Trakm8 Hldgs Regulatory News (TRAK)

9 May 2006 07:01

Trakm8 Holdings PLC09 May 2006 9th May 2006 TRAKM8 HOLDINGS PLC ("Trakm8" or "the Company") Proposed acquisition of Interactive Projects Limited ("IPL") The Company today announced that is in discussion with the shareholders of IPL("Vendors") in relation to the potential acquisition of the entire issued sharecapital of IPL ("IPL Shares"). The proposed consideration for the IPL Shares is £100,000 cash and 446,428 Ordinary Share giving an implied value of £ 702,667.80 as at 8th May 2006, based on a Trakm8 share price of 135p on 8 May 2006, the last business day before the announcement of the proposed acquisition. The cash component shall be payable upon acceptance by the Company of the Vendors offer("Completion") and the remainder to be satisfied by the allotment and issue of 446,428 Ordinary Shares to the Vendors on 29 November 2006 (subject to the Company withholding such number of Ordinary Shares, if any, in accordance with the terms of the proposed agreement, in satisfaction of the whole or part of any claim by the Company against the Vendors in connection with the proposed agreement). In view of the interests of some of the Directors in IPL (details of which areset out below) the prior approval of Shareholders is required pursuant tosection 320 of the Companies Act 1985 before the Company may enter into anarrangement whereby the Company acquires or is to acquire the IPL Shares. Reasons for the proposed acquisition of IPL IPL is a research and development company that focuses on the development ofbroader telematics technology and applications. Historically the Company has hada close relationship with IPL. The first Trakm8 branded product, known as the'Trakm8 1' was developed within IPL. The Company continues to licence some of its intellectual property from IPLwhich the Company uses in relation to applications for vehicle tracking andvehicle security markets. The Company also has a maintenance agreement andsecondment agreement with IPL. Under the maintenance agreement IPL providesagreed support and maintenance services for those products and productcomponents used by the Group which have been designed, developed, produced orsupplied by IPL. Under the secondment agreement IPL provides the services ofcertain IPL employees to the Company. The Company believes that the proposed acquisition will considerably strengthenits ability to develop new products and will open access to the non-vehicletracking markets which have to date been prevented. In addition the acquisitionwill achieve some operational economies of scale and result in limited costsavings from integration of technical, production and finance activities. In summary, given the interrelationship between the Company and IPL and theircontinued association under the intellectual property licence agreement,maintenance agreement and secondment agreement, the Directors consider that theacquisition of the IPL Shares will serve to further protect these importantaspects of the Company's business and offer additional opportunities for thefuture. Directors' interests The interests of the Directors (including the interests of their spouses andinfant children and the interests of any persons connected with them within themeaning of Section 346 of the Companies Act 1985), all of which are beneficial,in the issued share capital of IPL are as at the date of this document and willbe at the date of the EGM as set out in the table below. The table below also sets out the consideration by way of cash and the allotmentand issue of Ordinary Shares that will be received by each Director in relationto the sale of their IPL Shares to the Company. Director Number of IPL % of Consideration: Consideration: Shares Held IPLShares Cash Ordinary Held SharesAdrian Richard Dowding White 8,414 8.4% £8,414 37,562Cary Paul Knapton 18,213 18.2% £18,214 81,311Matthew William Cowley 9,137 9.1% £9,137 40,790Timothy Adam Cowley 8,995 9.0% £8,995 40,156Timothy Paul Couling Nil Nil Nil NilTimothy David Douglas Evans Nil Nil Nil NilDawson Buck Nil Nil Nil NIl In addition, Richard White and Tim Cowley are directors of IPL. Following shareholder approval and Completion of the proposed transaction: • Richard White, who is currently non-executive Chairman of both the Company and IPL, will have these roles consolidated into a role as non-executive Chairman of the Company. His appointment terms with the Company will remain unchanged. • Timothy Cowley, who is currently an executive director of IPL and non-executive director of the Company, will have these roles consolidated into a role as an executive director of the Company. His terms of appointment will otherwise remain unchanged. • All other directors of IPL will resign from the IPL board with immediate effect. Lock-in arrangements The shareholders of IPL have agreed not to sell, transfer or otherwise disposeof the Ordinary Shares to be received as part of the consideration for IPLwithout the consent of Arbuthnot Securities Limited ("Arbuthnot"), the Company'snominated adviser, other than in certain specified circumstances, for a periodof 12 months from the proposed date of issue of the consideration shares, being29 November 2006. Financial summary IPL's financial year runs from April to March and is the same as the Trakm8Group. IPL has not prepared audited accounts and has historically takenadvantage of the special provisions of Part VII of the Companies Act 1985relating to small companies. The Company intends that following completion ofthe acquisition IPL's accounts will be audited as part of the Company's groupaccounts for the year to 31 March 2007. IPL's unaudited profit & loss account for the 12 months ended 31 March 2006 showa pre-tax loss for the period of £75,073 and the accumulated losses for thefinancial years 2004 and 2005 were £108,000. Following completion of theacquisition the Company would intend to utilise these losses in due course. As at 31 March 2006 the unaudited balance sheet net asset value of IPL was£37,270. The Company currently accounts for approximately 85% of IPL's turnover,including licence fees payable under the terms of a licence agreement. As at 31March 2006 there was no significant outstanding trade debtors and all creditorswere paid up to date. There are no disputed items. IPL entered into two loan agreements in January 2003 and February 2005 with theNational Westminster Bank Plc ("NatWest"). Each loan was for £125,000 and areguaranteed by the Secretary of State under the Small Firms Loan GuaranteeScheme. The term of each loan is 7 years with interest payable quarterly andrepayments to be made by equal monthly instalments. As at 31 March 2006 theamount outstanding under these loans was £174,107. NatWest has confirmed to IPLand the Company that the proposed acquisition of the IPL Shares by the Companywill not affect the terms of the loans. Proposed share purchase agreement available for inspection A copy of the proposed share purchase agreement in relation to the IPL Shareswill be available for inspection at the offices of Lawrence Graham LLP, 190Strand, London WC2R 1JN during normal business hours on any weekday (Saturdayexcepted) from the date of this circular until close of the EGM, and at theplace of the EGM for at least 15 minutes prior to and during the EGM. Extraordinary General Meeting The EGM has been convened for 10 a.m. on Friday 26th May 2006 at the Company'soffices, Lydden House, Wincombe Business Park, Shaftesbury, Dorset. SP7 9UJ atwhich the resolution set out in the notice of EGM will be proposed to approvethe proposed acquisition. The resolution will be proposed as an ordinaryresolution. Recommendation Tim Couling, Tim Evans and Dawson Buck, being Directors who do not have aninterest in the issued share capital of IPL (the "Independent Directors"),consider, having consulted with Arbuthnot, that the terms of the proposedtransaction are fair and reasonable insofar as the Company's shareholders areconcerned. Accordingly the Independent Directors recommend that shareholdersvote in favour of the resolution to be proposed at the EGM. In providing theiradvice Arbuthnot has relied on the Independent Directors' commercial assessmentof the acquisition. A circular containing the details of the proposed acquisition of IPL andconvening the EGM is expected to be posted to Shareholders as soon as practicable. -ends- For further information please contact: Trakm8 Holding plcTim Couling, Finance Director 01747 858 444 Tavistock CommunicationsChristian Taylor-Wilkinson 020 7920 3150 This information is provided by RNS The company news service from the London Stock Exchange