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Rotala PLC (ROL)

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Thursday 01 August, 2019

Rotala PLC

Placing and Subscription

RNS Number : 4404H
Rotala PLC
01 August 2019


The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

1 August 2019

Rotala Plc

("Rotala" or "the Company" or "the Group")

Placing and conditional Subscription to raise £1.1 million


The Company announces a Placing and conditional Subscription with new and existing investors to raise up to £1,144,640 (before fees and expenses) by the issue and allotment of up to 2,044,000 new Ordinary Shares at the Issue Price of 56 pence per share.

The Placing is conditional on admission to trading on AIM of the Placing Shares ("First Admission"), which is expected to occur at 8.00 a.m. on 2 August 2019 or such later time and/or date as Cenkos Securities and the Company may agree, not being later than 16 August 2019. The Placing is not underwritten. The Subscription is conditional upon admission to trading on AIM of the Subscription Shares ("Second Admission"), which is expected to occur by no later than 30 November 2019. A further announcement will be made in due course once the Subscription Shares have been issued and allotted.

Background to and reasons for the Placing and Subscription

In line with its stated strategy, the Company continues to seek acquisition opportunities, including asset disposals by market competitors. These assets may be acquired and integrated into the Group's infrastructure with a view to realising synergies or other operational efficiencies.

On 27 June 2019, the Company announced that it had agreed to acquire from First Manchester Limited ("First"), a subsidiary of FirstGroup plc, its Bolton depot and the majority of the First business located at that depot (the "Acquisition"). The total consideration for the Acquisition is £5.3 million, payable in cash on completion of the asset purchase agreement, which shall be satisfied from the Company's existing bank facilities. The Acquisition, which is conditional, is expected to complete in August 2019.

As detailed in that announcement, the Acquisition will significantly expand Rotala's presence in the Greater Manchester bus market and is an indicator of how the UK bus landscape is beginning to change. The Acquisition demonstrates the Company's ability to capitalise on opportunities arising as a result of changes in the UK bus market, which will be important to the successful implementation of its targeted growth strategy. This aspirational goal targets revenues in excess of £300 million within a five-year period, while maintaining dividend growth and targeting a minimum return on capital employed (ROCE) of 15 per cent.

Following the Acquisition, as the Company will seek to complete further asset purchases, the Board has considered its current capital structure and associated ability to finance such deals. Whilst the Company has historically funded acquisitions primarily through hire purchase and other debt financing, having consulted with its shareholders, the Board has concluded that it is appropriate to seek to deleverage the business over time by paying down existing debt, targeting a longer-term net debt to EBITDA ratio of 2.5 times.

Accordingly, the Company is undertaking the Placing and Subscription so that it may improve its balance sheet through a reduction in net debt.

Use of proceeds

The Company has raised £1,044,680 before fees and expenses through the Placing and expects to raise a further  £99,960 from the conditional Subscription. The net proceeds of the Placing and Subscription, which are expected to be approximately £1.1 million, will be used to strengthen the Group's balance sheet by paying down the net debt.

Directors' participation in the Placing and Subscription

As part of the Placing, the Directors and certain persons closely associated with them  intend to subscribe for an aggregate of 838,000 Placing Shares at the Issue Price. Details of the Placing Shares for which the Directors intend to subscribe are displayed below:




Number of Existing Ordinary Shares

Placing quantum intended to be subscribed for

Number of Placing Shares intended to be subscribed for

Resulting shareholding following First Admission

Percentage of Ordinary Shares carrying voting rights following First Admission

Simon Dunn

Chief Executive Officer






Bob Dunn

Managing Director






John Gunn(2)

Non-Executive Chairman






Kim Taylor

Group Finance Director






Graham Peacock

Non-Executive Director






Graham Spooner

Deputy Chairman & Non-Executive Director







(1) Includes 23,000 Placing Shares to be subscribed by Karen Dunn, Simon's wife.

(2) In addition to the Placing Shares, John Gunn has subscribed for, conditional on Second Admission, 178,500 Subscription Shares at the Issue Price, equating to £99,960.

(3) Includes concert party holdings.

A further announcement will be made on completion of the proposed Subscription.

Details of the Placing

The Company has raised, conditional on First Admission, £1,044,680 before expenses by the conditional Placing of 1,865,500 Placing Shares at the Issue Price. The Placing is conditional on, inter alia:

 (iii)    the Placing Agreement becoming or being declared unconditional in all respects; and

(iii)     First Admission becoming effective at 8.00 a.m. on 2 August 2019 or such later time and/or date (being not later than 8.00 a.m. on 16 August 2019) as Cenkos Securities and the Company may agree.

If any of the conditions are not satisfied, the Placing Shares will not be issued and all monies received from the Placees will be returned to them (at Placees' risk and without interest) as soon as possible thereafter.


SAYE participants

In addition to the Placing and Subscription detailed above, the Company has invited participants in its Save As You Earn scheme ("SAYE Participants") to apply their accrued savings under that scheme towards a subscription for ordinary shares in the Company at 56p per share (the "SAYE Participants Offer").

The deadline for responses from SAYE Participants is 30 September 2019. Assuming that all SAYE Participants were to accept their SAYE Participants Offer in full, the total number of ordinary shares to be issued by the Company pursuant to the SAYE Participants Offer would be 165,000 shares, raising proceeds of approximately £92,400, before expenses. A further announcement will be made following the closing of the SAYE Participants Offer.


First Admission and Total Voting Rights

Application will be made to the London Stock Exchange for the admission of the Placing Shares and Subscription Shares to trading on AIM. It is expected that First Admission will occur and that dealings in the Placing Shares will commence at 8.00 a.m. on 2 August 2019. Following First Admission, the Company will have 49,892,080 Ordinary Shares in issue carrying voting rights, which excludes 854,338 shares currently held in Treasury that do not carry voting rights. A further announcement will be made in due course prior to the issuance of the Subscription Shares.

Placing Agreement

Pursuant to the Placing Agreement, Cenkos Securities has agreed to use its reasonable endeavours as agent of the Company to procure subscribers for the Placing Shares at the Issue Price. The Placing is not underwritten.

The Placing Agreement provides, inter alia, for payment by the Company to Cenkos Securities of commissions based on certain percentages of the product of the number of Placing Shares placed by Cenkos Securities multiplied by the Issue Price.

The Company will bear all other expenses of and incidental to the Placing, including the fees of the London Stock Exchange, printing costs, Registrar fees, all legal and accounting fees of the Company and any stamp duty and other taxes and duties payable.

The Placing Agreement contains certain warranties and indemnities from the Company in favour of Cenkos Securities and is conditional, inter alia, upon:

(a)  the Placing Agreement having become unconditional in all respects and not having been terminated in accordance with its terms prior to First Admission; and

(b)  First Admission becoming effective not later than 8.00 a.m. on 2 August 2019 or such later time and/or date as the Company and Cenkos Securities may agree, being not later than 8.00 a.m. 16 August 2019.

Cenkos Securities may terminate the Placing Agreement in certain circumstances, if, inter alia, the Company is in material breach of any of its obligations under the Placing Agreement; if there is a material adverse change in the financial position and prospects of the Company; or if there is a material adverse change in the financial, political, economic or stock market conditions, which in its reasonable opinion is or will be materially prejudicial to the successful outcome of the Placing.



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



the market of that name operated by the London Stock Exchange


"Board" or "Directors"

the directors of the Company as at the date of this announcement


"Business Day"

any day on which banks are generally open in England and Wales for the transaction of business, other than a Saturday, Sunday or public holiday


"Cenkos Securities"

Cenkos Securities plc


"Company" or "Rotala"

Rotala Plc



the European Union


"Existing Ordinary Shares"

the 48,880,918 Ordinary Shares in issue on the date of this document, which includes the 854,338 Ordinary Shares held in Treasury



the Company and its subsidiaries and subsidiary undertakings


"Issue Price"

56 pence per Placing Share


"London Stock Exchange"

London Stock Exchange plc



Market Abuse Regulation


"Ordinary Shares"

ordinary shares of 25p each in the capital of the Company



subscribers for Placing Shares



the placing by the Company of the Placing Shares with certain investors, otherwise than on a pre-emptive basis, at the Issue Price pursuant to the Placing Agreement


"Placing Agreement"

the agreement entered into between the Company and Cenkos Securities in respect of the Placing dated 25 July 2019, as described in this document


"Placing Shares"

the 1,865,500 new Ordinary Shares the subject of the Placing



the holders of Ordinary Shares from time to time



the subscription of 178,500 new Ordinary Shares at the Issue Price by John Gunn

"Subscription Shares"

the 178,500 new Ordinary Shares the subject of the Subscription


"United Kingdom" or "UK"

the United Kingdom of Great Britain and Northern Ireland



For further information please contact:


Rotala Plc

0121 322 2222

John Gunn, Chairman
Simon Dunn, Chief Executive
Kim Taylor, Group Finance Director

Nominated Adviser & Joint Broker:

Cenkos Securities plc


020 7397 8900

Stephen Keys/Callum Davidson (Corporate Finance)
Michael Johnson/Julian Morse (Corporate Broking)

Joint Broker: Dowgate Capital Stockbrokers Ltd

0203 903 7715

David Poutney/James Serjeant (Corporate Broking)


About the business

Rotala provides a range of transport solutions, ranging from local bus services under contract to local authorities, through to commercial bus routes. Rotala has operations at Heathrow airport, in the West Midlands and the North West.





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