RNS No 7774j
ACTIVE IMAGING PLC
24th November 1997
PART 1
This document is not for distribution in or into the United
States,
Canada, Australia or Japan
Recommended Offers by Greig Middleton & Co. Limited
on behalf of
Silvermines Group PLC
for the entire issued ordinary and preference share capital of
Active Imaging plc
The Boards of Silvermines plc ("Silvermines") and Active Imaging
plc ("Active Imaging") are pleased to announce that agreement has
been reached on the terms of recommended Offers on behalf of
Silvermines for the whole of the issued and to be issued ordinary
and preference share capital of Active Imaging.
Summary of Offers
* Silvermines is offering 17 New Silvermines Ordinary Shares
for every 92 Active Imaging Ordinary Shares, valuing Active
Imaging plc at approximately #4.5 million and each Active Imaging
Ordinary Share at 9.33p. This represents a premium of
approximately 16.6% over the closing price of Active Imaging
Ordinary Shares on the last dealing day prior to the announcement.
* Silvermines has also offered 50p in cash for each Active
Imaging 'A' and 'B' Preference Share and warrants to subscribe for
Silvermines' Ordinary Shares.
Key Points
* Active Imaging's expertise in the field of digital technology
will provide Silvermines with the necessary capabilities to
compete in the CCTV market as it moves from analogue to digital
technology.
* The acquisition provides Silvermines with the necessary
technology for communications protocols and networking competence,
digital image processing, digital storage and recording and
digital switching technology.
* Silvermines' standing in the worldwide CCTV industry will
enhance the sale opportunities for Active Imaging's products.
Silvermines' Chairman, Mr Bob Morton, commented on the
acquisition, saying:
"We are convinced that the combination of the two groups offers
an excellent strategic fit and represents a sensible step forward
for Silvermines as the CCTV market undergoes the transition into
digital technology. This deal also fulfils Silvermines' states
criteria of seeking strategic business acquisitions."
Clem Jansen, Group Managing Director of Silvermines Group, said:
"We have been actively pursuing the acquisition of digital
technology over the last 18 months for application in our CCTV and
Building Automation Division to provide us with a technological
lead in these sectors.
"The acquisition of Active Imaging also has synergy with the
digital broadcast technology of Continental Microwave Group, which
was acquired in November 1997."
The Chairman of Active Imaging, Michael Brooke, commented:
"I am confident that Active Imaging's businesses will prosper
within the enlarged Silvermines Group. Significant synergies will
result from this association, from which Active Imaging
shareholders will benefit through accepting the Offers."
For further enquiries, please contact:
Silvermines Group plc 0116 222 2111
Clem Jansen, Group Managing Director
Greig Middleton & Co Limited
Rod Venables 0171 655 4000
Paul Smith 0141 240 4000
Square Mile Communications Limited 0171 583 4567
Tim Jackaman / James Melville-Ross
Active Imaging plc 01628 415 440
Michael Brooke, Chairman
Introduction
The boards of Silvermines and Active Imaging have reached
agreement today on the terms of recommended Offers to be made by
Greig Middleton on behalf of Silvermines to acquire all of the
issued and to be issued ordinary and preference share capital of
Active Imaging ("Active Imaging Securities"). In recommending to
shareholders of Active Imaging that the terms of the offers are
fair and reasonable, the board of Active Imaging has been advised
by Beeson Gregory Limited. In providing advice to the board of
Active Imaging, Beeson Gregory Limited has taken into account the
directors' commercial assessment of the Offers.
Silvermines has received irrevocable undertakings to accept the
Offers from the Active Imaging directors and certain other
shareholders in respect of their aggregate holdings of 10,723,062
Active Imaging Ordinary Shares (representing approximately 26.01
per cent. of the Active Imaging Ordinary Shares in issue), 166,660
Active Imaging 'A' Preference Shares (representing approximately
66.67 per cent. of the Active Imaging 'A' Preference Shares in
issue) and 46,667 Active Imaging 'B' Preference Shares
(representing approximately 4.44 per cent. of the Active Imaging
'B' Preference Shares in issue). These undertakings are not
revocable even if a higher offer is made.
Furthermore, the directors of Active Imaging and certain other
shareholders have each granted a call option to Silvermines in
respect of their holdings of 4,634,238 Active Imaging Ordinary
Shares (representing approximately 11.24 per cent. of the Active
Imaging Ordinary Shares in issue). Pursuant to these call options,
Silvermines may, if a third party makes an offer for Active
Imaging Securities which the board of Active Imaging is advised,
by Beeson Gregory, to be more favourable than any of the Offers,
require the directors of Active Imaging and certain other
shareholders to sell to Silvermines their holdings for
consideration equal to that payable under the Active Imaging
Ordinary Share Offer.
In addition, 3i Group plc has indicated in writing to Silvermines
that it intends to accept the Offers in respect of its aggregate
holdings of 10,018,358 Active Imaging Ordinary Shares
(representing approximately 24.30 per cent. of the Active Imaging
Ordinary Shares in issue) and 980,000 Active Imaging 'B'
Preference Shares (representing approximately 93.33 per cent. of
the Active Imaging 'B' Preference Shares in issue).
Neither Silvermines nor any person acting in concert with
Silvermines owns or holds any rights over any Active Imaging
Securities or holds any options to purchase any Active Imaging
Securities with the exception of the irrevocable undertakings and
call options referred to above.
Based on the mid-market price of a Silvermines Ordinary Share of
50.5p (as derived from the Daily Official List of the London Stock
Exchange) as at the close of business on 21 November 1997, the
last dealing day prior to the announcement of the Offers, the
Active Imaging Ordinary Share Offer values each Active Imaging
Ordinary Share at 9.33p and the Offers value the entire issued
share capital of Active Imaging at approximately #4.5 million.
The offer document and relevant Forms of Acceptance are being
despatched today to Active Imaging shareholders.
Background to and reasons for the Offers
The CCTV market is in the course of a transition from analogue to
digital technology. Were Silvermines to attempt to develop digital
technology of the quality to compete with the Active Imaging
Group's products, the board of Silvermines believes that this
process would, in all probability, be likely to take 18 months to
2 years to complete with the attendant costs and risks. Buying
Active Imaging would provide Silvermines with the necessary
technology for: (1) communications protocols and networking
competence; (2) digital image processing, (3) digital storage and
recording; and (4) digital switching technology. All of these
technologies are currently utilised by the Active Imaging Group in
its products which are complementary to the Silvermines Group's
CCTV products.
Active Imaging has recently secured substantial orders from
Trafficmaster plc to deliver MvVision technology. However, further
orders will depend on the market's overall perception of Active
Imaging's products and their capability and the completion of
development and trials in respect of the Mv 2000 and other
products. Accordingly, the board of Silvermines does not expect
the Active Imaging Group to make any contribution to the Enlarged
Group's operating profits over the next 12 months. However, the
board of Silvermines would expect to reduce substantially the
Active Imaging Group's losses in the year ending 31 December 1998.
In the six months to 30 June 1997, Active Imaging reported pre-tax
losses of #2,886,000 and at 31 December 1996 had net assets of
#3,305,000.
The board of Silvermines believes that the acquisition of Active
Imaging and its technology will give Silvermines Group's CCTV
products added capability and that the Silvermines Group's
knowledge and experience of the CCTV industry worldwide and its
established distribution network will enhance the sales
opportunities for the Active Imaging Group's portfolio of
products.
The Offers
(a) The Active Imaging Ordinary Share OfferOn behalf of
Silvermines, Greig Middleton & Co Limited offers to acquire, on
the terms and subject to the conditions contained or referred to
in the offer document and in the Blue Form of Acceptance, all of
the issued and to be issued Active Imaging Ordinary Shares on the
following basis:
for every 92 Active 17 New
Imaging Ordinary Shares Silvermines Ordinary Shares
and so in proportion for any other number of Active Imaging
Ordinary Shares held.
(b) The Active Imaging 'A' Preference Share Offer
On behalf of Silvermines, Greig Middleton & Co Limited offers to acquire,
on the terms and subject to the conditions contained or referred to
in the offer document and in the Pink Form of Acceptance, all of
the issued and to be issued Active Imaging 'A' Preference Shares
on the following basis:
for each Active Imaging
A' Preference Share 50p in cash
and
for every 2 Active Imaging
'A' Preference Shares 1 warrant to subscribe
for 1 Silvermines
Ordinary Share at a subscription
price of 80p per share at any time
on, or prior to, 31 December 1999
and so in proportion for any other number of Active Imaging 'A'
Preference Shares held.
(c) The Active Imaging 'B' Preference Share Offer
On behalf of Silvermines, Greig Middleton & Co Limited offers to acquire,
on the terms and subject to the conditions contained or referred to
in the offer document and in the White Form of Acceptance, all of
the issued and to be issued Active Imaging 'B' Preference Shares
on the following basis:
for each Active Imaging
'B' Preference Share 50p in cash
and
for every 2 Active Imaging
'B' Preference Shares 1 warrant to subscribe
for 1 Silvermines
Ordinary Share at a subscription
price of 80p per share at any time
on, or prior to, 31 December 1999
and so in proportion for any other number of Active Imaging 'B'
Preference Shares held.
Value of the Offers
Based on the mid-market price of a Silvermines Ordinary Share of
50.5p as at the close of business on 21 November 1997, the last
dealing day prior to the announcement of the Offers, the Active
Imaging Ordinary Share Offer values each Active Imaging Ordinary
Share at 9.33p and all the Active Imaging Ordinary Shares in issue
at the date of this announcement at approximately #3.85 million.
This represents a premium of approximately 16.6 per cent. over the
closing mid-price of an Active Imaging Ordinary Share on AIM of 8p
on 21 November 1997, the last dealing day prior to the
announcement of the Offers.
Attributing no value to the Warrants, the Active Imaging 'A'
Preference Share Offer and the Active Imaging 'B' Preference Share
Offer value each Active Imaging 'A' Preference Share and each
Active Imaging 'B' Preference Share at 50p and all the Active
Imaging 'A' Preference Shares and all the Active Imaging 'B'
Preference Shares in issue at the date of this document at
#124,995 and #525,000 respectively.
Further details of the Offers
The Active Imaging Securities will be acquired free from all
liens, charges, encumbrances and other interests and together with
all rights now or after the date hereof attaching thereto,
including the right to receive and retain all dividends and other
distributions declared, paid or made after the date hereof
including, for the avoidance of doubt, the dividend payable on the
Active Imaging 'A' Preference Shares on 31 December 1998 in
respect of the period from 1 January 1997 to 31 December 1998.
Full acceptance of the Active Imaging Ordinary Share Offer
including New Silvermines Ordinary Shares to be issued following
the exercise of Active Imaging Share Options previously granted
over 131,675 Active Imaging Ordinary Shares would involve the
issue of 7,749,532 New Silvermines Ordinary Shares representing
approximately 8.44 per cent. of the enlarged issued share capital
of Silvermines.
Fractions of New Silvermines Ordinary Shares which would otherwise
be issued under the Active Imaging Ordinary Share Offer will not
be allotted to accepting Active Imaging Shareholders but will be
aggregated and sold in the market and the net proceeds of sale
will be distributed to the Active Imaging Shareholders entitled to
them, except that amounts of #3.00 or less will be retained for
the benefit of the Enlarged Group.
The conditions of the Offers are set out in the Appendix below.
The New Silvermines Ordinary Shares
Application has been made to the Irish Stock Exchange and to the
London Stock Exchange for the New Silvermines Ordinary Shares to
be issued pursuant to the Active Imaging Ordinary Share Offer to
be admitted to the Official Lists. The New Silvermines Ordinary
Shares will be issued credited as fully paid and free from all
liens, charges, encumbrances and other interests and will rank
pari passu in all respects with the existing issued Silvermines
Ordinary Shares save that they will not rank for the final
dividend which the Silvermines directors expect to recommend in
respect of the year ending 31 December 1997.
The Warrants
Each Warrant entitles its holder to subscribe for one Silvermines
Ordinary Share at a subscription price of 80p per share payable in
cash at any time on or before 31 December 1999. No application has
been or will be made to the Irish Stock Exchange or to the London
Stock Exchange for the Warrants to be admitted to the Official
Lists, although application will be made at the appropriate time
for the Silvermines Ordinary Shares that are allotted on exercise
of the subscription rights conferred by the Warrants to be
admitted to the Official Lists following their allotment.
Information on Silvermines
The Silvermines Group is an electronics and electrical group with
four divisions and a 49 per cent. equity shareholding in
Automotive Motion Technology Limited ("AMTL"), details of all of
which are set out below.
CCTV and Building Automation Division
The CCTV and Building Automation Division comprises Videmech Limited,
Molynx Limited, Hernis Scan Systems A/S, Molynx NV and BV and American
Auto-Matrix Inc. These companies serve different segments of the CCTV and
security market and together with building automation products
from American Auto-Matrix can offer a total and integrated
capability for these systems. In 1996 the Division's turnover was
#24.76 million. Continued growth is expected from export markets
in the United States of America, the Middle East and, in
particular, from China, where contracts have been secured in the
first half of this financial year including the China Construction
Bank for CCTV and Access Control and the prestigious Astronauts
Centre.
Electrical Division
Elequip Projects Limited ("Elequip") is the Electrical Division of
Silvermines. Elequip's principal activity is the management of
turnkey projects. These projects embrace all or a portion of
Elequip's extensive technical capabilities, which include
electrical and mechanical engineering, specialist diesel
generating sets, low and high voltage distribution and motor
control switchgear, electrical controls for rolling stock,
electrical protection and process control systems. Elequip also
provides commissioning and maintenance services. Elequip has this
year continued its penetration of overseas markets and, in
particular, the Middle East with the award of a #7.5 million
contract to provide and manage electrical power for a gas
processing plant in Egypt.
Broadcast and Telecommunications Division
The Broadcast and Telecommunications Division comprises
Continental Microwave Limited ("CML"), RF Technology Inc., USA,
Falcon Equipment & Systems Limited and Tru-Lon Printed Circuits
(Royston) Limited. CML products and applications include a full
range of VHF and microwave technology based equipment for
broadcasts transmission; portable microwave links; longhaul
network distribution links; electronic news gathering; satellite
news gathering; RF Technology manufactures and markets CML
products in the United States of America; Falcon which designs and
manufactures electronic equipment for defence communications; and
Tru-Lon Printed Circuits (Royston) Limited produces and markets
prototype and pre-production run printed circuit boards. Export
orders in the first half of the current financial year from all
over the world but, in particular, from China, the Pacific Rim,
the Middle East and South America are a feature of the growth of
this business.
Aerospace Division
The Aerospace Division comprises the businesses of Muirhead Vactric
Components Limited which includes the recently acquired avionics
and accessories business from Hunting plc, Norcroft Dynamics Limited and
Pickering Controls Inc., USA. This Division specialises in unique
solutions from individual components to integrated systems and is focused
in the aerospace, defence and industrial markets. The technology is used to
direct and control high performance equipment to exacting levels of
accuracy and reliability.
AMTL
AMTL is a joint venture company formed with Echlin Inc. (USA), a
leading producer of quality automotive products worldwide, to
design, develop, manufacture and sell electric motors for
automotive applications.
Current trading
While Silvermines performed strongly in the first half of this
financial year the economic problems in Silvermines' major new and
expanding markets in Thailand, Malaysia, Singapore, Indonesia and
Philippines, part of the Association of South East Asian Nations,
and the consequent collapse in the value of their currencies, has
adversely impacted on Silvermines CCTV and Building Automation
businesses in this region in the second half of 1997. Furthermore,
South Korea, which had remained isolated from the problems of this
region and from where Silvermines had secured good business for
the first 9 months of 1997, has also, very recently, suffered a
decline.
The directors of Silvermines are confident that trading in South
East Asia will recover in due course and will remain an area of
very high growth potential for its CCTV and Building Automation
products. Silvermines continues to remain active in these markets
helping its customers in these difficult times with the objective
of not losing market share. It is not believed by the board of
Silvermines that the performance of other divisions will
compensate for the trading shortfall experienced in South East
Asia this year.
Information on Active Imaging
Active Imaging was incorporated on 15 February 1996. Its shares
were admitted to trading on AIM on 24 April 1996 following a
placing of 4,910,714 Active Imaging Ordinary Shares at 112p per
share. On 4 February 1997, TVX Inc. announced that a recommended
offer would be made to acquire all the issued ordinary and
preference shares in Active Imaging. The offer was withdrawn on 21
March 1997, TVX Inc. stating that this was due to adverse stock
market conditions in the United States of America at that time.
Following the withdrawal of that offer, a rights issue was
required to meet Active Imaging's needs for immediate finance in
order to continue the investment already made in the MvVision
technology and to continue to establish Data Cell as a leading
systems integrator and value added reseller of imaging products.
Without this finance Active Imaging would have been unable to
continue to trade. On 15 August 1997 Active Imaging concluded a 5
for 4 rights issue raising approximately #2 million after
expenses.
The Active Imaging Group develops, manufactures and markets its
proprietary and jointly owned imaging products. It also operates
as a value added reseller, systems integrator and supplier of
third party imaging products through Data Cell. The operations of
the Active Imaging Group are focused on the application and
development of solutions and products for digital imaging. Its
products have been sold in applications in traffic management,
security and surveillance, the Internet, industrial imaging and
inspection and bio-medical.
Active Imaging's products
The principal products developed by the Active Imaging Group
centre around the use of MvVision technology.
MvVision is a digital imaging capture and transmission device
consisting of a video sensor, a frame grabber, a processor chip,
appropriate memory and hard disk space and communications modules.
All the necessary computing power is embedded directly inside the
camera. It transmits images in digital format over a variety of
networks. The images are automatically compressed within the
device before transmission, thereby reducing the volume of data
being sent and, consequently, reducing the need for transmission
bandwidth.
The MvVision technology has been applied by the Active Imaging
Group into application areas of security and surveillance and
"live" video over networks. The underlying technology is sold as
MvEngine to original equipment manufacturers and to strategic
partners who are well positioned in these chosen markets to
integrate MvVision technology with their own applications. A major
order worth #1 million has been received this year from
Trafficmaster plc for MvVision technology. Deliveries commenced in
October 1997 and are scheduled to finish in March 1998. A further
order worth #177,000 was recently received from Trafficmaster plc.
Mv2000
This product is aimed at the security and surveillance market.
Based on MvVision technology it offers many of the features of
MvNet Plus but offers additional capabilities in security and
surveillance applications including trigger inputs for interfacing
to external devices (for example, alarms) and relay outputs for
controlling other external devices (for example, lighting). The
device can also record digitally for subsequent playback at a
remote monitoring station across a telephone or computer network.
Each Mv2000 can be connected to six standard security cameras to
provide cost effective surveillance and digital recording. Mv2000
has been evaluated by a number of major organisations including UK
banks, UK utilities and by Aritech, a leading European
manufacturer and distributor of security products. The initial
units have been delivered to customers for extended trials.
Production units are scheduled to be shipped before the end of
1997. In February 1997, Mv2000 won the award for the best CCTV
product for 1997 from the British Security Industry Association.
MvNetMvNet Plus allows "live" video to be delivered across a
variety of computer and telephone networks and is available in
both ethernet and modem versions. Up to five additional standard
CCTV cameras can be connected to a unit. Each monitoring station
can control and view multiple cameras situated at different
locations. This product is fully developed. The camera can be
controlled remotely and can be mounted on a pan tilt zoom
mechanism. Active Imaging is now building a reseller network and
dealing directly with key original equipment manufacturer
accounts. Resellers, focusing on particular vertical markets, have
been appointed in the United Kingdom, France and Japan. This
policy is also now being followed in the United States of America.
Users of MvNet Plus have included Lords cricket ground (to
broadcast Test Match cricket over the Internet), the London
Notting Hill Carnival (to webcast the event), various adult
entertainment sites, a United Kingdom utility company to monitor
power stations, a toll-bridge project in California and
Smartroutes in Boston, New England, which are using a custom built
MvNet Plus for traffic monitoring in their commercial
SmartTraveller service.
Data Cell
Data Cell is a value added reseller of image acquisition
hardware and related software and imaging systems.
Its principal product is the "Snapper", an image acquisition
board, the technology for which is jointly owned, which provides a
modular approach to interfacing cameras or other video sources to
industry standard computers. Snapper, when installed as part of a
computer, allows images to be arranged and compressed making them
available for analysis. Applications for Snapper include medical
image analysis and a range of industrial and scientific
applications.
To date Data Cell has provided the majority of the revenue for the
Active Imaging Group and is expected to continue to be a key
contributor to the Active Imaging Group's revenues, particularly
during the initial phase of sales generation for the MvVision
products.
In the first half of 1997, Data Cell's sales showed an improvement
on the previous six months. Since March 1997, Data Cell has been
involved in a project to develop an evidential video enhancement
system. This has now received approval from the Police Scientific
Development Branch; consequently it is expected that this system
will become an important source of new sales during the remainder
of this financial year and into 1998.
Current trading
As stated in the interim results announcement, an
order worth approximately #1 million was received from
Trafficmaster plc which utilises the MvVision technology.
Deliveries of this order commenced in October and will continue
into 1998 and a further order worth #177,000 was recently received
from Trafficmaster plc.
The months from September to date were part of a critical period
in which it was necessary to secure volume orders from security
integrators, original equipment manufacturers, resellers and
technology partners. While orders have been received from
Trafficmaster plc for Mv2000 and also for the MvNet camera,
anticipated volume orders for these products have yet to be
received. In addition, Data Cell sales have failed to rise to the
level of earlier expectations due to delays in the placing of
orders from original equipment manufacturers and lower than
expected orders from the education sector. In the light of this,
and with a view to reducing Active Imaging Group's costs, the
board of Active Imaging intend to rationalise the operations at
Active Imaging Inc.
Management and employees
Raymond Fagan, George Hayter, Simon Acland and Michael Brooke have
indicated their intention to resign as directors of Active Imaging
if the Offers become or are declared wholly unconditional.
Existing employment rights of the management and employees of the
Active Imaging Group, including pension and share option rights
(except for share options whose exercise price is more than #1 per
share), will be fully safeguarded.
Active Imaging Share Options
The Active Imaging Ordinary Share Offer extends to any Active
Imaging Ordinary Shares which are unconditionally allotted or
issued pursuant to the valid exercise of options in respect of the
Active Imaging Share Option Scheme, the Data Cell Share Option
Scheme and an option agreement in favour of Beeson Gregory Limited
("Active Imaging Share Options"), while the Active Imaging
Ordinary Share Offer remains open for acceptance or until such
earlier time and/or date as Silvermines may, subject to the City
Code, decide.
Appropriate proposals will be made by Silvermines in due course to
the holders of Active Imaging Share Options (except for those
share options whose exercise price is more than #1 per share) to
the extent that they are not exercised and in the event that the
Offers become or are declared unconditional in all respects. In
view of the closing mid-price of an Active Imaging Ordinary Share
on AIM of 8p as at 21 November 1997 (the last dealing day before
the announcement of the Offers) Silvermines does not intend to
make any proposal to holders of Active Imaging Share Options whose
exercise price is more than #1 per share.
M O R E T O F O L L O W
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