ROL.L Regulatory News (ROL)

16 Jan 2008 10:24

Rotala PLC16 January 2008 Rotala plc ("Rotala" or "the Company") Loan to raise £1.0 million The Board of Rotala announces that it has raised £1.0 million under the terms ofa loan agreement (the "Loan Agreement") with Ludgate Investments Limited andJohn Gunn, Chairman of the Company (the "Loan"). The Loan will provide the finance required to enable the Company to complete theacquisition of Ludlows of Halesowen Limited ("Ludlows"). Subject to final duediligence and negotiations, the purchase contract for this acquisition isexpected to be agreed and signed within the next two weeks. The considerationfor the acquisition will be approximately £850,000 payable in cash oncompletion, which is expected to take place simultaneously with contractexchange. The balance of the Loan will be used for general working capitalpurposes. Information on Ludlows Ludlows is a bus business that operates 21 buses in the Halesowen district ofBirmingham approximately fourteen miles from the main depot of Flights HallmarkLimited ("Flights"), a subsidiary of Rotala in the Aston area of Birmingham. Thecurrent work undertaken by Ludlows is almost exclusively commercial stagecarriage. The Directors believe that the acquisition of Ludlows will improve theability of the enlarged Group to tender for and operate subsidised routes inWorcestershire and Warwickshire by enhancing the efficiency of the routes thatthe Group currently carries out in these counties. Flights intends to transfer vehicles to the Halesowen depot of Ludlows. Thiswill free up space at the Long Acre depot and enable a further expansion of workthere to be carried out. The Directors anticipate that cost savings will beachieved from a reduction in Ludlows' administrative and accounting overheads. Ludlows reported sales of £1.7 million in its unaudited accounts for thefinancial year ended 31 March 2007, with profit before tax of £169,000 and netassets of £489,000 as at 31 March 2007. Details of the Loan Agreement Under the terms of the Loan Agreement, the lenders will receive interestcalculated on a daily basis in arrears at the rate of 8% p.a. In addition,conditional upon, inter alia, appropriate resolutions being passed by theshareholders of the Company at a General Meeting of the Company to authorise thedirectors to allot securities in the capital of the Company for cash without thestatutory pre-emption procedure applying, the Loan Agreement provides for theprincipal amount advanced under the Loan to be settled in consideration of theissue of such number of Unsecured Convertible Redeemable Loan Notes of £1.00each due 2011 (the "Loan Notes") as have an equal nominal value to such amount,together with any warrants attaching to the Loan Notes as described below (the"Loan Conversion"). The investors under the Loan Agreement comprise John Gunn (who has advanced thesum of £250,000) and Ludgate Investments Limited ("Ludgate"), a company of whichJohn Gunn is deputy chairman and in which he is a shareholder, (which hasadvanced the sum of £750,000). The Board (excluding Mr. Gunn due to his position as a director and shareholderof Ludgate and his participation in the Loan), having consulted with Blue OarSecurities Plc, consider that the terms of the Loan Agreement are fair andreasonable insofar as the shareholders of the Company are concerned. General Meeting The Board continues to be engaged in discussions regarding a number of furtheracquisition opportunities in line with its principal strategy of expanding thegroup rapidly around a small number of commercial hubs, currently centred onBirmingham and Bristol. The Company will also require additional working capitalif it is to take full advantage of the opportunities for expansion that existthrough new contract wins, a number of which have been announced in recentmonths. For this reason the Company intends to seek approval from shareholders toauthorise the directors to allot up to 20.28 million relevant securities (asdefined in section 80(2) of the Companies Act 1985) in the Company for cashwithout the statutory pre-emption procedure applying. An issue of securities ofthis size would represent a 100% increase in the existing issued share capitalof the Company. The Company intends to post a circular to shareholders as soon as possibleconvening a General Meeting of the Company at which the relevant resolutionswill be proposed. Terms of Loan Notes Conditional upon, inter alia, appropriate resolutions being passed by theshareholders of the Company at a General Meeting of the Company to authorise thedirectors to allot securities in the capital of the Company for cash without thestatutory pre-emption procedure applying, the Loan Agreement provides for theprincipal amount advanced under the Loan to be settled in consideration of theissue of such number of Loan Notes. The Loan Notes will pay interest semi-annually in arrears on 30 June and 31December in each year at a rate of 8% p.a. with the first payment being for theperiod from the issue of the Loan Notes to 30 June 2008. The Loan Notes will beconvertible at a price of 67.5p per new ordinary share which represents apremium of 14.4% to the closing mid-market price of 59p per ordinary share on 15January 2008. If not converted, the Loan Notes will be redeemed by the Companyon 31 December 2011 or earlier, at the election of the Company and with theagreement of the noteholders. The Loan Notes will not be listed but aretransferable under the terms of the agreement. Assuming the full conversion ofthe Loan Notes to be issued under the Loan Conversion, a further 1,481,481 newordinary shares would be issued equivalent to 6.80% of the share capital of theCompany as enlarged by the issue (excluding any further placing made pursuant tothe resolutions to be proposed as referred to above). In addition the Company will issue to holders of the Loan Notes two types ofnon-transferable share warrants ("Warrants"). The first will be issued on thebasis of one Warrant for every six shares into which the Loan Notes areconvertible and subscribed for, exercisable (on the basis of 1 ordinary sharefor every 1 Warrant exercised) until 31 December 2009 and have an exercise priceof 75p per share (the "2009 Warrants"). The second will also be issued on thebasis of one Warrant for every six shares into which the Loan Notes areconvertible and subscribed for, exercisable (on the basis of 1 ordinary sharefor every 1 Warrant exercised) until 31 December 2010 and have an exercise priceof 80p per share (the "2010 Warrants"). The Warrants will not be listed and arenot transferable. Assuming that the Loan Conversion takes place, 493,826Warrants will be issued to the investors split equally between 2009 Warrants and2010 Warrants. In the event that at least £4m of Loan Notes are issued, and for as long as notless than £1m of Loan Notes are outstanding, the noteholders will have the right(by a resolution of 75% of the noteholders by nominal value) to nominate oneperson to be appointed as a director of the Company. Any person nominatedpursuant to this right must be approved by the Board and Blue Oar SecuritiesPlc, as the Company's nominated adviser. Any such appointee will be required toput himself forward for re-election by Shareholders at the annual generalmeeting next following his appointment. 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 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 or any other matters referred toherein. This information is provided by RNS The company news service from the London Stock Exchange