TIDMFLTA
RNS Number : 0065L
Filta Group Holdings PLC
19 December 2018
The information contained within this announcement (the
"Announcement") is deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulations (EU)
No. 596/2014. Upon the publication of this Announcement via
Regulatory Information Service, this inside information is now
considered to be in the public domain.
19 December 2018
Filta Group Holdings plc
("Filta" or the "Company" or the "Group")
Acquisition of Watbio Holdings Limited
Placing of new Ordinary Shares to raise GBP3 million
Filta Group Holdings plc (AIM: FLTA), a provider of fryer
management and other services to commercial kitchens, is pleased to
announce that it has entered into a conditional agreement to
acquire Watbio Holdings Limited ("Watbio"), which provides grease
and drain management solutions to commercial kitchens across the
UK, for a consideration of GBP6.9 million (the "Acquisition"),
subject to adjustment for working capital movements of up to a
maximum of a further GBP1.2 million. The consideration will be
payable in two principal tranches followed by a final payment to
take account of any increase in the working capital between 30
September 2018 and the date of completion and will be satisfied as
to GBP0.8 million by the issue of 400,000 new Ordinary Shares in
Filta to the vendors ("Consideration Shares") and by the payment of
up to GBP7.3 million in cash.
The cash element of the consideration is being satisfied from
the proceeds of an issue of new ordinary shares to raise GBP3.0
million, from a new GBP4.0 million 5-year term loan facility and
from the Group's existing bank and cash in hand. To this end, the
Company also announces that it has completed a conditional placing
with new and existing institutional investors to raise gross
proceeds of GBP3.0 million (the "Placing"), through the issuance of
1,500,000 new ordinary shares of 10 pence each in the capital of
the Company ("Placing Shares") at a price of 200 pence per Placing
Share ("Placing Price"). The Placing Price represents a premium of
8.1 percent to the closing price of 185 pence per ordinary share on
18 December 2018.
The first tranche of the consideration of GBP4.4 million will be
satisfied as to GBP3.85 million in cash and GBP0.55 million by the
issue, at the Placing Price, of 275,000 Consideration Shares, and
the second tranche, due by 31 December 2018, of GBP2.5 million will
be satisfied as to GBP2.25 million in cash and GBP0.25 million by
the issue of 125,000 Consideration Shares. A final payment of up to
a maximum of GBP1.2 million in cash, representing working capital
adjustments, will be due 35 days following completion.
Completion of the Acquisition is conditional on the admission of
the Placing Shares to trading, which is expected to occur on or
around 20 December 2018.
Background to and strategic rationale for the Acquisition
The Directors believe that the Acquisition:
-- Delivers a high-margin, repeat-revenue business, with scope
for significant margin improvement;
-- Creates the leading national provider of grease management and drainage services in the UK;
-- Strengthens and diversifies the Group's relationships with
national, blue-chip customers; and
-- Expands the Group's service delivery market, with increased
scope for cross-selling FiltaSeal.
The Group is targeting annual operational synergies in the order
of GBP0.9 million once fully implemented and expects the
Acquisition to be earnings enhancing in the first full year of
ownership.
Current Trading
Trading remains in line with market expectations with all of
fryer management, FiltaSeal and FiltaGMG revenues continuing to
grow and with a strong pipeline of potential franchisees expected
to be signed in the current year or during the first quarter of
2019.
About Watbio
Formed in 2014 through the merger of Watling Hope and
Environmental Biotech, Watbio provides the following services
nationally:
-- Fat, Oil and Grease ("FOG") Control and Management -
installation and maintenance services to control FOG in drainage
lines
-- Wastewater Pumping and Treatment - Installation, maintenance
and compliance services for wastewater treatment plants, pumps,
pumping systems and oil interceptors
-- Drainage Services - Full suite of drainage services
Watbio operates from its head office in Maldon, Essex, and a
further 10 regional office and warehouse locations, including
Glasgow, Newcastle, Manchester, Birmingham, London and Plymouth and
Stratford-upon-Avon. Watbio employs approximately 90 staff and
operates through its fleet of c. 70 vans, providing services to
over 860 customers, including major fast food, pub and coffee
chains.
In the year ended 30 September 2018, Watbio's audited accounts
reflect an Adjusted EBITDA(1) of GBP1.13 million and profit before
tax of GBP0.8 million on revenues of GBP10.3 million and, as at 30
September 2018, had gross assets of GBP3.1 million. The Directors
deem Watbio to have low capital intensity, with annual capital
expenditures averaging less than GBP0.1 million over the last three
years.
(1) earnings before interest, tax, depreciation, amortisation
and excluding costs (payments to the former shareholders) which are
not expected to continue following the Acquisition
Consideration Shares
250,000 of the Consideration Shares are being issued, at the
Placing Price, on completion to Edward Palin, Managing Director of
Watbio and are locked in for a period of 24 months. Mr Palin is
entering into a new service contract as part of the Acquisition and
will remain with the combined business going forward.
The remaining 150,000 Consideration Shares will be issued at the
Placing Price to other vendors of Watbio and are subject to orderly
market provisions for 2 years.
The Placing
The Company has raised gross proceeds of GBP3.0 million,
approximately GBP2.9 million net of expenses ("Net Proceeds"), from
the issue of the Placing Shares at the Placing Price through Cenkos
Securities plc pursuant to a conditional agreement dated 19
December 2018. The Placing is not conditional upon completion of
the Acquisition, and is neither underwritten nor subject to
shareholder approval.
The Net Proceeds of the Placing, and the new loan facility, will
be used to satisfy the funding requirements in relation to the
Acquisition, and the Directors expect average net debt to EBITDA
ratio for the Enlarged Group to remain below 1.0x following the
acquisition.
Related party transaction
The following substantial Shareholder (being a Shareholder
holding 10 per cent. or more of the Company's Ordinary Shares as at
18 December 2018, being the latest practicable date prior to the
date of this announcement) is participating in the Placing as
described below:
Number Percentage Amount Number Number Percentage
of of of
Existing of Existing subscribed Placing Ordinary of enlarged
Ordinary Ordinary Shares Shares share
held
Shares Shares including capital*
the Placing
Shares
Gresham House Asset
Management Limited 3,129,000 11.53% GBP970,000 485,000 3,614,000 12.44%
*following Admission of the Placing and all the Consideration
Shares
The participation by the Shareholder referred to above in the
Placing is classified as a related party transaction for the
purposes of the AIM Rules by virtue of such Shareholder being a
'substantial shareholder' (as defined in the AIM Rules for
Companies) in the Company. The Directors, having consulted with
Cenkos, the Company's Nominated Adviser, consider that the terms of
the transaction, namely the participation by Gresham House Asset
Management Limited in the Placing, are fair and reasonable insofar
as the Company's Shareholders are concerned.
Total Voting Rights
Application has been made for 1,500,000 Placing Shares and
275,000 Consideration Shares to be admitted to trading on AIM, and
it is expected that admission will occur at 8.00 a.m. on or around
20 December 2018. Following admission of the Placing Shares and
Consideration Shares, the Company's issued ordinary share capital
will comprise 28,918,630 ordinary shares, none of which are held in
treasury.
Therefore, the total number of ordinary shares with voting
rights in the Company will be 28,918,630, which may be used by
shareholders as the denominator for the calculations by which they
will determine if they are required to notify their interest in, or
a change to their interest in, the Company under the FCA's
Disclosure Guidance and Transparency Rules.
A further application for admission to trading on AIM will be
made for the remaining 125,000 Consideration Shares in advance of
their issue, which will be on or before 31 December 2018.
For further information please contact:
Filta Group Holdings plc Tel: +1 407 996 5550
Jason Sayers, Chief Executive Officer
Brian Hogan, Finance Director
Cenkos Securities (Nomad and Broker) Tel: +44 (0)20 7397 8900
Stephen Keys
Harry Hargreaves
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END
ACQGGGMAPUPRGPB
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