BLTG.L Regulatory News (BLTG)

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, JAPAN, RUSSIA OR THE REPUBLIC OF SOUTH AFRICA OR ANY JURISDICTION IN WHICH SUCH PUBLICATION OR DISTRIBUTION IS UNLAWFUL

REGENERSIS PLC

("Regenersis" the "Company" or the "Group")

£100 MILLION FUND RAISING AND €60 MILLION ACQUISITION

Regenersis, a strategic outsourcing partner to many of the world's leading consumer technology companies, is pleased to announce the proposed €60 million acquisition of Blancco Oy Ltd (the "Acquisition") and a conditional placing to raise gross proceeds of £100 million. The placing was significantly oversubscribed.

Acquisition of Blancco Oy Ltd

The Board is pleased to announce that it has conditionally agreed to acquire all of the issued share capital of Blancco Oy Ltd and controlling stakes in its major sales offices (together comprising "Blancco"), for a consideration of approximately €60 million on a cash- and debt-free basis comprising approximately €58.7 million (£48.5 million) in cash and approximately €1.3 million (£1.1 million) in Consideration Shares.

Completion is anticipated to occur on 17 April 2014. 

Blancco is a global market leader by revenue and number of accreditations in the provision of data erasure software. It was founded in 1997, has approximately 130 employees, is privately owned by certain individual selling shareholders and headquartered in Finland. Blancco has been growing revenue at approximately a 25 per cent. compound annual rate over the period 2008-2013, and in year to 31 December 2013, Blancco and its major sales offices generated revenues of €12.3 million (unaudited based on management accounts), EBIT of €4.3 million (unaudited based on management accounts) and Blancco Oy Ltd had net assets of €5.7 million (unaudited based on management accounts) before fair value adjustments.

Blancco has a global presence with major sales offices in Finland, the United Kingdom, Germany and the United States and additional sales offices in Australia, Canada, France, Italy, Japan, Malaysia, Mexico, Russia and Sweden. Blancco currently has minority interests in certain of its sales offices and it is expected to have acquired controlling stakes in its major sales office immediately prior to completion of the Acquisition. Key customers include blue chip corporates, government organisations, and aftermarket operations and suppliers of telecoms operators and OEMs.

The Board believes that:

· Data erasure is an attractive market, which is expected to show strong growth over the next few years, and will complement Regenersis' Advanced Solutions business.

· New European legislation is due to come into force in 2015, and is likely to make it mandatory for some companies to appoint a data protection officer, to adopt and keep records of a process-based approach to data protection compliance; and to introduce fines for data breaches of up to 5 per cent. of annual worldwide turnover.

· Blancco is a leading player in the data erasure market, with a comprehensive set of third-party accreditations and overall superior portfolio of data erasure solutions.

· Data erasure represents (increasingly as new rules come into force) a large corporate risk but a very small cost - this suggests that Blancco's strong market position is likely to become increasingly valuable as clients seek credible options to deal with data erasure problems.

· Blancco's software development team and methodologies are of a high quality and its cloud-based technical infrastructure is scalable.

· Overall, Blancco's track record, reputation, client list, accreditation list, solutions portfolio, and software and IT competencies represent a compelling offering in a market that is expected to show strong growth.

Of the €60 million consideration paid for Blancco, €58.7 million will be funded through a placing of new shares. In addition, the CEO of Blancco has elected to receive newly issued Ordinary Shares, in an amount representing 2.13 per cent. of the total consideration for the Acquisition (being €1.3 million of the total consideration payable), in exchange for 5 per cent. of his stake in Blancco (with the remainder of the consideration due to him being payable in cash) and has undertaken not to dispose of the consideration he will receive in newly issued ordinary shares for 12 months following completion of the Acquisition. The CEO, who currently owns 42.58 per cent. of the shares of Blancco, will remain with the business. The initial consideration will be payable less the buy-out cost of un-owned interest in Blancco's sales offices immediately prior to the completion of the Acquisition and is subject to adjustment following completion to address any variations in net debt and working capital and to reflect verification of Blancco's unaudited 2013 EBIT. 

The Board believes that the Acquisition will provide:

· A new channel for recommerce (because instances of data erasure typically occur directly before the sale and remarketing of an end of life device).

· A new way to leverage the Regenersis global sales team and its relationships with major global mobile operators and OEMs, supplementing a locally-driven sales approach.

· A one stop solution to Regenersis' existing repair clients for accredited repair/refurbishment and erasure solutions.

The Board believes that these factors will enable the Group to achieve improvements in operating margin and enhance the Group's long term growth prospects.

Placing

The Board is pleased to announce that Regenersis has conditionally raised gross proceeds of £100 million through a placing (the "Placing") of 28,986,000 new ordinary shares of 2 pence each (the "New Ordinary Shares") at a price of 345 pence per share. The Placing has been undertaken with new and existing institutional shareholders by Panmure Gordon (UK) Limited ("Panmure Gordon") and Cenkos Securities PLC ("Cenkos").

The net proceeds of the Placing (after commission and expenses of the Placing) will be used to fund the Acquisition and for general corporate purposes (which may potentially include repayment of certain indebtedness under the Group's Revolving Credit Facility).

The Placing Price represents a 3.6 per cent. discount to the closing middle market price of 358 pence per Existing Ordinary Share on 28 March 2014, being the last Business Day before the announcement of the Placing.

The New Ordinary Shares (and the shares to be issued as part of the consideration for Blancco) will, when issued, rank in full for all dividends and other distributions declared, made or paid on Ordinary Shares by reference to record dates falling after their date of issue and otherwise rank pari passu in all respects with the existing Ordinary Shares, save that they will not entitle the holder to receive the interim dividend of 1.32 pence per ordinary share payable in respect of the six months to 31 December 2013 declared on 17 March 2014.

Strategy

A key part of the Board's strategy is to develop the business through a combination of organic growth and strategic acquisitions. This strategy has produced double-digit revenue growth over the last two years. The Group is operating a sustained investment programme, as evidenced by the acquisitions undertaken in the last two years and double digit profit growth over the last 3 years. The Group is actively seeking to pursue a range of acquisition opportunities.

The data erasure services market is expected to show strong growth due to the impact of increased regulation in many of the markets in which the Group operates. This includes the draft European General Data Protection Regulation recently approved by the European Parliament and due to come into force in 2015. It is expected that this will lead to a higher compliance burden for all companies holding consumer data, both in terms of processes and in terms of documentation and record keeping requirements as well as a new requirement for some companies to have a permanent data protection officer.

The Group expects that, in the event of data protection breaches, many of its core customers will also face an increased risk of liability arising from the changing regulatory framework (which contemplates sanctions including fines levied at up to 5 per cent. of annual worldwide turnover) and exposure to potentially significant reputational damage. As such, the Board believes that data erasure services present very significant growth opportunities given (amongst other positive trends) the anticipated implementation of the draft General Data Protection Regulation across Europe.

Current trading and prospects

The Group's trading for the period since 31 December 2013 remains in line with market expectations for the year ending 30 June 2014. The Board expects that profit growth in the second half of the current financial year will come primarily from the Group's Emerging Markets and Advanced Solutions divisions.

The Board believes that opportunities for growth, both organically and by acquisition, remain strong. 

Posting of Circular and Notice of General Meeting

As the issue and allotment of the New Ordinary Shares will exceed the Directors' existing authorities to allot shares for cash on a non pre-emptive basis, a General Meeting will need to be called to seek shareholders' approval to grant new authorities to enable the Directors, inter alia, to complete the Placing. Accordingly, a circular, which contains further details of the Acquisition and the Placing, will today be posted to all shareholders together with the Notice of General Meeting. 

The General Meeting will take place at 11am on 16 April 2014 at the offices of Herbert Smith Freehills LLP at Exchange House, Primrose Street, London EC2A 2EG.

The circular will shortly be available on the Company's website and copies of the circular will be available from 4th Floor, 32 Wigmore Street, London, United Kingdom, W1U 2RP up to the date of the General Meeting.

Application will be made to the London Stock Exchange for the New Ordinary Shares and the consideration shares to be issued to Blancco's CEO to be admitted to trading on AIM. Assuming shareholder approval is granted at the General Meeting, and the Acquisition and the Placing become unconditional (save for any condition as to admission), it is expected that Admission will become effective and that dealings for normal settlement in the New Ordinary Shares on AIM will commence at 8.00 a.m. on 17 April 2014.

Matthew Peacock, Executive Chairman of Regenersis, said: "I am delighted with this acquisition. Blancco is a great business with an excellent fit, and at a price that works for shareholders. Most importantly it moves the centre of gravity of the group clearly into Advanced Solutions, with a majority of our profits in this segment, and it opens up a variety of possibilities for future development."

This announcement has been issued by Regenersis and is the sole responsibility of Regenersis. This announcement is for information purposes only and does not constitute an offer to sell or an invitation to subscribe for or a solicitation of an offer to buy or subscribe for any securities in any jurisdiction including in which such an offer or solicitation is unlawful and is not for distribution in or into, without limitation, the United Kingdom, the United States, Canada, Australia, Japan, New Zealand, Russia or the Republic of South Africa (the 'Restricted Jurisdictions') or to US persons (within the meaning of Regulation S of the United States Securities Act 1933 (as amended) (the 'Securities Act')).

The Placing Shares have not been and will not be registered under the Securities Act or under the applicable securities laws of any state in the United States or any Restricted Jurisdiction and, unless an exemption under such act or laws is available may not be offered for sale or subscription or sold or subscribed directly or indirectly within the Restricted Jurisdictions or for the account or benefit of any national, resident or citizen of the Restricted Jurisdictions. No public offering of securities will be made in the United States. The distribution of this announcement in other jurisdictions may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdictions.

Panmure Gordon and Cenkos Securities, which are authorised and regulated by the Financial Conduct Authority, are acting exclusively for Regenersis and for no one else in connection with the Placing and will not be responsible to anyone other than Regenersis for providing the protections afforded to clients of Panmure Gordon and Cenkos Securities nor for providing advice in relation to the Placing or any other matters referred to in this announcement.

About Regenersis - www.regenersis.com

With its core business in repairing consumer electronics, Regenersis helps companies like HTC, Nokia, Samsung, Orange, John Lewis, LG, Toshiba and others deliver the best possible after market service to its customers. Through the provision of technical call centres or managing returns and repairs, the company supports a wide range of products including mobile phones, laptops and tablets, set top boxes, televisions and other electronic equipment. Regenersis also operates in the business-to-business environment where it offers high quality and secure repair and refurbishment solutions for chip and pin devices, ATMs and even MRI scanners.

Building upon its success in repair, the company is already proving its pioneering range of services known as Advanced Solutions, which include in-field testing, where Regenersis is partnering with cable operators across the world to diagnose set-top box faults in the home, reducing unnecessary returns. The newly formed Renew business unit comprises Digital Care, which provides extended warranty and insurance services to end customers; Refurbishment, which provides legitimate, quality refurbished components and devices to the end customer; and Recommerce, which offers client led refurbishment, repair and onward disposition of devices.