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Warthog PLC (WHOG)


Friday 30 January, 2004

Warthog PLC

Placing and Notice of EGM

Warthog PLC
30 January 2004

                 Warthog plc ('Warthog', 'Group' or 'Company')

                    Placing of New Ordinary Shares for Cash

Warthog, one of Europe's leading independent games software developers, today
announces that it proposes to raise £4.5 million (before expenses) by way of a
placing of 225,000,000 ordinary shares of 1p each ('Placing Shares') at a price
of 2p per Placing Share ('the Placing'). The net proceeds of the Placing of
£4.15 million will strengthen the Company's balance sheet, enabling the Group to
complete its strategic re-positioning, and provide general working capital. The
Placing has been arranged and underwritten by Evolution Beeson Gregory.

Key points:

   • Placing of 225,000,000 Placing Shares to raise £4.5 million (before

   • Placing price of 2p represents a discount of approximately 47 per cent.
    to the closing mid-market price on 29 January 2004 of 3.75p

   • Placing Shares placed with new and existing institutional investors

   • Placing proceeds will strengthen the balance sheet, complete its
    strategic repositioning and provide general working capital

   • All of the Company's directors ('the Directors') will subscribe for
    Placing Shares amounting to, in aggregate, £104,000

   • Company proposes to raise additionally up to approximately £1.5 million
    by way of a non-underwritten 3 for 2 rights issue at 2p

Background to and reasons for the Placing

On 28 November 2003, the Company announced that its forthcoming results for the
six months ended 30  September 2003 would be below market expectations and that
the Company would report a loss for that period in the region of £2 million. As
part of that announcement, the Company also announced that the Board had
recognised the need to strengthen its balance sheet in the near future. On 30
December 2003, the Company announced its interim results for the six months
ended 30 September 2003 in line with these early guidelines. The Directors have
explored and actively pursued a variety of strategic alternatives to address the
immediate and future funding requirements of the Group. However due to the time
constraints, the Directors have concluded that the proposed cash placing is the
most certain option and is therefore in the best interests of the Company and
Shareholders as a whole.

Proposed Rights Issue

The arrangements for the Placing provide the Company with the certainty of
raising the funds necessary for the Group's immediate future development. In
order to offer the Company's existing Shareholders the opportunity to subscribe
for ordinary shares of 1p each in the Company ('Ordinary Shares') at the Placing
Price, the Company also intends to offer up to approximately 73.6  million new
Ordinary Shares by way of a 3 for 2 rights issue ('Proposed Rights Issue').

If all of the Company's existing shareholders elect to take up their full
entitlement under the Proposed Rights Issue, it will raise a maximum of
approximately £1.5 million (before expenses) for the Company. However, the
Proposed Rights Issue will not be underwritten.

A circular in relation to the Proposed Rights Issue will be sent to Shareholders
as soon as possible and in any event prior to the extraordinary general meeting
to approve, inter alia, the Placing, which has been convened for 23 February
2004 ('EGM').


As a result of recent industry changes within the video games market, the Group
believes that the potential returns available to video games developers from the
traditional 'work for hire' business model are diminishing and are not without
considerable risk to the developer. Consequently, the Group intends to achieve a
greater balance between developing games directly for publishers on a 'work for
hire' basis and developing games alongside the owners of valuable IP licences.
The Directors believe that their existing industry relationships with IP licence
holders, especially in the US, will enable the Group to secure a number of high
profile development contracts working directly with the IP licence holders to
develop video games. The Directors believe that, once it has secured the right
to develop a game based on valuable IP, the Group and the IP licence holder will
be in a strong position to negotiate a contract with the publisher to publish
the game.

Use of Proceeds

The net proceeds of the Placing will be approximately £4.15 million. The
Directors estimate that approximately £1.5 million will be invested in the
development of games alongside the owners of valuable IP licences, £1.0 million
will be required to strengthen the Group's balance sheet and the balance will be
used to satisfy the general working capital requirements of the Group.

Current Trading and Prospects

Trading conditions for the Group remain extremely challenging. However, since
the turn of the year, the Group has made good progress in securing interest from
a number of holders of significant IP licences, particularly IP in relation to
large budget feature films. The Directors anticipate securing at least one major
contract to develop a video game in conjunction with the IP holder by the end of
the third quarter 2004.

Whilst the Directors expect the Group to continue to incur losses throughout the
second half of the current financial year and into the first half of the next,
they are encouraged by prospects for the new strategy and of the benefits of the
cost cutting measures. The Directors are confident that with the funds raised
from the Placing the Group is now in a position to become cashflow positive
during 2005 without recourse to further funding.

Board Changes

The Company announces today that, with immediate effect, Ian Templeton will
become Chairman of the Board and Iain Macdonald will remain as a non-executive

Extraordinary General Meeting

The Placing is conditional, inter alia, on the passing of the Resolutions at the
EGM, finalisation of certain detailed terms of the Group's new banking
facilities and admission of the Placing Shares to trading on AIM, becoming
effective by no later than 31 March 2004. The EGM has been convened for 11.00am
on 23 February 2004.

Related party transactions

The issue of 5,200,000 Placing Shares in aggregate to the Directors pursuant to
the Placing will be classified as a related party transaction for the purposes
of the AIM Rules. Evolution Beeson Gregory, the Company's nominated adviser,
considers that the terms of the Placing are fair and reasonable insofar as the
Company's shareholders are concerned.

Ashley Hall, Chief Executive Officer of Warthog, commented:

'Warthog is now in a stronger position to fund its continued growth. We are
pursuing attractive opportunities, especially in the area of developing games
alongside the owners of valuable IP licences. We believe that Warthog has an
exciting future ahead and I look forward to reporting on our progress in the
near future.'

Application will be made to the London Stock Exchange for the Placing Shares to
be admitted to trading on AIM. It is expected that such Admission will occur on
24 February 2004.


Steven Law (Chief Operating Officer) and Simon Elms (Chief Financial Officer)
Warthog plc - 0161 608 1200

David Simonson/Kirsty Black
Merlin - 020 7653 6620

Tom Price
Evolution Beeson Gregory Limited - 020 7071 4300

30 January 2004

                      This information is provided by RNS
            The company news service from the London Stock Exchange

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