Transense Technologies Plc
("Transense" or the "Company")
Notice of AGM, Proposed Capital Reduction and Proposed Share Consolidation
Transense Technologies Plc (AIM: TRT), the provider of sensor systems for the transportation and industrial markets, announces that it will tomorrow post to shareholders a notice of Annual General Meeting ("AGM") to be held at finnCap Ltd, 60 New Broad Street, London EC2M 1JJ on 23 November 2016 at 2.00pm. Copies of the Notice of AGM are available on the Company's website www.transense.co.uk.
Proposed Capital Reduction and Proposed Share Consolidation
The board recognises that the capital structure of the Company, which currently includes valueless Deferred Shares and a substantial share premium account, is no longer fit for purpose. The Board are therefore bringing forward proposals at the forthcoming AGM for a reduction in share capital by the cancellation of the deferred shares and the share premium account. This will result in the Company having distributable reserves enabling the payment of dividends from income or return of capital to shareholders from major licensing transactions or partial disposals in future. Additionally, it is proposed that the ordinary share capital is subject to a 50:1 consolidation to mitigate the effect of prior dilutions on the unit price per share and to reduce trading spreads and transaction costs for shareholders in future dealings. Further details of the AGM, proposed Capital Reduction and proposed Share Consolidation are provided below.
For further information please visit www.transense.co.uk or contact:
Transense Technologies Plc
Graham Storey, Chief Executive
Tel: 01869 238380
Ed Frisby, Giles Rolls (Corporate Finance)
Tony Quirke, Alice Lane (Corporate Broking)
Tel: 020 7220 0500
Tim Metcalfe, Graham Herring, Heather Armstrong
Tel: 020 3053 8671
About Transense Technologies
Based in Oxfordshire, UK, Transense has developed patent-protected sensor systems and supporting technology for use in a variety of diverse high growth markets. Transense's Surface Acoustic Wave (SAW), wireless, battery-less, sensor systems offer significant advantages over legacy wireless sensor systems. Transense is targeting the transport and mining industries, and the global torque, temperature and pressure sensing markets, via its trading divisions, Translogik and SAWSense.
Transense's shares are admitted to trading on AIM, a market operated by the London Stock Exchange (AIM: "TRT").
The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.
Unless otherwise defined herein, capitalised terms used in this announcement shall have the same meanings as defined in the circular.
Expected Timetable of Principal Events
Publication date of this document 21 September 2016
Latest time and date for receipt of Forms of Proxy 2.00 p.m. on 21 November 2016
Annual General Meeting 2.00 p.m. on 23 November 2016
Consolidation Record Date 6.00 p.m. on 23 November 2016
Effective time of the Share Consolidation, Admission and 8.00 a.m. on 24 November 2016
dealings in Consolidated Ordinary Shares expected to
commence on AIM
CREST accounts credited with Consolidated Ordinary Shares 24 November 2016
Court directions hearing 9 December 20161
Capital Reduction Record Date 6.00p.m. on 20 December 2016
Court hearing to confirm the Capital Reduction 21 December 2016
Registration of Court Order and effective date of the Capital Reduction 22 December 20162
Anticipated date of dispatch for share certificates in respect of Within 10 business days of
Consolidated Ordinary Shares Admission
Anticipated date of dispatch of cheques following sale of Within 10 business days of
Fractional Entitlement Shares Admission
If any details contained in the timetable above should change, the revised times and dates will be notified by means of an announcement through a Regulatory Information Service.
1. This date is subject to any changes which may be imposed by the Court.
2. This date will depend on, amongst other things, the date on which the Court confirms the Capital Reduction.
Existing Ordinary Shares 472,314,428
Consolidated Ordinary Shares in issue immediately following the Share Consolidation 9,446,289
Nominal share value post Share Consolidation £0.50
Proposed New ISIN GB00BDHDTH21
Assumes no ordinary shares in the capital of the Company are issued between the date of this document and the Consolidation Record Date other than an additional 22 ordinary shares to be issued for the purposes of facilitating the Share Consolidation.
Annual General Meeting, Proposed Capital Reduction and Proposed Share Consolidation
I am pleased to be writing to you with details of the 2016 Annual General Meeting of the Company, which will be held at finnCap, 60 New Broad Street, London EC2M 1JJ on 23 November 2016 at 2.00 p.m. The formal notice of Annual General Meeting is set out in the Appendix to this document.
I would like to explain to you the ordinary and special business to be transacted and the Resolutions to be proposed at the Annual General Meeting which are set out in full in the Notice:
· section 2 explains our proposals in relation to the Capital Reduction;
· section 3 explains our proposals in relation to the Share Consolidation; and
· section 4 explains the other business proposed at the AGM (as well as summarising all the Resolutions contained in the Notice).
Section 5 of this letter sets out the action Shareholders are asked to take, and section 6 contains the unanimous recommendation of the Directors to vote in favour of the Resolutions.
2. The Capital Reduction
As at 30 June 2016, the Company had an accumulated deficit on its profit and loss account of £22,016,000. Whilst the balance on the Company's profit and loss account remains in deficit, the Company will be unable to pay or declare a dividend due to prohibitions under the Act.
Under the Act, a public company may reduce its capital and share premium account if so authorised by its articles of association, providing it obtains the approval of its shareholders by special resolution in general meeting and that the Court confirms the Capital Reduction. The reserve arising on such a Capital Reduction may be utilised in eliminating the accumulated deficit on the Company's profit and loss account and, subject to any creditor protection required by the Companies Court, in creating distributable reserves available for the payment of dividends, the purchase by the Company of its own shares and for other corporate purposes of the Company.
Accordingly, and in order to allow the Company to pay dividends in the future, the Company proposes, subject to approval by Shareholders, to apply to the Court to confirm the cancellation of (i) all of the Deferred Shares and (ii) the amount standing to the credit of the Company's share premium account as at 30 June 2016, being £17,218,000, and to offset the reserves arising from both (i) and (ii) against the deficit on the profit and loss account. The combined effect will be that the current deficit on the profit and loss account of £22,016,000 will be reduced to a surplus of £2,025,000.
Accordingly, subject to Shareholder approval, an application will be made to the Court in order to confirm and approve the Capital Reduction. It is anticipated that the initial directions hearing in relation to the Capital Reduction will take place on 9 December 2016, with the final hearing taking place on 21 December 2016. The Capital Reduction would then take effect once the Court order was registered with Companies House, which it is expected would take place within a few days of the Court order being made (the "Effective Date").
In considering whether to confirm the Capital Reduction, the Court takes account of the interests of the Company's creditors at the time of the Capital Reduction (including contingent and prospective creditors). The Court will need to be satisfied that the interests of the Company's creditors will not be prejudiced as a result of the Capital Reduction. If required to do so, the Company will put in place such form of creditor protection as the Court considers is appropriate. The Company currently understands that it is likely that no creditor will be able to show that there is any real likelihood that the Capital Reduction would result in the Company being unable to discharge that creditor's debt or claim when it fell due, which is the relevant test under the Act. If the Court is satisfied that this is the case, then the reserve arising on the Capital Reduction (following elimination of the accumulated deficit on the Company's profit and loss account) will be immediately distributable, subject to relevant accounts being prepared in accordance with the Act's rules on making distributions. It is, however, for the Court, ultimately, to determine the question of whether any protection is required for creditors, and if so, what form it should take.
The Deferred Shares
The Deferred Shares were created in 2010 in connection with a share split to reduce the nominal value of the Company's ordinary shares. Shareholders should note that the Deferred Shares have no voting rights and carry no entitlement to receive notice of or attend general meetings of the Company. They carry only the right to participate in any return of capital to the extent of their nominal capital but only after each Existing Ordinary Share has received, in aggregate, capital repayments totalling £10,000,000 per Existing Ordinary Share. Accordingly, the Deferred Shares are, for all practical purposes, valueless.
The notice of the AGM set out in the Appendix to this document contains a Resolution (Resolution 8) to approve the proposed Capital Reduction.
3. The Share Consolidation
Upon implementation of the Share Consolidation, Shareholders on the register of members of the Company at the Consolidation Record Date, will exchange every 50 Existing Ordinary Shares that they hold for one Consolidated Ordinary Share. As all existing ordinary shareholdings in the Company are proposed to be consolidated, the proportion of the issued ordinary share capital of the Company held by each Shareholder immediately before and after the Share Consolidation will, save for fractional entitlements and those holding fewer than 50 Existing Ordinary Shares, remain relatively unchanged.
To effect the Share Consolidation, it may be necessary to issue a minimal number of additional ordinary shares (anticipated to be 22 additional ordinary shares) prior to the Consolidation Record Date so that the aggregate nominal value of the ordinary share capital of the Company is exactly divisible by 50.
No Shareholder will be entitled to a fraction of a Consolidated Ordinary Share and where, as a result of the Share Consolidation, any Shareholder would otherwise be entitled to a fraction only of a Consolidated Ordinary Share in respect of their holding of Existing Ordinary Shares on the Consolidation Record Date (a "Fractional Shareholder"), such fractions will be aggregated with the fractions of Consolidated Ordinary Shares to which other Fractional Shareholders of the Company may be otherwise entitled so as to form full Consolidated Ordinary Shares ("Fractional Entitlement Shares") which will then be sold, as explained below.
This means that any such Fractional Shareholders will not have a resultant proportionate shareholding of Consolidated Ordinary Shares exactly equal to their proportionate holding of Existing Ordinary Shares, and as noted above, Shareholders with only a fractional entitlement to a Consolidated Ordinary Share (i.e. those Shareholders holding fewer than 50 Existing Ordinary Shares at the Consolidation Record Date) will cease to be Shareholders of the Company and will receive cash in lieu of their fractional entitlements (subject to a minimum value of one pound (£1.00)).
Accordingly, Shareholders currently holding fewer than 50 Existing Ordinary Shares who wish to remain a Shareholder of the Company following the Share Consolidation will need to increase their shareholding to at least 50 Existing Ordinary Shares prior to the Consolidation Record Date. Shareholders in this position are encouraged to obtain independent financial advice before taking any action.
The Fractional Entitlement Shares following the Share Consolidation will be sold on behalf of the relevant Fractional Shareholders in the market. Subject only to the de minimis provision below, the net proceeds of sale will be distributed amongst the relevant Shareholders pro rata to their shareholdings on the Consolidation Record Date. The Company anticipates that the net proceeds of the sale will be distributed to shareholders within 10 business days of Admission, although this will ultimately be decided by prevailing market conditions.
In the event that the net proceeds of sale are one pound (£1.00) or more per any entitled Fractional Shareholder following the Share Consolidation, then such proceeds will be paid to the relevant Fractional Shareholder. However, if such net proceeds of sale amount to less than one pound (£1.00) per any entitled Fractional Shareholder, the costs that would be incurred in distributing such proceeds are likely to exceed the total net proceeds distributable to such Fractional Shareholders. The Board is therefore of the view that, as a result of the disproportionate costs in such circumstances, it would not be in the Company's best interests to distribute such proceeds of sale and the proceeds will instead be retained for the benefit of the Company in accordance with Resolution 6(b).
Application will be made for the Consolidated Ordinary Shares to be admitted to trading on AIM and the implementation of the Share Consolidation is conditional on Admission occurring. This is expected to take place at 8.00 a.m. on 24 November 2016, the day after the Annual General Meeting.
The notice of AGM set out in the Appendix to this document contains a resolution (Resolution 6) to approve the proposed Share Consolidation.
4. Annual General Meeting: explanation of all other business and summary of the Resolutions proposed
The notice convening the AGM is set out in the Appendix to this document. The Resolutions are required in order to enable the Company to implement the Capital Reduction, the Share Consolidation and the other ordinary and special business that the Company proposes to transact at the AGM.
Resolutions 1 to 6 will be proposed as Ordinary Resolutions. This means that for these Resolutions to be passed, more than one-half of the votes cast must be in favour of the Resolution.
Resolutions 7 and 8 will be proposed as Special Resolutions. This means that for each of those Resolutions to be passed, at least three-quarters of the votes cast must be in favour of the Resolution.
Resolution 1 - To receive and adopt the Annual Report and Accounts
It is proposed to receive and adopt the Company's annual accounts for the financial year ended 30 June 2016 together with the Directors' report and independent auditor's report on those accounts.
Resolution 2 - To receive and adopt the Remuneration Report
It is proposed to receive and adopt the Company's remuneration report that is contained in the report of the Directors for the year ended 30 June 2016. The report gives details of the directors' remuneration for the year ended 30 June 2016 and sets out the Company's overall policy on directors' remuneration. In accordance with section 439 of the Act, this is an advisory vote only and does not affect the actual remuneration paid to any individual director.
Resolution 3 - Appointment of Auditors
This Resolution relates to the appointment of Grant Thornton UK LLP as the Company's auditors to hold office until the next annual general meeting of the Company and to authorise the Directors to set their remuneration.
Resolution 4 - Reappointment of Directors
This Resolution deals with the reappointment of Melvyn Segal who retires as a Director by rotation in accordance with the articles of association of the Company and, being eligible, offers himself for re-election as a director of the Company.
Resolution 5 - Allotment of Share Capital
This Resolution deals with the Directors' authority to allot new ordinary shares in the capital of the Company in accordance with section 551 of the Act.
The Board considers it appropriate that the Directors be granted authority to allot shares in the capital of the Company up to a maximum nominal amount of £1,574,381.50 representing approximately 33.33% of the Company's issued ordinary share capital as at 20 September 2016 (the latest practicable date prior to publication of this document). The power will last until the earlier of 23 February 2018 and the conclusion of the next annual general meeting of the Company.
Resolution 6 - Share Consolidation
As described in more detail in section 3 above, this Resolution will approve the Share Consolidation.
Resolution 7 - Disapplication of Statutory Pre-emption Rights
This Resolution will give the Directors authority to allot shares in the capital of the Company pursuant to the authority granted under Resolution 5 above for cash without complying with the pre-emption rights in the Act. This authority will permit the Directors to allot shares up to a maximum nominal value of £472,314.50 representing approximately 10.0% of the issued ordinary share capital of the Company as at 20 September 2016 (the latest practicable date prior to publication of this document) otherwise than in connection with a pre-emptive offer to existing Shareholders.
Resolution 8 - Capital Reduction
As described in more detail in section 2 above, this Resolution will approve the Capital Reduction.
5. Action to be taken
You will find enclosed with this document a Form of Proxy for use at the AGM. Whether you intend to be present at the AGM or not, you are asked to complete the Form of Proxy in accordance with the instructions printed on it and to return it to Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen, West Midlands B63 3DA as soon as possible and, in any event, so as to be received by no later than 2.00 p.m. on 21 November 2016. The completion and return of the Form of Proxy will not preclude you from attending the AGM and voting in person if you wish to do so.
Shareholders who hold their shares in the Company through CREST are referred to the Notes to the Notice of Annual General Meeting.
The Board considers that the Capital Reduction, the Share Consolidation and the other business that it proposes to transact at the AGM are in the best interests of the Company as a whole. Accordingly, the Board recommends that you vote in favour of the Resolutions as they have agreed to do in respect of their own shareholdings representing 1.8% of the Existing Ordinary Shares.
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