Placing and Open Offer

RNS Number:8552O
Impax Group PLC
20 August 2003


PRESS RELEASE                                                     20 August 2003
For immediate release


                                Impax Group plc

          Placing and Open Offer of Convertible Unsecured Loan Stock,
        Capital Re-organisation and amendment of Articles of Association


 -   Placing and Open Offer of #2,534,697 nominal of 5.5 per cent. Convertible
     Unsecured Loan Stock 2009 to raise #2.31 million net of expenses

 -   Rising equity markets have improved revenues from asset management and The
     Recycling Fund has added a new stream of income from 1 July 2003

 -   Corporate finance income in the three months ended 30 June 2003 was the
     highest since the quarter ended September 2001


Commenting, Stuart Bickerstaff, Non-Executive Chairman of Impax, said:

"Following a difficult period for the financial services sector, we believe that
the fundamentals for expansion and development of financial services in the
environmental infrastructure and technology sector are in place. Rising equity
markets since the end of March 2003 have improved our asset management revenues
and the launch of The Recycling Fund will have a significant positive effect on
the final quarter. Corporate finance fee income has also grown and quarterly
income for the period to 30 June 2003 was the highest since 2001. The fund
raising will provide the Group with the financial base to take advantage of the
opportunities in the sector."


Impax Group plc                                                  020 7434 1122
Nigel Taunt
Melville Haggard

Marshall Securities Limited (Nominated adviser)                  020 7490 3788
Robert Luetchford / Ian Tibbs


20 August 2003

                                Impax Group plc

  Placing and Open Offer, Capital Re-organisation and amendment of Articles of
                                  Association


Impax Group plc ("Impax" or "the Company") announces that it proposes to raise
approximately #2.31 million, net of expenses, through a placing of #2.53 million
nominal of 5.5 per cent. Convertible Unsecured Loan Stock 2009 ("the Stock") at
par. The Placing, which is subject to the right of Eligible Shareholders to
apply for Stock pursuant to the Open Offer, is to provide funds for the
restructuring of the Group's finances, the development of the Group and for
working capital.

The Open Offer will be made by Marshall Securities Limited as agent of the
Company on the basis of #1 nominal of Stock for every 14 Ordinary Shares held at
the close of business on 13 August 2003. Payment under the Open Offer is due by
3.00 p.m. on 12 September 2003.

The Stock will be issued at par and will carry a coupon of 5.5 per cent. per
annum, payable by equal half-yearly instalments. The Stock will be listed and
will be convertible at the rate of 22 Ordinary Shares for each #1 nominal of
Stock, an effective price of approximately 4.55p per Ordinary Share. On a
winding up the Stock will be entitled to repayment before any distribution is
made to holders of Ordinary Shares. The Stock will be unsecured and will be
repayable on 31 March 2009, if not previously redeemed or purchased or
converted. In the absence of any further issues of Ordinary Shares, the Ordinary
Shares which would fall to be issued on full conversion of the Stock would
represent 61.1 per cent. of the enlarged Ordinary Share capital.

The Company is also proposing to effect a Capital Re-organisation in order to
accommodate conversion of the Stock.

A circular is being despatched to Shareholders today convening an Extraordinary
General Meeting to be held at the offices of Marshall Securities Limited at
Crusader House, 145 - 157 St John Street, London EC1V 4RE at 11.00 a.m. on 15
September 2003. At the Extraordinary General Meeting a resolution will be
proposed to enable the Placing and Open Offer to proceed and to amend the
borrowing powers contained in the Company's Articles of Association. If the
resolution is not passed the Placing and Open Offer will not proceed and the
Company will need to secure forthwith an alternative source of funds in order to
continue trading. The Directors believe that any such funds, if available at
all, would be on terms which would be less attractive to Shareholders than the
Placing and Open Offer.

Background to the Placing and Open Offer

In June 2001 the Company, which had been involved in the oil business, acquired
Impax Capital Corporation Limited, an investment advisory and corporate finance
business specialising in the environmental infrastructure and technology ("EIT")
sector. The Board is convinced that the opportunities and industry drivers
identified at the time of the acquisition continue to exist.

In February 2002 the Board announced its intention to sell the Group's oil
assets in order to concentrate on development of opportunities in the EIT
sector. The sale of the Starks Field was completed on 30 May 2003 and the Board
is now preparing to sell the Nukern Field, the Group's remaining oil asset.

The business

Impax's specialised finance business is organised in two divisions: IAM, the
asset management division and ICC, the corporate finance division.

Impax Asset Management

IAM's original business of providing advice to managers of funds specialising in
the EIT sector has, since its acquisition by the Company, been expanded to
become a regulated asset management business with a similar focus. IAM manages
or advises both funds of listed securities and private equity funds.

In the private equity field IAM has a ten year contract with the International
Finance Corporation, the private sector lending arm of the World Bank, to manage
a US$25m fund to invest in solar electricity companies in India, Kenya and
Morocco. In addition, in July 2003 Impax announced the launch of The Recycling
Fund, established by WRAP (Waste & Resources Action Programme) and managed by
IAM. This #5.5 million equity fund is the first in the UK to focus specifically
on the recycling sector.

IAM also has contracts to act as investment adviser to two funds of listed
securities: the Alm Brand Invest #6 Fund, a Danish open-ended investment fund,
and ASN Milieufonds, a similar fund in the Netherlands.

IAM is the manager of Impax Environmental Markets plc ("IEM"), a closed-ended
fund listed on the Official List which was launched in February 2002. IEM
invests predominantly in quoted companies which provide, utilise, implement or
advise upon technology-based systems, products or services in the EIT sector.

IAM is responsible for the Impax ET50 Index, an index of the 50 largest
environmental technology stocks.

The division employs three professionals (four from September 2003) led by Ian
Simm who worked for McKinsey & Co in the Netherlands prior to joining Impax in
1996.

IAM's income is derived from investment management fees, advisory fees and
performance bonuses.

Impax Capital Corporation

ICC provides corporate finance advisory services to clients in the EIT sector.
Its clients include industrial and financial companies and government agencies.
Since becoming part of the Group ICC has focussed primarily on UK corporate
clients and has established a growing reputation and expertise in the Renewables
Obligations legislation.

ICC's multi-disciplinary team of seven professionals has experience across the
EIT sector, including debt and equity capital markets, mergers and acquisitions,
project finance, civil engineering and government. Melville Haggard is Chairman
of ICC. He worked for Lloyds Bank International for nine years and was Head of
Special Finance at Bank Tokyo-Mitsubishi in London for ten years before joining
Impax in 1999. Nigel Taunt has recently been appointed as Managing Director of
ICC. A Chartered Accountant, he has considerable experience of the waste
management sector, having spent six years as Finance Director of Kelda's
diversified businesses which included Yorkshire Environmental.

ICC's income includes fees for assignments on both a time and a success basis
together with retainers. In certain cases ICC also receives an equity interest
in the entity being created or funded.

Interim results

Impax's unaudited results for the six months ended 31 March 2003, which were
announced on 30 June 2003, showed revenues of #429,000, a 19.5 per cent.
increase on the comparable period last year. Both divisions contributed
increased revenues.

The sale of the Starks Field was completed after the end of the period, marking
the end of the Group's involvement in operational oil field activities. The net
consideration was US$1,334,000 (#848,000) of which US$1,195,000 (#759,000) was
received by way of loan notes. The Group is looking to dispose of the Nukern
Field, its remaining oil asset. The Board has concluded that any disposal
arrangements are likely to include deferred terms based on long-term production.
Accordingly, the Board reviewed the book value of the Nukern Field and adjusted
its carrying value to US$4,000,000 (#2,541,000). Before the exceptional cost of
#1,712,000 resulting from this adjustment the Group incurred an operating loss
for the period of #546,000 after charging goodwill of #141,000. The loss before
taxation for the period was #2,281,000.

At 31 March 2003 the Group's unaudited net assets were #4,828,000.

Reasons for the Placing and Open Offer

The Board believes that significant progress has been made in the last two years
towards creating a specialist financial business focussed on the EIT sector. IAM
has been authorised by the Financial Services Authority to carry out investment
management business and has supported the launch of IEM and The Recycling Fund.
ICC has broadened its already extensive list of clients and contacts in the EIT
sector, with particular emphasis on corporate clients based in the UK.

The majority of this period has, however, been notable for falling stock
markets, particularly in the technology sector, which have created an
unfavourable backdrop for investment management and corporate finance
businesses. Reduced net asset values in the funds have made it difficult to
promote investor interest and have had a direct adverse effect on IAM's
revenues. Several corporate projects from which ICC could have expected to
derive significant income have been delayed, cancelled or reduced in scale.

The disposal of the Group's oil assets has proved more time consuming than
anticipated and has tied up financial and personnel resources which were
intended to be focussed on development of opportunities in the EIT sector. In
planning the disposal of the remaining oil asset, the Nukern Field, the Board
has decided that the interests of the Group will be best served by adopting a
flexible approach, possibly involving a production based or partnership
arrangement. In the meantime, the Group will continue to incur certain expenses
connected with maintenance of the field and with the disposal process.

The Group has made an encouraging start to the second half of the financial
year. Markets and investment management revenues have partially recovered, the
Recycling Fund has been launched and ICC has shown strong revenue growth. Over
the coming years the Group expects to receive modest but steady inflows of cash
under the terms of the disposal of the Starks Field which was completed in May
2003.

Despite the difficult external conditions Impax has continued to invest in the
development of IAM and ICC in order to maintain and improve its market position.
To fund this investment short term loans were arranged with PMIB Limited, the
parent company of Marshall Securities Limited, the Company's nominated adviser.
The Board intended these loans to be repaid from the disposal proceeds of the
oil assets. However, the structure of the disposal of the Starks Field and the
Board's strategy regarding the disposal of the Nukern Field mean that this is
not a realistic option in the short term. The Board believes that a more formal
and permanent funding structure for the Group should be established and that
Shareholders should have the opportunity to maintain or, potentially, increase
their participation in the Company. The Placing and Open Offer is designed to
accomplish these objectives.

Details of the Placing and Open Offer

Marshall Securities Limited, as agent for the Company, has conditionally placed
#2,534,697 nominal of 5.5 per cent. Convertible Unsecured Loan Stock 2009 at par
with investors, subject to the right of Eligible Shareholders to apply for such
Stock pursuant to the Open Offer.

Eligible Shareholders are being invited to apply under the Open Offer for the
Stock at par (payable in full on application and free of all expenses) on the
following basis:

       #1 nominal of 5.5 per cent. Convertible Unsecured Loan Stock 2009
                     for every 14 Existing Ordinary Shares

held at the Record Date and so in proportion for any other number of Existing
Ordinary Shares then held. Fractions of #1 nominal of Stock will not be offered
to Eligible Shareholders but will be aggregated and placed pursuant to the
Placing for the benefit of the Company. Eligible Shareholders may apply for any
amount of Stock (in multiples of #1) up to their maximum entitlement as set out
in their Application Form and valid applications up to such amount will be
satisfied in full. Eligible Shareholders may also apply for Stock in excess of
their pro rata entitlements, although if the aggregate amount of Stock applied
for under the Open Offer (including excess applications) exceeds #1,645,443,
excess applications will be scaled back pro rata to the pro rata entitlements of
the excess applicants.

Stuart Bickerstaff, Melville Haggard, Ian Simm and Neville Brown have agreed to
subscribe for #64,195 nominal of Stock in aggregate pursuant to the Open Offer.
Mallin AS, of which Geirr Frostmann is the investment manager, has undertaken to
apply for its entitlement of #84,059 nominal of Stock in the Open Offer. Nigel
Taunt has agreed to subscribe for #10,000 nominal of Stock pursuant to the
Placing. Certain other shareholders have undertaken either to apply for or not
to apply for their entitlements so that in aggregate #889,254 nominal of Stock
has been placed firm.

The Placing and Open Offer are conditional on the Placing and Open Offer
Agreement becoming unconditional in all respects and not having been terminated
and on Admission occurring on 16 September 2003 or by such later date, not later
than 30 September 2003, as the Company and Marshall Securities Limited may
agree.

It is expected that trading in the Stock on AIM will commence on 16 September
2003.

Particulars of the Stock

The Stock will be constituted by a Trust Deed. Interest will be payable on 31
March and 30 September of each year, with the first payment being made on 31
March 2004 in respect of the period from Admission to that date.

The Stock will be convertible in whole or in part into New Ordinary Shares at
the option of the holder during the months of February and July in any of the
years 2004, 2005 and 2006 at the rate of 22 New Ordinary Shares for each #1
nominal of the Stock. This is equivalent to a conversion price of approximately
4.55p per New Ordinary Share. The conversion rate is subject to adjustment in
certain circumstances.

The Ordinary Shares issued upon conversion of the Stock will entitle the holder
to receive (a) in the case of Ordinary Shares allotted on a February conversion
date, all dividends and all other distributions declared, paid or made on the
Ordinary Shares in or in respect of the financial year of the Company in which
the relevant February conversion date falls, other than dividends in respect of
any earlier financial period and shall rank pari passu in all other respects and
form one class with the Ordinary Shares in issue on the relevant February
conversion date and (b) in the case of Ordinary Shares allotted on a July
conversion date, all dividends and all other distributions declared, paid or
made on the Ordinary Shares by reference to record dates falling after the
relevant July conversion date and shall rank pari passu in all other respects
and form one class with the Ordinary Shares in issue on the relevant July
conversion date.

Interest on Stock converted will cease to accrue after the interest payment date
last preceding the relevant February or, as the case may be, July conversion
date.

Subject to certain limitations, the Company may purchase Stock in the market or
by private treaty.

If not previously converted or redeemed or purchased by the Company, the Stock
will be repaid at par with accrued interest on 31 March 2009.

Current trading and prospects

The rising equity markets since the end of March 2003 have improved revenues for
the Group's asset management business for the third quarter and the launch of
The Recycling Fund will have a significant positive effect on the final quarter.
Corporate finance fee income in the third quarter was the highest since the
quarter ended September 2001. The Directors believe that the fundamentals for
expansion and development of financial services in the EIT sector remain good.

Use of net proceeds of the Placing and Open Offer

The net proceeds of the Placing and Open Offer, which are estimated to amount to
approximately #2.31 million, will be used to repay indebtedness of #1.34
million, to develop the activities of Impax and to provide the Group with
additional working capital. The majority of such indebtedness constitutes sums
advanced to the Company by PMIB Limited, Marshall Securities Limited's parent
company.

Borrowings

Under its Articles of Association the Company's borrowing powers are limited to
an amount equal to three times its Adjusted Capital and Reserves (as defined in
the Articles of Association). The resolution to be put to the Extraordinary
General Meeting provides for the increase of the borrowing powers of the Company
to an amount equal to #1 million (or an amount equal to three times the
Company's Adjusted Capital and Reserves, if greater) and an amount equal to the
nominal amount of the Stock outstanding from time to time.

Capital Re-organisation

The effective issue price of each New Ordinary Share to be issued on conversion
of Stock is approximately 4.55p which is below the 25p nominal value of an
Ordinary Share. Ordinary Shares may not be issued below their nominal value.
Accordingly, it is proposed to sub-divide each issued existing Ordinary Share of
25p into one new Ordinary Share of 1p and one Deferred Share of 24p. The rights
attaching to the Deferred Shares will be minimal so that the equity value of the
Company will effectively be attributed entirely to the new Ordinary Shares.

It is also proposed to sub-divide each of the 15,374,236 unissued existing
Ordinary Shares into 25 new Ordinary Shares of 1p and immediately to cancel
271,500,000 of such new Ordinary Shares thereby reducing the authorised capital
of the Company to #10 million. This will leave an authorised but unissued share
capital of #1,128,559 which is sufficient to accommodate conversion of the Stock
and exercise of any options which may be granted pursuant to the Share Option
Schemes and which is sufficient but not excessive having regard to the customary
level of authority granted to directors to allot shares for other purposes.

In due course, which is likely to be following the disposal of the Nukern Field,
the Directors intend to effect a reconstruction of the Company's share capital
in order to establish distributable reserves to enable the Company to pay
dividends. It is intended that the Deferred Shares will be cancelled as part of
any such capital reconstruction.

Extraordinary General Meeting

An Extraordinary General Meeting has been convened for 11.00 a.m. on 15
September 2003. At the meeting a special resolution will be proposed to effect
the Capital Re-organisation, to authorise the Directors (in accordance with
section 80 of the Act) to allot the Stock pursuant to the Placing and Open Offer
and to disapply the pre-emption provisions contained in section 89(1) of the Act
in connection with such allotment of the Stock and to increase the borrowing
powers of the Company.


EXPECTED TIMETABLE

Record date                               close of business on    13 August 2003 

Last time and date for splitting 
Application Forms (bona fide market 
claims only where shareholders 
have sold part of their shareholding        3.00 p.m.          10 September 2003 
prior to the ex entitlement date)                                                                

Last time and date for receipt              3.00 p.m.          12 September 2003
of Application Forms and payment 
in full                                      

Last time and date for receipt             11.00 a.m.          13 September 2003
of Forms of Proxy                           

Extraordinary General Meeting              11.00 a.m.          15 September 2003
of the Company                              

Dealings to commence in the Stock                              16 September 2003 

CREST Member Accounts credited                                 16 September 2003 

Stock certificates despatched                                  22 September 2003 
 

Further details of the Placing and Open Offer, including the procedures for
application and payment, are set out in the circular and in the Application Form
being sent to shareholders.

Marshall Securities Limited, which is regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for Impax Group plc in
connection with the Placing and Open Offer. Marshall Securities Limited is not
acting for, and will not be responsible to, any other person for providing the
protections afforded to clients of Marshall Securities Limited or for advising
any such person on the contents of this document or any transaction or
arrangement referred to herein.


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

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