ROL.L Regulatory News (ROL)

RNS

1 June 2023

Rotala Plc

("Rotala", the "Company" or the "Group")

Proposed Disposals

Rotala (AIM: ROL.L), an operator of bus routes in the UK for businesses, local authorities and the general public, is pleased to announce that it has exchanged contracts with Transport for Greater Manchester ("TfGM") and the Greater Manchester Combined Authority ("GMCA") in relation to the conditional disposals of its Bolton depot and the majority of its related vehicles (the "Proposed Disposals").

On 23 December 2022, the Company announced, amongst other matters, certain business developments in Greater Manchester and the West Midlands. The Company has now concluded negotiations with TfGM and GMCA and has conditionally exchanged contracts on the Proposed Disposals as follows:

1. to dispose of its Bolton depot to the GMCA, with all its associated fixtures, fittings, plant and machinery; and

2. to place 134 vehicles, being the majority of its buses based at the Bolton depot, into the notional asset pool (the Residual Value Mechanism or "RVM") created by TfGM as part of the franchising arrangements for Greater Manchester. Under this scheme, TfGM allocates buses in the asset pool to the incoming franchise operators. The successful franchise bidder is obliged to acquire the vehicles allocated to it in the notional asset pool at the value determined by TfGM under the RVM.

The Company will receive cash consideration of, in aggregate, approximately £30.4 million for the assets included within the two disposal stages outlined above. The total unaudited net book value of these assets, at their respective dates of sale, is expected to be approximately £23.0 million. The proceeds of the Proposed Disposals will be used as follows:

1. to repay the mortgage and hire purchase debt, totalling approximately £14.9 million, related to the assets which are being disposed of;

2. to repay the remaining outstanding drawings on the Company's Revolving Commercial Facility, totalling £10.8 million, which resulted from the Tender Offer to return £10.0 million to shareholders in February 2023 and the property purchase in March 2023; and,

3. in respect of the balance of the consideration, to strengthen the Company's balance sheet.

As the total consideration receivable for the Proposed Disposals is material compared to the Company's market capitalisation, the Proposed Disposals will be deemed to result in a fundamental change of business pursuant to Rule 15 of the AIM Rules for Companies, which requires in such circumstances the approval of the Company's shareholders in a general meeting. This approval needs to be obtained prior to completion of the Proposed Disposals. At this general meeting, the Board will recommend that shareholders approve both the Proposed Disposals and, prior to this general meeting, each of the Directors will irrevocably commit to vote their own shareholdings in favour of approving the Proposed Disposals.

In addition, in relation to the proposed disposal of the Bolton depot to the GMCA, consents from the superior landlord in certain of the property titles will need to be obtained before completion of the depot sale can be effected.

A circular setting out further details on the Proposed Disposals and convening the general meeting is expected to be posted to shareholders in due course.

About the business

Rotala provides a range of transport solutions, ranging from local bus services under contract to local authorities, through to commercial bus routes. It has operations at Heathrow Airport, in the West Midlands and in the North West. Operating companies are Diamond Bus Ltd, Diamond Bus (North West) Ltd, Diamond Bus (East Midlands) Ltd, Hallmark Connections Ltd and Preston Bus Ltd.