REG-Hardide PLC Restoration of trading
Released: 03/06/2008
com:20080603:RnsC8547V
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RNS Number : 8547V
Hardide PLC
03 June 2008
Press Release 3 June 2008
Hardide plc
("Hardide" or "the Company")
Restoration of trading
Placing
Strategic Review
The Board of Hardide plc (AIM:HDD) announces that the suspension of trading of
its Ordinary Shares on the AIM market, that commenced on 1 April 2008, will be
lifted with effect from 2 p.m. on 3 June 2008.
The suspension of trading in the Ordinary Shares of the Company was requested by
the Board whilst it investigated a corporate governance issue which linked to
the financial outlook of the Company. A review of the financial outlook was
necessary because of slower growth in the US business and a sudden and
unexpected reduction in demand from one of the Company's major customers in the
UK. This was due to a customer inventory issue affecting many suppliers and not
related to the Company or its technology. Although the reduction in the UK
appears to be temporary and orders are now resuming, it is likely to result in
the Company's full year results to 30 September 2008 being markedly short of
market expectations and thus a requirement for additional capital for day-to-day
operations.
During the period of suspension, the Board has been actively seeking a
replacement Chief Executive Officer and is pleased to announce the appointment
to that role of Dr. Graham Hine. A separate announcement covers this
appointment in more detail.
The Board of Hardide has also reviewed the strategic options open to the Company
and has reached agreement with a number of its shareholders to subscribe for
42,500,000 new Ordinary Shares at an issue price of 3 pence per share. In
addition, one other existing shareholder has agreed to provide £225,000 in the
form of a loan note with a coupon of 8 per cent. and convertible in to Ordinary
Shares at a conversion price of 4.5 pence per share. The gross amount raised
will be £1.5 million. The new capital will cover operating losses and the
development of applications designed to lead to additional near-term and
mid-term sales revenue.
Hugh Smith, an existing shareholder and non-executive director of Hardide is
participating in the fundraising, subscribing £49,775.01 for 1,659,167 Ordinary
Shares. Application will be made for the new Ordinary Shares to be admitted to
trading on AIM in due course.
The Company also wishes to incentivise existing and prospective new management
by having the ability to issue additional options over Ordinary Shares under the
Company's EMI scheme and in this regard wishes to issue options to the new Chief
Executive, other Directors and employees as follows:
Graham Hine 6,000,000
Robert Goddard 1,000,000
Peter Davenport 1,000,000
Yuri Zhuk 1,000,000
Employees 6,845,000
To the extent that employees agree to receive new options, their existing
options will be cancelled. It is proposed that each of these grants will have an
exercise price of 3 pence per share, which is the Placing Price, and which will
vest in three equal tranches over 3 years (for Directors and employees in
employment prior to July 2007, vesting to commence from October 2008 and for
Directors and employees employed since that date, vesting to commence from
October 2009) and will be exercisable after vesting at any time until the tenth
anniversary of grant.
In addition to the placing of the new Ordinary Shares, the terms of the two
existing £500,000 shareholder loans due originally to be retired in September
2009 will be extended by one year. The final exercise date of the associated
share option agreements (originally expiring in September 2010) will also be
extended by one year and the exercise price reduced to nine pence per share.
The directors, having consulted with Seymour Pierce, the Company's nominated
adviser, consider the revised terms to be fair and reasonable insofar as
shareholders are concerned.
Hardide will hold an EGM shortly to grant authority to the Board to give effect
to the above proposals.
The Company has revised its strategic plan and for the next twelve months will
focus on increasing cash generation in the UK operation and commercialising the
significant customer interest in the US. Capital and revenue expenditure will
be minimised until a firmer upward trend of sales growth is established.
Meanwhile, the Company will continue its discussions with potential partners in
new international markets.
Robert Goddard, Executive Chairman of Hardide plc, said: "The sudden reduction
in orders from a major UK customer and slower than expected growth in the US
meant that new capital was urgently needed to sustain growth and fund ongoing
losses. The Company has re-forecast its sales and its cash requirements under
various scenarios and has concluded that the most robust option is to reduce
discretionary revenue and capital expenditure over the coming year and
concentrate on increasing cash generation in the UK operation. The new
strategic plan has been thoroughly interrogated and the Board believes it to be
deliverable.
"The UK operation, Hardide Coatings Limited, was profitable in the first half of
the financial year and recent events do not diminish the positive results that
the Hardide technology is delivering. The Board remains confident that the
technology is proving its value to blue chip customers worldwide through
extending the life of their parts and reducing downtime. In the US, the Company
will focus on converting the substantial interest and test samples that have
been generated into commercial orders. We are continually encouraged by the
market response to the technology and believe there is now a sound foundation
for progress."
The Company will announce its interim results on Tuesday 17 June 2008.
- Ends -
For further information:
Hardide plc
Robert Goddard, Executive Chairman Tel: +44 (0) 1869 353830
Jackie Robinson, Head of Communications
jrobinson@hardide.com www.hardide.com
Seymour Pierce Limited
Nicola Marrin, Corporate Finance Tel: +44 (0) 20 7107 8000
nicolamarrin@seymourpierce.com
Media enquiries:
Abchurch
Henry Harrison-Topham / George Parker Tel: +44 (0) 20 7398 7719
george.parker@abchurch-group.com www.abchurch-group.com
This information is provided by RNS
The company news service from the London Stock Exchange
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