Solid State Share News (SOLI)

(Alliance News) - Solid State PLC said on Tuesday it entered a conditional agreement to acquire Los Angeles-based battery systems manufacturer Custom Power LLC for a maximum of USD45.0 million.

The Worcestershire, England-based computing products manufacturer said an initial cash consideration of USD30.0 million will be paid on completion and a deferred consideration of USD10.0 million will be payable in two equal tranches at six and 12 months post-completion.

A further earn-out consideration of up to USD5 million is payable, subject to a revenue performance target of USD37.5 million on a 12-month basis, the company added.

In 2021, Custom Power generated revenue of USD29.8 million and underlying earnings before interest, tax, depreciation and amortisation of USD3.5million.

Solid State said it believes the acquisition will be earnings enhancing in its first full year, the company's financial year ending March 31, 2024.

The company has conditionally entered into new term loan facilities with Lloyds Bank, totalling GBP13 million, to part finance the initial consideration.

This comprises of GBP6.5 million repayable over five years and a GBP6.5 million of interest only loan committed for three years.

In addition, Lloyds Bank has also committed to provide two USD5.0 million standby letters of credit providing security over the deferred consideration.

These new facilities will sit alongside the company's existing bank facilities, including a GBP7.5 million revolving credit facility and a GBP3.0 million multi-currency overdraft.

Solid State also proposed an equity fundraise of GBP27.2 million, comprising a GBP25 million placing, a GBP2 million open offer, and a GBP150,000 directors' subscription.

The placing price is 1,025 pence per share, representing a 11% discount to the company's closing mid-market price of 1,145p per share on Monday.

Shares in Solid State closed up 4.9% at 1,201.00p on Tuesday in London.

The company said it expects to release is full-year results on July 26. Solid State said it expects revenue of GBP85 million and adjusted pretax profit of no less than GBP7.2 million for the year, unchanged from the guidance given in its trading update on April 21.

In the first quarter of its new financial year, Solid State reports a "strong start" with revenue and margins ahead of the equivalent period last year. Its order book at the end of May was GBP89.7 million.

By Heather Rydings; heatherrydings@alliancenews.com

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