Nexus Management Plc (NXS.L) announced the acquisition ofthe business, assets and certain liabilities of Scott Technology Corp., or STC.
In order to effect the acquisition, the company has established a new subsidiary, which will be called Resilience Technology Corp., or RTC.
The total cash consideration of the acquisition is $1.8 million. The acquisition is being funded by way of a $320 thousand payment on completion and the assumption of an $80 thousand existing liability of STC. The balance is to be satisfied by a vendor loan note. The Vendor Loan Note is repayable as to $150 thousand by 31 March 2009, $500 thousand by 30 April 2009 and the balance by 31 October 2009.
The company anticipates advancing $200 thousand to RTC in the short term to provide additional working capital.
Included within the liabilities of STC that are being assumed as part of the acquisition is an unsecured loan of $80 thousand. The loan is repayable by 30 April 2009 and interest of 5% is payable on the redemption of the loan.
In order to assist the company in meeting the initial repayment of $150 thousand due under the Vendor Loan Note, the company has placed 24.12 million new ordinary shares at 0.83 pence per share to raise about GBP 200 thousand before expenses for the company.
The Placing is conditional upon admission of the new ordinary shares to trading on AIM. Admission is expected to become effective and dealings are expected to commence on 23 March 2009.
Nexus said its directors believe that the acquisition would be cash generative in the short to medium term and earnings enhancing in the year ending 30 September 2010.
In addition, the company will issue up to 78.75 million new ordinary shares at 1 pence per share to STC. These shares will be issued in three equal tranches based on the achievement of certain performance criteria linked to the profit beforetaxation of RTC in the three years following completion.
Furthermore, STC will be granted share options representing up to 21% of the shares in RTC. The RTC share options will be granted in equal installments over a 3-year period and will vest immediately on grant. The exercise price of the options values RTC at $1.8 million.
The company has also agreed that in each of the three years following the completion of the acquisition STC will be entitled to receive a cash bonus based on RTC achieving certain levels of profits before taxation.
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