Placing and EGM notification

RNS Number:0292F
In Cup Plus PLC
03 October 2007
             

             Placing and Notification of Related Party Transactions

Highlights

In Cup Plus plc ("In Cup" or the "Company") announces today that it has
conditionally raised up to #590,000 before expenses.

The funds are to be raised from the following sources;

*   the placing of 39,000,000 Ordinary Shares at a price of 1.00p per share
    raising gross proceeds of approximately #390,000 (the "Placing");

*   entering into a new option agreement between the Company and Barry Marks in 
    respect of 10,000,000 Ordinary Shares at a price of 1.00p per share (the 
    "New Option Agreement"); and

*   entering into a loan agreement between the Company and Barry Marks raising 
    #100,000 (the "Loan Agreement").


Overview

In July last year the Company entered into arrangements to raise a total of
#1.49 million before expenses to fulfil its short and medium term working
capital requirements.  The funds were to be raised from three sources over the
subsequent 18 months, namely: (i) the placing of 37,333,333 Ordinary Shares at a
price of 2.25p per share raising gross proceeds of approximately #840,000; (ii)
the entering into of an option agreement with Barry Marks (the "BM Option
Agreement") in respect of new Ordinary Shares for a total subscription price of
up to #250,000; and (iii) the entering into of option agreements between Pacific
Continental and the Company (the "PacCon Option Agreements") in respect of new
Ordinary Shares for a total subscription price of up to #400,000.

As announced on 29 June 2007, the Directors have been advised that Pacific
Continental has been placed into administration. The Company exercised the first
of the PacCon Option Agreements for #200,000 in April 2007. Subsequently, the
Company has sought to exercise the second PacCon Option Agreement, but Pacific
Continental has failed to perform its obligations under that agreement.  As a
result the Company has terminated both remaining PacCon Option Agreements.  In
addition, due to the terms of the BM Option Agreement which provides that the BM
Option Agreement cannot be exercised until all of the PacCon Option Agreements
have been exercised, the Company is unable to enforce the exercise of this
agreement.  The Company has therefore not received #450,000 of the #1.49 million
it believed it had raised last year.

Accordingly, the Board is raising a total of #590,000 before expenses to replace
this funding, as well as taking the opportunity to raise additional funds to
meet the working capital requirements of the Company. The Board believes that
the funds raised will sustain the Company's working capital requirements, based
on the assumptions set out in the Loss Forecast, to July 2008.

The funds are to be raised from three sources:

(i)   the placing of 39,000,000 Ordinary Shares at a price of 1.00p per share 
      raising gross proceeds of approximately #390,000;

(ii)  the entering into of the New Option Agreement between the Company and 
      Barry Marks in respect of 10,000,000 Ordinary Shares at a price of 1.00p 
      per share; and

(iii) the entering into of the Loan Agreement between the Company and 
      Barry Marks raising #100,000.

Should the Resolutions not be passed by Shareholders at the Extraordinary
General Meeting, and, as a consequence the Placing not take place, the Board
will need to assess other available sources of finance as a matter of urgency.
There can be no guarantee that other sources of finance will be available to the
Company.

The equity fundraising is being executed through a placing as the Board believes
that this is the most cost and time efficient method of raising new equity.  The
Board appreciates that the opportunity to participate in the fundraising would
ideally be made available to all existing Shareholders.  However, the process
and timescale of an open offer or rights issue would substantially increase the
cost to the Group of completing such a fundraising.  The Directors have
concluded that seeking general authority from Shareholders to issue Ordinary
Shares other than on a pre-emptive basis is therefore the most appropriate and
cost effective method available to the Company.

Accordingly, the Board intends to seek approval from Shareholders at an
Extraordinary General Meeting of the Company to the issue of the Placing Shares
and the subsequent issue of the Ordinary Shares under the New Option Agreement.
The Board also intends to seek approval from Shareholders at this time to the
issue of a limited number of additional Ordinary Shares to accommodate further
investment by way of placing, should the Board consider this to be in the
interests of the Company and its Shareholders. The Board will investigate a
further fundraising in the first half of 2008 to meet any future working capital
requirements, however, the quantum and nature of any fundraising will depend on
the performance of the Company during the remainder of 2007 and the beginning of
2008.

As a result of Barry Marks' position on the Board of the Company, both the Loan
Agreement and the New Option Agreement are "related party" transactions under
the AIM Rules.  Therefore this announcement contains the details the Company is
required by the AIM Rules to notify to Shareholders.

Further information on the Placing, the New Option Agreement and the Loan
Agreement (as well as the intended utilisation of the proceeds thereof) and
details of the Resolutions authorising the Directors to allot the Placing
Shares, and the shares to be issued under the New Option Agreement and to
approve the Loan Agreement are set out below.

A circular providing further detail and the details of the proposed EGM of the
Company has been sent to shareholders today (the "Shareholder Circular").

The Placing

Placing commitments have been procured for a total of 39,000,000 Placing Shares
for cash at a price of 1.00p per share.  The Placing Price is at a discount of
33.3 per cent. to the closing share price of 1.5p per Ordinary Share on 1
October 2007.  The Placing Shares will represent approximately 20.91 per cent.
of the Enlarged Share Capital.  Chris Ford, Finance Director, will as part of
the Placing subscribe for 1,500,000 Placing Shares totalling an aggregate
investment of #15,000.

The allotment and issue of the Placing Shares for cash at the Placing Price is
conditional upon the passing of the Resolutions at the EGM and on Admission.
Application will be made for the Ordinary Shares issued pursuant to the Placing
to be admitted to trading on AIM.  Subject to Shareholder approval of the
Resolutions and Admission, it is expected that the Placing Shares will commence
trading on AIM on 29 October 2007.

As part of the Placing, the Company will pay to (i) Nathan Alexander (UK)
Limited, commission at a rate of 5 per cent. of #150,000 of the Placing Proceeds
totalling in aggregate, #7,500; and (ii) IAF Securities (UK ) Limited,
commission at a rate of 5 per cent. of #25,000 of the Placing Proceeds totalling
in aggregate, #1,250.  The commissions will be payable only if Admission takes
place.

The Placing Shares will rank pari passu in all respects with the Existing Issued
Share Capital with regard to dividend entitlements, interests and all other
rights and obligations attaching to the Ordinary Shares, and may be held in
certificated form, represented by definitive share certificates, or in
uncertificated form, i.e in CREST.

Following the completion of the Placing, the interest of Barry Marks in the
share capital of the Company will be reduced from approximately 29.38 per cent.
to 23.23 per cent. of the Enlarged Share Capital.

The Directors have each entered into a lock-in agreement with the Company,
Deloitte Corporate Finance and the Company's broker whereby the Directors have
each agreed (i) not to dispose of their own shareholding in the Company for a
period of 12 months from the date of Admission and (ii) for a further period of
12 months thereafter to dispose of their shares in an orderly manner through the
Company's broker.

Placing Agreement

The Placing Agreement contains certain representations and warranties by the
Directors and an indemnity by the Company and the Directors which are customary
for an agreement of this nature.

The Placing Agreement is conditional on, among other things, Admission becoming
effective at or before 5.00 p.m. on 5 November 2007. The Placing Agreement
confers on Deloitte Corporate Finance the right, among other things, to
terminate their obligations prior to Admission in the event of a breach of
warranty and/or certain "force majeure" events relating to the occurrence of
adverse market conditions or political or economic events.

Option Agreement, Loan Agreement and Related Party Transactions

Pursuant to the New Option Agreement, Barry Marks has agreed, conditional on the
passing of the Resolutions, to subscribe in cash for 10,000,000 Ordinary Shares
at 1.00p per share on or before 22 February 2008, resulting in gross proceeds of
#100,000. Following the exercise of the New Option Agreement, Mr Marks will hold
a total of 53,329,723 Ordinary Shares, representing approximately 27.14 per
cent. of the Company's Enlarged Share Capital adjusted for the Ordinary Shares
issued to Mr Marks.

The New Option Agreement contains undertakings by the Company in favour of Mr
Marks which are of a customary nature.

Pursuant to the Loan Agreement Barry Marks has agreed, conditional on, inter
alia, Shareholder approval, to provide to the Company a loan of up to #100,000.
The loan is repayable in 24 monthly instalments, the first of which is due on 1
July 2009.  Interest on the loan is payable monthly at the rate of 2 per cent.
over Lloyds TSB Bank plc base rate as that rate fluctuates.

The Loan Agreement contains events of default and representations and warranties
by the Company in favour of Mr Marks which are customary in nature.  The Loan is
secured on a debenture basis over the assets of the Company.

The Independent Directors, having consulted with Deloitte Corporate Finance,
consider that the terms of the Loan Agreement and the New Option Agreement are
fair and reasonable insofar as shareholders are concerned. In providing its
advice to the Independent Directors, Deloitte Corporate Finance has taken into
account the Directors' commercial assessment of the New Option Agreement and the
Loan Agreement.

Current Trading and Use of Proceeds

At the time of the Company's Annual General Meeting in March of this year, the
Directors reported that trading for the current financial year was in line with
market expectations.  The Company's revised forecast for machine sales in the
year to 31 December 2007 is 191, 9 lower than originally announced. Tight
control of overheads means that the Board expects the loss in the year to be
smaller than originally anticipated.

The proceeds of the Placing, the New Option Agreement and the Loan Agreement,
amounting to #590,000 before expenses, will be used to replace the two PacCon
Option Agreements and the BM Option Agreement and provide additional funding to
sustain the working capital requirements of the Company. The Board believes
that, on the assumptions set out in the Appendix to this document, that the
funds raised will sustain the Company's working capital requirements to July
2008.

The Directors currently expect the results for the financial years ending 31
December 2007 and 31 December 2008 to be:

                            Year ending                         Year ending
                       31 December 2007                    31 December 2008
                                  #'000                               #'000

Revenue                           1,023                               1,898
Gross margin                        268                                 784
Operating (loss)                   (660)                               (394)
(Loss) before tax                  (660)                               (394)


Loss Forecast for the Financial Years Ended 31 December 2007 and 31 December
2008

Within the current trading and use of proceeds section of this announcement the
Directors have included a loss forecast for the years ending 31 December 2007
and 31 December 2008 (the "Loss Forecast"). These figures constitute a profit
forecast and need to be reported on as set in paragraph (d) of Schedule Two to
the AIM Rules.

Further information in respect of the Loss Forecast is set out in the
Shareholder Circular posted to shareholders today.

Extraordinary General Meeting

The Extraordinary General Meeting of the Company will be held at the offices of
Maclay Murray & Spens LLP, One London Wall, London, EC2Y 5AB at 10 a.m. on 26
October 2007. At this meeting resolutions will be proposed inter alia, to grant
the directors of the Company power to allot and issue the Placing Shares and
issue Ordinary Shares pursuant to the New Option Agreement on a non-pre-emptive
basis, i.e without first offering such shares to existing Shareholders as
required by the statutory pre-emption rights conferred by section 89 of the Act
and to approve the Loan Agreement. The Directors are also seeking general
authority to issue up to 30 million Ordinary Shares on a non pre-emptive basis
should a fundraising, via a placing, be necessary during the first half of 2008.

Recommendation

The Independent Directors consider that the passing of the Resolutions and
completion of the Placing are in the best interests of the Company and its
Shareholders as a whole. Accordingly, the Independent Directors unanimously
recommend that you vote in favour of the Resolutions as the Directors intend to
do in respect of their own beneficial holdings, being in aggregate 43,406,648
Ordinary Shares, representing approximately 29.43 per cent. of the Existing
Issued Share Capital.

Enquiries:

In Cup Plus
Martin Colenutt / Barry Marks                                   0870 7461 8888

Deloitte Corporate Finance - Nominated Adviser
Jonathan Hinton / James Lewis                                   020 7936 3000

IAF Securities Limited - Broker
David Coffman                                                   020 7747 7400


Certain capitalised terms and definitions used in this announcement are defined
in the Shareholder Circular. Unless otherwise stated these terms and definitions
carry the same meanings unless the context otherwise requires or unless
otherwise provided.

In accordance with AIM Rules 20 and 26, the Shareholder Circular will be
available on the Company's website (www.incupplus.com) as well as copies being
available free of charge from the Company's registered office during normal
business hours on any weekday (Saturdays, Sundays and public holidays excepted)
until the date which is one month from the date of the document.

The directors of In Cup accept responsibility for the information contained in
this announcement. To the best of the knowledge and belief of the directors of
In Cup (who have taken all reasonable care to ensure that such is the case) the
information contained in this announcement is in accordance with the facts and
does not omit anything likely to affect the import of such information.

Deloitte Corporate Finance is acting as nominated adviser to In Cup Plus plc and
for no-one else in connection with the Placing and will not regard any other
person as its client nor be responsible to anyone other than In Cup Plus plc for
providing the protections afforded to clients of Deloitte Corporate Finance nor
for providing advice in relation to the Placing or any matter referred to
herein. Deloitte Corporate Finance is a division of Deloitte & Touche LLP, which
is authorised and regulated by the Financial Services Authority in respect of
regulated activities.

IAF Securities Limited, which is authorised and regulated by the Financial
Services Authority and is a member of the London Stock Exchange plc, is acting
as broker to In Cup Plus plc.  IAF Securities Limited is acting for the Company
and for no-one else in connection with the Placing and will not be responsible
to anyone other than the Company for providing the protections afforded to
clients of IAF Securities Limited  or for advising any other person in relation
to the Placing or any matter referred to herein.




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