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Velosi trading name in Malaysia - 10 Feb 2010
Velosi Limited (Velosi or the Group) announces that it has acquired
the Velosi trading name in Malaysia and entered into a
licensing agreement with Velosi Malaysia
Summary of the key terms of the agreements:
Under the terms of the Trade Agreement, the Group has undertaken to pay the Vendors the Consideration,
of up to RM23,333,333 to be satisfied by the issue of up to 4,760,814 Consideration Shares based on the
weighted average closing middle market price of 91.25 pence per share for the three business days prior
to date of the Trade Agreement dated today. The Consideration is subject to Velosi Malaysia achieving a
cumulative PBT of at least RM25.0m (£4.65m) (“Guaranteed Income”) in the three year period from 1
July 2009 to 30 June 2012 (the “Guaranteed Period”). The Consideration will be paid in three
instalments, with the Group paying the Vendors an initial consideration of RM7,933,333, to be settled by
the issue of 1,618,677 Consideration Shares on completion of the Trade Agreement (the “Initial
Consideration”) scheduled to be on 15 February 2010. Subject to the achievement of certain
performance criteria, the Group will pay the Vendors a further RM7,933,333 to be settled by the issue of
1,618,677 Consideration Shares (the “Deferred Consideration”), which the Directors anticipate being
towards the end of the third quarter of 2011. If Velosi Malaysia achieves the Guaranteed Income of
RM25.0m at the end of the Guaranteed Period, the Group will pay the Vendors the full Consideration of
RM23.33m by the issue of up to 4.76m Consideration Shares less any consideration already paid to the
Vendors as Initial or Deferred Consideration. In the event that Velosi (M) has not achieved the Guaranteed
Income at the end of the Guaranteed Period, the Consideration due will be reduced on a pro-rata basis.
In addition, in the event that Velosi Malaysia reports a loss in the final year of the Guaranteed Period,
such that the cumulative PBT for the Guaranteed Period is less than the cumulative PBT achieved in the
two year period from 1 July 2009 to 30 June 2011, the Vendors shall be liable to pay compensation to the
Group of an amount equivalent to the shortfall in cash, subject to a maximum amount being the value of
the Initial and Deferred Consideration received by the Vendors.
On the basis that Velosi Malaysia achieves the Guaranteed Income at the end of the Guaranteed Period,
the full Consideration will be due to the Vendors, which will be satisfied by the issue of 4,760,814
Consideration Shares representing approximately 10.18 per cent. of the Company’s current issued share
capital and 9.24 per cent. of the Company’s then enlarged share capital.
Under the terms of the License Agreement, Velosi will license, on an ongoing basis, the Trade Name and
the intellectual property of the Group to Velosi Malaysia in return for an annual licensing fee. The annual
licensing fee payable to Velosi is based on a percentage of Velosi Malaysia’s audited annual PBT, which the
Directors estimate will be in the range of approximately 5.0 to 7.0 per cent. of Velosi Malaysia’s annual
revenue.
In addition, Dr Nabil Abdul Jalil will be joining the board of Velosi Malaysia.
Vendors’ shareholdings and number of shares in issue Prior to the issue and allotment of the Consideration Shares in relation to the Initial Consideration, the
Vendors were interested in, in aggregate, 9,701,460 ordinary shares of US0.02 each (“Ordinary Shares”),
being 6,736,955 Ordinary Shares held by Velosi Malaysia, 2,235,030 Ordinary Shares held by Mohd Ashari
and 729,475 Ordinary Shares held by Mohd Jai, representing in aggregate approximately 20.74 per cent. of
Velosi’s current issued share capital. Following the issue and allotment of the Consideration Shares in
relation to the Initial Consideration, the Vendors will be interested in, in aggregate, 11,320,137 Ordinary
Shares, being 6,736,955 Ordinary Shares held by Velosi Malaysia (representing 13.92 per cent. of Velosi’s
enlarged issued share capital), 3,331,923 Ordinary Share held by Mohd Ashari (representing 6.89 per cent.
of Velosi’s enlarged issued share capital) and 1,251,259 Ordinary Share held by Mohd Jai (representing
2.59 per cent. of Velosi’s enlarged issued share capital), representing in aggregate approximately 23.40
per cent. of Velosi’s enlarged issued share capital.
The Consideration Shares will rank pari passu in all respects with the existing Ordinary Shares and
application will be made for the Consideration Shares to be admitted to trading on AIM. Admission is
expected to become effective and dealings in the Consideration Shares is expected to commence at 8.00
a.m. on 11 March 2010 following which Velosi’s issued share capital will consist of 48,384,548 Ordinary
Shares, with each Ordinary Share carrying the right to one vote. Velosi does not hold any shares in
treasury.
Accordingly, following admission of the initial Consideration Shares the figure of 48,384,548 Ordinary
Shares may therefore be used by shareholders in Velosi as the denominator for the calculations by which
they will determine if they are required to notify their interest in, or a change to their interest in, Velosi
under the FSA’s Disclosure and Transparency Rules.
On the basis that the full Consideration is payable under the terms of the Trade Agreement, the Company
would have 51,526,685 Ordinary Shares in issue based on 46,765,871 Ordinary Shares currently in issue and
the Vendors would be interested in, in aggregate, 14,462,274 Ordinary Shares, being 6,736,955 Ordinary
Shares held by Velosi Malaysia (representing 13.07 per cent. of Velosi’s enlarged issued share capital),
5,461,186 Ordinary Share held by Mohd Ashari (representing 10.60 per cent. of Velosi’s enlarged issued
share capital)and 2,264,133 Ordinary Share held by Mohd Jai (representing 4.39 per cent. of Velosi’s
enlarged issued share capital), representing in aggregate approximately 28.07 per cent. of Velosi’s
enlarged issued share capital.
The Vendors confirm that they currently have no intention to dispose of any Ordinary Shares currently
held by them or to be issued to them in accordance with the Trade Agreement and that any future
transfer or disposal of Ordinary Shares by them, will be subject to standard orderly market arrangements.
Options in Velosi Malaysia
As previously disclosed, Dr Nabil Abdul Jalil holds an option to acquire 26.02 per cent. of Velosi Malaysia
(“Option”), but as of 31 December 2009, he agreed to cancel this Option and will acordingly no longer
have an option to acquire an interest in Velosi Malaysia.
Related party transactions
In accordance with AIM Rule 13, the Trade Agreement and License Agreement are deemed to be related
party transactions due to the Vendors (due to their aggregated shareholdings in Velosi) and Velosi Malaysia
respectively, being substantial shareholders in the Group. Accordingly, the Directors consider, having
consulted with the Company’s Nominated Adviser, Strand Hanson Limited, that the terms of Trade
Agreement and License Agreement are fair and reasonable insofar as Velosi’s shareholders are concerned. |
| Attachment: Acquisition and trading update 09-02-10.pdf |
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