Angelfish Investments plc

December 06, 2013 12:13 ET

Notice of GM

                                         LETTER FROM THE CHAIRMAN
                                         ANGELFISH INVESTMENTS PLC
                   (Incorporated and registered in England and Wales with No. 06400833)

Directors:                                                                               Registered Office:
Andrew Flitcroft, Chairman and Chief Executive Officer                                          Kings Court
Richard Ian Walker, Non-Executive                                                            Railway Street
                                                                                                   WA14 2RD
To Shareholders
                                                                                            6 December 2013
Dear Shareholder
                     Proposed creation of Cumulative Redeemable Preference Shares 2021
                                              (with Warrants)
                                        Proposed Capital Reduction
                                         Notice of General Meeting

1. Introduction

The Company is proposing to create a class of Preference Shares and to raise up to £4.2 million (equivalent
at current exchange rates to €5 million, the limit for which funds can be raised without a prospectus).

The  Company has accumulated losses on its profit and loss account of approximately £3.63 million as at  30
June  2013.  While this deficit exists, the Company is not able to make distributions to Shareholders,  and
would not be able to pay preferential dividends on the Preference Shares.  Your Board considers that it  is
in  the  interests  of Shareholders to eliminate this deficit, and the Company proposes to  carry  out  the
Capital  Reduction  as described below.  The Capital Reduction is subject to approval  by  Shareholders  in
general meeting, and to confirmation by the court.

Notice  of a General Meeting to create the Preference Shares and make consequential changes to the Articles
of  Association, and to approve the Capital Reduction, is set out at the end of this document.  The General
Meeting  is  to  be held at 12.05 p.m. on 23 December 2013 or, if later, immediately following  the  annual
general meeting convened for the same date at Kings Court, Railway Street, Altrincham, Cheshire WA14 2RD.

2. Preference Shares

It  is  proposed to create a class of Preference Shares carrying a preferential dividend and  repayable  in
2021.  In order to widen the attraction of the Preference Shares to potential investors, it is proposed  to
apply  for the Preference Shares to be admitted to trading on the ISDX Growth Market.  It is also  proposed
that subscribers for Preference Shares will be granted Warrants to subscribe for Ordinary Shares.

The  creation  of the Preference Shares is subject to the approval of Shareholders in General Meeting,  and
resolution  2 set out in the notice at the end of this document is a special resolution to be proposed  for
this purpose.  The grant of authorities to allot the Preference Shares (and Ordinary Shares arising on  the
exercise of Warrants) is sought by resolution 3 set out in the notice at the end of this document.

It  is  proposed  that the Preference Shares will be issued at £1 per share, and that they  will  have  the
following principal terms:

  -       a cumulative preferential dividend at a rate equivalent to 7.1% on the issue price

  -       no rights to vote, unless the preferential dividend is in arrears for at least six months, and in
          certain other limited circumstances

  -       redeemable at the issue price in 2021.

The rights to the Preference Shares will be contained in the Company's Articles of Association, and are set
out in full in the notice of General Meeting at the end of this document.

No  agreement has been entered into for the placing or subscription of Preference Shares.  The Company  has
held  discussions  with Solutions Associate as to the development of preference shares as  an  asset  class
capable  of  being held in self invested pension plans ("SIPPs").  Solutions Associate is a  company  whose
network  has been established to help companies access fundraising markets, and it has agreed to facilitate
introductions  to  various  counterparties in connection with subscriptions  for  Preference  Shares.   The
Company has agreed in principle that fees for their services would be paid to Solutions Associate.  If  the
full  amount  of £4.2 million is raised, such fees would amount to £1.05 million which, spread  over  seven
years,  is equivalent to an interest rate of approximately 3.6% per year, and means that the cost  of  this
capital  would  be approximately 10.7% per year.  On full subscription, the net proceeds  received  by  the
Company would be £3.15 million.

The  Company  intend  to  issue Preference Shares once the Capital Reduction  described  below  has  become
effective.  At that time, application would be made for the Preference Shares to be admitted to trading  on
the  ISDX  Growth  Market.  Subscriptions for Preference Shares would be conditional  upon  such  admission
becoming effective.

It  is  anticipated  that  the net proceeds of the issue of Preference Shares  would  principally  be  made
available for investment in One Media, to fund the development and manufacture of computer tablets, and  in
particular  the funding gap between deposit and balance payments on order of products from the manufacturer
and  receipt of deposit and balancing payment from the end customer to One Media together with any shipping
and  associated delivery costs.  It is anticipated that this should help accelerate the development of  One
Media's business.

3. Warrants

As  described  above, it is proposed to grant Warrants to subscribers for the Preference Shares.   Warrants
will be granted to each subscriber on receipt of the subscription monies for their Preference Shares.   The
Warrants  would entitle the holder to subscribe for Ordinary Shares an amount equal to up  to  25%  of  the
amount  subscribed by the holder for their Preference Shares.  The exercise price for each Warrant will  be
the  offer  market price for an Ordinary Share (as derived from the ISDX Growth Market) on  the  date  when
subscription monies from the issue of the relevant Preference Shares are received by the Company.  In  each
case, the Warrants would be exercisable until 31 March 2021.

4. Capital Reduction

Based on the Company's audited accounts for the year ended 30 June 2013, the Company has accumulated losses
on profit and loss account of approximately £3.63 million.

In  order to eliminate this accumulated deficit (together with any additional losses incurred in the period
up until the date when the Capital Reduction takes effect) and to enable distributions to be made in future
(including  in particular, the dividends that will become due on the Preference Shares), it is proposed  to
cancel  the  Deferred  Shares and the balance standing to the credit of the share premium  account  of  the

It is anticipated that the Capital Reduction will be sufficient to write off the entirety of the deficit on
its  profit  and  loss account and create reserves of approximately £330,000, which would be distributable.
The  Company is not currently trading and the accumulated deficit is not likely to alter materially  up  to
the date upon which the Capital Reduction takes effect.

The  Capital Reduction requires the approval of Shareholders by special resolution and, under the CA  2006,
the  subsequent confirmation of the Court and registration at Companies House of the relevant Court  order,
together with a statement of capital.  If resolution 1 set out in the notice at the end of this document is
passed, it is proposed to commence proceedings to obtain the confirmation of the Court as soon as possible.
It is expected that the final Court hearing at which the Court will confirm the Capital Reduction will take
place on 29 January 2014.

The  Court  will require to be satisfied that there is no real likelihood that the Capital Reduction  would
result  in the Company being unable to discharge any debt or claim as it fell due.  It is for the Court  to
determine  whether any protection is required for creditors.  The Company will put in place  such  form  of
creditor protection as the Court may require in order to permit dividends to be paid following the  capital
reduction taking effect.

Following the Capital Reduction, there will be no change in the number of Ordinary Shares in issue.

The Directors reserve the right not to seek confirmation of the Capital Reduction if they believe it ceases
to be in the best interests of the Company.

4. One Media

Under  a  memorandum of understanding dated 18 January 2013 and subsequent subscription  agreement  entered
into  on  30  April  2013, the Company has invested an aggregate of US$210,000 in secured convertible  loan
notes  to  date,  and a further US$290,000 may be invested into One Media under the subscription  agreement
subject  to the satisfaction of certain conditions.  The ability to provide additional funding through  the
issue of Preference Shares should enhance One Media's ability to secure product orders.

The  Company has an option to acquire the entire issued share capital of One Media, subject inter  alia  to
agreement being reached as to the terms of such acquisition.

5. General Meeting

A  notice  is  set out at the end of this document convening a General Meeting to be held at  Kings  Court,
Railway Street, Altrincham, Cheshire WA14 2RD, at 12.05 p.m. on 23 December 2013, or as soon thereafter  as
the  Company's annual general meeting convened for the same date has been concluded or adjourned.   At  the
General Meeting, special resolutions will be proposed:

(a)       to approve the Capital Reduction;
(b)       to change the Articles to create the Preference Shares; and
(c)       to  grant  general authority to allot securities, and specific authority to allot securities  for
          cash, disapplying statutory pre-emption rights, for the purposes of the Preference Shares and the
          issue of Ordinary Shares on the exercise of the Warrants.

If  the  Preference Shares are all issued, the exercise of the Warrants in full would,  if  granted  at  an
exercise  price  equal to the current offer price on the ISDX Growth Market, result in  the  issue  of  210
million  Ordinary Shares, and the receipt of additional cash of £1.05 million.  Such Ordinary Shares  would
represent approximately 22.8% of the ordinary share capital as enlarged by the exercise of the Warrants.

6. Action to be taken

Shareholders will find enclosed with this document a form of proxy for use at the General Meeting.  Whether
or  not you intend to be present at the meeting, you are requested to complete, sign and return the form of
proxy  to  the  Company's registrars, Share Registrars Limited, Suite E, 1st Floor, 9  Lion  &  Lamb  Yard,
Farnham, Surrey GU9 7LL, as soon as possible but, in any event, so as to arrive by no later than 12.05 p.m.
on 19 December 2013.  The completion and return of a form of proxy will not preclude you from attending the
meeting and voting in person should you wish to do so.

7. Recommendation

The Directors consider that the creation of the Preference Shares, grant of Warrants, the Capital Reduction
and the Resolutions to be proposed at the General Meeting of the Company to be in the best interests of the
Company  and  its Shareholders as a whole and accordingly unanimously recommend that Shareholders  vote  in
favour  of  the  Resolutions, as I intend to do in respect of my own beneficial holding  which  amounts  to
4,077,844  Ordinary Shares (representing approximately 0.57 per cent of the existing issued ordinary  share
capital of the Company).

Yours sincerely

Andrew Flitcroft

Contact Information

  • Angelfish Investments plc