Proposed Placing and Notice o
Mavinwood plc
("Mavinwood" or the "Company")
Proposed Placing of New Ordinary Shares and Notice of General Meeting
The Board of Mavinwood announces a proposal to raise £8 million (before expenses of £40,000) to strengthen the Company's balance sheet by a conditional placing (the "Placing") of 1,066,666,666 ordinary shares of 0.1 pence each in the Company ("New Ordinary Shares") at a price of 0.75p per share (the "Placing Price"). The Placing Price represents a premium of approximately 57.9 per cent. to the closing price of 0.475p on 18 March 2010. The placing has been underwritten by Geraldton Services Inc ("Geraldton"). It is expected that Geraldton will subscribe for the entire Placing. The proceeds of the Placing will be used to pay down debt due to Geraldton.
A circular has today been sent to Mavinwood shareholders to convene a General Meeting at 5.00pm on 12 April 2010 at Marble Arch Tower, 55 Bryanston Street, London W1H 7AA, to seek, amongst other things, the approval of Shareholders to allot the New Ordinary Shares. Application will be made for the New Ordinary Shares to be admitted to trading on AIM, which is expected to commence on 13 April 2010. The New Ordinary Shares will, upon issue, rank pari passu in all respects with the existing issued Ordinary Shares.
At the General Meeting, Resolutions are also being proposed to give the Directors authority to issue further Ordinary Shares and to disapply pre-emption rights in line with common market practice. Resolutions are also being proposed to make minor amendments to Mavinwood's constitution to take advantage of some of the provisions of the new Companies Act.
Background to the Placing and use of Proceeds
As at the date of this announcement, the Company owes to Geraldton a total of approximately £10.3 million consisting of £9.1 million of drawn down loans, £261,780 of interest and £900,000 of fees (the "Debt"). The proceeds of the Placing will be used to pay down the Debt. After such payment the Company will owe Geraldton approximately £2.3 million.
The Board remains keen to obtain investment in the Company from any other parties who may be interested in future.
Following completion of the Placing, the issued share capital of the Company will comprise 1,532,937,811 Ordinary Shares, of which Geraldton will own up to 1,333,102,919 Ordinary Shares representing 86.96 per cent. of the issued share capital.
Related Party Transaction
Geraldton is a substantial holder of the Ordinary Shares under the AIM Rules and, that being the case, the Placing constitutes a related party transaction for the purposes of Rule 13 of the AIM Rules. The Directors consider, having consulted with Cenkos, that the terms of the transaction are fair and reasonable insofar as the Shareholders are concerned.
Trading Statement
For the year ended 31st December 2009, trading was weaker than management forecasts. Restore and Wansdyke, our document storage businesses, continued to trade robustly in line with expectations. However DCS, our document scanning business, continued to experience delays in orders which adversely impacted the outturn for the year with sales approximately 35% lower than in 2008. Peter Cox, the timber treatment and damp proofing specialist, had a weaker than expected finish to the year. Head Office costs were below budget.
Performance in document storage in the current year has been broadly in line with budget. DCS has traded slightly better than in the second half of last year although volumes are still below historic levels. Peter Cox was adversely affected by the weather conditions at the start of the year but is now trading in line with expectations.
Major cost reductions have been made particularly in the financial reporting costs of the company. This, together with the restructuring required since the appointment of a wholly new board to the company last year, means that the company's full year results will be announced in June.
For further information, please contact:
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Mavinwood |
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Charles Skinner, Chief Executive |
Tel: 07966 234 075 |
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Cenkos Securities |
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Nicholas Wells / Beth McKiernan |
Tel: 020 7397 8900 |
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Threadneedle Communications |
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John Coles |
Tel: 020 7653 9848 |
This information is provided by RNS
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