ROL.L Regulatory News (ROL)

3 Mar 2008 08:00

Rotala PLC03 March 2008 Rotala plc ("Rotala" or "the Company") Trading Update and new Contract Wins Acquisition of Go West Midlands Limited Placing of Loan Notes and of Ordinary Shares to raise £3.8 million Intention of directors and proposed director to subscribe for Loan Notes and Ordinary Shares totalling £655,000 Appointment of new director Introduction The Board of Rotala is pleased to give an update on current trading, to announcethe acquisition by the Company of Go West Midlands Limited from the Go-AheadGroup plc for a total consideration of £2.0 million, the placing of a furthertranche of Unsecured Convertible Loan Notes due 2011 (the "Loan Notes") withwarrants to bring the total amount raised and to be raised under this instrumentto approximately £4.7 million, the intention to place approximately 750,000 newOrdinary Shares to raise £390,000 (the "Ordinary Share Issue") and theappointment of Robert Dunn to the Board. The Company has placed approximately £2.4 million of Loan Notes with newinvestors (the "Placing") arranged through Ludgate Investments Limited ("Ludgate") as further described below. At the same time the Company announces theconversion into Loan Notes of a loan of £1m made in January 2008 and thisfollows an investment of £0.25 million in Loan Notes made by Ludgate in December2007. In addition to the above the Board has received commitments fromDirectors, proposed directors and others to subscribe for a further £1.04million of Loan Notes and for approximately 750,000 Ordinary Shares to raise afurther £390,000 all of which are expected to complete shortly. The Placing will provide additional working capital for the Company to servicethe continued expansion of the group following recent contract wins and furthernew contract wins announced today. The Placing will also finance the acquisitionof Go West Midlands Limited as described below. 2007 Results, current trading and new contract wins As announced on 10 December 2007, the Company's financial performance improvedsteadily during the financial year which ended on 30 November 2007, a year whichwas characterised by increasing business volumes and improving margins. This ledto profitable trading in each of the last three months of the financial year anda record result in November 2007, with turnover of just over £2m for the month. Trading in the first 3 months of the new financial year has continued on thispositive trend with similar levels of turnover being recorded in December 2007and January 2008. The Company continues to be successful in winning tenders fornew contracts and is pleased to be able to announce the award of two furthercontracts by British Airways plc increasing revenues from this customer by £1.63million per annum. The Group's preliminary results for the year ended 30 November 2007 are nowexpected to be announced during May 2008. The Board now expects results for the current financial year to be ahead ofmarket expectations. Acquisition of Go West Midlands Limited Rotala has acquired the entire share capital of Go West Midlands Limited ("GWM")for a cash consideration of £2.0 million. GWM operates approximately 134 buses in the Birmingham area. The Board of Rotalaestimates that the annual income from GWM's bus operations, which areprincipally commercial, amount to approximately £12m p.a.. GWM has 370 employeesand operates from a purpose built freehold operating and engineering depot atTividale, near Oldbury, Birmingham and two leased depots at West Bromwich andRedditch. The Board of Rotala estimates that the net book value of the assets beingpurchased to be approximately £3.05 million comprising £1.7 million relating tovehicles net of hire purchase liabilities, £1.45 million relating to fixedassets including the freehold property and other net current liabilities ofapproximately £0.1 million. The last audited and filed accounts for GWM were in respect of the year ended 1July 2006 when it reported a loss of £1,869,000 on a turnover of £13,422,000. The acquisition of GWM provides Rotala with a significant expansion of itsactivities in the Birmingham conurbation and makes the Company the secondlargest provider of bus services in the market covered by the West MidlandsPassenger Transport Executive. The West Midlands bus market is the secondlargest (after London) in the UK. The Board expects that the management andoperations of GWM can be quickly integrated within the Group's existingstructure giving rise to significant cost savings and that the acquisition willbe earnings enhancing in the current financial year. The Board further believesthe enlarged group will be well placed to continue its organic growth as aresult of its greater operating capacity following this acquisition. Appointment of Robert Dunn Robert Dunn has been appointed to the Board as a non-executive director withimmediate effect. Mr Dunn will provide Rotala plc with the benefits of his 37 years experience inthe transport sector. His business experience includes leading and managingbusinesses, both private and AIM listed, where acquisitions have been animportant part of business growth. Robert Dunn is the father of Simon Dunn, Managing Director of Rotala plc, and ofScott Dunn who has been retained by the Company to lead the integration of GWM. Robert, Simon and Scott Dunn have in aggregate invested or committed to invest£650,000 in the Loan Notes and Ordinary Share Issue, as described later in thisannouncement. Details of the Placing The Placing comprises the issue of £2,372,500 of Loan Notes which have beenplaced with institutional and other investors by Ludgate. The Loan Notes willpay interest semi-annually in arrears on 30 June and 31 December in each year ata rate of 8% p.a. with the first payment being for the period from the date ofthe issue of the Loan Notes to 30th June 2008. The Loan Notes, which will notbe listed, are capable of being converted in aggregate into 3,514,806 newOrdinary Shares of the Company. The conversion price is 67.5p per share whichrepresents a premium of 6.3% to the closing mid-market price of 63.5p perOrdinary Share on 28 February 2008. If not converted, the Loan Notes will beredeemed by the Company on 31 December 2011, or earlier with the agreement ofthe noteholder. In addition, the Company has issued to placees an aggregate of 1,306,220warrants to subscribe for new Ordinary Shares in the Company (the "Warrants").Of these Warrants, 585,786 entitle placees to subscribe for new ordinary sharesat 75 pence per share at any time up to 31 December 2009 and 585,786 entitleplacees to subscribe for new ordinary shares at 80 pence per share at any timeup to 31 December 2010. In addition Ludgate, as placing agent to the Company,has been issued with warrants entitling it to subscribe for 134,648 new ordinaryshares at 67.5 pence per share at any time up to 31 December 2011. Ordinary Share Issue Robert Dunn, Simon Dunn and Scott Dunn have, in aggregate, committed tosubscribe for 749,998 new Ordinary Shares at an issue price of 52 pence pershare for an aggregate investment of £390,000. This investment in OrdinaryShares is in addition to a commitment to invest £160,000 in Loan Notes by SimonDunn and an investment in Loan Notes of £100,000 by Scott Dunn. Conversion of Loan On 16 January 2008, the Company announced that it had raised £1.0 million underthe terms of a loan agreement (the "Loan Agreement"). The investors under theLoan Agreement comprised John Gunn (who advanced the sum of £250,000) andLudgate, a company of which John Gunn is deputy chairman and in which he is ashareholder, (which advanced the sum of £750,000). The Loan Agreement provided for the principal amount advanced to be settled inconsideration of the issue of such number of Loan Notes as have an equal nominalvalue to such amount, together with any warrants attaching to the Loan Notes onthe same terms as described under the details of the Placing above (the "LoanConversion"). This conversion has now taken place. Enlarged Share Capital The conversion of all of the Loan Notes and exercise of all of the Warrantsissued under both the Placing and the Loan Conversion would result in the issueof 6,840,777 new Ordinary Shares in aggregate. This would representapproximately 25.2% of the enlarged issued share capital of the Company. Uponissue the new Ordinary Shares will rank pari passu in all respects with theexisting issued ordinary shares of 25p each in the capital of the Company. In aggregate, including £250,000 of Loan Notes which were taken up by Ludgate inDecember 2007, the Company now has £3,622,500 of Loan Notes in issue followingthe Placing and Loan Conversion. Directors' and other interests Certain directors intend to participate in the Placing as follows: John Gunn £30,000* Geoff Flight £50,000 Simon Dunn £160,000 Kim Taylor £25,000 *John Gunn has also invested £250,000 in Loan Notes through the Loan Conversiondescribed above. If these investments are completed a further announcement will be made settingout the resultant interests of the directors. John Gunn, Chairman, commented "The combination of the current trading performance of the group, the newfunding proposals, the latest acquisition announced today and the strengtheningof the Board set up Rotala for a successful future. The Board believes that these events will take the Company to a new level andenable it to deliver further increases in shareholder value going forward". Information required under Schedule 2, Para (g) of the AIM Rules: Robert Anthony Dunn (aged 53) is currently, or has been in the past five years,a director of the following companies: Current: Past:Monetgrange plc Dunn-Line PlcmotorBus Limited Dunn-line PolskaMP & C Investments Ltd Xtranet Solutions LimitedMotorcoach Ltd Dunn-Line Flights Limited Lamcote Motors (Radcliffe) Limited Bornyard Limited Dunn-Line (Holdings) Limited Dunn-Line (Derby) Limited The Nottingham Coach Company Limited Veolia Transport North Limited Dunn-Line (Southern) Limited Dunn-Line (Eastern) Limited Dunn-Line (Western) Limited Flights Hallmark Limited Flights Corporate Transfers Limited Solus (West Midlands) Limited Distance Coaching Limited The contents of this announcement include the full disclosures required underSchedule 2, Para (g) of the AIM Rules. Contacts: John Gunn, Chairman Rotala plc 020 7621 5770 Kim Taylor, CEO Rotala plc 020 7621 5770 Rhod Cruwys / Romil Patel, Blue Oar Securities Plc 020 7448 4400 Robert Petch, Ludgate Investments Limited 020 7621 5770 This announcement does not constitute an offer to sell or an invitation tosubscribe for, or the solicitation of an offer to buy or to subscribe for,Ordinary Shares in any jurisdiction in which such an offer or solicitation isunlawful and is not for distribution in or into Canada, Japan, the United Statesor Australia (the 'Prohibited Territories'). The Ordinary Shares have not beenand will not be registered under the United States Securities Act of 1933 (asamended) or under the applicable securities laws of any state in the UnitedStates or any Prohibited Territory and, unless an exemption under such Acts orlaws is available, may not be offered for sale or subscription or sold orsubscribed directly or indirectly within the Prohibited Territories or for theaccount or benefit of any national, resident or citizen of the ProhibitedTerritories. The distribution of this announcement in other jurisdictions may berestricted by law and therefore persons into whose possession this announcementcomes should inform themselves about and observe any such restrictions. Anyfailure to comply with these restrictions may constitute a violation of thesecurities laws of such jurisdictions. The contents of this announcement are not to be construed as legal, financial ortax advice. If necessary, each recipient of this announcement should consulthis, her or its own legal adviser, financial adviser or tax adviser for legal,financial or tax advice. Ludgate Investments Limited is regulated by the Financial Services Authority andis acting for Rotala plc and for no one else in connection with the Placing andwill not be responsible to anyone other than Rotala plc for providing theprotections afforded to customers of Ludgate Investments Limited, or foraffording advice in relation to the Placing, the Future Placing or any othermatters referred to herein. This information is provided by RNS The company news service from the London Stock Exchange