Deals
Advanced Power Components Plc Acquires 25% of Invisible Systems Limited
Advanced Power Components plc (AIM: APC) is pleased to announce that it has completed the acquisition of 25 per cent. of the issued share capital of Invisible Systems Limited ("ISL"), the cloud based, end-to-end monitoring and control solutions business focused on improving energy efficiency within the built environment, for a total consideration of £1,244,667 (the "Consideration") which comprises a £750,000 cash payment plus the issue of 1,558,007 new ordinary shares (the "New Ordinary Shares") in APC which, based on the mid-market closing price on 22 July 2013 of 31.75p, are valued at £494,667. The implied valuation for 100 per cent. of ISL is therefore approximately £4,978,669.
Also included within the share purchase agreement (the "SPA") are various put and call options (the "Put and Call Options") which, if exercised, could potentially result in APC acquiring 100 per cent. of ISL over the Put and Call Options exercise period (the "Exercise Period"). The Put and Call Options mechanism operates sequentially whereby the beneficial owners of the remaining 75 per cent. of ISL (the "Sellers") may initially require APC to purchase by way of up to two requests up to an initial additional 26 per cent. of the issued share capital of ISL thereby taking APC's ownership of ISL to 51 per cent. (the "First Put Option"). In the event, however, that the First Put Option is not exercised in full, such that following the exercise of this First Put Option, APC's aggregate holding is still less than 50 per cent., then APC has the right to exercise a call option allowing it to take its aggregate share holding up to 51% of the issued share capital (the "Call Option"). Further, should this Call Option be exercised, then the Sellers have the right to exercise a second put option (the "Second Put Option"), over such number of additional shares in ISL that the Sellers may choose, so that there is the possibility that APC may acquire the remaining 49 per cent. of the issued share capital of ISL that it does not already own following the optional exercise of the First Put Option and the Call Option.
The Exercise Period commences 1 October 2015 and ends 30 September 2020. The SPA contains a valuation mechanism (the "Valuation Mechanism") for the Put and Call Options based on ISL's earnings before interest, tax, depreciation and amortisation ("EBITDA"). The Valuation Mechanism implies a likely total consideration payable by APC for 100 per cent. of ISL following the exercise of the Put and Call Options to be between £2.4 million and £7.1 million. A cap of £15 million has, however, been agreed between the Sellers and APC on the aggregate value of the Consideration and the amount payable under the Put and Call Options should they be exercised in such a way that APC acquires 100 per cent. of ISL. Further, in the unlikely event that the aggregation of the Consideration and the Put and Call Options (if exercised) values ISL at a level that represents a reverse takeover under the AIM Rules, APC would seek shareholder approval prior to proceeding.
ISL provides cloud-based, end-to-end monitoring and control solutions designed to improve the energy efficiency within the built environment using its own battery powered, wireless communications technology. This provides an energy monitoring and control capability that is non-invasive, quick and simple to implement in both new and retrofit applications. Its existing customer base includes both public and private sector organisations and the technology is proven to enable average savings of between 15% and 30% typically providing a return on investment of between 12 and 18 months. ISL's products are approved in the UK, Europe and the Americas and will underpin APC's strategy of expanding its business model overseas. Further information on ISL can be found at www.invisible-systems.com
APC and ISL have also entered into a distribution agreement whereby APC will sell ISL's products and services through its Minimise Limited branded subsidiaries located throughout the UK as well as overseas.
In its last statutory accounts for the year ended 30 September 2012, ISL reported total assets of £606,000, revenue of £1,418,000 and profit before taxof £165,000.
Mark Robinson, CEO of APC, commented:
"This is an exciting development for APC and ISL. APC's cleantech strategy is dependent upon the Company securing ownership and access to a number of core technologies and we firmly believe that by taking an ownership position in ISL we are entering a mutually beneficial long term partnership with one of the most innovative companies in the cleantech energy monitoring space. There is a growing momentum behind the need for organisations and individuals to better understand energy consumption and then to measure the effect of steps taken to control it. This is being driven by the commercial need to control an escalation in utility costs and the need to comply with increasingly prescriptive legislation being introduced by governments all over the world intended to reduce energy consumption thereby reducing associated carbon emissions. ISL's wireless technology and innovative approach to product development have created a product portfolio which offers clear commercial advantages on which we have no doubt that our Minimise Limited branded subsidiaries can capitalise on both in the UK and internationally."
Following admission of the New Ordinary Shares, the total number of voting rights in the Company's ordinary shares will be 57,333,111. APC does not hold any ordinary shares in treasury. The New Ordinary Shares will rank pari passu in all respects with the existing ordinary shares. It is expected that admission will occur at 8.00 a.m. on Friday 26 July 2013.
The aforementioned figure of 57,333,111 ordinary shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, APC under the Financial Conduct Authority's Disclosure and Transparency Rules.
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