Eco City Vehicles : Notice of General Meeting

24 December 2014

Eco City Vehicles PLC

("ECV" or the "Company")

Notice of General Meeting

The board of directors of ECO City Vehicles plc ("the Board") announces that a Notice of a General Meeting of the Company to be held at the offices of DWF LLP at 20 Fenchurch Street, London EC3M 3AG on 20 January, 2015 at 12 noon has been sent to Ordinary Shareholders.

In addition, a Notice of a Class Meeting of the Deferred Shareholders of the Company to be held at the offices of DWF LLP at 20 Fenchurch Street, London EC3M 3AG on 20 January, 2015 at 12.10 pm (or as soon as practicable after the holding of the General Meeting of the Ordinary Shareholders beforehand) has been sent to Deferred Shareholders.

A copy of the Circular accompanying Notices of both the General Meeting and Class Meeting can be found on the Company's website athttp://www.ecocityvehicles.com/, and the material information contained in the Circular can be found below.

Enquiries:

Eco City Vehicles plc

John Swingewood, Director                                                      +44 1444 440 359

Allenby Capital (Nomad and Broker)

Nick Harriss/Nick Naylor                                                          +44 20 3328 5656         

Letter from the Directors

Dear Shareholder,

This document sets out proposals to raise funds of up to £250,000 by means of a private placing of up to £250,000 nominal of Unsecured 12 month Convertible Loan Notes ("CLNs" ), particulars of which are set out in Appendix 1 to this Letter (the "Subscription "). £143,000 of the proceeds of the Subscription are to be applied to fund the CVA Proposals.

As you are aware, the directors of Eco City Vehicles plc (the "Company ") appointed Kirstie Jane Provan and Mark Robert Fry of Begbies Traynor (Central) LLP as Joint Administrators of the Company with effect from 17th October 2014.

The Administrators acting as Nominees posted proposals for a company voluntary arrangement ("CVA ") on 28 November, 2014 ("CVA Proposals ") that sought approval for the solvent restructuring of the Company with the intention, in due course, of restoring the Company's trading facility on AIM. A CVA is a formal procedure under Part I of the Insolvency Act 1986 ("IA ") which enables a company to agree with its creditors how their debts should be paid and in what proportions. The effect of the CVA will be to bind all the unsecured creditors of the Company and clear its historical debts including preferential debts.

The CVA Proposals were approved without amendment by the requisite majorities at meetings of the shareholders and creditors of the Company to a Company Voluntary Arrangement at meetings held on 22nd December, 2014 ("CVA" ).

As a result of that approval, the Company has therefore exited Administration into a CVA. Control of the management of the Company has been returned to the Directors. The former Joint Administrators will continue in a different role as Joint Supervisors of the CVA for the purpose of implementing the CVA

There remains a 28 day period where a creditor seeking to challenge the CVA can do so by reason of an application to the court under section 6 of the Insolvency Act 1986 ( "IA" ). Subject to the passing of the resolutions proposed in the accompanying notices of meetings and the said period for objection by creditors to the court lapsing without any such objection being made, Completion of the Subscription is expected to take place on or around 20th January, 2015 shortly after the holding of the shareholder meetings.

The Subscription has been arranged by the Chairman, John Swingewood and a shareholder Jeremy Fenn (the "Funding Associates" ) after a thorough review and bidding process.

In order that the CVA can be funded, the Subscription needs to be effected. To do so, the Company is putting a number of resolutions to shareholders to reorganise the share capital so that each existing issued ordinary share becomes converted into 1 ordinary share of 0.008p (each a "New Ordinary Share ") and 1 B deferred share of 0.992p each ( ("B Deferred Shares ") , to give the Company the power and authority to allot the CLNs (and New Ordinary Shares arising on conversion) and to cancel the existing and new deferred shares arising as a result of the capital reorganisation. Set out at the end of this document are notices of two meetings.

It should be noted that the CLNs will automatically be extinguished on conversion into the New Ordinary Shares and this will occur subject to the Company's trading facility for its shares being restored by the AIM which will is intended once the Subscription completes and the Company has published its unaudited interim results for the six month period ended 30th June 2014

4.    RESOLUTIONS AND NOTICES OF MEETINGS

MEETING OF THE ORDINARY SHAREHOLDERS

A meeting of the ordinary shareholders is being convened to be held at the offices of DWF LLP at 20 Fenchurch Street, London EC3M 3AG on 20 January, 2015 at 12 noon to consider, and if thought fit, to approve the following resolutions:

Resolution 1

is a special resolution that will:

·     subdivide the existing ordinary share capital on the basis of dividing each ordinary share of 0.10 p each into 1 New Ordinary Share and 1 B deferred Shares

·     set out the rights of the B Deferred Shares and amend the Company's articles of association accordingly.

Resolution 2

is an ordinary resolution under s 551 Companies Act 2006 ( "2006 Act" ) to authorise the Company to allot and issue up to £250,000 in nominal amount of loan notes convertible into 3,125,000,000New Ordinary Shares;

Resolution 3

Is a special resolution that will permit the allotment and issue of up to £250,000 in nominal amount of loan notes convertible into 3,125,000,000 New Ordinary Shares on a non-pre-emptive basis as if section 561(1) of the 2006 Act did not apply to any such allotment;

Resolution 4

Is an ordinary resolution to approve the new Investing Policy (as defined and described in paragraph 7 below) of the Company;

Resolution 5

Is an ordinary resolution to change the name of the Company to Balanqua plc.

The deferred shares do not have the right to be voted or represented at this meeting. Resolution 1 converts the deferred shares into a new class of B Deferred Shares, and then amends the rights of those shares to give the Company and its directors the power to cancel the existing deferred shares of 0.10 each and the  B Deferred Shares( together or, any of them being the "Deferred Shares" ) . Such amendment represents a variation of the rights attaching to the existing Deferred Shares for which the consent of the deferred shareholders is required by way of a special resolution of that class at a separate class meeting.  

MEETING OF THE DEFERRED SHAREHOLDERS

A class meeting of the holders of existing Deferred Shares is being convened to be held at the offices of DWF LLP at 20 Fenchurch Street, London EC3M 3AG on 20 January, 2015 at 12.10 pm (or as soon as practicable after the holding of the general meeting of the shareholders beforehand) to approve the modification of their rights and to permit their cancellation. The existing Deferred Shares themselves have no voting rights or meaningful economic rights. The intention of the Company is to seek their cancellation together with those of the B Deferred Shares as soon practicable following the exit of the Company from Administration and lifting of the suspension of trading in the Company's shares.  

Subject to approval of all the resolutions, the cancellation of the B Deferred Shares will automatically result in the consolidation of the share capital of the company into one class of ordinary shares of 1p each on the basis that 125 remaining ordinary share of 0.008p each would consolidate into one ordinary share of 1 p.

FORMS OF PROXY

Please follow the directions in the forms of proxy supplied for your relevant meeting. Whether or not you propose to attend the General Meeting or the Class meeting (as appropriate), please complete and submit a proxy form relevant for your meeting in accordance with the instructions printed on the enclosed form. The proxy form must be received by no later than 48 hours before the time of the holding of each such Meeting. The proxy need not be a member.

IF THE SHAREHOLDERS DO NOT APPROVE RESOLUTIONS 1 TO 4, THE SUBSCRIPTION WILL BE UNABLE TO PROCEED. ACCORDINGLY THE CVA PROPOSALS PRESENTED TO SHAREHOLDER AND CREDITORS WILL FAILAND THE JOINT SUPERVISORS MAY PETITION FOR THE WINDING UP OF THE COMPANY, IF THE CREDITORS IN THE CVA RESOLVE TO DO SO.

A Subscription and Placing Agreement dated 28 November, 2014 was entered into with the Funding Associates to raise up to £250,000 by way of the issue of £250,000 nominal of CLNs. The Subscription will be effected on the basis that for every £1 of CLNs subscribed, the holder will receive 12,500 New Ordinary Shares . These proposals will also allow for the resulting ordinary share capital to be reconsolidated into ordinary shares of 1p each in due course.

Of the amount to be raised, £193,000 is underwritten by the Funding Associates. The excess above £193,000 is being raised using their reasonable endeavours from certain institutional and other persons but not on an underwritten basis. Of the total amounts subscribed, £143,000 is to be applied towards funding a dividend to creditors of the Company by way of the CVA and to meet the costs of the CVA and the surplus is to be left in the Company to provide working capital to meet the expenses of pursuing its investment policy.

The CVA Proposals are intended to provide a better dividend to creditors of the Company than liquidation on terms that will bind and extinguish the claims of all creditors and to enable shareholders to retain some value in their shareholding albeit with regard to the dilution that the Subscription will represent to existing shareholders.

It is expected that, once the time period shall have elapsed where a creditor seeking to challenge, the CVA can do so by reason of an application to the court under section 6 of the IA, completion of the Subscription will take place on or around 20th January, 2015.

6.    INVESTING POLICY

Once the CVA has been approved and becomes binding on creditors, the Subscription can complete. It is then intended that the Company will see a lifting of the suspension of trading of the Company's shares. The Company will first need to publish its unaudited interim results for the six month period to 30th June 2014 before it can do so and it is expected that this process will happen once the Company exits its administration and management is returned to your Board.  As the Company will no longer have a trading activity, the Company will become an investing company.

Under Rule 8 of the AIM Rules an investing company must state and follow an investing policy ("Investing Policy" ) and seek the prior consent of its shareholders in a general meeting for any material change to its investing policy.

The Company's new Investing Policy is to invest in and/or acquire companies and/or assets in the telecommunications, media and technology sectors where the Board believes there are opportunities for growth which, if achieved, will be earnings enhancing for Shareholders.

Where appropriate, the Board may seek to invest in businesses where it may influence the business at a board level, add their expertise to the management of the business, and utilise their significant industry relationships and access to finance. The ability to work alongside a strong management team to maximise returns through revenue growth will be something the Board will focus upon initially.

The Company's interests in a proposed investment and/or acquisition may range from a minority position to full ownership and may comprise one investment or multiple investments. The proposed investments may be in either quoted or unquoted companies; and may be in companies, partnerships, debt or other loan structures, joint ventures or direct or indirect interests in assets or projects.
The Board may focus on investments where intrinsic value can be achieved from the restructuring of investments or merger of complementary businesses.

The Board will place no minimum or maximum limit on the length of time that any investment may be held. The Company may be both an active and a passive investor depending on the nature of the individual investment.

There is no limit on the number of companies, businesses and / or projects into which the Company may invest, and the Company's financial resources may be invested in a number of propositions or in just one investment, which may be deemed to be a reverse takeover under the AIM Rules. The Directors intend to mitigate risk by appropriate due diligence and transaction analysis. Any transaction constituting a reverse takeover under the AIM Rules will also require Shareholder approval. The Board considers that as investments are made, and new promising investment opportunities arise, further funding of the Company may also be required.

Investments may be made in all types of assets and there will be no investment restrictions on the type of investment that the Company might make or the type of opportunity that may be considered.
The Company may consider possible opportunities anywhere in the world.

The Board will conduct initial due diligence appraisals of potential business or projects and, where they believe further investigation is warranted, intend to appoint appropriately qualified persons to assist. The Board believes it has a broad range of contacts through which they are aware of various opportunities which may prove suitable, although at this point only preliminary due diligence has been undertaken. The Board believes its expertise will enable it to determine quickly which opportunities could be viable and so progress quickly to formal due diligence. The Company will not have a separate investment manager. The Company proposes to carry out a comprehensive and thorough project review process in which all material aspects of a potential project or business will be subject to rigorous due diligence, as appropriate.

As an Investing Company, the Company will be required to make an acquisition or acquisitions which constitutes a reverse takeover under the AIM Rules or otherwise implement its proposed Investing Policy on or before the date falling 12 months from 20 January, 2015 and the adoption of the Investing Policy failing which, the Ordinary Shares would then be suspended from trading on AIM unless an ordinary resolution is passed to approve the continuation if its Investing Policy. In the event that the Ordinary Shares are so suspended and the Company fails to make an acquisition or acquisitions which constitute a reverse takeover under the AIM Rules or otherwise implement its Investing Policy, the admission to trading on AIM would be cancelled six months from the date of suspension.

Resolution 4 is presented to shareholders for approval of the Company's investing policy as an ordinary resolution.

7.    TAKEOVER CODE

Following the Subscription, the Funding Associates together with the other subscribers, (together, "the Offeror ") will hold more than 50% of the Company's voting share capital and as a result would then be able to acquire further shares in the Company without incurring any obligation under Rule 9 of the City Code on Takeovers and Mergers ("Takeover Code" ) to make a general offer.

Under Note 1 on the Notes on the Dispensations from Rule 9, the Takeover Panel ("the Panel") will normally waive the requirement for a general offer to be made in accordance with Rule 9 (a "Rule 9 offer ") if, inter alia, those shareholders of the company who are independent of the person who would otherwise be required to make an offer and any person acting in concert with it and do not have any interest in the proposed transaction which may compromise their independence ("the Independent Shareholders") pass an ordinary resolution on a poll at a general meeting (a "Whitewash Resolution ") approving such a waiver. The Panel have agreed to waive the requirement for a Whitewash Resolution to be considered at a general meeting (and for a circular to be prepared in accordance with Section 4 of Appendix 1 to the Code) if "Independent Shareholders" holding more than 50% of the company's shares capable of being voted on a Whitewash Resolution confirm in writing that they would vote in favour of the Whitewash Resolution were one to be put to the shareholders of the company at a general meeting. Independent Shareholders exclude the Funding Associates and subscribers for CLNs to the extent that they are shareholders.

The Company is expecting letters from Independent shareholders who between them own  54.03% of the voting rights of all Independent Shareholders.  A schedule showing the names and their associated voting rights of these shareholders is set out at Appendix 2 Part 2.

Following the approval of the CVA proposals, it is still possible for a creditor to make an application to the court to object to the CVA proposals under the IA as being unfairly prejudicial. Completion of the Subscription will not take place until the time period of 28 days following the notification to the court of the approval of the CVA Proposals has passed without any such objection or application having been made.

The Subscription is not conditional on trading of the Company's ordinary shares on AIM having recommenced with the lifting of the current suspension. It is expected that the Company's shares will remain suspended for a period until application to recommence trading is made following the publication of the Company's unaudited interim results for the period 30 June, 2014.

9.    EFFECT OF THE PROPOSALS

Assuming that £250,000 nominal of CLNs are subscribed, upon conversion of the CLNs, the ordinary share capital and the effects of dilution on existing shareholders shall be as set out below:

The Subscribers for CLNs will, as a result of the conversion of CLNs when aggregated with their existing shareholdings, own between them 94.40 % of the enlarged issued share capital of the Company.

The CLNS will, on issue, rank pari passu in all respects as unsecured obligations of the Company save that their indebtedness will not rank for participation in the CVA.

The New Ordinary Shares arising on conversion of the CLNs will rank pari passu in all respects with the other ordinary shares of the Company in issue.

The B Deferred Shares arising on the Capital Reorganisation are expected to be cancelled upon the Company resuming trading in its shares on AIM when the current suspension is lifted by AIM.

Upon production for your share certificates, or an indemnity in a form satisfactory to the Company in the event of a lost or stolen share certificate, certificates for the New Ordinary Shares will be issued to shareholders at your registered address.

Shareholders should carefully consider the implications of not voting or voting against the resolutions. You may also wish to note that the Company's ordinary shares will remain suspended at the time when the Subscription is scheduled to complete. Sh areh o l d ers should a ssum e a la ck o f liqu id ity as the re is n o r eady mark et f o r the C o mp an y's shar es.

Yours sincerely,

John Swingewood

Chairman

on behalf of the Board

APPENDIX 1: PARTICULARS OF UNSECURED CONVERTIBLE LOAN NOTES

APPENDIX 2: DETAILS OF SUBSCRIBERS FOR CLNS AND INDEPENDENT SHAREHOLDERS WAIVING THE REQUIREMENT FOR A WHITEWASH.

Part 1: DETAILS OF SUBSCRIBERS FOR CLNS

Part 2: INDEPENDENT SHAREHOLDERS WAIVING THE REQUIREMENT FOR A WHITEWASH.