NBI.L Regulatory News (NBI)

23 September 2014

NORTHBRIDGE INDUSTRIAL SERVICES PLC

("NORTHBRIDGE" OR THE "COMPANY")

ACQUISITION OF TASMAN OIL TOOLS LIMITED AND TASMAN OIL TOOLS LEASING LIMITED

AND

PLACING OF 642,202 NEW ORDINARY SHARES TO RAISE £3.5 MILLION

Northbridge Industrial Services plc, the industrial services and rental company, is pleased to announce the acquisition of Tasman Oil Tools Limited ("TOT") and Tasman Oil Tools Leasing Limited ("TOTL" and, together with TOT, "Tasman") by its wholly owned subsidiary Northbridge Industrial Services NZ Holdings Limited and a Placing of 642,202 new Ordinary Shares in the Company, to raise approximately £3.5 million before expenses.

Highlights:

· Agreement for the acquisition of Tasman for a consideration of NZ$26.0 million (£13.0 million) to be funded by a combination of the Placing, bank facilities, deferred consideration and through the issue of the Consideration Shares.

· Tasman, based in New Zealand, rents drilling tools for the onshore and offshore oil and gas industry and the geothermal power industry.

· Tasman has a strong asset base and will enhance Northbridge's presence in the Australasian region, in which Northbridge has operated since 2010 following the acquisition of a former associated company Tasman Oil Tools Australia based in Perth. It will also unify the Company's ownership of the Tasman brand facilitating further growth in the region.

· The Acquisition is expected to be modestly earnings enhancing in the first full year after Completion

· Placing of 642,202 new Ordinary Shares by Westhouse Securities Limited with existing institutional investors at 545 pence per share, which represents a discount of approximately 7.5 per cent. to the closing mid-market price on 22 September 2014, to raise approximately £3.5 million before expenses.

Placing Statistics

Commenting on the proposed Acquisition and the Placing, Eric Hook, Chief Executive of Northbridge said:

"On behalf of all at Northbridge I am delighted to announce the acquisition of Tasman which is in line with our stated strategy of acquiring niche specialist rental businesses.

"Tasman further strengthens our global reach and, in particular, our expertise and capabilities in the important oil and gas industries. The Board of Northbridge welcomes Tasman and their team and we look forward to working together.

"I am also pleased to announce the completion of our successful Placing which has been strongly supported by existing Shareholders. I would like to thank our investors for their support as we continue to grow and develop Northbridge."

These highlights should be read in conjunction with the full text of this announcement.

For further information:

ACQUISITION OF TASMAN OIL TOOLS LIMITED AND TASMAN OIL TOOLS LEASING LIMITED

AND

PLACING OF 642,202 NEW ORDINARY SHARES TO RAISE £3.5 MILLION

1. Introduction

The Company is pleased to announce that it has completed the acquisition of Tasman through its wholly owned subsidiary Northbridge Industrial Services NZ Holdings Limited, for a total consideration of NZ$26 million (£13 million), and has raised approximately £3.5 million (before expenses) by way of a placing of 642,202 new Ordinary Shares at a price of 545 pence per share. The consideration payable for Tasman will be satisfied by the net proceeds of the Placing along with the Consideration Shares, bank lending provided by KBC Bank NV and Lloyds Banking Group, and two deferred payments.

Tasman, which is based in New Plymouth, New Zealand, specialises in the rental of drilling tools and specialist equipment suitable for use in the onshore and offshore oil and gas industry and geothermal power industry.

The Placing Shares have been placed with institutional investors. Admission and dealings in the Placing Shares are expected to commence on AIM at 8.00 a.m. today. 

2. Background to and reasons for the Acquisition and Placing

Northbridge's strategy is to acquire and consolidate specialist industrial equipment businesses, supplying a non-cyclical customer base including the oil and gas industry, shipping, construction, power and utility companies.

The Directors believe that the Acquisition will complement Northbridge's existing businesses and is in line with the Company's stated strategy of acquiring companies in specialist, niche sectors which are capable of further organic growth. The Acquisition will also consolidate the global Tasman brand.

Through the Acquisition, Northbridge will acquire fixed assets with an estimated replacement cost of approximately NZ$17 million plus working capital. The expansion of the Northbridge fleet will enable better utilisation and management of assets with reduced reliance on external subrental of third party assets.

Tasman operates in the oil and gas tool rental market in New Zealand, a market and area that Northbridge knows well, having had a presence in the Australasian region since the acquisition of Tasman Oil Tools in Australia in 2010.

The net proceeds of the Placing will, in conjunction with the Banking Facilities, be used to finance the initial cash element of the consideration and expenses payable in relation to the Acquisition. The Placing and related funding will help to ensure the strength of the balance sheet for future growth.

3. Information on Tasman

Tasman specializes in the rental of drilling tools and equipment. Founded in 1980, it is beneficially owned by its management team. Revenue is generated from the rental, service, maintenance and sale of equipment and consumables. Tasman has 20 employees including management. All senior managers have entered into new service agreements, based on their previous terms and with 12 month notice periods.

Financial information

The trading record of Tasman for the two years ended 31 March 2014 as extracted from Tasman's financial statements is summarised below:

*Adjusted for non-recurring items

Exchange Rate: GBP 1 = NZ$ 2.00

Tasman's financial performance in the year to March 2013 and 2014 was enhanced by geothermal drilling activity, which is expected to run at much reduced levels in the immediate future.

4. Proposed terms of the Acquisition

The total consideration payable for the entire issued share capital of TOT and TOTL is NZ$26.0 million (£13.0 million). This is comprised of an initial cash consideration of NZ$13.0 million (£6.5 million), which will be satisfied from the net proceeds of the Placing and the Banking Facilities, and 365,132 Consideration Shares which have been allotted and issued to the Vendor. A further two deferred cash payments of NZ$4.5 million (£2.25 million) each will be made in January 2015 and January 2016.

The Consideration Shares will be subject to a 12 month lock in agreement and a further 12 month orderly market arrangement afterwards.

5. Details of the Placing

The Company has raised £3.5 million (before expenses) through the issue of the Placing Shares at the Placing Price in order to fund part of the consideration payable pursuant to the Acquisition. The Placing Price represents a discount of approximately 7.5 per cent. to the closing mid-market price of 589.5 pence per Ordinary Share on 22 September 2014, being the last business day prior to the publication of this announcement. The Placing Shares will represent approximately 3.5 per cent. of the Enlarged Share Capital (excluding any treasury shares).

Pursuant to the terms of the Placing Agreement, Westhouse Securities, as agent for Northbridge, has procured Placees for the Placing Shares at the Placing Price.

The obligations of Westhouse Securities under the Placing Agreement are conditional, inter alia, upon Admission having occurred by 8.00 a.m. on 23 September 2014 (or such later time and/or date as may be agreed, being no later than 10 October 2014), and there being prior to Admission no material breach of the warranties given to Westhouse Securities.

Westhouse Securities may terminate the Placing Agreement in specified circumstances (including for breach of warranty at any time prior to Admission, if such breach is reasonably considered by Westhouse Securities to be material in the context of the Placing) and in the event of a force majeure event occurring at any time prior to Admission. If the conditions of the Placing Agreement are not fulfilled on or before the relevant date in the Placing Agreement, Placing monies will be returned to Placees without interest as soon as possible thereafter.

Application has been made to the London Stock Exchange for the Placing Shares and the Consideration Shares to be admitted to trading on AIM. The Placing Shares and the Consideration Shares will rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive any dividend or other distribution declared, made or paid following Admission, including the interim dividend of 2.2p per share announced today. It is expected that Admission will become effective and that dealings in the Placing Shares and the Consideration Shares will commence at 8.00 a.m. today.

6. Total voting rights

Following Admission, the Company's issued share capital will comprise 18,578,886 ordinary shares, including 152,150 ordinary shares held in treasury.

Therefore the figure of 18,426,736 ordinary shares should be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules

7. Northbridge interim results to 30 June 2014

Northbridge has today separately released its interim results for the six months to 30 June 2014.

8. Forward-looking statements

This announcement may contain forward-looking statements relating to the Company's expected operations that are based on management's current expectations, estimates and projections. Words such as "expects", "intends", "plans", "projects", "believes", "estimates", and similar expressions are used to identify such forward-looking statements. These statements are not warranties or guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. By their nature forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future. Although the Company believes the expectations reflected in such statements are reasonable, no assurance can be given that such expectations will prove to be correct. There are a number of factors, many of which are beyond the control of the Company, which could cause actual results and developments to differ materially from those expressed or implied by forward-looking statements.

Definitions

All references in this announcement to "£" or "p" are to the lawful currency of the United Kingdom and all references to "NZ$" are to the lawful currency of New Zealand.

Unless otherwise stated, the following exchange rate is used throughout this announcement: £1 = NZ$2.00

Ends