Active Energy Regulatory News (AEG)

6 Jun 2007 13:35

Buckland Group PLC06 June 2007 Buckland Group plc ("Buckland" or the "Company") Placing of up to 12,857,142 New Ordinary Shares, Proposed share capitalreorganisation, Proposed Change of Name, Conversion of Loan Notes, Acquisitionof Gasignition limited, Board Changes, Exchange of Loan Notes and outstandingdebt for shares and Notice of Extraordinary General Meeting The Board of Buckland is pleased to announce today that it proposes to raise upto £900,000 through a placing ("Placing") of up to 12,857,142 new ordinaryshares of 1p each ("New Ordinary Shares") at 7p per share (equivalent to 0.07pence per existing ordinary share of 0.01p each ("Existing Ordinary Share")) andthat it has received placing applications from investors for £600,000 under thePlacing, conditional only on admission. The Company also proposes to acquireGasignition Limited, a number of board changes, a share capital reorganisation,the exchange of loan notes and debt for New Ordinary Shares and a proposedchange of name. DETAILS OF THE ACQUISITION The Company has agreed to acquire Gasignition Limited, which was established in2006 by Mr Palmer and Mr Sharples and acquired the gas igniter business from theadministrators of Buccleuch Engineering in September 2006. The objective hadbeen for Gasignition to acquire the business from the administrators ofBuccleuch Engineering with the intention to integrate Gasignition into theBuckland Group when funds became available. Gasignition products are already being sub-contract assembled in Buckland's Thaifactory. They are sold to gas boiler and industrial customers and the businessis highly synergistic with Buckland's existing business. As at 30 April 2007Gasignition had gross assets of £190,382 and as at 31 March 2007 made a loss of£8,352. Under the sale agreement dated 6 June 2007 between the Company (1) and MrPalmer, Mr Sharples and Consortia Trustees Limited (as trustee of the PhilipPalmer Trust) (the "Vendors") (2), the Company has agreed to acquire the entireissued share capital of Gasignition for a consideration valued at £150,000 whichis to be satisfied in full by the issue to the Vendors of 2,142,857 New OrdinaryShares of the Company at an issue price of 7 pence per share. Mr Palmer andMr Sharples will have converted all of their loans to Gasignition, totalling£100,000, into shares of Gasignition prior to the acquisition. The acquisition of Gasignition by the exchange of the shares of Gasignition heldby the Vendors, two directors of the Company, for Ordinary Shares of the Companyqualifies as a related party transaction under the AIM Rule 13. Mr Christopher Foster and Mr Kevin Baker, the independent directors of theCompany, having consulted with Seymour Pierce, the Company's Nominated Adviser,consider that the terms of the acquisition are fair and reasonable insofar asthe Shareholders are concerned. DETAILS OF THE PLACING The Company is proposing to raise approximately £900,000 (before expenses) through a conditional placing of 12,857,142 New Ordinary Shares ("Placing Shares")at 7 pence per share (equivalent to 0.07 pence per Existing Ordinary Share). Atthe date of this document, placing applications have been received frominvestors to subscribe for 8,571,428 Placing Shares at the Placing Priceconditional only on Admission to raise £600,000. The Placing remains open until25 June 2007, to enable those prospective investors that have not yet completedtheir placing applications to do so in respect of the balance of the PlacingShares. The placing applications that have been received are sufficient to meetthe minimum funding requirement of the Placing, which will proceed whether ornot further applications are received for the full amount that is being sought. Philip Palmer has applied for 278,571 Placing Shares at a total Placing Price of£19,500 and Christopher Foster has applied for 1,557,143 Placing Shares at atotal Placing Price of £109,000. Application will be made to the London Stock Exchange for admission of thePlacing Shares to trading on AIM. Dealings in the Placing Shares are expected tocommence on 2 July 2007. USE OF PROCEEDS The proceeds of the placing will be used to pay overdue creditors, allow extrastock to be made so that the currently expensive air-freighting can beeliminated, and leave a cash surplus for additional working capital. This willenable currently high financing costs to be reduced and better terms fromsuppliers to be negotiated. It will also provide a platform to make a furtheracquisition(s) without recourse to further fund raising. EXCHANGE OF LOAN NOTES AND OUTSTANDING DEBT FOR SHARES Buckland has total outstanding loans and accrued interest amounting to about£530,000, plus about £150,000 of overdue corporate creditors. The Board believesit is in Shareholders' best interests to exchange a substantial proportion ofthis indebtedness into New Ordinary Shares at the Placing Price. Agreement hasbeen reached with creditors for about £510,000 of this outstanding indebtednessto be applied in subscribing for an aggregate of 7,285,714 New Ordinary Sharesat a price of 7p per share on completion of the Proposals. Of the creditors undertaking the debt for equity swap, £30,100 is owed to LeonSharples and is therefore to be treated as a related party transaction pursuantto the AIM Rules. In addition, it has been agreed that the amount of £28,000owed by the Company to Mr Sharples under the £125,000 12% 2006 Loan NoteInstrument of the Company will be converted into New Ordinary Shares at 7p pershare. The Directors (other than Mr Sharples), having consulted with theNominated Adviser, consider that the term of the proposed debt for equity swapwith Mr Sharples are fair and reasonable insofar as Shareholders are concerned. This equity for debt exchange, complied with the Placing will provide thefinancial stability of a substantially positive balance sheet net worth, withnegligible debt other than bank finance against trade debtors BOARD CHANGES The Board announces the appointment of Christopher Kenneth Foster and KevinBaker to the board of the Company. Christopher Kenneth Foster, Non-Executive Director (aged 57) Christopher was one of the founder directors of Chase Corporation plc in 1985,which were responsible for an acquisition programme which centred on thepurchase of five publicly listed companies which were subsequently acquired byTrafalgar House plc for £197 million in 1987, where he was retained as afinancial adviser. He became a director of Wiggins Group in 1993 and held boardresponsibility for corporate activities and investor relations. He resigned inMarch 2005. He has also held other directorships in both listed and unquotedcompanies. On 6 June 2007, the Company and Mr Foster entered into a letter of engagement,pursuant to which Mr Foster is to be appointed non-executive director of theCompany at an annual fee of £30,000. The appointment may be terminated by eitherparty on 12 months' written notice. Kevin Baker (aged 56) Kevin Baker graduated a Bachelor of Technology in Industrial Management andEngineering from the Massey University in New Zealand in 1974. He served as theChief Executive of Thai Universal Office Products Ltd from 1997 to 2005 duringwhich time he helped to increase the turnover of that company from 70 millionThai Baht to 430 million Thai Baht. Prior to that, Mr Baker had held managerialpositions with manufacturing and other companies. Kevin Baker took over as General Manager of the Thai factory in April 2005 andhas since transformed the operation of the factory. As all manufacturing is nowin Thailand it is entirely appropriate that he is elevated to the Board. The Company and Mr Baker are to enter into a service agreement on completion ofthe Proposals, pursuant to which Mr Baker will be employed on a full-time basisas an executive director of the Company. Mr Baker's salary is 200,000 Thai Bahtplus $US45,000 (approximately £60,300 per annum) plus benefits. The serviceagreement is to be terminable by either party on 3 months' written notice. In addition to directorship of the Company, Mr Foster holds or has held thefollowing directorships or has been partners in the following partnershipswithin the 5 years prior to the date of this document: Current directorships Past directorshipsChristopher Syndicated Minerals + Planestation Group PlcFoster Resources plc Manzanillo plc Charles F. Hunter (Leisure) Limited Wiggins Management Services Limited Tomorrows Leisure Limited Kent International Airport (Holdings) Limited Kent International Business Park Limited Duskwave Property Limited Wiggins Investments Limited Wiggins St Johns Limited London City Racecourse Limited Wiggins City Clubs Limited Planestation Limited Wiggins Fairfield Limited Manston Car Parks Limited Ken International Airport Limited Wiggins Castle Wharf Limited Wiggins Cathedral View Limited Project Ventures Limited Kent International Travel Limited Wiggins Leisure Limited C.S. Wiggins & Sons Limited Pool Garrett Builders Limited Wessex Builders Guild Limited Norham Investments Limited Emptico Limited Wiggins Estates Limited Norham Multi Leisure Limited Selltime Limited Gudgeon Construction Limited Wiggins Property Developments Limited Planestation Management Services Limited Planestation International Leasing Limited Kingsbury (Cinema) Limited Wiggins (Liverpool) SPV Limited Wiggins (Burford) SPV Limited Mr Foster was a Director of Planestation Group Plc ("Planestation") (formerlyWiggins Group Plc), a listed company, and certain of its subsidiaries until 22March 2005, Planestation and its subsidiaries went into administration in July2005 and liquidation in January 2007. As at July 2005 Planestation Group Plc hadbank borrowings of some £22 million. One of Planestation's subsidiaries, ManstonAirport Ltd, was subsequently sold for £17 million. There is no further information to be disclosed under Schedule 2 paragraph G ofthe AIM Rules in relation to either Mr Foster or Mr Baker. OPTIONS AND WARRANTS New option arrangements are to be introduced for the directors to recognisetheir contribution to the implementation of the proposals described in thisannouncement ("Proposals") and to provide an incentive to deliver an improvementin the value of the New Ordinary Shares. To this end the Company is to grant,subject to the Proposals, new options to the Directors. These options are tocarry the right to subscribe for New Ordinary Shares at the Placing Priceexercisable at any time in the period of ten years commencing on completion ofthe Proposals. The options cease to be exercisable 6 months after the personconcerned ceases to be a director of the Company for any reason. The NewOrdinary Shares to be issued under the options are to be adjusted oncapitalisation or on a restructuring of the share capital, but are not affectedby any further issues of shares. The options may not be transferred. These options are to be granted to the Directors in respect of the members ofOrdinary Shares shown opposite their respective names below: Name No. of New Ordinary SharesPhilip Palmer 857,142Kevin Baker 357,142Christopher Foster 357,142Leon Sharples 357,142 In addition to the option rights referred to above, the Board has determinedthat further options to subscribe for New Ordinary Shares are to be granted toMr Foster to recognise his efforts in assisting the Company in co-ordinating thePlacing. Mr Foster is not to be paid any fees in cash in this respect (in orderto conserve the cash resources of the Company), but rather will be granted anoption to subscribe for 500,000 New Ordinary Shares at 1p per share (so that thedifference between the exercise price and the Placing Price for the New OrdinaryShares the subject of this Option amounts to £30,000). This option is otherwiseon the same terms as the options granted to the Directors mentioned above. Mr Palmer took over responsibility as the Executive Chairman in February of thisyear and has continued to act in this capacity without additional remunerationas has Mr Sharples. In recognition of their contribution the Directors haveagreed to grant to Mr Palmer and to Mr Sharples additional options under whicheach of them is entitled to subscribe for 450,000 New Ordinary Shares at 1p pershare (so that the difference between the exercise price and the Placing Pricefor the New Ordinary Shares the subject of this option amounts to £27,000 ineach case). These options are otherwise on the same terms as those granted tothe Directors mentioned above. Share capital reorganisation The Board is concerned at the negative market sentiment regarding penny sharesand believes that many smaller investors have been deterred from dealingOrdinary Shares as a result of the high bid-ask spread (which is currently inthe region of 15 per cent). It is therefore proposed that every 100 ExistingOrdinary Shares be consolidated into one New Ordinary Share. Based on price of0.072 pence per existing Ordinary Share as at 4 June 2007 (the latestpracticable date before the posting of this document), this implies a price perNew Ordinary Share of about 7 pence.Unless your holding of Ordinary Shares is exactly divisible by 100, you will beleft with a fractional entitlement to the redesignated ordinary shares. Thesefractional entitlements will be aggregated and sold by the Company. Because theproceeds of the sale which would be due to each Shareholder will be so small(less than 7 pence), and the costs of issuing individual cheques to Shareholdersrelatively so great, the proceeds of the sale will be retained by the Companyand used to offset the cost of undertaking the Share Capital Reorganisation.New share certificates will be issued following the Share Capital Reorganisationrepresenting the New Ordinary Shares or in the case of uncertificated holders,CRESTCO Limited will be instructed to credit the CREST participant's accountwith the New Ordinary Shares.The New Ordinary Shares will have the same rights as those currently accruing tothe Existing Ordinary Shares under the Company's Articles of Association,including those relating to voting and entitle the way in which Shareholders buyor sell Ordinary Shares has not been affected by the approval of the proposalsset out in this document.Shareholders or prospective investors in the Company should consult theirprofessional advisers on whether an investment in an AIM security is suitablefor them, or whether the tax treatment of shares traded on AIM is suitable forthem, in both cases dependent on their personal circumstances. CHANGE OF NAME The Directors propose that the name of the Company be changed to "Cinpart plc" extraordinary general meeting A circular, including Notice convening an Extraordinary General Meeting of theCompany at which the Resolutions will be proposed to restructure the sharecapital of the Company and to change the name of the Company, is being sent toshareholders today. EXPECTED TIMETABLE OF PRINCIPAL EVENTS Latest time and date for receipt of Form of Proxy 10:00 a.m. on 27 June 2007Extraordinary General Meeting 10:00 a.m. on 29 June 2007Latest time and date for dealings in Existing Ordinary 4.30 p.m. on 29 JuneShares 2007Record Date for Share Capital Reorganisation 5.00 p.m. on 29 June 2007Admission and Dealings in New Ordinary Shares expected 8.00 a.m. on 2 Julyto commence 2007Despatch of share certificates for New Ordinary Shares By 16 July 2007 Copies of the Circular will be available free of charge from the offices ofSeymour Pierce Limited, 20 Old Bailey, EC4M 7EN for one month from today. For further information please contact: Christopher Foster 07921 587 471Director John Depasquale Seymour Pierce Limited 020 7107 8010 This information is provided by RNS The company news service from the London Stock Exchange