Last checked at 24 Sep 2010 07:01
MERCURY RECYCLING GROUP PLC
Proposed Placing
Mercury Recycling Group PLC ('the Company') today announces its intention to raise £175,000 (net of expenses) by way of a conditional placing to Westleigh Investments Holdings Limited ("Westleigh").
Highlights
| ·; | Westleigh will subscribe for 1,701,308 Ordinary Shares at a price of 10 pence each and 8,399,996 warrants each at a price of 0.25 pence |
| ·; | Each warrant entitles Westleigh to subscribe for an Ordinary Share at 10 pence once the Company's share price has averaged 15 pence for a period of at least 30 consecutive days |
| ·; | Westleigh to be become a strategic investor with a 29.9% shareholding (on a fully diluted basis and assuming all Warrants are exercised) |
| ·; | Placing conditional upon receipt of necessary Shareholders approvals at a General Meeting to be held on 22 October 2010 |
| ·; | Proceeds to be used to explore growth opportunities |
| ·; | Giles Clarke and Nick Harrison of Westleigh to join the Company's board on completion of the Placing |
| ·; | Interim Results for the six months to 30 June 2010 announced separately today |
The Rt Hon The Lord Barnett JP PC, Non-Executive Chairman, commented:
"The proposals we are announcing today represent an exciting opportunity to create value for Shareholders. I am confident Westleigh's two representatives on the Board, Giles Clarke and Nick Harrison, will help to transform the future of the Group. They have a successful track record, and are very well respected in the City. This, together with the strategy we are spelling out today, can only help to move the Group forward."
| Enquiries: |
|
| Mercury Recycling Group PLC | 0161 877 0977 |
| The Rt Hon The Lord Barnett LP PC |
|
|
|
|
| Smith & Williamson Corporate Finance Limited | 0117 376 2212 |
| Nick Reeve (Nominated Adviser) |
|
| Barrie Newton (Broker) |
|
PROPOSED PLACING OF 1,701,308 NEW ORDINARY SHARES,
ISSUE OF WARRANTS TO SUBSCRIBE FOR 8,399,966 NEW ORDINARY SHARES
RELATED PARTY TRANSACTION
AND
NOTICE OF GENERAL MEETING
Introduction
Following the purchase by Westleigh Investments Holdings Limited of an aggregate of 3,618,569 ordinary shares of 10p each in the capital of the Company, as announced on 26 May 2010, the board of directors of the Company has been in discussions with Westleigh in relation to the Company's strategy and Westleigh's intentions. These discussions have resulted in Westleigh agreeing to subscribe for new Ordinary Shares and Warrants to raise approximately £175,000, net of costs and expenses, in order to support the Board's strategy for developing the Company. Further details of the Placing are set out below.
The Placing is conditional, inter alia, upon the Company obtaining approval from Shareholders to provide the Directors with the relevant authorities to allot Ordinary Shares, including the Placing Shares, and to issue the Warrants and Ordinary Shares pursuant to the terms of the Warrants on a non pre-emptive basis. The Placing is also conditional on Admission.
Background to and reasons for the Placing
The Board, including the Proposed Directors, remain committed to the Group's core business of recycling fluorescent tubes and intend to focus initially on growing this organically. However, as referred to previously, the Company has considered many aspects of diversification including battery and LCD display recycling.
In particular, given the advent of the new Battery Directive, the Company is considering ways of increasing the Group's battery collection, sorting and recycling service. The Board has historically considered a number of strategic acquisitions to complement its core business and Westleigh have indicated that they are keen to re-evaluate the market with the Directors, predominantly focussing on complimentary businesses in the recycling sector. The Company may also, in due course, seek to identify value for Shareholders through the acquisition of businesses outside of the recycling sector. Shareholders would be notified of any such acquisitions and their prior approval obtained should this be required, whether under the AIM Rules or otherwise.
The funds raised through the Placing will provide the Company with resources to assess such opportunities thoroughly. The Board believe that Westleigh's presence as a strategic investor will be an important factor in this process and it has invited Westleigh to appoint two directors to assist in implementation of the strategy. Westleigh has nominated the Proposed Directors and further information on each of them is provided below. All of the current directors will remain on the Board, although each of Joe Dwek and Anthony Leon have confirmed that they will resign as directors at the Company's next Annual General Meeting, or earlier if agreed with the Board.
Your Board believes the proposals present an exciting opportunity for the Company to create future value for the benefit of Shareholders and is unanimously recommending that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting.
Details of the Placing
Pursuant to the proposals Westleigh will:
1. subscribe for an aggregate of 1,701,308 Ordinary Shares in the capital of the Company by way of a non pre-emptive placing at the Placing Price; and
2. subscribe for 8,399,966 warrants at a price of 0.25p per warrant, with each warrant entitling Westleigh to subscribe for an Ordinary Share at the Placing Price, once the Company's share price has averaged 15p for a period of at least 30 consecutive days.
The Placing Price represents a 0.5 pence (or 4.8%) discount to the closing mid-market price of an Ordinary Share as at 22 September 2010, the latest practicable date prior to the announcement of the Placing.
The Placing is conditional upon, inter-alia:
i) effective resolutions being passed by the Company's shareholders at a general meeting granting the relevant authorities to the directors of the Company to allot, inter-alia, the Placing Shares on a non pre-emptive basis and to issue the Warrants, in each case pursuant to the Placing; and
ii) the Placing Shares being admitted to trading on AIM.
Application will be made for the Placing Shares to be admitted to trading on AIM. Subject to admission on AIM becoming effective, it is expected that dealings in the Placing Shares will commence on AIM on or around 25 October 2010. The Placing Shares will, when issued, rank pari passu in all respects with the existing Ordinary Shares.
The aggregate subscription monies for the Placing Shares will be £170,130.80 and for the Warrants will be £20,999.92, raising an aggregate of £191,130.72 (or approximately £175,000 net of costs and expenses). The Company is undertaking the Placing to facilitate implementation of its growth plans.
As at the date of this announcement, the Company has an authorised share capital of £5,000,000 divided into 50,000,000 Ordinary Shares of which 34,026,154 Ordinary Shares are in issue fully paid and an aggregate of 1,758,335 Ordinary Shares are subject to options to subscribe for Ordinary Shares.
Immediately following the issue of the Placing Shares (assuming none of the existing options are exercised), the issued share capital of the Company will increase to 35,727,462 fully paid Ordinary Shares and Westleigh will hold an aggregate of 5,319,877 Ordinary Shares representing approximately 14.89 per cent. of the Company's enlarged issued share capital (assuming none of the existing options are exercised). Immediately following the issue of Ordinary Shares pursuant to the Warrants (assuming all of the existing options are exercised), the issued share capital of the Company will increase to 45,885,763 fully paid Ordinary Shares and Westleigh will then hold an aggregate of 13,719,843 Ordinary Shares representing approximately 29.90 per cent. of the Company's then enlarged issued share capital.
Warrants
The Warrants will be issued as part of the Placing pursuant to the terms of a warrant instrument executed by the Company and dated 24 September 2010 ("the Instrument"). Under the Warrant Instrument, 8,399,966 Warrants are being created, with each Warrant granting the holder the right to subscribe for one Ordinary Share at a price of 10p per share (subject to adjustment in limited circumstances such as a subdivision or consolidation of the Company's share capital) payable in cash on exercise. The Warrants are exercisable within six years of being issued subject to the average closing market price of the Company's shares having been at least 15p per Ordinary Share over a period of at least 30 consecutive days (unless the Board waives this condition). The Company shall procure that the Ordinary Shares issued pursuant to the exercise of Warrants are admitted to trading on AIM. The Warrants themselves will not be dealt with or admitted to trading on any market and are only transferable in limited circumstances by their holders.
Board Changes
The Board has agreed that both the Proposed Directors will be appointed as non-executive directors of the Company with effect from Admission and the Company has entered into letters of appointment with Westleigh to provide the services of each of the Proposed Directors dated 24 September 2010, conditional upon Admission. Under the letters of appointment each of the Proposed Directors will be appointed non-executive directors of the Company for an annual fee of £5,000 each, payable to Westleigh together with reimbursement of reasonable expenses. The appointments are terminable on three months' written notice by either party provided that no such notice will have effect prior to the first anniversary of appointment.
Brief summaries of the biographies of the Proposed Directors are set out below:
Charles Giles Clarke (aged 57), Proposed non-executive director
Giles Clarke has considerable experience in the City and a number of commercial interests. He is Chairman of the England and Wales Cricket Board, Westleigh, Amerisur Resources plc, and of several private organisations. He founded Majestic Wine in 1981 and built it into a national chain of wine warehouses. He also co-founded Pet City in 1990, which he expanded nationwide before it was listed and subsequently sold in 1996 for £150 million and co-founded Safestore which was sold in 2003 for £40 million.
John Nicholas Harrison (aged 51), Proposed non-executive director
Nick Harrison qualified as an accountant with Arthur Andersen and subsequently held a number of senior positions with other professional services organisations. He was Finance Director of Pet City and has held finance director and chief executive positions in a number of private businesses. He is currently Chief Executive of Westleigh, a director of Amerisur Resources plc and of a number of private organisations.
Current trading
The interim accounts of the Company for the six months ended 30 June 2010 are being announced separately today and contain the Board's view on the current trading and prospects of the Company.
Related party transaction
The Placing constitutes a related party transaction under the AIM Rules by virtue of being a non pre-emptive issue of securities to a substantial shareholder. The Directors consider, having consulted the Company's Nominated Adviser, Smith & Williamson Corporate Finance Limited, that the terms of the transaction, as set out in the Circular, are fair and reasonable insofar as the Shareholders are concerned.
General Meeting and action to be taken
The notice of the General Meeting of the Company to be held at 11.00 a.m. on 22 October 2010 at The Copthorne Hotel, Clippers Quay, Salford Quays, Manchester M50 3XP at the end of the Circular sets out resolutions to provide the Directors with the relevant authorities to:
| 1 | allot the Placing Shares on a non-pre-emptive basis; |
| 2 | issue the Warrants on a non-pre-emptive basis; and
|
| 3 | issue Ordinary Shares pursuant to the exercise of the Warrants on a non-pre-emptive basis. |
A form of proxy for use at the GM is enclosed with the Circular. Whether or not you propose to attend the GM, you are requested to complete the form in accordance with the instructions printed on it and return it to Capita Registrars, PXS, 34 Beckenham Road, Beckenham, Kent, BR3 4TU as soon as possible, but in any event, to arrive not later than 11.00 a.m. on 20 October 2010.
If the Resolutions are duly passed at the GM, the Directors will be expressly authorised to issue and allot the Placing Shares, Ordinary Shares pursuant to the Warrants and existing options and, in addition, will be authorised to issue and allot a further 1,785,500 Ordinary Shares (representing approximately 5 per cent. of the Company's enlarged issued share capital following the Placing assuming none of the options are exercised) on a non-pre-emptive basis, as the Directors believe that it is desirable to maintain a margin of unissued share capital available for allotment on a non-pre-emptive basis in order to preserve flexibility for the future.
Shareholder circular
The circular due to be sent out to Shareholders shortly contains the Notice of GM at which the Resolutions will be proposed for the purposes of implementing the Placing. Copies of this document will be available for inspection by the public free of charge at Mercury House, 17 Commerce Way, Trafford Park, Manchester M17 1HW during normal business on any weekday (Saturday and bank holidays excepted) for a period of one month from the date of posting and will also be available at the Company's website, www.mercuryrecycling.co.uk.
Recommendation
The Directors unanimously consider that the Placing and Resolutions are in the best interests of the Company and its shareholders as a whole. Accordingly, the Directors unanimously recommend shareholders to vote in favour of the Resolutions as they have irrevocably undertaken to do so in respect of their own legal and beneficial shareholdings which total 6,944,358 Ordinary Shares, representing approximately 20.41 per cent of the current issued ordinary share capital of the Company at the date of this announcement.
PLACING STATISTICS
| Total number of Existing Ordinary Shares | 34,026,154 |
| Number of new Ordinary Shares being placed on behalf of the Company | 1,701,308 |
| Placing Price | £0.10 |
| Number of Ordinary Shares in issue following Admission | 35,727,462 |
| Number of Placing Shares as a percentage of the Enlarged Issued Share Capital (1) | 4.8% |
| Number of Warrants being issued | 8,399,966 |
| Number of Warrants as a percentage of the Enlarged Issued Share Capital (1) | 23.5% |
| Estimated net proceeds receivable by the Company pursuant to the Placing | £175,000 |
|
| |
| (1) Assuming no existing share options are exercised | |
DEFINITIONS
The following definitions apply throughout this announcement unless the context requires otherwise:
| "2006 Act" | the Companies Act 2006, as amended from time to time; |
| "Admission" | admission of the Placing Shares to trading on AIM and such admission becoming effective in accordance with the AIM Rules; |
| "AIM" | AIM, a market regulated by the London Stock Exchange plc; |
| "AIM Rules" | the 'AIM Rules for Companies' as published by the London Stock Exchange plc from time to time; |
| "Board" or "Directors" | the directors of the Company; |
| "Circular" | the circular being sent to Shareholders on or around the date of this announcement in connection with the Placing; |
| "Enlarged Issued Share Capital" | the Company's issued share capital immediately following Admission; |
| "Existing Ordinary Shares" | the existing Ordinary Shares in issue at the date of this announcement; |
| "Form of Proxy" | the form of proxy accompanying the Circular for use in connection with the GM; |
| "General Meeting" or "GM" | the general meeting of the Company convened for 11.00 a.m. on 22 October 2010, notice of which is set out at the end of the Circular; |
| ″Group″ | the Company and its wholly owned subsidiaries (as defined by section 1159 of the 2006 Act) including Mercury Recycling Limited; |
| "Mercury" or "the Company" | Mercury Recycling Group plc; |
| "Notice" | the notice convening the GM, which is set out at the end of the Circular; |
| "Ordinary Shares" | the ordinary shares of 10 pence each in the capital of the Company; |
| "Placing" | the conditional placing of the Placing Shares and Warrants; |
| "Placing Price" | 10 pence per Placing Share; |
| "Placing Shares" | the 1,701,308 new Ordinary Shares to be initially issued and allotted pursuant to the Placing; |
| "Proposed Directors" | Charles Giles Clarke and John Nicholas Harrison; |
| "Resolutions" | the resolutions set out in the Notice at the end of the Circular; |
| "Shareholders" | holders of Ordinary Shares at the date of this announcement; |
| "Warrants" | the 8,399,966 warrants to be issued pursuant to the Placing each entitling the holder to subscribe for an Ordinary Share at the Placing Price, once the Company's share price has averaged 15 pence for a period of at least 30 consecutive days; |
| "Westleigh" | Westleigh Investments Holdings Limited. |