Last checked at 17 Sep 2008 07:00
Avingtrans plc ("Avingtrans" or "the Company")
Placing
17 September 2008
Avingtrans is pleased to announce a conditional placing by KBC Peel Hunt on behalf of the Company with institutional and other investors of 7,000,000 new Ordinary Shares at price of 50 pence per share to raise £3.5 million (approximately £3.3 million after expenses).
Key points
For further information, please contact:
Avingtrans plc Tel: 0115 949 9020
Roger McDowell, Chairman
Stephen King, Finance Director
KBC Peel Hunt Tel: 020 7418 8900
(Nominated Adviser and Broker)
Julian Blunt
Daniel Harris
Hansard Group Tel: 020 7245 1100
Adam Reynolds
FORWARD LOOKING STATEMENTS
This announcement contains forward-looking statements, including, without limitation, statements containing the words "believes", "anticipates", "expects", and similar expressions. Such forward-looking statements involve unknown risks, uncertainties and other factors which may cause the actual results, financial condition, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, prospective investors are cautioned not to place any undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such forward-looking statements in this announcement to reflect future events or developments.
AVINGTRANS PLC
Placing
17 September 2008
1. Introduction
The Company is pleased to announce a conditional Placing of 7,000,000 new Ordinary Shares at 50 pence per Ordinary Share to raise £3.5 million before expenses. The issue of the Placing Shares will represent an increase of 39.7 per cent. in the issued ordinary share capital of the Company.
Shareholders will be sent a circular setting out the details of the Placing and notice of an Extraordinary General Meeting convened for 11.00 a.m. on 16 October 2008 on or around 18 September 2008.
2. Placing
The Company has conditionally raised £3.5 million, before expenses, by the issue of 7,000,000 new Ordinary Shares to institutional and other investors at 50 pence per share. Pursuant to the terms of the Placing Agreement, KBC Peel Hunt, as agent for Avingtrans, has agreed conditionally to use reasonable endeavours to place the Placing Shares with certain institutional and other investors.
The Placing is neither a rights issue nor an open offer and the Placing Shares will not be offered generally to shareholders on a pre-emptive basis. The Directors believe that the considerable extra cost and delay involved in a rights issue or open offer would not be in the best interests of the Company in the circumstances, and accordingly, the Board considers that it is in the best interests of the Company and shareholders as a whole for the funds to be raised through the Placing.
The Placing Price represents a discount of approximately 11.5 per cent. to the closing mid-market price of 56.5 pence per Ordinary Share on 16 September 2008, being the last dealing day prior to the date of this announcement.
The Placing Shares will represent approximately 28.4 per cent. of the enlarged issued share capital of the Company immediately following Admission (assuming none of the Company's outstanding Options are exercised).
The issue of the Placing Shares is conditional upon, inter alia, the passing of the Resolutions and their Admission. Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM and it is anticipated that dealings in the Placing Shares will commence on 17 October 2008.
3. Reasons for the Placing and Use of Proceeds
The anticipated £3.3 million net proceeds from the issue of Ordinary Shares will be spent on expansion of the Group's Sigma precision components business in Chengdu, central China.
The majority of the proceeds (£2.5m) will be used to purchase additional capital equipment to significantly increase the manufacturing capacity at Sigma, and the balance of the net proceeds will provide the Group with additional working capital to fund the anticipated growth.
The Group has invested in the establishment of a new, fully accredited manufacturing facility in Chengdu of approximately 35,000 sq.ft which commenced production in late 2006. The Directors are confident that the additional manufacturing capacity at Sigma will enable the Group to secure new contracts.
The major aerospace original engineering manufacturers ("OEMs") currently enjoy record order backlogs, despite the increase in fuel costs. The current order backlog of Boeing and Airbus is in excess of 7,500 aircraft, equivalent to almost eight years of production at current forecast 2008 build-rates. The recent Boeing Current Market Outlook 2008-2027 predicted 29,400 new commercial aircraft deliveries over the next 20 years, equating to straight line growth in deliveries of approximately 3.8% per annum.
The growth in aerospace precision component manufacture in China is driven by the increase in sourcing of components by western OEMs from low cost manufacturing economies plus an emerging Chinese aerospace developed to meet the anticipated growth in demand for aviation in Asia.
The Group is currently in discussions with multiple Tier 1 and Tier 2 aerospace component customers for volume orders and has received interest from major European and North American OEMs. In addition, the Group is also establishing commercial relationships with local Chinese Aerospace companies.
The Placing will allow the Company to build on its existing assets to further strengthen its position in its main global markets.
4. Directors' shareholdings
As at the date of this announcement, and immediately following the Placing and Admission, the Directors will have the following interests in Ordinary Shares:
| Name of Director/Proposed Director | Existing shareholding | Number of Placing Shares being subscribed for | Shareholding following the Placing | Percentage of share capital following the Placing |
| Roger McDowell | 1,373,900 | 800,000 | 2,173,900 | 8.8 |
| Stephen King | 40,000 | 10,000 | 50,000 | 0.2 |
| Jeremy Hamer | 84,500 | 20,000 | 104,500 | 0.4 |
| Peter Kenny | - | 40,000 | 40,000 | 0.2 |
| Stephen McQuillan | - | 40,000 | 40,000 | 0.2 |
5. Related Party
An existing substantial shareholder, Nigel Wray, who currently holds 2,497,433 Ordinary Shares representing 14.2 per cent. of the current issued share capital of the Company, has subscribed under the terms of the Placing and such participation constitutes a related party transaction within the meaning of the AIM Rules. By virtue of the Directors' participation as described above, KBC Peel Hunt as the Company's Nominated Adivser is required to, and does hereby, confirm that the terms of Mr Wray's subscription are fair and reasonable so far as Shareholders are concerned.
6. Recommendation
The Directors consider the terms of the Placing to be in the best interests of the Company and its shareholders as a whole. Accordingly, the Directors unanimously recommend shareholders to vote in favour of the Resolutions, as they intend to do in respect of their own beneficial holdings of Ordinary Shares which amount, in aggregate, to approximately 8.5% per cent. of the existing issued share capital of the Company.
The following definitions apply throughout this announcement, unless the context otherwise requires:
| "Act" or "Companies Act" | the Companies Act 1985 (as amended) |
| "Admission" | the admission of the Placing Shares to trading on AIM becoming effective in accordance with the AIM Rules |
| "AIM" | the AIM market of London Stock Exchange |
| "AIM Rules" | the AIM Rules for Companies and the AIM Rules for Nomads; |
| "AIM Rules for Companies" | the rules for AIM companies published by London Stock Exchange from time to time |
| "AIM Rules for Nomads" | the rules for nominated advisers published by London Stock Exchange from time to time |
| "Avingtrans' Shareholders" or "Shareholders" | holders of Ordinary Shares |
| "Board" or "Directors" | the directors of Avingtrans |
| "Company" or "Avingtrans" | Avingtrans plc (a company registered in England and Wales under the Companies Act with registered number 1968354) |
| "CREST" | the system for paperless settlement of trades and holdings of uncertificated shares administered and operated by Euroclear UK & Ireland Limited |
| "Extraordinary General Meeting" or "EGM" | the extraordinary general meeting of the Company at which the Resolutions will be proposed |
| "Form of Proxy" | the form of proxy for use at the Extraordinary General Meeting |
| "Group" | the Company, its subsidiaries and its subsidiary undertakings |
| "KBC Peel Hunt" | KBC Peel Hunt Ltd |
| "London Stock Exchange" | London Stock Exchange plc |
| "Options" | options granted by the Board over Ordinary Shares |
| "Ordinary Shares" | the ordinary shares of 5 pence each in the authorised share capital of Avingtrans |
| "Placing" | the conditional placing by KBC Peel Hunt pursuant to the Placing Agreement of the Placing Shares with investors at the Placing Price |
| "Placing Agreement" | the agreement relating to the Placing between the Company (1) and KBC Peel Hunt (2) |
| "Placing Price" | 50 pence per Placing Share |
| "Placing Shares" | 7,000,000 new Ordinary Shares the subject of the Placing |
| "Registrars" | Capita Registrars |
| "Resolutions" | the resolutions to be proposed at the EGM |
| "UK" or "United Kingdom" | United Kingdom of Great Britain and Northern Ireland |
| "United States" or "US" | the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia and all other areas subject to its jurisdiction |