MoneySwap Plc Conditional subscription, statement re suspension (0182A)

TIDMSWAP

RNS Number : 0182A

MoneySwap Plc

21 March 2017

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.

21 March 2017

MoneySwap plc

("MoneySwap" or the "Company")

Proposed subscription, proposed board changes and statement re suspension

Introduction

Further to the discussions with Wraith Holding B.V. ("Wraith"), as announced by the Company on 6 March 2017, and the publication today of the Company's annual report and accounts for the financial year ended 31 March 2016 (the "FY 2016 Results") and its half-yearly results for the six months ended 30 September 2016 (the "Interims") (together, the "2016 Results"), the board of MoneySwap is pleased to announce a conditional subscription for ordinary shares of GBP0.001 each in MoneySwap ("Ordinary Shares") by Wraith to raise up to c. GBP3.6 million (the "Subscription").

The Company is also providing an update on proposed board changes, the revision of certain arrangements with directors, a former director and a substantial shareholder of MoneySwap and an update on the suspension from trading in Company's shares on AIM.

The Subscription

The Company and Wraith have, on 20 March 2017, entered into a conditional subscription agreement (the "Subscription Agreement") which contains a number of conditions, further details of which are set out below, and provides for:

i) an initial investment by Wraith of GBP2,443,420 (the "Initial Subscription") through the issue of 2,443,420,775 new Ordinary Shares (the "Initial Subscription Shares") at GBP0.001 per new Ordinary Share (the "Subscription Price"); and

ii) the grant to Wraith of an option (the "Subscription Option"), exercisable at the Subscription Price, to acquire (when taken together with the Ordinary Shares held by Wraith at that date) up to 75% of the fully diluted share capital of the Company, which would result (assuming that the Company does not issue Ordinary Shares to anyone other than Wraith in the interim period and assuming exercise in full) in the issue of a further 1,149,845,071 new Ordinary Shares (the "Subscription Option Shares"), which would raise an additional GBP1,149,845 for the Company. The Subscription Option is exercisable (in whole or in part) by Wraith at any time during the two years following the issue and admission to trading on AIM of the Initial Subscription Shares ("Completion").

Following the issue of the Initial Subscription Shares, Wraith will hold a 67.11% interest in the enlarged issued share capital of the Company. If Wraith exercises the Subscription Option in full, it would hold 3,593,265,846 new Ordinary Shares, equivalent to 75% of the Company's fully diluted share capital (assuming no other new Ordinary Shares are issued by the Company following the Initial Subscription).

The Subscription is conditional on, inter alia:

(i) approval by MoneySwap's shareholders (the "Shareholders") of resolutions to be proposed at an extraordinary general meeting of the Company (the "General Meeting"), further details of which are set out below;

(ii) the lifting of the suspension from trading of the Ordinary Shares on AIM (the "Suspension"), the continued admission of the Company's Ordinary Shares to trading on AIM and the continued engagement of Allenby Capital Limited as the Company's nominated adviser;

(iii) the provision by the United Kingdom Financial Conduct Authority of a letter of no objection to the changes in qualifying holding in the Company's subsidiary, MoneySwap Limited; and

(iv) there having been no breach of certain warranties contained in the Subscription Agreement and no material adverse change in the financial markets.

The General Meeting

Given the level of dilution that Shareholders would experience as a result of the Subscription, the Directors consider that it is appropriate that Shareholders are provided the opportunity to vote on whether or not to proceed with the Subscription. A circular (the "Circular") setting out the background to and details of the Subscription and its associated proposals (together the "Proposals") and a notice convening the General Meeting ("Notice of GM") will be published and sent to Shareholders shortly.

Fee conversion arrangements

In connection with the Subscription, the Company has agreed to issue options over 224,634,146 new Ordinary Shares (the "Fee Conversion Options") in connection with certain unpaid fees (which total approximately GBP224,634) due from the Company to Emma Xu (a Non-Executive Director), Kung Min Lin (a former Director) and Heng Jui Lin (a substantial shareholder in the Company) (together, the "Option Holders"). The Fee Conversion Options will be exercisable at the Subscription Price and will be exercisable at any time after 3 months following Completion until the date being 15 months following Completion, at the election of the Option Holders. The aggregate subscription amount for the Fee Conversion Shares is equal to the amount of the outstanding fees currently owed to each of the Option Holders, such that upon the exercise of the Fee Conversion Options by each individual, the amount of the fees owed to the relevant individual by MoneySwap will be set-off against the relevant individual's obligation to pay the exercise price for exercise of the Fee Conversion Options. The options over the Fee Conversion Shares will be issued as follows:

 
 Option Holder    Outstanding   Fee Conversion 
                   fees (GBP)          Options 
 Emma Xu               81,301       81,300,813 
 Kung Min Lin          45,772       45,772,358 
 Hen Jui Lin           97,561       97,560,976 
 TOTAL                224,634      224,634,146 
 

The Option Holders will agree on Completion that, during the period of the Fee Conversion Options, he or she will not be entitled to make any demand of MoneySwap for the outstanding fees, but if any Option Holder does not exercise the Fee Conversion Options during the Fee Conversion Options period, at the end of that period the fees owed by MoneySwap to that individual will be payable on demand.

Cancellation of existing management options

All present and past directors of the Company who hold options over Ordinary Shares have agreed that, conditional on Completion, they will enter into a deed of waiver in favour of the Company pursuant to which each such person will waive in full their existing options over Ordinary Shares (the "Option Waivers"). Pursuant to the Option Waivers outstanding options over 13,507,053 Ordinary Shares will be cancelled.

Related party transactions

The issue of the Fee Conversion Options each constitutes a related party transaction under the AIM Rules for Companies. The Board (excluding Emma Xu), having consulted with Allenby Capital Limited, the Company's nominated adviser, considers the terms of the issue of the Fee Conversion Options to be fair and reasonable insofar as the Shareholders are concerned.

The Option Waivers each constitutes a related party transaction under the AIM Rules for Companies. As all members of the Board are agreeing to cancel any and all options held by each of them pursuant to the Option Waivers, Allenby Capital Limited, the Company's nominated adviser, considers that the terms of the Option Waivers are fair and reasonable insofar as the Shareholders are concerned. The Option Waivers will be subject to approval by Shareholders at the General Meeting.

Proposed board changes

Subject to Completion, Emma Xu will resign from her position as Non-Executive Director on the Company's board. It is proposed that Calvin Yan, MoneySwap's current financial controller, and William Morro, a Director of Wraith, will be appointed to the Board.

Following Completion, the board of the Company will be as follows:

 
 Craig Niven            Chairman and Interim 
                         Chief Executive 
 Calvin Yan             Chief Financial Officer 
 Javier Amo Fernandez   Non-Executive Director 
  de Avila 
 William Morro          Non-Executive Director 
 

Further details on Mr Yan and Mr Morro will be contained in the Circular.

Use of proceeds

The proceeds of the Initial Subscription will be used to repay transaction costs not already funded from monies advanced by Wraith under the Wraith loan, the trade and other creditors of the Group, including Wraith, and the remainder of the proceeds will be used for the general working capital purposes of the Company. As at the date of this announcement, the Company has drawn down a total of US$435,000 under the loan agreement with Wraith, details of which were announced on 6 March 2017.

Information on Wraith

Wraith is a Netherlands based investment company wholly owned by Mr Gilbert Armenta and incorporated for the purpose of investing in MoneySwap. It has not traded to date and is funded by Mr Armenta and other affiliated entities under his control. Mr Armenta has considerable experience in the payments sector and is the founder and chief executive officer of Fates Group, a family office management enterprise, created to bring traditional venture capital operating methodologies and private equity financial sophistication to mid-market investments. Fates Group is focused on investment in three core market segments: (i) real estate supporting telecommunications infrastructure; (ii) renewable energy; and (iii) process management systems in the financial services sector.

Following Completion, Wraith expects to work closely with MoneySwap to assist MoneySwap in developing its payment process business, both by providing technical and business development assistance and in introducing opportunities for new business. The Company and Wraith intend to formalise these working arrangements through certain commercial agreements, further details of which will be announced in due course.

The directors of Wraith are Gilbert Armenta and William Morro.

Suspension from trading in the Ordinary Shares on AIM

The Ordinary Shares were suspended from trading on AIM on 21 September 2016 due to the Company's failure to publish its FY 2016 Results within six months of the Company's year-end. In addition, the Company was required under the AIM Rules for Companies to publish the Interims before 31 December 2016.

Following the publication of the 2016 Results today, these suspension conditions have now been addressed. However, the Company has recently been informed by its registrars that, as a result of unpaid fees due to the Company's working capital constraints, the depositary interest ("DI") facility put in place at the time of the admission of the Company's Ordinary Shares to trading on AIM in 2011 has been cancelled. As the Company is incorporated in Gibraltar, its ordinary shares are not eligible for electronic settlement in the UK. The DIs were put in place in order to provide holders of Ordinary Shares with a mechanism of electronic settlement using the CREST system.

The AIM Rules for Companies require that all AIM companies must ensure that their securities are eligible for electronic settlement and the Company is currently unable to comply with its obligations under AIM Rule 36 is this regard. As a result, the Company's shares will remain suspended from trading on AIM until such time as the Company has put in place a replacement DI facility. The Company has engaged its registrars to implement a new DI facility and anticipates that it will be in place prior to the General Meeting date, which is expected to be on or around 19 April 2017. The Company's legal advisers are preparing certain legal opinions which will be provided to Euroclear shortly. Once received by Euroclear, the Company anticipate that the new DI facility will be in place 10 business days later.

Once a new DI facility has been set up the Board anticipate that trading in the Ordinary Shares on AIM will be restored. An update will be provided in due course.

- Ends-

For further information, please contact:

 
 MoneySwap Plc             Allenby Capital Limited 
------------------------  ------------------------ 
 Interim Chief Executive   Nominated Adviser 
------------------------  ------------------------ 
 Craig Niven               Nick Naylor 
                            James Reeve 
------------------------  ------------------------ 
 [phone]           [phone] 
------------------------  ------------------------ 
 

About MoneySwap (www.moneyswap.com)

MoneySwap provides payment solutions and gateways to merchants, which allow both online and point of sale transactions to be settled using UnionPay cards in the UK. In addition, UnionPay has licensed MoneySwap for its MoneyExpress service, which enables overseas persons to send funds directly to UnionPay cardholders in China. More information can be found at www.moneyswap.com.

This information is provided by RNS

The company news service from the London Stock Exchange

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March 21, 2017 03:01 ET (07:01 GMT)