CityFibre Infrastructure : Fundraise

CityFibre Infrastructure Holdings PLC
Placing to raise minimum gross proceeds of £185 million
Offer for Subscription to raise up to a further £15 million

• Commencement of FTTH network build in 5 to 10 UK towns & cities
• Acquisition of Entanet, provider of wholesale communications services
• Expansion of full fibre metro networks into new towns & cities

CityFibre Infrastructure Holdings PLC ('CityFibre' or the 'Company'), a designer, builder, owner and operator of fibre optic infrastructure in UK towns and cities, today announces that it intends to raise minimum gross proceeds of £185 million at 55 pence per share, fully underwritten by Citigroup, finnCap, Liberum and Macquarie (the 'Banks') (the 'Firm Placing'), with the intention to raise further proceeds through an accelerated bookbuilding process which will be launched immediately following this announcement (the 'ABB Placing') (together, the 'Placing'). In addition, the Company intends to raise further gross proceeds of up to £15 million through a non-underwritten offer for subscription (the 'Offer for Subscription').

The Company is pleased with the support of its new and existing shareholders, including Woodford Investment Management Ltd who has agreed to subscribe for 65,454,545 shares in the Firm Placing for a total consideration of £36.0 million.

The net proceeds of the Placing and the Offer for Subscription (together, the 'Capital Raising') will be used to fund the growth of the Company's full fibre network in the UK, including:

• The expansion of CityFibre's fibre metro networks from 42 UK towns and cities today to not less than 50 towns and cities by 2020;
• The commencement of construction of Fibre to the Home ('FTTH'), addressing the residential market, in five to ten UK towns and cities during 2018; and
• In support of the Company's strategy to focus on wholesale fibre services and accelerate the commercialisation of CityFibre's fibre assets, the acquisition of Entanet International Limited ('Entanet'), a provider of wholesale communications services, for a consideration of £29 million in cash (on a cash free, debt free basis and subject to adjustments).

Growth in data traffic is driving demand for investment in digital communications infrastructure and particularly in fibre optic broadband networks. The UK has one of the highest levels of internet adoption in the world, but lags behind nearly all OECD nations in terms of fibre infrastructure. Recent UK government and regulatory policy for greater competition and investment has resulted in a promising pipeline of projects for which CityFibre, as a builder and wholesaler of full fibre infrastructure, is well positioned.

Today's announcement follows CityFibre's successful participation in the FTTH trial in York. The trial demonstrated strong demand from Internet Service Providers ('ISPs') and consumers for gigabit speed FTTH services, and showed the propensity for consumers to switch to FTTH connections. The York trial demonstrates the commercial viability of FTTH in the UK. CityFibre is now in advanced negotiations with ISPs that will market full-fibre broadband services to consumers, deployed over its networks.

The acquisition of Entanet, which has approximately 1,500 channel partners having conducted business with it in the 12 months ending 31 December 2016, will substantially increase the Company's wholesale capabilities and its relationships with service providers, thereby extending CityFibre's channels to market. By combining CityFibre's fibre infrastructure with Entanet's established wholesale products, systems and relationships with Channel Partners, the Company expects to realise synergies of over £3 million per annum within three years.

CityFibre will extend its current metro footprint selectively, ensuring that each new metro project is anchored by long term contracts that deliver a satisfactory return on the capital investment required and that cover a substantial portion of projected capital expenditure. The same policy will apply to the extension or expansion of existing town and city networks to serve public sector, business and mobile customers.

Placing details

• Fully underwritten Firm Placing of 336,363,636 Placing Shares in the Company, representing approximately 126.6% of CityFibre's existing issued ordinary share capital, to both existing and new institutional investors and raising gross proceeds of minimum £185 million
• Potential to increase the Placing through an accelerated bookbuilding process, to commence immediately following this announcement, with the intention to raise further proceeds
• The Placing is to be made at 55 pence per Placing Share, representing a 9.09% discount to the Closing Price of 60.50 pence per Ordinary Share on 4 July 2017
• New Ordinary Shares in respect of which firm commitments are obtained from investors in the ABB Placing will be underwritten by the Banks upon completion

Offer for Subscription details

• A non underwritten Offer for Subscription to raise up to £15 million, comprising up to 27,272,727 Offer for Subscription Shares, will be open to certain qualifying shareholders of the Company
• The Offer for Subscription is to be made at 55 pence per Offer for Subscription Share, representing a 9.09% discount to the Closing Price of 60.50 pence per Ordinary Share on 4 July 2017
• Expected to open on or around 11 July 2017, alongside the publication of the Prospectus

A Prospectus containing full details of the Capital Raising is expected to be published on or around 11 July 2017 and a General Meeting in connection with the Capital Raising will be held on or around 27 July 2017. Shareholders' approval is required for the Capital Raising, including the Placing and the Offer for Subscription, by way of a special resolution.

An application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to AIM, and it is expected that Admission will become effective and dealings in the New Ordinary Shares will commence on or around 28 July 2017. The Prospectus will be submitted to the National Storage Mechanism and will be available for inspection at www.morningstar.co.uk/uk/nsm following publication.

Greg Mesch, Chief Executive Officer of CityFibre, said:

'We are building Gigabit Britain, driven by growing demand from Internet Service Providers and their customers to switch to full-fibre infrastructure. Our announcement to enter the residential market is the first step in our vision to bring gigabit connectivity to millions of UK homes and small businesses.

'This is about more than just better broadband - this is about future-proofing the digital infrastructure we've all come to rely on at work, at school, at home and in our communities. It's also about stimulating the market, creating jobs and growth. The Government and Ofcom recognise that investment in alternative fibre networks will catalyse growth in the UK's digital economy as well as reduce the country's reliance on BT Openreach.

'With Entanet now part of the CityFibre family, our combined offering will accelerate the take-up of services over our growing network footprints, leveraging Entanet's enviable channel partner network and continuing to transform digital connectivity for thousands of UK businesses.

'Today's capital raising also better positions CityFibre to undertake larger projects coming forward with the public sector as well as mobile operators in readiness for their small-cell roll-outs and 5G services.'Citigroup Global Markets Limited ('Citigroup' or 'Citi') is acting as Sole Global Coordinator, Joint Bookrunner and Joint Underwriter, while Macquarie Capital (Europe) Limited ('Macquarie'), Liberum Capital Limited ('Liberum') and finnCap Ltd ('finnCap') are together acting as Joint Bookrunners and Joint Underwriters in connection with the Capital Raising. N M Rothschild & Sons Limited ('Rothschild') is acting as financial adviser.

The preceding summary should be read in conjunction with the full text of the following announcement, together with the Prospectus.

The person responsible for making this announcement on behalf of the Company is Terry Hart.

Enquiries

CityFibre Infrastructure Holdings plc
+44 (0)845 293 0774
Greg Mesch, Chief Executive Officer
Terry Hart, Chief Financial Officer
James Enck, Head of Investor Relations

Vigo Communications
+44 (0)20 7830 9703
Jeremy Garcia
Fiona Henson
Natalie Jones

Citigroup Global Markets Limited
Sole Global Co-ordinator, Joint Bookrunner and Joint Underwriter
+44 (0) 207 986 4000
Stuart Field
Alex Carter
Sumit Guha

finnCap Ltd
Joint Bookrunner and Joint Underwriter
+44 (0)20 7220 0500
Stuart Andrews
Christopher Raggett
Simon Johnson
Liberum
Joint Bookrunner and Joint Underwriter
+44 (0)20 3100 2000Steve Pearce
Richard Bootle
Cameron Duncan

Macquarie Capital
Joint Bookrunner and Joint Underwriter
+44 (0) 203 037 2000
Ben Bailey
Alex Reynolds

Rothschild
Financial Advisor
+44 (0)20 7280 5000
Anton Black
Peter Nicklin
Noel Monro

For more information on the transaction please see the RNS issued in full here