Placing announcement

RNS Number : 4044U

Somero Enterprises Inc.

24 June 2009

 

THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA OR JAPAN
PRESS ANNOUNCEMENT
FOR IMMEDIATE RELEASE
24 June 2009
Somero Enterprises, Inc ® ('Somero' or the 'Company')
Placing raising net proceeds of approximately $5 million and agreement of new debt facilities

Placing The Board of Somero is pleased to announce that it has today completed a placing, arranged by Collins Stewart Europe Limited ('Collins Stewart'), to raise approximately $5.5 million before expenses ('the Placing'). A total of 20,606,730 shares of common stock of $0.001 par value each ('New Shares') have been placed with institutional investors at a price of 15 pence per New Share, representing a discount of approximately 14.3% to the closing middle market price (derived from the Daily Official List) on 23 June 2009. In addition, the senior management team of Somero has subscribed for 1,536,900 New Shares at a price of 15 pence per New Share, representing an investment of approximately $0.4 million. Somero anticipates that the net proceeds available to the Company will be approximately $5 million. Upon completion the New Shares will represent approximately 39% of the enlarged issued share capital of the Company. The Company currently has 34,281,968 shares of common stock issued. After the Placing, the Company will have 56,425,598 shares of common stock issued. The Placing is conditional on admission of the New Shares to trading on the AIM market of the London Stock Exchange ('Admission'). Application has been made for the New Shares to be admitted to trading on AIM and it is expected that Admission will occur on 26 June 2009. The Board has confirmed its intention to consider using a portion of future surplus free cash generated by the Company to return capital to shareholders, either through dividend payments or a share buy-back programme. The Board has also confirmed its intention in the near term to adopt a new employee share option scheme for the purposes of retaining key staff ('the New Option Plan'). The Board expects the existing option plan to be cancelled in conjunction with any option awards under the New Option Plan and any vesting under the New Option Plan will require performance conditions to be met. It is currently expected that an aggregate of approximately 3.4 million shares of common stock will be available for awards under the New Option Plan.
Banking The net proceeds of the Placing will be used to repay a portion of the $10 million term debt facility currently in place with RBS Citizens. In connection with the repayment, the Company has renegotiated the terms of its banking covenants in 2009 and 2010. The new covenants are expected to result in increased flexibility and to position the Company to take advantage of improving economic conditions as and when they develop.
Current trading The Board confirms that trading is in line with the update given at the time of the Company's preliminary results announcement on 6 May 2009. North America Overall sales are progressing in line with plan although Large line sales are running slightly below plan given the slow startup of construction projects although the new SXP-D with Somero Total Care Program is on plan. Small line sales are in line with Board expectations. Sales of the new Mini Screed Commercial are above plan, as a result of its value proposition and strong acceptance by customers. 3-D software system sales are strong and refurbished sales are ahead of plan. EMEA Sales are below plan but appear to be gaining momentum. Whilst both Large and Small line sales were slow due to the slow startup of construction projects to date, acceptance of the new SXP-D and Somero Total Care Program is encouraging, and an improvement in both Large line and Small line trading was seen in May 2009. Sales of the new Mini Screed Commercial were below plan, given the limited demonstration opportunities to date, but recent acceptance levels are encouraging and sales appear to be improving. Other sales are on plan. Rest of the World ('RoW') Sales in RoW are above plan and look to remain strong. Large line sales are strong, with particular interest from Latin and South America for the SXP-D and Somero Total Care Program. Although trading in China and Australia remains slow for Large line, Small line sales are showing improvement in these regions with total Small line sales ahead of plan on an overall basis. Sales for the new Mini Screed Commercial are on plan, with encouraging acceptance from Latin and South America. Other South American sales remain strong.
Cost Reduction Program The Company has continued to implement its cost reduction programme, and operating costs (excluding depreciation and amortisation) in 2009 and 2010 are expected to be around $11 million and $10 million respectively, down from a level of $24 million in 2008. Headcount reduction has been the key driver for this decrease in costs. The Company has also eliminated raises, bonuses and reduced employee salaries by 10%, generating annualised savings of approximately $1.7 million.
Related Party Transactions The following Substantial Shareholders (as defined by the AIM Rules for Companies) and directors have subscribed for New Shares issued as part of the Placing. They are therefore related parties for the purposes of AIM Rule 13. Substantial Shareholders -    Polar Capital Partners - 3,000,000 New Shares -    Toscafund Asset Management - 2,933,300 New Shares  Directors -    Jack Cooney - 1,412,468 New Shares -    Mike Niemela - 60,827 New Shares The independent, non-executive directors of Somero, having consulted with the Company's nominated adviser, Hawkpoint Partners Limited, consider the terms of the transaction to be fair and reasonable insofar as its shareholders are concerned.
Jack Cooney, CEO of Somero commented: 'I am delighted that Somero shareholders have demonstrated such confidence in the Company's future prospects through this placing. The Board believes that Somero now has a stable financial footing in place and I look forward to delivering value for shareholders through its next phase of growth.'
Enquiries
Hawkpoint	[phone]
Christopher Kemball / Chris Robinson
Collins Stewart	[phone]
Piers Coombs / Jon Drage
Important Notice This announcement has been issued by, and is the sole responsibility of, the Company. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by, Collins Stewart or Hawkpoint Partners Limited or by any of their respective affiliates or agents as to or in relation to, the accuracy or completeness of this announcement, or any other written or oral information made available to or publicly available to any prospective investor or its advisers, and any liability therefore is hereby expressly disclaimed. Hawkpoint Partners Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as nominated adviser to Somero Enterprises, Inc. and is acting for no-one else in connection with the Placing and will not be responsible to anyone other than Somero Enterprises, Inc. for providing the protections afforded to clients of Hawkpoint Partners Limited nor for providing advice in connection with the Placing or any other matter referred to herein.  Collins Stewart Europe Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as broker to Somero Enterprises, Inc. and is acting for no-one else in connection with the Placing and will not be responsible to anyone other than Somero Enterprises, Inc. for providing the protections afforded to clients of Collins Stewart Europe Limited nor for providing advice in connection with the Placing or any other matter referred to herein.  The shares in the Company have not been registered under the United States Securities Act of 1933, as amended (the 'US Securities Act'), and may not be offered or sold in the United States or to, or for the account or benefit of, US Persons (as defined in Regulation S under the US Securities Act) absent registration under the U.S. Securities Act or pursuant to an exemption from the registration requirements under the US Securities Act. The New Shares issued in the Placing are being offered and sold in a private placement exclusively to a limited number of 'accredited investors' pursuant to Rule 506 of Regulation D under the US Securities Act. Neither this announcement nor any part of it constitutes an offer to sell or issue or the solicitation of an offer to buy, subscribe or acquire any shares in the Company in any jurisdiction in which any such offer or solicitation would be unlawful and the information contained herein is not for publication or distribution, directly or indirectly, in or into Canada, Australia, the Republic of South Africa or Japan or any jurisdiction in which such publication or distribution would be unlawful. No public offering of securities of the Company is being made in the United Kingdom, the United States or elsewhere. Members of the general public are not eligible to take part in the Placing. Invitations to participate in the Placing have been limited to certain qualified persons.

 

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