Incepta rewrites earnout terms to stem shares flood

Incepta, the marketing and communications group that owns the City of London public relations group Citigate Dewe Rogerson, yesterday rewrote the terms of an acquisition earnout that was threatening to flood the market with new shares.

The group, whose shares have fallen from a 12-month high of 68p to 12.5p, said the revised terms of the earnout, which relates to the acquisition of the US financial public relations group Sard Verbinnen in April 2000, would "significantly limit the dilutive impact" for existing shareholders.

There had been fears that the earnout in its original form could have resulted in the issue of 100 million new Incepta shares, which would have represented one-sixth of the group's total share capital.

However, Incepta has now agreed to pay a significant portion of the deferred consideration with £8m in cash. Sixty million new Incepta shares will be issued to Sard Verbinnen shareholders in two tranches, one in March with the remainder to be handed over in April 2005.

Incepta's chief executive, Richard Nichols, said the current economic climate continued to be difficult with "overall visibility" remaining poor. "The group is not counting on an improvement in conditions in the near term," he said.

Mr Nichols said the lack of corporate activity had negatively impacted revenues in the group's corporate public relations business although it had advised Granada on its proposed merger with Carlton and CMG on its £1.2bn merger with Logica.

Incepta said that its year-end financial results, which will be published in early May, will include an exceptional restructuring charge of £7m, of which £2m relates to employee job losses and £5m to property and related costs.