CIMdata PLM Industry Summary Online Archive
30 March 2007
Financial News
Renishaw Placing
Delcam announced today that it had conditionally raised £6,096,208 before expenses through a placing of 1,524,052 new Ordinary Shares with Renishaw at £4.00 per share. The net proceeds will be used to fund the expansion of the business and for further investment in the development, sales and support of Delcam's products.
Reasons for the Placing, use of funds and dividend policy
The Directors believe that the Company's growth in sales can be sustained and built upon by working more closely with Renishaw.
Renishaw was established in 1973, is listed on the Official List of the United Kingdom Listing Authority and is a leading provider of metrology and spectroscopy solutions to manufacturers and researchers. It has been awarded eleven Queen's Awards for Export Achievement, Technological Achievement and Enterprise. In the year to 30 June 2006, Renishaw generated turnover of £175.8 million and profit before tax of £38.1 million.
Renishaw and Delcam have worked together for many years and share common metrology interests and customers. We believe closer cooperation with Renishaw will enhance the sales of both companies. This would be achieved by initiatives such as the agreement recently entered into with Renishaw for the development of software to support the application of Renishaw's new probes.
As a commitment to a closer working relationship, Renishaw has conditionally agreed to subscribe for the Placing Shares, which will represent approximately 20 per cent of Delcam's enlarged issued Ordinary Share capital. The proceeds of the Placing will be used to fund Delcam's expansion organically and by acquisition and to invest in the development, sales, development and support of Delcam's products.
After completion of the Placing, it is the intention of the Directors to review the Company's dividend policy to ensure that the level of dividend per Ordinary Share is not adversely affected by the Placing.
Placing and Renishaw director
The Company has conditionally raised £6,096,208 before expenses through a placing of 1,524,052 new Ordinary Shares with Renishaw at the Placing Price. The Placing is conditional on the passing of the Resolutions and the admission of the Placing Shares to trading on AIM. The Placing is also conditional on there being no material adverse change in the financial or trading position or prospects of the Company between the date of this letter and completion of the Placing.
The Company has been in discussions with Renishaw for some time in relation to these proposals and the Company's share price has risen considerably over that period. The average middle market price for the Company's shares in December 2006 was 310p and this had risen to 416.5p on 29 March 2007, a rise of 34.4%. The Placing Price of £4.00 represents a discount to the closing middle market price of the Company's shares on 29 March 2007 of 4%.
The Placing Shares will not qualify for the final dividend for the financial year ended 31 December 2006 but will otherwise rank pari passu in all respects with the existing Ordinary Shares.
Application will be made to the London Stock Exchange for admission of the Placing Shares to trading on AIM and, subject to the passing of the Resolutions at the EGM, the Placing Shares are expected to be admitted on 24 April 2007.
Delcam has agreed with Renishaw that, for so long as Renishaw holds more than 15 per cent of the Company's Ordinary Share capital, it will be entitled to nominate a director for appointment to the Board. The nominated candidate will be subject to the approval of the Directors (which will not be unreasonably withheld) and assessment of the candidate by the Company's nominated adviser in accordance with the AIM Rules.
Delcam has also agreed that it will not make a purchase of its own shares or reduce its share capital to an extent which would cause Renishaw's holding of Ordinary Shares to exceed 29.99% of the Company's Ordinary Share capital from time to time, unless the Panel on Takeovers and Mergers first waives Renishaw's obligation to make an offer for the Company in those circumstances.
Renishaw has agreed with the Company that:
• for five years from completion of the Placing and subject to certain exceptions, it will not acquire further shares in the Company which would result in it holding more than 20 per cent of the Company's Ordinary share capital from time to time without the agreement of the Board;
• it will not exercise the voting rights attaching to the Placing Shares on any resolution to appoint or remove a director of the Company other than Renishaw's nominated director (unless it elects to vote in accordance with a written voting recommendation made to Shareholders by the Board or to re-elect a director retiring by rotation and offering himself for re-election); and
• for five years from completion of the Placing and subject to certain exceptions, it will only dispose of the Placing Shares through the Company's brokers from time to time in order to maintain an orderly market in the Company's shares.
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