Mirada PLC £1.7m loan facilities with subscription rights (6545X)

TIDMMIRA

RNS Number : 6545X

Mirada PLC

28 November 2017

Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement, this information is now considered to be in the public domain.

28 November 2017

Mirada plc

("Mirada" or the "Company")

Loan facilities of up to GBP1.7 million, with subscription rights, and

proposed waiver of Rule 9 of the Takeover Code

Mirada plc (AIM: MIRA), a leading provider of integrated software solutions for digital TV operators and broadcasters, is pleased to announce that the Company yesterday entered into agreements for the provision to the Company of unsecured one-year loan facilities of up to an aggregate amount of GBP1.7 million (together, the "Facility"). The Facility has certain conditional subscription rights in respect of new ordinary shares of 1p each in the capital of the Company, as detailed further below.

The proceeds from the Facility are to be used alongside Mirada's existing financing facilities for the general working capital purposes of the Company, including for the implementation of the contracts with ATN International, Inc. ("ATNi"), a NASDAQ-listed group providing pay TV, wireless and wireline telecommunications services in North America, Bermuda and the Caribbean, and Digital TV Cable Edmund S.R.L ("Digital TV Cable"), a Bolivian pay TV operator and broadband services provider, details of which were announced on 29 August 2017 and 6 October 2017 respectively.

The Facility is being provided by Kaptungs Limited ("Kaptungs"), Kronck Business S.A. ("Kronck") and Minles Corporation Inc. ("Minles") (together, the "Lenders"), details of which are set out further below.

A first tranche of GBP800,000 will be drawn down from the Facility imminently as to GBP660,000 from Kaptungs, GBP118,000 from Kronck and GBP22,000 from Minles, with a second tranche of up to GBP900,000 being available for drawdown from Kaptungs only and available for such drawdown at the election of Mirada in minimum tranches of GBP150,000 (unless it is in respect of the undrawn balance of the Facility) within 11 months from the date of the Facility.

The Facility bears an interest rate of 15 per cent. per annum on monies that are drawn down, which shall be payable quarterly in arrears. Should an event of default occur, an additional 2 per cent. interest per annum will be charged until the funds drawn down under the Facility (the "Loan") have been repaid in full.

In certain circumstances, as detailed further below and subject to the satisfaction of certain conditions, amounts drawn down under the Facility may be applied by the Lenders in the subscription of new ordinary shares of 1p each in the capital of the Company ("Ordinary Shares") at a subscription price of 1.12p per share (being the average closing mid-market share price of an Ordinary Share on AIM in the thirty days ended 22 November 2017) (the "Subscription Price").

Repayment terms

Funds drawn down under the Facility are repayable 12 months from the date of the Facility (the "Maturity Date").

The Company can elect to give notice of early repayment of the Loan, in whole or in part, at any time after the date which is two months following the date of the Facility, subject to any repayment being for a minimum amount of GBP50,000, in respect of monies advanced by Kaptungs under the Facility, and GBP5,000, in respect of monies advanced by either Kronck or Minles under the Facility, or integral multiples thereof ("Early Repayment"). To the extent that any monies are drawn down and are repaid prior to the Maturity Date, then the Company shall pay a premium equal to 80 per cent. of the amount of the interest which would have been payable on such monies up to the Maturity Date. Monies that have been repaid under the Facility may not be re-borrowed or redrawn by the Company.

The Loan, and all applicable interest, is immediately repayable early on certain customary events of default occurring as set out further below.

Conditional share subscription rights

The Lenders have the conditional right at any time until one month before the Maturity Date to serve written notice on the Company that they elect to discharge the Company's liability to repay the whole, or part only, of the outstanding Loan (excluding any interest) in consideration for the Company treating the amount so discharged as payment in full for the subscription of fully paid new Ordinary Shares at the Subscription Price per share (the "Subscription").

The Subscription is conditional upon satisfaction of all the following conditions (the "Subscription Conditions"):

(1) a Rule 9 Waiver (as defined and detailed further below) having been obtained; and

(2) the Company having received the approval of:

(i) its independent shareholders in a general meeting of the Rule 9 Waiver; and

(ii) the holders of Ordinary Shares ("Shareholders") granting the necessary share allotment authorities in accordance with the Companies Act 2006 (the "Act") in order for the Company to issue Ordinary Shares to the Lenders pursuant to the Facility, including the allotment authority for the directors of the Company to allot Ordinary Shares pursuant to section 551 of the Act and for the purposes of disapplying the statutory rights of pre-emption in accordance with section 570 of the Act as if section 561 of the Act did not apply to any such allotment by the Company.

If the Company were to seek to undertake an Early Repayment then, subject to satisfaction of all the Subscription Conditions, the Lenders could instead notify the Company of their desire to discharge the whole, or part only, of the relevant amount of the outstanding Loan, but excluding any interest, through a Subscription.

If the Facility were drawn down in full and subsequently applied by the Lenders in full in the subscription of new Ordinary Shares (as detailed above) at the Subscription Price per share, this would result in 151,785,713 new Ordinary Shares being issued and allotted, which would represent approximately 52.19 per cent. of Mirada's issued ordinary share capital as enlarged by such issue of new Ordinary Shares (and assuming that no other new Ordinary Shares are issued and allotted).

The Facility contains a procedure for an appropriate adjustment to be made to the Subscription Price per Ordinary Share in the event that Mirada: (i) undertakes any consolidation or sub-division of its Ordinary Shares; (ii) allots any Ordinary Shares by way of capitalisation of profits or reserves; or (iii) undertakes any cancellation, purchase or redemption of Ordinary Shares or any reduction of Ordinary Shares.

Other terms of the Facility

The Facility is not transferable or assignable by the Lenders.

The Company will pay the Lenders aggregate fees of GBP25,500 for the provision of the Facility on first drawdown, such amount to be deducted from the proceeds of such drawdown.

The Company has provided the Lenders with customary warranties and representations in respect of the Facility and certain other matters. The Company has also given certain undertakings to the Lenders, including, inter alia, that until the Loan has been repaid in full, the Company will:

(i) not pay or make any payment or transfer to Shareholders of any dividend, bonus, loan or distribution;

(ii) not without the prior consent of the Lenders (such consent not to be unreasonably withheld or delayed) incur any other indebtedness other than: (a) trade debts incurred in the ordinary course of business; or (b) certain permitted indebtedness; or (c) the renewal or extension of any indebtedness which exists on the date of the Facility;

   (iii)         comply with relevant laws and regulations in relation to the Company; 

(iv) use reasonable endeavours to maintain the admission and trading of the Ordinary Shares on AIM;

   (v)          exercise all rights and comply with all obligations under the Facility; 
   (vi)         promptly notify the Lenders of any Event of Default (as defined below); and 
   (vii)        effect and maintain insurance over its assets and business. 

Events of default

The Loan, and all applicable interest, is immediately repayable early on certain customary events of default occurring including, inter alia, (the "Events of Default"):

   (i)           failure by the Company to make payment on a due date; 
   (ii)          any breach of warranty or representation by the Company; 

(iii) a material breach of the Facility by the Company which, if capable of remedy, is not remedied within 10 business days to the reasonable satisfaction of the Lenders;

   (iv)         the Company being unable to pay its debts or otherwise becoming insolvent; 
   (v)          the appointment of an administrator or other receiver; 

(vi) any distress or other legal process affects the whole or a material part of the assets of the Company and is not discharged within 21 days;

(vii) an order being made or a petition being presented for the winding-up or liquidation of the Company or an administration order against the Company being presented or notice of the appointment of an administrator in respect of the Company being presented;

(viii) any event occurring which in the reasonable opinion of the Lenders is likely to have a material adverse effect on the Company's ability to comply with its obligations under the Facility;

(ix) if any part of the Ordinary Shares are cancelled from admission or permanently cease to trade on AIM; or

(x) a change of control occurs, which means the transfer of shares in the Company to any person not already a shareholder in the Company, or persons acting in concert (as defined in the Takeover Code) with them, such that the transferee (or persons acting in concert) obtains control (as defined in section 1124 of the Corporation Tax Act 2010).

The Facility is unsecured. The Facility is governed by English law.

Background on the Lenders

Kaptungs is the owner of 10,639,183 Ordinary Shares in Mirada, which represents 7.65 per cent of the voting rights in the Company. Kaptungs is an investment company incorporated in the Commonwealth of the Bahamas which is beneficially owned by Mr Ernesto Luis Tinajero Flores ("Mr Tinajero"). Kaptungs also holds 26,954,266 Ordinary Shares in Mirada through Chase Nominees Limited, which represents 19.38 per cent of the voting rights in the Company. Accordingly, Mr Tinajero has a total beneficial interest in 37,593,449 Ordinary Shares in Mirada, which represents 27.03 per cent of the voting rights in the Company.

Mr Tinajero is a long-term supporter of the Company and has previously been the owner of Cablecom in Mexico, a customer of Mirada that is now part of the Televisa Group.

Kronck is an investment company incorporated in the Republic of Panama, which is beneficially owned by Enrique Septién Suárez. Mr Septién has a total beneficial interest in 2,857,143 Ordinary Shares in Mirada, which represents 2.05 per cent of the voting rights in the Company.

Minles is an investment company incorporated in the Republic of Panama, which is beneficially owned by Luis Martínez Ocariz. Mr Martínez has a total beneficial interest in 571,429 Ordinary Shares in Mirada, which represents 0.41 per cent of the voting rights in the Company.

In total, the ultimate beneficiaries of the Lenders, being Mr Tinajero, Luis Martínez and Enrique Septién, are currently collectively interested in 41,022,021 Ordinary Shares in Mirada, which represents approximately 29.50 per cent of the voting rights in the Company.

Related party transaction

The entering into of the Facility with Kaptungs is a related party transaction pursuant to Rule 13 of the AIM Rules for Companies, due to Mr Tinajero (the beneficial owner of Kaptungs) being a substantial shareholder pursuant to the AIM Rules for Companies. The Directors of Mirada, having consulted with Allenby Capital Limited, the Company's nominated adviser, consider that the terms of the Facility with Kaptungs are fair and reasonable insofar as the Company's shareholders are concerned.

Rule 9 of the Takeover Code

The terms of the Facility give rise to certain considerations under the Takeover Code. Brief details on the Takeover Panel, the Takeover Code and the protections they afford are described below.

The Takeover Code is issued and administered by the Takeover Panel. The Takeover Code applies to all takeovers and merger transactions, however effected, where the offeree company is, inter alia, a listed or unlisted public company resident in the United Kingdom and to certain categories of private companies. The Company is such a public company and its shareholders are entitled to the protections afforded by the Takeover Code.

Under Rule 9.1 of the Takeover Code, except with the consent of the Panel, when:

(a) any person acquires, whether by a series of transactions over a period of time or not, an interest in shares which (taken together with shares in which persons acting in concert with him are interested) carry 30% or more of the voting rights of a company; or

(b) any person, together with persons acting in concert with him, is interested in shares which in the aggregate carry not less than 30% of the voting rights of a company but does not hold shares carrying more than 50% of such voting rights and such person, or any person acting in concert with him, acquires an interest in any other shares which increases the percentage of shares carrying voting rights in which he is interested,

such person shall extend offers, to the holders of any class of equity share capital whether voting or non-voting and also to the holders of any other class of transferable securities carrying voting rights. An offer under Rule 9 must be made in cash or be accompanied by a cash alternative at not less than the highest price paid by the offeror or any person acting in concert with it for any interest in shares of that class during the 12 months prior to the announcement of that offer.

Under the Takeover Code, a concert party arises where persons acting together pursuant to an agreement or understanding (whether formal or informal) co-operate to obtain or consolidate control of that company.

Control means an interest, or interests, in shares carrying 30 per cent. or more of the voting rights of a company, irrespective of whether such interest or interests give de facto control.

Rule 9 Waiver

Under Note 10 to Rule 9.1 of the Takeover Code, in general, the acquisition of securities convertible into, warrants in respect of, or options or other rights to subscribe for, new shares does not give rise to an obligation under Rule 9 of the Takeover Code to make a general offer, but the exercise of any conversion or subscription rights or options will be considered to be an acquisition of an interest in shares for the purposes of Rule 9.

The Panel will not normally require an offer to be made following the exercise of conversion of subscription rights provided that the issue of convertible securities, or rights to subscribe for new shares carrying voting rights, to the person exercising the rights is approved by a vote of independent shareholders in general meeting in the manner described in Note 1 on the Notes on the Dispensations from Rule 9 (i.e. the shareholders of the company who are independent of the person who would otherwise be required to make an offer and any person acting in concert with him pass an ordinary resolution on a poll at a general meeting approving such a waiver) ("Rule 9 Waiver").

The ultimate beneficiaries of the Lenders, being Mr Tinajero, Luis Martínez and Enrique Septién, are currently interested in approximately 29.50 per cent. of the Company's issued share capital in aggregate and are deemed to be acting in concert pursuant to the Takeover Code. Therefore, unless a Rule 9 Waiver is obtained in advance, the Lenders would be in breach of Rule 9 if they and/or their connected parties (including Mr Tinajero, Luis Martínez and Enrique Septién) were to subsequently become interested in shares representing 30 per cent. or more of the voting rights of the Company. The Company and the Lenders have agreed that they shall use reasonable endeavours to obtain a Rule 9 Waiver to enable the Subscription under the terms of the Facility. The Rule 9 Waiver shall include, inter alia, the provision of all such information as shall be required by the Takeover Panel to satisfy the requirements of Appendix 1 of the Takeover Code and the publication of a circular to Shareholders which shall include a notice convening a general meeting of Shareholders. Further updates in this regard will be announced in due course.

In the absence of a Rule 9 Waiver, in the event that any of the Lenders and/or their connected parties (including Mr Tinajero, Luis Martínez and Enrique Septién) become interested in shares representing 30 per cent. or more of the voting rights of the Company, they would be obligated to make a general offer to existing shareholders of the Company pursuant to Rule 9 of the Takeover Code.

Other

There can be no guarantee that the Subscription Conditions will be satisfied in order to allow the Facility's share subscription rights to come into effect. If all the Subscription Conditions are not or cannot be satisfied, then under the terms of the Facility the Company will be required to repay all funds drawn down under the Facility upon the Maturity Date. The Company has relied on its current loan financing facilities, including its invoice discounting facilities, and the Company's net debt at 31 March 2017 was GBP4.21m, with available facilities of GBP3.16m (mostly comprised by invoice discounting facilities), and cash in hand was GBP0.22m. There can be no certainty that the Company would be able to repay all funds drawn down under the Facility upon the Maturity Date should the Subscription have not previously occurred in full or to a material extent.

José Luis Vázquez, CEO of Mirada plc, commented:

"We are pleased to have the support of Mr Tinajero, Mr Septién and Mr Martínez, who are relevant members of the industry and know the Company from both the perspective of long-standing shareholders and a former customer. The Board is confident that the Facility will provide the Company with the required working capital for the successful delivery of the ATNi and Digital TV Cable projects".

Enquiries:

 
 Mirada plc                        [phone] 
  José Luis Vázquez,      [e-mail] 
  Chief Executive Officer 
 Newgate Communications            [phone] 
  Bob Huxford                       [e-mail] 
  James Browne 
  Ed Treadwell 
 Allenby Capital Limited 
  (AIM Nominated Adviser 
  and Broker) 
  Jeremy Porter / Alex Brearley 
  / Liz Kirchner                   [phone] 
 

About Mirada

Mirada creates and manages products and services for digital TV operators and broadcasters. With almost 20 years of experience, the Company focuses on the future of Digital TV - multiscreen cross - platform navigation - anytime, anywhere. It offers a complete suite of end-to-end modular products for set-top boxes, PC, smartphones and tablets, all with innovative state-of-the-art user interface designs.

Mirada's products and solutions have been deployed by some of the biggest names in digital media and broadcasting including Televisa, Telefonica, Sky, Virgin Media, BBC, ITV and France Telecom. Headquartered in London, Mirada has commercial representation across Europe, Latin America and Southeast Asia and operates technology centres in the UK and Spain.

For more information, visit www.mirada.tv.

This information is provided by RNS

The company news service from the London Stock Exchange

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November 28, 2017 02:00 ET (07:00 GMT)