New Trend Lifestyle - Disposal, Share Consolidation, Placing, GM Notice
RNS ANNOUNCEMENT: The information communicated in this announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.
("NTLG" or "the Company" or "the Group")
(to be re-named
Disposal of New Trend Lifestyle Pte. Ltd
Consolidation of Share Capital, Conditional Placing of New Ordinary Shares, Grant of New Investor Warrants, Amendment of Articles of Association, Change of
NTLG announces the Disposal of its 85.71 per cent. owned subsidiary,
In addition, the Company currently has insufficient authority to dis-apply statutory pre-emption rights and therefore the Company is seeking Shareholder approval to give the Directors the authority to allot the Placing Shares, the Investor Warrants and the Broker Warrants and to dis-apply statutory pre-emption rights in respect thereof.
The Disposal will represent a fundamental change of business, as well as a related party transaction, under the AIM Rules for Companies following completion of which, the Company will become an AIM Rule 15 cash shell.
The purpose of the Circular is to provide you with details of the Proposals, to explain the background to and the reasons for the Proposals and why all Directors recommend that Shareholders vote in favour of Resolutions 2, 3, 4, 5 and 6 and the independent directors (in respect of the Disposal) recommend that Shareholders vote in favour of Resolution 1, all to be proposed at the General Meeting.
The Proposals are all conditional, inter alia, on the passing of the Resolutions by Shareholders at the General Meeting, notice of which is set out in the Circular. If the Resolutions are passed, admission of the Placing Shares to trading on AIM is expected to occur on or about
Additionally, the Annual General Meeting of the Company is scheduled for
The Circular, and notices of meeting for the Annual General Meeting and General Meeting are available on the Company's website: www.newtrendlifestylegroup.com.
Proposed format of the General Meeting
At the time of publication of this Document there is the risk associated with holding a physical general meeting given social distancing requirements and the various other provisions that follow from Covid-19. The Company is monitoring the announcements by Department of Business, Energy and Industrial Strategy, Financial Conduct Authority and the
Definitions in this announcement have the same meaning as in the Circular to Shareholders dated
For further information:
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+44 (0) 7830 182501
+44 (0) 20 3368 3550
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+44 (0) 20 7496 0930
Background to and reasons for the Disposal and Placing
The Company has been seeking to grow through acquisition for a number of years, with a view to mitigate against the decline in sales and shareholder value as a result of difficult trading conditions facing its existing business in
Accordingly, the Board believed that it was faced with the following alternatives:
· Fundraising for existing business: given the current and continuing situation, the Board does not believe it will be able to raise additional external equity and/or debt to fund the Group's current activities or invest in the development of its trading business, if the Company were to remain as an AIM-traded company;
· De-listing: the Board has considered seeking the cancellation of its admission to trading on AIM ("De-listing") given the costs of maintaining the listing, but then there would effectively be no market in the Ordinary Shares, which could penalise Shareholders; or
· Disposal: the Company could dispose of
Having considered the alternatives in detail with its advisers,
Details of the Disposal
The Company is proposing to dispose of their 85.71% owned subsidiary New Trend Lifestyle Pte. Ltd to
Summary of the Disposal Agreement
Against this background as set out above, the Company has today entered into a conditional sale and purchase agreement ("SPA") with Phang
The SPA is conditional on the passing of Resolutions 1, 4 and 5, (which will include including the approval of Resolution 1 approving the Disposal by the Independent Shareholders), and the successful completion of the Placing.
The Disposal is subject to the approval of the Independent Shareholders at the General Meeting (Resolution 1), and Phang
Further information on New Trend Lifestyle Pte. Limited
New Trend Lifestyle Pte. Ltd is the main trading subsidiary of the Group and was incorporated in the
Proposed Share Consolidation
The Company has announced a proposal for the 10 for 1 share consolidation of the Company's ordinary shares.
The Company's issued ordinary share capital currently consists of 225,000,000 Existing Ordinary Shares of 0.01p each in the capital of the Company ("Existing Ordinary Shares"). It is proposed to consolidate every 10 of the Existing Ordinary Shares into one Ordinary Share of 1.0p ("Ordinary Share").
Following the Consolidation (ignoring, for this purpose, the Placing Shares), there will be 22,500,000 Ordinary Shares in issue. Holders of Existing Ordinary Shares ("Existing Shareholders") should note that while the numbers of shares held by them will change, the proportion of the issued ordinary shareholdings in the Company held by each Existing Shareholder immediately before and after the Consolidation will, except for fractional entitlements, be unchanged.
Any Existing Shareholders holding fewer than 10 Existing Ordinary Shares at
Following the Consolidation, it is proposed that the Placing will take place.
The rights attaching to the Ordinary Shares will be identical in all respects to those of the Existing Ordinary Shares.
Should the Consolidation be approved at the General Meeting the Ordinary Shares will require new ISIN and SEDOL numbers from Admission; the new ISIN Number for the Ordinary Shares will be GB00BMX66220 and the new SEDOL number BMX6622.
Following the Consolidation, Share Certificates in respect of Existing Ordinary Shares will no longer be valid. Share Certificates in respect of the Ordinary Shares will be issued following the Consolidation or, in the case of uncertificated holders,
New Certificates in respect of the Ordinary Shares will be despatched to all Shareholders by first class post at the risk of the Shareholder.
In order to effect the Consolidation, in addition to Resolution 2, the Company proposes to amend the Company's articles of association pursuant to Resolution 3, which would amend the reference in Article 6.1 of the Articles to a nominal value of the ordinary shares in the Company from
AIM Rule 15
In accordance with AIM Rule 15, the Disposal constitutes a fundamental change of business of the Company. On Completion, the Company would cease to own, control or conduct all or substantially all, of its existing trading business, activities or assets.
Following completion of the Disposal therefore, the Company will become an AIM Rule 15 cash shell and as such will be required to make an acquisition or acquisitions which constitutes a reverse takeover under AIM Rule 14 (including seeking re-admission as an investing company (as defined under the AIM Rules)) on or before the date falling six months from completion of the Disposal or be re-admitted to trading on AIM as an investing company under the AIM Rules (which requires the raising of at least
As such a cash shell the Company would also have no operating cash flow and would be dependent on the net proceeds of the Placing, and any subsequent exercise of Investor Warrants or Broker Warrants, for its working capital requirements. The Company's ability to raise further funds will depend on the success of existing and acquired investments. The Company may not be successful in procuring the requisite funds on terms which are acceptable to it (or at all) and Shareholders' holdings of Ordinary Shares may be materially diluted in due course by subsequent equity issues.
AIM Rule Deadlines - Reverse Takeover
Any failure in completing an acquisition or acquisitions which constitute(s) a reverse takeover under AIM Rule 14 (including seeking re-admission as an investing company (as defined under the AIM Rules)) will result in the cancellation of the Company's Shares from trading on AIM.
The Company will be dependent upon the ability of the Board to identify suitable acquisition targets. As at the date hereof, the Directors have not identified any investment opportunities which they have resolved to pursue. There is no guarantee that the Company will be able to acquire an identified opportunity at an appropriate price, or at all, as a consequence of which resources might have been expended fruitlessly on investigative work and due diligence.
Market conditions may have a negative impact on the Company's ability to make an acquisition or acquisitions which constitutes a reverse takeover under AIM Rule 14. There is no guarantee that the Company will be successful meeting the AIM Rule 15 deadline as described above.
The Company expects to incur certain third-party costs associated with the sourcing of suitable acquisition or acquisitions. The Company can give no assurance as to the level of such costs, and given that there can be no guarantee that negotiations to acquire any given target business will be successful, the greater the number of deals that do not reach completion, the greater the likely impact of such costs on the Company's performance, financial condition and business prospects.
Details of the Placing
To preserve some prospect of future value for Shareholders, as announced on
Subject to Admission being passed,
If the Placing is fully subscribed, this would result in the allotment of 100,000,000 New Ordinary Shares (i.e. following the Consolidation) in the Company at the Issue Price.
Consequences of Placing for the Existing Shareholders
Following completion of the Placing, the proportion of the Ordinary Shares held by the Existing Shareholders shall be approximately 18.37 per cent. of the total issued ordinary share capital of the Company.
All Placing Shares will be issued credited as fully paid and will rank pari passu in all respects with the Ordinary Shares (i.e. the ordinary shares following the Consolidation), including the right to receive all dividends and other distributions declared on or after the date on which they are issued. For each two Placing Shares acquired by a participant in the Placing, that participant shall be granted one Investor Warrant providing a right to subscribe for a new Ordinary Share at a subscription price of 1.5p per share. In total, subject to completion of the Placing, there will be up to 50,000,000 Investor Warrants granted. The Investor Warrants shall be exercisable for a period of 12 months, after which any unexercised Investor Warrants shall lapse. If at any time prior to the lapse of the Investor Warrants the share price for the Ordinary Shares is 1.5p or more for five consecutive days, the Company shall have the option to require the holders of the Investor Warrants to exercise the Warrants within 14 days or their Investor Warrants will lapse.
For details as to the expected date and times by which certain events (e.g. Admission, the crediting of CREST accounts and the despatch of share certificates) are expected to happen in relation to the Placing Shares, please refer to the information on page 5 (Expected Timetable of Principal Events) of the Circular.
Related Party Transactions
The Disposal also constitutes a related party transaction under Rule 13 of the AIM Rules for Companies.
2. The findings of a private independent valuation report, commissioned by the Company, of
3. the Disposal, as it is a fundamental change of business, will be subject to Shareholders' approval at the General Meeting.
The independent directors in respect of the Disposal have also taken into account the principal relevant considerations that they have identified, which are set out further in the Circular.
The Directors expect that, with effect from Admission, Nicholas "Nick" Lee will join the Board as a non-executive Director, and that
Further announcements regarding the proposed Board changes will be made as appropriate.
Dis-application of Pre-Emption Rights and authority to allot shares
In connection with the Placing and the possible allotment of the Investor Warrants and the Broker Warrants, the Directors wish to have authority to issue a limited proportion of the Company's issued ordinary share capital without having to seek Shareholders' approval. Having such authorities will allow the Company to raise capital or issue shares for other reasons quickly and flexibly and without incurring the time and expense of convening a general meeting. The Directors believe that, at the current time, authorities in respect of 63.27 per cent. of the Company's issued ordinary share capital (following the Consolidation and the allotment of all the new shares relating to the Placing and the issue of the Investor Warrants and the Broker Warrants) will provide the Company with a reasonable capacity to issue shares.
Shareholders' approval is being sought for these Share authorities by way of Resolutions 4 and 5 in respect of the Placing and an addition authority up to
The Board has agreed with New
Under the Companies Act 2006 and the Company's Articles, a change of name requires the passing of a special resolution of Shareholders at a general meeting. Shareholders' approval is being sought for this change of name by way of Resolution 8.
If Resolution 8 is approved, the change of name will be effective once
If approved the Company's TIDM will change to "CCAP" with effect from Admission.
Any person who is in any doubt as to his tax position or who is subject to tax in a jurisdiction other than the
Use of Proceeds
The Company is raising funds to enable the Board to search for acquisition opportunities, which if successful would constitute a reverse takeover under the AIM Rules for Companies and fund the Company's general working capital.
The Company is seeking Shareholders' approval at the General Meeting in respect of the following Resolutions:
· Resolution 1 which will be proposed as an ordinary resolution, seeks approval by the Independent Shareholders of the Disposal, pursuant to the SPA.
· Resolution 2 which will be proposed as an ordinary resolution and be subject to the passing of Resolution 3 relating to the amendment of the Articles, seeks approval for the Share Consolidation.
· Resolution 3 which will be proposed as a special resolution and be subject to the passing of Resolution 2 relating to the Consolidation, seeks approval for the amendment of the Articles to amend the reference to the nominal value of the ordinary shares to
· Resolution 4 which will be proposed as an ordinary resolution seeks authority for the Board, pursuant to sections 551 and 570 of the Companies Act 2006, to allot, inter alia, the Placing Shares, the Investor Warrants and the Broker Warrants and the ability to issue additional Ordinary Shares up to a maximum nominal amount of £463,250.00.
· Resolution 5 which will be proposed as a special resolution seeks approval for the disapplication of pre-emption rights in relation to the issue of the Placing Shares, the Investor Warrants and the Broker Warrants and a further Ordinary Shares up to a maximum nominal amount of £463,250.00, under the authority granted by Resolution 4 such that such shares can be offered other than pro rata to existing Shareholders.
· Resolution 6 which will be proposed as a special resolution, seeks to approve the change of the Company's name to
In the event that Resolutions 1, 4 and 5 are not passed, the Disposal will not proceed.
In the event that Resolutions 2 and 3 are not passed, the Share Consolidation will not proceed.
In the event that Resolutions 4 and 5 are not passed, the Placing will not proceed.
In the event that Resolution 6 is not passed, the change of name to
The new authorities are being sought predominately to allow the Company to complete the Placing, allow the allotment of any Ordinary Shares pursuant to the exercise of the Investor Warrants and/or Broker Warrants and to enable the Board to take advantage of future business opportunities as they arise.
In order to obtain the necessary Shareholders' approval, a General Meeting of the Company is to be held at which the Resolutions will be proposed. Further information regarding the General Meeting is set out in paragraphs headed General Meeting and Action to be taken by shareholders below.
The Directors, and the independent directors where appropriate, believe the Proposals to be the most appropriate way to provide the necessary capital to meet the Company's future requirements. Should the Disposal not proceed for any reason, the Company would seek to delist from AIM. Should the Placing not proceed for any reason, the Company would need to find alternative funding to fund its acquisition plans which, given the current global uncertainty arising from COVID-19, may create unnecessary uncertainty. All Directors, where appropriate, therefore recommend that Shareholders vote in favour of the Resolutions set out in the Notice relating to the Proposals.
A notice convening the General Meeting to be held at the offices of
Action to be taken by Shareholders
You will find enclosed with the Circular a Form of Proxy for use at the General Meeting. You are requested to complete and return the Form of Proxy to Link Group,
The Company has received irrevocable undertakings from the following shareholders confirming their agreement to vote in favour of the Resolutions detailed below:
The independent directors in respect of the Disposal have considered the alternatives to the Disposal and have concluded that out of the alternatives, the Company carrying out the Disposal and becoming a cash shell is most likely to represent the best value to the Shareholders in the long term.
The Directors consider that the Placing will promote the success of the Company for the benefit of its members as a whole. Accordingly, the Directors unanimously recommend Shareholders to vote in favour of Resolutions 4 and 5 at the General Meeting as
All the Directors unanimously recommend Shareholders to vote in favour of Resolutions 2, 3, 4, 5 and 6.
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