Press releases
Announcement of Placing to fund European expansion
28/06/2001
- Placing of up to 17.2 million new ordinary shares to new and existing shareholders
- Funds to be used to finance expansion in Continental Europe
- Hoare Govett Limited is acting as broker to the Placing
- Announcement follows recent acquisitions in Sweden and Spain
- UK & European games markets set for period of rapid growth stimulated by new console formats
- Company continues to perform strongly in 2001
- Like for like sales up 19 per cent for 21 weeks to 24 June 2001
Peter Lewis, Chairman, said:
"The Board has long held the view that we should expand our leading market position in the UK into Continental Europe. The outlook for our industry over the coming years could not be more favourable given the unprecedented schedule of new console launches. Our initial moves into Sweden and Spain are a precursor to the development of our Group outside the UK".
| Enquiries: | ||
|---|---|---|
| Electronics Boutique plc | ||
| John Steinbrecher/Martin Long | 01344 464040 | |
| Hoare Govett | ||
| Mark Astaire/Andrew Osborne | 020 7678 8000 | |
| Financial Dynamics | ||
| Nic Bennett/Ben Foster | 020 7831 3113 |
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN THE UNITED STATES, CANADA, JAPAN OR AUSTRALIA
The Electronics Boutique plc Announcement of Placing to Fund European Expansion
The Electronics Boutique Plc ("Electronics Boutique" or "the Company") today announces its intention to issue up to 17.2 million new ordinary shares by way of a cash placing, representing approximately 5% of the current issued share capital of the Company (the "Placing"). The funds raised by the Placing will be used to finance the Company's current expansion plans.
Reasons for the Placing & use of proceeds
Electronics Boutique is the UK's leading specialist retailer of computer software and video games, operating from over 300 Electronics Boutique and Game outlets in the UK and Eire, together with on-line shopping services on the Internet and on Digital TV platforms.
The UK and European markets are set to benefit from a period of rapid growth stimulated by a number of new console formats that have either been recently released or are due for release in the next 12 months. The popularity of PlayStation 2 is rapidly expanding following on from its launch on 24 November 2000, and the Board expects more than 100 new PlayStation 2 software titles to be released before Christmas. Gameboy Advance was launched in Europe on 22 June 2001 and early indications of sales are very encouraging. In addition to the introduction of these two recent product formats, Nintendo have confirmed a US launch date of 5 November 2001 for their GameCube format, and Microsoft have set a date of 8 November 2001 for the US debut of the XBox. Both of these formats are set for their European launch in the Spring of 2002.
Having consolidated its position as the leading industry player in the UK, the Board of Electronics Boutique sees Continental Europe as a key area for future development.
Already this year, as part of its development programme, the Company has acquired the assets of BarrysWorld which is the UK's second largest on-line games business. In addition, it has seen its Swedish store base treble in size, with the acquisition of 4 stores from Softland AB on 19 June and a further 4 stores from Nordic Games on 26 June 2001. These 8 stores when added to the 4 stores established in late 1999 mean that the Company now operates the largest specialist chain of computer software and video games stores in the Swedish market, with plans for further openings.
Earlier this month, on 8 June, the Company announced its first significant move into Continental Europe with the acquisition of the CentroMAIL chain in Spain. CentroMAIL is the leading specialist retailer of computer software and video games in Spain with a national network of 69 stores, of which 11 are owned and 58 are franchised. CentroMAIL also has a mail and web order operation, an on-line games service and wholesaling activities supplying its own chain and third party retailers.
As well as investing in the Spanish and Swedish markets the Company believes there are further expansion opportunities in Continental Europe. The Board wishes to ensure that the Company is able to finance and execute quickly, when appropriate, these new and exciting investment and acquisition opportunities, when they arise, enabling it to compete more effectively in a rapidly growing market-place. The acquisition of CentroMAIL highlights that there are acquisition opportunities available to the Company, given its strong track record and balance sheet. Accordingly, the Board believes that the funds raised by the proposed share placing will provide the necessary flexibility to realise the Company's current expansion plans.
Current trading and prospects
The Company has continued to perform strongly throughout the first 21 weeks of the year to the week ended 24 June 2001, with like for like sales gaining momentum to 19%. The launch of Gameboy Advance on 22 June 2001 was a tremendous success which augurs well for the ensuing summer months, which also sees a list of eagerly anticipated software titles for PlayStation 2 such as Onimusha from Capcom and Gran Turismo 3 from Sony, both scheduled for release in July.
The Board is therefore confident of achieving good progress during the current financial year.
Details of cash Placing
A maximum total of 17.2 million new ordinary shares of 5 pence each will be issued for cash under the Placing (the "Placing Shares"), representing approximately 5 percent of the existing issued share capital of the Company. The Placing Shares are proposed to be placed by Hoare Govett Limited ("Hoare Govett"), the Company's agent to the process, through an accelerated bookbuilding exercise. The Placing Shares are being made available to both new and existing institutional shareholders.
The Placing is conditional on, inter alia, the admission of the Placing Shares to the Official List of the UK Listing Authority ("the Official List") becoming effective by 9:00am on 3 July 2001 (or such later time as the Company and Hoare Govett may agree), and will be conducted in accordance with the terms and conditions as set out in the appendix. Application will be made for the admission of the Placing Shares to the Official List, and to the London Stock Exchange for admission to trading. It is expected that admission will become effective and dealings in the Placing Shares on the London Stock Exchange will commence on 3 July 2001. The Placing Shares will be issued credited as fully paid and rank pari passu in all respects with Electronics Boutique's existing ordinary shares, save that they will not rank for the final dividend payable with respect to the year ended 31 January 2001.
Commenting on the Placing, Peter Lewis, Chairman of The Electronics Boutique Plc, said:
"The Board has long held the view that we should expand our leading market position in the UK into Continental Europe. The outlook for our industry over the coming years could not be more favourable given the unprecedented schedule of new console launches. Our initial moves into Sweden and Spain are a precursor to the development of our Group outside the UK".
| Enquiries: | ||
|---|---|---|
| Electronics Boutique plc | ||
| John Steinbrecher/Martin Long | 01344 464040 | |
| Hoare Govett | ||
| Mark Astaire/Andrew Osborne | 020 7678 8000 | |
| Financial Dynamics | ||
| Nic Bennett/Ben Foster | 020 7831 3113 |
APPENDIX: IMPORTANT INFORMATION ON THE PLACING
Members of the public are not eligible to take part in the Placing.
If you choose to participate in the Placing by making an oral offer to acquire Placing Shares you will be deemed to have read and understood this announcement in its entirety and to be making such offer on the terms and conditions contained herein and to be providing the representations, warranties and acknowledgements contained in this announcement. In particular you represent, warrant and acknowledge that you ("the Placee"):
1.are a person whose ordinary activities involve the acquiring, holding, managing or disposing of investments (as principal or agent) for the purpose of your business and you undertake that you will acquire, hold, manage or dispose of any Placing Shares that are allocated to you for the purposes of your business; and
2.are outside the United States or have executed an investment letter with ABN AMRO Securities LLC in a form previously provided to you.
This announcement does not and these materials do not constitute an offer to sell or issue or the solicitation of an offer to buy or subscribe for ordinary shares in the capital of the Company in the United States, Canada, Australia, Japan or in any jurisdiction in which such offer or solicitation is unlawful and the information contained herein is not for publication or distribution to persons in the United States, Canada, Australia, Japan or any jurisdiction in which such publication or distribution is unlawful. The Placing Shares referred to in this announcement have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act") and, subject to certain exceptions, may not be offered or sold within the United States. No public offering of the Placing Shares is being made in the United States. Any public offering to be made in the United States will be made by means of a prospectus containing detailed information regarding the Company and its Management including financial statements. The Placing Shares are being offered and sold outside the United States in reliance on Regulation S under the Securities Act. Securities may not be offered or sold in the United States unless they are registered under applicable law or exempt from registration.
The distribution of this announcement and the placing and/or issue of ordinary shares in the capital of the Company in certain jurisdictions may be restricted by law. No action has been taken by the Company or Hoare Govett that would permit an offer of such ordinary shares or possession or distribution of this announcement or any other offering or publicity material relating to such ordinary shares in any jurisdiction where action for that purpose is required. Persons into whose possession this announcement comes are required by the Company or Hoare Govett to inform themselves about and to observe any such restrictions.
Details of the Placing Agreement and the Placing Shares
Hoare Govett ("the Manager") has entered into a placing agreement (the "Placing Agreement") with Electronics Boutique whereby the Manager has, subject to the conditions set out therein, agreed to use its reasonable endeavours as agent of the Company to procure placees to subscribe for the Placing Shares.
The Placing Shares will be issued credited as fully paid and will rank pari passu in all respects with the existing issued ordinary shares of 5 pence each in the capital of the Company save that they will not rank for the final dividend payable with respect to the year ended 31 January 2001.
Bookbuilding Process
Commencing today the Manager will be conducting a bookbuilding process (the "Bookbuilding Process") for participation in the Placing. This announcement gives details of the terms and conditions of, and the mechanics of participation in, the Bookbuilding Process. No commissions will be paid to Placees or by Placees in respect of any Placing Shares.
How to participate in the Bookbuilding Process
If you wish to participate in the Bookbuilding Process you should communicate your bid by telephone to your usual sales contact at ABN AMRO Equities (UK) Ltd or ABN AMRO Securities LLC or to Lee Morton (020 7678 1139). If successful, your allocation will be confirmed to you orally following the close of the Bookbuilding Process, and a conditional contract note will be dispatched as soon as possible thereafter. The Manager's confirmation to you will constitute a legally binding commitment upon you to subscribe for and/or purchase the number of Placing Shares allocated to you on the terms and conditions set out in this announcement and in accordance with the Company's Memorandum and Articles of Association.
The Manager anticipates making a further announcement following the close of the Bookbuilding Process detailing the number of Placing Shares to be issued and the price at which the Placing Shares will be placed (the "Pricing Announcement").
Principal terms of the Bookbuilding Process
1.Hoare Govett is arranging the Placing as agent of the Company.
2.Participation will only be available to persons invited to participate by the Manager. The Manager is entitled to enter bids as principal in the Bookbuilding Process.
3.The Bookbuilding Process will establish a single price (the "Placing Price") payable by all Placees. In accordance with paragraph 4.8 of the Listing Rules of the UK Listing Authority ("UKLA"), the Placing Price will not be set below a price which is at a discount of more than 10% to the prevailing middle market price of the existing ordinary shares of the Company at the time the Placing Price is set. The Placing Price will be determined by the Manager, following consultation with the Company and having regard to such factors as it considers appropriate.
4.To enter a bid into the Bookbuilding Process, you should communicate your bid by telephone to your usual sales contact at ABN AMRO Equities (UK) Ltd or to ABN AMRO Securities LLC or to Lee Morton (020 7678 1139). Your bid should state the number of Placing Shares for which you wish to subscribe at either the Placing Price which is ultimately established by the Manager or at prices up to a maximum price limit specified in your bid.
5.Any bid will be legally binding on you to the extent that it is not varied or revoked prior to the close of the Bookbuilding Process and will not be capable of variation or revocation after the close of the Bookbuilding Process. In entering a bid into the Bookbuilding Process you will be deemed to have given the representations and warranties contained in the section of this announcement entitled "Representations and Warranties".
6.The Manager reserves the right not to accept bids or to accept bids in part rather than in whole. The acceptance of bids shall be at the Manager's absolute discretion.
7.The Bookbuilding Process will close no later than 4.30pm (London time) on 28 June, 2001, but may be closed earlier at the sole discretion of the Manager. The Manager may, at its sole discretion, accept bids that are received after the Bookbuilding Process has closed.
Conditions of the Placing
The Placing is conditional on, inter alia, the UK Listing Authority having admitted the Placing Shares to the Official List in accordance with the UK Listing Rules and the London Stock Exchange consenting to admission to trading in accordance with the London Stock Exchange Admission and Disclosure Standards for Listed Companies ("Admission") by no later than 9:00am on 3 July 2001 (or by such later time and date as the Manager and the Company may agree).
If, (a) the condition above is not satisfied within the stated time period, or (b) the Placing Agreement is terminated, or (c) the Placing Agreement does not otherwise become unconditional in all respects, the Placing will lapse and your rights and obligations hereunder shall cease and determine at such time and no claim can be made by you in respect thereof.
By participating in the Bookbuilding Process you agree that your rights and obligations hereunder terminate only in the circumstances described above and will not be capable of rescission or termination by you.
Right to terminate under the Placing Agreement
The Manager will be entitled in its absolute discretion (provided that the Manager acts reasonably) by notice in writing to the Company prior to Admission to terminate its obligations under the Placing Agreement if:
1) the Company is in breach of any of its obligations under the Placing Agreement in a manner which is material in the context of the Placing; or
2) any of the warranties given by the Company in the Placing Agreement is, or if repeated at any time prior to Admission (by reference to the facts and circumstances then existing) would be, untrue or inaccurate or misleading in any respect which is material in the context of the Placing.
By participating in the Bookbuilding Process you agree with the Manager that the exercise by the Manager of any right of termination or other discretion under the Placing Agreement shall be at the absolute discretion of the Manager and that the Manager need make no reference to you and shall have no liability to you whatsoever in connection with any such exercise.
No prospectus
No prospectus has been or will be submitted to be approved by the UK Listing Authority or filed with the Registrar of Companies in England and Wales in relation to the Placing Shares.
Registration and settlement
ABN AMRO Equities (UK) Ltd is acting as settlement and execution agent on behalf of Hoare Govett Nominees Limited.
Settlement of transactions in the Placing Shares following Admission will take place in uncertified form within the CREST system (subject to certain exceptions) via CREST Participant 590. The Manager reserves the right to require settlement for and delivery of the Placing Shares to Placees by such other means as it deems appropriate if delivery or settlement is not possible within the CREST system within the timetable set out in this announcement or if it would not be consistent with the regulatory requirements in the Placee's jurisdiction.
If you are allocated any Placing Shares in the Bookbuilding Process you will be sent a conditional contract note.
Settlement will be on a T+3 basis
Interest is chargeable and will accrue daily on all outstanding amounts due from Placees after the due date at the rate of 5 percentage points above prevailing LIBOR.
Representations and warranties
By participating in the Bookbuilding Process you represent, warrant and acknowledge that:
1.the issue to you of Placing Shares will not give rise to a liability under any of sections 67, 70, 93 or 96 of the Finance Act 1986 (depository receipts and clearance services);
2.you are, or at the time the Placing Shares are subscribed or purchased will be, the beneficial owner of such Placing Shares and you are not a resident of Canada, Japan or Australia and, unless you have executed an investment letter in a form previously provided to you, you are located outside the United States (within the meaning of Regulation S);
3.you are entitled to subscribe for and/or purchase Placing Shares under the laws of all relevant jurisdictions which apply to you and that you have fully observed such laws and obtained all guarantees and other consents which may be required thereunder and complied with all necessary formalities;
4.you are a person whose ordinary activities involve the acquiring, holding, managing or disposing of investments (as principal or agent) for the purpose of your business and undertake that you will acquire, hold, manage or dispose of any Placing Shares that are allocated to you for the purposes of your business;
5.you have complied with the Money Laundering Regulations (1993) (the "Regulations") and, if you are making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by you to verify the identity of the third party as required by the Regulations;
6.you have read this announcement in its entirety;
7.the only information upon which you have relied in committing yourself to subscribe for and/or purchase the Placing Shares is that contained in this announcement and any information previously published by the Company by notification to the Company Announcements Office of the London Stock Exchange, provided that before relying on any previously published information you should make your own investigations and satisfy yourself that the information is still current;
8.you are a person who falls within paragraph 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996; and
9.neither the Manager nor any person acting on its behalf has or shall have any liability for any publicly available or filed information or representation relating to the Company, provided that nothing in this paragraph excludes the liability of any person for fraudulent misrepresentation made by that person.
You acknowledge that the Company, the Manager and others will rely upon the truth and accuracy of the foregoing representations, warranties and acknowledgements.
This document has been issued by and is the sole responsibility of Electronics Boutique Plc and has been approved solely for the purposes of Section 57 of the Financial Services Act 1986 by Hoare Govett Limited, which is regulated in the United Kingdom by The Securities and Futures Authority Limited. Hoare Govett Limited is acting exclusively for Electronics Boutique and no one else in connection with the Placing and will not be responsible to any other person for providing the protections afforded to customers of Hoare Govett or for providing advice in relation to the Placing.
The price of shares may go down as well as up.
