TIDMMRL
RNS Number : 2543J
Marlowe PLC
08 September 2016
8 September 2016
Marlowe plc
Acquisition of H2O Chemicals Limited
Placing and Subscription of new ordinary shares to raise
approximately GBP10 million and new debt facilities
Notice of General Meeting
Marlowe plc ("Marlowe", the "Company" or the "Group"), the
support services group focused on acquiring and developing
companies that provide critical asset maintenance services,
announces that it has acquired H2O Chemicals Limited ("H2O") for a
total enterprise value of GBP2.8 million (the "Acquisition").
Founded in 1992 and headquartered in Leeds, H2O is a provider of
water treatment and hygiene services employing 84 staff from 3
offices across the UK. It is a national business with a strong
presence in the Midlands and Yorkshire and a base of more than 600
customers in a range of sectors including industrial, leisure, food
production, higher education and healthcare. It provides a
portfolio of services complementary to those offered by WCS, which
Marlowe acquired in April this year.
In the 12 months to 31 January 2016, H2O reported audited
revenues of GBP6.1 million and adjusted EBITDA of GBP0.6 million.
The Acquisition will be financed through an extension of the
Company's existing debt facility with Lloyds Bank by an additional
GBP2.5 million.
In conjunction with the Acquisition, the Company is pleased to
announce a Placing and Subscription with certain institutional
investors and Marlowe's existing shareholders to raise
approximately GBP10 million. The Placing and Subscription were
oversubscribed and the price of 170 pence per share (the "Issue
Price") represents a premium of 1.5 per cent to the mid-market
closing price per share of 168 pence on the day immediately prior
to this announcement.
The Board believes the Acquisition will:
-- double the size of the Group's current Water Treatment division,
offer synergy benefits and assist the Group in meeting its
key strategic objective of providing national coverage in
each of its sectors;
-- bring a large new base of customers with a significant proportion
of recurring revenues to which it can cross-sell other Group
services;
-- create an enhanced platform for further buy-and-build growth;
-- enhance earnings in its first full year of ownership.
-- Additionally, the Board believes the Subscription and Placing
will provide the Group with the financial resources to pursue
further acquisition opportunities within its well-developed
pipeline across the Water Treatment and Fire divisions.
The total H2O enterprise value includes cash consideration of
GBP2.1 million and the repayment of net debt of GBP0.3 million to
be financed from Marlowe's existing cash and debt facilities, as
well an additional GBP2.5 million new debt facility with Lloyds
Bank. In addition, the Company will issue 211,765 new ordinary
shares of 50 pence each (the "Consideration Shares") at the Issue
Price to the H2O Managing Director who will become a senior
executive of Marlowe's Water Treatment division. The Consideration
Shares are subject to a lock-up period of 24 months with orderly
market conditions attached after this period.
Application has been made for the Consideration Shares to be
admitted to trading on AIM at 8:00am on 9 September 2016.
The Placing will raise approximately GBP4.4 million before
expenses through the issue of 2,585,294 new ordinary shares of 50
pence each (the "Placing Shares") at 170 pence per share (the
"Issue Price") to certain institutional investors. The Subscription
will raise approximately GBP5.6 million before expenses through the
issue of 3,297,059 new ordinary shares of 50 pence each (the
"Subscription Shares") at 170 pence per share to certain existing
shareholders of Marlowe. The remaining Placing and Subscription
Proceeds, along with the Company's existing debt facilities, will
be used to support the Company's acquisition-led growth strategy as
well as the general working capital requirements of the Group. The
Company has a strong pipeline of acquisition opportunities.
Approximately GBP4.9 million of the Placing and Subscription
Proceeds will be subject to approval by the Company's shareholders
at the General Meeting (the "GM") to be held on 26 September 2016.
Accordingly, the Company has applied for admission of 2,994,166
Placing and Subscription Shares ("First Tranche Placing and
Subscription Shares"), not subject to shareholder approval, and the
Consideration Shares to trading on AIM and it is expected that
admission will occur on 9 September 2016. The Company will apply
for admission of 2,888,187 Placing and Subscription shares ("Second
Tranche Placing and Subscription Shares") to trading on AIM that
are subject to shareholder approval at the GM and it is expected
that admission will occur on 27 September 2016.
Following admission of the first tranche of Placing,
Subscription and Consideration Shares, the total number of voting
rights in the Company will be 24,578,808. Following admission of
the second tranche of Placing and Subscription Shares the total
number of voting rights in the Company will be 27,466,995.
Alex Dacre, Chief Executive of Marlowe plc, commented:
"The acquisition of H2O will significantly expand Marlowe's
water treatment activities and marks the next step towards
fulfilling our strategic objective of providing national coverage
in each of our sectors. H2O is a good fit with WCS and has some
excellent customer relationships that will further enhance our
platform for growth. The placing and subscription announced today
will provide us with resources to continue to add scale to Marlowe
across our Water Treatment and Fire divisions as we implement our
strategy of building a leading UK support services group in
complementary areas of critical asset maintenance."
For further information:
Marlowe plc www.marloweplc.com
Alex Dacre, Chief Executive Tel: +44 (0) 203 841 6194
IR@marloweplc.com
Cenkos Securities plc (Nominated Adviser and Broker)
Nicholas Wells Tel: +44 (0)20 7397 8900
Elizabeth Bowman
FTI Consulting
Nick Hasell Tel: +44 (0)20 3727 1340
Alex Le May
About Marlowe plc
Marlowe is an AIM-listed company formed to create sustainable
shareholder value through the acquisition and development of
businesses that provide critical asset maintenance services in the
UK. It is focused on fire protection, security systems and water
treatment services - which are essential to its customers'
operations and invariably governed by regulation, and where
customers require a single specialist outsourced provider with
nationwide coverage. Our customers can be found on most high
streets, in office complexes and industrial estates, and include
SMEs, local authorities, facilities management providers,
multi-site NHS trusts and FTSE 100 companies.
The information contained within the announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the
publication of this announcement via Regulatory Information Service
("RIS"), this inside information is now considered to be in the
public domain.
About H2O Chemicals Limited
Founded in 1992 and headquartered in Leeds, H2O is a provider of
water treatment and hygiene services, employing 84 staff from 3
offices across the UK. The company is a national business with a
strong presence in the Midlands and Yorkshire. H2O has a base of
more than 600 customers in a range of sectors including industrial,
leisure, food production, higher education and healthcare. H20
provides a complementary portfolio of services to WCS including:
chemical flushing, tank cleaning, water hygiene services, chemicals
and service for cooling towers and steam plant, cleaning and
chlorination and servicing of reverse osmosis and water softening,
and legionella monitoring.
H2O has over 600 customers and the Board estimates that over 85%
of revenue is on a recurring basis. Its top 20 customers represent
less than 50% of revenue and the largest customer contributes
approximately 6% of revenue.
In the 12 months to 31 January 2016, H2O reported audited
revenues of GBP6.1 million, unaudited adjusted EBITDA after
non-recurring costs of GBP0.6 million and audited profit before
taxation of GBP0.3 million. At 31 January 2016 audited gross assets
of H2O Chemicals Limited were GBP2.2 million and the net assets
were GBP0.2 million. Following a sale and leaseback of a property
valued at approximately GBP0.5 million, net assets on acquisition
are estimated to be GBP0.45 million. Average gross margin over the
past three financial years was 27%.
Background to and reasons for the Placing and Subscription
The Company has been pleased with the performance of Swift, WCS
and FAFS, the three acquisitions completed since Marlowe's
admission to AIM on 1 April 2016. The Board continues to review a
significant number of potential acquisition targets within its
target sector of critical asset maintenance services and will
expand its investor base through the Placing, providing the Company
with additional funds to execute suitable acquisitions. The Placing
and Subscription will provide Marlowe with a good level of cash
resources going forward.
The Placing and Placing Agreement
The Company proposes to raise approximately GBP4.4 million gross
proceeds (approximately GBP4.2 million net of expenses) through the
Placing of the Placing Shares at the Issue Price through Cenkos
Securities plc ("Cenkos"). A total of 1,315,938 of the Placing
Shares ("First Tranche Placing Shares") will not be subject to
shareholder approval at the General Meeting. A further of 1,269,356
of the Placing Shares ("Second Tranche Placing Shares") will be
subject to shareholder approval at the GM.
The Placing is not underwritten. The Placing Agreement contains
certain warranties and indemnities from the Company in favour of
Cenkos and is conditional, inter alia, upon:
(a) in relation to 1,269,356 Placing Shares, shareholder
approval of the resolutions at the GM;
(b) the Placing Agreement having become unconditional in all
respects (save for the condition relating to Admission) and not
having been terminated in accordance with its terms prior to
Admission; and
(c) Admission becoming effective not later than 8.00 a.m. on 9
September 2016 for the First Tranche Placing Shares and 8:00am on
27 September 2016 for the Second Tranche Placing Shares subject to
shareholder approval.
The Placing Agreement contains customary warranties and an
indemnity from the Company in favour of Cenkos together with
provisions which enable Cenkos to terminate the Placing Agreement
in certain circumstances prior to Admission (as applicable),
including where any warranties are found to be untrue, inaccurate
or misleading in any material respect or in the event of a material
adverse change in the financial position or prospects of the Group
in the context of the Placing or Admission.
Details of the Subscription
Certain existing shareholders of Marlowe have entered into
legally binding agreements to subscribe for up to GBP5.6 million
directly with the Company.
Use of proceeds of the Placing and Subscription
The net proceeds of the Placing and Subscription of
approximately GBP9.8 million in aggregate will be used to:
-- repay a portion of the company's existing revolving credit facility with Lloyds Bank;
-- provide funds for further acquisitions as part of Marlowe's ongoing buy-and-build strategy;
-- and provide working capital for the Group.
General Meeting
A General Meeting to consider and approve the Second Tranche
Placing Shares and Subscription Shares will be held at the offices
of Brabners Chaffee Street, 55 King Street, Manchester at 11:00am
on 26 September 2016. A circular will be posted to Shareholders on
9 September 2016 and will be made available on the Company's
website at www.marloweplc.com
Directors Subscription
Certain directors of the Company intend to participate in the
Subscription at the Issue Price as set out in the table below.
Director Existing Participation Percentage Participation Percentage
Holding in first holding in second holding following
tranche following tranche of Second Admission
of Subscription First Admission Subscription
--------------- --------- ----------------- ----------------- -------------- -------------------
Derek O'Neill 666,667 72,636 3.0% 89,129 3.0%
--------------- --------- ----------------- ----------------- -------------- -------------------
Peter Gaze 450,625 76,351 2.1% 73,649 2.2%
--------------- --------- ----------------- ----------------- -------------- -------------------
Charles
Skinner 408,333 29,941 1.8% 28,882 1.7%
--------------- --------- ----------------- ----------------- -------------- -------------------
Related Party Transaction
Lord Ashcroft KCMG PC is considered a Substantial Shareholder
under the AIM Rules and is subscribing for 2,563,428 new ordinary
shares in the Subscription at the Issue Price. His Subscription
participation constitutes a related party transaction under Rule 13
of the AIM Rules. The Directors consider that, having consulted
with Cenkos, the terms of his participation in the Subscription are
fair and reasonable insofar as shareholders are concerned.
Derek O'Neill, Peter Gaze and Charles Skinner intend to
subscribe for, in aggregate, 370,588, new ordinary shares in the
Subscription at the Issue Price. This aggregate participation
constitutes a related party transaction under Rule 13 of the AIM
Rules. Alex Dacre and Nigel Jackson consider that, having consulted
with Cenkos, the terms of this participation in the Subscription
are fair and reasonable insofar as shareholders are concerned.
Recommendation
The Board believe the Acquisition, the Placing and the
Subscription to be in the best interests of the Company and its
Shareholders as a whole. Accordingly, the Board unanimously
recommend Shareholders to vote in favour of the resolutions to be
put to the General Meeting as they intend so to do in respect of
their beneficial shareholdings amounting to 8,528,958 or 39.91% of
the existing ordinary shares.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
2016
Announcement of the Acquisition, Placing 8 September
and Subscription
Admission and commencement of dealings 9 September
of the First Placing and Subscription
Shares, and Consideration Shares
Posting of General Meeting Circular 9 September
Latest time and date for receipt of 11am on 22 September
Forms of Proxy
General Meeting 11am on 26 September
Admission and commencement of dealings 8am on 27 September
of the Second Placing and Subscription
Shares if the Resolutions are passed
The Second Placing and Subscription 27 September
Shares credited to CREST stock accounts
if the Resolutions are passed
Despatch of definitive share certificates week commencing 3 October
for Second Placing and Subscription
Shares if the Resolutions are passed
Notes:
(i) References to times in this Document are to London time (unless otherwise stated).
(ii) If any of the above times or dates should change, the
revised times and/or dates will be notified by an announcement to
an RIS.
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACQUGUPCBUPQPGM
(END) Dow Jones Newswires
September 08, 2016 02:00 ET (06:00 GMT)
Marlowe (LSE:MRL)
Historical Stock Chart
From Apr 2024 to May 2024
Marlowe (LSE:MRL)
Historical Stock Chart
From May 2023 to May 2024