Placing/Acquisition
06 March 2007
Placing of new Ordinary Shares to raise £10 million
Acquisition of Norton Folgate FG plc
Notice of Results
General Capital Group plc (AIM: GENC), the asset and venture finance specialist, announces that, subject, inter alia, to shareholder approval, it has raised £10 million gross via a placing of up to 7,692,400 new ordinary shares at 130 pence per share with institutional and other investors ("the Placing").
General Capital is also pleased to announce that it has entered into a conditional agreement to acquire Norton Folgate FG plc ("Norton Folgate"), a Hertford based asset finance broker for a maximum consideration of £1.294 million in cash and the allotment and issue of 812,307 new ordinary shares credited as fully paid with a value at the placing price of £1.056 million (the "Acquisition"). The Acquisition is conditional on completion of the Placing.
Highlights
- Successful placing of up to 7,692,400 new ordinary shares at 130 pence per share to raise £10 million before expenses
- Proceeds will be used to
- provide working capital
- redeem debt which should result in a reduction of annual interest
- part finance the acquisition of Norton Folgate
- Acquisition of Norton Folgate FG plc for a maximum consideration of £1.294 million in cash and the allotment and issue of 812,307 new ordinary shares credited as fully paid with a value at the placing price of £1.056 million
- Increased banking facilities of £40 million due to conditional offer by HBOS to increase its facility to the Company to £30 million
- Letter of intent from HBOS to provide a further £10 million of debt facilities
- Trading ahead of its market expectations
- Preliminary Results expected to be announced on Monday, 26 March 2007
Jonathan Hill, Executive Deputy Chairman of General Capital, commented: "We are delighted to announce the Placing and believe that the funds will put us in a strong position for further growth both organically and through further selective acquisitions. The agreement with Norton Folgate represents another important strategic milestone for General Capital in our ambition to build a significant presence in the UK"s flexible funding solutions market. Norton Folgate complements the Company"s asset finance offering and presents an opportunity for accelerated growth within that division. In addition, we are pleased with the ongoing support of HBOS. The additional banking facilities will be used to facilitate growth across all divisions.
"The Board is also pleased to confirm that trading has been ahead of its expectations and is confident that the Company will achieve market expectations for 2006."
The Acquisition
General Capital has entered into a conditional agreement to acquire Norton Folgate for a maximum consideration of £1.294 million in cash and the allotment and issue of 812,307 new ordinary shares credited as fully paid ("the Consideration Shares"). At the placing price, the Consideration Shares have a value of £1.056 million. The cash element of the consideration will be met by utilising certain of the net proceeds of the Placing and the Acquisition is conditional, inter alia, on completion of the Placing. The Vendors have entered into lock-in arrangements in respect of the Consideration Shares which expire 37 months from the date of Acquisition. Norton Folgate was established in 1996 and in 2006 placed over £20 million of gross forward receivables with over 11 funders, covering a diverse range of assets and an average deal size of circa £25,000.
Banking facilities
General Capital also announces that HBOS has conditionally offered to increase its facility to the Company to £30 million (the "New Facility"). This offer is conditional upon a New Facility agreement being entered into prior to the EGM and, inter alia, upon Admission. In addition, NM Rothschild & Sons Ltd ("Rothschilds") has agreed to extend its current £10 million debt facility for a further three year period. Execution of the New Facility will result in the Company having aggregate senior debt facilities of up to £40 million. Further, HBOS has provided the Company with a letter of intent to provide additional debt facilities in the amount of £10 million, which, if entered into, would result in the Company having senior debt facilities of up to £50 million. General Capital currently has £30 million of senior debt facilities available to it (£20 million by HBOS and £10 million by Rothschilds).
The New Facility will be provided for a term of three years from initial draw down and will attract interest at 175 basis points over either LIBOR or HBOS base rate and will be provided on similar terms to the existing facilities.
Further details of the Placing
The net proceeds of the Placing will be used to provide working capital, to redeem debt which should result in a reduction of annual interest and to part finance the acquisition of Norton Folgate. The up to 7,692,400 new ordinary shares being issued pursuant to the Placing, which will represent 30.6 per cent * of the Company's issued share capital immediately following the Placing, have been placed with institutional and other investors by Collins Stewart Europe Limited at the Placing Price of 130 pence which represents a discount of 16.9 per cent to the closing middle market price per ordinary share on 5 March 2007.
Application will be made to the London Stock Exchange for the new ordinary shares to be issued pursuant to the Placing and the Acquisition to be admitted to trading on AIM ("Admission"). It is expected that Admission will become effective and that dealings will commence at 8.00 a.m. on Friday, 30 March 2007.
The Placing is conditional, inter alia, upon: (a) the approval, without amendment, of the resolutions to be proposed at the EGM to be held on Thursday, 29 March 2007 at 11.00 a.m. at the offices of Abchurch Communications, 100 Cannon Street, London EC4N 6EU; (b) the New Facility being entered into by no later than 28 March 2007; (c) the Placing Agreement becoming unconditional in all respects and not having been terminated; and (d) Admission. The consideration for the acquisition of Norton Folgate will be met by utilising certain of the net proceeds of the Placing and the Acquisition is conditional, inter alia, on completion of the Placing. The new ordinary shares to be issued pursuant to the Placing and the Acquisition will, when issued and fully paid, rank pari passu in all respects with the existing ordinary shares of General Capital and will be issued subject to the memorandum and articles of association of General Capital.
* assuming full subscription under the Placing
Current trading
Since the Company's admission to AIM via the reverse acquisition of Clan Homes plc which completed on 14 September 2006, the Board is pleased to confirm that trading has been ahead of its expectations and is confident that the Company will achieve market expectations for 2006. In the current year, the Company has benefited from substantial unrealised profits through the recent admissions to AIM of Sabien Technology Group plc and Helius Energy Plc and has been able to realise a proportion of these gains through a sale of shares in both Sabien Technology Group plc and Helius Energy Plc at premiums to their flotation prices. The Asset Finance division has traded in line with expectations and should benefit from the proposed acquisition of the entire issued share capital of Norton Folgate as announced today. The Property Finance division performed ahead of expectations and is well positioned for further growth. Given the promising start to the current financial year, the Directors view the prospects for the Company with confidence.
Preliminary Results
The Company will be announcing its Preliminary Results for the year ended 31 December 2006 on Monday 26 March 2007. An analyst briefing given by Jonathan Hill (Executive Deputy Chairman), Mark Edworthy (Managing Director) and Nick Marsham (Finance Director) will be held at 9.30 a.m. on Monday 26 March 2007 at Abchurch Communications, 5th Floor, 100 Cannon Street, London EC4N 6EU.
For further information, please contact:
| General Capital | |
| Jonathan Hill, Executive Deputy Chairman | Tel: +44 (0) 1603 610 610 |
| jonathan.hill@generalcapital.co.uk | www.generalcapital.co.uk |
| Collins Stewart Europe Limited | |
| Chris Wells / Mark Connelly / Adam Cowen | Tel: +44 (0) 20 7523 8000 |
| www.cstplc.com |
Media Enquiries:
| Abchurch Communications | |
| Heather Salmond / Franziska Boehnke / Laura Riascos | Tel: +44 (0) 20 7398 7700 |
| heather.salmond@abchurch-group.com | www.abchurch-group.com |
Notes to Editors:
About General Capital
General Capital is an independent asset and venture finance specialist established in 1991. It has developed a strong niche in an under-serviced and growing market, providing a range of lending solutions to UK SME’s. Its three core focuses are commercial asset finance, property development and bridging and venture finance.
General Capital’s financing methods provide intelligently structured bespoke solutions for each client. It is experienced in supporting businesses through all stages of development; well backed start-ups, growth situations, turnaround projects, acquisitions, and management buy outs and buy ins. General Capital also has specific and growing experience in providing finance to companies on track for AIM flotations.
In September 2006, General Capital floated on AiM by way of a reverse take-over of Clan Homes plc and is currently capitalised at approximately £20 million.