Mirada PLC Proposed loan capitalisation & subscription & GM (8967A)

TIDMMIRA

RNS Number : 8967A

Mirada PLC

17 September 2018

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.

17 September 2018

Mirada plc

("Mirada", the "Company" or the "Group")

Proposed loan capitalisation

Proposed subscription for new ordinary shares

and

Notice of General Meeting

Mirada plc (AIM: MIRA), a leading audio-visual content interaction specialist, announces that the Company has conditionally raised GBP3 million before expenses, by way of a subscription of 300 million new Ordinary Shares at 1p per share by a substantial shareholder of the Company, Kaptungs Limited ("Kaptungs"). The Company has also entered into a conditional agreement with Kaptungs in respect of the capitalisation of an outstanding GBP3 million loan facility, which will result in the Company's obligation to repay the 2018 Secured Facility (announced on 7 March 2018) being satisfied and discharged through the capitalisation of the loan facility into 300 million new Ordinary Shares at 1p per share.

The Company will tomorrow publish a Circular to Shareholders setting out full details of and reasons for the Proposals, which are also set out in this announcement below as an extract of the Chairman's Letter from the Circular.

The Circular will contain notice of a General Meeting of the Company, to be held at the offices of Howard Kennedy LLP at No.1 London Bridge, London SE1 9BG at 2.00 p.m. on 4 October 2018.

The Proposals are conditional, inter alia, on the passing of the Resolutions at the General Meeting and Admission becoming effective. Application will be made for the Subscription Shares and the Loan Capitalisation Shares to be admitted to trading on AIM, conditional on the Resolutions being passed. It is expected that if the Resolutions are passed, Admission will occur at 8.00 a.m. on 5 October 2018.

The Proposals as a whole would, if the Resolutions are approved at the GM, result in the allotment and issue of 600,000,000 new Ordinary Shares, representing, in aggregate, approximately 67.35 per cent. of the Enlarged Issued Share Capital.

The Subscription and Loan Capitalisation are being undertaken with Kaptungs. Therefore, on Admission, Mr Ernesto Tinajero would, through his indirect interest in Kaptungs, be beneficially interested in a total of 776,879,163 Ordinary Shares, representing approximately 87.21 per cent. of the Enlarged Issued Share Capital.

The Subscription and the Loan Capitalisation are both related party transactions pursuant to rule 13 of the AIM Rules, due to Mr Ernesto Tinajero (through his interest in Kaptungs) being a substantial shareholder in the Company pursuant to the AIM Rules. The Directors, having consulted with Allenby Capital, the Company's Nominated Adviser, consider that the terms of the Subscription and the Loan Capitalisation are fair and reasonable insofar as the Company's shareholders are concerned.

The attention of Shareholders is drawn to the Directors' recommendation in the Circular that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting.

The Circular will be available for download from the Company's website, www.mirada.tv tomorrow.

All capitalised terms used throughout this announcement shall have the meanings given to such terms in the Definitions section set out at the end of this announcement.

Enquiries:

 
 Mirada plc 
  José Luis Vázquez, Chief           [phone] 
  Executive Officer                             [e-mail] 
  Gonzalo Babío, Finance Director 
 Newgate Communications 
  Bob Huxford                                  [phone] 
  James Browne                              [e-mail] 
 Allenby Capital Limited (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.

EXTRACTS FROM THE CIRCULAR

The following has been extracted from, and should be read in conjunction with, the Circular to Shareholders, which will be available tomorrow from the Company's website, www.mirada.tv. Any references 'this document' refer to the Circular.

LETTER FROM THE CHAIRMAN OF THE COMPANY

Proposed loan capitalisation

Proposed subscription for new ordinary shares

and

Notice of General Meeting

   1.     Introduction 

The Company has conditionally raised GBP3 million before expenses, by way of the Subscription from Kaptungs, and has also entered into an agreement with Kaptungs in respect of the Loan Capitalisation, which will result in the Company's obligation to repay the 2018 Secured Facility being satisfied and discharged through a capitalisation into new Ordinary Shares.

The Proposals are conditional, inter alia, on the passing of the Resolutions at the General Meeting and Admission becoming effective. Application will be made for the Subscription Shares and the Loan Capitalisation Shares to be admitted to trading on AIM, conditional on the Resolutions being passed. It is expected that if the Resolutions are passed, Admission will occur at 8.00 a.m. on 5 October 2018.

The purpose of this letter is to explain to Shareholders the background to and reasons for the Subscription and the Loan Capitalisation and to seek Shareholders' approval for the passing of the Resolutions at the General Meeting in order to enable the Directors to complete the Subscription and the Loan Capitalisation. The Notice is set out at the end of this document and a Form of Proxy is also enclosed for Shareholders to complete.

   2.     Background to and reasons for the Proposals 

The August 2018 Circular sought Shareholders' approval for the passing of resolutions in a general meeting to allow the Company to discharge its liability to repay three unsecured loan facilities totalling GBP1.7 million through the issue of new Ordinary Shares. The Company announced on 29 August 2018 that the resolutions had been passed and the new Ordinary Shares arising following such approval were admitted to trading on AIM on 30 August 2018.

The August 2018 Circular provided an overview of Mirada's current business, services, customers, strategy and business model as well as an update on its current trading and prospects. The August 2018 Circular is available from the Company's website at https://www.mirada.tv/investors/financial-results/.

As noted in the August 2018 Circular, Mirada has been focussed on expanding its sales pipeline and successfully converted two opportunities in new territories in 2017, one being a contract with US-based ATNi for deployments in the Caribbean and the other, a contract with Digital TV Cable in Bolivia.

Subject to an individual customer's requirements, the Company can offer customers an 'opex' model whereby it provides subscriber-based licences on a 'software-as-a-service' model with lower set-up fees for customers, affording the potential for more diversified revenue streams, a greater proportion of recurring monthly revenues and increased competitiveness within the market.

Following customer consultation, the Board believes that the opex model's lower entry price and recurring expenses linked to deployment growth are more attractive for certain customers, as these are better aligned to such customers' longer-term business models. The opex model also allows these customers to have a more up-to-date service with periodic access to newer versions of Mirada's product, notwithstanding that the opex model is costlier to the customer in the long term.

Whilst there are clear customer benefits to the opex model, it requires a significant initial working capital commitment from Mirada, which is in contrast to the Group's alternative business model whereby a greater proportion of fees are paid initially by customers but with fewer opportunities to receive significant recurring monthly revenues.

The Company is actively seeking to win new contracts and the Directors believe that a sufficiently strengthened balance sheet will enhance Mirada's standing in its industry and thereby assist the conversion of opportunities in its pipeline. The Board also believes that it is important that the Company has sufficient funds to cover increasing demand for professional services projects from customers, or to mitigate potential delays in projects. Further, in order to ensure that the Company can complete implementation of the ATNi and Digital TV Cable contracts and other potential opex model contracts, the Directors consider it essential that the Group be sufficiently funded. One of the four locations for ATNi has now been installed and is expected to go live shortly, and in Bolivia, commercial launch of the first phase is expected in the next two months.

It was indicated in the August 2018 Circular that the Board may seek to negotiate a capitalisation of the 2018 Secured Facility into new Ordinary Shares, should the terms of any such transaction be deemed to be in the best interests of the Company, and that the Board may also seek to conduct an equity fundraise in order to further strengthen the Company's balance sheet. In addition, the Proposals are to ensure the Company will have sufficient working capital for at least the next 12 months.

Accordingly, the Company is seeking Shareholders' approval of the Resolutions in order to authorise: (i) the allotment and issue of the Subscription Shares in respect of the GBP3 million fundraising pursuant to the Subscription; and (ii) the allotment and issue of the Loan Capitalisation Shares in satisfaction and discharge of the Company's obligation to repay the 2018 Secured Facility pursuant to the Loan Capitalisation.

   3.     Details of the 2018 Secured Facility 

The 2018 Secured Facility is a loan facility for up to GBP3 million, comprising two tranches: GBP1.5 million which could be drawn down within two months of the date of the 2018 Secured Facility (failing which the 2018 Secured Facility would be cancelled) and thereafter up to a further GBP1.5 million which could be drawn down in minimum tranches of GBP100,000, with any amount not drawn down within 11 months of the date of the Facility then being cancelled. The 2018 Secured Facility has been drawn down in full.

The 2018 Secured Facility has a term of one year and funds drawn down under the 2018 Secured Facility are repayable on the maturity date (being 6 March 2019). The Company can elect to give notice of early repayment of sums drawn down under the 2018 Secured Facility, in whole or in part, at any time which is two months after the date of the 2018 Secured Facility, subject to any repayment being for a minimum amount of GBP50,000 or multiples thereof. Any amounts which are repaid under the 2018 Secured Facility will cease to accrue interest and cannot be re-borrowed or redrawn.

The 2018 Secured Facility has been secured by way of a Spanish law first ranking pledge in favour of Kaptungs over the credit rights (equivalent to receivables due) under a master agreement and software licence agreement entered into between Mirada Iberia, S.A.U (a subsidiary of Mirada) and ATNi.

The 2018 Secured Facility bears an interest rate of 15 per cent. per annum on monies drawn down, payable quarterly in arrears. Should an event of default occur, an additional 2 per cent. interest per annum will be charged until the 2018 Secured Facility has been repaid in full. The 2018 Secured Facility, and all applicable interest, is immediately repayable early on certain customary events of default occurring.

   4.     Details of the Subscription and Loan Capitalisation 

The Company and Kaptungs have entered into an agreement pursuant to which, conditional on the passing of the Resolutions and Admission, Kaptungs will subscribe for a total of 300,000,000 new Ordinary Shares at a subscription price of 1p per share, which represents a premium of 48 per cent. of the closing mid-market price of an Ordinary Share at the close of business on 14 September 2018, in order to raise gross proceeds of GBP3 million for the Company, before expenses. The net proceeds of the Subscription will be used for the Company's general working capital purposes and for the purposes described in section 2 above.

In addition, the Company and Kaptungs have entered into a capitalisation agreement in order to effect the Loan Capitalisation, pursuant to which, conditional on the passing of the Resolutions and Admission, a total of 300,000,000 new Ordinary Shares are to be allotted and issued to Kaptungs at a price of 1p per share in satisfaction of the repayment in full by the Company of the 2018 Secured Facility.

The Company currently has insufficient authority to allot and issue the Subscription Shares and the Loan Capitalisation Shares and accordingly both the Subscription and the Loan Capitalisation are conditional upon, inter alia, the passing of the Resolutions. Therefore, the Resolutions will be put to Shareholders at the General Meeting in order to provide the Directors with the necessary allotment authorities in accordance with the Act to allot and issue the Subscription Shares and the Loan Capitalisation Shares and to allot such shares otherwise than on a non-pre-emptive basis.

In addition, the Subscription and the Loan Capitalisation are conditional, inter alia, on Admission. Application will be made for the Subscription Shares and the Loan Capitalisation Shares to be admitted to trading on AIM and it is expected that their admission to AIM will take place on or around 5 October 2018.

The Proposals as a whole would, if the Resolutions are approved at the GM, result in the allotment and issue of 600,000,000 new Ordinary Shares, representing, in aggregate, approximately 67.35 per cent. of the Enlarged Issued Share Capital.

The Subscription and Loan Capitalisation are being undertaken with Kaptungs. Therefore, on Admission, Mr Ernesto Tinajero would, through his indirect interest in Kaptungs, be beneficially interested in a total of 776,879,163 Ordinary Shares, representing approximately 87.21 per cent. of the Enlarged Issued Share Capital.

Mr Tinajero is a long-term supporter of the Company. Between 1996 and 2003, he was a majority shareholder, Chairman and CEO of Group Cable TV S.A. de C.V. ("Cablecom"), the third largest multiple systems operator in Mexico. Cablecom was a customer of Mirada and is now part of the Televisa Group, a current major customer of Mirada that owns izzi Telecom. The predecessor to Cablecom was founded by Mr Tinajero's family in 1963.

Mr Tinajero is a member of a concert party (for the purposes of the Takeover Code), which also includes Kaptungs, Mr Enrique Septién Suárez, Mr Luis Martínez Ocariz, Kronck Business S.A. and Minles Corporation Inc. Further details regarding this concert party and its members can be found in the August 2018 Circular. The current interests in the ordinary share capital of the Company of this concert party and their interests as they would be on Admission (assuming no further issues of Ordinary Shares other than the Subscription Shares and the Loan Capitalisation Shares) are as follows:

 
                           As at the date of                                                         On Admission 
                             this document 
 Name               No. of Ordinary   % of Existing    No. of Subscription           Interest       % of Enlarged 
                             Shares    Issued Share             Shares and        in Ordinary        Issued Share 
                                            Capital    Loan Capitalisation         Shares and         Capital and 
                                         and voting              Shares to      voting rights       voting rights 
                                          rights of            be allotted     of the Company      of the Company 
                                        the Company             and issued 
 Kaptungs 
  *                     176,879,163           60.82            600,000,000        776,879,163               87.21 
 Kronck Business 
  S.A**                  13,392,857            4.60                      -         13,392,857                1.50 
 Minles Minles 
  Corporation 
  Inc***                  2,535,714            0.87                      -          2,535,714                0.28 
 Total                  192,807,734           66.29            600,000,000        792,807,734               89.00 
 

* Includes Ordinary Shares held by Kaptungs and Ordinary Shares held by Chase Nominees Limited on behalf of Kaptungs. Kaptungs is owned by the Innokapk Trust and the Innokapi Trust. Mr Tinajero is the settlor of these trusts and also the beneficiary, along with his family.

** Kronck Business S.A. is beneficially owned by Mr Septién

*** Minles Corporation Inc is beneficially owned by Mr Martínez

The Subscription Shares and the Loan Capitalisation Shares will, when allotted and issued, be credited as fully paid and will rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends or other distributions made, paid or declared in respect of such shares after the date of Admission.

Due to the number of Ordinary Shares in which Mr Tinajero is beneficially interested, a relationship agreement is in place, as detailed in the August 2018 Circular, to seek to ensure that the Company will be capable of carrying on its business independently of Mr Tinajero and that any future transactions between the Company and Mr Tinajero will be at arm's length and on a normal commercial basis.

   5.     Related Party Transaction 

The Subscription and the Loan Capitalisation are both related party transactions pursuant to rule 13 of the AIM Rules, due to Mr Ernesto Tinajero (through his interest in Kaptungs) being a substantial shareholder in the Company pursuant to the AIM Rules. The Directors, having consulted with Allenby Capital, the Company's Nominated Adviser, consider that the terms of the Subscription and the Loan Capitalisation are fair and reasonable insofar as the Company's shareholders are concerned.

   6.     General Meeting 

Set out at the end of this document is a notice convening the General Meeting. A Form of Proxy for use by Shareholders in connection with the General Meeting has been sent to Shareholders with this document.

The Resolutions to be proposed at the General Meeting are, in summary, as follows:

-- Resolution 1 is an ordinary resolution to authorise the Directors, pursuant to section 551 of the Act, to allot shares in the Company and/or to grant rights to subscribe for or to convert any security into shares in the Company up to and including a maximum nominal amount of GBP6,000,000 (being equivalent to 600,000,000 Ordinary Shares) in connection with the Loan Capitalisation and the Subscription; and

-- Resolution 2 is a special resolution, conditional on the passing of Resolution 1, and is to empower the Directors pursuant to section 570 of the Act to disapply the statutory pre- emption rights in relation to the allotment of equity securities up to an aggregate nominal amount of GBP6,000,000 (being equivalent to 600,000,000 Ordinary Shares) in connection with the Loan Capitalisation and the Subscription.

The authorities set out in Resolutions 1 and 2 are in addition to the existing authorities conferred on the Directors by Shareholders at general meetings of the Company held on 30 October 2017 and 29 August 2018.

Resolution 1 is an ordinary resolution and requires a simple majority of those voting to vote in favour of the Resolution. Resolution 2 is a special resolution and will require not less than 75 per cent. of those voting in person or on a poll by proxy to vote in favour of the Resolution.

   7.     Action to be taken by Shareholders 

Whether or not you propose to attend the General Meeting in person, you are requested to complete the Form of Proxy in accordance with the instructions printed on it and to return it to the Company's registrar Link Asset Services, PXS, 34 Beckenham Road, Kent, BR3 4TU, by post or by hand (during normal business hours only), as soon as possible and in any event so as to arrive no later than 2.00 p.m. on 2 October 2018. Completion and return of the Form of Proxy will not preclude you from attending the General Meeting and voting in person should you so wish.

If you hold Ordinary Shares 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). Proxies submitted via CREST must be received by the Company's agent Link Asset Services (ID: RA10) by no later than 2.00 p.m. on 2 October 2018 (or, in the case of an adjournment, not later than 48 hours before the time fixed for the holding of the adjourned meeting). This will enable your vote to be counted at the General Meeting in the event of your absence. The use of the CREST Proxy Voting service will not prevent you from attending and voting at the General Meeting, or any adjournment thereof, in person should you wish to do so.

   8.     Irrevocable undertakings 

On 14 September 2018 Kaptungs entered into an irrevocable undertaking in favour of the Company, pursuant to which it agreed to vote in favour of all Resolutions at the General Meeting.

The Directors have undertaken to vote in favour of the Resolutions in respect of their aggregate beneficial holdings of 4,087,501 Ordinary Shares, representing approximately 1.41 per cent. of the Ordinary Shares in issue.

In aggregate, undertakings to vote in favour of Resolutions 1 and 2 have been received by the Company in respect of beneficial holdings of 180,966,664 Ordinary Shares, representing approximately 62.22 per cent. of the Existing Issued Share Capital.

   9.   Recommendation 

The Directors believe that the Loan Capitalisation and the Subscription are in the best interests of the Company and the Shareholders as a whole.

If the Resolutions are not passed then under the terms of the 2018 Secured Facility the Company will be required to repay all funds drawn down under it by the Maturity Date (being 6 March 2019). The Directors believe that seeking to repay the 2018 Secured Facility would be to the severe detriment of the Company particularly as sufficient funds are not currently available to the Company to repay the amounts drawn. Given the Company's current and anticipated working capital requirements, the Directors believe that should the Resolutions not be passed and if the Company was required to repay the 2018 Secured Facility upon its maturity, then, in the absence of other financing being available, repayment might only be possible if the Company made very substantial reductions in its workforce and operations. The Directors believe that the impact of taking such drastic actions would make it unfeasible for the Company to meet the requirements of its customer contracts, which could lead to potential claims and applicable penalties from existing customers, with the Company also suffering reputational damage and being unable to pursue new business opportunities. This, in turn, would severely impact the Company's working capital position.

Accordingly, the Directors unanimously recommend that Shareholders vote in favour of the Resolutions as they have undertaken to do in respect of their own aggregate beneficial holdings of 4,087,501 Ordinary Shares, representing approximately 1.41 per cent. of the Existing Issued Share Capital.

Yours faithfully,

Francis Coles

Non-Executive Chairman

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

The dates and times set out below are based on the Company's current expectations and may be subject to change. References to times in this document are to London times, unless otherwise stated.

 
                                                                  2018 
 Publication of this document and the Form                18 September 
  of Proxy 
 Latest time and date for receipt of Forms      2.00 p.m. on 2 October 
  of Proxy 
 General Meeting                                2.00 p.m. on 4 October 
 Admission and completion of the Subscription   8.00 a.m. on 5 October 
  and Loan Capitalisation 
 

STATISTICS

 
 Number of Ordinary Shares in issue as at the date 
  of this document                                            290,843,408 
 Subscription Price                                               1 penny 
 Number of Subscription Shares proposed to be issued 
  pursuant to the Subscription                                300,000,000 
 Number of Loan Capitalisation Shares proposed 
  to be issued pursuant to the Loan Capitalisation            300,000,000 
 Total number of Ordinary Shares in issue on Admission 
  and on completion of the Subscription and the 
  Loan Capitalisation                                         890,843,408 
 Percentage of the Enlarged Issued Share Capital                67.35 per 
  represented by the Subscription Shares and the                    cent. 
  Loan Capitalisation Shares 
 

DEFINITIONS

The following terms and definitions apply throughout this document, unless the context requires otherwise:

 
 "2018 Secured Facility"        the secured one-year loan facility for 
                                 up to GBP3 million provided by Kaptungs, 
                                 as announced by the Company on 7 March 
                                 2018, further details of which can be 
                                 found in section 3 of this document 
 "Act" or "Companies            the Companies Act 2006, as amended 
  Act" 
 "Admission"                    the admission of both the Subscription 
                                 Shares and the Loan Capitalisation Shares 
                                 to trading on AIM becoming effective 
                                 in accordance with the AIM Rules 
 "AIM"                          the market of that name operated by London 
                                 Stock Exchange 
 "AIM Rules"                    the AIM Rules for Companies, as published 
                                 by London Stock Exchange 
 "ATNi"                         ATN International, Inc., a NASDAQ-listed 
                                 company, which provides pay TV, wireless 
                                 and wireline telecommunications services 
                                 in several US and Caribbean locations 
                                 under various trade names 
 "August 2018 Circular"         the circular to Shareholders published 
                                 by the Company on 9 August 2018 
 "Company" or "Mirada"          Mirada plc, a company incorporated in 
                                 England and Wales with company number 
                                 03609752, whose registered office is 
                                 68 Lombard Street, London EC3V 9LJ 
 "CREST participant"            a person who is, in relation to CREST, 
                                 a system-participant (as defined in the 
                                 Regulations) 
 "Digital TV Cable"             Digital TV Cable Edmund S.R.L., a Bolivian 
                                 pay TV operator and broadband services 
                                 provider 
 "Directors" or "Board"         the directors of the Company at the date 
                                 of this document, as set out on page 
                                 4 of this document 
 "Enlarged Issued Share         the issued ordinary share capital of 
  Capital"                       the Company immediately following the 
                                 allotment and issue of the Subscription 
                                 Shares and the Loan Capitalisation Shares 
 "Euroclear"                    Euroclear UK & Ireland Limited, the operator 
                                 of CREST 
 "Existing Ordinary Share(s)"   the 290,843,408 Ordinary Shares in issue 
  or "Existing Issued            at the date of this document 
  Share Capital" 
 "FCA"                          the Financial Conduct Authority of the 
                                 United Kingdom 
 "Form of Proxy"                the form of proxy which accompanies this 
                                 document for use in connection with the 
                                 General Meeting 
 "FSMA"                         the Financial Services and Markets Act 
                                 2000 (as amended) 
 "General Meeting"              the general meeting of the Company to 
                                 be held at 2.00 p.m. on 4 October 2018, 
                                 notice of which is set out at the end 
                                 of this document 
 "Group"                        the Company and its subsidiaries and 
                                 subsidiary and associated undertakings 

                                 at the date of this document 
 "Kaptungs"                     Kaptungs Limited, an investment company 
                                 incorporated in the Commonwealth of the 
                                 Bahamas. Kaptungs Limited is owned by 
                                 the Innokapk Trust and the Innokapi Trust. 
                                 Mr Ernesto Tinajero is the settlor of 
                                 these trusts and is also the beneficiary, 
                                 along with his family 
 "Loan Capitalisation"          the discharging of the Company's liability 
                                 to repay the whole of the amount outstanding 
                                 and drawn down, being GBP3 million, pursuant 
                                 to the 2018 Secured Facility (excluding 
                                 any interest) in consideration for the 
                                 Company treating the amount so discharged 
                                 as payment in full for the subscription 
                                 of the Loan Capitalisation Shares, credited 
                                 as fully paid, at the Subscription Price 
                                 per share 
 "Loan Capitalisation           the 300,000,000 new Ordinary Shares to 
  Shares"                        be allotted and issued, credited as fully 
                                 paid, pursuant to the Loan Capitalisation 
                                 at the Subscription Price per share 
 "London Stock Exchange"        London Stock Exchange plc 
 "Maturity Date"                6 March 2019, being the date that is 
                                 12 months from the date of the 2018 Secured 
                                 Facility when funds drawn down under 
                                 the 2018 Secured Facility are repayable 
 "Notice"                       the notice convening the General Meeting 
                                 which is set out at the end of this document 
 "Ordinary Shares"              the ordinary shares of 1 penny each in 
                                 the capital of the Company 
 "Proposals"                    the Subscription and the Loan Capitalisation 
 "Prospectus Rules"             the Prospectus Rules issued by the FCA 
                                 and made under Part VI of FSMA 
 "relevant securities"          relevant securities includes: (i) shares 
                                 and any other securities carrying voting 
                                 rights; (ii) equity share capital (or 
                                 derivatives referenced thereto); and 
                                 (iii) securities carrying conversion 
                                 or subscription rights (including traded 
                                 options) of the Company 
 "Resolutions"                  the resolutions to be proposed at the 
                                 General Meeting which are set out in 
                                 the Notice 
 "Restricted Jurisdiction(s)"   the United States of America, Canada, 
                                 Australia, New Zealand, the Republic 
                                 of South Africa, Japan and/or the Russian 
                                 Federation 
 "Shareholder(s)"               holder(s) of Ordinary Share(s) from time 
                                 to time 
 "Subscription"                 the conditional subscription by Kaptungs 
                                 of the Subscription Shares at the Subscription 
                                 Price per share 
 "Subscription Price"           1 penny 
 "Subscription Shares"          the 300,000,000 new Ordinary Shares to 
                                 be allotted and issued pursuant to the 
                                 Subscription at the Subscription Price 
                                 per share 
 
 "Takeover Code"                the UK City Code on Takeovers and Mergers 
                                 (as amended from time to time) 
 "United Kingdom" or            the United Kingdom of Great Britain and 
  "UK"                           Northern Ireland, its territories and 
                                 possession, and all areas subject to 
                                 its jurisdiction 
 

A reference to "GBP" is to pounds sterling, the lawful currency of the UK.

Information to Distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the "Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the Product Governance Requirements) may otherwise have with respect thereto, the Loan Capitalisation Shares and Subscription Shares have been subject to a product approval process, which has determined that the Loan Capitalisation Shares and Subscription Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment"). Notwithstanding the Target Market Assessment, investors should note that: the price of the Loan Capitalisation Shares and Subscription Shares may decline and investors could lose all or part of their investment; Loan Capitalisation Shares and Subscription Shares offer no guaranteed income and no capital protection; and an investment in Loan Capitalisation Shares and Subscription Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Loan Capitalisation and the Subscription. Furthermore, it is noted that, notwithstanding the Target Market Assessment, only investors who have met the criteria of professional clients and eligible counterparties have been procured. For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to Loan Capitalisation Shares and Subscription Shares.

- ENDS -

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September 17, 2018 02:00 ET (06:00 GMT)