25th Nov 2005 17:15
Rotala PLC25 November 2005 Press Release 25 November 2005 Rotala plc ("Rotala" or "the Company") Further to the announcement made on 26 September 2005, the Company wishes toupdate shareholders on recent developments. Current trading In the above announcement, the Company stated that turnover had continued togrow. This trend continues; however the Company has through the acquisition ofthe Flights Companies inherited what have transpired to be a number ofunsatisfactory and uneconomic commercial arrangements which have proved moreproblematic than originally anticipated. This may therefore result in a largerloss for the current financial period than expected originally and this willhave an adverse effect on the financial results for 2005 and 2006 until sucharrangements can be re-negotiated. The Company wishes to emphasise that at thepoint of acquisition, no cash was paid to the vendor, and in fact all of theinitial consideration comprised shares which are the subject of non-disposalundertakings, and furthermore the vendor, a company controlled by StuartLawrenson, gave extensive warranties and indemnities in relation to thebusiness. The Directors have advised the vendor that they intend to pursue suchclaims. As previously noted such claims can also be set against the loan noteconsideration, which has not matured, and the Directors do not expect this to bepayable. Likewise, it is extremely unlikely that the deferred shareconsideration, which was contingent upon a threshold profitability, will bepayable. A further update on trading will be made shortly. Potential claims by Central Parking Corporation ("CPC") The Company informed shareholders in the previous announcement of certainproblems that had arisen in relation to CPC, the parent of the former employerof Stuart Lawrenson, the vendor of the Flights business. Since that time the Company has been engaged in constructive discussions withCPC to complete the unwinding of inter-company balances and otherdisentanglement issues. The Directors are reasonably confident that thissituation can be resolved on an amicable basis over the next few months and itshould be noted that no legal proceedings have been initiated by CPC against theCompany. Should settlement discussions with CPC not be concluded amicably and ifany proceedings were commenced against Rotala, these would be vigorouslyresisted. The Directors intend to update the market as and when a finaldetermination of this matter is arrived at. Any potential damage to the Companyresultant from these issues is also the subject of the proposed warranty andindemnity claims against Stuart Lawrenson referred to above. Potential equity fundraising As a result of the increased turnover of the Company (including the tenderingfor, and servicing of, potential new contracts which involves considerableexpense), the continuing losses and the diversion of efforts resultant upon theproblems with Stuart Lawrenson and CPC, the Directors consider that it isprudent to augment the working capital requirements of the Company. The Companyhas been successful in negotiating improved banking facilities to cover workingcapital requirements, leasing finance and the potential acquisition of newcontracts. Notwithstanding this the Directors have determined that new equityfunding should be raised of between £600,000 and £1,200,000. It is proposed thatthe Directors will underwrite £600,000 of such issue. Further details of the proposed fundraising are expected to be announced shortlyand it is expected that the issue price would be at a significant discount tothe current middle market price. Contacts: John Gunn, Rotala Plc 020 7 236 6236Nick Fox, M:Communications 020 7 153 1540 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
ROL.L