TIDMDGB
RNS Number : 5999Q
Digital Barriers plc
16 October 2013
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES,
JAPAN, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA OR THE
REPUBLIC OF IRELAND OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A BREACH OF THE RELEVANT SECURITIES LAWS OF SUCH
JURISDICTION.
For immediate release
16 October 2013
Digital Barriers plc
("Digital Barriers" or the "Company")
Proposed Placing of 13,357,143 new Ordinary Shares at 140 pence
per share
Digital Barriers plc (AIM: DGB), the specialist provider of
advanced surveillance technologies to the international homeland
security and defence markets, is pleased to announce a conditional
placing of 13,357,143 new Ordinary Shares at 140 pence per share to
raise approximately GBP18.0 million (after expenses) for the
Company.
Background to and reasons for the Placing
The purpose of the Placing is to raise funds to be used by the
Group to further implement its stated strategy. The Directors
believe that the market opportunity for Digital Barriers' advanced
surveillance products is large and continues to grow given the
global security and defence context. The Group will seek to
continue to expand its international sales across flagship
customers and to close sales with key customers that it believes
can support year-on-year sales growth, achieving the revenue
momentum that will allow the Group to reach break-even. The
Directors believe that continued tight control of its costs will
allow the Group to benefit from further operational leverage in the
medium term. The Directors are aiming to reach break-even and
operational positive cash flow in the year following the
Placing.
The Placing will raise funds for the short-term cash
requirements of the Group. The Group is experiencing greater levels
of seasonality than originally envisaged which exacerbates the
peaks and troughs of the Group's sales and delivery cycles. This,
combined with the need to purchase and integrate third-party
equipment into large-scale solutions built around Digital Barriers'
intellectual property for delivery to customers, places increased
demands on the Group's cash resources.
Furthermore, in some of its recent contract wins and current
projects, the Group is experiencing longer than expected trial
phases, albeit that such trial phases generally conclude
successfully for the Group. The Group has also embarked on new
revenue models with certain customers who offer multi-year annuity
contracts which typically result in a smaller cash flow to the
Group during the first year of a contract. The Directors believe,
however, that it is to the long-term benefit of the Group to
increase the level of contractual recurring revenues.
The Group continues to invest in both its product suite and
international sales infrastructure. Having set out to build the
UK's leading mid-market homeland security specialist, the Group now
has world-class intellectual property under its ownership and has
developed an export-led business, selling into flagship customers
around the world, including direct sales into more than 30
countries over the last six months and a number of strategic
contract wins. The net proceeds of the Placing will allow the Group
to fund the losses being incurred by the Group as a result of this
investment, which are in line with the Directors' expectations.
The Group is now also seeking to strengthen its balance sheet in
order to assist in senior planned recruitment, to improve supplier
payment terms and to enhance customer confidence in sales
situations.
Accordingly, the Group will be using approximately GBP10 million
of the net proceeds of the Placing to fund in-year cash
requirements (including seasonality, major order coverage and
commercial revenue models) and short-term losses. Additionally, the
balance of approximately GBP8 million of the net proceeds from the
Placing will be used to strengthen the Group's balance sheet.
The Placing
The Company has conditionally raised GBP18.7 million (before
expenses) through the proposed issue of the Placing Shares at the
Placing Price, which represents a discount of approximately 5.1 per
cent. to the closing middle market price of 147.5 pence per
existing Ordinary Share on 15 October 2013, being the last
practicable date prior to the publication of this announcement. The
Placing Shares will represent approximately 20.8 per cent. of the
Enlarged Issued Share Capital.
Settlement and dealings
Application will be made to the London Stock Exchange for the
Placing Shares to be admitted to trading on AIM. It is expected
that Admission will occur at 8.00 a.m. on 4 November 2013.
The Placing Shares will, when issued, rank in full for all
dividends and other distributions declared, made or paid on the
Ordinary Shares following Admission and otherwise pari passu in all
respects with the existing Ordinary Shares.
Directors' participation in the Placing and Related Party
Transaction
The Directors have agreed to subscribe, in aggregate, for
294,998 Placing Shares under the Placing as follows:
Name Number of Placing Shares
Thomas Black 142,857
Colin Evans 48,571
Zak Doffman 64,285
Paul Taylor 14,285
Bernard Waldron 25,000
Under the AIM Rules, Newton Investment Management Limited is
currently a "Related Party" of the Company as a result of the
current level of its shareholding in the Company of approximately
13.3%. Newton Investment Management Limited has subscribed for a
total of 1,885,000 Placing Shares in the Placing which is
considered a "Related Party Transaction" for the purpose of AIM
Rules. The Directors consider, having consulted with its Nominated
Adviser, Investec, that the terms of the Related Party Transaction
are fair and reasonable in so far as the Company's shareholders are
concerned.
The Placing Agreement
Pursuant to the terms of the Placing Agreement, Investec, as
agent for the Company, has conditionally agreed to use its
reasonable endeavours to procure subscribers for the Placing
Shares. Investec has conditionally placed the Placing Shares with
certain existing and new institutional and other investors at the
Placing Price. The Placing has been fully underwritten by Investec,
subject to the terms of the Placing Agreement.
The Placing Agreement is conditional upon, inter alia,
Resolutions 1 and 2 being duly passed at the General Meeting and
Admission becoming effective on or before 8.00 a.m. on 4 November
2013 (or such later time and/or date as the Company and Investec
may agree, but in any event by no later than 8.00 a.m. on 29
November 2013).
The Placing Agreement contains customary warranties from the
Company in favour of Investec in relation to, inter alia, the
accuracy of the information in this announcement and the Circular
and other matters relating to the Group and its business. In
addition, the Company has agreed to indemnify Investec in relation
to certain liabilities it may incur in respect of the Placing.
Investec has the right to terminate the Placing Agreement in
certain circumstances prior to Admission, in particular, in the
event of a material breach of the warranties given to Investec in
the Placing Agreement, the failure of the Company to comply in any
material respect with any of its obligations under the Placing
Agreement, the occurrence of a force majeure event or a material
adverse change affecting the condition, or the earnings or business
affairs or prospects of the Group as a whole, whether or not
arising in the ordinary course of business.
The Circular
The Company will later today publish a circular (the "Circular")
containing, inter alia, further details of the Placing and a notice
convening the General Meeting at which the Resolutions will be
proposed. The Circular will be available at
www.digitalbarriers.com.
The Sharesave Scheme
In addition, the Board also proposes to take this opportunity to
seek Shareholder approval to the proposed adoption by the Company
of a new savings-related share option scheme, which aims to
encourage employee share ownership throughout the Group.
The Sharesave Scheme will be submitted to HM Revenue &
Customs for approval in due course and, once adopted, will be a
standard HM Revenue & Customs tax-advantaged all-employee plan.
The main terms of the Sharesave Scheme will be summarised in
Appendix 1 to the Notice of General Meeting.
Current Trading
On 7 October 2013, the Company provided a trading update for the
six months ended 30 September 2013. The Company has traded in line
with the Directors' expectations since 30 September 2013. The Board
also confirms that its cash position at 30 September 2013 was
GBP1.1m.
Recommendation
The Directors consider the Proposals to be in the best interests
of the Company and its Shareholders as a whole and accordingly
intend to unanimously recommend Shareholders to vote in favour of
the Resolutions to be proposed at the General Meeting as they
intend to do so in respect of their own beneficial holdings
amounting, in aggregate, to 5,133,883 existing Ordinary Shares,
representing approximately 10.06 per cent. of the Issued Share
Capital.
Tom Black, Executive Chairman, commented:
"We are now selling our world-class surveillance technologies to
flagship customers around the world. Our core products have proven
themselves to be highly differentiated from their competition and
we are seeing increasing demand from customers across each of our
regions. This placing demonstrates the excellent support we
continue to enjoy from our shareholders and has also attracted
significant new investors into the Group."
Enquiries:
+44 (0) 20 7940
Digital Barriers plc 4740
Tom Black, Executive Chairman
Colin Evans, Managing Director
Zak Doffman, Development Director
Investec Bank plc - Nominated adviser and Broker +44 (0) 20 7597
to Digital Barriers 5970
Andrew Pinder / Patrick Robb
Dominic Emery / Carlton Nelson
+44 (0) 20 7831
FTI Consulting - PR Adviser to Digital Barriers 3113
Edward Bridges
Matt Dixon
Elodie Castagna
Important notice
Investec Bank plc, which is authorised by the Prudential
Regulation Authority and regulated by the Financial Conduct
Authority and the Prudential Regulation Authority, is acting
exclusively for the Company in connection with the Placing, and
will not be responsible to anyone other than the Company for
providing the protections afforded to clients of Investec Bank plc
or for providing advice in relation to the Proposals in this
announcement or any other matter in relation to the contents of
this announcement.
This announcement has been issued by Digital Barriers plc and is
the sole responsibility of the Company. This announcement has not
been approved by Investec for the purposes of section 21 of the
FSMA. No representation or warranty, express or implied, is or will
be made as to, or in relation to, and no responsibility or
liability is or will be accepted by Investec or by any of its
affiliates or agents as to, or in relation to, the accuracy or
completeness of this announcement or any other written or oral
information made available to or publicly available to any
interested party or its advisers, and any liability therefore is
expressly disclaimed.
This announcement does not constitute or form part of any offer
or invitation to sell or issue, or any solicitation of any offer to
purchase or subscribe for, any securities or any offer or
invitation to sell or issue, or any solicitation of any offer to
purchase or subscribe for, such securities by any person in any
circumstances, and in any jurisdiction, in which such offer or
solicitation is unlawful. Accordingly, copies of this announcement
are not being and must not be mailed or otherwise distributed or
sent in or into or from the United States, Canada, Australia,
Japan, the Republic of South Africa or the Republic of Ireland or
any other jurisdiction if to do so would constitute a violation of
the relevant laws of, or require registration thereof in, such
jurisdiction (each a "Restricted Jurisdiction") or to, or for the
account or benefit of, any United States, Canadian, Australian,
Japanese, South African or Irish person and any person receiving
this announcement (including, without limitation, custodians,
nominees and trustees) must not distribute or send it in or into or
from a Restricted Jurisdiction.Nopublic offering of the Placing
Shares is being made in any such jurisdiction.
In particular, the securities of the Company (including the
Placing Shares) have not been and will notbe registered under the
US Securities Act of 1933, as amended (the "Securities Act"), or
under thesecurities laws of any state or other jurisdiction of the
United States, and accordingly the PlacingShares may not be
offered, sold or transferred, directly or indirectly, in, into or
within the United Statesexcept pursuant to an exemption from, or in
a transaction not subject to, the registration requirements of the
Securities Act and the securities laws of any relevant state or
jurisdiction of the United States.There is no intention to register
any portion of the offering in the United States or to conduct a
publicoffering of securities in the United States.
The Placing Shares have not been approved or disapproved by the
US Securities and ExchangeCommission, any state securities
commission or other regulatory authority in the United States,
norhave any of the foregoing authorities passed upon or endorsed
the merits of the Placing or theaccuracy or adequacy of this
announcement. Any representation to the contrary is a criminal
offencein the United States.
This announcement includes statements that are, or may be deemed
to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates", "plans",
"projects", "anticipates", "expects", "intends", "may", "will", or
"should" or, in each case, their negative or other variations or
comparable terminology. These forward-looking statements include
matters that are not historical facts. They appear in a number of
places throughout this announcement and include statements
regarding the Directors' current intentions, beliefs or
expectations concerning, among other things, the Company's results
of operations, financial condition, liquidity, prospects, growth,
strategies and the Company's markets. By their nature,
forward-looking statements involve risk and uncertainty because
they relate to future events and circumstances. Actual results and
developments could differ materially from those expressed or
implied by the forward-looking statements. Forward-looking
statements may and often do differ materially from actual results.
Any forward-looking statements in this announcement are based on
certain factors and assumptions, including the Directors' current
view with respect to future events and are subject to risks
relating to future events and other risks, uncertainties and
assumptions relating to the Company's operations, results of
operations, growth strategy and liquidity. Whilst the Directors
consider these assumptions to be reasonable based upon information
currently available, they may prove to be incorrect. Save as
required by law or by the AIM Rules, the Company undertakes no
obligation to publicly release the results of any revisions to any
forward-looking statements in this announcement that may occur due
to any change in the Directors' expectations or to reflect events
or circumstances after the date of this announcement.
Expressions used in this announcement shall have the meanings
set out in the Appendix to this announcement.
Appendix
Definitions
In this announcement, the following expressions have the
following meanings, unless the context requires otherwise:
"Act" the Companies Act 2006 (as amended)
"Admission" the admission of the Placing Shares
to trading on AIM becoming effective
in accordance with the AIM Rules
"AIM" the market of that name operated by
the London Stock Exchange
"AIM Rules" the AIM Rules for Companies as published
by the London Stock Exchange, as amended
from time to time
"Board" or "Directors" the board of directors of the Company
"Enlarged Issued Share the enlarged issued ordinary share capital
Capital" of the Company immediately following
Admission
"FSMA" the Financial Services and Markets Act
2000 (as amended)
"General Meeting" the general meeting of the Company to
be convened for 10.00 a.m. on 1 November
2013 (or any adjournment thereof) at
which the Resolutions will be proposed,
notice of which will be set out in the
Circular
"Group" the Company and its Subsidiaries from
time to time
"Investec" Investec Bank plc, the Company's nominated
adviser and broker
"Issued Share Capital" the issued ordinary share capital of
the Company as at 15 October 2013, being
the latest practicable date prior to
the publication of this announcement,
being 50,984,761 Ordinary Shares
"London Stock Exchange" London Stock Exchange plc
"Notice of General Meeting" the notice of the General Meeting to
be set out in the Circular
"Ordinary Shares" ordinary shares of one penny each in
the capital of the Company
"Placing" the conditional placing of the Placing
Shares, by Investec as agent for and
on behalf of the Company, at the Placing
Price pursuant to the terms of the Placing
Agreement
"Placing Agreement" the conditional agreement dated 16 October
2013 between the Company and Investec
relating to the Placing
"Placing Price" 140 pence per Placing Share
"Placing Shares" the 13,357,143 new Ordinary Shares to
be issued pursuant to the Placing
"Proposals" together, the Placing, Admission and
the proposed adoption of the Sharesave
Scheme
"Resolutions" the resolutions to be proposed at the
General Meeting and to be set out in
the Notice of General Meeting
"Shareholder" a holder of Ordinary Shares
"Sharesave Scheme" the Digital Barriers Sharesave Scheme
proposed to be adopted by the Company,
further details of which will be set
out in the Circular
"Subsidiary" to be construed in accordance with section
1162 of the Act
"UK" or "United Kingdom" the United Kingdom of Great Britain
and Northern Ireland
"US" or "United States" the United States of America, its territories
and possessions, any state of the United
States of America, the District of Columbia
and all other areas subject to its jurisdiction
This information is provided by RNS
The company news service from the London Stock Exchange
END
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