Nwf Regulatory News (NWF)

25 Nov 2005 07:00

NWF Group PLC25 November 2005 Embargoed until: 07.00, 25 November 2005 NWF GROUP PLC PLACING OF 1,071,843 NEW ORDINARY SHARES AT 560 PENCE PER SHARE NWF Group plc ("NWF" or "the Company"), the diversified sales and distributionbusiness, announces that, subject inter alia to the approval of itsshareholders, it proposes to raise approximately £6.0 million by way of aPlacing of 1,071,843 new Ordinary Shares ("Placing Shares") at a price of 560pence per Ordinary Share. Graham Scott, Chief Executive of NWF commented: "This fundraising is animportant milestone in the Group's development as it will widen ourinstitutional shareholder base and enable us to significantly increase capacityand meet growing demand within our Distribution business. The Group willmaintain its programme of developing all four divisions which we believe is thebest strategy to continue the future growth and success of the Group." Background and reasons for the Placing The Group has previously announced that it has obtained planning permission tobuild three new warehouses and associated infrastructure at its Wardle site toenable the expansion of the Distribution division's storage capabilities. Theproposed development will increase the Distribution division's capacity byapproximately 42,000 pallets, which represents a 54 per cent. increase in thedivision's on and off-site capacity. The three new warehouses will be built on 18.5 acres of land adjoining theexisting Wardle site, over which the Group has an option to acquire for aconsideration of approximately £1.8 million. The Board anticipates that thisfreehold land (including a further small parcel of land required to improve siteaccess) will be acquired prior to the end of the Group's current financial year.It is expected that the proposed development work will commence in the firsthalf of 2006 with an anticipated completion date of early 2007. The total cost of the proposed development, including fees and other relatedinfrastructure costs, is estimated at £15 million. The proceeds of the Placing,together with the financing facilities with the Royal Bank of Scotland Group,further details of which are outlined below, will be used to provide the fundsrequired for the proposed development. The financing facilities will alsoprovide additional working capital facilities for the Group. Financing The Group has entered into new facility agreements with the Royal Bank ofScotland Group which provide the Group with banking facilities of £52.7 million.The new facilities comprise: • £7 million term loan for the development (repayable on or by 30 November 2008); • £9 million revolving credit facility (available until 30 November 2008); • £2.7 million term loan (repayable on or by 30 November 2008); • £25 million invoice discounting facility (available until 30 November 2008); • £5 million overdraft facilities; and • £4 million of asset lease facilities. Current trading and prospects The Board's stated strategy is to deliver growth through the continued expansionof its four separate operating divisions through ongoing development of theexisting operations or through appropriate acquisitions. The proposed development of the Wardle site will increase the Distributiondivision's storage capacity by 54 per cent. and will add significant scale tothis division. The Board is confident that it can gain further customers toutilise the three new warehouses, as well as providing increased ambient storagefacilities for its existing customers. Continued demand exists for theDistribution division's services from both grocery food suppliers andsupermarkets. The division has recently won a new contract with SomerfieldStores Limited, as announced on 11 August 2005, and the Deeside warehouse is nowfully utilised as a result of contracts with Patak's Food Limited, HP Foods andothers. The Feeds division is continuing to increase its market share and has increasedits combined production capacity of compound feeds at Wardle (Cheshire) andWixland (Devon) to around 400,000 tonnes per annum. In addition to producingcompound feeds the division also manufactures blended feeds at Wardle andWixland and new blend plants have been established at Ayr (Scotland), Penrith(Cumbria) and Exeter (Devon). The Feeds division, with its two major feed millsand three satellite operations, is able to provide an increased service to itslivestock farming customers located on the western side of Britain. The Fuels division continues to trade in line with the Board's expectations andthe acquisition of Broadland Fuels Limited, based in Norfolk, in August 2005extends the division's geographical reach to East Anglia. The Garden Centre division, despite trading conditions remaining tough, istrading ahead of the prior year period with improved margins and profits. Thedivision has continued with its strategy of developing its existing sites duringthe current year and the Board is satisfied with the progress of Victoria GardenCentre, acquired during November 2004. As a result the Board is confident of the financial and trading prospects andoutlook of the Group for the short, medium and longer term. Details of the Placing The Company is proposing to raise £5.7 million (net of expenses), by way of aplacing of 1,071,843 new Ordinary Shares at 560 pence per Ordinary Share.Charles Stanley, as agent for the Company, has conditionally agreed to use itsreasonable endeavours to procure subscribers for the Placing Shares. The PlacingShares will represent 11.7 per cent. of the issued share capital of the Companyas enlarged by the Placing. The Placing Price of 560 pence per share representsa 10.0 per cent. discount to the middle market closing price of 622.5 pence perOrdinary Share on 24 November 2005 (the latest practicable date prior to theannouncement of the Placing). The Board considers that it would be in the Group's and shareholders' bestinterests for the funds to be raised by the Placing. An offer to allow allexisting shareholders to subscribe for the Placing Shares would havenecessitated the production of a prospectus at significant additional cost,diversion of management time and a delay in the Company receiving the proceedsof the Placing. The Placing is conditional, inter alia, on the passing of the resolution at theExtraordinary General Meeting (referred to below) and Admission. Application will be made to the London Stock Exchange for the Placing Shares tobe admitted to trading on AIM. It is expected that Admission will becomeeffective and that trading will commence on 22 December 2005. The Placing Shares will, when issued and fully paid, rank pari passu in allrespects with the Company's existing Ordinary Shares, including the right toreceive any dividend or other distribution thereafter declared, made or paid. It is expected that the Placing Shares will be delivered in CREST on 22 December2005 and that share certificates for the Placing Shares to be held incertificated form will be despatched by 5 January 2006. Extraordinary General Meeting In order to give effect to the Placing, an Extraordinary General Meeting of theCompany, to be held at the offices of Brabners Chaffe Street LLP, 1 Dale Street,Liverpool L2 2ET, is being convened at 11.00 a.m on 21 December 2005. Timetable Latest time and date for receipt of Forms of Proxyfor use at the EGM 11.00 a.m. on 19 December 2005 Extraordinary General Meeting 11.00 a.m. on 21 December 2005 Expected date of admission and commencement oftrading of the New Ordinary Shares 8.00 a.m. on 22 December 2005 CREST member accounts expected to be credited 22 December 2005 A circular setting out details of the Placing has been posted to shareholderstoday. Copies of the circular will be available free of charge during normalbusiness hours on weekdays (excluding public holidays) from the date hereofuntil the date falling one month after the date of Admission from the offices ofCharles Stanley & Co. Limited, 25 Luke Street, London EC2A 4AR. For further information please visit www.nwf.co.uk or contact: Graham Scott, Chief Executive Mark Taylor John West / Claire MellyNWF Group plc Charles Stanley & Co. Tavistock CommunicationsTel: 01829 260 260 Tel: 020 7739 8200 Tel: 020 7920 3150 Charles Stanley & Co. Limited, which is authorised and regulated in the UnitedKingdom by The Financial Services Authority, is acting for NWF Group plc inconnection with the Placing and for no one else in connection with the Placingand will not be responsible to anyone other than NWF Group plc for providing theprotections afforded to customers of Charles Stanley & Co. Limited nor forgiving advice to any other person on the contents of this document or inrelation to the Placing generally. This information is provided by RNS The company news service from the London Stock Exchange