PTD.L Regulatory News (PTD)

30 Nov 2009 07:00



PITTARDS PLC

Acquisition of Ethiopia Tannery Share Company, a Placing raising approximately £2.8m and Related Party transactions

Pittards plc, ("Pittards" or "the Company"), the specialist producer of technically advanced leather and luxury leather goods for sale to retailers, manufacturers and distributors, is pleased to announce it has exchanged conditional contracts for the acquisition of the entire issued share capital of the Ethiopia Tannery Share Company ("ETSC") for a total consideration, payable in cash, of 70m Ethiopian Birr ("ETB") (approximately £3.8m).

Pittards also announces a placing of 186,591,652 new ordinary shares ("the Placing Shares") at 1.5 pence per share ("the Placing Price"), raising approximately £2.8m for the Company. A circular which includes notice of a general meeting to be held on 22 December ("the General Meeting") has been posted to Shareholders and is available on the Company's website (www.pittards.com).  

ETSC is Ethiopia's largest tannery and has been operated under Pittards' supervision since August 2005 in return for a monthly management fee and royalty payments. In that period, production quality, efficiencies and methods have been significantly enhanced. ETSC is operating profitably and Pittards intends to transfer more volume production from their UK site in Yeovil to ETSC, freeing up additional resource in Yeovil for more technologically advanced, higher value added leathers.

For the year ended 30 June 2009 ETSC reported an unaudited profit before tax of ETB 1.362 million (approximately £75,000) after Pittards management fee and royalty payments, on a turnover of ETB 196.5million (approximately £10.53 million). Payments to Pittards in respect of management fee and royalty amounted to approximately £400,000. As at 30 June 2009 ETSC had unaudited net assets of ETB 120.02million (approximately £6.46million).

The terms of the contract, which is conditional on the approval of Pittards' shareholders at the General Meeting and on admission of the Placing Shares to AIM, provides for half of the consideration ("the Initial Consideration") to be paid on completion and the balance to be paid in three equal annual instalments commencing on the first anniversary of completion. The Initial Consideration will be financed from the proceeds of the Placing and the balance of the proceeds of the Placing will provide the enlarged company with additional working capital. It is expected that the new ordinary shares will be admitted to AIM and that dealings in the new ordinary shares will commence on 23 December 2009.

The directors of Pittards, being Stephen Boyd, Reginald Hankey, Jill Williams and Louise Cretton have participated in the Placing and have subscribed for 6,666,667, 4,000,000, 666,667, and 300,000 Placing Shares, respectively.  In addition, Peter Gyllenhammar (who is the beneficial owner of Browallia AB which owns approximately 63.5 per cent. of the current issued share capital of Pittards) has participated in the Placing through Browallia AB and has subscribed for 66,666,667 Placing Shares. WH Ireland Limited, the nominated adviser and broker to Pittards, has consulted with the directors of Pittards and considers the terms of the Placing to be fair and reasonable insofar as the shareholders of Pittards are concerned.

Pittards also announces that loans amounting to £200,000 and £100,000 respectively from two companies associated with Stephen Boyd, chairman of Pittards, and Peter Gyllenhammar have been converted into new ordinary shares at the Placing Price. In addition, the Company has granted a subordinated charge to Chamberlain Plastics Limited, a company of which Stephen Boyd owns 60 per. cent., in respect of the outstanding indebtedness of £200,000 owed by Pittards. The directors, who have consulted with the Company's nominated adviser, WH Ireland Limited, consider the conversion of the loans and the granting of the legal charge, to be fair and reasonable so far as the interests of shareholders are concerned.

Stephen Boyd, Chairman of Pittards commented:

"We are delighted to have concluded this deal to acquire ETSC, a company we have known for many years and with which we have had a close working relationship since 2005. This acquisition has the potential to be a great deal for Pittards and Ethiopia and we look to the future with confidence."