4 Aug 2016 07:00
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM ANY JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF LOCAL APPLICABLE SECURITIES LAWS OR REGULATIONS
Aggregated Micro Power Holdings plc
("AMP", the "Company" or the "Group")
Fundraising & Acquisitions
Further to the announcement of 30 June 2016, Aggregated Micro Power Holdings plc (AIM: AMPH), which specialises in the sale of wood fuels and the development of distributed energy projects, is pleased to announce a £5 million fundraising and vendor subscription in connection with the proposed acquisitions of the entire issued share capital of Midlands Wood Fuel Limited ("Midlands Wood Fuel") and of the wood fuels customer base of Mi-Generation Limited ("Mi-Generation") (together the "Acquisitions"). The fundraising comprises a placing of ordinary shares of 0.5 pence each ("Ordinary Shares") at 66.5 pence (the "Issue Price") per Ordinary Share to raise gross proceeds of £1.535 million (the "Placing") and a subscription of £3.47 million nominal of convertible loan notes (the "Convertible Notes") at par (the "CLN Issue") (the Placing and the CLN Issue together, the "Fundraising").
Highlights
- Placing to raise gross proceeds of £1.535 million at 66.5 pence per Ordinary Share using existing authorities
- CLN Issue of £3.47 million nominal of Convertible Notes using existing authorities
- Proposed acquisition of Midlands Wood Fuel, a wood fuels supplier to North and Central England
- Proposed acquisition of Mi-Generation's wood fuels customer base, a Cornwall based supplier of wood fuels
Richard Burrell, Chief Executive of Aggregated Micro Power Holdings plc, said:
"We are delighted to announce this fundraising together with the acquisitions of these two wood fuels businesses which follow the acquisition of Forest Fuels earlier this year. On completion of the Acquisitions we will have a national presence in wood fuels offering both wood chip and wood pellet to end customers. The fundraising has been closed post the Brexit vote and we are confident of achieving further growth in our fuels and projects businesses throughout the UK."
About the Acquisitions
The Company has entered into a sale and purchase agreement to acquire Midlands Wood Fuel ("SPA"), a profitable premium grade wood fuels supplier. In its draft statutory unaudited consolidated accounts for the year ended 31 March 2016, Midlands Wood Fuel delivered turnover of £3.22 million and profit before interest and tax of £0.173 million. The consideration due is £1.4 million plus repayment of debt of £0.91 million, comprising £2.31 million to be subscribed by the sellers in the CLN Issue. For a period of 12 months from completion of the acquisition, the sellers of Midlands Wood Fuel have agreed not to transfer £1.155 million nominal of Convertible Notes (save in limited circumstances). The SPA includes a locked box mechanism running from 31 March 2016 and warranties and a tax indemnity from the sellers in favour of AMP which are subject to customary limitations on liability. The Midlands Wood Fuel acquisition is expected to complete at Admission.
The Company has entered into an asset purchase agreement to acquire the Mi-Generation wood fuels customer base ("APA"). Mi-Generation's wood fuels customer base delivered turnover in the year ended 31 March 2016 of £1.886 million (unaudited) and profit before interest and tax of £0.294 million based on an estimated margin of 15.5 per cent.. The consideration due is up to a total of £0.75 million in cash, with the first instalment of £300,000 payable on completion of the acquisition being subject to novation of an agreed list of contracts, and the total consideration is subject to future customer volumes. The completion of the Mi-Generation acquisition is expected to occur shortly after Admission on conclusion of the process of novating customer contracts from Mi-Generation to AMP. The APA also includes a mechanism which would allow the acquisition consideration to be reduced in the event that not all customer contracts can be novated.
Strategic Rationale for the Acquisitions
Following the acquisition earlier in 2016 of Forest Fuels Holdings Limited and the proposed acquisitions of Midlands Wood Fuel and the customer base of Mi-Generation, AMP's strategy is to focus on selling wood chip and wood pellet to end customers throughout the UK.
The Directors believe that these acquisitions will accelerate AMP's growth by providing a market leading distribution capability in wood fuels. The three businesses provide AMP with a platform of regional depots on which to seek installations of new biomass boilers in customer locations around its depot sites as AMP continues to develop its small-scale biomass boiler projects which it has been successful in selling to AMP Infrastructure Limited ("AMPIL"). Under the terms of its contract with AMPIL, AMP receives an upfront 10 per cent. development fee on each project and when AMPIL Loan Notes are repaid, AMP is entitled to receive 100 per cent. of the excess returns in the form of deferred development fees.
The UK heating market for wood chip boilers benefiting from the Renewable Heat Incentive is estimated by AMP to amount to 700,000 tonnes per annum and the market for wood pellet boilers is estimated to be in excess of 450,000 tonnes per annum. AMP expects both of these markets to grow by in excess of 5 per cent. per annum and at present, AMP estimates that its enlarged pro-forma market share is in excess of 8 per cent. in both markets.
The Directors believe that the combined group's wood fuels customer base can be grown by a combination of organic growth and further in-fill acquisitions in strategic locations.
Details of the Placing and Total Voting Rights
Pursuant to the Placing, the Company will issue 2,308,272 new Ordinary Shares (the "Placing Shares") at the Issue Price. Application has been made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM and Admission is expected to occur on 8 August 2016. The Placing Shares will rank pari passu in all respects with the existing Ordinary Shares.
The Placing is conditional, inter alia, upon the engagement letter with finnCap not having been terminated, and the SPA having become unconditional in all respects, and admission of the Placing shares having occurred by no later than 8 August 2016 (or such time and date as the Company and finnCap may agree, being not later than 31 August 2016). The Placing is not being underwritten.
Following Admission, the Company's enlarged issued share capital will comprise 31,192,774 Ordinary Shares. The Company holds no Ordinary Shares in treasury, therefore the total number of voting rights in the Company will be 31,192,774.
This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.
Use of proceeds
The Fundraising is expected to raise, in total, gross proceeds of approximately £2.695 million (before commission and expenses), together with an additional £2.31 million of Convertible Notes being subscribed for by the sellers of Midlands Wood Fuel.
The net proceeds of the Placing and the CLN Issue (after commission and expenses) will be used to fund the initial cash requirements under the APA and for growth working capital and operating costs of the enlarged AMP group.
The Convertible Notes Issue
The CLN Issue is for £3.47 million nominal. The CLN Issue includes subscriptions for Convertible Notes by the sellers of Midlands Wood Fuel for an aggregate nominal amount of £2.31 million.
The Convertible Notes are expected to be issued on 8 August 2016. The Convertible Notes will rank pari passu to those convertible notes issued by the Company in March 2016. The Convertible Notes have a five year term, with an 8 per cent. coupon per annum, paid quarterly in arrears. The Convertible Notes will have a conversion price equal to the higher of 70 pence per Ordinary Share and a 30 per cent. premium to the average closing mid-market price of an Ordinary Share for the 30 trading days prior to the date of issue of the Convertible Notes. The Company can redeem the Convertible Notes at par after 24 months or the Convertible Note holder can convert the Convertible Notes into Ordinary Shares. The Convertible Notes will be listed on Channel Islands Securities Exchange.
Related Party Transactions
The participation of Lansdowne Partners (UK) LLP, as a substantial shareholder in the Company, in the Placing constitutes a related party transaction under the AIM Rules for Companies (the "Related Party Transaction"). The Directors consider, having consulted with finnCap, the Company's nominated adviser, that the terms of the Related Party Transaction are fair and reasonable insofar as shareholders of the Company are concerned.
The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
Enquiries:
Aggregated Micro Power Holdings plc www.ampplc.co.uk
Richard Burrell, CEO Tel: 020 7382 7800
Neil Eckert, Executive Chairman
finnCap Ltd (NOMAD & Broker) Tel: 020 7220 0500
Ed Frisby/Simon Hicks (corporate finance)
Stephen Norcross (corporate broking)
Haggie Partners (Financial PR) Tel: 020 7562 4444
Peter Rigby/Brian Norris
Notes to Editors:
About Aggregated Micro Power Holdings plc
The AMP Group was established to develop, own and operate renewable energy generating facilities. It specialises in the sale of Wood Fuels and in the installation of distributed energy projects. AMP's wholly owned subsidiary Forest Fuels sells high quality wood chip and wood pellet to end customers throughout the UK, while its projects division installs biomass boiler and biomass CHP systems for a wide range of applications and customers. AMP is also active in developing projects for stand-by power generation facilities which aim to balance the transmission grid at times of peak demand.
IMPORTANT NOTICES
This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will", or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the Directors' current intentions, beliefs or expectations concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth, strategies and the Company's markets. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual results and developments could differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements in this announcement are based on certain factors and assumptions, including the Directors' current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's operations, results of operations, growth strategy and liquidity. Whilst the Directors consider these assumptions to be reasonable based upon information currently available, they may prove to be incorrect. Save as required by law or by the AIM Rules for Companies, the Company undertakes no obligation to release publicly the results of any revisions to any forward-looking statements in this announcement that may occur due to any change in the Directors' expectations or to reflect events or circumstances after the date of this announcement.
finnCap Ltd ("finnCap") which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting for the Company and no one else in connection with the Placing and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to the Placing and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing or any matters referred to in this announcement.
Apart from the responsibilities and liabilities, if any, which may be imposed on finnCap by the Financial Services and Markets Act 2000 or the regulatory regime established thereunder, finnCap does not accept any responsibility whatsoever for the contents of this announcement, and makes no representation or warranty, express or implied, for the contents of this announcement, including its accuracy, completeness or verification, or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company or the Placing Shares or the Placing, and nothing in this announcement is or shall be relied upon as, a promise or representation in this respect whether as to the past or future. finnCap accordingly disclaims to the fullest extent permitted by law all and any liability whether arising in tort, contract or otherwise (save as referred to above) which it might otherwise have in respect of this announcement or any such statement.