Tavistock Investments plc (LON:TAVI): Acquisition
Market Cap: £9.8m; Current Price: 3.4p
Acquisition, subscription and new debt facility
Tavistock Investments announced that it has entered into an agreement that will lead to Abacus Associates Financial Services Limited (Abacus) joining the Tavistock Group. It will do so as a wholly owned subsidiary, with effect from 1 April 2016.
Abacus is an independent financial advisory business headquartered in Hereford, with 45 predominantly self-employed financial advisers covering the North East, the Midlands and the South West of the country. Abacus is a directly authorised firm that is regulated by the Financial Conduct Authority (FCA). FCA approval for the transaction has been received.
In its unaudited accounts for the year ended 31 January 2016, Abacus reported pre-tax profits of £781,000 on turnover of £4.5 million. It also reported net assets of £1.59 million, which included £1.23 million in cash. The Company's assets under influence are estimated to exceed £650 million, of which some £250 million are managed directly by Abacus on an advisory basis.
The fixed initial consideration for the transaction is £5.165 million, to be satisfied by the payment of £4.165 million at completion, of which £2.535 million is to be settled in cash, £0.13 million through the adoption of a debt obligation, with the balance of £1.5 million satisfied through the issue to the vendor of 20,000,000 new ordinary shares of 1p each in the capital of the Company at an issue price of 7.5p per share (the Consideration Shares); a further £1 million is to be settled in cash on the first anniversary of completion.
The vendor is also entitled to potentially receive a performance-related deferred consideration, payable in cash in July 2018, subject also to certain other conditions relating to quality of service and customer satisfaction.
The transaction is to be financed using the Group's existing resources, together with the proceeds of a share subscription and a new debt facility, details of which are given below.
The Company also announced that it has received irrevocable undertakings from new and existing shareholders to subscribe for an aggregate of £800,000 for 24,615,385 new ordinary shares of 1p each in the capital of the Company at an issue price of 3.25p per share.
As well, the Company announced that it has entered into a new, three-year, £2 million debt facility with Assetz SME Capital Ltd which is to be secured by a charge in favour of Assetz SME Capital Ltd over the Group's shares in Abacus. Interest on the facility is to be paid monthly at the rate of 9% per annum and repayment of the principal sum will be made at the end of the term from the cash resources and cash generation of the enlarged business.