BLTG.L Regulatory News (BLTG)

Regenersis PLC ("Regenersis" or the "Company")

Proposed Disposal of the Repair Services Business

Proposed Return of Capital

Capital Reduction

Regenersis plc is pleased to announce that it has today entered into a conditional sale and purchase agreement to dispose of its Repair Services Business (the "Repair Services Business") to CTDI Repair Services Limited ("the Purchaser"), a wholly owned subsidiary of Communications Test Design, Inc., ("CTDI") for a cash consideration of €103.5 million (the "Disposal").

Highlights

· €103.5 million to be paid in cash at completion.

· Completion of the Disposal is expected in the second quarter of 2016.

· Following the Disposal it is currently intended that a return of capital to shareholders of around £50 million will be made in the second quarter of 2016.

· Following the Disposal, the Company will become a pure play global software business comprising of Blancco, SafeIT, Xcaliber and Tabernus, and will change its name to Blancco Technology Group plc.

· The Directors are engaged in a separate disposal of the Digital Care business with other potential purchasers.

Matthew Peacock, Executive Chairman, said:

"In line with the Company's strategy to position Regenersis as a pure play software asset, the conditional disposal of the Repair Services Business announced today is the outcome of a structured and competitive process, against a background of solid continued financial performance. I am confident that it represents good value for shareholders. The potential for shareholder value growth is significantly enhanced by our ability now to focus on the growth of our software business."

Background to and reasons for the Disposal

Regenersis is a global provider of diagnostics, repair and data erasure services to the consumer electronics industry, helping its clients and their customers successfully deploy, protect, maintain, and retire technology.

Regenersis has evolved significantly in recent years and now comprises three distinct businesses, the Digital Security Software business, the Repair Services Business, and the Digital Care mobile insurance business.

The Directors have concluded that separate disposals of the Repair Services Business and the Digital Care business are most likely to maximise value for shareholders of the Company (the "Shareholders"). As such, the Digital Care business does not form part of the Disposal and the Directors are continuing to explore a separate sale of the Digital Care business with other potential purchasers.

Following the announcement by the Company on 22 September 2015 of the potential sale of the Aftermarket Services business (including both the Repair Services Business and the Digital Care business), the Company undertook a competitive auction process conducted by the Group's advisers over a number of months with a view to maximising shareholder value, from which CTDI emerged as the preferred bidder for the Repair Services Business, while other bidders indicated greater interest in the Digital Care business.

The Directors believe that the Repair Services Business is a high quality business with robust systems, significant geographic coverage and a strong client base. Despite this, the Directors recognise that the Disposal represents an opportunity for the Company to realise substantial cash proceeds, unlock the significant value which has been created by the turnaround and growth of the Repair Services Business, and move closer to becoming a pure software business with increased focus and appeal to its stakeholders.

Following completion of the Disposal, the continuing business will have a simplified corporate structure with materially reduced operational complexity and head office costs.

As a pure software business the Company will focus on maximising its opportunities in secure, auditable data erasure across all types of devices and network environments. In the view of the Board, the Company will have a unique profile among UK listed software businesses in terms of its combination of market opportunity, market position and organic revenue growth track record.

Principal terms of the Disposal

The Company and Purchaser have entered into a share purchase agreement (the "SPA"), pursuant to which the Purchaser has conditionally agreed to acquire the Repair Services Business from the Company for total consideration, subject to adjustment, of €103.5 million payable in cash on completion.

The total consideration receivable by the Company on completion will comprise:

· €96 million for the entire issued share capital of Regenersis (Depot) Services Ltd (the holding company of the Repair Services Business), with the Disposal consideration agreed by reference to a balance sheet for the Repair Services Business as at 30 September 2015) (the "Locked Box Date"); and

· €7.5 million for the economic value added to the Repair Services Business between the Locked Box Date and completion, subject to upward or downwards adjustment at completion dependent on the actual profits of the Repair Services Business.

The total consideration amount will be subject to further adjustment to the extent that the Company does not have an agreed level of working capital on completion of the Disposal.

The Disposal is conditional upon:

(i) being approved by the Shareholders by 5 April 2016;

(ii) competition clearance being provided in Germany, Poland and Russia by no later than 5 August 2016 (the "Competition Conditions"); and

(iii) there being no material adverse effect on the business prior to the date on which Shareholders approve the Disposal.

The Purchaser has committed to use all reasonable endeavours to obtain satisfaction of the Competition Conditions. The SPA will terminate if the relevant conditions are not satisfied by their relevant longstop dates.

AIM Rule 15

Due to its size, the sale of the Repair Services Business constitutes a fundamental change of business of the Company under AIM Rule 15 and accordingly is subject to the approval of Shareholders in General Meeting. In advance of the General Meeting a circular will be sent to Shareholders setting out further details on and the rationale for the proposed Disposal.

On completion of the proposed Disposal, the Company will be deemed to continue as a trading company and will not be classified as an AIM Rule 15 cash shell.

Information on the Repair Services Business

The Repair Services Business comprises Regenersis' physical electronic repair, logistics and refurbishment business, and its set-top box automated equipment test solutions including in-field testing. During the financial year ended 30 June 2015 the revenues generated by the Repair Services Business were £184.6 million with Headline Operating Profit of £15.1 million at the Divisional level (excluding Digital Care and excluding significant unallocated Corporate costs supporting the management and development of the Repair Services Business under the current ownership structure).

Information on the continuing business

Following completion of the Disposal, the continuing business of the Company will consist of its Digital Security Software business, comprising Blancco, SafeIT, Xcaliber and Tabernus and the Digital Care business. During the financial year ended 30 June 2015 the revenues generated by the continuing business were £18.0 million with Headline Operating Profit of £5.5 million at the Divisional level (excluding unallocated Corporate costs) of which Digital Security Software represented £15.0 million with Headline Operating Profit of £5.4 million. Following completion of the Disposal, the continuing business will have a simplified corporate structure, with materially reduced operational complexity and head office costs.

The Directors are exploring a separate disposal of the Digital Care business with other potential purchasers having a strategic interest in the mobile insurance area.

As a pure software business the Company will focus on maximising its opportunities in secure, auditable data erasure across all types of devices and network environments.

Information on the Purchaser

The Purchaser is a wholly owned UK subsidiary of CTDI, a private, family-owned engineering, repair and logistics company headquartered in West Chester, Pennsylvania, USA. Founded in 1975, CTDI has grown its footprint to over 75 facilities in 15 countries and employs a workforce of over 9,500 globally. Its customers include major telecoms carriers, cable service providers and OEMs who are supported by CTDI's industry leading testing technology and supply chain solutions.

Return of capital to Shareholders

Following completion of the Disposal, the Company currently intends to return up to £50 million to Shareholders, comprising the net proceeds of the Disposal, less amounts required to prepay amounts outstanding under the Company's loan facilities, an amount to be retained in connection with provisions against contingent liabilities associated with the Disposal, and an amount to be retained for future operations of the continuing business ("Return of Capital").

The Return of Capital will be subject to the approval of Shareholders at the General Meeting and is currently expected to commence in the second quarter of 2016, following completion of the Disposal.

The Board currently expects to execute the Return of Capital via a tender offer.

In connection with the Return of Capital, the Company proposes creating additional distributable reserves via a reduction of amounts standing to the credit of its share premium account.

Capital Reduction

The Company does not currently have the distributable reserves required to complete the Return of Capital and maintain a prudent level of distributable reserves thereafter. Therefore, in order to create additional distributable reserves, it is proposed that an amount standing to the credit of the share premium account of the Company should be cancelled (the "Reduction").

The Reduction requires both the approval of a special resolution of Shareholders and the confirmation of the Court.

Expected timetable to completion

A circular containing further details of the Disposal, the Return of Capital, the Reduction, the Board's recommendation of the Disposal, the Return of Capital and the Reduction, and notice of the General Meeting and the resolutions required to approve the same (the "Resolutions") will be sent to Shareholders prior to the General Meeting and notified by RNS in due course.

Completion of the Disposal is expected to occur in the second quarter of 2016.

Recommendation

The Directors consider that the Disposal is in the best interests of the Company and Shareholders as a whole. Accordingly, in the circular, the Directors will recommend that you vote in favour of the Resolutions at the General Meeting as they intend to do so in respect of their own beneficial holdings of 5,875,497 Ordinary Shares representing 7.4 per cent. of the issued Ordinary Shares (which include Matthew Peacock's indirect interest in Hanover Investors and its connected parties, amounting in aggregate to 5,417,651 Ordinary Shares representing 6.9 per cent. of issued Ordinary Shares).

Change of Name

As the Purchaser will be operating the Repair Services Business under the Regenersis brand following completion of the Disposal, the Board has resolved, conditional upon completion of the Disposal, to change the name of the Company to Blancco Technology Group plc. The Company will remain listed on AIM on completion of the Disposal.

Board Change

Following completion of the Disposal, Ian Powell, CEO of the Repair Services Business, has agreed that he will resign from the board of the Company.

Notice of half yearly results

The Company intends to announce its half yearly results for the six months to 31 December 2015 on 8 March 2016.

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