THE MARKETING GROUP PLC: Placing, Allotment of Shares and Notice of General Meeting
THE MARKETING GROUP PLC
Placing, Allotment of Shares and Notice of General Meeting
LONDON: 30 January 2019 – The Marketing Group plc (the “Company” or the “Group”), which trades as RYVL, confirms that further to its announcement of 6 December 2018 is has now completed an unconditional placing of 13,000,000 new shares and an additional fundraising ofapproximately €407,520 (gross) by way of a placing and issue of 18,112,000 Units at a price of €0.0225. The Units each comprise one Share and one warrant to subscribe for a Share at a price of €0.05, and have been placed with certain institutional and other investors.
Notice of General Meeting
The BN Acquisition is conditional upon, amongst other things, the allotment of the BN Consideration Securities. Shareholder authority to allot the BN Consideration Securities will be sought at the forthcoming General Meeting to be held at Mappin House, 4 Winsley Street, London, England, W1W 8HF at 11.00 a.m. on Friday 15 February 2019.
The Placing is conditional upon, amongst other things, Shareholder approval of the Resolutions at the forthcoming General Meeting, and Admission becoming effective.
The allotment of the BN Consideration Securities will result in ZBL holding an aggregate shareholding in the Company of 23.21 per cent. of the Enlarged Issued Share Capital, and 62.22 per cent. of the Fully Diluted Enlarged Share Capital.
A Notice of General Meeting has been attached to this announcement. The purpose of this letter is to: (i) provide you details of, background to and reasons for the BN Acquisition and the Placing; and (ii) provide you with information in respect of the Resolutions to be proposed at the General Meeting.
The purpose of this announcement is also to set out the reasons why the Directors believe that the BN Acquisition and the Placing are in the best interests of the Company and its Shareholders as a whole and, therefore, why the Directors recommend that you vote in favour of the Resolutions at the General Meeting.
Background to and reasons for the BN Acquisition and the Placing
In light of the poor trading performance of certain Group companies in recent times, and the challenges this has created, the Board has been reviewing the Group’s strategy. The Board concluded that to be a viable, profitable public company, the Group lacks critical mass. As previously noted, funding is required to execute the growth strategy. The acquisition of Blockchain Nordic immediately gives the Group increased scale and strengthens the Group’s blockchain capability; furthermore the Board expects immediate synergies with the Group’s in-house blockchain start-up, Truth. The Board will continue to review the Group’s activities and portfolio in the light of the rapidly growing and changing blockchain application landscape.
Current trading and outlook
As published on the 30th November 2018, due to recent disappointing performance of the non-continuing operations, the Board anticipates that the financial results for the year ending 31 December 2018 will be below the Board’s previous expectations and the Company is likely to report an operating EBITDA loss for the full year.
Financing and use of proceeds
The proceeds of the Placing will be used to fund the BN Acquisition and provide additional working capital to the Group.
Details of the Placing
Under the terms of the Placing, the Company has placed 18,112,000 Units at the Placing Price by way of a conditional, non-pre-emptive placing. The Placing Price of €0.0225 per Unit represents a discount of approximately 10 per cent to the closing price of €0.025 per Share on Thursday 6th December 2018, when the placing was announced.
The Placing Shares will represent approximately 19.97 per cent. of the Enlarged Issued Share Capital following Admission. The Placing Shares will be issued credited as fully paid and will be identical to and rank pari passu in all respects with the Existing Shares, including the right to receive all future distributions, declared, paid or made in respect of the Shares following the date of Admission. The Placing is not being underwritten.
The Placing Warrants each entitle the holder to subscribe for one Share at a price of €0.05. The Placing Warrants will represent approximately 7.80% of the Fully Diluted Enlarged Share Capital following Admission.
The Board believes that raising equity finance using the flexibility provided by a non-pre-emptive placing is the most appropriate and optimal structure for the Company at this time. This allows new investors the opportunity to participate in the Placing.
Application will be made to Euroclear Sweden AB for the Placing Shares to be admitted to trading on Nasdaq First North Stockholm. Subject to, inter alia, the Resolutions being passed, it is expected that Admission will become effective and that dealings in the Placing Shares will commence on Wednesday 20th February 2019. Settlement for the BN Consideration Shares and Placing Shares is expected to take place at 8.00 a.m. on Wednesday 20th February 2019. Following Admission, the Company will have 90,703,575 Shares in issue.
The Placing is conditional upon the passing of the Resolutions. The Placing Shares are not being made available to the public and are not being offered or sold in any jurisdiction where it would be unlawful to do so.
Details of the BN Acquisition
The Company has agreed to acquire the entire issued share capital of BN, subject to certain conditions including the passing of the Resolutions. If the conditions are not satisfied or waived by 28 February 2019, the Share Purchase Agreement shall terminate. In certain circumstances a payment of €97,500 in respect of ZBL’s costs may become payable by the Company upon termination.
The Share Purchase Agreement contains customary warranties given to the Company by ZBL as to matters relating to BN and its business. The Company is entitled to terminate the Share Purchase Agreement in certain limited circumstances prior to Completion, including circumstances where any of the warranties are found to be materially untrue, inaccurate or misleading, or upon the occurrence of certain force majeure events.
The Share Purchase Agreement also contains customary non-compete obligations designed to protect the confidential information and goodwill acquired by the Company in the BN Acquisition. The consideration payable to ZBL under the Share Purchase Agreement is:
- €345,000 in cash within seven days of Completion;
- 21,051,557 Shares;
- €2,285,000 in principal amount of A Loan Notes; and
- €1,605,000 in principal amount of B Loan Notes.
The A Loan Notes are unsecured, and have an interest rate of 0 per cent. per annum. They are convertible at any time, at the option of the holder(s) of a majority of the A Loan Notes then in issue, into new Shares at a price per Share of €0.025. Any A Loan Notes then-outstanding shall be redeemed on 31 December 2023, or following certain events of default.
The B Loan Notes are unsecured, and have an interest rate of 5 per cent. per annum. They are convertible at any time, at the option of the holder(s) of a majority of the B Loan Notes then in issue, into new Shares at a price per Share of €0.05. Any B Loan Notes then-outstanding shall be redeemed on 31 December 2023, or following certain events of default.
Director’s irrevocable undertaking
Adam Graham, being the only Director who holds any Shares at the date of this announcement, has entered into an irrevocable undertaking in favour of the Company dated 29th January 2019 to vote in favour of the Resolutions in respect of all of the Shares held by him amounting, in aggregate, to 508,135 shares.
Purpose of General Meeting
The Company has exhausted its existing authorities to allot Shares or securities convertible into Shares. In order to be able to issue and allot the Placing Shares and BN Consideration Securities the Company will seek Shareholder approval at a General Meeting. The Resolutions being proposed are specifically tailored to authorise the issue of the 18,112,000 Units proposed to be issued pursuant to the Placing, and the 144,551,557 BN Consideration Securities proposed to be issued pursuant to the Acquisition.
A general meeting of the Company at which the Resolutions will be proposed, is to be held at Mappin House, 4 Winsley Street, London, England, W1W 8HF on Friday 15 February 2019 at 11.00 a.m.
The Company is proposing the following Resolutions:
Resolution 1 – an ordinary resolution to grant authority to the Directors under section 551 of the Act, to allot new Shares up to a maximum aggregate nominal amount of €903,877.79 being the amount required for the purposes of issuing the Units and the BN Consideration Securities;
Resolution 2 - an ordinary resolution to be passed to provide authority for the Company to purchase 928,571 of its own shares from certain of its shareholders. The Company intends to cancel these Shares and reduce the total share capital outstanding. The consideration for the repurchase will be the entire share capital of Imagine Group Pte Ltd, a subsidiary of the Company, which the Company regards as poorly performing and not a good strategic fit.
Resolution 3 – an ordinary resolution to grant authority to the Directors under section 551 of the Act, to allot further new Shares up to a maximum aggregate nominal amount of €302,345.25 (being 66 percent of the Enlarged Ordinary Share Capital)
Resolution 4 – a special resolution to empower the Directors, pursuant to section 570 of the Act, to allot the Units and BN Consideration Securities on a non-pre-emptive basis; and
Resolution 5 - a special resolution to empower the Directors, pursuant to section 570 of the Act, to allot up to 9,070,358 equity securities on a non-pre-emptive basis (being 10 percent of the Enlarged Ordinary Share Capital.)
The authorities in Resolutions 1 and 4 will together enable the Directors to effect the Placing and the Acquisition but will expire if Admission does not take place by the Long-Stop Date. If the Resolutions are passed at the General Meeting but the Placing does not complete, the Company undertakes not to exercise the authority given to it by these Resolutions.
The authorities in Resolutions 3 and 5 are sought for general acquisition and fundraising purposes, and will expire at the beginning of the next Annual General Meeting of the Company. The Company may exercise these authorities regardless of the outcome of the Placing.
Recommendation
The Directors consider that the Placing and the BN Acquisition, and the other corporate actions contemplated by the Resolutions, are in the best interests of the Company and Shareholders as a whole. Accordingly, the Directors recommend that the Shareholders vote in favour of the Resolutions at the General Meeting as they have irrevocably undertaken to do in respect of their entire holdings which amount to 508,135 Shares, representing approximately 0.99 per cent. of the issued Shares.
About RYVL
RYVL is the operating name of The Marketing Group Plc. (https://ryvl.com/)
RYVL is a global network of complementary marketing businesses. It is building a lean and technology centric approach to providing a global marketing solution, fit for the needs of modern brands.
The Marketing Group Plc (Ticker: TMG.ST) is listed on Nasdaq First North, Stockholm www.RYVL.com.
Mangold Fondkommission AB, +46 8-5030 15 50, is the Company’s Certified Adviser and liquidity provider.
Investor Relations
Tim Metcalfe
Miles Nolan
Phone: +44 (0) 203 934 6630
Email: investorrelations@ryvl.com