ADT.L Regulatory News (ADT)

15 Feb 2006 08:00

AdEPT Telecom plc15 February 2006 15 February 2006 AdEPT Telecom - First Day of Dealings on AIM and Acquisition of Transglobal Telecommunications Limited AdEPT Telecom plc ("AdEPT Telecom" or "the Company"), a leading non-network, UKtelecom company that provides fixed-line calls, line rental and broadband tobusiness and residential customers in the UK, is pleased to announce itsflotation today on the Alternative Investment Market ("AIM") under the tickersymbol ADT.L. The placing will raise £8.2 million (before expenses) for the Company. The netproceeds of £7.4 million will be used to finance the acquisition of TransglobalTelecommunications Limited ("Transglobal") for £3 million with an additional,expected deferred consideration of £0.1 million payable on 31 July 2006. Theacquisition of Transglobal completed on 14 February 2006. The balance ofproceeds will be used to grow AdEPT Telecom by way of acquisition and repayshareholder loans of £0.5 million and bank debt of £2.9 million. Placing Statistics Placing Price 140pNumber of new Ordinary Shares being placed on behalf of theCompany 5,857,143Estimated net proceeds receivable by the Company £7.4mGross proceeds of Placing Shares £8.2mNumber of Ordinary Shares in issue immediately followingAdmission 21,067,443Market capitalisation following the Placing at the Placing Price £29.5m Background •AdEPT Telecom is a leading non-network, UK telecom company that provides fixed-line calls, line rental and broadband to business and residential customers in the UK under the AdEPT Telecom brand. The Company today, raised £8.2 million by way of a placing to institutional and other investors in the UK and Europe. AdEPT Telecom is focused on growing the business by way of acquisition and believes it is well positioned to acquire competitors in this market. The Company has a proven M&A track record and an effective integration process. •AdEPT Telecom primarily operates within the business services provider sector. The market for supplying fixed line calls and line rental to business customers is fragmented, comprising of approximately 600 fixed line resellers. Many of these companies have revenues of less than £2 million, which presents an opportunity for an experienced consolidator to offer an exit strategy to smaller players. •AdEPT Telecom was founded in early 2003 and commenced trading following acquisition of the assets of the indirect access division of Eurobell in June 2003. Since inception, AdEPT Telecom has successfully completed and integrated 11 acquisitions, including Transglobal. •AdEPT Telecom reported EBITDA of £1 million on turnover of £8.7 million in the year to 31 March 2005, and for the 6 months to 30 September 2005 generated EBITDA of £0.8 million on turnover of £4.81 million. The Company employs 23 staff at its office in Tunbridge Wells, Kent. Growth Strategy AdEPT Telecom intends to grow primarily by way of acquisition. The Company hasan effective integration process which allows the acquired business contracts tobe swiftly integrated and re-branded within 6 weeks of the date of ownership.Typical acquisition targets for future growth would come from a group of c600small-medium sized resellers currently in the market. (The Communications Market2005, Ofcom). AdEPT Telecom acquired Transglobal on 14 February 2006 for £3 million, with anadditional, expected deferred consideration of £0.1 million payable on 31 July2006. Transglobal is a fixed line telecom reseller based in Kent and providesvoice telephone services to approximately 2,700 business customers. During theten months ended 30 November 2005, 83% of Transglobal's revenues were generatedfrom fixed line telephone calls, 14% from WLR and 3%, from mobile services.AdEPT Telecom has only acquired certain contracts for fixed line calls, WLR,non-geographic numbers and any other recurring revenue items owned byTransglobal. The Company now employs three of Transglobal's existing employees.The acquisition of Transglobal is in line with AdEPT Telecom's strategic focus. The key strengths and principal elements for growth are: • AdEPT Telecom lies in a non-consolidated market, and many of its competitors have revenues of less than £2 million. An opportunity therefore exists for a well-financed trade buyer to act as a leading consolidator in this market. • AdEPT Telecom has a lean cost structure and efficient back-office systems. The Company is able to generate EBITDA margins on sales of approximately 20% from acquired assets. • AdEPT Telecom's Directors estimate that the Company's annualised turnover-per-employee of more than £667,000 per annum will be more than four times the industry average. This is the result of a lean cost structure, efficient back office systems and low capital expenditure. • The Company is also committed to growing organically through continued development of the Company's dealer channel. Roger Wilson, AdEPT Telecom's Chairman said: "The response we received from institutional investors was very positive. Thefunds raised enabled us to complete the acquisition of Transglobal and planahead for future acquisitions. Over the last 3 years, we have completed 11acquisitions, including Transglobal, and we are confident in matching this rategoing forward, thereby achieving our objective of becoming a leadingconsolidator in this market." -ENDS- Enquiries Adept Roger Wilson Tel: 01491 571120 Chairman Strand Partners Simon Raggett Tel: 020 7409 3494 Warren Pearce Teather & Greenwood Corporate Finance Tel: 020 7426 9000 Stephen Austin/ Simon Brown Sales Adam Pollock/ Alastair Rae/Richard Kirkham Cardew Group Tim Robertson Tel: 020 7930 0777 M: 07900 927650 Shan Shan Willenbrock David Roach DISCLAIMER Words and expressions used in this announcement shall have the same meaning asin the Company's admission document dated 14 February 2006 unless the contextrequires otherwise. A copy of the Admission Document is available free of charge from the offices ofTeather & Greenwood Limited, Beaufort House, 15 St Botolph Street, London EC3A7QR until one month after Admission. This announcement does not constitute or form any part of an offer or invitationto sell or issue, or any solicitation of an offer to purchase or subscribe for,any shares in AdEPT Telecom, nor shall it or any part of it or the fact of itsdistribution form the basis of, or be relied on in connection with, anycontract thereof. The contents of this announcement have not been approved byan authorised person and recipients of this announcement who intend to purchaseor subscribe for shares in AdEPT Telecom following its publication of anadmission document in final form are reminded that any such purchase orsubscription may only be made on the basis of the information contained in suchdocument (which may be different from the information contained in thisannouncement). Accordingly, no reliance may be placed for any purposewhatsoever on the information contained in this announcement or on itscompleteness. No representation or warranty, express or implied, is given byAdEPT Telecom, its directors, Strand Partners Limited, Teather & GreenwoodLimited, Cardew Group or any other professional adviser as to the accuracy orcompleteness of the information and opinions contained in this announcement andno liability is accepted for the same or for the omission of any information.The Ordinary Shares have not been and will not be registered under the U.S.Securities Act of 1933 (the 'Securities Act') and may not be offered or sold inthe United States or to a U.S. person (as such term is defined in Regulations Sunder the Securities Act) absent registration or an applicable exemption fromregistration under the Securities Act. Teather & Greenwood Limited which isregulated in the United Kingdom by the Financial Services Authority is actingsolely for the Company in connection with Admission and no one else. StrandPartners Limited has been appointed as nominated adviser, and Teather &Greenwood Limited as broker to the Company. Teather & Greenwood Limited will notregard any other person as its client or be responsible to any other person forproviding the protections afforded to clients of Teather & Greenwood Limited norfor providing advice in relation to Admission. This information is provided by RNS The company news service from the London Stock Exchange