TIDMAPC
RNS Number : 6575V
APC Technology Group PLC
25 July 2018
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN,
NEW ZEALAND, RUSSIA, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER
JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A BREACH OF THE
RELEVANT SECURITIES LAWS OF SUCH JURISDICTION.
This announcement does not constitute a prospectus or offering
memorandum or an offer in respect of any securities of APC
Technology Group PLC or of any other entity and should not be
considered as a recommendation that any person should subscribe for
or purchase any such securities.
This announcement contains inside information for the purposes
of the market abuse regulation (EU No. 596/2014) ("MAR"). In
addition, market soundings (as defined in MAR) were taken in
respect of certain of the matters contained in this announcement,
with the result that certain persons became aware of such inside
information, as permitted by MAR. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain and such persons shall therefore cease to be in
possession of inside information.
25 July 2018
APC Technology Group PLC
(the "Company")
Acquisition of Aspen Electronics Limited
and
Placing and Subscription of 37,563,591 Ordinary Shares to raise
GBP2.54 million
APC Technology Group PLC (AIM: APC), the provider of design-in,
specification and distribution services for specialist electronic
components and systems, lighting technologies and connectivity
products, is pleased to announce the acquisition of Aspen
Electronics Limited and a placing, including the sale of Vendor
Ordinary Shares, and subscription of 37,563,591 new Ordinary Shares
in the Company at 6.75 pence per Ordinary Share, to raise
approximately GBP2.54 million before expenses.
Highlights:
-- Acquisition of Aspen for a net consideration of GBP2.2
million to be funded by a combination of part of the proceeds of
the Placing and the Subscription and the issue of 7,407,407
Consideration Shares which will be subject to a lock-in.
-- Aspen is a premium distributor of electronic components,
specialising in radio frequency (RF) and microwave components and
test and measurement equipment.
-- Complementary RF and microwave business to APC's which the
Board expects will lead to top line synergy opportunities.
-- The Acquisition is expected to be earnings enhancing in the
first full year after Completion.
-- Placing of 26,761,587 Ordinary Shares and vendor placing of
3,835,341 Ordinary Shares by Stockdale Securities and Subscription
of 6,966,663 Ordinary Shares with existing and new institutional
and other investors at 6.75 pence per Ordinary Share to raise
approximately GBP2.54 million before expenses.
-- Including the 7,407,407 Consideration Shares, a total
44,970,998 new Ordinary Shares are being issued at 6.75 pence each
for a total value of GBP3.04 million.
-- Approximately GBP200,000 of the proceeds from the
Subscription immediately used to repay Loan Notes held by a current
shareholder.
-- Anthony Lochery, Chairman of the Company, has subscribed for
1,481,481 Ordinary Shares for a total amount of GBP99,999.97 and
Richard Hodgson, Chief Executive of the Company, has subscribed for
300,000 Ordinary Shares for a total amount of GBP20,250.00.
Placing Statistics
Placing Price 6.75p
Number of Existing Ordinary Shares 134,912,990
Number of New Ordinary Shares 26,761,587
Number of Vendor Ordinary Shares 3,835,341
Number of Subscription Shares 6,966,663
Number of Consideration Shares 7,407,407
Expected gross proceeds of the placing of GBP2.54 million
the New Ordinary Shares and the Vendor Ordinary
Shares and the Subscription before expenses
Number of Ordinary Shares in issue immediately
following Completion 179,883,988
Number of new Ordinary Shares, including the 25 per cent.
New Ordinary Shares, the Vendor Ordinary Shares,
the Subscription Shares and the Consideration
Shares, expressed as a percentage of the Enlarged
Share Capital
The new Ordinary Shares are being issued under the Company's
existing authorities.
Commenting on the placing and acquisition, Richard Hodgson,
Chief Executive, said:
"We are delighted to have been able to complete the acquisition
of such a premium-quality, complementary RF and Microwave business
which has an excellent reputation and which is expected to lead to
top line growth opportunities as part of the enlarged APC group.
APC continues to trade in line with management expectations and we
expect this acquisition to be earnings enhancing in its first full
financial year. Following on from the Company's successful
acquisition and integration of First Byte Micro, this is a further
step in the Company's stated aim of consolidation led growth in its
components division"
Enquiries
APC Technology Group PLC +44 (0) 330 313 3220
Richard Hodgson, Chief Executive www.apcplc.com
Michael Thompson, Finance Director
Stockdale Securities Limited (Nominated Adviser and Broker) +44
(0)20 7601 6100
Mark Brown / Antonio Bossi / Rose Ramsden / Henry Willcocks /
Fiona Conroy
ACQUISITION OF ASPEN ELECTRONICS LIMITED
AND
PLACING AND SUBSCRIPTION OF 37,563,591 NEW ORDINARY SHARES TO
RAISE GBP2.54 MILLION
1. Introduction
The Company is pleased to announce that it has agreed to acquire
Aspen, for a total net consideration of GBP2.2 million, and a
Placing of 26,761,587 New Ordinary Shares and a Subscription of
6,966,663 Subscription Shares at a price of 6.75 pence per Ordinary
Share. The consideration payable for Aspen will be satisfied by
part of the net proceeds of the Placing along with the
Consideration Shares.
In addition, Howard Venning and Robert Johnson, the vendors of
Aspen, have agreed to sell down 3,835,341 Vendor Ordinary Shares to
be allotted and issued to them, taking the total placing and
subscription to GBP2.54 million.
Aspen, is a premium RF and Microwave distribution business,
specialising in a wide range of radio frequency and microwave
components and test and measurement equipment.
The Placing Shares and the Subscription Shares have been placed
with existing and new institutional and other investors. Admission
and dealings in the Placing Shares, the Subscription Shares and the
Consideration Shares are expected to commence on AIM at 8.00 a.m.
on 26 July 2018.
2. Background to and reasons for the Acquisition and Placing
APC's strategy is to complement organic growth within its
Components distribution division with acquisitions in the highly
fragmented UK electronic components distribution market. In line
with this strategy, in January 2018, APC acquired First Byte Micro
Ltd, now rebranded APC Locator, a franchised and independent
component sourcing company.
APC recently announced that APC Locator has integrated
successfully into the enlarged Group, expanded its offering and has
delivered GBP1 million in bookings in its first six months of
ownership which is well in excess of its acquired run rate of
GBP1.5 million per annum.
The Directors believe that Aspen's RF and microwave business
will complement APC's existing Components business and will create
top line synergy opportunities. APC intends to grow its business to
revenue of GBP50 million to 75 million within 3 to 5 years,
principally by growing its Components and Property Technology
divisions.
Approximately GBP1.7 million of the net proceeds of the Placing
to be received by the Company and the Vendors will be used to
satisfy the cash element of the consideration for the Acquisition.
Aspen has cash of GBP1 million on its balance sheet which reduces
the effective consideration payable by APC to GBP2.2 million. As
set out above approximately GBP0.2 million of the proceeds of the
Subscription to be received by the Company will immediately be used
to repay part of the existing Loan Notes on which interest of 10
per cent. per annum is payable; in addition, the Company expects to
use a further GBP0.42 million of the proceeds of the Placing and
the Subscription to repay the balance of the existing Loan Notes
and to satisfy outstanding professional fees.
The Acquisition is expected to be earnings enhancing in the
first full year after Completion.
3. Information on Aspen
In addition to the distribution of radio frequency and microwave
components, Aspen has in-house testing facilities which allow it to
provide enhanced value-added services to key customers and
suppliers.
It also distributes own brand products and has an online
sourcing business for lower value RF and microwave components.
In the year to 30 June 2017, Aspen reported Revenue of GBP4.3
million, Gross Profit of GBP1.35 million and adjusted* EBITDA of
GBP0.35 million.
Aspen has continued to grow in the year to 30 June 2018 and it
is expected to report an adjusted EBITDA of GBP0.55 million.
In addition, Aspen has GBP0.8m of debtors on its balance sheet,
which is available to be refinanced through the Group's existing
invoice discounting facility.
* Excluding the salary of its founder and vendor
4. Proposed terms of the Acquisition
The consideration payable for the entire issued share capital of
Aspen on a cash and debt free basis is GBP3.2 million. However, the
business has GBP1 million on its balance sheet which will be
distributed to the Vendors thus reducing the net consideration
payable by APC to GBP2.2 million.
The cash consideration payable by APC is therefore GBP1.7
million in addition to GBP0.5 million to be satisfied by the issue
of 7,407,407 Consideration Shares.
The Consideration Shares will be subject to a 12 month lock in
agreement and a further 12 month orderly market arrangement
afterwards.
5. Details of the Placing
The Company has raised GBP2.54 million (before expenses) through
the issue of the New Ordinary Shares and the Subscription Shares at
the Placing Price in order to fund part of the consideration
payable pursuant to the Acquisition, to repay the existing Loan
Notes and to provide additional working capital to the Group. The
Placing Price represents a premium of approximately 2 per cent. to
the closing mid-market price of 6.625 pence per Ordinary Share on
24 July 2018, being the last business day prior to the publication
of this announcement. The Placing Shares, the Subscription Shares
and the Consideration Shares will represent approximately 25 per
cent. of the Enlarged Share Capital.
Pursuant to the terms of the Placing Agreement, Stockdale
Securities, as agent for APC and the Vendors, has procured Placees
for the Placing Shares at the Placing Price.
The obligations of Stockdale Securities under the Placing
Agreement are conditional, inter alia, upon Admission having
occurred by 8.00 a.m. on 26 July 2018 (or such later time and/or
date as may be agreed, being no later than 8.00 a.m. on 31 August
2018), and there being prior to Admission no material breach of the
warranties given to Stockdale Securities.
Stockdale Securities may terminate the Placing Agreement in
specified circumstances (including for breach of warranty at any
time prior to Admission, if such breach is reasonably considered by
Stockdale Securities to be material in the context of the Placing)
and in the event of a force majeure event occurring at any time
prior to Admission. If the conditions of the Placing Agreement are
not fulfilled on or before the relevant date in the Placing
Agreement, placing monies will be returned to Placees without
interest as soon as possible thereafter.
Application has been made to the London Stock Exchange for the
Placing Shares, the Subscription Shares and the Consideration
Shares to be admitted to trading on AIM. The Placing Shares, the
Subscription Shares and the Consideration Shares will rank pari
passu in all respects with the Existing Ordinary Shares, including
the right to receive any dividend or other distribution declared,
made or paid following Admission. It is expected that Admission
will become effective and that dealings in the Placing Shares, the
Subscription Shares and the Consideration Shares will commence at
8.00 a.m. on 26 July 2018.
6. Related party transaction
Canaccord Genuity and Rockridge Investments are substantial
shareholders in the Company. Accordingly, each of their
participations in the Placing is deemed to be a related party
transaction pursuant to the AIM Rules for Companies. The directors
of the Company, having consulted with the Company's Nominated
Adviser, Stockdale Securities Limited, consider that the terms of
each of their participations in the Placing are fair and reasonable
insofar as shareholders are concerned.
7. Total voting rights
Following Admission, the Company's issued share capital will
comprise 179,883,988 Ordinary Shares.
Therefore the figure of 179,883,988 Ordinary Shares should be
used by shareholders in the Company as the denominator for the
calculations by which they will determine if they are required to
notify their interest in, or a change in their interest in, the
share capital of the Company under the FCA's Disclosure Guidance
and Transparency Rules.
Following Admission, Anthony Lochery will hold 3,603,703
Ordinary Shares and Richard Hodgson will hold 2,300,000 Ordinary
Shares representing respectively 2.00 per cent. and 1.28 per cent.
of the Company's enlarged share capital.
8. Forward-looking statements
This announcement may contain forward-looking statements
relating to the Company's expected operations that are based on
management's current expectations, estimates and projections. Words
such as "expects", "intends", "plans", "projects", "believes",
"estimates", and similar expressions are used to identify such
forward-looking statements. These statements are not warranties or
guarantees of future performance and involve certain risks,
uncertainties and assumptions that are difficult to predict.
Therefore, actual outcomes and results may differ materially from
what is expressed or forecast in such forward-looking statements.
By their nature forward-looking statements involve risk and
uncertainty because they relate to events and depend on
circumstances that may occur in the future. Although the Company
believes the expectations reflected in such statements are
reasonable, no assurance can be given that such expectations will
prove to be correct. There are a number of factors, many of which
are beyond the control of the Company, which could cause actual
results and developments to differ materially from those expressed
or implied by forward-looking statements.
Definitions
"Acquisition" the acquisition by APC of the entire
issued share capital of Aspen
"Acquisition Agreement" the sale and purchase agreement relating
to the Acquisition
"Admission" the admission of the Placing Shares,
the Subscription Shares and the Consideration
Shares to trading on AIM becoming effective
in accordance with the AIM Rules
"AIM" the market of that name operated by
the London Stock Exchange
"AIM Rules" the AIM Rules for Companies
"Aspen" Aspen Electronics Limited
"Company" or "APC" APC Technology Group plc
"Completion" completion of the Acquisition which
is expected to take place at 8.00 on
26 July 2018
"Consideration Shares" the 7,407,407 new Ordinary Shares allotted
and issued to the Howard Venning pursuant
to the Acquisition Agreement
"Directors" or the members of the board of directors of
"Board" APC
"Enlarged Share Capital" the 179,883,988 Ordinary Shares in
issue immediately following Admission
"Existing Ordinary the 134,912,990 Ordinary Shares in
Shares" issue at the date of this announcement
"Group" the Company and its subsidiary undertakings
"Loan Notes" the existing loan notes issued by the
Company which carry an interest of
10 per cent. per annum
"London Stock Exchange" London Stock Exchange plc
"New Ordinary Shares" the 26,761,587 new Ordinary Shares
which are proposed to be allotted and
issued pursuant to the Placing but
excluding the Vendor Ordinary Shares
"Ordinary Shares" ordinary shares of 2p each in the share
capital of the Company
"Placees" the subscribers of Placing Shares pursuant
to the Placing
"Placing" the placing by Stockdale Securities
of the New Ordinary Shares and the
Vendor Ordinary Shares pursuant to
the Placing Agreement
"Placing Agreement" the agreement dated 24 July 2018 between
the Company, the Vendors and Stockdale
Securities in connection with the Placing
"Placing Price" 6.75 pence per Placing Share
"Placing Shares" the New Ordinary Shares and the Vendor
Ordinary Shares
"Shareholders" holders of Ordinary Shares
"Subscription" the direct subscription with the Company
of 6,966,663 new Ordinary Shares
"Subscription Shares" the 6,966,663 new Ordinary Shares to
be allotted and issued pursuant to
the Subscription
"Vendors" Howard Venning and Robert Johnson
"Vendor Ordinary Shares" the 3,835,341 Ordinary Shares which
are proposed to be sold by the Vendors
pursuant to the Placing
"RF" radio frequency
"Stockdale Securities" Stockdale Securities Limited, the Company's
financial adviser, broker and AIM nominated
adviser
All references in this announcement to "GBP" or "p" are to the
lawful currency of the United Kingdom.
Ends
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END
MSCUVRRRWUABURR
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