Servision PLC Regulatory News (SEV)

The information contained within this announcement is deemed by the Group to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). 

22 February 2017

SerVision PLC

("SerVision" or "the Company")

Subscription to raise US$2.0 million

SerVision AIM: (SEV), a leader in mobile live video streaming over wireless and cellular networks, is pleased to announce that it has secured $2 million of new capital from Cascade SVP, LLC ("Cascade"), a US based investment fund (the "Subscription"). Cascade has agreed to subscribe for 14,089,084 ordinary shares of 1p each in the capital of the Company (the "Subscription Shares") at a price of approximately 11.4 pence per Subscription Share ("Issue Price"), which is a significant premium to the closing mid-market price on 21 February 2017 and which values the Company at approximately £14.4 million.

Subscription

Under the terms of the subscription, Cascade has subscribed for 14,089,084 Subscription Shares in two tranches. $1.0 million is to be transferred in five business days, on receipt of which SerVision will issue 7,044,542 Subscription Shares to Cascade at the Issue Price. The second tranche of $1.0 million is to be transferred by Cascade in 90 days' time, on receipt of which the Company will issue a further 7,044,542 Subscription Shares to Cascade at the Issue Price.

This new injection of capital will place the Company in its strongest financial position for several years. The proceeds of the Subscription, together with internally generated cash flow, will be used to provide working capital to finance the increasing number of global opportunities for selling the IVG40-N product, particularly into the bus and coach market, as well as to reduce its debt position, including the scheduled repayment of its facility with CSS Alpha (BVI) Ltd and YA II PN Ltd.

The strengthened balance sheet, coupled with the Company's expectations of improved trading in 2017, means that SerVision should have sufficient working capital for the foreseeable future.

In addition to the $2 million subscription, Cascade have been granted an option to invest up to a further $4.0 million, in two equal tranches, at the same Company valuation (the "Options"). The first option period runs until 20 October 2017, with an option price per share of approximately 10.2p per share, and the second option period runs until 29 September 2018, with an option price per share of approximately 9.3p per share. The Options are conditional upon shareholder approval, as set out below.

A condition of the Subscription is that if the Company's shares are not listed on either the Main Market of the London Stock Exchange or on Nasdaq, or if the Company has not been sold for a price higher than the Issue Price, before 21 February 2019, then any new capital raised by the Company thereafter must first be used to buy back the Subscription Shares, together with any new ordinary shares issued pursuant to the Options, that are still held by Cascade at the same price(s) as they were issued. Such a buy back would require the Company to have sufficient distributable reserves, which may involve a capital reduction, and would also require shareholder approval.

Cascade is a fund set up by a small group of private investors, based in New York, who focus on the healthcare, biotechnology and technology sectors.

Gidon Tahan, Chairman and CEO of SerVision, commented, "This investment is a very positive endorsement for the Company and its future potential, and we welcome Cascade as one of our major shareholders. The Company has been under capitalised in recent years and this significant boost to our financial strength will allow us to pursue a number of opportunities around the world that, if converted into new customers, will help the Company to become cash flow positive."

Craig Flashner, a Director of Cascade, said, "We are very pleased to be investing in SerVision. The worldwide mobile DVR market is growing dramatically and we believe that SerVision has superior technology in this market. In addition, we believe there is significant potential in their relationship with Mobileye, which opens access to their customers worldwide."

Related party transaction

In event that the Company defaults on the terms of the Subscription, albeit that the board of SerVision believe that such an event is extremely unlikely to occur, Gidon Tahan, Chairman and CEO of SerVision, is providing a personal guarantee to Cascade to cover the issue of the Subscription Shares. Mr Tahan is receiving no payment, nor any other benefit, for providing this guarantee.

The provision of the guarantee by Mr Tahan is deemed to constitute a related party transaction under the AIM Rules for Companies. The directors of the Company (with the exception of Mr Tahan), having consulted with the Company's nominated adviser, Allenby Capital Limited, consider the terms of the guarantee by Mr Tahan to be fair and reasonable insofar as shareholders are concerned.

General meeting

In order to be able to grant the Options, and issue new ordinary shares pursuant to any future exercise of the Options, the Company will need to convene a general meeting proposing that shareholders approve an increase in its authorities to grant rights to subscribe for new ordinary shares. The Company expects to publish a circular convening a general meeting in the next couple of weeks, when it will be posted to all shareholders. A further announcement will be made at the time of posting of the circular to shareholders.

Admission to trading on AIM

Following receipt of the initial $1.0 million from Cascade, application will be made to the London Stock Exchange for the first 7,044,542 Subscription Shares to be admitted to trading on AIM ("Admission"). A further announcement regarding the timing of Admission will be made following receipt of the funds from Cascade.

Significant shareholding

Following the issue of the first 7,044,542 Subscription Shares, Cascade will hold 7,044,542 Ordinary Shares, representing 5.3 per cent of the Company's issued share capital. Following completion of the Subscription, Cascade will hold 14,089,084 Ordinary Shares, representing 10 per cent of the Company's issued share capital. Should Cascade choose to exercise the Options in full, and assuming that no other new ordinary shares are issued by the Company, then Cascade would hold up to 27 per cent of the enlarged issued share capital of the Company.

Total voting rights

Following the issue of the first tranche of 7,044,542 Subscription Shares, the issued share capital of the Company will consist of 133,846,293 ordinary shares of 1p each with one voting right each. The Company does not hold any ordinary shares in treasury. Therefore the total number of ordinary shares and voting rights in the Company will be 133,846,293. The above figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

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Notes to Editors

SerVision is a pioneer in the field of security communications technology and a leading developer and manufacturer of fully integrated video recording and transmission systems for homeland security and transportation applications. The Company's core technology is proprietary video compression which is optimised for streaming real-time video over any type of cellular or narrowband network.