Acquisition & Equity Raising
Radstone Technology PLC
8 August 2003
NOT FOR RELEASE, DISTRIBUTION IN PART OR IN WHOLE IN OR INTO THE UNITED STATES,
CANADA, AUSTRALIA, JAPAN OR THE REPUBLIC OF IRELAND.
8 August 2003
Radstone Technology PLC
Proposed Acquisition of Interactive Circuits and Systems Limited
Proposed Placing and Open Offer at 280 pence per share to raise approximately
£10.0 million
Radstone Technology PLC ("Radstone"), a supplier of rugged, high-performance
embedded computer products, subsystems and support software for defence and
aerospace applications, today announces the conditional acquisition of
Interactive Circuits and Systems Limited ("ICS") for an initial consideration of
C$37.5 million (approximately £16.6 million) and additional consideration of up
to C$10.0 million (approximately £4.4 million).
Highlights
- ICS is a privately owned Canadian company that designs and manufactures
real-time data acquisition and analogue to digital conversion products for the
embedded sensor processing market. Markets for ICS products include embedded
digital signal processing ("DSP") applications such as radar, communications and
sonar, together with testing and measurement.
- The Acquisition of ICS will greatly strengthen Radstone's position and
image in the rapidly growing market for DSP products. Radstone will be able to
offer a more complete product offering to customers. This acquisition also
offers the potential to enter new markets outside the military sector on which
Radstone has been focused.
- ICS is also active in the design of software defined radio products, an
emerging technology which will be a key enabler in the shift by the military to
"network-centric" warfare. Radstone will be well positioned to exploit this
technology shift.
- The Board believes that the Acquisition is an important step enabling
Radstone to provide original equipment manufacturers with a more complete set of
system elements from sensor data acquisition through to operator displays.
- The initial consideration for the Acquisition is C$37.5 million
(approximately £16.6 million) which will be satisfied by the issue of the
Consideration Shares, valued at £0.7 million (approximately C$1.7 million) at
the Consideration Issue Price, and C$35.8 million (approximately £15.9 million)
in cash.
- The cash element of the initial consideration and related transaction
expenses will be financed out of the net proceeds of the Placing and Open Offer,
being approximately £10.0 million, and new secured bank borrowings.
- Further amounts of up to C$10.0 million (approximately £4.4 million) in
aggregate of additional consideration are payable based on ICS achieving certain
gross profit targets.
- As a result of the size of ICS relative to Radstone, the Acquisition is
conditional, inter alia, upon the approval of Shareholders at the EGM which has
been convened for 10.00 a.m. on 2 September 2003.
- Completion of the Acquisition is also conditional upon the Placing and
Open Offer Agreement becoming unconditional which is expected to occur upon
Admission on 4 September 2003.
Charles Paterson, Group Managing Director of Radstone, commented:
"In ICS we have found an acquisition which is an excellent strategic fit with
the Group's existing operations and provides the platform to expand our
activities in the rapidly growing DSP market. The acquisition represents an
important step towards achieving our long-term objective of developing Radstone
as a leading provider of high performance embedded computer products, subsystems
and software."
Press enquiries:
Radstone Technology PLC
Charles Paterson, Group Managing Director Tel: 01327 359 444
Jeffrey Perrin, Finance Director
Close Brothers Corporate Finance Limited
Andrew Cunningham Tel: 020 7655 3100
Evolution Beeson Gregory Limited
Tim Worlledge Tel: 020 7488 4040
Buchanan
Tim Thompson Tel: 020 7466 5000
Nicola Cronk
Your attention is drawn to the full text of the announcement. The full terms of
the Placing and Open Offer are set out in Part II of the Circular and should be
read in conjunction with this announcement. The Circular, including a notice
convening the EGM, together with the Application Form and the Form of Proxy, are
expected to be sent to Qualifying Shareholders later today. A copy of the
Circular will shortly be submitted to the UKLA and be available for inspection
at the UKLA's Document Viewing Facility, which is situated at 25 The North
Colonnade, Canary Wharf, London E14 5HS.
Close Brothers Corporate Finance Limited, Close Brothers Limited and Evolution
Beeson Gregory Limited are each acting exclusively for Radstone and for no one
else in connection with the Proposals and will not be responsible to anyone
other than Radstone for providing the protections afforded to clients of Close
Brothers Corporate Finance Limited, Close Brothers Limited or Evolution Beeson
Gregory Limited (as the case may be) or for providing advice in relation to the
Proposals or on any matter referred to herein.
The definitions of terms used in this announcement are set out in Appendix I of
this announcement.
The Directors and the Proposed Director of Radstone are the persons responsible
for the information contained in this announcement. To the best of the
knowledge and belief of the Directors and the Proposed Director (who have taken
all reasonable care to ensure that such is the case) the information contained
in this announcement is in accordance with the facts and does not omit anything
likely to affect the import of such information.
This announcement does not constitute or form part of any offer or invitation to
sell or issue or the solicitation of any offer to purchase or subscribe New
Radstone Shares in any jurisdiction in which such offer or solicitation is
unlawful. This document is not for distribution in the United States, Canada,
Australia, Japan or the Republic of Ireland. Neither the New Radstone Shares
nor the Application Form have been, or will be, registered under the Securities
Act or under the securities legislation of any state of the United States and no
clearances in relation to the Placing and Open Offer have been, nor will they
be, obtained from the securities commission of any province or territory of
Canada nor has nor will any document in relation to the New Radstone Shares be
lodged for registration with the Registrar of Companies in the Republic of
Ireland, nor has any prospectus been lodged with or registered by the Australian
Securities Commission. Accordingly, neither the Placing and Open Offer Shares
nor the Application Form, as applicable, may be offered, sold, renounced,
delivered or transferred, directly or indirectly, in or into the United States,
Canada, Australia, Japan or the Republic of Ireland, except pursuant to
exemptions from the Securities Act or other applicable requirements of such
jurisdiction.
NOT FOR RELEASE, DISTRIBUTION IN PART OR IN WHOLE IN OR INTO THE UNITED STATES,
CANADA, AUSTRALIA, JAPAN OR THE REPUBLIC OF IRELAND.
8 August 2003
Radstone Technology PLC
Proposed Acquisition of Interactive Circuits and Systems Limited
Proposed Placing and Open Offer at 280 pence per share to raise approximately
£10.0 million
1. Introduction
The Board announces that Radstone Technology PLC ("Radstone") has entered into a
conditional agreement to acquire Interactive Circuits and Systems Limited
("ICS"), a privately owned Canadian company that designs and manufactures real-
time data acquisition and analogue to digital conversion products for the
embedded sensor processing market. Markets for ICS products include embedded
digital signal processing ("DSP") applications such as radar, communications and
sonar, together with testing and measurement.
The consideration to be paid by Radstone for ICS consists of two elements,
C$37.5 million (approximately £16.6 million) initial consideration (subject to
adjustment) payable at Completion and up to C$10.0 million (approximately £4.4
million) additional consideration. The additional consideration is payable in
two tranches of up to C$5.0 million each based on ICS achieving certain gross
profit targets in the two years ending 30 September 2004 and 2005. Therefore,
the maximum aggregate consideration payable is C$47.5 million (approximately
£21.1 million).
The C$37.5 million initial consideration (subject to adjustment) payable at
Completion will be satisfied by the issue of the Consideration Shares to certain
of the Vendors, valued at £0.7 million (approximately C$1.7 million) at the
Consideration Issue Price, and C$35.8 million (approximately £15.9 million) in
cash. The cash element of the initial consideration and related transaction
expenses will be financed out of the net proceeds of the Placing and Open Offer,
being approximately £10.0 million and out of the Loan Facility.
As a result of the size of the transaction, the Acquisition is conditional,
inter alia, upon it being approved by Shareholders at the EGM which has been
convened for 10.00 a.m. on 2 September 2003 by the notice set out at the end of
the Circular. It is anticipated that Completion will take place on 3 September
2003 in escrow subject to certain conditions being fulfilled and that these
conditions (which include Admission) will be satisfied on 4 September 2003.
2. Information on ICS
ICS is a privately owned Canadian company that designs and manufactures real-
time data acquisition and analogue to digital conversion products for the
embedded sensor processing market. Markets for ICS products include embedded
DSP applications such as radar, communications and sonar, together with testing
and measurement.
ICS products are used primarily in defence applications and accordingly the
defence and government sector accounted for 77 per cent. of total sales in the
year to September 2002. The two principal product lines sold in this sector are
subsystems which are used in radar and sonar applications. ICS also operates in
the wireless communications sector (13 per cent. of total sales) and the test
and measurement sector (10 per cent. of total sales). ICS's customers include
major US and international defence and aerospace companies, as well as
government laboratories, major telecom equipment manufacturers and automotive
companies. Key customers include Lockheed Martin, Digital System Resources
(DSR), General Dynamics and Boeing.
ICS is also a developer of software defined radio products, a relatively new but
developing technology. This new technology provides increased functionality,
flexibility and upgradeability as well as reducing time-to-market for new
systems. It has applications in, inter alia, cellular base stations and radar
systems. At present ICS is one of only five main suppliers producing open
standard conversion and front-end processing products for software defined radio
applications.
ICS was founded in 1980 and currently has 52 employees, a large proportion of
whom have engineering qualifications. In addition, the senior management team
has a long track record with ICS. Following the Acquisition, Dipak Roy, co-
founder and major shareholder of ICS, will remain with the Enlarged Group as
President of ICS. Dipak Roy is receiving 7.5 per cent. of his share of the
initial consideration in New Radstone Shares which will represent approximately
1.0 per cent. of the share capital of the Enlarged Group.
ICS's headquarters are based on a freehold site in Ottawa, Canada. ICS Group
also has two leasehold offices in the US based in Maryland and Colorado.
The following summary of the trading record of ICS has been extracted from the
accountants' report set out in Part III of the Circular. Shareholders should
read the whole accountants' report and should not rely on the summarised
information provided here.
Year ended Year ended Year ended Six months
30 September 30 September 30 September 31 March
2000 2001 2002 2003
£'000 £'000 £'000 £'000
Turnover 5,067 6,421 5,483 3,056
Gross Profit 3,748 4,824 3,810 2,055
Operating profit before management
bonuses 2,068 2,957 1,823 1,051
Operating profit after management
bonuses 4 285 1,823 1,051
Pre-tax profit 31 185 1,763 1,046
Note: for the purposes of the above table and the accountants' report set out in
Part III of the Circular amounts have been translated from Canadian Dollars to
pounds at a pro-forma rate of £1:C$2.325 being the prevailing rate at the close
of business on 31 March 2003. Elsewhere in this announcement amounts have been
translated from Canadian Dollars to pounds at the Translation Rate of
£1:C$2.2563 (being the exchange rate at the close of business on 5 August 2003).
One of ICS's products is designed into a substantial long-term programme of one
of its major customers. During the year ended 30 September 2001, ICS received a
significant number of orders under this programme which contributed sales of
approximately £3.2 million during the year. The level of sales from this
programme were materially higher than the equivalent sales during the years
ended 30 September 2000 and 2002 which were approximately £0.7 million and £1.2
million respectively and also had a positive impact on the gross profit for the
year ended 30 September 2001.
In the year ended 30 September 2002, ICS achieved a gross margin of 69.5 per
cent and an operating margin (before management bonuses) of 33.2 per cent. The
margins were slightly lower than those achieved in the previous year due to the
lower level of sales from the programme referred to above and a change in the
product mix.
In the six months ended 31 March 2003, ICS increased its turnover and improved
the gross margin to 67.2 per cent over the corresponding period in the previous
year. Included within these results was approximately £1.0 million delivered
into the long-term programme mentioned above.
In the two years ended 30 September 2001, the co-founders awarded themselves
significant bonuses. No such bonuses have been awarded since then and the
remaining co-founder, Dipak Roy, will be entering into a new service agreement
upon Completion. Accordingly, these payments are exceptional, non recurring
items.
As at 31 March 2003, the net assets of ICS were approximately £2.1 million.
3. Background to and reasons for the Acquisition
Radstone has been seeking for some time to strengthen its position and image in
the rapidly growing market for DSP products. The acquisition of ICS will assist
greatly in doing this by allowing Radstone to offer a more complete product
offering to customers in the radar, sonar, communications and signal
intelligence markets. ICS has an excellent reputation in the DSP market and has
strong DSP application expertise.
The addition of the ICS acoustic and radio frequency data conversion products to
the Radstone portfolio will be a major step in the Board's strategy of providing
original equipment manufacturers with a complete set of system elements from
sensor data acquisition through to operator displays. In addition, ICS's
product line complements the current Radstone products, with no function
overlap, but with the potential for Radstone's expertise in ruggedisation to be
applied to the ICS product range. ICS products also sell into commercial
markets where Radstone's products have no presence. Some of the Radstone
products when combined with the ICS products may be suitable for these
commercial applications, enabling Radstone to enter into new markets outside the
military sector on which it is currently focused.
4. Business strategy of the Enlarged Group
Following completion of the integration of the Acquisition, Radstone intends to
use its well established route to the military market to increase penetration of
ICS products in this sector. The Enlarged Group's DSP offering will be
differentiated from its major competitors by being able to provide both data
acquisition and processing. By applying Radstone's ruggedisation techniques to
ICS products and combining these with Radstone's products, the Board believes
that the Enlarged Group will be in a better position to achieve incremental
design wins in major programmes.
ICS is active in the design of software defined radio products, an emerging
technology which will be a key enabling technology for the shift by the military
from "platform-centric" to "network-centric" warfare. This links sensors,
command and control systems and weapons systems in an interconnected grid via
secure broadband communications to allow real-time information to flow to those
who need it. The Enlarged Group will be well positioned to exploit this
technology shift. Furthermore, the software defined radio products will enable
the Enlarged Group to enter commercial markets.
5. Principal terms of the Acquisition
Under the Acquisition Agreements, the initial consideration payable by Radstone
to the Vendors at Completion is C$37.5 million (approximately £16.6 million),
subject to adjustment as explained below. The initial consideration will be
satisfied by the issue at Completion of the Consideration Shares valued at £0.7
million (approximately C$1.7 million) at the Consideration Issue Price and the
payment of C$35.8 million (approximately £15.9 million) in cash.
The cash portions of the consideration payable at Completion is subject to two
adjustments:
(a) it will either be increased by an amount equal to the sum of ICS's
consolidated cash and cash equivalents at the close of business on 30 September
2003 less the total of its consolidated debt (if such sum is positive) or
decreased by an amount equal to such sum (if negative);
(b) it will be decreased by the amount of cash (if any) that would need to
be injected into ICS as at the close of business on 30 September 2003 in order
for ICS to have a working capital ratio (being current assets (excluding cash
and cash equivalents) to current liabilities (excluding short term loans and
short term portions of long term loans)) of not less than 1.5:1.
C$937,500 (approximately £415,503 million) of the cash consideration will be
deducted from the amount payable to the Principal Vendors at Completion and will
be paid, together with an equal amount provided by Radstone from its own funds,
into an escrow account and any adjustments as mentioned above will be paid out
of the escrow account.
In addition, another escrow account will be created at Completion into which a
further C$2,812,500 (approximately £1,246,510) of the cash consideration will be
paid at Completion as security for the warranties and representations given by
the Principal Vendors in the Principal Vendors Agreement. Subject to no prior
breach of warranty claims being made, this escrow account will be released in
two equal tranches on 31 December 2004 and 31 December 2005.
Pursuant to the terms of the Acquisition Agreements, Radstone has paid a non-
refundable deposit of C$200,000 (approximately £88,641) into an account, which
will be set off against the cash consideration payable at Completion or will be
released to ICS should Radstone fail to complete the Acquisition in accordance
with the terms of the Acquisition Agreements.
Under the Acquisition Agreements additional cash consideration of up to C$10.0
million (approximately £4.4 million) is payable if ICS achieves certain gross
profit targets:
(a) C$2.631579 will be payable for every C$1.00 by which ICS Group's
aggregate gross profit for the two years ending 30 September 2003 and 30
September 2004 exceeds C$19.0 million (approximately £8.4 million) up to a
maximum of C$5.0 million (approximately £2.2 million). It will be paid
following finalisation and agreement of accounts for that period; and
(b) C$2.173913 will be payable for every C$1.00 by which ICS Group's gross
profit for the 12 months ending 30 September 2005 (plus any excess of ICS
Group's aggregate gross profit for the years ending 30 September 2003 and 30
September 2004 over C$20.9 million (approximately £9.3 million) or less any
shortfall in ICS Group's aggregate gross profit for those years below C$19.0
million) exceeds C$11.4 million (approximately £5.1 million) up to a maximum of
C$5.0 million (approximately £2.2 million). It will be paid following
finalisation and agreement of accounts for that period.
The maximum aggregate consideration payable for ICS is C$47.5 million
(approximately £21.1 million)(as adjusted). The cash element of the initial
consideration will be satisfied out of the net proceeds of the Placing and Open
Offer and new secured bank borrowings to be drawn down under the Loan Facility.
The Consideration Shares will be issued at Completion which is expected to take
place in escrow on 3 September 2003. It is the intention of the Company to put
in place currency hedging arrangements in order to cap the sterling cost of
acquiring the Canadian Dollars to be paid at Completion to the Vendors.
Completion of the Acquisition is conditional, inter alia, upon the passing at
the EGM of the Resolutions by Shareholders and upon the Placing and Open Offer
Agreement becoming unconditional.
6. Financial effects of the Proposals
The Acquisition is expected by the Board to enhance the earnings per Share of
the Enlarged Group in the current financial year.
7. Current trading and prospects
In the preliminary announcement in June, it was stated that the Group's long-
term prospects have never been stronger. This remains the case and Radstone has
had recent success in further design wins into major upgrade programmes. Whilst
an element of uncertainty remains over the timing of delivery of orders in the
short-term, the Group has increased the size of its order book from £62.7
million as at 31 March 2003 to £72.0 million as at 30 June 2003. The Board
believes that the Group's financial position is the strongest it has ever been.
The Embedded Computing division accounts for the majority of profits and is the
key growth driver for the Group. Trading and margins within Embedded Computing
remain in line with market expectations.
As explained in the preliminary announcement, the performance of the Electronic
Manufacturing Services ("EMS") division for the year ended 31 March 2003 was
enhanced by the winning of a unique short-term contract and this was not
expected to recur in the current year. However, trading and margins for EMS
continue to be in line with expectations.
ICS achieved strong results for the six months to 31 March 2003 which were ahead
of the corresponding period for 2002. The performance for the six months to 31
March 2003 supports the confidence of the Board in the performance of ICS for
the full year ending 30 September 2003.
Consequently, the Directors believe that the financial and trading prospects for
the Enlarged Group in the year ending on 31 March 2004 and onwards will be
enhanced as a result of the benefits of the Proposals set out in this
announcement.
8. The Placing and Open Offer
In order to finance part of the cash element of the initial consideration for
the Acquisition, Radstone is proposing to raise approximately £10.0 million
(after deducting expenses) through the issue of the Placing and Open Offer
Shares by means of the Placing and Open Offer.
Evolution Beeson Gregory and Close Brothers Corporate Finance, acting as agents
for the Company, are inviting Qualifying Shareholders to apply for Open Offer
Shares at the Placing and Open Offer Price of 280 pence per Ordinary Share on
the basis of:
2 Open Offer Shares for every 13 Existing Radstone Shares
held as at the close of business on the Record Date and so in proportion to the
number of Existing Radstone Shares then held by such Qualifying Shareholders.
Individual entitlements will be rounded down to the nearest whole number of Open
Offer Shares. Fractional entitlements that would otherwise arise will not be
allocated to Qualifying Shareholders but will be aggregated and allocated to
placees under the Placing. The maximum number of Open Offer Shares for which
Qualifying Shareholders may apply is set out in their respective Application
Forms. Shareholders may not apply for more than their maximum entitlement of
Open Offer Shares but may apply for less than their maximum entitlement of Open
Offer Shares.
Shareholders should note that the Open Offer Shares will not rank for the final
dividend payable in respect of the year ended 31 March 2003 of 2 pence per
Ordinary Share which is expected to be paid on 29 September 2003 to Shareholders
on the Register as at 5 September 2003.
Application will be made to the UK Listing Authority for the Placing and Open
Offer Shares to be admitted to the Official List and to the London Stock
Exchange for the Placing and Open Offer Shares to be admitted to trading on the
London Stock Exchange's market for listed securities. It is expected that
Admission will become effective and that dealings in the Placing and Open Offer
Shares will commence on 4 September 2003.
Under the terms and conditions of the Placing and Open Offer Agreement,
Evolution Beeson Gregory has agreed to use all reasonable endeavours to place
(by procuring subscribers for) the Firm Placed Shares and the Open Offer Shares
(other than Directors' Shares) at the Placing and Open Offer Price. The Open
Offer Shares, but not the Firm Placed Shares, may be "clawed back" from such
subscribers to meet valid applications from Qualifying Shareholders under the
Open Offer.
The Open Offer is fully underwritten in accordance with the terms of the Placing
and Open Offer Agreement, pursuant to which Close Brothers and Evolution Beeson
Gregory have agreed to subscribe themselves, at the Placing and Open Offer
Price, any Firm Placed Shares and / or Open Offer Shares (other than the
Directors' Shares) for which Evolution Beeson Gregory fails to procure
subscribers or which (in the case of the Open Offer Shares) are not taken up by
Qualifying Shareholders under the Open Offer.
The Placing and the Open Offer are conditional upon the Placing and Open Offer
Agreement having become unconditional in all respects and not having been
terminated in accordance with its terms. If the conditions of the Placing and
Open Offer Agreement, which include (amongst others) Admission and the passing
at the EGM of the Resolutions, are not fulfilled or waived on or before the
relevant time and date specified in the Placing and Open Offer Agreement,
application monies will be returned (at the applicant's risk), without interest,
as soon as possible.
The latest time and date for receipt of applications for Open Offer Shares
(together with payment in full) is 3.00 p.m. on 1 September 2003. Qualifying
Shareholders should note that the Open Offer is not a rights issue and that Open
Offer Shares not applied for under the Open Offer will not be tradeable or sold
in the market or placed for their benefit. Entitlements under the Open Offer
are not transferable except to satisfy a bona fide market claim and the
Application Form, which is not a document of title, cannot be traded.
The Open Offer is not being made to certain Shareholders who have their
registered address outside the United Kingdom, or who are residents, nationals
or citizens of countries other than the United Kingdom.
Shareholders' attention is also drawn to the further details of the Placing and
Open Offer set out in Part II of the Circular and to the summary of the
principal terms of the Placing and Open Offer Agreement and related placing
arrangements set out in section B of Part V of the Circular.
9. Directors' intentions
Irrevocable undertakings have been received from the Directors (excluding
Charles Paterson), who are Qualifying Shareholders to take up their entitlements
under the Open Offer only in respect of 12,251 Open Offer Shares out of their
total entitlement of 154,388 Open Offer Shares. The Directors (including
Charles Paterson) have irrevocably undertaken not to take up the balance of
their entitlement under the Open Offer, being 142,137 Ordinary Shares (the Firm
Placed Shares). The Firm Placed Shares are to be conditionally placed by
Evolution Beeson Gregory, as agent for the Company, with institutional and other
investors, at the Placing and Open Offer Price in accordance with the terms of
the Placing and Open Offer Agreement and are not subject to clawback under the
Open Offer.
Charles Paterson, Group Managing Director, has previously indicated his
intention to retire from the Board at the Company's next AGM due to be held on
10 September 2003. He has informed the Board that he will reduce his
shareholding in the Company and that he will not be taking up any of his
entitlement to subscribe Open Offer Shares. Accordingly, he has entered into an
agreement dated 8 August 2003 with Evolution Beeson Gregory pursuant to which
Evolution Beeson Gregory has agreed to use reasonable endeavours to place
200,000 Ordinary Shares on his behalf at the Placing and Open Offer Price plus 2
pence per Ordinary Share in respect of the final dividend payable for the year
ended 31 March 2003 to which those shares are entitled. Following the sale of
these shares, he will hold 317,757 Ordinary Shares.
10. Extraordinary General Meeting
The Proposals are conditional, inter alia, upon the passing of the Resolutions
to be proposed at the Extraordinary General Meeting to be held at 10 Crown
Place, London, EC2A 4FT, on 2 September 2003 at 10.00 a.m., notice of which is
set out in the Circular. At the EGM, Shareholders will be asked to consider the
Resolutions which will be proposed as follows:
(a) to approve the Acquisition;
(b) to increase the authorised share capital of the Company;
(c) to authorise the Directors to allot 3,949,774 New Radstone Shares in
connection with the Proposals; and
(d) to disapply pre-emption rights over which would otherwise apply in
respect of the issue for cash of New Radstone Shares.
The specific authorities to allot New Radstone Shares referred to above are in
addition to the general authorities given at the Company's AGM on 10 September
2002 which will remain in place until the next AGM.
11. Documentation
A Circular summarising the Acquisition and the Placing and Open Offer, including
a notice convening the EGM, together with the Application Form and Form of
Proxy, are expected to be sent to Qualifying Shareholders today.
Shareholders are recommended to read the whole of the Circular and not just rely
on the summary provided here.
Close Brothers Corporate Finance Limited, Close Brothers Limited and Evolution
Beeson Gregory Limited are each acting exclusively for Radstone and for no one
else in connection with the Proposals and will not be responsible to anyone
other than Radstone for providing the protections afforded to clients of Close
Brothers Corporate Finance Limited, Close Brothers Limited or Evolution Beeson
Gregory Limited (as the case may be) or for providing advice in relation to the
Proposals or on any matter referred to herein.
The definitions of terms used in this announcement are set out in Appendix I of
this announcement.
The Directors and the Proposed Director are the persons responsible for the
information contained in this announcement. To the best of the knowledge and
belief of the Directors and the Proposed Director (who have taken all reasonable
care to ensure that such is the case) the information contained in this
announcement is in accordance with the facts and does not omit anything likely
to affect the import of such information.
This announcement does not constitute or form part of any offer or invitation to
sell or issue or the solicitation of any offer to purchase or subscribe New
Radstone Shares in any jurisdiction in which such offer or solicitation is
unlawful. This document is not for distribution in the United States, Canada,
Australia, Japan or the Republic of Ireland. Neither the New Radstone Shares
nor the Application Form have been, or will be, registered under the Securities
Act or under the securities legislation of any state of the United States and no
clearances in relation to the Placing and Open Offer have been, nor will they
be, obtained from the securities commission of any province or territory of
Canada nor has nor will any document in relation to the New Radstone Shares be
lodged for registration with the Registrar of Companies in the Republic of
Ireland, nor has any prospectus been lodged with or registered by the Australian
Securities Commission. Accordingly, neither the Placing and Open Offer Shares
nor the Application Form, as applicable, may be offered, sold, renounced,
delivered or transferred, directly or indirectly, in or into the United States,
Canada, Australia, Japan or the Republic of Ireland, except pursuant to
exemptions from the Securities Act or other applicable requirements of such
jurisdiction. Appendix 1 - Definitions
The following definitions apply in this announcement unless the context requires
otherwise:
"Acquisition" the proposed acquisition of ICS by Radstone;
"Acquisition Agreement(s)" the three conditional sale and purchase agreements, being the Principal
Vendors Agreement, the Minority Vendors Agreement, and the Option
Holders Exercise Agreement, all relating to the Acquisition, the
material terms of which are set out in Part V of the Circular;
"Act" or "Companies Act" the Companies Act 1985, as amended;
"Admission" admission of the Placing and Open Offer Shares to the Official List and
to trading on the London Stock Exchange's market for listed securities
becoming effective in accordance with the listing rules of the UKLA and
the admission and disclosure standards published by the London Stock
Exchange respectively;
"AGM" annual general meeting of the Company;
"Application Form" the application form accompanying the Circular on which Qualifying
Shareholders may apply for Open Offer Shares under the Open Offer and
which forms part of the terms and conditions of the Open Offer;
"Articles of Association" or "Articles" the articles of association of the Company, a summary of which is set
out in Part VI of the Circular;
"Bank" HSBC Bank plc;
"Board" or "Directors" the directors of the Company whose names are set out in the Circular;
"Business Day(s)" a day other than a Saturday or Sunday or public holiday in England and
Wales;
"Circular" the document to be sent to Shareholders comprising a prospectus in
relation to Radstone;
"Close Brothers" Close Brothers Limited, one of the two Underwriters;
"Close Brothers Corporate Finance" Close Brothers Corporate Finance Limited, sponsor and financial adviser
to Radstone;
"Company" or "Radstone" Radstone Technology PLC;
"Completion" completion of the Acquisition in accordance with the terms of the
Acquisition Agreements;
"Consideration Share(s)" the 266,223 New Radstone Shares, to be issued by the Company to the
Vendors as part of the consideration for the Acquisition pursuant to the
Acquisition Agreements;
"Consideration Issue Price" 283.8 pence per Consideration Share, being the average mid-market
closing price for Radstone Shares as derived from the Official List for
the five Business Days ending on 6 August 2003;
"Directors' Shares" the 12,251 New Radstone Shares which the Directors have irrevocably
undertaken to take up under the Open Offer;
"Enlarged Group" the Group, as enlarged by the Acquisition;
"Evolution Beeson Gregory" Evolution Beeson Gregory Limited, stockbroker and one of the two
Underwriters;
"Existing Radstone Share(s)" the Ordinary Shares in issue at the date of the Circular;
"Extraordinary General Meeting" or "EGM" the extraordinary general meeting of the Company to be held at 10.00
a.m. on 2 September 2003, convened by the notice set out at the end of
the Circular;
"Firm Placed Shares" the 142,137 New Radstone Shares, which the Directors have irrevocably
undertaken not to take up under the Open Offer and which are to be
conditionally placed by Evolution Beeson Gregory with institutional and
other investors pursuant to the Placing and Open Offer Agreement and
which will not be subject to clawback under the Open Offer;
"Form of Proxy" the form of proxy for use in connection with the EGM, which accompanies
the Circular;
"Group" or "Radstone Group" the Company and its subsidiaries as at the date hereof;
"ICS" Interactive Circuits and Systems Limited of 5430 Canotek Road, Ottawa,
Ontario K1J 9G2;
"ICS Group" ICS and its subsidiaries;
"Loan Facility" the loan facility to be provided to the Group by the Bank for the
purposes, inter alia, of the Acquisition, a summary of which is set out
in Part VI of the Circular;
"London Stock Exchange" London Stock Exchange plc;
"Minority Vendors Agreement" the Acquisition Agreement made between the Minority Vendors and the
Company;
"Minority Vendors" the existing shareholders in ICS at the date of this announcement other
than the Principal Vendors and the Option Holders;
"New Radstone Share(s)" the 3,949,774 new Ordinary Shares to be issued pursuant to the
Acquisition and the Placing and Open Offer, comprising the Consideration
Shares and the Placing and Open Offer Shares;
"Official List" the Official List of the UK Listing Authority;
"Open Offer" the conditional invitation by Evolution Beeson Gregory and Close
Brothers Corporate Finance, acting as agents for the Company, to
Qualifying Shareholders to apply for the Open Offer Shares at the
Placing and Open Offer Price on the terms and subject to the conditions
set out in Part II of the Circular and in the Application Form;
"Open Offer Share(s)" the 3,541,414 New Radstone Shares, the subject of the Open Offer
(excluding, for the avoidance of doubt, the Firm Placed Shares);
"Option Exercise Agreement" the Acquisition Agreement between the Company and the Option Holders;
"Option Holders" the holders of options over shares in ICS;
"Overseas Shareholder(s)" Shareholders with registered addresses outside the UK or who are
residents, nationals or citizens of countries outside the UK;
"Placing" the conditional placing by Evolution Beeson Gregory, acting as agent for
the Company, of the Open Offer Shares (other than the Directors' Shares)
and the Firm Placed Shares at the Placing and Open Offer Price in
accordance with the terms of the Placing and Open Offer Agreement;
"Placing and Open Offer" together the Placing and the Open Offer;
"Placing and Open Offer Agreement" the agreement dated 8 August 2003 between (1) the Company, (2) Close
Brothers Corporate Finance (3) Close Brothers, and (4) Evolution Beeson
Gregory relating to the Placing and Open Offer, details of which are set
out in section B of Part V of the Circular;
"Placing and Open Offer Price" 280 pence per New Radstone Share;
"Placing and Open Offer Shares" together the Open Offer Shares and the Firm Placed Shares;
"Principal Vendors Agreement" the Acquisition Agreement made between the Principal Vendors and the
Company;
"Principal Vendors" Dipak Roy and Integrated Partners Limited Partnership One;
"Proposals" the Acquisition, the Placing and Open Offer and other funding
arrangements, and the Resolutions, details of which are set out in the
Chairman's letter in Part I of the Circular;
"Proposed Director" Kevin Boyd, who is proposed to be appointed as a director of the Company
at the forthcoming AGM;
"Qualifying Shareholders" Shareholders on the Register at the close of business on the Record
Date, other than certain Overseas Shareholders, as described Part II of
the Circular;
"Radstone Share(s)" or "Ordinary Share(s)" ordinary shares of 121/2 pence each in the capital of the Company;
"Record Date" the record date for the Open Offer, being the close of business on 5
August 2003;
"Register" the register of members of the Company held by the Registrars;
"Resolutions" the resolutions set out in the Notice of EGM at the end of this document
and to be proposed at the EGM;
"Shareholder(s)" a holder of Existing Radstone Shares;
"Share(s)" the Existing Radstone Shares or, as the context may require, the
Ordinary Shares in issue from time to time;
"subsidiary" the meaning set out in Section 736 of the Act (as amended) and
"subsidiaries" shall be construed accordingly;
"Underwriters" Close Brothers and Evolution Beeson Gregory in their capacity as
underwriters of the Open Offer Shares (other than the Directors' Shares)
and the Firm Placed Shares in accordance with the terms of the Placing
and Open Offer Agreement;
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland;
"UK Listing Authority" or "UKLA" the FSA acting in its capacity as competent authority for the purposes
of Part VI of the FSMA and in the exercise of its function in respect of
the admission of securities to the Official List otherwise than in
accordance with Part VI of the FSMA;
"Vendors" the Principal Vendors, the Option Holders and the
Minority Vendors; and
"C$" or "Canadian Dollars" the lawful currency of Canada; and
"£", "pounds" and "pence" the lawful currency of the UK.
Unless otherwise stated a conversion rate of £1:C$2.2563 has been applied in this announcement, being the exchange rate
at the close of business on 5 August 2003, being the last practicable date prior to the publication of this announcement
("the Translation Rate").
This information is provided by RNS
The company news service from the London Stock Exchange
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