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Keycom PLC (KCO)

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Friday 13 June, 2008

Keycom PLC

Placing and Acquisition

RNS Number : 6395W
Keycom PLC
13 June 2008

Keycom plc

Placing and Acquisition

The Board of Keycom plc ('the Company' or 'Keycom') is pleased to announce that it has agreed to exercise the option it had to acquire contracts and certain assets currently owned by Catalyst Management Limited ('Catalyst') for total consideration of £1.4 million ('Catalyst Acquisition'). The consideration will be settled through a cash payment of £475,000 and the issue to the vendors of Catalyst ('the Vendors') of loan notes to a value of £725,000 (the 'Loan Notes').  

The Company is also pleased to announce that is has raised £580,000 through the issue of 29,000,000 ordinary shares at a price per share of 2 pence ('the Placing'). The proceeds of the Placing will be used both to contribute to the cash consideration for the Catalyst Acquisition and for the Company's working capital requirements.  It is expected that the Placing will complete on Friday 13 June 2008. In addition, the Vendors will subscribe for 10,000,000 ordinary shares at a price per share of 2 pence (the 'Subscription') on completion of the Catalyst Acquisition.  

Application has been made for the Placing shares to be admitted to trading on PLUS.   It is expected that admission will occur on Friday 13 June 2008.    Application will be made for the Subscription shares to be admitted to trading on PLUS upon completion of the acquisition of the Catalyst contracts.   The Placing shares and the Subscription shares will rank pari passu with the existing ordinary shares.  

Following completion of the Placing and the Subscription, the Company's issued share capital will be 231,573,378 ordinary shares.  

Commenting on the Placing and AcquisitionRod Matthews, Executive Chairman and CEO of Keycom, said 'I am pleased to be able to announce thproposed acquisition of the Catalyst contracts, which is in line with our previously announced strategy of complementing Keycom's organic growth with acquisitions.  We continue to believe that Keycom is well placed to expand its business, both from organic and inorganic growth.  I am also delighted that both existing and new institutional shareholders are supporting our plans through additional equity investment in the Company.'

Background to the Acquisition 

On 2 April 2007, Keycom announced the conclusion of an outsourcing contract with Catalyst, under the terms of which Keycom would derive revenues from the broadband rooms under contract to Catalyst.  This arrangement has been successful and important to Keycom's continued expansion of the number of broadband rooms under management.  Keycom also maintained an option to acquire the contracts outright.  Today's announcement means that following completion any future revenue streams derived from the ex-Catalyst contracts will be available to Keycom on a continuing basis.  Since the agreement announced in April 2007, further contracts have been executed with Catalyst customers and the ex-Catalyst contracts now account for approximately 8,500 rooms.  Catalyst has agreed, as a part of the contractual arrangements, not to compete with Keycom in the student and key-worker residential broadband market.

Terms of the Acquisition

As stated above, the Loan Notes have been issued to the Vendors to a value of £725,000. The Loan Notes will be interest bearing at a rate of 3% over the Bank of England Base Rate and repayable by the Company within twelve months. It has also been agreed that up to £425,000 of the redemption of the Loan Notes can be satisfied through the subscription for ordinary shares in the Company, at the prevailing bid price in the market of the Company's shares. 

Current Trading

The Company is pleased to confirm that it has continued to make progress on each of its strategic aims, those being increasing the number of its university residential accommodation broadband contracts and the extension of the product offering into complementary market areas, such as NHS and key-worker accommodation. As at 1 June 2008, the Company has 14,364 tertiary education broadband contracts and 1,561 NHS and key-worker contracts, which figures compare favourably to the average figures for the financial year 2006/07, which were 12,494 and 264 respectively.  

The directors' interest in shares of the Company remain as before at 10,236,591 ordinary shares, which will represent 4.42% of the capital of the Company following the Placing and Subscription.

Keycom intends to announce its results for the six months to 31 March 2008 later this month.


Keycom plc
Rod Matthews, Executive Chairman & CEO
Graham Robertson, Finance Director & Company Secretary
07775 755 500
01785 717 411
Dawnay, Day Investment Banking
Nick Lovering
020 7630 4140





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