Ingenta Regulatory News (ING)

2 Feb 2007 07:00

Ingenta PLC02 February 2007 "These materials are not for distribution in, and should not be distributed inor sent into, the United States, Canada, Australia or Japan. These materials donot contain or constitute an offer of securities for sale or an invitation oroffer to the public or form of application to subscribe for securities. The securities referred to in this document have not been and will not beregistered under the US Securities Act of 1933, as amended (the Securities Act),and may not be offered or sold in the United States unless registered under theSecurities Act or pursuant to an exemption from such registration. No publicoffering of securities is being made in the United States." VISTA to join forces with AIM-listed Ingenta plc to create Publishing Technology plc Ingenta, the AIM listed technology supplier to the publishing and informationindustries, is to join forces with VISTA, a specialist supplier of softwaresolutions to the publishing sector. Key points • Consideration comprises 260 million new Ingenta shares and £2 million convertible loan notes; • Associated fundraising of 150 million new Ingenta shares to raise £1.5 million (before expenses); • Enlarged Group will be renamed "Publishing Technology plc"; • Strengthening of Ingenta's management with the integration of VISTA's management team; • George Lossius, VISTA CEO, will be the Enlarged Group's CEO; and • Enlarged Group will benefit from achieving critical mass in terms of range of products and services, cross-selling and significant cost savings. Introduction Ingenta plc, the technology supplier that connects the publishing andinformation industries, today announces that it has conditionally agreed toacquire VISTA, a specialist supplier of software solutions to the publishingsector to create a new company, Publishing Technology plc. Due to the size of VISTA, the Acquisition is conditional upon approval ofShareholders at the EGM. The Acquisition comprises both the purchase of theentire issued share capital of VISTA and the purchase of all outstanding VISTALoan Notes on Admission. The consideration for the Acquisition is to besatisfied by the issue to the Vendors of a total of 260,000,000 ConsiderationShares and the issue to the Trustees (pursuant to the Loan Note Sale Agreement)of the £2 million New Loan Notes. At the Subscription Price, the ConsiderationShares would be valued at approximately £2.6 million. In conjunction with theAcquisition, a further 150,000,000 New Ordinary Shares are being issued at theSubscription Price pursuant to the Fundraising, to finance the costs of theProposals and provide working capital for the Enlarged Group. Immediatelyfollowing Completion and Admission the Enlarged Group's market capitalisation(at the Subscription Price) will be £5.96 million. The 150,000,000 New Ordinary Shares to be issued pursuant to the Proposals willrepresent approximately 25.2 per cent. of the Enlarged Share Capital of whichthe Consideration Shares will represent approximately 43.6 per cent. of theEnlarged Share Capital. The issue of the Consideration Shares will result in theVendors (who together with Martyn Rose will be beneficially interested in theConsideration Shares to be allotted to the Trustees and who together comprisethe Concert Party) holding more than 30 per cent. of the Enlarged Share Capitaland the approval of the Independent Shareholders is being sought to waive therequirements of Rule 9 of the City Code, which would otherwise require theConcert Party to make an offer for the Enlarged Share Capital. It is also proposed that conditionally on the Acquisition completing the name ofthe Company be changed to Publishing Technology plc. Background to and reasons for the Acquisition The new company will benefit from the strengths of the combination of Ingentaand VISTA, which are: • providing opportunities to increase sales through cross-selling, particularly through VISTA's ability to sell the ICD products into its existing marketplace • strengthening the management team of Ingenta by integration of the VISTA management team • creating critical mass both in terms of the range of products and services as well as the scale of the combined businesses • obtaining cost savings from synergies and from reduction of duplicated functions The Directors and Proposed Directors believe that there are significant costsynergies to be achieved from the reduction of the central or group functionssuch as human resources, finance, IT support and product development and, to alesser extent, from some synergies and savings in the service delivery teams. Information on VISTA The summarised trading record of the VISTA Group, extracted from the financialinformation on the VISTA Group set out in the Circular to shareholdersdespatched today is set out below: Year ended 30 June 2004 2005 2006 £'000 £'000 £'000 Turnover 9,664 11,102 10,772 Operating profit/(loss) 146 365 (284) Loss on ordinary activities before taxation (315) (69) (711) Loss before taxation above is stated after charging the (728) (729) (1,081)following amounts relating to redundancy costs, amortisation ofgoodwill, and interest payable and similar charges (other thaninterest on bank loans) Fundraising In order to finance the costs of the Proposals and to provide working capital,the Company has conditionally agreed to issue 60,750,000 New Ordinary Shares toinvestors and 89,250,000 New Ordinary Shares to the Subscribers, all at theSubscription Price to raise a total of £1,500,000. The New Ordinary Shares are not being offered to all shareholders on a pro ratabasis as to do so would impose an obligation on the Company to issue aprospectus which would significantly increase the time and costs expended by theCompany. Moreover, for many Shareholders the number of Ordinary Shares for whichthey would be entitled to subscribe on a pro-rata basis would be small in termsof monetary value. Accordingly, the New Ordinary Shares are only being offeredto a limited number of institutional shareholders and to the Subscribers. The Company has also entered into an overdraft facility with Royal Bank ofScotland PLC conditional (inter alia) on Completion and Admission pursuant towhich it will provide an on-demand overdraft facility of £1.1 million forworking capital of the Enlarged Group which will be secured over the assets ofthe Enlarged Group. The Consideration Shares represent 43.6 per cent. of the Enlarged Share Capitaland will, when issued, rank pari passu in all respects with the other OrdinaryShares then in issue, including all rights to all dividends and otherdistributions declared, made or paid following Admission. Certain of the Vendorshave, as mentioned below, agreed to restrictions on their disposing of theirConsideration Shares. Pursuant to the terms of the Loan Note Sale Agreement, the Trustees have agreedto sell £2,000,000 nominal value of Vista Loan Notes to the Company, inconsideration for the issue to the Trustees of the New Loan Notes. The Loan NoteSale Agreement is conditional upon completion of the Acquisition Agreement andAdmission. Application has been made to the London Stock Exchange for admission of theEnlarged Share Capital to trading on AIM. It is expected that Admission willbecome effective and that trading in the Enlarged Share Capital will commence on28 February 2007. Related party issues Martyn Rose is a director and non-executive Chairman of both the Company andVista. Mr Rose's interest in Vista shares is currently held through Trustees, ofwhom he is one, as trustees of the MR Settlement. Martyn Rose is the beneficiaryof the MR Settlement and is therefore deemed to be beneficially interested inany assets held by the Trustees. Martyn Rose's involvement in Vista commenced in December 2005 when, as part of arefinancing of the Vista Group (involving the buy-out of 3i Group plc's interestin the Vista Group) the Trustees advanced £2,400,000 to Vista under the terms ofthe Vista Loan Notes and he was simultaneously appointed a director andnon-executive Chairman of Vista. Current trading Since 30 June 2006, Ingenta has made progress in improving operating margins anddeveloping business from existing and new clients in its PCG and IngentaConnectdivisions. However, as indicated in the announcement of the interim results on29 September 2006, sales shortfalls in the ICD division, continued write off ofproduct development costs and high levels of central overheads have continued inthe second half. Since 30 June 2006, Vista has traded ahead of expectations in terms of businessgains and operating margins. Operating profits for the six month period to 31December 2006 are expected to exceed those of the same period in 2005. Prospects The Directors are confident that there will be considerable opportunities forthe Enlarged Group to increase revenues across its core business streams inparticular from cross selling from the Enlarged Group's expanded suite ofservices. It is also expected that the Enlarged Group will considerably improveits group financial performance in the current financial year from alreadyidentified cost savings. These savings are expected partly from reduction in duplicated functions andpartly from efficiencies created by the Acquisition. The Directors anticipatethat the Enlarged Group will benefit from the high degree of visibility providedby continuous revenue streams generated by renewable annual contracts. The anticipated increased financial strength and scale resulting from theAcquisition will position the Enlarged Group as an attractive entity to lead theconsolidation opportunities that exist within the markets in which it operates.Indeed, the Directors have already identified a number of potentialcomplementary acquisitions and will seek to bring these to fruition during thecourse of this year. Recommendations Given the extent of his interests in the Proposals and that Martyn Rose is arelated party for the purposes of the AIM Rules, Martyn Rose has notparticipated in the Board's deliberations with regard to the Proposals. TheIndependent Directors, who have been so advised by Collins Stewart, considerthat the Proposals are in the best interests of the Company and Shareholders asa whole and that the terms of the Proposals (having regard to the relatedparties issues involved) are fair and reasonable insofar as the Shareholders areconcerned. In providing advice to the Independent Directors, Collins Stewart hastaken into account the Independent Directors' commercial assessments.Accordingly, the Independent Directors recommend that shareholders vote infavour of the Resolutions to be proposed at the Extraordinary General Meeting,as they have irrevocably undertaken to do in respect of their own shareholdings,which in aggregate amount to 9.6 per cent. of the Existing Ordinary Shares. -ENDS- For further information please contact: Richard Evans/Tom Nutt The Communication Group plc Tel: 020 7630 1411 revans@thecommunicationgroup.co.uk Notes to editors New board: Martyn Rose , aged 58 (Non-Executive Chairman) Martyn brings considerable entrepreneurial and management expertise to the Groupand has been closely involved as an active investor in a wide range ofcompanies. He qualified as a barrister before forming a corporate financeboutique involved in restructuring and refinancing smaller companies in 1975.Martyn became chairman of his first listed company at the age of 34 and has beenchairman of over 20 public and private companies since then. Successes include being the founder and chairman of a commercial radio groupsold to the forerunner of Gcap, where shareholders increased their investmenttwelve-fold in eight years, and more recently the sale of his soft drinksmanufacturing business where once again he was founder and chairman, and whichhe and his partner sold for £75 million in 2005 representing a 230 times returnon their investment. Martyn was short listed for the Non Executive Director of the Year Award in thefirst National Business Awards in 2002 and has been invited to judge TheEntrepreneur of the Year Award category in 2004, 2005, and 2006. George Lossius, aged 44 (Chief Executive) George has been involved with VISTA for almost 20 years, holding executivepositions in France, the United Kingdom and the United States. As CEO of VISTA,in addition to the responsibilities of overall corporate management andstrategic direction of the VISTA Group, George oversees VISTA's technologyinvestments in new products, services and VISTA's expansion of offshoreinitiatives. Prior to taking up his current position in April 2006, George wasthe Managing Director of Applications and Technology within the VISTA Group,overseeing all aspects of the direction and development of VISTA's applicationsand offshore services. During his tenure with VISTA, George has also heldpositions as the CEO of VISTA North America, and CEO of VISTA France, as well asvarious project management, sales and technical positions. Before joining VISTA,George worked for Unilever at Thames Group Ltd, and in the mid 1990s was alsothe founder and publisher of an electronic sports newsletter. George is a memberof the Book Industry Study Group's Executive Board. Simon Dessain, aged 50 (Chief Operating Officer) As Chief Executive of Ingenta, Simon has had responsibility for leading thebusiness globally. Prior to being appointed Chief Executive in 2004, Simon heldthe position of Chief Operating Officer for two years. He joined Ingenta fromCincom Systems, a large software vendor, where he worked for 14 years. His finalrole with Cincom was Managing Director for North America and Europe for their iDSolutions division for two years, having previously been Director of EuropeanSales. Simon worked for IBM Australia before joining Cincom. Alan Moug, aged 40 (Chief Financial Officer) Alan Moug joined VISTA in 2003 as Chief Financial Officer with jurisdiction overfinance, human resources and administration for the VISTA Group internationally.Prior to his move to VISTA, Alan held a number of senior positions withinIntershop AG, a global provider of e-commerce software and solutions, includingCFO of Intershop Communications Inc. in San Francisco, California. Alan has alsobeen the Corporate Reporting Manager for ICI plc and Finance & IT Manager forICI Explosives Europe. Alan began his career as a Chartered Accountant withCoopers & Lybrand in Scotland after graduating from Glasgow University with aBachelor of Accountancy degree. Mark Rowse, aged 46 (Non-Executive Director) Mark founded Ingenta in 1998 and was CEO of the Company for six years until2004, when he became a Non-Executive Director. He began his career at NMRothschild in 1981, and since 1987 has been involved in a wide range of start-upand early stage businesses. Since stepping down as CEO of Ingenta, Mark has beendeveloping a number of other business interests in the software and contentindustries and is currently a Non-executive Director of a number of companies. Ward Shaw, aged 60 (Non-Executive Director) Ward is based in the USA and has been a Non-Executive Director of the Companysince 2000. Ward was founder, Chairman and CEO of CARL Corp from 1988 to 1999. This information is provided by RNS The company news service from the London Stock Exchange