27 December 2006
Rotala plc ('Rotala' or 'the Company')
Issue of £400,000 of Convertible Loan Notes and Warrants
The Company announces that it has acquired the bus business and certain assets
of Birmingham Motor Traction Limited and Birmingham Motor Traction (North)
Limited (together 'BMT') for a total consideration of £34,000. BMT is a small
but established independent bus operator in the West Midlands with a turnover of
£600,000. The assets acquired consist of 9 vehicles and the right to operate a
number of contracts with the West Midlands Passenger Transport Executive
('Centro'), Staffordshire County Council and Birmingham City Council.
Following the acquisition, the vehicles and operations of BMT will be
transferred to and integrated with the existing bus operations at Rotala's 4.5
acre depot in Birmingham. This step will eliminate duplicated administration
and maintenance overheads and realise immediate cost savings. Thus the
acquisition is expected to be earnings enhancing from the outset.
In connection with the acquisition, the Company has issued £400,000 nominal
value convertible loan notes ('Loan Notes') to a number of placees amongst whom
are John Gunn, the non-executive chairman of the Company, Renate Gunn (John
Gunn's wife), the Ingrid Croft Trust and the Natalie Haynes Trust (of which John
Gunn is a trustee) and the Flight Pension Trust (of which Geoffrey Flight, a non
executive director of the Company is a beneficiary). These funds will finance
the acquisition and its associated costs. The funds raised will also finance the
lease of the 11 further vehicles necessary to operate the contracts acquired
from BMT and the investment in working capital which will initially be incurred.
Any remaining funds will augment the general working capital of the Company.
In addition, the Company has issued to the subscribers of the Loan Notes an
aggregate of 8,000,000 warrants to subscribe for ordinary shares of 1p each in
the Company at 2.5 pence per share (the 'Warrants').
The Loan Notes and Warrants issued to John Gunn and Geoffrey Flight and/or their
connected persons are as follows:
Loan Notes Warrants
John Gunn £25,000 500,000
Renate Gunn £25,000 500,000
Trustees of the Ingrid Croft Trust £20,000 400,000
Trustees of the Natalie Haynes Trust £20,000 400,000
Loan Notes Warrants
Flight Pension Trust £35,000 700,000
The Loan Notes entitle the holders to an annual 6 per cent. coupon, payable semi
annually. The Loan Notes are repayable or convertible into ordinary shares at
the option of the holder at a price of 2.5p per ordinary share up to 31 December
The Warrants are exercisable at a price of 2.5 pence per ordinary share at any
time between issue and 31 December 2008.
As a result of the issue of the Loan Notes and Warrants, John Gunn and persons
connected with him hold 77,093,119 ordinary shares, representing 20.97 per cent.
of the issued ordinary share capital and 4,300,000 warrants to subscribe for
ordinary shares. Geoffrey Flight and his connected persons hold 23,091,667
ordinary shares representing 6.28 per cent. of the issued ordinary share capital
of the Company and 700,000 warrants to subscribe for ordinary shares.
The acquisition is in line with the Company's ongoing acquisition strategy to
invest in bus operations and act as a consolidator in the bus market generally
around its local hubs.
John Gunn, Non-executive Chairman of Rotala commented:
'The Company is delighted with the acquisition of BMT's business as it adds to
the presence we established in the West Midlands bus market with the acquisition
of Zak's in October 2006. We believe that government policy on transport will
involve the expansion of urban bus services. This has been highlighted in
several recent reports, including the Eddington report at central government
level and a report specific to the West Midlands produced by the West Midlands
Metropolitan Authorities in September 2006. Both reports predicted a rise in
congestion under existing transport policies and identified significant
investment in public transport as a requirement to reduce real congestion
levels. We believe that Rotala, through its bus operations, will play a
meaningful part in this process. We intend to pursue growth in the bus division
over the coming years and we will update shareholders when such further
acquisitions are made.'
Corporate Synergy Plc 020 7448 4400
Rotala plc 0121 322 2370
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