30th Nov 2009 07:00
TELIT COMMUNICATIONS PLC
("Telit" or the "Company")
Placing to raise £5.3 million
Highlights
Intention to place 26,500,000 new Ordinary Shares at 20 pence per share to raise £5.3 million (approximately €5.8 million) before expenses (the "Placing")
Placing price represents a premium of approximately 17.6 per cent. to the closing mid-market price of 17 pence per existing ordinary share on 27 November 2009
Proceeds of the intended Placing to fund Telit's move of its manufacturing to China
The Placing is conditional, inter alia, upon certain resolutions being passed at a general meeting of the Company
Proposed Placing
The Board of Telit (AIM: TCM), the global wireless communications developer and distributor, is pleased to announce that Astaire Securities is arranging a placing to raise gross proceeds of approximately £5.3 million (approximately €5.8 million) by way of a placing of 26,500,000 new Ordinary Shares of nominal value 1 penny each at a price of 20 pence each ("Placing Shares") with new and existing investors. The size of the placing was increased owing to strong demand from placing participants. The Placing Shares will represent approximately 36.5 per cent. of the enlarged issued share capital.
The implementation of the Placing, which is not underwritten, is conditional, inter alia, on the passing of certain resolutions at a General Meeting permitting the allotment of the Placing Shares and on admission of the Placing Shares to trading on AIM.
Reasons for the Placing
The Company reported in its interim results for the six months ended 30 June 2009 that it has begun outsourcing some of its manufacturing to a Chinese manufacturer. The directors expect that a majority of the Company's products will from next year be manufactured in China. As a result of the proposed change, manufacturing costs per module are expected to be significantly reduced.
In order to effect this change in operations, the Company will be liable to pay one-off costs and there will be an increase in its working capital requirements. The Placing proceeds will be used to fund a proportion of these additional costs. The balance of the funding requirement will be met from the Company's existing resources.
Related party transaction
Boostt B.V. ("Boostt"), a substantial Shareholder currently holding 13,600,000 Existing Ordinary Shares, being 29.6 per cent. of the Company's existing share capital, has agreed to subscribe for 2,000,000 Placing Shares. This participation, when aggregated with the previously announced subscription for 1,500,000 Existing Ordinary Shares by Boostt B.V. on 28 August 2009, constitutes a related party transaction within the meaning of the AIM Rules.
Certain Directors of the Company are deemed to be connected with Boostt. Those Directors who are not so connected consider, having consulted with Astaire Securities, that the terms of Boostt's subscription in the transaction are fair and reasonable insofar as shareholders are concerned.
General Meeting
A general meeting will be held at 10:00 a.m. on 23 December 2009 at the offices of Olswang LLP, 7th Floor, 90 High Holborn, London WC1V 6XX (the "General Meeting"). The purpose of the General Meeting is to consider and, if thought fit, to pass the resolutions necessary to authorise the allotment of the Placing Shares and carry out the Placing.
A circular containing a notice of the General Meeting will be sent to shareholders today, and a copy will be available shortly on the Company's website www.telit.com. Shareholders should read the full text of the resolutions contained in the Notice of General Meeting in the circular.
Application is being made for the Placing Shares to be admitted to trading on AIM, following which the Company's total issued share capital will be 72,514,281 ordinary shares.
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Telit Communications Plc
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Tel: +972 3791 4040
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Michael Galai, Finance Director
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Astaire Securities Plc, Nomad & Broker
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Tel: +44 20 7448 4400
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Shane Gallwey / Sebastian Wykeham
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Related Shares:
TCM.L