CSLT.L Regulatory News (CSLT)

13 Sep 2007 07:02

Cosalt PLC13 September 2007 Not for release, publication or distribution in whole or in part, directly or indirectly, in or into or from the United States, Canada, Australia, South Africa, the Republic of Ireland or Japan or any jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction. 13 September 2007 COSALT PLC ("COSALT") - PROPOSED ACQUISITION OF GTC HOLDINGS LIMITED ("GTC") PROPOSED PLACING AND OPEN OFFER The Board of Cosalt announces the Company has conditionally agreed to purchasethe entire issued share capital of GTC, a marine services business specialisingin the supply, repair and management of lifting equipment for the oil & gassector, for a consideration of up to approximately £30 million. Based inAberdeen, Scotland, GTC services most of the large operators in the offshore oiland gas market in the North Sea. The Board of Cosalt also announces that, in order to finance the Acquisition,the Company proposes to raise approximately £25.5 million at 330 pence per shareby way of a Placing and Open Offer. In addition, the vendors will takeapproximately £7 million of their total consideration in new Cosalt shares. Acquisition Highlights • Significantly enhances Cosalt's core Marine Safety business in line with strategy • Highly complementary to Cosalt's existing testing and inspection services for lifting equipment • Opportunity for Cosalt to extend its reach into large operators in offshore oil & gas market in the North Sea from its existing service stations and through expansion in Norway, Denmark and Netherlands • Expected to be earnings enhancing in first full year following the acquisition Placing and Open Offer • Expected to raise approximately £25.5 million through the issue of newordinary shares, approximately half of which have been firmly placed with DavidRoss, the Rappaport Family and Hanover Investors Management LLP whilst theremaining shares have been underwritten by David Ross and the Rappaport Family;all of whom are all existing Cosalt shareholders. John Kelly, Chairman of Cosalt, commented: "The acquisition of GTC represents a step-change in the Group's development. Itis an excellent addition to the Group and will significantly enhance our coreMarine Safety business, one of our principal strategic objectives. GTC meetsall of our acquisition criteria and expands our service offering in the sizeableNorth Sea offshore oil & gas market in the UK, where we already have anextensive network of servicing stations. The share placing shows strong commitment from our existing shareholders, MrDavid Ross, the Rappaport Family and Hanover Investors Management LLP. Itallows us to both fund the acquisition and strengthen the Group's balance sheet which provides us with the flexibility to take advantage of furtheropportunities that may arise." This summary should be read in conjunction with the full text of the attachedannouncement and the Appendices thereto. Certain terms used in thisannouncement are defined in Appendix 2 to the announcement. Enquiries: Cosalt 01472 504504Per Jonsson, Chief ExecutiveNeil Carrick, Financial Director Noble Grossart Limited 0131 226 7011Guy Stenhouse College HillMatthew Gregorowski 020 7457 2020Mark Garraway Terms used in this summary but not defined herein shall have the meaning givento them on the full text of the announcement. The Prospectus and the Application Form will be posted to QualifyingShareholders as soon as practicable. This announcement is an advertisement and not a prospectus and investors shouldnot subscribe for or purchase any shares referred to in this announcement excepton the basis of information in the Prospectus to be published by Cosalt in duecourse. Copies of the Prospectus will, following publication, be available fromCosalt's registered office. This announcement is not intended to and does not constitute, or form any partof, any offer to sell or subscribe for any securities or the solicitation of anyvote or approval in any jurisdiction. Any application or other response to theOpen Offer should be made only on the basis of the information contained orreferred to in the Prospectus and the Application Form. The laws of relevantjurisdictions may affect the availability of the Open Offer to persons notresident in the United Kingdom. Noble Grossart, which is authorised and regulated in the United Kingdom by theFinancial Services Authority for designated investment business, is actingexclusively for Cosalt and for no one else in relation to the Acquisition andthe Placing and Open Offer and will not be responsible to anyone other thanCosalt plc for providing the protections afforded to clients of Noble Grossartor for giving advice in relation to the Acquisition, the Placing and Open Offer,or any other matter referred to in this document. This announcement has been prepared for the purpose of complying with Englishlaw and the information disclosed may not be the same as that which would havebeen disclosed if this announcement had been prepared in accordance with thelaws of jurisdictions outside the UK. Applications will be made to the Financial Services Authority for the NewOrdinary Shares to be admitted to the Official List and to the London StockExchange for the New Ordinary Shares to be admitted to trading on the LondonStock Exchange's main market for listed securities. The availability of the Open Offer to persons who are not resident in the UnitedKingdom may be affected by the laws of the relevant jurisdiction in which theyare located. In particular, the Open Offer will not be made directly orindirectly into the United States, Canada, Australia, or Japan. If you are in any doubt about the action you should take, you are recommended toseek your own personal financial advice immediately from your stockbroker, bankmanager, solicitor, accountant or independent financial adviser authorised underthe Financial Services and Markets Act 2000 if you are resident in the UnitedKingdom or, if not, from another appropriately authorised independent financialadviser. Not for release, publication or distribution in whole or in part, directly orindirectly, in or into from the United States, Canada, Australia, South Africa,the Republic of Ireland or Japan or any jurisdiction where to do so wouldconstitute a violation of the relevant laws of such jurisdiction. COSALT PLC ("COSALT") - PROPOSED ACQUISITION OF GTC HOLDINGS LIMITED ("GTC") PROPOSED PLACING AND OPEN OFFER 1. Introduction The Board of Cosalt is pleased to announce that the Company hasconditionally agreed to purchase the entire issued share capital of GTC for atotal consideration of up to £30.3 million on a debt free and cash free basis.Of the consideration, up to £19.25 million (subject to adjustments atCompletion) will be payable in cash at Completion together with the issue of2,121,212 Cosalt shares with a value of £7.3 million based on the middle marketclosing price of a Cosalt share as at the close of business yesterday, being thelatest practicable date prior to this Announcement (the value of these shares atthe Open Offer Price is £7.0 million). The balance of up to £3.75 million willbe payable in cash according to the level of profit (in the range of £4.5million to £6.5 million) achieved by GTC in the year ending 30 November 2008. Further details of the Acquisition will be contained in the Prospectusto be sent shortly to the Shareholders of Cosalt. The Board of Cosalt also announces that, in order to finance theAcquisition, the Company proposes to raise approximately £25.5 million by way ofa Placing and Open Offer, details of which are set out in paragraph 6 of thisAnnouncement. Due to the size of the Acquisition, the Listing Rules require that theCompletion is conditional upon the approval of Shareholders at the ExtraordinaryGeneral Meeting. Shareholder approval is also being sought to implement thePlacing and Open Offer. A Prospectus will be sent to Shareholders with detailsof the Acquisition and the Placing and Open Offer, to explain why the Directorsconsider them to be in the best interests of the Company and its Shareholders asa whole, and to recommend that they vote in favour of the Resolutions to beproposed at the Extraordinary General Meeting. The Directors intend to vote infavour of the Resolutions in respect of 4,289,555 Shares in which they arebeneficially interested, representing approximately 29.0 per cent. of the issuedshare capital of the Company. 2. Information on GTC Background GTC was established in 1990 by the Melville family to meet the demand forincreased outsourcing in the supply, repair and management of lifting equipmentin the North Sea oil and gas industry. Since then, the focus on liftingequipment has evolved and now GTC is also able to offer a full integrity andcompliance management service. In 2005, GTC acquired Assembly Solutions & ToolsLimited, a hire company specialising in tools required by the offshore sector,to complement its existing activities. GTC has successfully built a reputationfor quality in both its product and service offering. GTC, like Cosalt, hasbenefited in recent years from the increasing level of safety regulationsgoverning its customers. Summary financial information Summary financial information relating to GTC for the three years ended 30November 2006 is set out in the table below: Year ended Year ended Year ended 30 November 30 November 30 November 2006 2005 2004Consolidated Income Statements £ 000 £ 000 £000 IFRS IFRS IFRSRevenue 17,913 13,928 11,777Net operating expenses (16,255) (14,699) (9,827)Operating profit/(loss) 1,658 (771) 1,950Financing costs (1,019) (896) (927)Financial income 11 - -Profit/(loss) before taxation 650 (1,667) 1,023Income tax (expense)/credit (3) 206 (333)Profit/(loss) for the financial year attributable tothe equity holders of the parent 647 (1,461) 690 Consolidated Balance SheetsNon-current assets (including goodwill) 6,352 6,496 6,094Current assets 9,445 9,263 8,147Non-current liabilities (2,993) (3,898) (4,591)Current liabilities (10,366) (10,070) (6,398)Net assets 2,438 1,791 3,252Total assets 15,797 15,759 14,241 Note: Investors should read the Prospectus and should not rely on the summaryfinancial information set out above. Source: The financial information on GTC will be set out in the Prospectus, suchinformation will be prepared on the basis of the accounting policies of Cosaltfor the period ended 29 October 2006 as set out in its annual report andaccounts for the financial period ended 29 October 2006. Current Trading Since the end of the last financial year GTC has continued its impressive trackrecord of winning new service contracts with major oil and engineering companiesin Aberdeen. New wins include Exxon Mobil and Lloyds Register for liftingservices and the outsourcing to GTC of the E-Quip (Complete Tool Management)division, part of PSN, a significant new venture. These wins have led tosubstantially increased levels of activity for GTC. Further information Financial information on GTC will be set out in the Prospectus. 3. Principal terms of the Acquisition The total consideration for GTC of up to £30.3 million on a debt freeand cash free basis is to be paid as follows: (a) up to £19.25 million payable on Completion of the Acquisition less anestimated £4.6 million of GTC's bank debt that Cosalt will discharge onCompletion; (b) 2,121,212 million Shares which will be allotted and issued to theSellers on Completion credited as fully paid. The value of those Shares, basedon the closing mid market Cosalt share price as at the close of businessyesterday (being the latest practicable date prior to this Announcement), was£7.3 million (the value of these Shares at the Open Offer Price is £7 million);and (c) up to £3.75 million of Deferred Consideration payable in cash on asliding scale basis dependent upon the achievement by GTC of EBIT for the yearending 30 November 2008 of between £4.5 million and £6.5 million. The consideration will be subject to adjustments, the net financial effect ofwhich is currently expected to result in the cash paid or obligations taken onby Cosalt at Completion being reduced by approximately £1 million. The Acquisition Agreement is conditional, inter alia, upon: 1. the passing of the Resolutions; and 2. the Placing and Open Offer Agreement becoming unconditional (saveas to the conditions therein relating to completion of the Acquisition Agreementand Admission). Cosalt and the Sellers have rights to terminate the Acquisition Agreement priorto Completion in the event of a breach of warranty which could give rise todamages in excess of £2 million. The Sellers have a further right to terminatethe Acquisition Agreement in the event that Completion does not occur withineight weeks of the date of the Acquisition Agreement. The Acquisition Agreementcannot be terminated by any party following Admission. As part of the Acquisition it has been agreed that a company owned by members ofthe Melville family will acquire certain properties owned by the GTC Group.These properties will then be leased back to GTC at an aggregate annual rentalcost of £345,000 (excluding service and other charges). Further details of the Acquisition Agreement will be contained in theProspectus. 4. Background to and reasons for the Acquisition and financial effects ofthe Acquisition (a) Strategic fit Cosalt's strategy is to become Europe's leading service provider for regulatedsafety equipment for people exposed to hostile environments. This is to befulfilled through organic growth and acquisitions that meet Cosalt's investmentcriteria. Cosalt is already engaged in the testing and inspection of liftingequipment in the UK, predominantly in ports and industry and has been keen toextend its reach to the large operators in the offshore oil and gas market inthe North Sea. GTC satisfies this key objective. The management teams ofCosalt and GTC believe that the rapid growth GTC has experienced in Aberdeenover recent years could be duplicated in the southern North Sea where Cosalt hasservice stations engaged in lifting and testing onshore and where GTC's offshorecontracts could be extended. Further growth is envisaged across the North Seain Norway, Denmark and the Netherlands where Cosalt's growing footprint willagain be the enabler. Cosalt believes that the financial benefits of the Acquisition will come fromfaster growth being available to the Enlarged Group than would have been thecase for either Cosalt or GTC on their own. GTC brings to the Enlarged Group,industry leading safety and quality standards in lifting gear inspection andtesting developed in close co-operation with the Health and Safety Executive.GTC also has contracts with most major North Sea oil and gas operators. Cosaltbrings growing geographic coverage, systems and management practices tocomplement GTC's technical expertise and commercial strengths. (b) Financial benefits and effects The Acquisition is expected to enhance Cosalt's earnings per share in the firstfull year following acquisition, the period ending 26 October 2008(1). Inaddition, Cosalt believes that the return on the investment in GTC will exceedthe Company's weighted average cost of capital. Cosalt also believes that the operating margins that will be generated from GTCwill exceed those historically earned by Cosalt, which were 3 per cent in theperiod ended 29 October 2006. 5. Reasons for the Placing and Open Offer The Placing and Open Offer being undertaken in connection with the Acquisitionis expected to raise approximately £25 million (net of expenses). The netproceeds are being applied to: • fund the acquisition of GTC and related transaction costs; and • provide additional working capital for the Enlarged Group's operations. 6. Details of the Placing and Open Offer Under the terms of the Placing Agreement, the Company has conditionally placedthe Firm Placed Shares with the Placees and the Open Offer Shares with theUnderwriting Placees, at the Open Offer Price of 330 pence per share(representing a discount of 3.8 per cent. to the Company's mid market closingshare price yesterday (being the latest practicable date prior to thisannouncement of the Acquisition). The Open Offer Shares are subject to clawbackto satisfy valid applications from Qualifying Shareholders under the Open Offer. The Open Offer Shares The Open Offer Shares represent approximately 38.9 per cent. of the New OrdinaryShares. The Open Offer Shares have been conditionally placed by the Company withthe Underwriting Placees subject to clawback to satisfy valid applications fromQualifying Shareholders under the Open Offer. The Open Offer is not being madeto the Placees whose entitlements, that would have arisen had it been so made,are being dealt with under the Placing as described below. Qualifying Shareholders are being given the opportunity to subscribe under theOpen Offer for Open Offer Shares at the Open Offer Price payable in full onapplication and free of expenses, pro rata to their existing shareholdings, onthe following basis: 12 Open Offer Shares for every 23 Existing Ordinary Shares held by them and registered in their names on the Record Date and so inproportion to any other number of Existing Ordinary Shares then held, roundeddown to the nearest whole number of Open Offer Shares. Qualifying Shareholders may apply for any whole number of Open Offer Shares upto their entitlements to be indicated on the Application Form. Qualifying Shareholders should note that the Open Offer is not a rights issueand that Open Offer Shares not applied for under the Open Offer will not be soldin the market for the benefit of Qualifying Shareholders who do not apply underthe Open Offer. Open Offer Entitlements are not transferable unless to satisfy abona fide market claim and the Application Form, not being documents of title,cannot be traded. Full details of the Open Offer and the terms and conditions on which it is beingmade, including the procedure for application and payment, will be contained inthe Prospectus and the accompanying Application Form. The Placing arrangements The Firm Placed Shares and the Open Offer Shares, which together representapproximately 78.4 per cent. of the New Ordinary Shares, have been placed by theCompany at the Open Offer Price with David Ross, the Rappaport Family andHanover I Master Fund LP (together "the Placees") conditional, inter alia, uponAdmission. The Open Offer Shares will be subject to clawback by QualifyingShareholders and if not so clawed back will be taken up equally by David Rossand the Rappaport Family (together "the Underwriting Placees"). The Firm PlacedShares represent that proportion of the New Ordinary Shares which is equal tothe Placees' present aggregate proportionate shareholding in the Company and arenot accordingly subject to the claw back arrangements referred to above.Hanover Investors' existing shareholding in Cosalt is held by two separate fundsone of which, Hanover I Master Fund LP, will take up both funds' proportionateamount of the Firm Placed Shares. General The New Ordinary Shares will, when issued and fully paid, rank pari passu in allrespects with the Existing Ordinary Shares, save that they will not be eligiblefor the final dividend in respect of the period ending 26 October 2007. Application will be made to the Financial Services Authority for the NewOrdinary Shares to be admitted to the Official List and to the London StockExchange for the New Ordinary Shares to be admitted to trading on the LondonStock Exchange's main market for listed securities. The Open Offer is not being made to certain Overseas Shareholders or to thePlacees. The Placing and Open Offer is conditional, inter alia, upon the following: (i) the passing of the Resolutions; (ii) Admission becoming effective by no later than 3.00 pm on 30 November 2007; and (iii) the Placing and Open Offer Agreement having become unconditionalin all other respects and not having been terminated in accordance with itsterms prior to Admission. A summary of the principal terms of the Placing andOpen Offer Agreement will be contained in the Prospectus. Application will be made for the Open Offer Entitlements of Qualifying CRESTShareholders to be admitted to CREST. Applications through the CREST system willonly be made in respect of the Qualifying CREST Shareholder originally entitledor by a person entitled by virtue of bona fide market claims. 7. Current trading and prospects Cosalt announced its unaudited interim results for the twenty six weeks to 29April 2007 on 3 July 2007. In the twenty six week period to 29 April 2007 Cosalt reported turnover of £63.9million (2006: £57.1 million) and profits before taxation of £0.6 million (2006:£0.1 million). Since the interim statement in July Cosalt's core Safety & Protection businesshas benefited from continued good performance from the Bofort businesses whichwere acquired in December 2006 and also from the recent acquisition of SSM inSpain which has come on stream strongly. The UK has been more challenging butoverall the Safety & Protection business is meeting Cosalt's expectations.Protective Clothing has been through a restructuring involving a 20 per centreduction in employee numbers and achieving its plan is proving difficult. Schoolwear is presently performing in line with Cosalt's plans. In Holiday Homes poor demand earlier in the year has been partly offset by anincrease in demand for caravan holiday homes as temporary housing for use by thevictims of severe flooding during June and July. Cosalt's Custom Homes log cabinbusiness, which has a significant market presence, has continued its strongperformance in line with management expectations. 8. Dividend policy The Company has since 2004 paid an annual dividend of 18.75 pence per share.The cost of such a dividend, based on the Company's present issued capital isapproximately £2.8 million. In recent years the dividend has not been coveredby earnings and has been partly paid from reserves. The Company is currently engaged in a process of significant change tore-orientate its business towards areas of growth, particularly those wheresafety regulation is a key market driver, in which the Company has establishedexpertise. The acquisition of GTC is an important part of this change and isbeing funded in full by the issue of new ordinary shares so that the Company hasthe balance sheet strength and flexibility to maximise other opportunities whichmay arise. The Board believes that the maintenance of the dividend which has been paid inthe recent past is no longer appropriate, particularly in light of the increasednumber of shares which will be in issue following the acquisition of GTC.Accordingly, the directors intend, subject to there being no major change in theCompany performance or external factors, to set a level of aggregate dividendfollowing the acquisition of GTC and related share issues which will result inbroadly the same overall level of dividend cost as would have been the case hadno extra shares been issued. This will result in a reduction of the dividendpaid per share. Had this revised dividend policy been in place in respect ofthe whole of the current financial year the Board would have intended to pay orpropose the payment of dividends totalling 12 pence per share. The directors intend, subject to there being no major change in the Company'sperformance or external factors, to recommend a final dividend of 6 pence pershare in respect of the current financial year - this dividend being reflected,as required by accounting rules, in the financial statements for the year to26th October 2008. The New Ordinary Shares will not be eligible for this finaldividend. The Board intends that the dividend level of 12 pence per share should form abase from which they can pursue a progressive dividend policy to reflect growthin the Company's earnings. 9. Overseas Shareholders It is intended that the Open Offer will not be made to certain OverseasShareholders, including to shareholders with registered addresses in Australia,the Republic of Ireland, the United States, Canada (including its provinces,territories and possessions), Japan and South Africa. Further details of therestrictions and exclusions applying to Overseas Shareholders will be set out inthe Prospectus. 10. Taxation The Prospectus will include a summary guide to current UK tax legislationrelating to the Open Offer Shares. 11. Extraordinary General Meeting It is expected that an Extraordinary General Meeting of the Company will be heldin early October 2007 at 10 Crown Place, London, EC2A 4FT for the purposes ofapproving the Acquisition and the Placing and Open Offer. Further details willbe set out in the Prospectus to be published and sent to Shareholders shortly. 12. Recommendation The Board, which has been provided with financial advice in connection with theAcquisition and the Placing and Open Offer by Noble Grossart, considers that theAcquisition, the Placing and Open Offer, and the Resolutions are in the bestinterests of the Company and its Shareholders as a whole. In advising the Board,Noble Grossart has placed reliance on the Board's commercial assessment of theAcquisition. Accordingly, the Board unanimously recommends you to vote in favour of theResolutions to be proposed at the Extraordinary General Meeting, as they intendto do in respect of 4,299,555 Shares in which they are beneficially interested,representing approximately 29 per cent. of the existing issued share capital ofthe Company. 13. Documentation A Prospectus containing the full terms and conditions of theAcquisition and of the Placing and Open Offer is expected to be published anddespatched to Shareholders shortly. The Prospectus will also contain notice of the Extraordinary GeneralMeeting expected to be held in early October 2007 for the purposes ofconsidering the necessary resolutions to implement the Acquisition and thePlacing and Open Offer. Copies of the Prospectus will also be available, free of charge, fromthe offices of Pinsent Masons at CityPoint, 1 Ropemaker Street, London, EC2Y 9AHand from the registered office of the Company, from the date of publication ofthe Prospectus until Admission. A copy of the Prospectus will also be posted tothe Company's website for the same period. Enquiries: Cosalt 01472 504504Per Jonsson, Chief ExecutiveNeil Carrick, Financial Director Noble Grossart Limited 0131 226 7011Guy Stenhouse College HillMatthew Gregorowski 020 7457 2020Mark Garraway The Prospectus and the Application Form will be posted to QualifyingShareholders as soon as practicable. This announcement is an advertisement and not a prospectus and investors shouldnot subscribe for or purchase any shares referred to in this announcement excepton the basis of information in the Prospectus to be published by Cosalt in duecourse. Copies of the Prospectus will, following publication, be available fromCosalt's registered office. This announcement is not intended to and does not constitute, or form any partof, any offer to sell or subscribe for any securities or the solicitation of anyvote or approval in any jurisdiction. Any application or other response to theOpen Offer should be made only on the basis of the information contained orreferred to in the Prospectus and the Application Form. The laws of relevantjurisdictions may affect the availability of the Open Offer to persons notresident in the United Kingdom. Noble Grossart, which is authorised and regulated in the United Kingdom by theFinancial Services Authority for designated investment business, is actingexclusively for Cosalt and for no one else in relation to the Acquisition andthe Placing and Open Offer and will not be responsible to anyone other thanCosalt plc for providing the protections afforded to clients of Noble Grossartor for giving advice in relation to the Acquisition, the Placing and Open Offer,or any other matter referred to in this document. This announcement has been prepared for the purpose of complying with Englishlaw and the information disclosed may not be the same as that which would havebeen disclosed if this announcement had been prepared in accordance with thelaws of jurisdictions outside the UK. Applications will be made to the Financial Services Authority for the NewOrdinary Shares to be admitted to the Official List and to the London StockExchange for the New Ordinary Shares to be admitted to trading on the LondonStock Exchange's main market for listed securities. The availability of the Open Offer to persons who are not resident in the UnitedKingdom may be affected by the laws of the relevant jurisdiction in which theyare located. In particular, the Open Offer will not be made directly orindirectly into the United States, Canada, Australia, or Japan. If you are in any doubt about the action you should take, you are recommended toseek your own personal financial advice immediately from your stockbroker, bankmanager, solicitor, accountant or independent financial adviser authorised underthe Financial Services and Markets Act 2000 if you are resident in the UnitedKingdom or, if not, from another appropriately authorised independent financialadviser. Not for release, publication or distribution in whole or in part, directly orindirectly, in or into from the United States, Canada, Australia, South Africa,the Republic of Ireland or Japan or any jurisdiction where to do so wouldconstitute a violation of the relevant laws of such jurisdiction. APPENDIX 1 PLACING AND OPEN OFFER STATISTICS Number of Existing Ordinary Shares in issue as at the date of this document 14,791,031 Number of New Ordinary Shares under the Placing and Open Offer 7,717,060 Consideration Shares 2,121,212 Enlarged Share Capital 24,629,303 Open Offer Price 330 pence Percentage of the Enlarged Share Capital subject to the Placing and Open Offer 31.33% Market capitalisation of the Company immediately following completion £81.3 million of the Acquisition and the Placing and Open Offer at the Open Offer Price Gross proceeds of the Placing and Open Offer (approximately) £25.5 million Net proceeds of the Placing and Open Offer (approximately) £25.0 million APPENDIX 2 GLOSSARY AND DEFINITIONS ''£'' pound sterling ''Acquisition'' the proposed acquisition of the entire issued share capital of GTC by the Company on the terms set out in the Acquisition Agreement "Acquisition Agreement" the conditional agreement dated 12 September 2007 made between the Sellers and the Company relating to the Acquisition ''Admission'' admission of the New Ordinary Shares to (i) the Official List and (ii) trading on the London Stock Exchange's main market for listed securities becoming effective in accordance with, respectively, the Listing Rules and the Admission and Disclosure Standards ''Application Form'' the application form that will accompany the Prospectus "Admission and Disclosure Standards" the requirements contained in the publication " Admission and Disclosure Standards" dated July 2005 containing, amongst other things, the admission requirements to be observed by companies seeking admission to trading on the London Stock Exchange's market for listed securities ''Cosalt'' or ''Company'' Cosalt plc "Completion" completion of the Acquisition in accordance with the terms of the Acquisition Agreement "Consideration Shares" 2,121,212 Ordinary Shares to be issued and allotted, credited as fully paid, to the Sellers upon Completion of the Acquisition ''CREST'' the relevant system (as defined in the Regulations) in respect of which Euroclear UK & Ireland Limited (formerly CRESTco Limited) is the operator (as defined in the Regulations) ''Directors'' or ''Board'' the directors of the Company "Eardley" Eardley Investments N.V. (registered in Curacao under number 34348(0)) Paraweg 45, Curacao, Dutch Antilles; one of the Placees and part of the interests of the Rappaport Family ''EBIT'' earnings before interest and taxation ''Enlarged Group'' the Group as enlarged by the Acquisition ''Enlarged Share Capital'' the issued ordinary share capital of the Company, immediately following Admission ''Existing Ordinary Shares'' the Ordinary Shares in issue at the date of this document ''Extraordinary General Meeting'' the extraordinary general meeting of the Company expected to be convened in early October 2007 "Firm Placed Shares" 3,887,669 of the New Ordinary Shares, being those which are to be placed firm with the Placees under the Placing "GTC" GTC Holdings Limited "GTC Group" GTC and its subsidiaries "Hanover I Master Fund LP" Hanover I Master Fund LP of PO Box 309 GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands; one of the Placees ''IFRS'' International Financial Reporting Standards "Initial Consideration" the amount of £19.25 million payable to the Sellers ''Listing Rules'' the listing rules made by the UK Listing Authority for the purpose of Part VI of FSMA, as amended from time to time ''London Stock Exchange'' London Stock Exchange plc "Noble Grossart" Noble Grossart Limited "New Ordinary Shares" the Consideration Shares, the Firm Placed Shares and the Open Offer Shares ''Official List'' the Official List of the UK Listing Authority ''Open Offer Entitlements'' the pro rata entitlements to subscribe for Open Offer Shares allocated to Qualifying Shareholders pursuant to the Open Offer ''Open Offer Price'' 330 pence per New Ordinary Share ''Open Offer Shares'' 3,829,390 of the New Ordinary Shares which are being made available to Qualifying Shareholders under the Open Offer ''Open Offer'' the conditional offer inviting Qualifying Shareholders to subscribe for the Open Offer Shares at the Open Offer Price, on the terms and subject to the conditions to be set out in Part VII of the Prospectus "Ordinary Shares" Ordinary shares of 25 pence each in the capital of the Company''Overseas Shareholders'' Qualifying Shareholders with registered addresses in, or who are citizens, residents or nationals of, jurisdictions outside the United Kingdom "Placees" Mr David Ross, the Rappaport Family and Hanover I Master Fund LP ''Placing'' the conditional placing by the Company pursuant to the terms and conditions of the Placing Agreement, of (i) the Firm Placed Shares with the Placees; and (ii) the Open Offer Shares with the Underwriting Placees, subject to clawback to satisfy valid applications made by Qualifying Shareholders under the Open Offer ''Placing and Open Offer Agreement'' the conditional agreement dated 12 September 2007 and made between the Company and the Placees relating to the Placing and Open Offer ''Prospectus Rules'' or the Prospectus Rules brought into effect on 1 July 2005 pursuant to Commission Regulation (EC) No. 809''PD Regulation'' /2004 ''Prospectus'' the prospectus prepared in accordance with the Prospectus Rules and the Listing Rules of the UKLA expected to be sent to Shareholders shortly ''Qualifying CREST Shareholders'' Qualifying Shareholders holding Existing Ordinary Shares in a CREST account ''Qualifying non-CREST Shareholders'' Qualifying Shareholders holding Existing Ordinary Shares in certificated form ''Qualifying Shareholders'' Shareholders on the register of members of the Company at the Record Date, other than the Placees and certain Overseas Shareholders "Rappaport Family" the Rappaport family and Eardley, existing shareholders in Cosalt ''Record Date'' the close of business on 17 September 2007 being the latest times by which transfers of Existing Ordinary Shares must be received for registration by the Company in order to allow transferees to be recognised as Qualifying Shareholders ''Resolutions'' the resolutions to be set out in the notice of EGM to be contained in the Prospectus "Sellers" the Melville family, Gordon Middleton and Uberior Investments plc being the holders of ordinary shares of 100 pence each in the issued share capital of GTC ''Shareholders'' holders of Ordinary Shares ''Shares'' or ''Ordinary Shares'' ordinary shares of 25 pence each in the capital of the Company ''UK GAAP'' the Generally Accepted Accounting Principles in the UK, which are in force from time to time ''UK Listing Authority'' or ''UKLA'' the FSA acting in its capacity as the competent authority for the purposes of FSMA ''UK'' or ''United Kingdom'' the United Kingdom of Great Britain and Northern Ireland, its territories and dependencies "Underwriting Placees" Mr David Ross and the Rappaport Family ''United States'' the United States of America, its territories and dependencies All references to legislation in this announcement are to English legislationunless the contrary is indicated. Any reference to any provision of anylegislation shall include any amendment, modification, re-enactment or extensionthereof. Words importing the singular shall include the plural and vice versa, and wordsimporting the masculine gender shall include the feminine or neutral gender. For the purposes of this announcement, subsidiary, subsidiary undertaking,associated undertaking, undertaking and parent undertaking have the respectivemeanings given to them by the Companies Act 1985 (but for this purpose ignoringparagraph 20(1)(b) of Schedule 4A to the Companies Act 1985) and "substantialinterest" means the direct or indirect interest of twenty (20) per cent, or moreof the equity share capital (as defined in the Companies Act 1985) of anyundertaking. -------------------------- (1) This statement that the Acquisition is expected to be earnings accretive forCosalt in the first full year of acquisition relates to future actions andcircumstances, which, by their nature, involve risks, uncertainties and otherfactors. Such statements do not constitute a profit forecast and should not beinterpreted to mean that earnings for any future financial period wouldnecessarily match or be greater than those for any preceding financial period.Earnings in this context represent net after tax earnings on an IFRS basis,excluding the amortisation of intangible assets and any exceptional items. This information is provided by RNS The company news service from the London Stock Exchange