ROL.L Regulatory News (ROL)

30 Mar 2006 15:03

Rotala PLC30 March 2006 Press Release30 March 2006 Rotala plc ("Rotala" or "the Company") Placing of new shares to raise £1,625,000; option to buy Birmingham freeholdsite; acquisition of the "Central Liner" and "Central Coachways" brand names and grant of options The Board of Rotala is pleased to announce that it has raised £1,625,000 (beforeexpenses) in a placing with investors ("the Placing"). The funds will enableRotala to complete its settlement with Central Parking System of U.K. Limited("CPS"), to part finance the proposed acquisition of the freehold of itsoperational site in Birmingham, to acquire the "Central Liner" and "CentralCoachways" brand names and to augment its working capital resources. Details of the Placing Rotala has conditionally placed 108,333,334 new ordinary shares of 1p each("Ordinary Shares") ("the Placing Shares") at 1.5 pence each ("the PlacingPrice") to raise £1,625,000 (before expenses). The placing is being arranged byLudgate Investments Limited ("Ludgate") with its clients. The Placing isconditional (inter alia) upon the admission to trading on AIM ("Admission") ofthe Placing Shares by 4 April 2006, or such later date as Ludgate and theCompany may agree. Application has been made to AIM for such Admission. Before the Placing, the issued Ordinary Share capital amounted to 171,974,360Ordinary Shares. After Admission the issued share capital will be 280,307,694Ordinary Shares. The Placing Shares are equivalent to approximately 38.7% of theenlarged Ordinary Share capital. Certain Directors have participated in the Placing to the extent of 10,083,334Placing Shares at the Placing Price amounting to £151,250. Details of theplacing commitments and the interests of the Directors and their connectedpersons in the Ordinary Share capital of the Company as at Admission are set outbelow: Following the Placing Placing Shares at 1.5p Shares held % per share (excluding options) John Gunn * (1) 9,750,000 35,025,000 12.5Nick Kennedy ** 333,334 2,846,227 1.0 * includes Mrs R. S. Gunn and Wengen Pension Plan ** includes Mr Kennedy's pension fund (1) John Gunn holds his shares through W B Nominees Ltd, as shown below. In addition, as a result of the Placing the Company is aware of the followingpersons (other than the Directors and their connected persons set out above) whowill be significant shareholders (being holders (directly or indirectly) of morethan 3 per cent. or more of the Company's issued Ordinary Share capital): Placing Shares at Following the Placing 1.5p per share Shares held % ODL Securities Limited 10,000,000 20,281,250 7.24Ludgate 181 (Jersey) Ltd 5,000,000 16,431,042 5.86W B Nominees Ltd (1) 24,363,335 125,197,435 44.66Ludgate Investments Ltd 2,000,000 5,750,000 2.05 (1) includes the holding of John Gunn, as shown above. W B Nominees Ltd acts asbare nominee for underlying shareholders in respect of all the Ordinary Sharesregistered in its name. W B Nominees Ltd does not exercise any discretion overthe said shareholdings or voting rights. As consideration for its services to the Company, Ludgate Investments Ltd willreceive a fee of 5 per cent. of the total amount raised in the Placing and inaddition will be granted warrants over 5,000,000 Ordinary Shares exercisable at1.5 pence per Share within 5 years from the date of completion of the Placing.John Gunn, the Non-executive Chairman of Rotala is a shareholder in LudgateInvestments Ltd. He is also a Director and shareholder in Ludgate 181 (Jersey)Ltd. PURPOSE OF THE PLACING Rotala intends that the new funds will be used for the following three purposes: 1. Proposed acquisition of freehold of Rotala's Birmingham property Rotala and its subsidiaries (together the "Rotala Group") have the opportunityof acquiring the freehold of its 4.5 acre site at Long Acre in Birmingham. Thisproperty comprises a large hardstanding for the parking of its fleet of coachesand chauffeur-driven cars, an extensive multi-bay maintenance and repairsbuilding, large stores buildings for parts, an operations building and an officebuilding. The Rotala Group has signed an option agreement with Geoffrey Flight and FrankKenneth Flight (the vendors of the property) in return for an option fee of£100,000 (plus VAT) giving the Rotala Group the exclusive right to acquire thesite by 24 April 2006. The proposed acquisition price for the freehold isestimated at £2 million, of which it is estimated that £500,000 would be payablein cash from Rotala's own resources and the balance expected to be financed by abank loan. The acquisition of the freehold interest in the depot, if made, will give theCompany control of its main operating base. This base offers extensivefacilities to accommodate expansion of the Company's business. It possessessufficient office and operational space to enable the group to benefit from theexpected synergies to be derived from future acquisitions. It is expected thatthere will also be a small saving from the replacement of rent with mortgageinterest payments. The acquisition of the freehold property may necessitate the approval of theshareholders of the Company pursuant to the Companies Act 1985 and if so anotice convening the necessary meeting will be dispatched to shareholdersshortly. 2. Payment of final £270,000 of settlement On 30 December 2005, the Company announced that it had reached a settlement ofpotential claims by and between Rotala, CPS and certain former employees of CPS.As part of the settlement, the 46,666,667 existing Ordinary Shares held bySpritto Nominees Limited (as nominee for Stuart Lawrenson), were placed onbehalf of CPS with investors at a price of 1.35 pence per share on 18 January2006. Under the settlement Rotala is also required to make a payment of £270,000to CPS, representing the balance of the amount owing to CPS derived from theservices consumed by the Flights group of companies before their acquisition bythe Company. This payment will complete the implementation of the settlementwith CPS. 3. Acquire the "Central Liner" and "Central Coachways" brand names Rotala has conditionally agreed to acquire the "Central Liner" and "CentralCoachways" brand names from Geoffrey Flight. Mr. Flight is a former owner of theFlights business and his father was an original founder of the business. Hebecame a director of Flights Hallmark Ltd and Flights Corporate Transfers Ltd,subsidiaries of the Company, on 11 October 2005. The two brand names, in theview of the Board, present readily recognisable names in the public transportmarket, which is differentiated from the high-quality, dedicated transportservice supplied by the Flights Hallmark brand. The brand names should thereforegive the Company an established base upon which to add any acquisitions made inthe bus market in the Birmingham area. The acquisition of the brand names is conditional on completion of the Placing.The consideration for the brand names is £250,000, which is payable in cash. Geoffrey Flight has agreed to participate in the Placing through thesubscription for 8,333,333 Placing Shares at the Placing Price, equivalent to aninvestment of £125,000 and approximately 3.0% of the enlarged issued sharecapital. Rotala has also granted Geoffrey Flight an option to subscribe for a further8,333,333 shares in Rotala at 1.5 pence per share, such option to expire on 30June 2006. The Board of Rotala considers that the terms of the transactions described aboveare fair and reasonable insofar as the shareholders of the Company areconcerned. 4. Augment working capital requirements The balance of the new funds will be used to augment the working capitalresources available to the Company. CURRENT TRADING As announced on 10 January 2006, the acquired businesses incurred losses in theyear ended 30 November 2005. After the acquisition of the Flights group ofcompanies, it became clear that Rotala had inherited a number of unsatisfactoryand uneconomic commercial arrangements which were problematic, and whose adverseeffect will continue until they can be ended or re-negotiated. These underlyinglosses, though declining, are expected to continue in the year ending 30November 2006 and it is expected that they will not finally be eradicated untilthe year ending 30 November 2007. It is intended that full provision for these onerous contracts will be made inthe November 2005 accounts. Accordingly the losses of the acquired businessesare likely to be larger than originally anticipated, but the full provisionshould ensure that the accounts of future years will be largely free from thesefactors. The audit of the year to November 2005 will commence shortly and it isexpected that Rotala will announce its results at the end of May 2006. The Board has worked hard to reduce costs and eliminate unprofitable activities,with the result that monthly losses have been reduced. Although the contract tooperate the route for National Express Plc ended on 28 January 2006, the revenuefrom this contract of some £2m per annum has been replaced by equivalent revenueat significantly better margins with other customers largely within the airlinesector. The Directors are actively seeking organic growth and the Company'sefforts to win other new contracts are proving successful. Following the Placing, it is the Board's intention to purchase the freehold inBirmingham and to make the payment of the final £270,000 due to CPS. Rotala willthereby have fulfilled the remaining condition to its settlement with CPS. Thesesteps will enable the Company to continue to develop its business free from theprevious uncertainties and should allow it to concentrate on the original plans,formed at the time of the Company's flotation in March 2005, to create asubstantial specialist transport group. The Directors are confident that thebusiness model set out at that time remains valid and that the marketopportunities set out in the flotation document continue to be available. GRANT OF OPTIONS The Board and the Remuneration Committee have decided that options over15,000,000 shares should be granted to directors and senior staff. The optionsawarded to directors amount to 9,000,000 shares and are summarised below: Number of options Kim Taylor 4,000,000 John Gunn 3,000,000 Nick Kennedy 2,000,000 These options will each have an exercise price of 1.5 pence and they will becomeexercisable three years after the date of their grant. Contacts: Nick Fox at M Communications 020 7153 1540 Notes to Editors: The Company was admitted to trading on AIM on 29 March 2005, having beenincorporated on 21 January 2005, to invest in the parking and transportationsectors. In the transport sector, the Board anticipated that opportunities wouldarise in the provision of bus services, chauffeur-drive services and integratedground transportation. In the Company's admission document dated 11 March 2005the Board stated its intention to complete the Company's first acquisitionwithin six months of Admission and in August 2005 it agreed the acquisition ofthe Flights Group of companies. The Flights Group comprises three companies: Flights Hallmark, Flights CorporateTransfers and FH Transport. Flights Hallmark is a mature coach and bus businessformed through the acquisition and amalgamation of a number of businesses. Itsmain activities include the provision of dedicated transport solutions for arange of corporate customers, the operation of various shuttle bus services anda substantial coach hire business. Flights Corporate Transfers operateschauffeur driven cars, particularly relating to transport to and from UKairports, for a range of airlines and airline-related customers. The thirdcompany, FH Transport, does not currently trade, but holds certain contractswith customers relating to the business operated by the other members of theFlights Group. ENDS This information is provided by RNS The company news service from the London Stock Exchange