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14 June 2011

Sarantel Group PLC

Issue of Equity and Capital Reorganisation

Sarantel (AIM: SLG; 'Sarantel' or the 'Group'), the leading manufacturer of revolutionary filtering antennas for mobile and wireless devices, is pleased to announce the terms of a placing by Seymour Pierce Limited, acting as the Company's Nominated Adviser and Broker to the Placing, of 429,540,000 New A Ordinary Shares at a price of 0.5 pence per share.

The Placing is conditional, inter alia, upon Shareholders approving certain of the Resolutions at the General Meeting of the Company to approve the Capital Reorganisation and to grant to the Directors authority to allot shares and power to disapply statutory pre-emption rights on allotment and also upon the Placing Shares being admitted to trading on AIM. The Resolutions are contained in the notice of GM in the Circular posted today ("Circular").

Background to and reasons for the Placing

The Company's cash resources as at 30 September 2010 and 31 March 2011 were GBP0.6 million and GBP0.4 million, respectively. The proceeds of the Placing, which amount to approximately GBP2.0 million after expenses, provide the Group with additional working capital, permit the Group to expand its sales and marketing efforts and further invest in research and development.

The Directors believe that the Placing is the most appropriate means of providing financing for the Company and that it will allow the Group to capitalise on recent successes and progress future opportunities, particularly sales in the GPS and military markets taking full advantage of lower cost assembly processes with Elcoteq. As a result the Directors believe the outlook for the Company is very positive.

Shareholders should be aware that if Resolutions 1, 2 and 3 are not passed at the GM, the Group may not be able to continue trading without further financial resources being made available in the short term, in which case, the Board will have to consider all alternatives and take appropriate advice regarding the Group's position.

Current trading

In the announcement dated 27 May 2011 of the interim results for the six months ended 31 March 2011, it was reported that Sarantel experienced a significant sales setback in the first half when its largest GPS customer failed to place production orders because of a technical problem with their best selling product. This problem was not related to the Group's technology but negatively impacted GPS revenues. Total Group revenues were £1.0 million in the first six months of the current financial year (first half 2010: £1.4 million) despite the setbacks, in the same period GPS revenues grew 1 per cent. and the Group continued to expand its customer base. Revenues from military applications increased during the first half of the current financial year by 26 per cent and development revenues increased by 186 per cent. in the same period. Revenues for Sarantel's rugged L1/L2 GPS antenna were also delayed following a customer's technical problem which was unrelated to Sarantel's antenna. The Board have been informed that this problem has now been fixed and orders have been placed, with deliveries scheduled in the second half of the current financial year. Revenues from this product are difficult to predict as the US Government's budget restraints caused the said customer to re-schedule orders on two occasions. Operating loss before depreciation and amortisation during the first six months of the current financial year was £1 .3 million (first half 2010: £1.0 million). Net cash outflow before financing reduced by 4.8 per cent. to £1.07 million during the same period (first half 2010: £1.13 million).

Sarantel is currently tracking more than 200 different sales opportunities across a very broad range of GPS applications which the Board believes will drive significant revenue growth over the next two to three years.

The Directors continue to see momentum in the military GPS market, highlighted by recent announcements, and believe that consistent revenues from this important market will come through and drive significant revenue growth in time. The Company announced on 6 May 2011 that the Group had been awarded a new major contract to develop a rugged GPS antenna for the world's leading supplier of tactical radio systems. Such customer already uses the Group's second generation GPS antenna and has now worked with Sarantel to develop a solution for installing it into a rugged housing. This improved design, which will be produced by Sarantel, will help to increase the value-added content and significantly increase its revenues and profits. The Company also announced on 20 May 2011 two more military GPS antenna contract wins from Selex and Thales.

As announced on 16 November 2010, the Board believes that the selection of the Group's technology by Ricoh for the G700SE camera indicates the attractiveness of Sarantel's high performance technology in the consumer market. Sarantel is currently having conversations with multiple Japanese firms about the possible inclusion of its technology in consumer camera applications. Trends in the consumer GPS markets indicate that the importance of accurate and reliable GPS antennas is increasingly being recognised as critical to a satisfying user experience. Consumers have reported poor experiences with existing GPS enabled cameras and the desire to improve the consumer experience is what is driving the current interest in Sarantel's technology for the camera market. Additionally, the latest generation of smartphones are capable of running an increasing number of "apps" such as Facebook Places and Foursquare which rely on location as a central element. The Board believes that location-based advertising, in particular, will require a higher degree of reliability and accuracy than is possible with conventional antenna technologies.

As with any new technology, it is very difficult to predict the exact timing of the take up by the market but the Board believes the trend towards more demanding applications is driving the need for improved antenna performance.

Against this backdrop of growing markets, driven by an increasing use of navigation in everyday life, the Board believes that the Group's innovative technology will lead to increased market share as users demand ever-higher performance from navigation and other mobile devices.

Capital Reorganisation

The Placing Price is below the present nominal value of the Existing Ordinary Shares. Company law prohibits a company from issuing shares at a discount to the nominal, or par, value of its shares. Therefore, in order to carry out the Placing utilising A Ordinary Shares which rank pari passu in all respects with the existing A Ordinary Shares, it is necessary to reduce the nominal value of the Company's existing A Ordinary Shares. Further as the Directors do not wish the A Ordinary Shares and B Ordinary Shares to have differing par values because whilst they constitute separate classes of shares, they rank pari passu in all respects, save for an immaterial difference specifically set out in the Company's articles of association, it is deemed necessary to reduce the nominal value of the existing B Ordinary Shares. Premium paid up on an existing Ordinary Share will, following the Capital Reorganisation, be attributed to the New Ordinary Share arising therefrom. Accordingly, the Directors, propose to effect a share reorganisation on the following basis:

(a) each of the issued A Ordinary Shares of 1 p will be subdivided and redesignated into one New A Ordinary Share and nine New Deferred Shares;

(b) each of the issued B Ordinary Shares of 1 p will be subdivided and redesignated into one New B Ordinary Share and nine New Deferred Shares; and

The rights attaching to the New A Ordinary Shares and New B Ordinary Shares will, apart from the change in nominal value and the entitlement of Shareholders in respect of a return of capital arising from them, be identical in all respects to those of the existing A Ordinary Shares and the existing B Ordinary Shares, respectively.

The New Deferred Shares will have the same rights as the existing Deferred Shares. That is the New Deferred Shares will have no voting rights and will not carry any entitlement to attend general meetings of the Company; nor will they be admitted to AIM or any other market. They will carry only a priority right to participate in any return of capital to the extent of £1 in aggregate over the class. In addition, they will carry only a priority right to participate in any dividend or other distribution to the extent of £1 in aggregate over the class. In each case a payment to any one holder of New Deferred Shares shall satisfy the payment required. The Company will be authorised at any time to effect a transfer of the New Deferred Shares without reference to the holders thereof and for no consideration.

Accordingly the New Deferred Shares will (like the existing Deferred Shares), for all practical purposes, be valueless and it is the Board's intention, at an appropriate time, to have the New Deferred Shares cancelled, whether through an application to the Companies Court or otherwise.

Existing share certificates will continue to be valid following the Capital Reorganisation and no certificates will be issued in respect of the New Deferred Shares.

The notice of GM set out at the end of this document contains resolutions to give effect to the proposed Capital Reorganisation and the Placing which are conditional, amongst other matters, on the passing of Resolutions 1, 2 and 3.

The Placing

Under the terms of the Placing Agreement, Seymour Pierce has conditionally placed, on behalf of the Company, 429,540,000 New A Ordinary Shares at the Placing Price to raise approximately £2.15 million (gross) and approximately £2 million (net of expenses) for the benefit of the Company.

The Placing is conditional, inter alia, upon Resolutions 1, 2 and 3 being passed and Admission taking place by 8:00 a.m. on 1 July 2011 (or such later date, being not later than 15 July 2011, as the Company and Seymour Pierce may agree).

The Placing Agreement contains provisions entitling Seymour Pierce to terminate the Placing Agreement at any time prior to Admission in certain circumstances. If this right is exercised, the Placing will lapse.

The Placing Shares, when issued and fully paid, will rank equally in all respects with the issued New A Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after Admission.

It is expected that admission of the Placing Shares will become effective and dealings in the Placing Shares will commence on 1 July 2011. Following Admission, the Company will have 830,476,331 New Ordinary Shares in issue.

The number of outstanding options and warrants in the Company are 42,879,897 and 6,776,029 respectively.The outstanding number of warrants includes those warrants issued earlier today to Darwin (as referred to below).

Directors' participation in the Placing

Certain Directors of the Group have agreed (whether directly or through their nominees) to subscribe for New A Ordinary Shares in the Placing. The total number of Placing Shares subscribed for and the subsequent holdings of the Directors concerned (directly and/or through their nominees) as a percentage of the Enlarged Issued Share Capital are as follows:

				No. of New No. of New			Percentage
		Percentage		A Ordinary		Ordinary	of voting
		of existing		Shares		Shares	share
No. of Existing		voting		subscribed		following	capital
Ordinary		share		for in		the	following
Shares		capital		Placing		Placing	the Placing
Godfrey Shingles	2,292,132		0.57	3,000,000	5,292,132			0.64%
David Wither	2,100,079		0.52	2,500,000	4,600,079			0.55%
Dr Oliver Leisten	342,692		0.09	0	342,692			0.04%
John Uttley	1,341,876		0.33	1,320,000	2,661,876			0.32%
Philip David	944,742		0.24	20,000,000	20,944,742			2.52%
Nicola Malyon	160,000		0.04	720,000	880,000			0.11%

Equity financing facility

The Company has entered into a 3 year equity financing facility of up to £5m with Darwin.

The EFF agreement, which is dated 14 June 2011, provides the Company with a facility which (subject to certain restrictions) can be drawn down at any time over the next 3 years. Before the Company may make any draw down, the written consent of Legal & General must be sought, which consent is a condition of the EFF agreement in respect of each and every draw down. The issue of subscription notices is subject to other specified pre-conditions. Save as set out previously, the timing of any draw down is at the discretion of the Company and may be for any amount up to £1,000,000. The Company is under no obligation to make a draw down and may make as many draw downs as its wishes, up to the total value of the EFF, by way of issuing subscription notices to Darwin. Following delivery of a subscription notice, Darwin will subscribe and the Company will allot to Darwin A Ordinary Shares.

The subscription price for any A Ordinary Shares to be subscribed by Darwin under a subscription notice will be at a 5 per cent. discount to an agreed reference price determined during 15 trading days following delivery of a subscription notice (the "Pricing Period"). The Company is obliged to specify in each subscription notice a minimum price below which A Ordinary Shares will not be issued. The minimum price can be amended by the Company at any time during a Pricing Period, subject to Darwin's consent.

The maximum number of A Ordinary Shares which may be issued under any individual subscription notice will primarily be determined by reference to the average daily trading volume of A Ordinary Shares and B Ordinary Shares over the 15 trading days preceding the issue of the relevant subscription notice, although this may be reduced in certain circumstances, including where the minimum price is not maintained. There is also an over-allotment facility available to the Company, under which (and subject to the agreement of Darwin) the Company may, at any time before the issue of the A Ordinary Shares pursuant to a particular draw down, increase the amount of the draw down by up to the aggregate undrawn amount under the EFF.

Any subscription notice which the Company may issue will only be valid to the extent that it has the requisite shareholder authority to issue the maximum number of A Ordinary Shares that Darwin may be required to subscribe under the relevant subscription notice. On any single draw down, A Ordinary Shares will not be issued to Darwin to the extent that this would equate to more than 25 per cent. of the enlarged issued ordinary share capital of the Company.

Darwin or the Company may terminate the EFF in specified circumstances.

The Company has provided warranties to Darwin and indemnities to Darwin and affiliated persons.

In consideration of Darwin agreeing to provide the EFF, the Company has entered into a warrant agreement dated 14 June 2011 for the grant to Darwin of warrants to subscribe for up to 5 million A Ordinary Shares, such warrants to be exercisable at a price of 1 pence per share and to be exercisable at any time prior to the expiry of 36 months following the date of the warrant agreement.

In the event that the Capital Reorganisation becomes effective, all Darwin's rights in relation to A Ordinary Shares will automatically and immediately be replaced with rights in respect of New A Ordinary Shares.

Options

It is the Company's intention, in the near future, to revisit the terms of the Board's existing share incentive arrangements and align directors' interests to the Placees. Where possible, these new awards will be in the form of Enterprise Management Incentives (thereby delivering tax savings for both the participant and the Company) with all other awards taking the form of unapproved options. Where appropriate, these new awards will replace existing awards.

Taxation

The following paragraphs apply to the Company and to persons and entities who are holders of Existing Ordinary Shares and/or proposed holders of New A Ordinary Shares under the Placing and resident in the UK. The information is based on current UK legislation and practice, is subject to changes therein, is given by way of general summary and does not constitute legal or tax advice.

If you are in doubt about your tax position, or if you are subject to tax in a jurisdiction other than the UK, you should consult your independent financial adviser.

The Company has previously obtained clearance from HM Revenue & Customs that subscriptions made to date in the Company by VCTs and investors seeking EIS relief constituted qualifying holdings and eligible shares under VCT and EIS legislation respectively. However, in order to be certain that the Capital Reorganisation will not adversely impact upon the VCTs and/or current investors in the Company who wish to have the benefit of EIS relief in respect of their respective holdings of Existing Ordinary Shares, the Company will require the appropriate clearances from HM Revenue & Customs and an application is in the process of being submitted to the assigned tax inspector. In early 2008 the Company obtained a clearance from HM Revenue & Customs for a capital reorganisation that was carried out in materially the same manner and format as set out above. Specifically, HM Revenue & Customs then confirmed that the relevant classes of shares would continue to be regarded as qualifying holdings and eligible shares under VCT and EIS legislation respectively and that, for VCT purposes, they would be at the same value as prior to the restructuring.

Whilst the Company, therefore, believes it has a very persuasive historic precedent it can call upon when negotiating with HM Revenue & Customs, neither the Company nor the Directors make any guarantee, representation or warranty or give any undertaking that the appropriate clearance will be given and that VCT and/or EIS relief will, as a result, continue to be available in respect of any holdings of Existing Ordinary Shares.

The Company has obtained clearance from HM Revenue & Customs that the Placing Shares will, subject to investors' own personal circumstances, qualify as eligible shares for investors seeking EIS relief.

Although the Company believes it satisfies the relevant conditions contained in the VCT and EIS legislation, neither the Company nor the Directors make any representation or warranty or give any undertaking that EIS relief will be available in respect of any investment in the Placing Shares, nor do they represent, warrant or undertake that the Company will keep its qualifying status throughout the relevant holding periods for EIS investors or maintain its qualifying status for VCT investors or that, once given, such relief will not be withdrawn.

General Meeting

A General Meeting of the Company has been convened for 11:00 a.m. on 30 June 2011 at the offices of Seymour Pierce, 20 Old Bailey, London EC4M 7EN. The notice convening the GM is set out in the Circular a copy of which will be available for download from the Company's website www.sarantel.com .

The Resolutions seek to:

(a) approve the Capital Reorganisation;

(b) amend the Company's articles of association, as appropriate, to reflect the Capital Reorganisation;

(d) disapply statutory pre-emption rights in respect of the allotment of the Placing Shares; and

(e) authorise the directors to allot up to 1,000,000,000 New A Ordinary Shares in relation to the EFF and to disapply statutory pre-emption rights in respect thereof.

Recommendation

The Directors unanimously believe that the Capital Reorganisation, the Placing and the ability to issue additional New A Ordinary Shares in connection with the EFF are in the best interests of the Company and its Shareholders and recommend Shareholders to vote in favour of the Resolutions as they intend to do in respect of their aggregate shareholding of 7,181,521 A Ordinary Shares, equivalent to approximately 1.79 per cent. of the Existing Ordinary Shares.

Enquiries

Sarantel Group PLC	01933 670 560
David Wither, Chief Executive Officer
Nicola Malyon, Chief Financial Officer

Seymour Pierce	020 7107 8000
John Cowie/Freddy Crossley, Nominated Adviser David Banks/Paul Jewell, Corporate Broking

College Hill	020 7457 2020
Kay Larsen/Rozi Morris

About Sarantel www.sarantel.com

Sarantel is a leader in the design of high-performance miniature antennas for portable wireless applications. Sarantel's revolutionary ceramic filtering antennas offer dramatically improved performance over existing antenna designs, resulting in a clearer signal, better range and a 90 per cent reduction in the amount of signal radiation absorbed by the body. Because of their smaller size and higher capabilities, Sarantel's antennas enable manufacturers to create innovative wireless products for the GPS, WiMax, Satellite Radio and Satellite phone markets.

DEFINITIONS

The following definitions apply throughout this announcement, unless the context requires otherwise:

"A Ordinary Shares"	A ordinary shares of 1p each in the capital of the Company
"Act"	the UK Companies Act 2006 (as amended)
"Admission"	the admission of the New A Ordinary Shares and the New B Ordinary Shares in issue immediately following the Capital Reorganisation and the Placing Shares to trading on AIM becoming effective in accordance with rule 6 of the AIM Rules
"AIM"	the AIM market of London Stock Exchange plc
"AIM Rules"	the AIM Rules for Companies issued by the London Stock Exchange plc as amended from time to time
"B Ordinary Shares"	B ordinary shares of 1 p each in the capital of the Company
"Capital Reorganisation"	the proposed subdivision of each Existing Ordinary Share into one ordinary share of 0.1p (being an A ordinary share or B ordinary share dependent upon designation of the Existing Ordinary Share) and nine deferred shares of 0.1p each in the capital of the Company, and the proposed subdivision of each Deferred Share into ninety deferred shares of 0.1 p each in the capital of the Company
"Company"	Sarantel Group PLC
"Darwin"	Darwin Strategic Limited, a majority owned subsidiary of Evolution Group plc.
"Deferred Shares"	the existing deferred shares of 9p each in the capital of the Company
"Directors" or "Board"	the directors of the Company as named under the paragraph entitled "Directors' participation in the Placing" above
"EFF"	the equity financing facility provided to the Company pursuant to an equity credit line agreement dated 14 June 2011 and made between the Company (1) and Darwin (2)
"EIS"	the Enterprise Investment Scheme and related reliefs as detailed in the Income Tax Act 2007, Part 5 and in sections 1 50A to 1 50C and Schedule 5B and 5BA of the Taxation of Chargeable Gains Act 1992 (as amended)
"Enlarged Issued Share Capital"	the issued New Ordinary Shares immediately following Admission
"Existing Ordinary Shares"	the 400,936,331 Ordinary Shares in issue at the date of this document
"Form of Proxy"	the form of proxy enclosed with the Circular for use by Shareholders in connection with the GM
"GM" or "General Meeting"	the general meeting of the Company convened for 11:00 a.m. on 30 June 2011, notice of which is set out in the Circular
"Group"	the Company and its subsidiary undertakings
"Legal & General"	Legal & General Investment Management Limited
"New A Ordinary Shares"	the new A ordinary shares of 0.1 p each in the capital of the Company arising from the Capital Reorganisation or issued pursuant to the Placing
"New B Ordinary Shares"	the new B ordinary shares of 0.1p each in the capital of the Company arising from the Capital Reorganisation
"New Deferred Shares"	the deferred shares of 0.1 p each arising from the Capital Reorganisation
"New Ordinary Shares"	together the New A Ordinary Shares and the New B Ordinary Shares
"Ordinary Shares"	together the A Ordinary Shares and the B Ordinary Shares
"Placees"	the subscribers for Placing Shares pursuant to the Placing
"Placing"	the conditional placing of the Placing Shares at the Placing Price pursuant to the Placing Agreement
"Placing Agreement"	the conditional agreement dated 14 June 2011 between the Company and Seymour Pierce
"Placing Price	0.5 pence per Placing Share
"Placing Shares"	the 429,540,000 A ordinary shares of 0.1p each which have been conditionally placed by Seymour Pierce
"Proposals	the proposals set out in this announcement and the Circular namely the Placing and the Capital Reorganisation
"Resolutions"	the resolutions set out in the notice of General Meeting, which accompanies the Circular
"Sarantel"	the Company or any of its subsidiary undertakings, as the context permits
"Seymour Pierce"	Seymour Pierce Limited, the Company's nominated adviser and broker to the Placing
"Shareholders"	holders of Existing Ordinary Shares
"VCT"	a venture capital trust for the purposes of Income Tax Act 2007, Part 6