Ishs $ Sd Corp Share News (SDIG)

only be paid if and to the extent permitted by applicable law; · the obligation to pay the Contingent Consideration will remain a non-interest bearing and unsecured obligation of FSU Investments, and accordingly, in the event Contingent Consideration becomes payable and there is a default in payment, on insolvency of the FSU Investments or otherwise, SDI shareholders will rank as unsecured creditors only in respect of their entitlement to Contingent Consideration; · there can be no guarantee that SDI shareholders will receive any payment of Contingent Consideration; · Contingent Consideration, if any, would be paid to accepting shareholders and there is no mechanism that will enable payments to be made to any other person (save in the event of the death of an accepting shareholder, as set out in Part III of Appendix A); and · The Independent Directors will be appointed to oversee the payment of any Contingent Consideration to SDI Shareholders. SDI has entered into a legally enforceable agreement with FSU Investments to this effect, pursuant to which FSU Investments has undertaken to: o ensure that all intercompany money due to be paid to PEP in the period from the date on which the Offer is declared unconditional in all respects up to the date that the PEP Application is made will be paid in the normal course of business and not unreasonably withheld; o use all reasonable endeavours to collect all third party debts due at that time; o make available all cash resources within SDI to PEP from other group companies to the extent possible and not to be unreasonably withheld, to mitigate any shortfall that may exist; o allow the Independent Directors in their role of 'supervisors' of this process to have access to all cash reports, on a weekly and monthly basis, cash forecasts by SDI and PEP, and any correspondence between the bank and any SDI Group Company; and o use all reasonable endeavours to recover the Bonded Cash and thereafter ensure funds are advanced to FSU Investments so that the Contingent Consideration can be paid. 3. Recommendation All matters relating to the Offer have been considered by the Independent Directors. The Independent Directors are Mark McMenemy, Steve Butler and Richard Arkle. The Independent Directors are not connected with FSU Investments and have taken responsibility for considering the Offer on behalf of SDI Shareholders. Steve Butler is one of the Independent Directors notwithstanding that he will continue in his current role with SDI following completion of the Offer. There will be no changes made to Steve Butler's role or the terms and conditions of his service contract as a result of the Offer. Gordon Smith cannot be treated as an independent director of SDI by reason of his involvement with FSU Investments in the making of the Offer. Cenkos is acting as financial adviser to SDI. The Independent Directors, who have been so advised by Cenkos, consider the terms of the Offer to be fair and reasonable. In providing its advice to the Independent Directors, Cenkos has taken into account the Independent Directors' commercial assessments. Accordingly, the Independent Directors unanimously recommend SDI Shareholders to accept the Offer and Independent Shareholders to vote in favour of the Resolution, as the Independent Directors and their connected parties have irrevocably undertaken (or in the case of Richard Arkle intend) to do in respect of their entire holdings, which in aggregate amount to 328,043 SDI Shares, representing approximately 0.30 per cent. of the existing issued share capital of SDI. 4. Irrevocable undertakings The Independent Directors (other than Richard Arkle) have given FSU Investments irrevocable undertakings to accept, or (where applicable) to procure the acceptance of, the Offer, and to vote, or (where applicable) to procure that the registered holder votes, in favour of the Resolution, in respect of all of their respective beneficial holdings of SDI Shares, amounting, in aggregate, to 228,043 SDI Shares, representing approximately 0.21 per cent. of the existing issued share capital of SDI. These undertakings will continue to be binding even in the event of a higher competing offer for SDI, unless the Offer lapses or is withdrawn. The Management Team have each given FSU Investments (i) irrevocable undertakings to accept the Offer in respect of all of their respective beneficial holdings, amounting, in aggregate, to 28,538,993 SDI Shares, representing approximately 26.12 per cent. of the existing issued share capital of SDI; (ii) irrevocable undertakings to waive any right that they might have to the Contingent Consideration; and (iii) irrevocable instructions to FSU Investments to apply the aggregate cash consideration that they would otherwise be entitled to receive in respect of such beneficial holdings (taking account of the fact that they have each waived any entitlement that they might have to Contingent Consideration) in subscribing for ordinary shares of ten pence each in the share capital of FSU Investments. These undertakings will continue to be binding even in the event of a higher competing offer for SDI, unless the Offer lapses or is withdrawn. FSU Investments has also received irrevocable undertakings to accept the Offer and to vote, or (where applicable) to procure that the registered holder votes, in favour of the Resolution, in respect of a further 10,500,000 SDI Shares, representing, in aggregate, approximately a further 9.61 per cent. of SDI's existing issued share capital. FSU Investments has received non-binding letters of intent to accept the Offer, and to vote in favour of the Resolution at the General Meeting, in respect of a total of 7,262,957 SDI Shares, representing, in aggregate, approximately a further 6.65 per cent. of SDI's existing issued share capital. In addition, FSU Investments has received irrevocable undertakings not to accept the Offer in respect of a further 23,075,605 SDI Shares, representing, in aggregate, approximately a further 21.12 per cent. of the existing issued share capital of SDI. These undertakings will continue to be binding even in the event of a higher competing offer for SDI, unless the Offer lapses or is withdrawn. In summary, FSU Investments has received, in aggregate: · irrevocable undertakings and non-binding letters of intent to accept the Offer in respect of 46,529,993 SDI Shares, representing approximately 42.37 per cent. of the existing issued share capital of SDI; · irrevocable undertakings not to accept the Offer in respect of 23,075,605 SDI Shares, representing, in aggregate, approximately 21.12 per cent. of the existing issued share capital of SDI; and · irrevocable undertakings and non-binding letters of intent to vote in favour of the Resolution at the General Meeting in respect of a total of 69,605,598 SDI Shares, representing, in aggregate, approximately 63.70 per cent. of the existing issued share capital of SDI. Further details of the irrevocable undertakings are set out in Appendix C. 5. Background to and reasons for recommending the Offer SDI is a specialist in the design, build and support of warehouse handling systems in the international retail and order fulfilment sectors. The SDI Group provides consultancy services and designs its customers' warehousing and distribution systems with end products including sortation and picking systems, automated retrieval systems and conveyor systems, together with the supporting IT infrastructure. The SDI Group's main operations are in the UK and Germany with a presence in France, Italy, Spain, and the Netherlands. SDI was admitted to trading on AIM in July 2007 for the purpose of using Admission to further its strategy to: · raise its corporate profile; · consolidate the Group under a listed holding company; · gain an attractive acquisition currency and grow the business internationally; and · attract, retain and incentivise key management. It was also anticipated that SDI would pay dividends from profits generated after Admission. At the time of Admission the SDI directors were of the opinion that the market in which SDI operated was likely to continue to grow and that SDI would benefit from this growth. At the same time, the directors had a number of strategic plans to enhance the expansion of the SDI Group's business. Following Admission the global economy was severely affected by the worldwide economic crisis and trading in SDI's UK, US and other subsidiaries materially declined. The SDI Group's main customer base of corporates in the retail sector saw significant declines in their turnover and profitability and this resulted in reductions, cancellations and delays in capital spend which in turn adversely affected the pipeline of orders, profitability and cash flow of SDI. SDI sold its loss making US subsidiary and Chilean business in December 2008 so as to stabilise the Group from a cash flow perspective. As stated in SDI's preliminary results for the year ended 31 March 2010 released today, revenues were GBP32.070m, loss before tax pre-exceptional items of GBP1.143m and a loss before tax post-exceptional items of GBP18.776m. The exceptional loss of GBP17.633m is largely due to a write down of the carrying value of goodwill attributed to the SDI subsidiaries, but also from a default on payments on a completed project and some non-recurring issues. This compares with the sixteen month period ended 31 March 2009 in which SDI had revenues of GBP53.145m, loss before tax pre-exceptional items of GBP495k and a (MORE TO FOLLOW) Dow Jones Newswires July 16, 2010 02:00 ET (06:00 GMT)