IJC Acquisition and Placing raising ?4.2m

RNS Number : 3122S

Hangar 8 Plc

29 November 2012

 



29 November 2012

Hangar 8 plc

("Hangar8" or "the Company" or "the Group")

Acquisition of International JetClub Limited

Placing of new Ordinary Shares raising gross proceeds of £4.2 million

Hangar8, one of Europe's largest operators of privately owned passenger jet aircraft, is pleased to announce the acquisition ("the Acquisition") of International JetClub Limited and associated companies ("IJC"), for a total consideration of £1.1 million in cash, the issue of 500,000 new Ordinary Shares in Hangar8, plus a payment equivalent to IJC's net asset value on completion of the Acquisition ("Completion"), estimated to be approximately £2.6 million.  The IJC net assets on Completion will have approximately £2.4 million in cash.  

In addition, the Company announces that it has raised £4.2 million (before expenses) through an institutional placing undertaken by Seymour Pierce to fund the Acquisition and provide additional working capital for the continued expansion of Hangar8.

IJC, based in Farnborough, provides high-end management and charter services to ultra-high net worth owners of large private jet aircraft and has been doing so very successfully since 1998.  IJC has a similar business model to Hangar8 in that it derives its revenues from contracted management fees and charter services. At acquisition, 62 per cent. of the enlarged Group's combined revenues are contracted.

The private aviation industry increasingly operates on a global basis with operators needing to offer a combination of product depth, geographic reach and operating scale in order to be successful. The combination of Hangar8 and IJC enhances all three aspects and immediately establishes the combined business as one of Europe's leading providers of private aviation management services.

Significant benefits

·    Facilitates a step change in the scale of Hangar8's business. With the addition of ten heavy jets, the Acquisition increases the number of aircraft under management from 36 to 46 (up from 31 aircraft as at 30 June 2012 and 19 as at Hangar8's admission to AIM in November 2010) with four helicopters also under management;

·    Increases the proportion of long-range, more profitable heavy jets under management from 30 per cent. to 44 per cent;

·    Murray Law, IJC founder, vendor and widely respected industry advocate to join the Board of Hangar8 as Vice-Chairman and play an active on-going role in the development of the enlarged Group;

·    Enhanced, and truly global, operating capabilities with best-in-class systems, regulatory compliance and management expertise across jets from every major manufacturer;

·    Creates an enlarged Group which becomes one of Europe's premier providers of private aviation management services augmenting the Company's medium term growth strategy;

·    The Acquisition provides access to a highly experienced and talented pool of industry talent in the fastest growing segment of the market;

·    The Acquisition is expected to be earnings enhancing in the current financial year.

Rationale for the Acquisition

Hangar8 has identified significant strategic, revenue and operational synergy benefits from combining with IJC.  The Acquisition increases the reach and scale of the Company's business in a market where scale, global presence and delivery are becoming increasingly important.  In particular, IJC's focus on heavy jets accelerates Hangar8's presence in this market, with the ten jets IJC manage all being larger than the 12 heavy jets Hangar8 currently manages.  There are further, material economies of scale benefits, such as enhanced purchasing power, that will result from the increased size of the business.

Operationally, IJC is widely recognised as having one of the best management systems and management teams in the industry, from which Hangar8 expects to derive significant benefit. The combination of the businesses significantly enhances operational capability and expertise in managing and operating jets from every major manufacturer. 

Key financial information

Hangar8 announced on 28 November its final results for the year ended 30 June 2012, delivering profit before tax and exceptional items of £606,000 on revenue of £17.0 million.  

Additionally, the Company announced on 14 November that it has enjoyed a strong start to the current financial year with EBITDAfor the three months ended 30 September 2012 up 331 per cent to £461,000 (2011: £107,000).

For the year ended 31 March 2012, IJC generated turnover of approximately £6.8 million (net of direct recharges) and profit before tax and exceptionals of £551,000.  As at 31 March 2012, IJC's net assets were approximately £2.6 million with a cash balance of approximately £2.4 million.

Acquisition consideration

The consideration for the Acquisition comprises £1.1 million in cash, the issue of 500,000 new Hangar8 shares ("Consideration Shares"), which will be issued to Murray Law, the owner and founder of IJC on completion of the Acquisition ("Completion"), plus further consideration to be settled after Completion based on the agreed net asset value of IJC.  The Acquisition is conditional only on completion of the Firm Placing referred to below.

Murray Law has undertaken not to dispose of any of the Consideration Shares for a period of 12 months after acquisition and has further undertaken to only dispose in the twelve months thereafter under orderly market conditions. The Consideration Shares will rank pari passu with the Hangar8 Ordinary Shares currently in issue.

Placing, Notice of General Meeting and Total Voting Rights

The cash element of the consideration, together with the raising of additional working capital to support the growth opportunities presented to the enlarged group is being funded through a placing ("the Placing") of 2,470,000 new ordinary shares of 1p each in the Company, raising gross proceeds of approximately £4.2 million from existing and new institutional shareholders.  The Placing is to be undertaken in a two stage process:

(i)         633,300 new ordinary shares of 1p each in the Company (the "Firm Placing Shares") under the Company's existing authorities to raise approximately £1.1 million at a price of 170p per share (the "Placing Price") (the "Firm Placing"); and

(ii)        1,836,700 new ordinary shares of 1p each in the Company (the "Conditional Placing Shares") to raise approximately £3.1 million at the Placing Price (the "Conditional Placing").

Application has been made for the admission to trading on AIM of the 633,300 Firm Placing Shares and the 500,000 Consideration Shares, which is expected to take place on 3 December 2012 ("First Admission").

For the purposes of the Disclosure and Transparency Rules, on First Admission, the Company's total issued share capital consists of 7,587,564 ordinary shares of 1p each.

The above figure may be used by shareholders following First Admission as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company, under the Disclosure and Transparency Rules.

The Conditional Placing Shares have been placed conditional upon, inter alia, shareholder approval at a general meeting of the Company to be convened at 12 noon on 17 December 2012 ("General Meeting").  A notice of the General Meeting has been sent to shareholders today and can be downloaded on the Investor Relations section at www.hangar8.co.uk.

Irrevocable acceptances to vote in favour of the resolutions to be proposed at the General Meeting have been received from those directors of the Company who have an interest in the issued share capital, Mr Law and certain other shareholders representing, in aggregate, 76.27 per cent. of the issued share capital of the Company on First Admission.

Application will be made for the admission to trading on AIM of the 1,836,700 Conditional Placing Shares, which is expected to take place on 18 December 2012.

The Placing represents approximately 26.49 per cent of the Company's issued share capital post the Placing and the Acquisition.  

Board appointment

The board is particularly pleased that Murray Law, owner and founder of IJC, will be appointed as Vice Chairman of the Company on First Admission. Mr Law has been instrumental in IJC's development to become one of the UK's largest private aircraft management companies and he is one of the leading exponents in the industry. 

Commenting on the Acquisition, Dustin Dryden, Chief Executive of Hangar8, said:

"The combination of Hangar8 and IJC operating as one enhanced group marks a real step change in the scale, depth and breadth of our business. Our combined operation significantly increases the number of aircraft we manage and advances our position in the management of longer-range, more profitable aircraft. The acquisition is immediately earnings enhancing and importantly provides the enlarged group with access to best-in-class aircraft management systems, a larger and more experienced talent pool as well as numerous other operational and scale benefits.

"We believe there is further scope for consolidation within the sector and are confident that the enlarged group will continue to grow at a pace, whether organically or through further acquisitions, and remain at the forefront of sector developments.

"I am delighted to welcome the team at IJC to the Group and in particular I am excited to welcome Murray Law onto our board as Vice-Chairman. Murray has a major role to play in the development of not only this business but also the industry as a whole. 

"I am also particularly pleased by the level of interest expressed in Hangar8 through the participation in the placing from a number of new institutional shareholders.  In a difficult funding environment it is very encouraging that the placing was oversubscribed and I welcome those new shareholders to Hangar8."

Commenting on the Acquisition, Murray Law, owner and founder of IJC, said:

"I am excited by the opportunity to combine the complementary expertise and resources of Hangar8 and IJC to form a truly world class aircraft management operation - a combination that is taking place at just the right time for our industry. 

"By its nature, ours is a global industry which increasingly requires UK operators to be able to compete internationally and especially beyond Europe if we are to serve our existing and prospective clients better.  The scale of our combined group will enable the separate global strategies we each had previously to be pursued with greater strength, broader depth and increased effectiveness.  By being part of an enlarged Group our employees will also have greater opportunities to add to their expertise and skills.  

"The opportunity to adopt best practices from each business without compromise means that we can create in each of Hangar8 and IJC true centres of specialist expertise for their respective existing and new clients.  Furthermore, the prospect of additional carefully selected acquisitions adds to the excitement of the opportunities presented by this first step.

"The future for our new enlarged Group is an exciting one and I am delighted to be joining the Board as Vice-Chairman and play an intrinsic part in it."       

Enquiries

Hangar 8 plc                                                               [phone]

Dustin Dryden, Chief Executive

Philip Brady, Chief Financial Officer

Blythe Weigh Communications                                + 44 (0) 20 7138 3204

Paul Weigh                                                                  [phone]

Natalie Raper                                                              [phone]

Robert Kellner                                                             [phone]

Seymour Pierce                                                         [phone]

Mark Percy/Julian Erleigh (Corporate Finance)

David Banks/Katie Ratner (Corporate Broking)

Disclosure requirements under AIM Rule 17

Murray James Law, aged 61, is or has been a director or partner of the following companies during the previous five years:

Current Directorships/Partnerships:	International JetClub Limited Aravco Limited Exklusiv Aviation Limited BBGA Limited
Directorships held within the previous five years:	None

Mr Law does not currently have a beneficial interest in the share capital of the Company.  On First Admission, Mr Law will have a beneficial interest in 500,000 ordinary shares representing approximately 6.59 per cent. of the issued share of the Company.

There are no other matters, which are required to be announced with regard to the appointment of Mr Law under paragraph (g) of Schedule 2 of the AIM Rules.

ENDS

 

END

 

 

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