This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

28 October 2024

Cloudified Holdings Limited

("Cloudified" or the "Company")

Subscription &

Notice of General Meeting

Cloudified, an AIM quoted cash shell is pleased to announce that it has conditionally raised £500,000 (before expenses), through a subscription for 9,615,385 new Ordinary Shares at an issue price of 5.20 pence per new Ordinary Share. The Company intends to use the net proceeds of the Subscription, together with the Company's existing cash resources to pursue the Acquisition which will constitute a reverse takeover, pursuant to Rule 14 of the AIM Rules ("RTO").

The Company, in conjunction with Salonica Capital has identified an acquisition target in the media and entertainment sector, and indicative relative valuations between the acquisition target and the Company have been agreed. However, no formal transaction process will commence until the completion of the Subscription and, as in any transaction process, there can be no absolute certainty that it will be successfully completed.

Salonica GP has conditionally agreed to subscribe for the Subscription Shares pursuant to the Subscription Letter, to support the execution of a possible RTO introduced by Salonica Capital. Salonica GP is the general partner of Salonica Play and Salonica Capital is the investment adviser to Salonica GP. 

Pursuant to the terms of the Subscription, Salonica GP is entitled to appoint two directors to the board of the Company and has nominated the Proposed Directors. Subject to completion of the Subscription, the Company intends to appoint Othman Shoukat Majid and Richard Collett, further details are set out below.

The Subscription Shares will represent approximately 64.6 per cent. of the Enlarged Share Capital. The Issue Price of 5.20 pence represents a 131 per cent. premium to the closing mid-market price of 2.25 pence per Ordinary Share on 12 June 2024, being the latest practicable business day prior to the suspension of trading in the Company's Ordinary Shares ("Suspension"). 

Following completion of the Subscription, Salonica GP and its connected parties will hold 9,615,385 Ordinary Shares representing approximately 64.6 per cent. of the Enlarged Share Capital. Cloudified, as a company registered in the British Virgin Islands, is not subject to the Takeover Code. The Company's Articles nevertheless contain certain provisions similar to those of the Takeover Code, including a provision that any parties acquiring greater than 30 per cent. of the Company's issued share capital should make an offer to all shareholders, unless waived by Independent Shareholders by way of a resolution of Independent Shareholders. All existing Shareholders are considered to be Independent Shareholders for this purpose. As a result, the Subscription is subject to the passing of Resolution 1 of the Shareholders on a poll at a General Meeting of Shareholders to be convened and held on 13 November 2024.

In addition, the Company will require a disapplication of the pre-emption rights contained within the Articles to allot the Subscription Shares. Accordingly, the Subscription is conditional, inter alia, upon Shareholders approving Resolution 2 at the General Meeting. Subject to the passing of the Resolutions, the allotment is expected to occur  on or around 14 November 2024 (or such later time and/or date as maybe agreed, being not later than 30 November 2024).  Assuming the Resolutions are passed by Shareholders at the General Meeting, the Subscription Shares will rank pari passu in all respects with the Existing Ordinary Shares and will rank in full for all dividends and other distributions declared, made or paid on the Ordinary Shares after the Allotment. Admission of the Subscription Shares to trading on AIM is expected to occur on the earlier of the lifting of the Suspension or when the Company is re-admitted following completion of a reverse takeover.

The Subscription is conditional upon, inter alia, Shareholders approving the Resolutions 1 and 2 at the General Meeting, compliance by the Company and Salonica GP in all material respects with their respective obligations under the Subscription Letter and Allotment.

The Company is seeking an additional limited and routine authority to issue Ordinary Shares on a non pre-emptive basis, over approximately 20 per cent. of the Enlarged Issued Share Capital, by way of Resolution 3.

Ian Selby, Director of Cloudified, commented: "We have spent several months reviewing suitable candidates for a transaction, and I am delighted to be working with Salonica on an exciting opportunity. Its initial investment is at a 131% premium to the current share price, and should the Acquisition proceed as envisaged, the total uplift will be approximately 536%.  I am looking forward to Othman and Richard joining the board shortly and working with them on their exciting plan to bring a growth opportunity to the AIM market by way of an RTO in early 2025"

Othman Shokat Majid (Salonica and Proposed Director) said: "We have identified an acquisition target which operates in the international events, broadcast and technology sectors, and the team involved includes high profile industry figures.  Our focus is now on completing the necessary workstreams for the RTO.  We believe that this Acquisition will generate significant shareholder value over the medium to long term and I look forward to joining the board in November 2024."

Enquiries:

Background and reasons for the Subscription

On 12 December 2023, the Company completed the disposal of Falanx Cyber Defence Limited and Falanx Cyber Technologies Limited (the "Disposal") which was approved at the general meeting held on 27 November 2023. As a result the Company became a cash shell pursuant to Rule 15 of the AIM Rules on 13 December 2023. The Company's remaining subsidiaries have been closed or are in the process of being closed.

On 13 June 2024, the Company was suspended as it was not in a position to make an acquisition or acquisitions which constituted a reverse takeover under Rule 14 of the AIM Rules, within six months of becoming an AIM Rule 15 cash shell, in accordance with Rule 15 of the AIM Rules.

Since the Disposal, the Company's strategy has been to identify another company or business to acquire in exchange for the issue of Ordinary Shares in a single transaction (a "reverse takeover" or "RTO") or, if no suitable acquisition could be identified on a timely basis, to appoint a liquidator and enter a members voluntary liquidation ("MVL") and return any remaining cash to Shareholders. In considering the Company's future strategy, the Directors have sought to identify opportunities offering the potential to deliver value accretion to Shareholders over the medium to long-term in the form of capital and/or dividends.

Prior to the introduction to the Acquisition, the Directors have considered numerous opportunities across multiple sectors which did not meet the criteria. Alongside this, Directors also carried out the necessary preparatory work to rapidly execute an MVL, if it became clear it was the optimum means of preserving value for Shareholders. The Directors anticipate that in  a  MVL process the distribution to Shareholders would be approximately 2.25p per share after taking into account closure costs and liquidators fees.

The Directors therefore believe that the Subscription on its own at an issue price of 5.20 pence per Subscription Share followed by a 7:4 bonus issue of Ordinary Shares should the Acquisition  complete (as described below), should deliver an effective value of 14.30 pence per Ordinary Share, creating a better outcome for Shareholders than an MVL. This excludes the potential for the Company to create further value from the Acquisition over the medium to long term.

To support the execution of the Acquisition, Salonica GP has conditionally agreed to subscribe for 9,615,385 Ordinary Shares at an Issue Price of 5.20 pence per Ordinary Share, raising £500,000 (before expenses). The net proceeds of the Subscription, expected to be approximately £410,000  together with the Company's cash balance of £286,255 as at 28 October 2024, is expected to fund the non-contingent costs associated with the execution of the Acquisition and, if appropriate, re-admission to trading on AIM.

The Company, in conjunction with Salonica Capital, has identified an acquisition target in the media and entertainment sector and indicative relative valuations between the acquisition target and the Company have been agreed. If the Acquisition completes, it has been agreed that Shareholders will each receive by way of a bonus issue a further 7 Ordinary Shares for every 4 Ordinary Shares they hold.  This would result in an equity value of approximately 14.30 pence per Ordinary Share, delivering an uplift of 536 per cent. on the closing mid-market price of 2.25 pence per Ordinary Share on 12 June 2024.

The Company and Salonica GP intend to complete the Acquisition as soon as possible. However, it is unlikely that the Acquisition will be finalised by 13 December 2024, being the date by which the Company needs to have completed a RTO in accordance with Rule 41 of the AIM Rules. If the Company has not completed a RTO by that date, its admission to trading on AIM is expected to be cancelled on 14 December 2024. Should the Acquisition be successfully completed, the Company can expect to be readmitted to AIM in early 2025. Assuming Shareholders adopt the Resolutions, the audit for the year ended 31 March 2024 will commence and the annual report and the interim results for the six months to 30 September 2024 will be published on or before the completion of the Acquisition.

The Subscription

The Company has entered into a Subscription Letter with Salonica GP, in relation to the Subscription to purchase 9,615,385 Subscription Shares at the Issue Price. The Subscription Letter contains customary conditions. The Subscription Shares are expected to be allotted on or around 14 November 2024.

The Subscription is conditional upon, inter alia, Shareholders approving the Resolutions 1 and 2 at the General Meeting, and compliance by the Company and Salonica GP in all material respects with their respective obligations under the Subscription Letter and Allotment.

Following completion of the Subscription, Salonica GP and its connected parties will hold 9,615,385 Ordinary Shares representing approximately 64.6 per cent. of the Enlarged Share Capital. As a result Salonica GP has entered into the Relationship Agreement with the Company and Zeus.

Information on the Salonica Group

Salonica GP is the general partner responsible for the management of Salonica Play.  Salonica Play is the investment entity that, through its general partner, has conditionally agreed to participate in the Subscription.  Salonica GP also acts as the general partner for Salonica Maroon, a limited partnership registered in Jersey which holds investment interests in Creams Café, the UK's market-leading dessert chain with approximately 100 locations, Allegro Foodservice, a prominent UK food manufacturer and distributor, Aaron Wallace, a men's afro-haircare and skincare brand, and Wahed Invest, a consumer fintech company. 

Salonica Capital, an FCA authorised and regulated entity, is an independent corporate finance firm providing financial advisory as well as both buy and sell side M&A advisory services. Salonica Capital has been appointed as the investment adviser to Salonica GP.

Information on the Proposed Directors

Othman Shoukat Majid, aged 37

Othman is a seasoned corporate financier and private equity professional with extensive experience in M&A and strategic advisory, specialising in the consumer, sports, entertainment, and leisure sectors. Before joining Salonica in 2016, Othman spent nearly a decade at KPMG in London, where he advised clients on high-profile mergers and acquisitions as part of the deal advisory team. Starting his career at KPMG in 2007, he qualified as a Chartered Accountant. Othman holds a BSc from Bayes Business School and a Master of Studies (MSt) from the University of Cambridge.

Othman will not be considered an independent director on appointment.

Richard Collett aged 48 -Proposed Director

Richard brings a wealth of financial expertise and experience from various sectors, including corporate finance, operational management, and compliance. Richard is currently Chief Financial Officer, and Director, at main market listed World Chess Plc. His career includes roles as COO at Ellwood Atfield Ltd, Head of Finance at Ten Group, where he oversaw finance, legal, and compliance matters, and as Client Finance Director at FD Solutions, providing financial advisory services to SMEs. Richard is a member of the Chartered Institute of Management Accountants and holds a Bachelor of Arts in Economics from the University of Leeds, along with a Graduate Diploma in Law from City University, London.

Richard will be considered an independent director on appointment.

Information on the Acquisition

Salonica Capital has introduced the Company to the Acquisition. The Acquisition would be of a newly incorporated company which is being established with a management team to acquire the global distribution rights of certain media assets from an established international media company.  Consideration for the Acquisition is expected to be settled via the issue of new Ordinary Shares in the capital of the Company. A fundraising may be undertaken immediately prior to readmission to accelerate the development and growth of the Company. As referenced previously, should the Acquisition complete as envisaged, Shareholders will each receive a further seven new Ordinary Shares by way of bonus issue for every four Ordinary Shares they hold.  

General Meeting

The Circular convening the General Meeting is today being posted to Shareholders and will be shortly available on the Company's website: https://cloudified-holdings.com/aim-rule-26.

Set out in the Circular is a notice convening a General Meeting of the Company to be held at the offices of Blake Morgan LLP, Apex Plaza, Forbury Road, Reading RG1 1AX  at 9.00 a.m. on 13 November 2024. The Notice of General Meeting sets out the proposed Resolutions to approve the Subscription upon which Shareholders will be asked to vote.

Resolution 1 - is a resolution to disapply certain takeover provisions in the Articles necessary to implement the Subscription.

Resolution 2 - is a resolution to disapply certain pre-emption rights in the Articles necessary to implement the Subscription.

Resolution 3 - is a routine resolution to disapply certain pre-emption rights in the Articles to issue a limited number of Ordinary Shares

To become effective the Resolutions require passing by a simple majority at a meeting of such Shareholders. In accordance with the Company's Articles, Resolution 1 shall be taken on a poll of Independent Shareholders. All existing Shareholders are considered to be Independent Shareholders for the purpose of Resolution 1.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Notes:

i.    References to times in this announcement are to London time (unless otherwise stated).

ii.    If any of the above times or dates should change, the revised times and/or dates will be notified by an announcement to an RIS.

iii.   The timing of the events in the above timetable and in the rest of this announcement is indicative only.

SUBSCRIPTION STATISTICS

DEFINITIONS

The following definitions apply throughout this announcement, unless the context requires otherwise or unless it is otherwise specifically provided: