Registered in England and Wales. Company registration number: 04034645
VAT registration number: 765 4893 78
This site complies with Rule 26 of the AIM Rules for Companies. This website is owned by Merchant House Group Plc and hosted by Tinderhouse Limited. This section was updated on 3 November 2008.
13 March 08
Merchant House Group PLC
13 March 2008
MERCHANT HOUSE GROUP PLC (the ‘Company’)
ANNOUNCES NOTICE OF EGM AND PROGRESS ON RECRUITMENT OF A BROKING TEAM AND FUNDRAISING
Merchant House Group PLC, the AIM listed Financial Services business is pleased
to announce that it has today posted a circular to shareholders convening an EGM
in order to raise up to £2.5 million by the issue of Convertible Preference
Shares of £1 each to enable the recruitment of a new broking team. The Company
is seeking an authority to issue up to £4 million of Convertible Preference
Shares which upon conversion will result in an additional 160,000,000 Ordinary
Shares based on an effective conversion price of 2.5 pence per Ordinary Share.
Martin Eberhardt, Chairman of Merchant House Group has written to shareholders
as follows;
‘I am writing to you to explain the latest – and perhaps most significant – phase in the Company’s redevelopment plans and to seek shareholder approval for
resolutions that are necessary to put these plans into effect. A General
Meeting, at which the resolutions will be put to shareholders, will take place
on 7 April 2008 (‘General Meeting’).
When I last wrote to you in October 2007 I explained that the Board had decided
to broaden the scope of the business and to cut overheads significantly. As you
may be aware, we have now established subsidiary or associated companies in
personal wealth management and corporate legal services, strengthened our
corporate finance team through the recruitment of highly experienced associates
and steps are in hand for the further development of our asset finance
associate, Merchant House Finance Limited.
At the core of these plans is the development of the stockbroking activities of
Merchant Capital Limited, our corporate finance and stockbroking subsidiary.
Merchant Capital became a member of the London Stock Exchange but so far has
operated on a limited scale. It has recently, however, received the approval of
FSA to enable it to offer stockbroking facilities to private clients and plans
are in hand to enable it to offer a full stockbroking service.
It is planned to provide retail and corporate broking services on a significant
scale and the Directors expect to bring in a team to develop and market these
services, together with a group of experienced brokers, shortly after the
General Meeting.
The board policy, as stated on a number of occasions, is to incentivise the new
teams to control overheads and attract the best team members. This policy will
apply equally to a new broker team and the Board anticipates that a substantial
incentive warrant/option package will be put in place for such a new team with
an appropriate lock-in period and that such warrants/options will be exercisable
at a price higher than the current share price.
The Directors believe that there will be continuing demand for the services of
such firms, both from private clients and smaller companies, notwithstanding
recent market volatility. They expect this development to become the major part
of the Group’s business and also to become a driver for the development of its
corporate finance, wealth management and associated asset management activities.
The Directors believe also that, in order to finance this planned new
development on a sufficient scale, significant additional funds will be
required. Plans are in hand to raise this additional capital and the Directors
have decided that this can best be raised through the issue of convertible
preference shares (‘Convertible Preference Shares’), the principal terms of
which are described in the Schedule to this letter and which are fully described
in Resolution 4. While these securities will provide an 8% coupon to convertible
preference shareholders, they will also be less dilutive to ordinary
shareholders than an equity fundraising would be in view of the Company’s
current share price since they will be convertible at any time after 30 June
2011 at an effective conversion price of 2.5p per ordinary share. It is also
important to note that the Company will have the option in future to redeem the
Convertible Preference Shares at its discretion, should the then directors deem
it beneficial to do so at any time prior to 30 June 2011 at a premium of £2.00
per Convertible Preference Share.
If shareholders approve the resolutions at the General Meeting, the plans to
raise additional capital and to bring on board the broking team will immediately
be put in hand, thus completing the implementation of the strategy I outlined in
my Interim Statement of 28 September 2007.
GENERAL MEETING
You will find at the end of this document a notice of General Meeting, convened
for 11.00 am on 4 April 2008. The purpose of the General Meeting is to consider
and, if thought fit, to pass resolutions to increase the authorised share
capital of the Company, amend the Articles of Association to create the
Convertible Preference Shares and authorise the Directors to allot shares and
disapply the statutory pre-emption rights. A summary of the rights of the
Convertible Preference Shares is set out in the Schedule to this letter and full
details are set out in Resolution 4.
The purpose of Resolutions 1 and 2 is to enable the Company to issue the
proposed Convertible Preference Shares and to issue such number of ordinary
shares as would result from the conversion of the Convertible Preference Shares,
together with such additional number of ordinary shares as would arise from the
exercise of existing rights to ordinary shares relating to arrangements that the
Company has already entered into (these arising in relation to unconverted
secured and unsecured loan notes, unexercised warrants and the future conversion
of shares in Merchant Capital Limited held or prospectively to be held by the
ESOP), together with such number of ordinary shares as would result from the
conversion of warrants/options which the Directors believe may in due course be
granted in relation to the new broking team. Authority is being sought to issue
Convertible Preference Shares up to the full amount of convertible preference
share capital that it is proposed to create, although a somewhat smaller amount
of new capital may initially be raised. In addition, authority is being sought
in respect of an additional 21,354,229 ordinary shares (representing 26% of the
present issued share capital) to enable the Company to issue options or to take
advantage of other opportunities that may arise.
The purpose of Resolution 3 (which is a Special Resolution) is to enable the
Company to issue securities pursuant to Resolution 2 wholly for cash as if
section 89(1) of the Companies Act 1985 did not apply.
The purpose of Resolution 4 (which is also a Special Resolution) is to amend the
articles of Association of the Company to create the Convertible Preference
Shares
ACTION TO BE TAKEN
A Form of Proxy is enclosed with this document for use by Shareholders at the
General Meeting.
Whether or not you intend to be present at the General Meeting, you are
requested to complete and return the Form of Proxy as soon as possible and in
any event so as to reach Share Registrars Limited, no later than 11.00 am on 2
April 2008. Completion and return of the Form of Proxy will not preclude a
Shareholder from attending the meeting and voting in person, should he or she
wish to do so.
RECOMMENDATION
The Directors, consider that the passing of the resolutions is in the best
interests of the Company and its members as a whole and is most likely to
promote the success of the Company for the benefit of its members as a whole.
Accordingly, the Directors unanimously recommend Shareholders to vote in favour
of the Resolutions to be proposed at the General Meeting.’
End.
For more information please contact;
James Holmes, Director, Merchant House Group Plc
020 7332 2200
Alex Borrelli, Nominated Adviser, Shore Capital. & Corporate Ltd
020 7408 4090
This information is provided by RNS The company news service from the London Stock Exchange