TIDMFCRM
RNS Number : 5529V
Fulcrum Utility Services Ltd
06 April 2023
06 April 2023
FULCRUM UTILITY SERVICES LIMITED
("Fulcrum" or "the Group")
Trading Update and Amendment to Convertible Loan Facility
Fulcrum Utility Services Limited, a leading independent provider
of essential utility services including multi-utility connections
and renewable energy infrastructure, provides a trading update
today for its financial year ended 31 March 2023, along with
details of amendments to the Group's Convertible Loan Facility
Agreement announced on 5 December 2022 (RNS No: 5184L).
Trading update
The Group has been focused on addressing identified issues,
implementing improvements and developing a clear strategy that will
support it to capitalise on various opportunities in its markets.
Positive progress is being made and the Group confirms that its
full year performance will be in line with the expectations set out
in its Trading Update, published on 24 October 2022 (RNS
7933D).
Update on review of strategic options
As announced on 5 December 2022, the Group has initiated a
review of the various strategic options available to it in order to
maximise value for shareholders (the "Review"). The Group is
pleased to share that, to date, the Review has identified several
opportunities and operational improvements which includes the
development of a new sales strategy. A new, leaner, Senior
Leadership Team has also been formed and tasked with the effective
delivery of the Group's plans.
A further outcome of the Review is the Board's decision to exit
from the smart metering market. Since the Company's fundraise in
December 2021 the UK's energy sector has experienced significant
volatility such that the market dynamics have changed to an extent
that the Board no longer considers it an attractive opportunity or
area of the market for the Group to operate in. This exit also
enables the Group to focus on more attractive opportunities
available to it.
As the Review remains ongoing, the Board is pleased to confirm
that Interim CEO, Lindsay Austin, will continue in her role for a
minimum of a further six months to lead the Group and oversee the
Review. This includes the implementation of the identified
operational improvements and sales strategy to support Fulcrum to
capitalise on its core strengths.
Convertible Loan Facility amendment
Further to the Facility Agreement announced on 5 December 2022,
the Group today also announces that it has agreed to amend the
Facility Agreement (the "Amended Facility") under which the
provision of funding has been increased by GBP5 million such that
up to GBP11 million is provided as principal (being GBP8 million
from Bayford and GBP3 million from Harwood on a pro-rata basis).
The terms of the Amended Facility are the same as those in the
initial Facility Agreement being:
-- Repayable on or before 1 November 2023 ("Repayment Date") or such later date as may be agreed by the Lenders;
-- Convertible into Ordinary Shares at the discretion of the Lenders from 1 April 2023 ("Conversion");
-- If converted, the conversion price will be the lower of the volume weighted average market value of the Company's
Ordinary Shares in the 5 trading days immediately preceding the date of the conversion notice or 0.5p per
Ordinary Share of the Company (the "Conversion Price");
-- At or around the point of Conversion, the Company's shareholders will be entitled to participate in an open offer
or similar arrangement, at the same price as the Conversion Price;
-- Interest will be accrued from the date monies are drawn down under the Facility at a rate of 20 per cent. per
annum, repayable at the end of the term or on prepayment of the Facility;
-- A prepayment fee of 20 per cent. of the amount of the Facility prepaid early and a non-utilisation fee of 6 per
cent. per annum.
The Amended Facility will continue to support the ongoing Review
and ensure the Group continues to have adequate working capital.
Bayford has indicated to the Board that it is their current
intention to provide the Company with financial support beyond the
term of Amended Facility, if required, and the Board confirms that
this, together with the Amended Facility is expected to provide the
Group with the funding required for the trading year ahead and will
support the continued execution of the Group's strategy and
Fulcrum's journey back to profitability.
The entry into the Amended Facility by Bayford and Harwood, each
being a substantial shareholder of the Company, constitutes a
related party transaction with each Lender under rule 13 of the AIM
Rules. Accordingly, the directors who are independent of the
Facility, being Jennifer Babington and Dominic Lavelle, (the
"Independent Directors") consider, having consulted with Cenkos
Securities plc, acting in its capacity as the Company's nominated
adviser and broker, that entering into the Amended Facility is fair
and reasonable insofar as the Company's shareholders are
concerned.
Important matters to note for minority shareholders
The exercise of equity conversion rights by either Lender under
the Amended Facility may result in that Lender acquiring Ordinary
Shares carrying more than 30 per cent. of the voting rights in
Fulcrum, and in certain circumstances more than 50 per cent.
Although Fulcrum is not a company that is subject to the UK
Takeover Code, the Company's Articles of Association (the
"Articles") contain certain protections equivalent to that afforded
to shareholders under Rule 9 of the City Code on Takeovers and
Mergers. As a condition of the Amended Facility, the Independent
Directors of Fulcrum have agreed to exercise their discretion,
pursuant to the Articles, to waive any requirement for a mandatory
offer for the remaining Ordinary Shares in the Company which may
otherwise apply upon the exercise of equity conversion rights under
the Facility. For these purposes, the Independent Directors have
not made any determination that the Lenders are acting in concert
and each Lender has been granted a separate waiver.
In order to enable minority shareholders to participate in the
raising of funds for the Company on similar terms to the Lenders,
the Amended Facility contains an entitlement for minority
shareholders, at or around the point of Conversion, to participate
in an open offer or similar arrangement at the Conversion Price,
with a right to subscribe for additional shares in the capital of
the Company pro rata to their existing shareholdings at that time.
This offer is expected to be undertaken shortly following exercise
by the Lenders of their Conversion right.
The issue of shares to the Lenders, resulting from Conversion,
is also subject to shareholders approving certain resolutions (the
"Resolutions"). A shareholder circular convening a general meeting
for the purposes of seeking approval of the Resolutions will be
sent to shareholders in due course. Shareholders should be aware
that it is a term of the Amended Facility that these Resolutions
are approved by the requisite majority and the Amended Facility may
be terminated if they are not so approved. The termination of the
Amended Facility would likely result in little or no value for
Shareholders. Accordingly, it is important that Shareholders vote
in favour of all of the Resolutions so that Conversion may proceed
and all funding options are available to the Board.
Capitalised terms used in this announcement have the meanings
given to them in the announcement of 5 December 2022 (RNS No:
5184L) unless the context provides otherwise.
Jennifer Babington, Chair, said:
"The Board and I are pleased to confirm that the Group's full
year performance will be in line with expectations. Turning the
Group's performance around is an ongoing and challenging task, but
we are making positive progress as we implement a clear strategy
that puts the Group on a path back to profitability.
We are also pleased to confirm the continued support from our
major shareholders as we execute our plans and move the business
forward. Again, we view this as a clear indication of their
confidence in Fulcrum and its return to profitability.
The Group's future is also supported by m edium to long-term
market fundamentals, which remain strong. This, coupled with the
improvements we are implementing, means that the Group continues to
be ever better positioned to capitalise on the long-term
opportunities presented by the UK's transition to a low carbon
economy ."
This announcement contains inside information.
Enquiries:
Fulcrum Utility Services Limited +44 (0)114 280
Jonathan Jager, Chief Financial Officer 4150
Cenkos Securities plc (Nominated adviser and broker)
Camilla Hume / Callum Davidson (Nomad) / Michael +44 (0)20 7397
Johnson (Sales) 8900
Notes to Editors:
Fulcrum is a multi-utility infrastructure and services provider.
The Group operates nationally with its head office in Sheffield,
UK. It designs, builds, owns and maintains utility infrastructure
and offers smart meter exchange programmes.
https://investors.fulcrum.co.uk
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END
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