Science Group PLC Investment in Frontier Smart Technologies Grp Ltd (3446C)
June 14 2019 - 6:40AM
UK Regulatory
TIDMSAG TIDMFST
RNS Number : 3446C
Science Group PLC
14 June 2019
14 June 2019
Science Group plc
Investment in Frontier Smart Technologies Group Limited
("Frontier")
Science Group plc (Science Group") notes the announcement by
Frontier on 14 June 2019 (the "Frontier Announcement") of a
preliminary approach from another party in relation to a corporate
transaction. In contrast to the announcement made by Frontier on 20
May 2019 disclosing Science Group's interest, the Frontier
Announcement this morning does not identify the potential bidder or
provide details of the proposed price. Science Group also notes
that the Frontier Announcement this morning also does not provide
detail on conditionality or structure.
However, Frontier does notify shareholders that the approach is
at a preliminary stage and that there can be no certainty that the
approach will result in a formal offer for Frontier, nor as to the
terms of any such offer if made. Furthermore, Frontier highlights
that it is urgently seeking to clarify deliverability of this
second approach, a very significant point in the opinion of Science
Group.
With regard to deliverability, Science Group is currently the
largest shareholder of Frontier, holding approximately 28.3% of the
voting share capital. Science Group does not intend to sell its
shares to any other potential bidder or vote in favour of any
alternative transaction, including any vote on the disposal of
assets of Frontier. In particular, Science Group notes that it will
not be possible for another bidder to implement the transaction as
a statutory merger or scheme of arrangement without the cooperation
of Science Group, since each of these transactions would require
the approval of at least 75% of Frontier shareholders voting.
Science Group also notes that, whilst another bidder could
potentially gain voting control of Frontier by making a contractual
offer, any subsequent delisting from AIM would also require the
approval of at least 75% of Frontier shareholders voting, therefore
also requiring Science Group cooperation. If de-listing did not
occur, the integration of Frontier into another business with at
least one substantial minority shareholder would, in Science
Group's opinion, be likely to be challenging and would be subject
to material legal and operational constraints.
Science Group also highlights the potential risks to Frontier of
a protracted process, taking into account the financial position of
Frontier as reported in the trading update on 9 May 2019. In that
announcement, Frontier forecast an EBITDA trading loss of $2.2
million in the first half of 2019 and net debt at 30 April 2019 of
$3.9 million. Frontier's bank facility is GBP5 million,
approximately $6 million, although the Frontier announcement on 9
May did not provide any detail as to the headroom relative to the
bank covenants, despite the reported challenging trading
environment and deteriorating cash position.
As a result, Science Group reiterates the uncertainty regarding
the deliverability of the second approach, as well as the potential
risks to Frontier from further delay. Therefore, Science Group
again encourages the board of directors of Frontier to engage with
Science Group to complete a transaction with Science Group in a
timely manner.
- Ends -
For further information:
Science Group plc
Martyn Ratcliffe, Chairman Tel: +44 (0) 1223 875
Sarah Cole, Company Secretary 200
Panmure Gordon (UK) Limited
Dominic Morley / Alina Vaskina (Nominated Tel: +44 (0) 20 7886
Adviser) 2500
Erik Anderson (Corporate Broking)
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END
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