Mobile Tornado Regulatory News (MBT)

25 Sep 2006 07:08

InTechnology PLC25 September 2006 25 September 2006 InTechnology plc Proposed £4m investment in Mobile Tornado Group plc Introduction InTechnology plc ("InTechnology") (RIC: ITO.L), today announces that it hasreached agreement with Mobile Tornado Group plc ("Mobile Tornado" or "theCompany") to subscribe for 80,000,000 shares in Mobile Tornado for a totalconsideration of £4 million. The consideration for the subscription of the newshares will be cash and will be financed from InTechnology's internal cashresources. About Mobile Tornado Mobile Tornado specialises in providing platforms and applications in the mobiledata services market including presence-based messaging, push to talk (PTT),push to video and related services. The Company sells software licences andservices to mobile operators and enterprises worldwide through a number ofdistribution partners. 10 networks are currently licensed to use the Group'stechnology and the countries served now include China, India, and Nigeria. For the 13 month period to 30 June 2005, Mobile Tornado made an operating lossof £207,907 and had net assets of £922,273 of which £938,389 represented cash atbank. For the six month period to December 2005, Mobile made an operating loss£56,951 and had net assets of £868,441 of which £616,747 represented cash atbank. Background to and reasons for the investment InTechnology's Managed Services division offers a comprehensive range of ITinfrastructure services, including managed data backup and recovery, networksand data centres. The division allows the efficient management of the everincreasing amount of data, which needs to comply with business and legalrequirements, as an outsourced service. It offers a comprehensive range ofsolutions to protect and manage client data and voice networks, thus ensuringbusiness continuity. The Directors of InTechnology plan to make Mobile Tornado's Push to talkservices available as an in-network solution or as a hosted and managed serviceoutside the traditional mobile network, via the internet. They believe that theinvestment in Mobile Tornado will complement the activities of the ManagedServices Division for the following reasons: • The Managed Services division recently formed a new Voice over IP ("VoIP") service within its networking business. InTechnology established thisbusiness to help businesses to realise the significant operational and costbenefits to be derived from converging their voice and data platforms into onehigh-performance, scalable and cost effective network. InTechnology's Directorsbelieve that Mobile Tornado's services are highly relevant to this strategy andprovide a unique extension into the market for converged voice, video and dataservices. • Tier 2, Tier 3 & Mobile Virtual Network Operators have historicallyfound the entry cost of PTT services prohibitive. In providing PTT through apay as you go managed service, these operators are able to achieve a low entrycost. The Directors of InTechnology believe that this will lead to fastermarket traction for these services, especially as the market is now moreaccepting of the managed service approach. • Market forecasts continue to position Push to Talk services as one ofthe biggest new revenue sources available to mobile operators (Source: IMSPlatforms and Services : A Global Market Study Nov 2005). • Mobile Tornado's sales and marketing efforts have to date been focusedon the relationships in the Network Equipment Vendor market. The Directors ofInTechnology believe that significant benefits can be derived from leveragingits experience in sales and marketing to expand the sales approach throughdirect managed services to enterprise and via strategic global partnerships withhandset manufacturers. • InTechnology has undertaken that any commercial arrangements enteredinto between it and Mobile Tornado will be on an arm's length commercial basis. Recommendation from the Board of Mobile Tornado The Directors of Mobile Tornado have examined fundraising options available tothe Company given its current stage of development. The Directors haveconsidered the size of the funding required to sustain and to further expand theGroup's sales and development activities and the need for sufficient workingcapital. After careful consideration, the Directors of Mobile Tornado believe that theproposed investment from InTechnology is in the best interests of Mobile Tornadoshareholders as a whole. The funds are required to support the Company's mediumterm growth plans and it is unlikely that short term sales targets will be metin the absence of such funding. Use of Funds The Directors of Mobile Tornado believe that the subscription by InTechnologywill secure Mobile Tornado's financial position in the medium term. MobileTornado intends to accelerate its global marketing and extend its fixed-mobileconvergence products. The net proceeds of the Subscription and the Placing areexpected to be £3.8m and Mobile Tornado's Directors intend to use such netproceeds to expand the Group's sales and development activities, including theemerging hosted PTT services market, and to provide additional working capital. The Subscription InTechnology has conditionally agreed to subscribe for 80,000,000 new ordinaryshares in Mobile Tornado at an issue price of 5p. The new ordinary shares, issued pursuant to the subscription will representapproximately 43.38 per cent. of the enlarged share capital of Mobile Tornado.Peter Wilkinson and Richard James, directors of InTechnology, will together alsoown approximately 14.91 per cent. of the enlarged share capital of MobileTornado in their personal capacities. The subscription agreement is conditional on the resolutions being passed at theMobile Tornado EGM due to be held on 23 October 2006 and the new ordinary sharesto be issued pursuant thereto being admitted to AIM by 24 October 2006 or suchlater date as the parties may agree (being no later than 8.30 a.m. on 30November 2006). The agreement can be terminated by InTechnology prior to Admission on theoccurrence of certain events, including a material adverse change in thefinancial condition or prospects of the Company. Peter Wilkinson, Chairman of InTechnology, commented: "We are very excited by this investment as it further enhances our exposure tothe new and rapidly growing market for converged voice and data services.Today's deal provides us with access to the very strong technical resource andIP within Mobile Tornado as well as a foothold in the rapidly growing Push totalk market." Enquiries: InTechnology plc 01423 850 000 Peter Wilkinson Financial Dynamics 020 7831 3113 James Melville-Ross / Hannah Sloane This information is provided by RNS The company news service from the London Stock Exchange