Pinnacle Staffing Group plc
("Pinnacle" or the "Company")
Re Disposal and option agreement
Pinnacle Staffing Group plc is pleased to announce that its main trading subsidiary Pinnacle Health Care Limited ('PHC') has today entered into an agreement to issue new shares in each of two of its wholly-owned subsidiaries, Medic International Limited and Holt Doctors Limited ('the Subsidiaries') to their management team in exchange for nominal cash considerations of £20 and £50 respectively. The new shares to be issued will represent 25 per cent of the enlarged issued shares capital of each subsidiary and PHC will therefore continue to own 75 per cent of each business.
The Subsidiaries conduct the Company's doctors recruitment business and as at 5th July 2009 had estimated net liabilities in aggregate of £200k and during the first six months of the Company's current financial year made an estimated loss of £124k on unaudited turnover of £1660k. The subscription is therefore anticipated to increase the pro-forma net assets of Pinnacle by approximately £50k.
The management team comprises Peter Gregory and Tracy Ward who have significant experience in successfully building and running major locum agencies, most recently at JCJ Ltd and prior to that at Medacs Healthcare plc, both significant operators in the locum agency market and owned by publicly quoted companies. Mr Gregory and Ms Ward will shortly be appointed directors of the Subsidiaries and they will be responsible for driving the continued growth of Pinnacle's doctors recruitment business.
The agreement with Mr Gregory and Ms Ward contains a provision allowing them to sell their shareholdings to PHC provided the Subsidiaries achieve combined pre-tax profits in excess of £1.0 million in the financial year ending December 2012 (the "Option"). Consideration for the Option will be £1 for each of Mr Gregory and Ms Ward and the Option may only be exercised between 1 January 2013 and 30 April 2013. The purchase price will be paid in cash and will value their shareholdings on the basis of a multiple of 6.5 times the combined pre-tax profits (up to a maximum of £2.5 million) of the Subsidiaries multiplied by 25% (being the total of their shareholdings) and will also be dependent on the Subsidiaries having a minimum net asset position in aggregate of £2.4 million at the time of acquisition. On this basis, the maximum amount of the consideration payable on full exercise of the Option would be in the region of £4.1 million. Should the Option be exercised, Pinnacle would fund the purchase of the shareholdings by either new bank borrowings or through a placing of new ordinary shares in the Company.
The agreement with Mr Gregory and Ms Ward also contains an option allowing them to purchase the remaining 75% stake owned by PHC in each subsidiary should there be a substantial change of control at Pinnacle, defined as:
Both Tom Charlton, Executive Chairman of the Company, and David Hope, Chief Operating Officer and Finance Director of the Company, resign as directors of both Pinnacle Staffing Group Plc and PHC except in circumstances such as corporate reconstruction, where either retains a similar position in a successor company; or
Any reduction in Tom Charlton's shareholding in Pinnacle Staffing Group Plc which means that his shareholding when taken together with the shareholding of David Hope and the spouse of David Hope is less than 25% of the issued share capital of Pinnacle; or
The acquisition by a third party of more than 50% of the issued share capital of Pinnacle Staffing Group Plc; or
The disposal by Pinnacle Staffing Group Plc of a controlling interest in PHC.
The purchase price of the stakes from PHC will be based on a value of a multiple of 6 times the combined pre-tax profits of the Subsidiaries plus the total valuation of net assets multiplied by 75% (being PHC's shareholding) and will be subject to a minimum purchase price of £1 million.
The future purchase or sale of the shareholdings may also require the approval of shareholders of Pinnacle Staffing Group plc in general meeting.
Tom Charlton, Executive Chairman of Pinnacle Staffing Group plc commented:
'Mr Gregory and Ms Ward have a proven track record in setting up and running doctors locum agencies. We have agreed that they should have an equity participation in our doctors business and have set very demanding targets for its growth. We are hopeful that they can repeat their previous successes and make Pinnacle one of the leading doctors recruitment businesses in the UK'.
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RNS news service provided by Hemscott Group Limited.