Restore Regulatory News (RST)

23 Jun 2006 13:57

Mavinwood PLC23 June 2006 Mavinwood plc ("Mavinwood" or the "Company") Proposed fundraising and conditional acquisition of Independent Inspections Holdings Limited Mavinwood plc (AIM: MVW), the support services company, announces that it isproposing to raise £12 million through the placing (the "Placing") of100,000,000 new ordinary shares at 12 pence per share. These shares have beenconditionally placed with Geraldton Services Inc. subject to a proposedsub-placing of 40,701,497 of those shares by Seymour Pierce Limited on behalf ofthe Company with institutional and other investors. The Placing is subject toshareholder approval at an EGM, which has been convened for Monday 17 July 2006. The majority of the net proceeds of the Placing will be used to satisfy theinitial consideration of £10 million for the acquisition of IndependentInspections Holdings Limited ("Independent Inspections"). The Company has conditionally agreed to purchase the entire issued share capitalof Independent Inspections for an initial consideration of £10 million and acontingent consideration up to a maximum of £4 million dependent on theperformance of the Independent Inspections group (the "Independent Group").Following Completion, the existing management of the Independent Group willcontinue to run the business. The Independent Group is a UK based carpet and upholstery service businessfounded in 1989, which provides a complete and seamless validation/restorationand replacement service to the insurance industry. Its principal activity is theprovision of an independent inspection and validation service of an insurancepolicyholder's claim in respect of damaged carpets, laminates and otherflooring. It also provides a similar service to carpet manufacturers for claimsmade by householders in respect of their newly fitted carpets. The Independent Group's insurance customers include the RBS Insurance group ofcompanies, AXA, Norwich Union and Zurich. The Directors of Mavinwood estimatethat Independent's share of the carpet insurance claims market is in excess of25 per cent. In the year ended 31 December 2005, Independent Inspections made a profit beforetax of £366,000 on turnover of £6,486,000. At 31 December 2005, IndependentInspections has net assets of £1,971,000. The Directors of Mavinwood considerthat the earnings before interest, tax and amortisation, normalised fornon-recurring costs, of the Independent Group for the year ended 31 December2005 were £927,000. Kevin Mahoney, Chief Executive of Mavinwood, commented: "The acquisition of Independent Inspections continues our buy and build strategyfocusing on the emergency insurance services and document storage sectors. Itexpands the services we already provide to the insurance industry through ANSA,the specialist drainage insurance claims handling business, and makes us a majorprovider of insurance claims management." The initial consideration will be satisfied as to £9 million in cash and as to£1 million by the issue of 7,843,137 ordinary shares in the capital of theCompany (the "Consideration Shares"). The contingent consideration is payable incash in two tranches: £6.67 of additional consideration will be payable in cash in respect of each £1of EBIT in excess of £1,400,000 up to a maximum of £1,700,000 achieved by theIndependent Group during the year ending 31 December 2007; and£6.67 of additional consideration will be payable in cash in respect of each £1of EBIT in excess of £1,700,000 up to a maximum of £2,000,000 achieved by theIndependent Group during the year ending 31 December 2008. Each tranche of contingent consideration is subject to a maximum payment of £2million. Mavinwood Directors, Mike Vincent and John Minton, intend to subscribe for60,000 and 40,000 new ordinary shares respectively in the Placing. As well as providing funds for the initial cash consideration for theIndependent Inspections acquisition, the Company is also proposing to use thenet proceeds of the Placing to repay debt, pursue further acquisitionopportunities to add complementary businesses to the Group and provide workingcapital for the enlarged Group. The Directors of Mavinwood believe that the acquisition represents a goodopportunity to broaden the activities and further improve the performance of theMavinwood Group in line with the Board's stated strategy of building a group ofmarket-leading UK support services businesses. The Directors of Mavinwood, having consulted with the Company's nominatedadviser, Seymour Pierce Limited, consider the terms of the agreement withGeraldton relating to the Placing to be fair and reasonable insofar as theshareholders of the Company are concerned. Enquiries: Mavinwood plc Kevin Mahoney 020 7661 9650Mike Vincent 020 7661 9651 Threadneedle Communications John Coles 020 7936 9604 Background on Mavinwood Mavinwood was admitted to trading on AIM on 5 November 2004 as a companyestablished for the purpose of acquiring, or making investments in, companies orbusinesses involved in the support services sector, and which are considered bythe Directors to have the potential to create substantial shareholder value.Mavinwood completed its first acquisition, of Restore Group, a document storageand record management company on 11 May 2005 and subsequently acquired ANSA, aspecialist insurance claims handling business with particular expertise indrainage claims, on 30 June 2005. On 10 February 2006, Mavinwood acquiredWansdyke, which is also a document storage business. This information is provided by RNS The company news service from the London Stock Exchange