Issue of equity

RNS Number : 7266X

Sarantel Group PLC

10 December 2010

 



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10 December 2010

Sarantel Group PLC

Issue of Equity

Sarantel (AIM: SLG; 'Sarantel' or the 'Group'), the leading manufacturer of revolutionary filtering antennas for mobile and wireless devices, is pleased to announce the terms of a placing by Seymour Pierce Limited, acting as the Company's Nominated Adviser and Broker to the Placing, of 110,000,000 A Ordinary Shares at a price of 1.25 pence per share.

The Placing is conditional, inter alia, upon Shareholders approving the Resolutions at the General Meeting of the Company to grant to the Directors authority to allot shares and power to disapply statutory pre-emption rights on allotment and also upon the Placing Shares being admitted to trading on AIM. The Resolutions are contained in the notice of GM in the Circular posted today.

Background to and reasons for the Placing

The Company's cash resources as at 31 March 2010 and 30 September 2010 were £1.6 million and £0.6 million, respectively. The proceeds of the Placing, which amount to approximately £1.25 million after expenses, will provide the Group with additional working capital, allow the Group to expand its sales and marketing efforts and further invest in research and development.

The Directors believe that the Placing was the most appropriate means of providing financing for Sarantel and the Group can now capitalise on recent successes and future opportunities, particularly sales in the GPS and military markets and lower cost assembly processes with Elcoteq. As a result the Directors believe the outlook for Sarantel is very positive.

Current trading

In the announcement dated 22 November 2010 of the Preliminary Results for the year ended 30 September 2010, it was reported that Sarantel had increased and diversified its revenue base, cut costs and reduced its operating loss for the fourth consecutive year.

Total Group revenues grew to £2.9 million (2009: £2.8 million) and the military market continued to grow. Revenues from products such as military antennas increased during the year by 28 per cent.

Operating loss before depreciation and amortisation reduced by 3 per cent. to £1.85 million (2009: £1.9 million). Net cash outflow before financing was £2.2 million (2009: £2.2 million). In spite of continuing challenges in the economy, Sarantel's GPS business recovered during the year with revenues increasing by 34 per cent.

The Directors believe the momentum that the Company is building has been highlighted by recent announcements. In March 2010, Sarantel received development funding for a high performance military specification, dual frequency GPS antenna. The Company announced on 22 November 2010 that it had successfully developed this very challenging product and the Board expects sales from this antenna to contribute materially to revenues in 2011 and beyond. This development was undertaken with a US based market leader in the field of tactical military radio systems. Additionally, it was announced that the successful development of the Company's second generation Iridium antenna for NAL's SHOUT nano tracking device, together with the development of a number of ruggedized GPS antennas for a wide variety of military customers, provides the Board with confidence that the sales momentum in this market will continue to build in 2011.

As announced on 16 November 2010, the Board believes that the selection of the Company's technology by Ricoh for the G700SE camera indicates the attractiveness of Sarantel's high performance technology in the consumer market. Trends in the consumer GPS markets indicate that the importance of accurate and reliable GPS antennas is increasingly being recognised as critical to a satisfying user experience. This is particularly important with the latest generation of smartphones which are capable of running "apps" such as Facebook Places and Foursquare. The Board believes that location-based advertising, in particular, will require a higher degree of reliability and accuracy than is possible with conventional antenna technologies.

As with any new technology, it is very difficult to predict the exact timing of the take up by the market but the Board believes the trend towards more demanding applications is clearly driving the need for improved antenna performance.

Against this backdrop of growing markets, driven by an increasing use of navigation in everyday life, the Board believes that its innovative technology will lead to increased market share as users demand ever-higher performance from navigation and other mobile devices.

Since the Preliminary Results announcement the Company has made further progress by signing an agreement with a major US defence contractor to develop a custom antenna solution for portable military satellite communications which will be integrated into a rugged housing. The contractor is funding the development costs of the project. The antenna will be required to meet strict size, performance and weight requirements. If successfully completed, the antenna will address an existing large market and will offer higher performance and smaller size at a lower cost than existing solutions.

The Placing

Under the terms of the Placing Agreement, Seymour Pierce has conditionally placed, on behalf of the Company, 110,000,000 A Ordinary Shares at the Placing Price to raise £1.375 million (gross) and approximately £1.25 million (net of expenses) for the benefit of the Company.

The Placing is conditional, inter alia, upon the Resolutions being passed and Admission taking place by 8:00 a.m. on 30 December 2010 (or such later date, being not later than 31 January 2011, as the Company and Seymour Pierce may agree).

The Placing Agreement contains provisions entitling Seymour Pierce to terminate the Placing Agreement at any time prior to Admission in certain circumstances. If this right is exercised, the Placing will lapse.

The Placing Shares, when issued and fully paid, will rank equally in all respects with the issued A Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after Admission.

Directors' and Senior Employees participation in the Placing

Certain Directors and Senior Employees have agreed to subscribe for A Ordinary Shares in the Placing. The total number of Ordinary Shares subscribed for and the subsequent holdings of the Directors and Senior Employees concerned as a percentage of the issued ordinary share capital as enlarged by the Placing are as follows:

	No. of Existing Ordinary Shares	Percentage of existing voting share capital	No. of Ordinary Shares following the  Placing	Percentage of voting share capital following the Placing
Godfrey Shingles	979,132	0.34	1,779,132	0.44
David Wither	1,100,079	0.38	1,100,079	0.27
Dr Oliver Leisten	342,692	0.12	342,692	0.09
John Uttley	941,876	0.32	1,341,876	0.33
Philip David	144,742	0.05	944,742	0.24
Nicola Malyon	0	0.00	160,000	0.04

It is expected that admission of the Placing Shares will become effective and dealings in the Placing Shares will commence on 30 December 2010. Following Admission, the Company will have 400,936,331 Ordinary Shares in issue.

General Meeting

A General Meeting of the Company has been convened for 11:00 a.m. on 29 December 2010 at the offices of Seymour Pierce, 20 Old Bailey, London EC4M 7EN. The notice convening the GM is set out in the Circular a copy of which will be available for download from the Company's website www.sarantel.com .

The Resolutions seek to:

(a) authorise the directors to allot the Placing Shares up to an aggregate nominal value of £1,100,000; and

(b) disapply statutory pre-emption rights in respect of the allotment of the Placing Shares

Recommendation

The Directors unanimously believe that the placing is in the best interests of the company and its shareholders and recommend shareholders to vote in favour of the resolutions as they intend to do in respect of their aggregate shareholding of 5,508,521 A ordinary shares, equivalent to approximately 1.4  per cent of the existing ordinary shares. 

Enquiries

Sarantel Group PLC	01933 670 560
David Wither, Chief Executive Officer
Seymour Pierce (Nominated Adviser and Broker)	020 7107 8000
John Cowie/ Freddy Crossley
David Banks (Corporate Broking)
College Hill	020 7457 2020
Carl Franklin/Adrian Duffield

About Sarantel www.sarantel.com

Sarantel is a leader in the design of high-performance miniature antennas for portable wireless applications. Sarantel's revolutionary ceramic filtering antennas offer dramatically improved performance over existing antenna designs, resulting in a clearer signal, better range and a 90 per cent reduction in the amount of signal radiation absorbed by the body. Because of their smaller size and higher capabilities, Sarantel's antennas enable manufacturers to create innovative wireless products for the GPS, WiMax, Satellite Radio and Satellite phone markets.

DEFINITIONS

The following definitions apply throughout this announcement, unless the context requires otherwise:

"A Ordinary Shares"	A ordinary shares of 1p each in the capital of the Company
"Act"	the UK Companies Act 2006 (as amended)
"Admission"	the admission of the Placing Shares to trading on AIM becoming effective in accordance with rule 6 of the AIM Rules
"AIM"	the AIM market of London Stock Exchange plc
"AIM Rules"	the AIM Rules for Companies issued by the London Stock Exchange plc as amended from time to time
"B Ordinary Shares"	B ordinary shares of 1p each in the capital of the Company
"Company" or "Sarantel"	Sarantel Group PLC
"Directors" or "Board"	the directors of the Company
"EIS"	the Enterprise Investment Scheme and related reliefs as detailed in the Income Tax Act 2007, Part 5 and in sections 150A to 150C and Schedule 5B and 5BA of the Taxation of Chargeable Gains Act 1992 (as amended)
"Enlarged Issued Share Capital"	the issued Ordinary Shares immediately following Admission
"Existing Ordinary Shares"	the 290,936,331 Ordinary Shares in issue
"GM" or "General Meeting"	the general meeting of the Company convened for 11:00 a.m. on 29 December 2010
"Group"	the Company and its subsidiary undertakings
"Ordinary Shares"	together the A Ordinary Shares and the B Ordinary Shares
"Placees"	the subscribers for Placing Shares pursuant to the Placing
"Placing"	the conditional placing of the Placing Shares at the Placing Price pursuant to the Placing Agreement
"Placing Agreement"	the conditional agreement dated 10 December 2010 between the Company and Seymour Pierce
"Placing Price"	1.25 pence per Placing Share
"Placing Shares"	the 110,000,000 A Ordinary Shares which have been conditionally placed by Seymour Pierce
"Resolutions"	the resolutions set out in the notice of General Meeting
"Seymour Pierce"	Seymour Pierce Limited, the Company's nominated adviser and broker to the Placing
"Shareholders"	holders of Existing Ordinary Shares

 

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