TIDMMRG
RNS Number : 2298T
Mercury Recycling Group PLC
24 September 2010
MERCURY RECYCLING GROUP PLC
Proposed Placing
Mercury Recycling Group PLC ('the Company') today announces its intention to
raise GBP175,000 (net of expenses) by way of a conditional placing to Westleigh
Investments Holdings Limited ("Westleigh").
Highlights
+----------+--------------------------------------------------------------+
| · | Westleigh will subscribe for 1,701,308 Ordinary Shares at a |
| | price of 10 pence each and 8,399,996 warrants each at a |
| | price of 0.25 pence |
+----------+--------------------------------------------------------------+
| · | Each warrant entitles Westleigh to subscribe for an Ordinary |
| | Share at 10 pence once the Company's share price has |
| | averaged 15 pence for a period of at least 30 consecutive |
| | days |
+----------+--------------------------------------------------------------+
| · | Westleigh to be become a strategic investor with a 29.9% |
| | shareholding (on a fully diluted basis and assuming all |
| | Warrants are exercised) |
+----------+--------------------------------------------------------------+
| · | Placing conditional upon receipt of necessary Shareholders |
| | approvals at a General Meeting to be held on 22 October 2010 |
+----------+--------------------------------------------------------------+
| · | Proceeds to be used to explore growth opportunities |
+----------+--------------------------------------------------------------+
| · | Giles Clarke and Nick Harrison of Westleigh to join the |
| | Company's board on completion of the Placing |
+----------+--------------------------------------------------------------+
| · | Interim Results for the six months to 30 June 2010 announced |
| | separately today |
+----------+--------------------------------------------------------------+
The Rt Hon The Lord Barnett JP PC, Non-Executive Chairman, commented:
"The proposals we are announcing today represent an exciting opportunity to
create value for Shareholders. I am confident Westleigh's two representatives on
the Board, Giles Clarke and Nick Harrison, will help to transform the future of
the Group. They have a successful track record, and are very well respected in
the City. This, together with the strategy we are spelling out today, can only
help to move the Group forward."
+------------------------------------------------------------+---------------+
| Enquiries: | |
+------------------------------------------------------------+---------------+
| Mercury Recycling Group PLC | 0161 877 0977 |
+------------------------------------------------------------+---------------+
| The Rt Hon The Lord Barnett LP PC | |
+------------------------------------------------------------+---------------+
| | |
+------------------------------------------------------------+---------------+
| Smith & Williamson Corporate Finance Limited | 0117 376 2212 |
+------------------------------------------------------------+---------------+
| Nick Reeve (Nominated Adviser) | |
+------------------------------------------------------------+---------------+
| Barrie Newton (Broker) | |
+------------------------------------------------------------+---------------+
PROPOSED PLACING OF 1,701,308 NEW ORDINARY SHARES,
ISSUE OF WARRANTS TO SUBSCRIBE FOR 8,399,966 NEW ORDINARY SHARES
RELATED PARTY TRANSACTION
AND
NOTICE OF GENERAL MEETING
Introduction
Following the purchase by Westleigh Investments Holdings Limited of an aggregate
of 3,618,569 ordinary shares of 10p each in the capital of the Company, as
announced on 26 May 2010, the board of directors of the Company has been in
discussions with Westleigh in relation to the Company's strategy and Westleigh's
intentions. These discussions have resulted in Westleigh agreeing to subscribe
for new Ordinary Shares and Warrants to raise approximately GBP175,000, net of
costs and expenses, in order to support the Board's strategy for developing the
Company. Further details of the Placing are set out below.
The Placing is conditional, inter alia, upon the Company obtaining approval from
Shareholders to provide the Directors with the relevant authorities to allot
Ordinary Shares, including the Placing Shares, and to issue the Warrants and
Ordinary Shares pursuant to the terms of the Warrants on a non pre-emptive
basis. The Placing is also conditional on Admission.
Background to and reasons for the Placing
The Board, including the Proposed Directors, remain committed to the Group's
core business of recycling fluorescent tubes and intend to focus initially on
growing this organically. However, as referred to previously, the Company has
considered many aspects of diversification including battery and LCD display
recycling.
In particular, given the advent of the new Battery Directive, the Company is
considering ways of increasing the Group's battery collection, sorting and
recycling service. The Board has historically considered a number of strategic
acquisitions to complement its core business and Westleigh have indicated that
they are keen to re-evaluate the market with the Directors, predominantly
focussing on complimentary businesses in the recycling sector. The Company may
also, in due course, seek to identify value for Shareholders through the
acquisition of businesses outside of the recycling sector. Shareholders would be
notified of any such acquisitions and their prior approval obtained should this
be required, whether under the AIM Rules or otherwise.
The funds raised through the Placing will provide the Company with resources to
assess such opportunities thoroughly. The Board believe that Westleigh's
presence as a strategic investor will be an important factor in this process and
it has invited Westleigh to appoint two directors to assist in implementation of
the strategy. Westleigh has nominated the Proposed Directors and further
information on each of them is provided below. All of the current directors will
remain on the Board, although each of Joe Dwek and Anthony Leon have confirmed
that they will resign as directors at the Company's next Annual General Meeting,
or earlier if agreed with the Board.
Your Board believes the proposals present an exciting opportunity for the
Company to create future value for the benefit of Shareholders and is
unanimously recommending that Shareholders vote in favour of the Resolutions to
be proposed at the General Meeting.
Details of the Placing
Pursuant to the proposals Westleigh will:
1. subscribe for an aggregate of 1,701,308 Ordinary Shares in the capital
of the Company by way of a non pre-emptive placing at the Placing Price; and
2. subscribe for 8,399,966 warrants at a price of 0.25p per warrant, with
each warrant entitling Westleigh to subscribe for an Ordinary Share at the
Placing Price, once the Company's share price has averaged 15p for a period of
at least 30 consecutive days.
The Placing Price represents a 0.5 pence (or 4.8%) discount to the closing
mid-market price of an Ordinary Share as at 22 September 2010, the latest
practicable date prior to the announcement of the Placing.
The Placing is conditional upon, inter-alia:
i) effective resolutions being passed by the Company's shareholders at
a general meeting granting the relevant authorities to the directors of the
Company to allot, inter-alia, the Placing Shares on a non pre-emptive basis and
to issue the Warrants, in each case pursuant to the Placing; and
ii) the Placing Shares being admitted to trading on AIM.
Application will be made for the Placing Shares to be admitted to trading on
AIM. Subject to admission on AIM becoming effective, it is expected that
dealings in the Placing Shares will commence on AIM on or around 25 October
2010. The Placing Shares will, when issued, rank pari passu in all respects with
the existing Ordinary Shares.
The aggregate subscription monies for the Placing Shares will be GBP170,130.80
and for the Warrants will be GBP20,999.92, raising an aggregate of GBP191,130.72
(or approximately GBP175,000 net of costs and expenses). The Company is
undertaking the Placing to facilitate implementation of its growth plans.
As at the date of this announcement, the Company has an authorised share capital
of GBP5,000,000 divided into 50,000,000 Ordinary Shares of which 34,026,154
Ordinary Shares are in issue fully paid and an aggregate of 1,758,335 Ordinary
Shares are subject to options to subscribe for Ordinary Shares.
Immediately following the issue of the Placing Shares (assuming none of the
existing options are exercised), the issued share capital of the Company will
increase to 35,727,462 fully paid Ordinary Shares and Westleigh will hold an
aggregate of 5,319,877 Ordinary Shares representing approximately 14.89 per
cent. of the Company's enlarged issued share capital (assuming none of the
existing options are exercised). Immediately following the issue of Ordinary
Shares pursuant to the Warrants (assuming all of the existing options are
exercised), the issued share capital of the Company will increase to 45,885,763
fully paid Ordinary Shares and Westleigh will then hold an aggregate of
13,719,843 Ordinary Shares representing approximately 29.90 per cent. of the
Company's then enlarged issued share capital.
Warrants
The Warrants will be issued as part of the Placing pursuant to the terms of a
warrant instrument executed by the Company and dated 24 September 2010 ("the
Instrument"). Under the Warrant Instrument, 8,399,966 Warrants are being
created, with each Warrant granting the holder the right to subscribe for one
Ordinary Share at a price of 10p per share (subject to adjustment in limited
circumstances such as a subdivision or consolidation of the Company's share
capital) payable in cash on exercise. The Warrants are exercisable within six
years of being issued subject to the average closing market price of the
Company's shares having been at least 15p per Ordinary Share over a period of at
least 30 consecutive days (unless the Board waives this condition). The Company
shall procure that the Ordinary Shares issued pursuant to the exercise of
Warrants are admitted to trading on AIM. The Warrants themselves will not be
dealt with or admitted to trading on any market and are only transferable in
limited circumstances by their holders.
Board Changes
The Board has agreed that both the Proposed Directors will be appointed as
non-executive directors of the Company with effect from Admission and the
Company has entered into letters of appointment with Westleigh to provide the
services of each of the Proposed Directors dated 24 September 2010, conditional
upon Admission. Under the letters of appointment each of the Proposed Directors
will be appointed non-executive directors of the Company for an annual fee of
GBP5,000 each, payable to Westleigh together with reimbursement of reasonable
expenses. The appointments are terminable on three months' written notice by
either party provided that no such notice will have effect prior to the first
anniversary of appointment.
Brief summaries of the biographies of the Proposed Directors are set out below:
Charles Giles Clarke (aged 57), Proposed non-executive director
Giles Clarke has considerable experience in the City and a number of commercial
interests. He is Chairman of the England and Wales Cricket Board, Westleigh,
Amerisur Resources plc, and of several private organisations. He founded
Majestic Wine in 1981 and built it into a national chain of wine warehouses. He
also co-founded Pet City in 1990, which he expanded nationwide before it was
listed and subsequently sold in 1996 for GBP150 million and co-founded Safestore
which was sold in 2003 for GBP40 million.
John Nicholas Harrison (aged 51), Proposed non-executive director
Nick Harrison qualified as an accountant with Arthur Andersen and subsequently
held a number of senior positions with other professional services
organisations. He was Finance Director of Pet City and has held finance
director and chief executive positions in a number of private businesses. He is
currently Chief Executive of Westleigh, a director of Amerisur Resources plc and
of a number of private organisations.
Current trading
The interim accounts of the Company for the six months ended 30 June 2010 are
being announced separately today and contain the Board's view on the current
trading and prospects of the Company.
Related party transaction
The Placing constitutes a related party transaction under the AIM Rules by
virtue of being a non pre-emptive issue of securities to a substantial
shareholder. The Directors consider, having consulted the Company's Nominated
Adviser, Smith & Williamson Corporate Finance Limited, that the terms of the
transaction, as set out in the Circular, are fair and reasonable insofar as the
Shareholders are concerned.
General Meeting and action to be taken
The notice of the General Meeting of the Company to be held at 11.00 a.m. on 22
October 2010 at The Copthorne Hotel, Clippers Quay, Salford Quays, Manchester
M50 3XP at the end of the Circular sets out resolutions to provide the Directors
with the relevant authorities to:
+--+--------------------------------------------------------------+
| 1| allot the Placing Shares on a non-pre-emptive basis; |
+--+--------------------------------------------------------------+
| 2| issue the Warrants on a non-pre-emptive basis; and |
| | |
+--+--------------------------------------------------------------+
| 3| issue Ordinary Shares pursuant to the exercise of the |
| | Warrants on a non-pre-emptive basis. |
+--+--------------------------------------------------------------+
A form of proxy for use at the GM is enclosed with the Circular. Whether or not
you propose to attend the GM, you are requested to complete the form in
accordance with the instructions printed on it and return it to Capita
Registrars, PXS, 34 Beckenham Road, Beckenham, Kent, BR3 4TU as soon as
possible, but in any event, to arrive not later than 11.00 a.m. on 20 October
2010.
If the Resolutions are duly passed at the GM, the Directors will be expressly
authorised to issue and allot the Placing Shares, Ordinary Shares pursuant to
the Warrants and existing options and, in addition, will be authorised to issue
and allot a further 1,785,500 Ordinary Shares (representing approximately 5 per
cent. of the Company's enlarged issued share capital following the Placing
assuming none of the options are exercised) on a non-pre-emptive basis, as the
Directors believe that it is desirable to maintain a margin of unissued share
capital available for allotment on a non-pre-emptive basis in order to preserve
flexibility for the future.
Shareholder circular
The circular due to be sent out to Shareholders shortly contains the Notice of
GM at which the Resolutions will be proposed for the purposes of implementing
the Placing. Copies of this document will be available for inspection by the
public free of charge at Mercury House, 17 Commerce Way, Trafford Park,
Manchester M17 1HW during normal business on any weekday (Saturday and bank
holidays excepted) for a period of one month from the date of posting and will
also be available at the Company's website, www.mercuryrecycling.co.uk.
Recommendation
The Directors unanimously consider that the Placing and Resolutions are in the
best interests of the Company and its shareholders as a whole. Accordingly, the
Directors unanimously recommend shareholders to vote in favour of the
Resolutions as they have irrevocably undertaken to do so in respect of their own
legal and beneficial shareholdings which total 6,944,358 Ordinary Shares,
representing approximately 20.41 per cent of the current issued ordinary share
capital of the Company at the date of this announcement.
PLACING STATISTICS
+-----------------------------------------------------+------------+
| Total number of Existing Ordinary Shares | 34,026,154 |
+-----------------------------------------------------+------------+
| Number of new Ordinary Shares being placed on | 1,701,308 |
| behalf of the Company | |
+-----------------------------------------------------+------------+
| Placing Price | GBP0.10 |
+-----------------------------------------------------+------------+
| Number of Ordinary Shares in issue following | 35,727,462 |
| Admission | |
+-----------------------------------------------------+------------+
| Number of Placing Shares as a percentage of the | 4.8% |
| Enlarged Issued Share Capital (1) | |
+-----------------------------------------------------+------------+
| Number of Warrants being issued | 8,399,966 |
+-----------------------------------------------------+------------+
| Number of Warrants as a percentage of the Enlarged | 23.5% |
| Issued Share Capital (1) | |
+-----------------------------------------------------+------------+
| Estimated net proceeds receivable by the Company | GBP175,000 |
| pursuant to the Placing | |
+-----------------------------------------------------+------------+
| |
+------------------------------------------------------------------+
| (1) Assuming no existing share options are exercised |
+-----------------------------------------------------+------------+
DEFINITIONS
The following definitions apply throughout this announcement unless the context
requires otherwise:
+--------------------------+----------------------------------------+
| "2006 Act" | the Companies Act 2006, as amended |
| | from time to time; |
+--------------------------+----------------------------------------+
| "Admission" | admission of the Placing Shares to |
| | trading on AIM and such admission |
| | becoming effective in accordance with |
| | the AIM Rules; |
+--------------------------+----------------------------------------+
| "AIM" | AIM, a market regulated by the London |
| | Stock Exchange plc; |
+--------------------------+----------------------------------------+
| "AIM Rules" | the 'AIM Rules for Companies' as |
| | published by the London Stock Exchange |
| | plc from time to time; |
+--------------------------+----------------------------------------+
| "Board" or "Directors" | the directors of the Company; |
+--------------------------+----------------------------------------+
| "Circular" | the circular being sent to |
| | Shareholders on or around the date of |
| | this announcement in connection with |
| | the Placing; |
+--------------------------+----------------------------------------+
| "Enlarged Issued Share | the Company's issued share capital |
| Capital" | immediately following Admission; |
+--------------------------+----------------------------------------+
| "Existing Ordinary | the existing Ordinary Shares in issue |
| Shares" | at the date of this announcement; |
+--------------------------+----------------------------------------+
| "Form of Proxy" | the form of proxy accompanying the |
| | Circular for use in connection with |
| | the GM; |
+--------------------------+----------------------------------------+
| "General Meeting" or | the general meeting of the Company |
| "GM" | convened for 11.00 a.m. on 22 October |
| | 2010, notice of which is set out at |
| | the end of the Circular; |
+--------------------------+----------------------------------------+
| ?Group? | the Company and its wholly owned |
| | subsidiaries (as defined by section |
| | 1159 of the 2006 Act) including |
| | Mercury Recycling Limited; |
+--------------------------+----------------------------------------+
| "Mercury" or "the | Mercury Recycling Group plc; |
| Company" | |
+--------------------------+----------------------------------------+
| "Notice" | the notice convening the GM, which is |
| | set out at the end of the Circular; |
+--------------------------+----------------------------------------+
| "Ordinary Shares" | the ordinary shares of 10 pence each |
| | in the capital of the Company; |
+--------------------------+----------------------------------------+
| "Placing" | the conditional placing of the Placing |
| | Shares and Warrants; |
+--------------------------+----------------------------------------+
| "Placing Price" | 10 pence per Placing Share; |
+--------------------------+----------------------------------------+
| "Placing Shares" | the 1,701,308 new Ordinary Shares to |
| | be initially issued and allotted |
| | pursuant to the Placing; |
+--------------------------+----------------------------------------+
| "Proposed Directors" | Charles Giles Clarke and John Nicholas |
| | Harrison; |
+--------------------------+----------------------------------------+
| "Resolutions" | the resolutions set out in the Notice |
| | at the end of the Circular; |
+--------------------------+----------------------------------------+
| "Shareholders" | holders of Ordinary Shares at the date |
| | of this announcement; |
+--------------------------+----------------------------------------+
| "Warrants" | the 8,399,966 warrants to be issued |
| | pursuant to the Placing each entitling |
| | the holder to subscribe for an |
| | Ordinary Share at the Placing Price, |
| | once the Company's share price has |
| | averaged 15 pence for a period of at |
| | least 30 consecutive days; |
+--------------------------+----------------------------------------+
| "Westleigh" | Westleigh Investments Holdings |
| | Limited. |
+--------------------------+----------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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