Ingenta Regulatory News (ING)

1 Apr 2008 17:23

Publishing Technology PLC01 April 2008 Publishing Technology PLC ("Publishing Technology" or "the Company") Proposed Placing to raise £1.1 million Issue of 76,923,060 New Ordinary Shares on conversion of Loan Notes Reorganisation of Share Capital and Notice of Extraordinary General Meeting Publishing Technology which designs, installs and hosts software systems forpublishers and information providers is pleased to announce a proposed Placingto raise £1.1 million (before expenses) and the issue of 76,923,060 New OrdinaryShares on conversion of £0.5 million of Loan Notes. Despite the progress made in the last year as shown in today's results, theprospects of the Group remain constrained by lack of working capital, and theBoard therefore believes that it is necessary for the Company to raiseadditional funds to support its continued product development and promotion inits market space. The publishing industry is evolving rapidly and the Boardbelieves that it is important to continue these developments to take fulladvantage of opportunities that have been created by the creation of thePublishing Technology group. Accordingly, the Company proposes a placing of 168,230,560 Placing Shares at0.65 pence per share to raise £1.1 million (before expenses). This includes£580,000 that has been invested in aggregate by the Directors and seniormanagement. Of this amount, Martyn Rose, the Company's Chairman has invested£500,000. In addition, the Company has agreed with the Trustees, inter alia,that £500,000 of the Loan Notes will be converted into 76,923,060 New OrdinaryShares at the Placing Price and that the next repayment of £500,000 due underthe Loan Notes on 31 December 2008 will be deferred to 30 June 2009, both ofwhich will assist the Company's working capital position. The nominal value of the Existing Ordinary Shares is 1p and they are currentlytrading at a discount to the nominal value. Thus the issue of shares at thePlacing Price can only take place following the Reorganisation. This willrequire Shareholder approval at the EGM and a circular has been sent toshareholders today. In addition, Shareholder approval is required to increasethe number of New Ordinary Shares which shall be in issue following theReorganisation, to authorise the Directors to allot New Ordinary Shares, todisapply pre-emption rights with regard to the allotment of New Ordinary Sharesand to amend the Company's Articles. In order to effect the Proposals, theResolutions need to be passed. Further information in relation to the Proposalsis set out below. Reasons for the Placing and Conversion and use of proceeds The Placing will raise approximately £0.94 million, net of expenses for theCompany. As detailed above, this, together with the reduction in overall debtresulting from the Conversion and the deferral of the next repayment date underthe Loan Notes will contribute to available working capital and the Company willutilise this to strengthen its balance sheet and assist in PublishingTechnology's continued development. Results The results for the financial period ended 31 December 2007 have been announcedtoday and can be viewed at www.publishingtechnology.com. Report and accounts forthe financial period ended 31 December 2007 will be sent to Shareholders in duecourse. Due to the reverse acquisition of Vista International Limited on 28 February2007, the accounts for this period cover an 18 month period, or specifically,Vista's trading prior to the acquisition from 1 July 2006 to 28 February 2007,and a further 10 months of the combined Publishing Technology businesses to 31December 2007. Highlights on post-merger trading include: • Revenues have increased each quarter post merger; • Overheads of combined businesses substantially reduced; • Trading cash flow positive by end of period; • Over 50 new customers during 2007 and high level of customer retention; and • Significant impact on revenues and profits by US Dollar exchange rate weakening in 2007. Financial highlights for full reporting period: • EBITDA of £0.2 million; • Total revenues of £18.4 million; • Gross profit of £6.2 million; and • Pre-tax loss of £1.7 million after foreign exchange losses of £0.3 million and amortisation of intangible assets of £0.8 million. Current trading and prospects 2007 saw the Company focus primarily on integration synergies and consolidationto provide the Group with a stable and growing revenue base, and overheads werereduced significantly. The Directors are particularly pleased that the expertiseand relationships of the combined Publishing Technology sales team havesuccessfully enabled realisation of new business opportunities that the separateorganisations had previously lacked the authority and ability to complete. The Directors believe that the results of this greater customer confidence inPublishing Technology are illustrated in the improvement in trading post merger,and the Board is confident that this can be carried forward into 2008 by: • continuing to focus on increasing high-margin revenue streams; • providing innovative products to the expanding publishing and information industries; and • using the breadth of the Publishing Technology tools and services to differentiate the Group from its competitors. Having completed vital integration and consolidation activities during 2007, theDirectors believe that the potential for the business in the coming years isconsiderable and they look forward to the future with confidence. The Reorganisation The Reorganisation will result in the sub-division of each Existing OrdinaryShare of 1 p into one New Ordinary Share of 0.1 p and one Deferred "B" Share of0.9p. The number of New Ordinary Shares in issue following the Reorganisation(but prior to the issue of the Placing Shares and Conversion Shares) will equalthe number of Existing Ordinary Shares currently in issue. After the implementation of the Reorganisation the nominal value of each NewOrdinary Share will be one tenth of that of each Existing Ordinary Share butsubject to that, each New Ordinary Share will have the same rights (includingvoting and dividend rights and rights on a return of capital) as each ExistingOrdinary Share has at present. The rights attaching to the Deferred "B" Shares, which are set out below and forwhich no application for admission to trading on AIM will be made, will beminimal, thereby rendering them effectively valueless. No certificates will beissued in respect of the Deferred "B" Shares. The rights attaching to theDeferred "B" Shares can be summarised as follows: • they will not entitle holders to receive any dividend or other distribution or to receive notice of, attend, speak at or vote at general meetings of the Company; • on a return of assets on a winding up, they will only entitle the holder to the amounts paid up on such shares after the repayment of £10 million per New Ordinary Share; • they will authorise the Company to appoint any person to execute on behalf of the holders of the Deferred "B" Shares a transfer of such shares to the Company, or such person as the Company may nominate as custodian, without any payment therefore and without the sanction of the holders of the Deferred "B" Shares; and • the creation and issue of further shares which rank equally or in priority to the Deferred "B" Shares or the passing of a resolution of the Company to cancel the Deferred "B" Shares or to effect a reduction in capital shall not constitute a modification or abrogation of their rights. Only whole numbers of shares will be issued. Amendment to the Articles As part of the Reorganisation, the Company's Articles will need to be amended toinclude the rights of the Deferred "B" Shares as described above. Save in respect of the Deferred "B" Shares, no further amendments to theCompany's Articles will be undertaken. The Placing and the Placing Agreement Pursuant to the Placing Agreement entered into on 1 April 2008, 168,230,560 NewOrdinary Shares have been conditionally placed with institutional and otherinvestors at the Placing Price to raise net proceeds of approximately £0.94million. The Placing Shares will, on Admission, be credited as fully paid andwill have the same rights in all respects as the New Ordinary Shares arisingfrom the Reorganisation and the Conversion Shares, including the right toreceive all dividends and other distributions declared, made or paid on the NewOrdinary Shares by reference to any record date following Admission. The Placing is conditional, inter alia, upon: • the approval of the Resolutions at the EGM; • the Placing Agreement becoming unconditional in all respects and not having been terminated in accordance with its terms; and • Admission. As part of the Placing, Directors and members of the senior management team haveagreed to subscribe in aggregate for 89,230,560 Placing Shares at the PlacingPrice, which represents £580,000 in aggregate or approximately 53 per cent. ofthe Placing. Directors' shareholdings The interests of the Directors in the ordinary share capital of the Company asat 1 April 2008 and as they are expected to be immediately following theReorganisation and Admission are as follows: Number of Percentage of Conversion Enlarged Ordinary Existing issued New Shares Holding Shares Ordinary Placing Shares of 1p Shares each Martyn Rose* 91,965,293 76,923,060 76,923,060 245,811,413 29.2 George Lossius 36,164,628 3,846,100 - 40,007,728 4.8 Alan Moug 36,414,628 3,846,100 - 40,007,728 4.8 Ward Shaw 6,308,978 - - 6,308,978 0.7 Mark Rowse 26,558,558 769,200 - 27,327,758 3.2 *34,591,265 Existing Ordinary Shares are held by the Trustees Conversion and Amendments to the Loan Notes Under current terms, the Loan Notes can be converted into Ordinary Shares onlyin the months of June and December in the years 2008, 2009 and 2010, at a rateof 26.67 Ordinary Shares for every £1.00 of Loan Notes converted in 2008(effectively, 3.75p per share), 19.05 Ordinary Shares for every £1.00 of LoanNotes converted in 2009 (effectively, 5.25p per share) and 14.29 Ordinary Sharesfor every £1.00 of Loan Notes converted in 2010 (effectively, 7.00p per share).The Loan Notes are held by the Trustees of the MC Rose Settlement No. 1, asettlement of which Martyn Rose, a director of the Company, is a trustee andbeneficiary. The Company has today entered into an agreement with the Trustees providing forconversion of part of the Loan Notes and amendment of the terms of the remainingLoan Notes. The key terms of this agreement can be summarised as follows: • the agreement is conditional on the passing of the Resolutions and completion of the Placing save for Admission; • £500,000 of the Loan Notes will be converted, at the Placing Price, into 76,923,060 New Ordinary Shares, being the Conversion Shares; • outstanding interest of approximately £185,000 due to the Trustees will be repaid immediately after Admission and the Trustees will waive any claim against the Company for its default in not making payments of principal and interest to date. Additionally, interest accruing from Admission will only become payable on 31 December 2008, with no interest payable in June 2008; • the next Loan Notes conversion window, June 2008, will be deferred to December 2008; • the conversion price applying during the conversion windows of June and December 2008, currently 3.75p per ordinary share, will be reduced to 1p per New Ordinary Share in respect of up to £1 million of the Loan Notes and any balance of the £1 million of Loan Notes not converted in December 2008, will be available for conversion at 1p per New Ordinary Share between 1 April 2009 and 30 June 2009; • the conversion price applying during the conversion window of December 2009, currently 5.25p per ordinary share, will be reduced to 1p per New Ordinary Share in respect of up to £500,000 of Loan Notes, provided that no more than a total of £1 million of Loan Notes is converted at 1p per New Ordinary Share in the December 2008 and 1 April 2009 to 30 June 2009 and December 2009 conversion periods; • the next repayment date of 31 December 2008, on which £500,000 is repayable, will be postponed until 30 June 2009. Save as summarised above, the terms of the Loan Notes will remain unaltered. Given that Martyn Rose is a substantial shareholder and a Director, theamendment of the terms of the existing Loan Notes is a related party transactionunder the AIM Rules. Application will be made to the London Stock Exchange for the New OrdinaryShares in issue arising from the Reorganisation, the Placing Shares and theConversion Shares to be admitted to trading on AIM. It is expected thatAdmission will become effective and dealings in the New Ordinary Shares in issuearising from the Reorganisation, the Placing Shares and the Conversion Shareswill commence on 28 April 2008. No application has been or is being made forthese shares to be admitted to any other recognised investment exchange. Working capital In the opinion of the Directors having made due and careful enquiry (but withouthaving engaged the Company's auditors to test or report on their findings),taking into account the bank and other facilities available to the Group, thereduction in debt arising on the Conversion and the net proceeds of the Placing,the working capital available to the Group will be sufficient for its presentrequirements, that is for at least the next 12 months from the date of thisdocument. Extraordinary General Meeting An Extraordinary General Meeting to consider the Proposals will be held at 44Southampton Buildings, London WC2A 1AP at 11am on 25 April 2008. For further information please contact: Publishing Technology PLCGeorge Lossius/Alan Moug 01865 397800 FinnCap, nominated adviser and brokerGeoff Nash/Rose Herbert 020 7600 1658 The Communication Group plcRichard Evans 020 7630 1411 / 0775 108 7291Kit Bingham 020 7630 1411 / 0788 074 8672 PLACING STATISTICS Placing Price 0.65pNumber of Placing Shares, the subject of the Placing 168,230,560Number of New Ordinary Shares issued pursuant to partial conversion of the Loan Notes 76,923,060Number of New Ordinary Shares in issue following the Placing, Conversion and Reorganisation 841,361,040Market capitalisation of the Company at the Placing Price £5.5 millionEstimated net proceeds receivable by the Company £0.94 million EXPECTED TIMETABLE OF PRINCIPAL EVENTS Latest time and date for receipt of Forms of Proxy 11am on 23 April 2008Extraordinary General Meeting 11am on 25 April 2008Record Date for the Reorganisation 25 April 2008Admission and dealings in the issued New Ordinary Shares, the Placing Shares and Conversion Shares commence and CREST accounts credited (where applicable) 8am on 28 April 2008Issue of share certificates in respect of the Placing Shares and Conversion Shares (where applicable) By 6 May 2008 DEFINITIONS The following definitions apply throughout this announcement, unless the context otherwise requires: "Act" the Companies Act 1985 (as amended) or the Companies Act2006 (as amended), as applicable "Admission" the admission of the issued New Ordinary Shares, the Placing Shares and the Conversion Shares to trading on AIM becoming effective in accordance with rule 6 of the AIM Rules "AIM" the market of that name operated by the London Stock Exchange "AIM Rules" the AIM Rules for Companies or the AIM Rules for Nominated Advisers as the context may require, issued by the London Stock Exchange governing the operation of AIM "Articles" the articles of association of the Company for the time being "Company" or Publishing Technology PLC "Publishing Technology" "Conversion" the conditional conversion of £500,000 nominal amount of Loan Notes into the Conversion Shares "Conversion Shares" 76,923,060 New Ordinary Shares to be issued at the Placing Price pursuant to the Conversion "Deferred "B" Share" a deferred share of 0.9p in the capital of the Company, arising pursuant to the Reorganisation "Deferred Shares of existing deferred shares of 4p each in the capital of the Company 4p" "Directors" or "the the directors of Publishing Technology Board" "EGM" the extraordinary general meeting of the Company to be held at 44 Southampton Buildings, London WC2A 1AP at 11am on 25 April 2008 to consider the Resolutions "Existing Ordinary the 596,207,420 ordinary shares of 1 p each in issueShares" or "Existing Shares" "FinnCap" JM Finn Capital Markets Limited which is regulated and authorised by the FSA and who is acting as the Company's nominated adviser (as defined in the AIM Rules) and broker "Group" the Company and its subsidiary undertakings "London Stock London Stock Exchange plc Exchange" "Loan Notes" the £2m of secured convertible loan notes issued to the MC Rose Settlement No. 1 pursuant to a loan note instrument dated 2 February 2007 "New Ordinary new issued and unissued ordinary shares of 0.1p each in the capital Shares" of the Company, arising pursuant to the Reorganisation "Placing" the conditional placing by FinnCap on behalf of the Company of the Placing Shares at the Placing Price, in accordance with the Placing Agreement "Placing Price" 0.65 pence per New Ordinary Share "Placing Agreement" the conditional agreement dated 1 April 2008 made between the Company and FinnCap "Placing Shares" the 168,230,560 New Ordinary Shares to be issued at the Placing Price pursuant to the Placing "Proposals" the Reorganisation, the Conversion and the Placing as described in this document "Registrars" Capita Registrars "Reorganisation" the proposed reorganisation of the share capital of the Company "Resolutions" he resolutions to be proposed at the EGM as set out in the EGM Notice "Shareholder" a holder of Existing Ordinary Shares "Trustees" Martyn Rose and James Sykes as the trustees of the MC Rose This information is provided by RNS The company news service from the London Stock Exchange