Datong Plc : Seven Tech. Holdings - Offer Update

Not for release, publication or distribution, in whole or in part, directly or indirectly in, into or from the united states, australia, canada, the republic of south africa or japan or any other jurisdiction where to do so would constitute a violation of the relevant laws or regulations of such jurisdiction

24 May 2013

RECOMMENDED CASH offer by

SEVEN TECHNOLOGIES HOLDINGS LIMITED

FOR THE ENTIRE ISSUED AND TO BE ISSUED SHARE CAPITAL OF

Datong PLC

New Bank Facilities

In the announcement on 10 May 2013 of Seven Technologies Holdings Limited's ("Seven") intention to make a recommended cash offer (the "Offer") to acquire the entire issued and to be issued share capital of Datong plc ("Datong") at the offer price of 50 pence per Datong Share, it was disclosed that as soon as possible Seven intended to raise long term (more than 5 years) debt of up to £5.6 million and short term (1 year) debt of up to £1 million from a single bank on terms acceptable to Seven and YFM, with the new debt being used to refinance up to £5.3 million of YFM's investment in Seven, including an existing loan of £2 million.

Seven is now able to announce that a facility agreement dated 21 May 2013 (and countersigned by Seven on 24 May 2013)  ("VCT and Acquisition Facilities Letter") for the provision of a £2 million bank facility ("VCT Facility") and a £3.6 million bank facility ("Acquisition Facility") (together the "VCT and Acquisition Facilities") has been entered into between Seven and Danske Bank ("Danske").  The purpose of the VCT Facility is to fund the refinancing of existing YFM loan notes.  The purpose of the Acquisition Facility is to finance part of the acquisition cost of ordinary shares in Datong pursuant to the Offer. The term of the VCT and Acquisition Facilities Letter is seven years.

A copy of this announcement, the Offer Document andthe VCT and Acquisitions Facilities Letter,will be available free of charge, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, for inspection on Seven's website at http://www.Seventechnologies.co.uk and the Datong website (http://www.datong.co.uk/investor_relations.htm) and will remain so during the course of the Offer. For the avoidance of doubt, the content of the websites referred to is not incorporated into and does not form part of this announcement.

The VCT and Acquisition Facilities will be secured against the assets of the Seven Group prior to the proposed re-registration of Datong as a private limited company.  Following the re-registration, Danske will take a floating charge over all of the assets of the Enlarged Group. 

Draw down of the Acquisition Facility is conditional on the Offer for Datong having become unconditional in all respects. Seven is also obliged to ensure that Datong will be de-listed from the AIM market of the London Stock Exchange and re-registered as a private limited company as soon as reasonably practicable after completion of the Acquisition.

Under the VCT and Acquisition Facilities Letter, Danske is entitled to withdraw the VCT and Acquisition Facilities and/or demand repayment of all sums owing to it, on the fifth anniversary of the first draw down date (the "Early Termination Date").  Seven, equally, has a right to terminate the VCT and Acquisition Facilities on the Early Termination Date.  Additionally, it is possible for Seven to repay the amount owing to Danske earlier than agreed, but early repayment may incur a break cost.

The interest rate payable on the VCT and Acquisition Facilities is the aggregate of LIBOR and 2.85 per cent. per annum.

The VCT and Acquisitions Facilities Letter contains customary undertakings and representations.  Seven must also procure that each member of the Enlarged Group complies with the following financial covenants:

Seven has also entered into overdraft facility letters dated 20 May 2013 (and countersigned by Seven on 24 May 2013) with Danske in the amounts of £1,000,000 and £300,000.  Both overdrafts are on-demand facilities, as is customary for overdrafts.  Interest on each overdraft accrues at a rate of 3 month LIBOR from day to day plus a margin of 2.85 per cent.  The £1,000,000 overdraft may be used to finance some of the acquisition cost of ordinary shares in Datong plc pursuant to the Offer, but this is not expected to be needed.  The £300,000 overdraft is for working capital purposes.

Following draw down of the Acquisition Facility, it is envisaged that the terms of the Investment Agreement described in the Offer Document will be varied such that on completion of the Acquisitionthe shareholdings in Seven will be:

Acceptances

As indicated in the Offer Document, the Offer will initially remain open for acceptance until 1.00 pm (London time) on 4 June 2013.

In order to accept the Offer, Datong Shareholders who hold their Datong Shares in certificated form (that is, not in CREST) should complete, in accordance with the instructions printed on it, sign and return the Form of Acceptance (together with their share certificate(s) and any other documents of title) as soon as possible and, in any event, so as to be received by no later than 1.00 pm (London time) on 4 June 2013 by Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen, B63 3DA.   The procedure for acceptance of the Offer in respect of certificated Datong Shares is set out in paragraph 13(a) of the letter from Seven which forms Part II of the Offer Document and Appendix 1 to the Offer Document and in the accompanying Form of Acceptance.

In order to accept the Offer, Datong Shareholders who hold their DatongShares in uncertificated form (that is, in CREST), should make their acceptance electronically through CREST so that the TTE instruction(s) settles not later than 1.00 pm (London time) on 4 June 2013. If you are a CREST sponsored member you should refer to your CREST sponsor before taking any action. Only your CREST sponsor will be able to send the TTE Instruction(s) to Euroclear in relation to your Datong Shares in uncertificated form. The procedure for acceptance of the Offer in respect of uncertificated Datong Shares is set out in paragraph 13(b) of the letter from Seven which forms Part II of the Offer Document and Appendix I to the Offer Document.

Copies of the Offer Document, the Form of Acceptanceandthe VCT and Acquisitions Facilities Letterwill be available for inspection at the offices of Osborne Clarke at One London Wall, London, EC2Y 5EB, during normal business hours on any weekdays (Saturdays, Sundays and public holidays excepted).

If the Offer is declared unconditional in all respects with 75 per cent. or more acceptances, Seven intends to procure the making of an application by Datong to the London Stock Exchange for the cancellation of the admission of the Datong Shares to trading on AIM. It is anticipated that such cancellation of trading will take effect no earlier than 20 Business Days after the Offer becomes or is declared unconditional in all respects.

The cancellation of the trading of the Datong Shares would significantly reduce the liquidity and marketability of any Datong Shares not asserted to the Offer and their value may be affected in consequence. 

It is also intended that, following the Offer becoming or being declared unconditional in all respects, Datong will be re-registered as a private company.

Capitalised terms used but not defined in this announcement have the same meaning as given to them in the Offer Document.

Enquiries

BDO, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for Seven, as financial adviser in relation to the Offer, and is not acting for or advising any other person and accordingly will not be responsible to any other person other than Seven for providing the protections afforded to the clients of BDO or for providing advice in relation to the contents of this announcement or any offer or arrangement referred to herein or in the Offer Document and Form of Acceptance.  Neither BDO nor any of its affiliates owns or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of BDO in connection with this announcement, any statement contained herein or otherwise.

Disclosure requirements of the Code

Under Rule 8.3(a) of the City Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified. 

An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror(s).  An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 p.m. on the 10th Business Day following the commencement of the offer period and, if appropriate, by no later than 3.30 p.m. on the 10th Business Day following the announcement in which any paper offeror is first identified.  Relevant persons who deal in the relevant securities of the offeree company or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the City Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror.  A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8.  A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 p.m. on the Business Day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified.  If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.

Overseas jurisdictions

The availability of the Offer in, and the release, publication or distribution of this announcement in or into, jurisdictions other than the United Kingdom may be restricted by law.  Therefore persons into whose possession the Offer Document or this announcement comes who are not resident in the United Kingdom should inform themselves about, and observe, any applicable restrictions.  Datong Shareholders who are in any doubt regarding such matters should consult an appropriate independent adviser in the relevant jurisdiction without delay.  Any failure to comply with such restrictions may constitute a violation of the securities laws of any such jurisdiction. This announcement has been prepared for the purposes of complying with English law and the Code and the information disclosed may not be the same as that which would have been disclosed if the announcement had been prepared in accordance with the laws of jurisdictions outside the United Kingdom.

In particular, unless otherwise determined by Seven and permitted by applicable law and regulation, the Offer will not be made, directly or indirectly, in or into, or by the use of mails or any means of instrumentality (including, without limitation, telephonically or electronically) of interstate or foreign commerce of, or any facilities of a national securities exchange of any Restricted Jurisdiction (including the United States, Australia, Canada, the Republic of South Africa and Japan).  Accordingly, except as required by applicable law, copies of the Offer Document and this announcement are not being, and may not be, mailed or otherwise forwarded, distributed or sent in, into or from any Restricted Jurisdiction.  Persons receiving the Offer Document or this announcement (including without limitation nominees, trustees or custodians) must not forward, distribute or send it into any Restricted Jurisdiction.