4th Jan 2016 08:18
LONDON (Alliance News) - Castle Street Investments PLC on Monday said it has agreed to buy Selection Services Investments Ltd for GBP34.8 million, and that it has conditionally raised GBP30 million through an oversubscribed placing of new shares.
Selection is an IT and cloud services provider which makes around GBP35.0 million in annual revenue and has over 500 customers.
The acquisition, which constitutes a reverse takeover, will be funded by a combination of Castle Street's existing cash resources and the placing of 100 million shares raising GBP30 million, with MXC Capital Ltd acting as cornerstone investor.
"It has been our stated investment strategy to seek investment into a profitable and cash generative business with an experienced management team, good revenue visibility and growth opportunities. We believe that in Selection we have identified a business that meets these criteria and look forward to an exciting future," Castle Street Chairman Bill Dobbie said in a statement.
In a separate statement, MXC confirmed that it has agreed to cornerstone a placing of shares in Castle Street. It will subscribe for GBP12.9 million of equity and will own 25% of Castle Street's issued share capital.
MXC has also been granted, subject to certain vesting conditions, evergreen warrants over 5% of Castle Street's enlarged share capital at a price of 30 pence per share, with subsequent adjustment to reflect any further equity issues.
MXC Partner Andy Ross will lead Castle Street as chief executive following the acquisition.
Shares in Castle Street remained suspended, while MXC shares were trading down 1.5% at 3.30p early Monday.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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