TIDMPTCM
RNS Number : 9539M
Porta Communications PLC
03 August 2017
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
3 August 2017
Porta Communications Plc
("Porta" or the "Company" or the "Group")
Strategic investment, debt reduction, lower debt coupons, Board
changes
GBP3m Strategic Investment from SEC S.p.A
Partial Conversion of Hawk and Retro Grand Loans
Restructuring of Hawk and Retro Grand Loans
Appointment of Fiorenzo Tagliabue as Deputy Chairman
Porta Communications Plc (AIM: PTCM) announces that it has
agreed a GBP3 million equity subscription with SEC S.p.A ("SEC" -
AIM: SECG.L) a public relations company with operations across
Europe (the "Subscription").
It also announces the conversion and restructuring of debt
balances due to Hawk Investment Holdings Limited ("Hawk") and Retro
Grand Limited ("Retro Grand").
Alongside SEC's strategic investment, Mr Fiorenzo Tagliabue, CEO
and founder of SEC, has been appointed to the board of Porta as
Non-Executive Deputy Chairman.
Strategic Investment
- Pursuant to a subscription agreement (the "Subscription
Agreement") with SEC, the issue of 85,714,286 new ordinary shares
of 1 pence each in the capital of the Company ("Ordinary Shares")
at a price of 3.5 pence per Ordinary Share to SEC to raise gross
proceeds of GBP3 million (the "Subscription")
- Alongside the strategic investment, the signing of a
commercial collaboration agreement with SEC (the "Commercial
Agreement")
Partial conversion of Hawk and Retro Grand loans
- The settlement of a GBP311,375 debt due to Hawk, by way of the
allotment and issue of 8,896,429 new Ordinary Shares at 3.5 pence
per Ordinary Share (the "Hawk Conversion")
- The settlement of GBP417,779 of debt due to Retro Grand, by
way of the allotment and issue of 11,936,542 new Ordinary Shares at
3.5 pence per share (the "Retro Grand Conversion")
Lower debt coupons
- The replacement of the current Hawk facility with a
GBP4,460,243 discounted bond facility maturing on 14 April 2021,
with a reduced equivalent annual interest rate of 8% (the "Hawk
Discounted Bond Replacement")
- The replacement of the current Retro Grand convertible loan
facility with a new convertible loan facility with a reduced
interest rate of 8% and a maturity date 364 days after date of
completion (the "Retro Grand Loan Replacement")
Board changes
- The appointment of Fiorenzo Tagliabue to the Porta board as
Non-executive Deputy Chairman with effect from admission of the
Subscription Shares (as defined below) to trading on AIM
- The resignation of Raymond McKeeve following his decision to
step down from the board after more than five years of service,
with the date of departure to be formally agreed by the board in
due course
John Foley, Non-Executive Chairman of Porta, commented: "I
previously identified the need for an equity injection and I am
delighted to announce the subscription agreement with SEC which
will provide Porta with the necessary additional funds to support
the growth of the Company for the foreseeable future.
"The Board is also pleased to report the negotiation of much
improved terms with Hawk and Retro Grand which significantly reduce
the Company's finance costs. These important developments form part
of the Board's ongoing strategy to build a strong, growing business
supported by an equally strong balance sheet.
"The Board thanks Raymond McKeeve for all his valuable support
and expertise. The Board is actively seeking a replacement and will
make an appointment in due course.
"Porta is currently ahead of 2016 Interim results in terms of
both fee income and Adjusted Headline EBITDA and the Board looks
forward to updating shareholders with the interim report."
Steffan Williams, CEO of Porta, added:
"Porta and SEC are highly complementary businesses in terms of
geography, industry focus and services. The partnership will
benefit the clients of both groups by allowing us to offer valued
advice and services across many markets around the world.
"I'm looking forward to working closely with SEC. I've enjoyed
getting to know Fiorenzo over recent months - he and I share the
same approach - and he will bring considerable experience and
ability to Porta."
The Subscription Agreement
Porta announces that it has successfully raised gross proceeds
of GBP3m by way of an issue of 85,714,286 new Ordinary Shares to
SEC (the "Subscription Shares") at a price of 3.5 pence per
Ordinary Share. The Subscription Shares are subject to a lock-up
arrangement that includes a 12-month lock-in period followed by a
12-month orderly market period. The Subscription Agreement contains
standard warranties given by the Company and SEC and certain
undertakings by the Company. The Subscription Agreement also gives
SEC the right to appoint a Non-executive Director to the board of
Porta for so long as SEC holds an interest equal to, or greater
than, 7.5 per cent of the issued share capital of Porta. SEC has
agreed that all transactions with Porta will be conducted on an
arm's length basis and that it will not take any action that, inter
alia, would prevent the Company from conducting its business
independently, impair its corporate governance arrangements or
prejudice Porta's status as an AIM-quoted company.
The purpose of the Subscription is to raise funds to be used by
the Company for working capital to support a number of the
subsidiary companies in the next phase of their development and
growth as well as to strengthen the balance sheet of Porta.
Coupled with the above, Porta has sought out a strategic
investor with which to collaborate in order to create a wider range
of PR advisory capabilities and geographies that both companies
would otherwise not have access to (for further details see the
terms of the Commercial Agreement below).
SEC was founded in 1989 in Italy as a holding company and head
office for a public relations and advocacy business. It is
headquartered in Milan with operations across western Europe and
the UK. On inception it grew organically focusing on media
relations, institutional and business to business (B2B) events,
publishing, lobbying and public affairs. From 1997, SEC expanded
across Italy opening offices in Turin, Venice, Naples, Rome, Bari
and Catania.
Following consistent growth over a number of years, in 2013 SEC
began to expand internationally with a series of acquisitions in
Belgium (2013), Spain (2014), Germany (2015), the UK (2016) and
Poland (2017). The SEC Group currently comprises eleven
subsidiaries in which it holds stakes ranging between 51 per cent.
and 75 per cent of the share capital.
The Hawk Conversion
A loan was made from Hawk to Porta on 18 April 2016 in the
amount of GBP257,707 for a term of 364 days, at an annual interest
rate of 12%, with the interest payable quarterly, or compounded and
paid in arrears in full at the end of the loan term. The total sum
due as at 30 June 2017 was GBP311,375 consisting of the principal
balance of GBP257,707 and interest of GBP53,668 (the "Hawk
Loan").
The Company has agreed with Hawk to settle the Hawk Loan by way
of the issue of new Ordinary Shares. The terms of the Hawk
Conversion are that the sum due to Hawk totalling GBP311,375 under
the Hawk Loan is converted into 8,896,429 new Ordinary Shares at an
issue price of 3.5 pence per Ordinary Share (the "Hawk Conversion
Shares").
Pursuant to the Hawk Conversion, the Company has today allotted
and issued the Hawk Conversion Shares to Hawk (subject only to
admission).
The Retro Grand Conversion
A loan was made from Retro Grand to Porta ("the Retro Grand
Loan") on 9 November 2016 in the amount of GBP5,183,415 for a term
of 364 days, at an annual interest rate of 12%, with the interest
payable quarterly. It has been agreed to settle part of the Retro
Grand Loan in the sum of GBP417,779 ("the Conversion Liability") by
way of the issue of new Ordinary Shares.
The terms of the Retro Grand Conversion are that the Conversion
Liability is settled by way of the issue of 11,936,542 new Ordinary
Shares at an issue price of 3.5 pence per Ordinary Share ("the
Retro Grand Conversion Shares").
Pursuant to the Retro Grand Conversion, the Company has today
allotted and issued the Retro Grand Conversion Shares to Retro
Grand (subject only to admission).
Interests in Ordinary Shares
Following the issue of the Subscription Shares, the Hawk
Conversion Shares and the Retro Grand Conversion Shares, SEC will
be beneficially interested in 85,714,286 Ordinary Shares
representing approximately 19.3 per cent. of the enlarged issued
share capital of the Company; Hawk will be beneficially interested
in 69,054,077 Ordinary Shares representing approximately 15.6 per
cent. of the enlarged issued share capital of the Company; and
Retro Grand will be beneficially interested in 30,262,932 Ordinary
Shares representing approximately 6.8 per cent. of the enlarged
issued share capital of the Company.
The Hawk Discounted Bond Replacement
The Company has agreed the terms of a discounted bond with Hawk
to replace Porta's existing GBP4,110,000 deep discounted bond with
Hawk, maturing on 14 April 2019 with an equivalent annual interest
rate of 12.8%. The Hawk Discounted Bond Replacement has a
redemption date of 14 April 2021 and the amount to be redeemed on
that date will be GBP4,460,243.
The Hawk Discounted Bond Replacement represents an improvement
on the equivalent annual interest rate Porta was previously
accruing, from 12.8% to 8%, along with pushing out the maturity
date by two years to April 2021.
At its request, Porta is able to redeem the Hawk Discounted Bond
Replacement early at a discount calculated on the date of
redemption. As well as having the opportunity to repay early at a
discount, the Hawk Discounted Bond Replacement will help to
continue to reduce the Company's monthly cash interest payments as
the redemption premium is only payable on the date of
redemption.
The Retro Grand Loan Replacement
As announced on 8 November 2016, the Company re-financed the
pre-existing convertible loan from Retro Grand with a convertible
loan from Retro Grand with a face value of GBP5,183,415 and
interest payable at a rate of 1% per month. In the event of default
Retro Grand has the option of converting the loan into Porta
Ordinary Shares with the conversion price calculated on the basis
of the volume weighted average price of Porta Ordinary Shares for
the five business days immediately prior to a notice of conversion
being issued.
The Company has now agreed with Retro Grand to replace the
existing facility with the Retro Grand Loan Replacement facility
(also a convertible loan) which will have a face value of
GBP5,183,415, a term of 364 days from the effective re-financing
date of 30 June 2017 and on which interest will accrue at a rate of
8% per annum, payable quarterly in arrears.
The Commercial Collaboration Agreement
Porta has also entered into a Commercial Agreement with SEC
which provides that the two companies will share business
opportunities and platforms to leverage the capabilities of both
companies and to strengthen their respective positions in the
public relations market. SEC and Porta intend for this
collaboration to approach the market as a global partnership,
allowing for a broader set of skilled offerings to be offered
across a greater geographical reach than either company is
currently able to provide on its own.
Under the terms of the Commercial Agreement, Porta and SEC will
establish a central marketing and new business function to
facilitate the development of joint new business opportunities to
share best practices and to act as a conduit for future
collaborative activities (the "Collaboration Team"). The
Collaboration Team will initially comprise two individuals with one
individual nominated by Porta and one by SEC. The individuals
appointed to the Collaboration Team will be Senior Managers from
both companies. The work of the Collaboration Team will be
coordinated by the CEO of Porta and by the CEO of SEC.
The fee sharing arrangements on joint projects will be
determined on a case-by-case basis.
The Commercial Agreement and Collaboration Team will be further
supported by a SEC senior manager who will be on secondment and
based at Porta's office.
The Commercial Agreement shall continue, unless terminated
earlier, until the third anniversary of the commencement of the
Commercial Agreement. Separately, the Commercial Agreement may be
terminated at any time with the written consent of both parties, or
by one party giving at least 30 days' notice in writing to the
other party.
The Commercial Agreement is conditional upon admission occurring
in accordance with the provisions of the Subscription
Agreement.
Board changes
Mr Fiorenzo Tagliabue, CEO and founder of SEC, will be appointed
to the board of Porta as Non-Executive Deputy Chairman, with effect
from the Admission of the Subscription Shares to trading on
AIM.
Mr Tagliabue founded SEC Group in 1989 and continues to be
involved in the company's day-to-day operations and strategic
direction, serving as CEO. Mr Tagliabue has played a key role in
building SEC Group and expanding its footprint internationally. In
addition to his role as CEO of SEC he personally oversees the
lobbying and public affairs division based in Milan and Rome. Prior
to founding SEC, Mr Tagliabue served as Managing Director of NEI
S.p.A, the company that edits the daily newspaper Avvenire
(1983-1989) and as General Secretary of the Vatican Television
Centre (1986-1989).
Further information concerning Fiorenzo Tagliabue, as required
by the AIM Rules for Companies, is set out below.
The Company has also been informed by Raymond McKeeve, a
Non-Executive Director of the Company, that he has taken the
decision to step down from the Board after more than five years of
service and the date of departure will formally be agreed by the
Board in due course.
Related Party Transactions
The Hawk Conversion, the Retro Grand Conversion, the Hawk
Discounted Bond Replacement and the Retro Grand Loan Replacement
constitute related party transactions pursuant to Rule 13 of the
AIM Rules for Companies as Morton PTC Limited, as the trustee of
the Morton Family Trust, is the legal owner of Hawk (a substantial
shareholder of the Company) and as the trustee of the Edward Trust,
is the legal owner of Retro Grand.
The directors consider, having consulted with the Company's
nominated adviser, Grant Thornton UK LLP, that the terms of these
transactions are fair and reasonable insofar as the Company's
shareholders are concerned.
Application for admission to trading on AIM
Application has been made to the AIM Market of the London Stock
Exchange ("AIM") for a total of 106,547,257 Ordinary Shares,
representing the Subscription Shares, the Hawk Conversion Shares
and the Retro Grand Conversion Shares, which all rank pari passu
with the Company's existing issued Ordinary Shares, to be admitted
to trading on AIM. Dealings on AIM are expected to commence at 8:00
a.m. on or around 4 August 2017 ("Admission").
Total Voting Rights
For the purposes of the Financial Conduct Authority's Disclosure
Guidance and Transparency Rules ("DTRs"), following Admission the
issued ordinary share capital of the Company will comprise
443,341,441 Ordinary Shares with voting rights attached (one vote
per share). The Company does not hold any shares in treasury. This
figure of 443,341,441 may be used by the Company's shareholders as
the denominator for the calculation by which they will determine
whether they are required to notify their interest in, or a change
to their interest in the share capital of Porta under the DTRs.
Further information on Fiorenzo Tagliabue
Fiorenzo Vittorio Tagliabue, aged 67, is, or has been, a
director or partner of the following companies or partnerships
during the past five years:
Current directorships Past directorships and
and partnerships partnerships
SEC S.p.A. SEC and Up S.r.l. in
liquidation
Cambre Associates SA SEC & Partners S.r.l
in liquidation
ACH Cambre - Consejeros Della Silva Communication
De Relaciones Públicas Consulting S.r.l. in
S.L liquidation
Kohl PR & Partner Unternehmensberatung Fondazione Teatro alla
für Kommunikation Scala, Milan
GmbH Fondazione Banco Alimentare
Onlus
Newington Communications
Limited
SEC & Associati S.r.l.
SEC and Partners S.r.l.
SEC Meditarranea S.r.l.
HIT S.r.l.
Curious Designs S.r.l.
Martis Consulting Sp.
z o. o.
IUAV, Istituto Universitario
di Architettura Venezia
Fiorenzo Tagliabue was appointed a director of Berenice S.p.A on
6 May 2011. Mr Tagliabue resigned as a director on 27 February
2012. The company subsequently entered administration and was
liquidated.
Fiorenzo Tagliabue was appointed a director of SEC AND UP S.r.l.
on 2 February 2000. Mr Tagliabue resigned as a director on 12
November 2012. The company subsequently entered administration and
is in the process of being liquidated.
Fiorenzo Tagliabue was appointed a director of Della Silva
Communication Consulting S.r.l. on 13 October 2008. Mr Tagliabue
resigned as a director on 20 December 2016, when the company was
put into liquidation. The company is in the process of being
liquidated.
Fiorenzo Tagliabue was appointed a director of SEC &
Partners S.r.l. (formerly SEC Sponsoring S.r.l.) on 24 February
1992. Mr Tagliabue ceased to be a director on 14 February 2017 when
the company was put into liquidation. The company is in the process
of being liquidated.
There is no further information required to be disclosed in
respect of the above appointment pursuant to Rule 17 or Schedule 2
(g) of the AIM Rules for Companies.
-- ends --
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Enquiries
Porta Communications Plc
Steffan Williams, CEO
Rhydian Bankes, CFO
www.portacomms.com
+44 (0) 20 7680 6550
Grant Thornton UK LLP (Nominated Adviser)
Philip Secrett
Samantha Harrison
Daniel Bush
+44 (0) 207 383 5100
N+1 Singer (Broker)
James Maxwell
Lauren Kettle
+44 (0) 20 7496 3000
Newgate Communications (Media Enquiries)
Bob Huxford
Adam Lloyd
James Ash
+44 (0) 20 7680 6550
porta@newgatecomms.com
Notes to Editors:
Porta is a fully integrated communications and marketing group
with specialisms including financial, corporate and consumer public
relations, public affairs and research and multi-capability
marketing, brand and creative communications.
The group has offices in Abu Dhabi, Beijing, Brisbane, Bristol,
Canberra, Cardiff, Edinburgh, Hong Kong, London, Manchester,
Melbourne, Singapore and Sydney.
The brands and companies it owns are: Newgate Communications,
Redleaf Communications, Publicasity, 2112 Communications and Summit
Marketing Services.
Porta Communications' corporate website is -
www.portacomms.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
IOEEAKPAEFSXEFF
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