Pelatro PLC Placing, Subscription & Notice of General Meeting (0027V)

TIDMPTRO

RNS Number : 0027V

Pelatro PLC

04 August 2020

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. Upon the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM AUSTRALIA, CANADA, JAPAN, NEW ZEALAND, THE REPUBLIC OF IRELAND, THE REPUBLIC OF SOUTH AFRICA OR THE UNITED STATES OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES IN PELATRO PLC OR ANY OTHER ENTITY IN ANY JURISDICTION.

Pelatro plc

("Pelatro" or the "Company")

Placing and Subscription to raise GBP2.1 million

and

Notice of General Meeting

Pelatro Plc (AIM: PTRO), the telecom Customer Engagement software specialist , is pleased to announce a Placing and Subscription to raise GBP2.1 million (before expenses) through the conditional issue of 4,500,000 Ordinary Shares at the Issue Price of 47 pence per Ordinary Share. The Fundraise has been arranged by Cenkos Securities and the New Ordinary Shares will rank, pari passu, in all other respects with the Company's Existing Ordinary Shares.

Fundraising Highlights:

-- Placing and Subscription to raise GBP2.1 million through the conditional issue of 4,500,000 New Ordinary Shares to new and existing institutional and other investors at 47 pence per New Ordinary Share

-- The Issue Price equates to a 12.1 per cent. a discount to the closing mid-market price of 53.5 pence on 3 August 2020

   --    The New Ordinary Shares represent 12.2 per cent. of the Enlarged Share Capital 
   --    The net proceeds of the Fundraise will be used by the Company for the following purposes: 

o strengthen the sales team in both existing emerging and new developed markets

o marketing at various industry conferences and events to broaden Pelatro's brand recognition and network

o fund working capital for Managed Services, which the Directors believe will enable the Company to tender for larger contracts

General Meeting

The Fundraise is conditional, inter alia, upon Shareholder approval at the General Meeting of the Company which will be held at 49 Queen Victoria Street, London EC4N 4SA, at 11.00 a.m. on 20 August 2020.

In accordance with current Government regulations in relation to COVID-19, Shareholders are encouraged to submit their Form of Proxy in advance of the General Meeting, as to attend the General Meeting in person would, as at the date of this announcement, be inconsistent with the relevant regulations in respect of public gatherings. Shareholders who attempt to attend the General Meeting in person in breach of these will not be admitted.

The Company will shortly be posting a Notice of General Meeting and an accompanying circular to existing shareholders following this announcement. All relevant documents will also be available to download from the Company website at www.pelatro.com

Subject to, inter alia, the passing of the Resolutions at the General Meeting, the EIS/VCT Placing Shares are expected to be admitted to trading on AIM on or around 8.00 a.m. on 21 August 2020, being one Business Day prior to admission to trading on AIM of the General Placing Shares and Subscription Shares, which are expected to be admitted to trading on AIM on or around 8.00 a.m. on 24 August 2020.

Subash Menon, CEO of Pelatro plc, said : "We are very pleased with this support from investors as it enables us to continue executing the growth plan for the Company by investing in sales and marketing in both existing and new geographies, particularly developed markets. These investments will help us to expand our footprint while increasing Annual Recurring Revenue, in line with the strategy of the Company."

For further information contact:

 
 Pelatro Plc 
 Subash Menon, Managing Director                 c/o Cenkos Securities 
                                                                   plc 
 Nic Hellyer, Finance Director 
 
 
  Cenkos Securities plc (Nominated adviser 
  and broker)                                      [phone] 
 Stephen Keys / Cameron MacRitchie (corporate 
  finance) 
 Michael Johnson (sales) 
 

INTRODUCTION

The Company announced today a conditional Placing and Subscription to raise GBP2.1 million (before expenses) by way of the issue of 4,500,000 New Ordinary Shares in two tranches at the Issue Price of 47 pence per share, a discount of 12.1 per cent. to the closing middle market price of 53.5 pence per Ordinary Share on 3 August 2020 (being the last practicable date before publication of this announcement).

The Placing and Subscription are conditional, inter alia, upon the Shareholders approving the Resolutions at the General Meeting, which will be held at 49 Queen Victoria Street, London EC4N 4SA, on 20 August 2020 at 11:00 a.m. at which the Resolutions will be proposed.

BACKGROUND TO AND REASONS FOR THE PLACING

Introduction and Business Summary

The Company provides specialised, enterprise class software solutions for customer engagement, principally to telcos, who face a series of challenges including market maturity, saturation and customer churn. Pelatro's multi-channel contextual campaign management software enables relevant and personalised interactions with telco subscribers in real time to increase the telco's revenue and reduce customer churn. The Company currently provides its software solutions to 19 telco customers in 17 countries, principally in emerging markets, with a combined user base of more than 1 billion. It is headquartered in the UK and has offices in the USA, Singapore, Russia, Philippines, Malaysia, Brazil and India employing approximately 160 people. The Company is at an inflexion point for its growth prospects, with a complete end-to-end product suite and credibility with tier 1 telcos. The Placing will enable the Group to invest further in the business and capitalise on opportunities available to it, that might otherwise be limited due to capital constraints. The Directors believe that Pelatro can become a $25 million revenue business in the medium term with high recurring revenue streams and strong cash generation.

Products - mViva

Pelatro's Customer Engagement Hub, mViva, is a complete end-to-end product suite covering contextual campaign management, loyalty management, data monetisation and unified communication solutions. The mViva platform has resulted in increases of up to 5 per cent. of annual incremental revenue for our telco customer base. mViva uses big data analytics to study growing end user data to reveal patterns, trends, associations and key behavioural traits. mViva then applies algorithms to analyse this data and to identify patterns for each end user. Based on this analysis, relevant offers (which can include additional services or customised campaigns) are made to end users through a variety of channels like social media, SMS, email and apps. Importantly, Pelatro provides telcos with real time data, within two to three minutes from initial impression, enabling the telco to push targeted offers to users in response to their live online activity. This functionality and the ease of use of the platform for marketing teams when formulating campaigns, has enabled Pelatro to displace global software players who are not as specialised as Pelatro. The Group is continually developing its offering to respond to the changing demands of telco customers and has recently launched a suite of add-on modules to this end.

Strategy and Opportunity

Geographic expansion

It typically takes six to eight months to implement Pelatro's software solutions. Given the Group's technology is deeply embedded within the telco's software architecture, there are significant cross selling opportunities for other products and add-on modules, as well as expansion into new geographies. Accordingly, the Group intends to use certain of the Placing proceeds to strengthen the sales team by two people, in new geographies (Europe, Middle East and Central Asia). Furthermore, the Group intends to build on its existing industry network by attending various industry conferences and events to broaden Pelatro's brand recognition and network.

Revenue model

Pelatro was founded in March 2013 and admitted to AIM in December 2017. The Company's revenue model has evolved since its admission to AIM: initially focused on licences, which produced largely one-off revenues, with the expansion of the software suite and the increasing reputation of the Pelatro brand and proposition, the Company decided to transition more to a recurring revenue model in 2019, to improve the quality and visibility of earnings and also to help satisfy customer demand. The Company sells two types of recurring revenue contracts: Revenue Gain Share, in which Pelatro earns a share of the monthly revenue gain generated by using its product; and Managed Services, where Pelatro earns a fixed monthly fee for providing the product and managing the operations. The Company has won six such contracts to date and in H1 2020 recurring revenue accounted for approximately 60 per cent. of total revenue. The Company intends to use the proceeds of the Placing to fund the working capital for Managed Services as well, which will enable Pelatro to tender for larger contracts.

USE OF PROCEEDS

The Directors intend to use the net proceeds of approximately GBP1.9 million from the Fundraise for the following purposes:

-- GBP0.75 million (approx.) will be used to strengthen the sales team in both existing emerging and new developed markets;

-- GBP0.75 million (approx.) will be used for marketing at various industry conferences and events to broaden Pelatro's brand recognition and network; and

-- The remaining proceeds will be used to fund working capital for Managed Services, which the Directors believe will enable the Company to tender for larger contracts.

DETAILS OF THE CONCERT PARTY SHAREHOLDINGS

Certain shareholders are deemed to be acting in concert under the rules of the Takeover Code. Suresh Yezhuvath, an existing Concert Party member, intends to subscribe for 1,000,000 Subscription Shares at the Issue Price. The admission of the New Ordinary Shares will result in the combined Concert Party shareholding being diluted from 42.19 per cent. to 39.76 per cent. Full details of the Concert Party shareholdings can be found in the table below:

 
 Name                                     Number        % of existing                  Number                   Amount                 Interest        % of Enlarged 
                                              of               Issued         of Subscription               Subscribed              in Ordinary               Issued 
                                        Ordinary                Share                  Shares                                            Shares                Share 
                                          Shares              Capital                   being                                         on Second              Capital 
                                            held                                   subscribed                                         Admission 
                                                                                          for 
-----------------------  -----------------------  -------------------  ----------------------  -----------------------  -----------------------  ------------------- 
             Subash 
              Menon                    9,684,244               29.77%                       -                        -                9,684,244               26.15% 
             Sudeesh 
              Yezhuvath                3,309,309               10.17%                       -                        -                3,309,309                8.94% 
             Suresh 
              Yezhuvath                   14,613                0.04%               1,000,000               GBP470,000                1,014,613                2.74% 
             Ravi 
              Shanmugam                  716,240                2.20%                       -                        -                  716,240                1.93% 
-----------------------  -----------------------  -------------------  ----------------------  -----------------------  -----------------------  ------------------- 
             Total                    13,724,406               42.19%               1,000,000               GBP470,000               14,724,406               39.76% 
 

DETAILS OF THE PLACING AND SUBSCRIPTION

The Company is proposing to raise GBP2.1 million (before expenses) pursuant to the Placing and Subscription. The Company has conditionally raised a total of approximately GBP1.2 million through the placing of the EIS/VCT Placing Shares, approximately GBP0.46 million through the placing of the General Placing Shares and GBP0.47 million via the Subscription. Admission of the Placing Shares and Subscription Shares will occur over two Business Days to assist investors in the EIS/VCT Placing Shares to claim certain tax reliefs available to EIS and VCT investors.

Subject to, inter alia, the passing of the Resolutions at the General Meeting, the EIS/VCT Placing Shares are expected to be admitted to trading on AIM on or around 8.00 a.m. on 21 August 2020, being one Business Day prior to admission to trading on AIM of the General Placing Shares and Subscription Shares, which are expected to be admitted to trading on AIM on or around 8.00 a.m. on 24 August 2020. The allotment of the EIS/VCT Placing Shares will be conditional on First Admission occurring. The allotment of the General Placing Shares and Subscription Shares will be conditional on Second Admission occurring. Shareholders and potential investors should be aware of the possibility that the First Admission and Second Admission may not occur.

Although the Company currently expects to satisfy the relevant conditions for EIS/VCT Placing Shares, and the Directors are not aware of any subsequent change in the qualifying conditions or the Company's circumstances that would prevent the EIS/VCT Placing Shares from being eligible for EIS and VCT investments on this occasion, neither the Directors nor the Company, nor Cenkos, nor any of its respective directors or their officers, employees, affiliates or advisers give any warranty or undertaking or other assurance that relief will be available in respect of any investment in the EIS/VCT Placing Shares, nor do they warrant or undertake or otherwise give any assurance that the Company will conduct its activities in a way that qualifies for or preserves its status. As the rules governing EIS and VCT reliefs are complex and interrelated with other legislation, if Shareholders, or other potential investors, are in any doubt as to their tax position, require more detailed information, or are subject to tax in a jurisdiction other than the United Kingdom, they should consult their professional adviser.

The Issue Price of 47 pence per share equates to a discount of 12.1 per cent. to the closing price of 53.5 pence on 3 August 2020, the latest Business Day prior to the announcement of the Fundraise. The New Ordinary Shares will represent approximately 12.2 per cent. of the Enlarged Issued Share Capital. The New Ordinary Shares will, following each of the First Admission and Second Admission, rank in full for all dividends and distributions declared, made or paid in respect of the issued Ordinary Share capital of the Company after the date of their respective issue and will otherwise rank equally in all other respects with the existing Ordinary Shares.

DETAILS OF THE PLACING AGREEMENT

Pursuant to the terms of the Placing Agreement, Cenkos Securities has conditionally agreed to use its reasonable endeavours, as agent for the Company, to place the Placing Shares with certain institutional and other investors. The Placing has not been underwritten. The Placing Agreement is conditional upon, inter alia:

   --    the Resolutions being passed without amendment at the General Meeting; 

-- compliance by the Company in all material respects with its obligations under the Placing Agreement; and

-- with respect to the issue of the EIS/VCT Placing Shares only, First Admission becoming effective by not later than 8.00 a.m. on 21 August 2020 (or such later date as is agreed between the Company and Cenkos, being not later than 8.00 a.m. on the Long Stop Date).

-- with respect to the issue of the General Placing Shares and Subscription Shares only, Second Admission becoming effective by not later than 8.00 a.m. on 24 August 2020 (or such later date as is agreed between the Company and Cenkos, being not later than 8.00 a.m. on the Long Stop Date).

The Placing Agreement contains warranties from the Company in favour of Cenkos in relation to, inter alia, the accuracy of the information in the Circular and other matters relating to the Company and its business. In addition, the Company has agreed to indemnify Cenkos in relation to certain liabilities it may incur in respect of the Placing and Subscription. Cenkos has the right to terminate the Placing Agreement in certain circumstances prior to the First Admission and/or Second Admission, in particular, in the event of a breach of the warranties given to Cenkos in the Placing Agreement, the failure of the Company to comply in any material respect with its obligations under the Placing Agreement, the occurrence of a force majeure event or a material adverse change affecting the condition, or the earnings, management business, affairs, solvency or prospects of the Company as a whole.

GENERAL MEETING AND THE RESOLUTIONS

The Directors do not currently have authority to allot all of the New Ordinary Shares and, accordingly, the Board is seeking the approval of Shareholders to allot the New Ordinary Shares at the General Meeting. A notice convening the General Meeting, which is to be held at 49 Queen Victoria Street, London EC4N 4SA at 11.00 a.m. on 20 August 2020, is set out at the end of the Circular. At the General Meeting, the following Resolutions will be proposed:

-- Resolution 1 , which is an ordinary resolution, to authorise the Directors to allot relevant securities for cash up to an aggregate nominal amount of GBP112,500.00, being equal to 4,500,000 Ordinary Shares, pursuant to the Placing and Subscription; and

-- Resolution 2 , which is conditional on the passing of Resolution 1 and is a special resolution, to authorise the Directors to allot 4,500,000 Ordinary Shares for cash pursuant to the Placing and Subscription on a non-pre-emptive basis.

The authorities to be granted pursuant to the Resolutions will expire on whichever is the earlier of (a) the conclusion of the next Annual General Meeting of the Company; and (b) the date falling six months from the date of the passing of the Resolutions (unless renewed, varied or revoked by the Company prior to or on that date) and shall be in addition to the Directors' authorities to allot relevant securities and dis-apply statutory pre-emption rights granted at the Company's Annual General Meeting held on 17 June 2020.

For the purposes of section 571(6)(c) of the Act, the Directors determined the Issue Price after consideration of applicable market and other considerations and having taken appropriate professional advice.

RECOMMATION

The Directors unanimously believe that the Fundraise is in the best interests of the Company and its Shareholders and unanimously recommend you to vote in favour of the Resolutions as they intend to do in respect of their own beneficial holdings in the Company. The Board has a beneficial interest in 13,118,010 Ordinary Shares representing approximately 40.32 per cent. of the Ordinary Shares in issue as at the date of this announcement.

FUNDRAISING STATISTICS

 
 Number of Ordinary Shares in issue at the date 
  of this announcement                                      32,532,431 
 Issue Price                                                  47 pence 
 Number of EIS/VCT Placing Shares                            2,513,952 
 Number of General Placing Shares                              986,048 
 Number of Subscription Shares                               1,000,000 
 Total number of New Ordinary Shares                         4,500,000 
 Gross proceeds from the Fundraise                      GBP2.1 million 
 Enlarged Issued Share Capital at Second Admission          37,032,431 
 New Ordinary Shares as a percentage of the Enlarged    12.2 per cent. 
  Issued Share Capital 
 

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

2020

 
 Announcement of the Fundraise                                 4 August 
 Posting of the Circular                                       4 August 
 Latest time and date for receipt of proxy      11:00 a.m. on 18 August 
  voting instructions for the General Meeting 
 General Meeting                                11:00 a.m. on 20 August 
 Expected time and date of admission and         8.00 a.m. on 21 August 
  commencement of dealings of the EIS/VCT 
  Placing Shares on AIM 
 Expected time and date of admission and         8.00 a.m. on 24 August 
  commencement of dealings of the General 
  Placing Shares and Subscription Shares 
  on AIM 
 Long Stop Date                                             4 September 
 

Note: All references to times in this timetable are to London times and each of the times and dates are indicative only and may be subject to change. Any such change will be notified by an announcement on a regulatory information service.

DEFINITIONS

In this announcement, the following expressions shall have the following meanings, unless the context otherwise requires:

 
 "Act"                    the Companies Act 2006 (as amended) 
 "Admission"              First Admission and/or Second Admission (as the 
                           context requires) 
 "AIM"                    the market of that name operated by the London 
                           Stock Exchange 
 "AIM Rules"              the AIM Rules for Companies as published and 
                           amended from time to time by the London Stock 
                           Exchange 
 "Articles"               the articles of association of the Company (as 
                           amended from time to time) 
 "Board"                  the directors of the Company from time to time 
 "Business Day"           a day other than a Saturday, Sunday or public 
                           holiday in England when banks in London are open 
                           for business 
 "Cenkos" or "Nominated   Cenkos Securities plc, as the Company's nominated 
  Adviser" or "Broker"     adviser and sole broker 
 "certificated"           where an Ordinary Share is not in uncertificated 
  or "in certificated      form (i.e. not in CREST) 
  form" 
 "Company" or "Pelatro"   Pelatro plc 
 "Concert Party"          the shareholders of the Company as listed in 
                           paragraph 4 of the Circular together with anyone 
                           deemed to be acting in concert with them, as 
                           defined in the Takeover Code, including Subash 
                           Menon 
 "CREST"                  the relevant system for the paperless settlement 
                           of trades and the holding of uncerti cated securities 
                           operated by Euroclear UK & Ireland Limited in 
                           accordance with the CREST Regulations 
 "CREST Regulations"      the Uncertificated Securities Regulations 2001 
                           (SI 2001/3755) including any enactment or subordinate 
                           legislation which amends or supersedes those 
                           regulations and any applicable rules made under 
                           those regulations or any such enactment or subordinate 
                           legislation for the time being in force 
 "Directors"              the directors of the Company as the date of this 
                           announcement 
 "Circular"               the circular to Shareholders 
 "Enlarged Issued         37,032,431 Ordinary Shares, being the issued 
  Share Capital"           ordinary share capital of the Company immediately 
                           following Second Admission 
 "FCA"                    the Financial Conduct Authority of the United 
                           Kingdom 
 "First Admission"        admission of the EIS/VCT Placing Shares to trading 
                           on AIM becoming effective in accordance with 
                           Rule 6 of the AIM Rules which is expected to 
                           take place on 21 August 2020 
 "EIS"                    the Enterprise Investment Scheme under Part 5 
                           of the Income Tax Act 2007 
 "EIS/VCT Placing"        the placing by Cenkos on behalf of the Company 
                           of the EIS/VCT Placing Shares at the Issue Price 
                           pursuant to the terms of the Placing Agreement 
 "EIS/VCT Placing         the 2,513,952 new Ordinary Shares which have 
  Shares"                  been conditionally placed by Cenkos with Placees 
                           pursuant to the EIS/VCT Placing 
 "Fundraise"              together, the EIS/VCT Placing, the General Placing 
                           and the Subscription 
 "FSMA"                   the Financial Services and Markets Act 2000 (as 
                           amended) 
 "General Meeting"        the general meeting of the Company convened for 
  or "GM"                  11:00 a.m. on 20 August 2020 at 49 Queen Victoria 
                           Street, London EC4N 4SA, notice of which is set 
                           out at the end of the Circular 
 "General Placing"        the placing by Cenkos on behalf of the Company 
                           of the General Placing Shares at the Issue Price 
                           pursuant to the terms of the Placing Agreement 
 "General Placing         the 986,048 Ordinary Shares which have been conditionally 
  Shares"                  placed by Cenkos with Placees pursuant to the 
                           General Placing 
 "Group"                  the Company and its subsidiaries from time to 
                           time 
 "London Stock            London Stock Exchange plc 
  Exchange" 
 "New Ordinary            the 4,500,000 new Ordinary Shares to be issued 
  Shares"                  pursuant to the EIS/VCT Placing, General Placing 
                           and Subscription 
 "Ordinary Shares"        the ordinary shares of 2.5 pence each in the 
                           capital of the Company 
 "Placees"                those persons who have conditionally agreed to 
                           subscribe for Placing Shares 
 "Placing"                together, the EIS/VCT Placing and the General 
                           Placing 
 "Placing Agreement"      the conditional agreement dated on or around 
                           3 August 2020 between the Company and Cenkos 
                           relating to the Fundraise 
 "Issue Price"            47 pence per New Ordinary Share 
 "Placing Shares"         the EIS/VCT Placing Shares and/or the General 
                           Placing Shares (as the context requires) 
 "Resolutions"            the resolutions set out in the notice of the 
                           General Meeting at the end of the Circular 
 "Second Admission"       admission of the General Placing Shares and the 
                           Subscription Shares to trading on AIM becoming 
                           effective in accordance with Rule 6 of the AIM 
                           Rules which is expected to take place on 24 August 
                           2020 
 "Shareholders"           holders of Ordinary Shares from time to time 
 "Subscription"           the Subscription by Suresh Yezhuvath for the 
                           Subscription Shares at the Issue Price 
 "Subscription            the 1,000,000 Ordinary Shares which have been 
  Shares"                  conditionally subscribed for by Suresh Yezhuvath 
                           pursuant to the Subscription 
 "United Kingdom'         the United Kingdom of Great Britain and Northern 
  or "UK'                  Ireland 
 "VCT"                    a Venture Capital Trust under Part 6 of the Income 
                           Tax Act 2007 
 "GBP"                    UK pounds sterling, being the lawful currency 
                           of the United Kingdom 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

END

MSCPJMLTMTAMBFM

(END) Dow Jones Newswires

August 04, 2020 02:00 ET (06:00 GMT)