6pm Holdings plc - Rights Issue
On 30 March 2011, 6pm Holdings plc announced that it published a Prospectus with respect to a rights issue of 10,788,000 new ordinary shares at the price of £0.25 per share. Shareholders as at close of trading on Wednesday 23 March will be entitled to subscribe to 1.4384 new shares for every share held. Moreover, shareholders may also apply for more shares in excess of their entitlement. However, allotment of any excess shares is not guaranteed by the Company. Alternatively, shareholders may also transfer their rights to third parties.
The rights issue opens on Monday 11 April and closes on Friday 29 April at 14.00 hours. Listing of the new shares on the Official List of the Malta Stock Exchange is expected to be completed by 16 May and trading in the new shares is expected to commence the following day.
The proceeds from this rights issue will be used as follows:
- i) £850,000 to fund the acquisition of Compunet Operations Limited and Compunet Holdings Limited;
- ii) £472,000 to repay the existing loan facility with Banif Bank Malta plc;
- iii) £850,000 shall be used for working capital purposes particularly to sustain fluctuations in the Group’s working capital and enhance its negotiating ability when tendering for projects by offering competitive credit terms;
- iv) The balance of £425,000 will be held in a reserve account to fund future acquisitions by the 6pm Group.
The Prospectus also reveals that 6pm’s CEO Ivan Bartolo will be subscribing to 1,043,791 new ordinary shares whilst transferring the remaining rights of 1,044,209 shares to Brian Zarb Adami. Similarly, two other Directors, namely Alan West-Robinson and Stephen Wightman, will transfer part of their rights amounting to a total of 3,400,000 shares to Vassallo Builders Group Limited, who have agreed to take up the shares and will become the largest shareholder in 6pm Holdings plc together with Ivan Bartolo. The Directors will not subscribe to the balance of their entitlement. The table below shows the shareholding structure before and after the rights issue.
| Before Rights Issue | After Rights Issue | |
| Ivan Bartolo | 20.07% | 18.59% |
| Vassallo Builders Group Ltd | – | 18.59% |
| Alan West-Robinson | 20.07% | 5.91% |
| Stephen Wightman | 20.07% | 5.91% |
| Brian Zarb Adami | – | 5.71% |
| Jason Brickell | 10.00% | 4.10% |
| Other Shareholders | 29.79% | 41.19% |
Following the rights issue, the share capital of 6pm Holdings plc will increase from 7,500,000 ordinary shares to 18,288,000 shares of a nominal value of £0.20. The theoretical ex-rights price (the adjusted market price at which the shares should trade following the completion of the rights issue) is calculated at £0.33 per share.
The rights issue is underwritten by Mediterranean Bank plc.
The Prospectus reveals the unaudited figures for the year ended 31 December 2010 showing revenue dropping by 41.6% in 2010 to £3.1 million resulting in a loss of £0.36 million (2009: profit of £0.21 million). The Directors stated that this substantial downturn in revenue and profitability is attributable to the general economic slowdown, particularly in the UK, and the uncertainty regarding the planned austerity measures of the new Government in the UK. Nonetheless, the Directors expect the UK Health IT public sector to start recovering as evidenced by some recent substantial contract wins and backed by an improving sales pipeline for the first quarter of 2011.
This rights issue was approved during an Extraordinary General meeting held on Saturday 26 March. Moreover shareholders also empowered the Directors of 6pm to issue further new shares in the future to acquire other local IT companies in line with 6pm’s strategy of inorganic growth. The Directors may issue up to a maximum of a further 6,712,000 shares raising the issued share capital to £5.0 million, made up of 25,000,000 shares of a nominal value of £0.20 each.
Download a copy of the 6pm Holdings plc Rights Issue Prospectus dated 30 March 2011.