TIDMFOX
RNS Number : 0000O
Fox Marble Holdings PLC
27 May 2020
AIM: FOX 27 May 2020
Fox Marble Holdings plc
("Fox Marble" or the "Company")
Conditional placing to raise GBP0.8 million, Rescheduling of
CULNs and Notice of General Meeting
-- Conditional placing of GBP0.8 million with new and existing
shareholders through the issue of 45,714,292 new ordinary shares at
a price of 1.75 pence per share;
-- Rescheduling of GBP2.1m of cumulative unsecured loan notes
("CULN") to a new class of CULN at a reduced interest rate and a
five and half year term maturity; and
-- Appointment of Allenby Capital Limited ("Allenby Capital") as joint broker to the Company.
Fox Marble (AIM:FOX), the AIM quoted company focused on marble
quarrying in Kosovo and the Balkans region, is pleased to announce
a conditional placing of 45,714,292 new Ordinary Shares ("Placing
Shares") at a price of 1.75 pence per share ("Placing Price")
through Allenby Capital and Brandon Hill Capital Limited to raise
c.GBP0.8 million before expenses (the "Placing"). Warrants over new
ordinary shares will be issued on the basis of one for every two
Placing Shares, exercisable at a price of 3.5 pence per share,
representing a 100% premium to the Placing Price, for 18 months,
conditional, inter alia, on the General Meeting (as detailed
below).
The Placing is conditional, inter alia, on shareholders giving
the directors authorities to issue new ordinary shares on a
non-pre-emptive basis. A General Meeting of shareholders will be
convened as detailed below.
The Company has reached agreement with the holders of GBP2.1
million of its CULNs. Under this agreement the Company will replace
the eight existing series of CULNs with a new single class of CULN
which will have a maturity date of 1 December 2026 and will be
convertible at any date from 1 June 2020 at a conversion price of 5
pence per share. The interest rate of the new CULN is 2% per annum
payable half yearly on 1 June and 1 December.
In order to conserve cash, the Directors of the Company have
agreed to utilise their accrued fees to subscribe for new Ordinary
Shares in the Company. The Non-Executive Directors will do this for
the duration of 2020 whilst the Executive Directors will do this
until such point as operations affected, as a result of COVID-19,
return to normal. The number of Ordinary Shares subscribed for will
be calculated quarterly in arrears and with reference to the 30 day
volume weighted average price at the end of the quarter. The value
of fees to be applied to the subscription for shares, including
fees accrued to date, is expected to be approximately GBP230,000,
depending on the length of the current Covid-19 related operational
slowdown. A further announcement will be made later in the year
when the subscription takes place.
The Company intends to use the net proceeds from the Placing to
provide working capital for the medium term and to enable the
Company to fund the previously announced business strategy of:-
- Growing factory sales of processed marble within Kosovo and the greater Balkans area;
- Increasing block sales to China and other large block markets;
- Growing the Company's marble reserves base and opening new
quarries in Kosovo as demand increases once the worst effects of
the current pandemic subsides; and
- Developing the Company's sales and marketing activities.
Related Party Transaction
Andrew Muir, who, prior to the Placing, has an interest over
35,306,113 ordinary shares (13.44%) is a substantial shareholder in
the Company and is therefore deemed to be a related party pursuant
to the AIM Rules. Andrew Muir is subscribing for 3,428,572 Placing
Shares at the Placing Price.
The participation of Mr Muir in the Placing is a related party
transaction pursuant to AIM Rule 13 ("the Transaction") as he is a
substantial shareholder. The Directors, all of who are independent
of the Transaction, consider, having consulted with the Company's
nominated adviser, that the terms of the transaction are fair and
reasonable insofar as shareholder are concerned.
A circular, convening a General Meeting at 10.00 a.m. on 15 June
2020 to grant the Board authority to allot the Placing Shares for
cash on a non pre-emptive basis, will be sent to Shareholders today
and will be available for download from the Company's website at
www.foxmarble.net .
Application will be made for the 45,714,292 Placing Shares to be
admitted to trading on AIM on or around 17 June 2020 ("Admission").
The Placing Shares will rank pari passu with the existing ordinary
shares of the Company.
Following Admission, the Company will have in issue 308,372,214
ordinary shares with voting rights. The above figure may be used by
shareholders as the denominator for 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 Disclosure
Guidance and Transparency rules.
Appointment of Joint Broker
Allenby Capital has been appointed as joint broker to the
Company with immediate effect. Optiva Securities Limited will cease
to act as joint broker to the Company with immediate effect.
Annual Report and Accounts
Due to the current COVID-19 outbreak, the Company will be unable
to post its annual audited accounts to shareholders for the year to
31 December 2019 by the 30 June 2020 deadline pursuant to AIM Rule
18.
Further to the guidance provided by AIM Regulation in "Inside
AIM" on 26 March 2020, the Company requested an additional period
of up to three months to publish its annual audited accounts for
the year ended 31 December 2019.
AIM Regulation has granted the extension, and therefore the
Company will publish its annual audited accounts to 31 December
2019 by 30 September 2020. Fox Marble has also applied for and been
granted an extension to delay the filing of its audited annual
accounts by Companies House until 30 September 2020.
Chris Gilbert, CEO of Fox Marble, commented : "I am pleased to
announce this Conditional Placing and rescheduling of the CULNs
which considerably strengthens the balance sheet of the Company.
This allows us to continue to develop the business despite the
cessation of activities in our quarries due to the Coronavirus,
which has also reduced production in our factory which nonetheless
is allowed to continue to operate as a designated sector operation
in Kosovo."
"The reduction in production is a result of our concern for our
workforce who maintain social distancing practices balanced against
the need to continue to supply our customers and generate revenue
for all stakeholders."
"I would like to take this opportunity to thank our existing and
new Shareholders for the support shown."
"We are now well-placed to meet the expected demand for our
products as the worst effects of this pandemic recede. I look
forward to updating the market in due course regarding new
contracts for our processed marble and block sales once our
customers are able to return to purchase our desirable
material."
Definitions in this announcement are the same as those included
in the Company's circular to be posted to shareholders today, dated
27 May 2020, available on the Company's website at
www.foxmarble.net . An extract of the Company's circular is set out
below.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014. In addition, market
soundings (as defined in MAR) were taken in connection with the
Placing as a result of which certain persons became aware of inside
information (as defined in MAR), as permitted by MAR. This inside
information is set out in this Announcement. Therefore, those
persons that received such inside information in a market sounding
are no longer in possession of such inside information relating to
the Company and its securities.
For more information on Fox Marble please visit
www.foxmarble.net or contact:
Fox Marble Holdings plc
Chris Gilbert, Chief Executive Officer Tel: +44 (0) 20 7380
0999
Fiona Hadfield, Finance Director Tel: +44 (0) 20 7380
0999
Allenby Capital Limited (Joint Broker)
Amrit Nahal (Broking) Tel: +44 (0) 203
Nick Naylor/Nick Athanas/Liz Kirchner 328 5656
(Corporate Finance)
Brandon Hill Capital (Joint Broker)
Oliver Stansfield Tel: +44 (0) 20 3463
5000
Cairn Financial Advisers LLP (Nomad)
Liam Murray / Sandy Jamieson Tel: +44 (0) 20 7213
0880
Notes to Editors:
Fox Marble (AIM: FOX), is a marble production, processing and
distribution company in Kosovo and the Balkans region.
Its marble products, which includes Alexandrian Blue,
Alexandrian White, Breccia Paradisea, Etruscan gold and Grigio
Argento and are gaining sales globally both to international
wholesale companies as well as being supplied directly into luxury
residential properties. In the UK these include among others St
George's Homes and Capital and Counties Plc's Lillie Square
development. In Sydney, Australia Rosso Cait, Alexandrian White and
Breccia Paradisea marble have been used in what is expected to be
Australia's most expensive residential property. These sales serve
to demonstrate the desirability of Fox Marble's premium marble
products as the stone of choice in some of the most prestigious and
expensive residential developments around the world.
Extracts from the Circular
The following has been extracted from, and should be read in
conjunction with, the Circular, which will shortly be made
available for download from the Company's website:
www.foxmarble.net
1. Background to and reasons for the Placing
The Group's long-term strategy is to become a major
international supplier of high-quality marble blocks and processed
marble products from the Company's own processing facility based in
Lipjan, Kosovo. The Group has made significant progress in the
period since admission to AIM in August 2012. The Company is
carrying out the Placing to expand its sales and marketing
activities and provide additional working capital thereby putting
the Group on a secure footing to meet the expected demand for its
products, once the worst effects of the pandemic have subsided.
2. Current Trading
Sales
Unaudited sales for the year ended 31 December 2019 were EUR1.4
million (2018 - EUR1.4 million). The fall in block sales of
Illirico Selene following the closure of operations in Maleshevë
was offset by increased block sales from the Prilep quarry in
Macedonia. Sales from the factory increased significantly in the
final quarter of the year, outpacing the previous three quarters,
following the appointment of a new factory manager and a non-board
COO, and we expect this trend to continue in 2020. Sales of
processed marble are expected to form an increasing proportion of
sales in the future.
Quarry Operations
The quarry in Prilep in Macedonia, which produces Alexandrian
White and Alexandrian Blue marble, has seen production nearly
double in the 2019 financial year compared to 2018, a product of
both the investment in new machinery at the start of 2019 and the
new quarry team appointed at the end of 2018. Production has
effectively doubled two years in a row at the quarry (2017
production - 2,285 tonnes) and further growth is expected during
this financial year. Current production level is at around 10,000
tonnes per annum and the Directors believe there is potential
capacity of 20,000 tonnes through redeploying equipment from the
quarries in Kosovo.
The Cervenillë and Syrigane quarries in Kosovo - sources
respectively of our Argento Grigio, Rosso Cait and Breccia marbles
are open, with machinery on site and ready for deployment. At
present quarry teams are not on site, however as the Company has a
significant reserve of material in stock, the quarries can be
staffed at short notice. This allows the Company to preserve
working capital, whilst using existing stock reserves to provide
material for sale from the factory.
Production for the year ended 31 December 2019 was 14,515 tonnes
with production in Prilep of 11,547 tonnes (2018 - 5,803
tonnes).
Quarry production at the Maleshevë quarry in Kosovo was stopped
in July 2019 a result of the ongoing dispute with Green Power
Sh.p.k. The Company has filed civil claims in Kosovo against Green
Power Sh.pk for breach of contract and damages, in addition to the
wider arbitration case launched against the Government of Kosovo,
as announced in September 2019. The Company is represented by its
legal advisers, Stephenson Harwood LLP, as well as its Kosovan
lawyers. As the Company believes the Kosovan Government to be in
clear breach of its responsibilities towards the Company, which is
a foreign investor in Kosovo, the Company is of the opinion that
this action is in the best interests of its shareholders and
employees and anticipates a fair and satisfactory resolution. The
Company is in the process of obtaining litigation funding and will
not fund the case from operating cash flows. The first hearing on
the arbitration case is expected to take place in London within the
next 12 months.
Factory Operations
The Group's processing facility is a 5,400 square metre double
skinned steel factory for the cutting and processing of blocks into
polished slabs and tiles which was erected on a 10-hectare site
that the Company acquired in Lipjan in 2013, close to Pristina
airport in Kosovo. The new factory manager Secondino de Costas,
under the direction of our new COO Francisco Espinosa has
implemented new processes and improved operations across the
factory site.
The factory has a processing capacity of 165,000 square metres
per annum with output dependent on the number of shifts applied.
The Directors believe that capacity can be expanded to 247,500
square metres with an investment of c.EUR600,000. The Company has
sufficient block stock extracted in Kosovo to supply the factory
with stock for up to 24 months without any further investment in
extraction in Kosovo. Processing allows access to higher margin
sales.
The Group entered into three new contracts to process material
for third parties at the factory. These agreements represent a new
revenue stream for the Group, whereby it provides marble cutting
and polishing services to other companies quarrying in the wider
Balkan region. These agreements have allowed the Group to expand
capacity at the factory whilst maximising operating efficiencies
and continuing to process its own material for sale.
On 14 April 2020, Fox Marble announced that it has been awarded
a contract to supply up to 20,000 square metres of paving to a
local municipality for the town square in the town of Suhareka in
Kosovo. Fox Marble has been selected to supply its material after a
competitive tender process as is usual for local authority
contracts. This stone is to be supplied from the Group's factory in
Kosovo over the course of a year with the first 8,000 square metres
to be delivered by September 2020. The stone will be processed from
existing blocks of Grigio Argento, Flora and Alexandrian White
already extracted and awaiting processing. Material already
specified and contracted under the first two stages of the project
has a total value in excess of EUR400,000, and once all 20,000
square metres has been supplied is the project is expected to be
worth in excess of EUR750,000.
As a result of the lockdown in place in Kosovo due to the
Coronavirus, the supply of the material will be delayed until the
local contractor installing the paving is allowed to resume work on
this municipal project. However, the Company currently anticipates
that work will resume on this project by the end of September 2020
which was detailed in the announcement released by the Company on
13 May 2020.
Impact of Coronavirus
As announced on 3 April 2020, the spread of Coronavirus
(COVID-19) continues to have a significant impact across industries
worldwide, including the marble extraction and processing market,
given the international travel and working restrictions now in
place in many countries.
The Board's highest priority is the continued wellbeing of its
employees, customers and stakeholders both in the UK and Kosovo.
Given the continued uncertainty on the potential impact and
duration of the COVID-19 pandemic, the Board has taken preemptive
steps not only to ensure the wellbeing of those affected, but also
to best position the Group for future operations.
Under the current legislation, the Group's operations in Kosovo
are permitted to continue, as it falls within a designated sector.
The Group will continue to operate the factory, though it has
scaled back operations to specific projects. This will allow the
implementation of extra distancing procedures to protect our
workforce, as well as to take into account the impact of COVID-19
on the Group's customers. Existing and committed projects are being
completed, and timelines will be closely managed in co-ordination
with our clients. The level of operations at the factory will be
assessed every two weeks.
COVID-19 has had a significant impact on demand for block marble
due to travel restrictions since January 2020 placed on China,
which is the location of the principal buyers of the Group's block
marble. The spread of the virus into Europe and the resulting
impact on cross-border travel and trade has magnified this effect.
The Group has elected to significantly scale back production at the
quarry in order to keep operational cash flow neutral until the
international block marble market returns to normality. The Group
is well-positioned to ramp up operations as and when it is feasible
to do so.
The Board continues to closely monitor the situation and working
capital will continue to be tightly managed. Whilst operations are
temporarily suspended, the Company will seek to eliminate all
unnecessary costs. Head Office staff in London are on government
furlough, as we work to retain our hard working and committed
team.
In order to conserve cash, the Directors have agreed to utilise
their accrued fees to subscribe for new Ordinary Shares. The
Non-Executive Directors will do this for the duration of 2020
whilst the Executive Directors will do this until such point as
operations affected, as a result of COVID-19, return to normal. The
number of Ordinary Shares subscribed for will be calculated
quarterly in arrears and with reference to the 30 day volume
weighted average price at the end of the quarter. The value of fees
to be applied to the subscription for Ordinary Shares, including
fees accrued to date, is expected to be approximately GBP230,000,
depending on the length of the current Covid-19 related operational
slowdown. A further announcement will be made later in the year
when the subscription takes place.
3. Information on the Placing
The Placing Shares will be credited as fully paid and rank
equally with the existing issued Ordinary Shares if and when
issued. Application will be made for the Placing Shares to be
admitted to trading on AIM on or around 17 June 2020.
Use of Proceeds:
The Company intends to use the net proceeds from the Placing to
provide sufficient working capital for the medium term and to help
fund the previously announced business strategy of:
-- growing factory sales of processed marble within Kosovo and the greater Balkans area;
-- increasing block sales to China and other large block markets;
-- growing the marble reserves base and opening new quarries in
Kosovo as demand increases once the worst effects of the current
pandemic subside; and
-- Developing the Company's sales and marketing activities.
Caution regarding forward looking statements
Certain statements in this announcement, are, or may be deemed
to be, forward looking statements. Forward looking statements are
identi ed by their use of terms and phrases such as "believe",
"could", "should" "envisage", "estimate", "intend", "may", "plan",
"potentially", "will" or the negative of those, variations or
comparable expressions, including references to assumptions. These
forward looking statements are not based on historical facts but
rather on the Directors' current expectations and assumptions
regarding the Company's future growth, results of operations,
performance, future capital and other expenditures (including the
amount, nature and sources of funding thereof), competitive
advantages, business prospects and opportunities. Such forward
looking statements re ect the Directors' current beliefs and
assumptions and are based on information currently available to the
Directors.
A number of factors could cause actual results to differ
materially from the results discussed in the forward looking
statements including risks associated with vulnerability to general
economic and business conditions, competition, environmental and
other regulatory changes, actions by governmental authorities, the
availability of capital markets, reliance on key personnel,
uninsured and underinsured losses and other factors, many of which
are beyond the control of the Company. Although any forward looking
statements contained in this announcement are based upon what the
Directors believe to be reasonable assumptions, the Company cannot
assure investors that actual results will be consistent with such
forward looking statements. Accordingly, readers are cautioned not
to place undue reliance on forward looking statements. Subject to
any continuing obligations under applicable law or any relevant AIM
Rule requirements, in providing this information the Company does
not undertake any obligation to publicly update or revise any of
the forward looking statements or to advise of any change in
events, conditions or circumstances on which any such statement is
based.
Information to Distributors
Solely for the purposes of the product governance requirements
contained within: (a) EU Directive 2014/65/EU on markets in
financial instruments, as amended ("MiFID II"); (b) Articles 9 and
10 of Commission Delegated Directive (EU) 2017/593 supplementing
MiFID II; and (c) local implementing measures (together, the
"Product Governance Requirements"), and disclaiming all and any
liability, whether arising in tort, contract or otherwise, which
any "manufacturer" (for the purposes of the Product Governance
Requirements) may otherwise have with respect thereto, the Placing
Shares have been subject to a product approval process, which has
determined that the Placing Shares are: (i) compatible with an end
target market of retail investors and investors who meet the
criteria of professional clients and eligible counterparties, each
as defined in MiFID II; and (ii) eligible for distribution through
all distribution channels as are permitted by MiFID II (the "Target
Market Assessment"). Notwithstanding the Target Market Assessment,
investors should note that: the price of the Placing Shares may
decline and investors could lose all or part of their investment;
Placing Shares offer no guaranteed income and no capital
protection; and an investment in the Placing Shares is compatible
only with investors who do not need a guaranteed income or capital
protection, who (either alone or in conjunction with an appropriate
financial or other adviser) are capable of evaluating the merits
and risks of such an investment and who have sufficient resources
to be able to bear any losses that may result therefrom. The Target
Market Assessment is without prejudice to the requirements of any
contractual, legal or regulatory selling restrictions in relation
to the Placing. Furthermore, it is noted that, notwithstanding the
Target Market Assessment, only investors who have met the criteria
of professional clients and eligible counterparties have been
procured. For the avoidance of doubt, the Target Market Assessment
does not constitute: (a) an assessment of suitability or
appropriateness for the purposes of MiFID II; or (b) a
recommendation to any investor or group of investors to invest in,
or purchase, or take any other action whatsoever with respect to
the Placing Shares.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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