TIDMRGS
RNS Number : 1902O
Regenersis PLC
05 February 2016
Regenersis PLC ("Regenersis" or the "Company")
Proposed Disposal of the Repair Services Business
Proposed Return of Capital
Capital Reduction
Regenersis plc is pleased to announce that it has today entered
into a conditional sale and purchase agreement to dispose of its
Repair Services Business (the "Repair Services Business") to CTDI
Repair Services Limited ("the Purchaser"), a wholly owned
subsidiary of Communications Test Design, Inc., ("CTDI") for a cash
consideration of EUR103.5 million (the "Disposal").
Highlights
-- EUR103.5 million to be paid in cash at completion.
-- Completion of the Disposal is expected in the second quarter of 2016.
-- Following the Disposal it is currently intended that a return
of capital to shareholders of around GBP50 million will be made in
the second quarter of 2016.
-- Following the Disposal, the Company will become a pure play
global software business comprising of Blancco, SafeIT, Xcaliber
and Tabernus, and will change its name to Blancco Technology Group
plc.
-- The Directors are engaged in a separate disposal of the
Digital Care business with other potential purchasers.
Matthew Peacock, Executive Chairman, said:
"In line with the Company's strategy to position Regenersis as a
pure play software asset, the conditional disposal of the Repair
Services Business announced today is the outcome of a structured
and competitive process, against a background of solid continued
financial performance. I am confident that it represents good value
for shareholders. The potential for shareholder value growth is
significantly enhanced by our ability now to focus on the growth of
our software business."
Background to and reasons for the Disposal
Regenersis is a global provider of diagnostics, repair and data
erasure services to the consumer electronics industry, helping its
clients and their customers successfully deploy, protect, maintain,
and retire technology.
Regenersis has evolved significantly in recent years and now
comprises three distinct businesses, the Digital Security Software
business, the Repair Services Business, and the Digital Care mobile
insurance business.
The Directors have concluded that separate disposals of the
Repair Services Business and the Digital Care business are most
likely to maximise value for shareholders of the Company (the
"Shareholders"). As such, the Digital Care business does not form
part of the Disposal and the Directors are continuing to explore a
separate sale of the Digital Care business with other potential
purchasers.
Following the announcement by the Company on 22 September 2015
of the potential sale of the Aftermarket Services business
(including both the Repair Services Business and the Digital Care
business), the Company undertook a competitive auction process
conducted by the Group's advisers over a number of months with a
view to maximising shareholder value, from which CTDI emerged as
the preferred bidder for the Repair Services Business, while other
bidders indicated greater interest in the Digital Care
business.
The Directors believe that the Repair Services Business is a
high quality business with robust systems, significant geographic
coverage and a strong client base. Despite this, the Directors
recognise that the Disposal represents an opportunity for the
Company to realise substantial cash proceeds, unlock the
significant value which has been created by the turnaround and
growth of the Repair Services Business, and move closer to becoming
a pure software business with increased focus and appeal to its
stakeholders.
Following completion of the Disposal, the continuing business
will have a simplified corporate structure with materially reduced
operational complexity and head office costs.
As a pure software business the Company will focus on maximising
its opportunities in secure, auditable data erasure across all
types of devices and network environments. In the view of the
Board, the Company will have a unique profile among UK listed
software businesses in terms of its combination of market
opportunity, market position and organic revenue growth track
record.
Principal terms of the Disposal
The Company and Purchaser have entered into a share purchase
agreement (the "SPA"), pursuant to which the Purchaser has
conditionally agreed to acquire the Repair Services Business from
the Company for total consideration, subject to adjustment, of
EUR103.5 million payable in cash on completion.
The total consideration receivable by the Company on completion
will comprise:
-- EUR96 million for the entire issued share capital of
Regenersis (Depot) Services Ltd (the holding company of the Repair
Services Business), with the Disposal consideration agreed by
reference to a balance sheet for the Repair Services Business as at
30 September 2015) (the "Locked Box Date"); and
-- EUR7.5 million for the economic value added to the Repair
Services Business between the Locked Box Date and completion,
subject to upward or downwards adjustment at completion dependent
on the actual profits of the Repair Services Business.
The total consideration amount will be subject to further
adjustment to the extent that the Company does not have an agreed
level of working capital on completion of the Disposal.
The Disposal is conditional upon:
(i) being approved by the Shareholders by 5 April 2016;
(ii) competition clearance being provided in Germany, Poland and
Russia by no later than 5 August 2016 (the "Competition
Conditions"); and
(iii) there being no material adverse effect on the business
prior to the date on which Shareholders approve the Disposal.
The Purchaser has committed to use all reasonable endeavours to
obtain satisfaction of the Competition Conditions. The SPA will
terminate if the relevant conditions are not satisfied by their
relevant longstop dates.
AIM Rule 15
Due to its size, the sale of the Repair Services Business
constitutes a fundamental change of business of the Company under
AIM Rule 15 and accordingly is subject to the approval of
Shareholders in General Meeting. In advance of the General Meeting
a circular will be sent to Shareholders setting out further details
on and the rationale for the proposed Disposal.
On completion of the proposed Disposal, the Company will be
deemed to continue as a trading company and will not be classified
as an AIM Rule 15 cash shell.
Information on the Repair Services Business
The Repair Services Business comprises Regenersis' physical
electronic repair, logistics and refurbishment business, and its
set-top box automated equipment test solutions including in-field
testing. During the financial year ended 30 June 2015 the revenues
generated by the Repair Services Business were GBP184.6 million
with Headline Operating Profit of GBP15.1 million at the Divisional
level (excluding Digital Care and excluding significant unallocated
Corporate costs supporting the management and development of the
Repair Services Business under the current ownership
structure).
Information on the continuing business
Following completion of the Disposal, the continuing business of
the Company will consist of its Digital Security Software business,
comprising Blancco, SafeIT, Xcaliber and Tabernus and the Digital
Care business. During the financial year ended 30 June 2015 the
revenues generated by the continuing business were GBP18.0 million
with Headline Operating Profit of GBP5.5 million at the Divisional
level (excluding unallocated Corporate costs) of which Digital
Security Software represented GBP15.0 million with Headline
Operating Profit of GBP5.4 million. Following completion of the
Disposal, the continuing business will have a simplified corporate
structure, with materially reduced operational complexity and head
office costs.
The Directors are exploring a separate disposal of the Digital
Care business with other potential purchasers having a strategic
interest in the mobile insurance area.
As a pure software business the Company will focus on maximising
its opportunities in secure, auditable data erasure across all
types of devices and network environments.
Information on the Purchaser
The Purchaser is a wholly owned UK subsidiary of CTDI, a
private, family-owned engineering, repair and logistics company
headquartered in West Chester, Pennsylvania, USA. Founded in 1975,
CTDI has grown its footprint to over 75 facilities in 15 countries
and employs a workforce of over 9,500 globally. Its customers
include major telecoms carriers, cable service providers and OEMs
who are supported by CTDI's industry leading testing technology and
supply chain solutions.
Return of capital to Shareholders
Following completion of the Disposal, the Company currently
intends to return up to GBP50 million to Shareholders, comprising
the net proceeds of the Disposal, less amounts required to prepay
amounts outstanding under the Company's loan facilities, an amount
to be retained in connection with provisions against contingent
liabilities associated with the Disposal, and an amount to be
retained for future operations of the continuing business ("Return
of Capital").
The Return of Capital will be subject to the approval of
Shareholders at the General Meeting and is currently expected to
commence in the second quarter of 2016, following completion of the
Disposal.
The Board currently expects to execute the Return of Capital via
a tender offer.
In connection with the Return of Capital, the Company proposes
creating additional distributable reserves via a reduction of
amounts standing to the credit of its share premium account.
Capital Reduction
February 05, 2016 02:56 ET (07:56 GMT)
The Company does not currently have the distributable reserves
required to complete the Return of Capital and maintain a prudent
level of distributable reserves thereafter. Therefore, in order to
create additional distributable reserves, it is proposed that an
amount standing to the credit of the share premium account of the
Company should be cancelled (the "Reduction").
The Reduction requires both the approval of a special resolution
of Shareholders and the confirmation of the Court.
Expected timetable to completion
A circular containing further details of the Disposal, the
Return of Capital, the Reduction, the Board's recommendation of the
Disposal, the Return of Capital and the Reduction, and notice of
the General Meeting and the resolutions required to approve the
same (the "Resolutions") will be sent to Shareholders prior to the
General Meeting and notified by RNS in due course.
Completion of the Disposal is expected to occur in the second
quarter of 2016.
Recommendation
The Directors consider that the Disposal is in the best
interests of the Company and Shareholders as a whole. Accordingly,
in the circular, the Directors will recommend that you vote in
favour of the Resolutions at the General Meeting as they intend to
do so in respect of their own beneficial holdings of 5,875,497
Ordinary Shares representing 7.4 per cent. of the issued Ordinary
Shares (which include Matthew Peacock's indirect interest in
Hanover Investors and its connected parties, amounting in aggregate
to 5,417,651 Ordinary Shares representing 6.9 per cent. of issued
Ordinary Shares).
Change of Name
As the Purchaser will be operating the Repair Services Business
under the Regenersis brand following completion of the Disposal,
the Board has resolved, conditional upon completion of the
Disposal, to change the name of the Company to Blancco Technology
Group plc. The Company will remain listed on AIM on completion of
the Disposal.
Board Change
Following completion of the Disposal, Ian Powell, CEO of the
Repair Services Business, has agreed that he will resign from the
board of the Company.
Notice of half yearly results
The Company intends to announce its half yearly results for the
six months to 31 December 2015 on 8 March 2016.
Enquiries:
+44(0)20 3657
Regenersis PLC 7000
Matthew Peacock, Executive Chairman
Jog Dhody, Chief Financial Officer
+44(0)20 7418
Peel Hunt (Nomad and Joint Broker) 8900
Richard Kauffer
Euan Brown
Panmure Gordon (UK) Limited (Joint +44(0) 20 7886
Broker) 2500
Dominic Morley
Charles Leigh Pemberton
William Blair International Limited +44(0) 20 7868
(Financial Advisor) 4440
Matt Gooch
Oliver Parker
+44(0) 20 7353
Tulchan Communications (PR Advisor) 4200
Tom Murray
About Regenersis
Regenersis provides a suite of product life
cycle support services designed to help companies
and their customers successfully deploy, protect,
sustain, retire and re-use digital technology.
Regenersis is additionally the owner of Blancco
Technology Group, a leading data erasure software
business, serving enterprises and governments
around the world.
www.regenersis.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
DISEAXASESDKEEF
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February 05, 2016 02:56 ET (07:56 GMT)
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