TIDMPEG
RNS Number : 5885P
Petards Group PLC
26 October 2012
26 October 2012
Petards Group plc
("Petards" or the "Company")
Open Offer of up to 4,500,000 Open Offer Shares
Petards, the AIM quoted developer of advanced security and
surveillance systems, announces a share issue to raise up to
GBP1.125 million (before expenses) through the issue of up to
4,500,000 New Ordinary Shares by way of an Open Offer at 25 pence
per New Ordinary Share.
A circular will be posted today to Shareholders (the
"Circular"). The Circular sets out in more detail the background to
and reasons for the Open Offer and its terms. All capitalised terms
in this announcement are as defined in the Circular which will be
available on the Company's website at www.petards.com.
Background to and reasons for the Open Offer and use of
proceeds
In its circular to Shareholders dated 23 July 2012 the Company
made the following statement:
"On 19 July your Company announced that it had secured a
multi-million pound contract to supply Petards eyeTrain on-board
digital CCTV systems. This contract, worth in the region of GBP8m,
will be fulfilled and supported from Petards facility in Gateshead.
Initial equipment deliveries are expected to commence later this
year and to be completed by 2017. The highest proportion of
equipment deliveries are scheduled to take place from 2014
onwards.
Although the impact of the Contract will be relatively limited
in the current and next financial year thereafter the Contract will
significantly underpin the Company's financial performance and its
future prospects. As a result your Board is now able to plan for
the future with much more confidence. Therefore to further enhance
the prospects of the Company, the Board believes it would be
appropriate for the Company to raise additional equity capital. The
intention is that this would be undertaken by way of a pre-emptive
open offer to existing shareholders. The specific purpose of the
fundraising would be to raise additional working capital, which
will increase in light of the Contract, and to accelerate the
Company's product development programme.
Unfortunately at the Company's recent Annual General Meeting
held on 29 June 2012, the resolutions seeking to obtain the general
authority to issue shares were not passed. The Company is now
proposing a specific authority to issue shares in connection with
an open offer made to all shareholders."
At the General Meeting held on 9 August 2012 the resolution
seeking the authority to issue shares in connection with a fully
pre-emptive open offer was approved by Shareholders.
On 20 September 2012 the Company announced that it had received
an approach from Water Hall Group plc which may or may not lead to
an offer being made for the Company. As a result of this approach
the Company was obliged to abort its plans for an open offer which
was to be announced imminently.
Following its approach, Water Hall put forward a non binding
indicative proposal setting out the terms of an indicative paper
offer. The Independent Directors, being the directors other than
Osman Abdullah, did not believe the terms of the indicative paper
offer would be acceptable to Shareholders. This view was affirmed
by certain major shareholders who confirmed they would not accept
the indicative offer. Therefore, having consulted with WH Ireland
as the Company's Rule 3 adviser, the Independent Directors
concluded that there was no purpose in continuing discussions.
On 18 October 2012, having not made a formal offer Water Hall
Group plc, made an announcement, as it was obliged to do in
accordance with Rule 2.6(a)(ii) of the Takeover Code, to confirm
that it would not be making an offer for the Company.
The Independent Directors remain of the view that an equity
fundraising is the most appropriate way for the Company to raise
the additional finance the Company requires. They consider that
offering New Ordinary Shares to existing Shareholders first, by way
of a fully pre-emptive open offer, is in the best interests of
Shareholders as a whole as it minimises the potential effect of
dilution on existing Shareholders. The Board has also decided that
it is appropriate to provide existing Shareholders with the
opportunity to apply for more than their Basic Entitlement by way
of the Excess Application Facility.
It is the intention of the Board once the Open Offer has been
completed to place via WH Ireland any New Ordinary Shares not
taken-up in the Open Offer with new investors by way of the
Placing.
The funds raised through the Open Offer and, if required, the
subsequent Placing will be used to provide additional working
capital and accelerate the Group's product development
programme.
Details of the Open Offer
Petards is proposing to raise up to approximately GBP1,125,000
(before expenses) pursuant to the Open Offer.
The Open Offer is being made on a fully pre-emptive basis,
allowing all Qualifying Shareholders the opportunity to
participate. The Open Offer is not underwritten. The Open Offer is
not conditional upon the level of applications made to subscribe
under the Open Offer or upon any minimum level of proceeds being
raised. For the purposes of section 578 of the Act, the Open Offer
is being made on the basis that the New Ordinary Shares subscribed
for will be allotted in any event. Accordingly, even if the Open
Offer is not fully subscribed, New Ordinary Shares will be issued
to Qualifying Shareholders who have applied (subject to the terms
and conditions set out in the Circular and the Application
Form).
The Open Offer provides Qualifying Shareholders with the
opportunity to subscribe for Open Offer Shares at the Issue Price
pro rata to their holdings of Existing Ordinary Shares as at the
Record Date on the following basis:
0.7067 Open Offer Shares for every 1 Existing Ordinary Share
and so on in proportion for any other number of Existing
Ordinary Shares then held.
Fractions of Open Offer Shares will not be allotted to
Qualifying Shareholders in the Open Offer and, where necessary,
entitlements under the Open Offer will be rounded down to the
nearest whole number of New Ordinary Shares.
The Open Offer is subject to Admission becoming effective by
8.00 a.m. on 22 November 2012, (or such later time or date not
being later than 8.00 a.m. on 29 November 2012 as the Company may
decide).
The Open Offer is being made in accordance with the statutory
pre-emption provisions contained in sections 561 and 562 of the
Act.
Excess Applications
The Open Offer is structured to allow Qualifying Shareholders to
subscribe for Open Offer Shares at the Open Offer price pro rata to
their holdings of Existing Ordinary Shares. Qualifying Shareholders
may also make applications in excess of their pro rata Basic
Entitlement. To the extent that pro rata entitlements to Open Offer
Shares are not subscribed for by Qualifying Shareholders, such Open
Offer Shares will be available to satisfy such excess applications.
To the extent that applications are received in respect of an
aggregate of more than 4,500,000 Open Offer Shares, excess
applications from Qualifying Shareholders will be scaled back
accordingly. The satisfaction of excess applications will be at the
sole and absolute discretion of the Board.
The aggregate number of Ordinary Shares available for
subscription pursuant to the Open Offer (including under the Excess
Application Facility) is up to 4,500,000 Ordinary Shares.
Qualifying Shareholders should note that the Open Offer is not a
rights issue. Qualifying CREST Shareholders should also note that
although the Open Offer Entitlements will be admitted to CREST and
be enabled for settlement, applications in respect of entitlements
under the Open Offer may only be made by the Qualifying CREST
Shareholder originally entitled or by a person entitled by virtue
of a bona fide market claim raised by Euroclear UK & Ireland's
Claims Processing Unit. Qualifying non-CREST Shareholders should be
aware that the Application Form is not a negotiable document and
cannot be traded. Qualifying Shareholders should also be aware that
in the Open Offer, unlike in a rights issue, any Open Offer Shares
not applied for will not be sold in the market nor will they be
placed for the benefit of Qualifying Shareholders who do not apply
under the Open Offer.
Admission, settlement and dealings
Application will be made to the London Stock Exchange for the
New Ordinary Shares to be admitted to trading on AIM. It is
expected that such Admission will become effective and that
dealings will commence at 8.00 a.m. on 22 November 2012. Further
information in respect of settlement and dealings in the New
Ordinary Shares is set out in paragraph 8 of Part II of
Circular.
Effect of the Open Offer
Upon Admission, and assuming full take up of the New Ordinary
Shares, the Enlarged Share Capital is expected to be 10,867,100
Ordinary Shares. On this basis, the New Ordinary Shares will
represent approximately 41.4 per cent. of the Enlarged Share
Capital.
The New Ordinary Shares will, when issued and fully paid, rank
pari passu in all respects with the Existing Ordinary Shares,
including the right to receive all dividends and other
distributions declared, made or paid after the date of
Admission.
Following the issue of the New Ordinary Shares, and assuming
their full subscription, Qualifying Shareholders who do not take up
any of their Basic Entitlement will suffer a dilution of
approximately 41.4 per cent. to their economic interests in the
Company. Qualifying Shareholders who take up their Basic
Entitlements in full will, after the Open Offer and Placing have
been completed and ignoring any fraction of an Ordinary Share, as
nearly as practicable have the same proportionate voting rights and
entitlements to dividends as held by them on the Record Date
assuming that all of the Open Offer Shares are taken up by
Qualifying Shareholders or placed with new investors in the
Placing.
Current trading and prospects
The Company's interim results for the six months ended 30 June
2012 were announced on 13 September 2012.
In the announcement the Company reported a profit before and
after tax of GBP22,000 (2011: GBP5,000). The Chairman's statement
also included the following statement in relation to the outlook
for the Company:
"Despite the current economic climate, the Board remains
optimistic about the future. The Group has demonstrated its ability
to secure significant contracts from blue chip international
organisations at a time when there is expected to be an increase in
capital investment by operators in the world-wide rail industry.
The Group is also maintaining its level of activity within
specialist niches of the defence and security industries. We were
also pleased that at the recent General Meeting a majority of
shareholders supported the Board by voting in favour of providing
an authority to raise additional equity, and this matter remains
under review.
In recent weeks we have secured some of the orders that we had
been expecting, although they will not now contribute as much to
2012 revenues as we had hoped. In addition other contracts we have
been expecting to receive in the third quarter now seem likely to
be delayed into 2013. As a result the Board presently expects
revenues in the second half year to be slightly ahead of those for
the first half year and the operating performance to be similar to
that achieved in 2011."
Since the interim results were announced we have seen further
revenue which we had expected to recognise in 2012 delayed into
2013. The cancellation by the Department for Transport of the
InterCity West Coast franchise procurement has also caused some
short term uncertainty. Despite this however, the Company still
expects the operating performance for the year to 31 December 2012
to be in line with current market expectations and similar to the
level achieved in 2011.
In recent years the Company's strategy has been to:
-- maintain its position in the defence, emergency services and
retrofit rail transport markets;
-- strengthen its balance sheet; and
-- become an established supplier to global train builders for new build vehicles.
The Board intends to continue to pursue this strategy and in the
longer term to consider acquisition opportunities.
Takeover Code and mandatory offer provisions
Under Rule 9 of the City Code, any person who acquires an
interest (as such term is defined in the City Code) in shares
which, taken together with the shares in which he and persons
acting in concert with him are interested, carry 30 per cent. or
more of the voting rights in a company which is subject to the City
Code, is normally required to make a general offer to all of the
remaining shareholders to acquire their shares. Similarly, when any
person, together with persons acting in concert with him, is
interested in shares which in aggregate carry not less than 30 per
cent. of the voting rights but does not hold shares carrying more
than 50 per cent. of the voting rights of such a company, a general
offer will normally be required if any further interests in shares
are acquired by any such person. These limits apply to the entire
concert party as well as the total beneficial holdings of
individual members. Such an offer would have to be made in cash at
a price not less than the highest price paid by him, or by any
member of the group of persons acting in concert with him, for any
interest in shares in the Company during the 12 months prior to the
announcement of the offer.
The Company is aware that Water Hall Group plc, which holds 29.9
per cent. of the Existing Ordinary Shares is close to a Rule 9
threshold.
Providing that any New Ordinary Shares not subscribed for in the
Open Offer are subscribed for in the Placing, and assuming they are
not acting in concert with any other Shareholders, there will be no
Rule 9 implications for any Shareholder accepting their Basic
Entitlement in the Open Offer. However, in the event that any New
Ordinary Shares not taken up in the Open Offer are not fully
subscribed for in the Placing, it is possible that the acceptance
by Water Hall Group plc of some or all of its Basic Entitlement
could breach a Rule 9 threshold.
Therefore, in circumstances where it is apparent that acceptance
of Water Hall's application for its Basic Entitlement in full would
result in a breach of the Rule 9 threshold, Water Hall and Petards
have agreed that Petards will scale back any such application made
by Water Hall to such a level such that it would no longer result
in a breach of a Rule 9 threshold on completion of the Open Offer
and Placing.
Open Offer statistics
Closing Price per Existing Ordinary Share 31 pence
Issue Price of each New Ordinary Share 25 pence
Discount to Closing Price per Existing 19.4 per cent.
Ordinary Share
Number of Existing Ordinary Shares in
issue 6,367,100
Entitlement under Open Offer 0.7067 Open Offer Shares
for each 1 Existing
Ordinary Share
Number of Open Offer Shares to be offered up to 4,500,000
for subscription by the Company
Maximum proceeds of Open Offer (before GBP1,125,000
expenses)
Maximum Enlarged Share Capital following
Admission 10,867,100
Maximum percentage of Enlarged Share Capital
represented by the New Ordinary Shares 41.4%
Estimated aggregate net proceeds of the GBP1,000,000
Open Offer
Expected timetable of principal events
2012
Record Date and time for entitlements 5.00 p.m. on 24 October
under the Open Offer
Announcement of the Open Offer and posting 7.00 a.m. on 26 October
of the Circular and Application Forms
Existing Ordinary Shares marked 'ex' by 8.00 a.m. on 26 October
London Stock Exchange
Basic Entitlements and Excess Open Offer 8.00 a.m. on 29 October
Entitlements credited to stock accounts
in CREST of Qualifying CREST Shareholders
Notice of the Open Offer published in 29 October
the London Gazette
Recommended latest time for requesting 4.30 p.m. on 9 November
withdrawal of Basic Entitlements and Excess
Open Offer Entitlements from CREST
Latest time for depositing Basic Entitlements 3.00 p.m. on 12 November
and Excess Open Offer Entitlements into
CREST
Latest time and date for splitting of 3.00 p.m. on 13 November
Application Forms (to satisfy bona fide
market claims only)
Latest time and date for receipt of completed 11.00 a.m. on 15 November
Application Forms and payment in full
under the Open Offer or settlement of
relevant CREST instruction (as appropriate)
Results of Open Offer announced through 16 November
an RIS
Admission and commencement of dealings 22 November
in the New Ordinary Shares
New Ordinary Shares credited to CREST 22 November
stock accounts
Despatch of definitive share certificates within 14 days of Admission
for New Ordinary Shares
For further information:
Petards Group plc www.petards.com
Andy Wonnacott, Finance Director Tel: 0191 420 3000
WH Ireland Limited www.wh-ireland.co.uk
Mike Coe / Marc Davies Tel: 0117 945 3470
This information is provided by RNS
The company news service from the London Stock Exchange
END
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