13th Jul 2010 07:00
THE INFORMATION CONTAINED HEREIN IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, TO ANY PERSON IN THE UNITED STATES. THIS ANNOUNCEMENT DOES NOT CONTAIN OR CONSTITUTE AN OFFER OF, OR THE SOLICITATION OF AN OFFER TO BUY OR SUBSCRIBE FOR, SECURITIES TO ANY PERSON IN AUSTRALIA, JAPAN, CANADA OR THE UNITED STATES OR IN ANY JURISDICTION TO WHOM OR IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE US SECURITIES ACT OF 1933, AS AMENDED (THE "US SECURITIES ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION UNDER THE US SECURITIES ACT OR AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE US SECURITIES ACT. SUBJECT TO CERTAIN EXCEPTIONS, THE SECURITIES REFERRED TO HEREIN MAY NOT BE OFFERED OR SOLD IN AUSTRALIA, CANADA OR JAPAN OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY NATIONAL, RESIDENT OR CITIZEN OF AUSTRALIA, CANADA OR JAPAN. THERE WILL BE NO PUBLIC OFFER OF THE SECURITIES IN THE UNITED STATES.
Monitise plc
Monitise accelerates growth
Equity fundraising to raise £32.4 million (gross)
Pre-close trading update
Strengthening of Global Alliance Agreement with Visa
Appointment of new Board Member
London, UK, 13 July 2010 - Monitise plc, (LSE: MONI) ("Monitise" or the "Company" and, together with its group undertakings, the "Group") the mobile money specialists, today announces that it is raising £32.4 million (approximately £31 million net of expenses) at an issue price of 20.75p per new ordinary Monitise share of £0.01 each, ("New Ordinary Shares"), (the "Issue Price"), in aggregate, through a fully underwritten placing of £23.6 million (the "Placing") and a subscription of £6.6 million by Visa International Service Association ("Visa"), a subsidiary of Visa Inc., and £2.1 million by First Eastern (Holdings) Limited ("First Eastern"), part of the First Eastern Investment Group, (the "Subscriptions"), (together, the "Fundraising"). Following completion of the Subscriptions, Visa's shareholding in Monitise will increase to 14.4 per cent.
Alongside a pre-close trading update for the year ended 30 June 2010, the Company also announces today the extension and strengthening of its Global Alliance Agreement with Visa and the proposed appointment of Elizabeth Buse, Group Executive, International, for Visa Inc., to its Board of Directors.
A shareholder circular to be issued by the Company and containing details of the Fundraising is expected to be posted to shareholders shortly (the "Circular").
Highlights
·; The Fundraising will raise, in aggregate, £32.4 million before expenses (approximately £31 million after expenses).
·; Issue Price of 20.75p per share, equal to the closing bid price of 20.75p, and a 1.2% discount to the closing mid-market share price of 21p on 12 July 2010.
·; Subscription for 32,000,000 New Ordinary Shares (£6.6 million) by Visa and 10,000,000 New Ordinary Shares (£2.1 million) by First Eastern. Following completion of the Subscriptions, Visa's shareholding in Monitise will increase to 14.4 per cent.
·; Placing of 113,971,200 New Ordinary Shares with new and existing institutional investors. The Placing was oversubscribed, with strong support from institutional investors.
·; The Placing has been fully underwritten by Evolution Securities Ltd. ("Evolution") and Piper Jaffray Ltd. ("Piper Jaffray").
·; Funds raised of £31 million (net of expenses), together with the Group's cash balance of approximately £13 million at 30 June 2010, will enable the Group to become cash generative without the need for further equity funding.
·; Unaudited revenues for the year ended 30 June 2010 (FY10) estimated to be approximately £6 million, an increase of 120% from £2.7 million in FY09.
·; Unaudited revenues in the second half of FY10 estimated to be £4.3 million, an increase of 170% from £1.6 million in the second half of FY09. Transactional revenues, in particular, are growing rapidly.
·; Further strengthening of Monitise's existing strategic partnership with Visa through a one year extension of the five year Global Alliance Agreement with Visa to 2015 and an increase in the minimum fee commitment to US$16 million.
·; Appointment of Elizabeth Buse, Group Executive, International, for Visa Inc., to the Monitise Board of Directors with effect from completion of Visa's subscription.
Alastair Lukies, Chief Executive Officer, Monitise, commented:
"When Monitise was founded, the concept of using a mobile phone for banking and payment transactions was in its infancy. Since then, Monitise has worked tirelessly and invested heavily in both its market leading platform and inclusive business model. It is therefore hugely exciting and energising that the mobile money market globally is now taking off and accelerating fast. Monitise is very fortunate to have some of the world's leading companies in the banking, payments and mobile industries as our partners. It is our full intention to execute on the opportunity before us, creating value for our customers, partners and shareholders alike."
Financial highlights for the Year Ended 30 June 2010
(full pre-close trading update provided below)
Financial highlights
Full year unaudited revenues for the year are estimated to be approximately £6 million, an increase of 120% from £2.7 million in FY09. Monitise continues to perform well with revenues in the second half of FY10 estimated to be £4.3 million, an increase of 170% from £1.6 million in the second half of FY09 and 150% from £1.7 million in the first half of FY10.
Transactional revenues, in particular, are growing rapidly. Transactional revenues for FY10 are estimated to be £2.9 million, representing an increase of 480% from £0.5 million in FY09, and transactional revenues in the second half of FY10 are estimated to be £2.1 million, 2.6 times the transactional revenues in the first half of FY10 and a six fold increase on the second half of FY09. Transactional revenues are expected to continue to represent a growing proportion of total revenues in the current and future years.
The increase in revenues in the second half of FY10 from our existing live services has resulted in a reduction in those businesses' operating losses. Cost levels in the second half of the year reflect increased investment in the technology platform and in our new joint ventures. However this increase in investment has been broadly offset by the reduction in live services' operating losses.
Cash balances across the Group were approximately £13 million at 30 June 2010.
Current trading
Monitise's customer base continues to grow rapidly. The Company currently has in excess of 2 million registered customers in the UK and the USA, having more than doubled the number of registered customers since October 2009.
In FY10 there has been strong demand for the higher value services, driven in part by the launch of the Company's smartphone apps. in the UK in November 2009. This has meant an increase in share for the "advanced" segment of our customer base, now at 25% of total registered customers, with an accompanying impetus to both revenues and underlying gross margin.
Duncan McIntyre, Chairman, Monitise, added:
"This is a very exciting time for Monitise. On the first anniversary of signing our Global Alliance Agreement, we are delighted with the continued strengthening of our strategic partnership with Visa. The continued investment by Visa and First Eastern and the fully underwritten Placing announced today will enable Monitise to continue our strategy of developing our global franchise and expanding services in target markets as well as realising in full the opportunities created by our commercial and strategic relationship with Visa and our other partners. In addition, we are delighted at the prospect of Elizabeth Buse, Group Executive, International, for Visa Inc. joining the Monitise Board of Directors."
Background to and reasons for the Subscriptions and the Placing
Monitise has live operations in the UK and the USA with an active global alliance with Visa. Monitise is also actively developing a number of other investment areas. The UK business of Monitise, part of Monitise Europe, is expected to reach month-on-month cash break-even by December 2010. All these existing live operations are expected to reach cash break-even during or before FY12.
Whilst none of these existing live operations are expected to require significant further investment, the Company has invested, and will continue to do so, in new territories and opportunities. Most recently it has entered into joint venture agreements with local and international partners to develop the Asia Pacific and Indian regions and expects to conclude ongoing discussions in respect of certain African territories later this year.
The funds now being raised through the Fundraising will allow appropriate investments to be made into these new ventures and enable the Group to capitalise on the progress that it has made to date. It is important, in particular, to maintain the technological advantage that Monitise currently enjoys and also for the Group to be able to demonstrate the financial strength which can be critical in securing the best possible commercial terms with future partners. A strengthened balance sheet as a result of the Fundraising will provide the Group with a degree of flexibility as it pursues its growth strategy.
Furthermore, the Fundraising has provided the opportunity for the Group to further develop its relationship with Visa as described below. When the Global Alliance Agreement was originally announced, Visa entered into an agreement to subscribe for Ordinary Shares following which Visa owned 14.4% of the issued share capital of Monitise. This shareholding fell to 12.6% in April 2010 when Monitise issued Ordinary Shares to certain companies within the First Eastern Investment Group and UBS Global Asset Management (UK) Ltd in connection with the entering into by the Company and FE Mobile Investments Limited of the Asia Pacific Joint Venture. Visa now wishes to restore its proportional shareholding in the Company to 14.4%.
The Board believes that, together with the Group's cash balances of approximately £13 million at 30 June 2010, the net proceeds from the issue of the Placing Shares and the Subscription Shares will enable the Group to become cash generative without the need for further equity funding.
The Fundraising is being made on a non pre-emptive basis because the time and costs associated with the additional regulatory and disclosure requirements of making a pre-emptive offer to all Shareholders are considered by the Board to be excessive in these circumstances. Moreover, the Issue Price of 20.75p, which is equal to the closing bid price of 20.75p, is at a 1.2% discount to the closing mid-market price of 21p on 12 July 2010 and therefore does not represent significant value dilution for existing shareholders. The making of a pre-emptive offer would require the production of a prospectus which would have to comply with the Prospectus Rules and be pre-vetted and approved by the Financial Services Authority.
The Board believes, having been advised by Evolution Securities and Piper Jaffray, that the Issue Price represents the best price reasonably obtainable from investors and placees.
Strategy of the Group and use of proceeds
Monitise's Mobile Money Manager platform has been designed to enable banking anywhere and everywhere in the world. Our aim is to be the platform of choice for banking and other financial institutions throughout the world. Having established itself and proven the technology in the UK and US markets, Monitise's strategy is to continue to invest in its technology and to expand its reach, initially into other markets with high growth potential, by working with local and international partners who can provide both the local infrastructure and the international functionality which are necessary in new markets.
The net proceeds of £31.0 million to be raised pursuant to the Fundraising together with the Group's existing cash resources which were approximately £13 million as at 30 June 2010, will be used to enable Monitise to retain and extend its technological advantage, to fund investment in new areas of operation and to provide funding for ongoing growth through to cash generation for the Group, as follows:
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Retain /extend technological advantage |
£20 million* |
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Manage business growth (central costs) |
£11 million* |
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Fund Asia Pacific and India joint ventures |
£6 million |
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Fund new investments in line with Company strategy |
£7 million |
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£44 million |
* Spend in addition to re-investment of cashflows expected from current operations.
Strengthening of Global Alliance Agreement (GAA) with Visa
Monitise announced its GAA with Visa on 30 June 2009. This five year agreement, which currently has minimum fees payable to Monitise by Visa under it of US$13 million, combines Visa's reach, payments expertise and brand with the Monitise Mobile Money Manager platform and toolkit.
On 26 May 2010 Monitise and Visa announced their 50/50 joint venture in India.
To build on this strengthening relationship, Monitise has reached an agreement with Visa to extend the five year term of the GAA by an additional one year to June 2015, at the same time increasing the minimum fees payable to Monitise by Visa under the GAA from US$13 million to US$16 million.
In addition, Monitise has agreed to grant Visa an exclusive licence for deployment of its Mobile Money Manager platform in Russia and Mexico for a licence fee of US$1.5 million, expected to be accounted for in FY11.
Monitise remains a key strategic development partner for Visa's suite of mobile services, which include payments, mobile money transfers, mobile transaction alerts and mobile marketing offers to support Visa's mobile strategy.
Appointment of new Board member
Monitise is very pleased that Elizabeth Buse is proposed to join its Board with effect from completion of the Visa Subscription and subject to agreement of a letter of appointment with the Company.
Elizabeth Buse, 49, is currently a member of the Executive Team and the Group Executive, International, for Visa Inc. with responsibility for overseeing Visa's global sales and client service functions across Asia-Pacific, Central Europe, the Middle East and Africa.
Previously, Elizabeth was the global head of product for Visa Inc., leading all aspects of product strategy, development and growth. Prior to assuming the role of global head of product, Elizabeth was executive vice president of product development and management for Visa USA.
Elizabeth Buse, Group Executive, International, for Visa Inc, commented:
"As the momentum continues for mobile money services across the globe the opportunity for Visa remains significant as we continually look for new ways to innovate and bring the benefit of Visa electronic payments to more people in more places. With the continued investment and strengthening of our strategic relationship with Monitise this ensures Visa remains at the forefront of this momentum and demonstrates our ambition to provide Visa mobile services to our customers in key markets around the world."
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Enquiries:
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Monitise plc |
Tel: 020 7947 4300 |
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Alastair Lukies, CEO |
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John Brougham, CFO Tom Spurgeon, Finance Director |
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Evolution Securities Limited (NOMAD, Joint Financial Adviser and Joint Broker) |
Tel: 020 7071 4300 |
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Tim Worlledge / Jeremy Ellis / Tim Redfern
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Piper Jaffray Ltd. (Joint Financial Adviser and Joint Broker) Jamie Adams / Eric Sanschagrin |
Tel: 020 3142 8700 |
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Financial Dynamics |
Tel: 020 7831 3113 |
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Juliet Clarke / Haya Herbert-Burns / Erwan Gouraud |
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Evolution Securities Limited (as the Company's nominated adviser, joint financial adviser and joint broker) and Piper Jaffray Ltd. (as the Company's joint financial adviser and joint broker) are acting for the Company in relation to the proposed Subscriptions and Placing and will not be responsible to anyone else for providing the protections afforded to its customers nor for providing advice in relation to the proposed Issue or any other matters described in this announcement.
This announcement has been issued by Monitise plc and is the sole responsibility of Monitise plc.
Definitions used in this announcement will have the same meaning as those used in the Circular, unless the context requires otherwise.
The distribution of this announcement in certain jurisdictions may be restricted by law and such distribution could result in violation of the laws of such jurisdictions. In particular, this announcement is not for distribution in the United States, Australia, Japan or Canada.
This announcement may contain forward-looking statements that reflect the Group's current expectations regarding future events. Forward-looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein and depend on a number of factors.
Information on Monitise
Overview of the Group
Monitise is one of the world leaders in mobile financial transactions. The Monitise Mobile Money Manager platform enables financial institutions and other organisations to offer mobile financial services to their customers simply and securely and enables their customers to manage their money and make payments, in both developed and developing countries, whether they have access to bank accounts or not.
Monitise's offerings range from "essential" services, such as text messages to provide weekly balance updates, account alerts, account balances and mini statements, to higher value "advanced" services providing real-time mini statements and balance enquiries, usage history, inter-account transfers, pre pay top-up and payments.
Monitise has live services in the UK and the USA, where it is in partnership with FIS. Monitise is also developing mobile money services in high growth potential markets globally and broadening its product range in its live markets.
Monitise has over 200 financial institutions signed up, with in excess of 2 million registered customers in the UK and the USA. Its services include mobile money management, payments and mobile top-ups using a choice of smart, easy to use interfaces including mobile apps, browser and text message delivery.
Current key partners of Monitise include Visa, FIS, VocaLink, the First Eastern Investment Group, HSBC, Lloyds Banking Group, Royal Bank of Scotland Group, Travelex, Vodafone, Orange, O2 and 3 UK.
For more information visit www.monitisegroup.com.
Pre-close trading update for year ended 30 June 2010
Financial highlights
Full year unaudited revenues for the year are estimated to be approximately £6 million, an increase of 120% from £2.7 million in FY09. Monitise continues to perform well with revenues in the second half of FY10 estimated to be £4.3 million, an increase of 170% from £1.6 million in the second half of FY09 and 150% from £1.7 million in the first half of FY10.
Transactional revenues, in particular, are growing rapidly. Transactional revenues for FY10 are estimated to be £2.9 million, representing an increase of 480% from £0.5 million in FY09, and transactional revenues in the second half of FY10 are estimated to be £2.1 million, 2.6 times the transactional revenues in the first half of FY10 and a six fold increase on the second half of FY09. Transactional revenues are expected to continue to represent a growing proportion of total revenues in the current and future years.
The increase in revenues in the second half of FY10 from our existing live services has resulted in a reduction in those businesses' operating losses. Cost levels in the second half of the year reflect increased investment in the technology platform and in our new joint ventures. However this increase in investment has been broadly offset by the reduction in live services' operating losses.
Cash balances across the Group were approximately £13 million at 30 June 2010.
Current trading
Monitise's customer base continues to grow rapidly. The Company currently has in excess of 2 million registered customers in the UK and the USA, having more than doubled the number of registered customers since October 2009.
In FY10 there has been strong demand for the higher value services, driven in part by the launch of the Company's smartphone apps. in the UK in November 2009. This has meant an increase in share for the "advanced" segment of our customer base, now at 25% of total registered customers, with an accompanying impetus to both revenues and underlying gross margin.
Monitise Europe
Monitise Europe has already achieved coverage which gives access to its technology to more than 55% of the UK retail banking market. Revenues have grown rapidly during FY10 and are currently at an annualised run rate close to £5 million. Consumer demand for our smartphone apps. has been a strong revenue driver. As revenues have grown the operating loss has reduced, and this 100% owned business remains on track to reach month-on-month cash break-even by December 2010.
Monitise Americas
In the USA we have a 49% equity stake in a joint venture, Monitise Americas, with our partner FIS. FIS provides wide coverage of financial institutions throughout the USA, and Monitise Americas is contracted to more than 200 financial institutions, offering a wide range of services. Monitise Americas was launched in 2008 and is some 12 to 18 months behind the Group's UK operations in its development curve. Taking into account Monitise's share of the annual licence fee of US$1.5 million payable by the joint venture, our US operations are currently operating at close to break-even in terms of Group operating profit.
Visa Global Alliance
Details of the GAA are set out above. Significant levels of development activity are underway and we expect to launch the first product offering and begin generating transactional revenue from this alliance during FY11.
Monitise Asia Pacific
Our 50/50 joint venture with FE Mobile Investments Limited (part of the First Eastern Investment Group), which was announced in April 2010, is now up and running. The initial focus is on Hong Kong as a launch market, where discussions are underway with a number of banks and network partners. There are also plans for entry into the mainland China market. The joint venture is expected to see transactional revenues commence in FY11 and to scale significantly following roll-out of live services in China in FY12. Further rollouts within the region are also planned during FY12.
Monitise India
The formation of a joint venture in India with Visa, which was announced in May 2010, completed in June 2010 as scheduled. Launch is anticipated in FY11 and transactional revenues are expected to build in FY12.
The new joint venture company combines Visa Inc.'s expertise in enabling secure, globally interoperable financial transactions with Monitise's know-how in developing mobile financial technology for a broad range of handsets. It builds on the existing partnership between Visa and the Company and will give providers of financial services in India a platform to accelerate the delivery to consumers of mobile financial services such as banking, bill payments, mass transit ticketing, mobile top-up and other services in a market with an estimated 584 million mobile phone subscriptions as at March 2010*.
*Source: Telecom Regulatory Authority of India
Monitise Africa
Development activity in delivering Mobile Money services for Africa is ongoing with funding support from the Africa Enterprise Challenge Fund, and positive dialogue with potential partners is expected to lead to announcements later this year.
mCommerce
We expect our mCommerce proposition to play a key part in future developments and are actively developing this proposition to provide mobile money services to retailers and their customers. We expect to launch pilot services in the medium term, leading to a major mCommerce launch in 2013.
Details of the Subscriptions
Visa Subscription
Visa, pursuant to the Visa Subscription Agreement, has agreed to subscribe for up to 32,000,000 Subscription Shares at the Issue Price. Following completion of the Subscriptions and the Placing, Visa's shareholding will increase to 14.4% of the enlarged issued share capital of Monitise. It is anticipated that the Visa Subscription Shares will be admitted to trading on AIM on 30 July 2010. The issue of the Visa Subscription Shares is conditional, amongst other things, on the Company not having breached any warranties prior to completion of the Visa Subscription (including as to the absence of any event that has, or could reasonably be expected to have, a material adverse effect on the Company) and the admission to trading on AIM of the Subscription Shares to be issued to Visa in accordance with the AIM Rules.
Visa currently holds 67,753,000 Ordinary Shares, representing approximately 12.6% of the Ordinary Shares currently in issue and has irrevocably undertaken to vote in favour of the Resolutions in respect of these shares.
In the event that the Placing and the First Eastern Subscription do not take place prior to 13 August 2010, under the terms of the Visa Subscription Agreement Visa has agreed to subscribe for 11,144,800 Subscription Shares at 21.5p per New Ordinary Share, being a premium of 2.4% to the closing mid-market price of 21p on 12 July 2010. In those circumstances, the Board has sufficient authorities to allot and issue such New Ordinary Shares to Visa under the existing general authorities granted to it by Shareholders at the general meeting of the Company held on 4 January 2010. In the event that the Placing does take place prior to 13 August 2010 but the First Eastern Subscription does not take place by that time, under the terms of the Visa Subscription Agreement Visa has agreed to subscribe for 30,317,520 Subscription Shares at the Issue Price. In each case the allotment and issue of such New Ordinary Shares to Visa under the Visa Subscription Agreement will increase Visa's shareholding to approximately 14.4% of the enlarged issued share capital of Monitise following completion of the Visa subscription.
First Eastern Subscription
First Eastern, which is an existing Shareholder and Monitise's partner in its Asia-Pacific region joint venture through its associated company FE Mobile Investments Limited, has agreed to subscribe for 10,000,000 Subscription Shares at the Issue Price. Following completion of the Subscriptions and the Placing, the aggregate shareholding of all companies within the First Eastern Investment Group (and their respective nominees) will represent approximately 9.2% of the enlarged issued share capital of Monitise. It is anticipated that the First Eastern Subscription Shares will be admitted to trading on AIM on 30 July 2010. The issue of the First Eastern Subscription Shares is conditional, amongst other things, on Admission, the approval of the Resolutions numbered 1 and 3 in the Notice, completion of the Placing and nothing having occurred prior to Admission which has, or would, or could reasonably be expected to have, a material adverse effect on the Company's business or its financial condition or operations.
Companies within the First Eastern Investment Group (or their respective nominees) currently hold 53,858,973 Ordinary Shares, representing approximately 10.0% of the Ordinary Shares currently in issue and First Eastern has irrevocably undertaken to vote (and to procure that those other companies within the First Eastern Investment Group (or their nominees) vote) in favour of the Resolutions.
If the Resolutions numbered 1 and 3 in the Notice are approved without amendment, application will be made to the London Stock Exchange plc for the Subscription Shares to be admitted to trading on AIM. It is anticipated that Admission and completion of the Subscriptions will take place on the next business day following the General Meeting, being 30 July 2010.
The Subscription Shares will be settled through CREST (subject, where appropriate, to the requirements of the US Securities Act and applicable state securities laws).
Details of the Placing
The Company proposes, subject to certain conditions, to raise, in addition to the £8.7 million (gross) to be raised pursuant to the Subscriptions, £22.3 million net of expenses by way of an institutional placing of 113,971,200 Placing Shares at the Issue Price.
The Placing Shares have been conditionally placed with a number of existing and new institutional Shareholders and will thereby increase the institutional shareholder base of the Company and, at the same time, minimise transactional costs.
The Placing Shares will be issued at the same price as the Subscription Shares, being 20.75p per share, equal to the closing bid price of 20.75p, and a 1.2% discount to the closing mid-market share price of 21p on 12 July 2010 (being the latest practicable date prior to the date of this document).
The Placing Shares will represent approximately 16.5% and, together, the Placing and Subscription Shares will represent 22.5%, of the enlarged issued share capital of the Company following the Subscriptions and the Placing. If the Resolutions numbered 1 and 3 in the Notice are approved without amendment, application will be made to the London Stock Exchange for the Placing Shares and the Subscription Shares to be admitted to trading on AIM. It is anticipated that the Placing Shares will be admitted to trading on AIM on 30 July 2010. The Placing Agreement and the issue of the Placing Shares is conditional, amongst other things, on the Visa Subscription becoming unconditional, the approval at the General Meeting of the Resolutions numbered 1 and 3 in the Notice and Admission taking place on 30 July 2010, or such later date as the Company, Evolution Securities and Piper Jaffray shall agree, but not later than 13 August 2010.
The Placing is to be effected on behalf of the Company by Evolution Securities and Piper Jaffray on the terms of the Placing Agreement. The Placing Agreement provides that the Placing will be fully underwritten by Evolution Securities and Piper Jaffray. Pursuant to the Placing Agreement, Evolution Securities and Piper Jaffray will use their reasonable endeavours to procure subscribers for the Placing Shares, or failing which, subscribe for such Placing Shares themselves.
In consideration of their services in connection with the Placing, the Company will pay to Evolution Securities and Piper Jaffray, in aggregate, an advisory fee of £200,000 together with an additional fee of 4% of the aggregate value, at the Issue Price, of the Placing Shares. 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 indemnities to Evolution Securities and Piper Jaffray in connection with the Placing and Evolution Securities' and Piper Jaffray's performance of services in relation to the Placing. Evolution Securities and Piper Jaffray are entitled to terminate the Placing Agreement in certain specified circumstances.
General Meeting
A Circular will be sent to shareholders shortly convening a General Meeting of the Company to be held on 29 July 2010 to approve the resolutions required to effect the Subscriptions and the Placing.
Related party transactions
Visa currently has an interest in 67,753,000 Ordinary Shares, representing 12.6% of the issued share capital of the Company. If both the Placing and the First Eastern Subscription complete, Visa will subscribe for 32,000,000 Subscription Shares at the Issue Price. If only the Placing completes and not the First Eastern Subscription, Visa will subscribe for 30,317,520 Subscription Shares at the Issue Price. If neither the Placing nor the First Eastern Subscription completes, Visa will subscribe for 11,144,800 Subscription Shares at £0.215 per Subscription Share. In each case this will result in Visa having a total holding of 14.4% of the issued share capital of Monitise immediately following completion of the Visa Subscription.
Companies within the First Eastern Investment Group (and their respective nominees) currently have an aggregate interest in 53,858,973 Ordinary Shares, representing 10.0% of the issued share capital of the Company. First Eastern will be subscribing for 10,000,000 Subscription Shares which will result in companies within the First Eastern Investment Group (and their respective nominees) having a total aggregate holding of 9.2% of the issued share capital of Monitise immediately following completion of the Subscriptions and the Placing.
The Visa Subscription and the First Eastern Subscription are classified as related party transactions under the AIM Rules as both Visa and the First Eastern Investment Group are interested in 10% or more of the Ordinary Shares currently in issue. The Directors consider, having consulted with Evolution Securities, the Company's nominated adviser, that the terms of the Visa Subscription and the First Eastern Subscription are fair and reasonable insofar as Shareholders are concerned.
Related Shares:
Monitise