TIDMOPM
RNS Number : 2318U
1PM PLC
28 July 2015
28 July 2015
1pm plc
("1pm" or the "Company")
Acquisition of MH Holdings (UK) Limited for up to GBP12
million
Placing and Open Offer to raise up to GBP7.3 million
1pm plc (AIM: OPM), the AIM listed specialist independent
provider of finance facilities to the SME sector, is pleased to
announce the proposed acquisition of MH Holdings (UK) Limited
("MHH") for up to GBP12 million in cash and shares and a Placing
and Open Offer to raise in aggregate up to GBP7.263 million before
expenses. MHH is the holding company for a group of companies, the
only trading company of which is Academy Leasing Limited
("Academy").
Key Points:
-- Acquisition of MHH, a provider of equipment finance and an
equipment and vehicles broker to the SME market for consideration
of up to GBP12 million;
-- MHH annualised turnover of GBP5.1 million with potential for
further growth in combination with 1pm;
-- a Placing of 10,833,334 New Ordinary Shares at 60 pence per
share to the Placees to raise GBP6.5 million (before expenses);
-- new institutional shareholders joining the share register; and
-- a further issue of up to 1,270,847 New Ordinary Shares at 60
pence per share to Qualifying Shareholders pursuant to the Open
Offer to raise up to GBP0.763 million (before expenses).
The Placing Shares and Open Offer Shares will be issued at a
price of 60 pence each, which represents a discount of 11.1 per
cent. against the mid-market price of 67.5 pence per share at which
the Ordinary Shares were quoted on AIM as at close of trading on 27
July 2015, the last trading day prior to announcement of the
Acquisition, Placing and Open Offer.
A circular is being posted today to Shareholders (the
"Circular"). The Circular sets out in more detail the background to
and reasons for the Acquisition, Placing and Open Offer and their
respective terms. All capitalised terms in this announcement are as
defined in the Circular which will be available on the Company's
website: www.1pm.co.uk
1. Introduction
The Company announced today that it has exchanged a conditional
contract to acquire the entire issued share capital of MH Holdings
(UK) Limited for a total consideration of up to GBP12 million. The
consideration is to be satisfied as to:
-- GBP6 million payable in cash on Completion;
-- GBP2.385 million by way of the issue of 3,575,712 new Ordinary Shares on Completion;
-- Deferred consideration of up to GBP2.615 million by way of
the issue of up to 3,920,540 new Ordinary Shares, subject to the
satisfaction of certain performance conditions; and
-- GBP1 million by the issue of Vendor Loan Notes.
In order to meet the cash consideration and to provide
additional loan book lending for the Enlarged Group, the Company
has also announced today a Fundraising to raise a total of up to
GBP7.263 million (before expenses) by way of:
-- a Placing of 10,833,334 new Ordinary Shares at 60 pence per
share to the Placees to raise GBP6.5 million (before expenses);
and
-- a further issue of up to 1,270,847 new Ordinary Shares at 60
pence per share to Qualifying Shareholders pursuant to the Open
Offer to raise up to GBP0.763 million (before expenses).
The issue price of 60 pence per new Ordinary Share represents a
discount of 11.1 per cent. against the mid-market price of 67.5
pence per share at which the Ordinary Shares were quoted on AIM as
at close of trading on 27 July 2015, the last trading day prior to
announcement of the Acquisition, the Placing and the Open Offer.
The Consideration Shares have been valued at 66.7 pence per share,
being the average Closing Price for the 20 Business Days prior to
the date on which the Acquisition Agreement was signed.
The Acquisition is conditional, inter alia, on the Placing being
completed. The Company's existing share authorities which allow it
to issue shares on a non pre-emptive basis are insufficient to
allow the Placing and the Open Offer to proceed and therefore the
Placing and Open Offer is conditional on Shareholders'
approval.
The Fundraising is conditional, amongst other matters, on the
passing of certain Resolutions at the General Meeting, and is
expected to complete at 8.00 a.m. on 26 August 2015, being the
expected date of Admission.
2. Background to and reasons for the Acquisition and Fundraising
The Board's stated strategic and operational plan is to further
develop and grow the business through a combination of organic
growth, new product introductions and selective acquisitions. Over
the last six years the Company has achieved significant growth,
from reporting a GBP402,416 loss for the year ended 31 May 2010
through to reporting a profit before tax of GBP1,619,617 for the
year ended 31 May 2015. Over the same period, the loan book has
grown from GBP6.5 million to GBP30.1 million and the market
capitalisation of the Company has increased from GBP1.5 million to
around GBP25 million. This growth has been achieved entirely
organically without acquisitions. The Directors consider that the
Acquisition will facilitate further growth and strengthen the
Group's position in the market.
The Directors are of the opinion that the Acquisition will be
significantly earnings accretive. In addition, they believe that
the Acquisition will provide, inter alia, the following
benefits:
-- Academy currently undertakes both own book and brokered-on
business. 1pm writes all its business on its own book. Whilst
Academy will continue to broker on some of its deals, the
Acquisition will allow more own book business to be written which
should be more profitable than broking it on;
-- It will provide access to a new pool of customers. 1pm's
business is sourced via brokers while Academy's business is derived
from equipment suppliers;
-- It provides 1pm with a new source of revenue being the
commission revenue generated by the vehicles broking business of
Academy; and
-- The increased scale of the Enlarged Group is expected to
provide opportunities to negotiate reduced borrowing rates from
lenders.
The cash consideration for the Acquisition amounting to GBP6
million will be satisfied principally from the net proceeds of the
Placing. The Consideration Shares, representing up to GBP5 million
of the total consideration, will ensure that the interests of the
Vendors are aligned with the Company and its shareholders going
forward. The Initial Consideration Shares will be issued on
Completion. The Additional Consideration Shares will be issued
subject to the attainment by Academy of certain performance
conditions, principally the level of new business origination, over
the next three years. The cash consideration for the Acquisition
amounting to GBP6 million will be funded through a combination of
existing cash and debt facilities and the proceeds of the Placing.
The Vendor Loan Notes will satisfy GBP1 million of the total
consideration. The Vendor Loan Notes will be unsecured and will be
issued in integral multiples of GBP1 nominal value and will be
redeemed by the Company together with accrued interest (which shall
accrue at an annual rate of 5 per cent.) on a quarterly basis and
in equal instalments, with the first instalment being made on 30
November 2015 and the final instalment on 31 August 2018. If the
Company issues any Ordinary Shares while any amounts are
outstanding in respect of the Loan Notes, the Vendors may convert
any unredeemed Loan Notes at the Consideration Share Price.
The Board believes that existing shareholders should also have
the opportunity to further invest in the Company at the same price
as those institutions who are involved in the Placing and
accordingly the Circular sets out the terms of the Open Offer.
3. Information of MH Holdings (UK) Limited and Academy
MHH is the holding company for a group of companies, the only
trading company of which is Academy. MHH is owned by Mike Nolan and
Hazel Jacques. Academy is a provider of equipment finance and an
equipment and vehicles broker to the SME market. It has two
principal activities being the provision of:
-- finance either via its own loan book or brokered-on facilities; and
-- vehicle supply and fleet management services.
For the year ended 31 March 2015 own book and brokered-on
revenue accounted for approximately 80 per cent. and vehicle supply
revenue 20 per cent. of Academy's total revenue.
As at 31 March 2015, Academy's own loan book amounted to GBP16
million. Its average loan size is approximately GBP7,500 and is
typically for a period of three to six years. Its funding is
provided by a range of block funders. As at 31 March 2015 it had
total block funding facilities of approximately GBP19 million, of
which nearly GBP11 million was being utilised.
In its audited results for the year ended 31 March 2015, MHH
recorded revenues of GBP5,142,831, and profit before tax,
amortisation and directors' dividends of GBP1,870,795. As at 31
March 2015 MHH had net assets of GBP3.1 million.
4. Use of the proceeds of the Fundraising
The net proceeds of the Placing are expected to be approximately
GBP5.9 million. These proceeds will be applied in satisfying the
cash consideration payable for the Acquisition. The balance of the
proceeds of the Fundraising will be used to provide additional loan
book lending.
5. Details of the Placing and the Open Offer
1pm Plc is proposing to raise GBP6.5 million (before expenses)
pursuant to the Placing and up to a further GBP0.763 million
(before expenses) pursuant to the Open Offer. The Issue Price of 60
pence per new Ordinary Share represents a discount of 11.1 per
cent. to the Closing Price of 67.5 pence on 27 July 2015, the
latest Business Day prior to the release of this announcement.
The Placing has conditionally raised a total of GBP6.5 million
through the placing of 10,833,334 Placing Shares. Henderson
Volantis, a substantial shareholder in the Company, has subscribed
for 2,500,000 Placing Shares. This subscription constitutes a
related party transaction under the AIM Rules as Henderson Volantis
currently holds approximately 16 per cent. of the Existing Ordinary
Shares and is therefore a "substantial shareholder" under the AIM
Rules. In addition, certain directors are participating in the
Placing, namely Ron Russell, Ian Smith and Helen Walker. Their
participation in the Placing also constitutes a related party
transaction under the AIM Rules. Maria Lewis, an independent
director for these purposes, considers having consulted with WH
Ireland, the Company's nominated adviser, that the terms of
Henderson's subscription and those of Ron Russell, Ian Smith and
Helen Walker are fair and reasonable insofar as the Shareholders
are concerned.
The Placing is conditional upon, inter alia, the Acquisition
becoming unconditional in accordance with its terms, the
Resolutions being passed and Admission occurring no later than 8.00
a.m. on 26 August 2015 (or such later date as the Company and WH
Ireland shall agree, being no later than 9 September 2015).
The Open Offer is being made on a pre-emptive basis, allowing
all Qualifying Shareholders the opportunity to participate.
The Open Offer provides Qualifying Holders with the opportunity
to apply to acquire Open Offer Shares at the Issue Price pro rata
to their holdings of Existing Ordinary Shares as at the Record Date
on the following basis:
1 Open Offer Share for every 29 Existing Ordinary Shares
and so on in proportion to any other number of Existing Ordinary
Shares then held.
Entitlements to apply to acquire Open Offer Shares will be
rounded down to the nearest whole number and any fractional
entitlement to Open Offer Shares will be disregarded in calculating
the Basic Entitlement.
Shareholders who do not take up their Basic Entitlements in full
will experience a dilution to their interests of approximately 29.9
per cent. following the Fundraising (assuming full subscription
under the Open Offer) and the issue of the Initial Consideration
Shares. Shareholders who take up their Basic Entitlements in full
will suffer a dilution to their interests of 27.4 per cent. on the
same basis.
Qualifying Shareholders should note that the Open Offer Shares
have not been placed under the Placing subject to clawback under
the Open Offer nor have they been underwritten, and that the
Placing is not conditional upon the number of applications received
under the Open Offer.
The Open Offer is subject to the satisfaction, amongst other
matters, of the following conditions on or before 26 August 2015
(or such later date, being not later than 8.00 a.m. on 9 September
2015, as the Company and WH Ireland may decide):
-- the Placing becoming unconditional in all respects;
-- the passing of Resolution 1 at the General Meeting (or any adjournment thereof); and
-- Admission becoming effective by 8.00 a.m. on 26 August 2015
(or such later time or date not being later than 8.00 a.m. on 9
September 2015 as the Company and WH Ireland may decide).
The New Ordinary Shares will, when issued and fully paid, rank
pari passu in all respects with the Existing Ordinary Shares,
including the right to receive all dividends and other
distributions declared, made or paid after the date of
Admission.
6. Current trading and prospects
The Company's results for the year ended 31 May 2015 released on
24 July 2015 announced a profit before tax of GBP1,619,617, an
increase of 24 per cent. over the comparative of GBP1,346,524 in
2014. Revenues increased by 31.4 per. cent to GBP5,533,990 from
GBP4,211,569 in the prior year and the total loan book has grown
from GBP20.4 to GBP30.1 million.
Trading in the current year has commenced satisfactorily and is
ahead of the equivalent period last year.
7. Board changes
Mike Nolan and Hazel Jacques, the Vendors, will join the Board
of the Company on Completion. In addition, two new independent
non-executive directors, Julian Telling and John Newman, will be
appointed to the Board on Admission. On Admission, the Board will
comprise four executive and four non-executive directors who will
be as follows:
Ian Smith Non-executive Chairman
Maria Chief Operating Officer and Managing
Lewis Director of 1pm (UK) Limited
Helen Chief Financial Officer
Walker
Mike Nolan Chief Strategic Officer and Managing
Director of Academy
Hazel Chief Marketing Officer
Jacques
Ron Russell Non-executive Director
Julian Non-executive Director
Telling
John Newman Non-executive Director
Details of the proposed service agreements of Mike Nolan and
Hazel Jacques, being the proposed directors pursuant to the
Acquisition, are as follows:
-- Mike Nolan will be employed as Chief Strategic Officer
pursuant to the terms of a service agreement to be entered into
with the Company with effect from Admission. The agreement will be
terminable by either party on not less than 12 months' written
notice. He will be paid a basic annual salary of GBP120,000 and
will be eligible to receive a bonus (not exceeding his basic
salary). His basic salary is subject to annual review by the
Remuneration Committee of the Board. He will also be entitled to a
range of benefits which are available under the Company's flexible
benefit scheme up to a value of GBP16,000 per annum. He will be
subject to certain non-competition and non-solicitation covenants
for a period of 12 months and nine months respectively following
the termination of his employment.
-- Hazel Jacques will be employed as Chief Marketing Officer
pursuant to the terms of a service agreement to be entered into
with the Company with effect from Admission. The agreement will be
terminable by either party on not less than 12 months' written
notice. She will be paid a basic annual salary of GBP120,000 and
will be eligible to receive a bonus (not exceeding her basic
salary). Her basic salary is subject to annual review by the
Remuneration Committee of the Board. She will also be entitled to a
range of benefits which are available under the Company's flexible
benefit scheme up to a value of GBP16,000 per annum. She will be
subject to certain non-competition and non-solicitation covenants
for a period of 12 months and nine months respectively following
the termination of her employment.
8. Intentions of the Directors in relation to the Fundraising
Ian Smith and Helen Walker have subscribed for 41,667 and 16,667
Placing Shares respectively. Ron Russell has subscribed for
1,458,334 Placing Shares and has indicated his intention to
subscribe for 208,333 Open Offer Shares. In addition, UK Private
Healthcare Limited of which Ron Russell is a director and 25 per
cent. shareholder has subscribed for 499,999 Placing Shares.
9. General Meeting
The Circular will contain a notice convening the General Meeting
to be held at the Francis Hotel, Queens Square, Bath, BA1 2HH at
1:00 p.m. on 25 August 2015 at which resolutions will be proposed
to, inter alia, approve the Placing and the Open Offer
10. Placing and Open Offer statistics
Closing Price per Existing Ordinary Share 67.5 pence
on 27 July 2015
Number of Existing Ordinary Shares in issue 36,854,570
Basic Entitlement under the Open Offer 1 Open Offer
Share for
every 29
Existing
Ordinary
shares
Issue Price of each New Ordinary Share 60 pence
Discount to the market price of 67.5 pence 11.1 per
per Existing Ordinary Share(1) cent.
Number of Open Offer Shares to be offered
for subscription by Qualifying Shareholders 1,270,847
Number of Placing Shares to be issued pursuant
to the Placing 10,833,334
Number of Initial Consideration Shares 3,575,712
Expected proceeds of the Open Offer (before GBP0.763
expenses)(2) million
Expected proceeds of the Placing (before GBP6.5 million
expenses)
Expected proceeds of the Fundraising (before GBP7.263
expenses)(2) million
Enlarged Share Capital following Admission(2) 52,534,463
Percentage of Enlarged Share Capital represented 6.8 per cent.
by the Initial Consideration Shares(2)
Percentage of Enlarged Share Capital represented 2.4 per cent.
by the Open Offer Shares(2)
Percentage of Enlarged Share Capital represented 20.6 per
by the Placing Shares(2) cent.
Estimated net proceeds of the Fundraising(2) GBP6.6 million
Notes:
1. Based on the Closing Price on 27 July
2015 being the last practicable date prior
to the publication of this Document
2. Assuming full subscription under the
Open Offer
11. Expected timetable of principal events
2015
Record Date for the Open Offer 5.00 p.m.
on 24 July
Announcement of the Acquisition, Placing 28 July
and Open Offer
Existing Ordinary Shares marked "ex" by 28 July
the London Stock Exchange
Basic Entitlements credited to stock accounts 29 July
in CREST of Qualifying CREST Holders
Recommended latest time for requesting 4.30 p.m.
withdrawal of Basic Entitlements from on 18 August
CREST
Latest time for depositing Basic Entitlements 3.00 p.m.
and/or Excess Entitlements into CREST on 19 August
Latest time and date for splitting Application 3.00 p.m.
Forms (to satisfy bona fide market claims on 19 August
only)
Latest time and date for the receipt of 5.00 p.m.
completed Application Forms and payment on 21 August
in full under the Open Offer or settlement
of relevant CREST instruction (as appropriate)
Latest time and date for receipt of Forms 1.30 p.m.
of Proxy on 21 August
Annual General Meeting 12:30 p.m.
on 25 August
General Meeting 1.30 p.m.
on 25 August
Admission and commencement of dealings 8.00 a.m.
of the New Ordinary Shares on 26 August
New Ordinary Shares credited to CREST 26 August
stock accounts
Despatch of definitive share certificates w/c 31 August
for New Ordinary Shares
Commenting on the acquisition, 1pm Chairman, Ian Smith said:
"The acquisition of MHH substantially increases the size of our
business and significantly expands both our customer base and our
portfolio of products and services. It presents considerable
potential for growth and further product development. The MHH
management team bring with them many years of valuable industry
experience and we look forward to working together to further
enhance shareholder value."
Mike Nolan, Managing Director of Academy Leasing added:
"Academy Leasing has grown from humble beginnings in 1987 to
become one of the UK's leading providers of equipment and vehicle
nance. We are proud to be supporting British business and of the
enviable reputation we have built for being flexible, straight
talking and financially robust.
"The acquisition by 1pm will help to bolster continued growth
into the future. Academy Leasing will continue to trade under its
own name and we are committed to further strengthening its brand as
part of the Enlarged Group. It's good news for the whole team."
For further information,
please contact:
1pm plc
Ian Smith, Chairman 0844 967 0944
Maria Lewis, CEO 0844 967 0944
WH Ireland (NOMAD)
Mike Coe / Ed Allsopp 0117 945 3470
Walbrook Public Relations 0117 985 8989
Paul Vann 07768 807631
paul.vann@walbrookpr.com
Cameron Wells Communications 0161 973 4158
Debbie Wells 07980 833 067
debbie.wells@cameronwells.co.uk
About 1pm:
The Company was admitted to AIM in August 2006.
1pm plc is an established independent finance company focused on
providing SMEs with accessible funding to add value to their
businesses. All customers must have good credit histories and
proven ability to repay their finance commitments.
1pm currently provides assets finance from GBP1,000 to GBP50,000
for a period of between 12 and 60 months and GBP1,000 to GBP50,000
for business loans (repaid over 3-36 months).
Mission Statement - 'Helping the UK economy grow by providing
finance to businesses'
More information is available on the Company website
www.1pm.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
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