Flowtech Fluidpower Plc (LON:FLO) is the topic of conversation when Zeus Capital Equity Analyst Will Game talks to DirectorsTalk. With Flowtech announcing the complementary acquisition of Balu Limited Will talks to us about the company and financials, how Balu fits within the group, any effects this has on the forecast, the groups priorities now and the longer term aspirations.
On 13 March 2018, Flowtech Fluidpower, a wholly owned subsidiary of the Company, entered into the Acquisition Agreement to acquire the entire issued share capital of Balu and its trading subsidiaries, Beaumanor and Derek Lane, for a total consideration of approximately £10.2 million.
Pursuant to the Acquisition, the Company has agreed to allot the Acquisition Shares at the Placing Price, which constituted a portion of the consideration under the Acquisition Agreement, of approximately £0.5 million.
As part of the transaction, Zeus Capital and finnCap have co-ordinated a Firm Placing and Conditional Placing to raise in aggregate £11.0 million by way of the issue of an aggregate 6,470,589 new Ordinary Shares at the Placing Price of 170 pence per Ordinary Share.
The Firm Placing Shares and the Conditional Placing Shares have been placed with certain existing and new institutional and other professional investors.
The Firm Placing and the allotment of the Acquisition Shares are both being made pursuant to existing authorities to allot shares and disapply pre-emption rights under section 551 and section 570 of the Act, which the Directors were given at the Company’s Annual General Meeting of the Company held on 25 May 2017. Accordingly, completion of the Firm Placing and allotment of the Acquisition Shares are due to take place on First Admission which is expected to occur at 8:00 a.m. on 15 March 2018 and the Second Admission which is expected to occur on 8.00 a.m. on 20 March 2018.
However, the Conditional Placing is conditional, inter alia, on the passing of the Resolutions by the Shareholders at the General Meeting, which has been convened for 3 April 2018. If the Resolutions are passed, the Conditional Placing Shares are expected to be allotted immediately after the General Meeting, conditional on Third Admission, which is expected to occur at 8:00 a.m. on 4 April 2018.
The Acquisition (and the allotment of the Acquisition Shares) and the Firm Placing are not conditional upon approval of the Conditional Placing and there is, therefore, a possibility that the Acquisition may complete, the Acquisition Shares be allotted, and the Firm Placing Shares be issued but that the Conditional Placing Shares not be issued.
