Placing of new shares
Rotala PLC
30 March 2006
Press Release
30 March 2006
Rotala plc
('Rotala' or 'the Company')
Placing of new shares to raise £1,625,000; option to buy Birmingham freehold
site; acquisition of the 'Central Liner' and 'Central Coachways' brand names and
grant of options
The Board of Rotala is pleased to announce that it has raised £1,625,000 (before
expenses) in a placing with investors ('the Placing'). The funds will enable
Rotala to complete its settlement with Central Parking System of U.K. Limited
('CPS'), to part finance the proposed acquisition of the freehold of its
operational site in Birmingham, to acquire the 'Central Liner' and 'Central
Coachways' brand names and to augment its working capital resources.
Details of the Placing
Rotala has conditionally placed 108,333,334 new ordinary shares of 1p each
('Ordinary Shares') ('the Placing Shares') at 1.5 pence each ('the Placing
Price') to raise £1,625,000 (before expenses). The placing is being arranged by
Ludgate Investments Limited ('Ludgate') with its clients. The Placing is
conditional (inter alia) upon the admission to trading on AIM ('Admission') of
the Placing Shares by 4 April 2006, or such later date as Ludgate and the
Company may agree. Application has been made to AIM for such Admission.
Before the Placing, the issued Ordinary Share capital amounted to 171,974,360
Ordinary Shares. After Admission the issued share capital will be 280,307,694
Ordinary Shares. The Placing Shares are equivalent to approximately 38.7% of the
enlarged Ordinary Share capital.
Certain Directors have participated in the Placing to the extent of 10,083,334
Placing Shares at the Placing Price amounting to £151,250. Details of the
placing commitments and the interests of the Directors and their connected
persons in the Ordinary Share capital of the Company as at Admission are set out
below:
Following the Placing
Placing Shares at 1.5p Shares held %
per share (excluding options)
John Gunn * (1) 9,750,000 35,025,000 12.5
Nick Kennedy ** 333,334 2,846,227 1.0
* includes Mrs R. S. Gunn and Wengen Pension Plan
** includes Mr Kennedy's pension fund
(1) John Gunn holds his shares through W B Nominees Ltd, as shown below.
In addition, as a result of the Placing the Company is aware of the following
persons (other than the Directors and their connected persons set out above) who
will be significant shareholders (being holders (directly or indirectly) of more
than 3 per cent. or more of the Company's issued Ordinary Share capital):
Placing Shares at Following the Placing
1.5p per share Shares held %
ODL Securities Limited 10,000,000 20,281,250 7.24
Ludgate 181 (Jersey) Ltd 5,000,000 16,431,042 5.86
W B Nominees Ltd (1) 24,363,335 125,197,435 44.66
Ludgate Investments Ltd 2,000,000 5,750,000 2.05
(1) includes the holding of John Gunn, as shown above. W B Nominees Ltd acts as
bare nominee for underlying shareholders in respect of all the Ordinary Shares
registered in its name. W B Nominees Ltd does not exercise any discretion over
the said shareholdings or voting rights.
As consideration for its services to the Company, Ludgate Investments Ltd will
receive a fee of 5 per cent. of the total amount raised in the Placing and in
addition will be granted warrants over 5,000,000 Ordinary Shares exercisable at
1.5 pence per Share within 5 years from the date of completion of the Placing.
John Gunn, the Non-executive Chairman of Rotala is a shareholder in Ludgate
Investments Ltd. He is also a Director and shareholder in Ludgate 181 (Jersey)
Ltd.
PURPOSE OF THE PLACING
Rotala intends that the new funds will be used for the following three purposes:
1. Proposed acquisition of freehold of Rotala's Birmingham property
Rotala and its subsidiaries (together the 'Rotala Group') have the opportunity
of acquiring the freehold of its 4.5 acre site at Long Acre in Birmingham. This
property comprises a large hardstanding for the parking of its fleet of coaches
and chauffeur-driven cars, an extensive multi-bay maintenance and repairs
building, large stores buildings for parts, an operations building and an office
building.
The Rotala Group has signed an option agreement with Geoffrey Flight and Frank
Kenneth Flight (the vendors of the property) in return for an option fee of
£100,000 (plus VAT) giving the Rotala Group the exclusive right to acquire the
site by 24 April 2006. The proposed acquisition price for the freehold is
estimated at £2 million, of which it is estimated that £500,000 would be payable
in cash from Rotala's own resources and the balance expected to be financed by a
bank loan.
The acquisition of the freehold interest in the depot, if made, will give the
Company control of its main operating base. This base offers extensive
facilities to accommodate expansion of the Company's business. It possesses
sufficient office and operational space to enable the group to benefit from the
expected synergies to be derived from future acquisitions. It is expected that
there will also be a small saving from the replacement of rent with mortgage
interest payments.
The acquisition of the freehold property may necessitate the approval of the
shareholders of the Company pursuant to the Companies Act 1985 and if so a
notice convening the necessary meeting will be dispatched to shareholders
shortly.
2. Payment of final £270,000 of settlement
On 30 December 2005, the Company announced that it had reached a settlement of
potential claims by and between Rotala, CPS and certain former employees of CPS.
As part of the settlement, the 46,666,667 existing Ordinary Shares held by
Spritto Nominees Limited (as nominee for Stuart Lawrenson), were placed on
behalf of CPS with investors at a price of 1.35 pence per share on 18 January
2006. Under the settlement Rotala is also required to make a payment of £270,000
to CPS, representing the balance of the amount owing to CPS derived from the
services consumed by the Flights group of companies before their acquisition by
the Company. This payment will complete the implementation of the settlement
with CPS.
3. Acquire the 'Central Liner' and 'Central Coachways' brand names
Rotala has conditionally agreed to acquire the 'Central Liner' and 'Central
Coachways' brand names from Geoffrey Flight. Mr. Flight is a former owner of the
Flights business and his father was an original founder of the business. He
became a director of Flights Hallmark Ltd and Flights Corporate Transfers Ltd,
subsidiaries of the Company, on 11 October 2005. The two brand names, in the
view of the Board, present readily recognisable names in the public transport
market, which is differentiated from the high-quality, dedicated transport
service supplied by the Flights Hallmark brand. The brand names should therefore
give the Company an established base upon which to add any acquisitions made in
the bus market in the Birmingham area.
The acquisition of the brand names is conditional on completion of the Placing.
The consideration for the brand names is £250,000, which is payable in cash.
Geoffrey Flight has agreed to participate in the Placing through the
subscription for 8,333,333 Placing Shares at the Placing Price, equivalent to an
investment of £125,000 and approximately 3.0% of the enlarged issued share
capital.
Rotala has also granted Geoffrey Flight an option to subscribe for a further
8,333,333 shares in Rotala at 1.5 pence per share, such option to expire on 30
June 2006.
The Board of Rotala considers that the terms of the transactions described above
are fair and reasonable insofar as the shareholders of the Company are
concerned.
4. Augment working capital requirements
The balance of the new funds will be used to augment the working capital
resources available to the Company.
CURRENT TRADING
As announced on 10 January 2006, the acquired businesses incurred losses in the
year ended 30 November 2005. After the acquisition of the Flights group of
companies, it became clear that Rotala had inherited a number of unsatisfactory
and uneconomic commercial arrangements which were problematic, and whose adverse
effect will continue until they can be ended or re-negotiated. These underlying
losses, though declining, are expected to continue in the year ending 30
November 2006 and it is expected that they will not finally be eradicated until
the year ending 30 November 2007.
It is intended that full provision for these onerous contracts will be made in
the November 2005 accounts. Accordingly the losses of the acquired businesses
are likely to be larger than originally anticipated, but the full provision
should ensure that the accounts of future years will be largely free from these
factors. The audit of the year to November 2005 will commence shortly and it is
expected that Rotala will announce its results at the end of May 2006.
The Board has worked hard to reduce costs and eliminate unprofitable activities,
with the result that monthly losses have been reduced. Although the contract to
operate the route for National Express Plc ended on 28 January 2006, the revenue
from this contract of some £2m per annum has been replaced by equivalent revenue
at significantly better margins with other customers largely within the airline
sector. The Directors are actively seeking organic growth and the Company's
efforts to win other new contracts are proving successful.
Following the Placing, it is the Board's intention to purchase the freehold in
Birmingham and to make the payment of the final £270,000 due to CPS. Rotala will
thereby have fulfilled the remaining condition to its settlement with CPS. These
steps will enable the Company to continue to develop its business free from the
previous uncertainties and should allow it to concentrate on the original plans,
formed at the time of the Company's flotation in March 2005, to create a
substantial specialist transport group. The Directors are confident that the
business model set out at that time remains valid and that the market
opportunities set out in the flotation document continue to be available.
GRANT OF OPTIONS
The Board and the Remuneration Committee have decided that options over
15,000,000 shares should be granted to directors and senior staff. The options
awarded to directors amount to 9,000,000 shares and are summarised below:
Number of options
Kim Taylor 4,000,000
John Gunn 3,000,000
Nick Kennedy 2,000,000
These options will each have an exercise price of 1.5 pence and they will become
exercisable three years after the date of their grant.
Contacts:
Nick Fox at M Communications 020 7153 1540
Notes to Editors:
The Company was admitted to trading on AIM on 29 March 2005, having been
incorporated on 21 January 2005, to invest in the parking and transportation
sectors. In the transport sector, the Board anticipated that opportunities would
arise in the provision of bus services, chauffeur-drive services and integrated
ground transportation. In the Company's admission document dated 11 March 2005
the Board stated its intention to complete the Company's first acquisition
within six months of Admission and in August 2005 it agreed the acquisition of
the Flights Group of companies.
The Flights Group comprises three companies: Flights Hallmark, Flights Corporate
Transfers and FH Transport. Flights Hallmark is a mature coach and bus business
formed through the acquisition and amalgamation of a number of businesses. Its
main activities include the provision of dedicated transport solutions for a
range of corporate customers, the operation of various shuttle bus services and
a substantial coach hire business. Flights Corporate Transfers operates
chauffeur driven cars, particularly relating to transport to and from UK
airports, for a range of airlines and airline-related customers. The third
company, FH Transport, does not currently trade, but holds certain contracts
with customers relating to the business operated by the other members of the
Flights Group.
ENDS
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