Last checked at 29 Mar 2007 07:00
SOFTWARE RADIO TECHNOLOGY PLC ("SRT" or the "Company") PLACING TO RAISE ‚£4,000,000
The Directors of SRT, the AIM-quoted provider of TETRA and AIS solutions to the communications and homeland security markets, are pleased to announce that the Company has carried out a conditional placing through HansonWesthouse of, in aggregate, 9,523,810 new Ordinary Shares at 42p per share.
Background to and reasons for the Placing
The Directors intend to apply the net proceeds of the Placing, which are expected to be approximately ‚£3.8 million, in three areas:
‚£000 Working capital for the TETRA business 1,000 Development of new generation of PMR technology 1,300
Product development and working capital for the Marine 1,500 business
3,800
Working capital for the TETRA business
On 7 December 2006, the Company announced its interim results for the six months ended 30 September 2006 and stated that there would be a delay of approximately six months in the ability of the Group's customers to enter volume production of TETRA handsets, and thereby generate royalties for SRT, as a result of certain software-related issues which had arisen during extreme field testing by customers.
Final testing, debugging and approval processes are underway, with some approvals already obtained. The Directors believe that certain customers will shortly be in a position to enter volume production of TETRA handsets which would generate royalties for SRT. In addition, as customers commence production, ‚£2 million (approximately) of initial licence and development fees will become payable.
The delay in the commencement of royalties and in the payment of fixed licence and development fees by customers, coupled with the Group's other activities, resulted in the Directors concluding that the Company should seek to raise further equity funding.
Development of new generation of PMR technology
Within the PMR market, SRT has concentrated to date on the TETRA market. TETRA is primarily targeted at users for whom effective communications are mission-critical, such as the emergency services and the military and TETRA networks have now been implemented in over 70 countries.
The migration from analogue to digital PMR systems has involved the development of a number of other standards, including P25, which is prevalent in North America, as well as standards that address the less stringent requirements of other user groups. As a result, the Directors believe an opportunity exists to increase SRT's target market and margins through the potential evolution of the existing digital TETRA platform into a generic digital platform which can be software-configured for other digital PMR standards. This would enable SRT to provide technology to manufacturers addressing non-TETRA digital PMR markets.
The development of this platform is underway and the Directors intend to apply part of the proceeds of the Placing to continue and accelerate the development of this technology for adoption in the wider digital PMR market. Funds will also be applied to the development of SRT's own TETRA handset for sale to OEMs within the EU, where encryption issues hinder non-EU handset manufacturers from entering the market.
Product development and working capital for the Marine business
SRT has made significant progress in developing its Marine business, focusing on the marketing of the Group's AIS Class B technology which provides accurate and secure identification and tracking of moving assets, in particular ships and boats.
SRT's AIS technology has been designed to enable the production of low cost AIS products. The technology can be provided in different formats, including as a finished product, to suit the requirements of marine electronic manufacturers and distributors around the world with their established sales channels.
The Group's AIS Class B transceiver, which was launched at the end of 2006, has received EU type-approval and US Coast Guard Certification. Agreements are in place with over 20 companies, including some of the largest marine electronics companies in the world, for the use of SRT's technology to develop a range of AIS products. Certain SRT customers have been in production since December 2006 generating revenues for SRT.
The Directors believe that the progress of the Marine business to date and the indications in the market justify further investment to enable SRT to meet and support the anticipated demand. Funds will be applied both to reduce component lead times and expand customer technical and sales support. In addition, in order to capitalise on the demand for low cost AIS technology, the Directors intend that SRT will continue to invest in the evolution of its AIS technology with the objective of reducing the end user cost, thereby increasing both the addressable market and SRT's margins.
Details of the Placing
The existing power granted by Shareholders to the Directors to allot shares for cash is insufficient to allow the issue of all of the Placing Shares. Therefore, the Placing is being carried out in two tranches. The first tranche, which is being carried out under the existing power granted to the Directors, comprises the placing of the 7,142,857 First Placing Shares, which will raise approximately ‚£3 million, and is expected to be completed at 8.00 a.m. on 3 April 2007 (on First Admission). The second tranche, which is conditional, inter alia, on the passing of the Resolution at the EGM, comprises the placing of the 2,380,953 Second Placing Shares, which will raise approximately ‚£1 million, and is expected to be completed at 8.00 a.m. on 24 April 2007 (on Second Admission).
The Placing Shares will represent approximately 10.85 per cent. of the Enlarged Share Capital.
The Placing Agreement, in so far as it relates to the First Placing, is conditional, inter alia, on:
(a) First Admission occurring by not later than 8.00 a.m. on 3 April 2007 (or such later time and/or date as HansonWesthouse and the Company may agree but in any event not later than 17 April 2007); and
(b) the obligations of HansonWesthouse not having been terminated prior to First Admission.
The Placing Agreement, in so far as it relates to the Second Placing, is conditional, inter alia, on:
(a) Second Admission occurring by not later than 8.00 a.m. on 24 April 2007 (or such later time and/or date as HansonWesthouse and the Company may agree but in any event not later than 4 May 2007);
(b) the Resolution to be proposed at the EGM having been passed thereat (and not, save with the written consent of HansonWesthouse, at any adjournment thereof) without amendment; and
(c) the obligations of HansonWesthouse not having been terminated prior to Second Admission.
An electronic copy of the circular, which is being posted to Shareholders today, can be downloaded from the Company's website at www.softwarerad.com.
For further information please contact:
Software Radio Technology plc 01761 409500 Simon Tucker simon.tucker@softwarerad.com Hanson Westhouse Limited 0113 246 2610 Tim Feather tim.feather@hansonwesthouse.com Matthew Johnson matthew.johnson@hansonwesthouse.com CityRoad Communications 020 7248 8010 Paul Quade 07947 186694DefinitionsThe following definitions apply throughout this document, unless the contextrequires otherwise:"AIM" the AIM market of the London Stock Exchange "AIM Rules for the rules of the London Stock Exchange governing Companies" admission to AIM and the regulation of the companies whose securities are admitted to trading on AIM together with the accompanying guidance notes, in each case as amended or re-issued from time to time "AIS" automatic identification system "Company" or "SRT" Software Radio Technology plc "Directors" the board of directors of SRT "Enlarged Share the issued share capital of the Company immediately Capital" following the Placing "EU" European Union "Existing Ordinary the 78,287,082 Ordinary Shares in issue at 28 March Shares" 2007 "EGM" the extraordinary general meeting of the Company to be held at 11.00 a.m. on 23 April 2007, or any adjournment thereof "First Admission" admission of the First Placing Shares to trading on AIM and such admission becoming effective in accordance with the AIM Rules for Companies "First Placing" the placing of the First Placing Shares pursuant to the Placing Agreement
"First Placing Shares" the 7,142,857 new Ordinary Shares which are the subject
of the First Placing "Form of Proxy" the form of proxy for use by Shareholders in connection with the EGM "HansonWesthouse" Hanson Westhouse Limited, the nominated adviser and broker to the Company
"London Stock Exchange" London Stock Exchange plc
"Ordinary Shares" ordinary shares of 0.1p each in the capital of the Company "Placing" the conditional placing by HansonWesthouse, on behalf of the Company, of the Placing Shares at the Placing Price pursuant to the Placing Agreement "Placing Agreement" the conditional agreement dated 29 March 2007 between HansonWesthouse and the Company relating to the Placing "Placing Price" 42p per Placing Share "Placing Shares" together, the First Placing Shares and the Second Placing Shares "PMR" professional mobile radio "Resolution" the special resolution to be proposed at the EGM "Second Admission" admission of the Second Placing Shares to trading on AIM and such admission becoming effective in accordance with the AIM Rules for Companies "Second Placing" the placing of the Second Placing Shares pursuant to the Placing Agreement
"Second Placing Shares" the 2,380,953 new Ordinary Shares which are the subject
of the Second Placing "Shareholder(s)" holder(s) of Existing Ordinary Shares "TETRA" terrestrial trunked radio, the European Telecommunications Standards Institute standard for digital trunked radio communications
HansonWesthouse, which is regulated by the Financial Services Authority, is acting on behalf of SRT. HansonWesthouse is not acting for any other persons and will not be responsible to anyone other than SRT for providing the protections afforded to customers of HansonWesthouse or for providing advice in relation to the Placing or any other matter referred to in this announcement.
This announcement is for information only and does not constitute an offer to sell or issue or the solicitation of an offer to buy, subscribe or acquire any securities in any jurisdiction. This announcement does not constitute an offer to sell or issue or the solicitation of an offer to buy, subscribe or acquire any securities in the capital of the Company in the United States, Canada, Australia, Japan or South Africa or in any jurisdiction in which such offer would be unlawful and should not be relied upon in connection with any decision to acquire Placing Shares or any other securities in the capital of the Company. The information contained in this announcement is not for release, publication or distribution, directly or indirectly, to or into the United States, Canada, Australia, Japan or South Africa or in any jurisdiction in which such publication or distribution would be unlawful.
This announcement has been issued by, and is the sole responsibility of, the Company. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by HansonWesthouse or by any of its affiliates, directors, employees or agents as to or in relation to, the accuracy or completeness of this announcement, or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is hereby expressly disclaimed.
SOFTWARE RADIO TECHNOLOGY PLC