16 Sep 2016 07:00
PREMIER VETERINARY GROUP plc
("PVG" or "the Company")
US EXPANSION UPDATE AND ISSUE OF LOAN NOTES
London, UK, 16 September 2016 - Premier Veterinary Group plc (LSE: PVG) provides an update on its expansion into the US and announces the issue of Loan Notes to fund the acceleration of this strategy.
In May this year, the Company announced the commencement of its expansion into the US for its preventative healthcare program for pets branded Premier Pet Care Plan ("PPCP") with the appointment of two Regional Sales Directors, based out of Atlanta, Georgia and Charlotte, North Carolina, and the recruitment of two launching/training staff.
In early June, the Company announced that it had signed a major agreement with Veterinary Products, Inc. ("VPI"), a significant veterinary distributor co-op, headquartered in Atlanta, Georgia, US to promote and rollout the Company's PPCP to VPI's member hospitals numbering over 600 across 15 States, located primarily in the South East of the US.
At the end of June, the Company issued a further announcement confirming that it had signed another major agreement in the US for PPCP. That agreement was entered into with Merritt Veterinary Supplies Inc. ("MVS"), a leading veterinary supplies distributor founded in 1938, which has 9,000 member hospitals in the south east of the US. MVS is headquartered in Columbia, South Carolina. Recruitment of the product launch and training team was quickly commenced to service this substantial account, to be supported by MVS' internal 42-strong sales team.
As previously indicated, the Company had planned for a methodical build-up of its presence in the US with the appointment of additional sales and training personnel to support the product in due course. However, the rapid rate of expansion into the US has greatly surpassed the Company's expectations and, in order to capitalise on the high level of interest that has been shown to date in the take-up of PPCP, further trainers will need to be recruited in the US much sooner than had originally been predicted. The Company's US subsidiary, Premier Vet Alliance LLC, already employs eight staff in the US and it is envisaged that a further resource will need to be recruited to handle the higher than anticipated level of hospital launches.
As at 15 September 2016 agreements have been signed with 29 hospitals in the US, with 5 hospitals launched to date. The Company has also commenced the collection of recurring payments in relation to the first pets on plan. The available market for preventative healthcare programs for pets across the US is estimated at 70 million dogs and 74 million cats (U.S. Pet Ownership & Demographics Sourcebook 2012).
Over the past two years, the Company has invested heavily in the development of its bespoke software system to facilitate the worldwide operation of PPCP, and the Company is pleased to report that this software is now fully functioning and operating to specification in Europe and the United States.
The directors have looked at a number of strategies for financing the Company's continued expansion in the US while avoiding dilution for existing shareholders and have concluded that debt funding provides the most appropriate solution for the Company. On that basis, the Company has agreed terms for an aggregate issue of £1.25m of unsecured Loan Notes to existing and new investors in the Company split as follows:
External third parties: £600,000
Juliet Thompson, a Non-Executive Director and Chairman of the Company: £100,000
Timothy Thompson, Mrs Thompson's spouse: £200,000
Bybrook Finance Solutions Limited (of which Rajan Uppal,
an Executive Director of the Company, is sole director and shareholder): £350,000
The first tranche of Loan Notes totalling £900,000 will be issued immediately, with a further tranche from Bybrook Finance Solutions Limited with a value of £350,000 irrevocably committed for draw down by the end of the year. The Loan Notes mature after 18 months, and with a maximum total associated cost of £225,000 (equating to 12% interest). The Company has the right to repay the Loan Notes in full or in part before maturity. Early repayment would result in a minimum of nine months' interest being paid to the Loan Note holders, pro-rated in respect of investments made subsequent to the date of receipt of the first tranche. The Loan Notes are not capable of being converted into new ordinary shares in the Company.
In addition, the Company is in discussions with HSBC to put in place an overdraft facility to supplement further the working capital as the Company seeks to maximise the benefits of the US expansion opportunity.
Dominic Tonner, Chief Executive Officer of PVG, commented:
"Our detailed and lengthy research into the US market identified a clear and very significant opportunity for growth, starting in the south east of the country. Recently won contracts with industry majors in the veterinary distribution channels have accelerated our initial progress beyond our early expectations. We are now gearing up for more rapid rollout and expansion led by our very experienced local and central management teams."
The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.
For further information, please contact:
Premier Veterinary Group plc Tel: +44 (0)117 970 4130
Dominic Tonner, Chief Executive Officer
Daniel Smith, Chief Financial Officer
Zeus Capital Limited Tel: +44 (0)203 829 5000
Giles Balleny, Director, Corporate Finance
Hugh Kingsmill Moore, Director, Sales
Square1 Consulting Tel: +44 (0)207 929 5599
David Bick/Brian Alexander
Note to Editors:
PVG's services to third party veterinary practices, through its wholly-owned subsidiary Premier Vet Alliance Limited ("PVA"), include the administration and support of a preventative healthcare program for pets branded "Premier Pet Care Plan" ("PPCP"); and the operation of a buying group (the "PVA Buying Group") in the UK and Ireland, which offers enhanced discounts to member practices on pharmaceutical and consumable spending. PPCP is branded as "Huisdieren Zorg Plan" ("HZP") in the Netherlands and, in the US, PPCP is marketed through the Company's wholly-owned subsidiary, Premier Vet Alliance (US) Limited.
PPCP is a structured, preventative healthcare program for cats, dogs and rabbits and is available only through veterinary practices. The program is seen as a way of providing gold standard care for pets at an affordable price for the client, by way of fixed monthly payments.
PPCP uses a clinical approach to prevention, as this is the most effective method of ensuring illnesses are diagnosed more quickly and not given a chance to advance. What truly sets PPCP apart is its unique approach of offering an end-to-end solution and support to the practice, which has been proven to work extremely well. PVA works alongside practices to create a tailor-made, cost-effective service for clients, one that delivers excellent care to their patients and significantly improves practice performance.
The PVA Buying Group, is now the UK's largest veterinary buying group without group interests in veterinary practices or veterinary wholesalers offering its members some of the best discounts across the industry on pharmaceutical and consumable spend.
For further details: http://www.premiervetalliance.co.uk/
This announcement includes "forward-looking statements" which include all statements other than statements of historical facts, including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for future operations, and any statements preceded by, followed by or that include forward-looking terminology such as the words "targets", "believes", "estimates", "expects", "aims", "intends", "will", "can", "may", "anticipates", "would", "should", "could" or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this announcement. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this announcement to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. As a result of these factors, readers are cautioned not to rely on any forward-looking statement.