Disposal, Subscription and Capital Reorganisation

10 September 2013 SureTrack Monitoring plc (the "Company" or "SureTrack") Disposal, Capital Reorganisation, Subscription to raise £250,000, new Investing Policy and Notice of General Meeting For all defined terms within this announcement please refer to Appendix 2 at the end of this announcement The Company announces that it has entered into a conditional Sale and PurchaseAgreement to dispose of its wholly owned subsidiary IBP to the Purchaser, andsubject to a proposed Capital Reorganisation, that it intends to raiseapproximately £250,000 before expenses by means of a subscription for250,021,404 New Ordinary Shares at 0.1p per Ordinary Share and that it intendsto utilise those funds in connection with implementing a proposed new InvestingPolicy for the Company. In addition, and under the terms of the Subscription,250,021,404 Subscription Warrants to subscribe for New Ordinary Shares at anexercise price of 0.1p per New Ordinary Share exercisable for five years willbe issued to the subscribers. Disposal Pursuant to the Sale and Purchase Agreement between (1) SureTrack; (2) IBP; and(3) the Purchaser, the Purchaser has conditionally agreed to acquire the entireissued share capital of IBP. The Consideration payable by the Purchaser for IBPis £1 in cash on completion. SureTrack will retain ownership of debtorsamounting to approximately £10,282 on IBP's balance sheet at the date ofcompletion and the Purchaser will forward such debtor sums to SureTrack withinten working days of receipt in cleared funds. In addition, SureTrack will receive royalty payments of 2.5 per cent. on allsales to a leading supermarket chain of the New Product Range (Rapid DeploymentSystem (RDS) a fixed or temporary installation of a system for the protectionof cash using Smokenotes™ and operating using UHF transmitters) from the dateof completion until 31 March 2015, and royalty payments of 2.5 per cent. on allsales to an Eastern European Post Office, a leading supermarket chain andSafetell of the Existing Product Range (Secure Area System (SAS) a fixedinstallation system for the protection of cash using Smokenotes™ and operatingusing ultra low frequency transmitters) from the date of completion until 31March 2015. The Board are of the opinion that the revenue and profits derived from IBP arenot sufficient to fully offset the central costs associated with the Companybeing quoted on AIM. Disappointingly none of the major contract wins that theCompany has been targeting have come to fruition and as a result forecastrevenues are extremely weak. The Board are of the opinion that the Disposal andrelated Proposals represent the best chance for the Company to realise futurevalue for Shareholders. New Investing Policy If the Disposal is approved by Shareholders, SureTrack will have disposed ofall of its trading businesses. In this situation under Rule 15 of the AIM Rulesthe Company will be reclassified as an Investing Company. Under the AIM Rules,Investing Companies are required to adopt an Investing Policy that must beapproved by Shareholders. The Company's proposed new Investing Policy is to invest in and/or acquirecompanies and/or projects within the natural resources and/or agriculturesector with potential for growth. The Company will also consider opportunitiesin other sectors as they arise if the New Board considers there is anopportunity to generate an attractive return for Shareholders. The geographicalfocus will primarily be Africa, however, investments may also be considered inother regions to the extent that the New Board considers that valuableopportunities exist and returns can be achieved. In selecting investment opportunities, the New Board will focus on businesses,assets and/or projects that are available at attractive valuations and holdopportunities to unlock embedded value. Where appropriate, the New Board may seek to invest in businesses where it mayinfluence the business at a board level, add their expertise to the managementof the business, and utilise their significant industry relationships andaccess to finance. The ability to work alongside a strong management team tomaximise returns through revenue growth will be something the New Board willfocus upon initially. The Company's interests in a proposed investment and/or acquisition may rangefrom a minority position to full ownership and may comprise one investment ormultiple investments. The proposed investments may be in either quoted orunquoted companies; be made by direct acquisitions or farm-ins; and may be incompanies, partnerships, earn-in joint ventures, debt or other loan structures,joint ventures or direct or indirect interests in assets or projects. The NewBoard may focus on investments where intrinsic value can be achieved from therestructuring of investments or merger of complementary businesses. The New Board expects that investments will typically be held for the medium tolong term, although short term disposal of assets cannot be ruled out if thereis an opportunity to generate an attractive return for Shareholders. The NewBoard will place no minimum or maximum limit on the length of time that anyinvestment may be held. The Company may be both an active and a passiveinvestor depending on the nature of the individual investment. There is no limit on the number of projects into which the Company may invest,and the Company's financial resources may be invested in a number ofpropositions or in just one investment, which may be deemed to be a reversetakeover under the AIM Rules. The Directors intend to mitigate risk byappropriate due diligence and transaction analysis. Any transactionconstituting a reverse takeover under the AIM Rules will also requireShareholder approval. The New Board considers that as investments are made, andnew promising investment opportunities arise, further funding of the Companymay also be required. Where the Company builds a portfolio of related assets it is possible thatthere may be cross holdings between such assets. The Company does not currentlyintend to fund any investments with debt or other borrowings but may do so ifappropriate. Investments in early stage assets are expected to be mainly in theform of equity, with debt potentially being raised later to fund thedevelopment of such assets. Investments in later stage assets are more likelyto include an element of debt to equity gearing. The New Board may also offernew Ordinary Shares by way of consideration as well as cash, thereby helping topreserve the Company's cash for working capital and as a reserve againstunforeseen contingencies including, for example, delays in collecting accountsreceivable, unexpected changes in the economic environment and operationalproblems. Investments may be made in all types of assets and there will be no investmentrestrictions on the type of investment that the Company might make or the typeof opportunity that may be considered. The Company may consider possibleopportunities anywhere in the world. The New Board will conduct initial due diligence appraisals of potentialbusiness or projects and, where they believe further investigation iswarranted, intend to appoint appropriately qualified persons to assist. The NewBoard believes it has a broad range of contacts through which they are aware ofvarious opportunities which may prove suitable, although at this point onlypreliminary due diligence has been undertaken. The New Board believes itsexpertise will enable it to determine quickly which opportunities could beviable and so progress quickly to formal due diligence. The Company will nothave a separate investment manager. The Company proposes to carry out acomprehensive and thorough project review process in which all material aspectsof a potential project or business will be subject to rigorous due diligence,as appropriate. As an Investing Company, the Company will be required to make an acquisition oracquisitions which constitutes a reverse takeover under the AIM Rules orotherwise implement its proposed Investing Policy on or before the date fallingtwelve months from the Disposal and the adoption of the Investing Policyfailing which, the Company's Ordinary Shares would then be suspended fromtrading on AIM. In the event that the Company's Ordinary Shares are sosuspended and the Company fails to obtain Shareholders' consent to renew suchpolicy, the admission to trading on AIM would be cancelled six months from thedate of suspension. Subscription Under the terms of the Subscription Letters, the Subscribers have agreed tosubscribe for 250,021,404 Subscription Shares, in aggregate, at theSubscription Price, raising approximately £250,000 before expenses for thebenefit of the Company. The Subscribers will be issued with one SubscriptionWarrant for each Subscription Share and these warrants will be exercisable atthe Subscription Price for five years from the date of issue. The Subscription is conditional, inter alia, upon the passing of theResolutions and the admission of the Subscription Shares to trading on AIM.Accordingly, the Company has convened the General Meeting, notice of which isset out at the end of this document. The Subscription Shares, when issued and fully paid, will rank equally in allrespects with the New Ordinary Shares. The Subscription Warrants will not beadmitted to trading on any market but will be freely transferable. It is expected that Admission will become effective and dealings in theSubscription Shares will commence on or about 3 October 2013. Following the Subscription and Admission, the Company will have 306,276,755 NewOrdinary Shares in issue and admitted to trading on AIM. Terry Tyrell, a substantial shareholder of the Company, has agreed to subscribefor 20,000,000 Subscription Shares at the Subscription Price. Due to the sizeof Mr Tyrell's shareholding, his participation in the Subscription constitutesa related party transaction as defined by the AIM Rules. The directors of theCompany, having consulted with Sanlam Securities UK Limited, the Company'snominated adviser, consider that Mr Tyrell's participation in the Subscriptionis fair and reasonable insofar as Shareholders are concerned. Capital Reorganisation Prior to the proposed Capital Reorganisation, the Subscription Price would haveneeded to be 0.01p which is less than the current nominal value of the ExistingOrdinary Shares and under the Act a company cannot issue shares at a pricebelow their nominal value. In addition, the Company also currently has a largenumber of issued shares and the New Board believes that a CapitalReorganisation will reduce the number of shares to an amount more appropriatefor a company of SureTrack's size. This may assist in reducing volatility andaid future fundraisings. The Directors therefore propose to effect a CapitalReorganisation on the following basis: a. the Existing Ordinary Shares of 0.05p each will be consolidated into ordinary shares of 0.55p each at a ratio of 11 Existing Ordinary Shares for every 1 new ordinary share of 0.55p each; and b. each of the new ordinary shares of 0.55p each will then be subdivided into and reclassified as one Redenominated Share (being an ordinary share in the capital of the Company with a nominal value of 0.05 p each) and one Deferred Share (being a deferred share in the capital of the Company of 0.50 p nominal value). The Deferred Shares will carry negligible value and will not be admitted totrading. The Deferred Shares shall have limited rights, and shall be subject tothe restrictions, set out in the Company's articles of association. No sharecertificates will be in issued in respect of the New Deferred Shares. The Existing Ordinary Shares are currently admitted to CREST. Application willbe made for the Redenominated Shares arising from the Capital Reorganisation,to be admitted to CREST, all of which may then be held and transferred by meansof CREST. The record date of the Capital Reorganisation is 6.00 p.m. on 2October 2013. The rights attaching to the Redenominated Shares will be identical in allrespects to those of the Existing Ordinary Shares. New Board Conditional on Admission, Hamish Harris and Daniel Maling will be appointed tothe Board. Simon Barrell will remain on the Board and Brian Wise will resignfrom the Board, conditional on Admission. Following Admission, the New Boardwill consist of: Hamish Harris as Non-executive Director, Daniel Maling asNon-executive Director and Simon Barrell as Non-executive Chairman. Subject tothe Company's articles of association, Simon Barrell will remain on the Boarduntil such time as the new Investing Policy is implemented. Further informationon Hamish Harris and Daniel Maling is set out below. Hamish Hamlyn Harris (proposed Non-executive Director), aged 43, holds aBachelor of Commerce from the University of Tasmania. He has held positionswithin product control, market risk and risk management at a number offinancial institutions including Nomura Group, Dresdner Kleinwort Wasserstein,Deutsche Bank AG and Lloyds Banking Group plc. Hamish currently holds aposition with Nivalis Capital. He is currently a director of Marlin AtlanticFinance Limited and a Non-executive Director of AIM quoted Polemos plc and AIMquoted Doriemus plc. Daniel Maling (proposed Non-executive Director), aged 38, has over 15 yearssenior commercial management experience primarily in the oil and gas and miningsectors. He has worked with several AIM, ASX and TSX companies providingcorporate finance, business development, corporate strategy and investorrelations advice. Daniel was previously Business Development manager at AIMquoted mining investment house Cambrian Mining Plc before the group wasacquired by Walter Energy for $3.3bn in 2011 and has more recently beenretained by oil and gas clients Pura Vida Energy Plc (ASX- PVD) and MartResources (TSX-MMT). Daniel has a Bachelor of Commerce & Law and is a member ofthe Institute of Chartered Accountants in Australia. Notice of General Meeting A notice convening a General Meeting to be held at the offices of SanlamSecurities UK Limited, 10 King William Street, London EC4N 7TW at 9.00 a.m. on2 October 2013 has been dispatched to shareholders today. This Notice ofGeneral Meeting contains resolutions to give effect, inter alia, to theproposals set out above, which are conditional on the passing of theResolutions. Copies of the Shareholder Circular and Notice of General Meeting are availablefrom the Company's registered office and on the website www.suretrackgroup.com Enquiries: SureTrack Monitoring plc Simon Barrell - Executive Chairman Tel: 07850 934204 Sanlam Securities UK Limited (Nominated Adviser andBroker) Simon Clements - Corporate Finance Tel: 020 7628 2200 Catherine Miles - Corporate Broking Appendix 1 Expected timetable of principal events Posting of this document to Shareholders 10 September 2013 Latest time for receipt of Forms of Proxy for the 9.00 a.m. on 30 SeptemberGeneral Meeting 2013 General Meeting 9.00 a.m. on 2 October 2013 Record date for the Capital Reorganisation 6.00 p.m. on 2 October 2013 Admission effective and trading expected to 8.00 a.m. on 3 October 2013commence in the Redenominated Shares and theSubscription Shares CREST accounts credited with Subscription Shares 3 October 2013and Redenominated Shares Share certificates in respect of Subscription 16 October 2013Shares and Redenominated Shares expected to bedespatched by no later than (where applicable) Appendix 2 Definitions "Act" the Companies Act 2006 (as amended) "Admission" admission of the Subscription Shares to trading on AIM becoming effective in accordance with the AIM Rules "AIM" the AIM Market of London Stock Exchange "AIM Rules" the rules published by London Stock Exchange from time to time governing the admission to and operation of AIM "Capital Reorganisation" the proposed (a) consolidation of the Existing Ordinary Shares followed by the proposed (b) sub-division and (c) re-designation of those shares into New Ordinary Shares and Deferred Shares, further details of which are set out in the paragraph entitled "Background to and reasons for the Capital Reorganisation" in the Letter from the Chairman "Capital Reorganisation 6.00 p.m. on 2 October 2013 (or such later time andRecord Date" date as the Board may determine) "Company" or "SureTrack" SureTrack Monitoring plc, a public limited company registered in England and Wales under registered number 06214926 "Consideration" the consideration payable pursuant to the Sale and Purchase Agreement, details of which are set out in this document "CREST" the system for paperless settlement of trades and the holding of uncertificated shares administered through Euroclear UK & Ireland Limited "Deferred Shares" the new deferred shares of 0.50p each in the capital of the Company created pursuant to the Capital Reorganisation "Directors" or "Board" the existing directors of the Company as at the date of this document "Disposal" the proposed disposal of IBP pursuant to the Sale and Purchase Agreement "Enlarged Issued Ordinary the New Ordinary Shares in issue at AdmissionShare Capital" "Existing Ordinary Shares" the 618,808,861 issued ordinary shares of 0.05p each in the capital of the Company which will become 56,255,351 New Ordinary Shares pursuant to the Capital Reorganisation "Form of Proxy" the form of proxy accompanying this document for use in connection with the General Meeting "GM" or "General Meeting" the general meeting of the Company to be held at 9.00 a.m. on 2 October 2013, or any adjournment to that meeting "IBP" IBP Limited, a private limited company registered in England and Wales under registered number 02765423 "Investing Company" has the meaning described to the definition of "Investing Company" set out in the AIM Rules, that is, any AIM company which has as its primary business or objective, the investing of its funds in securities, businesses or assets of any description "Investing Policy" the investing policy proposed to be adopted by the Company at the GM, subject to shareholder approval at the GM "ISIN" International Securities Identification Number "London Stock Exchange" London Stock Exchange plc "New Board" Hamish Harris, Daniel Maling and Simon Barrell "Notice of GM" the notice of General Meeting which forms part of this document "Proposals" the proposed Disposal, the proposed Share Reorganisation, the proposed Subscription and implementation of the proposed Investing Policy "Purchaser" Nicholas Iain McDonald Steven and Helen Steven both of Danleys, River Hill, Binsted, Hampshire GU34 4QH "Redenominated Shares" or the ordinary shares of 0.05p each following the"New Ordinary Shares" consolidation, sub-division and reclassification of the Existing Ordinary Shares pursuant to the Capital Reorganisation "Resolutions" the resolutions set out in the Notice of GM at the end of this document "Sale and Purchase the conditional sale and purchase agreement dated 6Agreement" September 2013 between (1) SureTrack; (2) IBP; and (3) the Purchaser "Sanlam Securities" Sanlam Securities UK Limited, the Company's Nominated Adviser and Broker "Shareholders" holders of Ordinary Shares "Subscribers" the subscribers for New Ordinary Shares pursuant to the Subscription "Subscription" the Subscription by the Subscribers for the Subscription Shares "Subscription Share Price" 0.1p per New Ordinary Share "Subscription Shares" the 250,021,404 New Ordinary Shares to be issued by the Company pursuant to the Subscription "Subscription Warrants" the 250,021,404 warrants to subscribe for New Ordinary Shares at 0.1p per New Ordinary Share exercisable for five years to be issued by the Company pursuant to the Subscription * Ends -