Andalas Energy & Power Regulatory News (ADL)

15 Feb 2006 07:01

AdVal Group PLC15 February 2006 AdVal Group plc ("AdVal") Acquisition of Maxim Learning Ltd ("Maxim") Following the announcement issued on 25 January 2006, AdVal announces that ithas entered into a sale & purchase agreement for the acquisition of the whole ofthe share capital of Maxim (the "Acquisition") for a consideration of 65,658,000new AdVal ordinary shares. The consideration shares will represent 45 per cent.of the enlarged share capital of AdVal. Takeover Code Whitewash The Acquisition is not considered to be a "reverse takeover" for the purpose ofthe AIM Rules, but it is conditional upon, inter alia, shareholder approval. Theowners of Maxim, Root Capital LLP ("Root Capital"), will own more than 30 percent. of the enlarged share capital of AdVal. The partners of Root Capital,Simon Philips and Edward Mallinckrodt, are regarded as acting in concert withRoot Capital for the purposes of the City Code on Takeovers and Mergers (the"City Code"). The Company is consequently seeking a waiver of Rule 9 of the CityCode, which would otherwise require the concert party to offer to acquire thoseAdVal ordinary shares that they do not own following completion of theAcquisition. A proposal seeking Shareholder approval for such a waiver is,therefore, being sought at an Extraordinary General Meeting of the Company("EGM") convened for 13 March 2006. Conversion of Convertible Unsecured Loan Stock The Acquisition is also conditional upon all the existing Convertible UnsecuredLoan Stock in AdVal ("CULN") being converted into an aggregate of 45,749,081 newAdVal ordinary shares prior to the Acquisition. Because the CULN Holders arebeing required to convert their CULN early, thereby giving up their rights tointerest payments and their preferential position as creditors of the Companyrather than as equity investors, the Board and a majority of the CULN Holdershave irrevocably agreed that the conversion terms of the CULN will be modifiedprior to completion of the Acquisition to allow the conversion rate of all ofthe CULN into Ordinary Shares at a conversion price of 2p, as opposed to the2.75p conversion price contained in the original CULN Loan Note Instruments. Asthe effect of the modification of the conversion rate in the CULN and CULN LoanNote Instruments in this manner will mean that the Company will need to issue agreater number of Ordinary Shares on conversion of those CULN at the lowerconversion rate of 2p, the creation and allotment of the necessary additional12,477,022 Ordinary Shares comprising part of the Conversion Shares alsorequires the sanction of Shareholders at the EGM. Related Parties Transaction In addition, as all of the Directors are also CULN Holders, conversion of theCULN at the lower conversion rate constitutes a related parties transaction forthe purposes of the AIM Rules. The total principal amount of the CULNs in issueamounts to £914,981.63, of which the Directors collectively hold £30,045 inprincipal amount, equivalent to approximately 3.3 per cent. of the outstandingprincipal amounts of CULNs in issue. The Directors' interests in CULNs and theprincipal amounts held are as follows: (i) Dr Lars Ahrell £19,955 (ii) Peter Bonfield £5,000 (iii) Richard Horsley £2,035 (iv) John Hustler £3,025 Since all of the Directors are CULN Holders, for the purposes of the relatedparty provisions of the AIM Rules there are no independent Directors in relationto the related party aspects of the Acquisition insofar as it relates to theconversion of the CULNs. The Directors nevertheless consider, having consultedwith Shore Capital and Corporate Limited, the Company's Nominated Adviser, thatthe revised lower conversion rate of the CULNs is fair and reasonable insofar asAdVal shareholders are concerned. In arriving at this view, the Directors havetaken into account the current and future needs of the Company's business. Inarriving at its view, Shore Capital and Corporate Limited has taken into accountthe Directors' commercial assessment of the situation. Business & Strategy The Acquisition represents an important step in AdVal's recovery. The enlargedgroup will have greater critical mass and the integration of the two businesseswill substantially reduce combined costs. The Acquisition brings an establishedbusiness with high quality new clients and skills into AdVal's core e-Learningbusiness, as well as adding to its portfolio of generic products. The Acquisition will substantially improve the balance sheet of the EnlargedGroup and will remove the significant ongoing burden of interest costs. A cashinjection by Root Capital into Maxim before the Acquisition will also fund thecosts of the transaction and provide additional working capital for the EnlargedGroup. Directors and Proposed Directors Upon completion of the Acquisition, Simon Philips and Edward Mallinckrodt willjoin the Enlarged Group Board as Non-Executive Directors and Timothy Critchley,currently Managing Director of Maxim, will join as an executive director. Significant Shareholder Root Capital controls the whole of the voting rights of Maxim's equity and,following completion of the Acquisition, will control 45 per cent. of the votingrights attaching to the enlarged share capital of the Company. Root Capital hasagreed that with effect from Admission, except in certain limited circumstances,Root Capital will not dispose of any interests in the securities of the Companywithin the six month period following the Acquisition. Such restrictions shallexpire six months following completion of the Acquisition, but thereafter RootCapital has agreed that it will except in certain limited circumstances besubject to orderly marketing arrangements until and including 31 December 2006whereby any disposals of securities in the Company must be made through thebrokers to the Company. Irrevocable undertakings Irrevocable undertakings to vote in favour of all of the resolutions at the EGMhave been received from all of the Directors in respect of their shareholdings(representing 0.7 per cent of the ordinary shares in issue) and from the holdersof 9,626,922 AdVal ordinary shares (representing 27.9 per cent of the ordinaryshares in issue). Irrevocable undertakings to convert their CULNs into newordinary shares of AdVal have been received from the holders of £912,507 CULNS(representing 99.7 per cent of the CULN in issue). Circular A Circular has been posted to shareholders setting out full details of theproposed acquisition and calling the EGM which the necessary Resolutionsapproving the transaction will be presented. Enquiries: AdvalLars Ahrell, Chairman 01296 388100Richard Horsley, Finance Director Maxim 020 7248 2693Simon Philips This information is provided by RNS The company news service from the London Stock Exchange