Spacetalk Limited (SPA) Earnings Call Transcript & Summary

Good morning and afternoon and evening, everyone. My name is Georg Chmiel. I'm the Chairman of Spacetalk Limited, and I will be chairing the meeting today. On behalf of the Board of Directors, it's my pleasure to welcome you all to this Extraordinary General Meeting of Shareholders. I will introduce the Directors in a while. As there is a quorum present, I declare the Extraordinary General Meeting of Spacetalk Limited open. The technology you are locked into allows shareholders, proxy holders and guests to virtually attend the meeting. All attendees can watch a live webcast of the meeting. In addition, shareholders and proxy holders have the ability to submit questions and vote. Written questions can be submitted at any time. [Operator Instructions] Please note that while you can submit questions from now on, I will not address them until the relevant time in the meeting. Please also note that your questions may be moderated or if we receive multiple questions on one topic, amalgamated together. Finally, due to time constraints, we may run out of time to answer all of your questions. If this happens, we will answer them in due course via e-mail or on our website. For those shareholders who wish to ask a verbal question, an audio questions facility is available during the meeting. To use this service, please follow the instructions below the broadcast window on the virtual meeting platform, and the moderator will facilitate your participation in the meeting at the appropriate time. You will be able to listen to the meeting while waiting to ask your questions. If you have any issues using this system, please contact Computershare +61-3-9415-4024. I encourage shareholders who are attending online to submit questions and/or requests to address the meeting as early as possible. I will ask the Company Secretary, Kim Clark, to act as moderator for the meeting and read out written questions or advice of any shareholder or proxy holders with verbal questions. In the event that I am disconnected from the meeting and cannot immediately rejoin due to technology failure, Martin Pretty will assume the role of Chair of this meeting. Voting today will be conducted by way of a poll on the item of business. In order to provide you with enough time to vote, I will shortly open voting for the resolution. At that time, if you are eligible to vote at this meeting, a new polling icon will appear. Selecting this icon will bring up the resolution and present you with voting options. To cast a vote, simply select one of the options. There is no need to hit a submit or enter button as the vote is automatically recorded. You do, however, have the ability to change your vote up until the time I declare the voting closed. I appoint Nigel Bulling of Computershare Investor Services to be returning officer and to conduct the poll. I now declare the voting open. I would like to introduce to you the Directors of the Board: Martin Pretty; Brandon Gien; Michael Rann; Saurabh Jain; and Managing Director and CEO, Simon Crowther. Also attending from Spacetalk executive team is [ Tef Fadel ], Head of Finance; and Company Secretary, Kim Clark. No apologies have been received for today's meeting. The Notice of the Meeting dated 13 January 2023 was made available to shareholders, and if there's no objection, I shall take the Notice of Meeting as read. Where a vote is required on a particular item, the valid proxies received in advance of the meeting for the proposed resolution will be shown on the screen to enable shareholders to view them as each item is considered. These figures may be varied if a shareholder who submitted a proxy is attending the meeting today and has revoked their proxy. I will address each resolution and any questions received in respect of each resolution during each time of business. I note that as Chair, I intend to vote undirected proxies held in against each resolution, and that Directors recommend you vote against the resolutions put -- in favor of all the resolutions put forward in this meeting. In today's EGM, we present to you 3 different matters for a decision, which are -- which relate to the transformation program we have put the business on. The first resolution relates to the debt restructuring of our loan with PURE, which ensured that the covenants put in place as well as the interest rate are in the future at achievable and sustainable levels. The second resolution deals with the participation of all Board members in the rights issue as a result of them taking up some of the shortfall. This is a clear statement of support and confidence of all members of the Board. The third resolution deals with a temporary cash-preserving measure that Directors agreed to take 20% of the Director fees in share. The effective share price underlying this transaction is $0.033 per share, so higher than what Directors would have purchased the share at that time. As you hear from Saurabh at the business briefing for quarter 2 fiscal year 2023, the business made significant progress in transforming to a more sustainable and more modern business with stronger governance than before. We have now also appointed a highly qualified CEO and Managing Director in Simon Crowther to take the business further. We thank you for your support so far in the journey of making Spacetalk a strong player, again, on the stock market and extending the lead in the industry. Resolution 1, issue of warrant to PURE Asset Management. The motion before the meeting proposes the issue of warrant to PURE Asset Management. The motion is to consider, and if thought fit, pass the following resolution as an ordinary resolution: "That for the purpose of ASX Listing Rule 7.1 and for all other purposes, approval is given for the issuance of a warrant to PURE Asset Management Pty. Ltd. in its capacity as trustee for the Income and Growth Fund on the items and conditions set out in the Explanatory Memorandum accompanying this Notice of Meeting." The proxy details are displayed. Kim, are there any written questions?

Yes, Georg, we have received a written question from [ Kieran Nicholson ] to ask, if the warrants to PURE Asset Management are not approved, what right do they have under the funding agreement?

If the warrants were not approved by shareholders, then PURE Asset Management would have the right to seek a compensation for the value of those warrants until the date of the repayment of the loan, the second repayment date. However, PURE have always been a very, very constructive partner for us. I do believe we would find a very constructive way to deal with this should the resolution not pass. Do we have any verbal questions from shareholders?

There are no questions from shareholders via the phones.

I now invite you to vote on this resolution.

Apologies, Georg, there is one further question that's come in on this resolution as you were speaking from [ Christopher Cameron ] who also, please explain what would happen if this resolution wasn't passed. I think we've covered that, but he goes on to also ask, and whether the company could take adequate mitigation actions such as borrowing money elsewhere on more favorable terms?

I don't know if we would get a more favorable term because I do believe that the loan conditions which are in place are quite favorable in the current market condition and the condition also the company is in. While it's improving, it's coming from a not so strong position, especially when the negation had happened. As for the mitigation, there's a number of things the company could do if it would need to reimburse PURE for the value of those warrants. However, as I said, we will address that as soon as we know the vote for the warrants. We do believe the warrants are in the best interest given the circumstances at the time when we renegotiated the loan, and should it not be approved, we will simply take alternative measures in strong consultation with you. [Voting]

Okay. Resolution #2 issue of shares and options to Directors. The motion before the meeting proposes the issue of shares and options to Directors. The motion is to consider and, if thought fit, pass the resolution as an ordinary resolution: "That for the purpose of ASX Listing Rule 10.11 and for all other purposes, the issuance of the following shares and options to Directors as a result of the application to participate in the Shortfall component of the Entitlements Offer announced to the ASX on 23 November 2022 be approved." 1,500,000 shares and 750,000 options to Mr. Martin Pretty, Non-Executive Director, or his nominee; 1,666,667 shares and 833,333 options to Mr. Brandon Gien, Non-Executive Director, or his nominee; 3,333,333 shares and 1,666,666 options, to Mr. Georg Chmiel, Non-Executive Director, or his nominee; 350,000 shares and 175,000 options to Mr. Michael Rann, Non-Executive Director, or his nominee; and 840,000 shares and 420,000 options to Mr. Saurabh Jain, Executive Director, or his nominee. The proxy details are displayed. Kim, are there any written questions? Are there any verbal questions?

There are no questions from phone participants at this time.

I now invite you to vote on this resolution. [Voting]