Zotefoams Share Discussion Threads

[dubai123] 16/5/2018 08:34

Directors participation ..... demand led placing......let's no forget unique world class technologyUK plastics Pact which is endorsed by the brand holders has to also be an incredible opportunity for MuCell which removes c15% plastic content at source.So many opportunities in so many areas . How much more could we wantI'm a buyer

[woodcutter] 16/5/2018 08:18

kaz I don't disagree with much of what you say and so far at the open everything looks okay. nonetheless often at these placings the insiders who are on board have the opportunity to short the stock prior to the placing (it's not uncommon) and retain the short for sometime after as a hedge against other investor selling which pushes the price below the placing price. I've witnessed that many times over the years.

On the subject of the expansion. It's been clear for a couple of years that their products are in demand and they've made great improvements both in the UK and US but again in the US this has been two stage.

Maybe I'm being unfair in my criticism but they appear to me to be being reactive to the market rather than proactive. This new polish capacity should have been in the planning two years ago and coming on-line now to meet the current demand.

What if customers look elsewhere to fill the gap? You've got to tempt them back then.

On the positive side the stock is tightly held and quite illiquid so the likelihood of any shorting in to the placing is limited to say the least. And they are so niche their products aren't easily reproduced so maybe that'll help considerably.

as noted it will be accumulate on any weakness.

woody

[soundbuy] 16/5/2018 07:28

Excellent, away at 530p, mildly dilutive........

[battlebus2] 15/5/2018 20:54

You can by for just a tad over in the market. The better the price the lass dilution.

[dozey3] 15/5/2018 20:48

So once again small private investors are, er, right royally screwed as the fat cats lap up the cream. What’s wrong with a deeply discounted rights issue? Everyone then has an equal option, and underwriting isn’t necessary so costs are sensible. Don’t get me wrong; I like ZTF and have held since 2005. It’s now one of my largest holdings, and I don’t intend to sell any time soon. Furthermore investment in Europe makes good sense. But I am disappointed.

[battlebus2] 15/5/2018 18:14

Seems a very wise move given demand is accelerating. I’m very happy they’ve got on with this quickly and there’s no doubts over funding etc.

[janeann] 15/5/2018 18:10

Thanks exbroker; and lucky you; if they had the courtesy to ask I would have had my allowance as well!

I do see it all as positive long term but would have liked the price a tad higher (and the opportunity to participate). No doubt we will find out about uptake - perhaps at 8 am tomorrow.

[exbroker] 15/5/2018 17:55

Hi Janeann
I understand you comment but the soundings for this went out late last week, so any buyers were inside so could not deal that’s why the price fell on Friday on little volume no buyers!
I was inside on the deal so could not comment, I have taken my pro rata and got the impression I was lucky to get that many.

[janeann] 15/5/2018 17:34

seems to me the gradual decline in price has been orchestrated to enable the placing to not appear to be at a signifcant discount.

[geraldus] 15/5/2018 17:13

Yes Ed,that is what took the froth off the price alright.Looks like they have plenty of opportunities and shouldn't be anything untoward in tomorrows announcement.

[kazoom] 15/5/2018 17:08

HA - couldn't decide whether to read anything into the recent "price weakness" so I bought back HALF of my trading position earlier.
As I haven't been invited into the placing, I guess I'll have to settle for that.

The placing is only at a modest discount and given that it confirms confidence in future growth (coming on the back of recent capacity building) I'm pretty happy with that & I'll be looking at maybe buying the other half of my trading position in the morning.

[ed 123] 15/5/2018 16:59

Hmmm .... I didn't see that coming.

Following a decent rise in the share price recently, I suppose 530p is good for the shareholder body.

I'm comforted by this bit,

"Zotefoams continues to expect 2018 to be another year of substantial progress for the Group ..."

[douglas fir] 15/5/2018 16:53

Proposed placing of shares in Zotefoams plc

[...]

RNS
RNS Number : 1825O
Zotefoams PLC
15 May 2018

THIS ANNOUNCEMENT (INCLUDING THE APPENDIX) AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA OR JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
For immediate release
15 May 2018
Zotefoams plc
Accelerated bookbuild to raise up to approximately £20.6 million to fund investment in new manufacturing capacity
and
New debt facility
Introduction
Zotefoams plc (LSE: ZTF) ("Zotefoams", the "Company" or, together with its subsidiary undertakings, the "Group") today announces a proposed placing of up to 3,886,792 new ordinary shares of 5 pence each ("Ordinary Shares") in the capital of the Company (the "Placing Shares") at a price of 530 pence per Placing Share (the "Placing Price") with existing and new institutional and other investors to raise gross proceeds of up to approximately £20.6 million (the "Placing").

Highlights:
· Placing of up to 3,886,792 Placing Shares at a Placing Price of 530 pence per Placing Share, representing up to 8.8 per cent. of the existing issued share capital of the Company, to raise gross proceeds of up to £20.6 million.
· Placing Price represents a 2.9 per cent. discount to the closing middle market price of 546 pence per Ordinary Share on 14 May 2018.
· New £57.5 million secured debt facility (plus a £25 million accordion feature) (the "Facility") agreed on attractive terms, to replace existing debt facilities of approximately £35 million.


· The Facility and the net proceeds of the Placing to fund the planned capital investment of approximately £23 million in a new manufacturing facility in Central

Europe ("CE") and higher working capital associated with organic growth and product mix enrichment from higher margin high performance products ("HPP") sales,

in addition to existing capital investment programmes in the UK and the USA.

· Preferred site identified in Poland which will deliver an increase in capacity of approximately 20 per cent, compared with 2017 annualised capacity, with sufficient

infrastructure to double this capacity in the future.

· New CE facility is expected to become operational in 2020 and to deliver fully flexible assets, initially with a focus on the Polyolefin foams business, but with the option to add HPP capability if needed, as well as to provide a logistics hub for Europe and regional manufacturing centre for T-FIT® insulation products.



Background to and reasons for the Placing
Zotefoams' strategy is to expand its business through profitable organic growth of its Polyolefin foams, HPP foams and MuCell extrusion technology licensing
businesses, with overall margins enhanced by product mix enrichment.
Sales growth of 22 per cent. in the financial year ended 31 December 2017 was constrained by manufacturing capacity. Over time, capacity investments are required and, ideally, these will be positioned locally to meet demand.
As previously stated, the Company has recently completed its major US capacity expansion investment (operational in March 2018) and announced significant expenditure to deliver additional capacity for expected future growth, notably a £12 million low-pressure capacity investment in the UK and a further US$9 million investment to double high-pressure autoclave capacity in the USA. This significant, already committed, investment plan will increase global manufacturing capacity by around 45 per cent. by the end of 2019. The Company also announced its strategic partnership with Nike at the end of 2017, increasing growth prospects in HPP.
Recently expected demand growth has accelerated still further: there are strong forward indications from new customers within the premium ZOTEK® product range and there is also good growth expected in AZOTE® polyolefin products. Following a strategic planning process, the Company's board of directors (the "Board" or the "Directors") expects that additional capacity will be required by 2020. In addition, ZOTEK® growth has been prioritised over AZOTE® within the product mix enrichment strategy, leading to a continued anticipated European supply shortage of AZOTE® foam manufacturing capacity.
The planned investment in a new CE manufacturing facility, which is expected to become operational in 2020, is largely designed to address this anticipated shortfall in AZOTE® polyolefin foam capacity, will deliver an increase in capacity of approximately 20 per cent. with sufficient infrastructure to double its capacity in the future. It will provide fully flexible assets, initially for polyolefin foams, including a new polyolefin-foam product line which enhances the Company's competitive position, and with the option to add HPP capability if needed.
The new CE facility will also provide a logistics hub for Europe and a regional manufacturing centre for T-FIT® insulation products. An approximately seven hectare CE location has been selected as the Group's UK plant is now fully built-out and due to CE's proximity to customers, its lower costs and the local investment incentives available, while also taking into account Brexit-related considerations. The preferred site has been identified on the A4 corridor in South West Poland (subject to the agreement of appropriate local investment incentives).
The net proceeds of the Placing of up to approximately £20 million, together with the funds available under the Facility detailed below, will provide the Company with the financial capability to pursue the CE investment opportunity and to fund higher working capital associated with organic growth and product mix enrichment from higher margin HPP sales, in addition to existing capital investment programmes in the UK and the USA. The estimated investment in the new CE facility is approximately £23 million, comprising freehold land, buildings, plant and equipment. The investment programme will involve a phasing of costs over a two year build period and the intended benefits are expected to begin by 2020.
As a consequence, the Placing is expected to be fully earnings per share dilutive in the current and next financial year, with the intended benefits of the additional capacity likely to be realised from 2020. The Placing will maintain the Company's financial flexibility and meet the Board's desired gearing level.
The Facility
As part of the funding process for the planned CE investment, the Company has agreed a new £57.5 million, five year secured debt facility arranged by Handelsbanken and NatWest, replacing its existing debt facilities of approximately £35 million. The Facility comprises a £25 million multicurrency term loan, a £25 million multicurrency revolving credit facility and a further £7.5 million sterling annually renewable term loan replacing the current Lombard facility. The debt terms are attractive with significantly lower pricing than the existing debt being repaid. In addition, there is a £25 million accordion feature to the facility to provide additional flexibility to pursue further attractive investment opportunities in the future.
The Facility is conditional upon, amongst other things, the Placing completing.

Current trading
Zotefoams has experienced a good start in the first four months of the year. Group revenue was approximately 7 per cent. ahead of the comparative period in 2017. However, after adjusting for the adverse impact of currency this year and excluding the large non-recurring capital contract invoiced by MuCell in the first quarter of 2017, Group revenue was approximately 17 per cent. ahead of last year.
Underlying this strong performance were the following factors:
· a 7 per cent. increase in sales of polyolefin foams; additional capacity has become available for the polyolefin foams business part-way through the period as the US facility began high-pressure gassing operations in March;

· HPP foams experienced very strong growth, particularly from the PEBA product range, which accounted for approximately 50 per cent. of HPP revenue in the period; and

· MuCell, excluding the large non-recurring capital contract invoiced in the first quarter of 2017, delivered a strong percentage increase in revenue against a relatively weak comparative in 2017.

The Company's capital investment programmes are progressing on schedule: the US facility is now operating 24/7 and ramping up to full capacity; the investments to further extend high-pressure gassing in the US and to add high-temperature and low-pressure expansion in the UK remain on course for planned commissioning in 2019.
Zotefoams continues to expect 2018 to be another year of substantial progress for the Group and, with committed capacity investments to support growth, it remains confident about the long-term prospects of the business.


Details of the Placing
Investec Bank plc ("Investec") and Arden Partners plc ("Arden" and together with Investec, the "Joint Bookrunners") are acting as joint bookrunners in connection with the Placing.
The Placing is subject to the terms and conditions set out in the appendix (the "Appendix") to this announcement (which forms part of this announcement, such announcement and the Appendix together being this "Announcement").
The Placing Shares, when issued, will represent approximately 8.8 per cent. of the Company's existing issued share capital. The Placing Price of 530 pence per share represents a discount of approximately 2.9 per cent. to the closing middle market price of 546 pence per Ordinary Share on 14 May 2018.
The Placing Shares are being offered by way of an accelerated bookbuild ("Bookbuild") which will be launched immediately following this announcement. The books are expected to close no later than 5.30 p.m. (London time) on 15 May 2018. The timing of the closing of the Bookbuild and the final number and allocation of Placing Shares to be issued at the Placing Price are to be determined at the discretion of the Company and the Joint Bookrunners. A further announcement will be made following the closing of the Placing, confirming the final details of the fundraising.
The Placing Shares, when issued, will be fully paid and will rank pari passu in all respects with the existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of issue.
Application has been made for the Placing Shares to be admitted to listing on the premium listing segment of the Official List (the "Official List") of the Financial Conduct Authority (the "FCA") and to be admitted to trading on the main market for listed securities of London Stock Exchange plc (the "London Stock Exchange"), (together "Admission").
Settlement for the Placing Shares and Admission is expected to take place on or before 8.00 a.m. on 18 May 2018. The Placing is conditional upon, among other things, Admission becoming effective and the placing agreement between the Company and the Joint Bookrunners (the "Placing Agreement") not being terminated in accordance with its terms.
The Appendix sets out further information relating to the Placing and the terms and conditions of the Placing.
The person responsible for arranging the release of this Announcement on behalf of the Company is James Kindell, the Company Secretary of the Company.
Enquiries:
Zotefoams plc
[phone]
David Stirling (Group CEO)
Gary McGrath (Group CFO)

[soundbuy] 14/5/2018 07:47

Liquidity liquidity - has worked both ways here....

Happy to hold (and reserve the right to delete this comment at a later date!)

[ali47fish] 11/5/2018 18:41

arent we all James but i am trying to be disciplined and you know it s more conforting to be like somebody said an average upper than downer

[james188] 11/5/2018 18:19

Admit it, Ali - you are tempted. I certainly am, although we are all a bit in the dark about the size of the order book and the terms of the deal with Nike. I will chew on it over the weekend.

[ali47fish] 11/5/2018 17:47

i ve learnt not to be tempted before seeing the statement

[kazoom] 11/5/2018 17:41

My sell a few weeks ago @550, initially looked quite clever, then less so, now it's looking quite cute again.

My hope had been to buy back in at around the same price (I made 10% on redeploying the money so far, but had hoped for 20%+) just before the AGM trading statement next Wednesday.

Even though the share-price is pretty wiggly here this is quite a big single day fall and on reasonable volumes 50k shares traded is more than 3x a "normal" day. I am in two minds now whether to buy back my 'trading' portion before the AGM TU or to read the statement first.

I can't recall ZTF news being particularly leaky , but a sizeable move a few days before a TU will always raise the question.

It still looks very good value to me on a longer term horizon anyway and I've no intention at this stage to consider selling my 'core' holding.

[ali47fish] 11/5/2018 17:01

modform- but the price fall is a weakness- so isntit an opp to add?

[modform] 11/5/2018 16:34

This is very illiquid, and not much free float available to pi, so the aim is accumulate on weakness, the company has a real moat and am sitting tight as Jesse Livermere used to say

[battlebus2] 11/5/2018 15:50

My guess is we just have a seller or two. Nothing to worry about imv all part of the course.

[geraldus] 11/5/2018 15:48

AGM next Wednesday so should get an update.