Arria NLG PLC Proposed cancellation of trading on AIM (1717S)

TIDMNLG

RNS Number : 1717S

Arria NLG PLC

19 December 2016

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").

19 December 2016

Arria NLG plc

("Arria NLG", "Arria" or the "Company")

Proposed cancellation of trading on AIM, trading update and

notice of general meeting and warrantholder meeting

Arria NLG (AIM: NLG), a technology leader in Natural Language Generation ("NLG"), will today post to holders of Arria UK Shares and holders of Quoted Warrants a circular (the "Circular") with notices convening the following meetings:

(a) a general meeting of holders of Arria UK Shares, to be held at the offices of Travers Smith LLP, 10 Snow Hill, London EC1A 2AL at 10.00 a.m. on 6 January 2017 (the "General Meeting"); and

(b) a meeting of holders of Quoted Warrants, to be held at the offices of Travers Smith LLP, 10 Snow Hill, London EC1A 2AL at 10.15 a.m. on 6 January 2017 (the "Quoted Warrantholder Meeting").

At the meetings, the Company will, inter alia, seek approval for the cancellation of trading on AIM of the Arria UK Shares and Quoted Warrants ("Cancellation"). The purpose of the Circular is to provide holders of Arria UK Shares and Quoted Warrants with an update on the Company's current funding position and its progress towards the listing in New Zealand and the rationale to the proposed Cancellation.

If the Cancellation is approved at the General Meeting and Warrantholder Meeting, the last day of trading on AIM of the Arria UK Shares and Quoted Warrants is expected to be 19 January 2017 and Cancellation is expected to take effect at 7.00 a.m. on 20 January 2017. Cancellation will be conditional on the passing of the resolutions to approve cancellation of both the Arria UK Shares and the Quoted Warrants. Should one of the Cancellation resolutions not be passed at the General Meeting or Quoted Warrantholder Meeting, then both the Arria UK Shares and Quoted Warrants will remain admitted to trading on AIM.

A copy of the Circular is available from the Company's website, www.arria.com. A copy of the letter from the Chair and Interim Chief Executive of Arria UK as contained in the Circular is set out below, which includes an update on the Company's trading and financial position and fundraising activities.

Defined terms used in this announcement shall have the meaning as set out at the end of this announcement unless otherwise defined above.

For further information, please visit www.arria.com or contact:

 
Arria NLG plc - Chairman      Tel [phone] 
 and Interim Chief Executive 
 Sharon Daniels 
----------------------------  --------------------------------------- 
Allenby Capital (Nominated    Tel: [phone] 
 Adviser & Joint Broker)       5656 
 Nick Naylor 
 Jeremy Porter 
 James Reeve 
----------------------------  --------------------------------------- 
MSL Capital Markets (Lead     Tel: [phone] 
 Manager) 
 Andrew McDouall 
 Justine Dunnett 
 Peter Lynds 
----------------------------  --------------------------------------- 
Stockdale Securities          Tel: [phone] 
 (Joint Broker)                6100 
 Antonio Bossi 
 Robert Finlay 
----------------------------  --------------------------------------- 
IFC Advisory (Financial       Tel: [phone] 
 PR and IR)                    9788 
 Tim Metcalfe                  [e-mail] 
 Graham Herring                [e-mail] 
 Heather Armstrong             [e-mail] 
----------------------------  --------------------------------------- 
Ruder Finn (PR - USA)          Tel: [phone] 
 Scott Beaver (West Coast)      Tel: [phone] 
 Brianna Mulligan (East 
 Coast) 
----------------------------  --------------------------------------- 
 

The following information has been extracted from and should be read in conjunction with the Circular.

EXPECTED TIMETABLE

 
 Publication of this document            19 December 2016 
 Latest time for receipt          10.00 a.m. on 4 January 
  of Forms of Proxy for the                          2017 
  General Meeting 
 Latest time for receipt          10.15 a.m. on 4 January 
  of Forms of Proxy for the                          2017 
  Quoted Warrantholder Meeting 
 General Meeting                  10.00 a.m. on 6 January 
                                                     2017 
 Quoted Warrantholder Meeting     10.15 a.m. on 6 January 
                                                     2017 
 Last day of dealings in,                 19 January 2017 
  and for registrations of 
  transfers of, Arria UK 
  Shares and Quoted Warrants 
 Cancellation of admission        7.00 a.m. on 20 January 
  to trading on AIM of Arria                         2017 
  UK Shares and Quoted Warrants 
 
   1.               Introduction 

On 1 December 2016 Arria UK announced that the Arria Group expects its listings on NZX and ASX to be completed in March 2017.

The purpose of the circular is to provide Arria UK Shareholders and Quoted Warrantholders with an update on the Company's current funding position, its progress towards the Listings and to seek Arria UK Shareholder approval in relation to the IPO Pre-Subscription Offer and the proposed cancellation of admission to trading on AIM of the Arria UK Shares and Quoted Warrantholder approval in relation to the cancellation of admission to trading on AIM of the Quoted Warrants.

In addition, this circular sets out information in relation to:

(a) the General Meeting to be held at the offices of Travers Smith LLP, 10 Snow Hill, London EC1A 2AL at 10.00 a.m. on 6 January 2017; and

(b) the Quoted Warrantholder Meeting to be held at the offices of Travers Smith LLP, 10 Snow Hill, London EC1A 2AL at 10.15 a.m. on 6 January 2017.

   2.               Funding update 

Current trading position

As previously announced, Arria UK continues to seek additional funding to support its operations, and the IPO Pre-Subscription Offer (details of which were announced on 1 December 2016 and are set out below) comprises part of this additional funding. If the IPO Pre-Subscription Offer fails to raise sufficient amounts or the IPO Pre-Subscription Resolutions are not approved at the General Meeting then Arria UK would need to seek an increased amount of additional funding from alternative sources in order to support its operations. There is no guarantee, however, that such increased amount of additional funding could be obtained in the requisite time frame, or at all. Further, the Arria UK Directors believe that any such funding, if obtained, would likely be on less favourable terms than the IPO Pre-Subscription Offer.

If the IPO Pre-Subscription Offer fails to raise sufficient amounts or the IPO Pre-Subscription Resolutions are not approved at the General Meeting, and no alternative funding can be raised, Arria UK's ability to operate as a going concern may be put at risk during the first quarter of 2017.

Trading update

Over the last four years Arria UK has invested approximately GBP35 million to establish its global natural language generation capabilities, including: paths to market; trial marketing; strategic partnering; and beta-testing of Arria UK's natural language generation technologies. During this period Arria UK has gained invaluable market intelligence and applied it to product development. Arria UK has also had 9 patents awarded (with a 10(th) patent expected to be issued soon following a notice of allowance), with more progressing from its natural language generation intellectual property programme.

Over the past 18 months in particular, projects and partnerships have been undertaken across the USA, Europe and Asia Pacific with companies including: IBM; Genpact; Charles Schwab; Cognizant; Comcast; Consolidated Edison; Deloitte; Deutsche Bank; Farmlink; HSBC; Macquarie; McKinsey & Company; MeteoGroup; P&G; Pepsi; Results.com; Royal Bank of Canada; Rolls Royce; Sabre; Sanofi and Samsung.

Arria's core asset from this development and sales work is its natural language generation platform (the "NLG Platform"). The NLG Platform is used to both analyse data, and to generate rich, narrative and written insights. Arria UK now licenses the NLG Platform via three distinct offerings, all of which support the recurring revenue model central to the Arria UK's commercial strategy:

1. Professional Services - the development and licencing of large custom applications that use the NLG Platform for enterprise-level clients;

2. Recount - a subscription-based Software-as-a-Service accounting product built on top of the NLG Platform, that acts as a virtual financial advisor to small and medium sized business, which launches to the public in December 2016; and

3. The NLG Developer Cloud - the provision of tools and services that enable the 18-million-strong global third-party developer community to build natural language generation applications that interact directly with the NLG platform. These tools include Arria's Articulator and Articulator-Lite natural language generation products.

Arria UK is currently finalising its report and accounts for the year ended 30 September 2016 and expects that these will now be announced by 31 March 2017.

The IPO Pre-Subscription Offer

As announced on 1 December 2016 and in advance of the Listings, Arria UK is undertaking an IPO Pre-Subscription Offer. Arria UK has appointed Rainmaker, a Chicago-based registered broker-dealer that specialises in sourcing capital for growth issuers, particularly in the technology sector, to assist in a US private offering to accredited investors. Further announcements on the progress of the IPO Pre-Subscription Offer will be made in due course.

The IPO Pre-Subscription Offer consists of the issue of the Notes in return for a minimum investment per investor of the NZ$ equivalent of US$500,000.

On completion of the Scheme and the Listings (further details of which are set out below), the Notes and accrued interest will be acquired by Arria NZ in exchange for Arria NZ Offer Bundles.

In the event that the Scheme is completed, but the Listings have not happened by 30 June 2017, the Notes and accrued interest will be acquired by Arria NZ in exchange for four Arria NZ Shares for each NZ$1.00 of Note held (including accrued interest).

Additionally, if at any time up until maturity of the Notes on 30 June 2017, the Board of Arria UK should form the view (as a result of changes in global markets or for any other reason) that the capital appreciation prospects for Arria UK Shareholders are better served by retaining the current structure of Arria UK or if for any other reason the Scheme is not completed by 30 June 2017, the Notes will convert, in accordance with the terms of the Note Instrument, into four Arria UK Shares per NZ$1.00 of the balance of principal and interest of the Note.

Arria UK Shareholders should note that the proportion of shares that they own in Arria UK or Arria NZ (following the Scheme becoming effective in accordance with its terms) will be diluted, as the case may be, by:

   (1)             if the Scheme and the Listings occur: 

(i) the issue of the Arria NZ Offer Bundles in consideration for the acquisition of each Note (plus accrued interest);

   (ii)       the proposed fundraising of NZ$25 million in connection with the Listings; 
   (iii)     the exercise of the Arria UK Warrants issued pursuant to the Warrant Instruments; 
   (iv)      the conversion of the Arria UK Loan Notes pursuant to the Arria UK Loan Note Instruments; 

(v) the exercise of any warrants or loan notes which may be issued by Arria NZ and which can result in the issue of Arria NZ Shares; and

(vi) the exercise of outstanding options or vesting of outstanding awards to subscribe for Arria UK Shares pursuant to the Arria UK Share Schemes;

   (2)             if the Scheme is completed, but the Listings have not happened by 30 June 2017: 

(i) the issue of four Arria NZ Shares for each NZ$1.00 of Note (plus accrued interest) held; and

   (ii)       any of those scenarios in 1(iii) - (vi) above; or 

(3) if the Scheme and Listings do not happen by the maturity of the Notes on 30 June 2017 or the Board of Arria UK determines not to proceed with the Scheme by 30 June 2017:

(i) the issue of the Arria UK Shares on conversion of the Notes in accordance with the terms of the Note Instrument; and

   (ii)       any of those scenarios in 1(iii)-(vi) above. 

By way of example, assuming that the Scheme and Listings occur and that the total IPO Pre-Subscription Offer of NZ$25 million is taken up in full and the resulting Arria NZ Offer Bundles are all exercised, a total of NZ$75 million would have been raised and a total of 76,875,000 Arria NZ Shares will be issued. Therefore, if:

(i) no further Arria NZ Shares are issued in any fundraising undertaken at the time of the Listings or by any other instruments convertible into Arria NZ Shares;

(ii) no further Arria UK Shares are issued prior to the Scheme pursuant to the Arria UK Warrant Instruments, the Arria UK Loan Note Instruments or Arria UK Share Schemes; and

(iii) the existing Arria UK Shareholders hold Arria NZ Shares on a one for one basis pursuant to the Scheme,

then Arria UK Shareholders will own 123,680,610 Arria NZ Shares out of a total enlarged issued share capital of 200,555,610, representing 61.66 per cent. of the issued share capital of Arria NZ.

However, if the Scheme is completed, but the Listings have not happened by 30 June 2017, and assuming that:

   (i)           the total IPO Pre-Subscription Offer of NZ$25 million is taken up in full; 

(ii) no further Arria UK Shares are issued prior to the Scheme pursuant to the Arria UK Warrant Instruments, the Arria UK Loan Note Instruments or Arria UK Share Schemes; and

(iii) the existing Arria UK Shareholders hold Arria NZ Shares on a none for one basis pursuant to the Scheme,

a total of 102,500,000 Arria NZ Shares will be issued and the Arria UK Shareholders will own 123,680,610 Arria NZ Shares out of a total enlarged issued share capital of 226,180,610, representing 54.68 per cent. of the issued share capital of Arria NZ.

The existing Arria UK Shareholders would also end up owning 54.68 per cent. of the issued share capital of Arria UK assuming that:

   (i)           the Scheme does not become effective; 

(ii) that the total IPO Pre-Subscription Offer of NZ$25 million is taken up in full and the resulting Arria UK Shares are issued, resulting in the issue of a further 102,500,000 Arria UK Shares; and

(iii) that no further Arria UK Shares are issued pursuant to the Arria UK Warrant Instruments, the Arria UK Loan Note Instruments or Arria UK Share Schemes.

It is Arria UK's intention to use the proceeds from the IPO Pre-Subscription Offer in Arria UK's continuing operations including for general working capital requirements and to fund costs associated with the Scheme and the Listings.

The Arria UK Directors believe that, given Arria UK's requirements for additional financing, the IPO Pre-Subscription Offer, along with the RCF described in further detail below, is currently the most appropriate way to raise additional funds for the Arria Group prior to the Scheme and the Listings completing.

The IPO Pre-Subscription Resolutions will grant the Arria UK Directors authority to issue the Notes which are convertible into, in aggregate a maximum of 102,500,000 Arria UK Shares, and to disapply statutory pre-emption rights in relation to such allotments.

Arria UK Loan Note update

Between January 2015 and July 2016, Arria UK received funds from subscriptions for Arria UK Loan Notes totalling approximately GBP6.9m. On 3 October 2016, Arria UK announced it had reached agreement with investors subject to the completion of the relevant documentation, for the subscription of approximately GBP2.7 million of Arria UK Loan Notes with C Warrants attached and at the date of this document Arria UK has received approximately GBP1.1 million of funds relating to these subscriptions. The subscribers have included existing and new investors in Arria UK. Arria UK has today reached agreement with the subscribers of the Arria UK Loan Notes to extend the due date of receipt of the balance of outstanding funds of approximately GBP1.6 million to 31 January 2017.

Revolving credit facility with Global Vision Consulting Group

On or around the date of this document Arria UK will enter into an unsecured revolving credit facility with Global Vision, a New Zealand consulting group. Global Vision is a strategic adviser that collaborates with the board and management of emerging companies and registered funds to raise their potential. It is a New Zealand incorporated limited liability company which was set up in March 2016.

The RCF makes available to Arria UK a US$3.015 million line of credit upon which Arria UK can draw at its discretion. Interest is charged at Bank of England base rate plus 5 per cent. on amounts drawn under that RCF compounding annually, and payment of all balances of principal and interest are due at the termination date, being 30 June 2019. Arria UK will conclude a first drawdown of approximately GBP300,000 on the RCF shortly.

Under the terms of the RCF, Global Vision is permitted to syndicate the loan to third parties. As part of their syndication, Sharon Daniels, Chair and Interim Chief Executive has indicated that she may participate in subscribing for up to US$500,000.

As Sharon Daniels is a director of Arria UK, her participation as a subscriber for up to US$500,000 of the RCF is deemed to be a transaction with a related party under rule 13 of the AIM Rules. Accordingly, the Arria UK Directors (other than Sharon Daniels) consider, having consulted with Arria UK's nominated adviser, Allenby Capital Limited, that the terms of Sharon Daniels' participation in the RCF are fair and reasonable insofar as Arria UK Shareholders are concerned.

Subscription and sharing agreement with Lanstead

On 15 October 2015 Arria UK announced that it had entered into two subscription agreements with Lanstead, together with related sharing agreements. A total of 18,750,000 Arria UK Shares were subscribed for by Lanstead at an issue price of 32 pence per Arria UK Share. 15 per cent. of the GBP6,000,000 gross proceeds of the Lanstead subscription, being GBP900,000, was retained by Arria UK and the balance of GBP5,100,000 was pledged by Arria UK pursuant to two sharing agreements with Lanstead. These sharing agreements entitled Arria UK to receive back those proceeds on a pro rata monthly basis over a period of 18 months, subject to adjustment upwards or downwards each month depending on price of the Arria UK Shares at the time, as explained in the announcement of 15 October 2015. The monthly payments under the sharing agreements commenced during February 2016 and to date Arria UK has received GBP1.62 million from Lanstead under the sharing agreements.

Settlements under the sharing agreements will be paused during the period in which Arria UK's Shares are not quoted on a recognised exchange. The Arria UK Directors anticipate that the sharing agreements with Lanstead will continue following the Listings. Lanstead has indicated its support to the Arria UK Directors and its intention to support the GM Resolutions in the General Meeting.

   3.               Progress on the Listings and the Scheme 

The Arria Group expects to be able to complete the Scheme, the Cancellation and effect the Listings, on or before 30 June 2017. The target date is March 2017 to complete all these steps. Arria NZ expects to use a network of retail broking firms in New Zealand to complete the Listings, and legal, accounting and tax advisers are in place.

To implement the Listings, Arria UK has organised a New Zealand company, Arria NZ, to become the successor holding company and wholly owning parent of the Arria Group. This transition will be achieved through the Scheme, which will be subject to Arria UK Shareholder approval, such approval to be sought early in 2017. On Completion of the Scheme, Arria UK Shareholders will hold a like number of Arria NZ Shares (which following the Listings will be traded on NZX and ASX) rather than their Arria UK Shares, which are currently traded on AIM.

As the Scheme requires approval of both the High Court of Justice in England and Wales and the Arria UK Shareholders, Arria UK will send a scheme document containing full details of the Scheme, including the resolutions to be passed and relevant voting materials and the recommendation of the Board of Arria UK to the Arria UK Shareholders for their approval in early 2017.

4. Proposed cancellation of the admission to trading on AIM of the Arria UK Shares and Quoted Warrants

Ahead of the Scheme and the Listings, Arria UK intends to apply to AIM to cancel trading on AIM of the Arria UK Shares and Quoted Warrants.

Rule 41 of the AIM Rules requires, inter alia, that the cancellation of the admission of securities to trading on AIM must be conditional upon the consent of not less than 75 per cent. of votes cast by the holders of each security, given in a general meeting. In this case, the cancellation of the admission to trading on AIM of Arria UK Shares is conditional not only on the Cancellation Resolution being passed by the requisite majority of Arria UK Shareholders at the General Meeting, but also the Warrantholder Cancellation Resolution being passed by the requisite majority of Quoted Warrantholders at the Quoted Warrantholder Meeting. Similarly, the cancellation of the admission to trading on AIM of the Quoted Warrants is conditional not only on the Warrantholder Cancellation Resolution being passed by the requisite majority at the Quoted Warrantholder Meeting, but also the Cancellation Resolution being passed by the requisite majority of Arria UK Shareholders at the General Meeting. Accordingly, the cancellation of admission to trading on AIM of the Arria UK Shares will only take effect if the Quoted Warrants can also be simultaneously cancelled from trading on AIM, and vice-versa.

The Arria UK Shares have been admitted to trading on AIM since December 2013. The primary objectives of seeking such admission were: (a) to meet a requirement of the agreement whereby Arria UK acquired all the capital stock of Data2Text Limited, the Scottish company that developed the group's NLG technologies; (b) to increase the global profile of Arria UK as a result of being a quoted company; and (c) to provide Arria UK with access to further equity capital in the UK to fund business opportunities and provide working capital, should it be required. Over the past two years, approximately GBP9.7 million of funding has been raised to develop the Arria UK business. The vast majority of that funding has been raised outside of the UK from existing and new sources in New Zealand, North America and other jurisdictions with the support of Arria UK Directors, management and key shareholders, as price and terms of funds raised outside of the UK was more acceptable to the Arria UK Directors.

Accordingly, in June 2015, the Arria UK Directors considered the options as to which capital market, jurisdiction, and cultural environment would best support Arria UK's growth plans while best protecting Arria UK, its culture, its shareholders and its technologies.

The Arria UK Directors concluded that the New Zealand capital markets would best support the Arria Group's plans. Some of the indicators that supported this conclusion are noted below:

-- The S&P/NZX 50 Index was the world's best-performing developed stock gauge this year with overseas buying of equities jumping 21 percent in 2015;

-- The growing prominence of New Zealand as an investment opportunity and in particular the technology sector is supported by two recent publications;

i. "The Investor's Guide to the New Zealand Technology Sector" a report prepared by Technology Investment Network on behalf of the New Zealand Ministry of Business, Innovation and Employment that "makes a strong case for investment in New Zealand's technology sector"; and

ii. "Determining our Future: Artificial Intelligence (AI)" a report prepared by the Institute of Directors of New Zealand and New Zealand law firm Chapman Tripp, that indicates the profile that artificial Intelligence will have in New Zealand stating "Already, AI has a growing effect on our daily lives. Its potential impacts are profound. In the near future, it is likely to drive - at an unprecedented pace - highly disruptive change to our economy, society, and institutions. As such, AI presents huge opportunities and risks to all New Zealanders" The conclusion to the report's call to action states "The potential economic and social opportunities from AI technologies are immense. The public and private sectors must move promptly and together to ensure we are prepared to reap the benefits, and address the risks of AI."

-- The ability of New Zealand technology leaders such as Xero.com to raise approximately $500 million from US investors; and

-- The ongoing expansion of the New Zealand technology sector and, the New Zealand Government's Ultra-Fast Broadband (UFB) initiative that connected New Zealand to the world at the "speed of light" via its fibre optic network.

These indicators, along with others (including that a number of Arria UK's founders also co-founded Diligent, an NZX listed SaaS technology company that was recently sold for NZ$943 million in cash), all supported the Arria UK Directors' conclusion that the New Zealand capital market would better support the Arria Group's growth plans.

As part of the plan to raise the capital the Arria UK Directors believe Arria UK requires for its future development, Arria UK has for some time now been pursuing the Listings, and the associated reorganisation (including the Scheme). The regulatory process to achieve the Listings has proven time consuming and complex and, the Arria UK Directors believe, further complicated by maintaining the AIM quotation. The Cancellation would therefore be the first step in achieving the Listings and completing this now would remove a level of complication and distraction for management and potential investors.

The Arria UK Directors believe the removal of a public quote for the Arria UK Shares and the Quoted Warrants will assist in achieving the best outcome from the Listings. The Arria UK Directors believe that it would be better for Arria UK to operate as an unquoted company from the date of Cancellation until the Listings as they expect further capital can be more easily raised at an acceptable valuation within the US, New Zealand, Australia or other markets outside the UK as an unquoted company.

After careful consideration, the Arria UK Directors have therefore concluded that the commercial disadvantages and costs of maintaining an AIM quote at this time in Arria UK's development outweigh the potential benefits and that it is therefore no longer in Arria UK's or the Arria UK Shareholders' best interests to maintain its quotation on AIM.

Particular consideration has been given by the Arria UK Directors to the relatively low trading liquidity in the Arria UK Shares and their valuation. As at 16 December 2016, the last business day prior to the publication of this document, the closing mid-market price of the Arria UK Shares was 13.25 pence providing a market capitalisation of approximately GBP16.4 million, which the Arria UK Directors consider to be materially below the true value of Arria UK.

Cancellation is conditional upon the passing of both the Cancellation Resolution and the Warrantholder Cancellation Resolution at the General Meeting and Quoted Warrantholder Meeting, respectively.

Proposed cancellation of the admission to trading on AIM of the Arria UK Shares

As at the date of this document, Arria UK has received irrevocable undertakings and letters of intent to vote in favour of the GM Resolutions in respect of a total of no less than 64,554,410 Arria UK Shares representing, in aggregate, approximately 51 per cent. of Arria UK's ordinary share capital in issue on 16 December 2016 (being the latest practicable date prior to the publication of this document).

Subject to the Cancellation Resolution being passed by the requisite majority of Arria UK Shareholders at the General Meeting and the Warrantholder Cancellation Resolution being passed by the requisite majority of Quoted Warrantholders at the Quoted Warrantholder Meeting, it is anticipated that trading in the Arria UK Shares on AIM will cease at close of business on 19 January 2017, with cancellation of the admission to trading on AIM of the Arria UK Shares taking effect at 7.00 a.m. on 20 January 2017.

Proposed cancellation of the admission to trading on AIM of the Quoted Warrants

It is intended that along with the Arria UK Shares, the admission to trading on AIM of the Arria UK Quoted Warrants will also be cancelled. Accordingly, in the Notice of Quoted Warrantholder Meeting set out in the Circular, the Warrantholder Cancellation Resolution proposes to cancel the admission to trading on AIM of the Quoted Warrants.

As at the date of this document, Arria UK has received irrevocable undertakings and letters of intent to vote in favour of the Quoted Warrantholder Resolutions in respect of a total of no less than 7,276,250 Quoted Warrants representing, in aggregate, approximately 72 per cent. of the Quoted Warrants in issue on 16 December 2016 (being the latest practicable date prior to the publication of this document).

Subject to the Warrantholder Cancellation Resolution being passed by the requisite majority at the Quoted Warrantholder Meeting and to the Cancellation Resolution being passed by the requisite majority of Arria UK Shareholders at the General Meeting, it is anticipated that trading in the Quoted Warrants on AIM will cease at close of business on 19 January 2017, with cancellation of the admission to trading on AIM of the Quoted Warrants taking effect at 7.00 a.m. on 20 January 2017.

Effect of cancellation of the admission to trading on AIM of the Arria UK Shares and Quoted Warrants

Upon the cancellation of the admission to trading on AIM of the Arria UK Shares and Arria UK Quoted Warrants, Allenby Capital Limited will cease to be nominated adviser and broker to the Company and the Company will no longer be required to comply with the AIM Rules. Following such time, the Company will maintain the current arrangements in CREST so that Arria UK Shares and Quoted Warrants will still be capable of being held and transferred in uncertificated form.

Following Cancellation, the Arria UK Directors intend to put in place a matched bargaining trading facility with an independent third party, to allow Arria UK Shareholders to effect transactions in the Arria UK Shares between Cancellation and the Listings. Further details of such a facility will be announced in due course.

Nevertheless, once the cancellation of the admission to trading on AIM of the Arria UK Shares and Quoted Warrants has taken place, there will no longer be a formal market mechanism to trade in the Arria UK Shares or Quoted Warrants and no price will be publicly quoted for either security. Whilst from the date of Cancellation until the date of the Listings, Arria UK Shares and Quoted Warrantholders will continue to be able to trade "off-market", it may be more difficult for Arria UK Shareholders and Quoted Warrantholders to realise their Arria UK Shares and Quoted Warrants respectively than when the Arria UK Shares and Quoted Warrants were traded on AIM.

Nonetheless, for those reasons outlined above, the Directors consider that the cancellation of the admission to trading on AIM of the Arria UK Shares and Quoted Warrants is in the best interests of Arria UK and its stakeholders.

   5.               Description of proposed amendments to Quoted Warrant Instrument 

It is proposed that in order to allow a longer period for exercise of the Quoted Warrants the definition of "Long Stop Date" in the Quoted Warrant Instrument (being the last day for exercise of any Quoted Warrants under the Loan Note Instrument) be extended by around 18 months (the "Extension Amendment"). The long stop date of the Quoted Warrants is currently 30 September 2017. If the Extension Amendment is approved, the amended Long Stop Date of the Quoted Warrants will be 15 March 2019.

Pursuant to the terms of the Quoted Warrant Instrument, any amendment to the terms of the Quoted Warrant Instrument requires a special resolution consenting to the amendment to be passed by Quoted Warrantholders holding not less than 75 per cent. of the outstanding Quoted Warrants.

At the Quoted Warrantholder Meeting, Resolution 1 proposes to amend the terms of the Quoted Warrant Instrument in accordance with a deed of variation to be entered into by Arria UK or around the date of the Quoted Warrantholder Meeting.

The Deed of Variation enclosed with this circular will, if the Quoted Warrantholder Resolutions are passed, be entered into by Arria UK and will effect the Extension Amendment.

 
 
 
   6.               Notice of General Meeting 

There is set out in the Circular a notice convening the General Meeting to be held at 10.00 a.m. on 6 January 2017 at the offices of Travers Smith LLP, 10 Snow Hill, London EC1A 2AL.

The business to be conducted at the General Meeting is set out in the General Meeting notice and will consist of the GM Resolutions as follows:

IPO Pre-Subscription Resolutions

Resolution 1: authority to allot (ordinary resolution)

The resolution asks Arria UK Shareholders to grant the Directors authority under section 551 of the Companies Act 2006 to allot shares or grant such subscription or conversion rights as are contemplated by sections 551(1)(a) and (b) respectively of the Companies Act 2006 up to a maximum aggregate nominal value of GBP102,500, being 102,500,000 Arria UK Shares. This authority is in addition to the authorities granted to the Arria UK Directors at the Annual General Meeting held on 28 January 2016 and will expire on 6 January 2017.

Resolution 2: disapplication of pre-emption rights (special resolution)

If the Directors wish to allot new shares or other equity securities for cash, the Companies Act 2006 requires that such shares or other equity securities are offered first to existing shareholders in proportion to their existing holdings. The allotment of equity securities as referred to in this resolution includes the sale of any Arria UK Shares which Arria UK holds in treasury following a purchase of its own shares. Resolution 2 asks Arria UK Shareholders to grant the Directors authority to allot equity securities for cash up to an aggregate nominal value of GBP102,500, being 102,500,000 Arria UK Shares, without first offering the securities to existing Arria UK Shareholders. This authority is in addition to the authorities granted to the Arria UK Directors at the Annual General Meeting held on 28 January 2016 and will expire on 6 January 2017.

Cancellation Resolution

Resolution 3: cancellation of admission to trading on AIM of the Company's shares (special resolution)

In accordance with the AIM Rules, the resolution asks the Arria UK Shareholders to approve the cancellation of admission to trading on AIM of the Arria UK Shares.

   7.               Notice of Quoted Warrantholder Meeting 

There is set out in the Circular a notice convening the Quoted Warrantholder Meeting to be held at 10.15 a.m. on 6 January 2017 at the offices of Travers Smith LLP, 10 Snow Hill, London EC1A 2AL.

The business to be conducted at the Quoted Warrantholder Meeting is set out in the Quoted Warrantholder Meeting notice and will consist of the Quoted Warrantholder Resolutions.

   8.               Action to be taken 

The General Meeting and the Quoted Warrantholder Meeting will be held at the offices of Travers Smith LLP, 10 Snow Hill, London EC1A 2AL on 6 January 2017. The General Meeting will start at 10.00 a.m. and the Quoted Warrantholder Meeting will start at 10.15 a.m. (or, if later, as soon as the General Meeting has been concluded or adjourned).

You will find enclosed with this document a blue Form of Proxy for use in respect of the General Meeting by the Arria UK Shareholders and a white Form of Proxy for use in respect of the Quoted Warrantholder Meeting by the Quoted Warrantholders.

Whether or not you intend to attend the General Meeting or the Quoted Warrantholder Meeting in person, please complete and sign the enclosed Forms of Proxy and return it in accordance with the instructions printed thereon as soon as possible, but in any event so as to be received electronically at www.eproxyappointment.com by 10.00 a.m. on 4 January 2017 in the case of the General Meeting and by 10.15 a.m. on 4 January 2017 in the case of the Quoted Warrantholder Meeting (or, in the case of an adjourned Meeting, not less than 48 hours prior to the time and date set for the adjourned Meeting (excluding any day that is not a working day)).

Alternatively you can return the Forms of Proxy via email to #[e-mail] or [e-mail] by 10.00 a.m. on 4 January 2017 in the case of the General Meeting and by 10.15 a.m. on 4 January 2017 in the case of the Quoted Warrantholder Meeting (or, in the case of an adjourned Meeting, not less than 48 hours prior to the time and date set for the adjourned Meeting (excluding any day that is not a working day)).

Alternatively, you can return the Forms of Proxy by post to Computershare Investor Services PLC at Pavilions, Bridgewater Road, Bristol, BS99 6ZY, to arrive by 10.00 a.m. on 4 January 2017 in the case of the General Meeting and by 10.15 a.m. on 4 January 2017 in the case of the Quoted Warrantholder Meeting (or, in the case of an adjourned Meeting, not less than 48 hours prior to the time and date set for the adjourned Meeting (excluding any day that is not a working day)). If you wish to return your Form of Proxy by post, there is a pre-paid address for your convenience for use in the UK only. Unless the Form of Proxy is returned by the time noted above, it will be invalid.

If you hold your Arria UK Shares or Quoted Warrants in uncertificated form (that is, in CREST) you may vote using the CREST Proxy Voting service in accordance with the procedures set out in the CREST Manual (please also refer to the accompanying notes to the Notice of the General Meeting set out at the end of this document). Proxies submitted via CREST (under CREST participant 3RA50) must be received by the Registrars not later than 10.00 a.m. on 4 January 2017 in the case of the General Meeting and by 10.15 a.m. on 4 January 2017 in the case of the Quoted Warrantholder Meeting (or, in the case of an adjourned Meeting, not less than 48 hours prior to the time and date set for the adjourned Meeting (excluding any day that is not a working day)).

The completion and return of the Form of Proxy by post or by email or the appointment of a proxy or proxies electronically will not prevent you from attending and voting in person at the General Meeting or the Quoted Warrantholder Meeting as applicable, or any adjournment thereof, should you wish to do so.

If you have any questions relating to completion and return of the Forms of Proxy, please contact the Registrars, Computershare Investor Services PLC, on [phone] between 8.30 a.m. and 5.30 p.m. Monday to Friday (except public holidays). Please note that calls to this number may be monitored or recorded.

In order for the IPO Pre-Subscription Offer of the Notes to proceed, Arria UK Shareholders will need to approve the GM Resolutions set out in the Notice of General Meeting. If the GM Resolutions are not passed, Arria UK will only be able to issue Notes in return for a maximum of GBP15,260.34 being the remainder of the current authority given to the Arria UK Directors at the Annual General Meeting held on 28 January 2016, and will be unable to complete the full IPO Pre-Subscription Offer target of up to NZ$25 million and no authority will be available to the Arria UK Directors to issue further Notes for cash. Accordingly, it is important that Arria UK Shareholders vote in favour of the GM Resolutions, in order that these matters can proceed.

The notice convening the General Meeting is set out in the Circular and the notice convening the Quoted Warrantholder Meeting is set out in the Circular.

   9.               Recommendation 

The Arria UK Directors consider that approval of the GM Resolutions and the Quoted Warrantholder Resolutions are in the best interests of Arria UK and its members as a whole. The Arria UK Directors therefore unanimously recommend that you vote in favour of all the GM Resolutions and the Quoted Warrantholder Resolutions as, where relevant, they intend to do in respect of their own holdings.

Sincerely,

Sharon Daniels

Chairman and Interim Chief Executive Officer

DEFINITIONS

The following definitions apply throughout this document and the accompanying Forms of Proxy unless the context requires otherwise:

 
 AIM                           the AIM market operated by 
                                the London Stock Exchange 
                                plc 
 AIM Rules                     the AIM Rules for Companies 
                                published by the London Stock 
                                Exchange plc 
 Acquisition Options           the options to be issued 
                                by Arria NZ to Arria UK Shareholders 
                                in connection with the Scheme 
 Arria Group                   Arria UK and each of its 
                                subsidiaries 
 Arria NZ                      Arria NZ Limited (incorporated 
                                in New Zealand with company 
                                number 5947227 with its registered 
                                office at Unit 16, 144 Beaumont 
                                Street, Westhaven, Auckland, 
                                1010, New Zealand) 
 Arria NZ Offer Bundles        Arria NZ securities, having 
                                a purchase price of NZ$1.00 
                                (which will be satisfied 
                                by the acquisition of the 
                                Notes by Arria NZ) and consisting 
                                of one Arria NZ Share and 
                                two options to purchase one 
                                Arria NZ Share, exercisable 
                                until 15 June 2021 (the terms 
                                of which can be adjusted 
                                so that subscribers of the 
                                Notes receive the same terms 
                                as any investors in Arria 
                                NZ at the time of the Listings) 
 Arria NZ Shareholder          a holder of an Arria NZ Share 
 Arria NZ Shares               ordinary shares in the capital 
                                of Arria NZ 
 Arria UK or Company           Arria NLG plc (registered 
                                in England and Wales with 
                                company number 7812686 with 
                                its registered office at 
                                Space One, 1 Beadon Road, 
                                Hammersmith, London W6 0EA) 
 Arria UK Directors            the directors of Arria UK 
                                as at the date of this document 
 Arria UK Loan Notes           the loan notes issued by 
                                Arria UK pursuant to the 
                                Arria UK Loan Note Instruments 
 Arria UK Loan Note            the Unsecured Convertible 
  Instruments                   Loan Note Instrument 2019, 
                                Unsecured Convertible Loan 
                                Note Instrument 2019 Tranche 
                                2, Unsecured Convertible 
                                Loan Note Instrument 2019 
                                Tranche 3 and Unsecured Convertible 
                                Loan Note Instrument 2019 
                                Tranche 4, each with a longstop 
                                date of 31 October 2019 
 Arria UK Shareholder          a holder of an Arria UK Share 
 Arria UK Shares               ordinary shares of 0.1 penny 
                                each in the capital of Arria 
                                UK 
 Arria UK Share Schemes        the long-term incentive programme 
                                pursuant to which options 
                                are granted over Arria UK 
                                Shares which was adopted 
                                by Arria UK on 13 November 
                                2013 and, in addition, the 
                                options granted pursuant 
                                to share option agreements 
                                entered into between Arria 
                                and certain employees 
 Arria UK Warrants             the B Warrants, C Warrants 
                                and the Quoted Warrants 
 ASX                           ASX Limited 
 B Warrants                    the B warrants issued by 
                                Arria UK pursuant to the 
                                terms of the warrant instrument 
                                dated 11 June 2015 
 Board                         the board of directors of 
                                Arria UK 
 Business Day                  any day on which the London 
                                Stock Exchange plc is open 
                                for the transaction of business 
 Cancellation                  the cancellation of admission 
                                to trading on AIM of the 
                                Arria UK Shares and the Quoted 
                                Warrants 
 Cancellation Resolution       Resolution 3 set out in the 
                                notice of General Meeting 
 certificated or in            a share or other security 
  certificated form             which is not in uncertificated 
                                form 
 Companies Act 2006            the Companies Act 2006, as 
                                amended, modified, consolidated, 
                                re-enacted or replaced from 
                                time to time 
 CREST                         the relevant system (as defined 
                                in the CREST Regulations) 
                                for paperless settlement 
                                of share transfers and the 
                                holding of shares in uncertificated 
                                form in respect of which 
                                Euroclear UK & Ireland is 
                                the operator (as defined 
                                in the CREST Regulations) 
 CREST Manual                  the rules governing the operation 
                                of CREST consisting of the 
                                CREST Reference Manual, the 
                                CREST International Manual, 
                                the CREST Central Counterpart 
                                Service Manual, the CREST 
                                Rules, the CREST Operations 
                                Manual and the CREST Glossary 
                                of Terms, each as amended 
                                from time to time 
 CREST Regulations             the Uncertificated Securities 
                                Regulations 2001 (S.I. 2001 
                                No. 3755), as amended from 
                                time to time 
 C Warrants                    the C warrants issued by 
                                Arria UK pursuant to the 
                                terms of the warrant instrument 
                                dated 21 June 2016 
 Forms of Proxy                the blue form of proxy for 
                                use by Arria UK Shareholders 
                                at the General Meeting, and 
                                the white form of proxy for 
                                use by the Quoted Warrantholders 
                                at the Quoted Warrantholder 
                                Meeting, both of which accompany 
                                this document 
 General Meeting               the General Meeting of the 
                                Company convened for 10.00 
                                a.m. on 6 January 2017 
 Global Vision                 Global Vision Consulting 
                                Group 
 GM Resolutions                the Cancellation Resolution 
                                and the IPO Pre-Subscription 
                                Resolutions 
 IPO Pre-Subscription          the private placement by 
  Offer                         Arria UK of up to NZ$25 million 
                                of subscriptions from qualified 
                                investors outside the UK 
 IPO Pre-Subscription          Resolutions 1 and 2 set out 
  Resolutions                   in the notice of General 
                                Meeting 
 Lanstead                      Lanstead Capital LP 
 Listings                      the proposed primary listing 
                                of the Arria NZ Shares, Acquisition 

                                Options and the constituent 
                                parts of the Arria NZ Offer 
                                Bundles on the NZX Main Board 
                                and secondary listing on 
                                ASX and associated fundraising 
                                of approximately NZ$25 million 
                                plus over-allotments 
 Notes                         NZ$ denominated unsecured 
                                convertible loan notes of 
                                Arria UK, bearing interest 
                                at five percent (5%) per 
                                annum and with a maturity 
                                date of 30 June 2017 
 Note Instrument               the Arria UK instrument pursuant 
                                to which the Notes are created 
 NZ$                           New Zealand dollars 
 NZX                           NZX Limited 
 NZX Main Board                the main board equity securities 
                                market operated by NZX 
 participant ID                the identification code or 
                                membership number used in 
                                CREST to identify a particular 
                                CREST member or other CREST 
                                participant 
 Quoted Warrantholder          a holder of a Quoted Warrant 
 Quoted Warrantholder          the General Meeting of the 
  Meeting                       Quoted Warrantholders convened 
                                for 10.15 a.m. on 6 January 
                                2017 
 Quoted Warrantholder          the resolutions set out in 
  Resolutions                   the notice of the Quoted 
                                Warrantholder Meeting 
 Quoted Warrants               the quoted warrants of Arria 
                                UK issued pursuant to the 
                                terms of the warrant instrument 
                                dated 27 November 2013 
 Rainmaker                     Rainmaker Securities, LLC 
 RCF                           the US$3.015 million revolving 
                                credit facility to be entered 
                                into between Arria UK and 
                                Global Vision on or around 
                                the date of this document 
 Registrar                     Computershare Investor Services 
                                PLC 
 Scheme                        the scheme of arrangement 
                                proposed to be made in due 
                                course under Sections 895 
                                to 899 of the Companies Act 
                                2006 between Arria UK, Arria 
                                NZ and the holders of Arria 
                                UK Shares at the relevant 
                                time 
 uncertificated or             recorded on the relevant 
  in uncertificated             register as being held in 
  form                          uncertificated form 
 Unsecured Convertible         the unsecured convertible 
  Loan Note Instrument          loan note instrument dated 
  2019                          30 September 2014 constituting 
                                GBP7,500,000 of unsecured 
                                convertible notes 2019 
 Unsecured Convertible         the unsecured convertible 
  Loan Note Instrument          loan note instrument dated 
  2019 Tranche 2                26 October 2015 constituting 
                                GBP3,000,000 unsecured tranche 
                                2 convertible loan notes 
                                2019 
 Unsecured Convertible         the unsecured convertible 
  Loan Note Instrument          loan note instrument dated 
  2019 Tranche 3                8 June 2016 constituting 
                                GBP1,000,000 unsecured tranche 
                                3 convertible loan notes 
                                2019 
 Unsecured Convertible         the unsecured convertible 
  Loan Note Instrument          loan note instrument dated 
  2019 Tranche 4                21 June 2016 constituting 
                                GBP4,000,000 unsecured tranche 
                                4 convertible loan notes 
                                2019 
 US$                           United States dollars 
 US or United States           the United States of America, 
                                its territories and possessions, 
                                any state of the United States 
                                of America, any other areas 
                                subject to its jurisdiction 
                                and the District of Columbia 
 US Person                     a US person as defined in 
                                Regulation S under the US 
                                Securities Act 
 US Securities Act             the United States Securities 
                                Act of 1933 (as amended) 
 US Shareholders               Arria UK Shareholders who 
                                are based in the US 
  Warrantholder Cancellation    Resolution 1 set out in the 
   Resolution                    notice of Quoted Warrantholder 
                                 Meeting 
 

This information is provided by RNS

The company news service from the London Stock Exchange

END

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(END) Dow Jones Newswires

December 19, 2016 02:00 ET (07:00 GMT)