Iconic Labs PLC (LON:ICON) has issued a response to the content of a press release issued last Friday from Ott Holdings Ltd which it said makes various allegations against the company and its board of directors.
The AIM-listed firm said it does not accept the allegations and assertions made in the press release, which it “wholly denied”.
READ: Iconic Labs notes alleged claim from European High Growth Opportunities Securitization Fund
Iconic also highlighted several points, saying it has not received a valid requisition notice to convene a general meeting, nor has it called a general meeting of shareholders and no meeting is scheduled to take place.
The company added that notwithstanding Ott Holding's claim in the press release that they are the "holder of 5,735,555,554 shares" in Iconic, Ott was not registered as a holder of any shares in the company by its share registrar and that initial enquiry suggested that Ott Holdings is a Cyprus based developer of hotels and does not appear to have any commercial interest or experience in the social media and publishing industry in which the company conducts its operations.
Iconic said it is currently seeking to clarify how the ultimate owner of these shares acquired them, on what basis and whether they are acting in concert with other shareholders.
Ott Holdings issued a press release alleging lack of commercial progress, lamenting the “absolutely appalling" share performance, that “management have failed to create any shareholder value since coming to the helm in 2018/2019” and adding that the board has also “presided over the disastrous departure of David Sefton” as executive chairman.
“Ott Holdings is of the firm view that a competent and experienced board and management team needs to be installed at Iconic who can preserve shareholder value and secure the needed medium- and long- term financing which Iconic needs to put it on a sound financial footing. Further, the current business of Iconic needs to be rationalized and streamlined, with new potential M&A targets to be identified for growth,” the statement said.
Iconic “completely refuted” the allegations and said the business “has continued to make substantial progress in increasing the revenues and developing the operations of the company, enabling it to move towards its aim of being profitable”.
“In the last 22 months the board has had to restructure the previous WideCells business that was close to insolvency and has built a new media business from zero revenues to now running at an annual revenue run rate of over £1mln a year. The large majority of these revenues come from management service agreements which Iconic was only able to obtain because of the skills and experience of the board in managing digital media businesses. It should also be noted that during the last 20 months, the board members and the company's advisors have deferred substantial parts of their salaries and fees in order to invest in the growth of the company”, Iconic said in its response.
The group said it agrees that OTT is correct in identifying that the involvement of European High Growth Opportunities Securitization Fund (EHGOF) in the company pre-dates the involvement of any of the current board members or David Sefton, while also noting that the board inherited the convertible financing structure put in place by the previous management team with EHGOF and subsequently the board has been “very clear that it believes the share price of the company has been negatively affected by this type of facility”.
“The facility with EHGOF was terminated by the company when EHGOF refused to provide the investment monies due under a loan note for which it had subscribed. The company considers the obligation to provide investment monies was, following a subscription for the loan notes by EHGOF, unconditional and was the sole purpose of the company entering into the facility. This followed several instances of EHGOF being late in providing investment monies when obliged to do so, but the company does not know the reason why monies were being withheld by EHGOF. Following the termination of the facility with EHGOF, Alpha Blue Ocean (ABO), on behalf of EHGOF, then, in the company's view, reneged on an agreement in principle for settlement of all outstanding loan notes. The company has always been and remains open to reaching a settlement agreement with EHGOF on commercially practical and sensible terms”, Iconic continued.
The company also said it is aware that if the proposals referred to in the OTT Holdings press release in respect of changing the composition of the board at a general meeting were ever to be effected, this would give Greencastle Capital “a right (which it can exercise at its sole discretion) to terminate either or both of the management services agreements that exist between Greencastle Capital and the company” which are in respect of the JOE Media and TheLondonEconomic businesses.
“Given that the management services agreements constitute the large majority of the revenues the board does not believe this would be in the best interests of its shareholders as a whole”, the firm said, adding that if the proposals suggested by OTT in its press release as to the changing of the composition of the board to be effected then all of the members of the board would resign.
“Finally, despite the allegations made by OTT Holdings in the press release, the board remains resolute that it will seek to act in the best interests of its shareholders and stakeholders as a whole. For the avoidance of any doubt, the board as a collective will seek to protect the reputation of the company and its board and take all actions that are necessary to do so”, Iconic concluded.