RNS Number:2028P
Celoxica Holdings PLC
09 January 2007
9 January 2007
CELOXICA HOLDINGS PLC
("CELOXICA" OR "THE COMPANY")
Trading Update, Placing of New Ordinary Shares, Share Re-organisation
and Notice of Meeting
Celoxica Holdings plc (AIM: CXA) - a provider of electronic system level (ESL)
design technology for the embedded systems and accelerated computing markets,
today provides an update on current trading.
Following its trading update on 31 October 2006, the Company announces today
that due to the ESL market continuing to lag behind industry growth forecasts,
revenues for the twelve month period to 31 December 2006 are expected to be
approximately #3.6 million. This is below expectations and the shortfall in
revenue will significantly increase the anticipated loss for the period.
As outlined in the announcement on 31 October 2006, the Company is now executing
on its strategy of taking full advantage of emerging opportunities in the
accelerated computing market. This strategy has three major components:
I.Business Development: The Company has recently added three new accelerated
computing customers to its growing portfolio that targets blue chip companies
in the Oil & Gas and Finance industries, bringing the total
customers for the year to nine.
II.Technology Development: The Company will be finalising the latest release of
its design software and will also be releasing new accelerated computing
products in the first quarter of 2007.
III.Corporate Restructuring: The Company continues to assess all of its
strategic options. A restructuring of the company is presently underway
and further announcements on this restructuring will be made in due course.
The Company further announces that it proposes to raise approximately #3 million
(before expenses) (the "Placing") through the issue of 18,756,250 New Ordinary
Shares (the "Placing Shares") at a price of 16 pence per share ("Placing
Price"). The Placing Price represents a discount of 31.9 per cent. to the
closing mid-market price of 23.5 pence per Existing Ordinary Share on 8 January
2007, being the last dealing day prior to the release of this announcement. The
Placing Shares will represent approximately 26.7 per cent. of the Company's
Enlarged Ordinary Share Capital.
The Placing Shares have been conditionally placed by Arbuthnot Securities with
institutional, trade and other investors. Subject, inter alia, to the passing of
the Resolutions at the Meeting on 1 February 2007, Admission and dealings in the
Placing Shares are expected to commence on AIM on 2 February 2007. As part of
the Placing, certain Directors are subscribing for an aggregate of 187,500
Placing Shares. Certain Directors (and their related parties) and other
Shareholders have irrevocably undertaken to vote in favour of the Resolutions in
respect of 31,551,366 Existing Ordinary Shares, representing, in aggregate,
approximately 61.2 per cent. of the Company's Existing Issued Ordinary Shares.
As the Placing Price is below that of the nominal value of the Company's
Existing Ordinary Shares, the Company needs to effect the Share Re-organisation.
The Company intends to invest the net proceeds of the Placing on the three
components of the accelerated computing strategy with a particular emphasis on
the following:
*developing applications for existing and new accelerated computing
customers:
*application specific IP and products for the accelerated computing
market, focusing specifically on the finance, oil and gas and bioinformatics
application sectors;
*strategic partnerships and business development within the accelerated
computing market.
Jack Fryer, Chairman commented,
"We believe there is good, medium term growth potential in the Accelerated
Computing market where our solutions are now gaining market acceptance. The fund
raising has been completed in order for the Company to capitalise on this
opportunity. We would like to thank our existing shareholders for their
continued support."
ENQUIRIES
Celoxica Holdings plc (www.celoxica.com) Tel. +44 (0)1235 863 656
Phil Bishop, CEO
Bernard Morgan, CFO
ICIS Tel. +44 (0) 20 7651 8688
Tom Moriarty
Paul Youens
Arbuthnot Tel. +44 (0) 20 7012 2000
Tom Griffiths
Alasdair Younie
PLACING OF NEW ORDINARY SHARES,
SHARE RE-ORGANISATION,
AUTHORITIES TO ISSUE SECURITIES
AND
NOTICE OF MEETING
Introduction
The Company announces that it proposes to raise approximately #3 million (before
expenses) by way of a placing of 18,756,250 New Ordinary Shares at a price of 16
pence per share. The net proceeds of the Placing will be used to fund investment
in growth of the Company, specifically in the accelerated computing market, and
for working capital purposes.
The Placing Shares have been conditionally placed with institutional, trade and
other investors. Subject, inter alia, to the passing of the Resolutions at the
Meeting, Admission and dealings in the Placing Shares are expected to commence
on AIM on 2 February 2007. As the Placing Price is below that of the nominal
value of the Company's Existing Ordinary Shares, the Company needs to effect the
Share Re-organisation.
The Placing and the Share Re-organisation are conditional, inter alia, upon the
Company obtaining approval from Shareholders at the Meeting. Certain Directors
(and their related parties) and other Shareholders have irrevocably undertaken
to vote in favour of the Resolutions in respect of 31,551,366 Ordinary Shares,
representing, in aggregate, approximately 61.2 per cent. of the Company's
Existing Issued Ordinary Shares.
Background to and reasons for the Placing
Celoxica provides electronic system level ("ESL") design technology that
improves productivity and efficiency in the design of on-chip electronic systems
using programmable semiconductor chips for the embedded systems and accelerated
computing markets. The Company develops and delivers software design tools,
programmable boards, vertical market intellectual property and ongoing
consultancy services that enable electronic system design solutions for a
diverse and growing set of markets. Celoxica's ESL technology allows software
engineers to use programmable silicon chips in their applications thereby
extending the applicability of ESL solutions beyond those addressed by the
traditional electronic design automation ("EDA") industry.
The Company raised approximately #6.1 million on its admission to AIM on 27
October 2005 by way of a placing of 19,424,000 Existing Ordinary Shares at 31.25
pence per share with institutional and other investors. The net proceeds of the
placing were used to fund the next growth phase of the business, including
product creation and the launch of new products and to provide working capital
for the Group. At the time of the Company's admission to AIM, the Company had
licensed approximately 400 commercial seats of its design tools, making it a
leading provider of ESL design solutions.
The Company announced on 5 January 2006 that the total orders for the year ended
31 December 2005 would be #5.0 million, an increase of 42 per cent. over the
same period in 2004, with each of the Group's three geographic territories
(EMEA, Asia Pacific and the Americas) performing strongly. However, #0.4 million
of orders (primarily relating to software licences) arrived later in the year
than expected and as a result, the Company expected to report lower than
anticipated revenues for the year ended 31 December 2005 of not less than #4.25
million. On 21 March 2006, the Company reported its preliminary results for the
year ended 31 December 2005 with turnover of #4.3 million (2004: #3.4 million),
loss before tax of #2.6 million (2004: loss of #3.4 million) and cash of #4.5
million (2004: #2.6 million).
On 13 September 2006, the Company reported its interim results for the six
months to 30 June 2006, with turnover of #2.4 million (2005: #2.3 million), loss
before tax of #1.6 million (2005: loss of #1.4 million) and cash of #2.3 million
(2005: #1.0 million). At the same time, the Company announced that it continued
to maintain a solid platform in the embedded design market, while increasing its
emphasis and presence in the accelerated computing market. It stated that it had
increased its customer portfolio in the accelerated computing market with six
new high-performance computing projects within the finance and oil and gas
sectors, complementing its existing sectors of aerospace and defence and life
sciences.
Subsequently, on 31 October 2006, the Company announced that even though it
continued to win new customers for its ESL technology, the embedded systems
market was growing more slowly than expected. As a result, the Board anticipated
that revenues for the second half of the year would be in line with the same
period for 2005 and therefore the full year results would be materially lower
than market expectations. It was also announced that the Directors would
commence a review of the Company's strategic options in order to maximise
shareholder value.
The Directors believe that the reason for the lower than expected results is
primarily due to the lack of growth of ESL technology within the EDA industry.
At the time of the Company's admission to AIM, it was forecast by research
organisations such as Gartner Dataquest that ESL would become a major driver of
growth in the EDA industry. The Directors believe that this still remains the
case, but that the forecast growth has yet to materialise for a number of
reasons including:
*a general slow down in the semiconductor industry; and
*entrenched large existing EDA companies, delaying or choosing to redefine
their entry into ESL.
The Directors therefore believe that demand for the Company's products and
services in the EDA market will continue, but not at the rate previously
expected.
However, the demand for the Company's products and services within the
accelerated computing market is forecast to increase slightly in 2006. ESL
technology is helping to improve the performance of software algorithms. The
Directors consider that, within the $14.9 billion high performance computing
market, there are accelerated computing opportunities. The Company has developed
knowledge in the use and deployment of FPGA devices as co-processors. The
Company is using this knowledge to develop its IP and when coupled with the
Company's software and hardware products, the Directors believe that this will
provide a good opportunity to penetrate the finance, oil and gas, and
bioinformatic application sectors.
The Company's services have been used in the development of a wide range of
accelerated computing applications, including virus checking, real-time image
processing and scientific and industrial computing. The Company has been able to
develop relationships with existing business partners in the accelerated
computing market, including Intel, AMD and Xilinx. Xilinx will be participating
in the Placing.
The Directors believe that it is in the best interests of the Company to
initiate an investment programme in order to take advantage of the increasing
opportunities in the accelerated computing market.
In order to fully maximise the opportunities that exist in the accelerated
computing market, the Company requires increased investment which the Placing
will provide. The Company intends to invest the net proceeds of the Placing as
follows:
*to develop application specific IP and products for the accelerated
computing market, focusing specifically on the finance, oil and gas and
bioinformatic application sectors;
*to enable the Company to expand its strategic partnerships within the
accelerated computing market; and
*to provide working capital for the Company.
Details of the Placing
The Company proposes to raise approximately #3 million (before expenses) through
the issue of the Placing Shares at the Placing Price. The Placing Price
represents a discount of 31.9 per cent. to the closing mid-market price of 23.5
pence per Existing Ordinary Share on 8 January 2007, being the last dealing day
prior to the announcement of the Placing. The Placing Shares will represent
approximately 26.7 per cent. of the Company's Enlarged Ordinary Share Capital.
Pursuant to the terms of the Placing Agreement, Arbuthnot, as agent for the
Company, has agreed conditionally to use reasonable endeavours to procure
subscribers for the Placing Shares at the Placing Price. The Placing Agreement
is conditional upon, inter alia, the Resolutions being duly passed at the
Meeting and Admission becoming effective on or before 8.00 a.m. on 2 February
2007 (or such later time and/or date as the Company and Arbuthnot may agree, but
in any event no later than 8.00 a.m. on 16 February 2007). The Placing Agreement
contains provisions entitling Arbuthnot to terminate the Placing Agreement at
any time prior to Admission in certain circumstances. If this right is
exercised, the Placing will not proceed. The Placing has not been underwritten
by Arbuthnot.
Application has been 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 on AIM will commence on 2
February 2007.
The Placing Shares will rank pari passu in all respects with the New Ordinary
Shares in issue following the Share Re-organisation, including the right to
receive all dividends and other distributions declared following Admission. It
is expected that CREST accounts will be credited on the day of Admission and
that share certificates (where applicable) will be despatched by 9 February
2007.
As part of the Placing, certain of the Directors have agreed to subscribe for
187,500 Placing Shares in aggregate at the Placing Price. This represents 1.0
per cent. of the Placing Shares. Under the Placing, Philip Bishop, Chief
Executive, has agreed to subscribe for 62,500 Placing Shares, Bernard Morgan,
Finance Director, has agreed to subscribe for 31,250 Placing Shares, Ian Yeoman,
non-executive Director, has agreed to subscribe for 31,250 Placing Shares and
Jack Fryer, non-executive Chairman has agreed to subscribe for 62,500 Placing
Shares, all at the Placing Price. On completion of the Placing, Philip Bishop
will hold 91,700 New Ordinary Shares, representing approximately 0.1 per cent.
of the Enlarged Ordinary Share Capital, Bernard Morgan will hold 37,450 New
Ordinary Shares, representing approximately 0.1 per cent. of the Enlarged
Ordinary Share Capital, Ian Yeoman will hold 31,250 New Ordinary Shares,
representing approximately 0.1 per cent. of the Enlarged Ordinary Share Capital
and Jack Fryer will hold 64,164 New Ordinary Shares, representing approximately
0.1 per cent. of the Enlarged Ordinary Share Capital.
Share Re-organisation
The nominal value of the Ordinary Shares is currently 25 pence per share. As a
matter of English law, the Company is unable to issue the Placing Shares at a
Placing Price which is below their nominal value. It is therefore proposed to
sub-divide the entire existing authorised share capital, both issued and to be
issued, consisting of 60,000,000 Ordinary Shares of 25 pence each, into
60,000,000 Ordinary Shares of 1 pence each and 60,000,000 Deferred Shares of 24
pence each thus enabling the Company lawfully to implement the Placing at the
Placing Price. The aggregate nominal value of the Company's authorised share
capital immediately after this alteration is approved by Shareholders will
remain the same, but it is intended, as indicated below, then to seek approval
to increase the Company's authorised share capital to permit the Placing to
occur.
The rights attached to the New Ordinary Shares will be substantially the same as
the rights attached to the Existing Ordinary Shares. The lower nominal value of
the New Ordinary Shares will allow the Placing to proceed. The Deferred Shares
will, as their name suggests, have very limited rights which are deferred to the
New Ordinary Shares and will effectively carry no value as a result.
Accordingly, the holders of the Deferred Shares will not be entitled to receive
notice of, attend or vote at general meetings of the Company; nor be entitled to
receive any dividends or any payment on a return of capital until at least
#10,000,000 has been paid on each New Ordinary Share. No application will be
made for the Deferred Shares to be admitted to trading on AIM.
The Company will also be given power to arrange for all the Deferred Shares to
be transferred to a custodian or to be purchased for nominal consideration only
without the prior sanction of the holders of the Deferred Shares. It is the
current intention of the Directors to exercise this power within two months of
the passing of the Resolutions so that the Shareholders in the Company will, as
now, hold only Ordinary Shares in the Company. It is not intended therefore to
issue share certificates for the Deferred Shares.
Options, including the exercise price will be unaffected, save that the Ordinary
Shares to be issued on the exercise of such options will be New Ordinary Shares.
In the case of options granted under the Company's Unapproved (EMI) Share Option
Scheme 2002, the confirmation of HMRC will be applied for such that options
granted as EMI options will retain their tax approved status and that no
adjustment will be required to the exercise price payable under the options as
part of the Share Re-organisation.
Similarly, the Ordinary Shares to be issued on the exercise of the Warrant will
be New Ordinary Shares. Under the terms applicable to the Warrant, the formal
consent of the Warrantholder to the Share Re-organisation is required and this
has been obtained by the Company.
No new certificates for the New Ordinary Shares will be dispatched if the Share
Re-organisation becomes effective. Instead, on the date the Share
Re-organisation is due to become effective, a letter confirming that the Share
Re-organisation has become effective will be sent to Shareholders holding New
Ordinary Shares in certificated form. If any Shareholder wishes to receive a
replacement certificate for New Ordinary Shares he should send his certificate
in respect of his holding of Existing Ordinary Shares to the Company's
registrars, Attn: John Pottruff, Capita Registrars, Proxy Department, The
Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, and the registrars will
then issue to the Shareholder a replacement certificate for New Ordinary Shares.
If the Share Re-organisation becomes effective, then, prior to the commencement
of dealings in the New Ordinary Shares on AIM, the appropriate stock account in
CREST of the relevant shareholder will be credited with such person's
entitlement to New Ordinary Shares and the relevant holding of the Existing
Ordinary Shares will be cancelled. The New Ordinary Shares are expected to be
eligible to be traded through the CREST system with effect from the date of
commencement of dealings on AIM.
Meeting
The Meeting will be held on 1 February 2007 at the offices of Arbuthnot
Securities Limited at Arbuthnot House, 20 Ropemaker Street, London EC2Y 9AR at
10.00 a.m. at which the Resolutions will be proposed to permit the Share
Re-organisation and the issue of the Placing Shares.
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
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