TIDMUTW
RNS Number : 2051O
Utilitywise plc
28 January 2019
28 January 2019
Utilitywise plc
("Utilitywise", the "Company" or the "Group")
Strategic Review, Formal Sale Process and 2018 Annual Report and
Accounts
Utilitywise, a leading independent utility cost management
consultancy, announces that the Board has decided to review all the
Group's strategic options in order to deliver maximum value for its
stakeholders (the "Strategic Review"). The Strategic Review will
include a formal sale process of the Company, further details of
which can be found below. The Strategic Review will also consider
all types of corporate transactions, including the sale of certain
parts or the whole of the Group. In addition, the Group intends to
continue discussions with its shareholders and its bank in relation
to a potential equity fundraising and bank refinancing, as detailed
further below, alongside all other potential strategic options.
Background
As previously announced, in the past two years the Group has
experienced a number of significant and unexpected challenges and
legacy issues in its Enterprise Division that have hampered the
pace of transformation, with a consequential impact on the Group's
financial performance. These include, inter alia:
-- The repayment of commission to an energy supplier, the
overpayment of which arose due to historically poor operational
controls;
-- Weaknesses in industry processes relating to
early-termination of customer contracts (so-called "change of
tenancy"), which have been exploited by third-party intermediary
("TPI") competitors, to 'break' certain of the Group's customers
from energy contracts; and
-- Energy suppliers introducing lower caps to the amount of
commission that TPIs can charge their customers.
In order to overcome these challenges, the Group has made
significant improvements to the operational controls within its
business and is currently executing a clear strategy for
differentiation and growth, whilst evolving its existing
proposition in both its Enterprise and Corporate Divisions.
Furthermore, the Group is further developing its channel strategy
to reduce the cost of customer acquisition in its Enterprise
Division. The Board anticipates that new revenue streams will be
delivered by a strategy that places emphasis on:
-- Providing IoT-based intelligent building technology
solutions, which optimise building and organisational energy
efficiencies. The solutions deliver dynamic procurement strategies
and remotely control and optimise the efficiency of mid-sized and
corporate clients, through the Group's Corporate division;
-- Optimising the Group's core proposition by improving
efficiencies, optimising sales channels and focusing on margin
targets;
-- Growing a new inbound sales channel through a price
comparison website, which already exists and is generating order
book and revenue;
-- The creation of a digitally driven channel, targeting
Micro-SME customers and offering a multi-utility bill management
service with automation at its core;
-- Offering the Group's customers other utilities - customers
utilise many different products and services to run their business
and our model, skills and partnerships can extend to some of those
markets that customers also find difficult to manage or understand.
Following the addition of water and broadband to our core offering
of electricity and gas, we expect to add further utilities to our
offering; and
-- In-life cross selling - using our customer relationships
carefully and intelligently to expose relevant products and
services to customers and add value in-life, thus creating greater
lifetime value and customer retention than a transactional
model.
The Board believes that driving greater revenues from the
Group's Corporate Division and entering the micro-SME market will
result in profitable growth and significant cash flows for the
Group in the medium term, along with offering further business
services to its existing client base. However, the Group requires
to make investments in the business to the value of approximately
GBP10 million in order to execute this revised strategy.
Funding
In addition to the requirement for new investments detailed
above, the Group has been in discussions with its bank in recent
months with respect to the refinancing of its existing bank
facilities, amounting to GBP25m in aggregate and which expire on 20
April 2019. The Group's lending bank indicated its willingness to
refinance those banking facilities at the same level, on the
condition that other funding was also obtained from alternative
sources, such that the combined funding allowed the Group to make
the necessary strategic investments detailed above. The Group has
therefore approached both new and existing investors to seek to
conduct an equity fundraising (the "Proposed Equity Fundraising"),
to provide sufficient additional equity capital to the Group for
its investment and working capital requirements alongside the
refinanced GBP25m banking facility (the "Proposed Bank
Refinancing"). At this stage, the Group has not attracted a
sufficient level of interest in the Proposed Equity Fundraising to
satisfy the Group's overall funding requirements for the period to
31 July 2021. As a result, the Board has now concluded that it
should commence the Strategic Review.
Whilst the Strategic Review is carried out, and in the absence
of completion of the Proposed Equity Fundraising and the Proposed
Bank Refinancing, or any other similar refinancing transaction, the
Group continues to discuss the provision of ongoing funding with
the Bank, but will be reliant upon the ongoing support of the Bank.
There can be no guarantee that the Proposed Equity Fundraising, the
Proposed Bank Refinancing or any other refinancing transaction will
be completed, nor as to the terms on which the Proposed Equity
Fundraising, the Proposed Bank Refinancing or any other potential
refinancing transaction may be completed.
Proposed Formal Sale Process
As noted above, the Group has launched a formal sale process
within the meaning of the City Code on Takeovers and Mergers (the
"Takeover Code"), as part of the Strategic Review.
The Takeover Panel has granted a dispensation from the
requirements of Rules 2.4(a), 2.4(b) and 2.6(a) of the Takeover
Code (as referred to in the Note 2 of Rule 2.6 of the Takeover
Code) such that any interested party participating in the formal
sale process will not be required to be publicly identified as a
result of this announcement and will not be subject to the 28 day
deadline referred to in Rule 2.6(a) of the Takeover Code for so
long as it is participating in the formal sale process. Following
this announcement, the Company is now considered to be in an "offer
period" as defined in the Takeover Code, and the dealing disclosure
requirements listed below will apply.
Parties with an interest in making a proposal for the Group
pursuant to the formal sale process should contact finnCap through
the contact details set out at the end of this announcement. It is
currently expected that any party interested in participating in
the formal sale process will, at the appropriate time, enter into a
non-disclosure agreement with Utilitywise on terms satisfactory to
the Board of Utilitywise and on the same terms, in all material
respects, as other interested parties. The Company then intends to
provide such interested parties with certain information on the
business, following which interested parties shall be invited to
submit their proposals to finnCap. The Company will update the
market in due course regarding timings for the formal sale process
as agreed with the Panel.
There can be no certainty that an offer will be made, nor as to
the terms on which any offer will be made. The Company is not
currently in any discussions with any potential offeror relating to
an acquisition of the issued and to be issued share capital of the
Company.
The Board of Utilitywise reserves the right to alter or
terminate the process at any time and, in such cases, will make an
announcement as appropriate. The Board of Utilitywise also reserves
the right to reject any approach or terminate discussions with any
interested party at any time.
Rule 2.9 disclosures
In accordance with Rule 2.9 of the Takeover Code, Utilitywise
confirms that as at close of business on 25 January 2019 (being the
last Business Day prior to the date of this Announcement), it has
in issue 78,512,930 ordinary shares of 0.1 pence each. The
International Securities Identification Number (ISIN) of the
Utilitywise shares is GB00B6WVD707.
Disclosure requirements of the Takeover Code
Under Rule 8.3(a) of the Takeover Code, any person who is
interested in 1% or more of any class of relevant securities of an
offeree company or of any securities exchange offeror (being any
offeror other than an offeror in respect of which it has been
announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement
of the offer period and, if later, following the announcement in
which any securities exchange offeror is first identified. An
Opening Position Disclosure must contain details of the person's
interests and short positions in, and rights to subscribe for, any
relevant securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) applies must be made by no later than
3.30 pm (London time) on the 10th business day following the
commencement of the offer period and, if appropriate, by no later
than 3.30 pm (London time) on the 10th business day following the
announcement in which any securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of
the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead
make a Dealing Disclosure.
Under Rule 8.3(b) of the Takeover Code, any person who is, or
becomes, interested in 1% or more of any class of relevant
securities of the offeree company or of any securities exchange
offeror must make a Dealing Disclosure if the person deals in any
relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the
dealing concerned and of the person's interests and short positions
in, and rights to subscribe for, any relevant securities of each of
(i) the offeree company and (ii) any securities exchange offeror,
save to the extent that these details have previously been
disclosed under Rule 8. A Dealing Disclosure by a person to whom
Rule 8.3(b) applies must be made by no later than 3.30 pm (London
time) on the business day following the date of the relevant
dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and
8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Panel's website at www.thetakeoverpanel.org.uk, including
details of the number of relevant securities in issue, when the
offer period commenced and when any offeror was first identified.
You should contact the Panel's Market Surveillance Unit on +44 20
7638 0129 if you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure.
A copy of this announcement is also available on Utilitywise's
website at https://www.utilitywise.com/investor-relations/.
2018 Annual Report and Accounts
The audit of the financial results of the Group for the year
ended 31 July 2018 ("FY2018") is substantially complete. However,
in order for the Board to approve and publish the Group's annual
report and accounts for FY2018, the Proposed Bank Refinancing and
the Proposed Equity Fundraising (or equivalent re-financing or
fundraising) would need to be completed, following shareholder
approval of such proposed transaction(s).
Given the current shortfall in investor appetite for the
Proposed Equity Fundraising, the Group will not be in a position to
publish its annual report and accounts for FY2018 prior to close of
business on 31 January 2019. In such circumstances trading in the
Group's Ordinary Shares will be suspended* from 7.30 a.m. on 1
February 2019 (the "Suspension").
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement this inside information is now considered to be in the
public domain.
Further Details:
Utilitywise plc 0330 303 0233
Brendan Flattery (CEO)
Richard Laker (CFO)
finnCap (Nominated Adviser, Rule 3 Adviser and Joint Broker) 020 7220 0500
Matt Goode / James Thompson (Corporate Finance)
Andrew Burdis (Corporate Broking)
Liberum (Joint broker) 020 3100 2000
Robert Morton / Steve Pearce
Newgate Communications 020 3757 6880
Robin Tozer / Elisabeth Cowell
About Utilitywise
Utilitywise is a leading independent utility cost management
consultancy, which has established trading relationships with a
number of major UK and European energy suppliers and provides
services to its customers designed to assist them in achieving
better value out of their energy contracts, reduced energy
consumption and lower carbon footprint.
Utilitywise is a UK company quoted on the AIM market of the
London Stock Exchange. For more information, please visit
www.Utilitywise.com.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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