Accrol Group Holdings plc (LON:ACRL), a UK leading independent tissue converter, has announced that further to the Company’s announcement released at approximately 5.00 p.m on 2 November 2020, the bookbuild has closed and the Group has conditionally raised gross proceeds of £38.5 million, through the successful placing of 87,500,000 new Ordinary Shares in the capital of the Company, representing approximately 44.8 per cent. of the Company’s existing issued share capital. The Primary Placing Shares were placed at a price of 44 pence per Primary Placing Share, representing a discount of c. 1.1 per cent. to the last closing price of an Accrol ordinary share. The Primary Placing was oversubscribed by existing Shareholders and new investors.
Unless expressly defined in this Announcement, all capitalised terms used in this Announcement have the meanings stated in the Launch Announcement.
As outlined in the Launch Announcement, in order to meet excess investor demand for further Ordinary Shares, the Selling Shareholders have agreed to effect the Option Exercise and, conditional on admission of the Option Shares to trading on AIM becoming effective, to sell 6,454,668 Option Shares (in aggregate) at the Issue Price to placees. Further details of the Secondary Placing are set out further below.
The Primary Placing Shares and the Secondary Placing Shares have been conditionally placed with certain existing and new institutional and other professional investors. Zeus Capital and Liberum Capital acted as joint bookrunners to the Company in connection with the Primary Placing and to the Selling Shareholders in connection with the Secondary Placing.
Conditional on admission of the Placing Shares to trading on AIM becoming effective, and to provide other Shareholders not able to participate in the Placing with an opportunity to subscribe for additional Ordinary Shares, the Company is proposing to raise up to c.£4.1 million (before expenses) by way of an open offer made to qualifying shareholders of up to 9,297,454 Ordinary Shares at the Issue Price, on the basis of one Ordinary Share for every 21 existing Ordinary Shares held on the record date payable in full on acceptance.
The Primary Placing, Secondary Placing and Open Offer are conditional, inter alia, on the passing of the resolutions to be proposed at a General Meeting. The Primary Placing and the Secondary Placing, are not, in each case, conditional on the Open Offer proceeding or on any minimum take-up under the Open Offer. The Secondary Placing is conditional, inter alia, on Admission and completion of the Option Exercise. The Open Offer is also conditional on Admission.
Use of proceeds
The Directors intend to use the proceeds of the Primary Placing and the Open Offer to:
| ● | pay the Initial Consideration; |
| ● | meet the expenses relating to the Acquisition, the Primary Placing and the Open Offer; |
| ● | provide additional working capital for the Group; and/or |
| ● | reduce the Group’s net debt. |
The proceeds of the Secondary Placing will be received by the relevant Selling Shareholders and not by the Company.
The Acquisition is expected to be immediately earnings enhancing upon completion, and is expected to deliver a minimum of 10 per cent. earnings enhancement in its first full year of ownership.
General Meeting
Shareholder approval will be sought in respect of the authorities required to allot Ordinary Shares pursuant to the Placing and the Open Offer and, if required, any Deferred Consideration that becomes payable pursuant to the Acquisition, at the General Meeting which will be convened for 10.00 a.m. on 20 November 2020 at Delta Building, Roman Road, Blackburn, Lancashire, BB1 2LD. Given Government guidance in light of the COVID-19 pandemic, it will be held as a closed meeting.
Further details of the Placing
87,500,000 Primary Placing Shares will be allotted and issued through the Primary Placing at 44 pence per Placing Share to raise gross proceeds of £38.5 million.
The allotment and issue of the Primary Placing Shares is conditional on the Resolutions being passed, which shall include resolutions for the Directors to allot the Primary Placing Shares and for statutory pre-emption rights to be disapplied in respect of such allotment. The Resolutions comprise the relevant approvals required for the Primary Placing.
Principal terms of the Primary Placing
In accordance with the terms of the Placing and Open Offer Agreement, Zeus Capital and Liberum Capital have, as agents for the Company, conditionally placed, with institutional and other investors, 87,500,000 Primary Placing Shares at the Issue Price of 44 pence per share to raise gross proceeds of £38.5 million. The Issue Price represents a discount of c.1.1 per cent. to the closing price of an Ordinary Share on 2 November 2020 (which was 44.5 pence).
Effect of the Primary Placing
The Placing Shares will, following Admission, rank pari passu in all respects with the existing Ordinary Shares in issue at the date of this Announcement and will carry the right to receive all dividends and distributions declared, made or paid on or in respect of the Ordinary Shares after Admission.
Upon completion of the Placing, the Primary Placing Shares will represent approximately 28.1 per cent. of the Company’s enlarged share capital, assuming the Open Offer is subscribed in full.
Secondary Placing
In accordance with the terms of the Placing and Open Offer Agreement, Zeus Capital and Liberum Capital have, as agents for the Selling Shareholders, conditionally placed, with institutional and other investors, 6,454,668 Secondary Placing Shares at the Issue Price of 44 pence per share to raise gross proceeds of approximately £2.8 million.
The number of Option Shares being allotted and issued to the Optionholders pursuant to the Option Exercise, the number of such Option Shares to be sold by each of the Selling Shareholders pursuant to the Secondary Placing (to meet the costs of, and personal tax liabilities arising on, the Option Exercise) and the number of such Option Shares that will be retained by the Optionholders and which are not included in the Secondary Placing (“Residual Option Shares“) are as follows:
| Name of Optionholder | Number of Option Shares | Number of Secondary Placing Shares to be sold | Number of Residual Option Shares to be retained |
| Dan Wright | 5,700,738 | – | 5,700,738 |
| Gareth Jenkins | 9,396,544 | 4,437,436 | 4,959,108 |
| Mark Dewhurst | 2,750,944 | 1,326,617 | 1,424,327 |
| Graham Cox | 1,295,990 | 612,020 | 683,970 |
| Gary Earle | 83,213 | 39,297 | 43,916 |
| John Pilkington | 83,213 | 39,298 | 43,915 |
| Total | 19,310,642 | 6,454,668 | 12,855,974 |
Lock-in arrangements
The Residual Option Shares (being 7,067,404 Ordinary Shares in aggregate) retained by Gareth Jenkins, Mark Dewhurst and Graham Cox will be subject to lock-in arrangements to be released in two tranches: the first tranche being subject to lock-in until the release by the Company of its half-year results for the six months ended 31 October 2020 (expected in January 2021) (the “First lock-in“) and the second tranche being subject to lock-in until 1 August 2021 (the “Second Lock-in“).
| Name of Optionholder | Number of Option Shares subject to Lock-in arrangements | Number of Option Shares subject to the First Lock-in | Number of Option Shares subject to the Second Lock-in |
| Gareth Jenkins | 4,959,108 | 1,333,000 | 3,626,108 |
| Mark Dewhurst | 1,424,327 | 444,000 | 980,327 |
| Graham Cox | 683,970 | 333,000 | 350,970 |
| Total | 7,067,404 | 2,110,000 | 4,957,404 |
Related Party Transactions
Schroder Investment Management Limited, a substantial shareholder in the Company (and therefore a related party of the Company for the purposes of the AIM Rules) has conditionally subscribed for 10,893,917 Placing Shares. Therefore, the participation of this party in the Placing constitutes a related party transaction under Rule 13 of the AIM Rules.
In the case of the above transaction, all Directors are deemed to be independent. Therefore, having consulted with the Accrol Group Holdings’ nominated adviser and broker, Zeus Capital, Schroder Investment Management Limited’s participation in the Placing is considered, by the Directors, to be fair and reasonable insofar as Shareholders are concerned.
Expected timetable of principal events
| Record Date for the Open Offer | 2 November 2020 |
| Announcement of the Placing, the Option Exercise and the Open Offer | 3 November 2020 |
| Expected Ex-entitlement Date for the Open Offer | 4 November 2020 |
| Dispatch of the Circular, Form of Proxy and to certain Qualifying Non-CREST Shareholders, the Application Form | 4 November 2020 |
| Basic Entitlements and Excess CREST Open Offer Entitlements credited to CREST stock accounts of Qualifying CREST Shareholders | 5 November 2020 |
| Recommended latest time and date for requesting withdrawal of Basic Entitlements and Excess CREST Open Offer Entitlements from CREST | 4.30 p.m. on 13 November 2020 |
| Latest time for depositing Basic Entitlements and Excess CREST Open Offer Entitlements into CREST | 3.00 p.m. on 16 November 2020 |
| Latest time and date for splitting Application Forms (to satisfy bona fide market claims only) | 3.00 p.m. on 17 November 2020 |
| Latest time and date for receipt of Forms of Proxy | 10.00 a.m. on 18 November 2020 |
| Latest time and date for receipt of completed Application Forms and payment in full under the Open Offer or settlement of relevant CREST instruction (as appropriate) | 11.00 a.m. on 19 November 2020 |
| General Meeting | 10.00 a.m. on 20 November 2020 |
| Announcement of result of General Meeting, Placing and Open Offer Shares | 20 November 2020 |
| CREST members’ accounts credited in respect of Placing Shares and Open Offer Shares in uncertificated form | 23 November 2020 |
| Dispatch of definitive share certificates for the Placing Shares and Open Offer Shares (if required) by | 27 November 2020 |
