Last checked at 10 Feb 2009 07:00
Managed Support Services plc
("MSS" or "the Company")
Conditional Placing of up to 75,000,000 shares to raise approximately £6 million (before expenses)
The Board of MSS today announces a conditional placing by Cenkos Securities of up to 75,000,000 ordinary shares (the "Placing Shares") with various institutional investors at a price of 8 pence per share (the "Placing Price") to raise approximately £6 million before expenses (the "Placing"). The Placing is intended to increase materially the Company's net cash balances in order to exploit acquisition opportunities at a depressed stage in the business cycle. The Placing is conditional, inter alia, upon resolutions being passed at the Extraordinary General Meeting of the Company to be held on 26 February 2009. The VCT Placing Shares are expected to be admitted to trading on 27 February 2009 and the non- VCT Placing Shares are expected to be admitted to trading on 02 March 2009.
Background to and reasons for the Placing
Following the appointment of the current management team and a subsequent restructuring, the Group has traded profitably and has generated positive operating cash flow in the current financial year. The Directors have also ensured that the Company's surplus cash resources have been preserved. The Group is, therefore, now well placed to examine acquisition opportunities that the Board believes will emerge as a result of the rapidly worsening economic climate.
To date, the Directors have delayed the timing of acquisitions until such time that the worsening economic environment is fully reflected in the profitability of potential targets and the expectations of vendors. Nonetheless, the Directors are keen to make acquisitions in order to increase and expand the services of the existing Group.
The Directors also believe that the larger surplus cash balances resulting from the Placing will make MSS an increasingly attractive prospect as an offeror or purchaser. The Directors expect this will lead to further approaches from vendors and distressed public companies.
The Company will, initially, seek smaller acquisitions that offer similar or complementary services to MSS's existing businesses, such as in the provision of electrical testing, water treatment and energy management services. The Directors will, however, also consider larger potential acquisitions in other fields, whether in the private or public arena, where they believe value can be created for Shareholders.
Current trading and prospects
The Company announced its interim results on 19 November 2008 for the six months ended 30 September 2008. Reported turnover for the period was £16.3 million generating an operating profit before tax, amortisation of intangible assets and share-based payments of £1.0 million.
The Directors believe that the changes undertaken by the Group last year have ensured it is well placed to respond to any changes in the markets in which it operates. Current trading remains in line with management's expectations for the year ending 31 March 2009. The Board believes, however, that trading conditions will be harsher in the coming financial year to March 2010. Accordingly, in anticipation of a continued and possibly lengthy recession, the Group further reduced costs substantially during the third quarter in order to ensure acceptable profitability despite market conditions. The Directors believe that the Group's service levels and reputation provide it with some resilience while these hostile conditions persist.
The Placing
The Company proposes to raise up to approximately £5.7 million (net of expenses) through the issue of the Placing Shares at the Placing Price. The maximum number of Placing Shares would represent approximately 45 per cent. of the Company's issued ordinary share capital immediately following Admission.
As part of the Placing Simon Beart, Chief Executive, has conditionally agreed to subscribe for 312,500 new Ordinary Shares.
A circular containing details of the Placing is being posted to shareholders today and will be available on the Company's website: www.managedsupportservicesplc.com.
Commenting on today's news, Chief Executive, Simon Beart, said;
"We have increased our surplus cash balances at a time when cash is becoming increasingly scarce. We will now review a broad portfolio of opportunities as the economic climate worsens."
| Managed Support Services Group plc Simon Beart - Chief Executive Piers Wilson - Finance Director | Tel: 01483 735703 |
| Cenkos Securities plc Stephen Keys/Camilla Hume |
Tel: +44 (0) 20 7397 8900 |
| Buchanan Communications Ltd Richard Darby/Chris McMahon |
Tel: +44 (0) 20 7466 5000 |
| EXPECTED TIMETABLE OF PRINCIPAL EVENTS | |
| This document posted to Shareholders (by first class post) | 10 February 2009 |
| Latest time and date for receipt of Form of Proxy | 1:00 p.m. on 24 February 2009 |
| General Meeting | 1:00 p.m. on 26 February 2009 |
| Admission and dealings in the VCT Placing Shares expected to commence on AIM | 8:00 a.m. on 27 February 2009 |
| Admission and dealings in the non-VCT Placing Shares expected to commence on AIM | 8:00 a.m. on 02 March 2009 |
| Where applicable, expected date for CREST accounts to be credited in respect of the VCT Placing Shares in uncertificated form | 27 February 2009 |
| Where applicable, expected date for CREST accounts to be credited in respect of the non-VCT Placing Shares in uncertificated form | 02 March 2009 |
| Where applicable, expected date for posting of share certificates for Placing Shares | By 09 March 2009 |