AEC Education PLC
Share Subscription, Share Capital Reorganisation and Notice of General Meeting
The Company is delighted to announce that it has entered into a subscription agreement whereby, conditional on the passing of certain resolutions to be proposed at a general meeting of the Company, Cinnovation Incorporated (“Cinnovation”) will subscribe for 18,852,262 new ordinary shares in the capital of the Company (“New Ordinary Shares”) at 6p per New Ordinary Share raising a total of approximately £1,131,136 (the “Subscription”). On admission of the New Ordinary Shares to trading on AIM, the New Ordinary Shares will represent 29.9% of the enlarged share capital of the Company. The subscription price of 6 pence per New Ordinary Share represents a premium of 3.375p (approximately 129%) to the closing mid-market price of 2.625p per ordinary share on 2 December 2013.
In addition, the Company has entered into a conditional relationship agreement whereby Cinnovation will be entitled to appoint two persons it nominates as directors to the Board of the Company (such appointments being subject to the approval of the Company’s Nominated Adviser). The relationship agreement also governs some of the elements of the relationship between the Company and Cinnovation (as shareholder and through directors it nominates to the AEC board) by placing certain restrictions on Cinnovation which are standard for an agreement of this nature.
Share Capital Reorganisation
The par value of each existing ordinary share in the capital of the Company is 10p, which is the minimum price at which the Company’s ordinary shares can be issued. As the Company’s existing ordinary shares are now trading at below this price and have been trading at these levels for quite some time, in order to proceed with the Subscription, the Company is proposing to undertake a capital reorganisation (the “Capital Reorganisation”) so that the par value of its ordinary shares is reduced to below 6p (being the price at which the New Ordinary Shares are proposed to be issued pursuant to the Subscription). The proposal would, if passed, involve splitting each issued existing ordinary share into one New Ordinary Share of 5p and one deferred share of 5p (a “Deferred Share”). The Deferred Shares will be effectively valueless and further details of the rights attaching to them are summarised in the circular that is being sent to shareholders today in connection with the General Meeting (details of which are set out below).
Background on Cinnovation
Cinnovation is a subsidiary of the Cinnovation Group, a very successful and diverse organisation which contains a consultancy and training division. It has strong and growing interests in India and will join with AEC with the intention of expanding the Indian market and developing AEC’s market in the Middle East, East Africa and Nepal. The AEC directors believe that the appointments of Cinnovation’s nominees to its board will bring access to a wide range of skills and resources which will greatly assist AEC’s development plans for the future.
Update on AEC/Current Trading and Prospects
The interim accounts of the AEC Group for the six month period ended 30 June 2013 were announced on 16 September 2013 and contain the Board’s view on the current trading and prospects of the Group. As stated in the Chairman’s statement, the Group’s results for the six months ended 30 June 2013 showed a significant improvement in AEC’s European operations. Most importantly, its English language teaching operations in London returned to profitability and the new operation in Ireland also moved into profit at the end of the period. In addition, the Group’s Cyprus joint venture continued to trade profitably. While this remains encouraging, the continuing impact of the suspension of the EduTrust status in the Singapore College (announced in August of this year) continues to impact on the trading business of the Group. These issues are now being addressed and the reinstatement of EduTrust has been applied for with a decision from CPE expected in December.
The proceeds of the Subscription will be used by the Company to repay the loan from David Ho which was announced on 26 September 2013, in the amount of S$1,000,000 (approximately £485,000) and the balance used as further working capital for the Group.
A notice of General Meeting will be sent to the Company’s shareholders shortly convening a General Meeting to be held at WH Ireland, 24 Martin Lane, London EC4R 0DR at 9.00am on 20 December 2013 at which resolutions will be proposed:
The notice of General Meeting together with the accompanying circular to shareholders will also be available shortly on the Company’s website at www.malverninternational.com.
Admission to Trading
An application will be made to London Stock Exchange plc for the New Ordinary Shares to be issued pursuant to the Subscription and the New Ordinary Shares replacing the Company’s existing ordinary shares following the Capital Reorganisation to be admitted to trading on AIM (“Admission”). It is expected that Admission will become effective and the dealings in the New Ordinary Shares on AIM will commence at 8.00 am on 23 December 2013.
The directors of AEC consider that the resolutions to be proposed at the General Meeting are in the best interests of the Company and its shareholders as a whole and unanimously recommend that shareholders vote in favour of the resolutions to be proposed at the General Meeting, as they intend to do in respect of their own beneficial holdings, representing 28.81% of the issued share capital of the Company.
Liam Swords, Chairman of AEC, said: “I am delighted that Cinnovation have come on board as a substantial shareholder in AEC. The diverse range of skills and resources within their group will help to generate opportunities in product and market development and we greatly look forward to working with their teams to explore market opportunities where AEC currently have no penetration.”
For further information contact:
AEC Education plc Liam Swords, Chairman +44 (0) 7775 787 427 WH Ireland Limited (NOMAD) +44 (0)161 832 2174 Dan Bate Biddicks +44 (0) 20 3178 6378 Katie Tzouliadis