12 Jun 2009 07:00
For immediate release 12 June 2009
Northbridge Industrial Services Plc.
("Northbridge", "the Group" or "The Company")
Open Offer of up to 1,889,499 new Ordinary Shares at 110 pence per share
on the basis of 1 Offer Share for every 4 Existing Shares with Excess Application Facility
Northbridge Industrial Services Plc. the industrial services and rental company today announces that it proposes to raise up to approximately £2 million (after expenses) by way of an Open Offer to expand its existing hire fleet in line with the Group's strategy to acquire and develop rental assets to complement its existing industrial hire equipment activities.
Highlights
Open Offer of up to 1,889,499 new Ordinary Shares at 110 pence per share raising up to approximately £2 million (after expenses).
The proceeds raised will be used to acquire and develop additional industrial rental equipment.
The Company has received irrevocable commitments from Western Selection PLC and certain Directors to subscribe for 996,166 Offer Shares being 52.7 percent of the Open Offer Shares.
Commenting on the successful fundraising, Peter Harris, Chairman of Northbridge, said:
"We intend to use the proceeds of this fundraising to expand our hire fleet in line with our strategy of acquiring and developing our rental assets to further complement our existing hire equipment activities.
"Following the recent strengthening of our business in the Middle East we are confident that there is a significant opportunity to further expand our operations and become a key supplier of industrial hire equipment in the Middle East.
"Additionally, given the current economic market constraints further opportunities exist to acquire industrial equipment that would expand its rental fleet in the UK. As such the proceeds of the Open Offer will be used to both acquire and develop additional industrial rental equipment."
For further information
Northbridge Industrial Services plc
Eric Hook, Chief Executive Officer 01283 531645
Ash Mehta, Finance Director
Cattaneo LLP (Financial Adviser)
Charles Cattaneo 07774 276512
Ian Stanway 07837 179502
Buchanan Communications 020 7466 5000
Charles Ryland / James Strong
Charles Stanley Securities (Nominated Adviser) 020 7149 6000
Mark Taylor / Freddy Crossley
About Northbridge:
Northbridge Industrial Services was incorporated for the purpose of acquiring companies that hire and sell specialist industrial equipment supplying a non-cyclical customer base including utility companies, the public sector and the oil and gas industries. In particular it will seek to acquire specialist businesses that have the potential for expansion into complete outsourcing providers.
Introduction
The Board of Northbridge is announcing today that it proposes to raise up to approximately £2 million (after expenses) by way of an Open Offer, thus allowing the Company's existing Shareholders the opportunity to participate in the fundraising. Western Selection PLC, an existing Shareholder and certain of the Directors have irrevocably undertaken to subscribe for their basic pro rata Open Offer Entitlements amounting to 632,529 shares representing 33.5 percent of the Offer Shares. In addition Western Selection PLC has irrevocably undertaken to apply for an additional 363,637 Offer Shares under the Excess Application Facility if other Qualifying Shareholders (other than those who have given Irrevocable Undertakings) do not subscribe for their basic pro rata Open Offer Entitlements and do not apply for additional Offer Shares under the Excess Application Facility.
The terms of the Open Offer are described in this document. Qualifying Shareholders may also subscribe for Offer Shares above their basic pro rata Open Offer Entitlements if they so wish under the Excess Application Facility.
Northbridge is proposing to use the funds raised from the Open Offer to expand its existing hire fleet in line with the Group's strategy to acquire and develop rental assets to complement its existing industrial hire equipment activities.
The Company is able to undertake the Open Offer within the authorities that were approved by shareholders at the annual general meeting of the Company held on 19 May 2009.
Details of the Open Offer
Qualifying Shareholders are invited to apply for Offer Shares under the Open Offer at a price of 110 pence per Offer Share, payable in full on application and free of all expenses, pro rata to their existing shareholdings on the basis of:
1 Offer Share for every 4 Existing Ordinary Shares
held at the Open Offer Record Date. Entitlements of Qualifying Shareholders will be rounded down to the nearest whole number of Offer Shares. Fractional entitlements which would have otherwise arisen will not be issued.
The Open Offer is subject to, Admission becoming effective by 8.00 a.m. on 29 June 2009 (or such later date being not later than 13 July 2009, as the Company may decide).
The Offer Shares will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of Admission.
The Open Offer has been structured so as to allow Qualifying Shareholders to subscribe for Ordinary Shares at the Offer Price pro rata to their existing holdings. Qualifying Shareholders may, in addition, make applications in excess of their basic pro rata Open Offer Entitlements. Once subscriptions under the basic pro rata Open Offer Entitlements have been satisfied, the Company shall scale back any excess applications on a pro rata basis in proportion to the total number of additional Offer Shares applied for under the Excess Application Facility. To the extent that Offer Shares are not subscribed by Qualifying Shareholders, Open Offer entitlements will lapse.
PLEASE NOTE: Qualifying Shareholders can apply for as few or as many Offer Shares as they wish but will only be guaranteed to receive their basic pro rata Open Offer Entitlement. Excess applications may be fulfilled entirely or may be scaled back depending on Qualifying Shareholder demand.
Irrevocable Undertakings
Western Selection PLC, a Qualifying shareholder owning 19.8 percent of the voting share capital of the Company, has irrevocably undertaken to subscribe for its full basic pro rata Open Offer Entitlements amounting to 375,000 Offer Shares. Western Selection PLC has also irrevocably undertaken to subscribe for a maximum of a further 363,637 Offer Shares amounting to £0.4 million under the Excess Application Facility if other Qualifying Shareholders (other than those who have given Irrevocable Undertakings) do not subscribe for their Open Offer Entitlements. To the extent that Qualifying Shareholders, other than those who have given Irrevocable Undertakings, subscribe for their basic pro rata Open Offer Entitlements and additional Offer Shares under the Excess Application Facility, Western Selection PLC's commitment will be reduced on a share for share basis. The irrevocable undertaking given by Western Selection PLC does not prevent it from applying for additional Offer Shares under the Excess Application Facility independently of its commitment to subscribe for additional Offer Shares in accordance with its irrevocable undertaking. If Western Selection PLC is allocated its full application it will have a resultant shareholding of 2,238,637 shares representing 26.2 percent of the voting share capital of the Company on the basis of the Open Offer only being taken up by persons giving Irrevocable Undertakings.
Certain of the Directors of the Company have irrevocably undertaken to subscribe for their entitlements under the Open Offer amounting to 257,529 Offer Shares, representing 13.6 percent of the Open Offer.
The Company will, as a result of the irrevocable commitments by Western Selection PLC and the Directors to subscribe for in aggregate 996,166 Offer Shares, receive a minimum of £1.0 million from the Open Offer after expenses.
Related Party Transaction
Western Selection PLC is a substantial shareholder directly or indirectly holding more than 10 percent of the Issued Share Capital and entering into an agreement to irrevocably undertake to subscribe for Open Offer Shares in excess of its basic pro rata Open Offer Entitlements, for which the Company has agreed to pay Western Selection PLC a fee of £14,000, constitutes a related party transaction for the purposes of AIM Rule 13.
Where a company whose shares are quoted on AIM enters into a related party transaction, the Directors, with the exception of the related party, are required to consider, having consulted with the Company's nominated adviser, that the terms of the transaction are fair and reasonable insofar as its shareholders are concerned.
The Directors, with the exception of Mr David Marshall, who is a director of Western Selection PLC, having consulted with the Company's nominated adviser, consider the terms of the related party transaction with Western Selection PLC to be fair and reasonable insofar as the Shareholders are concerned.
Use of proceeds
Since being admitted onto AIM in March 2006, the Group has made a number of acquisitions which have been funded from operating cash flows.
The group has also grown organically and formed Northbridge Middle East FZE ("NME") in 2007. NME promotes the sales and rental of Crestchic's products in that region as well as acting as an outlet for generators from RDS (Technical) Limited ("RDS") and seeking new opportunities in its own right. NME acquired new premises in June 2008 which markedly accelerated the potential for growth of the business. On 20 April 2009 Northbridge announced the acquisition of 66.67 percent of Tyne Technical Equipment Rental Services LLS ("TTERS"). TTERS is a Dubai registered company whose principal business is the rental of generators and the sale of associated services to the infrastructure and the oil & gas industries in the United Arab Emirates. Furthermore on 16 April 2009 Northbridge announced that RDS, a wholly owned subsidiary of Northbridge Middle East FZE, has been awarded a rental contract to supply generators, transformers and associated equipment together with a maintenance agreement to the Jabali Zinc Project in Yemen.
These transactions have strengthened the Group's presence in the Middle East, and the Directors believe that a significant opportunity exists to expand the Group's operations, in line with its strategy of becoming a key supplier of industrial hire equipment, in this region. Additionally, the Directors believe that, as a result of the current economic environment, further opportunities exist to acquire industrial equipment that would expand its rental fleet in the UK. As such the proceeds of the Open Offer will be used to both acquire and develop additional industrial rental equipment.
Current trading and prospects
Northbridge reported consolidated revenue for the year ended 31 December 2008 which increased by 40 percent to £15.7 million (2007: £11.2 million). Profit before taxation increased by 82 percent to £2.97 million (2007: £1.63 million). Net assets at 31 December 2008 were £9.97 million (2007: £8.14 million).
As we indicated at the time of our preliminary results in March, trading for the year has started well. Although sales volumes of manufactured units are down from the record start we experienced in 2008, our rental revenues remain at a high level in all our operations. Rental is the most profitable and cash generative of our activities and we are now beginning to see the benefit of the investments into this area over the last few years. Recent acquisitions and contract wins have strengthened our position in the market, and we remain ready to capitalise on any opportunities that arise.
Our customers in the UK and overseas are largely involved in power generation and the oil & gas sector and demand for our products and services from these industries has been resilient. Our current volume of rental quotes and enquiries for future sales remains encouraging.
Change of Adviser
The Board of Northbridge, recognising that the Company has performed well since flotation and is about to enter a further phase of growth, is seeking to appoint a suitable new nominated adviser and also a broker to support the continued development of the Group. Charles Stanley Securities, the Company's present nominated adviser and broker, has given notice of its resignation and the Company expects to make an announcement of the appointment of a new nominated adviser shortly. The Board would like to thank Charles Stanley Securities for its support and advice in the three years since the IPO in 2006.
Directors' intentions
The Directors consider the Open Offer to be in the best interests of the Company and its Shareholders as a whole. Directors have irrevocably undertaken to take up their Open Offer Entitlements amounting to in aggregate, 257,529 Offer Shares with a subscription value of £0.3 million.
OPEN OFFER STATISTICS
| Offer Price | 110p |
| Number of Ordinary Shares in issue at the date of this document ‡ | 7,710,149 |
| Number of Offer Shares to be offered for subscription by the Company | 1,889,499 |
| Estimated maximum net proceeds of the Open Offer 1 | £2.0 million |
| Estimated minimum net proceeds of the Open Offer 2 | £1.0 million |
| Percentage of the Enlarged Issued Share capital represented by the Offer Shares 1 ‡ | 19.7% |
| Number of Ordinary Shares in issue at Admission 1 ‡ | 9,599,648 |
1 assuming maximum take up under the Open Offer
2 assuming take up under the Open Offer by those giving irrevocable Undertakings only
‡ including 152,510 Ordinary Shares held in Treasury and not participating in the Open Offer
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
| 2009 | |
| Open Offer Record Date | Close of business on Thursday 11 June |
| Despatch of this document | Friday 12 June |
| Latest time and date for splitting Application Forms (to satisfy bona fide market claims only) | 3.00 p.m. Wednesday 24 June |
| Latest time and date for receipt of completed Application Forms and payment in full under the Open Offer or settlement of relevant CREST instruction (as appropriate) | 11.00 a.m. Friday 26 June |
| Admission effective and dealings commence on AIM | Monday 29 June |
| CREST accounts credited | Monday 29 June |
| Share certificates despatched | by Friday 10 July |
Unless otherwise stated, terms defined in the circular dated 12 June 2009 have the same meaning in this announcement.
This announcement does not constitute an offer for sale or an invitation to subscribe for, or the solicitation of an offer to buy or subscribe for, Offer Shares in any jurisdiction where such an offer or solicitation is unlawful and, subject to certain exceptions is not for distribution in or into the United States, Canada, Japan, Australia or South Africa. The Offer Shares will not be registered under the United States Securities Act of 1933 (as amended) or under the securities laws of any state of the United States or qualify for distribution under any of the relevant securities laws of Canada, Australia or Japan, nor has any prospectus in relation to the Offer Shares been lodged with or registered by the Australian Securities and Investments Commission or the Japanese Ministry of Finance. Overseas Shareholders and any person (including, without limitation, custodians, nominees and trustees) who has a contractual or other legal obligation to forward this document to a jurisdiction outside the UK should seek appropriate advice before taking any action.