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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Brammer | LSE:BRAM | London | Ordinary Share | GB0001195089 | ORD 20P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 164.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMBRAM RNS Number : 2886A Brammer PLC 06 October 2009 Brammer plc 6 October 2009 THIS ANNOUNCEMENT (AND THE INFORMATION CONTAINED HEREIN) IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, NEW ZEALAND, THE REPUBLIC OF IRELAND, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION BRAMMER PLC PROPOSED RIGHTS ISSUE TO RAISE APPROXIMATELY GBP38.3 MILLION The Board of Directors of Brammer plc ("Brammer" or the "Company") today announces a fully underwritten Rights Issue to raise gross proceeds of GBP38.3 million (approximately GBP35.3 million net of expenses). The Rights Issue is subject to approval by Shareholders at a General Meeting which is expected to be held at 11.00 a.m. on 29 October 2009. Highlights * 1 for 1 fully underwritten Rights Issue to raise GBP35.3 million (net) through the issue of 53,142,794 Rights Issue Shares at 72 pence per Rights Issue Share, representing a discount of: - 57.0 per cent. to the Closing Price of an Existing Ordinary Share of 167.5 pence on 5 October 2009, being the last Business Day before the date of this announcement; and - 39.2 per cent. to the theoretical ex-rights price, when calculated by reference to the Closing Price on 5 October 2009, adjusted for the dividend of 2.6 pence per Existing Ordinary Share declared by the Company on 28 August 2009. * The proceeds of the Rights Issue will be used to reduce the Group's financial indebtedness, in order to create additional headroom over the Group's borrowing covenants and will provide increased flexibility to reinvest the Group's underlying cash flows, and so provide additional resources to take advantage of future value enhancing investment opportunities. Ian Fraser, Chief Executive of Brammer, said: "Notwithstanding the difficult economic environment, Brammer continues to show robust operational performance with stability in most markets and strong cash flow generation. The proceeds from the fully underwritten Rights Issue will significantly improve the strength of the Group's balance sheet, providing a robust capital structure and appropriate financial flexibility to enable the Group to continue to execute its growth strategy." Current trading and future prospects of Brammer On 28 August 2009, Brammer announced its Interim Results including the Board's outlook for the Group for the financial year ending 31 December 2009. As indicated in the Interim Results announcement, current trading for the Group is in line with management expectations. During the two month period ended 31 August 2009, the Group has experienced a reduction in sales of approximately 18.8 per cent. (expressed in constant currency) when compared to the same period in the previous financial year. The reduction in sales in the second quarter of the Group's current financial year on a sales per working day ("SPWD") basis was approximately 21.7 per cent. The decline in SPWD during July and August of the current financial year was approximately 19.4 per cent., a modest improvement over the second quarter. Most territories now appear to have reached stability or are showing slight improvements in their run-rate. As such, the Board believes that stability could be starting to return in the majority of the markets in which the Group operates, albeit at lower levels than during the previous financial year. There are also signs that confidence is rising in the world's key economies that the worst of the economic downturn has passed. For the remainder of the current financial year, the Board anticipates a modest increase in demand from recent levels together with some of the benefits arising from new Key Account contract wins. However, the Board recognises that, in the prevailing environment, its focus on costs and cash must remain a high priority. EXPECTED TIMETABLE OF PRINCIPAL EVENTS +----------------------------------------------------+--+-------------------+ | Announcement of Rights Issue and publication of | | 6 October 2009 | | prospectus | | | +----------------------------------------------------+--+-------------------+ | Record Date for entitlement to the Rights Issue | | 6.00 p.m. on | | | | 27 October 2009 | | | | | +----------------------------------------------------+--+-------------------+ | General Meeting | | 11.00 a.m. on | | | | 29 October 2009 | | | | | +----------------------------------------------------+--+-------------------+ | Admission/Dealings in Rights Issue Shares, nil | | 30 October 2009 | | paid, commence on London Stock Exchange and | | | | Existing Ordinary Shares marked "ex-rights" | | | | | | | +----------------------------------------------------+--+-------------------+ | Latest time and date for acceptance of payment in | | 11.00 a.m. on | | full for and registration of renounced Provisional | | 13 November 2009 | | Allotment Letters | | | +----------------------------------------------------+--+-------------------+ | Results of Rights Issue to be announced | | 8.00 a.m. on | | | | 16 November 2009 | | | | | +----------------------------------------------------+--+-------------------+ | Dealings to commence in Rights Issue Shares, fully | | 8.00 a.m. on | | paid, on the London Stock Exchange | | 16 November 2009 | +----------------------------------------------------+--+-------------------+ Notes: (1) The dates set out in the expected timetable of principal events above and mentioned throughout the Prospectus and the accompanying documents may be adjusted by the Company in consultation with RBS Hoare Govett, in which event details of the new dates will be notified to the UKLA and the London Stock Exchange and, where appropriate, to Shareholders. (2) The Rights Issue is subject to certain restrictions relating to Shareholders who are residents of, or who have registered addresses outside of, the UK. (3) The times set out in the expected timetable of principal events above and mentioned throughout the Prospectus are London times and may be adjusted by the Company in consultation with RBS Hoare Govett, in which event details of the new times and dates will be notified to the UK Listing Authority, the London Stock Exchange, and, where appropriate, Shareholders. This summary should be read in conjunction with the full text of this announcement. A prospectus relating to the Rights Issue (the "Prospectus") is expected to be published today and will be available at the registered office of Brammer at Claverton Court, Claverton Road, Wythenshawe, Manchester M23 9NE and on the Company's website, www.brammer.biz. RBS Hoare Govett is acting as Sponsor, Financial Adviser, Broker and Underwriter to the Company. For further information, please contact: +----------------------------------------------------+----------------------+ | Brammer plc | +44 (0) 161 902 5572 | | David Dunn, Chairman | | | Ian Fraser, Chief Executive | | | Paul Thwaite, Finance Director | | | | | +----------------------------------------------------+----------------------+ | RBS Hoare Govett Limited | +44 (0) 20 7678 8000 | | Lee Morton | | | Justin Jones | | | Hugo Fisher | | | | | +----------------------------------------------------+----------------------+ | Citigate Dewe Rogerson | +44 (0) 20 7638 9571 | | Martin Jackson | | | Nicola Smith | | +----------------------------------------------------+----------------------+ Shareholder enquiries If you have further questions, please telephone the Shareholder Helpline on the numbers set out below. This helpline is available from 8.30 a.m. to 5.30 p.m. on any London Business Day. Shareholder Helpline 0871 384 2050 (from inside the UK) or +44 121 415 0259 (from outside the UK) Calls to Equiniti's 0871 384 2050 number are charged at 8 pence per minute from a BT landline. Other service provider's costs may vary. Calls to the Equiniti's +44 121 415 0259 number from outside the UK are charged at applicable international rates. Different charges may apply to calls made from mobile telephones and calls may be recorded and monitored randomly for security and training purposes. Equiniti's Shareholder Helpline is unable to give advice on the merits of the Rights Issue or provide any financial, legal, tax or investment advice. General This announcement (and the information contained herein) is restricted and is not for release, publication or distribution, directly or indirectly, in whole or in part, in or into or from the United States, Canada, Australia, Japan, New Zealand, the Republic of Ireland, the Republic of South Africa or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction. The release, publication or distribution of this announcement, the Prospectus and/or the Provisional Allotment Letter and/or the transfer of the Nil Paid Rights, the Fully Paid Rights and/or the Rights Issue Shares in or into jurisdictions other than the UK may be restricted by law and therefore persons into whose possession this announcement or any other document in connection with the Rights Issue comes or to whom this announcement is released, published or distributed should inform themselves about and observe such restrictions. Any failure to comply with any such restrictions may constitute a violation of the securities laws or regulations of such jurisdictions. This announcement is an advertisement and not a prospectus and investors should not subscribe for or purchase any Nil Paid Rights, Fully Paid Rights or Rights Issue Shares referred to in this announcement except on the basis of information in the Prospectus which is expected to be published by the Company today in connection with the Rights Issue. Copies of the Prospectus will, following publication, be available from the Company's registered office. This announcement does not constitute, or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any solicitation of any offer to sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe for, any security in the capital of the Company in any jurisdiction. Any decision to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any Provisional Allotment Letter, Nil Paid Rights, Fully Paid Rights and/or Rights Issue Shares should only be made on the basis of information contained in and incorporated by reference into the Prospectus which contains further details relating to the Company in general as well as a summary of the risk factors to which an investment in the Rights Issue Shares is subject. Nothing in this announcement should be interpreted as a term or condition of the Rights Issue. This announcement is not directed to, or intended for distribution or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability, or use would be contrary to law or regulation which would require any registration or licensing within such jurisdiction. In particular, this announcement is not for distribution in or into the United States, Australia, Canada, Japan, New Zealand, the Republic of Ireland, the Republic of South Africa or any other Excluded Jurisdiction. The information in this announcement may not be forwarded or distributed to any other person and may not be reproduced in any manner whatsoever. Any forwarding, distribution, reproduction, or disclosure of this announcement in whole or in part is unauthorised. Failure to comply with this directive may result in a violation of the securities laws or regulations of other jurisdictions. This announcement and the information contained herein is not an offer of securities for sale in the United States. The Nil Paid Rights, the Fully Paid Rights, the Rights Issue Shares and the Provisional Allotment Letters have not been and will not be registered under the United States Securities Act 1933 (as amended) or under the applicable securities laws of any state or other jurisdiction of the United States and will not qualify for distribution under any of the relevant securities of any of the Excluded Jurisdictions. Accordingly, unless a relevant exemption from such requirements is available, none of the Existing Ordinary Shares, the Nil Paid Rights, the Fully Paid Rights the Rights Issue Shares or the Provisional Allotment Letters may be offered, sold, resold, taken up, exercised, renounced, transferred or delivered, directly or indirectly, in or into the United States or any other Excluded Jurisdiction or to, or for, the account or benefit of a person located in the United States or any other Excluded Jurisdiction. No money, securities or other consideration from any person inside the United States is being solicited and, if sent in response to the information contained in this announcement, will not be accepted. RBS Hoare Govett Limited ("RBS Hoare Govett"), which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as sponsor, financial adviser, broker and underwriter to the Company and for no one else in connection with the Rights Issue and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to the Rights Issue and will not be responsible to anyone other than the Company for providing the protections afforded to clients of RBS Hoare Govett or for providing advice to any such person in relation to the Rights Issue, the contents of this announcement, the Prospectus and the accompanying documents thereto or any matters or arrangements referred to herein or therein. Apart from the responsibilities and liabilities, if any, which may be imposed on RBS Hoare Govett by FSMA or the regulatory regime established thereunder, RBS Hoare Govett accepts no responsibility whatsoever, and makes no representation or warranty, express or implied, for the contents of this announcement including its accuracy, completeness or verification or for any other statement made or purported to be made by it or on behalf of it, the Company or any other person, in connection with the Company, the Nil Paid Rights, the Fully Paid Rights and the Rights Issue Shares or the Rights Issue and nothing in this announcement shall be relied upon as a promise or representation in this respect, whether as to the past or the future. RBS Hoare Govett accordingly disclaims all and any liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above), which it might otherwise have in respect of this announcement or any such statement. Cautionary note regarding forward looking statements The statements contained in this announcement and the information referred to in it includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "anticipates", "targets", "aims", "continues", "projects", "assumes", "expects", "intends", "may", "will", "would" or "should", or in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the Group's result of operations, financial condition, liquidity, prospects, growth strategies and the industries in which the Group operates. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward-looking statements, including without limitation: conditions in the markets, market position of the Company, earnings, financial position, cash flows, return on capital, anticipated investments and capital expenditures, changing business or other market conditions and general economic conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this announcement based on past trends or activities should not be taken as a representation that such trends or activities will continue in the future. None of the statements made in this paragraph in any way obviate the requirement that the Company complies with the Prospectus Rules, the Disclosure and Transparency Rules, the Listing Rules or FSMA. These forward-looking statements speak only at the date of this announcement. Except as required by the Listing Rules, the Disclosure and Transparency Rules, the Prospectus Rules and any law, Brammer does not have any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, further events or otherwise. Except as required by the Listing Rules, the Disclosure and Transparency Rules, the Prospectus Rules and any law, Brammer expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Brammer's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this announcement might not occur. Prospective investors should specifically consider the factors identified in this announcement and the Prospectus which could cause actual results to differ before making an investment decision. No statement in this announcement is intended as a profit forecast or a profit estimate and no statement in this announcement should be interpreted to mean that earnings per Ordinary Share for the current or future financial years would necessarily match or exceed the historical published earnings per Ordinary Share. Prices and values of, and income from, shares may go down as well as up and an investor may not get back the amount invested. It should be noted that past performance is no guide to future performance. No person has been authorised to give any information or to make any representation other than those contained in this announcement and, if given or made, such information or representation must not be relied on as having been authorised by the Company or RBS Hoare Govett. Subject to the Listing Rules, the Prospectus Rules and the Disclosure and Transparency Rules, the issue of this announcement shall not, in any circumstances, create any implication that there has been no change in the affairs of the Group since the date of this announcement or that the information in it is correct as at any subsequent date. Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement. This announcement has been prepared for the purposes of complying with applicable law and regulation in the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of the United Kingdom. BRAMMER PLC PROPOSED RIGHTS ISSUE TO RAISE APPROXIMATELY GBP38.3 MILLION 1. INTRODUCTION Today your Board announces that, conditional upon the passing of the Resolutions, it proposed to raise gross proceeds of GBP38.3 million (approximately GBP35.3 million net of expenses) by way of the Rights Issue. The Rights Issue will be undertaken on the basis of 1 Rights Issue Share for every 1 Existing Ordinary Share held at the Record Date at the Rights Issue Price of 72 pence per Rights Issue Share. The Rights Issue, which relates to the issue of 53,142,794 Rights Issue Shares, has been fully underwritten by RBS Hoare Govett pursuant to the terms of the Underwriting Agreement, other than in respect of an aggregate of 328,000 Rights Issue Shares, in respect of which all of the Directors have irrevocably undertaken to take up the rights to which they are beneficially entitled under the terms of the Rights Issue. The Rights Issue Price of 72 pence per Rights Issue Share represents a discount of 57.0 per cent. to the Closing Price of an Existing Ordinary Share of 167.5 pence on 5 October 2009, being the last Business Day before the date of this announcement and a discount of 39.2 per cent. to the theoretical ex-rights price when calculated by reference to the Closing Price on 5 October 2009, adjusted for the dividend of 2.6 pence per Existing Ordinary Share declared by the Company on 28 August 2009. The Rights Issue is conditional, amongst other things, upon the passing by Shareholders of the Resolutions (including resolutions to remove the current limit on the Company's ability to allot shares contained in the Articles of Association, to authorise the allotment of the Rights Issue Shares and to disapply section 561(1) of the 2006 Act in relation to the allotment of the Rights Issue Shares). 2. BACKGROUND TO THE GROUP Brammer is a leading pan-European, added value technical equipment distributor. The Group provides power transmission components, engineering and other related industrial services to a broad customer base including a number of leading European manufacturers such as the Bosch Group, Kraft Foods, TRW Automotive and Smurfit Kappa Group. With over 300 locations in 16 countries, Brammer has a large network of branches providing local coverage to its customers and fulfils an important role between its customers and suppliers. For the financial year ended 31 December 2008, the Group generated sales in the UK of GBP133.5 million (28 per cent.), in Germany of GBP121.8 million (25 per cent.), in France of GBP74.4 million (16 per cent.), in Spain of GBP42.7 million (9 per cent.) and in Benelux of GBP46.3 million (10 per cent.). The remainder of the Group generated sales of GBP59.7 million (12 per cent.) thereby generating total Group sales of GBP478.4 million in the financial year ended 31 December 2008. The figures in brackets represent the percentage of total Group sales generated by the relevant country or region during the financial year ended 31 December 2008. The Group's extensive product portfolio includes a wide range of power transmission components and mechanical MRO Products (such as bearings, belts, seals, chains, motors and gearboxes) which it supplies to a broad range of industries (such as metal, automotive, food and drink and transport and utilities). The Group also provides various industrial services including "Insite" services (where Brammer staff provide, or a Brammer branch is established on a customer's premises to provide, a year round service for MRO Products on a 24 hour, 7 day a week basis). Key strengths The Directors believe that Brammer has a number of key strengths and competitive advantages that are important factors in the Group ensuring it maintains and further develops its business. These include, but are not limited to: * a wide geographic footprint across the European continent which attracts large Key Account customers and diversifies risk for the Group overall; * close working relationships with its key suppliers based on a "partnering" approach which encourages support from suppliers but ensures a multi-brand offering to customers; * a well developed internal training programme which provides staff with extensive technical and commercial knowledge; * a diverse existing MRO Product offering with strong information systems enabling intra-Group transfers to facilitate trading with customers and greater visibility on stock levels across the Group; * a long established reputation and strong industry knowledge but without reliance on any one particular market segment or customer; * a strong culture and a set of core values across the Group's employees aimed at delivering the best possible service; and * experienced Executive Directors and country management teams working to implement a consistent and proven strategy. Strategy The Group's overall strategy is to be Europe's leading provider of MRO Products and support services. The principal elements of Brammer's corporate strategy are to: * increase organic growth in each of the Group's geographical locations by increasing sales and enhancing knowledge of customer processes; * focus on winning Key Account customers on both a national and European level; * increase the number of Insites and consistently implement best practice across the Group; * develop consistency through the implementation of Group information systems and development of the Brammer brand; * ensure the capability of Group employees is as high as possible through training, development and communication; * supplement organic growth through appropriate acquisitions; and * minimise costs, wherever possible, throughout all Group functions. 3. CURRENT TRADING AND PROSPECTS On 28 August 2009, Brammer announced its Interim Results including the Board's outlook for the Group for the financial year ending 31 December 2009. As indicated in the Interim Results announcement, current trading for the Group is in line with management expectations. During the two month period ended 31 August 2009, the Group has experienced a reduction in sales of approximately 18.8 per cent. (expressed in constant currency) when compared to the same period in the previous financial year. The reduction in sales in the second quarter of the Group's current financial year on a sales per working day ("SPWD") basis was approximately 21.7 per cent. The decline in SPWD during July and August of the current financial year was approximately 19.4 per cent., a modest improvement over the second quarter. Most territories now appear to have reached stability or are showing slight improvements in their run-rate. As such, the Board believes that stability could be starting to return in the majority of the markets in which the Group operates, albeit at lower levels than during the previous financial year. There are also signs that confidence is rising in the world's key economies that the worst of the economic downturn has passed. For the remainder of the current financial year, the Board anticipates a modest increase in demand from recent levels together with some of the benefits arising from new Key Account contract wins. However, the Board recognises that, in the prevailing environment, its focus on costs and cash must remain a high priority. 4. BACKGROUND TO AND REASONS FOR THE RIGHTS ISSUE The Interim Results announced on 28 August 2009 and current trading highlight that Brammer continues to deliver a resilient trading performance and, despite the challenging economic conditions prevailing in most of the markets in which the Group operates, has generated strong underlying cash flows. Whilst this difficult trading environment may continue for some time and despite the slowdown in the level of business activity across its markets, Brammer remains one of the leading European suppliers in its chosen markets. The Company's strategy of growth, enhanced capabilities, synergies and cost control remains unchanged and has continued to yield clear benefits to the Group since its introduction in 2004 and throughout the economic slowdown. However, notwithstanding this encouraging relative performance and Brammer's leading position in a very fragmented market, the prevailing economic conditions are such that the Board continuously monitors the Group's progress and takes appropriate action to ensure it is well positioned to both meet these difficult trading conditions and take advantage of any growth opportunities that may arise in the future. The difficult trading conditions have impacted the Group's sales as customers' activity has declined and, in response to this, the Board has undertaken a series of affirmative actions to manage the Group's gearing and net debt position including: Inventory reduction Investment by the Group in improving its management systems over previous financial years helped the Group to achieve a significant reduction in inventory levels during the first six months of the 2009 financial year (by significantly more than the sales decline) whilst still allowing the Group to maintain or improve its service levels. Those investments include the introduction of: (i) the Master Data Management (MDM) system which provides a common unique reference for all of our inventory across Europe; (ii) MOMASSE, a Brammer proprietary inventory management system used to manage stock on a pan-European basis; and (iii) Brammer Inline, an intra-group stock trading system. During the first six months of the 2009 financial year, the Group's internal inventory reduction target (as quoted at constant exchange rates) was exceeded with inventory down by approximately GBP19 million, a reduction of approximately 22 per cent. from the level as at 31 December 2008. Net inventory at 30 June 2009 was GBP72 million (GBP103 million as at 31 December 2008). The Group continues to target further inventory reductions during the remainder of the current financial year. Headcount reductions and other reductions in labour costs As a result of the reduction in the Group's European sales levels (which coincided with the general economic slowdown in Europe), the Group introduced a two stage restructuring programme towards the end of 2008 with the aim of bringing overhead costs down to reflect the current needs of the business. The Group's workforce has been reduced by approximately 250 staff in 11 countries in total (representing approximately 10 per cent. of the total Group workforce). In some countries, such as Germany, the Group has managed to introduce different working practices to assist the cost reduction process (through government supported short time working) whereby most of the Group's German staff are now working approximately 80 per cent. of their normal working week, with concomitant staff cost savings. These, and other measures introduced by the Group, have helped reduce total costs (on an annualised basis) by approximately GBP15 million. In addition to taking these operational actions, the Board has also given careful consideration to the Group's overall balance sheet strength and the levels of its financial gearing in light of the prevailing market conditions. At the present time, the Group has fully committed facilities of EUR165 million which remain in place through to 28 February 2012. These facilities were entered into in 2006 and were most recently amended and restated on 7 November 2008. The terms of these facilities require that the proceeds of the Rights Issue be applied to reduce the Group's commitment in respect of the facilities to the extent that the net proceeds are not used within six months of their receipt by the Group to pay any outstanding deferred consideration payable by it or used by the Group to make acquisitions. Should no such deferred consideration be paid or no acquisitions be made by the Group within the six months following the Group's receipt of the net proceeds of the Rights Issue, the facilities will therefore reduce by approximately GBP35.3 million (taking the committed facilities to approximately EUR126.6 million applying the Closing Exchange Rate). Further information relating to such facilities is set out in paragraph 20 of Part 10 of the Prospectus. These bank facilities were utilised to the amount of GBP69.4 million as at 30 June 2009. As at 31 August 2009 the Group had outstanding borrowings or indebtedness in the nature of borrowing (net of cash) of approximately GBP88.3 million. The Group has traded within its current bank facilities and covenants. Whilst the Group is pleased to have secured its banking requirements until February 2012, the Directors believe that, given the uncertain economic outlook and the current difficulties faced by the global financial markets, it is in the best interests of the Company and its Shareholders for the Group to target a reduction in its core net debt/EBITDA ratio. Accordingly, the primary purpose of the Rights Issue is to provide flexibility in the event of a more serious downturn in economic conditions than the Company currently anticipates. This will help provide further downside protection for the Group as well as ensuring value preservation for Shareholders. Following the Rights Issue, the Group will be able to reinvest its strong underlying cash flow and, mindful of gearing levels, will be well positioned to take advantage of value-enhancing investment opportunities that currently exist within the Group's core focus area. These would include, but are not limited to: (a) additional investment in the Group's growth drivers of Key Accounts, Insites and product range extension; and (b) the consideration of appropriate, bolt on value-enhancing acquisitions to further consolidate the market, improve critical mass and increase Brammer's leadership position. 5. USE OF PROCEEDS The proceeds of the Rights Issue will be used to reduce the Group's financial indebtedness, in order to provide additional headroom over the Group's financial covenants and increase flexibility to reinvest the Group's underlying cash flow, and so provide additional resources to take advantage of future value enhancing investment opportunities. 6. PRINCIPAL TERMS OF THE RIGHTS ISSUE, ADMISSION TO TRADING AND DEALING ARRANGEMENTS The Company proposes to offer up to 53,142,794 Rights Issue Shares at the Rights Issue Price of 72 pence per Rights Issue Share by way of rights to all Qualifying Shareholders, payable in full on acceptance, on the following basis: 1 Rights Issue Share for every 1 Existing Ordinary Share held and registered in their name at 6.00 p.m. on the Record Date and so in proportion to any other number of Existing Ordinary Shares then held. Entitlements to Rights Issue Shares will be rounded down to the nearest whole number. The number of Rights Issue Shares equal to the aggregated fractions will be treated as if they had not been taken up in accordance with the provisions of paragraph 3 of Part 6 of the Prospectus. The Rights Issue Shares will, when issued and fully paid, rank pari passu in all respects with the then Existing Ordinary Shares, including the right to receive in full all dividends and other distributions declared, paid or made on the Existing Ordinary Shares. The Rights Issue Shares will not, however, be entitled to receive the interim dividend announced by the Company on 28 August 2009 (as part of its Interim Results announcement) which is to be paid on 5 November 2009 to the holders of Existing Ordinary Shares on the Company's register of members at the close of business on 9 October 2009. Holdings of Existing Ordinary Shares in certificated and uncertificated form will be treated as separate holdings for the purpose of calculating entitlements under the Rights Issue, as will holdings under different designations and in different accounts. If a Qualifying Shareholder does not take up the offer of Rights Issue Shares pursuant to the Rights Issue, his or her shareholding will be diluted by 50 per cent. as a result of the Rights Issue. The Rights Issue is conditional, amongst other things, on: (i) the passing of the Resolutions at the General Meeting; (ii) Admission becoming effective not later than 8.00 a.m. on 30 October 2009 (or such later time and/or date as RBS Hoare Govett and the Company may agree, being not later than 8.00 a.m. on 13 November 2009); and (iii) the Underwriting Agreement not being terminated prior to Admission and being otherwise unconditional in all respects (save for the condition relating to Admission). An application will be made to the UKLA for the Rights Issue Shares (nil and fully paid) to be admitted to the Official List and for the Rights Issue Shares (nil and fully paid) to be admitted to trading on the London Stock Exchange's main market for listed securities. It is expected that Admission will become effective and that dealings in the Rights Issue Shares fully paid will commence at 8.00 a.m. on 16 November 2009. No application is currently intended to be made for the Existing Ordinary Shares or the Rights Issue Shares to be admitted to listing or dealt with on any other exchange. Application will be made for Admission of the Rights Issue Shares and applications will be made for the Nil Paid Rights and the Fully Paid Rights to be admitted to CREST. It is expected that the Nil Paid Rights and the Fully Paid Rights will be enabled for settlement in, and admitted to, CREST, as soon as practicable after Admission of the Rights Issue Shares, nil paid, has become effective on 30 October 2009. It is expected that Provisional Allotment Letters in respect of the Rights Issue Shares will be posted to Qualifying non-CREST Shareholders following the General Meeting to be held on 29 October 2009 and that Admission will become effective and dealings in the Rights Issue Shares, nil paid, will commence on the London Stock Exchange at 8.00 a.m. on 30 October 2009. Qualifying CREST Shareholders are expected to receive a credit to their CREST stock accounts in respect of the Nil Paid Rights to which they are entitled as soon as reasonably practicable after 8.00 a.m. on 30 October 2009. Qualifying CREST Shareholders will not receive a Provisional Allotment Letter. If for any reason Provisional Allotment Letters are posted later than 29 October 2009, the times and dates referred to in the Prospectus will be revised and the times and dates so revised will be announced through an RIS. The latest time and date for acceptance and payment in full under the Rights Issue is expected to be 11.00 a.m. on 13 November 2009 and the results of the Rights Issue will be announced on an RIS. 7. STRUCTURE OF THE RIGHTS ISSUE The Rights Issue has been structured in a way that is expected to have the effect of realising distributable reserves approximately equal to the net proceeds of the Rights Issue less the par value of the Rights Issue Shares issued by the Company. The Company and RBS Hoare Govett have agreed to subscribe for ordinary shares in Newco. Equiniti will receive, into an account set up specifically for the purpose, monies from Qualifying Shareholders or renouncees taking up Rights Issue Shares, as agent for and on behalf of RBS Hoare Govett. Provided certain conditions are met, RBS Hoare Govett will use the proceeds to subscribe for redeemable preference shares in Newco. The Company will issue and allot the Rights Issue Shares to those persons entitled thereto in consideration for RBS Hoare Govett transferring its holdings of ordinary shares and redeemable preference shares in Newco to the Company. Accordingly, instead of receiving cash as consideration for the issue of the Rights Issue Shares, at the conclusion of the Rights Issue, the Company will own the entire issued share capital of Newco whose only asset will be its cash reserves, which will represent an amount equivalent to the net proceeds of the Rights Issue. The Company will be able to utilise this amount by redeeming the redeemable preference shares it holds in Newco, or by procuring that Newco loans or dividends this amount to the Company. This chain of events is governed by the Subscription and Transfer Deed and the Initial Subscription and Put and Call Option Deed, summaries of which are set out at paragraph 20 of Part 10 of the Prospectus. The Company may elect to implement the Rights Issue without using the structure described above if it deems it to be in the Company's interest to do so. 8. FINANCIAL EFFECTS OF THE RIGHTS ISSUE If the Rights Issue had taken place at 30 June 2009, being the date of the Group's latest balance sheet, the effect on the consolidated net assets of the Group would have been to increase the consolidated net assets of the Group by an amount equal to the net proceeds of the Rights Issue. An unaudited pro forma statement of the consolidated net assets of the Group illustrating the hypothetical effects of the Rights Issue on the Group's net assets as at 30 June 2009 is set out in Section A of Part 9 of the Prospectus. If the Rights Issue had taken place at 1 January 2008, being the beginning of the 2008 financial year, the effect on the Group's 2008 earnings would have been positive. However, the increased number of Ordinary Shares in issue following the Rights Issue would have had a negative effect on the Company's earnings per share for the same period. 9. DIVIDEND POLICY The Company's current dividend policy is to pay a dividend upon its Ordinary Shares twice annually at a level which the Board considers (at the time of declaration or recommendation of such a dividend as appropriate) to be prudent and reasonable having regard to the current and future working capital needs of the Group and the level of the Company's distributable reserves at such time. In respect of the financial year ended 31 December 2008, the Group announced an interim dividend on 29 August 2008 of 2.6 pence per Ordinary Share (being an increase of 24 per cent. from the interim dividend paid during the financial year to 31 December 2007) and the final dividend for the financial year ended 31 December 2008 was maintained at 5.1 pence per Ordinary Share (being the same as the previous year). In respect of the financial year ending 31 December 2009, the Group announced an interim dividend on 28 August 2009 of 2.6 pence per Existing Ordinary Share (being the same as in the previous year). The level of future dividend payments will take into account, amongst other things, the Group's underlying earnings, cash flows, capital investment plans, distributable reserves, debt repayments and the need to maintain an appropriate level of dividend cover. 10. GENERAL MEETING At the end of the Prospectus is set out a notice convening a General Meeting to be held at the offices of DLA Piper UK LLP at 3 Noble Street, London EC2V 7EE at 11.00 a.m. on 29 October 2009. At the General Meeting, Resolutions will be proposed to: (i) remove the current limit on the Company's ability to allot shares in the Articles of Association imposed by virtue of paragraph 42(2) of Schedule 2 to The Companies Act 2006 (Commencement No. 8, Transitional Provisions and Savings) Order 2008; (ii) grant the Directors authority, pursuant to section 551 of the 2006 Act, to exercise all the powers of the Company to allot shares in the Company or to grant rights to subscribe for, or to convert any security into, shares in the Company up to a maximum aggregate nominal amount of GBP17,714,264.60 in connection with the Rights Issue and generally; (iii) disapply the requirements of section 561(1) of the 2006 Act in respect of the allotment by the Directors of equity securities in connection with the Rights Issue; and (iv) disapply the requirements of section 561(1) of the 2006 Act in respect of any other allotment by the Directors of equity securities pursuant to sections 570 and 573 of the 2006 Act. DEFINITIONS +-----------------------+--+--------------------------------------------------------+ | "2006 Act" | | the Companies Act 2006 to the extent in force at the | | | | date of the Prospectus; | +-----------------------+--+--------------------------------------------------------+ | "Admission" | | admission of the Rights Issue Shares (nil and fully | | | | paid) to the Official List becoming effective in | | | | accordance with the Listing Rules and the admission of | | | | such shares (nil and fully paid) to trading on the | | | | London Stock Exchange's main market for listed | | | | securities being granted; | +-----------------------+--+--------------------------------------------------------+ | "Articles" or | | the articles of association of the Company; | | "Articles of | | | | Association" | | | +-----------------------+--+--------------------------------------------------------+ | "Board" or | | the directors of the Company as at the date of the | | "Directors" | | Prospectus; | +-----------------------+--+--------------------------------------------------------+ | "Business Day" | | a day (other than Saturday or Sunday or a bank | | | | holiday) on which banks are generally open for normal | | | | banking business in the City of London; | +-----------------------+--+--------------------------------------------------------+ | "Closing Exchange | | the closing spot rate of EUR1.0883:GBP1.00 on 2 October | | Rate" | | 2009, as published in the Financial Times on 5 October | | | | 2009; | +-----------------------+--+--------------------------------------------------------+ | "Closing Price" | | the closing middle market quotation of an Existing | | | | Ordinary Share as derived from the Daily Official List | | | | published by the London Stock Exchange; | +-----------------------+--+--------------------------------------------------------+ | "Company" or | | Brammer plc; | | "Brammer" | | | +-----------------------+--+--------------------------------------------------------+ | "CREST" | | the system for the paperless settlement of trades in | | | | securities and the holding of uncertificated | | | | securities in accordance with the CREST Regulations; | +-----------------------+--+--------------------------------------------------------+ | "CREST Regulations" | | the Uncertificated Securities Regulations 2001 (SI | | | | 2001 No. 3755), as amended from time to time; | +-----------------------+--+--------------------------------------------------------+ | "Disclosure and | | the disclosure and transparency rules of the FSA; | | Transparency Rules" | | | +-----------------------+--+--------------------------------------------------------+ | "Equiniti" | | a trading name of Equiniti Limited; | +-----------------------+--+--------------------------------------------------------+ | "Euro" or "EUR" | | the lawful currency of the European Union; | +-----------------------+--+--------------------------------------------------------+ | "Euroclear" | | Euroclear UK & Ireland Limited; | +-----------------------+--+--------------------------------------------------------+ | "Excluded | | Australia, Canada, Japan, New Zealand, the Republic of | | Jurisdictions" | | Ireland, the Republic of South Africa, the United | | | | States or any other country, territory or possession | | | | where the transmission of this announcement and/or the | | | | Prospectus into it may contravene local securities | | | | laws or regulations; | +-----------------------+--+--------------------------------------------------------+ | "Existing Ordinary | | the 53,142,794 Ordinary Shares in issue at the date of | | Shares" | | the Prospectus; | +-----------------------+--+--------------------------------------------------------+ | "EURIBOR" | | the percentage offered rate per annum determined by | | | | the Banking Federation of the European Union for the | | | | relevant period; | +-----------------------+--+--------------------------------------------------------+ | "General Meeting" or | | the general meeting of the Company to be held at 11:00 | | "GM" | | a.m. at the offices of DLA Piper UK LLP, 3 Noble | | | | Street, London EC2V 7EE on 29 October 2009, notice of | | | | which is set out in the Prospectus and including any | | | | adjournment thereof; | +-----------------------+--+--------------------------------------------------------+ | "Form of Proxy" | | the form of proxy accompanying the Prospectus for use | | | | in connection with the GM; | +-----------------------+--+--------------------------------------------------------+ | "FSA" | | the Financial Services Authority; | +-----------------------+--+--------------------------------------------------------+ | "FSMA" | | the Financial Services Market Act 2000, as amended | | | | from time to time; | +-----------------------+--+--------------------------------------------------------+ | "Fully Paid Rights" | | rights to acquire Rights Issue Shares, fully paid; | +-----------------------+--+--------------------------------------------------------+ | "Group" | | the Company and its subsidiaries; | +-----------------------+--+--------------------------------------------------------+ | "Initial Subscription | | the initial subscription and put and call option deed | | and Put and Call | | between (1) the Company, (2) RBS HG and (3) Newco | | Option Deed" | | dated 6 October 2009; | +-----------------------+--+--------------------------------------------------------+ | "Insite" | | a self-contained facility of the Company established | | | | within a customer's premises through which the Company | | | | provides support services for a minimum period of four | | | | hours a day, five days a week; | +-----------------------+--+--------------------------------------------------------+ | "Interim Results" | | the financial results of the Group for the six month | | | | period ended 30 June 2009; | +-----------------------+--+--------------------------------------------------------+ | "Key Accounts" | | an account which is serviced by the Group on a | | | | multi-location basis (and/or which is part of a | | | | European group) and which includes the Group's minimum | | | | contractual requirements (such as having a written | | | | contract in place and which has been approved by the | | | | Group's management); | +-----------------------+--+--------------------------------------------------------+ | "Listing Rules" | | the listing rules made by the UKLA for the purposes of | | | | Part VI of the FSMA; | +-----------------------+--+--------------------------------------------------------+ | "London Stock | | London Stock Exchange plc; | | Exchange" or "LSE" | | | +-----------------------+--+--------------------------------------------------------+ | "MRO Products" | | maintenance, repair and overhaul products such as | | | | bearings, mechanical power transmission equipment, | | | | fluid power and tools and the related maintenance of | | | | such products; | +-----------------------+--+--------------------------------------------------------+ | "Newco" | | Brammer Jersey No 2 Limited; | +-----------------------+--+--------------------------------------------------------+ | "Nil Paid Rights" | | Rights Issue Shares in nil paid form provisionally | | | | allotted to Qualifying Shareholders pursuant to the | | | | Rights Issue; | +-----------------------+--+--------------------------------------------------------+ | "Official List" | | the Official List of the UKLA; | +-----------------------+--+--------------------------------------------------------+ | "Ordinary Shares" | | Ordinary shares of 20 pence each in the capital of the | | | | Company; | +-----------------------+--+--------------------------------------------------------+ | "Overseas | | holders of Ordinary Shares with registered addresses | | Shareholders" | | outside the United Kingdom or who are citizens of, | | | | incorporated in, registered in or otherwise resident | | | | in, countries outside the United Kingdom; | +-----------------------+--+--------------------------------------------------------+ | "Prospectus Rules" | | the prospectus rules made by the UKLA for the purpose | | | | of Part VI of FSMA; | +-----------------------+--+--------------------------------------------------------+ | "Provisional | | the renounceable provisional allotment letter to be | | Allotment Letter" of | | despatched to Qualifying Shareholders pursuant to the | | "PAL" | | Rights Issue; | +-----------------------+--+--------------------------------------------------------+ | "Qualifying CREST | | Qualifying Shareholders whose Ordinary Shares on the | | Shareholders" | | register of members of the Company at 6.00 p.m. on the | | | | Record Date are in uncertificated form; | +-----------------------+--+--------------------------------------------------------+ | "Qualifying non-CREST | | Qualifying Shareholders whose Ordinary Shares on the | | Shareholders" | | register of members of the Company at 6.00 p.m. on the | | | | Record Date are in certificated form; | +-----------------------+--+--------------------------------------------------------+ | "Qualifying | | holders of Ordinary Shares on the register of members | | Shareholders" | | of the Company at the close of business on the Record | | | | Date other than certain Overseas Shareholders to whom | | | | the Rights Issue does not apply; | +-----------------------+--+--------------------------------------------------------+ | "RBS Hoare Govett" | | RBS Hoare Govett Limited; | +-----------------------+--+--------------------------------------------------------+ | "Record Date" | | the record date for the Rights Issue, being 6.00 p.m. | | | | on 27 October 2009; | +-----------------------+--+--------------------------------------------------------+ | "Regulatory | | a service provided by the LSE for the distribution to | | Information Service" | | the public company of announcements; | +-----------------------+--+--------------------------------------------------------+ | "Resolutions" | | The resolutions set out in the notice of GM at the end | | | | of the Prospectus; | +-----------------------+--+--------------------------------------------------------+ | "Rights Issue" | | the proposed issue by way of rights of Rights Issue | | | | Shares to Qualifying Shareholders; | +-----------------------+--+--------------------------------------------------------+ | "Rights Issue Price" | | 72 pence per Rights Issue Share; | +-----------------------+--+--------------------------------------------------------+ | "Rights Issue Shares" | | 53,142,794 new Ordinary Shares proposed to be allotted | | | | and issued by the Company pursuant to the Rights | | | | Issue; | +-----------------------+--+--------------------------------------------------------+ | "RIS" | | regulatory information service; | +-----------------------+--+--------------------------------------------------------+ | "Shareholder" | | A holder of Existing Ordinary Shares; | +-----------------------+--+--------------------------------------------------------+ | "stock account" | | an account within a member account in CREST to which a | | | | holding of a particular share or other security in | | | | CREST is credited; | +-----------------------+--+--------------------------------------------------------+ | "Subscription and | | the subscription and transfer deed between (1) the | | Transfer Deed" | | Company, (2) Newco and (3) RBS Hoare Govett dated 6 | | | | October 2009; | +-----------------------+--+--------------------------------------------------------+ | "UK Listing | | the FSA acting in its capacity as the competent | | Authority" or "UKLA" | | authority for the purposes of Part VI of the FSMA; | +-----------------------+--+--------------------------------------------------------+ | "UK" or "United | | the United Kingdom of Great Britain and Northern | | Kingdom" | | Ireland, its territories and dependencies; | +-----------------------+--+--------------------------------------------------------+ | "US" or "United | | the United States of America, its territories and | | States" | | possessions, any state of the United States and the | | | | District of Columbia; and | +-----------------------+--+--------------------------------------------------------+ | "Underwriting | | the agreement dated 6 October 2009 between the Company | | Agreement" | | and RBS Hoare Govett. | +-----------------------+--+--------------------------------------------------------+ This information is provided by RNS The company news service from the London Stock Exchange END IOECKAKDPBDKDKK
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