Company Announcements

Announcement of Intention to Float

Source: RNS
RNS Number : 8495V
RM2 International SA
18 December 2013


RM2 International S.A.


Announcement of Intention to Float


RM2 International S.A. ("RM2" or the "Company"), a company established to use a combination of materials technology and logistic services to disrupt the global pallet market, today announces its intention to launch an initial public offering and placing (the "Placing") and to apply for the admission of its ordinary shares to trading on the AIM market of the London Stock Exchange ("Admission").


RM2 is raising gross proceeds of approximately £137.2 million (equivalent to approximately US$225 million) to expand its production capacity and to fund the production of pallets for rental and sale. The Company is expected to join AIM on 6 January 2014 with an initial market capitalisation of approximately £278.3 million.


Cenkos Securities plc is Nominated Adviser and broker to the Company.


Business Overview


·     RM2 specialises in pallet development, manufacture, supply and management and was founded in 2007 to establish a disruptive presence in global pallet supply by improving the supply chain of manufacturing and distribution businesses through the use and management of composite pallets.


·     RM2 has designed and manufactured the BLOCKPal, a multi-trip pallet made of a glass fibre and resin composite that is suitable for use in the supply chain of sectors such as fast moving consumer goods, food ingredients, pharmaceuticals and packaging.


·     RM2 is one of the few pallet businesses that provides a holistic solution, combining pallet manufacturing, standalone pallet management and financial options.


·     Global demand for pallets in unit terms was 6.2 billion in 2012 and, in the US market alone, approximately 2.3 billion pallets are used on an annual basis with demand in 2012 for 1.135 billion new and refurbished pallets.


·     The pallet production market is highly fragmented with no one manufacturer accounting for more than 3.2 per cent. of total industry revenues in the US in 2012.


·     The pallet rental market has grown consistently and the top four companies accounted for an estimated 56 per cent. of market share in the US in 2012.


·     The design and manufacture of the BLOCKPal is the result of significant investment in market research and R&D to produce a product that provides the optimal balance of the five key design parameters of strength, stiffness, durability, functionality and cost.


·     RM2's TACS pallet tracking and management software provides both the Company and its customers with 'real time' information on equipment balances throughout their supply chains, strengthening existing tracking systems and improving their pallet pool management.


·     RM2's primary strategy is to deploy the BLOCKPal pallet in the closed loop supply chains of upstream logistics, taking advantage of the BLOCKPal's key attributes and the TACS system.


·     RM2's pallet rental model is expected to generate high quality asset-backed recurring rental revenues, turning an often unquantified cost in the supply chain into an increase in margin for its customers through both direct and indirect cost savings and assisting customers in attaining sustainability goals.


·     RM2's flexible pultrusion manufacturing process enables it to produce bespoke pallets and sell into markets currently not served by either pallet rental or plastic pallet providers.


·     Having established a solid foundation for its proposed strategy, RM2 is positioned to enter a phase of significant capital expenditure and asset investment and commercialisation.


·     The Company's board includes several non-executive directors who have held senior executive positions with some of the world's leading organisations, many of which are the receivers of palletised goods including Ian Molson, Sir Stuart Rose, Paul Walsh and Amaury de Seze.


Ian Molson, Chairman of RM2, commented:


"RM2 has brought together the technology, the innovation, the management and the logistics to be both the catalyst for, and the pivotal point of, a step-change in the market."


John Walsh, Chief Executive Officer of RM2, said:


"Admission will give us the ability to turn a meticulously developed and tested pallet and logistics approach - for which we believe there is a clear demand - into an operation of real scale. With the funds raised we will expand our manufacturing capacity, and establish a pool of pallets which offer customers around the world a proposition that we believe is cost-effective, efficient, controllable and sustainable and which will provide RM2 and its shareholders with a high quality recurring revenue stream."  


For further information, please contact:


RM2 International S.A.


John Walsh, Chief Executive Officer

+44 (0)20 8820 1412

Ash Mohindra, Chief Financial Officer


Ruari McGirr, Strategic Development and Investor Relations




Cenkos Securities plc


Neil McDonald

+44 (0)20 7397 8900

Alan Stewart


Beth McKiernan




Citigate Dewe Rogerson


Simon Rigby

+44 (0)20 7638 9571

Kevin Smith


Lindsay Noton







RM2 has developed, designed and manufactured the BLOCKPal - a multi-trip pallet which is the result of several years of market research and product R&D focussed on pallet technology, pallet products and market practices.


The compound used to produce the BLOCKPal consists of approximately 80% glass fibre and 20% resin and reduces exposure to volatile oil and natural gas linked pricing. All raw materials and substances used in the manufacture of the BLOCKPal are readily available.


The BLOCKPal is produced in RM2's manufacturing operation in Canada using a pultrusion technique which allows component profiles to be produced to fine tolerances and which lends itself to a high degree of automation with low associated labour costs.


The BLOCKPal has many advantages over existing plastic and wooden pallets currently in use, including superior durability, strength to weight, fire resistance, hygiene and sustainability.


Strategy and Revenue Model


RM2 is differentiated from other pallet platforms by its alignment with the upstream logistics operations of large manufacturing, distribution and retail businesses to build dedicated high-quality pallet pools for their key supply chains. In addition, RM2 is one of the few pallet businesses that provides a holistic solution, combining pallet manufacturing, standalone pallet management and financial options, and its operations will focus on both rental and sales of the BLOCKPal, as well as the management and tracking of these pallets for its customers through the TACS system.


·     Pallet Rental


The BLOCKPal system turns a potentially unquantified cost in the supply chain into a significant, recurring increase in margin for its potential customers using simple, flexible and transparent pricing structures.


·     Pallet Sales


The majority of BLOCKPal production will be directed to the Company's pallet rental scheme, with the balance of production targeted at the direct sale of BLOCKPal to potential customers in North America and, in the future, Europe and the rest of the world.


·     Pallet Tracking & Management


Through the TACS system, the integrated pallet tracking and management service, RM2 can assist customers with the management of complex pallet flows (including non-RM2 pallets) by providing a tailored solution that can integrate with, or replace, a customer's existing tracking infrastructure allowing RM2 to focus on the closed loop operations with the highest velocity.


The TACS system can provide 'real time' equipment balances throughout a customer's supply chain and was designed to be the central operations software for equipment suppliers, providing a single integrated system for tracking, delivering, collecting and invoicing.


The directors believe that a proactive management of these different opportunities will offer investors an attractive combination of high-quality, long-term asset backed rental revenues and more short-term, higher-margin revenues from pallet sales, allowing for significant but prudent growth from a stable platform.


RM2 operates a structured four-stage process for the identification of, and engagement with, potential new customers as each opportunity moves from trial to full implementation. The Company's objective is to increase shareholder value through, firstly, establishing itself as a critical service provider to major companies across a diverse range of industry sectors in the US and Canada before replicating this strategy in Europe and, thereafter, the rest of the world.


Reasons for admission and use of proceeds


The Company intends to raise gross proceeds of approximately £137.2 million (equivalent to approximately US$225 million) from the issue of new ordinary shares. The Admission will provide a platform for the Company as it moves into a phase of significant capital expenditure and asset investment and commercialisation of the business. The net proceeds will principally be used to further expand the Company's pallet production capacity and fund the production of BLOCKPal for use in both the pallet rental market as well as direct sales. In addition the Company will use a proportion of the net proceeds to repay certain funding arrangements and to retire warrants, leaving the Company in a debt free position.


Admission is also expected to provide the Company with access to further capital in the future, should the directors identify appropriate opportunities for acquisitions or seek to accelerate the further development of the business in response to market demand for its products and services.




R. Ian Molson, Non-Executive Chairman.


R. Ian Molson was born and grew up in Montreal, Canada and is currently a director of a number of private equity, investment and other companies including Alphatec Spine Inc., Cayzer Continuation PCC Ltd, Central European Petroleum Ltd (Deputy Chairman) and Healthpoint Capital LLC. Mr Molson also serves as Chairman of The Royal Marsden NHS Foundation Trust and The Royal Marsden Cancer Charity.


From 1999 to 2004, he was deputy chairman of the board and Chairman of the Executive Committee of Molson Inc, a Canadian public corporation founded in 1786. Between 1977 and 1997, he was employed by Credit Suisse First Boston, one of the leading investment banking and securities firms in the world. From 1993 to 1997, he served as co-Head of their Investment Banking Department in Europe, a position which encompassed all corporate finance, corporate advisory, mergers and acquisitions businesses in Europe, Russia, Africa and the Middle East. He graduated from Harvard University (BA Honours) in 1977.


John Walsh, Chief Executive Officer.


John Walsh has been Chief Executive Officer of the Company since its inception. Mr Walsh has been instrumental in the development of the RM2 group. Mr Walsh has held leadership positions in the finance industry in New York and London.


Mr Walsh began his career at Bank of America and then joined Prudential Bache. From 1988 to 2003 Mr Walsh was at Credit Suisse, where he became a Managing Director. Mr Walsh was Head of Syndication and Head of Capital Markets in London and spent ten years as Head of Global Capital Markets. Mr Walsh was a member of the firm's Fixed Income and Investment Management Committee and the Global Management Committee.


In 2004, Mr Walsh joined RBS Greenwich Capital Markets where he was Head of North American Credit Markets. Immediately prior to leaving the finance industry to focus on RM2, Mr Walsh was recognised as the third most influential European in US Financial Markets by Financial News (November 2005) and the seventh most important British Businessman in the US by the Sunday Times (December 2005).


Ashavani Mohindra, Chief Financial Officer.


Ashavani Mohindra has been CFO of the RM2 group since its inception. Mr Mohindra has considerable commercial experience gained at both large and small companies, ranging from ABN Amro, the then financial regulator SFA (forerunner of the FCA), through to Touche Ross & Co. He has had a number of roles ranging from management accounts, audits, legal and compliance, computer systems implementation, regulatory and general financial reporting and general management through representation at board level as an executive director. Mr Mohindra graduated in 1980 from Manchester University with a Mathematics degree, and qualified as a chartered accountant in 1983.


Sir Stuart Rose, Non-Executive Director.


Sir Stuart Rose has been the Chief Executive of a number of substantial retail businesses including Burton Group plc, Argos plc, Booker plc and Arcadia Group plc. He was Chief Executive and also, latterly, Chairman of Marks & Spencer plc from 2004 to 2010. Sir Stuart is currently a non-executive director of Land Securities Group and Woolworths Holdings Limited. He is Chairman of Ocado Group plc and Fat Face Group Ltd as well as a number of other companies.


Paul Walsh, Non-Executive Director.


Paul Walsh was Chief Executive of Diageo plc from 2000 to 2013 and is now an advisor to the Chairman and Chief Executive of Diageo. Mr Walsh joined GrandMet's brewing division in 1982 and became its Finance Director in 1986. He held financial and commercial positions with Inter-Continental Hotels and in the GrandMet food business, becoming CEO of The Pillsbury Company in 1992. Mr Walsh was appointed to the GrandMet Board in October 1995 and to the Diageo Board in December 1997. Mr Walsh is a non-executive director of FedEx Corporation, Unilever plc and Avanti Communications plc and was previously a non-executive director of Centrica plc, stepping down in May 2009. He has also been appointed Business Ambassador for the food and drink industries by the UK Department for Business, Innovation and Skills and is a Council Member, and former Chairman, of the Scotch Whisky Association. In June 2013 it was announced that Mr Walsh will join the board of Compass Group PLC in January 2014 as a non-executive director and will assume the position of its chairman in February 2014.


Charles Duro, Non-Executive Director.


Charles Duro is the founding partner of Duro-Goebel, a Luxembourg law firm started in 1995, after having been a partner in another law firm in Luxembourg. He practises mainly in company law and has been on the board of a number of Luxembourg companies active in various sectors. Mr Duro is a former chairman of the tax commission of the "Association Internationale des Jeunes Avocats".


Jan Dekker, Non-Executive Director.


Jan Dekker worked for Philips Corporation from 1973 to 1981. He then joined KPMG Meijburg & Co where he became Senior Partner in the International Tax Practice. Mr Dekker is a director of a number of private companies and became chairman of RM2 in 2009, moving to a non-executive role shortly before Admission. He attended the Universities of Leyden, Rotterdam and Tilburg, studying civil and economic and international tax law, gaining several masters degrees.


Amaury de Seze, Non-Executive Director.


Amaury de Seze started his career in 1968 at Bull General Electric. In 1978, he joined Volvo Group, one of the world's largest producers of trucks, buses and construction equipment where he successively held positions of deputy chief executive officer of Volvo France, chairman and chief executive officer of Volvo France, chairman and chief executive officer of Volvo Europe, member of the group executive committee of AB Volvo and member of the strategic committee of Renault Volvo. He joined the Paribas group in 1993 as a member of the management boards of Compagnie Financière de Paribas and Banque Paribas. Mr de Seze is founding partner, chairman and chief executive officer of the private equity firm PAI Partners. He is currently vice chairman of Power Financial Corporation of Canada and is a member of the board of directors of Carrefour, Groupe Bruxelles Lambert, Imerys, Publicis and Suez Environment.


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