RNS Number:2535K
Transware PLC
23 April 2003
Not for release, production or distribution in, into or from the United States,
South Africa or Republic of Ireland.
TRANSWARE PLC
3 FOR 2 PLACING AND OPEN OFFER AT 3P PER SHARE
KEY POINTS
Transware PLC, the leading supplier of software localisation services
("Transware" or "the Company") is pleased to announce:
* a 3 for 2 placing and open offer of up to 66,468,255 new ordinary shares
of 1p each at 3p per share to raise up to approximately #2.0 million
("Placing and Open Offer");
* that Oyster Technology Investments Limited ("Oyster"), an existing major
shareholder in the Company, has irrevocably undertaken to subscribe for up
to 50,000,000 new ordinary shares, with a minimum subscription of 25,213,654
new ordinary shares ;
* an increase in the level of an existing unsecured loan facility provided
by Oyster to Euro1.2 million ("Oyster Loan");
* the re-scheduling of the repayment by the Company of loans provided by the
directors ("Directors' Loans");
* the cancellation of founder option arrangements and the issue of warrants
("Warrants"); and
* that an extraordinary general meeting to approve the proposals is to be
held on 16 May 2003.
Brian Raven, Chairman of Transware, said "The Directors are pleased that we have
been able to secure the Company's working capital position in partnership with
Oyster and to equip the business to see out this extremely difficult trading
period."
The above summary should be read in conjunction with the full text of the
following announcement.
Enquiries:
Transware PLC
Brian Raven, Chairman Tel: 00 353 1 260 1997
Kieran McBrien, Chief Executive Officer
Oliver Cooke, Finance Director
Corporate Synergy PLC, Nominated Adviser
Justin Lewis, Director Tel: +44 (0) 20 7626 2244
Buchanan Communication Limited
Lisa Baderoon Tel: +44 (0) 20 7466 5000
Not for release, production or distribution in, into or from the United States,
Canada, Australia, South Africa or Republic of Ireland.
TRANSWARE PLC
3 FOR 2 PLACING AND OPEN OFFER AT 3P PER SHARE
Introduction
The Company has today announced that it is proposing the Placing and Open Offer
of up to 66,468,255 new ordinary shares of 1p each ("Open Offer Shares") at 3p
per share to raise between #1.25 million and #1.70 million, net of expenses.
The Open Offer price of 3p per Open Offer Share represents a discount of
approximately 25 per cent. to the mid market closing price of 4p on 22 April
2003. The net proceeds of the Placing and Open Offer will be used to provide
working capital for the Group and to repay some of the Company's current
indebtedness.
Oyster, an existing major shareholder in the Company, has irrevocably undertaken
to take up its entitlement of 12,375,222 Open Offer Shares. In
addition,12,838,432 Open Offer Shares, being some of the entitlements of the
Directors have been placed firm with Oyster and a further 24,786,346 Open Offer
Shares have been conditionally placed with Oyster, subject to clawback by
Shareholders pursuant to the Open Offer. Such clawback will only be in the event
that applications under the Open Offer (excluding those of Oyster and the
Directors) exceed 14,768,057 Open Offer Shares. Consequently Oyster will
subscribe for a minimum 25,213,654 and a maximum of 50,000,000 Open Offer
Shares.
In addition the Company has also announced today that, conditional on Admission:
* the facility available pursuant to the Oyster Loan will be increased to
Euro1.2 million (#816,000) and the repayment date extended to 31 December 2004.
Oyster will also have the right to require any outstanding amounts under the
facility to be converted into new ordinary shares at the Open Offer price;
* the repayment by the Company of the Directors' Loans will be rescheduled;
and
* the founder option arrangements will be cancelled and Warrants issued in
their place.
The Company is also proposing a reorganisation of its share capital and a waiver
of Rule 9 of the City Code on Takeovers and Mergers. Both of these are necessary
in order for the Proposals to proceed. In particular, the waiver of Rule 9 of
the City Code on Takeovers and Mergers is required because Oyster, as a result
of the Proposals, will own or will be entitled to own up to a maximum of 71.5
per cent. of the enlarged issued share capital of the Company.
Corporate Synergy PLC is acting as Nominated Adviser to the Company.
Background to and Reasons for the Proposals
Over the past twelve months the Group has suffered a significant downturn in its
trading performance. The Directors attribute this to the economic slow down in
North America, where the Group derives the majority of its revenues, and to a
general dampening of business confidence caused by recent world events.
As a result of this downturn, the Group's working capital position came under
considerable pressure in the latter part of last year. In order to relieve this
pressure the Directors reduced the Group's overhead base and procured the
introduction of approximately #1.4 million of new funding.
This funding came from three principal sources:
*the Directors provided #753,000 in the form of unsecured loans, #500,000 was
subsequently converted into equity on 8 January 2003 at a price of 10p per
share, representing a 135 per cent. premium over the market price at the time of
conversion;
*Oyster provided #250,000 by way of an unsecured convertible loan. On 31
December 2002 this loan was converted into equity at its redemption value; and
*Enterprise Ireland Limited subscribed for Euro635,000 (#431,800) of Redeemable
Preference Shares in the Group's operating subsidiary Transware Limited on 14
November 2002.
Following this funding, early indicators of an increase in the level of business
activity led the Directors to believe that the Company's working capital
problems had been overcome. However, the tentative signs of improvement referred
to in my report in October 2002 on the final results for the year ended 30 June
2002 were not sustained and the continued absence of any significant improvement
in trading conditions in the new year has once again placed a significant strain
on the Group's working capital position. The Directors believe that trading
conditions are likely to remain difficult for the foreseeable future and that,
as a result, the Company needs to secure further funding.
On 10 March 2003, the Directors announced that they were conducting a strategic
review of the options available to the Company to resolve its long term funding
requirements. These options have included:
*an offer for the entire issued share capital of the Company;
*a sale of the Group's underlying business or assets; and
*the raising of new funds via both debt and equity.
Following this review and having held discussions with various parties, the
Board has concluded that the Proposals are the most appropriate and equitable
option for all shareholders. Whilst the Open Offer Price represents a
significant discount to the market price, it allows all shareholders an
opportunity to participate.
The Directors believe that the funds raised through the Placing and Open Offer
and the Oyster Loan will be sufficient to carry the Group through this difficult
trading period and will enable it to maintain its position as a leading provider
of software localisation services.
The net proceeds of the Placing and Open Offer of between #1.25 million and
#1.70 million, will be applied to repay some of the Group's existing
indebtedness, and to provide additional working capital for the Group.
The Company is of the opinion that, after taking into account the net proceeds
of the Placing and Open Offer and the current facilities available to the Group
(including the Oyster Loan), the Group will have sufficient working capital for
its present requirements, that is at least twelve months from the date of
Admission.
Strategy
Transware is a leading provider of linguistic and cultural localisation services
to companies wanting to distribute software or other content globally via the
internet or otherwise.
The Company has grown rapidly since its formation in 1996. During the year ended
30 June 2002 the Group reported revenues of #12.8 million and operating profits
of #436,000. The Directors believe that this growth was largely achieved through
the establishment of long-term relationships with key players in the rapidly
growing e.learning sector.
Organisations for which the Group has undertaken projects include Microsoft,
Oracle, DigitalThink, KnowledgeNet, SmartForce, SkillSoft, McGraw-Hill,
Mindleaders, NCR, Xilinx, Symantec, Thomson Publishing, Peregrine Software,
Interwoven and Lotus. In the Chairman's statement to the accounts for the year
ended 30 June 2002 it was reported that the Group had increased the number of
its key accounts to fifteen. A key account is defined as a customer from which
the Group believes it has the potential to achieve over US$1 million in annual
sales.
The Group derives the majority of its income from customers based in North
America. During 2002 the economic slow down there had a direct impact on trading
and led to lower than expected levels of localisation work being completed in
the year. It is the Directors' belief that in times of economic uncertainty
discretionary areas of expenditure, such as training, are amongst the first to
be scaled back. They also believe that such expenditure will continue to be held
in check until market conditions are seen to improve. It is not yet clear to the
Directors when more normal trading conditions will return and they expect the
current difficult conditions to remain for the foreseeable future.
The Directors remain committed to maintaining Transware's leading market
position and anticipate that once a degree of normality is restored to trading
conditions the Group will resume its historic pattern of rapid growth.
Current Trading and Prospects
On 28 March 2003,the Company announced its interim results for the six month
period ending 31 December 2002. The Company reported a pre-tax loss for the
period of #468,000,after making an exceptional provision for currency
fluctuations of #135,000. This is the first time in its trading history that the
Group has reported a loss and the Directors believe this to be a reflection of
the severity of the trading conditions which it has faced.
The Directors have continued to eliminate cost from the business wherever
possible. Initiatives taken include the deferral of capital expenditure, a
reduction in staff numbers, a deferral of a proportion of Directors' own
remuneration, and the closure of a number of offices in Germany, France, the USA
and the UK.
As part of these initiatives, following Admission, the Company intends to review
the composition of the Board with a view to reducing the involvement and
associated costs to the Company of those members not directly involved in the
day-today operational management of the Group.
Details of the Placing and Open Offer
The Company proposes to raise between #1.55 million and #2.0 million (before
expenses) by the issue of up to 66,468,255 Open Offer Shares by way of the
Placing and Open Offer. Oyster, an existing major shareholder in the Company,
has irrevocably undertaken to take up its entitlement of 12,375,222 Open Offer
Shares. Lord Sheppard and Anthony Carlton have irrevocably undertaken to take up
1,127,198 and 573,000 Open Offer Shares respectively. The Directors have
irrevocably undertaken to renounce, for nil consideration, their remaining
entitlements of 12,838,432 Open Offer Shares, which have been placed firm with
Oyster. A further 24,786,346 Open Offer Shares have been conditionally placed,
subject to clawback by Shareholders, with Oyster. Such clawback will only be in
the event that applications under the Open Offer (excluding those of Oyster and
the Directors) exceed 14,768,057 Open Offer Shares. Consequently, Oyster will
subscribe for a minimum of 25,213,654 Open Offer Shares and a maximum of
50,000,000 Open Offer Shares.
In order to enable qualifying shareholders to maintain their percentage
interests in the Company all the Open Offer Shares are being offered to
qualifying shareholders pro rata to their shareholdings.
Corporate Synergy PLC, as agent for the Company, will inviting qualifying
shareholders to subscribe, on and subject to the terms and conditions set out in
the prospectus and in the accompanying application form being sent to
shareholders today, for the Open Offer Shares on the following basis:
3 Open Offer Shares for every 2 existing ordinary shares
held by them on the 15 April 2003, and so in proportion for any other number of
existing ordinary shares then held, at a price of 3p per Open Offer Share
payable in full on application and free of all commission and expenses.
The Open Offer Shares will rank pari passu in all respects with the new ordinary
shares of 1p each arising from the Capital Reorganisation, including the right
to receive all dividends and other distributions hereafter declared, made or
paid.
The Placing and Open Offer is conditional, inter alia, upon the Placing and Open
Offer agreement becoming unconditional in all respects and not being terminated
in accordance with its terms; the passing of the Resolutions at the
extraordinary general meeting; and Admission.
The latest time and date for application and payment in full for Open Offer
Shares under the Open Offer is 3.00 pm on 15 May 2003.
Application will be made to the London Stock Exchange plc for the Open Offer
Shares arising from the Placing and Open Offer to be admitted to trading on AIM.
It is expected that Admission will become effective and that dealings will
commence in the Open Offer Shares on 19 May 2003.
Arrangements with Oyster
Placing and Open Offer agreement
Oyster has entered into the Placing and Open Offer agreement pursuant to which
Oyster has agreed to subscribe for up to 50,000,000 Open Offer shares. In
connection with the Placing and Open Offer, the Company has agreed to pay Oyster
a fixed commission of #125,000. The Directors, having consulted with Corporate
Synergy PLC, the Company's nominated adviser, consider that entering into the
Placing and Open Offer agreement is fair and reasonable insofar as Shareholders
are concerned.
The Oyster Loan
On 28 March 2003, the Company entered into the Oyster Loan whereby Oyster agreed
to provide an unsecured facility to the Company of up to Euro750,000 (#510,000),
repayable on the earlier of Admission and 28 September 2003. This agreement has
today been amended whereby, subject to Admission, the facility will be increased
to Euro1,200,000 (#816,000), repayable in full on or before 31 December 2004.
Following Admission, the maximum amount of the facility shall be reduced in the
event that additional funds become available to the Company from certain
specified sources. Interest on the amount drawn down under the facility at the
rate of 1.5 per cent. per month or part month together with a facility fee of
Euro37,500 (#25,500), will be payable when the facility is repaid. Following
Admission, Oyster may convert any amounts drawn down under the facility but not
repaid together with any unpaid interest thereon and the facility fee, into new
ordinary shares at 3p. The Directors, having consulted with Corporate Synergy
PLC, the Company's nominated adviser, consider that entering into the above
amendment of the Oyster Loan is fair and reasonable insofar as Shareholders are
concerned.
Option arrangements
Founder
Oliver Cooke and Brian Raven currently hold options over 1,809,798 and 3,619,385
existing ordinary shares respectively at exercise prices ranging from 125p to
10p per share. These options were granted pursuant to the founder option
arrangements. As a consequence of the Placing and Open Offer and the
convertibility of the Oyster Loan, Mr Cooke and Mr Raven are entitled under the
terms of the founder option arrangements to be granted in aggregate options over
up to a further 10,822,382 new ordinary shares, exercisable at the open offer
price of 3p per share, and would continue to be entitled to further options in
future specified circumstances.
However, conditional upon Admission, Mr Cooke and Mr Raven have agreed to
surrender for nil consideration all of the options granted pursuant to the
founder option arrangements and to cancel the founder option arrangements.
Conditional upon Admission, Mr Cooke and Mr Raven will be issued on a one off
basis Warrants over 2 million and 4 million new ordinary shares respectively.
The Warrants are exercisable at 3p at any time from 1 November 2003 up to and
including 1 November 2008, after which they will lapse. There is no agreement
pursuant to which further Warrants will be issued. The Directors (other than Mr
Cooke and Mr Raven) , having consulted with Corporate Synergy PLC, the Company's
nominated adviser, consider that entering into the above arrangement is fair and
reasonable insofar as shareholders are concerned.
Non-Executive Options
Subject to Admission, Lord Sheppard and Anthony Carlton have agreed to surrender
for nil consideration the options granted to them on 23 April 2002.
Directors' Loans
On 24 September 2002, all of the Directors, other than Mr Carlton, made
unsecured convertible loans to the Company totalling in aggregate #253,000
(Euro372,059). Interest is payable on each loan at the rate of 1.5 per cent. per
month or part month as well as a facility fee equivalent to 5 per cent. of the
amount of the loan. The Directors' Loans are currently convertible into existing
ordinary shares and, to the extent they are not converted, are repayable by no
later than 30 June 2003.
Conditional upon Admission, the relevant Directors have each agreed to amend the
terms of the loans so that one third of the outstanding amount of each loan,
together with the interest thereon and the facility fee, will be repaid on
Admission, a further one third of each loan, together with the interest thereon,
will be repaid on 30 September 2003 and the balance, together with the interest
thereon, on 28 February 2004. To the extent that the Directors choose to convert
any part of the loans before the final repayment date (at a conversion price
being the higher of 10p per share or the average middle market price per share
for the ten previous business days), the remaining repayment(s) shall be reduced
pro rata by the amount so converted.
Capital Reorganisation
The current nominal value of the Company's existing ordinary shares is 10 pence
per share. The price to be paid for each Open Offer Share is 3p. However, the
Companies Act does not allow a company to issue shares at a price that is less
than the nominal value. As a consequence, in order that the Placing and Open
Offer can go ahead, it is necessary to effect a capital reorganisation which
will reduce the nominal value of the Company's Ordinary Shares from 10p to 1p.
Expected timetable of principal events
Record date for the Open Offer Close of business on 15 April 2003
Latest time and date for splitting application forms
(to satisfy bona fide market claims only) 3.00 pm on 13 May 2003
Latest time and date for receipt of forms of proxy
for extraordinary general meeting 10.00 am on 14 May 2003
Latest time and date for receipt of application forms
and payment in full under the Open Offer 3.00 pm on 15 May 2003
Extraordinary general meeting 10.00 am on 16 May 2003
Admission effective and dealings to commence in the
Open Offer shares on AIM 19 May 2003
CREST accounts in respect of the Open Offer shares
to be credited by 26 May 2003
Expected date of despatch of share certificates
in respect of the Open Offer shares 26 May 2003
Corporate Synergy PLC which is regulated by The Financial Services Authority, is
acting for Transware PLC and no other person in relation to the matters
described in this announcement and accordingly will not be responsible to any
other person for providing the protections afforded to customers of Corporate
Synergy PLC or advising them on these matters.
Neither the New Ordinary Shares nor the Open Offer Shares have been, or will be,
registered under the United States Securities Act of 1933 (as amended), or under
the securities laws of any state of the United States, South Africa or the
Republic of Ireland. Subject to certain exceptions, the New Ordinary Shares or
the Open Offer Shares may not, directly or indirectly, be offered, sold, taken
up or delivered in, into or from the United States, South Africa or the Republic
of Ireland or their respective territories or possessions. This announcement
does not constitute an offer to sell or issue or the solicitation of an offer to
buy or subscribe for New Ordinary Shares or Open Offer Shares in any
jurisdiction in which such offer or solicitation is unlawful. Accordingly,
copies of the announcement are not being and must not be mailed or otherwise
distributed or sent in, into or from the United States, South Africa or the
Republic of Ireland and persons receiving this announcement (including
custodians, nominees and trustees) must not distribute or send it in, into or
from the United States, South Africa or the Republic of Ireland.
This information is provided by RNS
The company news service from the London Stock Exchange
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