RNS Number:1018N
InTechnology PLC
30 June 2000
INTECHNOLOGY PLC
ACQUISITIONS OF VDATA LIMITED AND HOLF TECHNOLOGIES LIMITED
(STORM) FOR #165 MILLION
RIGHTS ISSUE AND PLACING TO RAISE #33 MILLION
- Acquisitions of Vdata and Storm for #165 million creating a
leading UK advanced data technology services provider
- Proposed 1 for 2 rights issue of up to 6,000,000 New Ordinary
Shares at 150p per share, raising up to #9 million
- Proposed placing of up to 16,447,096 New Ordinary Shares at 150p
per share, raising up to #24.7 million
- Significant commercial synergies through integration of VData
and Storm
InTechnology plc ("the Company"), floated on AIM in March 2000,
announces that it has entered into conditional agreements to
purchase HOLF Technologies Limited (trading as "Storm") and VData
Limited ("VData").
The acquisitions deliver on InTechnology's strategy of identifying
and acquiring businesses which exploit the increasing
opportunities that the Internet presents, primarily within the B2B
sector.
VData's activities include the provision of automated and
unattended remote backup and restore services and the provision of
advanced infrastructures for the delivery of online applications.
VData had turnover for the period ended 31 December 1999, the
start up phase of the company, of #28,000 and a loss before
taxation of #1.6 million.
Storm is one of the UK's leading data storage solutions and value
added service companies, distributing, designing, specifying,
building and installing data storage solutions from many of the
world's leading manufacturers. These include Compaq, SUN
Microsystems and IBM. Storm had turnover for the year ended 31
March 2000 of #102 million, generating a profit before taxation of
#5.4 million.
The global market for managed computing networks and application
services is forecast to grow rapidly to approximately #38 billion
by the end of 2004*.
* source: IBM Global Market View
As part of the proposals, Lord Parkinson, the current non-
executive Chairman of VData and Storm will become non-executive
Chairman of the Company. David von Simson will become a non-
executive Director. Chris Akers and Rodger Sargent will resign
from the Company's Board.
In addition, Peter Wilkinson will become Chief Executive Officer.
Peter is the founder and managing director of Storm and VData.
Previous business successes have included Sports Internet Group
plc (for which an offer has been made by BSkyB plc) and Planet
Online Limited (sold to Energis in 1998). He was also architect of
Freeserve plc.
Consideration for the acquisitions will be satisfied by the issue
of 103,552,904 New Ordinary Shares and the payment of #9.7 million
in cash, which at the rights issue price, values VData at #126
million and Storm at #39 million. The Enlarged Group will have a
market capitalisation of #207 million at the rights issue price of
150p.
In addition, the Board announced today that the Company proposes
to raise approximately #9 million by way of a 1 for 2 rights issue
at 150p, which has been fully underwritten by WestLB Panmure
Limited, who are brokers to the issue. Up to a further #24.7
million will be raised by way of a placing of New Ordinary Shares
with institutional investors.
Proceeds of the Rights Issue and the Placing will be used to
finance the cash consideration for the acquisitions, to enable the
Enlarged Group to grow organically, by acquisition and through
joint ventures, particularly in Europe, and to provide additional
working capital.
The Directors and proposed Directors intend to integrate Storm and
VData upon completion and they believe that the combination will
enjoy considerable commercial synergies.
Chris Akers, Executive Director, InTechnology plc, said:
"We are delighted with these exciting acquisitions which deliver
on our stated aim of investing in the rapidly expanding B2B
sector. The combination of commercial synergies, a proven
management team and the rapidly growing data management industry
will allow InTechnology to produce real shareholder value."
Peter Wilkinson, Chief Executive, Storm and VData, said:
"The global demand for data storage has increased by 80% in the
last 2 years. Our significant investment in developing our own
network and data storage facilities has placed Storm and VData in
a leading position to take advantage of this phenomenal growth.
"The enlarged Group will be positioned as the UK's first, full
service, data management solutions provider. With high margins and
long term recurring rental revenues layered on top of existing
high volume turnover, today's transactions create a very exciting
business proposition."
For further information:
Chris Akers, InTechnology plc 020 7643 5330
Steve Pearce, Storm and Vdata 01423 850000
Tim Linacre, WestLB Panmure Limited 020 7638 4010
Jonathon Brill/Mark Way, Bell Pottinger Financial 020 7353 9203
INTECHNOLOGY PLC ("INTECHNOLOGY" OR "THE COMPANY")
* Proposed Acquisitions of VData Limited ("VData") and HOLF
Technologies Limited (trading as Storm) ("Storm")
* Proposed 1 for 2 Rights Issue of up to 6,000,000 new Ordinary
Shares at 150p per share ("Rights Issue")
* Proposed Placing of up to 16,447,096 new Ordinary Shares at 150p
per share ("Placing")
INTRODUCTION
On 8 May 2000, InTechnology announced that it had entered into
discussions which might or might not lead to it making a
substantial acquisition. In accordance with the AIM Rules, the
shares of the Company were suspended from trading on AIM from that
date.
InTechnology announces that it has entered into conditional
agreements with Peter Wilkinson and others to acquire the whole of
the issued share capital of VData and Storm, companies which are
involved in advanced computer data technology services. The
consideration for these acquisitions will be satisfied by the
issue of 103,552,904 new Ordinary Shares and the payment of #9.7
million in cash, which, at the Rights Issue price of 150p per
share, values VData at #126 million and Storm at #39 million.
InTechnology also proposes to raise approximately #9 million by
way of a rights issue and a further #24.7 million by way of a
placing of new Ordinary Shares with institutional investors. Under
the Rights Issue, qualifying shareholders are being offered up to
6 million New Ordinary Shares, on the basis of 1 new Ordinary
Share for every 2 Existing Ordinary Shares held at the close of
business on 14 July 2000, at a price of 150p per share. The Rights
Issue has been fully underwritten by WestLB Panmure Limited, who
are also brokers to the Issue.
The proceeds of the Rights Issue and the Placing will be used to
finance the cash consideration of #9.7 million payable to certain
of the vendors under the acquisition agreements, to enable the
enlarged Group to grow organically, by acquisition and joint
venture, particularly within Europe, and to provide additional
working capital.
VData was established in January 1999 by Peter Wilkinson and has
two trading divisions, VBAK and Advanced Infrastructure Provision,
AIP. VBAK which is in the latter stages of development, is an
online backup and restore service for computer networks which is
currently undergoing beta testing. VBAK's formal launch is
expected in late 2000. AIP will provide advanced infrastructure
services for corporate customers' online applications and has
already signed its first major contract. Audited results for the
period ended 31 December 1999 show revenues of #28,000 and losses
before taxation of #1.55 million. At 31 December 1999, VData had
net assets of #447,000.
Storm's business was established in 1983 by Peter Wilkinson. Storm
is one of the UK's leading advanced data storage solutions and
services companies, distributing equipment from many of the
world's leading manufacturers including Compaq, Sun and IBM. It
specialises in mid to high end computer storage solutions backed
up by an in-house technical services department that designs,
specifies, builds and installs complete computer data storage
solutions. Storm sells branded manufacturers' storage products
through many of the leading value added resellers ("VARs") to
corporate end users. Audited results for the year ended 31 March
2000 show revenues of #101.7 million (1999: #77.0 million) and
profits before taxation of #5.4 million (1999: #3.3 million). At
31 March 2000, Storm had net assets of #8.0 million (1999: #8.1
million).
The Directors and the proposed Directors of InTechnology believe
that because VData and Storm operate in the advanced data
technology sector and market their products and services through
VARs and specialist resellers, they will enjoy considerable
commercial synergies. The Directors and the proposed Directors
plan to integrate both companies immediately following completion
of these acquisitions.
As a result of the change in control of VData and Storm, holders
of VData share options and Storm share options would be entitled
to exercise their options. However, rather than exercise these
options, the optionholders have been given the opportunity to roll-
over their options into options over new Ordinary Shares.
On completion of the Proposals Peter Wilkinson will own 57.5 per
cent. of the enlarged share capital. He has undertaken not to
dispose of the new Ordinary Shares held by him for a period of one
year from completion of these acquisitions, subject to certain
exceptions.
Given the size of VData and Storm relative to InTechnology, these
acquisitions, which are conditional upon each other and upon the
underwriting agreement becoming unconditional, are subject, inter
alia, to the approval of the shareholders of InTechnology in
general meeting. An Extraordinary General Meeting of InTechnology
to approve these proposals will be held on 24 July 2000. A
prospectus setting out full details of the above mentioned
proposals is being sent to InTechnology shareholders today.
BACKGROUND TO INTECHNOLOGY
InTechnology was incorporated on 26 January 2000 and its existing
Ordinary Shares were admitted to trading on AIM on 2 March 2000.
The Company has not published any financial results since
incorporation. It was established to identify and acquire
businesses which the Directors believed would be in a position to
exploit the increasing opportunities within the Internet market,
primarily within the B2B sector. The Directors of InTechnology
consider that the acquisitions of VData and Storm are consistent
with the investment criteria determined when forming the Company.
INFORMATION ON VDATA
Industry Background
The global market for managed computing, networks and application
services is forecast to grow rapidly from #18.3 billion in 2000 to
approximately #38 billion by the end of 2004. Within this market
the Directors and the proposed Directors of InTechnology believe
there are two significant areas of opportunity:
(i) the management and protection of corporate computer data
which has become a vital issue for any organisation. Data
storage requirements have grown worldwide by approximately 80
per cent. in the past two years yet the processes used to
protect this data have changed little for over 20 years; and
(ii)advanced hosting and infrastructure services which will offer
a managed environment to support the European application
services provider ("ASP") services marketplace, an area which
is forecast to grow to US$14.6 billion by the end of 2003.
Approximately 10 per cent. of the UK's top 500 companies are
already using ASP services and a further 22 per cent. are running
trial pilots of these services with a view to implementation
within the next financial year. In addition, the growth of
Internet technologies has brought with it a new business model for
delivering application software, computer services and business
processes to end users.
The outsourced products and services currently available do not
always meet the high standards required to deliver computing
applications over wide area networks. This is evidenced by the
fact that, of the Fortune 1000 businesses, 57 per cent. chose to
host their own web sites, an increase from 33 per cent. in the
previous year.
In the increasingly sophisticated and complex area of computer
data centre operations, systems and storage management, network
design, implementation and management there is a global scarcity
of qualified Information Technology ("IT") personnel and a desire
by many companies to outsource parts of their IT functions whilst
still maintaining control and ownership of their applications. The
Directors and the proposed Directors of InTechnology intend to
supply products and services to meet these needs in the market
place.
The Directors and the proposed Directors of InTechnology believe
that the users of ASP services expect to receive the same degree
of availability and functionality that they associate with their
desktop computers. Applications should be available as a seamless
extension of their existing system. The delivery of this level of
service and infrastructure availability often requires a different
approach to the traditional methods, in the technologies used, the
processes implemented and the philosophy employed.
The Directors and the proposed Directors of InTechnology believe
that the VARs and specialist corporate resellers, which have
traditionally sold hardware, software and services to corporate
customers, are being asked to provide these infrastructure
services. They further believe that VData will be able to meet
this demand by providing the VARs and specialist corporate
resellers with an extended portfolio of products and services.
VData
VData was established in January 1999 by Peter Wilkinson when he
identified a gap in the B2B market for the provision of automated
and unattended remote backup and restore services. 1999 was spent
recruiting a team of experienced network, data management and
system engineers and commencing product development and
infrastructure delivery. VData currently has 41 employees.
VData has two divisions:
(i) VBAK data storage solutions; and
(ii) Advanced Infrastructure Provision, AIP.
(i) VBAK
VBAK, which is expected to be launched in late 2000, is an online
backup and restore service focused on the protection of short term
critical data to assist business continuity in the event of data
loss. Many companies still trust the backup of one of their most
vital resources -- data -- to a policy of distributed tape
devices, manual routines and offsite tape storage.
The Directors and the proposed Directors of InTechnology believe
that the increasing amounts of data requiring storage, and
increasing staff costs have meant that tape-based backup, which
has not fundamentally changed for over 20 years, is now becoming
outdated and impractical. VBAK addresses the limitations of this
traditional approach to backup and restoration of data with an
online service which provides an automated backup and restore
facility and allows the transfer of data offsite.
Working in conjunction with Storm, VData has system-engineered the
VBAK product, utilising its experience within the areas of data
management, network design, software integration, implementation
and operations to support such a service.
For a customer to receive the VBAK service, VData installs a
dedicated appliance, the Virtual Storage Gateway ("VSG") on the
customer's network and connects this to a VData data centre via a
secure, private leased line circuit. Customers can specify, using
the VBAK user interface, the data they wish to have backed up, and
the frequency and time at which the backup is executed. During the
specified backup window, data is transferred to the VSG where it
is compressed and encrypted. The customer retains the encryption
keys to ensure that the data cannot be viewed by non-authorised
personnel, including VData employees. Data is transferred offsite
via a leased line and held on disk from where it can be restored
online. A secondary backup copy can be transferred from disk to
tape if the customer requires.
In the event of a major data loss or site disaster, VData also
provides an emergency data transportation service, whereby backup
data can be delivered to a chosen disaster recovery site.
VBAK provides:
* multiple versions of the backup data which are held on disk
for file restoration;
* transfer of backup data to offsite VData data centres,
ensuring backups are stored remotely;
* a basis for business continuity planning;
* an all-inclusive monthly service charge;
* extensive automation reducing IT staff involvement at the
customers site; and
* remote monitoring of the service.
VData is also able to offer:
* a pre-installation sample of the client's backup data volumes
prior to installation of the VSG and an assessment of the
anticipated transfer rates; and
* pre-installation consultancy in conjunction with VARs and
specialist corporate resellers to assess a customer's
existing data management environment, which will in turn
generate business opportunities for Storm.
VData has also identified a need for longer term storage of
important but less critical data in an online archive format and
has commenced the outline specification of VARC, which is
currently planned to launch in mid 2001. VARC will be a long term
archive service that stores data offsite for security but is
accessed online for retrieval. Many companies archive data onto
tape or other media and store it in remote data storage warehouses
from where it has to be physically retrieved. VARC will be a
complementary service to VBAK, using much of the existing resource
and infrastructure, yet providing an additional incremental
revenue stream.
The Directors and the proposed Directors of InTechnology believe
that VBAK and related services have good prospects for success for
the following reasons:
* VData intends to fulfil a gap in the market where the
Directors and the proposed Directors of InTechnology perceive
demand levels to be high for a reliable managed offsite
backup and restore service;
* VData will enjoy first mover advantage, due to the products
it is developing and the technology it utilises;
* an online backup service needs access to telecom links. VData
has established good business relationships with several
telecommunication companies;
* the management of VData have considerable experience in the
high technology sector; and
* both the VBAK and AIP services are complementary to Storm's
existing business, target markets and customer base and
should therefore ensure maximum utilisation of valuable
resources.
(ii) Advanced Infrastructure Provision, AIP
VData is developing an advanced infrastructure for the delivery of
online applications providing a platform with security,
availability, resilience, integrity and scalability to meet the
infrastructure requirements of the emerging ASP market and the
existing corporate IT users within the managed computing services
market.
The UK market for managed computing, networks and application
services was forecast to be valued at #1.65 billion in 2000 and is
further forecast to rise to around #3.35 billion in 2004.
AIP's services go beyond those traditionally associated with the
generic Internet web hosting providers, as it offers an
infrastructure environment with a high service level guarantee
from which application services may be delivered.
VData has invested in a UK network infrastructure and currently
has two high specification data centres. This infrastructure has
been created as a platform for the delivery of online applications
and data management services. The original architecture of the
network was to support VBAK but had also been designed in such a
way as to be adaptable to change in order to meet further
requirements. The Directors and the proposed Directors of
InTechnology intend that the network and data centre
infrastructure will be extended through partnerships, within
continental Europe, thereby enabling the delivery of AIP services
throughout the European marketplace.
The process of infrastructure provision is rapidly changing and
the Directors and the proposed Directors of InTechnology intend to
continually develop the VData range of services to encompass a
range of pre-configured solutions in a variety of hardware and
software configurations.
While the AIP services have been primarily developed to meet the
needs of the highly secure private network services delivery
market, it is a logical extension of these services to develop
high quality Internet based hosting solutions.
Location
VData's headquarters are located in Harrogate, with an additional
data centre in London's Docklands and a corporate office in the
City of London. Both the Harrogate and the Docklands data centres
enjoy a controlled environment. The Harrogate and Docklands sites
are linked by a secure leased line connection. Other sites are
currently being investigated by VData to provide at least 70,000
sq. ft. of data centre. Certain office facilities are shared with
Storm.
Sales and Marketing
VData's marketing strategy is targeted on the "business to
business" ("B2B") market with a focus on small to medium-sized
businesses or departments and divisions of large corporate
organisations. Certain VBAK beta test customers, in different
market sectors, have participated in testing the service. The VBAK
service is targeted at companies with between 50 and 1,500 desk-
top networked users. In the opinion of the proposed Directors of
InTechnology, VBAK will be particularly attractive to those
companies, as there has been a proliferation of Microsoft NT and
Netware servers running key departmental applications in recent
years.
VData intends to utilise VARs and specialist corporate resellers
to market its services in a similar way to Storm's established
marketing strategy. VData will work with specialist partners who
sell complementary services and who have established relationships
with targeted customers. The VData sales and pre-sales teams will
work with the partners' sales teams to provide technical, product
and sales support.
The AIP service only began to be marketed in Spring 2000, and
signed a major contract in May 2000 which will generate sales of
#1.3 million per annum over a minimum term of 42 months.
Service revenue for both divisions is generated from a once only
set up fee and thereafter from recurring monthly revenues over the
term of the contract.
The Directors and the proposed Directors of InTechnology believe
that, once established, the recurring revenue stream from the
services offered by VBAK and AIP to their customers will grow as
customer requirements increase and additional products and
services are created.
Financial information on VData
VData had net assets as at 31 December 1999 of #447,000. A
summary of the trading results for VData is set out below:
Period ended 31
December 1999
#'000
Turnover 28
Operating loss (1,509)
Loss for the period before taxation (1,553)
INFORMATION ON STORM
Industry Background
The UK is one of the largest IT markets in Western Europe. In
1998, total UK IT expenditure in the VAR/system house channel was
estimated to be US$6.5 billion, and is expected to grow by 10 per
cent. per annum until 2003. The UK IT distribution market is very
competitive and dominated by US owned broad based distribution
companies which operate both in the US and throughout Europe. This
increased competition has led to pressure on operating margins and
has meant that the most successful distributors have had to
develop higher margin value added services to maintain levels of
profitability.
Worldwide sales of storage products are predicted to achieve
compound annual growth of more than 17 per cent. between 2000 and
2003, reaching US$45 billion by 2003. It is further predicted that
the demand for value added services that support data storage
solutions, such as assessment, design, support and training, will
grow at an even faster rate.
Storm
Storm's business was established by Peter Wilkinson in December
1983. During the last decade, Storm has developed into one of the
UK's leading data storage solutions and services companies
distributing equipment for many of the world's leading
manufacturers including Compaq, Sun and IBM. Storm chose to
concentrate on a niche market rather than trying to expand as a
broad based distributor for several manufacturers. As well as
hardware, Storm provides a comprehensive array of value added
service and data storage solutions to customers including the
assessment, design, configuration, implementation and testing of
systems, and is a leading supplier of storage area networks,
("SANs"). There are currently 116 employees within Storm, spread
amongst sales, technical, consulting, marketing, logistics,
finance and purchasing functions.
Storm distributes mid and top range branded storage products from
suppliers such as :
* Compaq -- Storm is the largest Compaq StorageWorks
distributor in Europe and has been appointed as Compaq's
first and only specialist storage services partner in Europe;
* SUN Microsystems -- Storm is SUN's only specialist storage
distributor in the UK;
* IBM -- Storm is IBM's first and largest specialist storage
distributor in Europe;
* StorageTek -- Storm is the only specialist distributor of
StorageTek storage products in the UK; and
* Hitachi Data Systems.
Storm also distributes data management software from Veritas and
Tivoli, which is of strategic importance to providing storage
solutions, and it recently received Tivoli's 'Distributor of the
Year 1999' award.
Storm provides value added services to its customers as described
below:
* Consultancy: Storm provides a 'design and assessment'
service, which involves an onsite visit to evaluate the end-
user's requirements and systems. Storm's consultants then
design specific recommendations for areas such as archiving,
configuration changes, network topology and server code
patches;
* Installation and testing: Installation services range from
adding additional devices to an existing network to a full
bespoke configuration of disaster tolerant solutions. Storm
has installed solutions to most major platforms. When
integrating and testing products, Storm's engineers adopt a
'building block' approach that allows flexibility when
configuring storage systems; and
* Training: Storm offers various courses at its training centre
on system administration and disaster recovery. It also
offers bespoke offsite training for customers. Storm is the
only Veritas authorised training partner for their Netbackup
product and, together with IBM, is the only UK company to
become an accredited training partner of Tivoli for their TSM
product.
Storm is perceived to be an effective niche operator in the UK
computer data storage market and, as illustrated by its continuing
revenue growth, is ideally positioned to benefit from the
continued demand for storage solutions and the value added
technical services that such solutions require. Storm has
differentiated itself in the market place by concentrating on the
mid to high end storage market. The Directors and the proposed
Directors of InTechnology consider that as systems become
increasingly complex, Storm's expertise in creating storage
solutions for its customers should lead to further demand for its
products and services.
The Directors and the proposed Directors of InTechnology believe
that Storm's continued growth is underpinned by the following
factors:
* long established relationships, both on the supply side and
demand side of the business;
* growth in new vendor product lines, for example StorageTek
and Hitachi Data Systems products;
* Storm's highly regarded reputation as a provider of value
added storage systems and solutions; and
* market and technology dynamics (such as the rapid growth of e-
commerce, ASPs and general use of computing products) which
mean that businesses will need more complex data solutions
and hardware as technology improves and businesses invest to
remain competitive.
The Directors and the proposed Directors consider that a
particularly significant area of future growth for Storm will
develop from the growth of fibre channel and storage area network
("SAN") storage solutions. As customer demand for these
technologies increases, Storm, through its hardware consulting,
design and implementation services, is well positioned to service
this demand.
Location
Storm has recently relocated to a modern integrated head office,
distribution and training facility in Harrogate, which it shares
with VData. This will accommodate Storm's continued growth and
increased technological requirements. This facility allows for
further expansion when required and is close to an excellent road
and rail service for receipt and distribution of products.
Sales and Marketing
Storm markets these services through a manufacturer accredited VAR
network. Storm effectively becomes an extension of the VAR's
existing technical resource and, when requested, provides a
service where the VAR has a resource shortage, or Storm has a
particular skill base. Storm also offers its services through
associations with its suppliers. IBM Global Services and Veritas
have recently engaged Storm to consult on specific projects.
Relationships such as these reflect the perceived quality of
service that Storm delivers. The Directors and the proposed
Directors of InTechnology believe it also illustrates how the
existing Storm channel partner network and relationships can be
leveraged to create a marketing and supply chain for VData's
forthcoming services.
Financial information on Storm
Storm had net assets as at 31 March 2000 of #8 million. A summary
of the trading results for Storm is set out below:
Year ended 31 March
1998 1999 2000
#'000 #'000 #'000
Turnover 61,289 77,049 101,677
Operating profit 2,919 3,259 5,816
Profit on ordinary activities before
taxation 2,742 3,288 5,430
PETER WILKINSON
VData and Storm's founder, Peter Wilkinson, has created a number
of other successful technology companies. In 1995 he founded
Planet Online Limited when he perceived there to be a demand for
corporate Internet services that were not being supplied. Planet
Online Limited became one of the UK's largest B2B ISPs and was
sold to Energis plc in August 1998 for #75 million. He retained
the sporting website division of Planet Online Limited, called
Planet Football (later incorporated as PlanetFootball.com
Limited), following the sale to Energis plc. Planet Football.com
Limited was acquired by Sports Internet Group plc in May 1999. In
May 2000, BSkyB plc made a recommended offer to Sports Internet
Group plc valuing the company at #301 million on the date the
offer was announced. Peter Wilkinson is also the architect of
Freeserve plc, the ISP that was launched on 24 September 1998.
Peter Wilkinson received the 'Internet Personality of the Year'
award at the 1999 ISPA Internet Industry Awards and is widely
recognised as one of the UK's leading technology entrepreneurs.
PRINCIPAL TERMS OF THE ACQUISITIONS
The terms of the Acquisition Agreement for VData provide for the
sale of the entire issued share capital, held by Peter Wilkinson,
Andrew Kaberry, Philip Taysom and Stephen Pearce, to the Company
in consideration for the issue of 83,450,000 consideration shares
in the following proportions: Peter Wilkinson, 59,301,094; Andrew
Kaberry, 9,879,562; Philip Taysom, 9,329,563 and Stephen Pearce,
4,939,781. In addition, #825,000 in cash will be paid to Philip
Taysom to be satisfied by part of the proceeds of the Placing.
The terms of the acquisition agreement for Storm provide for the
sale of the entire issued share capital, held by Peter Wilkinson,
to the Company in consideration for the issue of 20,102,904
consideration shares and the payment of #8,845,644 in cash to be
satisfied by part of the proceeds of the Placing.
The acquisition agreements are inter-conditional upon each other
and are also conditional, inter alia, upon the underwriting
agreement becoming unconditional, the resolutions being passed at
the Company's Extraordinary General Meeting and the holders of
VData share options and Storm share options agreeing to the roll-
over of their options into options over new Ordinary Shares.
The Vendors have given certain warranties on the respective
businesses of Storm and VData and, in respect of taxation,
indemnities in favour of the Company, such warranties to expire on
the date of the publication of the Company's audited accounts for
the year ended 31 December 2002, or if the Company changes its
accounting reference date, 30 April 2003, and the taxation
indemnities to expire on 31 March 2006 and 31 December 2006
respectively. In addition, the Vendors have agreed not to compete
with the respective businesses of VData or Storm for a period of 3
years from Completion. Such restrictions include covenants not to
solicit various customers or key employees during that time.
Pursuant to the Lock-in Deeds the Vendors have also agreed not to
dispose of their consideration shares for a period of one year
from the admission of those shares to trading on AIM.
THE RIGHTS ISSUE AND THE PLACING
Under the Rights Issue and the Placing, the Company is seeking to
raise approximately #32.5 million, net of expenses, which will be
used to finance the cash consideration payable to certain of the
vendors under the acquisition agreements, to enable the Company to
grow organically, by acquisition and joint venture, particularly
within Europe, and to provide additional working capital for the
enlarged Group.
Pursuant to the Placing, WestLB Panmure has agreed to use its
reasonable endeavours to find placees to subscribe for the Placing
Shares at the Rights Issue price. The Placing is not being
underwritten.
PRINCIPAL TERMS OF THE RIGHTS ISSUE
Up to 6,000,000 Rights Issue Shares will be offered to Qualifying
Shareholders at 150p per Rights Issue share, payable in full on
acceptance no later than 3.00 p.m. on 14 August 2000 on the
following basis:
1 Rights Issue share for every 2 existing Ordinary Shares
held at the close of business on 14 July 2000 and so in proportion
for any greater number of existing Ordinary Shares then held.
Fractional entitlements to Rights Issue Shares will not be
allotted and entitlements of qualifying shareholders will be
rounded down to the nearest whole number of Rights Issue shares.
The Rights Issue shares will, when issued and fully paid, rank
pari passu in all respects with the Ordinary Shares. The Placing
Shares and the consideration shares will not rank for entitlements
under the Rights Issue.
The Rights Issue (save for 1,190,000 Rights Issue Shares which the
Directors have undertaken to take up) has been fully underwritten
by WestLB Panmure Limited who are also brokers to the Issue. The
Rights Issue is conditional, inter alia, upon Shareholders'
approval of the resolutions to be proposed at the Extraordinary
General Meeting to be held on 24 July 2000.
It is expected that Provisional Allotment Letters in respect of
the Rights Issue Shares will be despatched to qualifying
shareholders following the extraordinary general meeting on 24
July 2000 and that dealings in the Rights Issue shares, nil paid,
will commence on 25 July 2000.
The Directors, who together have a beneficial interest in
approximately 19.9 per cent. of the existing issued ordinary share
capital of the Company, intend to take up their entitlements under
the Rights Issue in full, amounting to 1,190,000 Rights Issue
shares.
CURRENT TRADING AND PROSPECTS
The Directors and the proposed Directors anticipate that the
growth of Storm's revenues and profits will continue for the
coming year. VData aims to formally launch the VBAK service in
late 2000 and continue the development of its AIP infrastructure
and the client base.
THE BOARD
As part of the proposals, Lord Parkinson, the current non-
executive Chairman of VData and Storm will become non-executive
Chairman of the Company and David von Simson will become a non-
executive Director. In addition, Christopher Akers and Rodger
Sargent will resign from the Board.
The biographical details of the Directors and proposed Directors
are set out below:
David von Simson (current non-executive Chairman), aged 49, has
been a senior adviser of Ecofin, a privately owned investment bank
boutique, since 1998. Prior to this, he was a managing director of
Warburg Dillon Read in London where he was a senior member of the
corporate finance department, specialising in mergers and
acquisitions and head of the Consumer Products and Retail groups.
From 1993 to 1997, he was Chief Executive, and then Chairman, of
SBC Warburg France. Before joining Warburg Dillon Read in 1995, he
was a managing director, Corporate Finance, of Swiss Bank
Corporation in London and head of the Financial Services and Media
groups. Prior to joining Swiss Bank in 1985, he was an executive
director of Hill Samuel & Co. Limited, London.
Christopher Akers (current executive Director), aged 35, is
currently an executive director of Sports Internet Group plc, an
AIM quoted sports and bookmaking group, managing director of Chris
Akers Associates Limited, a media and sports consultancy business,
and a non-executive director of Seahorse Group plc, I Feel Good
(Holdings) plc, MyVal.com plc and Sportsworld Media Group plc. He
was non-executive Chairman of Virtual Internet plc. He is also an
investor in a number of other public and private companies. In
August 1996, he was instrumental in the acquisition of Leeds
United Holdings plc by Caspian plc (renamed Leeds Sporting plc) of
which he was Chairman and Chief Executive. Prior to this, he was a
founder investor in Freepages plc (later renamed Scoot.com plc).
Between July 1991 and May 1995 Mr Akers was an executive director
in the corporate finance division of Swiss Bank Corporation,
specialising in media, entertainment and IT related mergers and
acquisitions on a worldwide basis.
Rodger Sargent (current Finance Director), aged 28, is finance
director of Seahorse Group plc, a non-executive director of I Feel
Good (Holdings) plc and was a founder shareholder and the finance
director of Sports Internet Group plc, an AIM quoted sports and
bookmaking group. Prior to joining Sports Internet in 1998, he had
worked as a debt analyst in the credit-trading department of
Merrill Lynch. He qualified as a chartered accountant with Price
Waterhouse London in 1996.
PROPOSED DIRECTORS
The Rt. Hon. Lord Parkinson (proposed non-executive Chairman),
aged 68, is a Member of the House of Lords. He was a Member of the
House of Commons from 1970 to 1992 where he held a number of
senior ministerial positions. He was Chairman of the Conservative
Party from 1981 to 1983 and again from 1997 to 1998. From 1983 to
1987 he was a non-executive director of Sears plc, Babcock
International plc, Tarmac plc and Save & Prosper. He is currently
Chairman and director of a number of private companies, including
VData and Storm. He is also a Chartered Accountant.
Peter Wilkinson (proposed Chief Executive Officer), aged 46, is
the founder and managing director of Storm and VData. He is also
executive Deputy Chairman of Sports Internet Group plc. He was
also founder and former managing director of Planet Online
Limited, and the founder and architect of Freeserve plc, with
which he continues to be involved. He received the ''Internet
Personality of the Year'' award at the 1999 ISPA Internet Industry
awards and is widely recognised as one of the leading technology
entrepreneurs in the UK.
Andrew Kaberry (proposed Finance Director), aged 53, is currently
director, finance and administration, for both VData and Storm. He
has been a director of Storm since 1984. He was also finance
director of Planet Online Limited from its commencement in 1995
until its acquisition by Energis plc in 1998. Prior to this he was
finance director of Systime Computers Ltd from 1976 until leaving
to start Storm. Previously he was a divisional finance director at
a large textile manufacturer. He is an economics graduate and
qualified as a chartered accountant with KPMG in 1972.
Stephen Pearce (proposed Chief Operating Officer), aged 41, is
currently divisional sales director for VData. He was previously
divisional sales director for Planet Online Limited, which was
sold to Energis plc in 1998. Prior to this he was a divisional
sales director within Storm. He has previous experience within the
technology sector including Digital Equipment Corporation Ltd,
Data General UK Limited and Radius Software Ltd. He was also
European sales manager for Microvitec Plc and vice president of
sales and marketing for Microvitec Inc. based in the US.
Philip Taysom (proposed Chief Technical Officer), aged 33, is
currently technical director for VData where he has been
responsible for specifying and developing the VBAK and AIP
services. His role is to assess new products and technologies and
their potential use within VData. Prior to this he worked from
1995 for Planet Online Limited, which was sold to Energis plc in
1998. At Planet Online Limited he designed the infrastructure and
Internet products. From 1989 to 1995 he provided consultancy
services to a number of private and public sector organisations.
Prior to this from 1984 he was a technical co-ordinator for a
leading computer games company.
Bryn Sage (proposed Sales Director), aged 34, is currently
divisional sales director for Storm, which he joined in 1986 as a
computer engineer. Prior to this he worked from 1981 at Systime
Computers Ltd in computer engineering.
LOCK-IN DEEDS
The Directors' and the proposed Directors' aggregate interests in
the enlarged share capital are estimated to amount to
approximately 107.1 million new Ordinary Shares (which is
equivalent to approximately 77.6 per cent. of the enlarged share
capital, assuming the Placing is subscribed in full).
On the admission of the existing Ordinary Shares to AIM in March
2000, the Directors undertook not to dispose of any shares in the
Company for 12 months save in certain restricted circumstances.
The proposed Directors have agreed not to dispose of any interests
in new Ordinary Shares which they receive pursuant to the
acquisitions for 12 months from the date such securities are
admitted to AIM, save as above in certain restricted
circumstances.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
2000
Dealings re-commence in Existing Ordinary
Shares 3 July
Record Date for entitlement to the Rights close of business on
Issue 14 July
Latest time and date for receipt of proxy
cards for the EGM 10.00 am on 22 July
Extraordinary General Meeting 10.00 am on 24 July
Completion of the Acquisitions 24 July
Provisional Allotment Letters despatched 24 July
Dealings to commence in Rights Issue Shares,
nil paid, and Consideration Shares 25 July
Latest time and date for splitting
Provisional Allotment Letters (nil paid) 3.00 pm on 10 August
Latest time and date for payment in full and
registration of renunciation 3.00 pm on 14 August
Dealings in Rights Issue Shares, fully paid,
and Placing Shares commence 15 August
Crediting of CREST accounts in respect of
Placing Shares 16 August
Definitive share certificates for
Consideration Shares, Placing Shares and
Rights Issue Shares despatched by 22 August
KEY STATISTICS
Existing Ordinary Shares 12,000,000
Consideration Shares 103,552,904
Rights Issue Shares 6,000,000 1
Placing Shares 16,447,096 1
--------------- --
Enlarged number of New Ordinary
Shares issued following the
Proposals 138,000,000 1
--------------- --
Market capitalisation #207 million 2
Estimated net proceeds arising
from the Rights Issue and the
Placing #32.5 million 3
1 Assuming Placing is fully subscribed and no factional
entitlements arise under the Rights Issue
2 At the Rights Issue price of 150p
3 Prior to payment of the cash consideration under the
acquisition agreement
Notes:
1. InTechnology plc is incorporated and registered in England and
Wales under number 3916586.
2. At the date hereof the only shareholders of InTechnology plc
who hold 3% or more of the Company's share capital are Royal Bank
of Canada Trustees Ltd who hold 800,000 shares representing 6.66%
and Skerries Nominees Limited account T29006L who hold 455,000
shares representing 3.79%.
3. The nominated adviser and nominated broker is WestLB Panmure
Limited.
4. A prospectus, including the requirements for an AIM admission
document, will be available from WestLB Panmure Limited at 35 New
Broad Street, London EC2M 1SQ from 30 June 2000 until 15 August
2000 and which alone will contain full details of the Company and
its securities.
END
COMIIFVLRLIIVII
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