TT Electronics proposed equity raise

TT Electronics plc (LON:TTG), a global provider of engineered electronics for performance critical applications, has announced its intention to conduct a non pre-emptive placing of 10,000,000 new Ordinary Shares in the Company being approximately 6.1 per cent. of the issued share capital of the Company, at a price of 200 pence per Placing Share, to raise gross proceeds of £20m, to certain existing shareholders and institutional and other investors, by way of an accelerated bookbuild which will be launched immediately following release of this announcement.

The Placing will be effected pursuant to existing authorities of the Company to issue new Ordinary Shares on a non pre-emptive basis, granted at the Company’s annual general meeting on 6 May 2020.

The net proceeds of the Placing will be used to part-fund the acquisition of Torotel, Inc, a US-based designer and manufacturer of high-reliability power and electro-magnetic assemblies and components designed for harsh environments, primarily for defence markets, for an enterprise value of $43.4m (c. £33.9m1), as announced by the Company separately today. The balance of the consideration will be funded using TT’s existing debt facilities. Further information on the Acquisition can be found in the Acquisition announcement.

Certain directors of the Company intend to participate in the Placing to contribute approximately £185k in aggregate.

The Placing is fully underwritten and the net proceeds are intended to part-fund the Acquisition consideration. The Acquisition is not conditional on completion of the Placing.

The Acquisition is subject to customary closing conditions including regulatory conditions and approval by Torotel’s shareholders. Torotel shareholders representing approximately 62% of its common stock have signed agreements to vote in favour of the Acquisition and the Torotel stockholder vote (which requires a 66.67% majority) is expected to take place in November 2020. Completion is expected in Q4 2020.

Details of the Placing

Numis Securities Limited is acting as sole bookrunner in connection with the Placing. The Placing is being conducted through an accelerated bookbuilding process which will be launched immediately following this announcement and will be subject to the terms and conditions set out in Appendix 1. 

Prior to launch of the Placing, the Company consulted with a significant number of its shareholders to gauge their feedback as to the Acquisition and the Placing. Feedback from this consultation was supportive and as a result the Board has chosen to proceed with the Placing to part-fund the Acquisition consideration. If the Acquisition does not complete, in determining its actions in relation to the Placing proceeds, TT will review its capital structure, balance sheet position and the market conditions at the time. The Placing is being structured as a Bookbuild to minimise execution and market risk.

The Bookbuild will open with immediate effect following this Announcement. Results of the Placing will be announced by the Company as soon as practicable after the closing of the Bookbuild. The timing of the closing of the Bookbuild and allocations are at the discretion of the Company and Numis.

Members of the public are not entitled to participate in the Placing. The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing issued Ordinary Shares of TT. This includes the right to receive all dividends and other distributions declared  in respect of such existing issued Ordinary Shares after the date of issue of the Placing Shares.

Each investor, by participating in the Placing, will be deemed to have read and understood this Announcement in its entirety, and to be bound by the terms and conditions contained in Appendix 1 and to be providing the representations, warranties, acknowledgements, indemnities, undertakings and agreements contained in Appendix 1. Your attention is drawn to the detailed terms and conditions of the Placing set out in Appendix 1.

The Company will apply for admission of the Placing Shares to listing on the premium listing segment of the Official List of the Financial Conduct Authority and to trading on the main market for listed securities of London Stock Exchange plc. It is expected that Admission will take place, and that trading in the Placing Shares will commence, at 8.00 a.m. on Tuesday 22nd September 2020.

The Placing is conditional upon, amongst other things, Admission becoming effective. The Placing is also conditional upon the placing agreement between the Company and Numis becoming unconditional and not having been terminated in accordance with its terms. Further details of the Placing Agreement can be found in the terms and conditions of the Placing contained in Appendix 1.

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