UNG.L Regulatory News (UNG)

27 Mar 2007 07:04

Universe Group PLC27 March 2007 27 March 2007 Universe Group plc ("Universe" or the "Company") Placing of 42,857,143 new ordinary shares at 7 pence per share to raise £3.0 million The Board of Universe is pleased to announce that Charles Stanley Securitieshas, on behalf of the Company, completed a conditional placing (the "Placing")of 42,857,143 new Ordinary Shares of 5p each (the "Placing Shares") at a priceof 7 pence per Placing Share with institutional and other investors to raiseapproximately £3.0 million. The Placing is conditional, inter alia, upon theCompany obtaining shareholder approval of certain resolutions at anextraordinary general meeting to be held on 20 April 2007 (the "EGM"). The funds raised by the Placing will be applied to reduce further andrestructure the Company's current debt facilities, provide working capital tosupport an anticipated increase in activity, increase investment in sales andmarketing and to clarify the Company's product offering and strategy. ACircular containing details of the Placing and containing notice of EGM (the"Circular") has been sent to shareholders today. The Board is also pleased to announce that HTEC Limited ("HTEC"), the Company'soperating subsidiary, has received a significant contract award from a major oilcompany. The contract is for long term supply of software and services topetrol retailing outlets, with initial rollout into Europe, but with theexpectation of a wider international rollout over time. Summary of results for 12 months to 31 December 2006 The Company has today released its unaudited preliminary announcement of resultsfor the 12 months to 31 December 2006. The Company achieved an operating profiton continuing business (before goodwill impairment and non-recurring items) of£0.7 million in the year to 31 December 2006, compared to £1.5 million theprevious year. Sales on continuing business were £11.3 million, against £15.6million for 2005, yielding a profit before tax on the Company's continuingbusiness (pre goodwill impairment) of £0.3 million. As stated in the preliminary announcement the results were disappointing in thecontext of prior years. Group demands necessitated cash restraints on HTEC,which have undoubtedly held back the business. Nonetheless, HTEC generated bothcash and operating profits. With the restructuring of the Company's finances,as described below, the Board is confident that HTEC's operating momentum willresume in 2007, to the benefit of both the business and our shareholders. New bank facility The Board is also pleased to announce that it has agreed the terms of a £1.5million facility with Bank of Scotland. This facility will replace the Group'sexisting term debt facilities. This new banking arrangement includes a £100,000overdraft facility and a rescheduled term loan of £1.4 million with repaymentterms in line with the current operations of the business. Background to, and reasons for, the Placing As a result of the recently concluded strategic review of the Company, which isdescribed in more detail below, the Board believes that Universe requires afurther injection of equity capital. The funds raised by the Placing will beapplied to: • reduce further and complete the restructuring of the current debt facilities; • provide working capital to support the anticipated increase in activity, including in particular, the new contract with a major oil company; • increase investment in sales and marketing; and • clarify HTEC's product offering and strategy. Details of the Placing The Board is pleased to announce that 42,857,143 new Ordinary Shares have beenplaced with certain institutional and other investors at 7 pence per PlacingShare, conditional, inter alia, on the passing of the resolutions to beconsidered at the EGM as set out in the Circular (the "Resolutions"). ThePlacing will raise approximately £3.0 million before expenses. Application will be made to the London Stock Exchange for the Placing Shares tobe admitted to trading on AIM ("Admission"). The Placing Shares will represent37.4 per cent. of the entire issued share capital of the Company immediatelyfollowing Admission. The Placing Shares will, when issued, rank equally in allrespects with the existing ordinary shares, including the right to receive anydividend or other distribution declared, made or paid following Admission. Itis expected that Admission will become effective and that dealings in thePlacing Shares will commence on 23 April 2007. Certain of the Directors have agreed to participate in the Placing as set outbelow: Director Current Placing Shares Number of Ordinary Percentage of Shareholding Shares following enlarged issued completion of the ordinary share Placing and on capital following Admission completion of the Placing and on AdmissionJohn Scholes - 365,000 365,000 0.32%Paul Cooper - 215,000 215,000 0.19%Eddie Paul 94,500 85,000 179,500 0.16%Adrian Grinsell 107,329 50,000 157,329 0.14% As described above, the net proceeds of the Placing will be applied to reducingand restructuring the Company's debt and to meet the Company's working capitalrequirements, with specific investment in sales and marketing as well as productclarification. The Placing is not a rights issue or open offer and the Placing Shares will notbe offered generally to Shareholders, whether on a pre-emptive basis orotherwise. The Directors believe that the considerable extra cost and delayinvolved in a rights issue or open offer would not be in the best interests ofthe Company and accordingly the Board considers that it is in the best interestsof the Company and its Shareholders for the funds to be raised by the Placing. Strategic Review On 17 November 2006, the Board announced that it had received a number ofunsolicited approaches to acquire the Company, but had received no firmproposals. In light of the expressions of interest that had been received, andgiven the continuing disappointing share price performance, the Board decided toconduct a strategic review of the business and the opportunities available tothe Company, including means of improving the Company's balance sheet. The Board is pleased to announce that the strategic review has now beenconcluded. An offer for the Company at a level representing fair value for thebusiness was not received. The review also considered a number of other issuesrelating to the Company the most significant of which are as follows: • changing the banking arrangements of the Group; • a further placing of new ordinary shares to enable the Group to restructure its banking arrangements and to provide sufficient capital to support expansion of the HTEC business; • disposal of the Group's bureaux de change operation in France; • restructuring and strengthening of the Board of Directors; and • the opportunities for development of the HTEC business. The Board has addressed the issue of the Group's banking facilities and believesthat it is the best interests of the Company to refinance with a new bank, whichhas indicated its support for the Board's proposed future direction of theCompany. The background to this dates back to when the Company was formed byway of the demerger of Retail Decisions plc from Card Clear plc ("Card Clear")in January 2000. Universe assumed term debt of Card Clear totalling over £6million, including an onerous repayment schedule. Whilst the Group's overdraftand bank loan was reduced to £1.9 million at 31 December 2006, the continuingaggressive loan repayment schedule and high level of bank charges has continuedto deprive HTEC of the cash resources required to grow the business. The Boardbelieves this has had a detrimental effect on the development of the business ofthe Group as a whole. The Board further believes that the terms of the newfacility with the new banking lender are more appropriate to the conduct of theGroup's business. In order to facilitate the change of the bank arrangements, and as previouslyannounced, the Company also raised £373,000 through a placing of new ordinaryshares in January 2007. This eliminated the Company's overdraft. As announced at the last AGM, the decision was taken to divest the Frenchbureaux de change business. As previously announced the disposal has now takenplace, and was approved by Shareholders at the extraordinary general meetingheld on 26 January 2007. While there have been expressions of interest from a number of third partiesrelating to a potential acquisition of the Company, or the business of HTEC,none of those discussions have resulted in a firm offer being made which theBoard, having taken appropriate professional advice, believes representappropriate value for Shareholders. The Board believes that the Company's future prospects are encouraging and thatshareholder value can best be delivered through the continuation of Universe asan independent business, focusing on the development of the HTEC business. As aresult, the Board has decided having taken appropriate advice, not to pursue anyof the expressions of interest. After consultation with the Takeover Panel, theBoard confirms that the Company is no longer deemed to be in an Offer Period forthe purposes of the City Code on Takeovers and Mergers. The Directors have irrevocably undertaken to vote in favour of the resolutionsto be proposed at the EGM in respect of an aggregate number of 9,645,373Ordinary Shares representing approximately 13.42 per cent. of the issued sharecapital of the Company. Expected Timetable of Principal Events: Publication of the Circular to Shareholders 27 March 2007Latest time and date for receipt of completed Forms of Proxy for the EGM 10.00am 18 April 2007Extraordinary General Meeting 10.00am on 20 April 2007Dealings in new ordinary shares expected to commence on AIM 8.00 am on 23 April 2007 For Further Information: Universe Group plcJohn Scholes, Chairman 02380 689510Paul Cooper, Chief Executive Charles Stanley SecuritiesRussell Cook 020 7149 6000Anthony Noakes This information is provided by RNS The company news service from the London Stock Exchange