Originally published 9 December 2010
Keywords: Imperial Innovations Group, innovative rights issue, warrant issue, convertible B shares
AIM-quoted Imperial Innovations has raised approximately £140 million through a rights issue to shareholders and innovative warrant issue to major shareholders.
The equity raise was structured as a rights issue of new ordinary shares to all shareholders in combination with an issue of warrants to certain major shareholders giving rights to subscribe for a new class of convertible B shares, which will initially be partly-paid. The balance outstanding on these convertible B shares will be paid up by further instalments over a two year period, unless the holder elects to pay earlier. For legal reasons these shares could not be offered to all shareholders. However, the combination with the rights issue allows all shareholders to participate in the equity raise at the same price, and so avoid dilution.
The convertible B shares are not transferable, other than in a takeover offer, and will not be admitted to either trading on AIM or for settlement through CREST. They will automatically convert into fully paid transferable ordinary shares on the payment by the holder of the final instalment of the issue price. The shares carry the right to vote at general meetings but do not carry an entitlement to dividends. Imperial Innovations has resolved not to pay a dividend until the earlier of all the convertible B shares having converted and the due date for payment of the last instalment of the issue price.
This innovative structure was designed to give Imperial Innovations access to committed funds for the next 2 years, whilst not burdening the company with a large cash pile in the current environment of low interest rates, thereby allowing investors to retain use of their funds in the short term.
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