Issue of Equity
30 January 2008 - 6:00PM
UK Regulatory
RNS Number:8264M
Premier Direct Group PLC
29 January 2008
Premier Direct Group Plc
("Premier Direct", the "Company or the "Group")
Placing of 6,500,000 new Ordinary Shares at 20 pence per share
Premier Direct Group Plc, a leading nationwide shopping-at-work provider, today
announces that it has conditionally raised approximately �1.3 million (before
expenses) in a placing of 6,500,000 new ordinary shares of 1p each ("Ordinary
Shares") at a placing price of 20 pence per new Ordinary Share ("Placing Price")
(the "Placing").
Summary
*Approximately �1.15 million to be raised (net of Placing expenses) via
the Placing
*New short-term bank financing of �1.0 million secured in addition to
existing long-term bank facilities
*Net Placing proceeds to repay short-term bank financing and provide
further working capital
*Directors and senior management have committed �430,000 to the Placing
*Board expects to report pre-tax profit for the six months to 31 January
2008 ahead of last year and in line with its expectations
*EGM at 10.00 a.m. on 22 February 2008 at KBC Peel Hunt Ltd, 111 Old Broad
Street, London EC2N 1PH
For further information, please contact:
Premier Direct Group Plc Tel: 0191 497 4100
Eric McClenaghan, Chief Executive Officer
Christine Stobbs, Finance Director
Biddick Associates Tel: 020 7448 1000
Zoe Biddick
KBC Peel Hunt Ltd, Nominated Adviser and Broker Tel: 020 7418 8900
David Anderson
Jonathan Marren
Background to and reasons for the Placing and Bank Financing
As announced on 11 December 2007, the Company's recent focus has been to drive
the sustainable development of the distributor network whilst also optimising
stock levels consistent with its sales performance.
One of the Group's sales initiatives was to increase the number of sales cycles
before Christmas 2007. The sales cycle in the 12 week run up to Christmas 2007
was changed to four weeks from six weeks but whilst an increase in sales was
generated, the improvement was lower than anticipated. In addition, the IT
system installed in the early summer of 2007, which includes an integrated
planning and forecasting model, generated misleading information as to active
distributor numbers, which directly led to an over purchasing of stock.
These factors have led to the Group holding approximately �1.5 million of
non-seasonal stock more than it requires. In order to meet the Group's
short-term financing requirements, the Company has secured new additional
short-term bank financing of �1.0 million.
As part of the agreement with RBS to provide such new short-term bank financing,
the Company has agreed to pay an arrangement fee of �100,000 and to issue to RBS
warrants over 814,204 Ordinary Shares at an exercise price of 20p per Ordinary
Share. The warrants over 600,000 Ordinary Shares at an exercise price of 45p per
Ordinary Share issued to RBS pursuant to the announcement of 4 August 2007 have
been cancelled.
The board of Directors (the "Board") will use the net proceeds of the Placing to
repay the new short-term bank financing thus strengthening the Company's balance
sheet and the remainder will provide additional working capital.
The Board considered other methods to raise the necessary funds including an
offer of new Ordinary Shares by way of an open offer or a rights issue but the
Board considers that, taking account of time constraints and transaction costs,
the proposed Placing to be the most appropriate method of raising the required
capital.
The Board also considered an offer of debt finance from the Group's bankers.
This was rejected by reason of the cost impact on the Group's income statement
for a minimum period of 12 months.
Current Trading
Despite the issues relating to stock and the pre-Christmas sales cycles
discussed above, the Board expects to be able to report pre-tax profits for the
six months to 31 January 2008 to be ahead of the comparable period last year (
after charging additional costs connected with the new short-term bank funding)
and the results for the six months to 31 January 2008 to be in line with its
expectations. Further, the Board expects to be able to report sales revenues of
not less than �10.6 million for the six months to 31 January 2008.
The Company is continuing to improve gross margins and maintain the operating
cost reductions achieved in the second half of last year while at the same time
focusing on growing its distributor network at a sustainable pace. As a result,
the Board expects the Company to continue to trade profitably in the second half
of the current financial year.
Details of the Placing
The Company has conditionally raised approximately �1.3 million (before
expenses) (approximately �1.15 million net of expenses of the Placing) in a
placing of 6,500,000 new Ordinary Shares representing approximately 31.4 per
cent. of the Company's issued share capital at the date of this announcement
(the "Existing Ordinary Shares") at the Placing Price of 20 pence per new
Ordinary Share.
Under the Placing, the new Ordinary Shares have been conditionally placed with
institutional and other investors (including Directors and senior management of
the Company) by KBC Peel Hunt Ltd ("KBC Peel Hunt").
The new Ordinary Shares will be allotted fully paid and will 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 on or after the
date of their allotment.
The Placing is conditional, inter alia, on the passing of certain resolutions
(the "Resolutions") to be proposed at an Extraordinary General Meeting of the
Company to be held at 10.00 am on 22 February 2008 ("EGM"), admission of the new
Ordinary Shares to trading on the AIM market of London Stock Exchange plc
becoming effective ("Admission") and on the placing agreement, today entered
into by the Company and KBC Peel Hunt, having become unconditional in all other
respects and not having been terminated in accordance with its terms on or
before 25 February 2008 (or such later time or date, being not later than 3
March 2008, as KBC Peel Hunt may determine).
Application will be made to London Stock Exchange plc and it is expected that
Admission will become effective and that dealings will commence in the new
Ordinary Shares on 25 February 2008.
Board participation
Members of the Board have conditionally subscribed for 1,050,000 new Ordinary
Shares under the Placing at the Placing Price. The details of the subscriptions
and the subsequent holdings are as follows:
Director Existing number Number of new Placing Price Total holding % holding
of Ordinary Ordinary Shares following following
Shares held subscribed for completion of completion of
the Placing the Placing
Graham 600,500 500,000 20p 1,100,500 4.0%
Wilson
Eric
McClenaghan 2,500,000 500,000 20p 3,000,000 11.0%
Christine
Stobbs 125,000 50,000 20p 175,000 0.6%
Further members of the Group's senior management team have conditionally
subscribed for, in aggregate, 1.1 million new Ordinary Shares under the Placing
at the Placing Price.
Eric Blakie, the independent (for the purpose of the Placing) Non-executive
Director, considers, having consulted with KBC Peel Hunt in its capacity as the
Company's nominated adviser pursuant to the AIM Rules for Companies, that the
terms of the other Directors' participations in the Placing are fair and
reasonable insofar as the Shareholders are concerned.
The Company has received from the Board irrevocable undertakings to vote in
favour of the Resolutions representing 3,690,009 Ordinary Shares (representing
approximately 17.8 per cent. of the Existing Ordinary Shares).
A circular to Shareholders, including a notice of Extraordinary General Meeting,
is being posted to Shareholders. Copies of the circular to Shareholders will be
available from the Company's registered office at 1 Waldridge Way, Simonside
East Industrial Park, South Shields, Tyne & Wear NE34 9PZ and will be available
on the Company's website at www.premierdirectgroup.co.uk
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
END
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