Vulcan Industries Plc - Acquisition of Romar Process Eng. and Other Updates
PR Newswire
London, October 20
Vulcan Industries plc
("Vulcan" or "Company")
Acquisition of Romar Process Engineering,
Update on the proposed acquisition of E Lowe Holdings Limited,
and Issue of Equity
ACQUISITION
Vulcan Industries plc (AQSE: VULC) is pleased to announce the proposed acquisition of the business and certain assets of Romar Process Engineering Ltd ("Romar") for a total consideration of £550,000 to be satisfied from internal financial resources and the issue of 2.5 million ordinary shares in the Company (the "Acquisition"). The Board of Vulcan expects the Acquisition to be immediately earnings enhancing.
Acquisition Rationale
Vulcan has been incorporated to build a group of UK companies providing products and services to the engineering and, manufacturing sectors, particularly focussed on metal fabrication and precision engineering, which have underlying profitability and growth potential and can benefit from being part of a larger group.
The acquisition of Romar, the first for Vulcan since its admission to AQSE in June, is in line with its strategy to create a multidisciplinary engineering Group establishing economies of scale. The skills base in Romar is closely aligned to other businesses within the Group and will enable sharing and transfer of skills between in-house fabrication and fitting on client sites. This gives the Group the ability to undertake larger contracts and distribute workload between sites optimising resource capacity. The Romar site also offers another business within the Group and the opportunity to shed its discrete overhead cost and move production into the Romar facility. We see opportunity (or, it is our intention) to merge these two operations in 2021. This acquisition provides clear contribution to Vulcan EBITDA through new long-term clients, extended workforce skill sets, (bottom line) saving for existing businesses and improvements in supplier negotiations.
About Romar
Romar specialises in all types of metal fabrication including:
- Ring Rolling
- Turning and milling
- Forming and bending
- Structural steel fabrication
- All types of welding: MIG, TIG & ARC
- Sheet metal work including cutting and profiling sheet metal
For the 9-month period to 20 July 2020, Romar reported unaudited revenue and Profit Before Tax of £732,000 and £202,00 respectively. The book value of tangible assets, inventories and cash being acquired is approximately £65,000.
Transaction summary
The total consideration for the purchase of the business and assets of Romar is £550,000 to be satisfied as follows:
- £350,000 payable in cash on completion of the acquisition.
- Deferred consideration of £50,000, payable in ten equal instalments per month following the completion date.
- £150,000 to be satisfied by the issue of 2.5m ordinary shares in Vulcan at an issue price of 6p.
IVI is making an interest free loan to RPE of £350,000 to fund the Acquisition including all fixed assets, Intangible assets and inventory with the deferred payment of £50,000 to be satisfied through ten equal instalments, paid monthly.
The Vulcan Group has formed a subsidiary RPE 2020 Limited ("RPE") whereby IVI Metallics Limited ("IVI"), a subsidiary of Vulcan, initially held 73% of the issued share capital with the vendor holding the remaining 27%.
Upon completion, Vulcan has acquired the remaining 27% holding RPE through the issue of 2.5m ordinary shares of 0.04p each in the Company to the Vendor ("Consideration Shares"). As a result, RPE's share capital is now 100% owned by Vulcan (directly and indirectly via IVI). Under the terms of the Purchase Agreement, RPE will change its name to Romar Process Engineering Limited.
The Purchase Agreement contains standard restrictive covenants, warranties and indemnities from the Vendor in favour of the Company
EXTENSION OF EXCLUSIVITY PERIOD
Vulcan also announces that the exclusivity period in respect of its proposed acquisition of E Lowe Holdings Ltd ("E Lowe") has been further extended until 15 January 2021. The Company is still conducting the due diligence and the disruptions caused by the Covid-19 pandemic have significantly impaired the ability and availability of the parties' advisers to complete that process.
ISSUE OF EQUITY
The Company has agreed to issue 797,619 new ordinary shares (83,333 shares at an issue price of 6p per share and 714,286 shares at an issue price of 4.2p per share) to suppliers of consultancy services to the company in lieu of £35,000 of fees ("Fee Shares").
Admission
Application will be made for 3,297,619 ordinary shares to be admitted to trading which is expected to commence on or around 27 October 2020 at 8:00am.
Total Voting Rights
Following admission of the Consideration Shares and of the Fee Shares, the Company's issued share capital will comprise 249,290,835 ordinary shares of £0.0004 each, with each share carrying the right to one vote.
The Company does not hold any ordinary shares in treasury. The above figure of 249,290,835 may therefore be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or of a change to their interest in the Company under the FCA's Disclosure and Transparency Rules.
The Directors of Vulcan intend to continue to identify opportunities they believe fulfil the Company's strategy to establish, invest in or acquire assets and businesses in the engineering sector. Acquisitions and investments may be funded with a combination of equity and cash, although the Company may also utilise debt under certain conditions.
Contacts
| Vulcan Industries plc | Via Vox Markets |
| Ian Tordoff, Chairman | |
| John Maxwell, CEO | |
| First Sentinel Corporate Finance Ltd (AQSE Corporate Adviser) | +44 7876 888 011 |
| Brian Stockbridge | |
| Gabrielle Cordeiro | |
| Vox Markets (Media and Investor Relations) | vulcan@voxmarkets.co.uk |
| Kat Perez | +44 7881 622 830 |
| Paul Cornelius | + 44 7866 384 707 |
About Vulcan
Vulcan seeks to acquire and consolidate traditional but historically profitable engineering, manufacturing and industrial SMEs for value and to enhance this value in part through group synergies, but primarily by unlocking growth which is not being achieved as a standalone private company.
For further information, visit: https://vulcanplc.com
