27th Nov 2009 07:00
27 November 2009
SnackTime plc
("SnackTime", the "Company" or the "Group")
Proposed Placing to raise £5.8 million
HIGHLIGHTS
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3,414,800 new Ordinary Shares (the "Placing Shares") conditionally placed by Arbuthnot Securities Limited at a price of 170p per share ("Placing Price") to raise approximately £5.8 million (the "Placing") |
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The net proceeds of the Placing will be used to fund the acquisition of snack and chilled drink vending machines, to fund further selected acquisitions, to develop the Company's new hot drinks division and to strengthen the Company's balance sheet |
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The Placing Price represents a discount of approximately 7 per cent. to the closing middle market price of 182.5p per Existing Ordinary Share on 26 November 2009, being the last dealing day prior to the date of this announcement |
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The Placing Shares will represent approximately 31.3 per cent. of the Company's Enlarged Share Capital |
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The Placing is conditional, inter alia, upon the passing of resolutions at a general meeting of the Company to be held on 21 December 2009. First Admission and dealings in the First Placing Shares, which will constitute a qualifying holding for EIS purposes, are expected to commence at 8.00 a.m. on 22 December 2009 and Second Admission and dealings in the Second Placing Shares are expected to commence at 8.00 a.m. on 23 December 2009 |
Blair Jenkins, Chief Executive of SnackTime, commented:
"We are delighted to secure this additional funding from new and existing investors. This is a strong endorsement of SnackTime's potential. The proceeds of the Placing will enable the business not only to continue its strong snacks expansion, but also to accelerate the growth of its hot drinks division, as well as providing funds to make further selected acquisitions and to strengthen the Company's balance sheet.
SnackTime continues to see significant opportunities to grow sales and profits in the snack and chilled drink vending sectors. In addition, the Company believes that there are significant opportunities for growth in the near future via further selective acquisitions. We believe that the vending sector will continue to consolidate and we intend to continue to be not only the UK's leading snack vending company, but also to become a leading operator in the hot beverage market."
ENQUIRIES
SnackTime plc
Blair Jenkins, Chief Executive Tel. 0118 977 3344
Arbuthnot Securities Limited
Tom Griffiths/Alasdair Younie Tel. 0207 012 2000
Proposed Placing to raise £5.8 million
Introduction
The Company announces that it proposes to raise approximately £5.8 million (before expenses) by way of a conditional placing of 3,414,800 new Ordinary Shares at a price of 170p per share. The net proceeds of the Placing will be used to fund the acquisition of snack and chilled drink vending machines, to fund further selected acquisitions, to develop the Company's new hot drinks division and to strengthen the Company's balance sheet.
The Placing Shares have been conditionally placed with institutional investors by Arbuthnot Securities. Subject, inter alia, to the passing of the Resolutions at the General Meeting to be held at 10.00 a.m. on 21 December 2009, First Admission and dealings in the First Placing Shares are expected to commence on AIM on 22 December 2009 and Second Admission and dealings in the Second Placing Shares are expected to commence on AIM on 23 December 2009.
The Company
SnackTime is one of the UK's largest national operators of snack and chilled drink vending machines. The Company has various types of snack and chilled drink vending machines and following the acquisition of MBM Business Systems Limited ("MBM") referred to below, the Group currently has approximately 23,000 installed SEQs located throughout the UK which are serviced by its agent and franchise networks. The core element of the Company's business model is that it retains ownership of the vending machines, which are essentially sited free on loan and at no cost to the site owner or occupier.
The Company generates cash through sales of products from its vending machines and also from contributions from its Brand Owners, Mars Snacks, Britvic, Walkers, Coca Cola and Tatyo.
The Company's shares were admitted to trading on AIM on 19 December 2007. At the same time, the Company raised £3.0 million before expenses pursuant to a placing of 2,083,333 new Ordinary Shares at a price of 144p per share. The net proceeds of the placing were used to fund the next growth phase of the business.
In December 2008, the Company raised £0.42 million (before expenses) by way of a placing of 466,667 new Ordinary Shares at a price of 90p per share. In addition, the Company also raised £0.6 million through the issue of the Convertible Loan Notes. The net proceeds of the placing and the issue of the Convertible Loan Notes were used to fund the acquisition of snack and chilled drink vending machines.
On 16 September 2009, the Company announced that it had acquired MBM, which owned the trademarks and assets to Snack in the Box ("SITB") and operates the SITB franchise network, for a cash consideration of £1.5 million. SITB was established 14 years ago and specialises in the provision of snack and chilled drinks to the workplace. The business services customers through franchisees who operate either vending machines or honesty boxes. SITB has in excess of 5,000 vending sites and 10,000 honesty boxes. The acquisition is expected to be earnings enhancing in its first year of ownership.
Reasons for the Placing
Since incorporation, the Company has experienced rapid growth both in terms of the number of its installed SEQs and its financial results. In August 2009, the Company reported its audited results for the year ended 31 March 2009 which showed profit before tax of approximately £0.2 million on revenue of £6.7 million.
SnackTime's growth, prior to the acquisition of MBM, has been entirely organic and has been funded by a combination of cash flows from trading activities, investor funding, bank debt and the hire purchase market. As a result of the acquisition of MBM, which was the Company's main snack and chilled drink vending machine competitor, the Directors believe that the Company is now the largest snack vending network in the UK and Eire.
The Directors believe that there remain significant opportunities for organic growth within the Company's core business of snack and chilled drink vending machines and honesty boxes. The Company is looking to expand into a number of new snack and chilled drink sectors including the public and justice sector, the leisure sector and the auto sector, whilst continuing to penetrate further the retail and general business sectors.
Following the successful integration of MBM, the Directors believe that there are a number of further acquisition opportunities and the Company is currently in discussions with a few potential targets.
For a number of years, the Directors have been evaluating the possibility of developing a hot drinks division. The Directors believe that there is a significant opportunity to target the Company's snack and chilled drink vending machine estate by offering its existing customers a hot drinks machine. The Company has established a partnership with Lavazza, whereby the hot drinks machines will be branded Lavazza machines and will be provided to the customer on the same basis as the snack and chilled drink vending machines, i.e. via a free on loan guarantee agreement.
The net proceeds of the Placing will therefore be used to continue the expansion of the Company's snack and chilled drink vending machines division, to fund further selected acquisitions, to develop a hot drinks division and strengthen the Company's balance sheet.
Details of the Placing
The Company proposes to raise approximately £5.8 million (before expenses) through the issue of the Placing Shares at the Placing Price. The Placing Price represents a discount of approximately 7 per cent. to the closing middle market price of 182.5 pence per Existing Ordinary Share on 26 November 2009, being the last dealing day prior to this announcement. The Placing Shares will represent approximately 31.3 per cent. of the Enlarged Share Capital.
Pursuant to the terms of the Placing Agreement, Arbuthnot Securities, as agent for the Company, has agreed conditionally to procure subscribers for the Placing Shares at the Placing Price. The Placing is to be conducted in two tranches, with Second Admission in respect of the Second Placing Shares taking place subsequent to, and conditional upon, First Admission in respect of the First Placing Shares. The Directors have been advised that by structuring the admission of the First Placing Shares and Second Placing Shares in this manner, the First Placing Shares are expected to constitute a qualifying holding for the purposes of EIS legislation. This might not otherwise be the case if the First Placing Shares and Second Placing Shares were admitted to trading simultaneously, as the gross asset limit for EIS investment may be exceeded by receipt by the Company of the combined proceeds of the placing of the First Placing Shares and the Second Placing Shares.
The Placing Agreement is conditional upon, inter alia, the Resolutions being duly passed at the General Meeting, First Admission and Second Admission. Subject to First Admission becoming effective, dealings in the First Placing Shares which will constitute a qualifying holding for EIS purposes are expected to commence at 8.00 a.m. on 22 December 2009 (or such later time and/or date as the Company and Arbuthnot Securities may agree, but in any event no later than 3.00 p.m. on 8 January 2010) and, subject to Second Admission becoming effective dealings in the Second Placing Shares are expected to commence at 8.00 a.m. on 23 December 2009 (or such later time and/or date as the Company and Arbuthnot Securities may agree, but in any event no later than 3.00 p.m. on 8 January 2010). The Placing Agreement contains provisions entitling Arbuthnot Securities to terminate the Placing Agreement at any time prior to First Admission in certain circumstances. If this right is exercised, the Placing will not proceed. Arbuthnot Securities also has the right to terminate the Placing Agreement following First Admission but prior to Second Admission in certain circumstances. If this right is exercised, the placing of the Second Placing Shares will not proceed. The Placing has not been underwritten by Arbuthnot Securities.
Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. The Placing Shares will rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared following First Admission or Second Admission (as appropriate). It is expected that CREST accounts will be credited on the day of First Admission or Second Admission (as appropriate) and that share certificates (where applicable) will be despatched by 4 January 2010.
Current Trading
The Company expects to announce its unaudited interim results for the six months ended 30 September 2009 on 24 December 2009. The Company's trading and financial performance in the current financial year is strong. The Company's recent acquisition, MBM Business Systems Limited, which has been successfully integrated into the Group continues to perform well. The Directors believe that the outlook for the Group is positive. Its cash position is healthy and, strengthened by the net proceeds of the Placing, the Directors believe that there are significant opportunities within the snack and chilled drink vending machine market in addition to the opportunities to develop the hot drinks division.
Irrevocable Undertakings
The Directors have irrevocably undertaken to vote in favour of the Resolutions in respect of 2,523,238 Ordinary Shares, representing, in aggregate, approximately 33.7 per cent. of the Existing Ordinary Shares.
General Meeting
The General Meeting will be held at the offices of Arbuthnot Securities at Arbuthnot House, 20 Ropemaker Street, London EC2Y 9AR on 21 December 2009 at 10.00 a.m., at which the Resolutions will be proposed.
DEFINITIONS
The following definitions apply throughout this announcement unless the context requires otherwise:
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"AIM" |
the Alternative Investment Market operated by the London Stock Exchange |
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"AIM Rules" |
the rules of AIM governing admission to and the operation of AIM for AIM companies and their nominated advisers as published by the London Stock Exchange from time to time |
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"Arbuthnot Securities" |
Arbuthnot Securities Limited, the Company's nominated adviser and broker |
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"Brand Owners" |
Mars Snacks, Britvic, Walkers, Coca Cola and Tatyo |
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"Britvic" |
Britvic plc |
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"Coca-Cola" |
Coca-Cola Bottlers (Ulster) Limited |
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"Company" or "SnackTime" |
SnackTime plc |
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"Convertible Loan Notes" |
£0.6 million 8 per cent. unsecured convertible loan notes |
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"CREST" |
the relevant system (as defined in the Uncertificated Securities Regulations) of which Euroclear is the operator (as defined in the Uncertificated Securities Regulations) |
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"Directors" or "Board" |
the directors of the Company |
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"EIS" |
enterprise investment scheme |
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"Enlarged Share Capital" |
the Existing Ordinary Shares and the Placing Shares in issue immediately following Second Admission |
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"Euroclear" |
Euroclear UK & Ireland Limited, a company incorporated under the laws of England and Wales, the operator of CREST |
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"Existing Ordinary Shares" |
the 7,486,359 Ordinary Shares of 2p each in the capital of the Company in issue at the date of this announcement |
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"First Admission" |
the effective admission of the First Placing Shares to trading on AIM pursuant to the AIM Rules |
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"First Placing Shares" |
the 588,000 New Ordinary Shares to be issued pursuant to the Placing at the Placing Price which are expected to be treated as a qualifying holding for the purposes of Part 5 of the Income Taxes Act 2007 (Enterprise Investment Scheme) |
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"GM" or "General Meeting" |
the general meeting of the Company convened for 10.00 a.m. on 21 December 2009 |
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"GM Notice" |
the notice convening the GM |
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"Group" |
SnackTime and its subsidiaries and subsidiary undertakings |
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"Lavazza" |
Lavazza Coffee (UK) Limited |
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"London Stock Exchange" |
London Stock Exchange plc |
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"Mars Snacks" |
Mars Snackfoods UK |
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"New Ordinary Shares" |
the 3,414,800 new Ordinary Shares to be issued pursuant to the Placing |
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"Ordinary Shares" |
the ordinary shares of 2p each in the capital of the Company |
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"PepsiCo" |
PepsiCo UK & Ireland |
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"Placing" |
the conditional placing by Arbuthnot Securities of the First Placing Shares and the Second Placing Shares pursuant to the Placing Agreement |
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"Placing Agreement" |
the conditional agreement dated 27 November 2009 between the Company and Arbuthnot Securities relating to the Placing |
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"Placing Price" |
170p per Placing Share |
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"Placing Shares" |
the First Placing Shares and the Second Placing Shares |
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"Resolutions" |
the resolutions set out in the GM Notice |
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"Second Admission" |
the effective admission of the Second Placing Shares to trading on AIM pursuant to the AIM Rules |
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"Second Placing Shares" |
the 2,826,800 New Ordinary Shares to be issued pursuant to the Placing at the Placing Price in addition to the First Placing Shares |
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"SEQs" |
Slimline equivalents, the Company's measurement of numbers of vending machines |
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"Shareholders" |
holders of Ordinary Shares |
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"Tatyo" |
Tatyo Northern Ireland Limited |
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"Uncertificated Securities Regulations" |
the Uncertificated Securities Regulations 2002 (SI 2001/3755) |
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"United Kingdom" or "UK" |
the United Kingdom of Great Britain and Northern Ireland |
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"VCT" |
venture capital trust |
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"Walkers" |
Walkers Crisps |
END
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