6 June 2019
("Koovs" or the "Company")
Posting of Circular and Notice of General Meeting
Further to the Company's announcement on 29 May 2019, the Company announces it is today posting a circular (the "Circular") to shareholders to convene the necessary general meeting (the "General Meeting") to approve the issue of the Compulsorily Convertible Preference Shares, to Future Lifestyle Fashions Limited, further details on which are disclosed in the Company's 7 May and 24 May announcements. The General Meeting will be held at 9.00 a.m. on 25 June 2019 at the offices of Strand Hanson Limited, 26 Mount Row, London W1K 3SQ.
An extract from the Circular is set out below. Shareholders are encouraged to read the Circular, which will also be made available shortly on the Company's website, in full, and to return the form of proxy enclosed with the Circular as soon as possible and in any event by 9.00 a.m. on 21 June 2019 as per the instructions in the Circular.
As announced on 7 May 2019, Future Lifestyle Fashions Limited ("FLFL") has agreed to invest approximately a further £10.5 million into Koovs plc in two tranches. This new agreement with FLFL replaces the previous agreement with FLFL announced on 27 September 2018, the obligations under which have now fallen away.
The first tranche completed on 30 May 2019, pursuant to which FLFL subscribed for an amount of £3,667,125.04 at 8 pence per new ordinary share of £0.01 each in the Company ("Ordinary Share") (the "First Tranche"). As such, 45,839,063 new Ordinary Shares were issued to FLFL (the "First Tranche Shares") and admitted to trading on AIM on 30 May 2019
The second tranche is conditional upon shareholder approval and, subject to such approval being forthcoming, will be invested in the form of compulsorily convertible preference shares ("CCPS") (the "Second Tranche"). The CCPS requires certain changes to be made to the Company's articles, which are the subject of the resolutions which are being proposed at the EGM.
If the resolutions are passed, FLFL will subscribe a further £6,810,374.96 for 24,010,937 CCPSs which are compulsorily convertible on the first anniversary of issue (or, at the option of FLFL, at an earlier date prior to the first anniversary, or in certain other circumstances by the Company) into 24,010,937 new Ordinary Shares. The implied investment price is approximately 28.36 pence per new Ordinary Share, which when combined with the investment into the First Tranche Shares equates to a blended investment price by FLFL for the full investment of approximately £10.5 million of 15 pence per new Ordinary Share - the same as that announced by the Company in 27 September 2018. The CCPSs have no voting rights and rank behind, in terms of seniority, the existing convertible loan notes of the Company. The CCPSs are non-participating and non-cumulative with a pre-determined dividend rate of 0.01% per annum, amounting to a maximum of approximately £681.
If, for any reason, it is not possible to issue the CCPSs, and consequently the Second Tranche does not complete, then the Company has the right (subject to shareholder and any other necessary approvals), but not the obligation, to buy back 21,391,563 Ordinary Shares held by FLFL for a nominal value (subject to such price being compliant with relevant rules and regulations) in order to ensure that the effective price (before factoring in the consideration that FLFL would receive as a result of such repurchase) of the First Tranche is 15 pence per new Ordinary Share issued. Any Ordinary Shares repurchased may be cancelled or held in treasury
Further, in the event that shareholders do not approve the issue of the CCPSs, and consequently the Second Tranche does not complete, then the Company will not receive the approximate £6.8 million proceeds of the Second Tranche. The Company will therefore be required to source funding from FLFL in an alternative manner, which there is no guarantee of, and therefore potentially with an alternative party, of which there is no guarantee of either. Shareholders are therefore strongly encouraged to vote in favour of the resolutions.
If you would like to vote on the resolutions proposed at the EGM but are unable to attend, please complete the Form of Proxy enclosed within this document and return it to Link Asset Services, PXS, The Registry, 34 Beckenham Road, Kent BR3 4TU.
Business to be transacted at the EGM
The resolutions set out below will be proposed at the EGM. Shareholders will be asked to:
1. Adopt new Articles of Association to create the CCPSs; a summary of the changes required to the Articles of Association are set out later in this letter.
2. Authorise the Directors to issue and allot new compulsorily convertible preference shares in the Company or to grant rights to subscribe for or convert any security into CCPS in the Company up to an aggregate nominal value of £240,109.37. FLFL will then subscribe £6,810,374.96 for 24,010,937 CCPS, which are compulsorily convertible on the first anniversary of issue (or at the option of FLFL, at an earlier date prior to the first anniversary, or in certain other circumstances by the Company) into 24,010,937 new Ordinary Shares. Unless revoked, varied or extended, this authority will expire on the date falling 18 months from the passing of the resolution.
3. Authorise the Directors to issue and allot new Ordinary Shares in the Company up to an aggregate nominal value of £240,109.37, to be allotted pursuant to the conversion rights attaching to the CCPS. Unless revoked, varied or extended, this authority will expire on the date falling 30 months from the passing of the resolution.
4. Authorise the Directors to issue and allot new shares in the Company or to grant rights to subscribe for or convert any security into shares in the Company up to an aggregate nominal value of £1,326,399.87 (constituting 33% of the issued share capital of the Company). Unless revoked, varied or extended, this authority will expire at the conclusion of the next annual general meeting of the Company or the date falling 18 months from the passing of the resolution, whichever is the earlier.
The Directors of the Company, other than Avni Biyani who is abstaining from the recommendation as she is the representative of FLFL on the Board, consider that all the proposed resolutions to be considered at the Extraordinary General Meeting are in the best interests of the Company and its shareholders as a whole and accordingly unanimously recommend you to vote in favour of all the proposed resolutions as they intend to do so in respect of their own beneficial holdings, amounting to 51,136,155 Ordinary Shares, representing approximately 12.72 per cent. of the Ordinary Share capital.
For further information please contact:
Mary Turner / Robert Pursell
Tel: +44 (0) 20 7151 0170
Strand Hanson Limited (Nominated & Financial Adviser)
James Harris / Ritchie Balmer / Georgia Langoulant
Tel: +44 (0) 20 7409 3494
Whitman Howard Limited (Corporate Broker)
Nick Lovering (Corporate) / Mark Murphy (Institutional Sales)
Tel: +44 (0) 20 7659 1234
Adam Lloyd / Fiona Norman
Tel: +44 (0)20 3757 6880
The information contained within this announcement is considered to be inside information prior to its release, as defined in Article 7 of the Market Abuse Regulation No.596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.
Notes to Editors:
· Koovs is a UK business that has built KOOVS.COM into India's leading online western fashion destination. Koovs' fashion brands are designed and developed in London exclusively for the young Indian fashion market where two thirds of the population are under the age of 35. It has 2.7m online social followers
· The tremendous potential of the Indian fashion market has been further underlined by the Strategic Partnership with Future Lifestyle Fashions Limited (FLFL) which is part Future Group - one of India's leading retail businesses and one of the top 10 fashion apparel companies in the world
· Koovs' proprietary online technology platform powers KOOVS.COM and is a proven market-leading success in India's rapidly expanding e-commerce market. The capability and scalability of the platform has been recognised by FLFL which has contracted Koovs to build and maintain the online platform for its Brand Factory retail format. For more information, please visit www.koovs.com and follow us on Facebook, LinkedIn, Twitter @mykoovs and Instagram @koovsfashion.
About Future Group
Future Group is one of India's leading consumer, retail and services companies covering fashion, food and homewares. It owns over 60 brands, operates close to 2,000 retail stores spanning over 22 million square feet and attracts a footfall of over 500 million a year. Future Group sells in the region of 300 million garments a year, making it one of the top 10 fashion apparel companies in the world. Future Group also has one of India's most unique and rapidly-growing digital payment platforms, Future Pay, which has an active user base of over 6.5 million
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