22nd Aug 2006 07:00
Delling Group PLC22 August 2006 DELLING GROUP PLC (DLG.L) The AIM-listed marketing services group Acquisition of Exhibition Company in Sweden Placing of £1.16 million shares Issue of £1 million loan notes Delling Group PLC ("Delling" or the "Company"), the AIM listed marketing supportservices group, announces that in line with its acquisition strategy, it hasexchanged contracts to acquire Eckerud Scandinavian Group AB ("Eckerud"), aprivately owned Swedish exhibition company, with completion scheduled for 30August 2006. The acquisition substantially increases Delling's presence in thisarea, which has historically represented approximately 10% of Group turnover. The initial consideration payable is approximately £1.5 million, equivalent toapproximately 5.6 times Eckerud's anticipated pre-tax profit for the year ended31 December 2006. An earn-out is payable such that the ratio of Eckerud'spre-tax profit to the total consideration is maintained at a multiple of 5,subject to a maximum of £4m should pre-tax profits rise to £1.1m by 31 December2008. Up to 20% of the earn out can be paid in shares, at Delling's option,using the average share price in December for the year in which an earn-out ispayable. The initial consideration will be satisfied by a cash payment of £1.5million andthis will be funded by a combination of the proceeds of a new issue of sharesand £1million of loan notes. Eckerud has been the leading developer of this industry in Sweden for more thanfifty years, having accumulated broad international experience in developing andmanaging complex and sophisticated exhibition projects in more than 80countries. For the year ending 31 December 2006 Eckerud is expected to produce aturnover of approximately £4.4m and generate profits before tax of £260,000.Eckerud is the leading company in Sweden in the field of exhibitions by salesand, combined with Delling's existing business, will now become one of the topthree in Norway. It manufactures and designs stands for trade shows, briefingcentres and point of sale locations for a broad range of customers includingEricsson, Astrazeneca and Boss Media The Board views the acquisition of Eckerud as a very important and exciting stepin their objective to establish Delling as one of the largest companies in itssector in Scandinavia, and expect to conclude a number of further acquisitionsover the coming months. As previously announced, the recent placings were to strengthen the balancesheet to enable the Company to obtain bank financing to, inter alia, fund futureacquisitions. However the acquisition of Eckerud is being completed quicker thanDelling had initially expected and before bank discussions have been concluded.The Board considers the acquisition of Eckerud to be strategically important andtherefore has decided to finance it through a share and loan note issue. Delling Group will issue 11,897,436 shares at 9.75 pence, being the mid-marketshare price at the close of trading on 16 August 2006 ("the placing"). Theshares have been placed with Scandinavian investors, including 4,102,564 sharesto Mr Bjart Dysthe. After the placing Mr Dysthe, already a substantialshareholder in the Company, will hold 40,626,481 shares in the companyrepresenting 27.2% of the issued voting share capital. The loan notes have been issued to RAB Capital ("RAB"), and, as a commitmentfee, Delling has issued 2,000,000 shares to RAB, credited as fully paid at 9.5pence per share being the mid-market share price at close of trading on 17August 2006. The loan is intended to be short term in nature whilst it arrangeslonger term bank financing; however if after three months it has not been repaidRAB may then charge interest at 10% per month, although it is the Directors'intention to fully repay the loan in cash at the end of the three month period. The share and loan note issue together raise £2.16 million. £1.5 million is tobe used to conclude the acquisition of Eckerud and the balance is to be used forfurther acquisitions that are expected to complete shortly. Application has been made for the admission of 13,897,436 new ordinary shares,being the placing shares and those issued to RAB, to trading on AIM on 24 August2006 and dealings are expected to commence on or around that date. Commenting on the acquisition, Aksel Bratvedt, Executive Chairman of DellingGroup, said: "This acquisition, one of our largest to date, is an excellent addition toDelling's service offering and gives a larger presence in this sector. Theacquisition has been concluded before bank financing discussions could befinalised, and therefore a share issue has had to be made. I am very confidentthat Eckerud will add substantial value to the shareholders and it is expectedto be earnings enhancing in the first year of ownership, as well as providingscope for cross-fertilisation and further contract wins". "I am confident that we can substantially increase the pace of our acquisitionprogramme, targeting only profitable companies to become the leading operator inthe marketing support services sector in the Nordic area." For further information please contact: ENDS Contact:Delling Group PlcAksel Bratvedt, Chairman Tel: 020 7484 5663James Robinson, Finance Director Tel: 020 7484 5664www.dellinggroup.com Adventis Financial PRPeter Binns Tel: 020 7034 4760Annabel Loveluck Tel: 020 7034 4756 Kreab ASBrynjulf Freberg Tel: +47 9066 3646 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Direct Line