First Day of Dealings on AIM
18 Septembre 2007 - 9:00AM
UK Regulatory
Kurawood plc
("Kurawood", "the Group" or "the Company")
First Day of Dealings on AIM
Placing of Ordinary Shares raising �4.5 million
Kurawood announces the admission ("Admission") of the ordinary shares of 1.0
pence ("Ordinary Shares") of the Company to trading on AIM with ticker symbol
KURA. The Company has raised �4.5 million in a Placing of ordinary shares at a
placing price of 100 pence per ordinary share ("Placing Price"). The market
capitalisation of the Company at the Placing Price is �17 million. Nominated
adviser to the Company is City Financial Associates Limited and St Helen's
Capital Plc is nominated broker.
The Group's business will be to exploit the VECO process, to manufacture and
distribute "Vecowood�", an organically hardened softwood which is made using
what the Directors believe to be a proprietary and innovative timber treatment
process. This process enables softwood such as pine to be treated and hardened
to the workable consistency of hardwoods using innovative know how and industry
standard equipment. The Directors believe that products made from Vecowood�
have significant advantages over hardwoods in terms of their performance and
use as well as contributing to the sustainability of forestry.
On Admission the Company has agreed to acquire the entire issued share capital
of PG Industries Limited ("PGI"), the New Zealand company which holds the
intellectual property for the VECO process and manufactures Vecowood�. The
consideration for the Acquisition is �4,767,000, which will be satisfied by the
issue of 4,767,000 Consideration Shares to the Vendors (representing 28.0 per
cent. of the Enlarged Share Capital). Of the 4,767,000 Consideration Shares,
500,000 Consideration Shares (constituting the Vendor Shares) are being sold by
the Vendors on Admission.
Kurawood is seeking to develop the commercial prospects of Vecowood�. In order
to achieve this, the Company is being admitted to trading on AIM and has raised
�4.5 million through the issue of the Placing Shares (representing 26.5 per
cent. of the Enlarged Share Capital). The proceeds of the Placing will be used
for the phased increase of installed production capacity at the PGI factory to
meet increasing demand, to provide additional working capital, and for
marketing.
The Company's strategy to date has been to market products made by Kurawood
from Vecowood� directly to retailers such as B&Q, Homebase and Floors-2-go to
build up market presence and brand awareness. In the future, the Company will
also seek to supply Finished Wood and Rough Wood to timber merchants and
manufacturers who in turn may manufacture finished products for onward sale to
retailers and / or the general public.
The Company will continue to research and develop the treatment of different
softwood species using the VECO process and also work on further product
enhancements, while looking to expand routes to market geographically. The
Directors believe that the factors that will drive economic interest in
Vecowood� include the diminishing amounts of hardwood available globally, and
that the factors that will drive environmental interest in Vecowood� include
the threat of global warming through de-forestation and the use of carbon/oil
based products to treat existing softwood. As such, the Directors believe that
there is a potential market for a product such as Vecowood�, which can
replicate the physical properties of hardwood.
Commenting, Roy Tilleard Chairman of Kurawood plc, said: "The use of
traditional hardwoods is becoming increasingly controversial due to the
sustainability issues and the impact of deforestation. The VECO process of
organically hardening softwood offers a proven alternative, by mimicing the
durability and performance characteristics of many hardwoods. The reaction from
major retailers has been very positive to the initial products that they have
been presented with made from Vecowood. This will give a firm base on which
Kurawood can build its brand.
Enquiries:
John Bick, Hansard Group Tel: 020 7250 1100
James Caithie, City Financial Associates Limited Tel: 020 7492 4777
Ruari McGirr/Mark Anwyl, St Helen's Capital plc Tel: 020 7628 5582
Information required by Rule 26 of the AIM Rules for Companies is available on
the Company's website: www.kurawood.com
Placing Statistics
Placing Price 100p
Number of Placing Shares 4,500,000
Number of Ordinary Shares in issue on Admission 17,000,000
Market capitalisation of the Company at the �17,000,000
Placing Price on Admission
Gross proceeds of the Placing �4,500,000
Kurawood - Notes to Editors
The VECO process takes kiln dried softwood and introduces the proprietary VECO
formulation to it in industry standard pressure treatment vessels. At this
stage, colouring materials can also be added to the VECO formulation to colour
the wood throughout. The resultant Vecowood� is then kiln dried again to cure
and bond the VECO formulation to the natural cell structure of the wood.
Vecowood� is currently only manufactured in a plant in New Zealand operated by
PGI. This plant can produce sufficient VECO formulation to treat up to 66,000
cubic metres of timber per annum with a current installed capacity to pressure
treat circa 5,000 cubic metres of Vecowood� per annum, outsourcing the re-kiln
drying stage as required. �1 million of the proceeds of the Placing will be
provided by way of loan to PGI, some of which will be used to prepare the PGI
facility for a phased scaling up, initially by increasing the number of
pressure treatment vessels and kilns on site to approximately 30,000 cubic
metres over the coming 12 to 18 months. To the extent that demand requires, the
Directors will authorise additional capital expenditure to increase capacity
further.
The Vecowood� Brand - Vecowood� has been developed with an objective of
satisfying, the Directors believe, the timber market requirements and design
opportunities, as well as addressing a need for the sustainability of raw
materials. The management team at PGI has considerable experience in the wood
modification industry and will be integral to the further development of the
Group's intellectual property. The Directors believe that Vecowood� provides a
new solid wood material that can be used to create a range of products which
address the following areas which they believe are important to the timber
market and tests carried out by PGI have shown that Vecowood� displays all of
these characteristics:
* Environmentally Sustainable - All softwood used to produce Vecowood� is
sourced from recently planted, intensively managed, fast growing plantation
forests, all of which have FSC certification.
* Natural Grain - Company tests have shown that Vecowood� exhibits all of the
natural grain and features of the softwood and works particularly well with
the radiata pine species commonly found in New Zealand. Other suitable wood
species include baltic pine (Redwood), birch, poplar hybrid, rubber wood,
ponderosa pine, cotton wood and New Zealand pre-historic swampwoods.
* Durability - Company tests have shown that Vecowood� is strong, hard and
chemically and dimensionally stable; it also machines well and accepts
coatings and dyes.
* Colouring - Company tests have shown that the VECO process can incorporate
a range of colours that enhance rather than camouflage the wood's natural
grain. Colours can replicate various wood species (Walnut, Rosewood and
Chestnut), and in addition include designer inspired colours such as deep
grey, blue, black, khaki, orange, red and yellow.
The VECO Process and Technology - the normal chemicals used in treated softwood
(being chromated copper arsenate ("CCA") and alkaline copper quat ("ACQ")) are
generally detrimental to human health, hence the presence of warnings advising
the wearing of gloves, avoiding breathing the sawdust, and to refrain from
burning treated softwood. The VECO process (as opposed to CCA, ACQ and other
toxic treatment methods) uses what the Directors believe to be a totally
organic compound comprising a proprietary mix of vegetable oil and aminoplast
to create a non-toxic stable product which can be used either indoors or
outdoors.
The VECO process organically hardens softwood by cell densification. The
resultant Vecowood� is hardened softwood that offers what the Directors believe
to be an environmentally sustainable organic product with better durability and
performance characteristics than most treated softwoods. Moreover, the
Directors believe that unlike other modified wood products, Vecowood� has very
low levels of VOCs.
Intellectual Property and Know How - The PGI know-how, processes and technology
are currently not protected by patents. However, there has been significant
investment in the intellectual property comprising the VECO process. The
Directors believe that it would take a significant amount of time to replicate
the process and expertise required to perform the VECO process, as very
specific combinations of the treatment ingredients, pressure, temperature, time
and wood type have been tested over a number of years. No claim has been made
to register or apply for a patent over the formulation used in the VECO process
as the Directors believe that this could materially diminish the commercial
value and advantage of the Company by exposing its intellectual property to the
public domain. The Directors believe that it would currently be difficult for a
competitor to reverse engineer the VECO process, but that it would be less
difficult if a competitor were to have the information contained in a patent.
The Market - The market size in North America for the wood and wood products
industry was estimated in 2005 to be approximately 600 million cubic metres on
an annual basis (source: UNECE/FAO Forest Products Annual Market Review
2005-2006 Analysis Table). The Directors believe that the size of the market in
North America and Europe for those areas where the Company's products are
expected to compete with existing hardwoods and hardwood alternatives is close
to 40 million cubic metres per annum (source: UNECE/FAO Forest Products Annual
Market Review 2005- 2006 Analysis Table).
Executive directors
Roy Tilleard (aged 59) - Chairman and Chief Executive, has extensive
international experience in many industries in both multinational and private
business. A qualified accountant, he spent almost 20 years working for Unilever
Plc in various locations including three years based in Hamburg before leaving
to start his own industrial chemicals business. This he sold in 1990 and
subsequently completed a buy out of the Deb Group, a �17m per annum revenue
business best known for Swarfega, a well-known brand of hand cleaner. He
continued in his role as Finance Director for the Deb Group increasing annual
revenues to �71m in 2005 through the strengthening of market positions in a
number of key geographies and implementation of a cohesive and focused strategy
for the international expansion of the business. Mr. Tilleard and his business
partner sold around half of the Deb Group to Barclays Private Equity in March
2004 in a �135 million transaction and subsequently sold his remaining holding
in December 2006. He has a number of other business interests including
Callow's Yard which is a �13 million re-development of Castletown in the Isle
of Man.
Kevin Fraser (aged 50) - Sales and Marketing Director, has considerable
experience in the DIY and building supply Industry. He founded Eliteforce 2000
Limited and Jika Limited which were both chemical suppliers to DIY multiple
outlets such as B&Q. Both companies turned over in excess of �5m from a zero
base standing start before they were sold on to their major suppliers in 2003.
Prior to this he was Sales & Marketing Director at SPUR Shelving and an account
director at Coloroll PLC, and also worked in the sales team at Polycell. From
these positions he has retained a wealth of contacts in the DIY and building
sectors. He is an ex-diplomat having served in the private office of the former
Foreign Secretary, Dr Owen, and has previously been posted in Chile for four
years, at the British Embassy in Santiago de Chile. He is a History and Law
graduate having obtained his MA at Aberdeen University.
Justin Martin (aged 38) - Chief Financial Officer - previously served on the
main board of IncaGold plc, the AIM listed specialist digital content
publisher, and Flintstone Technologies plc, the then AIM listed specialist
investment company that he co-founded in 1998. During his tenure at Flintstone,
the company raised over �40m in private equity, successfully launching and
managing seven technology based companies, one of which, Hardide plc, was
admitted to AIM in 2005. From 1995 to 1997, Mr Martin co-founded and operated
the Moscow based arm of a UK stockbroking, asset management and corporate
finance business. He began his career as the Finance and Administration
Director for a Moscow based subsidiary of Universal Leaf Tobacco Corporation,
and previous to this was the Deputy Financial Director for the Moscow based
restaurant and electronics importer JSC Rosinter. He holds a Bachelor's degree
in Economics and Law from Plymouth University, a Masters degree in Finance and
Investment from Exeter University and is an Accredited Consultant with the Isle
of Man's Department of Trade and Industry.
Peter McArthur (aged 49) Chief Technical Officer is a founder of PG Industries
and one of the key developers of the VECO process. He founded Pacific Hardwood
Industries Limited, and purchased from Wood Hardening Technologies Limited, a
subsidiary of New Zealand Forest Research Institute, a wood hardening
technology together with patent applications, called Indurite. In 2002 Carter
Holt Harvey Limited acquired Mr McArthur's stake in the company. Mr McArthur
then set about developing a totally new chemical process for the hardening of
wood, setting up PG Industries with Ian Macrae and Graeme Fraser, both of whom
were also previous shareholders in Pacific Hardwood Industries. After 5 years
of research and development for which the company secured funding and operation
in a full scale pilot plant, PGI's VECO Process was perfected and ready for
full scale production.
Peter Hammonds (aged 53) Independent Non-executive Director - Mr Hammonds was
for four years executive chairman of Conister Trust Plc, an AIM listed bank
licensed in the Isle of Man, and for nine years was group company secretary of
National Westminster Bank Plc. He was formerly a managing director of Darwin
Strategy Consulting Limited and non-executive director of ProShare Limited. He
was both the UK and then international president of the Institute of Chartered
Secretaries and Administrators (ICSA).
He is a non-executive director of Zurich International Life Limited and Allied
Dunbar International Funds Limited, chairman of the Institute of Directors'
Chartered Director Programme and chairman of ICSA's Worldwide Professional
Standards Committee. Mr Hammonds is a chartered director and chartered
secretary. He holds an MBA with distinction from London Business School.
END
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