30th May 2006 16:31
Blueheath Holdings PLC30 May 2006 For Immediate Release 30 May 2006 Blueheath Holdings plc ("Blueheath" or the "Company") Placing and Board Changes Blueheath today announces a placing (the "Placing") in which it has placed,conditional on admission, 26,250,000 new ordinary shares of 1 pence each in theCompany ("the Placing Shares"). The Placing Shares were placed at a price of 20pence per share ("Placing Price"). The Placing has raised 5.0million of newfunds for the Company (net of expenses). In addition, the Board has alsoannounced that Richard Rose will be appointed Deputy Chairman with immediateeffect, taking on the role of Executive Chairman from 1 September 2006, and thatthe current Chief Executive and company founder, Douglas Gurr, has announced hisintention to step down with effect from 31 August 2006. The Company hasidentified a successor to Mr Gurr whose name will be announced shortly. The necessary authority required for the allotment of the Placing Sharespursuant to the Placing will be sought at an Extraordinary General Meetingconvened for 11.00 a.m. on 23 June 2006. The purpose of this announcement is toprovide information on the Placing and the EGM. Admission of the Placing Sharesis expected on 26 June 2006. Background to and reasons for the Placing Despite progress, it has taken longer than originally expected for the businessto achieve the level of sales required for it to be profitable through thecurrent infrastructure. This fact, and corresponding concerns over the impact onthe cash position, led the Board to perform a detailed review of the business.The review has examined the current year forecasts, sensitivities to theseforecasts, the potential impact on cash flow and breakeven, and theopportunities for further performance improvement. Having considered the review the Directors believe that the integration workdelivered to date, together with a further logistics restructuring, should besufficient to generate satisfactory operating profits at the current level ofsales and gross margin. The Directors have also identified that there is sufficient logistics capacitywithin its existing warehouse operations at Thurrock and Wrexham for the Group'scurrent and foreseeable future needs and the decision has therefore been takenby the Board to close the third party warehouse operation at Tamworth. Thisclosure will enable the Company to make considerable operational savings and thereallocation of distribution operations should be achieved by September 2006. In addition to the integration work delivered to date, this restructuring isexpected to save £2.2 million in the financial year ending 28 February 2007,rising to £4.0 million in the financial year ending 28 February 2008. Thisrestructuring is likely to cost £0.5 million with all costs incurred in thefinancial year ending 28 February 2007. The Company's proprietary technologycontinues to operate well across multiple sites with excellent levels offulfilment and, on current progress, it is expected that breakeven for the Groupshould be achieved by September 2006, once Tamworth is closed. Once the cost savings are achieved, the Directors believe that the businessremains well placed, both operationally and commercially, to deliver attractivereturns from further sales and margin growth. Whilst the Directors and Richard Rose believe that the current levels of sales,cost reduction programme and restructuring proposals should enable the Companyto achieve cash flow breakeven, they believe that it would be prudent to raiseadditional equity capital to fund the cost reduction programme and restructuringand provide sufficient comfort within the working capital. Board Changes The Board has also undertaken a review of both executive and non-executive teamsto ensure the capability is in place to drive the necessary changes proposedfollowing the review of the business. The Board has concluded that the immediate focus of the business should be toimplement the logistics restructure in order to go through breakeven into profiton the current level of sales. The growth focus will return once the cost basehas been restructured. To help drive the necessary changes, Richard Rose will bejoining the Board with immediate effect in the role of deputy chairman. ColinSmith, the Company's chairman, then intends to hand-over the role of chairman toRichard, resulting in the chairman being an executive within the Group, witheffect from 1 September 2006. Richard was previously chief executive of Whittardof Chelsea plc. Prior to that he has been a director of Hagemeyer (UK) Ltd andchief executive of WF Electrical plc. Richard has a strong track record indelivering business growth and shareholder value and will be taking primaryresponsibility for business strategy and investor relations. Having led the Company over the past five years from a start-up to its currentscale and position as a leading player in the wholesale market, the chiefexecutive and Company founder, Douglas Gurr, has announced his intention to stepdown with effect from 31 August 2006. The Company has identified a successorwhose name will be announced shortly. Incentives for Richard Rose and senior management are being reviewed and will beawarded at the Placing Price. Further details will be sent to shareholders withnotice of the annual general meeting of the Company. Summary In summary, the Directors continue to believe that Blueheath offers anattractive opportunity. The business is continuing to attract new customers andto deliver excellent levels of fulfilment and on-time delivery. The technologyis continuing to operate well across multiple sites enabling the delivery ofthis high level of fulfilment from exceptionally low stock levels. The marketremains fragmented with further opportunities to grow both organically andthrough acquisition utilising the logistics capacity of the Group. The Placing The Company is proposing to raise £5.25 million (before expenses) through theplacing of the Placing Shares. As part of the Placing, Colin Smith has agreed tosubscribe for 250,000 new Ordinary Shares and Douglas Gurr has agreed tosubscribe for 150,000 new Ordinary Shares, together representing 1.5 per cent ofthe Placing Shares. The Placing is to be effected on behalf of the Company byEvolution Securities Limited on the terms of a placing agreement. The PlacingShares are predominately being placed with existing Shareholders. The Placing Price represents a discount of approximately 58.3 per cent. to theclosing mid-market price of 48p per Ordinary Share on 26 May 2006, being thelast dealing day prior to the publication of this announcement. The Directorsrecognise that this level of discount is substantial to the current marketprice. Nonetheless, taking into account the required restructuring costs and thecurrent working capital headroom, the Directors believe it is in the bestinterests of the Company and its Shareholders as a whole to take a prudent viewand proceed with raising additional equity capital by way of the Placing. The Placing Shares will represent approximately 36.5 per cent. of the issuedshare capital of the Company immediately following admission of such shares toAIM, as enlarged by the issue of such shares. On 30 May 2006, the Company entered into a placing agreement with EvolutionSecurities Limited, pursuant to which Evolution Securities Limited agreed to actas agent for the Company and to use its reasonable endeavours to procuresubscribers for the Placing Shares, or failing which, to subscribe for suchPlacing Shares itself, as principal, in each case at the Placing Price. The Placing, which has been fully underwritten by Evolution Securities Limited,is conditional, inter alia, upon: * the passing of the resolutions at the EGM; * the placing agreement becoming unconditional in all respects and not having been terminated in accordance with its terms; and * admission to trading on AIM by not later than 8.00am on 26 June 2006. It is expected that the Placing Shares will be admitted to trading on AIM on 26June 2006. The new Ordinary Shares to be issued in connection with the Placing will beissued credited as fully paid and free from all liens, equities, charges,encumbrances and other interests and will, when issued, rank in full for alldividends and distributions thereafter declared, made or paid and otherwise paripassu in all respects with, and carry the same voting and dividend rights as,the existing Ordinary Shares. The placing agreement contains various warranties given by the Company withrespect to its business and the Group and certain matters connected with thePlacing. In addition, the Company has given indemnities to Evolution SecuritiesLimited in connection with the Placing and the performance by EvolutionSecurities Limited of the services in relation to the Placing. Shareholders who are in any doubt as to their tax position are strongly advisedto consult with their own independent financial advisor immediately. Extraordinary General Meeting A notice convening the EGM to be held at the offices of BuchnananCommunications, 45 Moorfields, London EC2Y 9AE at 11.00 a.m. on 23 June 2006 hasbeen sent to shareholders. Resolutions will be proposed to authorise theDirectors to allot equity securities in connection with the Placing; otherwisethan in accordance with statutory pre-emption provisions. In addition, theresolutions will renew the Company's general authorities to allot OrdinaryShares and to do so otherwise than in accordance with the statutory pre-emptionprovisions to reflect the changes to its issued share capital, as enlarged bythe Placing. Recommendation The Directors consider the terms of the Placing to be in the best interests ofthe Company and its Shareholders as a whole. Accordingly, the Directors haverecommended that shareholders vote in favour of the resolutions to be proposedat the EGM, as they intend to do in respect of their own holdings of OrdinaryShares, totalling 2,216,000 Ordinary Shares, being approximately 4.8 per cent.of the current issued share capital of the Company. Buchanan Communications Tel: 020 7466 5000Mark Edwards / James Strong Evolution Securities Tel: 020 7071 4300Michael Brennan / Bobbie Hilliam Notes to editors: Blueheath is a wholesaler of groceries to convenience stores in the £16.8billion UK grocery wholesale sector. The Group sells and arranges thedistribution of approximately 3,500, primarily ambient, product lines to over5,000 independent and multiple retail and leisure outlets within the UK.Blueheath's innovative technology-driven business model is founded on the basicprinciples of stripping out unnecessary supply chain costs and overheads andpassing on financial and operational benefits to customers. This enablesBlueheath to offer customers a wholesale delivery service of groceries at closeto Cash & Carry prices. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Booker Group