Manroy PLC Production Expansion (5438X)

TIDMMAN

RNS Number : 5438X

Manroy PLC

13 January 2014

MANROY PLC ("Manroy" or the "Company")

PRODUCTION EXPANSION, ASSOCIATED FUNDING FROM A RELATED PARTY

AND REVIEW OF STRATEGIC OPTIONS RELATING TO MANROY USA

Manroy, the AIM listed UK Defence Contractor, is pleased to announce that it is expanding production capacity at its Slade Green facility to enable construction of military rifles. The total capital expenditure and working capital required for this expansion is estimated at GBP0.75m.

Funding for this expansion has been provided by Caledonian Heritable Limited ("Caledonian"), a 23.1% shareholder in Manroy, pursuant to a loan agreement entered into on 28 November 2013 (the "Loan Agreement"). This funding and associated interest totalling GBP0.35m is structured to be repaid by 28 November 2014 from the cashflow receivable by Manroy on sales of the resultant products to an existing customer. Orders for these sales were announced on 25 March 2013 and originally envisaged an intra-group order of approximately GBP5.0m to Manroy USA ("MUSA"). However, the new production capacity will enable these to be manufactured entirely by Manroy in the UK, thereby significantly increasing the profit earned by the Group from these sales. UK Government export licences for these products have already been obtained by Manroy.

Given Caledonian's shareholding in the Company, entry into the Loan Agreement by the Company is considered to be a related party transaction pursuant to Rule 13 of the AIM Rules for Companies (the "Transaction"). The Company's directors, having consulted with the Company's nominated adviser, Allenby Capital Limited, consider that the terms of the Transaction are fair and reasonable insofar as the Company's shareholders are concerned.

On 20 December 2013 theCompany announced that in accordance with Rule 2.6(a) of the Code, each of Herstal SA ("Herstal") and Beretta Holding S.p.A ("Beretta") must, by not later than 5.00 p.m. on 14 February 2014, either announce a firm intention to make an offer for the Company in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. The Company also announced that it could approach the Panel for an additional extension to this deadline in due course in accordance with Rule 2.6(c) of the Code. Further to that announcement, Manroy confirms today that it is considering strategic options relating to its 49% shareholding in MUSA.

Glyn Bottomley, Manroy's Chief Executive, said: "This increase in production capacity, and its associated funding, are expected to produce significantly increased profitability on this contract than previously because major components will now be manufactured in-house rather than being sourced externally. The additional review of strategic options for our investment in MUSA is planned to enhance value for our shareholders."

ENDS

For further information please contact:

Manroy Plc Tel: 01252 874177

Glyn Bottomley, Chief Executive

   Opus Corporate Finance                                                        Tel: 020 7025 3600

(Financial Adviser and Rule 3 Adviser)

Malcolm Strang / John McElroy

Allenby Capital Tel: 020 3328 5656

(Nomad & Corporate Broker)

Mark Connelly/ Alex Price

Bankside Tel: 020 7367 8888

(PR Adviser)

Richard Pearson/ Simon Rothschild

Notes to Editors:

1. Manroy is a UK based defence contractor specialising in the supply of weapon systems for land, air and maritime applications.

2. A key UK Ministry of Defence supplier for 26 years, Manroy designs, manufactures, supplies and supports:

   --      the 12.7mm M2 Heavy Machine Gun ("HMG"), also known as the 0.50" calibre HMG; 
   --      the 7.62mm General Purpose Machine Gun ("GPMG"); 
   --      HMG Quick Change Barrel kits; 
   --      a range of turret products for armoured fighting vehicles; and 
   --      weapon tripods and weapon mounting systems

3. Production of the HMG, along with support and spares, is Manroy's core area of operation. In recent years Manroy has increasingly focused on the export market and diversification of its customer base into new territories.

4. Manroy owns 49% of North Carolina based MUSA, a defence supplier to both military and civilian law enforcement agencies.

   5.   MUSA manufactures a range of weapons systems and ancillary products, including: 
   --      The M2 HMG; 
   --      HMG Quick Change Barrel kits; 
   --      Barrel manufacturing for both the military and commercial markets; 
   --      M16 and M4 military rifles; 
   --      Electronic boresights; 
   --      Mounting systems; and 
   --      Commercial rifle barrels and spares.

The Group adheres strictly to UK legislation concerning the sale of weapons to foreign countries. Manroy's overseas sales are undertaken in adherence to UK Government regulations and approvals. Such sales are only undertaken after all appropriate UK Government licenses have been granted.

DISCLAIMER

Opus Corporate Finance LLP ("Opus"), which is regulated in the United Kingdom by The Financial Conduct Authority, is acting for the Company in relation to the matters described in this announcement and is not advising any other person, and accordingly will not be responsible to anyone other than the Company for providing the protections afforded to customers of Opus or for providing advice in relation to the matters described in this announcement.

Allenby Capital Limited ("Allenby Capital") which is regulated in the United Kingdom by The Financial Conduct Authority is acting for the Company in relation to the matters described in this announcement and is not advising any other person, and accordingly will not be responsible to anyone other than the Company for providing the protections afforded to customers of Allenby Capital or for providing advice in relation to the matters described in this announcement.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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