Mellon HBV says Latium offer undervalues Ultraframe

Mellon HBV Alternative Strategies has challenged the offer made by Latium Holdings for Ultraframe, saying it prefers a recapitalization of the company.

Mellon HBV, a registered investment adviser and a subsidiary of Mellon Financial Corporation, owns approximately 11.65% of Ultraframe's issued share capital. In a letter dated 8 June, Mellon HBV informed the board of Ultraframe that in its view the recommended 30p offer by Latium Holdings Limited undervalues Ultraframe.

To this end Mellon HBV does not intend to accept the Latium offer but would, subject to due diligence, support a recapitalisation of Ultraframe by underwriting a rights issue and assisting Ultraframe to secure new long term bank facilities.
In its letter to the board, Mellon HBV informed Ultraframe that it believes greater value can be created through alternative proposals.

In particular, Mellon HBV says it would be willing to support the following Recapitalisation Proposal:

• A rights issue by Ultraframe to raise GBP 15 million, fully underwritten by Mellon
• HBV (together with any other supportive shareholders);
• A new GBP 10 million term loan facility to replace the existing facility together with
• a GBP 10 million revolving credit facility;
• The development of a new business plan to grow the business and create additional value for all investors.

Ultraframe shareholders who wish to support the Recapitalisation Proposal could take up their rights. Alternatively, the nil paid rights could be sold and/or existing positions in Ultraframe could be realised through the open market.

Mellon HBV says it is making this announcement in order to enable full and open discussion to be held with Ultraframe and other investors in relation to the Recapitalisation Proposal.

To further develop the Recapitalisation Proposal, Mellon HBV would like to carry out limited due diligence into the Company's business and has asked Ultraframe for the information that was provided to Latium. Mellon HBV would of course be prepared to sign a confidentiality agreement in order to receive this information.

Mellon HBV has taken legal advice and understands that the Recapitalisation Proposal will likely involve, in summary, the following:

• A discussion with the Takeover Panel (which Mellon has already commenced);
• Shareholder consent under Rule 21 of the Code (unless the Offer has already lapsed in accordance with its terms);
• A prospectus by the Company to implement the rights issue;
• An underwriting agreement to be entered into by Mellon HBV (together with any other supportive shareholders) in connection with the rights issue.

Mellon HBV says it would welcome the opportunity to meet with the board of Ultraframe and NM Rothschild to discuss the Restructuring Proposal or indeed any other proposals that might create additional value for Ultraframe investors.