Proposed cancellation of AIM admission and Meeting Documents

 

The Notice of the General Meeting is set out in Part IV of this Document.

 

 

2. Background and reasons for Cancellation

 

 

The   Directors  have  conducted  a  review  of  the  benefits  and  drawbacks  to  the  Company  and  its Shareholders in retaining its quotation on AIM and believe that Cancellation is in the best interests of the  Company  and  its  Shareholders  as  a  whole.  In  reaching  this  conclusion,  the  Directors  have considered the following key factors, amongst others:

 

·           the company strategy has been to focus on PHBChoices, this has not performed as expected and the resulting shortfall in revenue means that further significant cost reductions are required:

·     the considerable cost, management time and the legal and regulatory burden associated with maintaining  the  Company's  admission  to  trading  on  AIM  are,  in  the  Directors'  opinion, disproportionate to the benefits to the Company. Excluding savings from staff and director redundancies, it is estimated that Cancellation will reduce the Company's recurring administrative costs by £100,000 per annum, and these sums can be better spent maintaining the business; and.

       the company no longer has any institutional investors and has a low market capitalisation which makes it very difficult to raise further funds in the market as the volume of trading further reduces the attractiveness to institutional investors. 

 

Following careful consideration, the Directors believe that it is in the best interests of the Company and

 

Shareholders to seek the proposed Cancellation at the earliest opportunity.

 

Following   the  Cancellation,  the  Board  believes  that  the  requirements  and  associated  costs  of  the Company maintaining its public company status will be difficult to justify and that the Company will benefit from the more flexible requirements and lower costs associated with private limited company status. It is therefore proposed to re-register the Company as a private limited company. In connection with the Re-registration, it is proposed that the New Articles be adopted to reflect the change in the Company's status to a private limited company. The principal effects of the Re-registration and the adoption  of  the  New  Articles  on  the  rights  and  obligations  of  Shareholders  and  the  Company  are summarised in Part II of this Document.

3. Process for, and principal effects of, the Cancellation

The Directors are aware that certain Shareholders may be unable or unwilling to hold Ordinary Shares in  the  event  that  the  Cancellation  is  approved  and  becomes  effective.  Such  Shareholders  should consider selling their interests in the market prior to the Cancellation becoming effective.

 

Under   the  AIM  Rules,  the  Company  is  required  to  give  at  least  20  clear  Business  Days'  notice  of Cancellation. Additionally, Cancellation will not take effect until at least 5 clear Business Days have passed following the passing of the Cancellation Resolution. If the Cancellation Resolution is passed at the General Meeting, it is proposed that the last day of trading in Ordinary Shares on AIM will be 6

February 2020 and that the Cancellation will take effect at 7.00 a.m. on 7 February 2020. The principal effects of the Cancellation will be that:

      while the Ordinary Shares will remain freely transferrable, it is likely that the liquidity and marketability of the Ordinary Shares will be constrained  and the value of such shares may be adversely affected as a consequence;

      in   the  absence  of  a  formal  market  and  quote,  it  may  be  more  difficult  for  Shareholders  to determine the market value of their investment in the Company at any given time;

      the   regulatory  and  financial  reporting  regime  applicable  to  companies  whose  shares  are admitted to trading on AIM will no longer apply;

      Shareholders will no longer be afforded the protections given by the AIM Rules, such as the requirement to be notified of price sensitive information or certain events and the requirement that the Company seek shareholder approval for certain corporate actions, where applicable, including   substantial   transactions,   reverse   takeovers,   related   party   transactions   and fundamental changes in the Company's business, including certain acquisitions and disposals;

      the levels of disclosure and corporate governance within the Company may not be as stringent as for a company quoted on AIM;

    Arden Partners will cease to be nominated adviser to the Company;

 

      whilst the Company's CREST facility will remain in place immediately post the Cancellation, the Company's CREST facility may be cancelled in the future and, although the Ordinary Shares will remain transferable, they may cease to be transferable through CREST. In this instance, Shareholders who hold Ordinary Shares in CREST will receive share certificates; and

      the    Cancellation   and   Re-registration   may   have   personal   taxation   consequences   for Shareholders. Shareholders who are in any doubt about their tax position should consult their own professional independent tax adviser.

 

The Company will remain registered with the Registrar of Companies in England & Wales in accordance with   and   subject   to   the   Companies   Act   2006   (the   "Law"),   notwithstanding   the   Cancellation. Shareholders should also note that the Takeover Code will continue to apply to the Company following the Cancellation for the period of at least 10 years from the date of Cancellation subject to the Re- registration occurring.  

 

The above considerations are not exhaustive, and Shareholders should seek their own independent advice when assessing the likely impact of the Cancellation on them.

 

The Company currently intends to continue to provide certain facilities and services to Shareholders that they currently enjoy as shareholders of an AIM company. The Company will:

 

    continue to communicate information about the Company (including annual accounts) to its

 

Shareholders, as required by the Law;

 

      continue   to  hold  general  meetings  and annual general meetings for  at  least  2  years  following  the  Cancellation  and  Re- registration  where  shareholder  resolutions  are  proposed.  ; and

      continue,    for   at   least   12   months   following   the   Cancellation,   to   maintain   its   website, https://investor.CloudBuy.com and to post updates on the website from time to time, although Shareholders should be aware that there will be no obligation on the Company to include all of the information required under the Disclosure Guidance and Transparency Rules, AIM Rule 26 or to update the website as required by the AIM Rules.

 

       In addition, the Company confirms that, with the exception of David Gibbon, the existing Directors expect to resign following the Cancellation. Ronald Duncan and Lyn Duncan will be available in an advisory capacity only, based on their long experience of the Company.

 

The Resolutions to be proposed at the General Meeting include the adoption of the New Articles with effect from the Re-registration.  A summary of the principal changes being made by the adoption of the New Articles is included in Part II of this Document.   A copy of the New Articles can be viewed at https://investor.cloudbuy.com/aim-rule-26.html.

 

4. Transactions in the Ordinary Shares prior to and post the proposed Cancellation

 

 

4.1 Prior to Cancellation

 

 

Shareholders should note that they are able to trade in the Ordinary Shares on AIM prior to Cancellation.

 

4.2 Dealing and settlement arrangements

 

The Company do not intend to implement a recognised dealing facility following the delisting, and, as such, it is likely that the liquidity and marketability of the Ordinary Shares will be constrained and the value of such shares may be adversely affected as a consequence. In the absence of a formal market and quote, it may be more difficult for Shareholders to determine the market value of their investment in the Company at any given time.

The Directors are aware that Shareholders may wish to acquire or dispose of Ordinary Shares in the Company following the Cancellation. Accordingly, the Board intends to put in place an internal process that will allow Shareholders or persons wishing to acquire or sell Ordinary Shares to leave an indication that they are prepared to buy or sell at an agreed price. The Company will then use its reasonable endeavours to contact those parties that are willing to buy and sell in order that they may discuss effecting the bargain.

 

Once such a procedure has been put in place details will be made available to Shareholders on the

 

Company's website (.https://investor.cloudbuy.com/). It is expected that this will take place after the Cancellation.

 

Transfers of interests in Ordinary Shares in certificated form should be sent to the Company Secretary, CloudBuy PLC, 5 Jupiter House, Calleva Park, Aldermaston RG7 8NN. Existing share certificates remain valid.

 

If Shareholders  wish  to  buy  or  sell  Ordinary  Shares  on  AIM  they  must  do  so  prior  to  the Cancellation becoming effective. As noted above, in the event that Shareholders approve the Cancellation, it is anticipated that the last day of dealings in the Ordinary Shares on AIM will be

6 February 2020 and that the effective date of the Cancellation will be 7 February 2020.

 

5. Current Trading, Strategy and Prospects

 

Since the interim results for the six months ended 30 June were published on 21 August 2019, revenue has not grown as expected. One of the Company's larger customers, UOB in Singapore have cancelled their contract. Under the termination agreement, the Company will receive a termination fee in January 2020 representing the majority of the fixed fees which would have been payable in the remaining period of the contract which was due to end in September 2021. The Company has also generated significant revenue for enhancements in the past and had expected future transaction based revenue from UOB, these prospective revenues will not be compensated for.

 

The Company will continue to pursue its strategy of simplifying the business and focusing on a few larger clients and in particular to grow revenue from PHBChoices. If the cancellation resolution is passed, the Company intends to make significant savings in Q1 through redundancies including the redundancy of 2 executive and 2 non-executive directors. The directors made redundant are expected to receive less than 50% of their contractual redundancy entitlement. The salary of David Gibbon, the remaining director, will be reduced significantly for at least 6 months post delisting.

 

6. Re-registration

 

Following the Cancellation, the Directors believe that the requirements and associated costs of the Company maintaining its public company status will be difficult to justify and that the Company will benefit from the more flexible requirements and lower costs associated with private limited company status. It is therefore proposed to re-register the Company as a private limited company. In connection with the Re-registration, it is proposed that the New Articles be adopted to reflect the change in the Company's status to a private limited company. The principal effects of the Re-registration and the adoption of  the  new  articles  of  association  on  the  rights  and  obligations  of  Shareholders  and  the Company are summarised in Part II of this Document.

 

Application will be made to the Registrar of Companies for the Company to be re-registered as a private limited company. Re-registration will take effect when the Registrar of Companies issues a certificate of incorporation on Re-registration. The Registrar of Companies will issue the certificate of incorporation on Re-registration when it is satisfied that no valid application can be made to cancel the resolution to re-register as a private limited company or that any such application to cancel the resolution to re- register as a private limited company has been determined and confirmed by the Court.

 

7. Takeover Code

 

Notwithstanding the  Cancellation  and  Re-registration,  under  the  Takeover  Code  the  Company  will continue to be subject to its terms for a period of 10 years following the Cancellation (subject to the  Re- registration occurring).  

 

Under Rule 9 of the Takeover Code, when any person or group of persons acting in concert, individually or collectively, are interested in shares which in aggregate carry not less than 30 per cent. of the voting rights of a company but do not hold shares carrying more than 50 per cent. of the voting rights of a company and such person or any person acting in concert with him acquires an interest in any other shares, which increases the percentage of the shares carrying voting rights in which he is interested, then that person or group of persons is normally required by the Panel to make a general offer in cash to all shareholders of that company at the highest price paid by them for any interest in shares in that company during the previous 12 months. Rule 9 of the Takeover Code further provides that where any person, together with persons acting in concert with him, holds over 50 per cent. of the voting rights of a  company to  which  the  Takeover  Code  applies  and  acquires  additional shares  which  carry voting rights, then that person will not generally be required to make a general offer to the other shareholders to acquire the balance of the shares not held by that person or his concert parties. As part of his funding, Roberto Sella has received a dispensation (whitewash) from Rule 9.

 

Following   the  expiry  of  the  10  year  period  from  the  date  of  the  Cancellation  (subject  to  the  Re- registration occurring), or such other date on which the Takeover Code ceases to apply to the Company, the  Company will no  longer  be  subject  to  the  provisions  of  the  Takeover  Code.  A summary of the protections afforded to Shareholders by the Takeover Code which will be lost is set out in Part III of this document.

 

8. Process for Cancellation

 

Under the AIM Rules, it is a requirement that the Cancellation must be approved by not less than 75 per cent. of votes cast by Shareholders at the General Meeting. Accordingly, the Notice of General Meeting set out in Part IV of this Document contains a special resolution to approve the Cancellation.

 

Furthermore,   Rule  41  of  the  AIM  Rules  requires  any  AIM  company that  wishes  the  London  Stock Exchange  to  cancel  the  admission  of  its  shares  to  trading  on  AIM  to  notify  shareholders  and  to separately inform the London Stock Exchange of its preferred cancellation date at least 20 Business Days prior to such date. In accordance with AIM Rule 41, the Directors have notified the London Stock Exchange of the  Company's  intention,  subject  to  the  Cancellation  Resolution  being  passed  at  the General Meeting, to cancel the Company's admission of the Ordinary Shares to trading on AIM on

6 February 2020. Accordingly, if the Cancellation Resolution is passed the Cancellation will become effective at 7.00 a.m. on 7 February 2020. If the Cancellation becomes effective, Arden Partners will cease to be nominated adviser of the Company and the Company will no longer be required to comply with the AIM Rules.

 

9. General Meeting

 

9.1 General Meeting Details

 

   The General Meeting will be held at the offices of cloudBuy plc, 5 Jupiter House, Calleva Park, Aldermaston RG7 8NN commencing at 11.00am on 27 January 2020. Each Resolution other than resolutions 3 and 4 will be proposed as a special resolution. Resolution 1 with respect to the cancellation is not conditional on any of the other Resolutions although the other Resolutions are conditional on the Cancellation, set out in Resolution 1 being passed, the adoption of the  New  Articles  pursuant  to  Resolution  2  is  also  effectively  conditional  on  the  Re-registration, Resolution 3 is also conditional on the Re-registration and adoption of the New Articles and Resolution 5 is also conditional on the passing of Resolution 4.

 

9.2 Voting Commitments

 

The Directors and Roberto Sella together representing 27.5% of the issues share capital, have given an irrevocable commitment that they will vote in favour of the motions at the General Meeting.

 

10. Action to be taken

 

 

You will find enclosed with this Document a Form of Proxy for use at the General Meeting. Whether or not you propose to attend the General Meeting in person, you are requested to complete and return the Form  of  Proxy  to  the  Company  Secretary, CloudBuy PLC 5 Jupiter House, Calleva Park, Calleva Park, Aldermaston RG7 8NN, in accordance with the instructions printed thereon as soon as possible but, in any event, to be received no later than 11 a.m. on 23 January 2020. Completion and return of a Form of Proxy will not preclude you from attending and voting at the General Meeting in person if you so wish.

 

11. Recommendation

 

 

The Directors consider that the Cancellation, Re-registration and adoption of the New Articles are in the best interests of the Company and its Shareholders as a whole and therefore unanimously recommend that you vote in favour of the Resolutions at the General Meeting.

 

Yours faithfully,

 

 

The Board