Placing and Acquisitions

Released : 18/06/2007 07:00

Rotala PLC
18 June 2007

                                   Rotala plc

                          ('Rotala' or 'the Company')

                Acquisitions and a Placing to raise £2.5 million

Rotala is pleased to announce that it has exchanged contracts to acquire the
entire issued share capital of North Birmingham Busways Limited ('NBB') and
certain customer contracts and vehicles currently owned by or of which South
Gloucestershire Bus and Coach Company Limited has the benefit (the 'Business')
(together the 'Acquisitions').

The Directors expect the Acquisitions to be earnings enhancing immediately.

The Company has also entered into an exclusivity arrangement to make a further
acquisition ('Company A'). Due diligence and negotiation of terms are currently

Further details on the Acquisitions and Company A are set out below.

Today, the Company also announces that it has raised £2.5 million, before
expenses, by way of a conditional placing, arranged by Blue Oar Securities Plc,
with institutional and other investors of 100 million new ordinary shares of 1
penny each in the capital of the Company ('Ordinary Shares') at 2.5 pence per
new Ordinary Share ('Placing').  The Placing is conditional upon approval of
certain resolutions by the shareholders at an Extraordinary General Meeting to
be held on 17 July 2007 ('EGM'). The Acquisitions are being funded in part
through the proceeds of the Placing and are therefore dependent upon the Placing
becoming unconditional.

At the EGM the Board also proposes to simplify the Company's share structure to
provide a more appropriate share price on AIM; the Board proposes to consolidate
every 25 ordinary shares of 1p each into 1 new ordinary share of 25p each ('

John Gunn, Non Executive Chairman of Rotala, said:

'The board is delighted to take this major step forward in Rotala's development.
We are beginning to see the benefits of all the moves we have initiated in the
past year or so. By bringing in now the positive results that we can expect by
adding the turnover and profits from the Acquisitions, we shall begin to see the
company achieving the levels of turnover and profitability we have always
planned for.  This will of course become more clear as 2008 progresses.

Current trading is satisfactory, being a little in excess of budget.  We look
forward to the coming year with great confidence; we will welcome our new
colleagues to our Group and thank both our current staff and our shareholders
for their efforts in supporting our endeavours'.

Information on the Acquisitions and Company A:

The Acquisitions consist of the following:

(1) North Birmingham Busways Limited

The main depot of Flights Hallmark Limited ('Flights Hallmark'), a subsidiary of
the Company, is at Long Acre in the Aston area of Birmingham. NBB is a bus
company that operates 28 buses from a site in the Erdington district of
Birmingham, some two miles from Long Acre.  NBB is long established on a number
of its routes and the majority of the work undertaken by NBB is commercial stage
carriage.  Approximately one third of its revenues derive from contracts with
Centro, which is the operating name of The West Midlands Passenger Transport
Executive. The Directors believe that NBB is one of Birmingham's most well known
and respected small bus operators.

The Directors believe that immediate cost savings can be made from a reduction
in maintenance, accounting and administration overheads. The Company will
acquire NBB for a price of £860,000, payable in cash.

NBB is exempt from audit. It reported sales of £1.4 million in its unaudited
accounts for the financial year ended 30 November 2006, with profit before tax
of £155,000 and net assets of £409,000 as at 30 November 2006.

(2) The Business

Flights Hallmark  will acquire a total of 68 buses for a price of £1.26 million.
The right to operate the routes that these buses run on will be acquired for a
consideration of a further £600,000. The acquisition of the buses and routes
will be in tranches but will be completed in full by 31 March 2008 and the total
consideration of £1.86 million will be apportioned to particular buses and
routes on completion of the acquisition of particular buses and routes. The
acquisition of the right to operate each of the routes is conditional upon the
novation or sub-contracting of the relevant contract to Flights Hallmark and in
the event that such novation or sub-contracting is not forthcoming Flights
Hallmark shall have no obligation to the vendor to acquire in any way such
contract although the buses allocated to service such contract will still be

The vendor will transfer routes and vehicles to Flights Hallmark as soon as it
is able to do so but the pace of this process is dictated by working
arrangements and (as referred to above) is conditional upon the agreement of the
issuers of the bus operation contracts, principally Bristol City Council and
South Gloucestershire County Council, to the novation or sub-contracting of the
contracts to Flights Hallmark. These local authorities have not indicated any
objection to the transfer of these routes and the process is expected to take
between nine and twelve months.

The assets being acquired have a current annual turnover attaching to them of
approximately £4.2 million, consisting primarily of contracts with Bristol City
Council and South Gloucestershire County Council.  The assets of the Business
being acquired amounted to £1.26 million as at 30 April 2007.

In addition the Company has entered into an exclusivity agreement to make
another acquisition:

 Company A

Company A is a bus business that operates some 20 buses in the West Midlands
area. The current work undertaken by Company A is almost exclusively commercial
stage carriage.

The Directors believe that the acquisition of Company A will improve the ability
of the enlarged Group to tender for and operate subsidised routes in certain
parts of the West Midlands by enhancing the efficiency of the routes that the
Group currently carries out in such parts.

Details of the placing

The Company is proposing to raise £2.5 million, before expenses, through a
placing arranged by Blue Oar Securities Plc of 100 million Ordinary Shares at
2.5 pence per Placing Share. Blue Oar Securities Plc has conditionally agreed,
as agent for the Company, to use its reasonable endeavours to procure
subscribers for the Placing Shares at the Placing Price.

The Placing Shares will represent approximately 20 per cent. of the Enlarged
Share Capital at Admission.  On Admission, the Company will have a market
capitalisation of approximately £12.5 million at the Placing Price.

Following approval of the EGM resolutions and the Placing, the Company will have
499,982,696 Ordinary Shares in issue (19,999,308 after the Consolidation which
is one of the EGM resolutions). Admission of the Placing shares to trading on
AIM is expected to occur on or around 18 July 2007.

John Gunn, together with his wife Mrs R S Gunn, the Wengen Pension Plan and the
Gunn Trusts (of which John Gunn is one of the trustees), has subscribed for
18,800,000 Ordinary Shares as part of the Placing.

The Placing funds will be utilised on the prospective acquisitions. In addition,
the Directors have available to them a number of other sources of working
capital. These include additional borrowings that can be secured on freehold and
leasehold property, use of sales discounting arrangements on trade debtors and
the sale and leaseback of vehicles unencumbered by existing hire purchase

April 2007 placing

In relation to the placing of Ordinary Shares with warrants announced on 25
April 2007, there was agreed with the placees ('April Placees') at that time

1.                       if there was a further placing by the Company in the
following 12 months to raise in excess of £500,000 at an equivalent issue price
of less than 3 pence per Ordinary Share, there would be a bonus issue of
additional ordinary shares made to the April Placees such that the average price
per Ordinary Share received as a result of the April placing and the subsequent
issue would be reduced to the equivalent issue price of the further placing; and

2.                       the subscription price for the Ordinary Shares the
subject of such warrants ('April Warrants') would also be reduced accordingly.

The Company does not currently have distributable reserves and is therefore not
in a position to issue bonus shares.  The Directors therefore propose to issue
further share purchase warrants ('Warrants') to the April Placees so as to
permit them to subscribe for such number of Ordinary Shares at 1 pence per
Ordinary Share, which, if subscribed for in full, would bring the average price
per Ordinary Share issued pursuant to the April Placing and under the Warrants
to 2.5 pence per Ordinary Share, being the price per Placing Share.  In
addition, the subscription price for the Ordinary Shares the subject of the
April Warrants will be reduced to 2.5 pence per Ordinary Share.

The April Placees would have participated in the Placing, but at the behest of
the Company the April Placees subscribed for Ordinary Shares in advance of the
Placing to provide the Company with the funds to commence  business in Bristol
where it had won certain park and ride contracts.

Details of the Consolidation

The middle market share price for the Ordinary Shares as at the close of
business on 15 June 2007 was 3p. In order to simplify the Company's share
structure and provide a more appropriate share price on AIM, the Board proposes
to consolidate every 25 ordinary shares of 1p each into 1 new ordinary share of

Upon implementation of the Consolidation, shareholders on the register of
members of the Company at the record date will exchange 25 Ordinary Shares for 1
New Ordinary Share and so on in proportion for any other number of Ordinary
Shares then held.

Any resulting fractional entitlements of shareholders will be aggregated and the
Directors will then sell the resulting shares and where the individual
entitlement to net proceeds is less than £3 such proceeds will be retained by
the Company

Other than the change in nominal value, the New Ordinary Shares arising on
implementation of the Consolidation will have the same rights as the Ordinary
Shares, including voting, dividend and other rights.

On the Consolidation becoming effective the April Warrants and the Warrants will
be amended to refer to New Ordinary Shares and the subscription price will be
adjusted accordingly.

Issue of Options

Conditional upon completion of the Placing the Company is also granting
30,000,000 options to management and key employees ('Options'). Under the grant
of the Options the following will be granted to the Directors:

                           Grant                      Price                     Term
Kim Taylor                 6,000,000                  2.5p                      10 years
Simon Dunn                 5,000,000                  2.5p                      10 years
John Gunn                  5,000,000                  2.5p                      10 years
Geoffrey Flight            3,500,000                  2.5p                      10 years
Nicholas Kennedy           2,500,000                  2.5p                      10 years

Convertible Security

The holders of the 8% convertible loan notes issued in June 2006 have given the
Company written notice that they wish to convert, on 30 June 2007, £250,000 of
the loan note principal into Ordinary Shares at the rate of 1.6 pence of
principal for each Ordinary Share.  Such conversion will result in a further
15,625,000 Ordinary Shares being issued to John Gunn, his wife Mrs R.S. Gunn and
the Gunn Trusts (of which John Gunn is a trustee).

Directors' Interests

Following the Placing, the issue of the Warrants, the issue of further share
options as set out above and the conversion of the convertible loan notes as set
out above, (but before the Consolidation) the Directors will have the following

                       Ordinary Shares      % of enlarged            Options          Warrants   Convertible Loan
                                         share capital of                                                   Notes
                                              the Company

John Gunn *, (1)           120,018,119               24.0         10,000,000         7,983,333            £90,000
Nick Kennedy**               3,346,227                0.7          6,500,000                 -                  -
Kim Taylor                     500,000                0.1         12,000,000                 -                  -
Geoff Flight***             24,758,334                4.9          5,500,000         1,422,221            £35,000
Simon Dunn                     875,000                0.2          9,000,000                 -                  -

* Includes Mrs R.S. Gunn, Wengen Pension Plan, and the Gunn Trusts (of which
John Gunn is a trustee) .

** Includes Mr Kennedy's pension fund.

*** Includes Mr Flight's pension fund.

(1)  John Gunn holds his shares through WB Nominees Ltd.


A notice convening the EGM of the Company to be held at 10 a.m. on 17 July 2007
at 46 Cannon Street, London, EC4N 6JJ and circular to shareholders will be sent
out shortly.   The following resolutions ('Resolutions') will be proposed at the

(i)                 as an ordinary resolution to increase the authorised share
capital of the Company and (subject to the New Ordinary Shares being admitted to
AIM and (if the Second Resolution is passed) the Placing Shares being issued,
allotted and admitted to AIM) consolidate the existing Ordinary Shares and the
Placing Shares on the basis of 25 Ordinary Shares for every 1 New Ordinary

(ii)               as a special resolution to authorise the Directors to allot
the new Ordinary Shares for the purposes of the Placing and to disapply
shareholders' pre-emption rights for the purposes of the Placing, and also to
cancel any Ordinary Shares of 1p each existing 3 months after the date of the
passing of the Resolutions; and

(iii)             as a special resolution authorise the Directors to allot the
Warrants and to disapply shareholders' pre-emption rights for the purposes of
issuing the Warrants.


The Directors consider that the Consolidation, the Placing, the issued Warrants
and the Resolutions are in the best interests of the Company and its
shareholders as a whole. Accordingly, the Directors unanimously recommend
shareholders to vote in favour of the Resolutions as they have irrevocably
undertaken to do so in respect of their own beneficial and non-beneficial
shareholdings which amount, in aggregate to 115,072,680 Ordinary Shares,
representing approximately 30 per cent. of the Existing Share Capital.



John Gunn, Chairman                                   020 7236 6236
Kim Taylor, CEO                                       07918 883796
Romil Patel / Rhod Cruwys, Blue Oar Securities        020 7448 4400

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