TIDMTHAL
RNS Number : 0662Y
Thalassa Holdings Limited
01 December 2017
Thalassa Holdings Ltd
(Reuters: THAL.L, Bloomberg: THAL:LN)
("Thalassa", "THAL" or the "Company")
Thalassa executes definitive agreement for the sale of the
assets of WGP Group Ltd ("WGP")
This announcement contains inside information for the purposes
of Article 7 of Regulation 596/2014.
Introduction
Thalassa Holdings Ltd (AIM: THAL) ("Thalassa" or the "Company")
is delighted to announce that it has conditionally agreed to sell
the business and assets of the WGP Group to Fairfield Industries
Incorporated ("FFN") for a maximum cash consideration of
$30,000,000 (the "Sale").
Gross initial proceeds from the sale of WGP will be $20,000,000
(approximately $19,750,000 net of transaction costs). A further
$10,000,000 will become payable by FFN contingent on certain
customer contracts being entered into within 5 years of
completion.
The Company has agreed to leave up to $2,500,000 of cash in the
business to meet its working capital requirements during the first
five months of 2018. Any revenue received post completion in
relation to certain sales made, services provided and work
undertaken by WGP Group prior to completion will be repayable by
FFN against this working capital amount.
The Sale is of sufficient size relative to that of the existing
Company to constitute a disposal resulting in a fundamental change
of business, pursuant to Rule 15 of the AIM Rules and completion
is, therefore, conditional upon the approval of shareholders by way
of an ordinary resolution. Based on Thalassa's classification as a
holding company and its continuing business, the Company has sought
and received confirmation that upon completion the Company will not
be regarded as an AIM Rule 15 cash shell.
The Company had previously announced on 15 August 2017 that FFN
would invest $2,000,000 to acquire a 20% equity stake in ARL (the
"Investment"), together with a 2-year option to purchase the same
number of shares at the same price. The detailed agreement relating
to the Investment has yet to be finalised and is now expected to be
exchanged by no later than 31 March 2018.
The Board of Thalassa (the "Board" or "Directors") believes that
the terms of the Sale and the Investment represent good value for
shareholders, and further reasons for the sale are set out later in
this announcement. As such, the Directors unanimously recommend
that shareholders vote in favour of the Resolution to be proposed
at the General Meeting as they intend to do in respect of their
beneficial holdings amounting, in aggregate, to 3,622,441 Ordinary
Shares, representing approximately 17.6 per cent. of the existing
ordinary share capital of the Company.
A circular containing, amongst other things, further details of
the Sale and the notice of the General Meeting to be held at
Columbus Monte-Carlo, 23 Avenue des Papalins, MC-98000 Monaco is
being posted to shareholders of Thalassa and is being placed on its
website today.
Background to and reasons for the Sale and the Investment
Background
Thalassa is a BVI international company established as a holding
company whose Board's investment mandate is to identify opportunity
for investment growth, without any limitation as to industry.
WGP Group
WGP Group is a wholly owned subsidiary of Thalassa and is the
owner of the seismic operating assets and business of the group.
Its subsidiaries include:
-- WGP Energy Services Ltd
-- WGP Exploration Ltd
-- WGP Professional Services Ltd
-- WGP Survey Ltd
WGP Energy Services Ltd's PMSS(TM) and P-Cable equipment,
combined with WGP Professional Services Ltd's operational staff and
WGP Exploration Ltd's ground support staff assist oil companies in
maximising oil recovery through reservoir management practices as
well as assisting in the discovery of new reserves. WGP Survey Ltd
has previously operated the P-Cable equipment and is part owner of
multi-client high-resolution 3D data.
Reasons for the Sale
WGP Group's trading results for 2017 showed an improvement on
2016. However, the Company has only two main clients and four
contracts. The loss of any contract or, worse, any client would
have a material negative impact on the business. It is with this in
mind that the Board of Thalassa actively sought to find a buyer for
WGP at an appropriate consideration who not only shared the Board's
vision for the future of WGP Group and its employees and clients
but who also brought substantially greater financial and operating
resources to the table as well as access to new business
opportunities. The Board believes that the sale to FFN fulfils all
of these objectives.
In summary, the Sale:
-- provides the opportunity to monetise Thalassa's investment in WGP;
-- crystalises a 446% gain on average capital employed,
equivalent to an average annual return of 50% or a CAGR of
20.8%;
-- provides the Board with the platform to execute its strategy
of focusing on acquisition of other assets, which in the opinion of
the Board have the opportunity to generate capital growth and
superior returns for shareholders;
-- provides WGP Group with greater development opportunities as
part of a larger, better capitalised parent company, FFN Group;
and
-- strengthens Thalassa's balance sheet.
The Board has therefore concluded that the Sale is in the
interests of the Company and its Shareholders, thereby providing
the Board with the opportunity to proceed with the execution of its
strategy for the continuing group.
Autonomous Holdings Ltd
Autonomous Holdings Ltd is a wholly owned subsidiary of Thalassa
with currently one sole subsidiary, ARL (previously GO Science 2013
Limited), an autonomous underwater vehicle research and development
company.
Reasons for the Investment
The Company has, to date, invested significant resources in ARL
(c.$7.0 million) and the Investment would provide additional
funding to accelerate ongoing research and development and future
growth. Furthermore, in FFN, ARL would have a new shareholder whose
node expertise and manufacturing resources should, in the opinion
of the Board, be highly complementary.
As stated above, the agreement relating to the Investment is
expected to be exchanged by no later than 31 March 2018.
Illustrative financial effects of the Sale
WGP currently generates all of Thalassa's operating revenue
(excluding foreign exchange gains), but does not represent all or
substantially all of its activities or assets.
In the year to 31 December 2017, it is estimated that WGP will
generate c.$1.1 million in profit after tax from an estimated $17.8
million of revenue.
Figures for WGP Group for the years ended 31 December 2016 and
2017 are set out in the table below.
$m 2017E 2016A
Revenue 17.8 14.0
Profit after Tax 1.1 0.0
Net assets being disposed 10.2 11.6
The above figures are shown after deduction of Group
administrative fees and interest expense.
Post completion net asset value ("NAV")
Following completion, the Board estimates that Thalassa's NAV
per share will be c.$1.91/GBP1.44, made up as follows:
$m
Net cash 21.3
Holding in The Local Shopping REIT 9.3 (at cost)
PLC
ARL (based upon the proposed FFN investment
of $2m for 20%) 8.0
Other 0.7 .
Total $39.3
Use of proceeds
The Board intends to apply the net consideration received by the
Company on completion to pursuing the continuing group's strategy,
being acquisition of other assets, which in the opinion of the
Board, have the opportunity to generate superior returns for
shareholders. The Board, in seeking to fulfil its mandate, may
acquire stakes in target companies or seek to acquire companies or
assets in their entirety.
Strategy for the continuing group
Thalassa currently has two operating subsidiaries, both in the
energy services industry, currently focused on marine geophysical
services and AUV research and development, being WGP Group and
Autonomous Holdings Ltd. The Company also currently has a
significant stake in The Local Shopping REIT plc (LSR.L) and
recently sold its 26.7% holding in Papua Mining plc (PML.L) for a
gain of 23%.
As stated above, the Board will seek to invest the proceeds in
one or more situations which, in the opinion of the Board, have the
opportunity to generate superior returns for shareholders.
Current trading and prospects
The Board is confident that the sale of WGP Group and continued
implementation of the existing investment strategy will
appropriately position the continuing group to readily capitalise
on opportunities that become available to it. The Board believes
that prospects in the future are positive. The continuing group's
focus on investment and acquisition of assets which are, in the
opinion of the Board, undervalued, and management's proven ability
to enhance shareholder value, through hands-on oversight and where
necessary direct management of its portfolio companies in order to
improve their operational and financial performance, should result
in successful achievement of superior returns for shareholders.
Information on the buyer
Privately held FFN, a global leader in seismic nodal technology,
designs and manufactures a complete range of revolutionary, true
cable-free ZLand(R) and ZMarine(R) systems, and offers expert
marine acquisition and data processing services. Known for its
extensive multi-client library of high-quality 3D seismic data in
the Gulf of Mexico, the company is also expanding licensing
coverage in the revitalized Permian Basin through a series of
successful multi-client programmes. FFN has been in existence for
over 40 years and employs approximately 240 staff based out of the
headquarters in Sugarland, Texas.
Duncan Soukup, Chairman of Thalassa, stated: "We are delighted
to have exchanged contracts on the sale of WGP and are excited by
the opportunities open to Thalassa as we continue to implement our
strategy. We will announce the investment in ARL as soon as it is
completed."
Investor Enquiries:
+33 (0)6 78 63
Thalassa Holdings Ltd 26 89
Duncan Soukup, Chairman
WH Ireland Limited (Nominated +44 (0)207 220
Adviser and Broker) 1650
Chris Fielding, Head of Corporate
Finance
www.thalassaholdingsltd.com
Note to Editors:
Thalassa Holdings Ltd, incorporated and registered in the BVI
and quoted on AIM, is a holding company currently with positions in
the Energy Services, Defence and Homeland Security and Real
Estate.
This information is provided by RNS
The company news service from the London Stock Exchange
END
AGRBCBDBRDXBGRG
(END) Dow Jones Newswires
December 01, 2017 02:01 ET (07:01 GMT)
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