14th Jun 2007 07:02
Speedy Hire PLC14 June 2007 14 June 2007 SPEEDY HIRE Plc Proposed Acquisition of Hewden Tools Arrangement of £325m debt facilities and proposed 9.5 per cent. equity placing Speedy Hire Plc ("Speedy Hire") is pleased to announce the proposed acquisitionof the trade and assets of the tool hire division ("Hewden Tools") of HewdenStuart Plc, a wholly owned subsidiary of Finning International Inc. KEY ACQUISITION HIGHLIGHTS • Proposed acquisition of Hewden Tools for a total consideration of £115m in cash • Acquisition consolidates Speedy Hire's position as the UK's leading hire company • A transformational deal, strengthening Speedy Hire's customer offering and service • Significant increase in Speedy Hire's geographic coverage and scale of operations - the enlarged Group will have over 540 depots, of which 402 will be in the tool hire division • Enlarged and diversified customer base of approximately 100,000 customers providing additional cross-selling opportunities • Substantial operating and revenue synergy potential across the enlarged Group • Acquisition funded through new debt facilities of £325m; proposed 9.5% equity placing to provide Speedy Hire with additional flexibility for future investment • Earnings neutral in the first full year and materially accretive thereafter Commenting, Steve Corcoran, Chief Executive of Speedy Hire said: "This is a transformational acquisition for Speedy Hire which is consistent withour strategy of growing the business organically and through acquisition. Thisacquisition is an excellent strategic and cultural fit. It brings with it 1,200knowledgeable and highly experienced people with complementary skills, operatinga similar business model to our own in a closely related area of the market. The transaction enables us to consolidate our position as number one in the UKhire market, enlarge our customer base and create further cross-sellingopportunities. It also improves our customer service capability through havinga significantly enlarged depot network." For further information: Speedy Hire Plc Rothschild Oriel Securities Limited Hudson SandlerSteve Corcoran Richard Bailey Adrian McMillan Nick LyonChief Executive Natalie Fortescue Wendy BakerNeil O'Brien Kate HoughGroup Finance DirectorTel: 01942 720 000 Tel: 0161 827 3800 Tel: 0207 710 7600 Tel: 0207 796 4133 SPEEDY HIRE Plc 14 June 2007 Proposed Acquisition of Hewden Tools Arrangement of £325m debt facilities and proposed 9.5 per cent. equity placing Speedy Hire Plc ("Speedy Hire" or the "Company") is pleased to announce theproposed acquisition of the trade and assets of the tool hire division ("HewdenTools") of Hewden Stuart Plc (the "Vendor"), a wholly owned subsidiary ofFinning International Inc. (the "Acquisition"). Hewden Tools operates a networkof 188 depots in the UK, with a workforce exceeding 1,200 employees. Whencombined with Speedy Hire's existing depot network, the enlarged Group will haveover 540 depots throughout the UK, of which 402 will be in the tool hiredivision, and employ in excess of 5,000 people. The acquisition consolidatesSpeedy Hire's position as the UK's largest hire company with revenues in excessof £400m. The total consideration payable for the Acquisition is £115m in cash, subject toadjustments by reference to completion accounts. To finance the Acquisition,Speedy Hire has arranged new debt facilities of £325m through two primarymembers of its existing banking syndicate, an increase of £115m over SpeedyHire's existing debt facilities of £210m. In addition, Speedy Hire announces that it is today placing with institutionalinvestors 4,359,800 new ordinary shares of 5 pence each ("Placing Shares") at aprice of 1250 pence per share, representing approximately 9.5 per cent. ofSpeedy Hire's existing issued share capital (the "Placing"). The Placing is tohelp fund the Acquisition and to ensure that Speedy Hire has the flexibility tocontinue to invest at appropriate levels in its business. The Placing, which isbeing undertaken in full today, comprises two equal tranches, as describedfurther below. The first tranche comprising half of the Placing Shares (the "Firm Placing Shares") is not conditional on the Acquisition and has beenunderwritten by Oriel Securities Limited - the Firm Placing Shares are expectedto be admitted to trading on 20 June 2007. The second tranche of 2,179,900Placing Shares (the "Conditional Placing Shares") is conditional on completionof the Acquisition and the passing of certain share capital resolutions at theforthcoming AGM. The Conditional Placing Shares have not been underwritten andare expected to be admitted to trading on 2 August 2007. The Acquisition is consistent with Speedy Hire's strategy of profitably growingits UK businesses through acquisitions that provide market consolidation, brandstretch or improved geographic coverage. Acquisition highlights • Hewden Tools is an excellent strategic and cultural fit with Speedy Hire and is expected to benefit from Speedy Hire's clear focus on tool and equipment hire • Creates an enlarged customer base of approximately 100,000 customers across a wide range of sectors. Hewden Tools has a complementary customer base to that of Speedy Hire with particular strength in the industrial and local authority markets • Enables Speedy Hire to provide an improved level of customer service to existing and new customers, through the expansion of current specialist depots, more centres of excellence, a larger fleet of assets for hire and a diversified product range • Significant increase in Speedy Hire's geographic coverage and scale of operations, with depots increasing from 361 to over 540 locations, of which 402 will be in the tool hire division. All depots are expected to be rebranded to Speedy Hire by the end of December 2007 • Provides Speedy Hire with a larger and stronger operating platform to take advantage of opportunities in the consolidating UK hire market • Substantial operating and revenue synergy potential, with additional cross-selling opportunities from the enlarged and diversified customer base • The Acquisition is expected to be earnings neutral in its first full year (to 31 March 2009), and materially accretive thereafter • Following initial investment and reorganisation, it is anticipated that the enlarged tool hire division will be highly cash generative • Return on capital is expected to be greater than the weighted average cost of capital in the year ending 31 March 2010 Hewden Tools Hewden Tools operates a complementary business model to Speedy Hire with astrength in tool hire to industrial, construction and engineering customers.Hewden Tools hires a wide range of products including industrial power tools,lifting gear, surveying equipment, power generation, compressed air, accessproducts and support systems. Hewden Tools operates a network of 188 depots located in England, Scotland andWales, and employs over 1,200 highly experienced employees who will transfer toSpeedy Hire on completion. For the year ended 31 December 2006, Hewden Tools reported unaudited turnover of£89.8m and EBITDA of £23.5m, with unaudited gross assets as at the year end of£63.2m. Hewden Tools is one of a number of divisions of the Vendor. The Vendor's otherdivisions, including the Plant Hire, Accommodation Hire and Site Servicesoperations, will be retained by the Vendor following completion of theAcquisition. Acquisition Agreement Speedy Hire has entered into an agreement to acquire Hewden Tools on a cash anddebt free basis from the Vendor, for a total cash consideration of £115m, asadjusted by reference to completion accounts. Completion of the Acquisition is conditional upon satisfactory clearance fromthe Office of Fair Trading. The Board of Speedy Hire is confident of obtainingsuch clearance and the Acquisition is not conditional upon the Placing. Completion of the Acquisition is expected to occur on 31 July 2007. The Placing Speedy Hire is proposing to issue 4,359,800 new ordinary shares of 5 pence each,representing approximately 9.5 per cent. of the Company's existing issued sharecapital. The new ordinary shares will be offered to existing institutionalshareholders at 1250 pence per share, representing a discount of 0.6 per cent.to the volume weighted average price at which Speedy Hire shares were traded on13 June 2007 and raising approximately £54.5m, before expenses. The Placing, which will be undertaken in full today, comprises two tranches.The first tranche of 2,179,900 new ordinary shares of 5p each comprising theFirm Placing Shares is not conditional on the Acquisition and has beenunderwritten by Oriel Securities Limited. The Firm Placing Shares representapproximately 4.7 per cent. of the Company's existing issued share capital. TheFirm Placing Shares will be issued credited as fully paid and will rank equallyin all respects with the existing ordinary shares of Speedy Hire, including theright to receive all future dividends and other distributions, including, forthe avoidance of doubt, the proposed final dividend of 11.5 pence per sharepayable to shareholders on the Company's register on 22 June 2007. Applicationwill be made for the Firm Placing Shares to be admitted to the Official List andto be admitted to trading by the London Stock Exchange on its market for listedsecurities ("First Admission"). The placing of the Firm Placing Shares isconditional only on First Admission, which is expected to take place on 20 June2007. The second tranche of 2,179,900 new ordinary shares of 5p each comprising theConditional Placing Shares also represents approximately 4.7 per cent. of theCompany's existing issued share capital. The Conditional Placing Shares will beissued credited as fully paid and will rank equally in all respects with theexisting ordinary shares of Speedy Hire, including the right to receive allfuture dividends and other distributions, but excluding, for the avoidance ofdoubt, the proposed final dividend of 11.5 pence per share payable toshareholders on the Company's register on 22 June 2007. Application will in duecourse be made for the Conditional Placing Shares to be admitted to the OfficialList and to be admitted to trading by the London Stock Exchange on its marketfor listed securities ("Second Admission"). The placing of the ConditionalPlacing Shares is conditional upon the following: • Resolutions being passed at Speedy Hire's forthcoming annual general meeting (expected to take place on 17 July 2007) to authorise Speedy Hire's directors to allot and issue the Conditional Placing Shares on a non pre-emptive basis; • Completion of the Acquisition; and • Second Admission. Completion of the Acquisition is expected to take place on 31 July 2007 andSecond Admission is expected to be on 2 August 2007. New debt facilities In conjunction with the Acquisition, Speedy Hire has secured revised debtfacilities of £325m from Barclays Capital and The Royal Bank of Scotland plc,which are underwritten by Barclays Bank PLC and The Royal Bank of Scotland plc,the two primary members of Speedy Hire's current banking syndicate. Thesefacilities will replace Speedy Hire's existing debt facilities of £210m. Thenew debt facilities have been arranged with a margin broadly in line with SpeedyHire's existing debt facilities and for a five year term. Steve Corcoran, Chief Executive said: "This is a transformational acquisition for Speedy Hire which is consistent withour strategy of growing the business organically and through acquisition. Thisacquisition is an excellent strategic and cultural fit. It brings with it 1,200knowledgeable and highly experienced people with complementary skills, operatinga similar business model to our own in a closely related area of the market. The transaction enables us to consolidate our position as number one in the UKhire market, enlarge our customer base and create further cross-sellingopportunities. It also improves our customer service capability through havinga significantly enlarged depot network." For further information, please contact: Speedy Hire PlcSteve Corcoran, Chief ExecutiveNeil O'Brien, Finance DirectorTelephone: 01942 720 000 RothschildRichard BaileyTelephone: 0161 827 3800 Oriel Securities LimitedAdrian McMillanNatalie FortescueTelephone: 0207 710 7600 Hudson SandlerNick LyonWendy BakerKate HoughTelephone: 0207 796 4133 Note to editors: Speedy Hire is the number one provider of equipment hire services in the UK,operating from 361 depots throughout the UK. The Group is focused primarily ontool hire, with complementary businesses specialising in portable accommodation,lifting equipment, surveying and measurement instruments and compressed air andpower generating equipment. Further information is available on the company's website:www.speedyhire.plc.uk N M Rothschild & Sons Limited ("Rothschild"), which is authorised and regulatedby the UK Financial Services Authority, is acting for Speedy Hire and no oneelse in connection with the subject matter of this announcement and will not beresponsible to anyone other than Speedy Hire for providing the protectionsafforded to clients of Rothschild or for providing advice in relation to thesubject matter of this announcement. Oriel Securities Limited ("Oriel"), which is authorised and regulated by the UKFinancial Services Authority, is acting for Speedy Hire and no one else inconnection with the subject matter of this announcement and will not beresponsible to anyone other than Speedy Hire for providing the protectionsafforded to clients of Oriel or for providing advice in relation to the subjectmatter of this announcement. This announcement does not constitute an offer to sell or the solicitation of anoffer to acquire ordinary shares in the share capital of Speedy Hire ("Shares"). The information contained in this announcement is not for release, publicationor distribution to persons in the United States, Australia, France, Canada,Japan, New Zealand or the Republic of South Africa. This announcement is not anoffer of securities for sale into the United States. The Shares have not beenand will not be registered under the US Securities Act of 1933, as amended, andmay not be offered or sold, directly or indirectly, in the United States absentregistration or an exemption from registration. The Shares have not been andwill not be registered with any regulatory authority of any state within theUnited States. There will be no public offer of securities in the United States. Certain statements in this announcement are forward-looking statements. Theseforward-looking statements speak only as at the date of this announcement. Suchstatements are based on current expectations and beliefs and, by their nature,are subject to a number of known and unknown risks and uncertainties that couldcause actual results and performance to differ materially from any expectedfuture results or performance expressed or implied by the forward-lookingstatement. There are several factors which could cause actual results to differmaterially from those expressed or implied in the forward-looking statements.These factors include Speedy Hire's ability to successfully combine thebusinesses of Speedy Hire and Hewden Tools and to realise expected synergiesfrom that combination, changes in global, political, economic, business,competitive, market or regulatory forces, future exchange and interest rates,changes in tax rates and future business combinations or dispositions. Theinformation and opinions expressed in this announcement are subject to changewithout notice and none of Speedy Hire, Rothschild or Oriel assumes anyresponsibility or obligation to update publicly or review any of theforward-looking statements contained herein, regardless of whether thosestatements are affected by the results of new information, future events orotherwise. No statement in this announcement is intended to be a profit forecast and nostatement in this announcement should be interpreted to mean that Earnings perShare for the current or future financial years would necessarily match orexceed the historical published Earnings per Share. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Speedy Hire