Plastics Capital PLC Placing to raise £3.74 million (2955G)

TIDMPLA

RNS Number : 2955G

Plastics Capital PLC

26 May 2017

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Plastics Capital plc

("Plastics Capital" the "Company" or the "Group")

Placing of 3,194,445 new Ordinary Shares at 117 pence per share to raise

approximately GBP3.74 million

Plastics Capital, the niche plastics products group, today announces a conditional Placing to raise approximately GBP3.74 million, before expenses, by way of a Placing of 3,194,445 new Ordinary Shares at 117 pence per Placing Share.

The net proceeds of the Placing, which are expected to amount to approximately GBP3.54 million, are to be applied, in part, towards the proposed increase of the Company's stake in the CCM Group, its US based minority investment focused on the production of creasing matrix. In addition, part of the net Placing proceeds will be invested in other parts of the Group in order to increase capacity to satisfy increasing demand for the Group's products and thereby accelerate organic growth.

Application will be made for the Placing Shares to be admitted to trading on AIM at 8.00 a.m. on 31 May 2017. Following Admission of the Placing Shares, the total number of voting rights in the Company is expected to be 38,945,151.

The net proceeds of the Placing will be augmented by the decision of the Board to suspend dividend payments for at least the next two scheduled payments. The Directors estimate that this will result in a cash saving of approximately GBP1.7 million. It is intended that the cash saving will be re-invested in the business, alongside certain of the net proceeds of the Placing. After 12 months, the Directors will reconsider the payment of dividends within the overall context of capital allocation decisions then facing the Company.

Faisal Rahmatallah, Chairman and CEO of Plastics Capital, commented:

"We are very pleased to announce an oversubscribed GBP3.74 million placing with institutional Shareholders, at a small discount to the prevailing market price, which when added to the cash saving from the suspension of dividend payments, will be applied towards the proposed increase of our stake in the CCM Group and increasing investment in a number of growth areas including capacity in our mandrels, bearings and films businesses."

Contacts:

 
 Plastics Capital          Tel: [phone] 
  plc 
 Faisal Rahmatallah, 
  Executive Chairman 
 Nick Ball, Finance 
  Director 
 
 Cenkos Securities         Tel: [phone] 
  plc 
  (Nomad and Joint 
  broker) 
 Mark Connelly 
  Callum Davidson 
 
 Allenby Capital Limited   Tel: [phone] 
  (Joint broker) 
 David Hart 
  Katrina Perez 
  James Reeve 
 
 

Notes to Editors

Plastics Capital is a niche manufacturer of specialist plastic products. Applications for these products vary widely and examples include:

   --    Packaging for the food manufacturing and distribution - films, sacks and pouches 

-- Steering columns and instrument control knobs in the automotive industry - plastic ball bearings

   --    Hydraulic and industrial rubber hose manufacture - various types of plastic mandrel 
   --    Cardboard box manufacture - plastic creasing matrices 

Plastics Capital's business model is based on understanding customers' problems in depth, and then developing and mass producing proprietary, technical solutions for these problems.

The business operates through two divisions, Films and Industrial, and has the majority of its production in five UK based factories, with a further three factories in Asia. Approximately 45 per cent. of its GBP65 million sales are made outside the UK to more than 80 countries.

Further information can be found on www.plasticscapital.com

IMPORTANT INFORMATION

IMPORTANT NOTICE

The information contained in this announcement is restricted and unless an available exemption applies is not for release, publication or distribution, directly or indirectly, in whole or in part, in, into or from the United States (including its territories and possessions, any state of the United States and the District of Columbia, collectively the "United States") Australia, Canada, Japan or South Africa or any jurisdiction in which the same would be unlawful. This announcement is for information purposes only, does not constitute a recommendation regarding the Placing and does not constitute an offer or invitation to sell or issue or the solicitation of an offer to buy, acquire or subscribe for any shares in the capital of the Company. In particular, this announcement does not constitute an offer or invitation to sell or issue or the solicitation of an offer to buy, acquire or subscribe for any shares in the capital of the Company in the United States, Australia, Canada, Japan or South Africa or any other jurisdiction where such offer or solicitation may be unlawful or require preparation of any prospectus or other offer documentation or would be unlawful prior to registration, exemption from registration or qualification under the securities laws of any such jurisdiction. Any failure to comply with the restrictions set out in this important notice may constitute a violation of the securities laws of such jurisdictions.

The securities referred to herein may not unless an available exemption applies be offered or sold in the United States, Canada, Japan, South Africa or Australia or to, or for the account or benefit of any national resident or citizen of the United States, Canada, Japan, South Africa or Australia. The Placing Shares have not been and will not be registered under the United States Securities Act of 1933, as amended ("Securities Act") or the securities laws of any other jurisdiction of the United States, and may not be offered, sold or transferred, directly or indirectly, in the United States absent registration under the Securities Act except pursuant to an available exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the securities laws of any other jurisdiction of the United States. No public offering of the shares referred to in this announcement is being made in the United States, the United Kingdom or any other jurisdiction.

The distribution of this announcement and the offering of the Placing Shares in certain jurisdictions may be restricted by law. No action has been taken by the Company, Cenkos or Allenby Capital that would permit an offering of such shares or possession or distribution of this announcement or any other offering or publicity materials relating to such shares in any jurisdiction where action for that purpose is required. Persons into whose possession this announcement comes are required by the Company, Cenkos and Allenby Capital to inform themselves about and to observe, such restrictions.

The Placing Shares have not been approved or disapproved by the U.S. Securities and Exchange Commission (the "SEC"), any state securities commission in the United States or any other US regulatory authority , nor have any of the foregoing authorities passed upon or endorsed the merits of the Placing or the accuracy or adequacy of this announcement. Any representation to the contrary is a criminal offence in the United States.

The relevant clearances have not been, and nor will they be, obtained from the securities commission of any province or territory of Canada, no prospectus has been lodged with, or registered by, the Australian Securities and Investments Commission, the Japanese Ministry of Finance or the South African Financial Services Board and the Placing Shares have not been, and nor will they be, registered under or offered (save to the extent an available extension applies) in compliance with the securities laws of any state, province or territory of Canada, Japan, Australia or South Africa. Accordingly, the Placing Shares may not (unless an exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into the United States, Canada, Australia, South Africa or Japan or any other jurisdiction outside the United Kingdom.

The information in this announcement may not be forwarded or distributed to any other person and may not be reproduced in any manner whatsoever. Any forwarding, distribution, reproduction, or disclosure of this information in whole or in part is unauthorised. Failure to comply with this directive may result in a violation of the Securities Act or the applicable laws of other jurisdictions. Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this announcement should seek appropriate advice before taking any action.

This announcement does not constitute, and the Company is not making, an offer to the public of transferable securities within the meaning of sections 85 and 102B of the Financial Services and Markets Act 2000. This announcement is therefore not an approved prospectus for the purposes of section 85 of FSMA, and has not been prepared in accordance with the prospectus rules of the Financial Conduct Authority ("FCA") and as such neither its contents nor its issue have been approved by the FCA or by an authority which would be a competent authority for the purposes of any legislation that implements the Prospectus Directive.

This announcement contains (or may contain) certain forward-looking statements with respect to certain of the Company's current expectations and projections about future events. These statements, which sometimes use words such as "aim", "anticipate", "believe", "intend", "plan", "estimate", "expect" and words of similar meaning, reflect the directors' beliefs and expectations and involve a number of risks, uncertainties and assumptions that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement. Statements contained in this announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The information contained in this announcement is subject to change without notice and, except as required by applicable law, the Company does not assume any responsibility or obligation to update publicly or review any of the forward-looking statements contained herein. Investors should not place undue reliance on forward-looking statements, which speak only as of the date of this announcement. No statement in this announcement is or is intended to be a profit forecast or profit estimate or to imply that the earnings of the Company for the current or future financial years will necessarily match or exceed the historical or published earnings of the Company. The price of shares and the income from them may go down as well as up and investors may not get back the full amount invested on disposal of the shares. Past performance is no guide to future performance and persons who require advice should consult an independent financial advisor.

Cenkos, which is authorised and regulated in the United Kingdom by the FCA, is the Company's Nominated Adviser. The responsibilities of Cenkos, as Nominated Adviser under the AIM Rules and the AIM Rules for Nominated Advisers, are owed solely to the London Stock Exchange and are not owed to the Company, any Shareholder or any Director of the Company or to any other person in respect of his or her decision to acquire Placing Shares. Cenkos is acting exclusively for the Company and for no one else in relation to the Placing and Admission and will not be responsible to any person other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing, Admission or otherwise. Allenby Capital, which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively for the Company and for no one else in relation to the Placing and Admission and will not be responsible to any person other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing, Admission or otherwise.

No representation or warranty, express or implied, is or will be made by or on behalf of Cenkos and Allenby Capital, and no responsibility or liability is or will be accepted by Cenkos and Allenby Capital or any of their affiliates, as to the accuracy, completeness or verification of the information set out in this announcement, and nothing contained in this announcement is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or the future. Cenkos, Allenby Capital and their affiliates accordingly disclaim, to the fullest extent permitted by law, all and any liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this announcement.

The Placing Shares will not be admitted to trading on any stock exchange other than the AIM market of the London Stock Exchange.

Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this announcement.

This announcement has been prepared for the purposes of complying with applicable law and regulation in the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside the United Kingdom.

Introduction

Plastics Capital has today announced the terms of a placing by Cenkos, acting as the Company's Nominated Adviser and Joint Broker and Allenby Capital, acting as the Company's Joint Broker, to raise approximately GBP3.74 million from the issue and allotment by the Company of 3,194,445 Placing Shares at the Placing Price of 117 pence per share.

The Placing Price represents discount of 4.5 per cent. to the closing mid-market price of an Ordinary Share on 25 May 2017, the latest practicable date prior to the publication of this announcement. It is intended that the net proceeds of the Placing, which are expected to amount to approximately GBP3.54 million, which will in part be used to fund the proposed increase in the Company's ownership of the CCM Group, the US based creasing matrix business, from 10 per cent. to 49 per cent., implement manufacturing efficiencies at the CCM Group and to increase capacity in certain of the Company's existing operations in order to help accelerate the Company's organic growth plans.

The Placing is from the Company's existing authorities to issue and allot shares for cash on a non-pre-emptive basis, such authorities having been approved by shareholders at the Company's AGM held in July 2016 and is therefore not conditional on shareholder approval.

Reasons for the Placing and Use of Proceeds

The Company has benefitted recently from increasing demand for a significant number of its products, most notably for films, bearings and mandrels. It has therefore been increasing capital expenditure primarily in order to increase capacity in a number of its business in order to try to satisfy such demand resulting in an increase in net debt. The Company therefore proposes to raise new equity capital for two principal reasons:

-- to increase the Company's stake in the CCM Group from its current 10 per cent. interest to 49 per cent. and rationalise its manufacturing operations; and

-- to invest in the Group's existing facilities and increase capacity in order to meet increasing demand, particularly for films, bearings and mandrels.

As announced on 2 May 2017, given its significant control over the running of the CCM Group, it is intended that the CCM Group's results will be consolidated in the forthcoming Group annual results. The Directors intend to invest approximately GBP1.25 million of the net proceeds of the Placing in US-based the CCM Group, including the cost of increasing its equity interest to 49 per cent. It is also intended to move the manufacture of creasing matrix from the CCM Group to the Group's UK creasing matrix manufacturer, C&T Matrix which should generate material cost savings. The resultant capacity at the CCM Group would then be utilised to manufacture mandrels for which the Directors believe there is increasing demand in the USA. In the year ended 31 December 2016, the CCM Group generated revenue of approximately $ 7,260,000 and a profit after taxation of approximately $230,000. As at 31 December 2016, the CCM Group's net assets were approximately $120,000.

The remainder of the net proceeds is proposed to be applied towards increasing capacity at certain of the Group's existing operations. For example, Bell Plastics is experiencing high demand and the Board intends to invest in a number of additional production lines. Additionally, having recently won a substantial contract, BNL is in the process of increasing capacity significantly at a material cost.

As a result of the Placing and the change in dividend policy described below, the Company therefore intends to increase its budgeted capital expenditure from approximately GBP2.0 million to GBP4.5 million over the next twelve months.

Suspension of dividend payments

The Company has, for a number of years, paid a significant amount to Shareholders by way of dividends in the form of cash and, more recently, a share alternative. Notwithstanding the share alternative, the cash cost of such dividends over the last twelve months was approximately GBP1.1 million.

Given the increasing demand for a number of the Group's products and the planned increases in capacity to meet the increasing demand for certain of the Group's products referred to above, the Board has concluded that it would be a more efficient use of capital to suspend the payment of dividends for at least the next two scheduled payments (in July and December this year). This will result in an approximate cash saving of GBP1.7 million (assuming no scrip dividend alternative) which the Directors intend to reapply, alongside certain of the net proceeds of the Placing, in accelerating the Group's organic growth strategy.

The Board is aware that certain Shareholders value the payment of dividends more highly than others. It is intended that the Board will revisit this position in twelve months' time to consider whether it would be an appropriate use of capital to recommence the payment of dividends and, if so, the level of such payments.

Details of the Placing

The Company is to raise approximately GBP3.74 million (before expenses of the Placing which are estimated to amount to approximately GBP0.2 million) through the issue of the Placing Shares at the Placing Price. The Placing Shares will be issued under the Company's existing authorities.

The Placing Price represents a discount of 4.49 per cent. to the closing mid-market price of an Ordinary Shares on 25 May 2017 (the latest practicable date prior to the publication of this announcement).

It is expected that Admission in respect of the Placing Shares will occur on 31 May 2017. On Admission, the Placing Shares will represent approximately 8.2 per cent. of the Enlarged Issued Share Capital.

The Placing Agreement

Cenkos and Allenby Capital have entered into the Placing Agreement with the Company whereby they have agreed to use their reasonable endeavours, as agents for the Company, to procure placees for the Placing Shares.

The Placing is conditional upon, inter alia, Admission of the Placing Shares to AIM becoming effective no later than 8:00 a.m. on 7 June 2017.

The Placing Agreement contains warranties from the Company in favour of Cenkos and Allenby Capital in relation to, among other matters, the accuracy of the information in this announcement and other matters relating to the Company and its business. In addition, the Company has agreed to indemnify Cenkos and Allenby Capital in relation to certain liabilities they may incur in respect of the Placing. Cenkos and Allenby Capital have the right to terminate the Placing Agreement in whole or in part prior to Admission in certain circumstances, in particular, in the event that any of the warranties given under the Placing Agreement were not when given or have since ceased being (or are likely to cease being) true, accurate and not misleading in any material respect.

Settlement and dealings

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings in the Placing Shares will commence at 8.00 a.m. on 31 May 2017.

The Placing Shares will, when issued, rank pari passu in all respects with the Existing Ordinary Shares including the right to receive dividends and other distributions made, paid or declared following the Placing.

Total voting rights

Following Admission, the Company's issued share capital will consist of 38,945,151 Ordinary Shares, with each Ordinary Share carrying the right to one vote. The Company does not hold any Ordinary Shares in treasury. This figure of 38,945,151 Ordinary Shares may therefore be used by Shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

DEFINITIONS

The following definitions apply throughout this announcement, unless the context otherwise requires:

 
 "Admission"           the admission of the Placing Shares 
                        to trading on AIM becoming effective 
                        in accordance with rule 6 of the 
                        AIM Rules 
 "AIM"                 AIM, the market of that name operated 
                        by London Stock Exchange plc 
 "AIM Rules"           the AIM Rules for Companies issued 
                        by London Stock Exchange plc as 
                        amended from time to time 
 "Allenby Capital"     Allenby Capital Limited, a private 
                        limited company incorporated in 
                        England & Wales under registered 
                        number 6706681 and having its registered 
                        office at 3 St. Helen's Place, 
                        London EC3A 6AB, the Company's 
                        Joint Broker to the Placing 
 
 "CCM Group"           Channel Holdings Delaware, Inc., 
                        a company in which the Company 
                        currently owns 10 per cent. of 
                        the equity capital, and its wholly 
                        owned subsidiary, Channel Creasing 
                        Matrix, Inc. 
 
 "Cenkos"              Cenkos Securities plc, a public 
                        limited company incorporated in 
                        England & Wales under registered 
                        number 5210733 and having its registered 
                        office at 6-8 Tokenhouse Yard, 
                        London EC2R 7AS, the Company's 
                        Nominated Adviser and Joint Broker 
                        to the Placing 
 "Company" or          Plastics Capital plc, a public 
  "Plastics Capital"    limited company incorporated in 
                        England & Wales under registered 
                        number 6387173 and having its registered 
                        office at Room 1.1, London Heliport, 
                        Bridges Court Road, London, SW11 
                        3BE 
 
 "Directors"           the directors of the Company 
  or "Board" 
 "Enlarged Issued      the number of issued Ordinary Shares 
  Share Capital"        immediately following Admission 
 "Existing Ordinary    the 35,750,706 Ordinary Shares 
  Shares"               in issue at the date of this announcement 
 "Group"               the Company and its subsidiary 
  "Joint Brokers"       undertakings 
                        Cenkos and Allenby Capital 
 "Ordinary Shares"     ordinary shares of 1p each in the 
                        share capital of the Company 
 "Placees"             the subscribers for Placing Shares 
                        pursuant to the Placing 
 "Placing"             the placing of the Placing Shares 
                        at the Placing Price pursuant to 
                        the Placing Agreement 
 "Placing Agreement"   the conditional agreement dated 
                        on or around 25 May 2017 between 
                        the Company and the Joint Brokers 
 "Placing Price"       117 pence per Placing Share 
 "Placing Shares"      the 3,194,445 new Ordinary Shares 
                        to be issued pursuant to the Placing 
                        which have been conditionally placed 
                        by Cenkos and Allenby Capital 
 "Shareholders"        holders of Existing Ordinary Shares 
                        and the term "Shareholder" shall 
                        be construed accordingly 
 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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May 26, 2017 02:00 ET (06:00 GMT)