REG - Rockpool Acq Plc - Potential reverse takeover European Lingerie Group

Rockpool AcquisitionsAnnouncement

18/12/2024 09:30

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RNS Number : 5759Q  Rockpool Acquisitions PLC  18 December 2024

 Press release    18(th) December 2024

 

The information contained within this announcement is deemed by the Company to
constitute inside information stipulated under the Market Abuse Regulation
(EU) No. 596/2014 which is part of domestic UK law pursuant to the Market
Abuse (Amendment) (EU Exit) Regulations (SI 2019/310) ("UK MAR").  Upon the
publication of this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public domain.

 

Rockpool Acquisitions Plc ("Rockpool" or "the Company")

Heads of Agreement signed with European Lingerie Group, AB ("ELG AB" or "the
Target")

Potential Reverse Takeover and Temporary Suspension of Listing

 

Rockpool Acquisitions Plc, the Special Purpose Acquisition Company ("SPAC")
whose shares are listed in the Equity Shares (Shell Companies) category of the
Official List and traded on the Main Market of the London Stock Exchange, is
pleased to announce that it has entered into heads of terms ("Heads") relating
to the proposed acquisition (the "Acquisition") of the entire issued and to be
issued share capital of European Lingerie Group AB, a Swedish company that is
the holding company of a long-established vertically-integrated intimate
apparel group ("the Group").  The intention is to seek readmission to the
Main Market and admission to the Equity Shares (Commercial Companies) category
of the UK's Official List (together, "Readmission") on completion of the
Acquisition.

 

The Acquisition, if completed, will constitute a "initial transaction" under
Section 13.4 of the UK Listing Rules.  Therefore, in accordance with UKLR
21.1.4 and 21.3, the Company has requested a suspension of its listing pending
either the issue of an announcement giving further details of the initial
transaction, the publication of a prospectus, or an announcement that the
Acquisition is no longer in contemplation.  The suspension will take effect
immediately.  Rockpool and the other parties to the Heads intend to proceed
as quickly as possible and have agreed that they will work together in good
faith with a view to signing and effecting the Acquisition and Readmission in
the first half of 2025.

 

ELG AB can trace its origins back to 1885 and carries on the production,
wholesaling and (to a limited extent currently) retailing of intimate apparel,
as well as the production of fabrics used in the making of intimate apparel.
The Group, which is headquartered in Germany, where it also has design and
production facilities, additionally has factories in Hungary and Latvia.  It
also undertakes a limited amount of outsourcing to producers in other
countries.  ELG manufactures garments under its own brands of Felina,
Senselle and Conturelle and these have a high level of recognition in its main
markets in Germany and the Benelux but are also sold in a wide range of other
markets from Australia to the United States.  The Group, through its Lauma
fabrics division, also manufactures and supplies fabrics which are
incorporated into garments made by over 100 other lingerie producers,
including a number of other leading brands, such as Triumph and Wacoal.  The
LYCRA Company's factory at Maydown, Co. Derry, N. Ireland, is a major supplier
of yarn to the Group and works increasingly closely with it.

SIA European Lingerie Group (a company incorporated in Latvia) is the parent
company of the Group's operating companies.  ELG AB is currently the holder
of 70% of the issued and to-be-issued share capital of SIA European Lingerie
Group, but has an option to acquire the remaining 30% that it intends to
exercise prior to completion of its acquisition by Rockpool.

In 2023 European Lingerie Group AB had a turnover of not less than €53m
(circa £44m) and adjusted EBITDA of not less than €2.1m (circa £1.7m)
(provisional figures subject to final audit).  The Group is currently
undertaking a programme of asset disposals, sale and lease back transactions,
debt reduction and debt refinancing at the same time as pursuing efficiency
improvements and other initiatives which are targeted at improving EBITDA
further in 2025 and beyond.

The intention is for the Company and European Lingerie Group AB to raise funds
in a combination of a pre-initial transaction fundraising (the "Pre-RTO
Fundraising") by the Target and a placing of new ordinary Rockpool at
Readmission ("the Placing"), with the net proceeds being used to provide
additional working capital for the Group and to fund certain new business
initiatives and, potentially, an acquisition.

The Heads provide that completion of the Acquisition will be subject to a
number of matters, including the negotiation of a formal sale and purchase
agreement ("the SPA"), the satisfactory conclusion of due diligence, and
Readmission.

The consideration for the Acquisition, if it is concluded, ("the Price") will
be settled by the issue of new ordinary shares of Rockpool, valuing each
ordinary share at 10p per share (compared with a mid-market price of 2.85p at
close on Tuesday 17(th) December 2024).  The Price will be agreed by Rockpool
and the sellers in light of the valuation at which the Company's brokers
anticipate being able to procure investors to subscribe for new ordinary
shares in the Placing as well as the price at which the Target raises funds in
the Pre-RTO Fundraising.

In lieu of the five-year options to acquire 10% of the post-readmission fully
diluted Ordinary Share capital of Rockpool that were proposed in Rockpool's
original prospectus, the parties to the Heads have agreed that Rockpool's
founders ("the Founders") will receive between them four-year options over, in
aggregate, 4% of the fully diluted share capital of Rockpool as it is
immediately following Readmission.  The exercise price will be 11p per share.
 Each of the Founders will also receive a cash bonus of £35,000 on
Readmission.  The Heads provide that one of the Founders may remain on the
Board for up to 18 months, should they wish to do so.

As mentioned above, as well as being subject to contract, the Acquisition is
subject to certain conditions, including obtaining of a whitewash under Rule 9
of the Takeover Code, there being no adverse change or deterioration in the
business, assets, financial or trading position or prospects of European
Lingerie Group or its subsidiaries between the date of the Heads and
completion which is in the reasonable opinion of the Rockpool Board
material.  Rockpool will be required to give certain warranties in the SPA
relating to, amongst other things, its assets and liabilities and its
shareholdings.

 

The costs of the Acquisition and Readmission will be met by ELG with
Rockpool's cash being used initially to meet those, and ELG making payments
towards those costs as follows:

 

(a)     a contribution of £20,000 per calendar month from 1(st) March
2025 onwards; and

(b)     if it is successful in its planned Pre-RTO Fundraising or in the
disposal of assets as part of the programme outlined above, a contribution of
at least 2.5% of the amounts raised (in the case of the assets disposals, net
of associated debt repayment) in additional monthly instalments.

ELG has also agreed to indemnify Rockpool in relation to its costs and wasted
overhead should the transaction not proceed to completion for certain
reasons.  Any amount payable pursuant to that indemnity will carry interest
from the date that the relevant expense was incurred by Rockpool and will be
paid in four equal monthly instalments with the first instalment being due 30
days after Rockpool presents its calculation of the amount due.

 

The Heads contain an exclusivity obligation on the part of the parties thereto
other than Rockpool for a period ("the Exclusivity Period") ending on 30 June
2025 or, if later, such date as either (i) Rockpool or (ii) the target or the
sellers communicate to the other their decision not to pursue the Acquisition
and Readmission.

Rockpool has undertaken that during the Exclusivity Period neither Rockpool
nor its Directors will carry out a restricted action within the meaning of
Rule 21.1 of the UK's Takeover Code without the prior written consent of the
Target (other than any action that is contemplated by the Heads) and such
consent may not to be unreasonably withheld or delayed.  Rockpool may
terminate negotiations in relation to the Proposed Transactions at any time if
the parties other than Rockpool are in breach of the Heads or Rockpool has
received any alternative offer to conduct an initial transaction without
incurring any liability to the Sellers or the Target in relation to such
termination.

 

Mike Irvine, co-founder and Non-Executive Director of Rockpool, said: "I am
delighted that we are able to announce the potential acquisition of European
Lingerie Group that is intended to see Rockpool transform from a SPAC into a
profitable trading enterprise.  European Lingerie Group's long track record
and growth plans make the Acquisition a transaction that should create value
for its shareholders as well as those of Rockpool.  It is particularly
pleasing that the Group already has a connection with Northern Ireland through
its relationship with Lycra."

 

Indrek Rahumaa, the CEO of European Lingerie Group AB, commented: "After
thorough analysis and a review of several capital markets and a significant
number of shells, European Lingerie Group is delighted to have entered into
heads of terms with Rockpool.  ELG AB is committed to the transaction and the
associated capital raises for a number of reasons, including that a listing by
way of a reverse into Rockpool should enable ELG AB to use its shares as an
acquisition currency and there are currently several attractive opportunities
being considered."

 

"Also, being able to make partial payment in Rockpool shares will enable an
alignment of the interests of the selling shareholders and founders of these
targets with our own.  The pre-RTO Fundraising and the Placing are aimed at
bringing the capital for ELG to execute planned celebrity brand launches as
well as improve its existing distribution model.  ELG has tremendous
expertise in creating and selling world class lingerie. Those management
capabilities when combined with new capital, will enable us to execute a
highly competitive strategy."

 

Alistair Williamson, Vice President, EMEA & South Asia at The LYCRA
Company said, "European Lingerie Group is a valued long-term customer of The
LYCRA Company and our Maydown manufacturing site located in Londonderry,
Northern Ireland.  We are excited about the opportunity to build an even
closer relationship as European Lingerie Group joins forces with Rockpool."

 

-  Ends -

 

Notes to Editors  - Photography.

High or Low resolution model / product photographs are available on the
attached JPG or from Abchurch.  These come in the form of thumbnails with
OneDrive links through which to download at high-resolution.

 http://www.rns-pdf.londonstockexchange.com/rns/5759Q_1-2024-12-18.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/5759Q_1-2024-12-18.pdf)

For further information please contact:

 

 Rockpool Acquisitions Plc            mike@cordovancapital.com (mailto:mike@cordovancapital.com)
 Mike Irvine, Non-Executive Director  www.rockpoolacquisitions.plc.uk (http://www.rockpoolacquisitions.plc.uk)

 

 

 Abchurch:  Financial PR and Investor Relations   Tel: +44 (0)20 4594 4070

 Julian Bosdet                                    +44 (0) 7771 663 886

                                                  julian.bosdet@abchurch-group.com (mailto:julian.bosdet@abchurch-group.com)

                                                  www.abchurch-group.com (http://www.abchurch-group.com)

 

 European Lingerie Group, AB  indrek@lauma.com
 Indrek Rahumaa, CEO          www. (http://www.rockpoolacquisitions.plc.uk) elg-corporate.com

 

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