Acquisition and Placing

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM ANY JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF LOCAL APPLICABLE SECURITIES LAWS OR REGULATIONS.

THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND IS NOT AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES.  IT IS NOT A CIRCULAR, A PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT.  INVESTORS SHOULD NOT SUBSCRIBE FOR OR PURCHASE ANY SHARES REFERRED TO IN THIS ANNOUNCEMENT EXCEPT SOLELY ON THE BASIS OF INFORMATION CONTAINED IN THE PROSPECTUS TO BE PUBLISHED BY TOROTRAK PLC IN CONNECTION WITH THE PROPOSED FUNDRAISING AND ACQUISITION.

 

13 December 2013

Torotrak plc

(“Torotrak”, the “Company” or the “Group”)

Proposed Firm Placing of 54,021,005 New Ordinary Shares,

Proposed Placing and Open Offer of 22,161,819 New Ordinary Shares,

Proposed Subscription for 12,706,064 New Ordinary Shares by Allison Transmission, Inc.

each at an Issue Price of 18 pence per Ordinary Share

Proposed Acquisition of 80 per cent. of the issued share capital of

Flybrid Automotive Limited and proposed issue of 7,836,990 Consideration Shares
and

Notice of General Meeting

Torotrak (LSE: TRK), a leading developer and supplier of emissions reduction and fuel efficiency technology for vehicles, today announces that it has entered into an Acquisition Agreement to acquire, subject to Shareholder approval, the remaining 80 per cent. of the issued ordinary shares in Flybrid for a maximum consideration of up to £23.0 million, of which £15.0 million is subject to performance targets.

In addition, the Company is pleased to announce that it has conditionally raised funds of £16.0 million (before expenses) by way of an equity fundraising of an aggregate of 88,888,888 New Ordinary Shares at an issue price of 18 pence per share, comprising a Firm Placing, a Placing and Open Offer and a Subscription by Allison Transmission, Inc.

The net proceeds of the Issue will be used to finance the initial cash consideration payable in connection with the Acquisition, to finance the investment required for the commercialisation of Flybrid’s first manufactured product for the commercial vehicle market and to finance the on-going design, development and testing of Torotrak’s V-Charge technology and Flybrid’s M-KERS technology for the passenger car markets, as well as enhancing Torotrak’s testing and engineering capabilities.

Further details of the Acquisition and the Issue are set out in this announcement and in the Prospectus being published today.

Highlights

Flybrid

  • Acquisition of the remaining 80 per cent. of the issued ordinary share capital of Flybrid not already owned by Torotrak for a maximum consideration of up to £23.0 million, of which £8.0 million is payable on Completion (£6.0 million in cash and £2.0 million in new Ordinary Shares). The remaining £15.0 million (of which a maximum of £5.0 million can be satisfied through the issue of new Ordinary Shares) is to be paid subject to the satisfaction of certain performance targets.
  • The Directors believe that the acquisition of Flybrid provides Torotrak with the leading commercially viable flywheel technology in the market, offering low cost, high performance hybrid systems for mass market adoption in passenger cars and commercial vehicles.
  • The integration of Flybrid and Torotrak provides the platform for a joint development and launch of M-KERS as the Company continues to take greater control of routes to market for its technology.
  • Jon Hilton (currently Managing Director of Flybrid) will join the board of Torotrak plc and, together with Doug Cross (currently Technical Director of Flybrid), will be key members of the Enlarged Group’s executive team.

Market window and opportunity

  • The Group intends exploiting a market window from 2015 to 2020 where new technologies are being demanded to achieve tough new EU CO2 targets applying to vehicle manufacturers’ overall fleets.
  • The Directors believe that electric hybrid and plug in solutions will for the foreseeable future only address a small element of the market and remain expensive. This leaves Torotrak’s technologies that improve the internal combustion engine’s performance well positioned as affordable, mainstream solutions in the mass car markets.
  • In commercial vehicles, Flybrid M-KERS offers affordable hybrid efficiency within a five year pay back period.  The Group intends launching this product into the market in trials in 2014 and into production in 2015 to achieve a first to market advantage and providing growing product revenues from 2015 onwards.

The Issue

  • Placing of 76,182,824 New Ordinary Shares with existing and new institutional investors at an Issue Price of 18 pence per share of which 54,021,005 New Ordinary Shares have been placed firm.
  • Open Offer to existing shareholders on the basis of 1 Open Offer Share for every 8 Existing Ordinary Shares at 18 pence per share.  Qualifying Shareholders can also subscribe for Excess Shares under the Excess Application Facility, subject to availability. All of the Open Offer Shares have been conditionally placed with institutional investors subject to clawback by existing investors under the Open Offer
  • Allison has agreed to subscribe for a further 12,706,064 New Ordinary Shares at the Issue Price, which would result in Allison holding 12.98 per cent. of the Company’s Enlarged Issued Share Capital.
  • The Issue will raise gross proceeds of £16.0 million.

Notice of General Meeting

  • A notice convening the General Meeting, to be held at the offices of Tavistock Communications at 131 Finsbury Pavement, London EC2A 1NT at 11.00 a.m. on 8 January 2014 will be contained in the Prospectus.

 

Jeremy Deering, Chief Executive of Torotrak, said:

“Today’s announcement marks a significant step in our strategy to capitalise on the substantial opportunities in global automotive markets in the next few years. 

“The acquisition of Flybrid enables the Group to commercialise an affordable hybrid system (Flybrid M-KERS), that the Directors believe is capable of mass market adoption. The funds raised support our plans for low volume manufacturing and accelerated testing facilities for a start of production in 2015 to supply initially the UK bus market. For mass car markets, the strategy over the next 12 to 24 months is to  increase our engagement with vehicle OEM and Tier 1 manufacturers to maximise the opportunities for take up of our V-Charge and Flybrid M-KERS technologies from 2017 onwards as tougher new CO2 regulatory targets are implemented.

“The combination of the Flybrid and Torotrak teams creates a new energy and a new looking enterprise, with Formula 1 heritage, Flybrid’s entrepreneurial track record and Torotrak’s well respected development and commercial capability, combining in one team.  Innovation, delivery and forming lasting customer relationships lie at the heart of this.  

“The response from our strategic shareholder Allison Transmission, Inc. and from institutional investors in supporting the fund raise has been excellent and the Open Offer provides an opportunity for private and other  shareholders to participate at the Issue price.”

Jon Hilton, Managing Director of Flybrid, said: “The combination of Flybrid’s entrepreneurial, performance focused culture with Torotrak’s depth of engineering expertise will create a competitive group with the ability to access a large proportion of the world’s auto manufacturers and Tier 1 and 2 suppliers.  The team at Flybrid are very enthusiastic and excited about the prospects. Doug Cross and I are looking forward to joining the new executive team at Torotrak and delivering success for the Group.”

For more information, please visit www.torotrak.com or contact:

Torotrak plcJeremy Deering, Chief Executive / Rex Vevers, Finance Director
Tel: +44 1772 900931
Charles Stanley Securities  (sponsor, financial adviser and joint broker to Torotrak)Marc Milmo / Karri Vuori / Carl Holmes
Tel: +44 20 7149 6000
N+1 Singer  (joint broker to Torotrak)Andrew Craig / Ben Wright
Tel: +44 20 7496 3000
Tavistock Communications  (financial PR)Simon Hudson / Lulu Bridges / James Collins
Tel: +44 20 7920 3150 or +44 (0)7966 477256

 

IMPORTANT NOTICE

This announcement is not a prospectus but an advertisement and Qualifying Shareholders should not acquire any New Ordinary Shares referred to in this announcement except on the basis of the information contained in the Prospectus.

Neither the content of the Company’s website nor any website accessible by hyperlinks to the Company’s website is incorporated in, or forms part of, this announcement.  The distribution of this announcement, the Prospectus and any other documentation associated with the Proposals into jurisdictions other than the United Kingdom may be restricted by law.  Persons into whose possession these documents come should inform themselves about and observe any such restrictions.  Any failure to comply with these restrictions may constitute a violation of the securities laws or regulations of any such jurisdiction.  In particular, such documents should not be distributed, forwarded to or transmitted, directly or indirectly, in whole or in part, in, into or from the United States, Canada, Japan or Australia or any other jurisdiction where to do so may constitute a violation of the securities laws or regulations of any such jurisdiction (each an “Excluded Territory”).

No action has been taken by the Company or any other person that would permit an offer of the New Ordinary Shares or possession or distribution of this announcement, the Prospectus or any other documentation or publicity material or the Application Forms in any jurisdiction where action for that purpose is required, other than in the United Kingdom.

The New Ordinary Shares have not been and will not be registered under the US Securities Act 1933 (as amended) (the “US Securities Act”) or with any securities regulatory authority of any state or other jurisdiction of the United States and, accordingly, may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, within the United States except in reliance on an exemption from the registration requirements of the US Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States.

There will be no public offer of the New Ordinary Shares in the United States.  The New Ordinary Shares are being offered and sold outside the US in reliance on Regulation S under the US Securities Act.  The New Ordinary Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the US or any other US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the New Ordinary Shares or the accuracy or adequacy of the Application Form or this announcement.  Any representation to the contrary is a criminal offence in the US.

The New Ordinary Shares have not been and will not be registered under the relevant laws of any state, province or territory of any Excluded Territory and may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, within any Excluded Territory except pursuant to an applicable exemption from registration requirements.  There will be no public offer of New Ordinary Shares in Canada, Japan, or Australia.

This announcement is for information purposes only and does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in any jurisdiction and should not be relied upon in connection with any decision to subscribe for or acquire any of the New Ordinary Shares.  In particular, this announcement does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States.

This announcement has been issued by, and is the sole responsibility of, the Company.  No person has been authorised to give any information or to make any representations other than those contained in this announcement and, if given or made, such information or representations must not be relied on as having been authorised by the Company, Charles Stanley Securities or N+1 Singer.  Subject to the UKLA Rules, the issue of this announcement shall not, in any circumstances, create any implication that there has been no change in the affairs of the Company since the date of this announcement or that the information contained in it is correct at any subsequent date.

Charles Stanley Securities, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting for the Company and no one else in connection with the Proposals and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to the Proposals and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Proposals or any matters referred to in this announcement.

N+1 Singer, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting for the Company and no one else in connection with the Proposals and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to the Proposals and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Proposals or any matters referred to in this announcement.

Apart from the responsibilities and liabilities, if any, which may be imposed on Charles Stanley Securities or N+1 Singer by the Financial Services and Markets Act 2000 or the regulatory regime established thereunder, neither Charles Stanley Securities or N+1 Singer accepts any responsibility whatsoever for the contents of this announcement, and makes no representation or warranty, express or implied, for the contents of this announcement, including its accuracy, completeness or verification, or for any other statement made or purported to be made by them, or on their behalf, in connection with the Company or the New Ordinary Shares or the Proposals, and nothing in this announcement is or shall be relied upon as, a promise or representation in this respect whether as to the past or future.  Charles Stanley Securities or N+1 Singer accordingly disclaim to the fullest extent permitted by law all and any liability whether arising in tort, contract or otherwise (save as referred to above) which they might otherwise have in respect of this announcement or any such statement.

No statement in this announcement is intended to be a profit forecast or estimate and no statement in this announcement should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.

This announcement may include statements that are, or may be deemed to be, “forward-looking statements”.  These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “plans”, “projects”, “anticipates”, “expects”, “intends”, “may”, “will”, or “should” or, in each case, their negative or other variations or comparable terminology.  These forward-looking statements include matters that are not historical facts.  They appear in a number of places throughout this announcement and include statements regarding the Directors’ current intentions, beliefs or expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity, prospects, growth, strategies and the Company’s markets.  By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances.  Actual results and developments could differ materially from those expressed or implied by the forward-looking statements.  Forward-looking statements may and often do differ materially from actual results.  Any forward-looking statements in this announcement are based on certain factors and assumptions, including the Directors’ current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company’s operations, results of operations, growth strategy and liquidity.  Whilst the Directors consider these assumptions to be reasonable based upon information currently available, they may prove to be incorrect.  Save as required by law or by the UKLA Rules, the Company undertakes no obligation to release publicly the results of any revisions to any forward-looking statements in this announcement that may occur due to any change in the Directors’ expectations or to reflect events or circumstances after the date of this announcement.

This announcement should not be considered a recommendation by the Company, Charles Stanley Securities or N+1 Singer or any of their respective directors, officers, employees, advisers or any of their respective affiliates, parent undertakings, subsidiary undertakings or subsidiaries of their parent undertakings in relation to any purchase of or subscription for the New Ordinary Shares.  Price and volumes of, and income from, securities may go down as well as up and an investor may not get back the amount invested.  It should be noted that past performance is no guide to future performance.  You are advised to read this announcement and, once available, the Prospectus and the information incorporated by reference therein, in their entirety for a further discussion of the factors that could affect the Group’s future performance and the industry in which it operates.  Persons needing advice should consult an independent financial adviser.

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM ANY JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF LOCAL APPLICABLE SECURITIES LAWS OR REGULATIONS.

THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND IS NOT AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES.  IT IS NOT A CIRCULAR, A PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT.  INVESTORS SHOULD NOT SUBSCRIBE FOR OR PURCHASE ANY SHARES REFERRED TO IN THIS ANNOUNCEMENT EXCEPT SOLELY ON THE BASIS OF INFORMATION CONTAINED IN THE PROSPECTUS TO BE PUBLISHED BY TOROTRAK PLC IN CONNECTION WITH THE PROPOSED FUNDRAISING AND ACQUISITION.

 

Click here to read the full announcement: Acquisition and Placing.

Click here to view the Prospectus: Prospectus.