TIDMAMR
RNS Number : 2359A
Armour Group PLC
28 January 2011
Armour Group
("Armour " or "the Company")
Placing to raise GBP2m
and Proposed Share Capital Reorganisation
The Company is pleased to announce that it has raised GBP2.0
million (before expenses) by way of a conditional placing of
28,571,429 New Ordinary Shares at 7 pence per share. These funds
will be used to provide additional working capital to fund the
Group's continued growth.
The Resolutions required to approve the Placing will be put to a
general meeting of Shareholders on 23 February 2011.
Application will be made to the London Stock Exchange for the
Placing Shares to be admitted to trading on AIM. It is expected
that such Admission will occur at 8.00 a.m. on 24 February
2011.
The Placing Shares will, when issued, rank pari passu in all
respects with the New Ordinary Shares including the right to
receive dividends and other distributions declared or made
following Admission. Following the Placing, the Company will have
97,051,496 New Ordinary Shares in issue.
Commenting on the Placing, George Dexter, Chief Executive,
commented:
"We are delighted to have raised funds in what continues to be a
very difficult market. The proceeds will give Armour additional
flexibility to further develop the business. In the medium term we
remain confident that our strong brand portfolio and our continued
investment in new product programmes will place the Group in a good
position for growth when markets recover."
Enquiries:
www.armourgroup.uk.com
Armour Group plc Tel: 01892 502700
George Dexter, Chief Executive
John Harris, Finance Director
finnCap, Nominated Adviser and Broker Tel: 0207 600 1658
Geoff Nash/Ben Thompson
Stephen Norcross (Sales)
Threadneedle Communications, Financial PR Tel: 0207 653 9850
Trevor Bass, Alex White
Armour Group
("Armour " or "the Company")
Placing to raise GBP2m
and Proposed Share Capital Reorganisation
Introduction
The Company is pleased to announce that it has raised GBP2.0
million (before expenses) by way of a conditional placing of
28,571,429 New Ordinary Shares at 7 pence per share. These funds
will be used to provide additional working capital to fund the
Group's continued growth. The Resolutions required to approve the
Placing will be put to a general meeting of Shareholders on 23
February 2011.
In addition, the Independent Shareholders will be asked to waive
an obligation on the Concert Party which will arise under Rule 9 of
the Takeover Code as a result of their subscription for New
Ordinary Shares pursuant to the Placing.
Background to and reasons for the Placing
As a result of the economic downturn in 2008, Armour adapted its
operating plan to protect profitability whilst looking to maintain
competitiveness in its market leading positions. This resulted in
an element of restructuring in early 2009 which included a number
of redundancies. The Board also focused on a programme of product
price increases and cost reduction initiatives. Together, these
actions enabled the Group to continue to trade profitably through
2009 and 2010.
The sales growth achieved by the Group in the year to 31 August
2010 was encouraging given the economic backdrop. This growth has
come from across the Group and reflects investments made in its new
product programme, operations and new sales channels. Specific
areas of growth were Asia and Scandinavia, where the Armour
businesses have grown significantly on the back of the expansion of
their respective sales operations; the successful entry into the
office furniture market in 2010; increased automotive sales through
the agricultural and commercial vehicle channel which benefited
from an improvement in market conditions; and new products such as
QTV2 and our new cable range QED Profile which helped to grow sales
in the home retail channel.
Despite the sales growth, profit margins have come under
pressure from a weaker sales mix, additional promotional activity
and continuing competitive price pressure. The Board has responded
to these pressures by taking appropriate actions to control the
operating cost base and improve gross margins. These actions
included a reduction in head count, cost negotiations with the
Group's supply base, restricted promotional activity and selective
price increases.
The Group continues to seek opportunities to develop and expand
its activities. To this end, the Group recently set up a
manufacturing facility in northern China in response to a number of
opportunities initiated by key customers. Whilst this initiative is
in its early stages, the response from customers has been
encouraging.
The Group has also launched, and is planning to launch, a number
of new products aimed at the premium mass market, which it expects
will generate incremental sales through 2011 and into 2012. These
include QTV2, Q2 internet radio and the Conran iPod dock. Initial
reviews of these products have been encouraging.
The Group has recently agreed new banking facilities totalling
GBP16.0 million in aggregate. These facilities are available until
December 2013.
The new banking facilities provide a variable level of funding
due to the invoice discounting and inventory based elements. The
Placing will provide additional funds and flexibility to allow
management to further develop the business. Shareholders should be
aware that if the Resolutions are not passed and/or the Placing
does not proceed and there is a further deterioration in the
economic environment, the Group may not have sufficient working
capital to continue to trade.
Current Trading and Prospects
The results for the year to 31 August 2010 showed an increase in
sales to GBP56.6 million (2009: GBP51.6 million). Profit from
operations fell to GBP1.2 million (2009: GBP1.5 million) and the
Group's net debt at 31 August 2010 was GBP5.7 million (2009: GBP4.9
million).
The Board has initiated a review of all aspects of the Group's
operations and how they can be streamlined with regard to reducing
costs and improving efficiency. As a result of this review, the
Armour Home division is being restructured by way of merging the
current two trading entities into one business operation. This
restructuring of the Armour Home division is expected to be
complete by the end of the current financial year.
The economic outlook remains uncertain and challenging in the
near term for the Group's core UK markets. Whilst there are
opportunities for the Group to grow over the coming year, the Board
remains cautious with regard to the short term prospects. The
Group's trading in the first four months of the financial year has
been weaker than expected, aggravated by the poor weather in
December, which is an important trading period for the Group. The
Board expects that this weak trading, coupled with the
restructuring programme in Armour Home and the start up costs of
the new factory facility in China, will result in an operating loss
for the first half of the year. The second half of the year is
expected to be profitable, benefiting from the cost savings
resulting from the operational review and the introduction of a
number of new products, which include the second generation iO
platform, QTV1, the Conran iPod dock, the Q7000 speaker range and
the new Systemline S6.2 multi-room system. The Board believes that
the actions taken to lower the Group's operating cost base combined
with the new product launches, will result in the Group remaining
profitable for the year as a whole. In the medium term, the Board
remains confident that the strong brand portfolio, the continued
investment in the new product programmes and initiatives such as
the new China facility will place the Group in a good position for
growth when markets recover.
The Placing
The Company intends to raise GBP2.0 million (before expenses)
pursuant to the Placing. Pursuant to the terms of the Placing
Agreement, finnCap has conditionally agreed, as agent for the
Company, to place 28,571,429 New Ordinary Shares with institutional
investors and certain members of the Concert Party. The Placing has
not been underwritten by finnCap but in the event that the Placing
Agreement does not become unconditional or is terminated, the
Concert Party will subscribe for 21,428,572 of the Placing Shares
subject only to the passing of the Resolutions and Admission. The
Placing Agreement is conditional upon, inter alia, the Resolutions
being duly passed at the General Meeting and Admission becoming
effective on or before 8.00 a.m. on 24 February 2011 (or such later
time and/or date as the Company and finnCap may agree, but in any
event by no later than 8.00 a.m. on 4 March 2011).
The net proceeds of the proposed Placing will, in the Directors'
opinion provide sufficient working capital for the present
requirements of the Group, that is for at least the next 12 month
period following Admission.
Application will be made to the London Stock Exchange for the
Placing Shares to be admitted to trading on AIM. It is expected
that such Admission will occur at 8.00 a.m. on 24 February
2011.
The Placing Shares will, when issued, rank pari passu in all
respects with the New Ordinary Shares including the right to
receive dividends and other distributions declared or made
following Admission.
Board Participation in the Placing
As a part of the Placing, certain of the following Shareholders,
all of whom are related parties for the purposes of the AIM Rules
by virtue of the size of their interests in Ordinary Shares, or
because they are Directors, have indicated that they will subscribe
for Placing Shares as follows:
Percentage Number of Percentage
of Ordinary Ordinary of New
Ordinary Shares Shares to be Ordinary
Shares held held prior acquired Shares
prior to to the pursuant to held after
the Placing Placing the Placing the Placing
ALR Morton -** -** -** -**
George Dexter* 1,346,736 2.0 -* 1.4
John Harris 176,541 0.3 71,428 0.3
Steve Bodger 100,000 0.1 142,857 0.3
Total 1,623,277 2.4 214,285 1.9
============= ============= =============== =============
* George Dexter is not participating, but his adult brother, Mr
S Dexter is subscribing for 715,000 New Ordinary Shares pursuant to
the placing
** ALR Morton holds no shares in his own name but is considered
by the Takeover Code to be in concert with Sue Morton, Hawk Pension
Fund, Groundlinks Limited, Hawk Investment Holdings Limited, Retro
Grand Limited and Seraffina Holdings Limited. The aggregate holding
of the Concert Party is 20,345,152 Ordinary Shares.
ALR Morton is beneficially interested in 14,225,152 Ordinary
Shares, being those held by Hawk Investment Holdings Limited, Hawk
Pension Fund and Sue Morton, his wife. Following the Placing, the
aggregate holding of the Concert Party will be 37,986,582 New
Ordinary Shares. In the unlikely event that the Placing with
Independent Shareholders does not become unconditional or is
terminated, the Concert Party will subscribe for 21,428,572 of the
Placing Shares. This would result in a total holding of 41,773,724
New Ordinary Shares following the Placing, representing 46.5 per
cent. of the issued share capital. In the event that the Concert
Party subscribes for 21,428,572 of the Placing Shares, ALR Morton
has undertaken to ensure that no member of the Concert Party will
hold more than 29.9 per cent. of the enlarged share capital of the
Company.
The Independent Director considers, having consulted with the
Company's Nominated Adviser, finnCap, that the subscription by the
above Shareholders is fair and reasonable insofar as Shareholders
are concerned.
The Takeover Code
Rule 9
The Takeover Code governs, inter alia, transactions which may
result in the change of control of a public company to which the
Takeover Code applies.
Under Rule 9, any person who acquires an interest (as defined in
the Takeover Code) in shares, which taken together with shares in
which he is already interested and in which persons acting in
concert with him are interested, carry 30 per cent. or more of the
voting rights of a company which is subject to the Takeover Code,
is normally required to make a general offer to all the remaining
shareholders to acquire their shares.
Similarly, when any person, together with persons acting in
concert with him, is interested in shares which in aggregate carry
not less than 30 per cent. of the voting rights of such company but
does not hold shares carrying more than 50 per cent. of such voting
rights, a general offer will normally be required if any further
interest in shares are acquired by any such person.
An offer under Rule 9 must be made in cash and at the highest
price paid by the person required to make the offer, or any person
acting in concert with him, for any interest in shares in the
company during the 12 months prior to the announcement of the
offer.
The Concert Party
For the purposes of the Takeover Code, persons acting in concert
comprise persons who, pursuant to an agreement or understanding
(whether formal or informal), actively co-operate, through the
acquisition by them of shares in a company, to obtain or
consolidate control of that company.
ALR Morton, Sue Morton, Hawk Pension Fund, Groundlinks Limited,
Hawk Investment Holdings Limited, Retro Grand Limited and Seraffina
Holdings Limited are deemed to be continuing to act in concert for
the purposes of the Takeover Code. Resolution 1 concerns the waiver
of an obligation on the Concert Party which would arise under Rule
9. Accordingly, only the Independent Shareholders will be entitled
to vote on Resolution 1.
The Concert Party is currently beneficially interested in an
aggregate of 20,345,152 Ordinary Shares, representing approximately
29.7 per cent. of the entire existing issued capital of the
Company.
Percentage Number of Percentage
of Ordinary Ordinary of New
Ordinary Shares Shares to be Ordinary
Shares held held prior acquired Shares
Concert Party prior to to the pursuant to held after
Member the Placing Placing the Placing the Placing*
ALR Morton -** -** -** -**
Sue Morton 210,000 0.3 - 0.2
Hawk Pension
Fund 400,000 0.6 600,000 1.0
Hawk
Investment
Holdings
Limited 13,615,152 19.9 15,403,245 29.9
Groundlinks
Limited 2,040,000 3.0 - 2.1
Retro Grand
Limited 2,040,000 3.0 - 2.1
Seraffina
Holdings
Limited 2,040,000 3.0 1,638,185 3.8
Total 20,345,152 29.7 17,641,430 39.1*
============= ============= =============== ==============
* This percentage is on the basis of the Placing with the
Concert Party and Independent Shareholders. finnCap has binding
commitments in respect of GBP2.0 million and has entered into the
Placing Agreement on this basis. In the unlikely event that the
Placing with Independent Shareholders does not become unconditional
or is terminated, the Concert Party will subscribe for 21,428,572
of the Placing Shares. This would result in a total holding of
41,773,724 New Ordinary Shares following the Placing, representing
46.5 per cent. of the total voting rights. In the event that the
Concert Party subscribes for 21,428,572 of the Placing Shares, ALR
Morton has undertaken to ensure that no member of the Concert Party
will hold more than 29.9 per cent. of the enlarged share capital of
the Company.
** ALR Morton is beneficially interested in 14,225,152 Ordinary
Shares being those held by Hawk Investment Holdings Limited, Hawk
Pension Fund and Sue Morton, his wife.
Potential voting rights of the Concert Party
If the Whitewash Resolution is passed at the General Meeting and
on the assumption that:
(a) 28,571,429 New Ordinary Shares are issued pursuant to the
Placing at the Placing Price, of which 17,641,430 New Ordinary
Shares are subscribed for by the Concert Party; and
(b) that there are no other changes to the issued share capital
of the Company,
the voting rights attributable to the New Ordinary Shares held
by the Concert Party following Admission, would constitute 39.1 per
cent. of all the voting rights in the Company. Shareholders should
be aware that in the unlikely event that the Placing with
Independent Shareholders does not become unconditional or is
terminated, the Concert Party will subscribe for 21,428,572 of the
Placing Shares. This would result in a total holding of 41,773,724
New Ordinary Shares following the Placing, representing 46.5 per
cent. of the issued share capital.
Therefore following completion of the Proposals, the Concert
Party will be interested in Ordinary Shares carrying more than 30
per cent. but less than 50 per cent. of the Company's voting share
capital and, for so long as they continue to be treated as acting
in concert, any further increases in their aggregate interest in
shares will be subject to the provisions of Rule 9.
The Panel has agreed, however, to waive the obligation of the
Concert Party to make a general offer that would otherwise arise as
a result of the Proposals, subject to the approval of Independent
Shareholders. Accordingly, Resolution 1 is being proposed at the
General Meeting and will be taken on a poll. The Concert Party,
which includes ALR Morton, will not be entitled to vote on
Resolution 1.
Given that the Proposals are required to be implemented in order
to provide the Company with the additional funds necessary to
develop its business, the Independent Director recommends that you
vote in favour of the Resolutions necessary to approve and
implement the Proposals as he intends to do in respect of his own
beneficial holdings of 1,354,736 Ordinary Shares, representing
approximately 2.0 per cent. of the issued share capital.
Intentions of the Concert Party
The Concert Party is not intending to seek any changes to the
Board and has confirmed that it would be its intention that,
following the increase in its proportionate shareholding as a
result of the participation in the Placing, the business of the
Company would be continued in substantially the same manner as it
is at present, with no major changes. With this in mind, there will
be no repercussions on employment or the location of the Company's
places of business and no redeployment of the Company's fixed
assets. The Concert Party is also not intending to prejudice the
existing employment rights, including pension rights, of any of the
employees or management of the Group nor to procure any material
change in the conditions of employment of any such employees or
management.
Capital Reorganisation
The Placing Price represents a discount to the current 10 pence
nominal value of an Ordinary Share. However, company law prohibits
the issue of shares at a price below their nominal value and,
accordingly, a share capital reorganisation will be necessary in
order to undertake the Placing. It is therefore proposed to
reorganise the share capital of the Company by sub-dividing each
issued Existing Share into one New Ordinary Share of 1 pence and
one Deferred Share of 9 pence.
The New Ordinary Shares will have the same rights (including
voting and dividend rights) as each Ordinary Share has at present.
No new certificates will be issued in respect of the New Ordinary
Shares and existing share certificates in respect of Ordinary
Shares will be valid and will continue to be accepted as evidence
of title for the New Ordinary Shares.
In order to effect the Reorganisation, the Articles will need to
be amended to include the rights of the Deferred Shares, which will
be minimal thereby rendering them effectively valueless.
The rights attaching to the Deferred Shares can be summarised as
follows:
-- they do not entitle holders to receive any dividend or other
distribution or to receive notice or, speak or vote at general
meetings of the Company;
-- on a return of assets on a winding up, they only entitle the
holder to the amounts paid up on such shares after the repayment of
GBP10 million per Deferred Share;
-- they are not freely transferable;
-- the creation and issue of further shares which rank equally
or in priority to the Deferred Shares or the passing of a
resolution of the Company to cancel the Deferred Shares or to
effect a reduction of capital shall not constitute a modification
or abrogation of their rights; and
-- the Company shall have the right at any time to purchase all
of the Deferred Shares for an aggregate consideration of
GBP1.00.
No application will be made for the Deferred Shares to be
admitted to trading on AIM or any other stock exchange. No share
certificates will be issued for any of the Deferred Shares. There
are no immediate plans to purchase or to cancel the Deferred
Shares, although the Directors propose to keep the situation under
review.
General Meeting
A notice convening the General Meeting to be held on 23 February
2011 at the offices of Arnold & Porter (UK) LLP at which the
Resolutions will be proposed for the purposes of implementing the
Proposals will be posted to Shareholders today.
Resolution 1 is the Whitewash Resolution. This resolution will
be taken on a poll of the Independent Shareholders voting in person
and by proxy at the General Meeting.
Shareholders should note that Resolutions 1 and 2 are
inter-conditional and, if either one is not passed, the Proposals
described in this letter will not proceed. Thus if the Whitewash
Resolution is not passed, the Placing will not proceed.
Shareholders should be aware that the Directors believe that the
Group may not have adequate working capital if the Resolutions are
not passed and/or the Placing does not proceed and there is a
further deterioration in the economic environment then the Group
may not have sufficient working capital to continue to trade.
Recommendation
The Independent Director, who has been so advised by finnCap,
considers the Proposals to be fair and reasonable and in the best
interests of Independent Shareholders and the Company as a whole.
In providing advice to the Independent Director, finnCap has taken
into account the commercial assessment of the Independent Director.
Accordingly, the Independent Director recommends that Shareholders
vote in favour of the Resolutions necessary to approve and
implement the Proposals as he intends to do in respect of his own
beneficial holdings of 1,354,736 Ordinary Shares, representing
approximately 2.0 per cent. of the issued share capital.
Placing Statistics
Number of Existing Shares in issue 68,480,067
Number of New Ordinary Shares in issue following
the Sub-Division 68,480,067
Number of Deferred Shares in issue following the
Sub-Division 68,480,067
Number of Placing Shares 28,571,429
Number of New Ordinary Shares in issue following
Admission 97,051,496
Net proceeds of the Placing GBP1.9
million
Expected timetable of principal events
2011
Latest time and date for receipt of Form 2.00 p.m. on 21 February
of Proxy in respect of the AGM
Latest time and date for receipt of Form 2.30 p.m. on 21 February
of Proxy in respect of the GM
Annual General Meeting 2.00 p.m. on 23 February
General Meeting 2.30 p.m. on 23 February
Last time and date for dealing in Existing 4.30 p.m. on 23 February
Shares
Admission and dealings in the Placing Shares 8.00 a.m. on 24 February
and New Ordinary Shares to commence on
AIM
CREST stock accounts to be credited for 8.00 a.m. on 24 February
Placing Shares in uncertificated form
Posting of share certificates for Placing by 4 March
Shares
Definitions
The following definitions apply throughout this announcement
unless the context otherwise requires:
"2006 Act" the Companies Act 2006 (as amended)
"Admission" admission of the Placing Shares to
trading on AIM becoming
"AIM" the AIM Market operated by the London
Stock Exchange
"AIM Rules" the AIM rules for companies published
by the London Stock Exchange from
time to time
"AGM" or "Annual General Meeting" 23 February 2011, and any adjournment
thereof
"Articles of Association" or the articles of association of the
"Articles" Company
"Capita Registrars" a trading name of Capita Registrars
Limited, the Company's registrars
"certificated form" or "in an ordinary share recorded on a
certificated form" company's share register as being
held in certificated form (namely,
not in CREST)
"Circular" the circular sent to Shareholders and
dated 28 January 2011
"Company" or "Armour" Armour Group plc
"Concert Party" together ALR Morton, Sue Morton, Hawk
Pension Fund, Groundlinks Limited,
Retro Grand Limited, Seraffina
Holdings Limited and Hawk Investment
Holdings Limited
"Deferred Shares" deferred shares of 9 pence each in
the capital of the Company, arising
pursuant to the Sub-Division
"Directors" or "Board" the directors of the Company or any
duly authorised committee thereof
"Existing Shares" the 68,480,067 Ordinary Shares in
issue at the date of the Circular,
all of which are admitted to trading
on AIM
"Form of Proxy" the form of proxy for use in
connection with the GM which
accompanies this Circular
"GM" or " General Meeting" the general meeting of the Company
convened for 23 February 2011, and
any adjournment thereof
"GM Notice" or"Notice of General the notice convening the GM
Meeting"
"Group" the Company, its subsidiaries and its
subsidiary undertakings as at the
date of the Circular
"Independent Director" the director of the company who is
not included in the Concert Party and
not participating in the Placing,
namely George Dexter
"Independent Shareholders" Shareholders other than the members
of the Board who are participating in
the Placing, relatives of members of
the Board and the Concert Party
"London Stock Exchange" London Stock Exchange plc
"New Ordinary Shares" new ordinary shares of 1 pence each
in the capital of the Company, to be
issued pursuant to the Placing and
arising pursuant to the Sub-Division
"Ordinary Shares" ordinary shares of 10 pence each in
the capital of the Company
"Panel" Panel on Takeovers and Mergers
"Placing" the conditional placing of the
Placing Shares pursuant to the terms
of the Placing Agreement
"Placing Agreement" the conditional agreement dated 27
January 2011 and made between the
Company and finnCap in relation to
the Placing
"Placing Price" 7p per Placing Share
"Placing Shares" the 28,571,429 New Ordinary Shares to
be allotted and issued pursuant to
the Placing
"Proposals" the Placing, the proposed
Reorganisation and the Waiver
"Reorganisation" the proposed reorganisation of the
share capital of the Company and
pursuant to Resolution 2 set out in
the GM Notice
"Resolutions" the resolutions set out in the GM
Notice
"Rule 9" Rule 9 of the Takeover Code
"Share Authority Resolution" the resolution to sub-divide the
issued and unissued Ordinary Shares,
amend the Articles and grant to the
Directors the authority to allot New
Ordinary Shares to be proposed at the
General Meeting and set out in the
Notice of General Meeting as
Resolution 2
"Shareholders" holders of Ordinary Shares or New
Ordinary Shares (as the case may be)
"Sub-Division" the proposed sub-division of each of
the issued Existing Shares into one
New Ordinary Share and one Deferred
Share and the proposed sub-division
of each of the unissued Ordinary
Shares into 10 New Ordinary Shares
"Takeover Code" the City Code on Takeovers and
Mergers
"UK" the United Kingdom of Great Britain
and Northern Ireland
"uncertificated" or "in an ordinary share recorded on a
uncertificated form" company's share register as being
held in uncertificated form in CREST
and title to which, by virtue of the
Uncertificated Securities Regulations
2001 (SI 2001/3755), as amended, may
be transferred by means of CREST
"Waiver" the waiver granted by the Panel
(subject to the passing of the
Whitewash Resolution) in respect of
the obligation of the Concert Party
to make a mandatory offer under Rule
9 of the Takeover Code in connection
with the Placing
"Whitewash Resolution" the ordinary resolution of the
Independent Shareholders concerning
the waiver of obligations under Rule
9 of the Takeover Code to be proposed
at the General Meeting in connection
with the issue of New Ordinary Shares
to certain members of the Concert
Party pursuant to the Placing and set
out in the Notice of General Meeting
as Resolution 1
This information is provided by RNS
The company news service from the London Stock Exchange
END
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