Placing etc

 

TIDMWDNY 
 
RNS Number : 0112M 
Widney PLC 
21 January 2009 
 

Widney plc 
 
 
("Widney" or the "Company") 
 
 
Proposed issue of 7,500,000 Consideration Shares, 
Proposed Placing of 12,000,000 new Ordinary Shares and GBP245,000 10% Secured 
Loan Stock 2014, 
Waiver of Rule 9 of the City Code on Takeovers & Mergers and 
Notice of Extraordinary General Meeting 
 
 
 
 
The Board is pleased to announce that arrangements have been agreed with certain 
creditors of Widney which will materially improve the cash flow position of 
Widney and its operating subsidiaries, Widney UK and Widney Pressings. Widney 
also announces that the Board has agreed terms for a placing of 12,000,000 new 
Ordinary Shares in order to raise approximately GBP180,000 (before expenses) at 
the Placing Price of 1.5 pence per new Ordinary Share and the issue of 
GBP245,000 of Secured Loan Stock. Some of the Directors have agreed to 
participate in the Placing as follows; Joe Grimmond has agreed to subscribe for 
GBP80,000 worth of new Ordinary Shares and GBP170,000 worth of Secured Loan 
Stock. Graham Errington has agreed to subscribe to GBP25,000 worth of new 
Ordinary Shares and GBP25,000 worth of Secured Loan Stock. Gerry Cotterill has 
agreed to subscribe for GBP50,000 of Secured Loan Stock. Further details of the 
Proposals are set out below. 
 
 
The Proposals are conditional, inter alia, on the approval of the Shareholders 
at the EGM, to be held at 10.00 am on 13 February 2009 at the offices of College 
Hill, The Registry, Royal Mint Court, London EC3N 4QN, notice of which has been 
posted to Shareholders today. 
 
 
A Circular has been sent to Shareholders today explaining the background to and 
reasons for the Proposals and recommending that Shareholders vote in favour of 
each of the Resolutions, required to be passed in order to implement the 
Proposals, to be proposed at the EGM. All definitions in this announcement bear 
the same meaning as those set out in the Circular, unless otherwise stated. The 
Circular will be available to view at the Company's website www.widney.plc.uk 
 
 
 
 
Following Completion, Joe Grimmond, Graham Errington, Gerry Cotterill, Barry 
Jordan, Beryl Grimmond and Widney Pension Trustees Limited (the "Concert Party") 
will, together, be the beneficial owners of, in aggregate, 19,081,199 Ordinary 
Shares, representing 42.10 per cent. of the Enlarged Issued Share Capital. 
Independent Shareholders will therefore also be asked to vote on the Waiver 
Resolution to approve a waiver by the Panel of any obligation on the part of the 
Concert Party to make a general offer to Shareholders under Rule 9 of the City 
Code arising from the issue of Ordinary Shares pursuant to the Proposals to the 
Concert Party. 
Background to and reasons for the Proposals 
 
 
The Group has been adversely affected by the current economic conditions, in 
particular, the widely reported problems within the UK motor industry and 
construction equipment industries. 
 
 
Widney UK and Widney Pressings are trading in difficult circumstances and they 
are not in a position to remit sufficient monies to satisfy the ongoing 
liabilities of two major creditors of Widney. Accordingly, the Board has reached 
agreement with Darby Properties, the landlord of the Northampton Properties and 
TrustCo in relation to such liabilities, further details of which are set out 
below. 
 
 
The arrangement with TrustCo constitutes a related party transaction for the 
purposes of the AIM Rules. Accordingly the Independent Director (Andrew 
Wingfield) has been appointed by the Board to consider the Creditor 
Arrangements. The Independent Director considers, having consulted with FinnCap, 
that the terms of the Creditor Arrangements are fair and reasonable insofar as 
the Shareholders are concerned. 
 
 
Notwithstanding the significant cash flow savings that will be achieved by the 
Creditor Arrangements, the Board considers that it is necessary to raise further 
funds to provide additional working capital to support the Group's operations 
for the remainder of the current financial year. It is not possible to provide 
such funding out of existing debt facilities. Widney's banks, whilst unwilling 
to increase the existing facilities, are supportive of the Creditor Arrangements 
and the Placing. 
 
 
In view of the current credit climate, the associated difficulties in raising 
bank debt and the general economic conditions, the Board believes that any 
increase in funds invested is best achieved by issuing equity and subordinated 
debt. The Directors believe that the Placing represents the best way to build 
value in the Company by providing the Company with additional working capital. 
 
 
Graham Errington, Gerry Cotterill and Joe Grimmond have agreed to participate in 
the Placing in order to support this strategy. This participation is a related 
party transaction for the purposes of the AIM Rules. Accordingly the Independent 
Director has been appointed by the Board has been formed for the purposes of 
considering the terms of the Placing. The Independent Director considers, having 
consulted with FinnCap in its capacity as the Company's nominated advisor, that 
the terms of the Placing are fair and reasonable insofar as the Shareholders are 
concerned. 
 
 
Shareholders should be aware that, without the Placing Proceeds, the Directors 
believe that the Company is unlikely to have adequate working capital. Such 
funds are required to support the Company's plans and ongoing working capital 
requirements. The Directors believe that should the Shareholders not vote in 
favour of the Resolutions this might threaten the Company's ability to sustain 
its business. 
 
 
The proposed issue of the Consideration Shares and Placing Shares is being 
carried out on a non-pre-emptive basis subject to Shareholder approval. The 
Independent Director believes that the substantial additional cost and delay 
which a rights issue or an open offer would entail, would not be in the best 
interests of the Company in the circumstances, given the financial position of 
the Company and the necessity to complete the Placing in a timely manner. 
 
 
Proposed arrangements with Darby Properties and the TrustCo 
 
 
Darby Properties 
 
 
Widney leases the Northampton Properties from Darby Properties. The properties 
were previously occupied by Widney Cabs and are now vacant following a 
restructuring of the operations of Widney Cabs. The lease of Unit 61 has 13 
unexpired years at an annual rental of GBP145,000 excluding insurance premium 
and council tax. Darby Properties has agreed that in consideration for the issue 
of 1,500,000 new Ordinary Shares credited as fully paid to Darby Properties, 
together with a dilapidations payment of GBP60,000 payable in three annual 
instalments, Widney may surrender the lease of Unit 61 without further financial 
penalty. Completion of the agreement with Darby Properties is conditional on the 
Company passing the Resolutions and raising not less than GBP425,000 
(before expenses) pursuant to the Placing. 
 
 
Widney will retain the lease of Unit 60 which will be jointly marketed with 
Darby Properties. 
 
 
The Widney (1988) Pension Scheme 
 
 
As at 1 October 2007 the latest triennial valuation of the Scheme's assets and 
liabilities produced a deficit of GBP1,039,000. Widney has previously 
contributed to the Scheme deficit at GBP157,000 per annum with monthly cash 
contributions of GBP13,083. 
 
 
The directors of TrustCo (Graham Errington, Barry Jordan and Steve Roberts) have 
agreed with the Board (Graham Errington and Barry Jordan having been excluded 
from any deliberations of the Board) that in consideration for a moratorium on 
cash contributions by Widney to the Scheme for a period of three years from 1 
January 2009 to 1 January 2012, Widney will issue 6,000,000 new Ordinary Shares 
credited as fully paid to TrustCo. Such Ordinary Shares will form part of the 
Scheme's assets. If such Ordinary Shares increase in value over the next three 
years then such increase in value will reduce the deficit and will be a 
significant factor in determining the level of contributions which Widney will 
be required to make in three years time to fund any further deficit. Completion 
of the agreement with the Trustees is conditional upon the Company passing the 
resolutions and raising not less than GBP425,000 (before expenses) pursuant to 
the Placing. 
 
 
Upon Completion, TrustCo will hold 6,000,000 Ordinary Shares representing 
approximately 13.24 per cent of the Enlarged Issued Share Capital. TrustCo has 
entered into an agreement with the Company and FinnCap which requires TrustCo to 
sell such Ordinary Shares through FinnCap in order to maintain an orderly market 
in the share capital of the Company. 
 
 
Section 108 valuation 
 
 
The issue of Ordinary Shares to TrustCo in consideration of a moratorium on cash 
contributions for a period of three years amounts to non-cash consideration for 
the purposes of the Act. 
 
 
In accordance with the Act a public company cannot issue shares for non-cash 
consideration unless the consideration for the allotment has been independently 
valued, a report with respect to its value has been made to Widney within a 
period of 6 months prior to such issue and a copy of the report has been 
delivered to TrustCo and the Registrar of Companies prior to the issue of such 
shares. 
 
 
PKF (UK) LLP, having been instructed by the Board, has completed such a report 
and that it has been delivered to Widney and will be delivered to TrustCo. A 
copy of such report will also be delivered to the Registrar of Companies. 
 
 
The Consideration Shares will, when issued, rank pari passu in all respects with 
the existing Ordinary Shares then in issue, including the right to receive all 
dividends and other distributions thereafter declared, made or paid on such 
Ordinary Shares. Application will be made for the Consideration Shares to be 
admitted to trading on AIM and dealings are expected to commence on 16 February 
2009. The issue of the Consideration Shares is conditional upon the approval of 
the Resolutions at the EGM. 
 
 
Details of the Placing 
 
 
The Company is proposing to raise GBP425,000 (before expenses) by means of the 
issue to certain investors of 12,000,000 new Ordinary Shares at the Placing 
Price and the issue of GBP245,000 of Secured Loan Stock. The Placing Price 
represents a discount of approximately 55.56 per cent. to the closing mid-market 
price of the Ordinary Shares on 20 January 2009 (the latest practicable date 
prior to the date of this announcement) of 3.375 pence. 
 
 
The net proceeds of the Placing will amount to approximately GBP325,000. The 
Placing Proceeds will be used to fund the ongoing working capital requirements 
of the Group. 
 
 
Conditional upon the Company raising, in aggregate, GBP425,000 (before expenses) 
pursuant to the Placing, Joe Grimmond has agreed to subscribe for GBP80,000 
worth of Placing Shares and GBP170,000 of Secured Loan Stock and Graham 
Errington has agreed to subscribe for GBP25,000 worth of Placing Shares and 
GBP25,000 of Secured Loan Stock and Gerry Cotterill has agreed to subscribe for 
GBP50,000 of Secured Loan Stock. 
 
 
 
 
 
 
The Placing is conditional, inter alia, upon: 
 
 
  *  the approval of the Resolutions at the EGM; 
  *  the Placing Agreement becoming unconditional in all respects and not having been 
  terminated in accordance with its terms; and 
  *  Admission of the Placing Shares, 
 
 
 
in each case by no later than 8.00 a.m. on 16 February 2009 (or such time and 
date as the Company and FinnCap may agree, being not later than 31 March 2009). 
 
 
The Placing Shares will, when issued, rank pari passu in all respects with the 
existing Ordinary Shares then in issue, including the right to receive all 
dividends and other distributions thereafter declared, made or paid on such 
Ordinary Shares. Application will be made for the Placing Shares to be admitted 
to trading on AIM and dealings are expected to commence on 16 February 2009. The 
Secured Loan Stock will not be admitted to AIM or otherwise listed or dealt with 
on any stock exchange. 
 
 
The Concert Party 
The Concert Party Directors are deemed to be acting in concert for the purpose 
of the City Code. The Concert Party Directors and TrustCo are also deemed to be 
acting in concert for the purpose of the City Code by virtue of Graham 
Errington's directorship of TrustCo. In addition, Beryl Grimmond is deemed to be 
acting in concert with the other members of the Concert Party as the spouse of 
Joe Grimmond. 
As at 20 January 2009 (being the latest practicable date prior to the date of 
this announcement), the Concert Party, collectively, held 6,081,199 Ordinary 
Shares representing 23.55 per cent. of the Company's issued share capital. 
The City Code and the Rule 9 Waiver 
The terms of the Proposals give rise to certain considerations under the City 
Code. Brief details of the Panel, the City Code and the protection they afford 
are given below. 
The City Code is issued and administered by the Panel. Widney is a company to 
which the City Code applies and Shareholders are accordingly entitled to the 
protections afforded by the City Code. The City Code and the Panel operate 
principally to ensure that shareholders are treated fairly and equally. 
Under Rule 9 of the City Code, any person who acquires an interest (as defined 
in the City Code) in shares which, taken together with shares in which he is 
already interested and in which persons acting in concert with him are 
interested, carry 30 per cent. or more of the voting rights of a company which 
is subject to the City Code is normally required by the Panel to make a general 
offer to all of the remaining shareholders to acquire their shares. Similarly, 
when any person, together with persons acting in concert with him, is interested 
in shares which in aggregate carry not less than 30 per cent. of the voting 
rights of such a company but does not hold shares carrying more than 50 per 
cent. of such voting rights, a general offer will normally be required if he or 
any person acting in concert with him, acquires any further interest in any 
other shares which increases the percentage of shares carrying voting rights in 
which he is interested. An offer made under Rule 9 must be made in cash at a 
price not less than the highest price paid by him, or any other member of the 
group of persons acting in concert with him, for any interest in shares in the 
Company during the 12 months prior to the announcement of the offer. 
As at the date of this announcement the Concert Party collectively hold 
interests in 6,081,199 Ordinary Shares which represent 23.55 per cent. of the 
Company's voting rights. Upon Completion, the Concert Party will collectively 
hold interests in 19,081,199 Ordinary Shares which will represent approximately 
42.10 per cent. of the Company's voting rights. 
The Panel has, however, agreed to waive the obligation to make a general offer 
that would otherwise arise on the Concert Party as a result of the issue of 
Ordinary Shares pursuant to the Proposals subject to approval by the Independent 
Shareholders. Accordingly, Resolution 1 will be proposed at the EGM, and will be 
taken on a poll of Independent Shareholders. To be passed, the Waiver Resolution 
will require a simple majority of the votes cast by the Independent 
Shareholders. The Concert Party will be disenfranchised from voting on the 
Waiver Resolution at the EGM due to its involvement in the Proposals. 
Given that the Proposals are required to be implemented in order to provide the 
Company with the additional funds necessary to continue to sustain its business, 
the Independent Director considers the Rule 9 Waiver to be in the best interests 
of the Company and the Shareholders as a whole, and recommends that you vote in 
favour of the Waiver Resolution. 
The Rule 9 Waiver is only in respect of the issue of Ordinary Shares pursuant to 
the Proposals to the Concert Party. Any acquisition of Ordinary Shares by other 
means will be subject to the normal provisions of the City Code. The Concert 
Party will, following Completion, be interested in Ordinary Shares carrying more 
than 30 per cent. of the Company's voting share capital but will not hold 
Ordinary Shares carrying more than 50 per cent. of such voting rights and any 
further increase in that interest in Ordinary Shares will be subject to the 
provisions of Rule 9. 
Extraordinary General Meeting 
 
 
The Resolutions to be put to shareholders at the EGM are as follows: 
 
 
Resolution 1 (the Waiver Resolution) 
The first Resolution is an ordinary resolution and relates to the disapplication 
of the application of Rule 9 in respect of the Proposals described above. The 
Panel has confirmed that, subject to Resolution 1 being passed by the requisite 
majority of the Independent Shareholders on a poll, no mandatory bid obligation 
under Rule 9 would be triggered by virtue of the issue of Ordinary Shares to the 
Concert Party pursuant to the Proposals. 
In accordance with the requirements of the City Code, no member of the Concert 
Party will vote on Resolution 1 in respect of their aggregate holding of 
6,081,199 Ordinary Shares which represents 23.55 per cent. of the Company's 
Existing Shares. Voting on the Waiver Resolution will be by way of poll, and 
following the EGM, the Company will announce its result. 
Resolution 2 (share authorities) 
Resolution 2 relates to the share capital authorities required to implement the 
Proposals and to provide flexibility for additional share issues in the future. 
If passed, the authorities granted by the Resolution will replace the current 
share issue authorities of the Company obtained at general meetings of the 
Company. The proposed authorities will: 
  *  increase the authorised share capital of the Company from GBP450,000 to 
  GBP1,500,000 by the creation of an additional 105,000,000 new Ordinary Shares to 
  facilitate the issue and allotment of the Consideration Shares and Placing 
  Shares and to allow future headroom for further issues.; 
  *  provide the Board with authority to allot Ordinary Shares (i) in connection with 
  the issue of the Consideration Shares and Placing Shares up to a maximum 
  aggregate nominal amount of GBP195,000 and (ii) otherwise up to a maximum 
  nominal amount of GBP86,089 (representing approximately one third of the 
  ordinary share capital of the Company in issue as at 20 January 2009, the latest 
  practicable date prior to the publication of the Circular.; and 
  *  give the Board authority to allot Ordinary Shares for cash without first being 
  required to offer such securities to existing Shareholders in accordance with 
  the statutory pre-emption provisions set out in the Act, provided that such 
  authority will be limited to: 
 
(a)    the issue of the Consideration Shares; 
(b)    the issue of the Placing Shares 
(c)    the issue of Ordinary Shares pursuant to rights issues or open offers; 
and 
(d)    (otherwise pursuant to sub-paragraphs (a), (b) and (c)) up to an 
aggregate nominal amount of GBP25,827 (representing approximately 10 per cent. 
of the ordinary share capital of the Company in issue as at 20 January 2009, the 
latest practicable date prior to the publication of the Circular). 
Resolution 2 will be proposed as a special resolution. 
Shareholders should note that these Resolutions are inter-conditional and, if 
either one is not passed, the Proposals will not proceed. The Directors believe 
that should Shareholders not vote in favour of the Resolutions this might 
threaten the Company's ability to sustain its business. 
 
 
Irrevocable undertakings 
 
 
The Company has received irrevocable undertakings to vote in favour of 
Resolution 1 from the three largest institutional Shareholders, who in aggregate 
have a beneficial interest in respect of 3,663,932 Ordinary Shares representing 
approximately 14.19 per cent. of the existing issued share capital of the 
Company. 
 
 
The Company has received irrevocable undertakings to vote in favour of the 
Resolution 2 from a number of shareholders who in aggregate have a beneficial 
interest in respect of 9,145,131 Ordinary Shares representing approximately 
35.41 per cent. of the existing issued share capital of the Company. 
 
 
Importance of voting in favour of the Proposals 
 
 
As described above, the Directors believe that should Shareholders not vote in 
favour of the Proposals, or should the Placing not proceed for any other reason, 
this might threaten the Company's ability to sustain its business unless the 
Directors were able to find alternative funding and, therefore, the Directors 
would urge Shareholders to vote in favour of the Proposals. 
 
 
Recommendation 
 
 
The Independent Director, who has been so advised by FinnCap, considers that the 
Proposals are fair and reasonable and are in the best interests of the Company 
and the Independent Shareholders as a whole. Accordingly, the Independent 
Director recommends that Shareholders vote in favour of all of the Resolutions 
to be proposed at the EGM. In giving its advice to the Independent Director in 
respect of the matters outlined above, FinnCap has taken into account the 
Independent Director's commercial assessments. 
 
 
21 January 2009 
 
 
  Enquiries: 
 
 
+------------------------------------+-----------------------------------+ 
| Widney plc                         |                Tel: [phone] | 
+------------------------------------+-----------------------------------+ 
| Joe Grimmond, Chairman             |                                   | 
+------------------------------------+-----------------------------------+ 
| Graham Errington, Finance Director |                                   | 
+------------------------------------+-----------------------------------+ 
|                                    |                                   | 
+------------------------------------+-----------------------------------+ 
| FinnCap                            |                Tel: [phone] | 
+------------------------------------+-----------------------------------+ 
| Clive Carver                       |                                   | 
+------------------------------------+-----------------------------------+ 
| David Lawman                       |                                   | 
+------------------------------------+-----------------------------------+ 
|                                    |                                   | 
+------------------------------------+-----------------------------------+ 
| College Hill                       |                Tel: [phone] | 
+------------------------------------+-----------------------------------+ 
| Richard Pearson                    |                                   | 
+------------------------------------+-----------------------------------+ 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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