Placing and Subscription

6 April 2017

Corero Network Security plc

("Corero" or the "Company")

 

Placing and Subscription to raise £5.6 million, approval of waiver of obligations

under Rule 9 of the Takeover Code and Notice of General Meeting

 

Corero, the AIM listed network security company, is pleased to announce that, further to the announcement on 30 March 2017, it has conditionally raised approximately £5.6 million (before expenses) through a Placing and Subscription at a Placing Price of 5 pence per new Ordinary Share.  Due to the level of demand from existing shareholders, Jens Montanana, the Company's Chairman, has agreed to reduce the amount he will subscribe for and has conditionally agreed to subscribe for approximately £3.4 million of the Subscription and Placing, increasing his shareholding in the Company to approximately 44 per cent. of the issued share capital of the Company as enlarged by the Transaction.

 

Highlights

 

·    Placing and Subscription of up to 112,000,000 new Ordinary Shares at the Placing Price of 5 pence per Ordinary Share to raise up to £5.6 million (before expenses)

 

·    The Placing Price represents a discount of 5 per cent. to the Company's closing mid-market share price on 5 April 2017, being the latest practicable date prior to this announcement

 

·     The net proceeds will be used to support SmartWall sales and marketing activities in the US and Europe, for further development of the SmartWall product and for the general working capital requirements of the Group

 

·    The Placing and Subscription are conditional, inter alia, upon Independent Shareholders approving the Whitewash Resolution and Shareholders approving the other Resolutions at a General Meeting. A circular containing a Notice of General Meeting will be sent to Shareholders today

 

Capitalised terms in this announcement shall have the same meaning as in the Circular that will be posted to shareholders today.

 

 

Introduction

The Company has today announced a conditional Placing and Subscription to raise up to approximately £5.6 million before expenses by the issue and allotment by the Company of up to 112,000,000 new Ordinary Shares at the Placing Price of 5 pence per Ordinary Share to certain institutional investors, the Concert Party and other investors.  In the announcement made by the Company on 30 March 2017, Jens Montanana indicated that he proposed to subscribe for no less than £4.2 million in the Subscription and Placing, thereby increasing his shareholding in the Company to above 50 per cent. However, due to the level of demand from existing shareholders to participate in the Placing, Jens Montanana has agreed to reduce the amount that he will subscribe for in the Subscription.

 

The Concert Party consists of Jens Montanana and Andrew Miller. As at the date of this announcement Jens Montanana has an interest in 69,303,990 Ordinary Shares, representing 34.1 per cent of the Company's current issued share capital and Andrew Miller has an interest in 891,437 Ordinary Shares, representing 0.4 per cent of the Company's current issued share capital. The Concert Party therefore has an aggregate holding in the Company of 70,195,427 Ordinary Shares, representing 34.5 per cent of the Company's current issued share capital. In addition, the Concert Party has an interest in the Company of a total of 2,921,000 Existing CP Share Options. Should the Concert Party exercise its rights under the Existing CP Share Options in full, and assuming no other Ordinary Shares are issued by the Company, then the Concert Party would have an interest in the Company of 73,116,427 Ordinary Shares representing 35.4 per cent of the Company's issued share capital as enlarged by the exercise of the 2,921,000 Existing CP Share Options.

 

Under the terms of their Subscription Agreements, Jens Montanana and Andrew Miller have conditionally agreed to subscribe for 68,696,010 Subscription Shares and 200,000 Subscription Shares respectively as part of the Transaction. Upon the issue of Subscription Shares to the Concert Party, it will together hold 44.1 per cent of the Enlarged Share Capital. Conditional on the passing of the Resolutions, the Company is also proposing to grant share options to each member of the Concert Party under the Company's existing share option scheme, immediately following the General Meeting, which will vest subject to certain performance criteria. It is proposed that the Concert Party will be granted an aggregate of 2,913,000 New CP Share Options. Should the Concert Party exercise its rights under its Existing CP Share Options and New CP Share Options in full and the Transaction be completed, and assuming no other Ordinary Shares are issued by the Company following the date of the Circular (except for the New Ordinary Shares) and the Transaction is fully subscribed, then the Concert Party would have an interest in the Company of 144,925,437 Ordinary Shares, representing 45.1 per cent of the Company's issued share capital at that date.

 

Since (i) the proposed subscription of Subscription Shares by Jens Montanana  and the Concert Party will result in Jens Montanana and the Concert Party increasing its shareholding; and/or (ii) the exercise of any CP Share Options (being any Existing CP Share Options or New CP Share Options), would increase the percentage of Ordinary Shares in which Jens Montanana and the Concert Party has an interest, without a waiver of the obligations under Rule 9 of the Takeover Code (commonly referred to as a "Whitewash"), Jens Montanana and the Concert Party would be obliged to make a general offer to Shareholders under Rule 9 of the Takeover Code in either circumstance. The Panel has agreed to a waiver, subject to the Whitewash Resolution being approved at the General Meeting (on a poll) by Independent Shareholders who hold in excess of 50 per cent. of the Independent Shares.

 

The Transaction and the grant of New CP Share Options are therefore each conditional, inter alia, upon Shareholders approving the Whitewash Resolution and the Transaction is also conditional upon Shareholders approving the resolutions that will grant the Directors the authority to allot the New Ordinary Shares and to disapply statutory pre-emption rights in respect of the New Ordinary Shares, at the General Meeting. Admission is expected to occur no later than 8.00 a.m. on 25 April 2017 or such later time and/or date as Cenkos and the Company may agree. The Placing and Subscription are not underwritten.

 

The purpose of the Circular is to explain the background to, and the reasons for, the Resolutions and the proposed Transaction and to explain why the Board considers the Transaction to be in the best interests of the Company and its Shareholders as a whole, and why the Board recommends that you vote in favour of Resolutions 2 and 3 and the Independent Directors alone recommend that you vote in favour of the Whitewash Resolution.

Corero Network Security plc - Nature of Business

Corero is positioned to be a leader in real-time, high-performance distributed denial-of-service ("DDoS") mitigation solutions. Service providers, hosting providers and online enterprises rely on Corero's award winning technology to eliminate the DDoS threat to their environment through automatic attack detection and mitigation, coupled with comprehensive network visibility, analytics and reporting. Corero's next generation technology provides a First Line of Defense® against DDoS attacks in the most complex environments while enabling a more cost effective economic model than previously available.

Background to and reasons for the Transaction

The Transaction is being undertaken to support the execution of the Company's business plan which is focused on selling into the target market for its SmartWall Threat Defense System ("SmartWall") product, namely service providers including telecommunication ISPs, data centre hosting providers, multiple service operators and mobile operators and online enterprises.

 

The Company's SmartWall products enable it to address the growing service provider market demand for DDoS protection solutions. The Board believes that the SmartWall has several competitive differentiators to its peers and that Corero is well positioned to capitalise on the evolving DDoS defence market and the increasing requirement for real-time, automatic DDoS mitigation. This is a market the SmartWall was designed to address.

 

As set out in a trading update released by the Company on 9 February 2017 and the audited accounts of the Company for the year ended 31 December 2016 (published today), the Company had net cash at 31 December 2016 of $2.9 million.  Corero recorded an EBITDA loss (operating loss before depreciation, amortisation and financing) for the year ended 31 December 2016 of approximately $5.1 million (2015: EBITDA loss $6.4 million). In order to get to the position of being cash generative, the Company requires further financing support. Since the trading update on 9 February 2017, the Board has explored various forms of financing, both equity and debt, and following consultation with key Shareholders, has concluded that an equity fundraising is the most appropriate form of financing for the Company.  

 

Use of proceeds

The Company intends to raise up to £5.6 million before expenses via the Placing and Subscription. The estimate of expenses for the Transaction is expected to be approximately £0.15 million.

 

The net proceeds of the Transaction will be deployed to support SmartWall sales and marketing activities in the US and Europe, for further development of the SmartWall product and for the general working capital requirements of the Group.

 

If the Resolutions are not approved by the requisite number of Independent Shareholders and Shareholders (as applicable) and/or the Placing and Subscription do not proceed for any other reason, the Company will be required to immediately secure alternative financing for the purposes set out above from alternative sources.

 

The Placing and Subscription

Details of the Placing

The Company has conditionally raised approximately £2.1 million before expenses by the conditional Placing of up to 42,803,990 Placing Shares at the Placing Price to the Placees.

The Placing is conditional, inter alia, upon:

a)      the passing of the Whitewash Resolution by Independent Shareholders on a poll;

b)      the passing of the Resolutions (excluding the Whitewash Resolution) at the General Meeting by Shareholders;

c)      the Placing Agreement becoming or being declared unconditional in all respects and not having been terminated in accordance with its terms prior to Admission;

d)      the Subscription Agreements becoming or being declared unconditional in all respects and not having been terminated in accordance with their terms prior to Admission; and

e)      Admission becoming effective by no later than 8.00 a.m. on 25 April 2017 or such later time and/or date (being no later than 8.00 a.m. on 9 May 2017) as Cenkos and the Company may agree.

If any of the conditions are not satisfied, the Placing Shares will not be issued and all monies received from the Placees will be returned to the Placees (at the Placees' risk and without interest) as soon as possible thereafter. The Placing is not being underwritten.

The Placing Shares will be issued free of all liens, charges and encumbrances and will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

Application will be made to the London Stock Exchange for the admission of the Placing Shares to trading on AIM. It is expected that Admission will occur and that dealings will commence at 8.00 a.m. on 25 April 2017 at which time it is also expected that the Placing Shares will be enabled for settlement in CREST.

Details of the Subscription

The Company has conditionally raised £3.5 million before expenses by the conditional Subscription of 69,196,010 Subscription Shares at the Placing Price by each of Jens Montanana, Andrew Miller and Andrew Lloyd. Each of Mr Montanana, Mr Miller and Mr Lloyd have entered into a Subscription Agreement with the Company pursuant to which each has conditionally agreed to subscribe for a specific number of Subscription Shares set out in that person's Subscription Agreement. None of the Subscription Agreements are conditional on any other Subscription Agreement but each Subscription Agreement is subject to the same conditions.

The Subscription is conditional upon the passing of the Whitewash Resolution by Independent Shareholders on a poll, the passing of the Resolutions (excluding the Whitewash Resolution) at the General Meeting by Shareholders and Admission. The Subscription is not being underwritten.

The Subscription Shares will be issued free of all liens, charges and encumbrances and will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

Application will be made to the London Stock Exchange for the admission of the Subscription Shares to trading on AIM. It is expected that Admission will occur and that dealings will commence at 8.00 a.m. on 25 April 2017 at which time it is also expected that the Subscription Shares will be enabled for settlement in CREST.

Directors' Participation in the Transaction and Related Party Transaction

Under the terms of the Subscription Agreements, Jens Montanana, Andrew Miller and Andrew Lloyd, each a Director of the Company, have conditionally agreed to subscribe for new Ordinary Shares as part of the Subscription. The interests of the Directors on 5 April 2017 (being the last practicable date prior to publication of this announcement) are, and immediately following Admission will be, as follows:

Director	Number of Ordinary Shares held on 5 April 2017 (being the last practicable date prior to publication of this announcement)	Number of New Ordinary Shares subscribed for in the Subscription	Resulting number of Ordinary Shares held immediately following Admission	Resulting holding as a percentage of the Enlarged Share Capital
Jens Montanana	69,303,990*	68,696,010**	138,000,000	43.8%
Andrew Miller	891,437	200,000	1,091,437	0.3%
Andrew Lloyd	0	300,000	300,000	0.1%
Total	70,195,427	69,196,010	139,391,437	44.2%

* of which 21,700,181 Ordinary Shares are held in the name of JPM International Limited, which is wholly owned by Jens Montanana, and 29,850,000 Ordinary Shares are held in the name of The New Millennium Technology Trust.

** which will be subscribed for by JPM International Limited, which is wholly owned by Jens Montanana, or by The New Millennium Technology Trust, of which Jens Montanana is a beneficiary.

 

The participation in the Placing and Subscription by Jens Montanana, Andrew Miller and Andrew Lloyd, as Directors of the Company, constitutes a related party transaction pursuant to the AIM Rules. Richard Last and Ashley Stephenson, being the only Directors who will not participate in the Placing and Subscription, consider, having consulted with Cenkos, the Company's nominated adviser, that the participation in the Placing and Subscription by these Directors, as set out above, is fair and reasonable insofar as Shareholders are concerned.  

The Company also proposes to grant share options over Ordinary Shares to each member of the Concert Party immediately following the General Meeting, conditional on the passing of the Whitewash Resolution. It is proposed that Jens Montanana and Andrew Miller will receive 994,000 New CP Share Options and 1,919,000 New CP Share Options, respectively. If the Whitewash Resolution is not approved by the requisite number of Independent Shareholders, the grant of New CP Share Options to the members of the Concert Party will not proceed.

The Takeover Code

The Takeover Code is issued and administered by the Takeover Panel. The Takeover Code applies, inter alia, to all public companies which have their registered office in the United Kingdom. The Company is such a company and Shareholders are therefore entitled to the protections afforded by the Takeover Code.

 

Under Rule 9 of the Takeover Code, any person who acquires an interest (as such term is defined in the Takeover Code) in shares which, taken together with the shares in which he and persons acting in concert with him are interested, carry 30 per cent. or more of the voting rights in a company that is subject to the Takeover Code, is normally required to make a general offer to all of the remaining shareholders to acquire their shares. Similarly, when any person, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30 per cent. of the voting rights but does not hold shares carrying more than 50 per cent. of the voting rights of such a company, a general offer will normally be required if any further interests in shares are acquired which increases the percentage of shares carrying voting rights by any such person. Such an offer would have to be made in cash at a price not less than the highest price paid by him, or by any member of the group of persons acting in concert with him, for any interest in shares in the company during the 12 months prior to the announcement of the offer. A shareholder will, in such circumstances, incur an obligation to make a mandatory offer unless the consent of the Takeover Panel to a waiver of such an obligation is obtained.

 

Shareholders should be aware that if the Whitewash Resolution is passed and the Subscription completes, then following completion of the Transaction, Jens Montanana will hold an interest in Ordinary Shares carrying more than 30 per cent., but not more than 50 per cent., of the voting rights of the Company's voting share capital.  As such, for the purposes of the provisions of Rule 9 of the Takeover Code, any further increase in Jens Montanana's interest in Ordinary Shares will be subject to the provisions of Rule 9 of the Takeover Code.

 

Shareholders should also be aware that if the Whitewash Resolution is passed and the Subscription completes, then following completion of the Transaction, the Concert Party will also hold an interest in Ordinary Shares carrying more than 30 per cent., but not more than 50 per cent., of the voting rights of the Company's voting share capital. As a result, for as long as they continue to be treated as acting in concert, any further increase in the Concert Party's interest in Ordinary Shares will also be subject to the provisions of Rule 9 of the Takeover Code. Furthermore, Andrew Miller will not be able to increase his percentage interest in Ordinary Shares through or between a Rule 9 threshold without Panel consent.

 

The Concert Party

 

Under the Takeover Code, a concert party arises when persons acting together pursuant to an agreement or understanding (whether formal or informal), actively co-operate to obtain or consolidate control of, or frustrate the successful outcome of an offer for the Company. Control means an interest or interests in shares carrying an aggregate of 30 per cent. of more of the voting rights of the Company irrespective of whether the holding or holdings give de facto control.

 

The Company's largest Shareholder and Non-Executive Chairman, Jens Montanana, together with Andrew Miller, Chief Financial Officer, have an aggregate holding in the Company of 34.5 Ordinary Shares at the date of this announcement. As set out in a circular issued by the Company dated 14 July 2010 and a circular issued by the Company dated 25 February 2013, Jens Montanana and Andrew Miller are deemed by the Takeover Panel to be acting in concert for the purposes of the Takeover Code. Both members of the Concert Party are Directors and employees of the Company.

 

Should the Transaction complete, the Concert Party would on Admission in aggregate hold 139,091,437 Ordinary Shares of the Company representing 44.1 per cent. of the Company's Enlarged Share Capital at that date. Further if the Transaction completes and the Concert Party exercise their rights under both the Existing CP Share Options and New CP Share Options in full, and assuming no other Ordinary Shares are issued by the Company following the date of this anouncement (except for the New Ordinary Shares) and the Placing and Subscription is fully subscribed, then the Concert Party would have an interest in the Company of 144,925,437 Ordinary Shares representing 45.1 per cent of the Company's issued share capital at that date. Full details of the Concert Parties interests on Admission and potential interest in Ordinary Shares if the members of the Concert Party exercise their rights under the CP Share Options are set out below:

 

Director	Number of Ordinary Shares held on 5 April 2017 (being the last practicable date prior to publication of this announcement)	Existing holding as a percentage of the Existing Share Capital	Number of Existing CP Share Options held on 5 April 2017 (being the last practicable date prior to publication of this announcement)	Number of new Ordinary Shares subscribed for in the Subscription	Resulting number of Ordinary Shares held immediately following Admission	Resulting holding as a percentage of the Enlarged Share Capital	Number of New CP Share Options to be  granted conditionally on the passing of the Resolutions	Resulting holding as a percentage of the Enlarged Share Capital assuming the exercise of all of the CP Share Options and assuming no further issue of Ordinary Shares
Jens Montanana	69,303,990*	34.07%	425,000	68,696,010**	138,000,000	43.8%	994,000	43.4%
Andrew Miller	891,437	0.44%	2,496,000	200,000	1,091,437	0.3%	1,919,000	1.7%
Total	70,195,427	34.51%	2,921,000	68,896,010	139,091,437	44.1%	2,913,000	45.1%

 

* of which 21,700,181 Ordinary Shares are held in the name of JPM International Limited, which is wholly owned by Jens Montanana, and 29,850,000 Ordinary Shares are held in the name of The New Millennium Technology Trust.

** which will be subscribed for by JPM International Limited, which is wholly owned by Jens Montanana, or by The New Millennium Technology Trust, of which Jens Montanana is a beneficiary.

 

Further detail of the Concert Party's interests in the Company prior to and subsequent to the Transaction, both before and after any potential exercise of their rights over the Existing CP Share Options and the New CP Share Options, is set out in paragraph 3 of Part III of the Circular.

 

The Concert Party is not financing the Subscription from any debt facility or other instrument.

 

Rule 9 Waiver

The issuance of 68,696,010 Subscription Shares to Jens Montanana pursuant to the Transaction will result in Jens Montanana being beneficially interested in approximately 43.8 per cent. of the Enlarged Share Capital.  Further, the issuance of 68,896,010 Subscription Shares to the Concert Party pursuant to the Transaction, which includes the subscription by Jens Montanana, will result in the Concert Party being beneficially interested in approximately 44.1 per cent. of the Enlarged Share Capital.

 

In addition, conditional on the passing of the Resolutions, the Concert Party will have an interest in the Company of a total of 2,913,000 New CP Share Options and the Concert Party currently has an interest in the Company of a total of 2,921,000 Existing CP Share Options. Should the Concert Party exercise their rights under the CP Share Options in full and the Transaction be completed, and assuming no other Ordinary Shares are issued by the Company following the date of this announcement (except the New Ordinary Shares) and the Placing and Subscription is fully subscribed, then the Concert Party would have an interest in the Company of 144,925,437 Ordinary Shares representing 45.1 per cent of the Company's issued share capital at that date.

 

The Panel has agreed to waive the obligation on Mr Montanana and the Concert Party to make a general offer that would otherwise arise as a result of their subscription of Subscription Shares as part of the Transaction and/or the exercise of Existing CP Share Options and/or the grant of New CP Share Options, subject to the approval of the Independent Shareholders, taken on a poll.  The waiver of the obligation on Mr Montanana and the Concert Party to make a general offer that would otherwise arise as a result of the exercise of CP Share Options is being made retrospectively as certain Existing CP Share Options were granted on 3 April 2013, 12 May 2014, 24 April 2015 and 7 January 2017, further details of which are set out in paragraph 3 of Part III. Accordingly, the Whitewash Resolution is being proposed at the General Meeting to approve the Rule 9 Waiver in respect of the Concert Party participating in the Subscription and/or for the future exercise of any of the Existing CP Share Options and/or the grant and future exercise of the New CP Share Options. None of the Placees or Subscribers (who include the Concert Party) will be entitled to vote on the Whitewash Resolution.

 

 

Intentions of the Concert Party

The Concert Party has confirmed that, if the Whitewash Resolution is passed by the Independent Shareholders on a poll, there is no agreement, arrangement or understanding for the transfer of their Ordinary Shares to any third party. Save as set out below, the Concert Party is not intending to seek any changes in respect of: (i) the composition of the Board, nor the Company's plans with respect to the continued employment of employees and management of the Company and its subsidiaries (including any material change in conditions of employment); (ii) the Company's future business and its strategic plans; (iii) the location of the Company's place of business; (iv) employer contributions into any of the Company's pension schemes, the accrual of benefits for existing members, nor the admission of new members; (v) redeployment of the Company's fixed assets;  or (vi) the continuation of the Ordinary Shares being admitted to trading on AIM.

 

Current trading

The Company has today released its annual audited results for the year ended ending 31 December 2016. A copy of the annual audited results for the year ended ending 31 December 2016 is available on the Company's website at: www.corero.com/investors.

 

Independent advice provided to the Board

The Takeover Code requires the Board to obtain competent independent advice regarding the merits of the Transaction which is the subject of the Whitewash Resolution, the increase of the Concert Party's controlling position and the effect it will have on the Shareholders generally. Accordingly, Cenkos, as the Company's financial adviser, has provided formal advice to the Board regarding the Transaction.  Cenkos confirms that it is independent of Jens Montanana and Andrew Miller, being the Concert Party, and has no commercial relationship with them.

 

Irrevocable undertakings

The Company has received irrevocable undertakings to vote in favour of all Resolutions, including the Whitewash Resolution, from certain Independent Shareholders who in aggregate have a beneficial interest in respect of 8,265,975 Ordinary Shares representing approximately 14.2 per cent. of the Existing Ordinary Shares held by Independent Shareholders. This includes irrevocable undertakings to vote in favour of the Resolutions received from the Independent Directors, who hold in aggregate 1,316,667 Ordinary Shares representing approximately 2.3 per cent. of the Existing Ordinary Shares held by Independent Shareholders.

In addition, the Company has received irrevocable undertakings to vote in favour of the Resolutions, save for the Whitewash Resolution on which they are not able to vote, from all of the Subscribers (who include the Concert Party) and from certain of the Placees who in aggregate have a beneficial interest in respect of 125,062,976 Ordinary Shares representing approximately 61.5 per cent. of the Existing Ordinary Shares.

General Meeting

The Directors do not currently have the authority to allot all of the New Ordinary Shares on a non-pre-emptive basis and, accordingly, the Board is seeking the approval of Shareholders to allot the New Ordinary Shares at the General Meeting.

 

You will find set out at the end of the Circular a notice convening a general meeting of the Company to be held at 11.00 a.m. on 24 April 2017 at the offices of Redleaf Communications, First Floor, 4 London Wall Buildings, Blomfield Street, London, EC2M 5NT, at which the following Resolutions will be proposed to approve:

 

Ordinary Resolutions

1.             the Whitewash Resolution;

2.             authority for the Directors to allot the New Ordinary Shares up to a maximum aggregate  amount of £1,120,000 (being up to 112,000,000 New Ordinary Shares (the maximum number available under the Placing and Subscription)); and

 

Special Resolution

3.             the disapplication of the statutory pre-emption rights in connection with the allotment of up to 112,000,000 New Ordinary Shares pursuant to the Placing and Subscription.

 

In accordance with the requirements of the Takeover Panel for granting the Rule 9 Waiver in relation to the Transaction, the Whitewash Resolution will be taken on a poll of Independent Shareholders.

 

To be passed, Resolution 2 (proposed to be passed as an ordinary resolution) will require a simple majority, and Resolution 3 (proposed to be passed as a special resolution) will require a majority of not less than 75 per cent. of persons voting in person or on a poll by proxy in favour of the relevant Resolution.

 

The authorities to be granted pursuant to Resolutions 2 and 3 shall expire on whichever is the earlier of the conclusion of the Annual General Meeting of the Company to be held on 20 June 2017 or the date falling six months from the date of the passing of the Resolutions 2 and 3 (unless renewed, varied or revoked by the Company prior to or on that date) and shall be in addition to the Directors' authorities to allot relevant securities and dis-apply statutory pre-emption rights granted at the Company's Annual General Meeting held on 15 June 2016.

 

Recommendation

The Independent Directors consider the Transaction to be in the best interests of the Company and its Shareholders as a whole. The Independent Directors, who have been so advised by Cenkos, consider that the Transaction is fair and reasonable and in the best interests of the Independent Shareholders and the Company as a whole. In providing advice to the Independent Directors, Cenkos has taken into account the Independent Directors' commercial assessments.   

 

The Independent Directors unanimously recommend that Shareholders vote in favour of the Whitewash Resolution, as they have undertaken to do in respect of their own beneficial holdings, representing approximately 0.7 per cent. in aggregate of the Existing Ordinary Shares. Jens Montanana and Andrew Miller, who are members of the Concert Party and Andrew Lloyd, who is participating in the Subscription, are not deemed to be independent for the purpose of this recommendation.

 

The Directors consider the Placing and Subscription to be in the best interests of the Company and its Shareholders as a whole. The Directors as a whole unanimously recommend that Shareholders vote in favour of all the Resolutions (excluding the Whitewash Resolution), as they have undertaken to do in respect of their own beneficial holdings, representing approximately 35.2 per cent. in aggregate of the Existing Ordinary Shares.

 

The Transaction is conditional, inter alia, upon the passing of the Resolutions at the General Meeting. Shareholders should be aware that if the Resolutions are not approved at the General Meeting, the Placing and Subscription will not proceed. Should the Placing and Subscription not proceed, the Company cannot be certain that suitable financing will be available in the required amounts or on acceptable terms for the working capital requirements of the Group.

 

Important Information

 

The distribution of this announcement and the offering of the Firm Placing Shares, the Subscription Shares and the Offer Shares in certain jurisdictions may be restricted by law.  No action has been taken by the Company or Cenkos Securities that would permit an offering of such shares or possession or distribution of this announcement or any other offering or public material relating to such shares in any jurisdiction where action for that purpose is required.  Persons into whose possession this announcement comes are required by the Company and Cenkos Securities to inform themselves about, and to observe such restrictions.

 

This announcement contains (or may contain) certain forward-looking statements with respect to certain of the Company's current expectations and projections about future events.  These statements, which sometimes use words such as "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning, reflect the directors' beliefs and expectations and involve a number of risks, uncertainties and assumptions that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement.  Statements contained in this announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future.  The information contained in this announcement is subject to change without notice and neither Cenkos Securities nor, except as required by applicable law, the Company assumes any responsibility or obligation to update publicly or review any of the forward-looking statements contained herein.  You should not place undue reliance on forward-looking statements, which speak only as of the date of this announcement.

 

Cenkos Securities, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting solely as nominated adviser and broker to the Company in connection with the Firm Placing and this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to the clients of Cenkos Securities or for affording advice in relation to this announcement or any matters referred to herein.  The responsibilities of Cenkos Securities as the Company's nominated adviser and broker under the AIM Rules for Companies and the AIM Rules for Nominated Advisers are owed solely to the London Stock Exchange plc and are not owed to the Company or to any director of or shareholder of the Company or any other person, in respect of his decision to acquire shares in the capital of the Company in reliance on any part of this announcement, or otherwise.

 

 

Enquiries:

 

Corero Network Security plc
Andrew Miller, CFO		Tel: 01895 876 382
Cenkos Securities plc		Tel: 020 7397 8900
Bobbie Hilliam - NOMAD Alex Aylen - Corporate Broking
Redleaf Communications		Tel: 020 7382 4747
Rebecca Sanders-Hewett/David Ison/Susie Hudson	[email protected]