RNS Number:2673Q
Roxspur PLC
29 September 2003
Roxspur PLC
Acquisition of the entire issued share capital of Cellular Holdings Limited
Change of name to The Telecommunications Group PLC
Share Reorganisation
Admission to the Alternative Investment Market
Summary
Roxspur PLC (the "Company") today announces it has conditionally agreed to
acquire the entire issued share capital of Cellular Holdings Limited ("Cellular
Holdings"). Due to the size of the acquisition in relation to Roxspur, the
acquisition is classified as a reverse takeover for the purposes of the Listing
Rules and is therefore conditional on shareholders' approval. The transaction
will be satisfied by the issue of 327,197,168 New Ordinary Shares, representing
86.5 per cent. of the enlarged issued share capital of the Company.
Transaction Highlights
* The acquisition of Cellular Holdings, the ultimate holding
company of a telecommunications services group ("Cellular Holdings Group"),
for 86.5 per cent. of the enlarged issued share capital of the Company;
* The Cellular Holdings Group will comprise:
- Phone Direct Group (wholesaler and distributor of mobile
phones);
- Anglia Telecom (UK mobile distributor and fixed line reseller);
and
- Ventelo Group (Benelux based fixed line and mobile carrier);
* Cellular Holdings Group has operations in the UK, the Netherlands and
Belgium;
* The Company is transferring its listing to AIM;
* Proposed Board - Peter Ryan (Chairman), Michael Hanna
(Group Chief Executive), Martin Eberhardt (Group Finance Director), Graham
Pollard (Sales & Commercial Director) and Ross Sampson (Marketing Director);
and
* Change of the Company's name to The Telecommunications Group PLC.
An Extraordinary General Meeting of shareholders to approve the proposals above,
will be convened for 11.00 a.m. on 23 October 2003. Subject to shareholder
approval, completion of the acquisition of Cellular Holdings and admission to
AIM is expected to take place on 29 October 2003. It is anticipated that a
circular and admission document detailing the full terms of the proposals will
be sent to shareholders today.
Peter Ryan, Chairman of Roxspur, commented:
"We are delighted to announce this transaction today. The Cellular Holdings
Group is a substantial business and an attractive opportunity for our
shareholders. We look forward to an exciting new chapter in the Company's
development."
Michael Hanna, the proposed Group Chief Executive Officer of The
Telecommunications Group PLC, commented:
"This is a significant phase in the development of The Telecommunications Group
as an established supplier of integrated fixed line and mobile
telecommunications services in the UK, Belgium and the Netherlands. The listing
will give the group the required status and profile to grow rapidly while the
combined operational synergies and cost savings should underpin the considerable
shareholder value potential."
For further information, please contact:
Peter Ryan 07775 505 341
Roxspur PLC
Martin Eberhardt 07775 505 342
Roxspur PLC
Jonathan Hinton/Byron Griffin 020 7936 3000
Deloitte & Touche Corporate Finance
Bobby Morse/Jeremy Garcia 020 7466 5000
Buchanan Communications
Roxspur PLC
Acquisition of the entire issued share capital of Cellular Holdings Limited
Change of name to The Telecommunications Group PLC
Share Reorganisation
Admission to the Alternative Investment Market
1. Introduction
The Board has today announced that it has entered into a conditional agreement
(the "Acquisition Agreement") to acquire the whole of the issued share capital
of Cellular Holdings, the holding company of a telecommunications services
group. The consideration for the acquisition of Cellular Holdings (the "
Acquisition") will be satisfied by the issue of 327,197,168 New Ordinary Shares
(the "Consideration Shares"), representing 86.5 per cent. of the enlarged issued
ordinary share capital of the Company following the Admission.
The Vendors will receive upon Completion the Consideration Shares, of which
273,932,513 New Ordinary Shares will be allotted to Alan Dugard (the Managing
Director of Phone Direct Holdings Limited, a subsidiary of Cellular Holdings),
representing approximately 72.4 per cent. of the enlarged issued share capital
of the Company.
The Board's strategy has been to effect a merger with an attractive business
with an experienced management team for the benefit of all shareholders. The
Directors have been looking for a suitable company to acquire for some time and
have since January 2002 looked at a number of potential merger candidates. The
Directors believe Cellular Holdings Group meets the merger criteria of the Board
and represents an exciting growth opportunity for shareholders.
As Roxspur no longer has any trading operations, the Acquisition is classed as a
reverse takeover and accordingly, under the Listing Rules, the listing of
Roxspur on the Official List was suspended on 31 July 2003 pending publication,
or otherwise, of the full terms of the Acquisition. It is anticipated that the
suspension of the existing Ordinary Shares will be lifted on 30 September 2003,
being the next business day after the publication of the circular to
shareholders. The Acquisition is conditional, inter alia, on the approval of
shareholders, which is to be sought at the Extraordinary General Meeting.
The Directors have decided that the Company should apply for its shares to be
traded upon AIM. The Company will, conditional upon Completion, request the UKLA
to cancel its listing on the Official List and apply to the London Stock
Exchange for admission of the issued ordinary share capital to trading on AIM ("
Admission"). Dealings on AIM are expected to commence on 29 October 2003.
2. Background to and reasons for the Acquisition
Roxspur completed the disposal of the last of its trading businesses on 18
January 2002. Since this disposal, the main asset of the Group has comprised its
cash reserves. As at 30 June 2003, the net assets of the Group were #2.6 million
comprising cash of #5.0 million less net liabilities of #2.4 million.
Following the completion of the disposal programme, the Directors have
considered how best to protect and deliver value to shareholders. The Board's
strategy has been to effect a merger of Roxspur with an attractive business with
an experienced management team for the benefit of all shareholders. The
Directors have examined many companies and held discussions with a number of
them. The culmination of this process is the proposed reverse takeover by way of
the acquisition of Cellular Holdings. Discussions with Cellular Holdings were
initiated in March of this year.
The Directors consider the proposed reverse takeover by way of the acquisition
of Cellular Holdings to be an attractive opportunity. Cellular Holdings Group
represents a profitable and cash generative business and the Directors believe
the Enlarged Group has the potential for significant future growth.
3. Information on Cellular Holdings Group
Following Completion, Cellular Holdings Group will comprise a telecommunications
services group offering fixed line services and mobile telecommunications
products and services. The group strategy will be to offer a range of
telecommunications solutions to business customers in Europe.
Cellular Holdings proposed acquisitions
Cellular Holdings is currently the ultimate holding company of Phone Direct
Holdings Limited and its subsidiaries (together "Phone Direct Group"). It is
proposed that immediately prior to completion of the Acquisition, Cellular
Holdings will acquire Ventelo Holding BV ("Ventelo Holding") and its
subsidiaries (together "Ventelo Group") and Anglia Telecom Centres PLC ("Anglia
Telecom").
Phone Direct Group currently holds 50 per cent. of the issued share capital of
Ventelo Holding. It is proposed that the remaining 50 per cent. of Ventelo
Holding will be acquired by Cellular Holdings in exchange for the issue of
shares representing approximately 16.3 per cent. of the enlarged issued share
capital of Cellular Holdings, pursuant to a conditional agreement dated 26
September 2003.
In addition, it is proposed that Cellular Holdings will acquire Anglia Telecom
for up to #5.8 million in cash (of which #1.6 million is deferred) pursuant to a
conditional agreement dated 26 September 2003.
The Acquisition and the acquisitions of Ventelo Holding and Anglia Telecom are
interconditional and conditional upon Admission.
Phone Direct Group
The main business operation of Phone Direct Group is the bulk wholesale of
mobile phones in the UK and Western Europe. The wholesale mobile phone handset
market is driven by supply imbalances, with surplus handsets being redistributed
around the world in response to rapid changes in demand, and generally involves
the purchase and resale of large quantities of handsets between a number of
wholesale traders and other market participants. A key attribute of the business
is the relationship between Phone Direct Group and the various market
participants. These relationships, together with market knowledge, enable the
business to reduce transaction risk by matching, normally on the same day,
available handsets with likely buyers. Phone Direct Group reviews all new
customers to establish they have a suitable trading history through appropriate
information sources. Phone Direct Group complies with the current guidance
provided by Customs & Excise as to what reasonable commercial steps should be
taken to check the status of the parties with whom it trades, and liaises with
Customs & Excise on a monthly basis to confirm that each party has a valid VAT
registration.
In addition, the Phone Direct Group distributes mobile phones and mobile phone
connection packages to a dealer network and through direct sales. It is proposed
that the distribution business will be merged with the operations of Anglia
Telecom following the Acquisition.
Phone Direct Holdings achieved consolidated profit before taxation of #2.9
million (after deducting an exceptional bad debt expense of #1.1 million) on
sales of #96.1 million for the year ended 31 March 2003. As at 31 March 2003
Phone Direct Holdings reported net consolidated assets of #5.1 million.
Anglia Telecom
Anglia Telecom has two principal operations being (i) the distribution of mobile
network connection packages together with mobile phones and accessories to a
dealer network, and (ii) a fixed line telecommunications services switchless
reseller.
Anglia Telecom supplies a range of mobile network connection packages, mobile
phone handsets and accessories through a network of over 170 mobile phone
dealers in the UK. The business supports a dealer network, providing marketing
expertise, sourcing the hardware and arranging for the connection of the
dealers' customers to the desired network. To provide these connection services,
Anglia Telecom has direct connection agreements with four mobile phone networks,
being O2, Orange, T-mobile and Vodafone. In addition, Anglia Telecom acts as a
switchless reseller of fixed line telecommunications services, providing such
services to over 700 business customers.
Anglia Telecom achieved profit before taxation of #0.6 million on sales of #24.6
million in the year ended 31 March 2003. Following the acquisition of Anglia
Telecom, the remuneration package of the vendor of Anglia Telecom will be
significantly reduced to #60,000 per annum. The total emoluments of the vendor
in the financial year ended 31 March 2003 were #508,000. This cost reduction
will have a significant positive effect on the ongoing profitability of the
company. As at 31 March 2003, Anglia Telecom had net assets of #2.0 million.
Ventelo Group
Ventelo Group is predominantly a fixed line telecommunications service provider,
with operations in the Netherlands and Belgium. The business provides fixed line
voice, data and Internet solutions to over 5,000 business customers. Ventelo
Group operates its own infrastructure, including a number of telecom switches
and interconnect points, which interconnect Ventelo Group customers with
telecommunications networks operated by national and international carriers.
Ventelo Group offers its customers one point of contact at the service provider
level, one bill for all services, and the provision of these services at a
competitive price. Ventelo Nederland (the Dutch business) intends to enter the
mobile phone dealer distribution market (operating a similar model to Anglia
Telecom) and has recently signed a contract with Vodafone Nederland to enable it
to do so. In addition, Ventelo Nederland has recently entered the mobile phone
bulk trading wholesale market, operating a similar model to the Phone Direct
Group.
Ventelo Nederland incurred losses before taxation of #0.5 million on sales of
#14.4 million for the five months ended 31 May 2003 and Ventelo Belgium incurred
losses before taxation of #0.3 million on sales of #1.1 million for the same
period. As at 31 May 2003, Ventelo Nederland had net assets of #2.6 million and
Ventelo Belgium had net assets of #0.4 million.
Ongoing Cellular Holdings Group strategy
Following the Acquisition, the Ongoing Directors intend to merge the activities
of Phone Direct Group, Anglia Telecom and Ventelo Group into broadly three
operating divisions, being (i) the bulk trading of mobile phones, (ii) the
distribution of mobile phone connection packages to businesses, and (iii) the
provision of fixed line and mobile telecommunications services. It is intended
that Europe will be the main geographical focus of the enlarged group.
The Ongoing Directors believe that the Enlarged Group will benefit from a number
of synergies by integrating operations. First, it is expected that both Anglia
Telecom and Ventelo Group will benefit from the bulk buying terms enjoyed by
Phone Direct Group. Second, it is believed that integrating the existing dealer
network and direct sales of Phone Direct Group with the operations of Anglia
Telecom should deliver operating efficiencies. Third, it is expected that the
fixed line reseller activities of Anglia Telecom should benefit from the
existing market expertise within Ventelo Group.
4. The board and senior management
Following Completion, Peter Ryan will continue as Chairman, Martin Eberhardt
will be appointed Group Finance Director and the Proposed Directors (being
Michael Hanna, Graham Pollard and Ross Sampson) will be appointed to the board
of directors. Biographical details of the Ongoing Directors and their
respective proposed roles are as follows:
Peter Ryan (Age 72) - Chairman
Peter Ryan was appointed to the Board in July 1993 as a Non-Executive Director
and became Executive Chairman on 1 November 2000. Following Completion, Peter
will continue as Non-Executive Chairman. He is a Chartered Engineer and has
been chairman or director of a number of public and private companies.
Michael Hanna (Age 55) - Group Chief Executive Officer
Michael joined Phone Direct Group in 2001 from GMC (Holdings) Ltd and was
appointed Finance Director shortly after joining. He is also currently Finance
Director of Ventelo Group. Michael has over 30 years' experience in the
strategic management, organisation and financial control of commercial
operations and 10 years' experience in the telecommunications industry.
Martin Eberhardt (Age 42) - Group Finance Director and Company Secretary
Martin Eberhardt was appointed to the Board as Finance Director and Company
Secretary in September 1997. He is a Chartered Accountant, having previously
held a senior managerial role within KPMG.
Graham Pollard (Age 39) - Sales and Commercial Director
Graham has over 20 years' experience in the telecommunications industry. He
joined COLT Telecom Group plc as head of Indirect Sales, where he oversaw the
growth of the COLT Connect indirect service to revenues of #28 million per
annum. Graham joined Ventelo Group in January 2003 where he is currently Chief
Executive Officer and following Completion it is intended he will widen his role
to become Sales and Commercial Director of the Enlarged Group.
Ross Sampson (Age 44) - Marketing Director
Ross has more than 20 years' experience in marketing within the
telecommunications industry, working in senior roles across Europe for a number
of companies, including COLT Telecom Group plc, where he oversaw the launch of
the company across Europe. Ross joined Ventelo Group as Marketing Director in
January 2003 and following Completion it is intended he will widen his role to
become Marketing Director of the Enlarged Group.
Under the proposed service agreements, Michael Hanna will be entitled to an
annual salary of #200,000 and a discretionary bonus. Graham Pollard will be
entitled to an annual salary of #130,000 and has the opportunity to earn a bonus
of up to 100% of his annual salary. Ross Sampson will be entitled to an annual
salary of #90,000 and has the opportunity to earn a bonus of up to 100% of his
annual salary. The proposed service contracts of the Ongoing Directors are
conditional upon Admission.
In addition, further non-executive directors are currently being sought and will
be appointed to the Board as soon as is practicable following Admission.
5. Current trading and prospects of the Enlarged Group
Phone Direct Group is currently trading at lower sales volumes but higher
margins compared to last year. The Ongoing Directors consider that the reduction
in sales volumes is due principally to working capital constraints which should
be alleviated following the Acquisition.
Phone Direct Group is currently experiencing delays in the receipt of
recoverable VAT from Customs & Excise. The total balance outstanding for the two
months ended 31 July 2003 is approximately #2.2 million. The company has been
informed, following discussions with Customs & Excise, that the delay is
attributable to increased enquiries being undertaken by Customs & Excise into
the supply chain. Phone Direct Group does not have significant amounts
outstanding from Customs & Excise for the period since 31 July 2003. The
Ongoing Directors believe that the amounts owed to Phone Direct Group by Customs
& Excise are recoverable in full. However, the timing of such payments is
uncertain. Phone Direct Group has received a letter of support from Bank of
Scotland indicating they will consider providing additional funding facilities
in the event that these are required as a result of the delayed repayment of
VAT. To the extent that Bank of Scotland does not provide the necessary
additional facilities in relation to these amounts outstanding, Alan Dugard has
agreed that he will, if required, sell a proportion of his New Ordinary Shares
and make the proceeds available by way of a loan of up to #2 million to the
Enlarged Group to cover any cash flow shortfall from 1 January 2004.
The Anglia Telecom distribution business is performing well in increasingly
competitive markets. The switchless reseller business revenues continue to grow
strongly and the Ongoing Directors believe that this business has promising
prospects.
The new management team within Ventelo Group has delivered an improvement in the
trading performance of Ventelo Group compared to the financial year ended 31
December 2002.
Ventelo Nederland signed an agreement with Vodafone Netherlands on 4 September
2003, which will enable Ventelo Nederland to connect Vodafone customers to the
Vodafone Netherlands network via the Ventelo Nederland switch. Ventelo Nederland
does not currently provide this service. The Ongoing Directors believe that this
arrangement will help to further enhance the future trading performance of the
Ventelo Group.
The Ongoing Directors believe that the additional resources available to
Cellular Holdings Group following the Acquisition will help to enhance the
prospects of the Enlarged Group. In light of current trading as described above
and the opportunities available to the Enlarged Group, the Ongoing Directors are
optimistic about the financial and trading prospects of the Enlarged Group for
the current financial year.
6. Change of name
In order to reflect the main business of the Enlarged Group, a resolution will
be proposed at the EGM to change the name of the Company to The
Telecommunications Group PLC.
7. Share Reorganisation
In order that the Consideration Shares are not issued by the Company at a
discount to their nominal value (which is prohibited by the Companies Act 1985),
the Board is proposing to reduce the nominal value of the existing Ordinary
Shares to 1p by sub-dividing each of the issued Ordinary Shares into one New
Ordinary Share of 1p and one Deferred Share of 9p and each unissued Ordinary
Share into 10 New Ordinary Shares of 1p. The number of issued New Ordinary
Shares immediately following the Share Reorganisation will be the same as the
number of issued Ordinary Shares prior to the Share Reorganisation.
8. Voting Undertakings
Undertakings have been received from shareholders in respect of 32.4 million
Ordinary Shares in total, representing approximately 36.8 per cent. of current
issued share capital of the Company, to vote in favour of the Resolutions.
9. Vendors' shareholding arrangements
The Vendors have each given an undertaking in the Acquisition Agreement that
they will not sell, transfer or otherwise dispose of any New Ordinary Shares or
interests held in New Ordinary Shares held on Admission until 31 December 2004
save in certain limited circumstances, including the sale of New Ordinary Shares
to settle warranty claims or indemnities under the Acquisition Agreement or to
finance any loans to the Company in relation to any cash shortfall arising from
outstanding VAT recoverable balances as at 1 January 2004.
Upon Admission, Alan Dugard will hold approximately 72.4 per cent. of the
Enlarged Share Capital. The Board, in conjunction with the Company's broker,
intends to seek suitable investors to purchase some of Alan Dugard's holding in
order to reduce his holding and increase the liquidity of the Company's shares.
10. General
It is anticipated that a document setting out details of the above will be
posted to shareholders today. The document will contain a notice convening the
EGM to approve, inter alia, the Acquisition.
The EGM will be convened for 23 October 2003. It is anticipated that
conditional upon, inter alia, shareholder approval, completion of the
Acquisition and Admission will take place on 29 October 2003.
Defined terms have the same meaning as set out in the circular and admission
document which is expected to be sent to shareholders today.
A copy of the full circular and admission document expected to be sent to
shareholders today and will be available, as soon as is practicable, from the
Company website, www.roxspur.plc.uk..
The Directors and Proposed Directors ("Ongoing Directors") accept responsibility
for the information contained in this announcement. To the best of the
knowledge and belief of the Ongoing Directors (who have taken all reasonable
care to ensure that such is the case), the information contained in this
announcement is in accordance with the facts and does not omit anything likely
to affect the import of such information.
Deloitte & Touche Corporate Finance is acting for Roxspur as sponsor in
connection with the Proposals and Nominated Adviser in relation to the Admission
and for no-one else and will not be responsible to anyone other than Roxspur for
providing the protections offered to clients of Deloitte & Touche Corporate
Finance nor for providing advice in relation to the Proposals. Deloitte &
Touche Corporate Finance is a division of Deloitte & Touche LLP which is
authorised and regulated by the Financial Services Authority in respect of
regulated activities.
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACQNKAKDNBKBNCB