TIDMSBS TIDMVDN
RNS Number : 0862K
Source BioScience PLC
24 July 2013
Source BioScience plc
24 July 2013
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE
UNITED STATES, CANADA, AUSTRALIA, JAPAN, SOUTH AFRICA OR ANY
JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OF SUCH JURISDICTION.
THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN ANNOUNCEMENT OF A FIRM
INTENTION TO MAKE AN OFFER OR TO PURSUE ANY OTHER TRANSACTION UNDER
RULE 2.7 OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE "TAKEOVER
CODE"). ACCORDINGLY, VINDON HEALTHCARE PLC SHAREHOLDERS ARE ADVISED
THAT THERE CAN BE NO CERTAINTY THAT A FORMAL OFFER FOR VINDON
HEALTHCARE WILL BE MADE.
This Announcement is an advertisement. It is not a prospectus.
Investors should not seek to subscribe for or to purchase any
shares referred to in this Announcement except SOLELY on the basis
of information in THE prospectus to be published by Source
BioScience plc in connection with the proposed Fundraising. Copies
of the prospectus will, following publication, be available from
the company's registered office and, OTHER THAN IN CERTAIN
JURISDICTIONS, on its website at www.sourcebioscience.com.
FOR IMMEDIATE RELEASE
24 July 2013
Source BioScience plc ("SOURCE BIOSCIENCE" OR THE "COMPANY")
Update regarding Funding Arrangements for the Possible Offer for
Vindon HEALTHCARE PLC
Proposed Firm Placing TO raise up to GBP 9.5 million gross
proceeds
Final stage negotiations of GBP 9.5 million new debt
facility
On 15 July 2013, the Board of Source BioScience (the "Board"),
the international diagnostic and genetic analysis services
business, announced that it was at an advanced stage of discussions
with the board of Vindon Healthcare plc ("Vindon Healthcare"), a
leading provider of controlled environment services and products to
the pharmaceutical and life sciences sectors in the UK, Ireland,
Europe and North America, regarding a possible all cash offer (the
"Possible Offer") for the entire issued and to be issued share
capital of Vindon Healthcare not already owned by Source
BioScience, at a price of 13.7 pence per Vindon Healthcare share
(the "Possible Offer Price"). The Possible Offer Price would value
the entire issued and to be issued share capital of Vindon
Healthcare at approximately GBP 12.2 million.
Highlights:
-- The Board can report good progress which has been made
towards securing funding for the Possible Offer
-- Since the Possible Offer announcement referred to above, Source BioScience has:
- through its broker N+1 Singer, conditionally raised GBP 9.5
million firm with new and existing institutional investors;
- made good progress towards finalising a new debt facility
expected to total GBP 9.5 million, to be provided by its existing
lender; and
- continued to advance other preparations towards the
announcement of the Possible Offer
-- Further information is provided below, including important
additional information regarding the conditionality of the funding
arrangements being put in place
-- This announcement does not constitute an announcement of a
firm intention to make an offer or to pursue any other transaction
under Rule 2.7 of the Takeover Code. Accordingly, Vindon
shareholders are advised that there can be no certainty that a an
offer for Vindon will be made, even if the pre-conditions to the
Possible Offer are satisfied or waived
The making of any offer by Source BioScience remains subject to
certain pre-conditions, including but not limited to the unanimous
recommendation of such an offer by the directors of Vindon
Healthcare, and the arrangement of suitable funding which is also
addressed below. Source BioScience reserves the right to waive any
of the pre-conditions, including that in relation to the unanimous
recommendation in the event of a competing offer or proposed
offer.
Overview
The Board can report substantial progress in respect of the
proposed funding arrangements for the Possible Offer (the "Funding
Arrangements"). The Funding Arrangements are expected to consist of
a combination of the partial use of the net proceeds from a GBP 9.5
million firm placing of new shares in the Company, and the partial
drawdown under a new GBP 9.5 million debt facility (the "New Debt
Facility"), the arrangement of which is expected to be finalised
over the coming days.
Source BioScience has today, through its broker, N+1 Singer,
conditionally raised GBP 9.5 million through a firm placing of new
shares with new and existing institutional investors. Under the
conditional firm placing, the Company is expected to issue
100,000,000 new ordinary shares of 2 pence each (the "Firm Placing
Shares") at an issue price of 9.5 pence per Firm Placing Share (the
"Firm Placing").
The Firm Placing has not yet been formally launched and is
subject to certain pre-conditions, details of which are set out
below. The Firm Placing remains subject to, amongst other things,
the issue of a prospectus and circular, which is required under the
Financial Services and Markets Act 2000 and under the Listing
Rules, and of certain resolutions being passed by shareholders in
order to give effect to the Acquisition and the Firm Placing. The
issue of the prospectus remains subject to UKLA approval and, while
drafting and review is at a reasonably advanced stage, there can be
no certainty at this stage that the Possible Offer (or any offer)
or the Firm Placing will proceed.
In parallel with arranging the Firm Placing, the Company has
been arranging debt finance and expects to reach agreement on the
terms of the New Debt Facility and to enter into a final agreement
shortly with the Company's existing lender, The Royal Bank of
Scotland plc. Utilisation of the New Debt Facility will be
conditional, among other things, upon the Possible Offer, if made,
becoming or being declared unconditional in all respects in due
course and certain minimum funding from the Firm Placing (which the
conditional Firm Placing size exceeds).
Excess proceeds or headroom arising from the Funding
Arrangements, after applying the proceeds from debt and equity
funding to the Possible Offer as described below and after
deducting costs and expenses, are expected to be applied to
additional organic and selected acquisitive growth opportunities,
in line with the Company's existing strategy.
The Funding Arrangements
- The Firm Placing is supported by existing and new
institutional investors and is being carried out for the purposes
of partially funding the Possible Offer and providing finance for
additional organic and selected acquisitive growth opportunities,
in line with the Company's existing strategy
- Assuming the Possible Offer is made, the contractual
obligations of the placees in the Firm Placing (the "Firm Placees")
will be subject to:
(1) the passing of certain resolutions relating to the
Acquisition and the Firm Placing by no later than 5 p.m. on 30
August 2013;
(2) the Acquisition becoming or being declared unconditional in
all respects (subject only to admission of the Firm Placing Shares
having taken place) by no later than 5 p.m. on 30 October 2013;
and
(3) Admission of the Firm Placing Shares becoming effective by
no later than 8.30 a.m. on 31 October 2013,
as such conditions may be amended, varied or supplemented by the
agreement of the Company and N+1 Singer prior to the release of any
announcement under Rule 2.7 of the Takeover Code in respect of the
Possible Offer
- Assuming the Possible Offer, having been made at the Possible
Offer Price, becomes or is declared unconditional in all respects
in due course, approximately GBP 7.3 million of the gross proceeds
of the Firm Placing will be used to part fund the consideration
payable to Vindon shareholders in connection with the Possible
Offer, alongside the use of approximately GBP 6.4 million drawn
down from the New Debt Facility
- The above uses of proceeds of the Firm Placing and the New
Debt Facility include the payment of estimated costs and expenses
related to the Possible Offer, the Firm Placing and the arrangement
of the acquisition funding under the New Debt Facility
- Assuming the Possible Offer, having been made, becomes or is
declared wholly unconditional in all respects, the balance of the
New Debt Facility will be used to repay existing debt in Source
BioScience of approximately GBP 2.4 million and net debt of
approximately GBP 0.7 million expected to remain in Vindon at the
time of completion of such an offer (the New Debt Facility is
expected to be entered into on more favourable terms, including
lower interest rates, than the existing debt held by either Source
BioScience or Vindon)
- Excess net proceeds from the Firm Placing not required for
funding the Possible Offer, having been made and become or declared
unconditional in all respects, will be applied as growth capital to
support additional organic and other selected acquisitive growth
opportunities that complement Source BioScience's existing product
and service portfolio in any or all of its Healthcare, LifeSciences
or PharmaBiotech business lines and/or which complement its
geographic presence in the UK or internationally
- Source BioScience will continue to seek additional selected
acquisition opportunities, irrespective of whether the Acquisition
or the Firm Placing complete, including by way of using any mixture
the net proceeds of the Open Offer should it proceed as
anticipated, available cash in the business and headroom from time
to time under existing debt facilities (or under the New Debt
Facility and excess proceeds from the Firm Placing if the
Acquisition proceeds)
- If these organic and other selected acquisitive growth
opportunities do not materialise on terms sufficiently attractive
to Source BioScience, then the net funds from the Open Offer and
any remaining funds from the Firm Placing (assuming that the
Acquisition completes) may be used, at the Company's discretion, to
pay down existing debt in Source BioScience or, assuming completion
of the Acquisition, the enlarged group
- Source BioScience is not reliant on the Open Offer (described
below), or the additional funds raised through the Firm Placing and
not used for the Acquisition and associated costs (assuming that
the Acquisition completes), to pay down either its existing debt or
the New Debt Facility, or to fund the working capital needs of the
Group or the enlarged group
- Both the Firm Placing and the New Debt Facility are
conditional on the Possible Offer, having been made, becoming or
being declared unconditional in all respects (save for the
admission of the Firm Placing Shares). If the Possible Offer,
having been made, does not become or is not declared unconditional
in all respects (save for Admission of the Firm Placing Shares),
the Firm Placing will not proceed and the Company will not have use
of the New Debt Facility for any purpose
- The Firm Placing Shares, when issued and fully paid, will be
identical to, and rank in full with, the existing ordinary shares
in Source BioScience for all dividends or other distributions
declared, made or paid after admission and will rank pari passu in
all respects with the existing ordinary shares. No temporary
documents of title will be issued
Open Offer
- Source BioScience is also finalising arrangements for an open
offer to raise up to approximately a further GBP 1.0 million by
issuing further new ordinary shares in the share capital of the
Company ("Open Offer Shares") at the price of 9.5 pence per share
(the "Open Offer"), in order to provide existing shareholders with
the opportunity to mitigate in part the effects of dilution of the
Firm Placing, and to provide the Company with additional growth
capital for organic and further funding for other selected
acquisition opportunities
- The proceeds of the Open Offer will not be required for the
purposes of funding the Possible Offer, if made, nor will there be
any clawback arrangement in place in respect of the Firm Placing
Shares. The Open Offer proceeds will be applied to additional
organic and selected acquisitive growth opportunities as for any
excess funds or headroom arising from the Funding Arrangements
- The Open Offer process will run in parallel with a general
meeting (the "General Meeting"), notice of which will be included
in the prospectus and circular, at which shareholders' approval
will be sought for certain resolutions including, among other
things, to approve the Acquisition and enable the Firm Placing to
proceed
- Further details on the Offer, the Firm Placing and the Open
Offer, including the terms and conditions on which the Open Offer
is to be made and the procedure for application and payment, as
well as the expected timetable of key events, will be provided in a
prospectus to be issued in due course in connection with the
Acquisition, the Funding Arrangements and the Open Offer and, where
appropriate, on the relevant application form
Summary Rationale for the Offer
- The Board believes that the Acquisition represents a strategic
opportunity to add additional depth and breadth to Source
BioScience's existing products and services portfolio, thereby
strengthening considerably the enlarged group's proposition to its
customers and prospective customers, and to enhance the combined
customer base and geographic reach of the enlarged group. The Board
believes that the acquisition of Vindon will significantly
strengthen the Company's existing business model and underpin its
growth objectives through increased levels of cash generation in
the enlarged group
- The Acquisition is expected to be accretive to earnings per
share in 2014, being the first full financial year following
completion of the Acquisition, and potentially expected to result
in EBITDA margin enhancement for the enlarged group(1)
- The Board believes that completion of the Possible Offer, if
made, the Funding Arrangements and the proposed Open Offer, are all
in the best interests of shareholders and will be recommending that
shareholders vote to approve the resolutions to be put to them at
the General Meeting in order to give effect to the Possible Offer,
if made, and the Funding Arrangements described above and to
provide additional growth capital for the Company
- The Board reasonably expects that the Possible Offer, if made,
would receive a unanimous recommendation from the Vindon directors,
subject to the receipt by them of appropriate independent advice in
accordance with Rule 3 of the Takeover Code. This statement is
being made with the consent of Vindon.
1. This should not be construed as a profit forecast or
interpreted to mean that the future earnings per share, profits,
margins or cashflows of the Source BioScience group will
necessarily be greater than the historic published figures.
Additional Information
The Firm Placing remains subject to and conditional upon, among
other things, shareholder approval at a general meeting to be
convened shortly (the "General Meeting"), the passing of
resolutions to be put to shareholders at the General Meeting to
approve the Acquisition and to give effect to the Firm Placing
(including to resolutions to disapply pre-emption rights in respect
of the Firm Placing and to convey authority for the Company to
allot the Firm Placing Shares), the Company entering into the New
Debt Facility and the availability of sufficient debt thereunder to
allow the Possible Offer to be made (in conjunction with part of
the net proceeds of the Firm Placing) with certainty of funding,
and admission of the Firm Placing Shares to the Official List and
to trading on the Main Market of the London Stock Exchange.
The Firm Placing is not being underwritten. However, N+1 Singer
has entered into binding placing letters with the Firm Placees,
pursuant to which they have conditionally agreed to take up their
allocation of Firm Placing Shares.
Utilisation of the New Debt Facility will be conditional, among
other things, upon the Offer becoming or being declared
unconditional in all respects (save for admission of the Firm
Placing Shares) in due course and certain minimum funding from the
Firm Placing (which the conditional Firm Placing size exceeds).
Customary other conditions for a banking arrangement of this type
will also apply, including conditions precedent for utilisation of
the New Debt Facility, customary covenants, representations and
events of default. Covenants will include EBITDA senior interest
cover, the senior debt to EBITDA ratio, cash flow cover (the ratio
of net operational cash flow, subject to certain adjustments ,to
senior finance costs) and a capital expenditure limit in any
financial year (with allowance for an unspent portion of prior year
budget to be carried forward into the next financial year. The
covenants also include a restriction on making dividend payments
if, at the time of the proposed payment, the Company is in breach
of the New Debt Facility or cannot give a confirmation that the
financial covenants will be complied with during the following 12
months.
The New Debt Facility will be secured by fixed and floating
charges and certain legal mortgages granted by Source BioScience
and its active UK subsidiaries, and Vindon and its active UK
subsidiaries. Following closing, Inverclyde Biologicals Limited (a
Source BioScience subsidiary) and Vindon Scientific (Ireland) Ltd
(a Vindon subsidiary) are expected to guarantee and secure the New
Debt Facility, as this is a requirement under the terms of the New
Debt Facility.
Further information is expected to be provided in a prospectus
to be issued to Source BioScience shareholders as soon as
reasonably practicable, in the "Rule 2.7 Announcement" and in an
offer document to be posted shortly thereafter. The Firm Placing is
further dependent upon the issue of a prospectus, which is required
under the Listing Rules and the Prospectus Rules in relation to
approval of the Acquisition and in relation to the Firm Placing.
The issue of the prospectus remains subject to UKLA approval and,
while drafting and review is at a reasonably advanced stage, there
can be no certainty at this stage that the Possible Offer (or any
offer) or the Firm Placing will proceed. Similarly, while the
arrangement of debt financing is at a near final stage, there can
be no certainty that debt funding will be available.
The Open Offer is not conditional upon any of the Firm Placing,
the New Debt Facility or the Offer being made and may proceed,
subject to shareholder approval, even if the Firm Placing, the New
Debt Facility and the Offer do not.
Enquiries:
Source BioScience +44 (0)115 973 9010
Dr Nick Ash
N+1 Singer +44 (0)20 7496 3155
Aubrey Powell
Joe Stroud
College Hill +44 (0)20 7457 2020
Melanie Toyne Sewell
Claire Dickinson
Email: SourceBioScience@collegehill.com
Important Notice
This Announcement is not a prospectus and shareholders should
read the prospectus if and when issued in order to inform fully any
investment decision in the capital of the Company (whether in
relation to Open Offer Shares or to existing shares).
Neither the content of Source BioScience's website nor any
website accessible by hyperlinks to Source BioScience's website is
incorporated in, or forms part of, this Announcement. The
distribution of this Announcement, the prospectus if and when
issued and any other documentation associated with the fundraising
described above or the Offer into jurisdictions other than the
United Kingdom may be restricted by law. Persons into whose
possession any such documents come should inform themselves about
and observe any such restrictions. Any failure to comply with these
restrictions may constitute a violation of the securities laws of
any such jurisdiction. In particular, such documents should not be
distributed, forwarded to or transmitted, directly or indirectly,
in whole or in part, in or into the United States, Australia,
Canada, Japan, New Zealand, Switzerland, South Africa and the
United Arab Emirates.
No action has been taken by Source BioScience or any other
person that would permit an offer of the Firm Placing Shares or the
Open Offer Shares when made or possession or distribution of this
Announcement, the prospectus if and when issued or any other
documentation or publicity material or any application form in
respect of the Open Offer in any jurisdiction where action for that
purpose is required, other than in the United Kingdom.
The Firm Placing Shares and the Open Offer Shares (together the
"New Ordinary Shares") have not been and will not be registered
under the US Securities Act or with any securities regulatory
authority of any state or other jurisdiction of the United States
and, accordingly, may not be offered, sold, resold, taken up,
transferred, delivered or distributed, directly or indirectly,
within the United States except in reliance on an exemption from
the registration requirements of the US Securities Act and in
compliance with any applicable securities laws of any state or
other jurisdiction of the United States.
There will be no public offer of the New Ordinary Shares in the
United States. The New Ordinary Shares are being offered and sold
outside the US in reliance on Regulation S under the US Securities
Act. The New Ordinary Shares have not been approved or disapproved
by the US Securities and Exchange Commission, any state securities
commission in the US or any other US regulatory authority, nor have
any of the foregoing authorities passed upon or endorsed the merits
of the offering of the New Ordinary Shares or the accuracy or
adequacy of the Application Form or this document. Any
representation to the contrary is a criminal offence in the US.
The New Ordinary Shares have not been and will not be registered
under the relevant laws of any state, province or territory of any
of the Excluded Territories and may not be offered, sold, resold,
taken up, transferred, delivered or distributed, directly or
indirectly, within any Excluded Territories except pursuant to an
applicable exemption from registration requirements. There will be
no public offer of New Ordinary Shares in Australia, Canada, Japan,
New Zealand, Switzerland, South Africa and the United Arab
Emirates.
This Announcement is for information purposes only and does not
constitute or form part of any offer to issue or sell, or the
solicitation of an offer to acquire, purchase or subscribe for, any
securities in any jurisdiction and should not be relied upon in
connection with any decision to subscribe for or acquire any of New
Ordinary Shares. In particular, this Announcement does not
constitute or form part of any offer to issue or sell, or the
solicitation of an offer to acquire, purchase or subscribe for, any
securities in the United States.
This Announcement has been issued by, and is the sole
responsibility of, the Company. No person has been authorised to
give any information or to make any representations other than
those contained in this Announcement and, if given or made, such
information or representations must not be relied on as having been
authorised by Source BioScience or N+1 Singer. Subject to the
Listing Rules, the Prospectus Rules and the Disclosure and
Transparency Rules, the issue of this Announcement shall not, in
any circumstances, create any implication that there has been no
change in the affairs of the Group since the date of this
Announcement or that the information contained in it is correct at
any subsequent date.
N+1 Singer, which is authorised and regulated in the UK by the
Financial Conduct Authority, is acting for Source BioScience and no
one else in connection with the Funding Arrangements and will not
regard any other person (whether or not a recipient of this
Announcement) as a client in relation to the Fundraising
Arrangements and will not be responsible to anyone other than
Source BioScience for providing the protections afforded to their
respective clients or for providing advice in relation to the
Funding Arrangements or any matters referred to in this
Announcement.
Apart from the responsibilities and liabilities, if any, which
may be imposed on N+1 Singer by the Financial Services and Markets
Act 2000, N+1 Singer does not accept any responsibility whatsoever
for the contents of this Announcement, and makes no representation
or warranty, express or implied, for the contents of this
Announcement, including its accuracy, completeness or verification,
or for any other statement made or purported to be made by it, or
on its behalf, in connection with Source BioScience or the New
Ordinary Shares or the Funding Arrangements, and nothing in this
Announcement is or shall be relied upon as, a promise or
representation in this respect whether as to the past or future.
N+1 Singer accordingly disclaims to the fullest extent permitted by
law all and any liability whether arising in tort, contract or
otherwise (save as referred to above) which it might otherwise have
in respect of this Announcement or any such statement.
No statement in this Announcement is intended to be a profit
forecast and no statement in this Announcement should be
interpreted to mean that earnings per share of Source BioScience
for the current or future financial years would necessarily match
or exceed the historical published earnings per share of Source
BioScience.
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", "projects",
"estimates", "anticipates", "expects", "intends", "plans", "goal",
"target", "aim", "may", "will", "would", "could", "should" or
"continue" or, in each case, their negative or other variations or
comparable terminology. These forward looking statements include
all matters that are not historical facts. They appear in a number
of places throughout this Announcement and include statements
regarding the intentions, beliefs or current expectations of the
Directors, the Company or the Group concerning, among other things,
the Company's financial position and projections, business plan,
financial model and future covenant ratios and compliance, the
results of operations, prospects, growth, strategies and dividend
policy of the Group and the industry in which it operates.
By their nature, forward looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future and may be
beyond the Company's ability to control or predict. Forward looking
statements are not guarantees of future performance. The Company's
or Vindon's actual financial performance, results of operations,
dividend policy and the development of the industry in which it
operates may differ materially from the impression created by the
forward looking statements contained in this Announcement. In
addition, even if the financial performance, results of operations
and dividend policy of the Company or Vindon (as the case may be),
and the development of the industry in which it operates, are
consistent with the forward looking statements contained in this
Announcement, those results or developments may not be indicative
of results or developments in subsequent periods. Important factors
that could cause these differences include, but are not limited to:
the effects of the Firm Placing and the Open Offer on the Group;
the Group's ability to generate growth or profitable growth; the
Group's ability to generate sufficient cash over the longer term to
service its debt; the Group's ability to control its capital
expenditure and other costs; changes in the competitive framework
in which the Group operates and its ability to retain market share;
industry trends; general local and global economic, political,
business and market conditions; significant changes in exchange
rates, interest rates and tax rates; significant technological and
market changes; future business combinations or dispositions;
changes in government and other regulation, including in relation
to the environment, health and safety and taxation; labour
relations and work stoppages; and changes in business strategy or
development plans. More detailed information on the potential
factors which could affect the financial results of the Group is
contained in the Group's public filing and reports.
The forward looking statements contained in this document speak
only as of the date of this Announcement. Other than in accordance
with their legal or regulatory obligations (including under the
Listing Rules and/or the Prospectus Rules and/or the Disclosure and
Transparency Rules) and as required by the FCA, the London Stock
Exchange or the City Code, neither of the Company nor Source
BioScience undertakes any obligation to update or revise publicly
any forward looking statement, whether as a result of new
information, future events or otherwise. All subsequent written and
oral forward looking statements attributable to the Group or
individuals acting on behalf of the Group are expressly qualified
in their entirety by this paragraph. Prospective investors should
specifically consider the factors identified in this document and
in the prospectus if and when issued which could cause actual
results to differ before making an investment decision.
This announcement should not be considered a recommendation by
the Company, Source BioScience or any of their respective
directors, officers, employees, advisers or any of their respective
affiliates, parent undertakings, subsidiary undertakings or
subsidiaries of their parent undertakings in relation to any
purchase of or subscription for the Firm Placing Shares. Price and
volumes of, and income from, securities may go down as well as up
and an investor may not get back the amount invested. It should be
noted that past performance is no guide to future performance. You
are advised to read this announcement and, once available, the
Prospectus and the information incorporated by reference therein,
in their entirety for a further discussion of the factors that
could affect the Group's future performance and the industry in
which it operates. Persons needing advice should consult an
independent financial adviser
N+1 Singer is acting as sponsor, financial adviser and broker to
the Firm Placing and to the Open Offer.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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