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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Intechnology | LSE:ITO | London | Ordinary Share | GB0001388932 | ORD 1P |
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0.00 | 0.00% | 24.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:1018N InTechnology PLC 30 June 2000 INTECHNOLOGY PLC ACQUISITIONS OF VDATA LIMITED AND HOLF TECHNOLOGIES LIMITED (STORM) FOR #165 MILLION RIGHTS ISSUE AND PLACING TO RAISE #33 MILLION - Acquisitions of Vdata and Storm for #165 million creating a leading UK advanced data technology services provider - Proposed 1 for 2 rights issue of up to 6,000,000 New Ordinary Shares at 150p per share, raising up to #9 million - Proposed placing of up to 16,447,096 New Ordinary Shares at 150p per share, raising up to #24.7 million - Significant commercial synergies through integration of VData and Storm InTechnology plc ("the Company"), floated on AIM in March 2000, announces that it has entered into conditional agreements to purchase HOLF Technologies Limited (trading as "Storm") and VData Limited ("VData"). The acquisitions deliver on InTechnology's strategy of identifying and acquiring businesses which exploit the increasing opportunities that the Internet presents, primarily within the B2B sector. VData's activities include the provision of automated and unattended remote backup and restore services and the provision of advanced infrastructures for the delivery of online applications. VData had turnover for the period ended 31 December 1999, the start up phase of the company, of #28,000 and a loss before taxation of #1.6 million. Storm is one of the UK's leading data storage solutions and value added service companies, distributing, designing, specifying, building and installing data storage solutions from many of the world's leading manufacturers. These include Compaq, SUN Microsystems and IBM. Storm had turnover for the year ended 31 March 2000 of #102 million, generating a profit before taxation of #5.4 million. The global market for managed computing networks and application services is forecast to grow rapidly to approximately #38 billion by the end of 2004*. * source: IBM Global Market View As part of the proposals, Lord Parkinson, the current non- executive Chairman of VData and Storm will become non-executive Chairman of the Company. David von Simson will become a non- executive Director. Chris Akers and Rodger Sargent will resign from the Company's Board. In addition, Peter Wilkinson will become Chief Executive Officer. Peter is the founder and managing director of Storm and VData. Previous business successes have included Sports Internet Group plc (for which an offer has been made by BSkyB plc) and Planet Online Limited (sold to Energis in 1998). He was also architect of Freeserve plc. Consideration for the acquisitions will be satisfied by the issue of 103,552,904 New Ordinary Shares and the payment of #9.7 million in cash, which at the rights issue price, values VData at #126 million and Storm at #39 million. The Enlarged Group will have a market capitalisation of #207 million at the rights issue price of 150p. In addition, the Board announced today that the Company proposes to raise approximately #9 million by way of a 1 for 2 rights issue at 150p, which has been fully underwritten by WestLB Panmure Limited, who are brokers to the issue. Up to a further #24.7 million will be raised by way of a placing of New Ordinary Shares with institutional investors. Proceeds of the Rights Issue and the Placing will be used to finance the cash consideration for the acquisitions, to enable the Enlarged Group to grow organically, by acquisition and through joint ventures, particularly in Europe, and to provide additional working capital. The Directors and proposed Directors intend to integrate Storm and VData upon completion and they believe that the combination will enjoy considerable commercial synergies. Chris Akers, Executive Director, InTechnology plc, said: "We are delighted with these exciting acquisitions which deliver on our stated aim of investing in the rapidly expanding B2B sector. The combination of commercial synergies, a proven management team and the rapidly growing data management industry will allow InTechnology to produce real shareholder value." Peter Wilkinson, Chief Executive, Storm and VData, said: "The global demand for data storage has increased by 80% in the last 2 years. Our significant investment in developing our own network and data storage facilities has placed Storm and VData in a leading position to take advantage of this phenomenal growth. "The enlarged Group will be positioned as the UK's first, full service, data management solutions provider. With high margins and long term recurring rental revenues layered on top of existing high volume turnover, today's transactions create a very exciting business proposition." For further information: Chris Akers, InTechnology plc 020 7643 5330 Steve Pearce, Storm and Vdata 01423 850000 Tim Linacre, WestLB Panmure Limited 020 7638 4010 Jonathon Brill/Mark Way, Bell Pottinger Financial 020 7353 9203 INTECHNOLOGY PLC ("INTECHNOLOGY" OR "THE COMPANY") * Proposed Acquisitions of VData Limited ("VData") and HOLF Technologies Limited (trading as Storm) ("Storm") * Proposed 1 for 2 Rights Issue of up to 6,000,000 new Ordinary Shares at 150p per share ("Rights Issue") * Proposed Placing of up to 16,447,096 new Ordinary Shares at 150p per share ("Placing") INTRODUCTION On 8 May 2000, InTechnology announced that it had entered into discussions which might or might not lead to it making a substantial acquisition. In accordance with the AIM Rules, the shares of the Company were suspended from trading on AIM from that date. InTechnology announces that it has entered into conditional agreements with Peter Wilkinson and others to acquire the whole of the issued share capital of VData and Storm, companies which are involved in advanced computer data technology services. The consideration for these acquisitions will be satisfied by the issue of 103,552,904 new Ordinary Shares and the payment of #9.7 million in cash, which, at the Rights Issue price of 150p per share, values VData at #126 million and Storm at #39 million. InTechnology also proposes to raise approximately #9 million by way of a rights issue and a further #24.7 million by way of a placing of new Ordinary Shares with institutional investors. Under the Rights Issue, qualifying shareholders are being offered up to 6 million New Ordinary Shares, on the basis of 1 new Ordinary Share for every 2 Existing Ordinary Shares held at the close of business on 14 July 2000, at a price of 150p per share. The Rights Issue has been fully underwritten by WestLB Panmure Limited, who are also brokers to the Issue. The proceeds of the Rights Issue and the Placing will be used to finance the cash consideration of #9.7 million payable to certain of the vendors under the acquisition agreements, to enable the enlarged Group to grow organically, by acquisition and joint venture, particularly within Europe, and to provide additional working capital. VData was established in January 1999 by Peter Wilkinson and has two trading divisions, VBAK and Advanced Infrastructure Provision, AIP. VBAK which is in the latter stages of development, is an online backup and restore service for computer networks which is currently undergoing beta testing. VBAK's formal launch is expected in late 2000. AIP will provide advanced infrastructure services for corporate customers' online applications and has already signed its first major contract. Audited results for the period ended 31 December 1999 show revenues of #28,000 and losses before taxation of #1.55 million. At 31 December 1999, VData had net assets of #447,000. Storm's business was established in 1983 by Peter Wilkinson. Storm is one of the UK's leading advanced data storage solutions and services companies, distributing equipment from many of the world's leading manufacturers including Compaq, Sun and IBM. It specialises in mid to high end computer storage solutions backed up by an in-house technical services department that designs, specifies, builds and installs complete computer data storage solutions. Storm sells branded manufacturers' storage products through many of the leading value added resellers ("VARs") to corporate end users. Audited results for the year ended 31 March 2000 show revenues of #101.7 million (1999: #77.0 million) and profits before taxation of #5.4 million (1999: #3.3 million). At 31 March 2000, Storm had net assets of #8.0 million (1999: #8.1 million). The Directors and the proposed Directors of InTechnology believe that because VData and Storm operate in the advanced data technology sector and market their products and services through VARs and specialist resellers, they will enjoy considerable commercial synergies. The Directors and the proposed Directors plan to integrate both companies immediately following completion of these acquisitions. As a result of the change in control of VData and Storm, holders of VData share options and Storm share options would be entitled to exercise their options. However, rather than exercise these options, the optionholders have been given the opportunity to roll- over their options into options over new Ordinary Shares. On completion of the Proposals Peter Wilkinson will own 57.5 per cent. of the enlarged share capital. He has undertaken not to dispose of the new Ordinary Shares held by him for a period of one year from completion of these acquisitions, subject to certain exceptions. Given the size of VData and Storm relative to InTechnology, these acquisitions, which are conditional upon each other and upon the underwriting agreement becoming unconditional, are subject, inter alia, to the approval of the shareholders of InTechnology in general meeting. An Extraordinary General Meeting of InTechnology to approve these proposals will be held on 24 July 2000. A prospectus setting out full details of the above mentioned proposals is being sent to InTechnology shareholders today. BACKGROUND TO INTECHNOLOGY InTechnology was incorporated on 26 January 2000 and its existing Ordinary Shares were admitted to trading on AIM on 2 March 2000. The Company has not published any financial results since incorporation. It was established to identify and acquire businesses which the Directors believed would be in a position to exploit the increasing opportunities within the Internet market, primarily within the B2B sector. The Directors of InTechnology consider that the acquisitions of VData and Storm are consistent with the investment criteria determined when forming the Company. INFORMATION ON VDATA Industry Background The global market for managed computing, networks and application services is forecast to grow rapidly from #18.3 billion in 2000 to approximately #38 billion by the end of 2004. Within this market the Directors and the proposed Directors of InTechnology believe there are two significant areas of opportunity: (i) the management and protection of corporate computer data which has become a vital issue for any organisation. Data storage requirements have grown worldwide by approximately 80 per cent. in the past two years yet the processes used to protect this data have changed little for over 20 years; and (ii)advanced hosting and infrastructure services which will offer a managed environment to support the European application services provider ("ASP") services marketplace, an area which is forecast to grow to US$14.6 billion by the end of 2003. Approximately 10 per cent. of the UK's top 500 companies are already using ASP services and a further 22 per cent. are running trial pilots of these services with a view to implementation within the next financial year. In addition, the growth of Internet technologies has brought with it a new business model for delivering application software, computer services and business processes to end users. The outsourced products and services currently available do not always meet the high standards required to deliver computing applications over wide area networks. This is evidenced by the fact that, of the Fortune 1000 businesses, 57 per cent. chose to host their own web sites, an increase from 33 per cent. in the previous year. In the increasingly sophisticated and complex area of computer data centre operations, systems and storage management, network design, implementation and management there is a global scarcity of qualified Information Technology ("IT") personnel and a desire by many companies to outsource parts of their IT functions whilst still maintaining control and ownership of their applications. The Directors and the proposed Directors of InTechnology intend to supply products and services to meet these needs in the market place. The Directors and the proposed Directors of InTechnology believe that the users of ASP services expect to receive the same degree of availability and functionality that they associate with their desktop computers. Applications should be available as a seamless extension of their existing system. The delivery of this level of service and infrastructure availability often requires a different approach to the traditional methods, in the technologies used, the processes implemented and the philosophy employed. The Directors and the proposed Directors of InTechnology believe that the VARs and specialist corporate resellers, which have traditionally sold hardware, software and services to corporate customers, are being asked to provide these infrastructure services. They further believe that VData will be able to meet this demand by providing the VARs and specialist corporate resellers with an extended portfolio of products and services. VData VData was established in January 1999 by Peter Wilkinson when he identified a gap in the B2B market for the provision of automated and unattended remote backup and restore services. 1999 was spent recruiting a team of experienced network, data management and system engineers and commencing product development and infrastructure delivery. VData currently has 41 employees. VData has two divisions: (i) VBAK data storage solutions; and (ii) Advanced Infrastructure Provision, AIP. (i) VBAK VBAK, which is expected to be launched in late 2000, is an online backup and restore service focused on the protection of short term critical data to assist business continuity in the event of data loss. Many companies still trust the backup of one of their most vital resources -- data -- to a policy of distributed tape devices, manual routines and offsite tape storage. The Directors and the proposed Directors of InTechnology believe that the increasing amounts of data requiring storage, and increasing staff costs have meant that tape-based backup, which has not fundamentally changed for over 20 years, is now becoming outdated and impractical. VBAK addresses the limitations of this traditional approach to backup and restoration of data with an online service which provides an automated backup and restore facility and allows the transfer of data offsite. Working in conjunction with Storm, VData has system-engineered the VBAK product, utilising its experience within the areas of data management, network design, software integration, implementation and operations to support such a service. For a customer to receive the VBAK service, VData installs a dedicated appliance, the Virtual Storage Gateway ("VSG") on the customer's network and connects this to a VData data centre via a secure, private leased line circuit. Customers can specify, using the VBAK user interface, the data they wish to have backed up, and the frequency and time at which the backup is executed. During the specified backup window, data is transferred to the VSG where it is compressed and encrypted. The customer retains the encryption keys to ensure that the data cannot be viewed by non-authorised personnel, including VData employees. Data is transferred offsite via a leased line and held on disk from where it can be restored online. A secondary backup copy can be transferred from disk to tape if the customer requires. In the event of a major data loss or site disaster, VData also provides an emergency data transportation service, whereby backup data can be delivered to a chosen disaster recovery site. VBAK provides: * multiple versions of the backup data which are held on disk for file restoration; * transfer of backup data to offsite VData data centres, ensuring backups are stored remotely; * a basis for business continuity planning; * an all-inclusive monthly service charge; * extensive automation reducing IT staff involvement at the customers site; and * remote monitoring of the service. VData is also able to offer: * a pre-installation sample of the client's backup data volumes prior to installation of the VSG and an assessment of the anticipated transfer rates; and * pre-installation consultancy in conjunction with VARs and specialist corporate resellers to assess a customer's existing data management environment, which will in turn generate business opportunities for Storm. VData has also identified a need for longer term storage of important but less critical data in an online archive format and has commenced the outline specification of VARC, which is currently planned to launch in mid 2001. VARC will be a long term archive service that stores data offsite for security but is accessed online for retrieval. Many companies archive data onto tape or other media and store it in remote data storage warehouses from where it has to be physically retrieved. VARC will be a complementary service to VBAK, using much of the existing resource and infrastructure, yet providing an additional incremental revenue stream. The Directors and the proposed Directors of InTechnology believe that VBAK and related services have good prospects for success for the following reasons: * VData intends to fulfil a gap in the market where the Directors and the proposed Directors of InTechnology perceive demand levels to be high for a reliable managed offsite backup and restore service; * VData will enjoy first mover advantage, due to the products it is developing and the technology it utilises; * an online backup service needs access to telecom links. VData has established good business relationships with several telecommunication companies; * the management of VData have considerable experience in the high technology sector; and * both the VBAK and AIP services are complementary to Storm's existing business, target markets and customer base and should therefore ensure maximum utilisation of valuable resources. (ii) Advanced Infrastructure Provision, AIP VData is developing an advanced infrastructure for the delivery of online applications providing a platform with security, availability, resilience, integrity and scalability to meet the infrastructure requirements of the emerging ASP market and the existing corporate IT users within the managed computing services market. The UK market for managed computing, networks and application services was forecast to be valued at #1.65 billion in 2000 and is further forecast to rise to around #3.35 billion in 2004. AIP's services go beyond those traditionally associated with the generic Internet web hosting providers, as it offers an infrastructure environment with a high service level guarantee from which application services may be delivered. VData has invested in a UK network infrastructure and currently has two high specification data centres. This infrastructure has been created as a platform for the delivery of online applications and data management services. The original architecture of the network was to support VBAK but had also been designed in such a way as to be adaptable to change in order to meet further requirements. The Directors and the proposed Directors of InTechnology intend that the network and data centre infrastructure will be extended through partnerships, within continental Europe, thereby enabling the delivery of AIP services throughout the European marketplace. The process of infrastructure provision is rapidly changing and the Directors and the proposed Directors of InTechnology intend to continually develop the VData range of services to encompass a range of pre-configured solutions in a variety of hardware and software configurations. While the AIP services have been primarily developed to meet the needs of the highly secure private network services delivery market, it is a logical extension of these services to develop high quality Internet based hosting solutions. Location VData's headquarters are located in Harrogate, with an additional data centre in London's Docklands and a corporate office in the City of London. Both the Harrogate and the Docklands data centres enjoy a controlled environment. The Harrogate and Docklands sites are linked by a secure leased line connection. Other sites are currently being investigated by VData to provide at least 70,000 sq. ft. of data centre. Certain office facilities are shared with Storm. Sales and Marketing VData's marketing strategy is targeted on the "business to business" ("B2B") market with a focus on small to medium-sized businesses or departments and divisions of large corporate organisations. Certain VBAK beta test customers, in different market sectors, have participated in testing the service. The VBAK service is targeted at companies with between 50 and 1,500 desk- top networked users. In the opinion of the proposed Directors of InTechnology, VBAK will be particularly attractive to those companies, as there has been a proliferation of Microsoft NT and Netware servers running key departmental applications in recent years. VData intends to utilise VARs and specialist corporate resellers to market its services in a similar way to Storm's established marketing strategy. VData will work with specialist partners who sell complementary services and who have established relationships with targeted customers. The VData sales and pre-sales teams will work with the partners' sales teams to provide technical, product and sales support. The AIP service only began to be marketed in Spring 2000, and signed a major contract in May 2000 which will generate sales of #1.3 million per annum over a minimum term of 42 months. Service revenue for both divisions is generated from a once only set up fee and thereafter from recurring monthly revenues over the term of the contract. The Directors and the proposed Directors of InTechnology believe that, once established, the recurring revenue stream from the services offered by VBAK and AIP to their customers will grow as customer requirements increase and additional products and services are created. Financial information on VData VData had net assets as at 31 December 1999 of #447,000. A summary of the trading results for VData is set out below: Period ended 31 December 1999 #'000 Turnover 28 Operating loss (1,509) Loss for the period before taxation (1,553) INFORMATION ON STORM Industry Background The UK is one of the largest IT markets in Western Europe. In 1998, total UK IT expenditure in the VAR/system house channel was estimated to be US$6.5 billion, and is expected to grow by 10 per cent. per annum until 2003. The UK IT distribution market is very competitive and dominated by US owned broad based distribution companies which operate both in the US and throughout Europe. This increased competition has led to pressure on operating margins and has meant that the most successful distributors have had to develop higher margin value added services to maintain levels of profitability. Worldwide sales of storage products are predicted to achieve compound annual growth of more than 17 per cent. between 2000 and 2003, reaching US$45 billion by 2003. It is further predicted that the demand for value added services that support data storage solutions, such as assessment, design, support and training, will grow at an even faster rate. Storm Storm's business was established by Peter Wilkinson in December 1983. During the last decade, Storm has developed into one of the UK's leading data storage solutions and services companies distributing equipment for many of the world's leading manufacturers including Compaq, Sun and IBM. Storm chose to concentrate on a niche market rather than trying to expand as a broad based distributor for several manufacturers. As well as hardware, Storm provides a comprehensive array of value added service and data storage solutions to customers including the assessment, design, configuration, implementation and testing of systems, and is a leading supplier of storage area networks, ("SANs"). There are currently 116 employees within Storm, spread amongst sales, technical, consulting, marketing, logistics, finance and purchasing functions. Storm distributes mid and top range branded storage products from suppliers such as : * Compaq -- Storm is the largest Compaq StorageWorks distributor in Europe and has been appointed as Compaq's first and only specialist storage services partner in Europe; * SUN Microsystems -- Storm is SUN's only specialist storage distributor in the UK; * IBM -- Storm is IBM's first and largest specialist storage distributor in Europe; * StorageTek -- Storm is the only specialist distributor of StorageTek storage products in the UK; and * Hitachi Data Systems. Storm also distributes data management software from Veritas and Tivoli, which is of strategic importance to providing storage solutions, and it recently received Tivoli's 'Distributor of the Year 1999' award. Storm provides value added services to its customers as described below: * Consultancy: Storm provides a 'design and assessment' service, which involves an onsite visit to evaluate the end- user's requirements and systems. Storm's consultants then design specific recommendations for areas such as archiving, configuration changes, network topology and server code patches; * Installation and testing: Installation services range from adding additional devices to an existing network to a full bespoke configuration of disaster tolerant solutions. Storm has installed solutions to most major platforms. When integrating and testing products, Storm's engineers adopt a 'building block' approach that allows flexibility when configuring storage systems; and * Training: Storm offers various courses at its training centre on system administration and disaster recovery. It also offers bespoke offsite training for customers. Storm is the only Veritas authorised training partner for their Netbackup product and, together with IBM, is the only UK company to become an accredited training partner of Tivoli for their TSM product. Storm is perceived to be an effective niche operator in the UK computer data storage market and, as illustrated by its continuing revenue growth, is ideally positioned to benefit from the continued demand for storage solutions and the value added technical services that such solutions require. Storm has differentiated itself in the market place by concentrating on the mid to high end storage market. The Directors and the proposed Directors of InTechnology consider that as systems become increasingly complex, Storm's expertise in creating storage solutions for its customers should lead to further demand for its products and services. The Directors and the proposed Directors of InTechnology believe that Storm's continued growth is underpinned by the following factors: * long established relationships, both on the supply side and demand side of the business; * growth in new vendor product lines, for example StorageTek and Hitachi Data Systems products; * Storm's highly regarded reputation as a provider of value added storage systems and solutions; and * market and technology dynamics (such as the rapid growth of e- commerce, ASPs and general use of computing products) which mean that businesses will need more complex data solutions and hardware as technology improves and businesses invest to remain competitive. The Directors and the proposed Directors consider that a particularly significant area of future growth for Storm will develop from the growth of fibre channel and storage area network ("SAN") storage solutions. As customer demand for these technologies increases, Storm, through its hardware consulting, design and implementation services, is well positioned to service this demand. Location Storm has recently relocated to a modern integrated head office, distribution and training facility in Harrogate, which it shares with VData. This will accommodate Storm's continued growth and increased technological requirements. This facility allows for further expansion when required and is close to an excellent road and rail service for receipt and distribution of products. Sales and Marketing Storm markets these services through a manufacturer accredited VAR network. Storm effectively becomes an extension of the VAR's existing technical resource and, when requested, provides a service where the VAR has a resource shortage, or Storm has a particular skill base. Storm also offers its services through associations with its suppliers. IBM Global Services and Veritas have recently engaged Storm to consult on specific projects. Relationships such as these reflect the perceived quality of service that Storm delivers. The Directors and the proposed Directors of InTechnology believe it also illustrates how the existing Storm channel partner network and relationships can be leveraged to create a marketing and supply chain for VData's forthcoming services. Financial information on Storm Storm had net assets as at 31 March 2000 of #8 million. A summary of the trading results for Storm is set out below: Year ended 31 March 1998 1999 2000 #'000 #'000 #'000 Turnover 61,289 77,049 101,677 Operating profit 2,919 3,259 5,816 Profit on ordinary activities before taxation 2,742 3,288 5,430 PETER WILKINSON VData and Storm's founder, Peter Wilkinson, has created a number of other successful technology companies. In 1995 he founded Planet Online Limited when he perceived there to be a demand for corporate Internet services that were not being supplied. Planet Online Limited became one of the UK's largest B2B ISPs and was sold to Energis plc in August 1998 for #75 million. He retained the sporting website division of Planet Online Limited, called Planet Football (later incorporated as PlanetFootball.com Limited), following the sale to Energis plc. Planet Football.com Limited was acquired by Sports Internet Group plc in May 1999. In May 2000, BSkyB plc made a recommended offer to Sports Internet Group plc valuing the company at #301 million on the date the offer was announced. Peter Wilkinson is also the architect of Freeserve plc, the ISP that was launched on 24 September 1998. Peter Wilkinson received the 'Internet Personality of the Year' award at the 1999 ISPA Internet Industry Awards and is widely recognised as one of the UK's leading technology entrepreneurs. PRINCIPAL TERMS OF THE ACQUISITIONS The terms of the Acquisition Agreement for VData provide for the sale of the entire issued share capital, held by Peter Wilkinson, Andrew Kaberry, Philip Taysom and Stephen Pearce, to the Company in consideration for the issue of 83,450,000 consideration shares in the following proportions: Peter Wilkinson, 59,301,094; Andrew Kaberry, 9,879,562; Philip Taysom, 9,329,563 and Stephen Pearce, 4,939,781. In addition, #825,000 in cash will be paid to Philip Taysom to be satisfied by part of the proceeds of the Placing. The terms of the acquisition agreement for Storm provide for the sale of the entire issued share capital, held by Peter Wilkinson, to the Company in consideration for the issue of 20,102,904 consideration shares and the payment of #8,845,644 in cash to be satisfied by part of the proceeds of the Placing. The acquisition agreements are inter-conditional upon each other and are also conditional, inter alia, upon the underwriting agreement becoming unconditional, the resolutions being passed at the Company's Extraordinary General Meeting and the holders of VData share options and Storm share options agreeing to the roll- over of their options into options over new Ordinary Shares. The Vendors have given certain warranties on the respective businesses of Storm and VData and, in respect of taxation, indemnities in favour of the Company, such warranties to expire on the date of the publication of the Company's audited accounts for the year ended 31 December 2002, or if the Company changes its accounting reference date, 30 April 2003, and the taxation indemnities to expire on 31 March 2006 and 31 December 2006 respectively. In addition, the Vendors have agreed not to compete with the respective businesses of VData or Storm for a period of 3 years from Completion. Such restrictions include covenants not to solicit various customers or key employees during that time. Pursuant to the Lock-in Deeds the Vendors have also agreed not to dispose of their consideration shares for a period of one year from the admission of those shares to trading on AIM. THE RIGHTS ISSUE AND THE PLACING Under the Rights Issue and the Placing, the Company is seeking to raise approximately #32.5 million, net of expenses, which will be used to finance the cash consideration payable to certain of the vendors under the acquisition agreements, to enable the Company to grow organically, by acquisition and joint venture, particularly within Europe, and to provide additional working capital for the enlarged Group. Pursuant to the Placing, WestLB Panmure has agreed to use its reasonable endeavours to find placees to subscribe for the Placing Shares at the Rights Issue price. The Placing is not being underwritten. PRINCIPAL TERMS OF THE RIGHTS ISSUE Up to 6,000,000 Rights Issue Shares will be offered to Qualifying Shareholders at 150p per Rights Issue share, payable in full on acceptance no later than 3.00 p.m. on 14 August 2000 on the following basis: 1 Rights Issue share for every 2 existing Ordinary Shares held at the close of business on 14 July 2000 and so in proportion for any greater number of existing Ordinary Shares then held. Fractional entitlements to Rights Issue Shares will not be allotted and entitlements of qualifying shareholders will be rounded down to the nearest whole number of Rights Issue shares. The Rights Issue shares will, when issued and fully paid, rank pari passu in all respects with the Ordinary Shares. The Placing Shares and the consideration shares will not rank for entitlements under the Rights Issue. The Rights Issue (save for 1,190,000 Rights Issue Shares which the Directors have undertaken to take up) has been fully underwritten by WestLB Panmure Limited who are also brokers to the Issue. The Rights Issue is conditional, inter alia, upon Shareholders' approval of the resolutions to be proposed at the Extraordinary General Meeting to be held on 24 July 2000. It is expected that Provisional Allotment Letters in respect of the Rights Issue Shares will be despatched to qualifying shareholders following the extraordinary general meeting on 24 July 2000 and that dealings in the Rights Issue shares, nil paid, will commence on 25 July 2000. The Directors, who together have a beneficial interest in approximately 19.9 per cent. of the existing issued ordinary share capital of the Company, intend to take up their entitlements under the Rights Issue in full, amounting to 1,190,000 Rights Issue shares. CURRENT TRADING AND PROSPECTS The Directors and the proposed Directors anticipate that the growth of Storm's revenues and profits will continue for the coming year. VData aims to formally launch the VBAK service in late 2000 and continue the development of its AIP infrastructure and the client base. THE BOARD As part of the proposals, Lord Parkinson, the current non- executive Chairman of VData and Storm will become non-executive Chairman of the Company and David von Simson will become a non- executive Director. In addition, Christopher Akers and Rodger Sargent will resign from the Board. The biographical details of the Directors and proposed Directors are set out below: David von Simson (current non-executive Chairman), aged 49, has been a senior adviser of Ecofin, a privately owned investment bank boutique, since 1998. Prior to this, he was a managing director of Warburg Dillon Read in London where he was a senior member of the corporate finance department, specialising in mergers and acquisitions and head of the Consumer Products and Retail groups. From 1993 to 1997, he was Chief Executive, and then Chairman, of SBC Warburg France. Before joining Warburg Dillon Read in 1995, he was a managing director, Corporate Finance, of Swiss Bank Corporation in London and head of the Financial Services and Media groups. Prior to joining Swiss Bank in 1985, he was an executive director of Hill Samuel & Co. Limited, London. Christopher Akers (current executive Director), aged 35, is currently an executive director of Sports Internet Group plc, an AIM quoted sports and bookmaking group, managing director of Chris Akers Associates Limited, a media and sports consultancy business, and a non-executive director of Seahorse Group plc, I Feel Good (Holdings) plc, MyVal.com plc and Sportsworld Media Group plc. He was non-executive Chairman of Virtual Internet plc. He is also an investor in a number of other public and private companies. In August 1996, he was instrumental in the acquisition of Leeds United Holdings plc by Caspian plc (renamed Leeds Sporting plc) of which he was Chairman and Chief Executive. Prior to this, he was a founder investor in Freepages plc (later renamed Scoot.com plc). Between July 1991 and May 1995 Mr Akers was an executive director in the corporate finance division of Swiss Bank Corporation, specialising in media, entertainment and IT related mergers and acquisitions on a worldwide basis. Rodger Sargent (current Finance Director), aged 28, is finance director of Seahorse Group plc, a non-executive director of I Feel Good (Holdings) plc and was a founder shareholder and the finance director of Sports Internet Group plc, an AIM quoted sports and bookmaking group. Prior to joining Sports Internet in 1998, he had worked as a debt analyst in the credit-trading department of Merrill Lynch. He qualified as a chartered accountant with Price Waterhouse London in 1996. PROPOSED DIRECTORS The Rt. Hon. Lord Parkinson (proposed non-executive Chairman), aged 68, is a Member of the House of Lords. He was a Member of the House of Commons from 1970 to 1992 where he held a number of senior ministerial positions. He was Chairman of the Conservative Party from 1981 to 1983 and again from 1997 to 1998. From 1983 to 1987 he was a non-executive director of Sears plc, Babcock International plc, Tarmac plc and Save & Prosper. He is currently Chairman and director of a number of private companies, including VData and Storm. He is also a Chartered Accountant. Peter Wilkinson (proposed Chief Executive Officer), aged 46, is the founder and managing director of Storm and VData. He is also executive Deputy Chairman of Sports Internet Group plc. He was also founder and former managing director of Planet Online Limited, and the founder and architect of Freeserve plc, with which he continues to be involved. He received the ''Internet Personality of the Year'' award at the 1999 ISPA Internet Industry awards and is widely recognised as one of the leading technology entrepreneurs in the UK. Andrew Kaberry (proposed Finance Director), aged 53, is currently director, finance and administration, for both VData and Storm. He has been a director of Storm since 1984. He was also finance director of Planet Online Limited from its commencement in 1995 until its acquisition by Energis plc in 1998. Prior to this he was finance director of Systime Computers Ltd from 1976 until leaving to start Storm. Previously he was a divisional finance director at a large textile manufacturer. He is an economics graduate and qualified as a chartered accountant with KPMG in 1972. Stephen Pearce (proposed Chief Operating Officer), aged 41, is currently divisional sales director for VData. He was previously divisional sales director for Planet Online Limited, which was sold to Energis plc in 1998. Prior to this he was a divisional sales director within Storm. He has previous experience within the technology sector including Digital Equipment Corporation Ltd, Data General UK Limited and Radius Software Ltd. He was also European sales manager for Microvitec Plc and vice president of sales and marketing for Microvitec Inc. based in the US. Philip Taysom (proposed Chief Technical Officer), aged 33, is currently technical director for VData where he has been responsible for specifying and developing the VBAK and AIP services. His role is to assess new products and technologies and their potential use within VData. Prior to this he worked from 1995 for Planet Online Limited, which was sold to Energis plc in 1998. At Planet Online Limited he designed the infrastructure and Internet products. From 1989 to 1995 he provided consultancy services to a number of private and public sector organisations. Prior to this from 1984 he was a technical co-ordinator for a leading computer games company. Bryn Sage (proposed Sales Director), aged 34, is currently divisional sales director for Storm, which he joined in 1986 as a computer engineer. Prior to this he worked from 1981 at Systime Computers Ltd in computer engineering. LOCK-IN DEEDS The Directors' and the proposed Directors' aggregate interests in the enlarged share capital are estimated to amount to approximately 107.1 million new Ordinary Shares (which is equivalent to approximately 77.6 per cent. of the enlarged share capital, assuming the Placing is subscribed in full). On the admission of the existing Ordinary Shares to AIM in March 2000, the Directors undertook not to dispose of any shares in the Company for 12 months save in certain restricted circumstances. The proposed Directors have agreed not to dispose of any interests in new Ordinary Shares which they receive pursuant to the acquisitions for 12 months from the date such securities are admitted to AIM, save as above in certain restricted circumstances. EXPECTED TIMETABLE OF PRINCIPAL EVENTS 2000 Dealings re-commence in Existing Ordinary Shares 3 July Record Date for entitlement to the Rights close of business on Issue 14 July Latest time and date for receipt of proxy cards for the EGM 10.00 am on 22 July Extraordinary General Meeting 10.00 am on 24 July Completion of the Acquisitions 24 July Provisional Allotment Letters despatched 24 July Dealings to commence in Rights Issue Shares, nil paid, and Consideration Shares 25 July Latest time and date for splitting Provisional Allotment Letters (nil paid) 3.00 pm on 10 August Latest time and date for payment in full and registration of renunciation 3.00 pm on 14 August Dealings in Rights Issue Shares, fully paid, and Placing Shares commence 15 August Crediting of CREST accounts in respect of Placing Shares 16 August Definitive share certificates for Consideration Shares, Placing Shares and Rights Issue Shares despatched by 22 August KEY STATISTICS Existing Ordinary Shares 12,000,000 Consideration Shares 103,552,904 Rights Issue Shares 6,000,000 1 Placing Shares 16,447,096 1 --------------- -- Enlarged number of New Ordinary Shares issued following the Proposals 138,000,000 1 --------------- -- Market capitalisation #207 million 2 Estimated net proceeds arising from the Rights Issue and the Placing #32.5 million 3 1 Assuming Placing is fully subscribed and no factional entitlements arise under the Rights Issue 2 At the Rights Issue price of 150p 3 Prior to payment of the cash consideration under the acquisition agreement Notes: 1. InTechnology plc is incorporated and registered in England and Wales under number 3916586. 2. At the date hereof the only shareholders of InTechnology plc who hold 3% or more of the Company's share capital are Royal Bank of Canada Trustees Ltd who hold 800,000 shares representing 6.66% and Skerries Nominees Limited account T29006L who hold 455,000 shares representing 3.79%. 3. The nominated adviser and nominated broker is WestLB Panmure Limited. 4. A prospectus, including the requirements for an AIM admission document, will be available from WestLB Panmure Limited at 35 New Broad Street, London EC2M 1SQ from 30 June 2000 until 15 August 2000 and which alone will contain full details of the Company and its securities. END COMIIFVLRLIIVII
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