Proposal to shareholders of Sefton Resources
This announcement is for shareholders of Sefton Resources ("the Company"), which was formerly listed on the Alternative Investment Market ("AIM").
On Tuesday 11 October the requisition for an Extraordinary General Meeting of Sefton was delivered to the Company's registered office in the British Virgin Islands. The resolutions to be put to shareholders, described in the requisition, seek the removal of Clement Chambers and Michael Hodges as directors of the Company, to be replaced by Matthew Benjamin "Ben" Turney and Stuart James Langelaan.
The current board of Sefton has yet to respond to the legal requisition.
Assuming Sefton's board fulfils its legal duties, as required by the 2004 BVI Companies Act of the Companies (BVI) Law 1991, Turney and Langelaan would now like to present their proposal to Sefton's shareholders.
Background and Strategy - Sefton Resources
On 08 September 2015 a requisition nominating Clement Chambers and Michael Hodges to take over the board of Sefton was made. The following statement was made to shareholders in support of that requisition:
"Clem Chambers and Michael Hodges need no introductions. They are highly respected city of London (proven) successful, financial businessmen.
The Company will immediately take an aggressive legal stance with the Ellerton 'Greenmail' writ/s seeking to have them struck out in the Denver Federal Courts.
The so called 'Joint Venture Agreement' will be terminated and all monies ($750,000) returned back to the Company accounts.
The New Board will upon success of the EGM immediately pick up where it left the turnaround strategy. They will drive through the strategy to its logical conclusion. Assets located in Indonesia which, as previously stated, are subject to ongoing negotiations, are already in place. We believe we can close the deal within a matter of weeks, if not days. We will seek to close the deal as soon as possible. Further assets in the Bahamas and South America are also on the agenda. A new Chief Executive Officer will be employed. Approaches have already been made to a leading AIM CEO. Who has agreed, in principle, should we be successful, (subject to negotiation package), to take the Company forward. The Boardroom and the whole process will be made transparent to all shareholders and stakeholders. Shareholder representatives will be re-appointed."
Sefton shareholders are now asked to consider whether they believe this strategy has been successfully executed over the last 11 months, when assessing the merits of Turney and Langelaan's proposal below.
Background and Strategy - Teathers Financial Plc
Teathers Financial Plc is an English-registered public limited company that until very recently was listed on the London (AIM) market. Teathers lost its AIM listing on 04 June 2016. On 28 June 2016 the former board of directors was removed from office at an EGM called by a shareholder action group. This led to Turney and Langelaan joining a newly invigorated Teathers board. Since then they have been successfully leading the company's turnaround.
Teathers' main assets are:
1. Its stock portfolio (expected to be worth c.£130,000 once all liabilities are cleared)
2. The Teathers mobile App
Teathers' strategic aims are:
1. To re-launch the Teathers App, so as to generate a revenue stream for the business
2. To increase the value of the company's stock portfolio, which is well positioned to ride a new bull market in the commodities sector to produce material gains
3. To introduce a new project to the company and seek a re-listing
Description of the Teathers App
The Teathers App is a unique mobile app, designed to give private investors access to placements on AIM. When an AIM-listed company raises money, users of the Teathers App would have the opportunity to participate in the placement. Shard Capital is supporting Teathers in re-launching the Teathers App. Shard is the broker and provides the Teathers App with the necessary environment including compliance oversight. Shard Capital is regulated by the FCA.
The Teathers App business opportunity
The Teathers App addresses several pressing needs among private investors in the market for AIM securities.
· First, smaller retail investor are often (indeed usually) excluded from participating in small-cap fundraises. This can lead to long-term loyal shareholders feeling aggrieved when they see others participating in heavily discounted placements in a company they hold stock in. This has a negative impact on companies' relationships with their existing shareholder bases.
· Second, by enabling more retail investors to participate in placements, they can therefore benefit from the additional financial incentives often offered to placement participants. For example this might be through the issue of warrants. Such incentives can significantly increase the financial upside on offer and many retail investors have been excluded from this for too long.
· Third, the market for small-cap funding on AIM remains challenging. Brokers can struggle to fill placements for smaller companies in particular. Attempting to raise money from small retail investors is costly, owing to the time involved in engaging with a large number of people, who might individually only subscribe to small amounts. The Teathers App immediately and efficiently widens the field of potential investors to approach with a fundraising offer.
· Fourth, it is often prohibitively expensive for a smaller AIM-listed company to conduct a Rights Issue or Open Offer for existing shareholders. The regulated environment provided within the Teathers App provides a direct solution to this issue. It offers AIM-listed companies the cheapest option available on the market to enable them to include their wider shareholder bases in fundraisings.
A broker that is able to offer a placement to a larger retail investor base, as well as to existing shareholders, has a significant business advantage over its competitors. It can offer a better quality of service to its corporate clients, though increasing the size of investment made, while improving investor relations with existing shareholders. The Teathers App will be the only solution on the market that offers brokers this ability.
Advantages of the Teathers App to private investors
The advantages of using the Teathers App for existing shareholders and private investors are:
1. They are able to purchase stock offered in a discounted placing on the same terms
2. They receive the same additional incentives (e.g. warrants)
3. It provides a mechanism for existing shareholders to manage their dilution
4. Shareholders are able to support the companies they believe in, knowing that their investment will be added to the company's balance sheet, as opposed to simply buying shares on the secondary market from another shareholder
5. By putting more shares into the hands of long-term holders this reduces the "flipping" of stock, which can be so harmful to share price appreciation.
As a result of the efforts of Turney and Langelaan, since they joined the board of Teathers, the Teathers App is now on-track to be re-launched at the end of October 2016.
The Teathers asset-trading arm
As a former investing company, Teathers has an established investing policy in the natural resources and technology space. Although the former board made a poor effort of executing the investing policy, the new board is far more confident of being able to generate material return for the company. The portfolio is now solely in natural resources, and thus aligns better with Sefton Resources. Leveraging the combination of the board's existing contacts in the market together with the opportunities that the Teathers App should present, Teathers' directors anticipate the asset-trading arm should provide a significant contribution to the company's balance sheet.
Plan to relist Teathers
As much as the Teathers App offers a commercial opportunity for the business, it is an untested concept. For Teathers to seek to relist it is more than likely the business will need the introduction of a new opportunity. Prior to losing its AIM-listing Teathers was an investing company. To complete a reverse takeover would have required going through the re-admission process, which can cost up to £500,000. The re-admission process is broadly the same as the admission process for an unlisted company, and costs roughly the same amount. In short there is no disadvantage to Teathers being privately held at this stage, when seeking an opportunity to relist the company.
Indeed there are several practical and financial advantages of remaining an (unquoted) Plc at this stage. As a Plc, Teathers remains subject to the same audit and reporting requirements as a quoted Plc. However, it no longer faces the significant financial overheads associated with a listing (Nomad, listing fees, broker, etc) which can be prohibitively expensive for a company of the scale of Sefton or Teathers. Remaining as an English-listed but unquoted public limited company puts Teathers in an ideal "sweet spot" financially while it grows and puts in place any reverse takeover or acquisition that would enable it to relist.
Teathers also brings with it a well-organised and motivated shareholder base. The board maintains active communiciations with Teathers shareholders. The feedback the new board has received from market participants is that, once the clean-up process of Teathers is complete, it would represent an attractive shell to introduce a new project to. Reflecting this, Teathers' board has already received a number of unsolicited approaches from third parties interested in bringing the company back to market, including two verbal offers to raise money Although the Teathers board has not pursued any of these approaches yet, it demonstrates the wider perception of the opportunity that Teathers presents.
Future plans at Teathers
The clean-up of Teathers is entering the final phase, as is up-dating the Teathers App to reflect the need to be compliant with the new MAR regulations and to enable users to fund their accounts directly on the App. Testing of the new release is active at the moment, with the expectation that the App will be re-launched by the end of Oct 2016.
In parallel, theTeathers board expects to start heavily promoting the company, both with regard to the app and the asset-trading arm. It will also start searching for a new opportunity to introduce to the company with a view to relisting at some point in 2017.
Offer to Sefton shareholders
If Sefton shareholders support the resolutions proposed at the forthcoming EGM, Turney and Langelaan will do the following:
1. Promptly finalise the clean-up of Sefton and provide Sefton shareholders with a final report detailing the net asset value of the company. Langelaan and Turney will not charge any fees for this work.
2. Finalise the details of a takeover offer of Sefton by Teathers, using Teathers shares. This offer will be subject to due diligence, Sefton having sufficient positive net current assets, and approval from both Sefton and Teathers shareholders.
3. Simultaneously establish a share buy-back programme for those Sefton shareholders who wish to exit (for example, to crystallise capital gains losses for offsetting purposes). This buyback programme would be priced at Sefton's current net asset value.
Advantages to Sefton shareholders
Assuming Sefton has sufficient net current assets to make a deal worthwhile and approval by both sets of shareholders is given, Turney and Langelaan believe Sefton shareholders will benefit from this proposal through:
1. Sefton shareholders would now hold shares in an English-registered Plc with the level of corporate governance and audit that this brings with it, as opposed to a BVI-registered offshore vehicle. As such, there is a far greater chance of re-listing on the London Exchange.
2. They would now hold stock in a company run by a dynamic and pro-active board of directors, which has demonstrated that it is committed to regular shareholder communications and a high degree of transparency. This is evidenced by the rapid progress and success that has occurred since the new board was appointed at Teathers, with detailed weekly updates being provided to Teathers shareholders to inform them of progress.
3. Combining the cash balances of the two companies, together with reducing two sets of running costs to one, would provide economies of scale and a critical mass that Sefton currently lacks. This, together with the track record of audited accounts submitted by Teathers (as a public listed company), would make the enlarged entity a much more attractive target for re-listing than the BVI-listed Sefton is at the moment.
4. Sefton shareholders would now benefit from a company with an imminent revenue stream, as opposed to net cash burn.
5. The asset trading arm has the potential to generate significant returns for the business and increase its capital value.
This information is provided by RNS