Tricor PLC Proposed Transaction and Notice of General Meeting (8486I)

TIDMTRIC

RNS Number : 8486I

Tricor PLC

02 September 2016

Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR).

Tricor plc

("Tricor" or the "Company")

Proposed sale of the plant and equipment of Tricor Minerals Pte Ltd to KGGD Pte Ltd and the new operating arrangements between Tricor Environmental Pte Ltd and KGGD Pte Ltd

and

Notice of General Meeting

Tricor (AIM: TRIC) announces that it has entered into a conditional sale and purchase agreement with KGGD Pte Ltd ("KGGD") and Dunamis Mining Pte Ltd ("Dunamis") whereby KGGD will acquire the iron sand processing plant and equipment of Tricor Minerals Pte Ltd ("Tricor Minerals"), a 72 per cent. subsidiary of the Company. In addition, Tricor Environmental Pte Ltd ("Tricor Environmental"), a wholly-owned subsidiary of the Company, has entered into a new operating arrangement with KGGD. The disposal and the new operating agreement together form the Transaction.

The Transaction is conditional, inter alia, on the approval of shareholders at a general meeting of the Company to be held on at 11.00 a.m. on 30 September 2016 at 11 Collyer Quay, #14-06 The Arcade, Singapore 049317 (the "GM"), further details of which are set out below.

A circular (the "Circular"), containing information in relation to the Transaction and convening the GM, is expected to be sent to shareholders on 5 September 2016. The Circular will be available on the Company's website at www.tricor-plc.co.uk in due course.

Enquiries:

 
Tricor plc 
 Chan Fook Meng 
 CEO                               [phone] 
Allenby Capital Ltd (Nominated 
 Adviser & Broker)                 [phone] 
 John Depasquale / Richard Short    5656 
 

Proposed sale of the plant and equipment of Tricor Minerals to KGGD and the new operating arrangements between Tricor Environmental and KGGD and Notice of General Meeting

   1.        Introduction 

The purpose of this letter is to provide you with the background to and the reasons for the Transaction. In addition, it explains why the Directors consider the Transaction to be in the best interest of the Company and Shareholders as a whole and why they recommend that Shareholders should vote in favour of the Resolution to be proposed at the General Meeting.

The Company announced today that it has reached an agreement in principle with KGGD and Dunamis with regard to Settlement Agreement 1 and Settlement Agreement 2:

Settlement Agreement 1

In exchange for a full and final settlement amongst the Company, TEPL, KGGD and Dunamis, the parties have agreed in principle on the Settlement Agreement 1. Based on the Settlement Agreement 1, upon securing the Mineral Processing Permit ("MPP"), TEPL will work exclusively with KGGD in relation to the iron sand operations for one year on a 50/50 profit sharing basis, the extension of which will be dependent on the performance of KGGD during the year.

Settlement Agreement 2

In conjunction with Settlement Agreement 1, TMPL and KGGD have also agreed to a conditional sale and purchase agreement to transfer the ownership of TMPL's iron sand processing plant and related equipment to KGGD in exchange for KGGD and Dunamis' agreement to write off the entire amount owed by TMPL to both these parties as of the signing date of Settlement Agreement 2.

The Disposal constitutes a fundamental change of business of the Company pursuant to Rule 15 of the AIM Rules. Accordingly, the execution of the settlement agreement is subject to, inter alia, on the approval of Shareholders at the General Meeting, notice of which is being sent to shareholders on 5 September 2016.

Following the Disposal, the Company will be classified pursuant to Rule 15 of the AIM Rules as an AIM Rule 15 cash shell. The Company will be required to make an acquisition or acquisitions which constitute a reverse takeover transaction under the AIM Rules within six months of becoming an AIM Rule 15 cash shell (which will be deemed to be the date of completion of the Transaction) or be re-admitted to trading on AIM as an investing company under the AIM Rules (which requires the raising of at least GBP6 million), failing which, the Ordinary Shares would then be suspended from trading on AIM. After six months of suspension, the Ordinary Shares would then be cancelled from trading on AIM.

The Company is currently in ongoing discussions with a number of potential reverse takeover targets. The Board believe that there is a reasonable chance that the Company will undertake a reverse takeover within the permitted six-month timeframe. Consequently, at this time, the Board do not have plans to re-admit the Company to trading on AIM as an investing company, requiring a GBP6 million fundraise.

   2.       Background and reasons for the Disposal 

TMPL was set up to process and produce iron sand in the Philippines. Tricor invested SGD720 in this project for a 72 per cent. stake on 28 May 2013. TMPL currently owns an iron sand processing plant which commenced construction in 2013. The trial run of the plant was stopped after a short period as it did not reach the anticipated processing capacity and experienced various operational and technical problems (the "Problems"). The plant has therefore been idle since early 2014 so that it could be redesigned and also be moved to another site with a better resource of iron sand. At the same time, TMPL was applying for the necessary permits to process and sell iron sand (both at the original site and the new site), which have not been forthcoming.

The remaining 28 per cent. of TMPL shares are held by KGGD (18 per cent.), Dunamis (7 per cent.) and Mr. Tan Hong Pheng (3 per cent.). KGGD is fully owned by Mr. Chong Seow Meng and Dunamis is fully owned by Mr. Chong Koon Ann. It was agreed from the outset that KGGD would be responsible for managing and funding TMPL. To date, KGGD and Dunamis have an accumulated amount owing to them from TMPL, in the form of loans and payables, of approximately USD$1.3 million. The amount due results from the costs incurred in building the plant and funding the personnel costs, general operations and the permit applications. The MPP was not received by 31 December 2013, as KGGD expected, and on 25 June 2015, KGGD consequently issued a statutory demand to TMPL for the repayment of the loan received by TMPL. The Company, TEPL, TMPL, KGGD and Dunamis have since been in discussions to reach an amicable resolution.

Due to the uncertainty of whether the MPP would eventually be secured, which is central to TMPL's ability to generate cash flow and to pay the amount owed to KGGD and Dunamis in relation to the costs in building the iron sand processing plant and acquiring the relevant equipment, the Directors believe that a reasonable solution is to transfer the iron sand processing plant to KGGD in exchange for KGGD and Dunamis' agreement to write off all amounts owed to them as of the signing date of Settlement Agreement 2. The Directors believe that this transaction is in the best interest of the Shareholders. A full impairment of the iron sand processing plant was performed in FY2015 and it has since carried a zero book value on the balance sheet of TMPL.

In the event TEPL manage to secure the MPP with TMPL, as per Settlement Agreement 1, TEPL and KGGD will continue to work on the iron sand operation on a 50/50 profit sharing basis.

   3.         Summary of the Settlement Agreements 

A summary of the Settlement Agreement 1 and Settlement Agreement 2 is set out below:

Settlement Agreement 1 - New operating arrangements between TEPL and KGGD

Subject to the passing of the Resolution, TEPL has agreed to grant KGGD a one-year, royalty free, sole and exclusive right and licence to own and operate an iron sand processing plant on the Bangan Sub-Concession to extract iron sand therefrom and to process, export and sell any product from the date that TEPL obtains an MPP. KGGD will operate the Bangan Sub-Concession strictly in accordance with the conditions imposed by the MPP, and, subject to the conditions of the MPP, KGGD will have the right to increase its production as it chooses.

KGGD and TEPL will jointly obtain any financing necessary to commence and continue the iron sand operation for the duration of the license at market rate and KGGD is entitled to charge US$2.00 per metric tonne for the cost of marketing and arranging all banking facilities for the sale of the iron sand. In addition, subject to the deduction of all costs associated with the setting up and operation of iron sand processing plant at the Bangan Sub-Concession, and all costs, taxes and other outgoings associated with the export and sale of iron sand, TEPL will be entitled to 50 per cent. of the net profit of the iron sand business annually.

Settlement Agreement 2 - Proposed sale of the Plant and Equipment by TMPL to KGGD

Subject to the passing of the Resolution, TMPL agrees to transfer the ownership of the Plant and Equipment to KGGD, in exchange for KGGD and Dunamis's agreement to write off the full amount owed to them by TMPL as of the date of the Settlement Agreement 2, being approximately USD$1.3 million. KGGD shall take delivery of the Plant and Equipment at whichever location and will pay all charges and expenses of removing the Plant and Equipment.

The Company's operations following the Disposal

Following the completion of the Transaction, TEPL will continue to work with its operating partner, Chahaya, to attempt to secure reclamation sand contracts. In addition, TEPL will continue to work with TMPL to try to secure the MPP. Once the MPP application is approved, TEPL and KGGD will work on the iron sand operation on a 50/50 profit sharing basis as per Settlement Agreement 1. TRT will remain dormant until the iron sand operation commences.

On completion of the Transaction, the Board anticipates that the Company will further explore corporate opportunities with the aim of identifying a reverse takeover transaction opportunity within the next six months, and to provide working capital for the day-to-day business of the Company. The Board has been pursuing a number of corporate opportunities in the resources and medical sectors and believe that it will be able to complete a reverse takeover transaction within the six months following completion of the Transaction and maintain the admission of the Ordinary Shares to trading on the AIM Market.

Any reverse takeover transaction will require the publication of an AIM-compliant admission document and will be subject to Shareholder approval at a further general meeting of the Company to be convened at the appropriate time.

   4.         General Meeting 

Purpose of the General Meeting

The General Meeting is being convened for the purpose of approving the Transaction.

A notice convening the General Meeting to be held at 11.00 a.m. at the offices of 11 Collyer Quay, #14-06 The Arcade, Singapore 049317 on 30 September 2016 at which the Resolution will be put to Shareholders is being sent to shareholders on 5 September 2016.

The result of the voting on the Resolution will be announced via a Regulatory Information Service and posted on the Company's website after the meeting.

For ease of reference the Resolution is set out below:

1. The approval of the signing of Settlement Agreement 1 and Settlement Agreement 2 amongst the Company, its subsidiaries, KGGD and Dunamis

   5.         Related Party Transaction 

The disposal of iron sand processing plant and related equipment by TMPL to KGGD and the new operating arrangements between TEPL and KGGD represent a related party transaction under AIM Rule 13 as KGGD and Dunamis Mining are substantial shareholders in TMPL, holding 25 per cent. of the issued share capital of TMPL. The Directors consider, having consulted with the Company's nominated adviser, Allenby Capital, that the terms of the transaction are fair and reasonable insofar as the Shareholders are concerned.

   6.         Irrevocable Undertakings 

The Company intends to seek irrevocable undertakings from its major shareholders over the coming weeks in advance of the General Meeting to vote in favour of the Resolution. Further announcements will be made and as when appropriate in this regard.

   7.         Recommendation 

For the reasons set out above, the Board is of the view that approval of the signing of Settlement Agreement 1 and Settlement Agreement 2 by the Shareholders is in the best interests of Shareholders as a whole.

The Board unanimously consider the Resolution to be in the best interest of the Company and the Shareholders as a whole. The Directors recommend that the Shareholders vote in favour of the Resolution to be proposed at the General Meeting as they intend to do in respect of their aggregate beneficial holdings amounting to 56,655,635 Ordinary Shares, representing 30.5 per cent. of the Ordinary Shares.

In the event that the Resolution is not passed, the Company will need to raise additional funds to meet current liabilities and to fulfil its settlement obligations to KGGD under the terms of the loan agreement. There is no guarantee that the Board will be able to raise these necessary funds on terms acceptable to Shareholders, or at all.

Yours sincerely,

Chan Fook Meng

CEO

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

 
Date of this document              2 September 2016 
Latest time and date for receipt   10.00 a.m. on 27 
 of Forms of Proxy                   September 2016 
General Meeting                    11.00 a.m. on 30 
                                     September 2016 
Expected date of the completion      5 October 2016 
 of Transaction 
 

DEFINITIONS

 
"AIM"                     the market of that name operated 
                             and regulated by the London 
                             Stock Exchange; 
"AIM Rules"               together the AIM Rules for Companies, 
                             the AIM Rules for Nominated 
                             Advisers and the AIM Disciplinary 
                             Procedures and Appeals Handbook 
                             as published by the London Stock 
                             Exchange from time to time; 
"Allenby Capital"           Allenby Capital Limited (incorporated 
                             and registered in England and 
                             Wales with registered number 
                             06706681), the Company's nominated 
                             adviser and broker; 
"Articles"                  the articles of association 
                             of the Company, as adopted by 
                             a special resolution of the 
                             Company passed on 2 February 
                             2011; 
"Bangan Sub-Concession"     the sub-concession of the Bucao 
                             Concession which Tricor Environmental 
                             Pte Ltd and Tricor Minerals 
                             Pte Ltd applied for a Mineral 
                             Processing Permit; 
"Board" or "Directors"  the directors of the Company 
                             as at the date of this Document, 
                             whose names are set out on page 
                             3 of this document 
"Bucao Concession"          a sand concession located along 
                             the Bucao River in the Philippines; 
"Company" or "Tricor"     Tricor plc, a company incorporated 
                             in England and Wales under the 
                             Companies Act 2006 with registered 
                             number 02709891 whose registered 
                             office is at Finsgate, 5-7 Cranwood 
                             Street, London, EC1V 9EE, United 
                             Kingdom; 
"Companies Act"             the Companies Act 2006, as amended 
 or "Act"                    from time to time; 
"CREST"                   the relevant system (as defined 
                             in the Uncertificated Securities 
                             Regulations 2001 (SI 2001 No 
                             3755)) for the paperless settlement 
                             of trades and the holding of 
                             uncertificated securities, operated 
                             by 
                             Euroclear, in accordance with 
                             the same regulations; 
"Disposal"                the proposed sale of the plant 
                             and equipment of Tricor Minerals 
                             Pte Ltd to KGGD Pte Ltd and 
                             the new operating arrangements 
                             between Tricor Environmental 
                             Pte Ltd and KGGD Pte Ltd; 
"Document"                this document dated 2 September 
                             2016; 
"Dunamis"                   Dunamis Mining Pte Ltd, a company 
                             incorporated in Singapore with 
                             registered office at 3 Shenton 
                             Way #24-06, Shenton House, Singapore 
                             068805; 
"Euroclear"               Euroclear UK & Ireland Limited, 
                             the operator of CREST; 
"Form of Proxy"           the form of proxy enclosed with 
                             this document for use by Shareholders 
                             in connection with the General 
                             Meeting; 
"General Meeting"         the general meeting of the Company 
                             to be held at 11.00 a.m. on 
                             30 September 2016 at 11 Collyer 
                             Quay, #14-06 The Arcade, Singapore 
                             049317, to consider and if through 
                             fit, pass the Resolution, notice 
                             of which is set out at the end 
                             of this Document; 
"KGGD"                      KGGD Pte Ltd, a company incorporated 
                             in Singapore with registered 
                             office at 3 Shenton Way #24-06, 
                             Shenton House, Singapore 068805; 
 
 
"London Stock Exchange"  the London Stock Exchange Group 
                            plc; 
"Notice of Meeting"        the Notice of General Meeting 
 or "Notice"                set out at the end of this document; 
 "Ordinary Shares"       ordinary shares of 0.001 pence 
                            each in the capital of the Company; 
"Options"                the outstanding options to purchase 
                            Ordinary Shares; 
"Plant and Equipment"      the plant and equipment that 
                            is to be transferred to KGGD 
                            Pte Ltd under the Settlement 
                            Agreement 2 includes the iron 
                            sands separating plant equipment, 
                            the processing equipment, the 
                            steel sheet and screen, 8 units 
                            of container, steel parts, power 
                            house, water piping system, conveyer 
                            system, silo and control room 
                            and MS plate 10,000 litre fuel 
                            tank; 
"Regulatory Information   a regulatory information service 
 Service"                  operated by the London Stock 
                            Exchange as defined by the AIM 
                            Rules; 
"Resolution"             the resolution set out in the 
                            Notice of General Meeting; 
"Settlement Agreement      the Agreement to be entered into 
 1"                         between the Company, Tricor Environmental 
                            Pte Ltd, KGGD Pte Ltd and Dunamis 

                            Mining Pte Ltd, further details 
                            of which are set out at paragraph 
                            3 of this Circular; 
"Settlement Agreement      the Agreement to be entered into 
 2"                         between Tricor Minerals Pte Ltd 
                            and KGGD Pte Ltd, further details 
                            of which are set out at paragraph 
                            3 of this Circular; 
"Shareholder(s)"         holder(s) of Ordinary Shares 
                            in the Company from time to time; 
"Subsidiaries"             The subsidiaries of the Company 
                            at the date of this Document, 
                            being Tricor Environmental (100% 
                            owned) and Tricor Minerals (72% 
                            owned); 
 
"Transaction"              Settlement Agreement 1 and Settlement 
                            Agreement 2, together the Transaction; 
 
"Tricor Environmental"     Tricor Environmental Pte Ltd, 
 or "TEPL"                  the Company's wholly-owned subsidiary, 
                            a company incorporated in Singapore 
                            with registered office at 150 
                            Cecil Street, #03-00, Singapore 
                            069543; 
"Tricor Minerals"          Tricor Minerals Pte Ltd, the 
 or "TMPL"                  Company's 72% subsidiary, a company 
                            incorporated in Singapore with 
                            registered office at 120 Robinson 
                            Road #13-02 Singapore 068913; 
"UK"                     the United Kingdom of Great Britain 
                            and Northern Ireland; 
"uncertificated"         recorded on the relevant register 
 or "in uncertificated     of the share security concerned 
 form"                     as being held in uncertificated 
                            form in CREST and title to which, 
                            by virtue of the Crest Regulations, 
                            may be transferred by means of 
                            CREST; 
"GBP"                    the legal currency of the UK. 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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September 02, 2016 08:30 ET (12:30 GMT)