REG - Victoria PLC - Acquisition & Placing <Origin Href="QuoteRef">VCP.L</Origin>

VictoriaAnnouncement

11/09/2015 07:01

RNS Number : 7572Y
Victoria PLC
11 September 2015
For Immediate Release11 September 2015
Victoria PLC
("Victoria", the "Company", or the "Group")
Acquisition of Interfloor Group Limited 
Oversubscribed Placing to raise 44.50 million
The Board of Victoria (AIM:VCP), a manufacturer, supplier and distributor of design-led flooring, is delighted to announce that it has agreed to acquire the entire issued share capital and shareholder indebtedness of Interfloor Group Limited ("Interfloor"), the UK market-leading manufacturer of carpet underlay and related accessories, for a total enterprise value of 65.0 million from Milestone Capital, Hutton Collins Partners, and management (the "Acquisition").
As part of this transaction, Victoria is also pleased to advise that Cantor Fitzgerald Europe has placed 2,504,223 new ordinary shares of 25 pence each in the capital of the Company (the "Vendor PlacingShares") at a placing price of 1230 pence per Ordinary Share (the "Placing Price". 30.8 million has been raised by the sale of the Vendor Placing Shares (the "VendorPlacing") to fund the cash consideration due to the sellers under the Acquisition.
Cantor Fitzgerald Europe has placed a further 402,633 new ordinary shares (the "FirmPlacing Shares"), at the Placing Price, on behalf of the Company, to raise a further 4.95 million (the "Firm Placing"). The net proceeds of the Firm Placing will be used by the Group to part fund the Acquisition.
In addition, Cantor Fitzgerald Europe has conditionally placed 711,035 new ordinary shares (the "Conditional Placing Shares"), at the Placing Price, on behalf of the Company to raise 8.75 million (the "Conditional Placing"). The Conditional Placing is being undertaken to satisfy the significant institutional demand identified in response to the Acquisition. The net proceeds of the Conditional Placing will be used by the Group to augment working capital.
The 3,617,891 new ordinary shares, representing the Vendor Placing Shares, the Firm Placing Shares and the Conditional Placing Shares (together the "Placing Shares"), are being placed with certain existing and new institutional investors (the "Placing").
The Board believes that the Acquisition will:
- be immediately and materially earnings enhancing for the enlarged Group;
- be complementary to the Group's other subsidiary businesses;
- continue Victoria's strategy of growing its business with earnings enhancing acquisitions; and
- enable Interfloor to deliver strong longer term growth as part of the enlarged Group.
For the year ended 30 May 2015, Interfloor recorded net sales of 72.29 million and EBITDA of 10.02 million.
Geoff Wilding, Chairman of Victoria PLC commented:
"We believe that Interfloor, as the market-leader, will be an excellent addition to the Group, bringing the complementary established underlay brands of Tredaire and Duralay in alongside our growing portfolio of well-respected carpet and hard-flooring brands. In the UK, Interfloor and Victoria share many of the same customers and there will be significant opportunities to capitalise on this.
In line with our other recent acquisitions, the Acquisition will be materially earnings enhancing and value creating for shareholders. Working in conjunction with the very experienced operational management team at Interfloor, we expect to be able to drive operational efficiency improvements in future years.
In the Board's view this is another high quality acquisition and we are pleased to welcome Interfloor to the Group."
For more information contact:
Victoria PLC                                                       +44 (0) 207 440 7520
Geoff Wilding
Alexander Anton
Cantor Fitzgerald Europe (Nominated Adviser, Broker  +44 (0) 20 7894 7000
and Sole Bookrunner)
Rick Thompson, Phil Davies,
David Foreman, Michael Reynolds (Corporate Finance)
David Banks, Tessa Sillars (Corporate Broking)
NM Rothschild & Sons Limited (Financial Adviser)                      +44 (0) 121 600 5252
Alistair Allen, Michael Scott, 
William Scales, Tom Palmer
Whitman Howard Limited (Joint Broker)+44 (0) 20 7659 1234
Niall Devins, Ranald McGregor-Smith
MHP Communications (Financial PR)+44 (0) 20 3128 8100
Nick Denton, Gina Bell
Information on Interfloor Group Limited
Interfloor is one of the UK's leading manufacturers of carpet underlay, primarily through the long established brands Treadaire and Duralay, and supplier of related flooring accessories under the Gripperrods and Stikatak brands. Based on a 10 acre site in Haslingden, Lancashire, it was created by the merger of Tredaire and Duralay in 2002, with a heritage that dates back to the 1940s. Since 2005, Interfloor has been owned by Milestone Capital Partners LLP, Hutton Collins Capital LLP, and members of the management team.
A diverse range of products are supplied in the UK and around the world to flooring retailers, distributors, and contractors. These products include the three most common forms of underlay - polyurethane foam, sponge rubber and crumb rubber, alongside carpet gripper, floor edgings, flooring adhesives, tapes and tools.
In the UK, Interfloor has some 1,500 customers, including a number of blue chip UK high street retail customers. In addition, it has approximately 400 customers in over 70 countries, particularly in hospitality. Interfloor benefits from long standing customer and supplier relationships, and it is typically the preferred or sole supplier to larger customers.
Summary financial results for Interfloor in the year ended 30 May 2015, together with comparative information for the prior year, are set out below:
Year to 30 May (m)
2014 (audited)
2015 (unaudited)
Net Sales
68.85
72.29
EBITDA*
6.70
10.02
*pre exceptional charges
As at 30 May 2015 Interfloor had total assets of 52.24 million.
All key operational management of Interfloor will remain with the business and it will continue to operate independently, whilst benefiting from the synergies of an enlarged group, in its ongoing drive for profitable growth.
Strategic Rationale for the Acquisition
The Acquisition is an obvious strong strategic fit with Victoria's growth strategy and the Directors believe that Interfloor will have strong long term growth prospects as part of the Group. The Acquisition will provide a number of commercial, operational and financial benefits which are expected to create value for shareholders.
In addition, the Board does not envisage significant integration costs arising from the Acquisition and indeed it is intended that as with other of the Group's businesses, Interfloor will operate with a significant degree of autonomy.
The Acquisition is expected to be materially earnings enhancing and there are significant opportunities to improve EBITDA margin that will be pursued at the earliest opportunity.
Details of the Acquisition
The enterprise value payable is 65.0 million, to be satisfied in cash from the proceeds of the Vendor Placing, the Firm Placing and from the Company's existing banking facilities.
Details of the Placing
Cantor Fitzgerald Europe is acting as nominated adviser, broker and sole book runner and placing agent in connection with the Placing. Whitman Howard is joint broker to the Company in connection with the Placing.
Under the terms of the Placing, the Company has placed 2,504,223 Vendor Placing Shares, 402,633 Firm Placing Shares, and 711,035 Conditional Placing Shares at the Placing Price with existing and new institutional investors, raising gross proceeds of approximately 44.5 million.
The Placing Shares will represent approximately 24.83 per cent. of the enlarged share capital of the Company.
The Placing Price represents a discount of 1 per cent. to the closing mid-market price of 1242.5 pence per Ordinary Share on 10 September 2015, being the last dealing day prior to the date of this announcement.
In connection with the Placing, the Company has entered into the Placing Agreement pursuant to which Cantor Fitzgerald Europe, as agent for the Company, has agreed to use its reasonable endeavours to procure subscribers for the Placing Shares at the Placing Price. The Placing is not being underwritten.
The placing agreement contains customary warranties given by the Company to Cantor Fitzgerald Europe with respect to the Company's business and customary indemnities given by the Company to Cantor Fitzgerald Europe in respect of liabilities arising out of or in connection with the Placing. Cantor Fitzgerald Europe is entitled to terminate the Placing Agreement in certain circumstances prior to Admission, including circumstances where any of the warranties are found not to be true or accurate or were misleading and which in any such case is material, or on the occurrence of certain force majeure events. 
The Vendor Placing and Firm Placing
Application has been made for the 2,504,223 Vendor Placing Shares and 402,633 Firm Placing Shares to be admitted to trading on AIM and it is expected that Admission will take place on 14 September 2015. The new ordinary shares will rank pari passu with the existing ordinary shares of the Company. Following Admission, the total issued share capital of the Company will be 17,479,906 Ordinary Shares.
The Vendor Placing Shares and Firm Placing are conditional, inter alia, upon:
 completion of the Acquisition agreements (subject only to Admission);
 the conditions in the Placing Agreement relating to the Vendor Placing and Firm Placing being satisfied (or, if applicable, waived) and the placing agreement not having been terminated in accordance with its terms prior to Admission of the Placing Shares; and
 Admission of the Vendor Placing Shares and Placing Shares becoming effective by no later than 8.00 a.m. on 14 September 2015 (or such later time and/or date as the Company and Cantor Fitzgerald Europe may agree, but in any event not later than 8.00 a.m. on 21 September 2015).
The Vendor Placing Shares and Placing Shares will be issued credited as fully paid and will rank in full for all dividends and other distributions declared, made or paid after Admission of the Vendor Placing Shares and Placing Shares, and will otherwise rank on Admission pari passu in all respects with the existing ordinary shares. The Vendor Placing Shares and Placing Shares are not being made available to the public and are not being offered or sold in any jurisdiction where it would be unlawful to do so.
The Conditional Placing
In order to undertake the Conditional Placing, Victoria needs to seek approval from the Company's shareholders at a general meeting (the "General Meeting"), notice of which will be set out in a circular to shareholders that will be posted shortly (the "Circular"). The General Meeting will be held at the offices of Brown Rudnick LLP, 8 Clifford Street, London W1S 2LQ at 10.00 a.m. on 2 October 2015.
Application will be made for the 711,035 Conditional Placing Shares to be admitted to trading on AIM ("Second Admission") and it is expected that Second Admission will take place on 6 October 2015. The new ordinary shares will rank pari passu with the existing ordinary shares of the Company. Following Second Admission, the total issued share capital of the Company will be 18,190,941 Ordinary Shares.
The Conditional Placing is conditional, inter alia, upon:
 The passing of the resolutions at the General Meeting;
the conditions in the Placing Agreement relating to the Conditional Placing being satisfied (or, if applicable, waived) and the placing agreement not having been terminated in accordance with its terms prior to Second Admission of the Conditional Placing Shares; and
 Admission of the Conditional Placing Shares becoming effective by no later than 8.00 a.m. on 6 October 2015 (or such later time and/or date as the Company and Cantor Fitzgerald Europe may agree, but in any event not later than 8.00 a.m. on 16 October 2015).
The Conditional Placing Shares will be issued credited as fully paid and will rank in full for all dividends and other distributions declared, made or paid after Second Admission, and will otherwise rank on Second Admission pari passu in all respects with the existing ordinary shares. The Conditional Placing Shares are not being made available to the public and are not being offered or sold in any jurisdiction where it would be unlawful to do so.
Andrew Harrison, a non-executive director, who holds 26,956 existing ordinary shares, representing 0.18 per cent. of the existing issued share capital of the Company, has agreed to subscribe for 8,950 Placing Shares (with 345 in the Firm Placing and 8,605 in the Conditional Placing). Following Second Admission, Mr Harrison will hold 35,906 ordinary shares, representing 0.20 per cent. of the enlarged issued share capital of the Company.
In addition, the Business Growth Fund has agreed to subscribe for 365,855 Placing Shares (as part of the Conditional Placing). Gavin Petken, a non-executive director, is a Regional Director of the Business Growth Fund. The Business Growth Fund does not currently own any ordinary shares in the Company and following Second Admission, it will hold 2.01 per cent. of the enlarged issued share capital of the Company.
Current Trading and Prospects
As highlighted in the announcement of the audited full year results to 28 March 2015, the outlook for the Group's UK businesses remains positive, aided by a recovery in the residential housing market.
Similarly, continued strength in the major markets of New South Wales and Victoria States is providing a solid start to the current financial year, albeit we must remain cautious about the weaker Australian Dollar and higher raw material costs. 
Overall, we remain positive about the current financial year and there continues to be good opportunities to continue to grow earnings in the UK and abroad via further carefully scrutinised, high quality acquisitions and organically via a committed sales focus and operational synergies.
- Ends -

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