TIDMCTFA
RNS Number : 2981Q
Cientifica PLC
29 August 2014
Cientifica PLC
("Cientifica" or the "Company")
Investment in G Heat Limited
Cientifica PLC, the AIM-quoted investment company focused on
investment in businesses making use of advanced materials, graphene
and emerging technologies, announces the acquisition of a 24%
interest in G Heat Limited ("G Heat") following the acquisition of
all of the share capital of TEH Investments Limited ("TEH
Investments"), a private company owned and controlled by Tim
Harper, Chief Executive of Cientifica and co-inventor of the G Heat
infra-red technology. The Company has also agreed to invest up to
GBP204,000 in G Heat by way of convertible unsecured loan
notes.
Highlights
-- G Heat's technology uses graphene in the manufacture of
infra-red heating units, which allow power usage to be cut by up to
70% when compared to conventional heaters. G Heat, with its
partners, has developed a cost effective method of reliably
depositing graphene in a way that optimises the output of infra-red
for domestic and commercial heating applications. This is
Cientifica's first investment.
-- Cientifica has acquired TEH Investments, which has a
shareholding of 24 ordinary shares in G Heat (equalling 24% of G
Heat's issued share capital), from Tim Harper in exchange for new
shares in Cientifica. 1,440,000 new Ordinary Shares (the "New
Ordinary Shares"), equating to 4.2 per cent. of the enlarged issued
share capital of Cientifica issued to Tim Harper at 1.5p per share,
conditional upon admission of the New Ordinary Shares to trading on
AIM.
-- In addition, the Board of Cientifica has agreed to invest up
to GBP204,000 in G Heat by way of convertible unsecured loan notes
in G Heat which will be issued in two tranches. Under the first
tranche, the Company has today subscribed for GBP74,000 nominal of
5 per cent convertible unsecured loan notes 2017 ("Loan Notes")
with a second tranche subscription of GBP130,000 to be made,
subject to performance milestones being met. On full conversion it
is expected that Cientifica would hold 45 per cent of G Heat's then
enlarged issued share capital.
G Heat
G Heat is a private company based in Yorkshire. Over the last
two years, G Heat has been developing an advanced form of infra-red
heating using graphene. G Heat's proprietary infra-red heating
technology, involving flat panel heaters, makes use of graphene to
emit infra-red light at wavelengths precisely tailored for maximum
comfort and minimum energy use. G Heat's infra-red heating
technology allows users to maintain the same levels of comfort,
whilst using up to 70 per cent. less energy than conventional
heaters. Laboratory tests have shown the heaters to be equally
efficient whether running on mains electricity or DC from a solar
panel.
G Heat has developed the technology to the stage of
pre-production prototypes and expects to take these to market in
the near future. The solid state heaters remove the need for
conventional boilers and plumbing, and their low power consumption
and instant on capability means that installation is quick and
simple, and that they make an ideal partner for smart
thermostats.
For further information on G Heat, please see the company's
website at http://www.g-heat.com
Agreement with Tim Harper, CEO of Cientifica
Cientifica has entered into an agreement with Tim Harper to
acquire all of the issued share capital of TEH Investments, which
has a shareholding of 24 ordinary GBP1 shares in G Heat ("G Heat
Shares"), representing 24 per cent. of G Heat's issued share
capital, for a consideration of GBP21,600. The consideration is to
be satisfied by the issue to Tim Harper of 1,440,000 New Ordinary
Shares at a price of 1.5p per New Ordinary Share, being
Cientifica's share price at the close of business on 28 August
2014.
On Admission, Tim Harper will have a beneficial interest, in
1,440,000 Ordinary Shares in Cientifica, representing 4.2 per cent.
of the Company's issued share capital as enlarged by the issue of
the New Ordinary Shares.
Tim Harper has undertaken to the Company and Allenby Capital
Limited, the Company's Nominated Adviser, that (subject to certain
limited exceptions) he will not dispose of the New Ordinary Shares
for a period of 12 months following Admission.
Convertible loan note with G Heat
Cientifica and G Heat have agreed that Cientifica will invest up
to GBP204,000 in G Heat by way of the Loan Notes which have a
coupon of 5 per cent. per annum and the term of which will expire
on 31 December 2017. The Loan Notes will be subscribed in two
tranches. Under the first tranche, Cientifica has subscribed for
GBP74,000 nominal of Loan Notes (the "First Tranche Loan Notes")
payable as to GBP50,000 in cash and GBP24,000 worth of development
work carried out on behalf of G Heat at the cost of the
Company.
Further, Cientifica has agreed to subscribe a further GBP130,000
of loan notes (the "Second Tranche Loan Notes"), subject to funding
and certain initial milestones (referred to below) being
achieved.
The milestones are as follows:
Initial Milestones:
(i) obtaining a full open-ended scope Intellectual Property
assessment and report from G Heat's Intellectual Property advisers
with an opinion, acceptable to Cientifica, as to whether the
company has freedom to operate in the fields of domestic and
commercial heating;
(ii) the filing of further information and documentation with a
view to protecting further G Heat's Intellectual Property in
accordance with the advice of its Intellectual Property
advisers;
(iii) complete a process whereby G Heat product(s) are fully CE
tested; secure a first distributor, acceptable to G Heat and then
approved by Cientifica, which will list G Heat products; and
(iv) first sale of a G Heat product.
Secondary Milestone:
(v) sales of GBP200,000of G Heat product.
In the event that the G Heat management achieves the Initial
Milestones, G Heat has agreed that GBP26,240 nominal of the First
Tranche Loan Notes will be converted into an additional 8 G Heat
Shares. As a result, Cientifica's stake will increase from 24 G
Heat Shares to 32 G Heat Shares, representing an increased stake of
30 per cent of G Heat's then enlarged issued share capital. At the
same time, G Heat will require Cientifica to confirm that it is
able to subscribe for the Second Tranche Loan Notes. If Cientifica
confirms that it will, subject to raising further funding, be able
to subscribe for the Second Tranche Loan Notes then the Secondary
Milestone will be set once the Second Tranche Loan Notes are
subscribed for.
If Cientifica notifies G Heat that it is unable to subscribe for
the Second Tranche Loan Notes then from the date of such notice no
further interest will accrue on the First Tranche Loan Notes and
Cientifica will use its reasonable endeavours to assist G Heat to
find sources of funding for the further development of its
business.
In the event that Cientifica subscribes for of the Second
Tranche Loan Notes and the Secondary Milestone is achieved, the
whole of Cientifica's outstanding GBP177,760 nominal of Loan Notes
will be converted into a further 30 G Heat shares. It is expected
that Cientifica's shareholding will be increased from 32 G Heat
Shares to 62 G Heat Shares, representing an increased holding of 45
per cent of G Heat's then enlarged issued share capital.
In view of Cientifica's shareholding in G Heat, it has been
agreed that Tim Harper will join the Board of G Heat as a
non-executive director.
Following the purchase of TEH investments and the acquisition of
its G Heat Shares, Cientifica will have an interest in 24 per cent
of the equity in G Heat. The Board of Cientifica believes there is
considerable potential for G Heat's products particularly in the
light of the Government's commitment to reducing CO2 emissions and
optimizing energy efficiency. The Board of Cientifica expects to
increase its interest in G Heat as a result of the conversion of
its Loan Notes in G Heat and the achievement of the management
milestones. In this event, it is expected that Cientifica's
aggregate interest will increase to 45 per cent of G Heat's then
enlarged issued share capital.
The G Heat investment is the first stage in implementing the
Company's investing strategy.
Related party transactions
The acquisition of TEH Investments, a company owned and
controlled by Tim Harper and the issue to him of the New Ordinary
Shares is a related party transaction under the AIM Rules for
Companies. Tim Baldwin and Rod Venables, being the independent
directors for the purpose of the transaction, having consulted with
Allenby Capital Limited, the Company's Nominated Adviser, consider
that the terms of the purchase of TEH Investments and its interest
in the G Heat Shares are fair and reasonable insofar as the
Company's shareholders are concerned.
Admission
Application has been made for the New Ordinary Shares to be
admitted to trading on AIM ("Admission"). Admission is expected to
take place on 4 September 2014. The New Ordinary Shares will rank
pari passu in all respects with the existing Ordinary Shares of the
Company.
Total Voting Rights
Following Admission, the Company's enlarged issued share capital
will comprise 34,255,690 ordinary shares with voting rights. This
figure of 34,255,690 ordinary shares may therefore be used by
shareholders in the Company as the denominator for the calculations
by which they will determine if they are required to notify their
interest in, or a change in their interest in, the share capital of
the Company under the FCA's Disclosure and Transparency Rules.
About Graphene
Graphene is pure carbon in the form of a very thin, nearly
transparent sheet, one atom thick. It is remarkably strong for its
very low weight (100 times stronger than steel) and it conducts
heat and electricity with great efficiency. It can be produced by
separating atomic layers of graphite or by depositing graphene
directly onto a substrate from a vapour.
Craig Clement, Managing Director of G Heat, stated:
"G Heat is a result of over two years of research into infra-red
heating, initially by the Kirkstyles Innovations Group and latterly
by the Company. With G Heat's partners we have perfected a cost
effective method of reliably depositing graphene in a way that
optimises the output of infra-red for domestic and commercial
heating applications. Our materials are carefully selected to be
both efficient and easily recyclable, allowing homes and businesses
to reduce their carbon footprint and their energy bills.
"G Heat's proprietary graphene technology promises to change the
energy consumption of commercial and domestic heating in the same
way that LEDs changed lighting. We already have significant
interest from a number of major players in the commercial heating
space which we fully expect to convert into sales."
Tim Harper, CEO of Cientifica, added:
"G Heat has developed a simple and ingenious application of
graphene that addresses a real unmet need in the heating market.
Its plug and play capability allows users to make significant
energy savings from day one. G Heat has a pipeline of
graphene-based heating products which we believe will allow them to
gain significant market traction whilst protecting its position
through rapid innovation. It is one of the few companies worldwide
with graphene enabled market ready products".
"The convertible loan note investment in G Heat will allow G
Heat to accelerate the launch of its initial products and, in time,
provide us with an increased shareholding in the G Heat business.
Furthermore, our previously announced relationship with Perpetuus
Carbon Limited will allow G Heat to further develop its range of
products."
Further announcements will be made in due course.
29(th) August 2014
For further information, please contact:
Cientifica PLC
Tim Harper, Chief Executive +44 (0) 207 518 4300
Allenby Capital (Nominated Adviser)
Nick Naylor/James Reeve +44 (0) 203 328 5656
Peterhouse Corporate Finance (Broker)
Lucy Williams / Heena Karani +44 (0) 207 469 0930
Lothbury Financial Services Limited
Michael Padley / Gary Middleton +44(0) 203 440 7620
This information is provided by RNS
The company news service from the London Stock Exchange
END
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