22 December 2021

Rutherford Health plc

Proposed Withdrawal from AQSE and Notice of Meeting

Rutherford Health plc (AQSE: RUTH, the "Group"), a healthcare group committed to providing innovative cancer care of the highest quality, announces that it has published a circular (the "Circular"), including a Notice of General Meeting, in connection with (i) the proposed withdrawal of its securities from admission to trading on the AQSE Growth Market ("Cancellation"); and (ii) the seeking of authority to allot shares and disapply pre-emption rights (together the "Proposals").

If the requisite majority of Shareholders vote to agree the proposed Cancellation, withdrawal of the Company's Ordinary Shares from trading on AQSE will take place at 08.00 on 25 January 2022.

The full text of the letter from the Chairman extracted from the Circular is set out below together with the expected timetable of principal events.

The Circular, which contains the notice convening the General Meeting to be held at the offices of Fieldfisher LLP, Riverbank House, 2 Swan Lane, London, EC4R 3TT on 11 January 2022 at 11:00 am, will today be posted to Shareholders, together with the Form of Proxy, for voting on the resolutions relating to each of the Proposals.

Copies of the Circular are available from the Company's website, www.rutherfordhealth.com

Any capitalised terms not defined in this announcement shall have the same meaning as those defined in the Circular.

The information contained within this announcement is deemed to constitute inside information as stipulated under the retained EU law version of the Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. The information is disclosed in accordance with the Company's obligations under Article 17 of the UK MAR. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

  • Notice provided to AQSE and announcement of proposed Cancellation - 22 December 2021
  • Publication of Notice of General Meeting and Form of Proxy - 22 December 2021
  • Latest time and date for receipt of Forms of Proxy - 11 a.m. on 7 January 2022
  • General Meeting - 11 a.m. on 11 January 2022
  • Expected last day of dealings in Ordinary Shares - 24 January 2022
  • Expected time and date of Cancellation - 8 a.m. on 25 January 2022

CHAIRMAN'S LETTER

Dear Shareholder,

Proposed Withdrawal of Ordinary Shares from admission to trading on the AQSE Growth Market

Authority to allot shares and disapply pre-emption rights

and

Notice of General Meeting

1.         Introduction

The Company today announced its intention to hold a General Meeting on 11 January 2022 at 11 a.m. at the offices of Fieldfisher LLP, Riverbank House, 2 Swan Lane, London, EC4R 3TT formal notice of which is set out at the end of this document, for the purpose of passing the Resolutions. The purpose of this document is to explain the background to and reasons for convening the General Meeting.

2.         Background to and reasons for the General Meeting

Proposed Fundraising

On 31 August 2021 the Company announced a placing of ordinary shares to the value of £12.35m with a new investor, SDI Holding Limited at a price of 65 pence per Ordinary Share, and an agreement to acquire Proton Partners International Health Care Investments LLC in consideration for the issue of 64 million Ordinary Shares in the Company. Neither of these transactions has completed to date.

In the announcement of the interim results for the period to 31 August 2021, the Company reported that it would require additional working capital should the SDI placing not complete and that it was exploring a number of options.

Since that announcement, the Schroder PPCT has engaged with certain other shareholders in the Company who have together committed to provide bridge finance in the form of a shareholder loan in the amount of £8m which will accrue (but not pay) interest at the rate of 15% p.a.  The Loan is to be repaid within six months of  15 December 2021 or on the first day after the Company has received new capital in an aggregate principal amount of £40m or more (if earlier).  Rutherford will provide second ranking security over all or substantially all of its assets.

The Loan will be provided in two tranches of £4.0m.  The first tranche was drawn on 15 December 2021 and the second tranche can be drawn down at any time in the next six months by providing five days' notice if the majority of the lenders have agreed to the making of such second tranche.

In addition, LF EIF has agreed with the Company that it will provide a convertible loan facility of £2m.  The debt aspect of the Proposed Fundraising is proposed be on the same terms as the Loan, with two tranches of £1m each.   The Proposed Fundraising is proposed to be convertible on the Repayment Date into Ordinary Shares in the Company and issued to LF EIF, at a proposed conversion price of £1.76 per Ordinary Share or otherwise will be repaid in cash at the election of LF EIF.

The Company intends to appoint an investment bank in due course to source additional long-term funding to strengthen the business as it grows revenues in its existing facilities. The Loan and the Proposed Fundraising are expected to provide the Company with sufficient working capital for the period of the Loan while the Company sources additional long-term funding.

As the Company does not presently have the necessary authorities to issue any Ordinary Shares pursuant to the conversion of the debt to LF EIF under the Proposed Fundraising, it is seeking the authority of Shareholders to issue shares and disapply pre-emption rights in respect of such conversion.

In addition, the Company is seeking additional general authorities to issue up to circa 10 per cent of the Company's existing share capital and to disapply pre-emption rights to take advantage of any opportunities to raise funds from equity investors that may arise.

Cancellation of Listing

The Company also announced today that it intends to seek shareholder approval for the withdrawal of its Ordinary Shares from admission to trading on the AQSE Growth Exchange with effect from 8:00 a.m. on 25 January 2022. The background to the Company's decision to seek Cancellation is set out below.

The Company was incorporated on 4 February 2015 and its Ordinary Shares were admitted to trading on AQSE (at the time, the NEX Exchange Growth Market) on 28 February 2019, raising £20 million from funds managed by Woodford Investment Management Limited and securing an additional funding line of £80 million, which has since been fully drawn down. Since then, the Company has completed further fundraisings, including an infrastructure investment with Equitix Investment Management Ltd, ("Equitix"), for £40 million in March 2021 and, as announced on 16 December 2021, £10 million funding from existing shareholders. Since the Company was admitted to NEX in 2019, it has not completed a fundraising through the issue of Ordinary Shares, other than as part of the Woodford Commitment (as defined in the Company's NEX admission document). The Ordinary Shares are currently quoted on the APEX Segment of the AQSE Growth Market.

For the reasons described below, The Company is proposing to delist from AQSE. The AQSE  Rules require that, unless AQSE otherwise agrees, the withdrawal of a company's shares from admission to trading on the AQSE Growth Market requires the consent of not less than 75 per cent. of votes cast by its shareholders given in a general meeting.

Under the terms of the Relationship Agreement (which will terminate following Cancellation), as successors to the Woodford Funds, Schroder PPCT and LF EIF, which between them hold 55.1 per cent. of the Company's issued share capital, are not permitted to vote on the Cancellation.

Reasons for the Cancellation

The Directors have conducted a review of the various benefits and drawbacks to the Company and its Shareholders in relation to retaining its listing on the AQSE Growth Market]. The Directors unanimously believe that the Cancellation is in the best interest of the Company and its Shareholders, and have considered the following key factors (amongst others) in reaching a decision:

  • the regulatory burden, management time and considerable costs associated with maintaining admission of the Ordinary Shares to trading on the AQSE Growth Market (including professional, legal, accounting, broker and nominated adviser costs and fees of AQSE) which the Directors consider are now disproportionate to the value provided by admission of the ordinary shares to trading on the AQSE Growth Market;
  • the limited trading in the Ordinary Shares on the AQSE Growth Market;
  • the limited opportunity to raise funds from equity investors in quoted companies for a company such as Rutherford, given the nature of its business and stage of development;
  • the regulatory and disclosure requirements which the Directors believe will make it more difficult to raise funds from external investors and restructure the business; and
  • the benefits of supporting of the growth potential of the business through the re-focussing of management resources thereby providing long-term benefit to all stakeholders;

Following careful consideration and having consulted with several Shareholders, for the reasons given above the Directors believe that it is in the best interests of the Company and Shareholders to seek the proposed Cancellation.

3.         Procedure for Cancellation

Shareholder Approval Required

The Cancellation is conditional, pursuant to Rule 5.3 of the AQSE Rules, upon the approval of not less than 75 per cent. of the votes cast by Shareholders (whether present in person or by proxy) at a General Meeting. Pursuant to the Relationship Agreement entered into by LF EIF and Schroder PPCT at the time of the Company's listing on the AQSE Growth Market and which will terminate following Cancellation, LF EIF and Schroder PPCT which together hold 109,163,383 Ordinary Shares comprising 55.1% of the Company's share capital, are not permitted to vote on a resolution to cancel the Company's listing on the AQSE Growth Market. The Company is therefore seeking approval of the remaining Shareholders to the Cancellation at the General Meeting.

Timetable for Cancellation

In accordance with Rule 5.3 (3) of the AQSE Rules, the Company has announced its proposed withdrawal from admission to trading on the AQSE Growth Market and has provided not less than 20 Business Days' notice of its intended withdrawal of securities from admission to trading on the AQSE Growth Market. If the Authorising Resolution is passed at the General Meeting, it is proposed that the last day of trading in Ordinary Shares on the AQSE Growth Market will occur on 24 January 2022 and that the Cancellation will take effect at 8:00 a.m. 25 January 2022.

4.         Implications of Proposed Cancellation

Set out below is an overview of the principal effects of the Cancellation, however, this list in not exhaustive. Shareholders should seek their own independent advice when assessing the likely impact of the Cancellation on them:

  • notwithstanding the limited trading in the Company's shares since Admission, there will be no formal market mechanism enabling the Shareholders to trade Ordinary Shares the Ordinary Shares may therefore be more difficult to sell compared to shares of companies traded on the AQSE Growth Market (or any other recognised market or trading exchange);
  • while the Ordinary Shares will remain freely transferable (subject to the provisions in the Company's articles of association), it is possible that the liquidity and marketability of the Ordinary Shares will, in the future, be more constrained than they might be were the Company to remain listed on AQSE and the secondary market value of such shares may be adversely affected as a consequence;
  • the regulatory and financial reporting regime applicable to companies whose shares are admitted to trading on the AQSE Growth Market will no longer apply;
  • Shareholders will no longer be afforded the protections given by the AQSE Rules, such as the requirement to be notified of certain events;
  • the Company will cease to have an independent corporate adviser;
  • Shareholders will continue to be afforded the protection of the Takeover Code while the Company remains a public company and for a minimum period of 10 years thereafter;
  • whilst the Company's CREST facility will remain in place following the Cancellation, the Company's CREST facility may be cancelled in the future and, although the Ordinary Shares will remain transferable, they will cease to be transferable through CREST. In this instance, Shareholders who hold Ordinary Shares in CREST will receive share certificates; and
  • the Cancellation may have taxation consequences for Shareholders. Shareholders who are in any doubt about their tax position should consult their own professional independent tax adviser

Termination of Relationship Agreement

Under the terms of the Relationship Agreement Schroder, LF EIF and Omnis gave certain undertakings to the Company to vote their shares so as to ensure that the Company is able to carry on its business independently, that transactions between any of them and the Company are entered into at arm's length and on a normal commercial basis and that there should at all times be two independent directors. It is a term of the Relationship Agreement that it will terminate upon the Cancellation taking effect.

5.         Shareholders Access to Information following Cancellation

The Company currently intends that it will continue to communicate selected information about the Company to its Shareholders including annual accounts and any other information as required by the Act. 

6.         Transactions in Ordinary Shares prior to and post Cancellation

Prior to Cancellation

If Shareholders wish to buy or sell Ordinary Shares on the AQSE Growth Market they must do so prior to the Cancellation becoming effective. If Shareholders approve the Cancellation, it is anticipated that the last day of dealings in the Ordinary Shares on the AQSE Growth Market will be 24 January 2022. The Board is not making any recommendation as to whether or not Shareholders should buy or sell their Ordinary Shares.

Post Cancellation

The Directors are aware that the proposed Cancellation, should it be approved by Shareholders at the Annual General Meeting, there will be no formal market mechanism to trade the Ordinary Shares which may make it more difficult for Shareholders to buy and sell Ordinary Shares should they wish to do so although they may be able to sell their Ordinary Shares by private arrangement.

7.     Takeover Code

Notwithstanding the Cancellation, the Company will, continue to be subject to the terms of the Takeover Code for as long as it remains a public limited company and for a period of 10 years thereafter.

Under Rule 9 of the Takeover Code ("Rule 9"), any person who acquires an interest in shares (as defined in the Takeover Code), whether by a series of transactions over a period of time or not, which (taken together with any interest in shares held or acquired by persons acting in concert (as defined in the Takeover Code) with him) in aggregate, carry 30 per cent. or more of the voting rights of a company which is subject to the Takeover Code, that person is normally required by the Takeover Panel to make a general offer to all of the remaining shareholders to acquire their shares. Similarly, when any person, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30 per cent. of the voting rights of such a company but does not hold shares carrying more than 50 per cent. of such voting rights, a general offer will normally be required if any further interests in shares are acquired by any such person which increases the percentage of shares carrying voting rights in which he is interested.

An offer under Rule 9 must be in cash or be accompanied by a cash alternative and at the highest price paid by the person required to make the offer, or any person acting in concert with him, for any interest in shares of the company during the 12 months prior to the announcement of the offer.

Under the Takeover Code, a concert party arises where persons who, pursuant to an agreement or understanding (whether formal or informal), co-operate to obtain or consolidate control (as defined below) of a company or to frustrate the successful outcome of an offer for a company. "Control" means holding, or aggregate holdings, of shares carrying 30 per cent. or more of the voting rights of the company, irrespective of whether the holding or holdings give de facto control. A person and each of their affiliated persons will be deemed to be acting in concert with each other

The Concert Party, comprising Schroder PPCT and LF EIF, who between them have 55.1 per cent.of the Company's issued share capital, have advised the Company that they are acting in concert for the purposes of the Takeover Code. The Concert Party will, following Cancellation and assuming no other Ordinary Shares are issued in the meantime, be interested in shares carrying more than 50 per cent. of the voting rights of the Company. Accordingly, they will (subject to note 4 on Rule 9.1 of the Takeover Code) be able to acquire further interests in Ordinary Shares without incurring an obligation to make a general offer under Rule 9 of the Takeover Code.

In the event that the Company issues Ordinary Shares or the Concert Party reduces its holding in the Company in each case such that the Concert Party is interested in shares carrying more than 30 per cent. but not more than 50 per cent. of the voting rights of the Company, save with the consent of the Panel, any acquisition by a member of the Concert Party of a further interest in Ordinary Shares will be subject to the provisions of Rule 9 of the Takeover Code.

8.         General Meeting

You will find at the end of this document a notice convening the General Meeting to be held at the offices of Fieldfisher LLP, Riverbank House, 2 Swan Lane, London, EC4R 3TT on 11 January 2022 at 11 a.m. to consider and, if thought appropriate, pass resolutions to pass resolution 2 as an Ordinary Resolution, and resolutions 1 and 3 as Special Resolutions. The resolutions to be proposed at the General meeting will be as follows:

Resolution 1:  Withdrawal of the Ordinary Shares from admission to trading on AQSE Growth Market

To withdraw the Company's Ordinary Shares from admission to trading on the AQSE Growth Exchange in accordance with Rule 5.3 of the AQSE Rules. Under the AQSE Rules, it is requirement that the Cancellation must be approved by not less than 75 per cent. of votes cast by eligible Shareholders at a General Meeting of the Company..

Resolution 2: Authority to Allot Shares

To authorise the Directors to allot ordinary shares of £0.001 each in the capital of the Company up to (1) an aggregate nominal amount of £20,136.37 representing approximately 10.2 per cent of the current issued share capital of the Company and (2) a further aggregate nominal amount of £66,004 representing approximately one third of the current issued share capital of the Company in connection with a rights issue to holders of ordinary shares made in proportion to their respective shares held by them and to holders of any other class of equity securities In the event that this Resolution is passed, Directors will be authorised to allot up to an aggregate of 86,140,370 new Ordinary Shares representing 43.5 per cent of the Existing Ordinary Shares.

If given, this authority will expire until the earlier of 31 August 2022 and the conclusion of the Company's next annual general meeting.

Resolution 3: Dis-Application of Pre-Emption Rights

To authorise the Directors to allot equity securities for cash pursuant to the authority conferred by resolution 4 on a non pre-emptive basis up to a nominal amount of £20,136.37 which represents approximately 10.2 per cent of the Company's current issued share capital.

As at the date of the notice of general meeting, the Company does not hold any treasury shares.

As at the date of the notice of general meeting, the Company has no authority to issue further share capital without requiring further shareholder approval. The Resolutions will enable the Directors to issue up to a further 20,137,370 Ordinary Shares on a non-pre-emptive basis without requiring further shareholder approval. This will enable the issue of the LF EIF convertible loan and the previously announced placing of shares to SDI Holding Limited or another fundraising.

The authorities granted by these Resolutions will continue until the earlier of 31 August 2022 and the Company's next annual general meeting in 2022.

Resolution 2 will be proposed as an ordinary resolution.  For an ordinary resolution to be passed, more than 50 per cent. of the votes cast must be in favour of the resolution.

Resolutions 1 and 3 will be proposed as special resolutions.  For a special resolution to be passed, at least 75 per cent of the votes cast must be in favour of the resolution.

9.         Action to be taken in respect of the General Meeting

The Board takes the wellbeing of its Shareholders, employees and other personnel very seriously. Given the UK Government's current guidance on social distancing due to COVID-19, the General Meeting will proceed with only such attendees as are strictly required to run the General Meeting and satisfy the quorum requirements. We regret that due to the ongoing COVID-19 pandemic it will not be possible for Shareholders (other than those forming the quorum, which will be facilitated by the Company) to attend the General Meeting in person. Any Shareholders who try to attend the General Meeting will be turned away, on the grounds of personal safety of all concerned and to avoid the need for persons to be in the same physical location, in line with current Government guidance.

The Board will keep the situation under review and may need to make further changes to the arrangements relating to the General Meeting, including how it is conducted, and Shareholders should therefore continue to monitor the Company's website and announcements for any updates. The Company values Shareholder participation and the votes of Shareholders, and accordingly the Company encourages all Shareholders to exercise their voting rights BUT ONLY by appointing the Chairman of the General Meeting to be their proxy. Any proxy received appointing a person other than the Chairman of the General Meeting as the Shareholder's proxy will deemed to have appointed the Chairman of the General Meeting as that Shareholder's proxy.

Proxies may be appointed by either:

  • completing and returning the enclosed proxy form; or
  • using the CREST electronic proxy appointment service (for CREST members only).

In either case, the notice of appointment of a proxy should reach the Company's registrars, Share Registrars Limited of Molex House, The Millennium Centre, Crosby Way, Farnham, Surrey, GU9 7XX by no later than 11 a.m. on 7 January 2022.  Please refer to the Notes to the Notice of General Meeting on page 15 of this circular and the enclosed proxy form for detailed instructions.

The attention of shareholders is drawn to the voting intentions of the Directors set out below.

10.       Recommendation

For the reasons mentioned above the Directors believe that Resolutions to be put to the General meeting will promote the success of the Company for the benefit of its shareholders as a whole.

Accordingly they unanimously recommend you to 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, amounting to (in aggregate) 6,054,348  Ordinary Shares, representing 3.06 per cent. of the share capital of the Company at the date of this document.

Yours sincerely

Mark Jackson
Chairman

VIEW ANNOUNCEMENT ON AQSE