RNS Number:5227F
Myhome International PLC
11 October 2007
Embargoed for release at 7.00 a.m. 11 October 2007
Myhome International plc
("Myhome" or the "Company")
Acquisition of ChipsAway Group (the "Acquisition")
placing of 9,358,000 new ordinary shares at 72 pence per share (the "Placing")
and
exercise of 3,500,000 warrants (the "Warrants")
The Board of Myhome, a leading provider of franchised service operations, is
pleased to announce that it has conditionally agreed to acquire Edwin
Investments Limited (known as ChipsAway Group), for an initial consideration
(payable in cash and loan notes) of approximately #16.0 million with further
payments of up to #4.0 million dependent upon future performance. ChipsAway is a
mobile service delivered to customers' homes and offices, repairing scratches,
chips and other minor damage to car paintwork using proprietary technology. The
ChipsAway Group also includes Professional Car Cleaning ("PCC") a mobile
valeting service. The Company, as enlarged by the Acquisition (the "Enlarged
Group"), will, the Directors believe, become one of the largest UK franchise
operators. The Enlarged Group will operate 12 franchise brands, comprising over
800 franchise territories and 1,000 vehicles in the UK, as well as international
representation in 14 countries.
HIGHLIGHTS
* Acquisition of ChipsAway valued at up to #20.0 million;
* Enlarged Group turnover to exceed #80.0 million and with over 800
franchisees will become the UK's largest franchise operator by number of
franchisees;
* ChipsAway operating in 13 countries with over 400 franchisees;
* ChipsAway target the same "cash rich, time poor" demographic as the rest of
the Myhome group;
* Initial consideration to be funded by way of a placing of #6.7 million, a
new banking facility of #8.0 million and the exercise of #1.4 million
of Warrants by Nigel Wray and Stephen Hemsley; and
* Acquisition expected to be immediately earnings enhancing
Commenting on the Acquisition, Russell O'Connell, Executive Chairman of Myhome,
said:
"I am delighted to welcome the ChipsAway management and franchisees to the
Myhome group. After this acquisition, the Enlarged Group will have over 800
franchisees, a combined network turnover in excess of #80.0 million, over 1,000
vans in use and franchisees in 14 countries, making Myhome one of the biggest
franchisors in the United Kingdom. I believe the Enlarged Group now has the
necessary infrastructure, personnel and brands in place to accelerate the
development and growth of the Group's proven franchise concepts. "
Roger Wild, of ChipsAway Group, said:
"The ChipsAway management team is delighted to be joining the Myhome group
following 4 years of growth in the ChipsAway Group business. We look forward to
working with Myhome in creating one of the United Kingdom's biggest franchisors
with potential for strong growth over the coming years."
Simon Fraser, Head of Large Corporate at Lloyds TSB Bank plc in London
commented:
"Myhome is an impressive and ambitious business and we are extremely pleased to
have supported them on this deal."
PLEASE SEE BELOW FOR FULL DETAILS ON THE ACQUISITION
Enquiries:
Myhome International plc 01372 471 575
Russell O'Connell investors@myhomeplc.com
Simon McNeill Ritchie
Jonathan Jenkins
Noble & Company Limited 020 7763 2200
Nick Naylor
Alastair Maclachlan
Bishopsgate Communications Limited 020 7562 3350
Maxine Barnes
Nick Rome
11 October 2007
Myhome International plc
("Myhome" or the "Company")
Acquisition of ChipsAway Group (the "Acquisition")
placing of 9,358,000 new ordinary shares at 72 pence per share (the "Placing")
and
exercise of 3,500,000 warrants (the "Warrants")
Introduction
The Board of Myhome is pleased to announce that it has conditionally agreed to
acquire Edwin Investments Limited (known as ChipsAway Group), for an initial
consideration (payable in cash and loan notes) of approximately #16.0 million
with up to #4.0 million of deferred consideration dependent upon future
performance. The Company, as enlarged by the Acquisition (the "Enlarged Group")
will, the Directors believe, become one of the largest UK franchise operators.
The Enlarged Group will operate 12 franchise brands, comprising over 800
franchise territories and 1,000 vehicles in the UK, as well as international
representation in 14 countries.
The ChipsAway Group is a leading automotive services franchise business with
over 400 franchisees in the United Kingdom. It currently operates in 13
countries. The Acquisition is in line with Myhome's strategy of acquiring niche
residential service franchise providers whose services are attractive to the
Company's "cash rich, time poor" target customer base. The Directors believe
that the acquisition of ChipsAway Group will complement the Company's existing
activities in the automotive area, which is currently served by Autosheen, and
will help to accelerate the Company's development.
Myhome will acquire ChipsAway Group for an initial consideration of
approximately #16.0 million, payable in cash and loan notes on completion. In
addition up to #4.0 million of deferred consideration may be paid to certain
ChipsAway Group management shareholders (in loan notes or through the issue of
new ordinary shares) dependent on ChipsAway Group achieving certain targets over
the next two years. The deferred consideration is dependent upon ChipsAway Group
and its subsidiaries achieving earnings before interest, tax, depreciation and
amortisation of between #1.5 million and #2.0 million in each of the 12 month
financial periods ending 30 September 2008 and 30 September 2009. The
Acquisition, which is subject to shareholder approval, is to be funded through
the Placing, a new bank facility of #8.0 million with Lloyds TSB Bank plc (the "
Bank Facility") and the exercise of the Warrants by Nigel Wray and Stephen
Hemsley. The Directors believe that the Acquisition will be immediately earnings
enhancing.
Reasons for the Acquisition
The Board believes that the acquisition of ChipsAway Group will be beneficial to
the Company for the following reasons:
* ChipsAway Group meets the Company's acquisition policy to acquire
brands dedicated to the provision of residential and automotive services to the
ABC1 consumer market;
* ChipsAway Group has highly experienced franchise management team and
established infrastructure, which will remain in place after the Acquisition;
* ChipsAway Group will benefit immediately from the core franchising
infrastructure and systems of Myhome, and will, in the future, benefit from
future additional centrally managed initiatives, such as cross-selling, referral
programmes and loyalty schemes;
* The Company expects to make some synergistic gains across its current
portfolio of franchise brands;
* Autosheen will benefit from ChipsAway Group's franchise recruitment
facility and larger network of operators, both domestically and internationally;
* Professional Car Cleaning is expected to benefit from the national
contracts that Autosheen already has in place;
* ChipsAway Group will be able to benefit from the non-technical
training systems that Myhome currently operates for all of its brands at the
Franchise Academy in Glasgow; and
* ChipsAway Group's customer database will be added to the Myhome Group
database and therefore will be included in the Group's central cross-selling,
referral programmes and loyalty schemes as they are launched, as well as
marketing via www.myhome.com.
Information on ChipsAway Group
ChipsAway Group is a leading franchise operator in the UK automotive services
industry, the fastest growing franchising sector in the United Kingdom. It is
operated by an experienced management team, which will remain in place following
the Acquisition, and has a track record of being a cash generative and
profitable business. ChipsAway Group is based in Kidderminster and it currently
operates two brands, totalling over 400 franchisees. The two brands are:
ChipsAway
ChipsAway is an automotive repair business for minor interior and exterior
automotive defects to paintwork, dents or trim, known as SMART Repair. ChipsAway
franchise territories are sold to franchisees for a one off fee starting at
#22,500 exclusive of VAT. As at 31 July 2007 ChipsAway had a total of 376 active
franchisees in 13 countries: UK, Denmark, Germany, Sweden, Ireland, Austria,
Greece, Spain, Portugal, South Africa, Russia, the Netherlands and Ukraine. The
repair system was originally developed in the US and ChipsAway Group has been
granted an exclusive, perpetual, irrevocable licence to use the intellectual
property rights of the ChipsAway business in all countries outside of USA and
Canada. The ChipsAway Group acquired ChipsAway International Limited, the
operator of the ChipsAway business in September 2003 in a buy in and management
buy out backed by Barclays Ventures, headed up by Chairman Roger Wild and
Managing Director Steve Bignell.
A Proactel survey in 2005 identified that 62 per cent. of the 30 million
vehicles in the United Kingdom required SMART Repair and 81 per cent. of car
owners would be interested in the service. The Directors believe that ChipsAway
is already the largest SMART Repair operator in the United Kingdom, covering
approximately 3 per cent. of the estimated market place. As such, the Directors
believe there is significant potential to continue expanding the customer base
beyond its current level. For example, ChipsAway Group has an agreement with the
AA to assist in growing the customer base.
Professional Car Cleaning
Professional Car Cleaning is an automotive valeting franchise business with 28
franchisees launched in January 2006. It is a business to consumer franchise
concept and franchise territories are typically sold for a one-off fee starting
at #9,995 exclusive of VAT.
The table below sets out selected consolidated financial information on
ChipsAway Group for the year ended 31 December 2006 and the six months ended 30
June 2007.
Year ended 31 December 6 months ending 30 June
2006 2007
Audited Unaudited
#'000 #'000
Turnover #5,198 #2,869
Operating profit 673 657
Profit before taxation 392 558
Net assets 1,239 1,588
Further details of the Placing
The Company proposes to raise #6.7 million (before expenses) through the issue
of 9,358,000 new ordinary shares (the "Placing Shares") at 72 pence per Placing
Share (the "Placing Price"). These shares have been conditionally placed by
Noble & Company Limited ("Noble") with institutional and other investors. The
Placing Price represents a discount of approximately 14.3 per cent. to the
closing mid-market price of 84 pence per Ordinary Share on 10 October 2007, the
last business day prior to this announcement. The Placing is not being
underwritten.
The Placing is divided into 2 parts:
1. A VCT qualifying placing (the "VCT Placing")
The VCT Placing comprises the placing of 2,430,500 Placing Shares (the "VCT
Shares") and is conditional upon, inter alia, certain resolutions (the "
Resolutions") being passed at an extraordinary general meeting of the Company's
shareholders (the "Extraordinary General Meeting") and the VCT Shares being
admitted to trading on AIM , a market operated by London Stock Exchange plc ("
AIM") ("First Admission")
The Company has made an application to HM Revenue & Customs for confirmation
that the VCT Shares will comply with the requirements of schedule 28B of the
Income and Corporation Taxes Act 1988 and that the VCT Shares will be eligible
shares for the purpose of venture capital trusts ("VCT relief"). To date no such
confirmation has been received.
2. A Non VCT qualifying placing (the "Non VCT Placing")
The Non VCT Placing comprises the placing of 6,927,500 Placing Shares (the "Non
VCT Shares") and is conditional upon, inter alia: the Resolutions being duly
passed; the Bank Facility being unconditional; the acquisition agreement (the "
Acquisition Agreement") being unconditional; First Admission; and the Non VCT
Shares being admitted to trading on AIM on or before 8.00 a.m. on 7 November
2007 (or such later time and/or date as the Company and Noble may agree, being
not later than 5.00 p.m. on 23 November 2007 ("Second Admission")).
If the Acquisition is not completed, but First Admission has become effective
(but Second Admission has not), the VCT Shares will continue to be traded on AIM
and the Non VCT Shares will not be issued or admitted to trading on AIM.
The VCT Shares will, on First Admission, rank pari passu in all respects with
the existing ordinary shares of the Company and will have the right to receive
all dividends and other distributions thereafter declared, made or paid in
respect of the issued ordinary share capital of the Company. The Non VCT Shares
will, on Second Admission, rank pari passu in all respects with the existing
ordinary shares of the Company and the VCT Shares and will have the right to
receive all dividends and other distributions thereafter declared, made or paid
in respect of the issued ordinary share capital of the Company.
It is anticipated that First Admission will become effective and that dealings
will commence in the VCT Shares at 8.00 a.m. on 6 November 2007 and that Second
Admission will become effective and that dealings will commence in the Non VCT
Shares at 8.00 a.m. on 7 November 2007.
Further details of the Bank Facility
The Company has entered into the Bank Facility with Lloyds TSB Bank plc
conditional, inter alia, upon Second Admission and the Acquisition completing.
The Bank Facility consists of a term loan of #8.0 million, which is repayable in
12 equal quarterly instalments, the first becoming payable on 31 December 2008.
The Bank Facility will be secured against the assets of the Enlarged Group. The
Board considers that it is in the best interests of the Company that the cash
element of the consideration payable for the Acquisition be funded by a
combination of debt and equity in order to maximise the return to shareholders.
As part of the fees payable to Lloyds TSB Bank plc in connection with the
provision of the Bank Facility, the Company has agreed to grant the Bank a
warrant to subscribe for 357,143 Ordinary Shares at 105 pence per Ordinary
Share. The warrant is exercisable at any time up until 10 October 2012.
Exercise of Warrants
The Board is also pleased to announce that Nigel Wray and Stephen Hemsley have
agreed today to exercise Warrants to subscribe for 3,500,000 Ordinary Shares at
an exercise price of 40 pence per share. The exercise of the Warrants is
conditional upon, inter alia, Second Admission and completion of the
Acquisition. The proceeds of the exercise of the Warrants will be # 1.4 million.
Following completion of the Acquisition Nigel Wray will be interested in
9,375,000 ordinary shares in the Company representing 14.75 per cent. of the
total voting rights of the Company and Stephen Hemsley will be interested in
3,500,000 ordinary shares in the Company representing 5.51 per cent. of the
total voting rights of the Company.
Application will be made for the new ordinary shares to be issued following the
exercise of the Warrants (the "Warrant Shares") to be admitted to AIM. It is
anticipated that admission of the Warrant Shares to trading on AIM will become
effective and that dealings in the Warrant Shares will commence at 8.00 a.m. on
7 November 2007. The Warrant Shares will on admission, rank pari passu in all
respects with the existing ordinary shares of the Company and will have the
right to receive all dividends and other distributions thereafter declared, made
or paid in respect of the issued ordinary share capital of the Company.
Notice of EGM
The Acquisition Agreement is conditional, inter alia, upon the approval of the
Resolutions to be proposed at the Extraordinary General Meeting of the Company
to effect the Placing and admission of the Placing Shares to trading on AIM.
The Board of Myhome that it is today dispatching a circular (the "Circular") to
Myhome shareholders. The Circular contains, inter alia, information on the
Acquisition, the Placing and a notice of Extraordinary General Meeting to be
held at the offices of Noble, 120 Old Broad Street, London, EC2N 1AR at 11.00
a.m. on 5 November 2007. Copies of the Circular shall also be available from
Myhome's website in accordance with Rule 26 of the AIM Rules for Companies.
---ENDS---
This information is provided by RNS
The company news service from the London Stock Exchange
END
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