Last checked at 29 May 2009 07:00
eXpansys plc
("eXpansys" or the "Company")
Placing of 133,333,333 Placing Shares at 1.5 pence per Placing Shareand
Notice of General Meeting
The Board is pleased to announce that the Company has conditionally raised £2,000,000 (before expenses) in a Placing (the "Placing") with Virtual Phone Shop Limited ("VPS") at a price of 1.5 pence per share.
The net proceeds of the Placing are expected to be £1.92 million and will provide the Company with additional working capital.
Following the Placing, VPS will own approximately 81 per cent. of the Company's enlarged share capital.
Background to and reasons for the Placing
In common with many other retailers, the Company has been adversely affected by the current difficult economic conditions. On 24 March 2009 the Company announced that it had entered into a trade credit facility with Data Select Limited ("Data Select") (a subsidiary of Oval 2074 Limited ("Oval"), the ultimate parent company of VPS) for up to £1.25 million, secured by way of a fixed and floating charge in favour of Data Select. On 30 April 2009 the credit facility was temporarily increased to £2 million. Notwithstanding the credit facilities made available by Data Select, the Board considers that it is necessary to raise further working capital in order to help finance the Company's ongoing operations and to pay trade creditors including Data Select, some of which are overdue.
Following the completion of the Placing, the Company will seek to re-establish necessary credit limits with its major suppliers.
The Board does not consider it possible to obtain the additional working capital which the Placing secures through debt facilities on commercially acceptable terms. In view of the current credit climate, the Board believes that the best means of securing additional funds is by way of an equity fundraising. The Directors believe that the Placing represents the most efficient and cost effective way to provide the Company with additional working capital.
In the interests of keeping the costs associated with the fundraising to a minimum, the Directors have concluded that a limited marketing exercise, without offering existing shareholders the opportunity to participate in the Placing on a pre-emptive basis, is preferable. Accordingly, the Directors have decided that it would be in the best interests of the Company and its shareholders for the funds to be raised through the Placing.
Use of proceeds
The proceeds of the Placing will be used to provide the Company with additional working capital to help the Company to negotiate the current period of uncertainty in the market and to support the Company's ongoing operations. In particular, it is expected that the Placing proceeds will be employed to pay trade creditors (including a payment of up to £1.6 million to Data Select) to bring the Company back within its agreed credit terms.
Current trading and future prospects
The Company faces challenging trading conditions and shareholders should note that without the Placing proceeds, the Directors believe that the Company may not have adequate working capital. The Company intends to use the proceeds of the Placing to support the Company's plans and ongoing working capital requirements. The Directors believe that should shareholders vote against the Proposals, the ability of the Company to sustain its ongoing operations will be severely threatened.
The Company has repaid all of its UK bank borrowings and, if the Placing does proceed, the Directors believe that the Company will be in a position to trade through the difficult economic environment in which it finds itself.
Details of the Placing
The Company proposes to raise approximately £2 million (before expenses) through the issue of 133,333,333 ordinary shares of 0.25p each (the "Placing Shares"). Application will be made for the Placing Shares to be admitted to trading on AIM and dealings are expected to commence on 16 June 2009.
The Placing is subject to the terms of the Placing and Implementation Agreement.
The Placing is conditional, inter alia, upon the approval of all the Resolution at the General Meeting and Admission occurring no later than 8 am on 16 June 2009 (or such time and date as the Company may agree, being no later than 1 August 2009). Accordingly a general meeting will be held at 10:00 am on 15 June 2009.
The Placing Shares will, when issued, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions thereafter declared, made or paid on such Ordinary Shares following Admission.
A circular containing details of the Placing is being posted to shareholders today and will be available on the Company's website: www.expansys.com.
Background and information on Virtual Phone Shop Limited
VPS is a company incorporated in England and Wales under the control of Peter Jones via his 100% shareholding in Oval, the ultimate parent company of VPS. Peter Jones has varied interests in the mobile communications industry in the UK through his ownership of Oval.
On completion of the Placing, it is intended that Stephen Vincent, a director of Oval and VPS, will be appointed a non-executive director of the Company.
Related Party Transaction
VPS is an existing Shareholder who falls within the definition of a related party in the AIM Rules because it holds more than 10 per cent. of the Company's Existing Ordinary Shares.
The Directors, having consulted with Cenkos Securities as the Company's Nominated Adviser, consider that the terms of this transaction are fair and reasonable insofar as the Company's Shareholders are concerned. In being consulted, Cenkos Securities plc ("Cenkos Securities") has relied on the Directors' commercial assessment of the transaction.
Recommendation
Given that the Placing and the waiver of rule 9 of the City Code on Takeovers and Mergers (the "Proposals") is required to be implemented in order to provide the Company with the additional funds necessary to continue to sustain its business, the Board, having been so advised by Cenkos Securities, believes the Proposals to be fair and reasonable and in the best interests of the Company and its Independent Shareholders. Accordingly the Board unanimously recommends Independent Shareholders to vote in favour of the Resolutions to be proposed at the General Meeting as those Directors holding Existing Ordinary Shares have irrevocably undertaken to do so in respect of their beneficial holdings amounting, in aggregate, to 11,895,767 Existing Ordinary Shares, representing approximately 26.5 per cent. of the Existing Share Capital.
For further information:
| eXpansys plc Roger Butterworth - Chief Executive Cate Hulme - Finance Director | 0161 868 0868 |
| Cenkos Securities plc Stephen Keys/Camilla Hume | 020 7397 1949 |
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
2009
Dispatch of this document 29 May
Latest time and date for receipt of Forms of Proxy
for the General Meeting 10 am on 13 June
General Meeting 10 am on 15 June
Admission of Placing Shares effective and dealings commence on AIM 8 am on 16 June