Fundraising Announcement

24th Sep 2009 17:08



24 September 2009

For immediate release

Lombard Risk Management plc

('LRM' or the 'Company')

Proposed Placing to raise £ 1.8 million

Annual results

Repayment and capitalisation of Directors' loans

Notice of Extraordinary General Meeting

Fundraising

Lombard Risk Management plc, the second largest global provider of specialised software solutions that improve the management of collateralised trading and regulatory compliance announces today that it is planning to raise £1.8 million (before expenses) through a conditional placing of 45 million new Ordinary Shares ("Placing Shares") with certain institutions and other investors at 4 pence per Placing Share ("Placing Price") subject to approval by shareholders at an Extraordinary General Meeting to be held on Monday 19 October 2009.

It is intended that net proceeds from the proposed Placing will be used to fund additional working capital for the Company to enable it to execute its strategy, including funding the working capital requirements of potential contract wins and to repay, in part, directors' loans. Unpaid amounts of directors loans will be capitalised. This will remove £1.6 million of debt from the Company's balance sheet and no directors loans will remain outstanding.

The Company also announces its final results for the financial year ended 31 March 2009 in the accompanying announcement. A Notice of the Extraordinary General Meeting of the Company, will be posted to shareholders today and is available free of charge for a period of one month at the Company's registered office, 1st Floor, India House, Curlew Street, London SE1 2ND 

John Wisbey, Chairman and Chief Executive, commented: "This is a very significant milestone in the development of the Company. LRM emerges from this placing with a stronger debt-free balance sheet and a set of first class institutional shareholders. We have considerable opportunities for organic growth in the collateral management area following a major Tier 1 German bank contract signed earlier this year, and in the regulatory compliance area there is a very large opportunity owing to the move by the FSA and other regulators away from light touch regulation, starting in the UK with Liquidity Reporting. This Placing ensures that we have the means to execute our strategy in these areas well and aggressively." 

One consequence of the Placing is that my own shareholding will fall slightly below 50%. In these circumstances and as the Company expands, it is entirely appropriate that we split the Chairman and Chief Executive roles, and we will be looking to make an appointment of an independent non-executive Chairman. This follows the recent appointment of Keith Butcher as Finance Director." 

Director loans and related party transaction

As previously announced, certain Directors have made loans or loan facilities available to the Company totalling £1,780,000 of which  £1,600,000 is currently outstanding and a former director has lent a further £30,000 which remains outstanding (together the "Loans").

Following the Proposed Placing the unused loan facilities will be withdrawn and the Loans, which bear interest at 1% per month on drawn amounts only, will be capitalised by issuing to the Directors and the former Director a total of 25,750,000 new ordinary shares ("Capitalisation Shares") as the Placing Price or repaid as follows:

	Pre Placing				Post Placing
	Number of shares held	% holding		Loan Repayment		Loan Capitalisation	Subscriptions for shares in the Placing	Number of shares held	% holding
John Wisbey 1	81,889,562	60.13%		400,000		19,750,000		101,639,562	49.12%
Ian Peacock	1,088,532	0.80%		0		250,000	250,000	1,588,532	0.77%
Brian Crowe	625,000	0.46%		200,000		5,000,000		5,625,000	2.72%
Keith Butcher							1,250,000	1,250,000	0.6%
	83,603,094	61.39%		600,000		25,000,000		110,103,094	53.21%
Michael Thomas 2	7,958,360	5.84%				750,000			4.21%
	91,561,454	67.24%		600,000		25,750,000	1,500,000	118,811,454	57.42%

77,939,562 shares are owned directly. In addition John Wisbey is a beneficiary of Advanced Technology Trust which owns a further 3,950,000 shares. The new shares will be subscribed by Advanced Technology Trust, taking its holding up to 23,700,000 shares.

Michael Thomas is a former director of the Company

The Board, with the exception of John Wisbey, Ian Peacock and Brian Crowe (all of whom are related parties under the AIM Rules), and having consulted with Noble & Company Limited, considers the terms of the repayment and capitalisation of the Loans and the subscription of new Shares by certain of the Directors to be fair and reasonable, insofar as the Company's shareholders are concerned. 

Current trading and prospects

There has been continued strong demand by banks for collateral management products and likely further changes in bank regulation in 2009 will create ongoing commercial opportunities despite the global downturn. The cost cutting measures implemented in late 2008, should ensure that the business is cash generative again during FY 2010. The Directors believe that the proposed Placing and capitalisation of directors loans after the financial year end combined with good commercial prospects leave the Company well placed for the next few years.

Results

The Company has today announced its final results for the year to 31 March 2009 ("Results"). Copies of the Report and Accounts, together with notice of the Annual General Meeting, are expected to be posted to shareholders shortly. 

Details of the Placing

The Company announced today that it intends to raise approximately £1.8 million, before expenses, through the issue of 45 million new Ordinary Shares at the Placing Price pursuant to the Placing.

The Placing Price represents a discount of approximately 41 per cent. to the closing mid-market price of 6.75 pence per Ordinary Share as at 23 September 2009, the latest practicable date prior to the announcement of the Placing. The Placing Shares will, when issued, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive dividends and other distributions declared following Admission.

The Placing Shares will represent approximately 21.75 per cent. of the share capital of the Company as enlarged by the issue of the Placing Shares and the Capitalisation Shares. The Placing is being made on a non pre-emptive basis as the time and costs associated with a pre-emptive offer which would require the preparation and approval by the FSA of a full prospectus are considered by the Directors to be excessive.

Application will be made by the Company for the Placing Shares and Capitalisation Shares ("New Ordinary Shares") to be admitted to trading on AIM. Subject to completion of the Placing, it is expected that the New Ordinary Shares will be admitted to trading on AIM and that dealings in the New Ordinary Shares will commence at 8.00 a.m. on 23 October 2009.

The issue of the New Ordinary Shares is conditional, inter alia, upon:

the approval of  an ordinary and a special resolution at the EGM of the Company to authorize the Directors to allot the New Ordinary Shares ("Resolutions");

the Placing Agreement becoming unconditional in all respects and not having been terminated in accordance with its terms; and

Admission;

in each case by no later than 8.00 a.m. on 23 October 2009 (or such later time and date as the Company and Noble may agree, being not later than 7 November 2009).

Pursuant to the terms of the Placing Agreement, Noble has conditionally received commitments , as agent for the Company, to place the Placing Shares at the Placing Price with certain institutional and other investors, subject to shareholder approval,. The above obligations are subject to certain conditions including those listed above.

The Placing Agreement contains warranties given by the Company with respect to its business and the Group and certain matters connected with the Placing. In addition, the Company has given certain indemnities to Noble in connection with the Placing and Noble's performance of services in relation to the Placing. Noble is entitled to terminate the Placing Agreement in specified circumstances.

General Meeting and action to be taken

A notice convening an Extraordinary General Meeting to be held at the offices of Memery Crystal LLP at 44 Southampton Buildings London WC2A 1AP at 10am. on Monday 19 October 2009 will be sent to shareholders today. The resolutions to be proposed at that meeting are to authorise the Directors generally to allot shares in the Company and to further authorise the Directors to allot equity securities for cash and to do so otherwise than in accordance with the statutory pre-emption provisions, as set out in the Companies Act, in connection with the Placing and otherwise.

Venture Capital Trust ("VCT") 

The Company has received confirmation from Her Majesty's Revenue & Customs that the Company is a qualifying holding under the VCT legislation.

The availability of tax reliefs under the VCT legislation will depend, inter alia, upon the investor and the Company satisfying certain qualifying conditions, some of which must be satisfied for a future period of not less than three years. The Company cannot guarantee that it will conduct its activities so as to maintain its status under the VCT legislation, although the Directors do intend to do so in so far as possible.

This document does not constitute tax advice. Investors should consult appropriate professional advisers.

-ends-

Enquiries:

Lombard Risk Management plc

John Wisbey, Chairman & CEO

Tel: 020 7089 3700

E: [email protected]

Noble & Company Limited

Brian Stockbridge, Associate Director

Tel: 020 7763 2200

City Profile 

William Attwell

Tel: 020 7448 3244

DEFINITIONS

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

"Admission"	admission of the New Ordinary Shares to trading on AIM becoming effective in accordance with the AIM Rules;
"AIM"	AIM, a market regulated by the London Stock Exchange;
"AIM Rules"	the rules for AIM companies and their nominated advisers published by the London Stock Exchange governing admission to and the operation of AIM (as amended from time to time);
"Companies Act"	the Companies Act 1985 (as amended) or the Companies Act 2006 to the extent in force at the relevant time;
"Company"	Lombard Risk Management plc, a company incorporated and registered in England and Wales with company number 03224870 ;
"CREST"	the United Kingdom paperless share settlement system of which Euroclear UK & Ireland Limited is the Operator (as defined in the Uncertificated Securities Regulations 2001 (SI 2001/3755));
"Directors"	the directors of the Company;
"Enlarged Share Capital"	the Company's issued share capital as enlarged by the Placing Shares and the Ordinary Shares issued on capitalisation of the Directors' Loans;
"Existing Ordinary Shares"	the existing Ordinary Shares in issue at the date of this document, prior to the Placing;
"Form of Proxy"	the form of proxy for use by Shareholders in connection with the General Meeting;
"FSA"	the UK Financial Services Authority;
"Exraordinary General Meeting" or "EGM"	the Extraordinary General Meeting of the Company to be held at the offices of Memery Crystal LLP at 44 Southampton Buildings London WC2A 1AP on 19 October 2009, to be contained in the circular to Shareholders;
"Group"	the Company and its subsidiaries from time to time;
"London Stock Exchange"	London Stock Exchange plc;
"Noble"	Noble & Company Limited;
"Ordinary Shares"	the ordinary shares of 0.5 pence each in the capital of the Company;
"Placing Agreement"	the conditional agreement dated 24 September 2009 between Noble and the Company, relating to the Placing;
"Placing Price"	4 pence per Placing Share;
"Placing"	the proposed placing by Noble, as agent for the Company, of the Placing Shares at the Placing Price on the terms of the Placing Agreement;
"Placing Shares"	45 million new Ordinary Shares to be allotted on the terms of the Placing Agreement;
"Resolutions"	the resolutions to be proposed at the EGM, as set out in the notice of EGM;
"Shareholders"	holders of Ordinary Shares at the date of this announcement;
"UK"	the United Kingdom of Great Britain and Northern Ireland.

ENDIOEILFIRAVISFIA

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Related Shares:

Lombard Risk Management