REG - 600 Group PLC - Letter of Intent re Potential Disposal

600Announcement

06/10/2023 07:00

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RNS Number : 8854O  600 Group PLC  06 October 2023

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
EU REGULATION 596/2014, AS AMENDED (AS IT FORMS PART OF UK DOMESTIC LAW BY
VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018.

 

6 October 2023

 

The 600 Group PLC

("600 Group", the "Group" or the "Company")

 

Letter of Intent re Potential Disposal

 

The 600 Group announces the entry of a non-binding letter of intent (the
"LOI") by the Company's wholly owned subsidiary, 600 Group Inc. (the
"Subsidiary"), with a U.S. based operationally-oriented mid-market private
equity firm (the "Counterparty") regarding the potential disposal by the Group
of a majority interest in the business and assets of the Group's wholly owned
TYKMA Electrox and Control Micro Systems industrial laser businesses in the
U.S. (the "Potential Disposal").

 

The LOI envisages the Potential Disposal to entail the disposal by the Group
of an 80 per cent. stake in TYKMA Electrox and Control Micro Systems (the
"Laser Business") for a cash consideration of US$9.5 million, subject to
customary working capital adjustments, with the Group retaining a 20 per cent.
interest in the Laser Business which would be subject to a put and call option
arrangement between the parties (the "Option"). The Option would be capable of
exercise by the parties in the 30-day periods following the conclusion of
either of the Laser Business' FY25 and FY26 financial years should the Laser
Business' EBITDA exceed pre-agreed targets.

 

The Board would therefore expect the initial cash proceeds to the Group of the
Potential Disposal, should it be completed, to be sufficient to pay off all
existing Group bank borrowings, provide significant operating cash and the
Company would retain a 20 per cent. interest in the ongoing operations of the
Laser Business.

 

Whilst the LOI is non-binding as to the terms of the Potential Disposal which
remains subject to, inter alia, contract, the Subsidiary has provided the
Counterparty with a binding 90-day period of exclusivity to conclude the
Proposed Disposal (the "Exclusivity Period").

 

In the event that Group shareholder approval is required to approve the
Potential Disposal, the Subsidiary has committed to meeting the reasonably
incurred expenses of the Counterparty in the event that the Group's
shareholders do not approve the Potential Disposal.  In addition, and should
the Subsidiary pursue an alternative proposal in respect of a similar
transaction during the Exclusivity Period, the Subsidiary has agreed to pay to
the Counterparty a termination fee of $500,000. The Company cautions that
notwithstanding the entry of the LOI and the award of exclusivity to the
Counterparty, there can at no certainty that the Potential Disposal will be
concluded and nor can there be any certainty as to the terms on which any
transaction may be possible.

 

Paul Dupee, Chairman of 600 Group, commented:

 

"The Group's industrial laser businesses continue to be well placed in their
respective highly fragmented markets. Whilst non-binding, the entry of the LOI
with the counterparty provides scope for TYKMA and CMS, and the Group, to
partner with a U.S. private equity firm in the continued future growth of the
industrial laser business."

 

 Further announcements will be made, as appropriate, in due course.

 

Enquiries:

 

 The 600 Group PLC                                        Tel: +1 407 818 1123

 Paul Dupee, Executive Chairman

 Cavendish Securities plc (Nominated Adviser and Broker)  Tel: 020 7220 0500

 Ben Jeynes / Dan Hodkinson (Corporate Finance)

 Henry Nicol (Sales)

 

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