RNS Number:0627O
NXT PLC
29 July 2003
NXT plc
29 July 2003
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO AUSTRALIA, CANADA,
DENMARK, FRANCE, JAPAN, MALTA, NEW ZEALAND, REPUBLIC OF IRELAND, SOUTH AFRICA,
SWITZERLAND AND THE UNITED STATES
Proposed rights issue
NXT plc, the British audio and speech technology company, today announces it is
raising a net #9.5 million of new equity capital through a Rights Issue at 70.0
pence per share, representing a discount of 50.4 per cent. to the mid-market
price of NXT's shares as at close of trading yesterday.
The Rights Issue of 1 new Ordinary Share for every 5 Existing Ordinary Shares
has been fully underwritten by Bridgewell.
The proceeds of the Rights Issue will be used to strengthen the balance sheet:
* to give a stronger financial position in negotiations with potential
customers;
* to allow NXT to robustly defend its intellectual property should it be
necessary; and
* to ensure that the Company is not at risk from any delays in its
customers' product launch plans.
We have separately announced today that we have signed a licence with Synaptics,
the leading provider of Touchpads to the portable personal Computer Market.
Synaptics plans to pioneer the inclusion of NXT technology in its components to
replace existing loudspeakers.
David Pearson, Chief Executive of NXT commented:
"A combination of increasing commercialisation of our technology and appropriate
cost-cutting has steadily reduced our net cash outflow. However, this
additional funding will put us in a stronger position to build on the
foundations we have already established and create long term value for all our
stakeholders"
For further information please contact:
David Pearson / Peter Thoms Tel: 020 7343 5050
NXT plc
Giles Elliott / John Craven Tel: 020 7003 3000
Bridgewell
Nick Lockwood Tel: 020 7878 3181
Capital MS&L
Introduction
NXT plc ("NXT" or the "Company") is seeking to raise up to #10.4 million of new
capital by way of a rights issue underwritten by Bridgewell Securities Limited
("Bridgewell"). The Company is issuing up to 14,853,051 New Shares at a price
of 70 pence per New Share, made on the basis of 1 New Share for every 5 Existing
Shares (the "Rights Issue").
The Rights Issue is conditional, inter alia, upon the approval of Shareholders.
This approval will be sought at an extraordinary general meeting of shareholders
to be held on 14 August 2003 and convened by a notice set out in a circular ("
Circular") to shareholders to be posted as soon as practicable.
The Rights Issue
Background to and reasons for the Rights Issue
As at 31 December 2002, the Company had cash balances of #7.4 million compared
with #12.2 million as at 30 June 2002. Based on the unaudited management
accounts, cash balances as at 30 June 2003 were #5.9 million and the net cash
outflow for the year, and the six months, to that date were #6.3 million and
#1.5 million respectively. The Company was also pleased to announce in its
interim results the continued progress in the commercialisation of NXT
technology and the increasing strength of our collaboration with strategic
partners. During the last 6 months the Company has reduced further its cost
base and also received a $4 million (#2.5 million) payment from a new licensee.
We are encouraged by the progress of many of the activities of the Company, a
number of which are confidential owing to the commercial sensitivities of our
customers, and we refer to progress on some of these under "Current Trading"
below. Despite this encouraging progress, there are a number of reasons why we
believe that it is prudent and desirable to strengthen the balance sheet and
provide extra operational headroom:
* it is possible that the plans of some of our customers may be delayed.
Although the Company has not been notified of any programme delays we have
noted that external factors such as the conflict in Iraq and the SARS
outbreak have led to conservatism in decision making, and, for example, the
reluctance on behalf of some key engineers employed by our customers to
travel to the Far East where the majority of products using our technology
are produced.
* in negotiations with prospective customers it is highly beneficial for the
Company to be able to present a strong financial position. Large
corporations need to be assured that their prospective partners have
substance and are going to continue for the long term. Financial strength
also underpins NXT's position when negotiating with licensees.
* as a technology licensing company, it is inevitable that, from time to
time, there will be challenges to our intellectual property. It is,
therefore, important to demonstrate that we have sufficient funds to meet
such challenges. The fact that a company has a strong balance sheet and a
willingness to engage in a robust defence may often be enough to discourage
the threat.
Having considered all of these factors, the Board is of the view that the
Company would benefit from raising additional financing. It is still probable
that we would reach profitability without additional funding being required but,
with a strengthened balance sheet, we will seek to accelerate the further
commercialisation of our technology, drive growth in sales and overcome any
constraints on that process. The net proceeds of #9.5 million will, therefore,
be used to strengthen the Company's balance sheet and to finance the continuing
support of our licensees in their efforts to roll-out products using NXT
technology, the continued development of the core technology and the working
capital requirements of the Group.
Principal terms and conditions of the Rights Issue
It is proposed to issue up to 14,853,051 New Shares under the Rights Issue to
raise approximately #9.5 million, after expenses. The issue price of 70 pence
per New Share represents a 50.4 per cent. discount to the closing middle market
price of 141 pence per Share on 28 July 2003, the latest practicable date before
the announcement of the Rights Issue. Qualifying Shareholders will be offered
New Shares at a price of 70 pence per New Share on the following basis:
1 New Share for every 5 Existing Shares
held and registered in their name at the 8 August 2003 and so in proportion for
any other number of Shares then held. The rights to fractions of New Shares
will be rounded down to the nearest whole number of New Shares and will not be
allotted to Qualifying Shareholders.
The Rights Issue is conditional, inter alia, upon:
(i) the passing of the resolution set out in the notice to the EGM set out in
the Circular;
(ii) an underwriting agreement made between the Company, Bridgewell Limited, and
Bridgewell Securities Limited (the "Underwriting Agreement") having become
unconditional in all respects (save for the condition relating to Admission) and
not having been terminated in accordance with its terms by not later than 8.00
am on 15 August 2003 (or such later time and/or date as Bridgewell and NXT may
agree (not being later than 8 September 2003)); and
(iii) Admission having occurred by not later than 8.00 am on 15 August 2003 (or
such later time and date as Bridgewell and NXT may agree).
The New Shares, when issued and fully paid, will rank pari passu in all respects
with the Existing Shares including the right to receive all dividends declared
and paid and all distributions made after their issue. The Company has
arranged for the Rights Issue to be underwritten in order to provide certainty
as to the amount of capital to be raised.
Under the Underwriting Agreement, Bridgewell, as agent for the Company, has
conditionally agreed to procure subscribers for or, failing which, itself to
subscribe as principal for the New Shares not taken up in the Rights Issue at
the price of 70 pence per New Share. Based on the Existing Issued Share
Capital, up to 14,853,051 New Shares will be offered pursuant to the Rights
Issue and this number of New Shares has been underwritten by Bridgewell. If, as
at the 8 August 2003, further Shares have been issued pursuant to the exercise
of any options under the Employee Share Schemes, the number of New Shares
offered pursuant to the Rights Issue could rise. These additional New Shares
have not been underwritten. Admission is expected to occur and dealings to
commence in the New Shares (nil paid) on 15 August 2003. The latest time and
date for acceptance and payment in full under the Rights Issue is expected to be
9.30 am on 8 September 2003.
Results estimate
On the basis of the unaudited interim statement of NXT for the six months ended
31 December 2002 and the unaudited management accounts of NXT for the six months
ended 30 June 2003, the Directors estimate that the loss before tax of NXT for
the year ended 30 June 2003 was #10.2 million with a loss after tax of #9.4
million.
Current trading and prospects
In the year ending 30 June 2003, the Company's overall performance was in line
with expectations. Despite continuing economic difficulties in many markets in
the world, sales growth in New Transducers Ltd. has been over 200 per cent.,
strongly supported by a major licence with 3M announced in February. Work on
the 3M project is running ahead of plan. Key developments in the year have been
the further strengthening of relationships with major corporations such as NEC,
TDK and Pioneer in Japan, 3M and Brookstone in North America, and Philips in
Europe. NEC has recently announced that it has developed mobile phones for the
3G market using NXT SoundVu technology. With NEC's successful launch of LCD
monitors, now numbering over 20 models, and with 3M's launch of a SoundVu
equipped Rear Screen projection TV, SoundVu has now been validated across a
range of sizes and product types. In addition there is continued progress in
bringing products to market in the longer-term development areas such as
Automotive, and, based on information received from our licensees, we expect the
world's first mobile phone using SoundVu technology to be introduced to the
market this year.
We have separately announced today that we have signed a licence with Synaptics,
the leading provider of Touchpads to the portable personal Computer Market.
Synaptics plans to pioneer the inclusion of NXT technology in its components to
replace existing loudspeakers.
Cyrus Electronics has continued to perform well with sales growth of 7 per cent.
supported by innovative product development and the introduction of products
into new markets.
20/20 Speech has maintained its previous levels of performance but remains at an
early stage in its commercial development and continues to operate in a
difficult market. However, there has been a marked change in the profile of
that company's customer base as business with the Ministry of Defence declines
and is replaced by new commercial business. The most promising feature is the
opportunity to adapt our transcription software, first developed for use in
broadcasting, to new markets such as the legal deposition market in the US. It
must be recognised that whilst these new opportunities represent an exciting
potential source of new business, they are still in the very early stages of
commercialisation.
Further reductions in group overheads have been implemented as the evolution of
the Company from a research based to a customer-focussed enterprise continues.
Based on unaudited management accounts to 30 June 2003 net cash outflow in the
six months to 30 June 2003 was #1.5 million and going into the new financial
year our costs in the technology businesses are 24 per cent. lower than the peak
of three years ago and cash balances remain healthy at #5.9 million.
The Company's relationships with major multinational corporations combined with
new product introductions are encouraging and should lead to increased sales
across all key markets. In particular, the Board anticipates that the first
full year of SoundVu sales will show significant progress, reflecting the steady
roll-out of products during the current financial year.
Given this increased sales potential along with the continued judicious
management of costs already in place, the Board believes that the continued
trend of reduced trading losses can be maintained in the current financial year.
Intentions of Directors
David Pearson, Peter Thoms, Anita Frew, Ian Buckley, Tony Knox and Henry Azima
have stated their intention to take up their rights under the Rights Issue.
Gordon Owen has stated his intention to subscribe for such number of New Shares
as can be funded by the net proceeds of the sale of the balance of his remaining
entitlement.
Extraordinary General Meeting
An EGM will be held at Bridgewell Limited, Old Change House, 128 Queen Victoria
Street, London, EC4V 4BJ at 10. 00 am on 14 August 2003, at which the resolution
necessary to enable the rights Issue will be put to Shareholders for approval.
Proposed timetable
2003
Record Date for the Rights Issue 8 August
Latest time and date for receipt of Forms of Proxy 10.00 am on 12 August
Extraordinary General Meeting 10.00 am on 14 August
Despatch of Provisional Allotment Letters (to Qualifying non-CREST 14 August
Shareholders only)
London Stock Exchange 8.00 am on 15 August
Existing Shares marked 'ex' by London Stock Exchange 8.00 am on 15 August
Nil Paid Rights and Fully Paid Rights credited to stock accounts in Crest 8.00 am on 15 August
and enabled
Recommended latest time for requesting withdrawal of Nil Paid Rights or 4.30 pm on 1 September
Fully Paid Rights from CREST (i.e. if your Nil Paid Rights are in CREST and
you wish to convert them into certificated form)
Latest time for depositing renounced Provisional Allotment Letters, Nil 4.30 pm on 2 September
paid, into CREST or for dematerialising Nil Paid Rights or Fully Paid
Rights into a CREST stock account
Latest time and date for splitting Provisional Allotment Letters, nil paid 3.00 pm on 4 September
or fully paid
Latest time and date for acceptance, payment in full and registration of 9.30 am on 8 September
renunciation of Provisional Allotment Letters
Dealings in New Shares, fully paid, commence on the London Stock Exchange 8.00 am on 9 September
New Shares credited to CREST stock accounts 9 September
Expected dispatch of definitive share certificates for New Shares by 15 September
Notes
(i) The dates set out in the expected timetable of principal events above and
mentioned throughout this document and in the Provisional Allotment Letter may
be adjusted by NXT, in which event details of the new dates will be notified to
the UK Listing Authority and to a Regulatory Information Service and, where
appropriate, to Shareholders.
(ii) References in this document are to London time unless otherwise stated.
This announcement does not constitute or form part of, and should not be
construed as, an offer for sale or subscription of, or solicitation of an offer
to buy or subscribe for, any securities of NXT plc nor should it, or any part of
it, form the basis of, or be relied on in connection with, any contract or
commitment whatsoever. Any decision in connection with the proposed Rights Issue
should be made solely on the basis of the information contained in the Circular.
This announcement is not for publication or distribution or release, directly or
indirectly, in the Australia, Canada, Denmark, France, Japan, Malta, New
Zealand, Republic of Ireland, South Africa, Switzerland and the United States.
This announcement does not constitute or form any part of any offer to sell,
issue or to acquire any securities of the Company in the Australia, Canada,
Denmark, France, Japan, Malta, New Zealand, Republic of Ireland, South Africa,
Switzerland and the United States or in any other jurisdiction. Neither the
Company's New Ordinary Shares nor the Provisional Allotment Letters are being
registered under the US Securities Act of 1933, as amended (the 'Securities
Act') and may not be offered or sold in the United States (as such term is
defined in Regulation S under the Securities Act) at any time except pursuant to
the terms of an applicable exemption under the Securities Act and applicable
securities laws of the states of the United States.
Bridgewell Limited and Bridgewell Securities Limited are acting for the Company,
and no one else, in connection with the Rights Issue and will not be responsible
to any other person for providing the protections afforded to their respective
clients or for providing advice in relation to the proposed Rights Issue.
Certain statements made in this announcement are forward-looking statements.
Such statements are based on current expectations and, by their nature, are
subject to a number of risks and uncertainties that could cause actual results
and performance to differ materially from any expected future results or
performance, expressed or implied by the forward-looking statement. The
information and opinions contained in this announcement are subject to change
without notice and NXT plc assumes no responsibility or obligation to update
publicly or revise any of the forward-looking statements contained herein.
Terms in this announcement shall bear the same meaning, unless the context
otherwise requires, as defined in the Circular, published today in respect of
the Rights Issue.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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