Confirmation of Successful Placing

RNS Number : 0217E

Accrol Group Holdings PLC

03 November 2020

 

03 November 2020

THIS ANNOUNCEMENT, AND THE INFORMATION CONTAINED HEREIN, IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM THE UNITED STATES, AUSTRALIA, NEW ZEALAND, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO DO SO.

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO CONSTITUTE INSIDE INFORMATION STIPULATED UNDER THE MARKET ABUSE REGULATION (EU) NO. 596/2014 ("MAR").  UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA THE REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN. 

ACCROL GROUP HOLDINGS PLC
("Accrol" or the "Company")

CONFIRMATION OF SUCCESSFUL PLACING

Accrol, a UK leading independent tissue converter, is pleased to announce that further to the Company's announcement released at approximately 5.00 p.m on 2 November 2020 ("Launch Announcement"), the bookbuild has closed and the Group has conditionally raised gross proceeds of £38.5 million, through the successful placing of 87,500,000 new Ordinary Shares in the capital of the Company ("Primary Placing Shares"), representing approximately 44.8 per cent. of the Company's existing issued share capital ("Primary Placing"). The Primary Placing Shares were placed at a price of 44 pence per Primary Placing Share, representing a discount of c. 1.1 per cent. to the last closing price of an Accrol ordinary share. The Primary Placing was oversubscribed by existing Shareholders and new investors.

Unless expressly defined in this Announcement, all capitalised terms used in this Announcement have the meanings stated in the Launch Announcement.

As outlined in the Launch Announcement, in order to meet excess investor demand for further Ordinary Shares, the Selling Shareholders have agreed to effect the Option Exercise and, conditional on admission of the Option Shares to trading on AIM becoming effective, to sell 6,454,668 Option Shares (in aggregate) ("Secondary Placing Shares") at the Issue Price to placees ("Secondary Placing"). Further details of the Secondary Placing are set out further below.

The Primary Placing Shares and the Secondary Placing Shares (together being referred to in this Announcement as the "Placing Shares") have been conditionally placed with certain existing and new institutional and other professional investors. Zeus Capital and Liberum Capital acted as joint bookrunners to the Company in connection with the Primary Placing and to the Selling Shareholders in connection with the Secondary Placing.

Conditional on admission of the Placing Shares to trading on AIM becoming effective ("Admission"), and to provide other Shareholders not able to participate in the Placing with an opportunity to subscribe for additional Ordinary Shares, the Company is proposing to raise up to c.£4.1 million (before expenses) by way of an open offer made to qualifying shareholders of up to 9,297,454 Ordinary Shares at the Issue Price, on the basis of one Ordinary Share for every 21 existing Ordinary Shares held on the record date payable in full on acceptance ("Open Offer").

The Primary Placing, Secondary Placing and Open Offer are conditional, inter alia, on the passing of the resolutions to be proposed at a General Meeting ("Resolutions"). The Primary Placing and the Secondary Placing, are not, in each case, conditional on the Open Offer proceeding or on any minimum take-up under the Open Offer. The Secondary Placing is conditional, inter alia, on Admission and completion of the Option Exercise. The Open Offer is also conditional on Admission.

Use of proceeds

The Directors intend to use the proceeds of the Primary Placing and the Open Offer to:

●	pay the Initial Consideration;
●	meet the expenses relating to the Acquisition, the Primary Placing and the Open Offer;
●	provide additional working capital for the Group; and/or
●	reduce the Group's net debt.

The proceeds of the Secondary Placing will be received by the relevant Selling Shareholders and not by the Company.

The Acquisition is expected to be immediately earnings enhancing upon completion, and is expected to deliver a minimum of 10 per cent. earnings enhancement in its first full year of ownership.

General Meeting

Shareholder approval will be sought in respect of the authorities required to allot Ordinary Shares pursuant to the Placing and the Open Offer and, if required, any Deferred Consideration that becomes payable pursuant to the Acquisition, at the General Meeting which will be convened for 10.00 a.m. on 20 November 2020 at Delta Building, Roman Road, Blackburn, Lancashire, BB1 2LD. Given Government guidance in light of the COVID-19 pandemic, it will be held as a closed meeting. 

Further details of the Placing

87,500,000 Primary Placing Shares will be allotted and issued through the Primary Placing at 44 pence per Placing Share to raise gross proceeds of £ 38.5 million.

The allotment and issue of the Primary Placing Shares is conditional on the Resolutions being passed, which shall include resolutions for the Directors to allot the Primary Placing Shares and for statutory pre-emption rights to be disapplied in respect of such allotment. The Resolutions comprise the relevant approvals required for the Primary Placing .

Principal terms of the Primary Placing

In accordance with the terms of the Placing and Open Offer Agreement, Zeus Capital and Liberum Capital have, as agents for the Company, conditionally placed, with institutional and other investors, 87,500,000 Primary Placing Shares at the Issue Price of 44 pence per share to raise gross proceeds of £ 38.5 million. The Issue Price represents a discount of c. 1.1 per cent. to the closing price of an Ordinary Share on 2 November 2020 (which was 44.5 pence).

Effect of the Primary Placing

The Placing Shares will, following Admission, rank pari passu in all respects with the existing Ordinary Shares in issue at the date of this Announcement and will carry the right to receive all dividends and distributions declared, made or paid on or in respect of the Ordinary Shares after Admission.

Upon completion of the Placing, the Primary Placing Shares will represent approximately 28.1 per cent. of the Company's enlarged share capital, assuming the Open Offer is subscribed in full.

Secondary Placing

In accordance with the terms of the Placing and Open Offer Agreement, Zeus Capital and Liberum Capital have, as agents for the Selling Shareholders, conditionally placed, with institutional and other investors, 6,454,668 Secondary Placing Shares at the Issue Price of 44 pence per share to raise gross proceeds of approximately £2.8 million.

The number of Option Shares being allotted and issued to the Optionholders pursuant to the Option Exercise, the number of such Option Shares to be sold by each of the Selling Shareholders pursuant to the Secondary Placing (to meet the costs of, and personal tax liabilities arising on, the Option Exercise) and the number of such Option Shares that will be retained by the Optionholders and which are not included in the Secondary Placing ("Residual Option Shares") are as follows:

Name of Optionholder	Number of Option Shares	Number of Secondary Placing Shares to be sold	Number of Residual Option Shares to be retained
Dan Wright	5,700,738	-	5,700,738
Gareth Jenkins	9,396,544	4,437,436	4,959,108
Mark Dewhurst	2,750,944	1,326,617	1,424,327
Graham Cox	1,295,990	612,020	683,970
Gary Earle	83,213	39,297	43,916
John Pilkington	83,213	39,298	43,915
Total	19,310,642	6,454,668	12,855,974

Lock-in arrangements

The Residual Option Shares (being 7,067,404 Ordinary Shares in aggregate) retained by Gareth Jenkins, Mark Dewhurst and Graham Cox will be subject to lock-in arrangements to be released in two tranches:  the first tranche being subject to lock-in until the release by the Company of its half-year results for the six months ended 31 October 2020 (expected in January 2021) (the "First lock-in") and the second tranche being subject to lock-in until 1 August 2021 (the "Second Lock-in").

Name of Optionholder	Number of Option Shares subject to Lock-in arrangements	Number of Option Shares subject to the First Lock-in	Number of Option Shares subject to the Second Lock-in
Gareth Jenkins	4,959,108	1,333,000	3,626,108
Mark Dewhurst	1,424,327	444,000	980,327
Graham Cox	683,970	333,000	350,970
Total	7,067,404	2,110,000	4,957,404

Related Party Transactions

Schroder Investment Management Limited, a substantial shareholder in the Company (and therefore a related party of the Company for the purposes of the AIM Rules) has conditionally subscribed for 10,893,917 Placing Shares. Therefore, the participation of this party in the Placing constitutes a related party transaction under Rule 13 of the AIM Rules.

In the case of the above transaction, all Directors are deemed to be independent. Therefore, having consulted with the Company's nominated adviser and broker, Zeus Capital, Schroder Investment Management Limited's participation in the Placing is considered, by the Directors, to be fair and reasonable insofar as Shareholders are concerned.

Expected timetable of principal events

Record Date for the Open Offer	2 November 2020
Announcement of the Placing, the Option Exercise and the Open Offer	3 November 2020
Expected Ex-entitlement Date for the Open Offer	4 November 2020
Dispatch of the Circular, Form of Proxy and to certain Qualifying Non-CREST Shareholders, the Application Form	4 November 2020
Basic Entitlements and Excess CREST Open Offer Entitlements credited to CREST stock accounts of Qualifying CREST Shareholders	5 November 2020
Recommended latest time and date for requesting withdrawal of Basic Entitlements and Excess CREST Open Offer Entitlements from CREST	4.30 p.m. on 13 November 2020
Latest time for depositing Basic Entitlements and Excess CREST Open Offer Entitlements into CREST	3.00 p.m. on 16 November 2020
Latest time and date for splitting Application Forms (to satisfy bona fide market claims only)	3.00 p.m. on 17 November 2020
Latest time and date for receipt of Forms of Proxy	10.00 a.m. on 18 November 2020
Latest time and date for receipt of completed Application Forms and payment in full under the Open Offer or settlement of relevant CREST instruction (as appropriate)	11.00 a.m. on 19 November 2020
General Meeting	10.00 a.m. on 20 November 2020
Announcement of result of General Meeting, Placing and Open Offer Shares	20 November 2020
CREST members' accounts credited in respect of Placing Shares and Open Offer Shares in uncertificated form	23 November 2020
Dispatch of definitive share certificates for the Placing Shares and Open Offer Shares (if required) by	27 November 2020

Important information

This Announcement is for information purposes only and does not itself constitute an offer or invitation to underwrite, subscribe for or otherwise acquire or dispose of any securities in the Company and does not constitute investment advice.

Neither this Announcement nor any copy of it may be taken or transmitted, published or distributed, directly or indirectly, in or into the United States of America, its territories and possessions, any state of the United States and the District of Columbia (the "United States"), Australia, New Zealand, Canada, Japan or the Republic of South Africa or to any persons in any of those jurisdictions or any other jurisdiction where to do so would constitute a violation of the relevant securities laws of such jurisdiction. Any failure to comply with this restriction may constitute a violation of the securities laws of the United States, Australia, New Zealand, Canada, Japan or the Republic of South Africa. The distribution of this Announcement in other jurisdictions may be restricted by law and persons into whose possession this Announcement comes should inform themselves about, and observe any such restrictions.

Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. Neither this Announcement nor any part of it nor the fact of its distribution shall form the basis of or be relied on in connection with or act as an inducement to enter into any contract or commitment whatsoever.

In particular, the Placing Shares have not been and will not be registered under the US Securities Act, or under the securities laws or with any securities regulatory authority of any state or other jurisdiction of the United States, and accordingly the Placing Shares may not be offered, sold, pledged or transferred, directly or indirectly, in, into or within the United States except pursuant to an exemption from the registration requirements of the US Securities Act and the securities laws of any relevant state or other jurisdiction of the United States. There is no intention to register any portion of the Placing in the United States or to conduct a public offering of securities in the United States or elsewhere.

Zeus Capital is authorised and regulated in the United Kingdom by the FCA and is acting as nominated adviser and joint bookrunner to the Company in respect of the Placing. Liberum Capital is authorised and regulated in the United Kingdom by the FCA and is acting as joint bookrunner to the Company in respect of the Placing. Each of Zeus Capital and Liberum Capital is acting for the Company and for no-one else in connection with the Placing, and will not be treating any other person as its client in relation thereto, and will not be responsible for providing the regulatory protections afforded to its customers nor for providing advice in connection with the Placing or any other matters referred to herein and apart from the responsibilities and liabilities (if any) imposed on Zeus Capital or Liberum Capital, as the case may be, by FSMA, any liability therefor is expressly disclaimed. Any other person in receipt of this Announcement should seek their own independent legal, investment and tax advice as they see fit.

Deloitte LLP is acting as Financial Adviser to the Company in respect of the Acquisition and no-one else and will not be responsible to anyone other than the Company for providing the protections offered to clients of Deloitte LLP or for providing advice in relation to the Acquisition. Deloitte LLP is authorised and regulated in the United Kingdom by the Financial Conduct Authority in respect of regulated activities. Deloitte LLP can be contacted at its principal office: 1 New Street Square, London EC4A 3HQ.

Forward-looking statements

This Announcement contains statements about the Group and the Enlarged Group that are or may be deemed to be "forward-looking statements".

All statements, other than statements of historical facts, included in this Announcement may be forward-looking statements. Without limitation, any statements preceded or followed by, or that include, the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "may", "should", "anticipates", "estimates", "projects", "would", "could", "continue" or words or terms of similar substance or the negative thereof, are forward-looking statements. Forward-looking statements include, without limitation, statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects and (ii) business and management strategies and the expansion and growth of the operations of the Group and the Enlarged Group.

These forward-looking statements are not guarantees of future performance. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of any such person, or industry results, to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are based on numerous assumptions regarding the present and future business strategies of such persons and the environment in which each will operate in the future. Investors should not place undue reliance on such forward-looking statements and, save as is required by law or regulation (including to meet the requirements of the AIM Rules for Companies, the Prospectus Rules, the FSMA and/or MAR), does not undertake any obligation to update publicly or revise any forward-looking statements (including to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based). All subsequent oral or written forward-looking statements attributed to the Company, the Group or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above. All forward-looking statements contained in this Announcement are based on information available to the Directors of the Company at the date of this Announcement, unless some other time is specified in relation to them, and the posting or receipt of this Announcement shall not give rise to any implication that there has been no change in the facts set forth herein since such date.

For further information, please contact:
Accrol Group Holdings plc
Dan Wright, Executive Chairman	Via Belvedere Communications
Gareth Jenkins, Chief Executive Officer
Zeus Capital Limited (Nominated Adviser, Broker & Joint Bookrunner)
Dan Bate / Jordan Warburton	Tel: [phone]
Dominic King / John Goold	Tel: [phone]
Liberum Capital Limited (Joint Bo okrunner)	Tel: [phone]
Clayton Bush / Edward Thomas
Deloitte LLP (Financial Adviser)	Tel: [phone]
Andrew Westbrook / Chris Nicholls
Belvedere Communications Limited
Cat Valentine	Tel: [phone]
Keeley Clarke	Tel: [phone]
Llew Angus	Tel:  [phone]
	[e-mail]

Overview of Accrol

Accrol Group Holdings plc, based in Lancashire, is a leading tissue converter and supplier of toilet tissues, kitchen rolls and facial tissues, as well as other tissue products, to grocery retailers and retailers operating in the discount market sector throughout the UK. The business operates from four sites in Lancashire:

· A manufacturing, storage and distribution facility in Blackburn

· A storage and administrative centre in Blackburn

· A facial tissue plant, also in Blackburn

· A manufacturing, storage and distribution facility in Leyland

The Group's vision is to deliver the best possible value to the UK consumer on essential everyday tissue products. The "Brand Killers" growth strategy is simple: take market share from established brands by providing consumers with the best value products and its customers with great service, whilst ensuring it is the lowest cost operator. Accrol currently has circa 13 per cent. of the UK's £1.7 billion tissue market, which makes it the fourth largest operator in the UK by revenue.

 

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