TIDMBGBL
RNS Number : 5553I
Bglobal PLC
02 June 2014
2 June 2014
Bglobal plc ('Bglobal', the 'Group' or the 'Company')
Disposal of Utiligroup Limited
Bglobal plc (AIM:BGBL), announces it has conditionally agreed to
sell its wholly owned subsidiary Utiligroup Limited to a new
company backed by NorthEdge Capital LLP and supported by
Utiligroup's management team, for a cash consideration of GBP16.1
million, payable on completion.
The Disposal constitutes a fundamental change of business under
Rule 15 of the AIM Rules. Accordingly, the Disposal is conditional
upon approval of Shareholders at a general meeting to be held on 18
June 2014.
Highlights
-- Disposal of Utiligroup for a cash consideration of GBP16.1 million
-- Following completion of the Disposal Bglobal will have
estimated cash balances of GBP16.8 million
-- The Board's strategy is to return this capital to
Shareholders, and it is currently in discussion with its advisers
to explore ways in which this can be achieved most effectively
-- It is anticipated that capital equal to up to 11 pence per
Ordinary Share will be returned to Shareholders in 2014, with the
balance of GBP5.1 million being retained to cover working capital
and any liabilities arising from the disposal of Utiligroup and the
disposal of B Global Metering Limited (which was announced on 22
April 2014)
A circular, explaining the background to and reasons for the
Disposal and providing notice of a general meeting (the
"Circular"), is expected to be posted to Shareholders later today.
Copies of the Circular will also be available on the Company's
website (www.bglobalplc.com).
John Grant, Executive Chairman of Bglobal plc, commented:
"When I became Chairman in August last year, it was apparent
that there was significant value within the Group that was in
danger of being depleted rather than realised. Since then, I am
pleased that the Board has been able to deliver improved underlying
performance for Bglobal Metering and Utiligroup. This transaction,
and the sale of Bglobal Metering in April, demonstrate that value
which the Board has been able to unlock for our shareholders."
Tim Jackson Smith, Chief Executive of Bglobal plc,
commented:
"I am delighted that we have agreed, subject to shareholder
approval, to sell Utiligroup to a new company backed by NorthEdge
Capital LLP. This deal is part of our ongoing programme to return
value to our shareholders and the price we have achieved, which
represents a significant premium to the current share price, fairly
reflects the value of Utiligroup."
Background to and reasons for the Disposal
At the general meeting of the Company on 15 August 2013,
Shareholders approved a resolution mandating the Board to carry out
of a strategic review of the Group the purpose of which was to
improve the performance of the business and enhance value for
Shareholders. The Board appointed KPMG to carry out this review,
whilst at the same time it actioned its own plan to significantly
reduce Bglobal's head office costs, re-focus the business on its
customers, implement strict cash management procedures and remove
approximately GBP1.0 million of annualised costs from Bglobal
Metering. As announced on 11 November 2013, following detailed
consultation and receipt of a report from KPMG, the Board commenced
exploring a potential sale of its metering business.
On 22 April 2014, Bglobal announced it had reached an agreement
with Energy Assets Group plc to dispose of the entire issued
ordinary share capital of its metering business, Bglobal Metering,
for a cash consideration of GBP2.3 million, which included a
payment of GBP0.2 million for the cash balance on completion.
Following the announcement of the strategic review, the Board
received a number of enquiries from various parties who expressed
an interest in acquiring Utiligroup. Whilst the Board's main focus
was in securing a buyer for Bglobal Metering and removing excess
costs from the Group, it was decided in early 2014 to pursue a
formal process to gauge the level of interest in Utiligroup and the
likely value that a disposal of that business could generate for
Shareholders. As part of this process, in February 2014, NorthEdge,
supported by Utiligroup's management team, approached the Board
with an offer for the entire issued share capital of
Utiligroup.
The Board is focused on enhancing value for Shareholders and
considers that the sale of Utiligroup represents the best way to
increase value for a number of reasons, namely:
-- in connection with the formal sales process of the business
over 25 parties were approached to explore whether they were
interested in acquiring Utiligroup. As part of that process several
offers were received from both trade and private equity backed
buyers and it was clear from the terms being offered that the offer
from NorthEdge was the most attractive, not only with regard to the
price being offered but also with regard to the deliverability of
the offer. The sensible approach being adopted in respect of the
scope and length of warranty and indemnity protection required and
the caps on liability under those warranties and indemnities, will
also allow the Board to return cash to Shareholders much quicker
than under the alternative offers;
-- it has been clear to the Board for a while now that in order
to thrive as a business, capitalise on future opportunities and
fulfil its potential Utiligroup requires significant investment in
its resources and systems which the Directors believe NorthEdge can
deliver. The Board's view is that the Group is unable to provide
this investment without raising further funds the return on which
would be uncertain;
-- without the necessary investment, the Group would remain a
small AIM quoted company and Utiligroup would need to support the
head office and other costs that are associated with an AIM
quotation, which will further restrict its potential to grow;
and
-- when Utiligroup was acquired by the Company in June 2010, the
total consideration paid was GBP10.79 million (of which GBP6.8
million was satisfied in cash). In February 2013, Utilisoft Pty was
sold for GBP2.2 million cash and accordingly, if this present
transaction is completed, the Company will have received GBP18.3
million in cash in less than four years for the whole of the
Utiligroup group, representing a significant return on that
investment. Throughout the period of ownership Utiligroup has been
profitable and cash generative all of which has helped to support
the Group as other parts of its business failed to perform in line
with expectations.
Accordingly, the Board considers that the offer for Utiligroup
represents good value for the business and is in the best interests
of Shareholders as a whole.
Following the completion of the Disposal, which is subject,
inter alia, to Shareholder approval, Bglobal will have estimated
cash balances (net of the expenses incurred in carrying out the
strategic review and in the sale of Bglobal Metering and
Utiligroup) of GBP16.8 million. The Board's strategy is to return
this capital to Shareholders and it is currently in discussions
with its advisers to explore ways by which this can be achieved
most effectively. The Board anticipates that a return of capital of
equal to up to 11 pence per Ordinary Share will be undertaken in
2014, with the balance of approximately GBP5.1 million being
retained to cover working capital and any liabilities arising from
the disposal of Utiligroup and Bglobal Metering under the
warranties and indemnities given to each buyer in respect of those
transactions. The Board expects that surplus monies will be
returned to Shareholders once the extent of these liabilities, if
any, has been determined.
Additionally, it is the Board's intention, in due course, to
cancel the admission of the Company's Ordinary Shares to trading on
AIM.
The Board will update Shareholders in relation to these matters
when further information is available.
Information on Utiligroup
Utiligroup is a leading provider of energy management software
and process solutions to UK energy participants. Utiligroup has
many years' experience in managing market participants' dataflow
requirements and breaking down barriers to entry through the
"Supplier in a Box" offering to new entrants.
The business operates through two subsidiaries, Utilisoft
Limited ("Utilisoft") and Utiliserve Limited ("Utiliserve").
Utilisoft is a software company specialising in the development
of software solutions that manage industry processes concerned with
the movement of dataflows and the automation of core processes,
such as retail customer registration and energy trading.
Utiliserve offers outsourced managed services providing back
office support to a number of energy suppliers who use Utilisoft
software solutions. Typical support would include managing the data
processes of customers switching between suppliers and dataflows
associated with meter readings or meter works.
Utiligroup is a market leading provider of software and services
to the energy retail sector, providing solutions to 29 of the
active UK energy suppliers, from the 'Big 6' suppliers to new
entrants. Its range of solutions is easily scalable for all sizes
of business, from small new entrants with ambitious plans to grow,
to large multi-national corporations with millions of
customers.
For the year ended 31 March 2013, Utiligroup's revenue was
GBP7.1 million and profit before taxation was GBP0.5 million. Gross
assets at 31 March 2013 were GBP5.7 million. For the six months
ended 30 September 2013, Utiligroup's revenue was GBP3.0 million
and profit before taxation was GBP0.4 million.
Terms of the Disposal
Pursuant to the Sale Agreement, the Buyer has conditionally
agreed to purchase from the Company the whole of the issued share
capital of Utiligroup, for a consideration of GBP16.1 million
payable in cash on completion.
Conditions
Completion of the Sale Agreement ("Completion") is conditional
on:
(i) the despatch to Shareholders of the Circular later today ;
(ii) the passing, without amendment, of the Resolution;
(iii) the transfer of the freehold property at Unit 2D, Phoenix
Park, Blakewater Road, Blackburn to the
Company; and
(iv) the Sale Agreement not having been terminated by the Buyer
pursuant to the Sale Agreement
("Termination Rights", as described below).
The Company has agreed to use all its reasonable endeavours to
procure that each of those conditions is satisfied. If all such
conditions have not been satisfied on or before 27 June 2014 (or
such later date as may be agreed) the Sale Agreement will
automatically terminate.
Warranties
The Company has given limited warranties to the Buyer customary
for a transaction of this size and nature in relation to
Utiligroup, including share capital, accounting and financial
changes since 31 March 2013, assets, intellectual property, real
estate, compliance and litigation matters.
The Company will not be liable for any warranty claim unless (i)
the amount that would otherwise be recoverable from it in respect
of such warranty claim exceeds GBP30,000; (ii) the amount of the
liability when aggregated with all other warranty claims exceeds
GBP300,000 (in which event the Company will be liable for the whole
amount of such warranty claim and not merely the excess); (iii) the
Company receives notification from the Buyer of a warranty claim on
or before 30 June 2015. The maximum aggregate liability of the
Company in respect of any claim arising out of the Sale Agreement
is GBP3.22 million, being 20 per cent. of the consideration.
The warranties are given by the Company at the date of the Sale
Agreement and repeated at Completion. The warranties are given by
the Company subject to matters fairly disclosed (i) in the
disclosure letter dated 30 May 2014 from the Company to the Buyer,
and (ii) in a second disclosure letter to be delivered by the
Company to the Buyer before Completion disclosing only any matter
occurring after the date of the Sale Agreement.
Termination Rights
The Buyer may by notice in writing to the Company at any time
before Completion elect to terminate the Sale Agreement without
liability on the part of the Buyer if any of the following come to
the notice of the Buyer before Completion:
(i) a failure of the Company to comply with its obligations
under the Sale Agreement in respect of how to conduct the business
of Utiligroup in the period between signing the Sale Agreement and
Completion;
(ii) a material breach of any of the warranties given by the
Company in the Sale Agreement; or
(iii) any matter which would result in a loss or liability to
the Buyer of GBP300,000 or more and which affects or is likely to
affect materially and adversely the financial position (including
without limitation turnover, profitability and cashflow) of
Utiligroup (not being an event affecting or likely to affect to a
similar extent generally all companies carrying on similar
businesses in the United Kingdom).
In the event that the Resolution is not passed, the Company has
agreed to reimburse the Buyer for its costs and expenses incurred
in connection with this transaction up to a maximum sum of
GBP200,000 plus any applicable VAT.
Tax Covenant
The Company has entered into a tax covenant in favour of the
Buyer in respect of any liability to taxation of any member of
Utiligroup for all periods ending on or prior to Completion
(subject to certain customary exceptions) in a form which is usual
for a transaction of this size and nature save that any claims
under the tax covenant need to be brought on or before 30 June
2015.
Conduct of business pending Completion
The Company has agreed to procure that pending Completion, the
business of Utiligroup is carried on in the ordinary course and in
accordance with the specific restrictions set out in the Sale
Agreement.
Related Party Transaction
Matthew Hirst and Andrew Green are directors of Utiligroup and
are also shareholders of the Buyer and Martin Evans, who is
interested in 11.57 per cent. of the issued share capital of
Bglobal, is also a shareholder of the Buyer. Accordingly, the
Disposal is a related party transaction for the purposes of Rule 13
of the AIM Rules.
The Directors, who are all independent for the purposes of the
AIM Rules, having consulted with Charles Stanley Securities, the
Company's Nominated Adviser, consider the terms of the Disposal to
be fair and reasonable insofar as the Shareholders are
concerned.
The AIM Rules do not prohibit related parties from exercising
the voting rights attached to their respective shareholdings at the
General Meeting.
Irrevocable Commitments
Irrevocable Undertakings to vote in favour of the Resolution at
the General Meeting have been obtained from the Directors and
certain other Shareholders in respect of their shareholdings,
amounting in aggregate to 22,836,370 Ordinary Shares representing
21.54 per cent. of the existing Ordinary Shares.
Recommendation
The Directors, who are all independent for the purposes of the
AIM Rules, having consulted with Charles Stanley Securities, the
Company's Nominated Adviser, consider the terms of the Disposal to
be fair and reasonable insofar as the Shareholders are
concerned.
The Directors believe that the disposal of Utiligroup is in the
best interests of the Company and Shareholders as a whole.
Accordingly, the Directors, unanimously recommend that you vote in
favour of the Resolution to be proposed at the General Meeting as
they have irrevocably undertaken to do so in respect of their own
aggregate holdings of 125,000 Ordinary Shares, representing
approximately 0.18 per cent. of the existing ordinary share capital
of the Company.
- Ends-
For further information, please contact:
John Grant, Executive Mark Taylor Rebecca Sanders-Hewett
Chairman Laura White Dwight Burden
Tim Jackson-Smith, Charles Stanley David Ison
CEO Securities Redleaf Polhill
Bglobal plc Nominated Adviser Tel: 020 7382
Tel: 01254 819 and Broker 4730
600 Tel: 020 7149 6000
DEFINITIONS
The following definitions apply throughout this announcement,
unless the context otherwise requires:
"Act" the Companies Act 2006 (as amended)
"AIM" a market operated by the London Stock Exchange
"AIM Rules" the rules which apply to AIM companies and their
directors, contained in the document entitled the "AIM Rules for
Companies" published by the London Stock Exchange, as amended from
time to time
"Bglobal Metering" B Global Metering Limited
"Board" or "Directors" the board of directors of the Company
"Buyer" DWF Apollo Midco Limited
"Company" or "Bglobal" Bglobal plc
"Disposal" the proposed disposal of the entire issued share
capital of Utiligroup pursuant to the terms of the Sale
Agreement
"FCA" the Financial Conduct Authority
"FSMA" the Financial Services and Markets Act 2000 (as
amended)
"General Meeting" the general meeting of the Company convened by
the Notice of General Meeting, to be held at the offices of Travers
Smith LLP, 10 Snow Hill, London EC1A 2AL at 10 a.m. on 18 June
2014
"Group" the Company and its subsidiary undertakings
"KPMG" KPMG LLP
"London Stock Exchange" London Stock Exchange plc
"NorthEdge" NorthEdge Capital LLP
"Notice of General Meeting" the notice convening the General Meeting set out in the circular
"Ordinary Shares" ordinary shares of one pence each in the
capital of the Company
"Resolution" the ordinary resolution set out in the Notice of
General Meeting
"Sale Agreement" the conditional agreement dated30 May 2014
between the Company and the Buyer for the sale and purchase of the
entire issued share capital of Utiligroup
"Shareholder" a holder of shares in the issued capital of the Company
"Utiligroup" Utiligroup Limited and its subsidiary undertakings
This information is provided by RNS
The company news service from the London Stock Exchange
END
DISUAABRSOANRAR
Bglobal (LSE:BGBL)
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