Reverse Acquisition and Placi

RNS Number : 1635R

Marwyn Materials Limited

17 August 2010

 



17 August 2010

MARWYN MATERIALS LIMITED

Reverse Acquisition of Breedon Holdings Limited

Placing of £50 million

Posting of Admission Document and Notice of Extraordinary General Meeting

Summary of the proposed Acquisition and Placing

§ The Board of Marwyn Materials Limited ("Marwyn Materials" or the "Company") today announces that Marwyn Materials Investments Limited, a subsidiary of the Company has entered into conditional agreements to acquire the entire issued share capital of Breedon Holdings Limited ("Breedon"), a large independent UK aggregates producer, for a total consideration of £2.25 million in cash and warrants to subscribe for 55,266,667 Ordinary Shares at an exercise price of 12.0 pence per share (representing 10.0 per cent. of the Enlarged Share Capital of the Company).

§ In view of the size of Breedon, the Acquisition will constitute a reverse takeover pursuant to Rule 14 of the AIM Rules for Companies and as such will require the approval of Shareholders, which will be sought at an Extraordinary General Meeting convened for 10.00 a.m. on 1 September 2010 at the offices of Travers Smith LLP, 10 Snow Hill, London EC1A 2AL.  The Admission Document has been published and is expected to be sent to Shareholders today.

§ The Company also announces that it has conditionally raised £50.0 million (before expenses) by the issue of 416,666,667 Placing Shares at 12.0 pence per share (the "Placing Price"). The net proceeds of approximately £44.25 million will be used to pay down some of the Breedon Group's debt and provide approximately £25.0 million to fund the ongoing working capital of the Enlarged Group and to finance potential future acquisitions.

§ Marwyn Materials was admitted to AIM on 12 June 2008 as a special purpose vehicle with initial funding of £13.6 million (before expenses).  The stated strategy of the Company was to acquire controlling stakes in one or more quoted or unquoted profitable businesses or companies in the UK and international building materials industry by way of a reverse takeover and to use these as a platform for further acquisitions, creating shareholder value through market consolidation. The Directors have reviewed a number of potential acquisition targets since the Company was admitted to AIM and believe that the acquisition of Breedon represents an exciting opportunity within this strategy.

§ Following Admission, the Company will be renamed Breedon Aggregates Limited.

Highlights

§ Immediate scale - Breedon is the largest independent player in the UK aggregates sector after the five global majors with 29 quarries, 19 asphalt plants and 27 concrete plants in England and Scotland

§ Strong asset backing with approximately 181 million tonnes of mineral reserves and resources in the UK, providing an estimated life of approximately 50 years at current output levels

§ Investment being made at a low point in the economic cycle

§ Business generates positive operating cashflow, but the Directors believe it needs strategic direction and improved leadership

§ The Directors have over 70 years of experience in the building materials industry

§ The Directors believe that Breedon will provide the Company with a robust platform for accelerated growth through consolidation of the UK heavyside building materials sector

Commenting on the Acquisition and Placing Peter Tom CBE, Chairman of Marwyn Materials, said:

"Breedon represents a unique opportunity for us to acquire a profitable and well-invested building materials company at or near the bottom of the cycle.  We are confident that we can appreciably improve the financial and operational performance of the business over the next few years, drawing on the experience and commitment of a board and senior management team with outstanding experience in our industry.

"Opportunities to secure such a substantial position in the UK building materials market come along very rarely.  As the UK's largest independent building materials business, Breedon provides us with an excellent launchpad from which to make further acquisitions and consolidate the smaller end of the UK market, and we already have several acquisitions in our sights or under negotiation.

"We intend to be a nimble, flexible player with a strong commitment to customer service, which we believe will enable us to increase revenues and optimise margins in the business."

Enquiries:

Marwyn Materials

Peter Tom / Simon Vivian                                                                                           [phone]

Cenkos Securities plc (nominated adviser and broker)                                                                              

Beth McKiernan / Max Hartley                                                                                    [phone]

Marwyn Materials

Steve Jacobs (head of communications)                                                                  [phone]

Shareholders are informed that the Admission Document has been published and is expected to be posted today, together with a notice convening the Extraordinary General Meeting at which the approval of Shareholders will be sought, inter alia, for the Acquisition, the authority to allot new Ordinary Shares pursuant to the Placing and to change the name of the company to Breedon Aggregates Limited.  A copy of the Admission Document is available from the Company's website: www.marwynmaterials.com 

Background to the Acquisition

The UK Building Materials Market

In 1990 there were nine fully-listed big-name UK aggregates companies, including Blue Circle, Tarmac, Hanson, RMC and Aggregate Industries, but following significant market consolidation during the last 20 years, there are now none. The UK building materials market is dominated by the four major global cement companies: Holcim, Heidelberg, Cemex and Lafarge, together with Tarmac. Many of these global players have significant debt burdens and hence are currently less focused on pursuing acquisitions. The smaller end of the aggregates market is still highly fragmented with over 200 businesses currently operating in the UK, some of which are available for acquisition, providing an opportunity for a smaller, more focused independent supplier to increase market share by acquisition and by providing a first-class localised service to customers.

In 2009 the UK construction industry declined by 12 per cent., its sharpest annual decline in output since 1974.  Consequently aggregates volumes declined by approximately 24 per cent., reflecting the greater severity of the recession in the heavy building materials sector.  Based on their extensive experience during previous recessions, the Directors believe that investing at the current cyclical low point presents an opportunity to create significant value.

History of the business of Breedon

Breedon's trading history dates back to 1996 as the former Ennstone plc. By 2007, Ennstone had become, through a series of bolt-on acquisitions, the largest independent UK aggregates producer after the four major global cement companies and Tarmac.  Ennstone's operations included the production of aggregates, asphalt, ready mix concrete, other concrete products and contracting services in the UK, the production of aggregates and ready mix concrete in the US, and the production of aggregates and ready mix concrete production in Poland.

Up until 2007, Ennstone delivered consistently strong historical returns. However, the recent general

economic downturn had a harsh impact on the construction industry in each of Ennstone's geographical markets and as a consequence the performance of Ennstone deteriorated.  In addition, Ennstone had become highly leveraged, principally due to a number of debt-funded acquisitions and a high level of investment in new equipment funded through finance leases.  The deterioration of the UK and US building materials markets resulted in Ennstone being unable to generate sufficient cash flows to meet covenant requirements and debt repayments, particularly at the level of its US subsidiary.  Furthermore, certain subsidiaries of Ennstone participated in a defined benefit pension scheme which was in deficit. On 24 February 2009, Ennstone Inc. (Ennstone's US subsidiary) filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code, triggering a parent company guarantee in the UK. Ennstone and certain of its UK subsidiaries consequently went into administration on 9 March 2009.

Breedon was incorporated on 15 December 2008 in advance of a pre-packed administration and on behalf of the BHL Lenders acquired certain assets and trading subsidiaries of Ennstone (comprising Johnston (England), Thistle (Scotland) and Enneurope (Poland)) on the date of administration of Ennstone.  At the same time, Breedon entered into a new £140 million bank facility with the BHL Lenders and responsibility for the pension deficit (and for the debt which will be triggered when the Johnston Management Holdings Limited Pension and Life Assurance Scheme winds up) was transferred to a subsidiary of Ennstone which was placed into administration. Accordingly Breedon does not retain any liability for the defined benefit pension scheme.  The Pensions Regulator approved the transfer and granted clearance for this administration.  As part of the agreement reached with the Pensions Regulator, the Trustee Shares were transferred to the Trustees so that at the date of the Admission Document, 67 per cent. of the issued share capital of Breedon is owned by the Vendors with the remaining 33 per cent. share owned by the Trustees.

On 16 August 2010, Breedon transferred the entire issued share capital of Enneurope, the parent company of Ennstone Sp. z o.o. to Enneurope Holdings (incorporated on behalf of the BHL Lenders and wholly-owned by the Vendors) in consideration for assuming £5.5 million of the debt drawn down on the existing facilities agreement.  It is expected that Enneurope Holdings will sell Enneurope or Ennstone Sp. z o.o. to a third party but, if it does not, it has a right to put it back to Breedon for a consideration of £5.5 million pursuant to an agreed Put and Call Option.  If the Put and Call Option is exercised, the acquisition of Enneurope will be subject to certain conditions, including the consent of the Office of Competition and Consumer Protection in Poland and the continued solvency of Enneurope and its subsidiaries and would include only limited warranties as to title and capacity. The acquisition would be funded by a drawdown under the New Facilities Agreement, which would increase the total facilities under that agreement by £5.5 million.

Enneurope owns the entire issued share capital in Ennstone Sp. z o.o. which operates three quarries and nine concrete plants located in the north west of Poland. It supplies sand and gravel as well as ready mix concrete and concrete pumping products to this region. It generated profits of £1.4 million in the financial year ended 31 December 2008 from revenue of £18.4 million, with the highest proportion of revenue being generated by the ready mix concrete business.

Principal operations

The principal activities of Breedon comprise: quarrying and sale of aggregates; production and sale of asphalt; production and sale of ready mix concrete; and contracting (asphalt surfacing).  The Group currently employs approximately 700 employees in two autonomous trading divisions, each with its own management and finance functions.

Johnston

Johnston is based in the Midlands, and comprises ten quarries (six crushed rock, one sand and gravel, plus three that are currently non-operational), eight asphalt plants (including one that is currently non-operational) and five concrete plants.

It employs approximately 300 people and produces aggregates, ready mix concrete and a range of asphalt products for supply throughout the East Midlands, West Midlands and East Anglia.  Its road surfacing business operates in an area from the East Coast to Mid Wales and from the M62 corridor to the South Midlands.

The production of asphalt for road surfacing materials is the largest activity in Johnston by revenue, and is used on trunk roads, driveways and car parks for both new construction and maintenance. The primary aggregates business produces a full range of construction aggregates including decorative aggregates, which are used extensively in many of Britain's stately homes and visitor attractions. A  significant proportion of aggregates production is used internally to manufacture asphalt and ready mix concrete.  The contracting services business supplies contractors undertaking activities including minor road surfacing contracts as well as major infrastructure contracts and is an important route to market for asphalt. The ready mix concrete business has applications across residential, industrial, commercial and infrastructure sectors for small and large contracts as well as the DIY market.

Thistle

Thistle is based in Northern Scotland and comprises 19 quarries (16 crushed rock and three sand and gravel), 11 asphalt plants and 22 concrete plants.

Thistle has almost 400 employees in a number of locations across Scotland including Dundee, its head office.  The division offers a fully integrated service to customers through its supply of aggregates, ready mix concrete, asphalt and contracting services.

Thistle's asphalt and contracting businesses generate the highest revenue of the division and, like Johnston, Thistle services a broad range of activities from small driveways and road surfacing contracts through to large motorway contracts.  Through its wholly owned subsidiary, Ennstone Facilities Management Limited, Thistle owns a 37.5 per cent. stake in BEAR (along with its joint venture partners Jacobs UK Limited and Ringway Group Limited). Through this strategic alliance with BEAR, Thistle also generates income from BEAR's management and maintenance of both the North East and South East trunk road networks on behalf of Transport Scotland and from traffic management services through its 90 per cent. owned subsidiary Alba Traffic Management Limited.

Mineral Reserves and Resources

Breedon has current reserves totalling 181.2 million tones, of which approximately 53 per cent are fully consented.  At current output levels, the estimated life of Breedon's consented and unconsented aggregates reserves is approximately 50 years.

Summary financial information and current trading of Breedon

Since mid-2008 the UK construction industry has seen a significant decline in output, recording a 12 per

cent. fall in 2009 alone, the sharpest annual fall in 35 years. Building material volumes also fell, with primary aggregates volumes down 24 per cent., asphalt volumes down 18 per cent. and concrete volumes down 28 per cent.

The following financial information has been extracted from the audited company accounts of Johnston and Thistle prepared in accordance with UK GAAP for the three years ended 31 December 2009, 2008 and 2007.  It excludes head office and other consolidation adjustments.

Johnston:	12 month period ending 31 December
	2009	2008	2007
	£'000	£'000	£'000
Revenue	57,738	86,216	77,639
EBITDA1	5,554	5,320	14,359

Thistle:	12 month period ending 31 December
	2009	2008	2007
	£'000	£'000	£'000
Revenue	76,269	97,557	83,839
EBITDA1	13,926	17,957	15,006

1.         EBITDA represents profit before finance income, finance costs, income tax expense, depreciation, amortisation and impairments and is further adjusted to add back exceptional items and excludes income from associates and Alba Traffic Management Limited.

The audited consolidated results for the Breedon Group prepared in accordance with IFRS for the 13 month period ended 31 December 2009 (which includes trading from 9 March 2009 and a gain on bargain purchase of £30m) show profit before taxation of £20.7 million.

After a challenging start to the year, turnover during the second quarter of 2010 has been stronger, driven by increased volumes and slightly improved pricing.  Price increases, particularly in relation to increased bitumen costs, are gradually being passed on to customers, leading to improving EBITDA margins.  Net assets declined by £5 million during the six-month period from 31 December 2009, due to a loss before tax which was mainly attributable to the significant payment-in-kind interest accrual. This interest burden is expected to decline significantly after the Acquisition with the £50 million reduction in the level of drawn debt facilities and reduced interest margins on the New Bank Facilities.

The trading information above should be read in conjunction with the full text of the Admission Document.

Further opportunities

The Directors and Executives of Marwyn Materials believe that they can provide Breedon with strategic direction, re-energise the existing management team and drive earnings improvement in the Breedon Group, particularly by improving commercial performance and boosting operational efficiency.  The Directors have identified the following opportunities to increase revenue:

Managerial

The Directors believe that Breedon is a strong business but needs strategic direction and improved leadership.  There is scope to re-energise the existing management team, which has been operating without a Group Chief Executive Officer since September 2009.  The operational and commercial performance of the business has suffered over the last few years and will need to be strengthened.

Financial & Acquisitions

The Directors intend to seek to improve the financial performance of the businesses organically through improved financial controls and working capital management.  Acquisitive growth, which will be funded partly through the New Bank Facilities, is also expected to improve the financial performance of Breedon.

The Directors have already identified a number of opportunities which are currently under negotiation. These opportunities are all aggregates-related and will complement Breedon's existing activities.

Operational

Drawing on their extensive operating management experience, the Directors have identified a number of operational issues which they intend to address upon the Acquisition, including:

•           Improving procurement, particularly for bitumen and cement - the main raw materials in the production of asphalt and ready mix concrete;

•           Increasing productivity at quarrying operations through better cost control;

•           Elimination of losses in Johnston's contracting operations;

•           Optimisation of haulage performance through better logistics management and increased use of owner drivers;

•           Differentiating customer service and forging closer relationships with key customers to drive margin            improvement and capture additional market share;

•           Building relationships with all stakeholders to facilitate mineral reserves replacement; and

•           Securing necessary quality and environmental accreditation to ensure that sales opportunities are not missed.

Following the implementation of the organic and acquisition growth strategy, and subject to prevailing market and trading conditions at the time, the Directors intend to make an application to the UK Listing Authority for the Ordinary Shares to be admitted to a standard listing on the Official List and to the London Stock Exchange for the Ordinary Shares to be admitted to trading on the Main Market.

Directors

There are no new directors joining the Board at Admission.  However, the Directors intend to appoint another non-executive director, who will be independent of both Marwyn and the Directors, to the Board of the Company within three months of Completion.

Peter Tom has subscribed for 8,333,333 Ordinary Shares as part of the Placing and Simon Vivian has been issued 666,667 Ordinary Shares pursuant to the bonus arrangements set out in paragraph 8.1.4 of Part VII (Additional Information) of the Admission Document so that the Directors' shareholdings, immediately following Admission, will be as follows:

Director	Number of Ordinary Shares held immediately following Admission	Percentage of Enlarged Share Capital
Peter Tom CBE (and family)	30,683,333	5.5
David Williams	11,000,000	1.9
James Corsellis (and family)	5,500,000	1.0
Simon Vivian	3,166,667	0.6
David Warr	2,500,000	0.5

Principal terms and conditions of the Acquisition

On 16 August 2010 Marwyn Materials and Marwyn Materials Investments entered into the Main SPA with the Vendors in respect of their 67 per cent. shareholding in Breedon and the Trustee SPA with the Pension Trustees in respect of their 33 per cent. shareholding, pursuant to both of which Marwyn Materials Investments will acquire the entire issued share capital of Breedon.

The consideration payable by Marwyn Materials Investments under the Main SPA is £1, to be satisfied in cash on Completion.  Separately, the BHL Lenders will be issued warrants to subscribe for 55,266,667 Ordinary Shares (representing 10.0 per cent. of the Enlarged Share Capital) with an exercise price of 12.0 pence per share and an exercise period of seven years in consideration for the entry into the New Bank Facilities. The consideration payable by Marwyn Materials Investments under the Trustee SPA is £2.25 million, to be satisfied in cash on Completion.  Limited warranties as to capacity and title are being provided by the Vendors and the Trustees under the Acquisition Agreements.

On 16 August 2010, Breedon transferred the entire issued share capital of Enneurope, the parent company of Ennstone Sp. z o.o. to Enneurope Holdings (incorporated on behalf of the BHL Lenders and wholly-owned by the Vendors) in consideration for assuming £5.5 million of the debt drawn down on the existing facilities agreement.  It is expected that Enneurope Holdings will sell Enneurope or Ennstone Sp. z o.o. to a third party but, if it does not, it has a right to put it back to Breedon for a consideration of £5.5 million pursuant to the Put and Call Option. If the Put and Call Option is exercised, the acquisition of Enneurope will be subject to certain conditions, including the consent of the President of the Office of Competition and Consumer Protection in Poland and the continued solvency of Enneurope and its subsidiaries and would include only limited warranties as to title and capacity.

Completion of the Acquisition Agreements is conditional, amongst other things, upon:

•           The Placing Agreement becoming unconditional (save with respect to Admission);

•           The New Bank Facilities becoming unconditional (save with respect to Admission);

•           Shareholder approval of the Acquisition at the Extraordinary General Meeting; and

•           Admission.

In connection with the Acquisition, the Managers have given certain warranties to Marwyn Materials Investments.  Additional information relating to the Management Warranty Deed and Acquisition Agreements is set out in Part VII (Additional Information) of the Admission Document.

Principal terms and conditions of the New Facilities Agreement

On 16 August 2010, the Company and Breedon entered into an amendment and restatement agreement with (amongst others) the BHL Lenders, pursuant to which Breedon's existing facilities agreement will be amended and restated from Completion. The New Bank Facilities, which will be made available on the terms of the New Facilities Agreement, will comprise:

a)         a £64.5 million term facility, to be made available to Breedon;

b)         a £15.0 million revolving facility A, to be made available to fund the Enlarged Group's working

capital requirements; and

c)         a £15.0 million revolving facility B, to be made available to fund the Enlarged Group's working

capital requirements and to finance capital expenditure and potential future acquisitions.

The New Bank Facilities made available to Breedon will be augmented for the three business days following Completion, until the proceeds of the Placing are received by the Company.  It is a requirement of the New Facilities Agreement that the Placing proceeds and existing cash of the Company are used to pay down the New Bank Facilities (as augmented) by £50.0 million within three business days of Completion.  It is expected that after this payment approximately £25.0 million of the revolving facilities A and B will be available to be drawn.  

The BHL Lenders have agreed to extinguish all payment-in-kind interest which has accrued on the existing facilities (in an amount of approximately £11.0 million).  The term facility will be increased by £5.5 million if the Put and Call Option is exercised and Breedon becomes obliged to acquire Enneurope.

The Placing

Details of the Placing

Due to the requirements of the Venture Capital Trust ("VCT") Scheme, the Company will conduct two placings. The VCT Placing Shares will be offered to VCTs investing funds raised prior to 6 April 2006. The General Placing Shares will be offered to other investors who will not be seeking relief under the VCT legislation.

The Placing Shares have been conditionally placed by Cenkos Securities as agent for the Company with institutional and other investors in accordance with the terms of the Placing Agreement.

The Placing Shares issued pursuant to the Placing will represent approximately 75.3 per cent. of the Enlarged Share Capital.  The Placing Shares will, following Admission, rank in full for all dividends and pari passu in all other respects with the Existing Ordinary Shares and will have the right to receive all dividends and distributions declared, made or paid in respect of the issued Ordinary Share capital of the Company after Admission.  Subject to Admission, the Company will issue 416,666,667 Placing Shares which will raise £50 million (before expenses). After the expenses of the Placing and Admission, estimated to be £5.75 million (excluding VAT) in total, the Placing is intended to raise approximately £44.25 million.

Further details of the Placing are set out in Part VII (Additional Information) of the Admission Document.

Use of Placing proceeds

The net proceeds of the Placing will be used to pay down part of the existing debt of Breedon. Following Completion and payment of the Placing proceeds the Enlarged Group will have approximately £10 million of undrawn revolving credit facility available to fund the ongoing working capital requirements of the Enlarged Group and £15 million of undrawn revolving credit facility available to fund the ongoing working capital requirements of the Enlarged Group, to finance capital expenditure and to finance the implementation of the Company's acquisitive growth strategy. The Company will also be able to draw on the increased term facility (if needed) to fund the acquisition of Enneurope under the Put and Call Option.

The Ordinary Shares have not been, and will not be registered under the US Securities Act 1933 (as

amended) or with any regulatory authority of any state or other jurisdiction of the US and may not be offered or sold within the US.

Admission, settlement and dealing arrangements

Application has been made to the London Stock Exchange for the Enlarged Share Capital to be admitted to trading on AIM, conditional on (amongst other things) Shareholder approval at the Extraordinary General Meeting. It is expected that First Admission will become effective and that dealings in the VCT Placing Shares will commence at 8.00 a.m. on 2 September 2010 and it is expected that subject to First Admission having occurred, Second Admission will become effective and that dealings in the General Placing Shares will commence and dealings in the VCT Placing Shares and Existing Ordinary Shares will recommence at 8.00 a.m. on 3 September 2010.

Dealings in VCT Placing Shares on the London Stock Exchange before First Admission will only be settled if First Admission takes place and dealings in General Placing Shares on the London Stock Exchange before Second Admission will only be settled if Second Admission takes place. All dealings in Placing Shares prior to commencement of unconditional dealings will be at the sole risk of the parties concerned.

Full details of settlement arrangements can be found in the Admission Document.

Notice of Extraordinary General Meeting

An Admission Document is expected to be posted to Shareholders today.  The formal notice convening the Extraordinary General Meeting will be enclosed with the Admission Document sent to Shareholders.

Recommendation

The Board unanimously recommends that all Shareholders vote in favour of both Resolutions, as the

Directors intend to do, or procure, in respect of their own beneficial holdings which comprise a total of 43,850,000 Ordinary Shares, representing approximately 32.2 per cent of the Company's current issued share capital.

Expected Timetable of Principal Events

Publication of the Admission Document                                                                          17 August 2010

Latest time and date for receipt of Forms of Proxy                                  10.00 a.m. on 30 August 2010

Extraordinary General Meeting                                                             10.00 a.m. on 1 September 2010

First Admission becomes effective and dealings commence

in the VCT Placing Shares and Existing Ordinary Shares                     8.00 a.m. on 2 September 2010

Delivery into CREST of the VCT Placing Shares to be held in uncertificated form    2 September 2010

Cancellation of dealing facility for the Existing Ordinary Shares

and the VCT Placing Shares                                                                 8.00 a.m. on 3 September 2010    

Completion of the Acquisition; Second Admission becomes effective and dealings

commence in the General Placing Shares and dealings recommence in the Existing

Ordinary Shares and the VCT Placing Shares                                      8.00 a.m. on 3 September 2010

Delivery into CREST of the General Placing Shares to be held in uncertificated       3 September 2010

form

Despatch of definitive share certificates (where applicable) in                 during the week commencing

respect of the Placing Shares to be held in certificated form                                   13 September 2010

Each of the dates and times in the above timetable are subject to change at the absolute discretion of the Company and Cenkos Securities and satisfaction of all conditions contained in the Acquisition Agreements are assumed.

Placing Statistics

Number of Existing Ordinary Shares                                                                                     136,000,000

Existing Ordinary Shares as a percentage of the Enlarged Share Capital¹                       24.6 per cent.

Placing Price¹                                                                                                                          12.0 pence

Number of Placing Shares being issued and allotted pursuant to the Placing¹                    416,666,667

Placing Shares as a percentage of the Enlarged Share Capital¹                                       75.3 per cent.

Number of VCT Placing Shares¹                                                                                             12,500,000

VCT Placing Shares as a percentage of Enlarged Share Capital¹                                       2.3 per cent.

Number of General Placing Shares¹                                                                                     404,166,667

General Placing Shares as a percentage of Enlarged Share Capital¹                               73.0 per cent.

Market capitalisation of the Company at the Placing Price on Admission¹                           £66,440,000

Gross proceeds of the Placing¹                                                                                             £50,000,000

Estimated proceeds of the Placing net of expenses¹                                                           £44,250,000

Enlarged Share Capital immediately following Admission²                                                   553,666,667

¹Assuming the Resolutions are passed at the Extraordinary General Meeting and the Acquisition Agreements and the Placing Agreement become unconditional in all respects

²Includes 1,000,000 Ordinary Shares to be issued to the Executives pursuant to the bonus arrangements set out in paragraph 8.1.4 of Part VII (Additional Information) of the Admission Document

Definitions

The following words and expressions taken from the Admission Document shall have the following meanings in this Announcement, unless the context otherwise requires:

"Acquisition"	the proposed acquisition by Marwyn Materials Investments Limited of the entire issued share capital of Breedon
"Acquisition Agreements"	the Main SPA and the Trustee SPA
"Admission"	means: (i) in relation to the VCT Placing Shares, First Admission; and (ii) in all other respects including in relation to the Acquisition and/or admission of the General Placing Shares and the re-admission of the Existing Ordinary Shares and the VCT Placing Shares, Second Admission
"AIM"	AIM, a market operated by the London Stock Exchange
"AIM Rules for Companies"	the rules for AIM companies published by the London Stock Exchange
"BEAR"	BEAR Scotland Limited (company number SC206139)
"BHL Lenders"	Barclays Bank plc, Allied Irish Banks p.l.c., the Governor and Company of the Bank of Ireland and KBC Bank NV
"Board"	the directors of the Company from time to time, or any duly constituted meeting of the directors or (where relevant) a committee thereof)
"Breedon"	Breedon Holdings Limited (company number 6773575)
"Breedon Group"	Breedon and its subsidiary undertakings at the date of the Admission Document
"Cenkos Securities"	Cenkos Securities plc (company number 5210733)
"Company" or "Marwyn Materials"	Marwyn Materials Limited (company number 98465) to be renamed Breedon Aggregates Limited on Completion (subject to the passing of Resolution 2 at the Extraordinary General Meeting)
"Completion"	completion of the Main SPA and the Trustee SPA
"CREST"	the relevant system (as defined in the Uncertificated Securities Regulations 2001 SI 2001 No. 3755) in respect of which Euroclear UK & Ireland is the operator (as defined in the Uncertificated Securities Regulations 2001 SI 2001 No. 3755)
"Directors"	the directors of the Company as at the date of the Admission Document
"Enneurope"	Enneurope Limited (company number 4254380)
"Enneurope Holdings"	Enneurope Holdings Limited (company number 7303053)
"Ennstone"	Ennstone plc (company number 185664)
"Enlarged Group"	the combined Marwyn Materials Group and Breedon Group
"Enlarged Share Capital"	the enlarged issued share capital of the Company following Admission
"Euroclear UK & Ireland"	Euroclear UK & Ireland  Limited, the operator of CREST
"Executives"	Peter Tom CBE, Simon Vivian and Ian Peters
"Existing Ordinary Shares"	existing Ordinary Shares in issue at the date of the Admission Document
"Extraordinary General Meeting"	the Extraordinary General Meeting of the Company to be held at 10.00 a.m. on 1 September 2010, at the offices of Travers Smith LLP, 10 Snow Hill, London EC1A 2AL, notice of which is set out at the end of the Admission Document
"First Admission"	admission of the VCT Placing Shares to trading on AIM becoming effective in accordance with Rule 6 of the AIM Rules for Companies
"FSMA"	the Financial Services and Markets Act 2000 as amended from time to time
"General Placing"	the proposed conditional placing of the General Placing Shares with certain institutional and other investors at the Placing Price
"General Placing Shares"	the 404,166,667 new Ordinary Shares to be allotted and issued by the Company pursuant to the General Placing
"HMRC"	Her Majesty's Revenue and Customs
"ISIN"	International Securities Identification Number
"Jersey Companies Law"	Companies (Jersey) Law 1991, as amended
"Jersey Financial Services Commission"	the Jersey Financial Services Commission
"Johnston"	Ennstone Johnston Limited (company number 156531), a wholly owned subsidiary of Breedon
"London Stock Exchange"	London Stock Exchange plc
"Main SPA"	the conditional agreement, dated 16 August 2010, between Marwyn Materials Investments and the Vendors, relating to the sale and purchase of the Sale Shares
"Management Warranty Deed"	the management warranty deed dated 16 August 2010 entered into between the Managers, Marwyn Materials Investments and Marwyn Materials
"Managers"	Alan Mackenzie, Ciaran Kennedy, Tony Large, Ross McDonald and John Foldes, the managers of Breedon
"Marwyn"	Means Marwyn Investments Group Limited and its subsidiaries and associated companies
"Marwyn Materials Group"	the Company and its subsidiary undertakings at the date of the Admission Document
"Marwyn Materials Investments"	Marwyn Materials Investments Limited (company number 160816)
"New Bank Facilities" or "New Facilities Agreement"	the facilities made available pursuant to the facilities agreement originally dated 9 March 2009 and made between Breedon and the BHL Lenders, as amended on 30 April 2010 and further amended and restated pursuant to an amendment and restatement agreement dated 16 August 2010
"Official List"	the Official List of the UK Listing Authority
"Ordinary Shares"	ordinary shares of no par value in the share capital of the Company
"Placing"	the conditional placing of the Placing Shares by Cenkos Securities, at the Placing Price pursuant to the Placing Agreement
"Placing Agreement"	the conditional agreement dated 16 August 2010 between the Company, the Directors and Cenkos Securities relating to the Placing, summary details of which are set out in paragraph 2 of Part 5 of the Admission Document
"Placing Price"	12.0 pence per Placing Share
"Placing Shares"	the VCT Placing Shares and the General Placing Shares
"Put and Call Option"	the put and call option agreement dated 16 August 2010 between Breedon, Enneurope Holdings and the Vendors, summary details of which are set out in paragraph 15.2.6. of Part VII (Additional Information) of the Admission Document
"Resolutions"	the resolutions set out in the notice of Extraordinary General Meeting set out at the end of the Admission Document
"Sale Shares"	the one A ordinary share, 36,526 B ordinary shares, 6,064 C1 ordinary shares, 7,205 C2 ordinary shares and 7,205 C3 ordinary shares in the capital of Breedon
"Second Admission"	Admission the General Placing Shares and readmission of the VCT Placing Shares and Existing Ordinary Shares to trading on AIM, becoming effective in accordance with Rule 6 of the AIM Rules for Companies
"Shareholder"	a holder of Ordinary Shares
"subsidiary undertaking"	as defined in section 1162 of the Companies Act 2006
"Thistle"	Ennstone Thistle Limited (company number SC144788), a wholly owned subsidiary of Breedon
"Trustees"	the trustees of the Johnston Management Holdings Limited Pension and Life Assurance Scheme, being HR Trustees Limited, Brian Watkins and John Campbell
"Trustee Shares"	the 28,070 D ordinary shares in the capital of Breedon
"Trustee SPA"	the conditional agreement, dated 16 August 2010, between Marwyn Materials, Marwyn Materials Investments and the Trustees, relating to the sale and purchase of the Trustee Shares
"UK" or "United Kingdom"	the United Kingdom of Great Britain and Northern Ireland
"UK Listing Authority"	the Financial Services Authority acting in its capacity as the competent authority for the purposes of Part VI of the FSMA and in the exercise of its functions in respect of admission to the Official List
"VCT"	a venture capital trust for the purposes of Part 6, Chapters 1 to 6 of the UK Income Tax Act 2007 and a company, broadly similar to an investment trust, which has been approved by HMRC and which subscribes for shares in, or lends money to, unquoted (including AIM listed) companies
"VCT Placing"	the proposed conditional placing of the VCT Placing Shares with certain institutional investors at the Placing Price
"VCT Placing Shares"	the 12,500,000 new Ordinary Shares to be issued and allotted by the Company pursuant to the VCT Placing
"VCT Scheme"	a scheme under which VCTs and their investors enjoy certain tax reliefs
"Vendors"	Stephen Rushworth Smith, Barclays Converted Investments (No. 2) Limited, Globe Nominees Limited, KBC Bank NV, Allied Irish Banks plc and the Governor and Company of the Bank of Ireland
"Warrant Holder"	a holder of Warrants
"Warrant Instrument"	the warrant instrument to be executed by the Company constituting the Warrants
"Warrants"	the warrants to subscribe for 55,266,667 Ordinary Shares pursuant to the terms of the Warrant Instrument to be issued in connection  with the Acquisition

Notices

This announcement does not constitute an offer or invitation to purchase or subscribe or a solicitation of an offer to buy any securities pursuant to this announcement or otherwise in any jurisdiction and investors should not subscribe for any shares referred to herein except on the basis of the Admission Document, produced by the Company, drawn up in accordance with the AIM Rules for Companies. The Admission Document is available at www.marwynmaterials.com

The release, publication or distribution of this announcement in jurisdictions other than the UK may be restricted by the laws of those jurisdictions and therefore persons should inform themselves about and observe such restrictions. Any failure to comply with any such restrictions may constitute a violation of the securities laws of any such jurisdictions.

This communication does not constitute an offer of securities to the public in the United Kingdom. No prospectus has been or will be registered in the United Kingdom in respect of the securities referred to in this communication. This document is exempt from the general restriction on the communication of invitations or inducements to enter into investment activity (within the meaning of section 21 of FSMA) and has therefore not been approved by an authorised person within the meaning of FSMA. This communication is being distributed only to and directed only at (i) persons falling within Article 19(5) ("investment professionals") of The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") who have professional experience in matters relating to investments, (ii) persons falling within Article 49 ("high net worth companies etc") and/or (iii) other persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as "relevant persons"). This communication must not be acted on or relied on by any person who is not a relevant person. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons.

Information for United States and other overseas shareholders

This announcement is not for release in the United States, South Africa, Australia, Canada or Japan or in any other country outside the United Kingdom where such distribution may lead to a breach of law or regulatory requirements. This information is not for publication or distribution to persons in the United States. The distribution of this announcement in whole or part may, in certain jurisdictions, be restricted by law and therefore persons into whose possession this document comes should inform themselves about and observe any restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

The information herein is not an offer of securities for sale in the United States. The Ordinary Shares have not been and nor will be, registered or qualified for sale under the US Securities Act of 1933, as amended (the "Securities Act") and, unless the Ordinary Shares are registered under the Securities Act or an exemption from the requirements of the Securities Act is available, the Ordinary Shares may not be offered or sold directly or indirectly within the United States or to, or for the account or benefit of, any US persons or any national, citizen or resident of the United States.

Cautionary note regarding forward-looking statements

This announcement contains forward-looking statements. Such statements are subject to certain risks and uncertainties, in particular statements regarding plans, goals, prospects, developments and strategies for the Enlarged Group's future. The Enlarged Group's actual results and operations could differ fundamentally from those anticipated in such forward looking statements as a result of many factors including the risks faced by the Enlarged Group which are described in Part III and elsewhere in the Admission Document. These statements and assumptions that underlie them are based on the current expectations of the Directors and are subject to a number of factors, many of which are beyond their control. As a result, there can be no assurance that actual results will not differ materially from those described in this announcement. Forward-looking statements are identified by their use of terms and phrases such as "believe", "could", "envisage", "estimate", "intend", "may", "plan", "will" or the negative of those, variations or comparable expressions, including reference to assumptions.

 

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