Restore Regulatory News (RST)

20 July 2016

Restore plc

Proposed Acquisition of PHS Data Solutions

Placing of new Ordinary Shares to raise approximately £35 million

Restore ("Restore", the "Company" or the "Group"), the UK office services provider, today announces that it has entered into a conditional agreement to acquire PHS Data Solutions from Personnel Hygiene Services Limited for a total consideration of £83.1 million, on a cash and debt free basis (the "Acquisition"). The Acquisition will be financed from funds raised through a placing with certain institutional investors (the "Placing") and from Restore's existing debt facilities.

The Placing will raise approximately £35.2 million before expenses (the "Placing Proceeds") through the issue of 12,143,632 new ordinary shares of 5 pence each (the "Placing Shares") at 290 pence per share (the "Issue Price"). The Placing was oversubscribed with new and existing investors. Approximately £27.7 million of the Placing Proceeds will be applied to the Acquisition and Restore will simultaneously draw down an additional £48.5 million of debt on the same terms as its existing facilities, together with cash reserves, to finance the remaining acquisition consideration. The acquisition is expected to complete on 26 August 2016.

Approximately £7.5 million (2,586,207 new ordinary shares) of the Placing Proceeds will be subject to approval by the Company's shareholders at a general meeting (the "General Meeting") to be held on 22 August 2016. The Company will apply for admission ("Admission") of the Placing Shares to trading on AIM and it is expected that Admission will occur on 26 August 2016 of both the shares to be issued not subject to the holding of the General Meeting and, assuming that the General Meeting is held as scheduled and the resolutions put to it are passed, the additional shares to be placed. Issue and Admission of all Placing Shares is conditional on completion of the Acquisition.

Background to and reasons for the Acquisition

Following the successful acquisition of the records management business of Wincanton plc in late 2015, Restore has conditionally agreed to acquire PHS Data Solutions for a consideration of £83.1 million, further consolidating the Company's position in the UK document management sector.

PHS Data Solutions is the second largest provider of document shredding services in the UK as well as having a significant records management business and a presence in document scanning.

In line with Restore's strategy of consolidation, the Acquisition will strengthen the Company's market position in document shredding by combining what the Board believes to be the second and third largest document shredding businesses in the UK (PHS Datashred and Restore Shred respectively) and further extend its presence as the second largest records management operator in the UK. It is also expected that there will be significant synergy benefits from the integration of the businesses into Restore through overhead and operational savings.

The Board believes the Acquisition will:

· significantly expand Restore's presence in the attractive document shredding market to become the second largest operator in the UK;

· provide a strong platform for expansion in document shredding;

· further extend Restore's position as the second largest records management operator in the UK;

· broaden Restore Scan's service offering;

· materially increase the scale and customer base of the enlarged Group; and

· realise significant synergies through integration.

The Acquisition is expected to be earnings enhancing in its first full year of ownership.

About PHS Data Solutions

PHS Data Solutions is a trading subdivision of Personnel Hygiene Services Limited and comprises three businesses: PHS Datashred, PHS Records Management and PHS Capital Capture. The financial information set out below has been extracted from unaudited management information at 31 March 2016.

For the year ended 31 March 2016, PHS Data Solutions recorded unaudited Profit Before Interest and Tax of £8.4 million (2015: £8.0 million) on revenues of £46.8 million (2015: £46.3 million). These results exclude approximately £1.6 million of central costs incurred for services currently provided by PHS Data Solutions' parent company, not all of which Restore expects to be reinstated post-completion. The fixed assets of PHS Data Solutions at 31 December 2015 were £10.5 million and the net assets being acquired were estimated to be £11.7 million.

PHS Datashred operates from a national network of twelve branches and processes approximately 65,000 tonnes of paper a year, as well as providing the secure destruction of confidential items. PHS Records Management stores approximately 2.3 million boxes across 8 locations and has a capacity utilisation of approximately 82%. PHS Capital Capture provides on and off site document scanning services with branches in London and Birmingham. Collectively, PHS Data Solutions currently has 580 employees, who will transfer to Restore upon completion of the Acquisition.

The ultimate parent company of PHS Data Solutions will be providing limited warranties under relevant sale and purchase documentation and its liability under such warranties is limited to 1% of the total consideration payable pursuant to the Acquisition.

The Placing and Placing Agreement

The Company proposes to raise approximately £35.2 million gross proceeds (approximately £34 million net of expenses) through the issue of the Placing Shares at the Issue Price through Cenkos Securities plc ("Cenkos"). The Company will raise approximately £28 million through the issue of 9,557,425 Placing Shares that are not subject to shareholder approval of related resolutions. The Company also proposes to raise a further £7.5 million at the Issue Price through the issue via Cenkos of a further 2,586,207 Placing Shares (the "Additional Placing Shares") which will be subject to shareholder approval at the General Meeting.

The Placing is not underwritten. The issue and admission to trading on AIM of all Placing Shares is conditional on the Acquisition becoming unconditional. The Placing Agreement contains certain warranties and indemnities from the Company in favour of Cenkos and is conditional, inter alia, upon:

(a) in relation only to the Additional Placing Shares, shareholder approval of the resolutions at the General Meeting;

(b) the Placing Agreement having become unconditional in all respects (save for the condition relating to Admission) and not having been terminated in accordance with its terms prior to Admission; and

(c) Admission becoming effective not later than 8.00 a.m. on 26 August 2016 or such later time and/or date as the Company and Cenkos may agree, being not later than 9 September 2016.

The Placing Agreement contains customary warranties and an indemnity from the Company in favour of Cenkos together with provisions which enable Cenkos to terminate the Placing Agreement in certain circumstances prior to Admission (as applicable), including where any warranties are found to be untrue, inaccurate or misleading in any material respect or in the event of a material adverse change in the financial position or prospects of the Group in the context of the Placing or Admission.

Application will be made for Admission of the Placing Shares. It is expected that Admission will occur at 8:00 a.m. on 26 August 2016.

The Placing is conditional on, amongst other things, the agreement providing for the Acquisition becoming unconditional save in respect of conditions relating to the Placing, shareholder approval in relation to the Additional Placing Shares and Admission of the Placing Shares.

Following Admission, the total number of voting rights of the Company's ordinary shares will be 112,052,458.

Current trading

Restore has separately today issued a trading update for the six month period ended 30 June 2016 confirming that trading during the period was in line with expectations. The Company expects to publish its half year results on 12 September 2016.

General Meeting

Shareholders will shortly be sent a circular regarding the Additional Placing Shares and a notice convening the General Meeting to be held at 66 Grosvenor Street, London W1K 3JL, on 22 August 2016 at 14:00, at which ordinary or special resolutions will be proposed. A copy of the Circular will be available on the Company's website at www.restoreplc.com.

Related Party Transaction

Hargreave Hale Limited and Blackrock Investment Management are considered Substantial Shareholders under the AIM Rules and are subscribing for 1,499,513 new ordinary Shares and 1,550,000 new ordinary Shares respectively in the Placing. Their Placing participation constitutes related party transactions under Rule 13 of the AIM Rules. The Directors consider that, having consulted with Cenkos, the terms of their participation in the Placing are fair and reasonable insofar as Shareholders are concerned.

Recommendation

The Board believe the Acquisition and the Placing to be in the best interests of the Company and its Shareholders as a whole. Accordingly, the Board unanimously recommend Shareholders to vote in favour of the resolutions to be put to the General Meeting as they intend so to do in respect of their beneficial shareholdings amounting to 1,596,968 Existing Ordinary Shares.

Charles Skinner, Chief Executive of Restore plc, said:

"The acquisition of PHS Data Solutions is a further significant step in our strategy of consolidation and provides a compelling opportunity to combine with a business of scale whose activities are all core to Restore. It will transform our shredding activities to make Restore the second largest operator in an attractive market and provides scope to realise synergies in records management and document scanning. PHS Data Solutions and Restore are an excellent strategic fit whose combination we are confident will drive increased returns for Restore's shareholders."

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