Conduit Hldg Regulatory News (CRE)

20 Apr 2006 07:01

Creston PLC20 April 2006 Date: 20 April 2006On behalf of: Creston Plc ("Creston" or "the Company")Embargoed until: 0700hrs Creston Plc • Proposed Acquisition of ICM Research Limited, ICM Direct Limited and FieldworkUK.com Limited for a maximum consideration of £37.2 million• Proposed Acquisition of Tullo Marshall Warren Limited and Colombus Communications Limited for a maximum consideration of £38.3 million• Proposed Placing and Open Offer by Charles Stanley Securities of 9,132,306 New Ordinary Shares at 165 pence per share to raise approximately £15.07 million SUMMARY - This summary should be read in conjunction with the full text of thisannouncement. Creston Plc ("Creston" or the "Company"), the diversified marketing servicesgroup, today announces that the Company has agreed, subject inter alia toShareholder approval, the proposed acquisition of the ICM Research Group ("theICM Group" or "ICM"), a leading independent UK full service market researchagency and Tullo Marshall and Warren Limited ("TMW") and Colombus CommunicationsLtd ("Colombus") the sister agency of TMW ("TMW Group"), a leading independentUK direct marketing agency and a Placing and Open Offer by Charles StanleySecurities to raise approximately £15.07 million before expenses. Thehighlights are: • The ICM Group is one of the UK's leading independent market research agencies. It has a diverse range of national and international clients including Vodafone, Wanadoo, Norwich Union, NOP, Dixon Store Group, Saga, BT Mobile, O2, Orange and Yorkshire Bank. The ICM Group is divided into dedicated sector and product teams including Technology, Retail and Financial as well as product teams such as Polling, Omnibus and Government and Social; • For the year ended 30 June 2005 ICM's turnover was £14.0 million and pre tax profits were £2.48 million; • Its acquisition enables Creston to offer further quantitative and qualitative market research services to existing and potential clients and creates critical mass for Creston's Insight Division; • The TMW Group is one of the largest independent direct marketing agencies in the UK. It has a diverse range of national and international clients, across a number of sectors that includes British Airways, Diageo, COI, Lloyds TSB, Nissan, T-Mobile and Unilever. The TMW Group provides a range of direct market marketing services for its clients including strategic planning, creative and brand development and implementation of IT system design and build, with specialist expertise in growth areas such as digital marketing, data management and IT solutions; • For the year ended 31 December 2005, The TMW Group had aggregate turnover of £23.1 million and aggregate pre tax profit of £3.37 million; • The TMW Group adds further scale to Creston's MARCOMS division and has a capability in data analysis and digital technologies, in addition to its reputation for creativity and strategic planning; • The Creston Group has continued to make progress in the Group's second half of the financial year to 31 March 2006, and trading in the period to 28 February 2006 has been ahead of the comparable prior year period. The Group's operating businesses have continued to perform well, with new client wins in all divisions including Walkers Crisps, Alfa Romeo, Lotus, Disney TV, Carlsberg and BP; • Qualifying Shareholders are invited to subscribe for the Open Offer at a price of 165 pence per Open Offer Share, free of all expenses, on the following basis: 1 Open Offer Share for every 12 Existing Ordinary Shares; • The Board is confident of the Enlarged Group's prospects for the financial year ending 31 March 2007; • An Extraordinary General Meeting has been convened for 11.00am on 15 May 2006. Admission and commencement of dealings in the New Ordinary Shares is expected on 17 May 2006. Commenting on the proposed acquisitions, Don Elgie, Chief Executive of Creston,said: "We are delighted to announce the proposed acquisitions of ICM and TMW today.Both companies are best of breed, have proven track records over many years andstrong management teams that will remain with the businesses. Both acquisitionsare expected to be earnings enhancing. These acquisitions further underline ourcommitment to achieving critical mass in each of our four operating divisions -BRANDCOM, INSIGHT, MARCOMS and PUBLIC RELATIONS. "As part of the Creston Group, ICM and TMW will continue to operateautonomously, whilst benefiting from the cross-selling opportunities that existwithin the Group, together with gaining access to all the resources they need toensure that they are able to maintain the drive to growth and excellence intheir businesses. I am pleased to report that the Group has continued to makeprogress in the second half of its financial year with new business wins in alldivisions and trading is in line with Directors' expectations." Chris Warren, Managing Director of TMW, commented: "In joining Creston, we are now a member of one of the most dynamic marketingservices groups which is populated by some of the leading agencies in theirrespective markets. We were attracted by Creston's ethos which enables agenciesto preserve their own culture and style, whilst leveraging the related expertiseof the group companies. Creston is an ambitious and energetic business and as amajor shareholder in the group, we look forward to contributing to its continuedgrowth and success." Nick Sparrow, Managing Director of ICM, added: "In Creston we feel we have found an owner who is as keen as we are to see ICMgrow and prosper and will act with us in the best interests of the company andall the people who work here. We believe that joining the Creston group willopen an exciting new chapter in the development of ICM, giving us theopportunity to take the company to the next level and the staff at ICM are allvery enthusiastic about the opportunities it will offer us to grow ICM stillfurther." Enquiries: Creston Plc 020 7930 9757www.creston.comDon Elgie, Chief ExecutiveBarrie Brien, CFO and COO Redleaf Communications 020 7955 1410Emma Kane/Miranda Good/Sanna Lehtinen Charles Stanley Securities 020 7953 2000Mark Taylor NOTES TO EDITORS: • Publication quality photographs are available through Redleaf on the numbers shown above;• Creston's strategy is to build a diversified international marketing services group through a combination of organic growth and selective acquisitions. The Board's aim is to identify synergistic benefits between currently independent marketing services companies offering premium services such as market research, direct marketing, customer relationship marketing, advertising and other areas of marketing communications;• Creston's subsidiaries operate within four divisions: BRANDCOM, responsible for brand building and communication; INSIGHT, responsible for quantitative and qualitative research; MARCOMS responsible for activation and generation of sales push communication; and PUBLIC RELATIONS;• Creston's companies boast a range of blue-chip clients including the AA, AstraZeneca United Kingdom, Bacardi-Martini, Bayer, Canon, COI Communications, Cow & Gate, General Motors, George Wimpey, GlaxoSmithKline, Halifax, Kimberly-Clark, Lloyds Black Horse, NEC, Nestle Rowntree, NTL, Pfizer, Roche Diagnostics, Scottish Courage, Tesco, Toshiba and Unilever;• Creston's share price is quoted in the Financial Times, Telegraph, the Times and the London Evening Standard. INTRODUCTION Creston announced today that the Company has agreed, subject inter alia toShareholder approval, the proposed acquisitions of ICM Research and the TMWGroup. ICM Research is a leading independent UK full service market researchagency and the TMW Group is a leading independent UK direct marketing agency. Due to the size of the Acquisitions in relation to the Group, each of theAcquisitions constitutes a Class 1 transaction under the Listing Rules andaccordingly the Company is required to obtain the prior approval of Shareholdersfor both of the Acquisitions. The Company is also pleased to announce that, subject inter alia to Shareholderapproval, it proposes to raise approximately £14.15 million (net of expenses) bythe issue of 9,132,306 new Ordinary Shares at 165 pence each by way of a Placingand Open Offer. 6,000,000 new Ordinary Shares have been placed firm and3,132,306 new Ordinary Shares have been conditionally placed, subject only toclawback by Qualifying Shareholders, with institutional and other investors byCharles Stanley. Qualifying Shareholders have the right to subscribe for theOpen Offer Shares in accordance with the terms of the Open Offer. The net proceeds of the Placing and Open Offer and £14.58 million of existingcash resources and new bank facilities will be used to fund the ICM ClosingPayment and TMW Closing Payment. An Extraordinary General Meeting has been convened for 11.00 a.m. on 15 May2006, at which Shareholders will be asked to consider the Resolutions necessaryto approve and implement the Proposals. A notice of EGM is set out at the end ofthis document. DETAILS OF THE ACQUISITIONS The ICM Group The business now carried on by the ICM Group was founded in 1989 by the ICMPrincipal Vendors, who have remained with the business since inception. Sinceits inception the ICM Group has grown organically, expanding into new clientsectors and areas of business. In 1998 ICM Research became a provider oftelephone fieldwork services through its wholly owned subsidiary ICM Direct. In2000, ICM Research launched FieldworkUK.com Limited ("FWUK"), a specialistface-to-face fieldwork provider. ICM Direct and FWUK provide services to ICMResearch as well as to external clients. The ICM Group has doubled in size since 2001, from turnover of £6.8 million to£14.0 million for the year ended 30 June 2005 and its turnover grew by acompound average of 23 per cent. per year from 1997 to 2005 (Source: AuditedAnnual Report and Accounts 1997-2005: ICM Group). It is now one of the UK'sleading independent market research agencies. The ICM Group consists of the following companies as outlined below, whichprovide a complete service offering to clients. The ICM Group is divided intodedicated sector and product teams including Technology, Retail and Financial aswell as product teams such as Polling, Omnibus and Government and Social. ICM Research designs, conducts and analyses research on consumer and corporatebehaviour and opinion for private and public sector clients. ICM Research hasdivided its operations into industry sector teams including Technology, Retailand Financial as well as product teams such as Polling and Omnibus andGovernment and Social; ICM Direct provides telephone research fieldwork for ICM Group and for thirdparty market research firms. After investment over the past four years, ICMDirect is now one of the UK's leading providers of telephone research, with over240 CATI stations in the UK; and FWUK provides specialist face to face interviewing, for quantitative andqualitative research, with a national fieldforce of over 1,500 interviewers. The ICM Group has a diverse range of national and international clientsincluding Vodafone, Wanadoo, Norwich Union, NOP, Dixon Store Group, Saga, BTMobile, O2, Orange and Yorkshire Bank. Directors and senior management Nick Sparrow (age 50), Managing Director After initially working with Rover cars, Nick Sparrow moved into market researchat a company within the Bowater group before joining Marplan in 1979. He wasManaging Director of Marplan from 1985 to 1989, and left (with Steve Parker andKate Turner) to establish ICM Research. Nick Sparrow is the Managing Director ofICM Research, and is responsible for Opinion Polling and media appearancesconcerning polls. He was awarded the BMRA's Silver Medal for his development ofnew opinion polling methodologies. Steve Parker (age 48), Director, ICM Research: Retail Steve Parker joined Gallup in 1979, before moving to Gordon Simmons Consumerresearch in 1981 and then joining Marplan in 1984. In 1986 he was made anAssociate Director of Marplan, and a Director in 1988. He is the head of ICMResearch's Retail team and oversees FWUK. Kate Turner (age 51), Director, ICM Research: Technology, Qualitative After several years as a research officer in Essex University's SociologyDepartment, Kate Turner joined Maclean-Hunter in 1975. She moved to Marplan in1983 and was appointed as a Director in 1988. She heads up ICM Research'sTechnology team, along with Mathew Burn and Gary Muncaster. She also overseesqualitative research and is responsible for recruitment and training within ICMResearch. Mathew Burn (age 34), Director, ICM Research: Technology Mathew Burn joined ICM Research in 1998, after working as a freelance marketresearch interviewer in the mid 1990's and as Manager of Nat West's marketresearch telephone centre. He leads the Technology team with Kate Turner andGary Muncaster and is responsible for business development and new businessgeneration. Key client relationships include Vodafone, Orange, and SonyEricsson. Gary Muncaster (age 34), Director, ICM Research: Technology Gary Muncaster worked as a Research Associate at Middlesex University beforejoining Ipsos in 1997, and then moving to ICM Research in 1999 as a ResearchExecutive. He was promoted to Project Director in 2000, to Associate Director in2002 and was made a full Director in 2004. He heads up the Technology team withKate Turner and Mathew Burn. Steve Ogborn (age 36) Director, ICM Research: Financial Upon graduating Steve Ogborn joined Sports Marketing Surveys as a researchexecutive and, after a year, took over the management of its Leisure division.He joined ICM Research in 1995, with a focus on building the financial division.He acts as an account director for around a dozen financial clients, and is incharge of the development of current business and building new clientrelationships. Patrick Diamond (age 38), Managing Director ICM Direct Patrick Diamond joined NOP as a telephone interviewer in 1990, before movingquickly to manage telephone fieldwork projects, and then on to internetresearch. In 1997, he moved to BMRB, as an Associate Director of TGI, withresponsibility for Broadcast and Outdoor Media. In 1999, he joined ICM Direct asDeputy Managing Director, and was promoted to Managing Director in 2000. He isresponsible for ICM Direct's growth, development and operations. Barry Pegg (age 45), Managing Director FWUK Barry Pegg joined Market Analysis, a small independent research company, in1986. He then joined Research & Auditing Services Ltd. in 1988, and was asked tobecome Field Manager and re-organise the fieldwork division. Thisreorganisation, carried out over six months, led to Barry Pegg being promoted toField Director. In 1996, he joined Conquest Research, and in 1999 he moved tothe ICM Group, to set up and manage FWUK. He is responsible for FWUK's growth,development and operations. Financial information on the ICM Group The following financial information, which has been extracted without materialadjustment from the financial information on the ICM Group. Year ended 30 June 2003 2004 2005 £'000 £'000 £'000Turnover 8,227 11,279 13,981Gross profit 4,817 6,633 7,472Profit on ordinary activities before taxation 1,499 2,461 2,479 Gross assets at 30 June 2005 were £5.57 million. The TMW Group TMW TMW, which is based in Chelsea, London, was founded by Paul Tullo, RichardMarshall and Chris Warren in 1987. TMW has grown organically over the last 18years to become one of the largest independent direct marketing agencies in theUK employing over 200 people across a range of direct marketing services. TMWprovides a range of direct market marketing services for its clients, withspecialist expertise in growth areas such as digital marketing, data managementand IT solutions. TMW provides direct marketing services to its clientsincluding strategic planning, creative and brand development and implementationof IT system design and build. TMW has a diverse range of national and international clients in a number ofsectors that includes British Airways, Diageo, COI, Lloyds TSB, Nissan, T-Mobileand Unilever. TMW is recognised as one of the largest independent directmarketing agencies in the UK marketplace and is: • Ranked largest independent and 10th largest direct marketing agency by number of employees;• Ranked largest independent and 12th largest direct marketing agency by gross income; and• Ranked largest independent and 9th largest direct marketing agency by gross profit. Source: 1. Campaign magazine October 2005, Willott Kingston Smith data, annual 200 survey 2. Marketing magazine March 2005, Willott Kingston Smith data Colombus Colombus is a sister company to TMW and specalises in the procurement of directmarketing production, printing and merchandising. Its principal customer is TMW. Chris Warren (age 48), Managing Director Chris Warren's early career was in marketing management with Sony and DinersClub. In the early 1980's, he was responsible for helping to launch the UK'sfirst domestic video recorders, and the introduction of the first ever SonyWalkman in its global launch. At Diners Club, he helped create the company'sfirst marketing department and worked across both consumer and establishmentmarketing. In 1985, he left Diners Club to set up his own consultancy beforeteaming up with Richard Marshall and Paul Tullo to start TMW in 1987. Richard Marshall (age 48), Business Development Director Richard Marshall's career began in above the line advertising at Foote Cone &Belding where he worked on the British Airways, Cadburys and Bass Beers accountsin the late 70s and early 80s. He then moved to Paris and worked for DupuySaatchi & Saatchi on accounts such as P&G and IBM before moving back to the UKand working for Saatchi & Saatchi for another five years. In 1987, he startedTMW and is responsible for all business development across the agency. Paul Tullo, (age 49), Board Creative Director A founding partner of TMW, Paul Tullo has been instrumental in building theagency's creative reputation over the last 20 years and has been responsible forthe creative output of TMW. A trained Art Director, Paul is an active member ofthe Direct Marketing Association and is a Graduate of the LCP (London Institute)as well as a member of Chartered Society of Designers and Fellow of the RoyalSociety of Arts. Simon Collard (age 41), Finance Director After qualifying with Ernst & Young, Simon Collard worked in a variety ofEuropean roles with the oilfield company Schlumberger. He has spent the last 12years in marketing services, first in design with Davies Baron and then for thelast nine years with TMW. Dr Ian Robinson (age 48), Director of insight@TMW Director of insight@TMW (the planning and data strategy division) since 1995,Ian Robinson bridges the gap between traditional account planning and dataplanning. From the early to mid 80s, he carried out marketing research on aconsultancy basis for a number of companies including Sony UK and has a widevariety of above and below the line experience gained through working at Saatchi& Saatchi and Evans Hunt Scott on accounts including Nestle, BMW, Barclays andRAC. Mick Costella (age 35), Director of Strategy Mick Costella joined TMW in 2001 as part of the then embryonic digital division.His background was in marketing (British Airways) and consulting (Conduit) andhe soon moved from a digital role, growing the agency's strategy team. He wasappointed to the Board in 2005. Chris Freeland (age 37), Client Service Director After graduating in Business Studies, Chris Freeland initially began his careerin sales promotion before moving to direct marketing. He joined TMW in 1994 towork on the British Airways account. In addition to his role as Client ServiceDirector, he is responsible for the agency's training and development programme. Financial information The following financial information, which has been extracted without materialadjustment from the financial information on TMW and Colombus. TMW Year ended 31 December 2003 2004 2005 £'000 £'000 £'000Turnover 15,903 16,353 22,060Gross profit 10,858 10,989 13,989Profit on ordinary activities before taxation 650 461 3,130 Gross assets at 31 December 2005 were £9.1 million. Colombus Year ended 31 December 2003 2004 2005 £'000 £'000 £'000Turnover 634 698 1,044Gross profit 159 160 238Profit on ordinary activities before taxation 139 133 242 Gross assets at 31 December 2005 were £0.9 million. BACKGROUND TO AND REASONS FOR THE ACQUISITIONS The acquisitions of ICM Research and the TMW Group are in line with the Board'sstated acquisition strategy of building a diversified international marketingservices group through organic growth and selective acquisitions. The Boardbelieves that there is potential to identify synergistic benefits betweencurrently independent marketing services companies offering services such asadvertising, market research, direct marketing, PR, customer relationshipmarketing and other areas of marketing communications. ICM Research is one of the UK's leading independent market research companiesand its acquisition enables Creston to offer further quantitative andqualitative market research services to existing and potential clients andcreates critical mass for Creston's Insight Division. The TMW Group is one of the largest UK independent direct marketing agencies. Inaddition to adding further scale to Creston's MARCOMS division, the TMW Grouphas a capability in data analysis and digital technologies, in addition to itsreputation for creativity and strategic planning. The Acquisitions also fit Creston's acquisition criteria of having strong growthpotential in their chosen niche markets. Furthermore, the acquisition of ICMResearch and the TMW Group underlines the Company's commitment to exploitexisting market opportunities through acquisition and through leveragingcross-selling opportunities that exist within the Group. CURRENT TRADING AND PROSPECTS The Group has continued to make progress in the Group's second half of thefinancial year to 31 March 2006, and trading in the period to 28 February 2006has been ahead of the comparable prior year period. The Group's operatingbusinesses have continued to perform well, with new client wins in all divisionsthat include Walkers Crisps, Alfa Romeo, Lotus, Disney TV, Carlsberg and BP. In the year ending 31 March 2007, the Enlarged Group will benefit from thecontribution of a full year's trading results from Red Door as well asapproximately ten and a half month's contribution of trading results from theICM Group and the TMW Group. In addition, the Acquisitions will substantiallyincrease the size of the Group, broadening the range of marketing servicedisciplines that the Group is able to offer its clients and enhancing theoperating and synergy opportunities that exist between the operating companieswithin the Enlarged Group. As a result, the Board is confident of the EnlargedGroup's prospects for the financial year ending 31 March 2007. PRINCIPAL TERMS OF THE ACQUISITION AGREEMENTS ICM Acquisition Agreement The Company has today conditionally agreed to acquire the entire issued sharecapital of ICM Research for: (a) A closing payment of £19,373,154 payable to the ICM Vendors on Completion to be satisfied as to: (i) £14,123,154 in cash; and (ii) £5,250,000 by the issue of 3,068,829 new Ordinary Shares (the "ICM Consideration Shares").(b) A deferred closing payment of up to £1,130,771 payable to certain ICM Vendors in cash subject to and to the extent of certain tax reliefs being available to ICM Research after Completion.(c) Deferred consideration of up to £16,740,000 payable to the ICM Vendors subject to the average annualised profit before interest and tax of ICM Group from Completion to 31 March 2009 reaching agreed levels, to be satisfied as to: (i) 50 per cent. by the issue of either ICM Unsecured Loan Notes 2010 or ICM Series A Guaranteed Loan Notes 2010, at the ICM Vendors' option; and (ii) 50 per cent. by the issue of either ICM Series B Guaranteed Loan Notes 2010 or new Ordinary Shares (or a mixture of both) at the Company's option. On the production of audited accounts of ICM Group for the period from 1 July2005 to Completion, the ICM Vendors will pay to the Company a cash sum equal tothe amount (if any) by which the ICM Group net asset value at Completion is lessthan £6,003,925 and a cash sum equal to the amount (if any) by which the ICMGroup cash at bank at Completion is less than £3,503,925. If the ICM Group netasset value at Completion is more than £6,003,925 and ICM Group's cash at bankat Completion is more than £3,503,925, the Company shall pay the ICM Vendors anamount in cash equal to the lesser of the excess net asset value and the excesscash at bank, subject to a maximum of £250,000. If any deferred consideration becomes payable it will be paid followingcompletion of the audit of the ICM Group for the year ending 31 March 2009. Ifthe deferred consideration becomes payable ICM Group will also pay bonuses toICM Employees of up to £1,117,021. Such bonuses will be satisfied in cash and/ornew Ordinary Shares. Under the terms of the ICM Acquisition Agreement, theCompany shall not issue any new Ordinary Shares to the ICM Vendors as deferredconsideration if the issue of such Ordinary Shares would require any or all ofthe ICM Vendors to make a mandatory offer for the issued shares of the Companypursuant to Rule 9 of the City Code on Takeovers and Mergers. Save in exceptional circumstances as set out in the Prospectus to be issuedtoday: (a) the ICM Vendors are not permitted to sell any of: (i) the ICM Consideration Shares issued to them; or (ii) any Ordinary Shares issued to them as part of the net asset adjustment payment or the deferred consideration, for a period of 12 months starting on the date of allotment of such Consideration Shares or Ordinary Shares issued as part of the net asset adjustment payment or the deferred consideration; and(b) the ICM Vendors are not permitted to sell: (i) more than 25 per cent. of the ICM Consideration Shares issued to them; or (ii) more than 25 per cent. of any Ordinary Shares issued to them as part of the net asset adjustment payment or the deferred consideration, in any successive 12 month period after the first anniversary of the date of allotment. Completion of the ICM Acquisition Agreement is conditional on the passing of theResolutions, the Credit Agreement and the Placing Agreement becomingunconditional in certain respects and Admission. TMW Group Acquisition Agreement The Company has today conditionally agreed to acquire the entire issued sharecapital of each of TMW and Colombus for: (a) A closing payment of £19,325,000 payable to the TMW Vendors on Completion to be satisfied as to: (i) £13,305,000 in cash; and (ii) £6,020,000 by the issue of 3,518,924 new Ordinary Shares (the "TMW Consideration Shares").(b) A closing payment of £2,000,000 payable to the Colombus Vendors on Completion to be satisfied as to: (i) £1,300,000 in cash; and (ii) £700,000 by the issue of 409,177 new Ordinary Shares (the "Colombus Consideration Shares").(c) Deferred consideration of up to £17,011,200 payable to the TMW Vendors subject to the average annualised profit before interest and tax of the TMW Group from Completion to 31 March 2009 reaching agreed levels, to be satisfied as to: (i) 50 per cent. by the issue of either TMW Unsecured Loan Notes 2012 or TMW Series A Guaranteed Loan Notes 2012, at the TMW Vendors' option; and (ii) 50 per cent. by the issue of either TMW Series B Guaranteed Loan Notes 2012 or new Ordinary Shares (or a mixture of both) at the Company's option. On production of audited accounts of the TMW Group for the period from 1 January2006 to Completion, the TMW Vendors will pay to the Company a cash sum equal tothe amount (if any) by which the combined net asset value of the TMW Group atCompletion is less than £3,125,000 and a cash sum equal to the amount (if any)by which the combined cash at bank of the TMW Group at Completion is less than£2,625,000. If the combined net asset value of the TMW Group at Completion ismore than £3,125,000 and the combined cash at bank of the TMW Group atCompletion is more than £3,325,000, the Company shall pay the TMW Vendors anamount equal to the lesser of the excess net asset value and the excess cash atbank, subject to a maximum of £350,000. If any deferred consideration becomes payable it will be paid followingcompletion of the audit of the TMW Group for the year ending 31 March 2009. Ifthe deferred consideration is payable, TMW will also pay bonuses to the TMWEmployees of up to £3,358,865. Such bonuses will be satisfied in cash and/or newOrdinary Shares. Under the terms of the TMW Acquisition Agreement, the Companyshall not issue any new Ordinary Shares to the TMW Vendors as deferredconsideration if the issue of such Ordinary Shares would require any or all ofthe TMW Vendors to make a mandatory offer for the issued shares of the Companypursuant to Rule 9 of the City Code on Takeovers and Mergers. Save in exceptional circumstances as set out in the Prospectus to be issuedtoday:: (a) the TMW Vendors are not permitted to sell any of: (i) the TMW Consideration Shares and the Colombus Consideration Shares issued to them; or (ii) any Ordinary Shares issued to them as part of the deferred consideration, for a period of 12 months starting on the date of allotment of such Consideration Shares or Ordinary Shares issued as part of the deferred consideration; and(b) the TMW Vendors are not permitted to sell: (i) more than 25 per cent. of the TMW Consideration Shares and the Colombus Consideration Shares issued to them; or (ii) more than 33 per cent. of any Ordinary Shares issued to them as part of the deferred consideration, in any successive 12 month period after the first anniversary of the date of allotment. Completion of the TMW Acquisition Agreement is conditional on the passing of theResolutions, the Credit Agreement and the Placing Agreement becomingunconditional in certain respects and Admission. NEW BANKING FACILITIES The Company has entered into new banking facilities. The facilities comprise: (a) A term loan of £30 million which can be drawn down in connection with (i) repayment of all existing banking facilities, (ii) financing the consideration of future approved acquisitions and (iii) meeting obligations to pay certain deferred consideration liabilities of the Company. Interest is borne at 1.5 per cent. above LIBOR;(b) A revolving credit facility of up to £8 million to be used to finance the working capital and general corporate requirements of the Company. Interest is borne at 1.5 per cent. above LIBOR; and(c) An overdraft facility of £2 million to be used to finance the working capital and general corporate requirements of the Company. PRINCIPAL TERMS OF THE PLACING AND OPEN OFFER The Company is proposing to raise approximately £ 14.15 million (net ofexpenses) through the Placing and Open Offer. The Placing and Open Offer is inrespect of 9,132,306 New Ordinary Shares, of which 6,000,000 New Ordinary Shares(the Placing Shares) will be issued under the Placing and 3,132,306 New OrdinaryShares (the Open Offer Shares) under the Open Offer. The net proceeds of thePlacing and Open Offer (together with £14.58 million of existing cash resourcesand new bank facilities) will be used to fund the ICM Closing Payment and theTMW Closing Payment. The fundraising has been structured by way of the Placing and Open Offer inorder to strengthen the Company's shareholder base by allowing, subject toShareholder approval, new institutional shareholders to subscribe for newOrdinary Shares on a firm basis through the Placing, whilst at the same timeproviding existing Shareholders with the opportunity to participate in thefundraising through the Open Offer. The disapplication of statutory pre-emption rights which Shareholders will beasked to approve at the EGM will enable the Directors to issue and allot thePlacing Shares and the Open Offer Shares otherwise than in connection with a prorata issue of new Ordinary Shares to Shareholders. Under the terms of the Placing Agreement, Charles Stanley as agent for theCompany has placed with institutional and other investors the Placing Shares andOpen Offer Shares at the Offer Price, of which the Open Offer Shares have beenconditionally placed, subject only to clawback by Qualifying Shareholders inorder to meet valid acceptances pursuant to the terms of the Open Offer. CharlesStanley, as agent for and on behalf of the Company, is inviting QualifyingShareholders to subscribe for Open Offer Shares at a price of 165 pence per OpenOffer Share, free of all expenses, payable in full on application on thefollowing basis: 1 Open Offer Share for every 12 Existing Ordinary Shares registered in their names at the close of business on the Record Date, and so inproportion for any other number of Existing Ordinary Shares then registered. Thenumber of New Ordinary Shares for which Qualifying Shareholders are entitled toapply is set out on the Application Form. Qualifying Shareholders may apply for as many New Ordinary Shares as they wish,up to a maximum of twice their pro rata entitlement. Any New Ordinary Sharesapplied for in excess of their pro rata entitlement will be satisfied only tothe extent that corresponding applications by other Qualifying Shareholders aremade for less than their entitlements and excess applications may therefore bescaled down in such a manner as the Company and Charles Stanley may determine.Valid applications up to Qualifying Shareholders' pro rata entitlements will besatisfied in full. Entitlements of Qualifying Shareholders will be rounded down to the nearestwhole number of New Ordinary Shares. Accordingly, Shareholders holding fewerthan 12 Existing Ordinary Shares will have no entitlement to subscribeunder the Open Offer. Any resulting fractional entitlements of QualifyingShareholders arising under the Open Offer will not be allocated pursuant to theOpen Offer but will be aggregated and sold by Charles Stanley pursuant to thePlacing Agreement for the benefit of the Company. Holdings of Existing OrdinaryShares in certificated and uncertificated form will be treated as separateholdings for the purpose of calculating entitlements under the Open Offer. The New Ordinary Shares issued pursuant to the Placing and Open Offer, whenissued, will be fully paid and will rank pari passu in all respects with theExisting Ordinary Shares, including the right to record date on or after, thedate of their issue and they will be issued free from all liens, charges andencumbrances. Application has been made to the UK Listing Authority for the Placing Shares andthe Open Offer Shares to be admitted to the Official List of the UK ListingAuthority and for the Placing Shares and the Open Offer Shares to be admitted totrading on the London Stock Exchange's market for listed securities. The PlacingShares and the Open Offer Shares are not being made available in whole or inpart to the public except under the terms of the Open Offer. Not all Shareholders will be Qualifying Shareholders. Shareholders who arelocated or resident in, or who are citizens of, or who have a registeredaddress, in an Excluded Territory (regardless of the number of Existing OrdinaryShares that they hold) will not qualify to participate in the Open Offer. Theattention of Overseas Shareholders is drawn to paragraph 5.6 of Part III of theProspectus. The Open Offer is not a "rights issue". Invitations to apply under the OpenOffer are not transferable unless to satisfy bona fide market claims and theApplication Form is not a document of title and cannot be traded. QualifyingShareholders should be aware that, in the Open Offer, unlike in the case of arights issue, any Open Offer Shares not applied for under the Open Offer willnot be sold in the market or placed for the benefit of Qualifying Shareholders,but will be taken up under the Placing, with the proceeds retained for thebenefit of the Company. The Open Offer is subject, inter alia, to the satisfaction of the followingconditions on or before 17 May 2006 (or such later date as the Company andCharles Stanley agree, but in any event not later than 31 May 2006): (i) the passing of the Resolutions at the EGM or any adjournment thereof;(ii) the ICM Acquisition Agreement and the TMW Acquisition Agreement having become unconditional in all respects (save in respect of Admission);(iii) the Placing Agreement becoming wholly unconditional and not having been terminated prior to Admission; and(iv) Admission. Under the terms of the Placing Agreement, Charles Stanley has the right toterminate its obligations under the Placing Agreement in the event of, interalia, any of the warranties contained therein not being true in any materialrespect or a breach by the Company in any material respect of the PlacingAgreement. If the conditions of the Placing Agreement are not fulfilled on orbefore the relevant date in the Placing Agreement, application monies will bereturned to applicants without interest as soon as possible thereafter. ThePlacing and Open Offer have not been underwritten. EXTRAORDINARY GENERAL MEETING An Extraordinary General Meeting of the Company will be held at 11.00 a.m. on15 May at which Shareholders will be asked to consider theResolutions, necessary to approve and implement the Proposals. TIMETABLE Record Date for entitlement under the Open Offer close of business on Tuesday 18 April 2006 Publication of Prospectus Thursday 20 April 2006 Latest time and date for splitting of Application Forms 3.00 p.m. on Wednesday 10 May 2006(to satisfy bona fide market claims only) Latest time and date for receipt of Application Forms and 3.00 p.m. on Friday 12 May 2006payment in full under the Open Offer Latest time and date for receipt of Forms of Proxy 11.00 a.m. on Saturday 13 May 2006 Extraordinary General Meeting 11.00 a.m. on Monday 15 May 2006 Admission and commencement of dealings in New Ordinary 8.00 a.m. on Wednesday 17 May 2006Shares CREST members' accounts credited Wednesday 17 May 2006 Dispatch of definitive share certificates for New Ordinary Wednesday 24 May 2006Shares in certificated form (where applicable) Enquiries: Creston Plc 020 7930 9757www.creston.comDon Elgie, Chief ExecutiveBarrie Brien, CFO and COO Redleaf Communications 020 7955 1410Emma Kane/Miranda Good/Sanna Lehtinen Charles Stanley Securities 020 7953 2000Mark Taylor For the purposes of this press release Charles Stanley, which is authorised inthe United Kingdom under the Financial Services and Markets Act 2000, is actingas sponsor and stockbroker to the Company in relation to the Placing and OpenOffer, and is not acting for any other person and will not regard any otherperson (whether or not a recipient of this press release) as its customer inrelation to the Placing and Open Offer and will not be responsible for providingthe protections afforded to customers of Charles Stanley to any other person orfor providing advice to any other person in relation to the Placing and OpenOffer. If you require advice in relation to this press release you shouldcontact your stockbroker, bank manager, solicitor, accountant or otherindependent financial adviser authorised under the Financial Services andMarkets Act 2000. This press release does not constitute, or form part of the Placing and OpenOffer or any invitation to sell or issue, or any solicitation of any offer topurchase or subscribe for, any shares in the Company nor shall this pressrelease or any part of it, or the fact of its distribution, form the basis of,or be relied on, in connection with or act as any inducement to enter into anycontract or commitment whatsoever with respect to the Placing and Open Offer orotherwise. Definitions in this announcement bear the same meaning as those in theProspectus dated 20 April 2006, which will be sent to shareholders today. This information is provided by RNS The company news service from the London Stock Exchange