Ceps Regulatory News (CEPS)

25 Jan 2005 07:00

Dinkie Heel PLC25 January 2005 DINKIE HEEL PLC ACQUISITION AND PLACING The Board of Dinkie Heel plc (the "Company") is pleased to announce that it hastoday acquired a majority interest in the issued share capital of Friedman'sLimited ("Friedman's"), which imports, converts and distributes plain andbespoke lycra based materials, primarily to swimwear and dancewear manufacturerswithin the textile industry. Friedman's has approximately 200 customers,predominantly in the UK, but the Board believe that there are opportunities toexport. End users of Friedman's lycra products include, during the lastfinancial year, major high street chains. Turnover of Friedman's as extracted from the audited accounts for the year ended31 October 2004 was approximately £2.62 million. Turnover has increased onaverage in excess of 15 per cent. per annum during the last three years. Grossprofit was £0.82 million and profit before tax was £0.32 million. Friedman's isbased in Manchester and employs 5 staff. Net assets as at 31 October 2004 were£0.47m. The entire issued share capital of Friedman's will be acquired by SignatureFabrics Limited, a company set up for the purpose of acquiring Friedman's ("Signature"). The consideration payable for Friedman's by Signature is £1.7m incash and the issue of 5 per cent. of the share capital of Signature to theSellers. Signature is funded by bank finance of £1,221,000, £408,333 from theCompany in a subscription for loan stock, £91,666 from the Company in asubscription for equity and the balance by an initial 20 per cent. equityinvestment from the management of Signature. The Company will initially hold a75 per cent. equity stake in Signature which will reduce down on a ratchet basisto 55 per cent. depending on the speed with which the Company's loan stock inSignature is repaid. The acquisition is in line with the Board's strategy stated in the circular toshareholders of 26 March 2004 of investing in Management Buy-Out and ManagementBuy-In opportunities with an overall value below £5 million. The Board'sintention is that target companies will be stable, profitable and cashgenerative businesses with the potential for steady growth. The Board believesthis area of the market is currently underfinanced and contains manyopportunities. In addition, the Board of the Company announces that it has placed 30,444,446and intends to place a further 2,888,889 new ordinary shares of 0.1 pence eachin the Company (representing in aggregate approximately 18.71 per cent of theenlarged share capital of the Company) at a price of 2.25p each, conditionalonly upon admission of the new ordinary shares to trading on AIM. Applicationhas been made to the London Stock Exchange for admission of the new ordinaryshares to trading on AIM. Admission of the new ordinary shares is expected totake place on Friday 28 January 2005. Following the placing, the enlarged sharecapital of the Company will comprise 178,154,127 ordinary shares. A further71,938,292 warrants are in issue, each of which entitles the holder to subscribefor a new ordinary share at a price of 2p. The 33,333,335 new ordinary shares are being placed for a total of approximately£750,000 (before expenses) with clients of Seymour Pierce Ellis and a range ofinvestors, including members of the concert party detailed in the circular sentto shareholders of the Company on 26 March 2004 (the "Concert Party"). As aresult, the Concert Party, whose holding at that time represented 56.45 percent. of the entire issued share capital of the Company, will, if all of theplacing shares are placed hold ordinary shares representing 50.52 per cent ofthe entire issued share capital of the Company. The placing proceeds will inthe main be utilised to fund Signature for the acquisition of Friedman's withthe balance providing additional working capital for the Company. Enquiries Dinkie Heel plc, Tel: 01225 483 030David HornerPeter Cook City Financial Associates Ltd, Tel: 020 7090 7800Tony RawlinsonJames Caithie This information is provided by RNS The company news service from the London Stock Exchange