Proposed Disposals
01/06/2023 07:00
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RNS Number : 2419B Rotala PLC 01 June 2023
RNS
1 June 2023
Rotala Plc
("Rotala", the "Company" or the "Group")
Proposed Disposals
Rotala (AIM: ROL.L), an operator of bus routes in the UK for businesses, local
authorities and the general public, is pleased to announce that it has
exchanged contracts with Transport for Greater Manchester ("TfGM") and the
Greater Manchester Combined Authority ("GMCA") in relation to the conditional
disposals of its Bolton depot and the majority of its related vehicles (the
"Proposed Disposals").
On 23 December 2022, the Company announced, amongst other matters, certain
business developments in Greater Manchester and the West Midlands. The Company
has now concluded negotiations with TfGM and GMCA and has conditionally
exchanged contracts on the Proposed Disposals as follows:
1. to dispose of its Bolton depot to the GMCA, with all its associated
fixtures, fittings, plant and machinery; and
2. to place 134 vehicles, being the majority of its buses based at the
Bolton depot, into the notional asset pool (the Residual Value Mechanism or
"RVM") created by TfGM as part of the franchising arrangements for Greater
Manchester. Under this scheme, TfGM allocates buses in the asset pool to the
incoming franchise operators. The successful franchise bidder is obliged to
acquire the vehicles allocated to it in the notional asset pool at the value
determined by TfGM under the RVM.
The Company will receive cash consideration of, in aggregate, approximately
£30.4 million for the assets included within the two disposal stages outlined
above. The total unaudited net book value of these assets, at their respective
dates of sale, is expected to be approximately £23.0 million. The proceeds of
the Proposed Disposals will be used as follows:
1. to repay the mortgage and hire purchase debt, totalling approximately
£14.9 million, related to the assets which are being disposed of;
2. to repay the remaining outstanding drawings on the Company's Revolving
Commercial Facility, totalling £10.8 million, which resulted from the Tender
Offer to return £10.0 million to shareholders in February 2023 and the
property purchase in March 2023; and,
3. in respect of the balance of the consideration, to strengthen the
Company's balance sheet.
As the total consideration receivable for the Proposed Disposals is material
compared to the Company's market capitalisation, the Proposed Disposals will
be deemed to result in a fundamental change of business pursuant to Rule 15 of
the AIM Rules for Companies, which requires in such circumstances the approval
of the Company's shareholders in a general meeting. This approval needs to be
obtained prior to completion of the Proposed Disposals. At this general
meeting, the Board will recommend that shareholders approve both the Proposed
Disposals and, prior to this general meeting, each of the Directors will
irrevocably commit to vote their own shareholdings in favour of approving the
Proposed Disposals.
In addition, in relation to the proposed disposal of the Bolton depot to the
GMCA, consents from the superior landlord in certain of the property titles
will need to be obtained before completion of the depot sale can be effected.
A circular setting out further details on the Proposed Disposals and convening
the general meeting is expected to be posted to shareholders in due course.
Rotala Plc 0121 322 2222
John Gunn, Chairman
Simon Dunn, Chief Executive
Kim Taylor, Group Finance Director
Shore Capital 020 7408 4090
Tom Griffiths / James Thomas / Lucy Bowden (Corporate Advisory)
Henry Willcocks (Corporate Broking)
About the business
Rotala provides a range of transport solutions, ranging from local bus
services under contract to local authorities, through to commercial bus
routes. It has operations at Heathrow Airport, in the West Midlands and in the
North West. Operating companies are Diamond Bus Ltd, Diamond Bus (North West)
Ltd, Diamond Bus (East Midlands) Ltd, Hallmark Connections Ltd and Preston Bus
Ltd.
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