Notice of AGM

 

TIDMAINC 
 
RNS Number : 8972L 
Applied Intellectual Capital Ltd 
19 January 2009 
 
APPLIED INTELLECTUAL CAPITAL LIMITED 
19th JANUARY 2009 
Annual General Meeting and cancellation of listing 
Applied Intellectual Capital Limited ("AIC" or the Company") has today posted a 
circular ("Circular") to shareholders to call an Annual General Meeting of the 
Company on 17th February 2009, at 11:00 a.m. California time at the principal 
offices of the Company at 2450 Mariner Square Loop, Alameda, California, USA 
94501, at which: 
  *  the report of the directors and the audited accounts for the year to 31st July 
  2008 will be received; 
 
  *  Robert Stoffregen and Darron Brackenbury are retiring by rotation and will be 
  subject to reappointment; 
 
  *  AIC's auditors will be proposed for reappointment and it will be proposed that 
  the Board be authorised to agree their remuneration; and 
 
  *  it will be proposed that the Company's admission of its Shares on AIM be 
  cancelled. 
 
 
The Board believes that it is in the best interests of Shareholders for the 
Company to cancel its admission on AIM and has recommended that shareholders 
vote in favour of it. 
 
 
Cancellation of listing 
 
 
Firstly, the Board considers that the Company's recent share price performance 
significantly undervalues the businesses and technologies of the AIC Group and 
has resulted in unwarranted loss in shareholder value. This undervaluation 
undermines important negotiations that are currently underway with respect to 
operational aspects of the AIC Group's technology and is unhelpful to its 
commercial relationships in general. The low prices at which the Shares have 
traded on AIM has a potentially negative impact on the AIC Group's ability to 
raise additional capital, the Company's use of its Shares for acquisitions of 
other companies and the grant of equity incentives for management and employees. 
Whilst the Board cannot be certain that ongoing commercial negotiations will 
succeed, against a background of widespread economic uncertainty and weak equity 
and loan markets, it considers that the cancellation of listing may support 
them. 
 
 
Secondly, the Board considers that the costs associated with being a company 
with its shares traded on AIM are now disproportionate to the benefits of that 
market. The Board believes that there would be significant costs savings from 
the Shares not being traded on AIM. These costs savings could be up to US$ 
650,000 per year, not including savings in the considerable amount of executive 
and administrative time that is currently devoted to meeting regulatory and 
reporting requirements. These funds could then be available to the businesses 
and technologies of the AIC Group. 
 
 
Thirdly, on 3rd December 2008, the Company's Nominated Adviser to AIM, Nabarro 
Wells & Co. Limited ("Nabarro Wells"), notified the Company of its intention to 
cease to act on behalf of the Company as its Nominated Adviser. Termination of 
Nabarro Wells' engagement is to be effective as of 3rd March 2009. Following the 
acquisition of Nabarro Wells by Ambrian Partners Limited ("Ambrian") the Company 
agreed to engage Ambrian for the remainder of Nabarro Wells' notice period. If 
the Company is not able to replace its Nominated Adviser by 3rd March 2009, 
trading of its shares will be suspended and if this is not rectified by 
3rd April 2009 the admission of its shares to trading on AIM will be cancelled. 
All companies listed on AIM are required to have a NOMAD. As noted in an 
announcement of final results made on 15th January 2009, the Company's future is 
dependent on securing additional working capital. The working capital position 
is discussed further in the auditors' report dated 13th January 2009 on AIC's 
audited accounts for the year to 31st July 2008. The actions being taken by the 
Board to manage expenditure are described below. The Company is in the process 
of discussing several initiatives towards meeting the working capital shortfall 
by an injection of new funding. If the Company is unable to complete one of 
these initiatives by 3rd April 2009 the Board believes that it will be unable to 
attract a replacement Nominated Adviser. Accordingly, this increases the 
importance of the Board seeking opportunities for the Company but to do so 
against such a deadline is not considered by the Board to be in the 
Shareholders' best interests as discussed above. 
 
 
Finally, the loss of the AIM status will detrimentally affect liquidity for the 
Company's shares. This will affect all Shareholders. However, the Board 
considers that the Company's shares are not sufficiently liquid on AIM anyway. 
If anything, this situation can be expected to worsen unless working capital 
improves considerably. 
 
 
If the Board identifies a new opportunity before the proposed Annual General 
Meeting, which it considers is worth pursuing and which alters the above 
assessment, for example where the working capital position changes significantly 
as a result of a new investment in AIC, the Board will inform Shareholders and 
may decide, in the best interests of Shareholders, to change their 
recommendation as to how to vote on the resolution to cancel the listing on AIM. 
 
 
Following the cancellation, the Shares will cease to trade on AIM on or around 
25th February 2009 (being at least 5 business days following the date of the 
Annual General Meeting) assuming that the resolution to cancel trading of the 
shares on AIM is approved. The Shares will come out of the CREST system and 
Shareholders who currently hold Shares in uncertificated form will receive share 
certificates. 
 
 
ITI 
 
 
Discussions with ITI Scotland Limited ("ITI") about the GBP3.86 million debt 
owed to ITI by AIC and about the future of Plurion Ltd. are ongoing. To 
facilitate this continuing dialogue, ITI has agreed to extend the payment period 
on the debt to 1st July 2009 and to waive interest accruing on the balance from 
1st February 2009 onwards. The Board believes AIC will be able to reach a timely 
and acceptable resolution of these matters. 
 
 
Company Reorganisation and Redirection 
 
 
Assuming Shareholders resolve to cancel the admission of AIC, the Board is 
preparing to reorganise the Company's business priorities by rationalising its 
operations, and simplifying its management and governance structure. 
 
 
Tony Amor would resign as Chief Executive Officer immediately after the 
Company's proposed cancellation from AIM. Mr. Amor originally assumed the role 
of interim CEO in mid-July 2008. He has significantly exceeded the three month 
term to which he agreed, and he has done this at the expense of other business 
and personal obligations which now require his urgent attention. The Board is 
grateful to him for his commitment and guidance during one of the most 
challenging periods in the Company's history. Upon his resignation, Stephen 
Clarke will be re-appointed CEO. 
 
 
New share-based incentivisation arrangements for directors and staff of the AIC 
Group are being put in place, whereby existing out of the money options are 
being cancelled and share awards are being made. The Directors consider that 
these new arrangements are appropriate to incentivise and retain staff. The 
previous option arrangements were no longer serving this purpose because they 
were set at prices which are now significantly higher than the present trading 
price. In view of the working capital position, the Board considers these new 
arrangements to be sensible as a way of keeping and encouraging staff in a way 
which is aligned with shareholder interests. 
 
 
In anticipation of these changes, the Board has already taken measures to 
downsize the organisation, to adjust geographic focus, and to reduce overhead 
and burn rate. Projects that have not met their technical and commercial targets 
or where current market conditions do not allow for successful financing and 
commercialisation will be documented and shelved. 
 
 
Resources will continue to be devoted to those developments where the Board 
believes that the Company's technical and competitive advantages, market demand, 
and investor interest combine to create real, near-term commercial 
opportunities. For example, the change of the political administration in the 
U.S. has resulted in increased interest in water technologies and advanced 
batteries. Accordingly, the Company has re-prioritised its development efforts 
to take advantage of these opportunities. Certain technologies developed as part 
of shelved projects will be reassigned to these higher priority ventures. 
Similarly, technologies which were previously shelved when water technology 
markets collapsed in 2001 are being re-evaluated. 
 
 
Although the Company is currently critically short of cash, the Board believes 
that the prioritised developments, some of which should start to materialise as 
fully funded ventures during the first half of 2009, hold the prospect of 
creating shareholder value. Additionally, the Company has re-started its 
consulting activities as AIC Technica and is now generating revenues both 
through the provision of technical services and through the supply of commercial 
equipment. One example of this was the first shipment of commercial quality 
nitrate destruction systems for use in water treatment markets by our licensee, 
Rohm and Haas. 
 
 
Consistent with these objectives, the management team is being re-aligned, 
building on the successes of the last 12 months and adjusting to both the 
challenges and the opportunities ahead. 
 
 
Proposed Change of Directors 
 
 
Robert Clarke, Darron Brackenbury and Robert Stoffregen are retiring from the 
Board by rotation, in accordance with the Company's articles of association. Mr. 
Stoffregen, the Company's Chief Financial Officer, will be offering himself for 
reappointment as an Executive Director, and Mr. Brackenbury will be offering 
himself for reappointment as a non-Executive Director. Robert Clarke is not 
offering himself for election. Robert has agreed to chair the new Technical 
Advisory Board, which will report to the Board on technical matters.  The 
Directors thank him for his enormous contribution to the Company to date as a 
Director, for his valuable insight and for now taking on the role as chairman of 
the Technical Advisory Board. 
 
 
It is not proposed to fill the vacancy created by the resignation of Sir Andrew 
Likierman, who stepped down, as was announced  on 19th December 2008, in order 
to assume increased responsibilities at the London Business School. 
 
 
Assuming the resolutions to reappoint Mr. Stoffregen and Mr. Brackenbury are 
passed by Shareholders, the composition of the Board after the proposed 
cancellation of listing will be Stephen Clarke and Robert Stoffregen (Executive 
Directors) and David Thompson (Chairman), Jamie Weir, Tony Amor and Darron 
Brackenbury (Non-Executive Directors). It is anticipated that the composition of 
the Board may change further as the needs of the business evolve during 2009. 
 
 
Uncertain and Potential Negative Consequences from the cancellation of trading 
of shares on AIM 
 
 
Following the date of cancellation of the AIM listing, the Shares will cease to 
trade on AIM and CREST on or around 25th February 2009 (being the date at least 
5 business days following the date of the Annual General Meeting) assuming the 
resolution to delist is approved. 
 
 
As noted above, the Board considers that cancellation is in the best interests 
of Shareholders. However, the overall impact of the proposed cancellation cannot 
be accurately predicted for certain and there may be negative consequences. The 
cost savings may be materially less than anticipated. Moreover, the provision of 
certain financial and other publicly available information required by the AIM 
Rules for Companies would be discontinued, although the Company will continue to 
provide financial information to Shareholders through its annual report and 
account, its website and periodic circulars. 
 
 
In addition, following the proposed cancellation there will be very limited 
liquidity in the Shares, which may make it more difficult for Shareholders to 
realise their investment in the Company by the sale of part or the whole of 
their shareholdings. There will be no public market for the Shares in the UK or 
the United States. Resale of the Shares may be limited also by provisions of the 
US federal securities laws relating to restricted securities as defined for 
Regulations S purposes and in Rule 144 promulgated by the US Securities and 
Exchange Commission. 
 
 
Upon cancellation of the shares from trading on AIM, the takeover protection in 
the Company's articles of association, whereby an offer needs to be made to all 
shareholders if a party acquires over 30% of the Shares, will automatically come 
to an end. 
 
 
Although, in the current difficult market conditions, there can be no certainty 
about the future, the Board believes that the Company is currently undervalued 
on AIM and that, following the proposed cancellation of the listing, the Company 
will be better positioned to attract financing for its projects. It also 
believes that there will be opportunities for Shareholders to realise value from 
the Company's activities through a variety of mechanisms once the capital 
adequacy of the operations is stabilised such as dividend payments, stock 
buy-back programmes and the partial sale of equity in affiliates and 
subsidiaries to third parties. As Shareholders, the Board, founders, management 
and staff are all similarly motivated for there to be liquidity events for all 
the Company's Shareholders. 
 
 
The Board is also active in seeking further investment into the Company. Such 
investment may be in the form of equity. The articles of association of the 
Company set out certain pre-emption rights on a new equity fund raise, which 
operate when any new issue exceeds 10% of the then outstanding issued share 
capital, at Article 3.7. It is the Board's intention that in the event of an 
equity fund raise exceeding 10%, the existing shareholders would be invited to 
participate in accordance with Article 3.7 or (having regard to the subscription 
timetable) on similar terms. The Board would thereby intends, if possible, to 
give investors the opportunity to participate and not be diluted. 
 
 
Who can Vote 
 
 
Only holders of record of Shares at the close of business on the record date of 
15th February 2009 will be entitled to vote in person or by proxy. Shareholders 
are urged to vote by proxy regardless of whether they attend the Annual General 
Meeting. On 19th January 2009, there were 44,990,115 outstanding Shares. Each 
Share carries one vote (subject to the below). 
 
 
Enclosed with the Circular is a Disclosure Notice. It asks for disclosure of 
information about shareholdings as at 19th January 2009. Shareholders are urged 
to respond to the Disclosure Notice as the Directors may resolve in their 
discretion that any Shareholder failing to do so shall have his or its votes 
suspended (pursuant to Article 13.11). A previous form of the Disclosure Notice 
was distributed to Shareholders as at the relevant record date (28th November 
2008) on 19th December 2008 and some Shareholders have replied. 
 
 
Approval Required and Expected Timing 
 
 
Under the AIM Rules for Companies, it is a requirement that any voluntary 
cancellation of trading of the shares on AIM must be approved by not less than 
75 per cent of votes cast by Shareholders in general meeting. Accordingly, the 
relevant Resolution contained in the Notice of Annual General Meeting that 
accompanies the Circular seeks the approval by Shareholders of the Company's 
application to London Stock Exchange plc for cancellation of admission to 
trading in the Shares on AIM. The Company has notified London Stock Exchange plc 
of its preferred cancellation date and, if the Resolution is approved, it is 
expected that cancellation will take effect on or about 25th February 2009. 
 
 
Terms contained and defined in the Circular have the same meaning in this 
announcement. A copy of the Circular, which was posted today, is available on 
the Company's website www.apicap.com 
 
ENQUIRIES: 
Applied Intellectual Capital:  Bob Stoffregen Tel  [phone] 
Perlgut Group:  Mark Perlgut Tel  [phone] 
Ambrian Partners:  Marc Cramsie Tel             [phone] 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
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