#VELA Vela Technologies investee #CSFS Cornerstone FS – Variation of Share Incentives Proposed Fundraising August 5, 2022 – Posted in: Blog, Vela Technologies Plc (VELA) – Tags: , , , , ,

Cornerstone FS plc (AIM: CSFS), the cloud-based provider of international payment, currency risk management and electronic account services to SMEs, announces that it has agreed to vary certain share incentive arrangements, details of which are set out below, and its intention to raise approximately £1 million (before expenses) by way of a placing (the “Placing”) of new ordinary shares at a price of 6.5 pence per share and issue of a new convertible loan note, together (the “Fundraising”).

 

Variation of Share Incentive arrangements

 

The Company announced in September 2021 that it had opened an office in Dubai led by Robert O’Brien. In March 2022, Cornerstone announced that Mr O’Brien had taken on the role of interim COO.

 

On joining Cornerstone Mr O’Brien was entitled to receive share-based incentivisation based on a multiple of revenue generation and contribution to profit. As a result of his performance ahead of expectations and the widening leadership role that he had taken on following the departure of Julian Wheatland, the previous CEO, the Board has agreed with Mr O’Brien to vary the terms of the original incentivisation arrangements. Under the new arrangements Mr O’Brien will now be entitled to £2,940,000, paid over the next three years, to be satisfied by:

 

1.  the issue of new ordinary shares in the capital of Cornerstone (“CSFS Shares”) equivalent to 9.9% of the enlarged issued share capital of Cornerstone (following the allotment and issue of shares pursuant to the Placing at a price of 10p per share (the maximum percentage holding allowed for a regulated payment services company without the prior consent of the FCA). The number of shares will only be able to be calculated after the closing of the Fundraising;

 

2.  the issue of CSFS Shares also calculated on the basis of 10p per CSFS Share to satisfy the balance (being the sum calculated by deducting from £940,000 the value of the CSFS Shares issued in 1 above) (such shares to be issued following receipt from the FCA of permission for Mr O’Brien to increase his holding to more than 9.9% of the issued share capital of the Company); and

 

3.  the issue of a loan note to Mr O’Brien with a value of £2 million and carrying a coupon of 6%, repayable by the Company on 31 July 2025.

 

Any shares issued in points 1 and 2 above are subject to a 12-month lock-in from the date of issue and, for a further period of 12 months thereafter, the disposal of any interests in the shares can only be effected on an orderly market basis through the Company’s brokers.

 

Cornerstone has benefitted greatly from the business generated by Mr O’Brien and the team he has built, as notified to the market in the Company’s Trading Updates. In those updates the majority of the revenue recorded since his arrival has been generated by Mr O’Brien and his team. The Board is therefore delighted to have aligned Mr O’Brien’s interests with the Company for the long term.

 

The variation of Mr O’Brien’s share-based incentivisation (as described above) is a related party transaction for the purposes of the AIM Rules. The Company’s Directors, having consulted with the Company’s nominated adviser, SPARK Advisory Partners Limited, consider that the revised terms of Mr O’Brien’s share-based incentivisation are fair and reasonable insofar as the Company’s shareholders are concerned.

 

The three senior members of Mr O’Brien’s team have also agreed to vary the terms of their incentive arrangements in line with the changes agree with Mr O’Brien and they will receive £210,000 in aggregate to be shared between them, which will be satisfied by the allotment and issue to them of 2,100,000 new ordinary shares (the “Team Shares”).

 

Proposed Fundraising

 

The Company also announces its intention to raise approximately £1 million (before expenses) by way of the Placing of new ordinary shares (the ” Placing Shares “) at a price of 6.5 pence per share and issue of a new convertible loan note . The Placing Shares are being offered by way of an accelerated bookbuild process (the ” Bookbuild “) which will be launched immediately following the release of this Announcement. SP Angel Corporate Finance LLP is acting as sole bookrunner in connection with the Placing.

 

The Bookbuild will open with immediate effect following this Announcement and is expected to close during the morning on the 5 August 2022. The timing for the close of the Bookbuild, the number of Placing Shares to be issued and allocation of the Placing Shares shall be at the discretion of the Company in consultation with the bookrunner.

 

The net proceeds of the Fundraising will be used to provide additional working capital for the Group and in particular, provide funds to invest in expanding its inside sales team.

 

The Placing Shares, CSFS Shares and Team Shares, which will rank pari passu with the existing ordinary shares, will be issued under the Company’s share allotment authority and shareholders pre-emption disapplication granted at its Annual General Meeting held on 25 July 2022. The Fundraising is not underwritten.

 

Application will be made to the London Stock Exchange for the Placing Shares, CSFS Shares and Team Shares to be admitted to trading on AIM (” Admission “).

 

Appendix I sets out further information relating to the Bookbuild and the terms and conditions of the Placing. Persons who have chosen to participate in the Placing, by making an oral, electronic or written offer to acquire Placing Shares, will be deemed to have read and understood this Announcement in its entirety (including Appendix I) and to be making such offer on the terms and subject to the conditions herein, and to be providing the representations, warranties, agreements, acknowledgements and undertakings contained in Appendix I.

 

Certain other technical terms and abbreviations not otherwise defined in the text of this Announcement are defined in the glossary at Appendix II to this Announcement.

 

Expected timetable for the Fundraising

Announcement of completion of the Fundraising

5 August 2022

Expected Admission and commencement of dealings in the Placing Shares

On or about 8:00 a.m. on 12 August 202 2

Further announcements will be made as appropriate.

 

 

Commenting on the changes, Cornerstone Chairman Elliott Mannis, said:

“Rob O’Brien and his team have already made a significant impact to the Group since their arrival less than a year ago.  It was important for the Board to recognise this impact and review the arrangements in the light of our experience to date, which has resulted in this agreed variation which provides clarity and certainty to the outcome of the original agreement given the team’s performance since they joined together with Rob O’Brien’s increased contribution to the Group since taking on the role of interim COO.

“The proceeds from the Fundraising will provide additional working capital for the Group.

 “We continue to search for a new CEO and hope to be able to update the market with more information in the near future.”

 

Enquiries

Cornerstone FS plc

+44 (0)203 971 4865

Elliott Mannis, Non-Executive Chairman

Judy Happe, Chief Financial Officer

SPARK Advisory Partners Limited (Nomad)

+44 (0)203 368 3550

Mark Brady, Neil Baldwin

SP Angel Corporate Finance LLP (Broker)

+44 (0)203 470 0470

Jeff Keating, Harry Davies-Ball

Luther Pendragon (Financial PR)

+44 (0)207 618 9100

Harry Chathli, Claire Norbury