30 September 2014
Victoria PLC
('Victoria' or the 'Company')
Acquisition of Abingdon Flooring Limited
£10m subordinated 2022 unsecured loan note facility from the Business Growth Fund ("BGF") and
New Board Appointment
Acquisition
Victoria PLC, (LSE: VCP) a manufacturer, supplier and distributor of design-led carpets and floorcoverings, is pleased to announce the acquisition of Abingdon Flooring Limited, a UK carpet manufacturer and its wholly owned subsidiaries, Alliance Distribution Limited and Distinctive Flooring Limited (together "Abingdon")(the 'Acquisition'), for an initial cash consideration of £7.655m. Additional deferred cash consideration of up to £4.5m will be payable to the vendors of Abingdon if annual performance targets for increased EBIT are achieved over a three year period. Victoria will retain Abingdon's existing bank facilities with RBS.
Operating from facilities in South Wales, Kidderminster, and Yorkshire, and employing a workforce of more than 500 people, Abingdon manufactures and distributes mid-range carpets, carpet tiles and hard flooring across the UK, producing in excess of nine million square metres of carpet per annum. Abingdon is one of the UK's largest privately owned manufacturers of quality carpets, producing a wide range of products under their market leading brands of Stainfree, Wilton Royal and Distinctive Flooring. All key senior management will be remaining with the business and it will continue to operate independently, whilst benefiting from the synergies of an enlarged Group, in its ongoing drive for growth. For the financial year ended 31 March 2014 Abingdon generated turnover of £75.1m, EBIT of £2.5m and profit before tax of £2.2m. Net assets were £8.2m (Year ended 31 March 2013: turnover £70.3m, EBIT of £1.64m, profit before tax of £1.35m, and net assets of £6.75m).
The Acquisition is in line with Victoria's strategy of growing its business with earnings enhancing acquisitions. The annual turnover of the enlarged Group will be more than £160m, operating from 6 manufacturing sites in the UK and 2 in Australia.
2022 Unsecured Loan Note Facility
The Abingdon acquisition will be funded using facilities provided by the Company's long-standing bankers, Barclays Bank, and from its newly-signed fully-subordinated £10m 2022 unsecured loan note facility ("Loan Note") provided by BGF.
BGF is a UK active growth capital investor in small mid-sized companies, with up to £2.5bn to invest and is backed by five of the UK's main banking groups - Barclays, HSBC, Lloyds, RBS and Standard Chartered but is a fully independent organisation. This is BGF's first investment into a quoted public company.
The Loan Note carries a fixed coupon of 10 per cent, but with no capital repayment for the first five years, with capital then being repaid over the following three years. BGF has also been granted an option over 746,000 new Victoria ordinary 25p shares, representing 5 per cent. of the Company's deemed enlarged issued share capital. These options have an exercise price of £2.86p, being the latest closing mid-market price prior to completion. The options are exercisable, inter alia, on the earlier of (i) three years from the date of grant, (ii) a change of control pursuant to a takeover of the Company, and (iii) Geoff Wilding ceasing to be beneficially interested in 30 per cent or more of issued share capital of the Company.
Board Appointment
Gavin Petken, BGF's Regional Director for The Midlands will join the Victoria board. Gavin joined BGF in 2013 to develop the firm's local investment activities in the Midlands region for smaller entrepreneurial companies. He has also been actively involved with BGF's major strategic initiative to extend the firm's provision of growth capital to listed companies providing similar access to long term funding. He was previously a Managing Director with RBS where he worked for over 12 years, latterly as a senior member of the team in RBS' Non-Core division, managing the operational improvement and exit of a number of companies. Previously he worked in RBS' private equity division. Before moving to RBS, Gavin headed the investment team of a venture capital fund backed by US fund Providence Equity Partners and before that spent 4 years in M&A working for Close Brothers Corporate Finance on public market and private transactions. He is a Chartered Accountant, qualifying with Arthur Andersen in London.
Mr Petken entered a letter of appointment with the Company dated 30 September 2014. The appointment is terminable by BGF on notice to the Company or terminable by the Company automatically in specified circumstances. There is no annual fee payable to Mr Petken in respect of his services to the Company. BGF will receive an annual fee commensurate with that paid to the Company's NED's.
Gavin Christopher Petken, aged 43, is or has been in the previous 5 years, a director of the following companies:
Current directorships |
Former directorships |
Digichannel Limited |
RBDC Investments Limited |
|
Royal Bank Development Capital Limited |
|
Royal Bank Ventures Investments Limited |
|
Royal Bank Ventures Limited |
|
SMBC Aviation Capital (UK) Limited |
|
Gate Leasing Limited |
|
RBS Aerospace Limited |
|
International Aviation Management (CI) Limited |
The Company confirms that there is no other information which is required to be disclosed pursuant to Schedule 2 paragraph (g) of the AIM Rules for Companies.
Geoff Wilding, Executive Chairman of Victoria, commented:
"We are delighted that the Company has acquired Abingdon with the support of BGF. The acquisition of Abingdon Flooring represents the second significant step forward for Victoria, following the acquisition of Westex in December last year. By integrating Abingdon into the Group, we anticipate accelerating Victoria's growth by enhancing its combined offering and reach across the UK.
"Overall, when added to our existing operations the two acquisitions have together substantially increased the scale, breadth and reach of Victoria's offering and are expected to be immediately earnings enhancing. Our focus is on integrating the business and delivering the synergies and growth we have identified."
Gavin Petken, BGF's Regional Director for the Midlands who joins Victoria's board, commented:
"Victoria has built a fantastic reputation in the UK and overseas for supplying a wide range of quality flooring materials. We saw this as an excellent opportunity to back a company with global ambitions and the potential to expand organically and through acquisitions such as Abingdon."
For more information contact:
Victoria PLC Geoff Wilding Executive Chairman |
+44 (0) 15 6274 9300 |
Cantor Fitzgerald Europe Rick Thompson David Foreman |
+44 (0) 20 7894 7000 |
MHP Nick Denton Vicky Watkins |
+44 (0) 20 3128 8100 |
Notes for Editors:
Business Growth Fund
BGF is an active UK growth capital investor in small and mid- sized companies. It was established in 2011 as an independent company, with up to £2.5bn to invest and a mandate to support the growth of British smaller and mid-sized businesses (usually generating a turnover of between £5m-£100m).
This transaction marks the first time that BGF has invested in a publicly listed company. BGF's investment is unsecured and flexible, in line with its approach as a provider of capital to support companies' development over the longer term. Investing in listed companies is a natural next step for BGF in its drive to provide long-term equity investment to those growing companies that do not have enough access to this source of capital.
BGF makes long-term equity investments of between £2m and £10m in businesses with the potential to grow and in turn receives a minority stake and a seat on the board.
BGF is backed by five of the UK's main banking groups - Barclays, HSBC, Lloyds, RBS and Standard Chartered but is a fully independent organisation. For more information, visit www.bgf.co.uk
