Issue of Equity

RNS Number:9480M
Xpertise Group PLC
30 June 2003

                                                                    30 June 2003



                               XPERTISE GROUP PLC

                           ("Xpertise" or "Company")



    Placing of 172,000,000 new Ordinary Shares at a price of 0.75p per share



          Proposed issue of #200,000 Convertible Unsecured Loan Notes



                    Arranged by Nominated Adviser and Broker

                         Brewin Dolphin Securities Ltd



*            Fundraising to raise #1.49 million, before expenses, to provide
working capital for the Company and to strengthen its balance sheet:

      * Placing of 172 million ordinary shares at 0.75p to raise #1.29 million
        before expenses
      * The issue of #200,000 convertible unsecured loan notes
      * Conversion of Lynx loan of #300,000 into 20 million ordinary shares

*           Integration of Power Education acquired in January 2003 completed on
            schedule

*           Success in first half in:

      * Developing specific larger corporate accounts
      * Winning new business from established competitors
      * Reducing overheads

*           Xpertise in good position to increase market share through:

      * Brand reputation
      * Broad portfolio of courses
      * Nationwide coverage
      * Skilled workforce

*            IT training market remains difficult





For further enquires:

Bob Bradley (Chief Executive - Xpertise Group PLC)    01865 310 150

Ian Johnson (Finance Director - Xpertise Group PLC)   0161 929 2202

Alex Clarkson (Brewin Dolphin Securities Ltd)             0161 214 5547

Brian Coleman Smith / Amanda Sheehy (Beattie Financial)   020 7398 3300





XPERTISE GROUP PLC

Issue of securities



The Company is pleased to announce a fundraising of #1.49 million, before
expenses.  A circular is being posted to shareholders today containing details
of the Proposals, which are conditional on Shareholder approval, and to convene
an extraordinary general meeting of the Company at which Resolutions to enact
the Proposals will be proposed.  Set out below is the full text of the
Chairman's letter from the circular.  All terms used in this announcement are as
defined in the circular.



"Introduction



Your Board is pleased to announce a fundraising of #1,490,000 to provide working
capital for the Company and to strengthen its balance sheet. The fundraising
comprises the placing of 172,000,000 new Ordinary Shares at a placing price of
0.75p per share to raise #1,290,000 before expenses, the issue of the Loan Notes
to raise #200,000 and the settlement of the Lynx Loan by the issue of 20,000,000
new Ordinary Shares to Lynx.



The Proposals are conditional upon certain approvals from Shareholders being
obtained as set out in resolutions numbered 1 and 2 contained in the notice
convening the Extraordinary General Meeting of the Company set out at the end of
this document. Shareholders are also invited to renew the authority of the
Directors to allot new shares by passing the resolutions numbered 3 and 4 of the
notice of EGM. The purpose of this document is to provide you with information
about the Proposals and explain why your Board considers them to be in the best
interests of the Company and its Shareholders as a whole.



Background to and reasons for the Proposals



On 29 May 2003 the Company issued a trading update in which it stated that
market conditions remain difficult and that it expected sales for the year
ending 31 December 2003 to be below expectations; and that despite structural
cost reductions already implemented it expected the Group to incur an operating
loss before goodwill and exceptional items in the current financial year. The
Company further stated that the combination of the trading losses and the cash
impact of the cost reduction measures already implemented meant that it needed
to pursue a fundraising in order to provide adequate working capital and funding
for the business going forward.



Your Board is pleased to announce that the Proposals will provide working
capital for the Company and to strengthen its balance sheet.



On 2 January 2003, the Group completed the acquisition of the Power Education
business from Lynx. The integration of this business into the Group was
completed quickly and in line with the Board's expectations. Although
significant cost savings were achieved, the UK market for IT training remained
difficult in the first quarter of 2003. The Board therefore acted decisively to
reduce overhead costs further in April 2003.



In order to minimize both the costs and the time taken and to maximize the funds
applied to the Company's working capital, your Board has decided to expedite the
fundraising by way of the Placing rather than offering all Shareholders the
opportunity to acquire shares in an open offer or rights issue, which would take
more time.



Current Trading and Outlook



The UK market for IT training remains difficult and the Directors recognise that
Xpertise has undergone a significant integration and disruptive cost reduction
exercise over a short period of time. The Directors would like to thank its
employees, customers and suppliers for their support during those months.



The Board believes that it has now created a business with a smaller and more
appropriate overhead cost base and is in a good position to increase its market
share through its brand, broad portfolio of courses, nationwide coverage and
skilled workforce. A dedicated team of experienced sales people has already
enjoyed success in the first half of 2003 developing specific larger corporate
accounts and winning new business from established competitors. On completion of
these Proposals the Group will concentrate on achieving its sales targets.





Details of the Placing, the issue of the Loan Notes and the issue of the
Conversion Shares



The Company is proposing to raise #1.49 million, before expenses by way of the
Placing and the issue of the Loan Notes.



The Placing Price represents a discount of 33 per cent. to the closing
mid-market share price as at 27 June 2003 (the last practicable date prior to
the publishing of this document). The Placing Shares being issued will represent
41.06 per cent. of the Company's enlarged issued ordinary share capital
following completion of the Proposals.



The Directors have agreed to subscribe for, in aggregate, 17,333,328 new
Ordinary Shares in the Placing.



The key terms of the Loan Notes are set out below. The Loan Notes:



*                     have an aggregate nominal value of #200,000 and will be
issued at par value;

*                    do not carry any right to interest;

*                     are unsecured and are subordinated in right of payment to
any bank debt;

*                     may be converted into Ordinary Shares by the holder of the
Loan Notes on 14 days notice;

*                     may be repaid by the Company on 14 days notice unless the
holder of the Loan Notes exercises its right to convert in which case the Loan
Notes will be converted to Ordinary Shares;

*                     convert to Ordinary Shares at a conversion price of 0.75
pence per Ordinary Share;

*                     will be redeemed on the date which is 5 years after the
date of the issue if not previously purchased, redeemed or converted;

*                    are freely transferable by the holder; and

*                    will not be admitted to trading.



In order to support the refinancing of the Company, Lynx, a company associated
with Richard Last and Mark Hatton who are both directors of the Company, has
agreed that the obligation to pay the Lynx Loan can be transferred from Power
Education to the Company and then satisfied by the issue of the Conversion
Shares to Lynx. The effective issue price under these arrangements is 1.5 pence
per new Ordinary Share.



In addition Brewin Dolphin, the Company's nominated adviser and broker, has
agreed to receive part of its fee for services in arranging the Placing by the
issue of the Brewin Dolphin Shares at the Placing Price.



Admission, settlement and dealings



Application will be made to the London Stock Exchange plc for the New Ordinary
Shares to be admitted to trading on AIM. It is expected that, conditional upon
shareholders passing the Resolutions, dealings in the New Ordinary Shares will
commence on 24 July 2003. The New Ordinary Shares will be issued as fully paid
and will rank pari passu with the existing Ordinary Shares.



The Directors have arranged with CRESTCo Limited for the New Ordinary Shares to
be admitted to CREST with effect from Admission. Accordingly settlement of
transactions in the New Ordinary Shares following Admission may take place
within the CREST system, if the relevant Shareholders so wish. CREST is a
paperless settlement procedure, which allows securities to be evidenced without
a certificate and transferred otherwise than by written instrument. The Articles
permit the holding and transfer of Ordinary Shares under the CREST system.



CREST is a voluntary system and holders of New Ordinary Shares who wish to
receive and retain certificates in respect of New Ordinary Shares will be able
to do so.



Taxation



On 13 June 2003, the Company received provisional approval from the Inland
Revenue for the purposes of investments by Venture Capital Trusts and pursuant
to the Enterprise Investment Scheme and Corporate Venturing Scheme legislation
in respect of the Placing Shares.



Extraordinary General Meeting



Notice of the EGM to be held at 11.00am on 23 July 2003 at the offices of Taylor
Wessing, Carmelite, 50 Victoria Embankment, Blackfriars, London EC4Y 0DX at
which the Resolutions will be proposed is set out at the end of this document.



Resolutions numbered 1 and 2 authorise the Directors to issue the New Ordinary
Shares to effect the Proposals.  Shareholders should be in no doubt that if
these resolutions are not passed and the Proposals are not completed, the
Directors, in the absence of alternative proposals, would have to consider
whether the Group is in a position to continue trading.



Your Directors believe that it would be prudent to renew the shareholder
authorities to allot new shares in order to avoid the cost and expense of going
back to shareholders to renew these authorities before the next Annual General
Meeting of the Company.  The authorities are set out in resolutions numbered 3
and 4 of the Notice of EGM.  The authorities are in accordance with existing
guidelines.



Action to be taken



A Form of Proxy for use at the EGM is enclosed. Whether or not you intend to be
present at the meeting, you are requested to complete the Form of Proxy in
accordance with the instructions therein and return it to the Company's
registrars, Computershare Services PLC, PO Box 1075, The Pavilions, Bridgwater
Road, Bristol, BS99 3FA as soon as possible and in any event not later than
11.00am on 21 July 2003.  The completion and return of the Form of Proxy will
not preclude you from attending the EGM and voting in person if you so wish.



Recommendation and voting intentions



Your Board, who have been so advised by Brewin Dolphin, considers the Proposals
to be in the best interests of the Company and its Shareholders as a whole.
Accordingly, the Directors unanimously recommend that the Shareholders vote in
favour of the Resolutions as they have irrevocably undertaken to do so in
respect of their own holdings, which in aggregate amounts to 13,158,759 Ordinary
Shares representing approximately 6.01% per cent. of the issued ordinary share
capital of the Company. In addition Lynx has also irrevocably undertaken to vote
in favour of the Resolutions in respect of its own shareholding which amounts to
65,828,571 Ordinary Shares, representing 30.07 per cent. of the issued ordinary
share capital.



As Lynx is a related party of the Company, the arrangement to convert the Lynx
Loan into new Ordinary Shares represents a related party transaction within the
meaning of the AIM  Rules.  Directors, other than Richard Last and Mark Hatton
who are associated with Lynx, having consulted with Brewin Dolphin, consider
that the terms of the arrangement with Lynx are fair and reasonable insofar as
the Shareholders are concerned."








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            The company news service from the London Stock Exchange
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