15th Jan 2010 07:00
Chime Communications PLC ("Chime" or the "Company")
A Vendor Placing and Cash Placing to Facilitate the Merger of Bell Pottinger Corporate & Financial and Pelham and the Acquisition of Tree
Highlights
Placing of £4.5 million at 200 pence per ordinary share by way of a vendor placing of £1.8 million and a cash placing of £2.7 million fully underwritten by Numis Securities Limited.
Merger of Pelham Public Relations and Bell Pottinger Corporate and Financial. Payment of £2.0 million to make Chime shareholding in merged business 60%.
Heads of terms entered into in relation to the acquisition of Tree, a research and data analytics company, for a total consideration of £2.0 million.
Lord Bell said
"I am delighted with the merger with Pelham and the proposed acquisition of Tree. These are attractive transactions financed in a sensible manner and further enhance our position as the Modern Communications Group."
For further information please contact:
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Lord Bell, Chairman
Chime Communications
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Tel: 020 7495 4044
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James Henderson, CEO
Pelham Public Relations
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Tel: 020 7337 1500
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Steve Mattey
Tree/Cagney
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Tel: 020 7467 9400
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Christopher Wilkinson
Numis Securities Limited
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Tel: 020 7260 1000
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The Board of Chime (the "Board") today announces that further to its announcement of 9 November 2009, the Company has entered into agreements relating to the merger of Pelham Public Relations ("Pelham"), a financial public relations business, and Bell Pottinger Corporate and Financial (the "Merger Agreements"). As a result of the Merger Agreements, which include a payment by Chime of £2.0 million, Chime will own 60 per cent of the merged business, £1.8 million of the £2.0 million payment will be satisfied by way of a vendor share placing (the "Vendor Placing") and £0.2 million through the issue of ordinary shares of 25 pence ("Ordinary Shares") each in the capital of Chime (the "Consideration Shares").
In addition, Chime also announces that it has entered into heads of terms in relation to the acquisition of Tree (London) Limited ("Tree"), a research and data analytics company (the "Tree Acquisition"), for a total consideration of £2.0 million. The consideration for the Tree Acquisition will be satisfied in cash. The Company will be raising £2.7 million by way of a cash placing (the "Cash Placing"), to be applied by the Company to settle the total consideration for the Tree Acquisition together with the related costs of both transactions. Any additional cash over and above that required to satisfy acquisition consideration and related expenses will be utilised to strengthen Chime's balance sheet. If the Tree Acquisition does not complete, the Cash Placing will provide Chime with additional cash resources and flexibility when satisfying the earn-out payments due in 2010 primarily in relation to Fast Track.
The Vendor Placing and the Cash Placing (referred to together as the "Placing"), together with the merger with Pelham and the acquisition of Tree, will strengthen Chime's financial position and enhance the products and services which the Chime group can offer its clients.
In total, 2.25 million new Ordinary Shares ("Placing Shares") are being placed with certain institutional investors by Numis Securities Limited ("Numis") at a placing price of 200 pence per Ordinary Share. The Placing has been underwritten by Numis.
Application will be made for the 2.25 million Placing Shares and the 99,994 Consideration Shares to be listed on the Official List of the Financial Services Authority, and to be admitted to trading by the London Stock Exchange plc on its main market for listed securities ("Admission") and it is expected that dealings in the Placing Shares will commence on 20 January 2010. Upon Admission, the Placing Shares will rank pari passu in all respects with the existing Ordinary Shares in issue. Following Admission, the total number of Ordinary Shares in the Company with voting rights will be 69,686,962. This will be the existing issued Share capital plus the Placing Shares and the Consideration Shares.
The merger of Pelham with Bell Pottinger Corporate and Financial
Under the terms of the Merger Agreements, Pelham and Bell Pottinger Corporate and Financial will merge and become Pelham Bell Pottinger. A compensating payment of £2.0 million will be made to Pelham shareholders of which 10% will be paid in Chime shares. The merged business will be 60% owned by Chime and 40% by existing Pelham shareholders. James Henderson will be chief executive of Pelham Bell Pottinger.
The cash payment of £1.8m is to be satisfied through the Vendor Placing. In the 16 months ended 31 December 2008, Pelham had revenue of £8.2 million and pre-tax profits of £0.9 million. Pelham has grown rapidly since its foundation in 2004 and the creation of Pelham Bell Pottinger will create a stronger financial public relations business and allow Pelham's clients to benefit from the wide offering of services across the Chime group.
Tree
Chime has entered into heads of terms with Cagney Plc under which Chime intends to acquire the entire issued and to be issued share capital of Tree, a research and data analytics company for £2 million.
Tree which was founded in 2001 by Steve Mattey and Matt Bayfield has capabilities in database management, research and analysis and clients include 02 and VW. Both Steve Mattey and Matt Bayfield will remain with the business following the acquisition and Chime will offer Tree's service to clients who require intelligent database management in order to achieve effective commercial solutions.
It is expected that a definitive agreement will be signed during February 2010.
Both acquisitions are expected to be earnings enhancing in 2010.
Current trading
In its interim management statement issued on 17 November 2009, Chime stated
'Our first half results for 2009 were ahead of expectations and we delivered the best pretax profit in our history. We have continued to trade strongly in the second half of 2009 and we expect full year revenue to be ahead of 2008.
We have completed the acquisition of Essentially into our sports marketing group and announced but not yet completed the merger of Pelham and our Bell Pottinger financial public relations company.
We appear to have outperformed our competitors in the sector both small and large. We have controlled our cost base well and look forward to further growth in 2010 as the market recovers'.
Since that time the Group's trading has been strong and the Board is pleased with the overall performance for 2009. The Board believes that Chime is well positioned to take advantage of any growth in the market place during 2010. The preliminary results for 2009 are expected to be announced on 10 March 2010.
Notes to Editors
About Chime
Chime Communications plc is the holding company for a number of leading public relations, marketing services and research consultancy firms.
The Chime Group consists of one of the UK's leading public relations groups, Bell Pottinger; a research and consultation business, Opinion Leader, VCCP, the advertising and marketing services group and Fast Track, the UK's leading sports marketing agency.
The Chime group helps clients create, manage, monitor and market their businesses, brands and reputations both in the UK and internationally.
Related Shares:
CHW.L