TIDMSKIN
RNS Number : 9484K
Integumen PLC
16 April 2018
16 April 2018
THIS ANNOUNCEMENT (INCLUDING THE APPICES) AND THE INFORMATION
CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION
OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN,
INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE
REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH
RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.
LEI: 213800M477RQVVHVUD72
Integumen plc
("Integumen" or the "Company")
Proposed Acquisition and Trading Update
Integumen (LSE: SKIN) announces that it has conditionally agreed
to acquire Cellulac PLC ("Cellulac") in an all share transaction,
subject to, inter alia, due diligence and the approval of both
Integumen's and Cellulac's shareholders (the "Proposed
Acquisition"). Cellulac has developed, acquired and integrated
technologies to produce biodegradable plastic components for
consumer packaging, natural oils and nutritional food ingredients
for use in the cosmetics, nutritional food and health care sectors.
The Proposed Acquisition will enable Integumen to enter the highly
attractive bio-materials and nutritional food sector complementing
its existing personal care businesses.
The enlarged group will focus on biodegradable plastic
ingredients, cosmetics and human grade food supplements and will
have a portfolio of existing products, with high-margins in the
oral care, medical and cosmetic industries. Existing Integumen
cosmetic packaging, oral care consumer products and third party
products can in time be replaced with biodegradable plastic
materials. These drop-in replacements will be focused on existing
and near to market products. Demand for these products is
established and an offtake agreement worth up to $36m over five
years is already in place.
The Board of Integumen believes that the Proposed Acquisition
has a compelling strategic and financial rational as it will:
-- enable the enlarged group to focus on biodegradable plastic
ingredients, cosmetics and human grade food supplements,
complementing Integumen's existing personal care businesses driving
growth through innovative products and technology;
-- diversify and create opportunities to increase revenue streams;
-- create an enlarged group that will focus on human grade food
supplements and cosmetics and will have a portfolio of existing
products, with high-margins in the oral-care, medical and cosmetic
industries;
-- allow the enlarged group to capitalise on the shifting
opinion around single use plastics amongst consumers and policy
makers by fulfilling demand for products with biodegradable plastic
packaging. Existing Group cosmetic packaging, oral care consumer
products and third party products can in time be replaced with
biodegradable plastic materials and these replacements will be
focused on existing and near to commercialised products;
-- provide significant market opportunities due to complementary business activities; and
-- bring a strong well-established management team to the enlarged group.
Integumen proposes to acquire the entire issued and to be issued
share capital of Cellulac. The consideration will comprise such
number of new ordinary shares in Integumen ("Consideration Shares")
as will represent approximately 84% of the issued share capital, as
enlarged by the Consideration Shares only. In addition, Integumen
intends to raise up to GBP7.5 million by way of an equity placing
and/or debt funding (the "Fundraising").
The Proposed Acquisition would constitute a reverse takeover for
Integumen under Rule 14 of the AIM Rules for Companies (the "AIM
Rules") and under the City Code on Takeovers and Mergers ("Code").
Accordingly, under the AIM Rules the Proposed Transaction is
subject to the publication of an admission document and approval by
Integumen's shareholders.
In accordance with Rule 14 of the AIM Rules, the Company's
ordinary shares will be suspended from trading on AIM with effect
from 7:30 a.m. today. The Company's ordinary shares will remain
suspended until such time as either an admission document is
published, or an announcement is released confirming that the
Proposed Acquisition is not proceeding. The Company will update its
shareholders as and when appropriate.
Cellulac is a public company with 35 shareholders and, although
its shares are not traded on any exchange, it is currently also
subject to the Code. However, a non-waivable condition of the
Proposed Transaction is that Cellulac will re-register as a private
company, at which point it will cease to be subject to the Code.
Further details regarding the proposed re-registration of Cellulac
as a private company and the operation of the Code are provided
below.
The Proposed Acquisition will be subject to a number of further
conditions, including, inter alia, completion of satisfactory due
diligence, amendments to Cellulac's convertible debt, the entering
into and completion of a share purchase agreement, publication of
an AIM admission document, the grant of a waiver by the Panel in
connection with a Whitewash (as detailed further below), approval
of both Integumen's and Cellulac's shareholders, and the
Fundraising.
In conjunction with the admission of Integumen's enlarged share
capital to trading on AIM ("Admission"), the Company intends to
perform a consolidation of its ordinary shares and change the name
of the Company to Cellulac plc.
Information on Cellulac
Cellulac is a vertically integrated group of companies with
operations in Ireland and with headquarters in the United Kingdom.
Activities undertaken by these companies range from the production
of biodegradable plastic ingredients and natural oils to expertise
in consumer marketing in cosmetics, food and health care
industries. The production division capabilities include process
engineering, chemical engineering, biochemistry and polymer
science.
Cellulac has scaled from 10-litre Omega 3, laboratory scale in
2009 to pilot-scale of 1,000 litres in 2014. This was further
expanded up to 10,000 litres in 2015 before moving to commercial
scale of 80,000 litres in 2016.
Commercial scale batches of Omega 3 oil for human consumption,
resulted in operational savings of 25% over conventional Omega 3
production methods. Regulatory approvals were sought and received
for the sale of the product in the European Union and the United
States.
Cellulac's website address is www.cellulac.com.
Proposed changes to the board of directors of Integumen (the
"Board")
Upon Admission, it is proposed that Gerard Brandon and Camillus
Glover, who are, respectively, the current Chief Executive Officer
and Chief Operations Officer of Cellulac, will join the Board as
(I) Chief Executive Officer and (II) Chief Operations Officer,
respectively. It is proposed that Chris Bell, the current Chief
Financial Officer of the Company, will remain as an executive
director upon Admission. It is further proposed that an additional
two non-executive directors will be appointed to the Board. In
light of the above, Declan Service has resigned from the Board with
immediate effect and Chris Bell has agreed to act as interim Chief
Executive Officer of the Company.
Trading Update
On 22 December 2017, the Board of Integumen outlined its
commitment to review the product portfolio with a view to setting
commercialisation priorities for 2018 and beyond. After considering
a number of options the Board determined that it needed to expand
its revenue generating activities through product acquisitions to
enhance its higher margin oral care, skincare and personal care
business and leverage its cost base more effectively.
Consequently, pending completion of the Proposed Acquisition and
the Fundraising, the Board has decided to continue the promotion of
the more significant revenue generating technologies, in the
expectation that they have the earliest potential for positive
cash-flow. To support this, the Board has approved a cost reduction
and cost deferral programme amounting to a saving of approximately
GBP40,000 a month across other areas of the business and corporate
overheads. In addition the Company is in the process of undertaking
a small debt or equity raise, in association with Cellulac, to pay
ongoing transaction costs and increase its financial resources
while the transaction progresses.
Stoer, the male cosmetics brand, has been progressing sales from
existing inventory acquired as part of its acquisition, via new
online outlets. Pending further funding, development activities
beyond existing products at Visible Youth and Clarogel have been
reduced, contract discussions with Champion Shave deferred and
emphasis is now targeted on maintaining the Company's patent and
trademark portfolio.
The Code
The Code currently applies to each of Integumen and
Cellulac.
Compliance with the Code
As the Proposed Acquisition is conditional upon the
re-registration of Cellulac as a private company, upon which the
Code would cease to apply to Cellulac, the Proposed Acquisition
will not comply with the Code.
Rule 9
The shareholders in Cellulac (the "Selling Shareholders") are
presumed to be acting in concert for the purposes of the Code and,
if the Proposed Acquisition proceeds, it is likely that they will
together acquire more than 50% of the voting rights in the enlarged
share capital of Integumen which, without a waiver of the
obligations under Rule 9 of the Code (commonly referred to as a
"Whitewash"), would oblige the Selling Shareholders (and any
persons acting in concert with them) to make a general offer to
Integumen Shareholders under Rule 9 of the Code (a "Rule 9 Offer").
Consequently, the Proposed Acquisition is conditional upon the
grant of a waiver by the Panel of such a waiver and the approval of
such a waiver by at least 50% of independent shareholders in
Integumen voting on a poll at a general meeting.
Re-registration of Cellulac as a private company
A condition to the Proposed Acquisition is that Cellulac is
first re-registered as a private company. Accordingly, Cellulac
will issue a circular to its shareholders setting out the
background to and reasons for the re-registration and calling a
general meeting at which its shareholders will be asked to approve
the re-registration (the "Re-registration Circular"). If Cellulac
shareholders do not approve the re-registration of Cellulac as a
private company, the Proposed Acquisition will not proceed and
Cellulac will remain a public company.
The Code currently applies to Cellulac. If Cellulac is
re-registered as a private company, the Code will cease to
apply.
Cellulac shareholders should note that, if the resolution to
re-register Cellulac as a private company becomes effective, they
will not receive the protections afforded by the Code in the event
that there is a subsequent offer to acquire their Cellulac
shares.
The Re-registration Circular is expected to be published in the
next few weeks and, as well as setting out the background to and
reasons for the re-registration and calling a general meeting at
which its shareholders will be asked to approve the
re-registration, it will include an explanation of the Code and the
protections that Cellulac shareholders will be giving up if the
re-registration becomes effective.
Brief details of the Code and the protections given by the Code
are described below. Before giving consent to the re-registration
of Cellulac as a private company, Cellulac shareholders may want to
take independent professional advice from an appropriate
independent financial adviser.
The Code
The Code is issued and administered by the Panel. Cellulac is a
company to which the Code applies and its shareholders are
accordingly entitled to the protections afforded by the Code.
The Code and the Panel operate principally to ensure that
shareholders are treated fairly and are not denied an opportunity
to decide on the merits of a takeover and that shareholders of the
same class are afforded equivalent treatment by an offeror. The
Code also provides an orderly framework within which takeovers are
conducted. In addition, it is designed to promote, in conjunction
with other regulatory regimes, the integrity of the financial
markets.
The General Principles and Rules of the Code
The Code is based upon a number of General Principles which are
essentially statements of standards of commercial behaviour. These
General Principles are set out in Part 1 of Appendix B. The General
Principles apply to all transactions with which the Code is
concerned. They are expressed in broad general terms and the Code
does not define the precise extent of, or the limitations on, their
application. They are applied by the Panel in accordance with their
spirit to achieve their underlying purpose.
In addition to the General Principles, the Code contains a
series of Rules, of which some are effectively expansions of the
General Principles and examples of their application and others are
provisions governing specific aspects of takeover procedure.
Although most of the Rules are expressed in more detailed language
than the General Principles, they are not framed in technical
language and, like the General Principles, are to be interpreted to
achieve their underlying purpose. Therefore, their spirit must be
observed as well as their letter. The Panel may derogate or grant a
waiver to a person from the application of a Rule in certain
circumstances.
This announcement is made with the agreement of Cellulac.
Further announcements will be made as and when appropriate.
Announcements made by Cellulac in connection with the Proposed
Acquisition will be made on its website at www.cellulac.com.
In accordance with Rule 26.1 of the Code, a copy of this
announcement will be available on Integumen's website at
www.integumenplc.com and on Cellulac's website at www.cellulac.com.
The content of the websites referred to in this announcement is not
incorporated into and does not form part of this announcement.
Tony Richardson,
Integumen plc Chair + 353 (0) 87 770 5506
SPARK Advisory Partners
Limited Neil Baldwin/Andrew
(Nominated Adviser) Emmott +44 (0) 113 370 8974
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Hybridan LLP (Broker) Claire Noyce +44 (0) 203 764 2341
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Turner Pope Investments Ben Turner/James
(TPI) Ltd (Broker) Pope +44 (0) 20 3621 4120
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TB Cardew Shan Shan Willenbrock +44 (0) 20 7930 0777
Joe McGregor mailto:integumen@tbcardew.com
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This information is provided by RNS
The company news service from the London Stock Exchange
END
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