1st Mar 2005 16:56
Mercury Group PLC01 March 2005 For immediate release 1 March 2005 Mercury Group PLC ("Mercury" or the "Company") Acquisition of Smith Melzack Pepper Angliss Limited ("Smith Melzack Pepper Angliss") Placing of 120,000,000 new Ordinary Shares at 0.5 p per Ordinary Share (the "Placing") Board change Option to acquire Lee Baron Group Limited ("Lee Baron") Introduction On 3 December 2004, the Company announced that it had exercised the options toacquire the outstanding 60 per cent. of Navitas Hemway and 100 per cent. ofTelco Solutions. Each of those acquisitions constituted a "reverse take-over"under the AIM Rules and was each therefore subject to the approval ofshareholders being given at the extraordinary general meeting of the Companyheld on 30 December 2004. The acquisitions were duly approved and the Companywas re-admitted to AIM on 31 December 2004. Mercury's strategy is to provide a wide range of professional services to thereal estate industry in the UK and Continental Europe. In the admission documentposted to shareholders dated 3 December 2004 the Directors of the Company statedthat in due course, the Directors would consider expanding the services offeredby Mercury to include a commercial property agency and that the Company was indetailed discussions with a number of possible significant acquisition targets.Further to that statement, the Directors are now delighted to announce thatagreement has been reached for the acquisition of the entire issued sharecapital of Smith Melzack Pepper Angliss (the "Acquisition"). Smith Melzack Pepper Angliss Immediately prior to completion of the Acquisition, Smith Melzack Pepper Anglisswill acquire all of the business and assets of Smith Melzack Pepper Angliss LLPpursuant to the terms of an intra-group reorganisation agreement dated 28February 2005. With its roots in the early 1950's, Smith Melzack Pepper AnglissLLP is a privately owned commercial agency business with offices in the City ofLondon and the West End. Smith Melzack Pepper Angliss LLP was formed following amerger between Smith Melzack and Pepper Angliss and Yarwood in 2001. Presently,Smith Melzack Pepper Angliss LLP has 7 consultants and employs, through itssubsidiaries, a further 25 staff. The consolidated audited financial results ofSmith Melzack Pepper Angliss LLP for the two years ended 31 December 2003 andthe unaudited results for the year ended 31 December 2004 are set out in thetable below: (£) Year ended 31 Year ended 31 Year ended 31 December December December 2002 2003 2004 Audited Audited Unaudited Turnover 3,073,555 2,926,678 2,821,283 Operatingprofit 291,718 240,051 467,764 As at 31 December 2004 Smith Melzack Pepper Angliss LLP's net assets were£431,470. As at 24 February 2005 Smith Melzack Pepper Angliss LLP had netindebtedness of £300,135. Acquisition agreement The Company has agreed to acquire Smith Melzack Pepper Angliss for a maximumconsideration of up to £1,300,000 to be satisfied by the issue of new ordinaryshares of 0.1p each ("Ordinary Shares") and loan notes ("Loan Notes"). The initial consideration payable by the Company to the vendors of Smith MelzackPepper Angliss on completion of the Acquisition comprises £200,000 to besatisfied by the issue of 40,000,000 new Ordinary Shares. Provided that SmithMelzack Pepper Angliss' profit before tax is not less than £250,000 in each ofthe years ending 31 December 2005 and 31 December 2006, further consideration(the "Deferred Consideration") is payable to the vendors of Smith Melzack PepperAngliss on the following basis: (i) an amount equal to 1.667 times the amount by which Smith Melzack PepperAngliss' turnover for the year ending 31 December 2005 exceeds £2,900,000. Thisadditional consideration is subject to a maximum of £500,000; and (ii) an amount equal to 0.8333 times the amount by which Smith Melzack PepperAngliss' turnover for the year ending 31 December 2006 exceeds £2,900,000. Thisadditional consideration is also subject to a maximum of £500,000. The Deferred Consideration will be payable within 5 business days offinalisation of Smith Melzack Pepper Angliss' accounts for the relevant year andwill be satisfied by the issue of Loan Notes and new Ordinary Shares (to beissued at the then prevailing middle market price) in the proportion of £20 ofLoan Notes and £80 of new Ordinary Shares for every £100 of DeferredConsideration. In addition, provided that Smith Melzack Pepper Angliss achieves an aggregateturnover of not less than £6,700,000 and an aggregate profit before tax of notless than £500,000 ("Aggregate Profits") for the 24 month period ending 31December 2006, further deferred consideration will be payable to the vendors ofSmith Melzack Pepper Angliss equal to 0.25 times the amount by which AggregateProfits exceeds £500,000. This further deferred consideration is subject to amaximum of £100,000 and will be payable within 5 business days of finalisationof Smith Melzack Pepper Angliss' accounts for the year ending 31 December 2006and will be satisfied by the issue of new Ordinary Shares (to be issued at thethen prevailing middle market price). The holders of the Loan Notes will be entitled to redeem them at par with effectfrom six months from the date they are issued. Interest will accrue on the LoanNotes at the base rate of Barclays Bank plc and is payable on 31 January, 30April, 31 July, and 31 October in each year following the issue of the LoanNotes. The sale and purchase agreement contains a number of warranties and indemnitiesgiven by the vendors of Smith Melzack Pepper Angliss to the Company. The vendors of Smith Melzack Pepper Angliss have also undertaken to the Companythat they or any persons connected with them will not sell or dispose of any oftheir respective interests in Ordinary Shares received as consideration for thesale of their interests in Smith Melzack Pepper Angliss at any time before thefirst anniversary of the Acquisition or the date on which the Company announcesits results for the year ending 30 September 2005, whichever is the later. As described above, immediately prior to completion of the Acquisition, SmithMelzack Pepper Angliss will acquire all of the business and assets of SmithMelzack Pepper Angliss LLP pursuant to the terms of an intra-groupreorganisation agreement dated 28 February 2005. Following this reorganisation,Smith Melzack Pepper Angliss will owe the aggregate sum of £800,000 to theformer partners of Smith Melzack Pepper Angliss LLP (the "Loans"). £600,000 isrepayable by Smith Melzack Pepper Angliss on the date of completion of theAcquisition. The remaining £200,000 is repayable by Smith Melzack Pepper Anglisson 31 May 2005. The Company is obliged to procure that Smith Melzack PepperAngliss has sufficient funds to repay the Loans in cash on the relevant duedates. Board change Following completion of the acquisition, Mr Ronald Franks will join the Board ofMercury as an Executive Director. Mr. Franks has been Managing Partner of SmithMelzack Pepper Angliss since 2001, and has 40 years experience in the commercialagency sector. Mr Ronald Franks, 58, during the past five years has been or continues to be adirector or partner of the following companies or entities: Present Past Director of two trustee companies : Smith Melzack (Service & Management) 1) Intercity House Slough Ltd Smith Melzack (Facilities) Ltd 2) Grayrose Properties Ltd Smith Melzack Pepper Angliss Ltd Smith Melzack Pepper Angliss (Professional Services) Ltd Smith Melzack Pepper Angliss (Management) Ltd Smith Melzack Pepper Angliss (Services) Ltd Smith Melzack Pepper Angliss (Croydon) Ltd There is no further information in respect of Mr. Franks to be disclosed inaccordance with the AIM Rules. The Placing In order to finance the Acquisition and to provide some additional workingcapital for the Enlarged Group, the Company has itself placed 120,000,000 newOrdinary Shares with a small number of investors at a price of 0.5p per OrdinaryShare (the "Placing"), pursuant to which the Company will receive gross proceedsof £618,000 (before commissions of £18,000), which after commissions amounts tonet proceeds of £600,000. The proceeds of the Placing will, together with theother cash balances of the Company, be used to provide additional workingcapital for the Enlarged Group. The new Ordinary Shares will, following allotment, rank pari passu in allrespects with the existing Ordinary Shares and will have the right to receiveall dividends and other distributions thereafter declared, made or paid inrespect of the issued ordinary share capital of the Company. Lee Baron The Company also announces that it has agreed the terms of an option with theshareholders of Lee Baron (the "Shareholders") pursuant to a call option deeddated 1 March 2005 (the "Option"). Lee Baron is a leading independent commercialproperty agency in the UK. The company employs over 90 staff, has been tradingfor over 20 years and currently operates from offices in London and Manchester.It is involved in all aspects of commercial property, including management,insurance, sales and acquisitions, rent reviews and valuations. For the yearended 31 December 2003 turnover of the Lee Baron Group was £6,655,501, andoperating profits amounted to £465,550. Under the Option, Mercury has the right exercisable at any time prior to 31 May2005 to require the Shareholders to enter into an agreed form sale and purchaseagreement in respect of the entire issued share capital of Lee Baron. If theCompany does not exercise the Option prior to 31 May 2005 it is obliged to paythe Shareholders a contribution to their costs not exceeding £150,000 (includingVAT) incurred in relation to the preparation of the Option and the agreed formsale and purchase agreement, other than in circumstances where the Company failsto exercise the Option in certain circumstances, including where theShareholders shall have breached the warranties and undertakings set out in theOption or if Lee Baron and subsidiaries for the time being are substantiallydifferent from that which the Shareholders have led the Company to expect. David Williams, the Chairman, commented: "The acquisition of Smith Melzack Pepper Angliss is an important step inachieving our stated strategy of building a vertically integrated European basedproperty services group. I am excited by the opportunity to cross sell theGroup's professional services across our businesses and look forward to workingwith the highly respected Smith Melzack Pepper Angliss team. " ENDS Enquiries: David J Williams Michael Cornish Chairman Beaumont Cornish Limited Mercury Group plc Tel: 0207 628 3396 Tel: 020 7422 6585 Appendix Definitions the the proposed acquisition of the entire issued share capital of"Acquisition Smith Melzack Pepper Angliss by the Company "Board" or the directors of the Company"Directors" "Company" or Mercury Group PLC, formerly called "Cater Barnard plc""Mercury " "Enlarged the Group and Smith Melzack Pepper AnglissGroup" "Group" the Company and its subsidiaries "Lee Baron Lee Baron Group Limited "Loan Notes" the unsecured loan notes to be issued to the vendors of Smith Melzack Pepper Angliss "Option" the call option deed dated 1 March 2005 pursuant to which Mercury has the right exercisable at any time prior to 31 May 2005 to require the shareholders of lee Baron to enter into an agreed form sale and purchase agreement in respect of the entire issued share capital of Lee Baron. "Ordinary Ordinary Shares of 0.1p each in the capital of the CompanyShares" "Shareholders" the shareholders of the entire issued share capital of Lee Baron "Smith Melzack Smith Melzack Pepper Angliss LimitedPepperAngliss" This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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