Batm Advanced Regulatory News (BVC)

8 Jul 2008 07:00



Vigilant Technology Limited ("Vigilant" or the "Company")

For immediate release 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN OR ANY OTHER JURISDICTION WHERE IT WOULD BE UNLAWFUL TO DO SO.

8 July 2008

RECOMMENDED OFFER 

for 

Vigilant Technology Limited ("Vigilant" or the "Company")

by 

BATM Advanced Communications Limited ("BATM")

to be implemented by means of a Merger under Chapter 1 of the Eighth Part of the Israeli Companies Law, 5759-1999.

The Boards of BATM and Vigilant are pleased to announce that they have reached agreement on the terms of a recommended cash offer (with a share alternative) to be made by BATM for the entire issued and to be issued share capital of Vigilant (the "Offer") to be effected by way of a merger of a BATM subsidiary and Vigilant (the "Merger").

Under the terms of the Offer, Vigilant Shareholders will receive 1.3 pence per Ordinary Share (the "Cash Offer") or, if they elect before 13 August 2008, approximately 1.6 pence per share payable in New BATM Shares (the "Share Offer").

The terms of the Cash Offer value the existing issued share capital of Vigilant at approximately £845,000, assuming that all Vigilant Shareholders accept the cash offer or, up to approximately £1,040,000, if Vigilant Shareholders elect to receive the Share Offer, based on a BATM share price of 46.4 pence, being the average share price of BATM between 4 April 2008 and 4 July 2008.

The terms of the Offer represent a premium of up to approximately 126 per cent. (assuming that Vigilant shareholders accept the Share Offer) to the closing price of 0.575 pence per Vigilant share on 30 June 2008, being the date on which Vigilant shares were suspended on AIM.

The Vigilant Directors (the "Directors") unanimously recommend that Vigilant Shareholders accept the Offer, as they have irrevocably undertaken to do or procure to be done in respect of their entire beneficial holdings of 14,413,186 Vigilant Shares which, in aggregate, represent approximately 22.17 per cent. of the existing issued share capital of Vigilant. 

A Circular containing the full terms and conditions of the Merger together with a proxy to be used at an Extraordinary General Meeting of the Company will be posted to Vigilant Shareholders as soon as reasonably practicable. 

(i) Introduction

The board of Vigilant ("Board") is pleased to announce that they have today reached agreement on the terms of a recommended offer (the "Offer") by BATM for the entire issued and to be issued share capital of Vigilant to be effected by way of a merger of a BATM subsidiary and Vigilant. It is intended that the Offer will be implemented by way of a Merger under Chapter 1 of the Eighth Part of the Israeli Companies Law, 5759-1999.

(ii) Summary terms of the Offer

Full Cash Offer

Each Vigilant Shareholder will be entitled to receive:

1.3 pence in cash for each Vigilant Share

The Cash Offer will be financed by BATM's internal cash resources. The full terms of the Cash Offer will be included in the Circular, which will be posted to Vigilant Shareholders as soon as is reasonably practicable.

Share alternative

The Share Offer allows Vigilant Shareholders to elect to receive: 

for every 29 Vigilant Shares  1 New BATM Share

As an alternative to the Cash Offer, Vigilant Shareholders may elect before 13 August 2008 to receive 1 New BATM Share for every 29 Vigilant Shares, representing approximately 1.6 pence for each Vigilant Share and valuing the Company at approximately £1,040,000 million (based on a BATM share price of 46.4 pence, being the average share price of BATM between 4 April 2008 and 4 July 2008). 

The Share Offer represents a premium of approximately 178 per cent. to 0.575 pence, being the Closing Price per Vigilant Share on 27 June 2008, being the day on which Vigilant Shares were suspended from trading on AIM.

Vigilant Shareholders should note that if they elect to receive New BATM Shares that the value of the Share Offer (once implemented and assuming the Merger becomes effective in accordance with its terms) will depend upon the market for BATM shares.

(iii) Irrevocable Undertakings to accept the Offer

BATM has received irrevocable undertakings to accept, or procure acceptance of, the Offer from the Vigilant Directors who hold, in aggregate, 14,413,186 Vigilant Shares representing approximately 22.17 per cent. of Vigilant's existing issued share capital.

In addition, undertakings to vote (or procure the vote) in favour of the Merger at the Vigilant Extraordinary General Meeting have been received from Vigilant Shareholders who hold, in aggregate 19,695,000 Vigilant Shares, representing approximately 30.3 per cent. of Vigilant's existing issued ordinary share capital. Such undertakings, taken together with the undertakings from the Vigilant Directors, in aggregate, amount to 34,108,178 Vigilant Shares representing approximately 52.48 per cent. of the existing issued ordinary share capital of Vigilant.

(iv) Background to and reasons for the recommendation 

On 3 June 2008, Vigilant announced that it was actively working to raise further equity capital of between £1.5 million and £2 million and that the net proceeds would be used to provide the necessary working capital for the Company and to strengthen its balance sheet. The Company also stated that if it did not raise the additional equity finance that it would have to consider other strategic options.

Furthermore, in its preliminary results announced on 3 July 2008, Vigilant reiterated that if it did not raise additional equity finance, then it would have to consider other strategic options. In addition, the Company stated that it was working on a solution to its working capital issues and expected to make a further announcement.

In deciding to recommend the Offer unanimously, the Directors have taken into account a number of factors, including: 

The Company was unable to conclude an additional equity fundraising on a timescale which would ensure its survival;

Vigilant has a bank facility which is due to be repaid on 30 September 2008, which without further equity funds being raised, the Company will not be in a position to repay;

The Offer provides the Company with access to working capital and enhanced clarity as to the future funding of Vigilant's business;

If the Offer completes, the Directors consider that Vigilant Shareholders will also benefit from: 

less exposure to the difficulty and cost of maintaining a stand-alone corporate infrastructure; 

greater exposure to a more diversified asset portfolio with further potential for value growth; 

improved prospects of retaining existing and attracting new personnel;

a broader institutional shareholder base and the potential for increased liquidity; and

The Cash Offer is at a premium of approximately 126 per cent. to Vigilant's share price on 27 June 2008 (being the date on which Vigilant's shares were suspended from trading on AIM) and, if Vigilant Shareholders elect to receive the Share Offer, the premium increases to approximately 178 per cent.

Consequently, the Board of Vigilant considers the Offer from BATM to be in the best interests of Vigilant Shareholders. 

(v) Information on Vigilant

Vigilant is a leading provider of intelligent IP based digital video/audio solutions for the high-end CCTV security and surveillance markets. Vigilant specialises in software and hardware which enables the storage, archiving, retrieval and analysis of material captured from a large number of cameras.

Vigilant has an installed base of more than 85,000 high-end channels worldwide, enabling thousands of users to benefit from premium quality CCTV video and intelligent video analysis solutions in a wide range of market segments including: transportation, gaming and casinos, town centres, correctional facilities, finance and banking and public spaces.

Vigilant's product portfolio is designed for large-scale installations in mission-critical, multi-user application environments and accommodates a broad range of technical inputs addressing sophisticated requirements while maintaining flexibility for system designers and integrators. The offering includes unique content analysis tools which provide material to assist detection. Vigilant Technology's systems are based on a proprietary DSP platform, enabling extensions and upgrades, as new features are introduced and new industry standards and applications emerge.

Vigilant's systems for recording, monitoring and analysing video use a proprietary software package for video control centres called NetView. The systems can accommodate tens, hundreds and even thousands of cameras per control centre - operating over closed and open IP networks. Vigilant's system is designed to be readily integrated into third party software applications and management systems (access control, alarm, etc.).

Vigilant's customers include leading casinos in the US, category 1 prisons in the UK, local authority boroughs and shopping centres. New customer wins during 2007 included several major contracts in the UK. In addition to its traditional markets (retail, shopping centres, local government and correctional facilities), Vigilant won its first contract in the healthcare sector. 

New customers included: Selfridges, Bentalls and Sainsbury's, Corby  Willow Place, Almondvale Phase 3, Princess Hay and Bridges Centre, Watford, Hounslow, Kings Lynn, Fakenham, Lichfield, Luton, London Borough of Sutton, Her Majesty's Prison Service, European Medicines Agency, Leeds Teaching Hospital NHS Trust and the new headquarters of Knight Frank at 55 Baker Street; indicating the continuation of a strong relationship with its business partners. Outside the UK, Vigilant has secured leading projects such as the Hong Kong International Airport and several Airports in Cyprus and a Casino chain in the US.

On 3 July 2008 Vigilant announced its unaudited preliminary results for the year ended 31 December 2007, reporting revenues of US6.7 million and gross profits of US$2.3 million.

(vi) Information on BATM

BATM

BATM is a world leader in the design and supply of IP packet-based systems such as high-capacity, self-routing switches with extensive QoS capabilities. BATM designs and produces broadband data and telecommunications solutions geared toward the needs of enterprises, corporate and Telecom networks. 

BATM is listed on the Official List of the London Stock Exchange with a market capitalisation of approximately £198 million. It joined the Official List in 1999, having floated on AIM in 1996.

BATM's customers include a range of major telecom carriers. In 2007, its turnover was US$96.9 million on which it made a net profit of US$20.1 million.

BATM recently released a trading update in which it indicated that its revenue for 2008 was anticipated to exceed the current market forecasts of revenues of US$110 million with a corresponding increase in forecast operating and net profit.

(vii) Cancellation

BATM intends to cancel trading of Vigilant Shares on AIM and the Company will become a private subsidiary of BATM following the Merger becoming effective and subject to any applicable requirements of the London Stock Exchange. 

BATM intends to procure that Vigilant applies to the London Stock Exchange for the cancellation of trading in Vigilant on AIM. In accordance with the rules of AIM such cancellation will take effect no earlier than 20 Business Days following approval of the Merger at the Extraordinary General Meeting of Vigilant. 

(viii) General

Vigilant and BATM have entered into agreements, pursuant to which BATM has been granted exclusivity in respect of its proposed acquisition of Vigilant and, following this announcement, BATM will provide up to US$1 million in financing to Vigilant and will assist with the day to day management of the Company's operations, subject to applicable laws. These funds will be used by Vigilant to satisfy current working capital requirements. In the event that the Merger is not completed within 150 days of this announcement, the merger agreement shall become null and void. 

The approval of the Merger is subject to the following accumulated conditions: 

obtaining shareholder consents at the Extraordinary General Meeting of the Company at the required majority;

obtaining the necessary regulatory permissions and third party consents; and 

obtaining all of the necessary regulatory permits according to Chapter 1 of the Eighth Part of the Companies Law 5759-1999. 

A Circular containing the full terms and conditions of the merger together with a proxy to be used at an Extraordinary General Meeting of the Company will be posted to Vigilant Shareholders as soon as reasonably practicable.

Enquiries:

Vigilant Technology Limited

+972 3 6491110

Moshit Yaffe-Blushinsky, CEO

BATM Advanced Communications Limited

+972 9866 2525

Dr Zvi Marom, Chief Executive

Shore Capital - Nominated Adviser to the Company

020 7408 4090

Graham Shore / Dru Danford

Kaupthing Singer & Friedlander - Adviser to BATM

020 3205 7620

Nicholas How / Marc Young

Shore Capital and Corporate Limited ("Shore Capital"), which is authorised and regulated by the Financial Services Authority in the United Kingdom, is acting exclusively for Vigilant and no one else in connection with the Offer and will not be responsible to anyone other than Vigilant for providing the protections afforded to clients of Shore Capital nor for providing advice in relation to the Offer, the content of this summary and the Announcement or any other matter or arrangement referred to herein.

Kaupthing Singer & Friedlander Capital Markets Limited ("Kaupthing"), which is authorised and regulated by the Financial Services Authority in the United Kingdom, is acting exclusively for BATM and no one else in connection with the Offer and will not be responsible to anyone other than BATM for providing the protections afforded to clients of Kaupthing nor for providing advice in relation to the Offer, the content of this summary and the Announcement or any other matter or arrangement referred to herein.

THE ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO SUBSCRIBE FOR OR BUY ANY SECURITIES NOR THE SOLICITATION OF ANY VOTE OR APPROVAL IN ANY JURISDICTION, NOR SHALLTHERE BE ANY SALE, ISSUE OR TRANSFER OF THE SECURITIES REFERRED TO IN THE ANNOUNCEMENT IN ANY JURISDICTION, IN CONTRAVENTION OF ANY APPLICABLE LAW. THE OFFER WILL BE MADE SOLELY BY MEANS OF THE OFFER DOCUMENT AND THE FORM OF ACCEPTANCE ACCOMPANYING THE OFFER DOCUMENT.

These written materials do not represent an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration under the US Securities Act 1933 (the 'US Securities Act') or an exemption therefrom. The New BATM Shares have not been, and will not be, registered under the US Securities Act or under any relevant securities laws of any state or other jurisdiction of the United States, nor have clearances been, nor will they be, obtained from the securities commission or similar authority of Canada and no prospectus has been, or will be, filed or registration made, under any securities law of Canada nor has a prospectus in relation to the New BATM Shares been, nor will one be, lodged with or registered by, the Australian Securities and Investments Commission, nor have any steps been taken, nor will any steps be taken, to enable the New BATM Shares to be offered in compliance with applicable securities laws of Japan. Accordingly, unless an exemption under relevant securities laws is available, the New BATM Shares may not be offered, sold, resold or delivered, directly or indirectly, in, into or from a Restricted Jurisdiction, or to or for the account or benefit of any US person or resident of any Restricted Jurisdiction.

The BATM Directors accept responsibility for the information contained in this summary and the Announcement other than information relating to Vigilant, the Vigilant Directors and their immediate families, related trusts and controlled companies. To the best of the knowledge and belief of the BATM Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this summary and the Announcement for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

The Vigilant Directors accept responsibility for the information contained in this summary and the Announcement relating to them and their immediate families, related trusts and controlled companies and Vigilant. To the best of the knowledge and belief of the Vigilant Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this summary and the Announcement for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

Distribution of announcement and other matters 

The distribution of this announcement and the availability of the Offer in jurisdictions other than the United Kingdom and Israel may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than United Kingdom or Israel should inform themselves about, and observe any applicable requirements. 

Copies of this announcement are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any jurisdiction where to do so would violate the laws of that jurisdiction and persons receiving this announcement (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send it in, into or from any such jurisdiction. 

The statements contained herein are made as at the date of this announcement, unless some other time is specified in relation to them, and the issue of this announcement shall not give rise to any implication that there has been no change in the facts set forth herein since that date. Nothing contained herein shall be deemed to be a forecast, projection or estimate of the future financial performances of Vigilant or BATM, except where otherwise stated. 

No person has been authorised to make any representations on behalf of Vigilant or BATM concerning the Offer which are inconsistent with the statements contained herein and any such representations, if made, may not be relied upon as having been so authorised. 

This announcement does not constitute a prospectus or prospectus equivalent document. No person should construe the contents of this document as legal, financial or tax advice and should consult their own advisers in connection with the matters contained herein.