TIDMMCIL
RNS Number : 7588N
Marwyn Capital I Limited
17 June 2010
MARWYN CAPITAL I LIMITED (the "Company")
Reverse takeover of Fulcrum Group Holdings Limited ("Fulcrum")
Fundraising
of up to GBP11 million
Posting of Admission Document and Notice of General Meeting
The Company is pleased to announce today that Marwyn Capital Investments I
Limited, a subsidiary of the Company (the "Subsidiary") has entered into a
conditional agreement to acquire Fulcrum, an independent gas transporter and
provider of unregulated gas connection services, from National Grid plc for a
nominal consideration of GBP10, payable in cash on Completion, with a
post-Completion working capital adjustment anticipated to be approximately
GBP5.0 million in favour of the Enlarged Group.
In view of the size of Fulcrum, the Acquisition will, on Completion, constitute
a reverse takeover under the AIM Rules for Companies, and as such will require
Shareholder approval at a general meeting of the Company, to be held on 5 July
2010. The Admission Document has been published and is expected to be sent to
shareholders at 9.00am today.
The Company also announces that it proposes to raise up to GBP11 million (before
expenses) by way of a conditional placing of up to 91,666,667 new ordinary
shares at 12p per share and to appoint John Spellman as CEO to lead the Enlarged
Group together with Philip Holder as Non-Executive Chairman. Following
Admission, the Company will be renamed Fulcrum Utility Services Limited.
Highlights
· Fulcrum is a provider of unregulated gas connections services to the UK
market and a licensed
independent gas transporter
· Experienced new management team identified to turnaround loss-making
operations and re-
establish the business as a market leader
· Fulcrum is well positioned to take advantage of opportunities driven by
smart meter roll-out and
network asset ownership
· Nominal consideration payable at completion and working capital injection
from National Grid
· Business turnaround to be funded by placing of up to GBP11 million at 12p
per share
· Strong shareholder base including strategic investor Ecofin Water and
Power alongside institutions
including Legal & General, Foreign & Colonial
and Artemis
· Largest shareholder Marwyn has a proven track record in assisting
portfolio companies to deliver
value
Commenting on the Acquisition, John Spellman, proposed CEO, said:
"I am looking forward to the opportunity to lead Fulcrum onto AIM and
re-establishing the business as the leading connections provider to the UK
market. Fulcrum has the key attributes required to succeed in the market and I
am confident that my team has the experience required to turn around the
business' operations and to take advantage of the opportunities available to the
business."
Mark Watts, Proposed Non-Executive Director and Managing Partner of Marwyn
Investment Management LLP, said:
"We are delighted to announce the acquisition of Fulcrum. The combination of an
experienced management team and the backing that Marwyn brings has already
transformed many of our portfolio businesses and this dynamic approach will
enable Fulcrum to build real shareholder value in a sector full of potential".
Enquiries:
Cenkos Securities plc (nominated adviser and broker)
+44 (0)20 7397 8900
Beth McKiernan / Stephen Keys
Merlin PR
+44 (0)20 7726
8400
Toby Bates / Fiona Crosswell
Shareholders are informed that the Admission Document has been published and
will be posted today, together with a notice convening the General Meeting at
which the approval of Shareholders will be sought, inter alia, for the
Acquisition, the authority to allot new Ordinary Shares pursuant to the Placing,
to change the name of the Company to Fulcrum Utility Services Limited and to
amend the Company's Memorandum and Articles. A copy of the Admission Document
is available from the Company's website: www.marwyncapitalone.com
Background to the acquisition and the fundraising
The Company was admitted to trading on AIM on 24 December 2009 with the purpose
of acquiring companies with a particular focus on media, industrials and
business and support services sectors. Having considered a number of
opportunities, the Directors have identified the opportunity to become a leading
provider of gas connection services to the UK utilities markets.
Fulcrum provides specialist engineering design and project management services
to the unregulated UK gas connections market, servicing customers with simple
single-site connections requirements through to large multi-site residential and
industrial and commercial developments across the UK.
Fulcrum is currently loss making and has experienced falling market share. The
strategy of the Enlarged Group is to turnaround the business through growth in
market share, improved operation performance and enhanced cost efficiencies. The
New Board believes that there are a number of factors which suggest that Fulcrum
is well positioned to pursue this strategy and to derive significant value,
namely:
· Nationwide coverage;
· An established skilled engineering and design employee base; and
· A well recognised brand within the industry established over a number of
years.
Fulcrum is a non-core asset within the National Grid. The New Board believes
that under independent ownership and with a clear strategic direction the
business will be better positioned to succeed in the future.
Details of the Acquisition and Board appointments
John Spellman will be appointed as the new Chief Executive of the Company at
Admission. John has more than 30 years experience in the energy industry, both
in the UK and overseas and until 2007 was Managing Director of Corona Energy
Limited, the largest independent supplier of gas to the UK's industrial and
commercial sectors. Philip Holder will be appointed as the new Non-Executive
Chairman at Admission. Philip has worked in the UK utilities sector for more
than 30 years and was Managing Director of East Surrey Holdings, the mid-cap
water and gas utilities business between 1997 and 2007.
The Board currently comprises Paul Everitt, Paul Cookson and James Corsellis.
On Admission, all of the current directors will step down from the Board, and
Mark Watts and Stephen Gutteridge will be appointed as Non-Executive Directors.
The consideration for the Acquisition is GBP10 to be satisfied in cash at
Completion with a post-Completion working capital adjustment, which it is
anticipated to be approximately GBP5.0 million in favour of the Enlarged Group,
to ensure a working capital figure at Completion of negative GBP5.275 million.
The net proceeds of the Placing will be utilised by the Company to meet the
working capital requirements of the Enlarged Group and to implement the
operational improvements required to re-establish the business in line with the
Company's strategy.
Proposed Directors' service agreements
The following agreements have been entered into between the Proposed Directors
and the Company and in each case are conditional upon, and commencing from
Admission:
John Spellman
On 16 June 2010, John Spellman entered into a service agreement with the Company
pursuant to which he will be appointed as chief executive officer of the
Company. Mr. Spellman's appointment will continue unless terminated by (i) Mr.
Spellman giving the Company not less than 6 months' written notice (ii) the
Company giving Mr. Spellman not less than 12 months written notice, or (iii)
will automatically terminate on Mr. Spellman's 65th birthday. The Company may
terminate the letter of appointment immediately on the occurrence of certain
events.
Mr. Spellman will be entitled to a salary of GBP220,000 per annum. Mr. Spellman
is also eligible to a discretionary bonus in each calendar year of up to 50 per
cent. of his annual salary, to be based on certain performance criteria to be
set by the Company's remuneration committee. Mr. Spellman is also entitled to
certain company benefits including an employer pension contribution of 10 per
cent. of basic salary, life and medical insurance and a company car allowance.
In addition, Mr. Spellman entered into a side letter on 16 June 2010 with the
Company. Pursuant to the terms of the side letter, Mr. Spellman is entitled to
receive a bonus payment of GBP100,000 less any deductions for income tax and
employee national insurance contributions. This bonus payment is conditional on,
amongst other things, Completion, the execution of his service agreement with
the Company and Mr. Spellman commencing active employment with the Company.
Mark Watts
On 16 June 2010, Mark Watts entered into a letter of appointment with the
Company pursuant to which he will be appointed as a non-executive director of
the Company. The term of his appointment is for one year and may be terminated
by either party giving the other not less than three months' written notice. The
Company may terminate Mr. Watts' appointment on the occurrence of certain
events.
Mr. Watts' anticipated time commitment to the Company is at least one day per
month after an induction phase which includes at least 10 board meetings per
year. Mr.Watts' is entitled to an annual fee of GBP30,000 which may be increased
by agreement if his anticipated monthly time commitment is materially exceeded.
The annual fee will be reviewed annually by the remuneration committee of the
Board.
Stephen Gutteridge
On 16 June 2010, Stephen Gutteridge entered into a letter of appointment with
the Company pursuant to which he will be appointed as a non-executive director
of the Company. The term of his appointment is for one year and may be
terminated earlier by either party giving the other not less than three months'
written notice. The Company may terminate Mr. Gutteridge's appointment
immediately on the occurrence of certain events.
Mr. Gutteridge's anticipated time commitment is at least one day per month after
an induction phase which includes at least 10 board meetings per year. Mr.
Gutteridge is entitled to an annual fee of GBP30,000 which may be increased by
agreement if his anticipated monthly time commitment is materially is exceeded.
The annual fee will be reviewed annually by the remuneration committee of the
Board.
Philip Holder
On 16 June 2010, Philip Holder entered into a letter of appointment with the
Company pursuant to which he will be appointed as Chairman of the Company. The
terms of the letter is for one year and may be terminated earlier by either
party giving the other not less than three months' written notice. The Company
may terminate Mr. Holder's appointment immediately on the occurrence of certain
events.
Mr. Holder's anticipated time commitment is at least two days per week after an
induction phase which includes at least 10 board meetings per year. Mr. Holder
is entitled to an annual fee of GBP60,000 which may be increased by agreement if
his anticipated weekly time commitment is materially exceeded. The annual fee
will be reviewed annually by the remuneration committee of the Board.
Details of the Placing and Admission
The Company will conduct three placings due to the requirements of the VCT
Scheme and EIS Scheme. The New VCT/EIS Placing Shares will be offered to VCT's
investing funds raised after 6 April 2006 and to EIS investors. The Old VCT
Placing Shares will be offered to VCT's investing funds raised prior to 6 April
2006. The General Placing Shares will be offered to other investors who will
not be seeking relief under the VCT/EIS legislation.
It is expected that:
· First Admission will become effective and that dealings in the New VCT/EIS
Placing Shares and the
Existing Ordinary Shares will commence at 8.00 a.m.
on 6 July 2010.
· Subject to First Admission having occurred, Second Admission will become
effective and that
dealings in the Old VCT Placing Shares will commence at
8.00 a.m. on 7 July 2010.
· Subject to First Admission and Second Admission having occurred, Third
Admission will become
effective and that dealings in the General Placing
Shares will commence at 8.00 a.m. on 8 July 2010.
Recommendation
The Directors unanimously recommend that Shareholders vote in favour of the
resolutions to be passed at the General Meeting.
Shareholders, including Marwyn Value Investors LP, representing 81% of the
Company's Ordinary Shares at 15 June 2010 (the latest practicable date prior to
the date of this announcement) have irrevocably undertaken to vote in favour of
the Resolutions .
Notice of General Meeting
An Admission Document is expected to be posted to Shareholders at 9.00 a.m.
today. The formal notice convening the General Meeting, will be enclosed with
the Admission Document sent to Shareholders.
ADMISSION AND PLACING STATISTICS
Number of Existing Ordinary Shares
62,640,000
Existing Ordinary Shares as a percentage of the Enlarged Share Capital
40.6 per cent.
Placing Price
12 pence
Number of Placing Shares being issued and allotted pursuant to the Placing
91,666,667
Placing Shares as a percentage of the Enlarged Share Capital
59.4 per cent.
Number of New VCT/EIS Placing Shares
11,666,165
New VCT/EIS Placing Shares as a percentage of Enlarged Share Capital
7.6 per cent.
Number of Old VCT Placing Shares
14,249,500
Old VCT Placing Shares as a percentage of Enlarged Share Capital
9.2 per cent.
Number of General Placing Shares
65,751,002
General Placing Shares as a percentage of Enlarged Share Capital
42.6 per cent.
Market capitalisation of the Company at the Placing Price on Admission
GBP18,516,800
Gross proceeds of the Placing
GBP11,000,000
Estimated proceeds of the Placing net of expenses
GBP9,000,000
Enlarged Share Capital immediately following Admission
154,306,667
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Latest time and date for receipt of Forms of Proxy
10.00 a.m. on 3 July 2010
Latest time and date for receipt of Forms of Direction
10.00 a.m. on 2 July 2010
General Meeting
10.00 a.m. on 5 July
2010
Cancellation of dealing facility for the Existing Ordinary Shares
5 July 2010
First Admission becomes effective and dealings commence in the
New VCT/EIS Placing Shares and the Existing Ordinary Shares on AIM
8.00 a.m. on 6 July 2010
Delivery into CREST of the Depositary Interests representing the New
VCT/EIS Placing Shares to be held in uncertificated form
6 July 2010
Second Admission becomes effective and dealings commence in the
Old VCT Placing Shares
8.00 a.m. 7 July 2010
Delivery into CREST of the Depositary Interests representing the
Old VCT Placing Shares to be held in uncertificated form
7 July 2010
Completion of the Acquisition; Third Admission becomes effective and
dealings commence in the General Placing Shares
8.00 a.m. on 8 July 2010
Delivery into CREST of the Depositary Interests representing the
General Placing Shares to be held in uncertificated form
8 July 2010
Despatch of definitive share certificates (where applicable) in
respect of the Placing Shares to be held in certificated form
16 July 2010
Each of the dates and times in the above timetable are subject to change at the
absolute discretion of the Company and Cenkos Securities and satisfaction of all
conditions contained in the Acquisition Agreement is assumed.
Definitions
The following words and expressions taken from the Admission Document shall have
the following meanings in this Announcement, unless the context otherwise
requires:
"Acquisition" means the acquisition of all of the issued and outstanding shares
of Fulcrum Group Holdings Limited pursuant to the Acquisition Agreement
"Acquisition Agreement" means the conditional agreement dated 16 June 2010
between (1) the Subsidiary (2) the Company and (3) National Grid.
"Admission" means (i) in relation to the Existing Ordinary Shares and the New
VCT/EIS Placing Shares, First Admission; (ii) in relation to the Old VCT Placing
Shares, Second Admission; and (iii) in relation to the General Placing Shares,
Third Admission
"AIM" means AIM, the market of that name operated by London Stock Exchange
"Articles" means the articles of association of the Company as at the date of
the Admission Document
"Board" means the board of directors of the Company from time to time
"Completion" means completion of the Acquisition in accordance with the
Acquisition Agreement
"CREST" means the relevant system (as defined in the CREST Regulations) operated
by Euroclear UK & Ireland in accordance with which securities may be held or
transferred in uncertificated form
"Depository Interests" means the dematerialised depository interests created
pursuant to and issued on the terms of the Deed Poll
"Directors" means the directors of the Company as at the date of the Admission
Document
"EIS" means Enterprise Investment Scheme and related reliefs as detailed in Part
5 of the Income Tax Act 2007 and in Sections 150A to 150C and Schedules 5B and
5BA of the Taxation of Chargeable Gains Act 1992
"EIS Scheme" means a scheme under which EIS investors enjoy certain tax reliefs
"Enlarged Group" means the Company, the Subsidiary and, subject to Completion,
Fulcrum, as described in paragraph 10 of Part I (Letter from the Directors of
Marwyn Capital I Limited) of the Admission Document
"Enlarged Share Capital" means the entire issued ordinary share capital of the
Company immediately following Admission, comprising the Existing Ordinary Shares
and the Placing Shares
"Existing Ordinary Shares" means the 62,640,000 Ordinary Shares in issue as at
the date of the Admission Document
"Form of Proxy" means the form of proxy to be used by Shareholders in respect of
the General Meeting
"First Admission" means admission of the New VCT/EIS Placing Shares and
re-admission of the Existing Ordinary Shares to trading on AIM becoming
effective in accordance with Rule 6 of the AIM Rules for Companies
"FSA" means the Financial Services Authority of the United Kingdom
"FSMA" means Financial Services and Markets Act 2000 of the United Kingdom, as
amended from time to time
"General Meeting" meansthe general meeting of the Company to be held at 10.00
on 5 July 2010, notice of which is set out at the end of the Admission Document
"General Placing" means the proposed conditional placing of the General Placing
Shares with certain institutional and other investors at the Placing Price
"General Placing Shares" means the 65,751,002 new Ordinary Shares to be allotted
and issued by the Company pursuant to the General Placing
"Memorandum" means the memorandum of association of the Company as at the date
of the Admission Document document, details of which are set out in paragraph 5
of Part VII (Additional Information) of the Admission Document
"National Grid" means National Grid Commercial Holdings Limited, a subsidiary of
National Grid plc
"New Board" means Philip Holder, John Spellman, Mark Watts and Stephen
Gutteridge
"New VCT/EIS Placing" means the proposed conditional placing of the New VCT/EIS
Placing Shares with certain institutional investors at the Placing Price
"New VCT/EIS Placing Shares" means the 11,666,165 new Ordinary Shares to be
issued and allotted by the Company pursuant to the New VCT/EIS Placing
"Old VCT Placing" means the proposed conditional placing of the Old VCT Placing
Shares with certain institutional investors at the Placing Price
"Old VCT Placing Shares" means the 14,249,500 new Ordinary Shares to be allotted
and issued by the Company pursuant to the Old VCT Placing
"Ordinary Shares" means the ordinary shares of 0.1 pence each in the share
capital of the Company with ISIN KYG587891014 as at the date of the Admission
Document
"Placing" means the proposed conditional placing by Cenkos Securities of the
Placing Shares with institutional investors at the Placing Price pursuant to the
Placing Agreement
"Placing Agreement" means the conditional agreement dated 16 June 2010 between
(1) the Company (2) the Directors (3) the New Board and (4) Cenkos Securities
plc relating to the Placing
"Placing Shares" means the New VCT/EIS Placing Shares, the Old VCT Placing
Shares and the General Placing Shares
"Proposed Directors" means Philip Holder, John Spellman, Stephen Gutteridge and
Mark Watts
"Resolutions" means the resolutions to be proposed at the General Meeting as
set out in the Notice of General Meeting
"Second Admission" means admission of the Old VCT Placing Shares to trading on
AIM in accordance with Rule 6 of the AIM Rules for Companies
"Shareholders" means the holders of Ordinary Shares, each individually being a
"Shareholder"
"Third Admission" means admission of the General Placing Shares to trading on
AIM in accordance with Rule 6 of the AIM Rules for Companies
"VCT" means a venture capital trust for the purposes of Part 6, Chapters 1 to 6
of the UK Income Tax Act 2007 and a company, broadly similar to an investment
trust, which has been approved by HMRC and which subscribes for shares in, or
lends money to, unquoted (including AIM listed) companies
"VCT Scheme" means a scheme under which VCTs and their investors enjoy certain
tax reliefs
Notices
This announcement does not constitute an offer or invitation to purchase or
subscribe or a solicitation of an offer to buy any securities pursuant to this
announcement or otherwise in any jurisdiction and investors should not subscribe
for any shares referred to herein except on the basis of the Admission Document,
produced by the Company, drawn up in accordance with the AIM Rules for
Companies. It is intended that copies of the Admission Document when published,
will be available at www.marwyncapitalone.com
The release, publication or distribution of this announcement in jurisdictions
other than the UK may be restricted by the laws of those jurisdictions and
therefore persons should inform themselves about and observe such restrictions.
Any failure to comply with any such restrictions may constitute a violation of
the securities laws of any such jurisdictions.
This communication does not constitute an offer of securities to the public in
the United Kingdom. No prospectus has been or will be registered in the United
Kingdom in respect of the securities referred to in this communication. This
document is exempt from the general restriction on the communication of
invitations or inducements to enter into investment activity (within the meaning
of section 21 of FSMA) and has therefore not been approved by an authorised
person within the meaning of FSMA. This communication is being distributed only
to and directed only at (i) persons falling within Article 19(5) ("investment
professionals") of The Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005 (the "Order") who have professional experience in matters
relating to investments, (ii) persons falling within Article 49 ("high net worth
companies etc") and/or (iii) other persons to whom it may otherwise lawfully be
communicated (all such persons together being referred to as "relevant
persons"). This communication must not be acted on or relied on by any person
who is not a relevant person. Any investment or investment activity to which
this communication relates is available only to relevant persons and will be
engaged in only with relevant persons.
Information for United States and other overseas shareholders
This announcement is not for release in the United States, South Africa,
Australia, Canada or Japan. This information is not for publication or
distribution to persons in the United States. The distribution of this
announcement in whole or part may, in certain jurisdictions, be restricted by
law and therefore persons into whose possession this document comes should
inform themselves about and observe any restrictions. Any failure to comply with
these restrictions may constitute a violation of the securities laws of any such
jurisdiction.
The information herein is not an offer of securities for sale in the United
States. The Ordinary Shares have not been and nor will be, registered or
qualified for sale under the US Securities Act of 1933, as amended (the
"Securities Act") and, unless the Ordinary Shares are registered under the
Securities Act or an exemption from the requirements of the Securities Act is
available, the Ordinary Shares may not be offered or sold directly or indirectly
within the United States or to, or for the account or benefit of, any US persons
or any national, citizen or resident of the United States.
For the attention of Cayman Island Residents
No invitation or offer, whether direct or indirect, may be or has been made to
the public in the Cayman Islands to subscribe for the Ordinary Shares. Neither
the Cayman Islands Monetary Authority nor any other governmental authority in
the Cayman Islands has passed judgment upon or approved the terms or merits of
this document. There is no investment compensation scheme available to investors
in the Cayman Islands.
Cautionary note regarding forward-looking statements
This announcement contains forward-looking statements. Such statements are
subject to certain risks and uncertainties, in particular statements regarding
plans, goals, prospects, developments and strategies for the Enlarged Group's
future. The Enlarged Group's actual results and operations could differ
fundamentally from those anticipated in such forward looking statements as a
result of many factors including the risks faced by the Enlarged Group which are
described in Part III and elsewhere in the Admission Document. These statements
and assumptions that underlie them are based on the current expectations of the
Directors and are subject to a number of factors, many of which are beyond their
control. As a result, there can be no assurance that actual results will not
differ materially from those described in this announcement. Forward-looking
statements are identified by their use of terms and phrases such as "believe",
"could", "envisage", "estimate", "intend", "may", "plan", "will" or the negative
of those, variations or comparable expressions, including reference to
assumptions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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