Maxima Holdings plc : Recommended Acquisition of Maxima Holdings PLC by Redstone PLC and Placing

The Independent Maxima Directors and the board of directors of Redstone are pleased to announce that they have reached agreement on the terms of a recommended acquisition of Maxima by Redstone, to be effected by means of a scheme of arrangement under Part 26 of the Companies Act 2006.  Under the terms of the Scheme, Maxima Shareholders will receive 28 New Redstone Shares for each Scheme Share held by them.

The acquisition of Maxima fits with Redstone's strategy to be a leading provider of network based end to end managed services and technology and infrastructure solutions and the combination will create an independent UK managed services provider with enhanced revenues, customer scale and technical ability.  The combination of the businesses is complementary in terms of technical capabilities and should provide good potential for cross selling into each company's respective client bases.

Redstone will, conditional upon, inter alia, the Scheme becoming effective, raise approximately £3,000,000 before expenses by means of a placing of new Redstone Shares at 1 pence per Redstone Share, representing a premium of 27.4 per cent. to the Closing Price of 0.785 pence per Redstone Share on 14 September 2012 (being the last practicable date prior to the date of this Announcement).  The Placing will be used to fund the implementation of the synergies between the businesses of Redstone and Maxima identified by the Redstone Board, as well as to meet the costs associated with the Acquisition and to provide the Enlarged Group with general working capital.

Redstone will convene a general meeting at which resolutions to approve the Placing will be put to shareholders and a circular, providing further details of the Placing and the Scheme and the Scheme's effect on Redstone, will be circulated to Redstone Shareholders shortly.

Summary and highlights

Acquisition

• Under the terms of the Scheme, Maxima Shareholders will receive 28 New Redstone Shares for each Scheme Share held, which, based on the Placing Price, represents a premium of approximately:
  • 38.3 per cent. to the Closing Price of 20.25 pence per Maxima Share on 14 September 2012 (being the last practicable date prior to the date of this Announcement); and
  • 18.3 per cent. to the average Closing Price of 23.67 pence per Maxima Share over the three month period ended on and including 14 September 2012.
• Based on the Placing Price, the Acquisition values the entire existing issued ordinary share capital of Maxima at approximately £9.9 million and each Maxima Share at 28 pence.  Based on Maxima's reported net debt at 31 May 2012 of £3.9 million, the Acquisition represents an enterprise value for Maxima of approximately £13.8 million.
• Material cost savings are expected, estimated to be in the region of £2.3 million.
• Maxima's Indian operations are expected to deliver significant service and cost benefits to the Enlarged Group.
• The Acquisition is expected to be earnings enhancing for the Enlarged Group following implementation of cost synergies identified. *
• The Enlarged Group will be better positioned to capitalise on growth opportunities in managed IT services and cloud computing.
• The Acquisition has been approved by Barclays Bank plc, who has conditionally agreed to provide a new facility to the Enlarged Group.
• The Independent Maxima Directors, who have been so advised by Oakley Capital, consider the terms of the Acquisition to be fair and reasonable.  In providing its advice, Oakley Capital has taken into account the commercial assessments of the Independent Maxima Directors.  In addition, the Independent Maxima Directors consider the terms of the Acquisition to be in the best interests of Maxima Shareholders as a whole.
• The Maxima Directors have irrevocably undertaken to vote in favour of the Acquisition and Scheme Resolutions in respect of their entire beneficial shareholdings in Maxima, amounting to, in aggregate, 3,582,651 Maxima Shares, representing approximately 10.2 per cent. of the existing issued ordinary share capital of Maxima.
• Certain other significant shareholders of Maxima have also irrevocably undertaken to vote in favour of the Acquisition and Scheme Resolutions in respect of a total of 11,554,062 Maxima Shares, representing approximately 32.8 per cent. of the existing issued ordinary share capital of Maxima.
• Irrevocable undertakings to vote in favour of the Redstone Resolutions at the Redstone General Meeting have been secured from the holders of 612,056,552 Redstone Shares (including all Redstone Directors) representing approximately 19.7 per cent. of the Redstone Shares in issue at the date of the Scheme Document

* This statement is not intended to be a profit forecast, nor should it be interpreted to mean that the future earnings per share of Redstone will necessarily match or exceed the historical earnings per share of Redstone or Maxima.

Placing

• The Placing Price represents a 27.4 per cent. premium to the Closing Price of 0.785 pence per Redstone Share on 14 September 2012 (the Business Day prior to this announcement).
• The Placing proceeds will be used to fund the implementation of the synergies between the businesses of Redstone and Maxima identified by the Redstone Board, as well as to meet the costs associated with the Acquisition and to provide the Enlarged Group with general working capital.
• The Placing is conditional upon, inter alia, the Scheme becoming effective, the resolutions to be put to Redstone Shareholders at the Redstone General Meeting being passed and Admission becoming effective on or before 8.00 a.m. on 12 November 2012.
• MXC Capital, representing the interests of Ian Smith and Tony Weaver, has agreed to invest £550,000 though the subscription of 55,000,000 Redstone ordinary shares in the Placing at the Placing Price.  Upon Completion of the Acquisition and Admission, MXC Capital, and Ian Smith's self invested personal pension plan will be interested in 730,298,676 Redstone Shares representing 16.6 per cent. of the enlarged issued share capital of Redstone.  Ian Smith is Executive Chairman of Maxima and a non-executive director of Redstone.  Tony Weaver is Chief Executive Officer of Redstone.
• The participation in the Placing by MXC Capital, representing the interests of Ian Smith and Tony Weaver (directors of Redstone), is deemed to be a related party transaction under the AIM Rules. In addition, the Acquisition is deemed to be a related party transaction under the AIM Rules as Ian Smith is a director of, and MXC Capital has shareholdings in, both Redstone and Maxima (together, the "Proposals"). The Independent Redstone Directors, who have been so advised by Redstone's nominated adviser, finnCap, believe that the terms of the Proposals are fair and reasonable so far as the Redstone Shareholders are concerned.

Commenting on the Acquisition:

Richard Ramsay, Non-Executive Chairman of Redstone, said:

"I am pleased to announce the proposed Acquisition which the Board of Redstone believes will confer benefits to shareholders of both Redstone and Maxima. The Enlarged Group will benefit from enhanced scale, an enlarged client base with increased cross selling opportunities, a broader technical offering and a reduced cost base. We are excited by the opportunities for the Enlarged Group to capitalise on its position as a leading independent UK managed services provider and to deliver healthy profit margins. I would like both to thank Redstone's institutional shareholders for their support in our Placing and the Acquisition and to welcome Maxima's shareholders on to the register. The Placing Price conveys the continued strong support we have enjoyed from a high quality investor base."

Michael Brooke, Senior Non Executive Director of Maxima, said:

"The proposed Acquisition enables Maxima Shareholders to benefit from the cost savings that will become available from a combination of the two groups, whilst also benefiting from being part of a larger business, better placed to exploit growth in the managed IT services and cloud computing market. Having fully explored potential disposal options for Maxima's core Managed Services, Infrastructure and Applications division, the Independent Maxima Directors believe that the proposed terms of the Acquisition would result in a better financial return for Maxima Shareholders and which fairly reflects the potential benefits of combining the two businesses. The Maxima Independent Directors therefore urge Maxima Shareholders to vote in favour of the Acquisition and the Scheme Resolutions to be proposed at the Court Meeting and General Meeting."

Expected Timetable

Scheme document posted to  Company's shareholders - 24 September 2012

The following dates are indicative only and will depend, among other things, on the date upon which the Court sanctions the Scheme and confirms the associated reduction in capital.

Last day of dealings in, and for registration of transfers of, Maxima Shares - 9 November 2012

Scheme Court Hearing - Tuesday 6 November 2012

Scheme Record Time - 6.00 p.m. on 6 November 2012

Reduction Court Hearing - Friday 9 November 2012

Effective Date of the Scheme - Friday 9 November 2012

Cancellation of admission of Maxima Shares to trading on AIM - 7.00 a.m. on 12 November 2012

Commencement of dealings in New Redstone Shares on AIM - 8.00 a.m. on 12 November 2012

Latest date for despatch of New Redstone Share certificates and crediting of CREST accounts under the Scheme - 30 November 2012

Long Stop Date - 14 December 2012

The Court Meeting and the Maxima General Meeting will each be held at the offices of Olswang LLP, 90 High Holborn, London WC1V 6XX, United Kingdom.

Enquiries:
For further information, please contact:

Redstone plc
Tony Weaver, CEO / Peter Hallett, CFO                                              
Tel. +44 (0)845 201 000

finnCap   
(financial adviser to Redstone)                                                
Tel. +44 (0)20 7220 0500
Marc Young / Charlotte Stranner

Newgate Threadneedle    
(public relations adviser to Redstone)                                                 
Tel. +44 (0)20 7653 9850
Josh Royston / Guy McDougall

Maxima Holdings plc
Michael Brooke - Senior Non Executive Director                              
Tel: +44 (0)1242 211 211
David Memory - Chief Financial Officer                                                   

Oakley Capital Limited
(financial adviser to Maxima)
Chris Godsmark / Chris Brooks                                                 
Tel: +44 (0)20 7766 6900

Cenkos
(Nominated adviser to Maxima)
Stephen Keys / Adrian Hargrave                                                              
Tel: +44 (0)20 7397 8900

MHP Communications
(public relations adviser to Maxima)
Reg Hoare / Vicky Watkins                                                         
Tel: +44 (0)20 3128 8100

This summary should be read in conjunction with the full text of this Announcement. The Scheme will be subject to the conditions set out in Appendix I to this Announcement and to the full terms and conditions to be set out in the Scheme Document when issued. Appendix II contains definitions of certain expressions used in this summary and in this Announcement.
This Announcement is for information purposes only and is not intended and does not constitute or form part of an offer or invitation to sell or purchase any securities or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, pursuant to the Scheme or otherwise. The Acquisition will be made solely by the Scheme Document and the accompanying Forms of Proxy which will contain the full terms and conditions of the Scheme.

Oakley Capital is acting for Maxima and no one else in connection with the Scheme and will not regard any other person as its client nor be responsible to anyone other than those persons for providing the protections afforded to clients of Oakley Capital nor for providing advice in relation to the Scheme, the contents of this Announcement or any other matters referred to in this Announcement. Oakley Capital is authorised and regulated by the Financial Services Authority in respect of regulated activities.

Cenkos Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting only for Maxima and no one else in connection with the Scheme and will not be responsible to anyone other than Maxima for providing the protections afforded to clients of Cenkos Limited or for providing advice in relation to the Scheme, the contents of this Announcement or any other matters referred to in this Announcement.
finnCap Ltd, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting only for Redstone and no one else in connection with the Scheme and will not be responsible to anyone other than Redstone for providing the protections afforded to clients of finnCap Ltd or for providing advice in relation to the Scheme, the contents of this Announcement or any other matters referred to in this Announcement.

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 this Announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of England.

Overseas Shareholders
The distribution of this Announcement in jurisdictions outside the United Kingdom may be restricted by the laws of those jurisdictions and therefore persons into whose possession this Announcement comes should inform themselves about and observe any such restrictions. Failure to comply with any such restrictions may constitute a violation of the securities laws of any such jurisdiction. To the fullest extent permitted by applicable law, the companies involved in the Acquisition disclaim any responsibility or liability for the violation of such restrictions by any person.

The Acquisition relates to the acquisition of shares in a UK public company and is proposed to be made by means of a scheme of arrangement under Part 26 of the 2006 Act. In particular, with respect to investors in the United States, a transaction effected by means of a scheme of arrangement is not subject to the tender offer rules under the US Exchange Act. Accordingly, the Scheme is subject to the disclosure requirements, rules and practices applicable in the United Kingdom to schemes of arrangement, which differ from the requirements of US tender offer rules. Financial information on the Maxima Group included in the relevant documentation has been prepared in accordance with accounting standards applicable to listed companies in the UK, being IFRS as adopted by the European Union. These may not be comparable to the financial statements of US companies.

This document is not an offer of securities for sale in the United States. The New Redstone Shares which will be issued in connection with the Acquisition have not been, will not be and are not required to be registered with the US Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "US Securities Act") or under the securities laws of any state, district or other jurisdiction of the United States, and may not be offered, sold, delivered or transferred except pursuant to an available exemption from or in a transaction not subject to the registration requirements of the US Securities Act and applicable US state securities laws. It is expected that the New Redstone Shares will be issued in reliance upon the exemption from the registration requirements of the US Securities Act provided by section 3(a)(10) of that Act. To qualify for the exemption from the registration requirements of the US Securities Act, Maxima will advise the Court that Redstone will rely on the section 3(a)(10) exemption based on the Court's sanctioning of the Scheme, which will be relied upon by Redstone as an approval of the Scheme following a hearing upon the fairness of the terms and conditions of the Scheme to Scheme Shareholders at which hearing all such shareholders are entitled to attend in person or through counsel to support or oppose the sanctioning of the Scheme and with respect to which notification has been given to all such shareholders.

Neither the SEC nor any other US federal or state securities commission or regulatory authority has approved or disapproved the New Redstone Shares or passed an opinion upon the fairness or merits of such securities or upon the accuracy or adequacy of the disclosures contained in this document. Any representation to the contrary is a criminal offence in the United States.

Forward-looking statements
This Announcement includes certain "forward-looking" statements with respect to the financial condition, results of operations and business of Maxima and/or Redstone and certain plans and objectives of the board of directors of Maxima and Redstone with respect thereto. The forward-looking statements contained herein may include statements about the expected effects on Maxima or Redstone of the Acquisition, the expected timing and scope of the Acquisition, anticipated earnings enhancements and other strategic options, as well as other statements in this Announcement other than historical facts. Forward-looking statements include, without limitation, statements typically containing words such as "intends", "expects", "anticipates", "targets", "estimates" and words of similar import. These statements are based on assumptions and assessments made by the boards of directors of Maxima or Redstone in the light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe appropriate. They have not been reviewed by the auditors of Maxima or Redstone. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements.

All subsequent oral or written forward-looking statements attributable to Maxima or Redstone or any of their respective members, directors, officers or employees or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above. All forward-looking statements included in this Announcement are based on information available to Maxima or Redstone on the date of this Announcement and are made only as of the date of this Announcement. Undue reliance should not be placed on such forward-looking statements.
Subject to compliance with the Code and the AIM Rules, neither Maxima or Redstone intend, or undertake any obligation, to update any information contained in this Announcement.

Dealing disclosure requirements
Under Rule 8.3(a) of the Code, any person who is interested in one 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. (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 p.m. (London time) 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 Code, any person who is, or becomes, interested in one 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. (London time) 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 of the Code.

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 of the Code).

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. You should contact the Panel's Market Surveillance Unit on +44 (0) 20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Opening Position Disclosure

Redstone is, on the same date as the date of this announcement, disclosing the details required to be disclosed by it under Rule 8.1(a) of the Code.

Information relating to Maxima Shareholders

Addresses, electronic addresses and certain information provided by Maxima Shareholders, persons with information rights and other relevant persons for the receipt of communications from Maxima may be provided to Redstone during the Offer Period as requested under Section 4 of Appendix 4 to the Code.

Publication on website and availability of hard copies

A copy of this announcement will be made available free of charge, at www.Redstone.com and www.Maxima.co.uk by no later than 12.00 noon on 17 September 2012 and will be available during the course of the Scheme. You may request a hard copy of this Announcement, free of charge, by contacting David Memory, the Company Secretary of Maxima, on +44 118 923 5150.  You may also request that all future documents, announcements and information sent to you in relation to the Scheme should be in hard copy form.
For the avoidance of doubt, the content of the websites referred to above is not incorporated into and does not form part of this Announcement.

Rule 2.10 Disclosure
In accordance with Rule 2.10 of the Code, Maxima confirms that at the date of this Announcement, there are 35,261,402 Maxima Shares in issue and admitted to trading on AIM. The ISIN of the Maxima Shares is GB00B034R743.

In accordance with Rule 2.10 of the Code, Redstone confirms that at the date of this Announcement, there are 3,102,419,622 Redstone Shares in issue and admitted to trading on AIM. The ISIN of the Redstone Shares is GB00B1VGFJ71.