Acquisition

    RNS Number : 2489V
  Debts.co.uk PLC
  27 May 2008
   

    For release at 07.00 27 May 2008


    Debts.co.uk plc
    ("Debts.co.uk" or "the Company")

    Acquisition, Board Changes and Change of Name

    Highlights

    *     Acquisition of Relax Finance Limited and associated companies, a rapidly growing consumer loans and mortgages broker, for
consideration of £3 million
    *     Significant broadening of the Group's ability to deliver solutions to consumers with a range of financial requirements and/or
personal circumstances 
    *     Expansion of Board level skills
    *     Proposed renaming of the Company to "Relax Group plc" 


    Acquisition of Relax Finance Limited and Associated Companies

    The Board of Debts.co.uk plc, (DETS.L), a leading provider of a range of consumer debt related solutions to over-indebted individuals
and corporate insolvency services, are pleased to announce that the Company has entered into and completed an agreement (the "Acquisition
Agreement") for the acquisition of the entire issued share capital of Relax Finance Limited and two further agreements for the acquisition
of the entire issued share capital of each of Relax Mortgages Limited and Relax Finance (Chester) Limited (all such entities being,
together, "Relax") (the "Acquisition").

    The agreed consideration for the Acquisition was £3 million, which was satisfied on completion. The consideration comprises as £1.2
million in cash, £1.5 million by the issue of 3,333,333 new ordinary shares in the Company (the "Consideration Shares") to the vendors and
£300,000 in the form of unsecured loan notes which bear interest on the amount outstanding at the Barclays Bank base rate, redeemable in 20
equal monthly instalments of £15,000 each, beginning the month after completion.

    An application has been made for the 3,333,333 Consideration Shares in the Company to be admitted to trading on the AIM market of the
London Stock Exchange. The 3,333,333 Consideration Shares will rank pari passu in all respects with the existing issued ordinary share
capital of the Company. Following the admission of the 3,333,333 Consideration Shares, the total number of ordinary shares in issue and
therefore the total number of voting rights will be 30,493,255. The recipients of the Consideration Shares have agreed not to sell or
otherwise dispose of those shares until the first anniversary of Completion (save for in certain limited customary circumstances).

    Board Changes

    Ian Guy and Carl Kroger have joined the board of the Company from completion of the Acquisition as Chief Operating Officer and Sales and
Marketing Director, respectively, on similar terms to the existing Chief Executive and Managing Director of the Company.

    Ian (49) has been Chief Executive officer of Relax since it was founded. He has had a successful career within the financial services
industry, including Bright Finance Ltd as a Director and Black Horse Personal Finance Limited as their Regional Director.  

    Ian spent 16 years at Black Horse Personal Finance Limited (formerly Chartered Trust & Savings Limited before it was acquired by Lloyds
TSB) working within the personal finance sector.  During his time there he was responsible for 18 branches as well as credit and risk
related matters. In 1999, he instigated a successful move for Chartered Trust into the broker referral industry. In 2001, when Lloyds TSB
Asset Finance Limited acquired Chartered Trust, Ian became one of the new six regional directors within Black Horse Personal Finance
Limited. In 2003, Ian took up a role within Bright Finance Limited as their Director of Lending.  On his departure in 2005, Ian founded
Relax Finance Limited. Ian was elected to the Financial Industry Standards Associated (FISA) board in 2008.  

    Carl (33) has been Director of Partnerships of Relax since it was founded. Prior to Relax he was regional manager at Firstplus Financial
Group plc. 

    Carl started his career within Lloyds TSB Bank plc and in 1996 was project manager responsible for the development and implementation of
PC Banking as well as being involved in the development and implementation of large scale call centres within the UK. In 2001, Carl joined
Citifinancial Limited as regional sales manager in the south west region. In 2003, Carl joined Firstplus Financial Group plc as a regional
manager where he was responsible for their relationships with the majority of the UK's largest finance brokers. In 2005, he and Ian founded
Relax Finance Limited.  

    Barry Krite, Managing Director of the Company since our admission on AIM in May 2006 and one of the founders of the business over 10
years ago, has retired and stepped down from the board with effect from completion of the Acquisition. The Board would like to thank Barry
for his valuable contribution in creating a successful business and wish him well in his retirement.  

    Rationale for enlarged Group

    Debts.co.uk is a leading provider of a range of consumer debt related solutions to over-indebted individuals. Debts principally operates
in the consumer market, attracting individuals seeking suitable solutions to their indebtedness.  
    Relax is a respected and rapidly growing consumer loan and mortgage broker. Operating in a highly competitive market place, Relax has
demonstrated an ability over a short period of time to become a leading broker and a quality provider in the industry. Their stated aim is
the delivery of hassle free solutions for consumers.   
    Combining Debts.co.uk and Relax will enable the enlarged Group to provide a much wider range of advice and solutions to consumers and
enable the Group to expand beyond its core market of the over-indebted individual.  Importantly, it also allows the provision of products
over a greater period of time to individuals; this is particularly important as the circumstances of consumers for debt management and IVAs
can change during the debt management programme or IVA which can mean that refinancing becomes a viable and desirable option.  
    Founded by Ian Guy and Carl Kroger along with three former managers of Bright Finance Limited,  Adrian Shinn, Andrew Fisher and Richard
Burton, Relax started trading in August 2005.  The majority of the Relax business comprises the brokerage of second charge financial
products to individuals.  Additional revenues are generated in the first charge market and by broking of associated insurances.  In the
first eight months of operation to 30 April 2006, Relax generated unaudited profits before taxation of £100,000 on turnover of £994,000.
This has grown to an unaudited profit before taxation of £426,000 on turnover of £7,509,000 in the year to 30 April 2008.  As at 30 April
2008 the Relax companies had net assets of £125,000 and employed 106 staff at their offices in Doncaster. 
    The strong level of growth achieved by Relax is built on developing close relationships with known national secured and unsecured
lenders as well as providers of mortgage and insurance products. Relax is a top ten broker with Firstplus Financial Group, Nemo Personal
Finance and Paragon Personal Finance.  This has been underpinned by the ability of Relax to generate prime leads which then correspond with
a high conversion rate.

    The current trading performance of Relax continues to be strong. Although there are rapidly changing credit conditions, a key strength
of Relax is the ability to react to market conditions quickly and efficiently. The current demand for help from consumers is as high as
ever, and the credit crunch is increasing this demand. The Relax systems and management are sufficiently mobile to ensure these consumers
are matched to the best solution available in the market. 

    More consumers than ever are looking for financial solutions and Relax's partnerships with secured and unsecured lenders and mortgage
lenders allow the Group to deal with any further lending solution requirements.  The options of debt management programmes, IVAs or
Protected Trust Deeds are seen as the completion of a portfolio to help a greater percentage of consumers.

    The enlarged Group's strategy will be to take the best elements of both Relax and Debts.co.uk to offer a comprehensive financial
solution to consumers, whatever their financial requirements or personal circumstances are, delivered by the Group's 250 staff.  By
broadening both the product offering and the potential customer base, the Acquisition further supports the Group's stated strategy of
developing a diversified financial services group. The services provided by Relax will represent over 40 percent of revenue of the enlarged
Group.   

    In addition to the financial benefits, the Acquisition brings with it a strong management team, including all of the founder members of
Relax Finance Limited. Both Ian Guy and Carl Kroger will be joining the Board of Debts.co.uk plc. 

    Commenting on the acquisition, Paul Carter, Chief Executive Officer of Debts.co.uk said "Relax is a company we have admired for some
time and who we had already formed a strategic alliance.  The potential opportunities for complementary products are compelling. We believe
that this acquisition represents a clear logical step in the development of the Group and will provide an excellent opportunity for our
continued success and further profitable growth.  We are pleased that with the Acquisition we welcome both Ian and Carl to the Board; the
calibre and experience of these two individuals will be a valuable addition. "  

    Ian Guy, Chief Executive of Relax commented "This is a significant move for Relax that allows us to improve our service offering to our
consumers, importantly allowing us to recognise and deal with the needs of consumers with differing financial requirements or personal
circumstances.  Combining with Debts also gives us greater market presence and an opportunity to expand the business further."  

    Change of name 

    The Group has predominantly grown through organic growth and by way of acquisition within the businesses of personal insolvency under
the name of Debts.co.uk. This has served the Group well in recent years.  The acquisition of Relax significantly broadens the service range
that the Group can offer to include a range of solutions to consumers with differing financial requirements or personal circumstances.  

    It is therefore intended that the Company will change its name to "Relax Group plc" and a proposal in this regard will be put to
shareholders at an extraordinary general meeting in due course.  The enlarged Group will continue to operate its existing consumer facing
brands.

    Ends


    Enquiries

    Paul Carter, Chief Executive Officer            0870 990 9714
    Debts.co.uk plc                    

    Chris Steele                                          0207 034 4759
    Adventis Financial PR                              07979 604 687

    Mark Percy / Parimal Kumar                     0207 107 8000
    Seymour Pierce Limited


    Ian Russell Guy, aged 49, is or has been a director or partner at any time in the previous five years as follows:

    
 Current:                                                              Past:
 Relax Finance Limited                                Bright Finance Limited
 Relax Mortgages Limited                 The Underwriting Department Limited
 Blue Canary Marketing Limited             Relax Finance (Sheffield) Limited
 Relax Finance (South Wales) Limited                                        
 Blue Canary (East Anglia) Limited                                          
 Relax Finance (Chester) Limited                                            

    On completion of the Acquisition, he will have an interest in 1,700,000 ordinary shares in the Company.

    There are no other matters required to be reported pursuant to Schedule Two (g) of the AIM Rules for Companies. 

    Carl Vittorio Kroger (previously Alonzi), aged 33, is or has been a director or partner at any time in the previous five years as
follows:

    
 Current:                                                            Past:
 Relax Finance Limited                   Relax Finance (Sheffield) Limited
 Relax Mortgages Limited                                                  
 Blue Canary Marketing Limited                                            
 Relax Finance (South Wales) Limited                                      

    On completion of the Acquisition, he will have an interest in 633,334 ordinary shares in the Company.

    There are no other matters required to be reported pursuant to Schedule Two (g) of the AIM Rules for Companies.

This information is provided by RNS
The company news service from the London Stock Exchange
 
  END 
 
ACQGGGDUIBDGGIR