TIDMMLVN
RNS Number : 3089O
Malvern International PLC
16 May 2018
THIS ANNOUNCEMENT (AND THE INFORMATION CONTAINED HEREIN) IS NOT
FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY,
WITHIN, IN OR INTO THE UNITED STATES (INCLUDING ITS TERRITORIES AND
POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF
COLUMBIA), CANADA, AUSTRALIA, JAPAN, NEW ZEALAND AND SOUTH AFRICA
OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.
This announcement does not constitute an offer of, or a
solicitation to subscribe for or purchase, any securities in any
jurisdiction including in the United States.
Securities may not be offered or sold in the United States
absent registration under the United States Securities Act of 1933,
as amended (the "Securities Act"), or an exemption from, or in a
transaction not subject to, registration. The Company has not and
does not intend to register any securities under the Securities
Act, and does not intend to offer any securities to the public in
the United States unless registered under the Securities Act or an
exemption from such registration is available. No public offering
of securities of the Company is being made in the United
States.
No communication or information relating to the issue and
offering of securities may be disseminated to the public in
jurisdictions other than the UK where prior registration or
approval is required for that purpose. No action has been taken
that would permit an offer of securities in any jurisdiction where
action for that purpose is required, other than in the UK.
16 May 2018
MALVERN INTERNATIONAL PLC
("Malvern", the "Group" or the "Company")
PROPOSED ACQUISITION
CONDITIONAL PLACING OF 100,000,000 NEW ORDINARY SHARES
AND
NOTICE OF GENERAL MEETING
Malvern International plc (AIM: MLVN), the global learning and
skills development partner, is pleased to announce details of an
acquisition and a placing to raise in aggregate up to GBP4.0
million, before expenses.
Highlights include:
-- Acquisition of Manchester based Communicate English School
Limited, founded in 2013, for consideration of GBP2.34m, broadening
Malvern's UK footprint
-- Malvern's second acquisition as part of its acquisition strategy
-- First acquisition, SAA-GE in Singapore acquired in November
2017, successfully integrated and delivering transformational
growth opportunities
-- Placing to raise GBP4.0m before expenses at 4 pence per Ordinary Share
-- Support of existing shareholders in placing and introduction
of new Institutional Shareholders to the share register
-- Strengthened balance sheet for working capital purposes and to support further growth
-- Malvern's global proposition greatly strengthened by broader
geographic and subject offering; complemented by momentum carried
into 2018
Commenting on the Acquisition and Placing, the Chairman,
Gopinath Pillai, said:
"The acquisition of Communicate, our second in seven months,
illustrates the consolidation opportunities in our industry and
Malvern's ability to partner with willing vendors.
"The strength of offering students a wide choice of course
subjects and locations, coupled with the flexibility of being able
to study across multiple sites and online, sets Malvern apart.
"The new management team under Dr Sam Malafeh has a strong
growth strategy which is starting to demonstrate its true potential
which is very exciting. We look forward to updating the market on
further progress in due course."
This announcement includes inside information as defined in
Article 7 of the Market Abuse Regulation No. 596/2014 and is
disclosed in accordance with the Company's obligations under
Article 17 of those Regulations.
Capitalised terms used in this announcement have the same
meaning as in the Circular to be published by the Company on 17 May
2018 which will be available on its website at
www.malverninternational.com
For further information
please contact:
Malvern International www.malverninternational.com
Plc
Dr Sam Malafeh - Chief Via Walbrook PR
Executive Officer
Navin Khattar - Non-Executive malvern@walbrookpr.com
Director
WH Ireland (NOMAD & Broker) www.whirelandcb.com
Mike Coe / Ed Allsopp +44 117 945 3470
Walbrook PR +44 20 7933 8780
Tom Cooper / Paul McManus +44 797 122 1972
tom.cooper@walbrookpr.com
Information to Distributors
With respect to the product governance rules as set out in the
Markets in Financial Instruments Directive 2014/65/EU ("MiFID II")
and supplementing texts, as a manufacturer of financial instruments
WH Ireland Limited ("WHI") has taken steps to maintain, operate and
review a process for the approval of the following proposed
financial instruments: (i) the Placing Shares ( the "Financial
Instruments"). This approval process has been used to determine an
appropriate target market for the Financial Instruments (the
"Target Market Assessment"). The purpose of the Target Market
Assessment is to ensure that the distribution of the Financial
Instruments is consistent and congruent with an appropriate end
target market.
Following the Target Market Assessment, WHI has concluded that
the Financial Instruments are compatible with retail clients,
professional clients and eligible counterparties, each as defined
in MiFID II. WHI has further concluded that the Financial
Instruments are eligible for all distribution channels permitted
under MiFID II.
Notwithstanding the Target Market Assessment, distributors of
the Financial Instruments ("Distributors") should be aware that the
Financial Instruments may also be compatible with clients: (i) with
basic capital markets knowledge or experience about shares; (ii)
who have the ability to bear up to 100% capital loss; (iii) who are
willing to accept price fluctuations in exchange for the
opportunity to receive higher returns and who have a medium to high
risk tolerance; and (iv) who seek capital growth in liquid
instruments which are easily disposable and can be suitable for any
investment horizon.
The Financial Instruments do not offer: (i) capital protection
or the full repayment of the amount invested; or (ii) a fully
guaranteed income or a fully predictable return profile. WHI
considers that the Financial Instruments are inappropriate for
clients who are fully risk averse or who have no risk
tolerance.
For the avoidance of doubt, the Target Market Assessment does
not constitute a recommendation to any investor or group of
investors to invest in, purchase, or take any other action
whatsoever with respect to the Financial Instruments or otherwise
act as an assessment of suitability or appropriateness for the
purposes of MiFID II, and WHI disclaims all and any liability
whether arising in tort, contract or otherwise in respect of the
assessment of the Financial Instruments, this announcement or any
such statement.
Furthermore, the Target Market Assessment shall be without
prejudice to any selling restrictions applicable to the Financial
Instruments as identified within the terms of and conditions to
such Financial Instruments.
In addition, notwithstanding the Target Market Assessment, WHI
will only solicit investors who meet the criteria of professional
clients and eligible counterparties.
Each distributor is responsible for undertaking its own target
market assessment in respect of the Financial Instruments and
determining appropriate distribution channels.
Proposed Acquisition
Conditional Placing of up to 100,000,000 New Ordinary Shares
and
Notice of General Meeting
1. Introduction
The Company announces today that it has exchanged a conditional
agreement to acquire the entire issued share capital of Communicate
English School Limited for a consideration of GBP2.34 million,
subject to adjustments for surplus cash on Completion. The
consideration is to be satisfied on Completion as to GBP1.65
million in cash and GBP0.69 million by the issue of 13,800,000 New
Ordinary Shares at a price of five pence each.
In order to meet the cash element of the Consideration and to
provide additional funding for the Enlarged Group, the Company has
also announced a conditional placing of up to 100,000,000 New
Ordinary Shares to raise a total of up to GBP4.0 million (before
expenses).
The Issue Price of four pence per Placing Share represents a
discount of 23.8 per cent. against the mid-market price of 5.25
pence per share at which the Ordinary Shares were quoted on AIM as
at close of trading on 15 May 2018, the last trading day prior to
announcement of the Acquisition and Placing. The Placing is
conditional, amongst other matters, upon the passing of certain
resolutions in order to ensure that the Directors have the
necessary authorities and powers to allot the New Ordinary
Shares.
The Acquisition is conditional, inter alia, on the passing of
the Resolutions to authorise the Directors to issue the
Consideration Shares and the Placing Shares. In addition, because
the Issue Price of the Placing Shares is below the nominal value of
the Existing Ordinary Shares their issue is conditional on the
Sub-division being approved by Shareholders.
A circular setting out the details of the background to and
reasons for the Acquisition, the Placing and the Sub-division and
to explain why the Directors believe that the Acquisition, the
Placing and the Sub-division are in the best interests of the
Company and Shareholders as a whole and to recommend that
Shareholders vote in favour of all of the Resolutions at the
General Meeting will be sent to Shareholders shortly.
2. Background to and reasons for the Acquisition, the Placing and the Sub-division
The Board's stated strategic plan is to further develop and grow
the Malvern business through a combination of organic growth and
selective acquisitions. In terms of acquisitions the Board's
intention is to supplement its existing geographic areas of
operations in the UK, Singapore and Malaysia before it considers
moving into new territories. The first such acquisition was
completed in November 2017 when the Group completed the acquisition
of SAA Global Education in Singapore. The proposed acquisition of
Communicate is consistent with this strategy and will supplement
the Group's existing UK operations.
The Directors are of the opinion that the Acquisition will be
earnings accretive. In addition, they believe that the Acquisition
is in the best interests of the Company and its Shareholders for
the following reasons:
-- Communicate is well established and has a good track record for quality and growth;
-- its revenues and profits have increased in each of the last four years;
-- being based in Manchester it will complement the Group's
existing London school and provide an alternative location for
potential Malvern students; and
-- Communicate will benefit from Malvern's international marketing and agency network.
The cash consideration of GBP1.65 million payable on Completion
will be satisfied entirely from the net proceeds of the Placing.
The Sellers will remain in the Communicate business following
Completion. Therefore the Consideration Shares, which represent
approximately 29.5 per cent. of the Consideration will ensure that
interests of the Sellers are aligned with those of the Company and
its Shareholders.
The Issue Price of the Placing Shares is below the nominal value
of the Existing Ordinary Shares. The Act prohibits companies from
issuing new shares at less than the nominal value. Therefore, in
order for the Placing Shares to be issued and the Acquisition to be
completed, a sub-division of the Existing Ordinary Shares is
required. Details of the Sub-division are set out in paragraph 5
below.
3. Information on Communicate
Communicate is a private company owned by Mr Richard Mace and
Mrs Marzena Mace. Communicate operates the Communicate School of
English based in Manchester city centre. The school was founded in
2013 and in 2017 taught over 1000 students. The school is
established, growing and British Council accredited.
For the year ended 30 June 2017, Communicate reported unaudited
revenues of GBP1.0 million and profit before tax of GBP0.41
million. As at 30 June 2017 Communicate had net assets of GBP0.4
million
4. Principal terms and conditions of the Acquisition
On 16 May 2018, the Company entered into the Acquisition
Agreement with the Sellers pursuant to which the Company has
conditionally agreed to acquire the entire issued share capital of
Communicate.
The Consideration for the Acquisition is GBP2.34 million, which
will be satisfied on Completion by the payment of GBP1.65 million
in cash and GBP0.69 million through the issue of 13,800,000 New
Ordinary Shares at a price of 5 pence per share to the Sellers in
each case pro rata to their shareholdings in Communicate.
The Cash Consideration is subject to customary working capital
and cash adjustments following Completion.
Completion of the Acquisition Agreement is conditional, amongst
other things, on the passing of the Resolutions at the General
Meeting. Completion is expected to take place on 2 July 2018.
Admission of the Consideration Shares is expected to take place on
3 July 2018.
The Sellers have given certain customary warranties and
indemnities pursuant to the Acquisition Agreement.
5. Details of the Sub-division
Under the Act a company is unable to issue shares at a
subscription price which is less than their nominal value. The par
value of each Existing Ordinary Share is 5 pence, and the Issue
Price for the Placing Shares is four pence per share. Therefore in
order to proceed with the Acquisition and the Placing, the Company
is proposing to undertake the Sub-division so that the par value of
the Ordinary Shares is reduced to below the Issue Price. The
proposal would, if passed, involve sub-dividing each issued
Existing Ordinary Share into one New Ordinary Share of one pence
and four Deferred Shares of one pence each.
The percentage and number of New Ordinary Shares held by each
Shareholder immediately following the Sub-division will be the same
as the percentage and number of Existing Ordinary Shares held by
them on the Sub-division Record Date.
Save for the dilution which will result from the issue of the
Consideration Shares and the Placing Shares, the interests of
existing Shareholders (both in terms of their economic interest and
voting rights) will not be diluted by the implementation of the
Sub-division and each New Ordinary Share will have the same rights
(including voting and dividend rights) as each Existing Ordinary
Share has at present.
In order to effect the Sub-division, the Company proposes to
adopt the New Articles which will consist of the Articles amended
to include reference to the new Deferred Shares. The new Deferred
Shares created as a result of the Sub-Division will have the same
rights as the existing deferred shares of five pence each in the
capital of the Company. These rights are minimal, thereby rendering
the Deferred Shares effectively valueless.
The rights attaching to the new Deferred Shares can be
summarised as follows:
-- they will not entitle holders to receive any dividend or
other distribution or to receive notice or speak or vote at general
meetings of the Company;
-- they will have no rights to participate in a return of assets on a winding up;
-- they will not be freely transferable;
-- the creation and issue of further shares will rank equally or
in priority to the Deferred Shares;
-- the passing of a resolution of the Company to cancel the
Deferred Shares or to effect a reduction of capital shall not
constitute a modification or abrogation of their rights; and
-- the Company shall have the right at any time to purchase all
of the Deferred Shares in issue for an aggregate consideration of
GBP0.01.
Existing share certificates will continue to be valid following
the Sub-division. No certificates will be issued in respect of the
Deferred Shares, nor will CREST accounts of Shareholders be
credited in respect of any entitlement to the Deferred Shares. No
application will be made for the Deferred Shares to be admitted to
trading on AIM or any other investment exchange.
There are no immediate plans to purchase or to cancel the
Deferred Shares, although the Directors propose to keep the
situation under review.
A copy of the New Articles proposed to be adopted at the General
Meeting will be available for inspection at the General Meeting and
will be made available free of charge on the Company's website at
www.malverninternational.com.
6. Details of the Placing
Subject to the satisfaction of the conditions under the Placing,
inter alia, the passing of the Resolutions, the Company will place
a total of 100,000,000 New Ordinary Shares raising in aggregate
approximately GBP4.0 million (before expenses). The Placing Shares
have been conditionally placed by WH Ireland, as agent for the
Company with institutional and other investors. The Placing Shares
will be allotted at the Issue Price. The Issue Price of four pence
per Placing Ordinary Share represents a discount of 23.8 per cent.
against the mid-market price of 5.25 pence per share at which the
Ordinary Shares were quoted on AIM as at close of trading on 15 May
2018, the last trading day prior to announcement of the
Placing.
The Placing is conditional upon, inter alia, the Acquisition
Agreement becoming unconditional in all respects (save for any
condition relating to the Placing Agreement becoming unconditional)
and Admission of the Placing Shares occurring no later than 8.00
a.m. on 12 June 2018 (or such later date as the Company and WH
Ireland shall agree, being no later than 6 July 2018).
CG Corp and KSP Investments Pte Limited ("KSP"), the Company's
two largest shareholders and each of whom is represented on the
Board, together intend to subscribe for up to 12,500,000 Placing
Shares (a total of GBP0.5 million at the Issue Price), as part of
the Placing. In addition, Ramasamy Jayapal, a non-executive
Director, intends to subscribe for up to 500,000 Placing Shares,
These intentions are not legally binding and any subscription by CG
Corp and/or KSP and Mr Jayapal pursuant to the Placing will be
announced through a Regulatory Information Service.
As at 31 December 2017 the Company had outstanding loans of
approximately GBP836,000 with CG Corp and KSP. These loans are
interest free and have no fixed repayment dates. The Company's
intention is that these loans are repaid during 2018 and 2019.
Settlement and dealings
In due course application will be made for the Consideration
Shares and the Placing Shares to be admitted to trading on AIM and,
on the assumption that, inter alia, the Resolutions are passed,
Admission of the Placing Shares is expected to become effective and
that dealings will commence at 8.00 a.m. on 12 June 2018. Admission
of the Consideration Shares is expected to become effective and
that dealings will commence at 8.00 a.m. on 3 July 2018.
The New Ordinary Shares will rank pari passu in all respects
with the Existing Ordinary Shares, including the right to receive
all dividends and other distributions declared on or after the date
on which they are issued. It is expected that CREST accounts will
be credited with entitlements to the Placing Shares as soon as
practicable after 8.00 a.m. on the day of First Admission and that
share certificates (where applicable) will be despatched as soon as
practicable after First Admission.
If you are in any doubt as to what action you should take, you
are recommended to immediately seek your own personal financial
advice from your stockbroker, bank manager, solicitor, accountant
or other independent professional adviser duly authorised under the
Financial Services and Markets Act 2000 (as amended) if you are
resident in the United Kingdom or, if not, from another
appropriately authorised independent financial adviser.
7. Use of proceeds
The net proceeds of the Fundraising are expected to be
approximately GBP3.725 million, assuming full subscription under
the Placing. These proceeds will be applied in satisfying the Cash
Consideration of GBP1.65 million. The balance of the proceeds will
be used to support the future growth of the business.
8. Current trading and prospects
Malvern's last reported results were the final results for the
year ended 31 December 2017. These results reported revenues of
GBP4.1 million and a loss after tax of GBP0.7 million,
significantly below the losses of GBP1.5 million reported for
2016.
Trading in the current year has commenced well, with sales to
date plus sales already booked for delivery in the remainder of the
year standing at GBP3.95 million which is approximately 92 per
cent. of the sales turnover for the whole of 2017.
Trading momentum in London is being maintained with a strong
level of bookings at the school. In addition in April 2017 the
Company announced a partnership agreement with the University of
East London ("UEL") which will see Malvern established as an
embedded college within UEL, delivering pre-sessional foundation
and English language courses for international students at both
Degree and Masters levels. While the impact for this on the current
financial year will be modest, the potential for next year is more
significant and the long term potential of this and other similar
ventures is exciting.
Trading in Singapore will benefit from a first full year of
revenue from SAA Global Education ("SAA-GE"). The integration of
SAA-GE into the Group has gone smoothly following its acquisition
in November 2017. Operations in Singapore have now been
consolidated onto one site and the Board estimates that the
property, staff and other costs savings that have been implemented
since SAA-GE's acquisition should result in annualised costs
savings of approximately GBP200,000.
In Malaysia a licence to teach international students for
vocational training has been awarded to Malvern for the first time.
This, together with the significant management and operational
changes made last year, gives the Board confidence that the overall
performance in Malaysia will improve on last year.
The Board is now confident that, with the Group strategically
aligned, focused and directed, the impact on the performance of the
Group will be highly positive going forward and that this will
bring the Group to profitability in 2018.
9. Recommendation
The Directors believe the Sub-division, Placing and the
Acquisition to be in the best interests of the Company and its
Shareholders as a whole. Accordingly, the Directors unanimously
recommend Shareholders to vote in favour of the Resolutions as they
intend so to do in respect of their beneficial shareholdings.
10. General Meeting
The Circular will contain a notice convening the General Meeting
to be held at the offices of WH Ireland at 24 Martin Lane, London
EC4R 0DR on 11 June 2018 at 11.15 a.m. or as soon thereafter as the
AGM convened for 11 a.m. on that day has concluded, at which
resolutions will be proposed to, inter alia, to grant sufficient
share authorities to the Directors, to enable the Acquisition and
Placing to take place.
Capitalised terms used in this announcement have the same
meaning as in the Circular to be published by the Company on 17 May
2018 which will be available on its website at
www.malverninternational.com
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
2018
Announcement of the Placing 16 May
and Acquisition
Latest time and date for receipt 11.15 a.m. on
of Forms of Proxy 9 June
Annual General Meeting 11.00 on 11 June
General Meeting 11.15 a.m. on
11 June
Sub-division Record Date 6.00 p.m. on 11
June
First Admission and commencement 8.00 a.m. on 12
of dealings in the Placing Shares June
Placing Shares credited to CREST 12 June
stock accounts
Despatch of definitive share Week commencing
certificates for Placing Shares 18 June
Completion of Acquisition 2 July
Second Admission and commencement 8.00am on 3 July
of dealings in the Consideration
Shares
PLACING STATISTICS
Closing Price per Existing Ordinary 5.25 pence
Share on 15 May 2018(1)
Number of Existing Ordinary
Shares in issue 114,188,333
Issue Price of each Placing 4 pence
Share
Discount to market price of 23.8 per cent.
5.25 pence per Existing Ordinary
Share(1)
Number of Consideration Shares
to be issued pursuant to the
Acquisition 13,800,000
Number of Placing Shares to up to 100,000,000
be issued pursuant to the Placing
Shares(2)
Expected proceeds of the Placing up to GBP4.0 million
(before expenses)
Estimated net proceeds of the up to GBP3.725
Placing(2) million
Enlarged Share Capital following
Admission(2) 227,988,333
Percentage of Enlarged Share 6.1 per cent.
Capital represented by the Consideration
Shares(2)
Percentage of Enlarged Share 43.9 per cent.
Capital represented by the Placing
Shares(2)
Notes:
1 Based on the Closing Price on 15 May 2018,
being the last practicable date prior to the
announcement of the Acquisition and Placing.
2 Assuming full subscription under the Placing.
FORWARD LOOKING STATEMENTS
This announcement includes statements that are, or may be deemed
to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates",
"forecasts", "plans", "prepares", "anticipates", "projects",
"expects", "intends", "may", "will", "seeks", or "should" or, in
each case, their negative or other variations or comparable
terminology, or by discussions of strategy, plans, objectives,
goals, future events or intentions. These forward-looking
statements include all matters that are not historical facts. They
appear in a number of places throughout this announcement and
include statements regarding the Company's and the Directors'
intentions, beliefs or current expectations concerning, amongst
other things, the Enlarged Group's prospects, growth and
strategy.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future.
Forward-looking statements are not guarantees of future
performance. The Enlarged Group's actual performance, achievements
and financial condition may differ materially from those expressed
or implied by the forward-looking statements in this announcement.
In addition, even if the Enlarged Group's results of operations,
performance, achievements and financial condition are consistent
with the forward-looking statements in this announcement, those
results or development may not be indicative of results or
developments in subsequent periods.
Any forward-looking statements that the Company makes in this
announcement speak only as of the date of such statement, and none
of the Company, the Directors or WH Ireland undertakes any
obligation to update such statements unless required to do so by
applicable law. Comparisons of results for current and any prior
periods are not intended to express any future trends or
indications of future performance, unless expressed as such, and
should only be viewed as historical data.
IMPORTANT INFORMATION
WH Ireland Limited, which is authorised and regulated in the
United Kingdom by the Financial Conduct Authority, is acting
exclusively for the Company in relation to the Fundraising and will
not be responsible to any person other than the Company under the
Financial Services and Markets Act 2000, the rules of the Financial
Conduct Authority or otherwise for providing the protections
afforded to its clients or for advising any other person in
relation to the contents of this announcement, the Fundraising or
any matter, transaction or arrangement referred to in this
announcement. WH Ireland Limited is not making any representation
or warranty, express or implied, as to the contents of this
announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACQEAASKFLLPEFF
(END) Dow Jones Newswires
May 16, 2018 09:00 ET (13:00 GMT)
Malvern (LSE:MLVN)
Historical Stock Chart
From Mar 2024 to Apr 2024
Malvern (LSE:MLVN)
Historical Stock Chart
From Apr 2023 to Apr 2024