Craven House Capital Regulatory News (CRV)

2 January 2013

CRAVEN HOUSE CAPITAL PLC

("Craven House" or the "Company")

Acquisition of 50.1% shareholding in "Finishtec - Acabamentos Técnicos em Metais Ltda - ME"

The Company today announces that it has agreed to purchase 17,502 shares in Finishtec - Acabamentos Técnicos em Metais Ltda. - ME ("Finishtec") representing 50.1% of Finishtec's issued share capital. The shares are being purchased at a price of approximately $57 per share, amounting to a total consideration of $1,000,000, from the founding partners of Finishtec (the "Shareholders"). Simultaneously, the Shareholders have agreed to subscribe for 49,739,760 new ordinary shares of 0.1 pence each in the Company ("Ordinary Shares") for 1.25p per share, amounting to an aggregate subscription of £621,747 (approximately equivalent to $1,000,000).

Finishtec is a Brazilian manufacturing company, based in Curitiba, with net assets of over $1,000,000. Founded in 1998, Finishtec specialises in the manufacture of industrial electrical switching, distribution and insulating equipment for the domestic power sector in Brazil. It has a strong track record in the development of new technological practices, and has recently launched a new product line targeting the renewable energy sector. Finishtec benefits from an impressive list of blue-chip clients, which include ABB, Siemens, Alstom, Toshiba and Odebrecht. Its turnover has averaged circa $680,000 annually over the past three years, although this is expected to more than double with sales from the new renewable energy product line. 

Whilst Craven House will be the major shareholder, it will remain a passive investor with no involvement in the management of the operation. Craven House will assist Finishtec with the funding of additional inventory, enabling Finishtec to secure larger orders

Mark Pajak, Acting Chairman, commented, "Finishtec's prospects, in what is a booming sector within a rapidly growing economy, are very exciting, and we are extremely pleased that Craven House has been able to secure this position.

Finishtec has demonstrated an impressive ability to continually develop and adapt its product offering. The focus on business development has helped the company establish strong relationships with some of the largest industrial conglomerates in the world. We believe that Finishtec is poised to build substantial market share in the highly specialised renewable energy sector in the coming years.

Craven House intends to utilise its asset base and banking relationships to provide Finishtec with the support needed to enable it to build inventory and secure much larger orders than it has been able to in the past. The credit and capital markets in emerging economies such as Brazil tend not to serve small and mid sized manufacturers. This gap in the market creates an environment in which very well run small-to-medium sized enterprises, such as Finishtec, are unable to access the capital they need to expand. Craven House aims to provide this support on terms that will give Finishtec a competitive advantage, so enabling it to increase revenues and enhance profit margins.

Once again we have demonstrated our ability to secure an excellent asset while continuing to value Craven House shares at a premium to the market price - a clearly defined and central aspect of our investment strategy. This and all other recent transactions have valued the Company's shares at 1.25p per share.

We were able to achieve this because Craven House is recognised as a value added shareholder that not only supplies capital but also leverages its expertise and relationships in the markets within which it operates. "

Application has been made to the London Stock Exchange for the new Ordinary Shares to be admitted to trading on AIM. Admission is expected to take place on 8th January 2013. The shares will rank pari passu with the existing issued ordinary shares.

Following the issue of the new ordinary shares, the Company's total issued share capital will consist of 547,776,501ordinary shares with each share carrying the right to one vote. The Company has no ordinary shares held in treasury. The total of 547,776,501 ordinary shares may therefore be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FSA's Disclosure and Transparency Rules.

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