TIDMMPS
RNS Number : 9673W
Minorplanet Systems PLC
06 August 2009
NOT FOR DISTRIBUTION OR TRANSMISSION, DIRECTLY OR INDIRECTLY, IN OR INTO THE
UNITED STATES, CANADA, JAPAN, AUSTRALIA OR THE REPUBLIC OF SOUTH AFRICA
MINORPLANET SYSTEMS PLC
("MINORPLANET" OR THE "COMPANY")
GBP1.15M PLACING, OPEN OFFER OF UP TO APPROXIMATELY GBP2.1M AND 1 FOR 20 SHARE
CAPITAL CONSOLIDATION
The Board of Directors (the "Board") of Minorplanet Systems plc ("Minorplanet"
or the "Company") today announces a refinancing of the Company and an Open Offer
to all shareholders designed to address the Company's current working capital
difficulties, which were highlighted in the interim results announcement made on
29 May 2009. The refinancing comprises a GBP1.15m Placing and an Open Offer of
up to approximately GBP2.1m, all to be preceded by a share capital consolidation
whereby each holding of 20 existing Ordinary Shares of 1p each will be
consolidated into 1 New Ordinary Share of 20p (together referred to as the
"Refinancing").
The key terms of the Refinancing are as follows:
* A GBP1.15m Placing of 3,836,091 New Ordinary Shares at 30p per share
* An Open Offer of approximately GBP2.1m of New Ordinary Shares open to all
existing Shareholders pro rata to their existing shareholdings at a subscription
price of 30p per New Ordinary Share
* Shareholders wishing to apply for New Ordinary Shares under the Open Offer in
excess of their pro rata entitlements will be able to apply for additional
shares to the extent that other existing Shareholders do not take up their
entitlements
In addition the Company has negotiated:
* Block Discount Loan Facilities with Siemens & ING
* The conversion of its existing bank overdraft facility to an Enterprise Finance
Guarantee Loan ("EFGL")
* An agreement regarding HMRC in respect of sums currently due and owing
The Refinancing is conditional upon the passing of the required resolutions of
the Company's shareholders, the publication of a Circular and on the listing of
the New Ordinary Shares to be issued in connection with the Placing and Open
Offer.
A circular containing details of the Refinancing and including a notice of
general meeting setting out the required resolutions will be posted (or
communicated by other permitted means) to Shareholders as soon as practicable
and will be available on the Company's website, www.minorplanet.com.
Shore Capital & Corporate Limited ("SCC") is acting as NOMAD and financial
adviser to the Company in relation to the Refinancing and Shore Capital
Stockbrokers Limited ("SCS") is acting as broker.
Terry Donovan, Chief Executive of Minorplanet, said: "Established in 1996,
Minorplanet is the founding father of the telematics industry in the UK. We are
keen to take full advantage of our unrivalled industry experience, product
strength, market position and European presence to lead the consolidation of our
fragmented industry and create growth. As a result of the downturn, Minorplanet
is already a more focused and leaner business.
"The Refinancing will allow us to ride the current economic storm and continue
to build a platform for growth, targeting the large corporate sector as well as
servicing our traditional SME customer base. The medium term prospects of the
Company remain healthy and we should be well positioned to take advantage of the
upturn when it happens."
For further information, please contact:
+-----------------------------------------+------------------------------+
| Minorplanet Systems plc | Tel: 0113 346 7733 |
+-----------------------------------------+------------------------------+
| Terry Donovan, Chief Executive | |
+-----------------------------------------+------------------------------+
| Richard Hopkin, Finance Director | |
+-----------------------------------------+------------------------------+
| | |
+-----------------------------------------+------------------------------+
| Rawlings Financial PR Limited | Tel: 01653 618 016 |
+-----------------------------------------+------------------------------+
| Catriona Valentine | |
+-----------------------------------------+------------------------------+
| | |
+-----------------------------------------+------------------------------+
| Shore Capital and Corporate Limited | Tel: 020 7408 4090 |
+-----------------------------------------+------------------------------+
| Guy Peters/Edward Mansfield | |
+-----------------------------------------+------------------------------+
This announcement has been issued by, and is the sole responsibility of
Minorplanet. SCC, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting as NOMAD and financial adviser to the
Company in connection with the Placing, Open Offer and SCS is acting as broker.
Neither SCC nor SCS will be responsible to any person other than the Company for
providing the protections afforded to its customers, or for advising any such
person on the contents of this announcement or any other transaction,
arrangement or matter referred to herein.
IMPORTANT NOTICE:
The information in this press release is not for release, publication or
distribution, directly or indirectly, in or into the United States, Canada,
Japan, Australia or the Republic of South Africa.
The information in this press release shall not constitute an offer to sell or
the solicitation of an offer to buy, nor shall there be any sale of, the
securities referred to herein in the United Kingdom or in any other jurisdiction
in which such offer, solicitation or sale would require preparation of further
prospectuses or other offer documentation, or be unlawful prior to registration,
exemption from registration or qualification under the securities laws of any
such jurisdiction.
The information in this press release does not constitute or form a part of any
offer or solicitation to purchase or subscribe for securities in the United
States. The securities mentioned herein have not been, and will not be,
registered under the United States Securities Act of 1933 (the "Securities
Act"). The securities mentioned herein may not be offered or sold in the United
States except pursuant to an exemption from the registration requirements of the
Securities Act. There will be no public offer of securities in the United
States.
The information in this press release may not be forwarded or distributed to any
other person and may not be reproduced in any manner whatsoever. Any forwarding,
distribution, reproduction, or disclosure of this information in whole or in
part is unauthorized. Failure to comply with this directive may result in a
violation of the Securities Act or the applicable laws of other jurisdictions.
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS:
Certain statements made in this press release constitute "forward-looking
statements" within the meaning of the US Private Securities Litigation Reform
Act of 1995. These forward-looking statements can be identified by the use of
forward-looking terminology, including the terms "believes", "estimates",
"plans", "anticipates", "targets", "aims", "continues", "expects",
"intends", "hopes", "may", "will", "would", "could" or "should"
or, in each case, their negative or other variations or comparable terminology.
These forward-looking statements include matters that are not facts. They appear
in a number of places throughout this press release and include statements
regarding the Company's intentions, beliefs or current expectations concerning,
amongst other things, the Company's results of operations, financial condition,
liquidity, financial covenants, prospects, growth, strategies and the industries
in which the Company operates. By their nature, forward-looking statements
involve risk and uncertainty because they relate to future events and
circumstances. A number of factors could cause actual results and developments
to differ materially from those expressed or implied by the forward-looking
statements including, without limitation: conditions in the markets; the market
position of the Company or its subsidiaries; earnings, financial position, cash
flows, liquidity, financial covenants, return on capital and operating margins
of the Company; anticipated investments and capital expenditures of the Company;
changing business or other market conditions; and general economic conditions.
These and other factors could adversely affect the outcome and financial effects
of the plans and events described herein. Forward-looking statements contained
in this press release based on past trends or activities should not be taken as
a representation that such trends or activities will continue in the future.
Save as required by law or by the AIM Rules or the Disclosure and Transparency
Rules, Minorplanet does not undertake any obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. You should not place undue reliance on forward-looking
statements, which are applicable only as at the date of this press release.
This summary should be read in conjunction with the full text of the following
announcement.
NOT FOR DISTRIBUTION OR TRANSMISSION, DIRECTLY OR INDIRECTLY, IN OR INTO THE
UNITED STATES, CANADA, JAPAN, AUSTRALIA OR THE REPUBLIC OF SOUTH AFRICA
MINORPLANET SYSTEMS PLC
("MINORPLANET" OR "THE COMPANY")
GBP1.15M PLACING, OPEN OFFER OF UP TO APPROXIMATELY GBP2.1M AND 1 FOR 20 SHARE
CAPITAL CONSOLIDATION
1. Introduction
The Company announced earlier today a refinancing of the Company and a Placing
and Open Offer to all shareholders designed to address the Company's current
working capital difficulties, which were highlighted in the interim results
announcement for the six month period ending on 28 February 2009 and made on 29
May 2009. The refinancing comprises a GBP1.15m placing and an open offer of up
to approximately GBP2.1m, all to be preceded by a share capital consolidation
(together referred to as the "Refinancing").
The key terms of the Refinancing are as follows:
* A share capital consolidation whereby Shareholders will have their existing
Ordinary Shares of 1 pence each held on the Record Date consolidated and
replaced by New Ordinary Shares of 20 pence each, so, for example, a Shareholder
with 40 Ordinary Shares of 1 pence each will have these shares replaced by 2 New
Ordinary Shares of 20 pence each;
* A GBP1.15m Placing of 3,836,091 New Ordinary Shares at 30p per share;
* An Open Offer of up to approximately GBP2.1m of New Ordinary Shares open to
all existing Shareholders pro rata to their existing shareholdings at a
subscription price of 30p per New Ordinary Share; and
* Qualifying Shareholders wishing to apply for New Ordinary Shares under the Open
Offer in excess of their pro rata entitlements will be able to apply for
additional shares to the extent that other existing Shareholders do not take up
their entitlements.
* In addition as part of the Refinancing the Company has reached agreements with
the following key creditors and suppliers:
* The Company has agreed new block discounting facilities with Siemens Financial
Services Limited and ING Lease (UK) Limited in the sum of GBP400,000 for the
purposes of providing additional working capital for the Group;
* The Company has entered into an agreement with the Bank to convert the existing
GBP750,000 overdraft facility provided to Minorplanet Limited to an Enterprise
Finance Guarantee Loan ("EFGL"); and
* The Company has reached an arrangement with HMRC in respect of the payment of
sums currently due and owing to HMRC by the Group.
The net proceeds of the Placing are expected to amount to approximately GBP1.05m
The Open Offer could raise up to approximately a further GBP1.98m net of
expenses, with the actual amount raised being dependent upon the actual level of
take-up. The proceeds of the Placing and any proceeds of the Open Offer will be
used to strengthen the Group's balance sheet and to satisfy the general working
capital requirements of the Group, including the settlement of overdue
creditors.
The proposals are conditional, inter alia, upon Shareholders passing the
Resolutions to be proposed at the EGM.
2.Background to and reasons for the Placing and the Open Offer
In the past year the Group has experienced harsh trading conditions across all
of its territories. The recessions prevailing in the UK, Ireland and New Zealand
had a direct impact on customer demand, with a marked shortage of lease funding
affecting all the Company's subsidiaries, particularly in the SME sector. The
combination of these factors resulted in a sharp decline in turnover to GBP8.8m,
when compared with a turnover in the first half of 2008 of GBP11.3m, and the
Group made a pre-tax loss of GBP2.5m.
As a result of the losses incurred by the Company, creditors have been
inevitably stretched as cash resources have come under pressure in the period.
In addition, the Directors believe that as a consequence of the Group's losses
coupled with the negative economic outlook and adverse publicity, a number of
its customers have chosen to cancel or defer orders with the Company.
In the medium term, the Board's strategy is to increase its penetration of the
larger corporate market in both the public and private sectors. Recent
enhancements to the Company's hardware and software have made its products
highly attractive to larger fleet operators who, inevitably in the current
economic climate, are focusing on tangible opportunities for cost reduction and
improved efficiencies. It is intended to further open up the Group's software to
other hardware providers, as well as embedding the Company's software with other
back office systems through increased use of the Application Programming
Interface. This strategy is already proving successful with a number of key new
private sector gains in this market.
The Group's immediate priority is to cope with the current unprecedented
economic pressures. The Refinancing and the cost cutting measures recently
implemented and to be implemented are intended to enable the Group to emerge
from its current problems with a stronger, leaner business.
The Board has concluded that the Refinancing and, in particular, raising
additional equity capital combined with entering into arrangements with certain
key creditors and suppliers will provide the most appropriate means of providing
a capital structure and desired increase in financial headroom appropriate to
meet the current challenging trading environment. The Board believes that
this approach will enhance the Group's working capital position, and provide a
firm foundation for the short to medium term future. The proceeds of the Placing
are, in the Board's view, expected to provide the Company with sufficient funds
to satisfy its foreseeable working capital requirements, whilst any net proceeds
of the Open Offer will provide additional funds to give the Company additional
flexibility in managing its future cashflow requirements.
The Board has determined to make the Open Offer to allow Shareholders who have
not participated in the Placing to subscribe for New Ordinary Shares on the same
terms as the placees under the Placing.
3.Key elements of the Refinancing
Placing
The Company has undertaken a Placing with a number of Shareholders and
management, raising GBP1.15m (before expenses related to the Refinancing)
through the issue of 3,836,091 New Ordinary Shares, which are not subject to
clawback, at an issue price of 30 pence per New Ordinary Share. The Issue Price
represents a 46 per cent. discount to the Closing Price on the London Stock
Exchange of 55.6 pence per Ordinary Share on 5 August 2009, after taking
into account the proposed 1 for 20 share consolidation.
Open Offer
In order to provide those Shareholders who have not taken part in the Placing
with an opportunity to participate in the Refinancing, the Company is providing
all Qualifying Shareholders with the opportunity to subscribe at the Issue Price
for an aggregate of 7,035,496 Open Offer Shares. This allows Qualifying
Shareholders to participate on a pre-emptive basis in part of the
Refinancing whilst providing the Company with the flexibility to raise
additional equity capital to further improve its financial position.
The Open Offer Shares available to Qualifying Shareholders under the Open Offer
will be an aggregate of 7,035,496 New Ordinary Shares. Shareholders are being
offered the opportunity to apply for additional Open Offer Shares in excess of
their pro rata entitlements to the extent that other Shareholders do not take up
their entitlements in full. In the event that applications are received for in
excess of 7,035,496 Open Offer Shares, excess applications will be scaled back
pro rata to existing shareholdings. The Open Offer Shares have not been placed
subject to clawback nor have they been underwritten. Consequently, there may be
either no Open Offer Shares or fewer than 7,035,496 Open Offer Shares issued
pursuant to the Open Offer.
Both the Placing and the Open Offer are conditional upon, amongst other things,
the approval of Shareholders at a General Meeting and upon the Placing Agreement
becoming unconditional in all respects. Neither the Placing nor the Open Offer
are being underwritten and there is no guarantee that the proposals referred to
in this announcement will be implemented.
4.Use of proceeds
The net proceeds of the Placing are expected to amount to GBP1.05m. The Open
Offer could raise up to approximately a further GBP1.98m net of expenses, with
the actual amount raised being dependent upon the actual level of take-up.
For the purposes of the Open Offer and the Prospectus Directive the
GBP:Euro exchange rate has been taken at Euro1.179:GBP1 as at close of business
on 5 August 2009. The proceeds will be used to strengthen the Group's balance
sheet and to satisfy the general working capital requirements of the Group,
including an initial payment to HMRC and settlement of other overdue creditors.
5.Key elements of additional financing and restructuring of liabilities
New Block Discounting Facilities of up to GBP400,000
The Group has entered into arrangements with Siemens Financial Services Limited
("Siemens") and ING Lease (UK) Limited ("ING") for the provision of new
block discounting facilities (the "Block Discounting Facilities") up to
GBP400,000 to provide additional working capital for the Group. Under new
arrangements Siemens will provide a facility of up to GBP200,000 to the
Minorplanet Limited and ING will provide a facility of up to GBP200,000 to
Minorplanet Limited. Under the terms of the Block Discounting Facilities the
Company has provided guarantees to both ING and Siemens in respect of
Minorplanet Limited's obligations and liabilities arising under each of the
Block Discounting Facilities. Further, the Bank has agreed to provide waivers
(the "Bank Waivers") to ING and Siemens in respect of those various hire
agreements and other contracts which are secured under the Bank's existing
debenture to allow ING and Siemens to assume any rights and interest in
such contracts as a consequence of any draw down of funds under the Block
Discounting Facilities. The granting of the Bank Waivers is conditional upon a
director of Minorplanet Limited providing a limited guarantee to the Bank until
such time as the Overdraft Facility has been converted into an EFGL. However,
the directors of Minorplanet Limited do not intend to draw down any
amounts under the Block Discounting Facility prior to the conversion of the
Overdraft Facility into an EFGL.
New Banking Arrangements
Minorplanet Limited has reached an agreement with the Bank in connection with
its GBP750,000 overdraft facility (the "Overdraft Facility") and its
GBP690,000 BACS credit line facility (the "BACS Facility") provided to
Minorplanet Limited for the provision of general working capital facilities
until 31 August 2010 or, in the case of the Overdraft Facility conversion to an
EFGL (whichever is the earlier). However, the Bank has agreed in principle to
commence the conversion of the Overdraft Facility into an EFGL with a view to
ensuring that conversion will occur and the EFGL will be available for drawdown
prior to the EGM.
HMRC Repayment Agreement
The Company has, as a result of its recent working capital difficulties, and
with the acquiescence of HMRC, accumulated a significant balance of overdue
PAYE, National Insurance and VAT payments over the last 9 months. The Company
has now reached an agreement with HMRC on the terms of a repayment plan whereby
it will, following completion of the Refinancing, repay its outstanding arrears
to HMRC in instalments by 31 August 2010.
6.Current trading and future prospects
In the six months ended 28 February 2009 the Group incurred a pre-tax loss of
GBP2.5m on a turnover of GBP8.8m. Total revenues were GBP2.5m (22%) down on the
previous year, with the decrease in turnover primarily attributable to the UK.
Sales to the SME sector fell by 40% year on year due to the impact of the
recession on smaller businesses as well as a marked shortage of lease funding
traditionally used to finance telematics products. This reduction was partly
offset by gains made in the larger corporate sector.
The Board has responded to the fall in sales volumes by implementing aggressive
cost reduction programmes, involving major headcount reductions, particularly in
the UK and Australia. The total number of personnel employed by the Group has
fallen from 327 at the start of the current financial year to 271 and the UK
headcount has reduced from 164 to 129 over the same period.
Tough market conditions have continued to prevail in the second half, with
similar restrictions on lease finance, although this has partly been offset by
the introduction of new lease funders in the UK. The Group has experienced some
reluctance from customers to place orders due to the Company's financial
position, particularly since the publication on 29 May 2009 of the interim
statement for the six month period ending on 28 February 2009, with the
uncertainties outlined therein. Nevertheless, the positive impact of the cost
reduction measures indicated above, together with the normal seasonal uplift in
certain territories, is reducing the monthly losses incurred by the
Group. Management believes that a combination of the lower overhead base,
further cost saving and an expected recovery in turnover, following a successful
Refinancing and a recent strengthening of the sales management, will return the
UK business to profitability in the next financial year.
The cost base of the European operations has been reduced by combining the Dutch
and German businesses with the German subsidiary, Minorplanet Systems GmbH,
having been placed into administration in July 2009. In addition, Minorplanet
Systems BV, the Company's Dutch subsidiary, has agreed in principle to a revised
schedule of repayments in respect of a block discount loan provided by IBM
Global Finance which is ultimately guaranteed by the Company. The
Australian subsidiary is seeing an increase in sales activity, partly due to the
Government sponsored Intelligence Access Program and the development of a new
distributor in South East Asia. However, initial negotiations have commenced
with third parties to sell the Australian business in order to strengthen
further the Group's cash position and to allow management and
product development resources to be focused on the growth of the Company's
European operations.
As stated above, difficult market conditions and adverse publicity continue to
affect sales, particularly in the UK and Ireland. Consequently the Group
continues to be loss making, albeit at a reduced rate, and it is too early to
predict the outturn for this financial year.
The Refinancing is designed to address the concerns referred to above and
alleviate the pressure recently placed upon the Company by its suppliers. The
Board believes that the Refinancing is necessary to strengthen the Company's
balance sheet and provide further working capital to allow the Company to
continue to trade solvently.
In the event that the conditions relating to the Refinancing are not met, the
Company would immediately have to consult with the Bank. The Board believes that
the outcome of any such consultation would be likely to result in the withdrawal
of facilities by the Bank without delay. Consequently the Board would have no
real alternative but to put the Company into administration or some other form
of insolvency immediately.
7.Details of the Open Offer
Qualifying Shareholders, subject to the terms and conditions of the Open Offer,
will be given the opportunity under the Open Offer to apply for any number of
Open Offer Shares at the Issue Price pro rata to their holdings, after taking
into account the proposed Share Consolidation, on the following basis:
13 Open Offer Shares for every 3 Post Consolidation Existing Ordinary Shares
Fractions of Open Offer Shares will not be allotted to Qualifying Shareholders
in the Open Offer and entitlements under the Open Offer will be rounded down to
the nearest whole number of Open Offer Shares. The Issue Price represents a
46 per cent. discount to the closing price on the London Stock Exchange of
55.6 pence per Ordinary Share on 5 August 2009 (being the last trading day
prior to date of the Refinancing Announcement). The size of the discount is to
encourage participation in the Open Offer and allow Qualifying Shareholders to
participate at the same level of discount as the placees under the Placing.
Shareholders should note that their interest in the Company may be diluted even
if they take up their Open Offer Entitlement in full, depending on the take up
of the Open Offer.
There will be 7,035,496 New Ordinary Shares available to Qualifying Shareholders
under the Open Offer. Qualifying Shareholders are also being offered the
opportunity to apply for additional Open Offer Shares in excess of their Open
Offer Entitlement to the extent that other Qualifying Shareholders do not take
up their Open Offer Entitlement in full. A Qualifying Shareholder may only apply
for additional Open Offer Shares if they have themselves agreed to take up their
Open Offer Entitlement in full. In the event that applications are received for
in excess of 7,035,496 Open Offer Shares, excess applications will be scaled
back pro rata to existing shareholdings. The Open Offer Shares have not been
placed subject to clawback nor have they been underwritten.
Consequently, there may be no New Ordinary Shares issued, or fewer than
7,035,496 New Ordinary Shares issued pursuant to the Open Offer.
8.Irrevocable undertakings
The Company has received irrevocable undertakings to vote in favour of the
Resolutions to be proposed at the Extraordinary General Meeting from each of the
Shareholder Directors holding in aggregate, 2,839,505 Existing Ordinary Shares
representing approximately 8.74 per cent. of the Company's existing issued
ordinary share capital.
In addition, Mr T.J. Donovan, Mr P.W. Bennett and Mrs C. Hurley have agreed to
subscribe for in aggregate 1,084,597 New Ordinary Shares under the Placing and
conditional upon Admission.
9.Share Consolidation
As part of the Refinancing, the Board is proposing a share capital consolidation
to reduce the total number of shares that will be in issue upon completion and
to try to avoid the swings in share price and large dealing spreads which might
otherwise occur if the Company had a very low share price. Consequently, the
Board is proposing a share consolidation whereby each 20 existing Ordinary
Shares of 1p each will be consolidated into 1 New Ordinary Share of 20p.
Fractions of shares will not be issued and holdings of New Ordinary Shares will
be rounded down to the nearest multiple of 20 shares.
10.Circular and General Meeting
A circular containing details of the Placing, the Open Offer and the Refinancing
as a whole is expected to be posted (or communicated by other permitted means)
to Shareholders today. For the purposes of effecting the Refinancing, the
requisite resolutions will be proposed at a General Meeting of the Company. The
EGM is to be held at Greenwich House, 223 North Street, Leeds, West Yorkshire,
LS7 2AA on 1 September 2009 at 11.30 a.m.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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