director.
In accordance with the development plans (as detailed below
under 'future strategy') and in particular increasing the Company's
focus of activity on the web technology and software space - the
Company intends to appoint another independent non-executive
director, with sufficient professional expertise in the field.
Additional information on the New Directors
Mr. Alon Shany, age 28
Mr. Alon Shany has a BA in Sustainability and Governance from
IDC Herzliya in Israel, he currently lives in Israel. Mr. Shany is
an investor and a director of Kaman Capital (Since 2017) which is
in the process of merging blockchain technology companies.
Moreover, Mr. Shany also invested in two other technology
companies- Credit 24 Ltd., a company that provides loans using a
unique AI technology and ARTsys360 Ltd., a company that develops
technologies to monitor and locate drones and other similar
threats. Mr. Shany is also an Executive Vice President of
Bio&En Holdings. Kaman Capital is a public company traded on
the Tel Aviv Stock Exchange, Bio&En Holdings is a public
company traded on the OTC (over the counter) trading platforms,
Credit 24 Ltd. and ARTsys360 Ltd. are in the process of an IPO on
the Tel Aviv Stock Exchange.
Mr. Shany specializes in areas of sustainability and good
governance, including development and advanced technologies for
sustainability, broad vision and finding the required balance
between development needs, efficient management of resources and
social needs. Mr. Shany also specializes in developing
entrepreneurship in the field of advanced technologies.
Mr. Jacques Abitbol, age 32
Mr. Jacques Abitbol is a businessman that owns a chain of optic
stores in Europe and acts as a director in several private
companies, including: Optical Partners, Chateau d'optique, La
lunetterie de Paris, Custoptic, and Led partners.
Eva Abittan, age 21
Ms. Eva Abittan has a BA in Communication from the IDC Herzliya
in Israeli and she specialises in entrepreneurship.
Ms. Abittan specialized in the development of content and
products for digital communication, and is experienced in the
development of high-tech applications and ventures and in
innovative marketing for a variety of companies, organizations and
associations, including marketing communication (advertising, PR
and digital), interactive communication or influence and digital
awareness.
Further information regarding Mr. Shany, Mr. Abitbol and Ms.
Abittan will be detailed in the Circular.
The Company confirms that its current Article of Association
provide a reasonable basis for the Directors to make proper
judgments as to the financial position and prospects of the
Company, its operational and financial reporting procedures and
corporate governance, as it continues to grow through the
implementation of its business strategy.
Future Strategy and Proposed Change of Name
Following the completion of the Proposed Distribution of the
mining business, the Company will retain its listing on the London
Stock Exchange as a special purpose acquisition company ("SPAC" or
"cash shell") with only cash remaining as its sole asset. As a
result of the fundraising to be entered into as outlined above, the
Directors expect the net cash position after the Proposed
Distribution and Subscription will be sufficient working capital
for its present requirements, that is for at least the next 12
months following completion of the Proposals.
Future Strategy
Following the Proposed Disposal, as outlined above, the Company
will remain listed as a cash shell on the Main Market of the London
Stock Exchange and will look to make an acquisition of a suitable
company in the technology software space. Should an acquisition be
completed it would constitute a Reverse Takeover under the Listing
Rules and the Company would apply for the readmission of its shares
to the Official List and the Main Market of the London Stock
Exchange.
Although the Company has currently not identified a suitable
acquisition target, the Directors and New Directors will look for
an acquisition target in the web technology and software space. The
Company will particularly focus on the key areas of high growth
delivering digital services to consumers in areas such as leisure,
financials, e-commerce, gaming, as well as disruptive technologies
such as blockchain and crypto currencies.
In addition, the Company will also look at potential targets in
the software space. The Directors and New Directors believe that
the areas of B2B software, Customer Relationship Management
software and corporate risk management software present a good
opportunity for the Company to create shareholder value.
Should the Company identify a suitable target, it will, in
accordance with the Listing Rules, publish a prospectus containing
all information required for the approval of a reverse takeover. At
present, there can be no assurance that the Company will be able to
identify a suitable acquisition target or that it will be able to
complete any contemplated transaction and as a consequence, the
Company's admission to the Standard Listing segment of the Official
List and trading on the London Stock Exchange's Main Market for
listed securities may be cancelled.
Proposed Change of Name
The Company proposes, as part of broadening its field of
activity, to change its name to Alef Bet Advanced Technologies
(2021) Limited. The purpose of the name change is to more closely
reflect the Company's strategy to develop its business across the
web technology and software space.
In addition, the Company proposes to make application to the
London Stock Exchange to change its TDIM symbol from "SEFA" to
"ALEF".
Shareholders should note that their shareholdings will be
unaffected by the change of name, although new share certificates
will be issued to Shareholders following the name change and
completion of the Proposed Combined Transaction.
Condition Precedent
It is a condition to completion of the Proposed Combined
Transaction that trading in the Company's shares is not suspended
for any reason until the date of the SGM. In the event that trading
in the Company's shares is suspended, the Company will have a
period of 45 days to resume trading on the London Stock Exchange.
If there is no resumption of trading in the Company's shares within
45 days, the Proposed Combined Transaction will not proceed, and
the funds raised under the Subscription, will be returned to
investors.
In the event that the 45-day period extends beyond the date of
the SGM, the Proposed Distribution will not be performed until such
time as the trading suspension is lifted. If there is no resumption
of trading in the Company's shares within 45 days, the Proposed
Combined Transaction will not proceed, and the funds raised under
the Subscription, will be returned to investors.
It is clarified that as long as the trade suspension is not
enforced until the date of the SGM - and the shareholders approve
this combined transaction - the transaction will take full effect,
immediately after the shareholders' approval, and the Shani Group
will no longer have the right of cancellation as a result of a
trade suspension.
Irrevocable undertakings and Letter of Intent
The Directors and persons connected with them have agreed in
respect of their beneficial holdings of ordinary shares, amounting
in aggregate to approx. 16,000,000 Ordinary Shares in the Company,
representing approx. 8% of the Issued Ordinary Share Capital of the
Company, to vote (or where applicable, to procure that the
registered holder of such ordinary shares votes), in favour of the
Proposals at the SGM.
Action to be taken
Shareholders will be sent a Circular with a Notice of General
Meeting with a Form of Proxy which will enable them to vote at the
SGM.
Whilst, in normal circumstances, the Board values very highly
the opportunity to meet shareholders in person, due to the ongoing
COVID-19 pandemic and the related legal and other requirements, the
General Meeting will be held as a closed meeting with a minimum
number of Directors present, such the legal requirement to hold a
quorate meeting will be satisfied, and no other shareholders will
be permitted to access, attend or participate in person.
Shareholders are accordingly strongly urged to appoint the
Chairman of the General Meeting (rather than their own choice of
person) as their proxy as this is the only way to ensure their vote
is counted.
The Company is taking these precautionary measures to safeguard
shareholders' and its employees' health and to enable the General
Meeting to comply with current law. The Board will review these
arrangements and any additional and/or alternative measures in
advance of the General Meeting and will update shareholders, as
necessary, via a regulatory information service.
If you are in any doubt about the Proposed Disposal, the
subscription, changes to the board, the share consolidation or the
change of name or the contents of this announcement or the action
you should take, you are recommended to seek your own independent
financial, tax and legal advice immediately from your independent
financial adviser duly authorised under the Financial Services and
markets Act 2000 (as amended) if you are resident in the United
Kingdom or, if not, from another appropriately authorised
independent financial adviser in the relevant jurisdiction.
Recommendation
The Board, having reviewed the terms and the benefits of the
Agreement and the Proposals and having ensured it to be free of
conflict of interests, consider the Proposals to be proposed at the
Company's SGM, to be in the best interest of the Company and
Shareholders as a whole. Accordingly, the Board will unanimously
recommend that Shareholders should vote in favour of the Proposals
to be proposed at the SGM as they, and persons connected with them,
have undertaken to do in respect of their own holdings.
As stated above, a notice of the Company's General Meeting and a
Circular containing further information to all proposals set out in
this announcement are expected to be sent to Shareholders in a few
days and will also be made available for download from the
Company's website at www.shefagems.com .
- Ends -
Enquiries
Shefa Gems Ltd
Michael Rosenberg, OBE - Chairman
www.shefagems.com +44 7785 727595
-----------------------
VSA Capital Limited - Financial
Adviser
-----------------------
Andrew Raca, Pascal Wiese +44 20 3005 5000
-----------------------
SI Capital Limited - Broker
-----------------------
+44 20 3871 4038 / +44
Nick Emerson and Jon Levinson 1483 413500
-----------------------
Notes to Editors
About Shefa Gems Ltd
Shefa Gems Ltd (LSE: SEFA) is an explorer and developer of
precious gems deposits operating in Northern Israel. Exploration
activity is managed by professionally skilled and technically
competent personnel and is accompanied by an international team of
geological experts. All exploration activities are conducted under
international standards and the internationally recognized SAMREC
2016 Code.
Shefa Gems has established a "Source to Sink" geological model
and the presence of a Target Mineral Assemblage of gemstones ("TMA
Suite") in both primary volcanic sources and in secondary alluvial
deposits lying within the Kishon catchment, on Mount Carmel and in
the Zevulun and Yizre'el valleys and their margins. The TMA suite
comprises Precious Stones (Diamond, rare natural moissanite,
sapphire, ruby, Carmel Sapphire(TM), garnet, hibonite, spinel,
ilmenite) and heavy minerals including zircon and rutile.
On March 2020, the Quarries and Mines Branch of the Ministry of
National Infrastructures of the State of Israel has awarded a
Certificate of Discovery to the Company covering the projected
gemstone mine development in the Kishon Mid Reach, Zones 1 and 2.
The Certificate of Discovery is the culmination of the Company's
successful exploration activities and market analysis; and signals
the beginning of the process towards future commercial mining. 20
years of exploration in the Kishon valley have brought the Company
one step closer in the establishing Israel's first and only future
precious gemstone mine, originally identified and progressed by the
founder of the company, the late and much missed Abraham (Avi)
Taub.
Alongside its exploration activities, the Company is developing
a "Mine to Market" strategy to promote unique jewellery collections
utilising Shefa Gems' suite of precious gemstones.
The Company upholds environmental values and protects the nature
in the areas where it operates, cooperating fully with all
authorities.
For further information please visit the website at
www.shefagems.com
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END
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June 01, 2021 02:00 ET (06:00 GMT)
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