TIDMPRES
RNS Number : 0258R
Pressure Technologies PLC
24 October 2023
The information contained within this announcement is deemed by
the Group to constitute inside information as stipulated under the
UK version of the EU Market Abuse Regulation (2014/596) which is
part of UK law by virtue of the European Union (Withdrawal) Act
2018, ("MAR"), and is disclosed in accordance with the Group's
obligations under Article 17 of MAR. Upon the publication of this
announcement via a Regulatory Information Service, this inside
information will be considered to be in the public domain.
24 October 2023
Pressure Technologies plc
("Pressure Technologies" or "the Company" or "the Group")
Debt Refinancing - Agreement in Principle
Pressure Technologies plc (AIM: PRES), the specialist
engineering group, is pleased to announce it has reached agreement
in principle with Rockwood Strategic plc(1) and Peter Gyllenhammar
AB (together "the Lenders"), both major shareholders in the
Company, for the provision of a new Term Loan Facility of GBP1.5
million ("the Facility") that will be used to refinance the
existing debt facilities of the Group and provide additional
working capital headroom.
Background to the Debt Refinancing
The existing debt facilities of the Group currently comprise a
bank loan of GBP0.9 million provided by Lloyds Banking Group
("Lloyds") and finance leases totalling GBP1.1 million. The Lloyds
loan is secured against the assets of the Group and is due to be
repaid in full on 31 December 2023 at which point the facility will
expire. The finance leases are secured against specific assets and
have a range of expiry dates over the next 4 years.
During 2023, the Group has explored refinancing the Lloyds loan
with a number of mainstream lenders and challenger banks by way of
raising new asset-backed lending facilities secured against the
property assets, plant and debtors of the Group.
However, the challenging trading conditions experienced across
2022 and during the early part of 2023 subdued the financial
performance of the Group in that period. Whilst profitability for
the financial year ended 30 September 2023 ("FY23") reflected
materially improved trading on the prior year, as updated in the
Company announcement of 3 October 2023, it is expected to remain at
this level in the next 12 months. As a result, and alongside
tightening lending standards and credit availability, the debt
capacity of the Group has been restricted and a suitable mainstream
lending facility has not been made available.
Intention to divest Precision Machined Components ("PMC")
division
Further to the Company's announcement of 3 October 2023, the
Board has noted the continued improvement in oil and gas market
conditions which drove the much improved order intake and financial
performance of PMC in the second half of FY23. Considering the
current trading environment, improved outlook and positive
developments being made by PMC, the Board has decided that the
timing is now favourable to realise value through the divestment of
the PMC division.
The Group has appointed advisors to handle the sale process
which it expects to launch in November 2023. The sale process is
expected to run for approximately 6 months into the third quarter
of the financial year ending 30 September 2024 ("FY24").
Group Funding Requirement
The Group currently has available cash resources of
approximately GBP0.7 million, in addition to the debt facilities
noted above.
The sale of PMC is expected to deliver material cash proceeds
for the Group in the third quarter of FY24 which will underpin a
strong and stable financial position from which to transition
Chesterfield Special Cylinders into new UK defence, global defence
and hydrogen programmes during the remainder of FY24 and
beyond.
However, during the intervening period the cash position of the
Group is expected to tighten as a result of the final repayment
commitment to Lloyds of GBP0.9 million in December 2023 and reduced
activity levels around the Christmas shutdown.
The Group has therefore identified a short-term funding
requirement of up to GBP1.5 million to bridge the finances of the
Group to a sale of the PMC division.
New Term Loan Facility
The Group has arranged the proposed new Facility with Harwood
Capital LLP, as Investment Adviser to Rockwood Strategic plc (who
hold a 20.0% shareholding in the Company), and Peter Gyllenhammar
AB (who hold a 16.8% shareholding in the Company).
The Facility will provide GBP1.5 million on drawdown and will be
used to repay Lloyds, pay transaction expenses and provide working
capital headroom. The Facility is committed for a 5 year period and
is secured against the assets of the Group.
The Facility is subject to full capital repayment over the 5
year term with GBP0.5 million repayable in FY24, GBP0.25 million
repayable in October 2025 and GBP0.25 million repayable annually
thereafter to expiry in October 2028. An arrangement fee of 3% is
payable to the Lenders on drawdown and the Facility carries an
interest rate of 14.25% per annum. The Facility may be repaid at
any time by the Group without prepayment charges or penalties. Upon
a successful sale of the PMC division, the Facility will be repaid
in full.
In conjunction with the provision of the Facility, the Lenders
will also be issued with 1,933,358 warrants in aggregate
(representing 5% of the issued share capital) to subscribe for
ordinary shares in the Company ("the Warrants") at a price of 32
pence per share, representing a 20% premium to yesterday's closing
share price. The Warrants may be exercised at any time in the 5
years following drawdown of the Facility and continue to be
exercisable in the event the Facility is repaid before its final
expiry.
The Company and the Lenders expect to complete legal
documentation required for the Facility during November 2023.
Related Party Transaction
The Lenders are each substantial shareholders in the Company and
Richard Staveley, Non-Executive Director of the Company, is a board
representative of Harwood Capital LLP, investment manager of
Rockwood Strategic plc. The provision of the Facility, and the
associated grant of the Warrants, constitutes a related party
transaction pursuant to AIM Rule 13.
The Directors independent of the transaction (being all
Directors other than Richard Staveley), having consulted with the
Company's nominated adviser, Singer Capital Markets, consider that
the terms of the Facility and the grant of the Warrants are fair
and reasonable insofar as shareholders are concerned.
Chris Walters, Chief Executive of Pressure Technologies plc,
commented:
"We appreciate the strong support from two of our major
shareholders, demonstrated through this funding solution,
confirming their confidence in the Group's prospects whilst we
realise value from the sale of the PMC division in improving oil
and gas market conditions."
Additional Information
The person responsible for arranging release of this
announcement on behalf of the Company is Steve Hammell, Chief
Financial Officer.
(1) Harwood Capital LLP is the investment manager of Rockwood
Strategic plc.
For further information, please contact:
Pressure Technologies plc Tel: 0333 015 0710
Chris Walters, Chief Executive
Steve Hammell, Chief Financial
Officer
Singer Capital Markets (Nomad Tel: 0207 496 3000
and Broker)
Rick Thompson / Asha Chotai
Houston (Financial PR and Investor Tel: 0204 529 0549
Relations) pressuretechnologies@houston.co.uk
Kay Larsen / Ben Robinson
COMPANY DESCRIPTION
www.pressuretechnologies.com
With its head office in Sheffield, the Pressure Technologies
Group was founded on its leading market position as a designer and
manufacturer of high-integrity, safety-critical components and
systems serving global supply chains in oil and gas, defence,
industrial and hydrogen energy markets.
The Group has two divisions:
-- Chesterfield Special Cylinders (CSC) - www.chesterfieldcylinders.com
-- Precision Machined Components (PMC) - www.pt-pmc.com
o Includes the Al-Met, Roota Engineering and Martract sites.
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