10th May 2010 07:00
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO OR FROM JAPAN, CANADA OR AUSTRALIA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A BREACH OF THE RELEVANT SECURITIES LAWS OF SUCH JURISDICTION.
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For immediate release |
10 May 2010 |
TYRATECH, INC.
("TyraTech" or the "Company")
Proposed Subscription of Common Shares to raise £1m and up to a further £1.2m
Trading Update: Significant Terminix Order
TyraTech, Inc. (AIM: TYR), a leading independent novel pesticide company for human, animal and environmental health, announces that it is proposing to raise £1 million and up to a further£1.2 million before expenses by means of a subscription of new shares in the capital of the Company of $0.001 each (the "New Common Shares") at 9 pence per New Common Share (the "Issue Price") to provide additional working capital for the Company (the "Subscription").
Highlights
·; Subscription of New Common Shares at an Issue Price of 9 pence per share to raise £1 million and up to a further £1.2 million before expenses.
·; Net proceeds of the Subscription will be used to provide adequate working capital for the Company.
·; 300,000 unit order received from the Company's partner, Terminix, the largest professional pest control company in the world, for the Company's co-branded Terminix SafeShield™ product representing a step change in SafeShield™ product volume sales from 2009. Additional orders are expected in 2010.
·; Dr. Geoffrey Vernon steps down as non-executive director of the Company.
The Subscription is conditional, inter alia, on the Company passing a resolution in general meeting to permit the issue of the New Common Shares to Subscribers.
A Circular, providing Stockholders with information about the background to and the reasons for the Subscription and containing a notice convening a Special Meeting of the Company on 19 May 2010, was posted to Stockholders on 8 May 2010. At the Special Meeting Stockholder approval for Resolutions will be sought, inter alia, to enable the Company to complete the Subscription. Stockholders representing sufficient Common Shares to approve them have provided irrevocable undertakings to vote in favour of the Resolutions.
Alan Reade, Executive Chairman of the Company, commented: "Since joining TyraTech, the Company's management team have worked tirelessly to ensure the Company is well placed to leverage its unique technology platform and strengthen its partnerships and product offering. This approach has been validated by the significant product order from Terminix announced today and due to be shipped at the end of the month. In addition, today's fundraising will provide TyraTech with sufficient working capital to allow us to continue this positive momentum."
For further information please contact:
TyraTech, Inc.
Alan Reade, Executive Chairman +1 (321) 409 7724
Keith Bigsby, Chief Financial Officer +1 (321) 409 7714
www.tyratech.com
Nomura Code Securities Limited
Chris Collins and Richard Potts +44 (0) 20 7776 1200
www.nomuracode.com
Buchanan Communications
Lisa Baderoon, Catherine Breen +44 (0) 30 7466 5000
and Stasa Filiplic
www.buchanan.uk.com
This summary should be read in conjunction with, and is subject to, the full text of the attached announcement.
DISCLAIMER
Nomura Code Securities Limited is acting as nominated adviser and broker to the Company for the purpose of the AIM Rules. Nomura Code Securities Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for the Company in relation to the Subscription. Nomura Code Securities Limited is not acting for any other person in connection with the matters referred to in this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Nomura Code Securities Limited or for giving advice in relation to the matters referred to in this announcement.
This announcement has been issued by the Company and is the sole responsibility of the Company.
This announcement does not constitute a prospectus relating to the Company and has not been approved by the UK Listing Authority, nor does it constitute or form any part of any offer or invitation to purchase, sell or subscribe for, or any solicitation of any such offer to purchase, sell or subscribe for, any securities in the Company under any circumstances, and in any jurisdiction, in which such offer or solicitation is unlawful.
Proposed Subscription of New Common Shares to raise £1 million and up to a further £1.2 million and notice of Special Meeting
Introduction
Your Board announces that the Company is proposing to raise £1 million and up to a further £1.2 million before expenses by means of a subscription of New Common Shares to provide additional working capital for the Company. The Subscription is subject, inter alia, to the approval of Stockholders at the Special Meeting.
A further announcement will be made prior to the Special Meeting of the final size of the proposed Subscription.
A Special Meeting of the Company is being convened for 19 May 2010 at which Stockholders will be asked to consider and, if thought fit, pass the Resolutions including, inter alia, a resolution to enable the Company to issue the New Common Shares pursuant to the Subscription and to disapply Stockholders' pre-emption rights in respect of such shares.
SAM Sustainable Asset Management and PetroTech have given irrevocable undertakings to vote in favour of the Resolutions in respect of all Common Shares which they beneficially hold as at 8 May 2010 (amounting in aggregate to 12,072,390 Common Shares, representing approximately 55% of the issued and outstanding Common Shares) which assures both a quorum at the Special Meeting and the passing of the Resolutions.
Background to and Reasons for the Fundraising
The Directors believe that the Company made significant progress during 2009, reducing costs and focusing resources on building the long-term success of the current partnerships. On 4 January 2010, the Company appointed Alan Reade as its Executive Chairman. He led a review of the Company's commercialisation strategy and believes that the Company is well placed to leverage its technology platform and reinforce its partnerships and products for increased Stockholder value.
On 4 February 2010 the Company announced an expanded strategic relationship with Terminix. On 24 February 2010, the Company announced its unaudited preliminary results for the year ended 31 December 2009. In the chairman's statement and operational review Alan Reade noted that whilst the Company's cash balance was "lower than we would like and though we believe that this could be sufficient to fund the business through 2010 and beyond, the margin for slippage would be limited and the potential of the business may not be fully realised."
Whilst the Board believes that the business of the Group continues to perform broadly in line with expectations, it is aware, based on current cash flow forecasts and the likely timing of certain cash receipts due to be paid in June, that the Company's working capital headroom may fall to below £50,000 during the latter half of May.
Accordingly, the Board has decided to undertake the Subscription to provide adequate working capital for the Group. In addition, the Subscription will enable the Company to:
·; leverage the Company's existing partnerships to create new business opportunities;
·; develop relationships with new partners;
·; maintain the confidence of current and future partners in the Company;
·; improve the Company's negotiating position with new partners;
·; deliver improved value for the Company's Stockholders in the long term; and
·; provide greater security for the Company for the future.
Financial position of the Company
The Company's unaudited preliminary results for the year ended 31 December 2009 were announced on 24 February 2010 and can be found at www.tyratech.com.
The Directors believe that, based on current forecasts, following receipt of the net proceeds of the Fundraising, the Company will have adequate working capital to fund its operations. Based on these forecasts, the Directors anticipate that the Company will move to positive cash generation in the first half of 2011.
The achievability of these forecasts is dependent on a number of key assumptions, such as, in particular, increased market penetration with Terminix in 2010 and 2011 and the resulting sales increase and successful leveraging of the Company's products and technology into the US and potentially international markets. If the Company does not perform in line with these forecasts, the Company's cash resources may be absorbed earlier than anticipated.
Your attention is drawn to the section below headed "Litigation".
In the event that the Resolutions are not approved at the Special Meeting, the Subscription would not proceed and in some circumstances the Company might not have sufficient working capital to fund its operations. However, in light of the irrevocable undertakings received from certain Stockholders to vote in favour of the Resolutions amounting in aggregate to 12,072,390 Common Shares, representing approximately 55% of the issued and outstanding Common Shares, the Board is confident that the Resolutions will be passed at the Special Meeting.
Trading update
So far in 2010 the Company has successfully achieved two critical goals:
·; It has strengthened its commercial relationships with key partners - particularly Terminix and Kraft Foods Holdings, Inc.
·; It has significantly reduced its cost base in order to conserve cash.
The Company has received an order for 300,000 units of the Company's co-branded Terminix SafeShield™ product from Terminix, one of the largest professional pest control companies in the world. The Company has also expanded the partnership with Terminix into new areas and new and important markets such as USA consumer markets. This order is currently being fulfilled and represents a significant increase on the amount of Terminix SafeShield™ ordered in 2009, and additional orders are expected in 2010. The Company's partnership with Terminix requires that it supplies new products, for example other effective presentations and formulations, for new markets. The relationship with Kraft Foods Holdings, Inc. continues strongly. The Company has received the second payment under the revised contract announced in October 2009 reimbursing costs of the project incurred during 2010.
The Company's cost base has been cut to a level close to half of that incurred in 2009. Because of the current cash constraints, negotiations with new potential partners have been difficult and most have simply been put on hold until the Company can focus more on the strength of its products and less on the weakness of its balance sheet. Other important areas on hold include geographic expansion as the Company has had to freeze the European regulatory program.
In summary, given the circumstances, the Company is performing well. However, funding has to be made available to allow effective expansion in the Company's current market together with the creation of future value involving both products and geographic expansion.
Board changes
Dr. Geoffrey N. Vernon has resigned as a non-executive director of the Company. On behalf of the Board, Alan Reade would like to thank Dr. Vernon for his contribution to the development of TyraTech since the Company's admission to AIM in 2007 and wished him every success in his future endeavors.
Litigation
In November 2008, Molecular Securities, Inc. filed a complaint against the Company asserting claims for breach of contract and quantum merit. Molecular Securities, Inc. alleges that it is owed $2.7 million for services that it allegedly provided to the Company plus interest, attorneys' fees and costs. This claim is being contested in court and the Company expects the claim to be resolved in 2010.
Whilst the Directors believe that the Company will successfully defend itself in the lawsuit there can be no assurance that this will be the case. If Molecular Securities, Inc were to prevail in some or all of its claim against the Company, there could be a material adverse effect upon the Group's working capital and the Company might have insufficient funds to meet such a claim.
Subscription
Conditional inter alia on the passing of the Resolutions, Subscribers may subscribe pursuant to the Subscription for up to 24,444,444 New Common Shares to raise up to £2.2 million before expenses. Subscriptions have so far been received in respect of 11,113,604 New Common Shares conditionally raising £1,000,224 million before expenses.
The New Common Shares subscribed pursuant to this Subscription will be subject to a six month lock-in. The lock-up includes, conventional exceptions including inter alia, transfers or disposals, within the lock-up period in the following circumstances:
a) in acceptance of a general offer or merger proposal for the share capital of the Company;
b) acceptance of a tender offer made available to all holders of issued shares on a common basis;
c) a transfer pursuant to a plan of merger or reconstruction approved by the Company's shareholders or, if applicable, a majority of independent shareholders;
d) any intra-group transfer or disposal within the same corporate group or funds under common management or amongst immediate family members provided that the transferee has previously executed a binding commitment in favour of the Company to be bound by the terms of this paragraph as if they were the Subscriber for the duration of the Lock-up Period.
Pursuant to the Subscription, Alan Reade has subscribed for 3,690,249 New Common Shares, Barry Riley has subscribed for 1,255,555 New Common Shares and Patrick Regan has subscribed for 566,893 New Common Shares. Alan Reade, Barry Riley, and Patrick Regan are Directors of the Company.
Eugene Grin has subscribed for 2,267,574 New Common Shares pursuant to the Subscription. Eugene Grin is a director of PetroTech and a founder of Laurus.
Further details regarding the Subscription and the Subscribers are set out in Part II of this document.
Related Party Transaction
Certain actual and intended Subscribers under the Subscription constitute related parties for the purposes of Rule 13 of the AIM Rules. These related parties comprise Alan Reade, Barry Riley and Patrick Regan, each of whom is a Director of the Company, and SAM Sustainable Asset Management.
The Independent Directors consider, having consulted with Nomura Code, the Company's nominated adviser, that the terms of these related party transactions are fair and reasonable insofar as Stockholders are concerned.
Stockholder Approval and notice of Special Meeting
The Subscription is subject, inter alia, to Stockholders passing a resolution to enable the New Common Shares to be issued pursuant to the Subscription. A resolution will be proposed at the Special Meeting for this purpose.
The Special Meeting is to be held on 19 May 2010 at the offices of TyraTech, 1901 S. Harbour City Blvd., Suite 400, Melbourne, Florida 32901, USA at 11.00 a.m. (EDT).
The Resolutions to be proposed at the Special Meeting will, if passed, provide for the following:
1. The amendment of the Company's Certificate of Incorporation to enable (A) the issue of up to 24,444,444 New Common Shares in connection with the Subscription; (B) the issue of Common Shares for cash in the 12 month period following Admission representing up to ten percent (10%) of the issued and outstanding shares of the Company assuming a maximum issuance of shares pursuant to the Subscription; and (C) the issue of warrants to subscribe for 555,556 Common Shares to satisfy fees payable to Nomura Code.
2. The amendment of the Company's Bylaws to reduce the quorum requirement for Stockholder meetings from holders of a majority of the shares entitled to vote to one third of such shares.
Irrevocables and Directors' Votes
SAM Sustainable Asset Management and PetroTech have given irrevocable undertakings to vote in favour of the Resolutions in respect of all Common Shares which they beneficially hold as at the date of this document (amounting in aggregate to 12,072,390 Common Shares, representing approximately 55% of the issued and outstanding Common Shares). These irrevocable undertakings represent a sufficient number of Common Shares to pass the Resolutions at the Special Meeting.
The Directors, whose beneficial or controlled holdings collectively total 1.1% of the issued and outstanding Common Shares also intend to vote in favour of the Resolutions at the Special Meeting.
Appendix 1
FUNDRAISING STATISTICS
Issue Price 9p
Number of Common Shares in issue at the date of this document 22,000,022
Minimum number of New Common Shares 11,113,604
Maximum number of New Common Shares 24,444,444
Minimum Enlarged Issued Share Capital 33,113,626
Maximum Enlarged Issued Share Capital (1) 46,444,466
Minimum gross proceeds of the Subscription £1 million
Maximum gross proceeds of the Subscription £2.2 million
(1) Assuming the maximum number of New Common Shares are issued.
For the purposes of determining the Issue Price any subscription monies paid in US dollars will be converted into pounds sterling at an exchange rate of 1.47 as published in the London edition of the Financial Times on 7 May 2010.
Appendix 2
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
2010
Date of the Circular and posting of the Form of Proxy 8 May
Latest time and date for receipt of completed Form of Proxy 11.00a.m. (EDT) on 17 May
Special Meeting 11.00a.m. (EDT) on 19 May
The results of the Special Meeting and Subscription announced by way of a Regulatory Information Service 19 May
Admission and commencement of dealings on AIM of the New Common Shares 20 May
Despatch of definitive share certificates for the New Common Shares by 3 June
The times and dates in the above timetable may be subject to change. If any of the above times and/or dates change, the revised times and/or dates will be notified to Stockholders by announcement on a Regulatory Information Service.
Appendix 3
DEFINITIONS
The following definitions apply throughout this announcement, unless the context requires otherwise:
"£", "p" and "pence" the lawful currency of the United Kingdom
"Admission" the admission of the New Common Shares to trading on AIM becoming effective pursuant to paragraph 6 of the AIM Rules
"AIM" the AIM market operated by the London Stock Exchange plc
"AIM Rules" the AIM Rules for Companies published by the London Stock Exchange plc, as in force at the date of this document
"Bylaws" the Company's amended and restated bylaws
"Certificate of Incorporation" the Company's amended and restated certificate of incorporation, as further amended on 18 August 2008
"Circular" the shareholder circular dated 8 May 2010 incorporating the notice of Special Meeting
"Common Shares" common shares of $0.001 per share each in the capital of the Company
"Company" or "TyraTech" TyraTech, Inc. whose registered office address is 1209 Orange Street, Wilmington, Delaware, 19801, USA
"Directors" or the "Board" the board of directors of the Company as at the date of this document
"EDT" Eastern Daylight Time
"Enlarged Issued Share Capital" the issued common share capital of the Company as enlarged following the Subscription (which for the avoidance of doubt assumes the that no Common Shares are in issue as a result of the exercise of options granted under the option schemes or of any warrant issued by the Company)
"Group" the Company and its subsidiaries
"Independent Directors" Independent Directors of the Company, being Kenneth Daniel Noonan and Keith Edward Bigsby
"Issue Price" 9 pence per New Common Share
"Laurus Valens Master Funds"
and "Laurus" certain funds managed by Laurus Venture Capital Management, LLC and Valens Capital Management, LLC
"New Common Shares" the new Common Shares in the capital of the Company to be issued pursuant to the Subscription
"Nomura Code" Nomura Code Securities Limited
"PetroTech Holdings Corp." PetroTech Holdings Corp., a Delaware corporation owned collectively by Laurus
"Regulatory Information Service" a service approved by the London Stock Exchange for the distribution to the public of AIM announcements and included within the list maintained on the London Stock Exchange's website, www.londonstockexchange.com
"Resolutions" the resolutions set out in the notice of Special Meeting incorporated in the Circular
"SAM Sustainable Asset Management" JB Multipartner SICAV and SAM Sustainable Water Fund
"Special Meeting" the special meeting of TyraTech convened for 11.00 a.m. (EDT) on 19 May 2010 (or any adjournment thereof), notice of which is incorporated in the Circular
"Stockholders" holders of Common Shares
"Subscribers" the persons who agree to subscribe for New Common Shares pursuant to the Subscription
"Subscription" the subscription for the New Common Shares at the Issue Price
"Terminix" Terminix International Company L.P. whose business address is 860 Ridge Lake Boulevard, Memphis, Tennessee, USA
"United Kingdom" and "UK" the United Kingdom of Great Britain and Northern Ireland
"US", "USA" and the United States of America, each state thereof, its
"United States of America" territories and possessions, and all areas subject to its jurisdiction
"US$", "$" and "cents" the lawful currency of the United States of America
Related Shares:
Tyratech