RNS – Fundraising

28 December 2016 


(‘Intercede’, the ‘Company’ or the ‘Group’)

Proposed Issue of Convertible Loan Notes and Subscription Share

Intercede, the software and service company specialising in identity, credential management and secure mobility is pleased to announce that it has conditionally raised a total of approximately £5.0m (the “Fundraising”) through the issue of £4.495m of convertible loan notes (“CLNs”) which are convertible at 68.8125p and a subscription for up to 877,192 ordinary shares of 1p in the Company (“Ordinary Shares”) at a price of 57.0p per Ordinary Share. The Fundraising remains conditional on approval by shareholders of the Company and it is expected that a notice of General Meeting will shortly be sent to shareholders.

Background to, and reasons for, the Fundraising

On 16 September 2016, the Company announced the following trading update:

The Company announces that it has had a slow start to the current financial year and is continuing to experience delays in the receipt of anticipated MyID license orders from both new and existing customers. Consequently, trading for the year to date is below expectations and the prior year.

The Company still has a strong pipeline of MyID license opportunities and is continuing to make good progress in pursuit of its short to medium term strategic objectives. However, the Board recognises that revenues for the full year are now likely to be lower than last year’s record sales of £11.0m.

In light of current trading, it is unlikely that the Company will generate sufficient cash in the financial year ending 31 March 2017 to continue to support the Company’s rate of investment in its main areas as initially planned. The Board believes that to continue the journey to becoming a leading enabler of digital trust services and technology for mobile devices and the “Internet of Things”, the Company must undertake the Fundraising to take advantage of the large market opportunity it believes exists.

Use of proceeds

The net proceeds of the Fundraising will be used to continue to support the Company’s main areas of selective investment, including:

  • The development of mobile security applications involving interoperability with technologies such as iOS, Android, Windows and BlackBerry.
  • The establishment and launch of MyTAM, a cloud-based service that enables organisations such as app developers, service providers, banks and media streaming companies to load apps into the TEE built into chipsets in a rapidly increasing proportion of Android devices.
  • Increased collaboration with major industry players such as Intel, Microsoft, ARM and Citrix.
  • Creation of a dedicated Intercede Services team focused on delivering Intercede solutions into the consumer market.
  • Enhancing the core MyID platform to support US Standard FIPS 201-2 compliant derived credentials, thereby extending Intercede’s dominant position in the US federal government PIV market to mobile devices.
  • Re-engineering and expansion of the MyID platform as a cloud-based service to improve scalability to consumer levels and to ensure that all of the new areas of opportunity are supported.
  • Sales and marketing to promote and protect the MyID, MyTAM and RapID names and technology and to build industry relationships.

Information on the CLNs and the Subscription Shares

The issue of the CLNs remains conditional on:

  • the directors of the Company approving the terms of, and the transactions contemplated by, the Subscription Agreement and CLN Instrument;
  • the Company granting security by way of a composite guarantee and debenture in favour of Welbeck to secure the repayment of principal and interest due on the CLNs to the CLN Subscribers; and
  • the passing of the Resolution (which will authorise and empower the directors of the Company to allot the CLNs during the period of five years following the date on which the Resolution is passed).
  • In addition, £1.0m of the £4.495m of CLN’s is conditional on not less than £4.0m being raised in the current fundraising process and on the £1.0m being paid to an offshore bank account which the Company intends to open prior to 31 January 2017.

As and when the CLNs (or any part of them) are due to be redeemed in accordance with the CLN Instrument, the Company shall pay to the CLN Subscriber entitled thereto the principal amount of the CLNs to be redeemed at par together with any accrued and unpaid element of interest (after deduction of tax) up to (but excluding) the date of redemption. The final redemption date is the date falling five years and one day after the date of execution of the CLN Instrument (the Final Redemption Date).

Until the CLNs are redeemed in accordance with the CLN Instrument, the Company shall accrue (and on redemption pay to the relevant CLN Subscriber) interest (after deduction of tax) on the principal amount of the Notes. Interest on the CLNs shall accrue in respect of each interest period at the rate of 8 per cent. per annum.

The Subscription Agreement contains undertakings and warranties given by the Company to the CLN Subscribers and Welbeck (as agent for the CLN Subscribers), including as to the accuracy of information contained in this document, to matters relating to the Group and its business and a customary indemnity given by the Company to Welbeck (in its capacity as agent and security trustee for the CLN Subscribers) in respect of liabilities arising out of or in connection with the CLNs.

The CLNs are convertible into Shares upon the terms set out in the CLN Instrument. A CLN Subscriber shall have the right at any time from the date of issue of the CLNs until the Final Redemption Date to serve a conversion notice on the Company to convert all or part of his CLNs outstanding into Shares at the Conversion Price which for the £4.495m of CLNs referred to above will be £0.688125. Any Shares issued as a result of a Conversion will be issued credited as fully paid up, including any premium thereon, and will rank pari passu with the existing Shares for all dividends and other distributions in respect of the financial year or accounting period of the Company in which the Conversion falls, provided that the record date for such dividends or other distributions falls after the date on which Conversion takes place. In all other respects the Shares issued on Conversion will rank pari passu and form one class with the other Shares in issue in the same class as the Shares on the Conversion date and will carry the rights set out in the articles of association of the Company.

The CLNs are repayable early on certain customary events of default.

The CLNs are not being made available to the public and are not being offered or sold in any jurisdiction where it would be unlawful to do so.

Repayment of principal and interest due on the CLNs to the CLN Subscribers shall be secured by a composite guarantee and debenture to be granted by each member of the Group registered in England in favour of Welbeck (as security trustee for the CLN Subscribers).

The Company is also proposing to raise up to £500,000 (before fees and expenses) by the issue of Subscription Shares. The issue of the Subscription Shares is conditional on AIM Admission becoming effective and not less than £3,500,000 of CLNs being unconditionally allotted. The quantum of Subscription Shares is 10 per cent of the value of the CLN’s to be initially issued subject to a maximum of £500,000. The Subscription Shares will be issued at a price of 57.0p.

Notice of General Meeting

A Circular and notice convening a General Meeting, to be held at the offices of the Company at Lutterworth Hall, St. Mary’s Road, Lutterworth, Leicestershire, LE17 4PS at 11.00 a.m. on 27 January 2017, will be posted to shareholders shortly and will be available from the Company’s website at https://www.intercede.com/about-investors. At the General Meeting the Resolution will be proposed as a special resolution authorising the Directors to issue the CLNs on a non-pre-emptive basis. This authorisation will last for a period of five years after the date on which the Resolution is passed. The allotment of the Subscription Shares will utilise the existing authority and power granted to the directors of the Company at the annual general meeting held on 14 September 2016.

The Directors believe that the Resolution to be proposed at the General Meeting is in the best interests of the Company and Shareholders as a whole and unanimously recommend that shareholders vote in favour of the Resolution as they intend to do (or procure be done) in respect of their own beneficial holdings totaling 19,178,621 Shares, representing approximately 39 per cent. of the current issued share capital.

Related Party Transactions

Richard Parris, his wife (Jayne Kathryn Murphy), Andrew Walker and The Azalia Trust each propose to subscribe for £30,000, £20,000, £50,000 and £1,000,000 of CLNs (respectively). Each such person is a “related party” of the Company under the AIM Rules and accordingly their participation in the Fundraising constitutes a related party transaction for the purposes of Rule 13 of the AIM Rules. The independent directors (being the Directors apart from Richard Parris, Andrew Walker and Jacques Tredoux who, as potential subscribers or because of their relationship with certain subscribers of CLNs, are not regarded as independent for this purpose), having consulted with the Company’s nominated adviser, finnCap, consider that the terms on which such related parties propose to participate in the Fundraising are fair and reasonable insofar as Shareholders are concerned.

Admission of, and dealings in, the CLNs and AIM Admission of the Subscription Shares

Application will be made by the Company to the CISEA as soon as is reasonably practicable following the issue of the CLNs for the CLNs to be admitted to trading on the CISEA. It is expected that trading will become effective by the first Interest Payment Date (as defined in the CLN Instrument, such date expected to be 31 March 2017) and that dealings in the CLNs will commence at 8.00 a.m. on the relevant date.

Application will also be made to the London Stock Exchange for the AIM Admission of the Subscription Shares. It is expected that the AIM Admission of the Subscription Shares will become effective and that dealings in the Subscription Shares on AIM will commence at 8.00 a.m. on 31 January 2017.


Intercede Group plc                                                                Tel. +44 (0)1455 558 111

Richard Parris, Chairman & Chief Executive

Andrew Walker, Finance Director

finnCap                                                                                    Tel. +44 (0)20 7220 0500

Stuart Andrews, Corporate Finance

Simon Hicks, Corporate Finance

Bell Pottinger                                                                          Tel. +44 (0)7802 442486

Archie Berens

About Intercede

Intercede is a software and service company specializing in identity, credential management and secure mobility. Its solutions create a foundation of trust between connected people, devices and apps and combine expertise with innovation to provide world-class cybersecurity. Intercede has been delivering solutions to high profile customers, from the US and UK governments to some of the world’s largest corporations, telecommunications providers and information technology firms, for over 20 years. Intercede’s product portfolio includes MyID, an identity and credential management system that assigns trusted digital identities to employees citizens and machines. In 2015, Intercede launched MyTAM, enabling trusted applications to be loaded into a mobile device’s Trusted Execution Environment (TEE), providing hardware-level security for Android apps. In 2016, Intercede launched RapID, a secure, easy to implement authentication service for mobile apps and cloud services to completely eliminate the need for passwords.

For more information visit: www.intercede.com

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.


The following definitions apply throughout this document (including the Notice of General Meeting) and the Form of Proxy unless the context requires otherwise:


the Companies Act 2006, as amended from time to time;


the admission of the CLNs to trading on the CISEA;


the AIM market of the London Stock Exchange;

AIM Admission

the admission of the Subscription Shares to trading on AIM;

AIM Rules

the AIM Rules for Companies published by the London Stock Exchange, as amended from time to time;

Business Day

any day on which banks are generally open in England and Wales for the transaction of business, other than a Saturday, Sunday or public holiday;


the CISEA market operated by the Channel Islands Securities Exchange;

CLN Instrument

the convertible loan note instrument dated 28 December 2016 executed by the Company constituting the CLNs;

CLN Subscribers

such persons who subscribe for CLNs in accordance with the terms of the Subscription Agreement;


fixed rate secured convertible loan notes 2021 constituted by the CLN Instrument or, as the case may be, the principal amount outstanding;

Company” or “Intercede

Intercede Group plc;


conversion of the CLNs into Shares at the relevant Conversion Price in accordance with the terms of the CLN Instrument;

Conversion Price

the price at which the CLNs convert into Shares, being:

(a)     in relation to the Original Notes (as defined in the CLN Instrument), £0.688125 (being a 25 per cent premium to lower of (i) the average closing share price of the Shares for the 10 trading days prior to the announcement to AIM by or on behalf of the Company of the Company making available for subscription the CLNs and (ii) the placing price for Shares issued to investors at the time of such announcement); and

(b)     in relation to any Further Notes (as defined in the CLN Instrument), the higher of (i) the price referred to in (a) above and (ii) a 25 per cent premium to the average closing share price of the Shares for the 10 trading days prior to their date of issue,

subject, in each case, to adjustment in accordance with the CLN Instrument;


a relevant system (as defined in the CREST Regulations) in respect of which Euroclear is the Operator (as defined in the CREST Regulations);

CREST Regulations

the Uncertificated Securities Regulations 2001 (SI 2001/3755), as amended from time to time;

Directors” or “Board

the existing directors of the Company


Euroclear UK & Ireland Limited;

Existing Shares

the 49,114,547 Shares in issue at the date of this document;


finnCap Ltd (company number 06198898);


Financial Services and Markets Act 2000, as amended from time to time;

Form of Proxy

the form of proxy for use in connection with the General Meeting;


the proposed issue of the CLNs and Subscription Shares by the Company;

General Meeting

the general meeting of the Company to be held at 11.00 a.m. on 27 January 2017 at the offices of Intercede Group plc at Lutterworth Hall, St. Mary’s Road, Lutterworth, Leicestershire, LE17 4PS or any adjournment of it, notice of which is set out in the Notice of General Meeting;

Group” or “Intercede Group

the Company and its subsidiaries (such subsidiaries being: Intercede Limited, Intercede 2000 Limited and Intercede MyID Inc.);

London Stock Exchange

London Stock Exchange plc;

Notice of General Meeting

the notice convening the General Meeting

Regulatory Information Service

the regulatory information services approved by the London Stock Exchange for the distribution of AIM announcements;


the resolution to be proposed at the General Meeting, details of which will be set out in the Notice of General Meeting;


the holders of Shares from time to time;


ordinary shares of one penny each in the share capital of the Company;

Shares Subscriber

Peter Lloyd;

Subscription Agreement

the subscription agreement dated 28 December 2016 made between (1) the Company, (2) Welbeck Capital Partners LLP and (3) the CLN Subscribers; and

Subscription Shares

up to 877,192 new Shares proposed to be allotted and issued to the Shares Subscriber; and


Welbeck Capital Partners LLP (OC393454) and/or, as the context requires, Welbeck Ventures LLP (OC401614).

Trusted by Governments and Enterprises Worldwide

Where protecting systems and information really matters, you will find Intercede.  Whether its citizen data, aerospace and defence systems, high-value financial transactions, intellectual property or air traffic control, we are proud that many leading organisations around the world choose Intercede solutions to protect themselves against data breach, comply with regulations and ensure business continuity.