Acquisition, Placing and EGM

RNS Number:6669V
AeroBox plc
14 December 2005


                    AeroBox plc ("AeroBox" or the "Company")

                  Acquisition, Placing of Ordinary Shares and
                     Notice of Extraordinary General Meeting

Summary

   *Fund raising of #1,002,000 through the issue of 16,699,999 new ordinary
    shares at 6 pence.


   *Proposed second fund raising of #998,000 through the issue of 16,633,335
    new ordinary shares at 6 pence subject to approval at EGM.


   *Acquisition of UniversalCore LLC and OvoCorp LLC, specialist technology
    sourcing and resellers of thermoplastic composite materials.


   *Development of a composite materials technology base as a means of
    opening new markets for core and panel products.


Commenting, Ray Gibbs, Aerobox Managing Director said:

"The funding allows an expansion into complementary areas for the use of our
products and I would like to thank our shareholders for their continued support,
particularly as the Company opens up new markets with added value products. The
strategy of using the thermoplastic composite technology as the base for the
business growth in conjunction with UniversalCore and OvoCorp allows us to
develop a range of products, of which the Aerobox ULD is one, and critically
expand into markets previously unattainable.

We have seen product acceptance of the composite ULD and sales traction has
commenced with recently announced orders. There are opportunities for more sales
in the Middle and Far East which we are attacking directly and through our agent
network. The commitment to make the composite core and panel business work is
there from both parties, evidenced by the deferred consideration based on
delivery of $17.5m of orders over three years. "

Enquiries:

AeroBox plc                                           [phone]
Ray Gibbs, Group Managing Director

Seymour Pierce                                        [phone]
Jeremy Porter/Jonathan Wright

HolbornPublic Relations                               [phone]
Trevor Phillips/David Bick


                  Acquisition, Placing of Ordinary Shares and
                     Notice of Extraordinary General Meeting

Aerobox is pleased to announce that it has raised #1,002,000 (before expenses)
through the placing of 16,699,999 new Ordinary Shares at a price of 6p per share
with investment institutions and other investors (the "First Placing"). In
addition, the Company is proposing to raise a further #998,000 (before expenses)
through the placing of a further 16,633,335 new Ordinary Shares at 6p per share
with investment institutions and other investors (the "Second Placing") (the
First Placing and the Second Placing being together referred to as the
"Placing"). In aggregate the Placing will raise #2 million for the Company,
before expenses.

The First Placing is subject only to the 16,699,999 new Ordinary Shares being
issued being admitted to trading on the AIM market of the London Stock Exchange 
plc, which it is expected will take place on 15 December 2005. The Second 
Placing is conditional upon, inter alia, the passing of the resolutions at the 
EGM referred to below and admission to trading on AIM of the 16,633,335 new 
Ordinary Shares, which it is expected will take place on 6 January 2006.

The net proceeds of the Placing will be used to fund the general working capital
requirements of the group as enlarged by the acquisition, details of which are
set out below.

Ray Gibbs, Managing Director, and Anthony Leon, Non-executive Director, have
agreed to subscribe for respectively 800,000 new ordinary shares and 83,334 new
ordinary shares in the Second Placing.

Acquisition of Universal Core LLC ("Universal") and OvoCorp LLC ("OvoCorp")

Aerobox is also pleased to announce that Brookspey Investments Inc, a wholly
owned subsidiary of the Company and the holding company of AeroBox Composite
Structures, LLC ("ACS") and the Company had on 14 December 2005 entered into a
conditional contract to acquire Universal and OvoCorp (the "Acquisition").

Universal and OvoCorp are vehicles incorporated in 2005 by Stephen Mendola and
Klaus-Rainer Duchene to conduct the business of commercialising thermoplastic
materials to replace existing materials by providing a lighter, fully weather
resistant and more durable alternative product. The immediate identified markets
are construction and automotive.

Under the terms of the Acquisition, initial consideration of #1,718,172,
satisfied by the issue of 28,636,206 new Ordinary Shares (the "Initial
Consideration Shares"), credited as fully paid, is payable to the vendors. In
addition, further consideration of up to #2,577,259, to be satisfied by the
issue of up to 42,954,308 new Ordinary Shares (the "Further Consideration
Shares"), is payable to the vendors. This further consideration is dependent
upon orders being received and fulfilled by the enlarged Aerobox Group for its
products in the periods from completion to 31 December 2006 and then for the
year ending 31 December 2007 and the period ending 30 June 2009 (the "Earn Out
Period") exceeding, respectively, $2.5 million, $5 million and $10 million. The
Company has the option to decline any orders whereby the gross profit is below
20 per cent. The acquisition agreement (the "Acquisition Agreement") also
includes a mechanism whereby any shortfall in one of the aforementioned periods
has to be made up in subsequent periods before further consideration is payable
and conversely, any excess of orders received is capable of being carried over
and credited to a subsequent period.

The Acquisition Agreement is conditional, inter alia, upon the passing of the
Resolutions at the EGM and the admission to trading an AIM of the Initial
Consideration Shares. The Initial Consideration Shares are expected to be
admitted to trading on AIM on 6 January 2006.

Under the terms of the Acquisition Agreement the vendors have undertaken to the
Company that, save in certain specified circumstances, they will not dispose of
any Initial Consideration Shares or Further Consideration Shares for a period of
twelve months from their issue.

Universal and OvoCorp made their first sale in April 2005 and the turnover for
the 8 month period to 30th November 2005, as set out in their unaudited
management accounts, was $302,400 and profit before tax was $17,745. The net
asset value of the combined businesses at that date was $19,645. The Acquisition
Agreement provides that the Company will fund Universal and OvoCorp for the 12
months to 31st December 2006, and a sum of $250,000 has been allocated for that
purpose.

Upon completion of the Acquisition Stephen Mendola and Klaus-Rainer Duchene will
join the Board of the Company. Details of their careers to date are set out
below:

Klaus-Rainer Duchene
Klaus-Rainer Duchene (age 45) is a graduate of Ecole des Affaires de Paris and
specialised in marketing of industrial products, working for Proctor & Gamble
between 1986 and 1988 before moving to SC Johnson Wax GmbH with marketing
responsibility for Germany, France and Spain. In January 1992 Mr. Duchene joined
the leading thermoplastic honeycomb solutions company Tubus Bauer GmbH ("Tubus
Bauer") as an equity partner and managing director. In 1995 he became the Chief
Executive Officer and was responsible for increasing the annual sales volume
tenfold in tubular honeycomb between 1992 and 2000. Tubus Bauer is now a
substantial world wide supplier of thermoplastic laminar flow systems for
refrigeration applications, with a dominant market share in Europe and North
America. His development work included setting up two successful joint venture
companies in China and the UAE. He left Tubus Bauer in 2000 to build up the
North American market for Tubus Bauer products marketed through his own new
company Advanced Thermoplastic Systems, Inc. Together with Mr. Mendola, Mr.
Duchene began exploring the market potential for Universal and OvoCorp in 2002,
both of which they legally established in 2005 as operational companies. Mr.
Duchene is currently a director of Tubus Bauer GmbH, Advanced Thermoplastic
Systems, Inc., Verdant Solutions LLC, Universal and OvoCorp.

Stephen Louis Mendola
Stephen Louis Mendola (age 38) graduated magna cum laude in Economics and Native
American Studies from Colgate University in 1989 and gained a general management
MBA in 1993 from Amos Tuck School of Business Administration. In 1989 he joined
Price Waterhouse's Strategic Consulting Group, focusing on corporate
restructuring and strategy formulation. Mr. Mendola joined Accenture in 1993 and
served as a senior manager in the strategic services practice, working as lead
manager on consulting projects with clients such as Nestle, Xerox, Ocean Spray,
Tupperware, Polaroid, Travelocity and NYNEX. Mr. Mendola's professional
expertise regards driving economic value through strategic planning, marketing,
technology commercialisation and supply chain management. Since 1998 he has been
the owner of S&E Management, LLC, a business advisory and venture services
company based in Boston. This included working with Mr. Duchene, whom he met in
2000, since 2002 to explore the thermoplastic composites markets for both
Universal and OvoCorp both of which he owns with Mr. Duchene. Mr. Mendola is
currently a director of S&E Management LLC, Verdant Solutions LLC, Universal and
OvoCorp.

On completion of the Acquisition Messrs Duchene and Mendola will each be
interested in 14,318,103 new Ordinary Shares, which together will represent 14.6
per cent of the enlarged issued share capital of the Company.

Reasons for the Acquisition

Universal has no manufacturing plant and therefore in January 2005 ACS entered
into a manufacturing and supply agreement with Universal. The agreement was for 
the supply to Universal of a thermoplastic honeycomb product that does not have 
an integrated structural skin material ("Core"). Universal was able to 
demonstrate the potential customer base and ACS was able to show that their 
product and the production capability to manufacture Core met the immediate 
customer specifications. Universal placed its first order in April 2005 and the 
Company supplied $72,500 of Core product in the half year. At the end of 
November Core sales by ACS to Universal for the year to date were approaching 
$200,000.

Core material when integrated with a reinforced or non-reinforced thermoplastic
skin is known as Panel. OvoCorp was incorporated in September 2005 to
commercialise thermoplastic Panel products across a range of applications. To
achieve Panel sales there is a need for ACS to invest in laminating equipment
which is expected to be operational by the end of March 2006. The capital cost
of this is estimated to be $350,000.

Your Board has previously announced its intention to capitalise on the
experience gained by ACS in developing an innovative manufacturing capability
for superior Core and Panel products. The strategy of using the thermoplastic
technology as the platform for delivering innovative cost effective solutions
across a range of applications required the appropriate sales channels.

Universal and OvoCorp provide an immediate sales outlet for ACS and the
opportunity for Aerobox to vertically integrate offers enhanced group margin in
what is expected to be the main growth area of the Company.

The annual market for Panel products is considered by Universal and OvoCorp to
be very significant with near term OvoCorp prospects estimated to yield orders
towards the end on 2006. In the first year following the Acquisition, the
majority of sales are expected to be Core product as Panel sales are dependent
on completion of the laminator upgrade at ACS, scheduled to be completed at the
end of March 2006. Thereafter the business aim is to quickly grow the higher
margin, value-added Panel sales. The current Panel prospects include
applications for:

    *formworks - vertical, horizontal and shoring;
    *decking - scaffolding, stages, platforms, temporary floors;
    *temporary shelters;
    *containers - logistics and liquid; and
    *transportation - truck, trailer and doors/panels for the private vehicle 
     market.

Current trading and prospects

In 2005 ACS has been realigned from a research and development organisation to a
commercial operation. It has demonstrated the ability to deliver a quality
product in a highly regulated environment. The stated intention was to deliver
$1.5 million of Unit Load Devices ("ULDs") orders in the second half of this
year. To date ACS has delivered over half of the requirement but has experienced
changing delivery requirements from one customer that is likely to mean part of
the sale is pushed into 2006.

In the second half of this year there has been a marked increase in interest and
enquiries for the Aerobox ULD. The announcements of sales to premier USA and
European airlines and repeat orders, plus a long term supply agreement for a
major Middle East customer, has galvanised buyers to consider their ULD
requirements for 2006 and beyond. The Directors consider that ACS is now a
credible supplier of air cargo containers to the airline industry where the
annual addressable market for the Aerobox AKE/LD-3 unit is assessed by the ACS
management at up to 40,000 units. The ACS objective is to secure a 10-15 per
cent. share of the annual addressable market for the Aerobox ULD in 2006 and
increase this to 25 per cent. of the market within 3 years.

The Company recently announced a five year supply agreement for Aerobox ULDs to
a Middle East customer with an order value in excess of $6 million. This
contract was negotiated and agreed by the Company in conjunction with Watermark
Group plc ("Watermark") and is a significant step in establishing the
credibility of the Aerobox ULD in the aviation market. As Shareholders will be
aware a previous joint venture arrangement between the Company and Watermark
resulted in a dispute that was subsequently settled on a commercial basis in
July 2004.

Subsequently, the Board has decided it is in the Company's interests to enter
into a new, commission based, sales agency agreement with Watermark for
exclusive rights to sell and market the Aerobox ULD product range in the Middle
East and parts of Asia. It is hoped that the recent order announcement will
quickly increase the number of composite containers in operational use. In
particular the solid bi-fold door container is especially targeted at the Middle
East and Asia where Watermark has strong recognised relationships within the
airline community and where there are good prospects for additional long term
supply agreements.

Margins for the ULD have been an issue where the initial orders were secured at
or around cost. The production facility lends itself to long production runs not
requiring downtimes and disruption for re-tooling and change of production jigs.
The ULD pricing has now been established to ensure a margin which is reasonable
but not capable of covering the ACS overheads in the immediate future. However,
if the target Core sales to Universal in 2006 are achieved, then this, together
with the growth in ULD sales should make a significant contribution towards the
annual ACS overhead.

With anticipated volumes for Core and ULDs in 2006, ACS is likely to be capacity
constrained in the second half of the year. An estimated capital spend of over
$500,000 would be required to set up an additional extruder facility in the ACS
factory in New Mexico. The Board is mindful of the overhead base at ACS and the
desire for a low cost operation possibly in the far east. It will review its
options during the first half of 2006 which will include possible acquisition
targets currently under evaluation in China.

Notice of EGM

The Company will today post to shareholders a notice convening an EGM of the
Company to be held at the offices of Lawrence Graham LLP on Thursday 5 January
2006 at 10.30 a.m. At the EGM, resolutions will be put to shareholders for the
purpose of substituting and renewing the existing authority of the Directors
pursuant to sections 80 and 95 of the Act (authority to allot shares and
dis-application of statutory pre-emption rights).

Copies of the notice of EGM will be available from the offices of Seymour Pierce
Ltd, at Bucklersbury House, 3 Queen Victoria Street, London EC4N 8EL and from
the Company's website, www.aeroboxplc.com.

Enquiries:

AeroBox plc                                           [phone]
Ray Gibbs, Group Managing Director

Seymour Pierce                                        [phone]
Jeremy Porter/Jonathan Wright

HolbornPublic Relations                               [phone]
Trevor Phillips/David Bick





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