PTCM.L Regulatory News (PTCM)

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Porta Communications plc

£4 million Placing

Porta Communications plc ("Porta" or the "Company" or, together with its subsidiaries, the "Group") announces that it has conditionally raised £4.0 million (before expenses) by way of a placing of 40,000,000 new ordinary shares at a price of 10 pence per ordinary share of 10 pence each ("Ordinary Share") with certain institutional and other investors by Nplus1 Singer Advisory LLP ("N+1 Singer"), (the "Placing").

The purpose of the Placing is to raise funds to be used by the Company to implement the next phase of its acquisition strategy and to fund the working capital requirements of the Group by strengthening its balance sheet and thereby improving the ability of the Group to develop its income stream.

The board of directors of the Company (the "Directors") believe that the expansion of Newgate Communications, the Company's corporate and public affairs subsidiary, into the Asia Pacific region will open up additional fee earning avenues for the Group in some of the World's major finance centres and enhance the Group's international product offering, leading to increased client retention, more profitable client relationships and international cross selling opportunities. The Company intends to continue its strategy of recruiting high calibre individuals into start-up ventures as operations in this region are expected to be developed by the hiring of appropriately incentivised and experienced industry practitioners rather than by acquiring existing, developed businesses with high valuations, thereby avoiding goodwill payments. The Directors anticipate that the Group's new operations in Asia Pacific territories will be profitable from 2014.

In addition, the Directors also believe that the proposed acquisition of a small UK based public relations ("PR") firm will further enhance Newgate Communications' service offering and help maintain its status as a leading financial PR provider in the UK.

The Group's total indebtedness to Hawk Investment Holdings Limited, a company beneficially owned by Bob Morton, Non-Executive Chairman of the Company and his wife ("Hawk"), as at 27 February 2013 was £3.45 million and Hawk has provisionally agreed to advance a further £300,000 to the Group shortly. An appropriate regulatory announcement will be made once terms have been agreed. The Directors intend to use £500,000 of the Placing proceeds to repay one of the loans provided to the Company by Hawk and which is otherwise due for repayment by the Group on 2 April 2013. In addition, the Company has agreed with Hawk, subject to the terms of an existing convertible loan facility and obtaining Shareholder approval at the General Meeting, to convert a further £500,000 of debt into new Ordinary Shares at a price of 10 pence per Ordinary Share ("Loan Shares").

In addition to the above, Hawk is subscribing for 10,000,000 Ordinary Shares in the Placing on the same terms as other placees.

Following the Placing and issue of the Loan Shares, Bob Morton will have a beneficial holding, through Hawk and Hawk Pension Fund Limited, of 26,457,937 Ordinary Shares, representing 17.95% of the enlarged issued share capital as enlarged by the Placing and the Loan Shares.

Application will be made to the London Stock Exchange for the Placing Shares and the Loan Shares to be admitted to trading on AIM. It is expected that admission will occur and that dealings will commence at 8.00 a.m. on 19 March 2013.

The conditional agreement to subscribe for Placing Shares entered into by Hawk is classified as a related party transaction under the AIM Rules. The independent directors of the Company, being David Wright, Keith Springall, Brian Blasdale and Raymond McKeeve (the "Independent Directors") consider, having consulted with the Company's nominated adviser, N+1 Singer, that the terms of Hawk's participation in the Placing, is fair and reasonable insofar as its Shareholders are concerned. In providing advice to the Independent Directors, N+1 Singer has taken into account the commercial assessments of the Independent Directors.

The Placing is conditional, inter alia, upon the Company obtaining approval from its shareholders to disapply pre-emption rights and to grant the Directors authority to allot the Placing Shares. Completion of the Placing is therefore conditional upon the passing of all of the necessary resolutions by shareholders at a General Meeting of the Company (the "Resolutions"). A circular convening the General Meeting of the Company to pass the Resolutions is being sent to shareholders today. The General Meeting will be held at 11.30 a.m. on 18 March 2013 at 33 King William Street, London EC4R 9AS. The Directors believe that the Placing is in the best interests of the Company and the Shareholders as a whole, and recommend that shareholders vote in favour of the Resolutions at the General Meeting which is being convened for 18 March 2013, as they themselves have irrevocably undertaken to do in respect of their own beneficial share holdings amounting in aggregate to 18,976,269 Ordinary Shares representing approximately 18.53% of the existing issued share capital of the Company.

David Wright, CEO of Porta, commented, "At this early stage of the current year the Group is heading for an encouraging first quarter and we remain confident for the full year prospects."

Placing statistics

A copy of the Circular, including the notice of General Meeting, will be made available on the Company's website at: www.portacomms.com

N+1 Singer, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for the Company in connection with the Placing, and will not be responsible to anyone other than the Company for providing the protections afforded to clients of N+1 Singer or for providing advice in relation to the Proposals or any other matter in relation to the contents of this announcement.

This announcement has been issued by Porta Communications plc and is the sole responsibility of the Company. This announcement has not been approved by N+1 Singer for the purposes of section 21 of FSMA. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by N+1 Singer or by any of its affiliates or agents as to, or in relation to, the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

This announcement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities or any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, such securities by any person in any circumstances, and in any jurisdiction, in which such offer or solicitation is unlawful. Accordingly, copies of this announcement are not being and must not be mailed or otherwise distributed or sent in or into or from the United States, Canada, Australia, Japan, the Republic of South Africa or the Republic of Ireland or any other jurisdiction if to do so would constitute a violation of the relevant laws of, or require registration thereof in, such jurisdiction (each a "Restricted Jurisdiction") or to, or for the account or benefit of, any United States, Canadian, Australian, Japanese, South African or Irish person and any person receiving this announcement (including, without limitation, custodians, nominees and trustees) must not distribute or send it in or into or from a Restricted Jurisdiction.

This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will", or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the Directors' current intentions, beliefs or expectations concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth, strategies and the Company's markets. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual results and developments could differ materially from those expressed or implied by the forward-looking.