RNS Number:0600F
Bow Lane Capital PLC
23 June 2006
Bow Lane Capital Plc
23 June 2006
Proposed acquisition of Silverdell (UK) Limited,
proposed placing and proposed admission and re-admission to trading
on AIM as"Silverdell plc"
Bow Lane Capital Plc (the "Company"), admitted to trading on AIM on 21 April
2006 with the purpose of acquiring companies and businesses in sectors which are
subject to structural, technological and/or regulatory change and which offer
opportunities for consolidation, today announces that it has entered into a
conditional agreement to buy the entire issued share capital of Silverdell (UK)
Limited ("Silverdell"), a UK asbestos consultancy and remediation contractor for
a total consideration of up to #22.2m.
The Directors and Proposed Directors (as defined below) believe that Silverdell
has the following strengths:
*Brand and reputation: which provide a competitive advantage in an
industry which is both highly regulated and subject to increasing litigation
*Experience and track record: given the fragmented nature of the market,
only a few participants have the expertise and infrastructure to take on
major projects
*Scale and geographic coverage: which enable Silverdell to continue to
capture nationwide contracts as well as providing a strong platform for
market consolidation
*Health and safety record: of critical importance when winning new
business and difficult for competitors to replicate
*Industry representation: which allows Silverdell to be at the forefront
of developments within the industry
*Blue chip customer base: underpinning revenue and enabling Silverdell to
operate at the higher end of the market with the associated contract
premiums.
The Company also announces today that it proposes to raise approximately #12
million (approximately #10.5 million net of expenses) by issuing 16,000,000 new
ordinary shares in the share capital of the Company ("Ordinary Shares") at 75
pence per share by way of a placing to institutional investors. The proceeds of
the placing will be used to part-fund the cash consideration payable under the
acquisition, to meet the costs and expenses relating to the acquisition, the
placing and re-admission to AIM and also to meet the working capital
requirements of the Company and its subsidiaries following completion of the
acquisition.
David Williams, Chairman of Bow Lane Capital plc, said: "Silverdell is one of
the leading asbestos contractors in the UK, with a strong brand, a blue chip
customer base and a experienced management team. This acquisition provides a
platform for consolidation in the fragmented asbestos services sector, which we
believe has witnessed a compound annual growth rate of approximately 25 per cent
since 2002 due to increasing legislation and the threat of litigation. We have
already identified opportunities for further complementary acquisitions once
this acquisition is completed."
For further enquiries contact:
Bow Lane Capital Plc
David Williams, Chairman
+44 (0) 20 7248 0802
Mark Watts, Director
+44 (0) 20 7248 0802
Finsbury
Don Hunter
+44 (0) 20 7251 3801
Collins Stewart Limited
Simon Atkinson
+44 (0) 20 7523 8306
Ellen Francis
+44 (0) 20 7523 8317
Introduction
The Company announces today that it has entered into a conditional agreement to
acquire the entire issued share capital of Silverdell, a UK asbestos consultancy
and remediation contractor, together with certain outstanding shareholder loan
notes, for a total consideration of up to #22.2 million (the "Acquisition"). The
consideration of #16.2 million due at completion of the Acquisition
("Completion") will be satisfied by the payment of approximately #12.6 million
in cash, part-funded out of the net proceeds of a placing to institutional
investors (the "Placing") of 16,000,000 new Ordinary Shares (the "New Ordinary
Shares") in the Company at 75 pence per share (the "Placing Price") and, the
issue of 4,801,169 new Ordinary Shares in the Company (the "Consideration
Shares") (which at the Placing Price will have a value of approximately #3.6
million). In addition, an earn out of up to #6 million will be payable to
certain vendors through the issue of loan notes (the "Loan Notes") and
additional new Ordinary Shares, dependent upon the performance of the
Silverdell group in the financial years ending 30 September 2007 and 30
September 2008.
The Acquisition constitutes a reverse takeover pursuant to the AIM rules and is
therefore subject to the approval of the shareholders of the Company (the
"Shareholders"), which will be sought at an EGM. An application will be made to
the London Stock Exchange for the existing Ordinary Shares and the New Ordinary
Shares to be respectively readmitted and admitted to trading on AIM
("Admission"). Admission is conditional, inter alia, on the passing of the
resolutions (the "Resolutions"), which include a resolution to change the name
of the Company to "Silverdell Plc", contained in the admission document and
notice of the EGM (the "Notice"), which has been sent to all Shareholders today.
About Bow Lane Capital Plc
The Company was established to acquire and manage companies and businesses in
sectors where there are opportunities for consolidation. The Directors will
focus on sectors undergoing structural, technological and/or regulatory change
when assessing acquisition opportunities and will consider the environmental
services and alternative energy sectors in particular. The Directors have
identified the Acquisition as the initial step in the implementation of this
strategy.
The Company began trading on AIM on 21 April 2006 following an initial #5.7m
fundraising through a private institutional placing. Marwyn Neptune Fund LP, a
Cayman Islands fund managed by Marwyn Investment Management LLP, subscribed for
#4m of the placing and its interest currently represents approximately 70% of
Bow Lane Capital's issued share capital.
Overview of Silverdell
Silverdell was established in 1979 and is a UK asbestos remediation contractor,
with offices in London, Bradford, Leicester and Cardiff. Silverdell and its
subsidiary undertakings (the "Silverdell Group") perform all three types of
surveys under the Methods for Determination of Hazardous Substances no.100
("MDHS 100") published in July 2001 by the Health and Safety Executive ("HSE")
(which range from site inspections through to the testing of samples of a
building's fabric and structure), either on a stand alone basis or as part of a
larger asbestos remediation programme. This has historically accounted for
approximately 10 per cent. of the revenues of the Silverdell Group. The
Silverdell Group also undertakes remediation works, being the controlled
removal, encapsulation and/or labelling of asbestos and asbestos containing
materials ("ACMs"), which has historically accounted for approximately 80 per
cent. of the revenue of the Silverdell Group. Remediation work is often provided
to customers in conjunction with ancillary services, which include staff
training, ventilation decontamination and minor construction work.
The Silverdell Group has a business division focussed on the rail sector, is
approved to work for Network Rail and has full "Link-up" accreditation (the
accreditation required to work within the rail industry). The Silverdell Group
also has framework agreements with London Underground service providers.
In February 1998 Silverdell moved to the site it currently occupies at Pacific
Wharf in Barking, a facility that allowed Silverdell to combine office, stores
and workshop facilities under one roof whilst also allowing the opportunity for
further expansion. In May 2000 Silverdell opened its first regional office in
Leicester, with a staff of six. Bristol was the location of the next regional
office; Silverdell had carried out a major contract in the area and became aware
of potential business in the South West. This office subsequently moved to
Cardiff and has recently relocated to larger premises. Silverdell's Shepherds
Bush office is located to serve West London. In 2005, Silverdell opened an
office in Bradford to serve the North.
The implementation of the Control of Asbestos at Work Regulations, 2002 ("CAWR")
was the catalyst for the development of the asbestos surveying and consultancy
operations and in August 2002 Silverdell established Silverdell Management
Services LLP ("Silverdell LLP"). Initially, Silverdell LLP offered surveying and
consultancy services to existing clients of Silverdell but has recently
developed its own client base.
The Silverdell Group works for FTSE 100 companies as well as central and local
government. Corporates are drawn from a broad range of sectors including retail
(including Specsavers, J Sainsbury, Boots, WH Smith and the House of Fraser
Group), property (including Land Securities Trillium, Laing Construction,
Balfour Beatty and AMEC) and utilities (including Severn Trent and Yorkshire
Water). Local government clients include the City of Westminster, several London
Boroughs and Staffordshire County Council. Approximately one half of
Silverdell's revenue is underpinned by framework contracts. Silverdell has also
been involved with a number of prestigious projects, such as the refurbishment
of the Old Admiralty Building and the ongoing restoration of the Royal Festival
Hall.
Silverdell has held a full HSE Asbestos Licence (required for the removal and
encapsulation of asbestos) continuously since its initial grant in 1984 and in
March 2006 this licence was renewed for three years, until 2009. The HSE either
awards licences on a one year or a three year basis; many clients demand a three
year licence, possession of which gives the holder an advantage over contractors
with little or no proven experience who hold one year licences. In addition,
Silverdell holds a waste management licence for the operation of a hazardous
waste transfer station, which allows it to store asbestos and ACMs at its
Barking site until bulk transfer can be arranged to an appropriate waste
disposal site.
Silverdell has an excellent health and safety record amongst its industry peers.
Adherence by the Silverdell Group to high standards of health and safety are
recognised within the industry: a senior employee won the Asbestos Removal
Contractors Association ("ARCA") Supervisor of the Year award in 2003 and
Silverdell currently holds the ARCA Regional Award for Training (South East). In
2006 Silverdell also received an award from the Royal Association for the
Prevention of Accidents ("ROSPA"). ROSPA awards companies who show a commitment
to the prevention of accidents within the workplace by the installation of
systems and procedures that empower employees to work in a more knowledgeable
manner when it comes to health and safety.
Silverdell is a prominent member of ARCA and is represented on the Governing
Council and Technical Committee. The Directors and the Proposed Directors (which
terms are defined under the section entitled, "The Board" later) believe that in
a market where clients are heavily focussed on brand and reputation, not only
does this enhance the Silverdell Group's credentials, it means that it can
actively participate in developments within the industry.
Silverdell has also innovated, developing technologies to record and monitor
removal works using audiovisual equipment (which the HSE intend to make an
industry standard) and introducing on-site self-auditing, a process now adopted
as good practice by ARCA.
The construction industry recognised Silverdell's pre-eminence by awarding it
"Asbestos Removal Specialist of the Year, 2006" at the recent Construction News
awards. Silverdell beat industry nominee Rhodar as well as Cuddy Group and
demolition specialists Keltbray to win the prestigious award.
Silverdell is run by an experienced management team backed by many years of
practical experience in the asbestos removal industry.
Locations
Silverdell's head office is located in leased premises in Barking, East London,
where Silverdell also has a licensed waste transfer station. Silverdell's senior
management are located at these premises, together with the finance and the
sales and marketing functions. Silverdell has also leased small premises in
Shepherd's Bush, West London. The Silverdell Group also has a branch network
with offices in Leicester, Bradford and Cardiff. In Leicester, there are 6
contracts staff dealing with the estimating and contract management of projects.
In Bradford, there are 2 such staff and in Cardiff there are 6. In aggregate,
the Silverdell Group employs 173 people, of whom 128 are asbestos operatives.
The business's core operations are performed or supervised by directly employed
staff with the appropriate health and safety training and certificates.
Silverdell is focused on building a branch network throughout the UK in order to
allow it to compete for and capture further nationwide corporate and public
sector contracts.
Market
Market opportunity
Asbestos was used extensively in buildings and in engineered products in the UK
until its complete ban in the UK in 1999 although stockpiles of white asbestos
could be used until 2005. Imports of blue and brown asbestos were banned in
1985. As asbestos does not occur naturally in the UK, the volume of imports can
be used as a proxy for its use. Imports of asbestos reached their peak during
the 1960s.
The asbestos services market can be split into consultancy and remediation:
(a) consultancy principally involves the performance of the three types of
asbestos surveys under MDHS 100; and
(b) remediation involves the controlled removal, encapsulation, labelling and
on-site management of asbestos and ACMs.
It is believed that around 80 per cent. of the UK commercial and industrial
property stock have a high risk of containing asbestos, necessitating ongoing
asbestos management and potential remediation.
Legislation and litigation
Since 2002, it is estimated the asbestos consultancy and remediation market has
experienced a compound annual growth rate of approximately 25 per cent. The
Directors and the Proposed Directors believe that there are two main drivers for
the recent growth within the industry:
1. Legislation
Although legislation in relation to asbestos was first introduced over 20 years
ago, the principal legislation is contained within the CAWR.
In particular, Regulation 4 of CAWR introduces the concept of a "duty to manage"
asbestos within non-domestic UK premises, creating an obligation to assess and
manage the risks from asbestos and ACMs within relevant premises. Broadly
speaking, non-domestic premises are defined as commercial and industrial
buildings as well as the common parts of public and social housing.
In practice, this necessitates the identification of asbestos and ACMs through
the conduct of surveys, the introduction of asbestos management plans and
regular audits to assess the stability of asbestos and its remediation as
appropriate e.g. prior to demolition or major refurbishment work.
In late 2005/early 2006 the HSE published a consultation document that sought
views on draft Regulations and an Approved Code of Practice to implement
amendments to the EU Asbestos Worker Protection Directive 83/477/EEC and other
changes to the existing asbestos regulatory framework. The HSE proposes to
repeal the CAWR, the Asbestos (Licensing) Regulations 1983 and the Asbestos
(Prohibitions) Regulations 1992 and to replace them with a single set of
regulations. One of the legislative changes proposed in the consultation
document is to adopt a risk-based approach to defining work with asbestos or
ACMs which will be exempt from the requirement to obtain a licence from the HSE.
The HSE believes that for most work with asbestos this will maintain the status
quo; however, the HSE is proposing to consult further on whether work with
asbestos-containing textured coatings should be removed from the licensing
regime altogether. If that were to happen, licensed contractors such as
Silverdell could be exposed to competition from unlicensed contractors for such
work.
2. Litigation
As the incidences of asbestosis (scarring of the lung) and mesothelioma (cancer
of the lung lining) have gradually risen so have the number of asbestos-related
claims. Asbestos accounts for over 3,500 deaths each year and is the UK's
biggest single cause of work-related deaths. In 2005, the insurance industry
paid out #205 million in asbestos-related claims and the actuarial profession
has warned that the cost of asbestos claims in the UK could reach #20 billion in
the next 30 years.
The Directors and proposed Directors believe that rising claim volumes are
likely to encourage employers in particular to manage asbestos appropriately.
The current mortality rate from asbestos-related diseases is expected to rise
until around 2011-2015. There is also an appeal before the House of Lords in
respect of a number of cases in which the claimants are seeking damages for
pleural plaques (benign scarring of the lung tissue caused by exposure to
asbestos fibres). The Court of Appeal ruled that pleural plaques do not
constitute an injury and therefore do not attract compensation. If the House of
Lords reverses the Court of Appeal's decision and rules that compensation should
be paid for pleural plaques this may increase employers' concerns to manage
their asbestos risks appropriately.
Market size
Estimations of the overall size of the asbestos consultancy and remediation
market contain significant uncertainty and differ depending on which
methodologies are applied.
The HSE estimate of the market size (based on an estimation of the compliance
costs for the market) is between #1.2-1.7 billion. The general view within the
industry however is that this estimate is conservative. For example, the
Director General of the Asbestos Information Centre is of the belief that the
actual cost may be up to 10 times this amount.
Uncertainty also surrounds the longevity of the market, although expectations
are that asbestos removal will peak around 2020, with 85 per cent. of all
asbestos having been removed by 2050.
The industry
The Directors and Proposed Directors believe that industry participants can
broadly be divided into three categories:
(a) a significant number of regional providers who principally service small
and medium sized enterprises and who have revenues of less than #2m and
employ less than 15 individuals;
(b) specialist, professional providers, such as Silverdell, with multiple
operational bases within the UK (who therefore also compete for larger,
nationwide contracts and one-off projects) and who have revenues of
between #5 and #30 million; and
(c) multi-service providers (e.g. health and safety, compliance and demolition
service providers) for whom asbestos accounts for less than 25 per cent.
of business and who have revenues between #20 and #50 million.
The Directors and Proposed Directors believe that the industry is highly
fragmented, particularly as regards the regional providers, which presents a
significant opportunity for industry consolidation on a nationwide basis. The
Directors and Proposed Directors estimate that the Silverdell Group had
approximately 5 per cent. market share in 2005 based on its turnover when
compared to estimates of the market size.
In addition, the Directors and Proposed Directors believe that there are strong
barriers to entry to the industry, in particular:
(a) a customer requirement for reputation and credibility, which offsets low
start-up costs;
(b) scale and a full service capability - critical if a provider is to have
full access to the market;
(c) a track record - a pre-requisite for cost effective insurance cover, among
other things; and
(d) the hazardous nature of asbestos and litigation risk.
Trading record of Silverdell
The financial information relating to Silverdell and the Silverdell Group set
out below has been extracted from the financial information set out in the
Notice and the pro forma consolidated unaudited financial information for
Silverdell and Silverdell LLP has also been extracted from the financial
information set out in the Notice.
+--------------+--------------------------------------------+--------------+
| | Silverdell only |Silverdell and|
| | |Silverdell LLP|
| | | Pro Forma |
| | | |
+--------------+--------------+--------------+--------------+--------------+
| For year end | Audited 2003 | Audited 2004 | Audited 2005 |Unaudited 2005|
| 30 September | #'000 | #'000 | #'000 | #'000 |
| | | | | |
| | | | | |
+--------------+--------------+--------------+--------------+--------------+
| Turnover | 11,311 | 11,538 | 18,464 | 19,521 |
| | | | | |
| | | | | |
+--------------+--------------+--------------+--------------+--------------+
| Gross profit | 3,291 | 3,833 | 5,193 | 6,738 |
| | | | | |
| | | | | |
+--------------+--------------+--------------+--------------+--------------+
| Profit before| 715 | 238 | 778 | 1,844 |
| taxation | | | | |
| | | | | |
| | | | | |
+--------------+--------------+--------------+--------------+--------------+
The pro forma profit on ordinary activities for year end 30 September 2005
before taxation of #1.8 million include the following items, each of which are
stated in the Historical Financial Information on Silverdell which is set out in
the Notice:
(1) directors' discretionary bonuses, benefits in kind and pension contributions
totalling #1.1 million;
(2) basic salary of the highest paid Director, Daniel J Spicer who is not
continuing within the business post-transaction totaling #0.2 million;
(3) salaries paid to the wives of the directors totalling #0.1 million; and
(4) other exceptional non-recurring items totalling #0.1 million.
Excluding those items the adjusted pro forma profit on ordinary activities
before taxation for the year end 30 September 2005 is #3.3 million.
Current trading and prospects for the Enlarged Group
The Silverdell Group has continued to grow its core business of small and medium
sized contract work by securing a number of preferred supplier relationships and
framework contracts with county councils, utilities and insurance firms and by
increasing the volume of work performed under certain existing client contracts.
In addition, the Silverdell Group also secured two long term contracts towards
the end of 2005, which are anticipated to contribute a significant amount of
revenue in 2006.
Following completion of the Acquisition, the Directors and Proposed Directors
believe that the Company, together with its subsidiaries following the
Acquisition, (the "Enlarged Group") will be well positioned to take advantage of
the perceived consolidation opportunities within the industry. Opportunities to
make further complementary acquisitions have already been identified by the
Directors and Proposed Directors and following completion of the Acquisition the
Directors and Proposed Directors will seek to progress these opportunities. The
Directors and Proposed Directors also believe that, whether through the
completion of further acquisitions or through organic growth, the Enlarged Group
will be well positioned to benefit from increased scale and increased sector
and/or geographic coverage.
Principal terms of the Acquisition
Under the terms of a conditional sale and purchase agreement ("the Acquisition
Agreement") between the Company and the selling shareholders of Silverdell (the
"Vendors"), the Company has conditionally agreed (subject inter alia to the
passing of the Resolutions and Admission) to acquire the entire issued share
capital of Silverdell from the Vendors (together with certain outstanding
shareholder loan notes and loans from certain directors of Silverdell) for an
aggregate consideration of up to #22.2 million. The consideration of #16.2
million due at Completion will be satisfied by the payment of approximately
#12.6 million in cash (part-funded out of the net proceeds of the Placing), the
issue of the Consideration Shares (which at the Placing Price will have a value
of approximately #3.6 million). In addition, an earn out of up to #6 million
will be payable by the issue of the Loan Notes and additional Ordinary Shares
dependent upon the performance of the Silverdell Group in the financial years
ending 30 September 2007 and 30 September 2008.
The maximum earn out will be payable if the earnings before interest and
taxation of the Silverdell Group are #5 million in the year ending 30 September
2007 and #6 million in the year ending 30 September 2008 (subject always that
the Silverdell Group achieves year-on-year revenue growth of 15 per cent.).
Under the terms of the Acquisition Agreement and a tax deed between the Company
and certain Vendors (the "Tax Deed"), certain of the Vendors have given
warranties and indemnities in respect of certain business, taxation and other
matters subject to agreed limitations on liability. The Acquisition Agreement is
conditional inter alia upon the placing agreement between the Company and
Collins Stewart Limited (the "Placing Agreement") becoming unconditional and not
being terminated prior to Admission. The anticipated date for Completion is the
date of Admission.
Financing of the Acquisition and use of funds
The Company proposes to raise approximately #12 million (#10.5 million net of
expenses) by issuing 16,000,000 new Ordinary Shares, representing approximately
50% per cent. of the enlarged share capital.
The new Ordinary Shares to be issued as part of the Placing have been
conditionally placed by Collins Stewart, as agent for the Company, with
institutional and other investors in accordance with the terms of the Placing
Agreement. The Placing, which is being underwritten by Collins Stewart, is
conditional, inter alia on Admission and the passing of the Resolutions.
The total net proceeds of the Placing will be utilised by the Company to fund
the initial cash consideration payable under the Acquisition, to meet the costs
and the expenses relating to the Acquisitions, Placing and Admission and to meet
the working capital requirements of the Enlarged Group.
In order to maintain an orderly market in the Ordinary Shares, the Proposed
Directors and certain of the Vendors have undertaken to the Company and Collins
Stewart that they shall not (and, in the case of persons connected with them,
they shall use their best endeavours to procure that those connected persons
shall not) dispose of any interest in Ordinary Shares or enter into any
derivative-type transaction in relation to Ordinary Shares for the period of 24
months from Admission (the "Initial Period") and for the further period of 6
months from the Initial Period they shall not dispose of Ordinary Shares without
first offering the disposal through Collins Stewart. These arrangements relate
to 3,220,117 new Ordinary Shares representing 10 per cent. of the enlarged
issued ordinary share capital.
The Board
The Board currently comprises David Williams, Mark Watts, James Corsellis and
Benjamin Shaw (the "Directors"). On completion of the Acquisition, James
Corsellis and Benjamin Shaw will resign as executive director and non-executive
director respectively and Mark Watts will become a non-executive director. On
completion of the Acquisition, Daniel Spicer and Sean Nutley (the "Proposed
Directors") will join the Board as Chief Executive Officer and Chief Operating
Officer respectively. The new Board intends to appoint a finance director prior
to the next material acquisition. An interim chief financial officer, Simon
Gunn, who is not a director of Silverdell or the Company, has been appointed to
manage the finances of the Silverdell Group. The new Board also intends to
appoint additional independent non-executive directors in due course.
Following completion of the Acquisition, the Board will comprise:
David Williams, Non-Executive Chairman (53)
David has 35 years experience in the investment market. He has served as
Chairman in both executive and non-executive capacities for a number of
companies, both public and private. He has overseen the development of these
companies through both organic and acquisitive growth as well as dealing with
turnaround situations. For example, in 1994 David, as chairman, worked with the
executive team to float Waste Recycling Group plc at an initial value of #8
million. During his seven years as chairman at that company, its value grew to
#550 million. David was also chairman of RAL (S&G) Limited, on its management
buy out in 1996 from Rank Group plc (a position from which he resigned in 2000).
David is currently Chairman of Augean Plc, Talarius Plc, Marwyn Value Investors
Limited, Concateno plc, Zetar Plc and Aldgate Capital Plc as well as Marwyn
Investments Group and its subsidiary companies.
Mark Watts, Non-Executive Director (32)
Mark has a BA (Hons) from London University and since 1998 he has advised the
boards of quoted UK small and mid-cap companies. Over the past 18 months, Mark
has undertaken 15 transactions raising an amount in excess of #450 million in
acquisition funding for Marwyn backed management teams and special purpose
acquisition vehicles. Previously, Mark worked as a management consultant
completing international strategic development projects for clients including
Ford Motor Company (US), Cummins (Japan) and 3M (Europe) and financial analysis
and modelling for Barclays Bank, Shell and BP in the UK. Mark is a director of
Marwyn Investments Group and Aldgate Capital Plc, a partner in Marwyn Capital
and Marwyn Investment Management as well as a director in Zetar Plc, Inspicio
plc and Talarius Plc.
Daniel T Spicer, Chief Executive Officer (43)
Son of Silverdell's founder, Danny has worked for Silverdell for over 26 years,
initially as an insulation engineer; he took a management role 12 years ago.
Since 2000, he has been Managing Director and has been responsible for growth,
direction and strategy. Danny was also a founder partner in Silverdell LLP which
was sold to Silverdell in December 2005.
Sean Nutley, Chief Operating Officer (35)
Sean joined Silverdell in 1992 as an asbestos removal operative and became part
of the management team 12 years ago as an estimator. He became director for
special contracts in 2000. Sean is responsible for company growth, direction,
new business opportunities and client relations, as well as technical input and
co-ordination on large and difficult contracts. Sean was also a founder partner
of Silverdell LLP.
Key employees
The Board will be assisted by the following key employees:
Mark Roberts (46), Marketing Director (since 1994)
Mark joined Silverdell in 1992 as a Sales Manager; is a member of ARCA Governing
Council and obtained an ISO accreditation for Silverdell in 1995. His main
responsibilities include seeking new business opportunities and securing
pre-qualification on customer approved lists.
Wayne Farmer (41), Construction Director, Operations (since 2000)
Wayne has 12 years experience in the management team and joined Silverdell as an
asbestos removal operative. He is responsible for the day-to-day running of the
Silverdell Group's business operations, the contracts department, the accounts
department and site contracts.
Ashley Griffiths (33), Contracts Director (since 2005)
Ashley joined Silverdell as Regional Manager in 2001. His responsibilities
include pricing and processing of new business enquiries.
Dave Rhodes (34), Regional Director, Midlands/North (since 2005)
Dave joined Silverdell as a Regional Manager in 2000. His responsibilities
include pricing of new enquiries and the day-to-day running of the regional
business operations, contracts department and site contracts.
Relationship with Marwyn
David Williams and Mark Watts are directors of Marwyn Investments Group Limited
and partners in Marwyn Capital LLP and Marwyn Investment Management LLP. The
Company has a corporate finance agreement with Marwyn Capital and an office
support agreement with Marwyn Partners Limited (a wholly owned subsidiary of
Marwyn Investments Group Limited).
Marwyn Neptune Fund LP, a shareholder in the Company, is managed on an arms'
length basis by Marwyn Investment Management LLP. Marwyn Neptune Fund LP
currently holds 8,000,000 Ordinary Shares. Subject to Admission, the Company has
also agreed to grant a warrant (the "Marwyn Warrant") to subscribe for shares in
the Company to the Marwyn Neptune Fund LP. The Marwyn Warrant will entitle the
Marwyn Neptune Fund LP to subscribe for 3,220,117 Ordinary Shares which will
represent 10 per cent. of the enlarged issued Ordinary Share capital on
Admission, including the New Ordinary Shares and the Consideration Shares
(calculated upon the assumption that all Ordinary Shares which are under option
at Admission are not in issue). The Marwyn Warrant is exercisable at the Placing
Price and subject to the following criteria: (a) as to 50 per cent. at any time
from Admission up to the seventh anniversary of Admission provided that at any
time after Admission and prior to the expiry of the option, the mid-market price
of an Ordinary Share is greater than 133 per cent. of the Placing Price; and (b)
as to 50 per cent. at any time from Admission up to the seventh anniversary of
Admission provided that at any time after Admission and prior to the expiry of
the option, the mid-market price of an Ordinary Share is greater than 150 per
cent. of the Placing Price. The Company has also entered into a further
corporate finance advisory agreement (the "Second Corporate Finance Advisory
Agreement") with Marwyn Capital LLP, pursuant to which Marwyn Capital LLP will
provide the Company with ongoing corporate finance advice.
The Directors and Proposed Directors consider, having consulted with Collins
Stewart, that the terms of the Marwyn Warrant and the Second Corporate Finance
Advisory Agreement are fair and reasonable insofar as Shareholders are
concerned.
Corporate governance
The Directors and Proposed Directors recognise the importance of sound corporate
governance and intend that the Company, where practicable for a company of its
size, will comply with the Combined Code.
The Company has therefore established an audit committee which will, on
Admission, comprise David Williams and Mark Watts. The audit committee invites
the executive directors to attend as necessary to conduct its business. The
Company's auditors attend all audit committee meetings and have direct access to
its chairman. The audit committee will meet with the external auditors at least
twice a year, following a review of the interim results and on completion of the
audit process but prior to the Directors approving the financial statements of
the Company. It will also consider the Enlarged Group's financial and accounting
policies together with management reports on accounting and internal controls
and will review reports presented by the auditors of the Company and consider
any other matters raised by the auditors.
The Company has also established a remuneration committee which will, on
Admission, comprise David Williams and Mark Watts. The remuneration committee
implements the policy for the remuneration of the executive directors, reviews
the remuneration of the senior management of the Company and nominates potential
members of the Board. The remuneration of non-executive Directors is considered
by the board as a whole. The remuneration committee (consisting of Mark Watts
and David Williams) has recommended to the Board that employee share incentive
schemes should be introduced. Accordingly, the Board has adopted a share option
scheme (the "Share Option Scheme") which allows awards to be made to executive
Directors of the Company and to other employees in the Enlarged Group. Awards
will be at the discretion of the Board's remuneration committee. The
remuneration committee will also administer the Share Option Scheme and be
responsible for setting any performance targets in relation to the exercise of
options granted under the Share Option Scheme.
The Company has not established a nominations committee. All appointments to the
Board will be considered by the Board as a whole.
The Board has adopted a model code for directors' dealings in securities of the
Company which is appropriate for a company quoted on AIM. The Board will comply
with Rule 19 of the AIM rules relating to directors dealings and will take all
reasonable steps to ensure compliance by the Company's "applicable employees"(as
defined in the AIM Rules).
Dividend policy
The Board intends, subject to the availability of distributable reserves, that
dividends will be paid to Shareholders. However, the initial focus for the
Company will be on delivering capital growth for Shareholders and therefore the
Board will only commence the payment of dividends as and when it is appropriate
and practicable.
Dealing arrangements
Application will be made for the New Ordinary Shares issued pursuant to the
Placing to be admitted to trading on AIM and for the existing Ordinary Shares to
be re-admitted to AIM. It is expected that Admission will become effective and
that dealings in the existing Ordinary Shares and the New Ordinary Shares will
commence on 19 July 2006.
If the Acquisition and the Placing are not completed, the Ordinary Shares will
continue to be traded on AIM and the Proposed Directors will not be appointed to
the Board.
The New Ordinary Shares will be issued credited as fully paid and will, on
issue, 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 on the issued ordinary share capital after Admission. No temporary
documents of title will be issued. Pending the dispatch of definitive share
certificates (as applicable), instruments of transfer will be certified against
the register. All documents or remittances sent by or to a place, or as he may
direct, will be sent through the post at his risk.
Extraordinary General Meeting
In view of its size, the Acquisition is conditional upon, inter alia, the
approval of Shareholders in general meeting. This approval will be sought at the
Extraordinary General Meeting of the Company to be held at 10 a.m. on Monday, 17
July 2006 at the offices of Norton Rose at Kempson House, Camomile Street,
London EC2V 7AN.
Recommendation and voting intentions
The Directors believe that the Acquisition, Placing and Admission are in the
best interests of the Company and its Shareholders as a whole. Accordingly, the
Directors have unanimously recommended that the Shareholders vote in favour of
the Resolutions as they have irrevocably undertaken to do in respect of their
own beneficial shareholdings of Existing Ordinary Shares which amount to, in
aggregate, 1,080,000 existing Ordinary Shares representing approximately 9.47
per cent. of the current issued ordinary share capital of the Company. The
Company has also received irrevocable commitments to vote in favour of the
Resolutions in respect of a total of 10,870,850 existing Ordinary Shares from
Shareholders, representing approximately 92.73 of the current issued share
capital of the Company.
-ends-
This information is provided by RNS
The company news service from the London Stock Exchange
END
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