TIDMHAL TIDMHALO
RNS Number : 4358Z
HaloSource Inc
15 December 2017
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014. Upon the
publication of this announcement via a Regulatory Information
Service ("RIS"), this inside information is now considered to be in
the public domain.
THIS ANNOUNCEMENT IS NOT FOR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, TO ANY US PERSONS OR IN OR INTO THE UNITED STATES,
CANADA, AUSTRALIA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA.
HaloSource, Inc.
("HaloSource" or the "Company")
GBP2.8 million Placing of up to 166,940,688 New Common
Shares,
Subscription of 58,094,124 New Common Shares and
Notice of Annual General Meeting
Highlights
-- GBP2.8 million raised from new and existing shareholders to
drive commercialisation of Company's lead reduction technology and
astrea(R) brand
-- Significant progress made in lead-removal
-- Business strategy geared to pursuing cashflow break-even
target in the near future, following already significant reduction
in operating expenditure and rationalisation of core business
-- Directors to pursue potential re-domicile of the Company
HaloSource Inc. (HAL.LN, HALO.LN), the global clean water
technology company traded on London Stock Exchange's AIM market, is
pleased to announce a proposed fundraising of GBP2.8 million ($3.8
million) (before expenses) through the issue of an aggregate of
225,034,812 new common shares of no par value ("New Common Shares")
to new and existing investors at a price of 1.25 pence per New
Common Share (the "Issue Price") (the "Fundraising"). The New
Common Shares will rank pari passu in all respects with the
existing common shares of no par value in issue ("Common
Shares").
Completion of the proposed fundraising is conditional upon,
inter alia, passing of resolutions by shareholders at the Annual
General Meeting of the Company in order to ensure that the
Directors have the necessary authorities and powers to allot the
New Common Shares for cash on a non-pre-emptive basis. Notice of
the Annual General Meeting is included in the circular which is
being posted to Shareholders today (the "Circular"). The background
to and reasons why the Board believes that the proposed fundraising
is in the best interests of the Company and its shareholders as a
whole and why the Directors unanimously recommend that shareholders
vote in favour of the resolutions contained in the Circular are set
out below.
The Company expects to issue 166,940,688 New Common Shares
pursuant to a placing agreement entered into by the Company with
its broker (the "Placing Agreement") (the "Placing"), such shares
to be issued to investors in the United Kingdom. Subscribers have
also entered into conditional subscription agreements (the
"Subscription Agreements") with the Company to subscribe for an
aggregate of 58,094,124 New Common Shares (the "Subscription").
The net proceeds of the Placing and Subscription (together the
"Fundraising") will be used to provide additional working capital
to the Company and to fund the commercialisation of the Company's
lead reduction technology and continue the growth of its drinking
water business given the progress made in both the business to
business ("B2B") and business to consumer ("B2C") channels and for
the Directors to pursue the potential re-domicile of the
Company.
The Issue Price represents a discount of approximately 9 per
cent. to the mid-market closing price of 1.38 pence on 14 December
2017. The Fundraising is not being underwritten and is conditional
on, inter alia, the passing of a resolution to waive pre-emption
rights in respect of the Fundraising by shareholders at the Annual
General Meeting of the Company to be held at 1725 220(th) Street
SE, Suite 103, Bothell, Washington 98021 at 9.30 a.m. on 27
December 2017.
The New Common Shares will represent approximately 40 per cent.
of the issued share capital of the Company as enlarged by the
Fundraising (the "Enlarged Share Capital").
Application will be made to the London Stock Exchange for the
New Common Shares to be admitted to trading on AIM ("Admission").
The New Common Shares will rank pari passu in all respects with the
Common Shares, including the right to receive all dividends and
other distributions declared, made or paid in respect of the Common
Shares following Admission. It is expected that such Admission will
become effective, and that dealings on AIM will commence, at 8.00
a.m. on 29 December 2017. Following Admission, the Company's issued
share capital will consist of 337,970,964 Common Shares.
Related party transaction
Invesco Asset Management Limited and Woodford Investment
Management Limited are substantial shareholders of the Company (the
"Substantial Shareholders") and therefore classified as related
parties under the AIM Rules for Companies ("AIM Rules"). Alan
Matthews, James Thompson, Craig Crowell, Massoud Entekhabi and Kent
Johnson (the "Participating Directors") are, by virtue of their
directorships of the Company, also related parties of the Company
under the AIM Rules. The Substantial Shareholders and Participating
Directors (together the "Related Parties") participation in the
Fundraising is considered a related party transaction under the AIM
Rules.
The Directors of the Company, having consulted with the
Company's nominated adviser, Cantor Fitzgerald Europe, consider
that the terms of the Substantial Shareholders' participation in in
the Fundraising is fair and reasonable insofar as the Company's
Shareholders are concerned.
In the absence of an independent director, Cantor Fitzgerald, as
the Company's nominated adviser, considers that the terms of the
Participating Directors' investment are fair and reasonable insofar
as the Company's shareholders are concerned.
The Related Parties interest in the Company, following
Admission, will be:
Related Current Shareholding Shares being Shareholding Percentage
Party acquired following holding
pursuant Admission following
to the Fundraising Admission
Invesco
Asset Management
Limited 96,657,346 57,840,000 154,497,346 27.4%
Woodford
Investment
Management
Limited 84,205,044 56,033,664 140,238,708 24.9%
Kent Johnson 1,929,271 4,491,804 6,421,075 1.1%
James Thompson 3,738,395 2,096,184 5,834,579 1.0%
Alan Matthews 901,800 598,908 1,500,708 0.3%
Craig Crowell 353,333 299,448 652,781 0.1%
Massoud
Entekhabi 130,133 299,448 429,581 0.0%
Expected timetable
Announcement of the Fundraising 15 December 2017
Latest time for receipt 20 December 2017
of Forms of Instruction
Latest time for receipt 21 December 2017
of Forms of Proxy
Annual General Meeting 27 December 2017
Admission of the New Common 29 December 2017
Shares
Admission and commencement 29 December 2017
of dealings in the Enlarged
Share Capital expected
to commence on AIM
Each of the times and dates above is subject to change. Any such
change will be notified by an announcement on a Regulatory
Information Service.
Background to and reasons for the Fundraising
As announced in the Company's interim results for the six months
ended 30 June 2017, the Company has focused on stabilising its cost
base, with a year-on-year reduction in operating expenditure of 38%
while also reducing its year-on-year net loss by 29%.
The Company has made significant progress in the area of
lead-removal, including its manufacturing scale-up agreement with
Chematek, SpA and has restructured its supply-chain, having exited
manufacturing in India and then having signed an agreement with a
new e-commerce distribution partner in China (JiuBan).
Focusing on the core commercial activities of the business,
along with the continued development of a new, proprietary
heavy-metal removal offering, has led to the launch of the
Company's own branded line of hydration products under astrea(TM),
which has now launched through Amazon into the Indian market.
HaloSource has also partnered with Seven Step Ecotech Co. Ltd
("Seven Step") to launch a new line of purifying water bottles for
the Asian market, powered by HaloSource's HaloPure(R) disinfection
technology, which will leverage Seven Step's distribution channels
in India and Indonesia.
HaloSource has already announced its intention to reach cashflow
break-even in the near future, and with the recent progress made by
the Company in its product launch, distribution agreements and more
recently its global partnership with Water.org, the Company
continues to pursue cashflow break-even by building on the
strategic and operational initiatives it has already implemented.
The profitable growth of the Company's key product lines is the
Company's immediate objective. HaloSource will continue to pursue
its restructuring, lowering its break-even point further and
building upon the already significantly reduced cash-burn.
To support this strategy, the Company has launched the
Fundraising to provide the additional working capital required by
the Company to finance the commercialisation of the Company's lead
reduction technology and continue the growth of HaloSource's
drinking water business. The Company will use the net proceeds of
the Fundraising to pursue its existing business pipeline, primarily
in China, and focus on monetising its fully invested technology
within drinking water in multiple markets with multiple partners
and products.
James Thompson, CEO of HaloSource, said:
"We are very pleased by the response of the capital markets in
supporting our augmented commercialization strategy. With this
additional capital, we now have all of the pieces in place to drive
a significant outcome for our shareholders."
For further information, please contact:
HaloSource, Inc.
James Thompson, Chief Executive
Officer +1 425 419 2258
Craig Crowell, Chief Financial
Officer +1 425 419 2248
Cantor Fitzgerald Europe
(NOMAD and Broker)
Andrew Craig, Richard Salmond +44 207 894 7000
About HaloSource
HaloSource, Inc. innovates and integrates technologies to
deliver clean drinking water solutions to partners with trusted
brands around the world. The Company works with scientists and
industry experts across the globe in search of new ways to improve
drinking water quality and has been awarded more than 30 patents
for its ground-breaking chemistries, which provide safe drinking
water for more than 10 million consumers globally. The Company's
class-leading HaloPure(R) Drinking Water technology has the highest
global certifications, including registration with the US EPA.
Founded in Seattle, Washington, HaloSource has grown to become
an influential leader in drinking water purification. HaloSource is
headquartered in the US with operations in China and in India.
Learn more about the Company's research and development and future
cutting edge technologies by visiting www.halosource.com.
The HaloPure(R) and astrea(R) brands are registered trademarks
of HaloSource, Inc. All other trademarks, brand names or product
names belong to their respective holders.
Forward-looking statements
This announcement contains statements about HaloSource Inc. that
are or may be deemed to be "forward-looking statements".
All statements, other than statements of historical facts,
included in this announcement may be forward-looking statements.
Without limitation, any statements preceded or followed by, or that
include, the words "targets", "plans", "believes", "expects",
"aims", "intends", "will", "may", "should", "anticipates",
"estimates", "projects", "would", "could", "continue" or words or
terms of similar substance or the negative thereof, are
forward-looking statements. Forward-looking statements include,
without limitation, statements relating to the following: (i)
future capital expenditures, expenses, revenues, earnings,
synergies, economic performance, indebtedness, financial condition,
dividend policy, losses and future prospects and (ii) business and
management strategies and the expansion and growth of the
operations of HaloSource Inc.
These forward-looking statements are not guarantees of future
performance. These forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of any such person, or
industry results, to be materially different from any results,
performance or achievements expressed or implied by such
forward-looking statements. These forward-looking statements are
based on numerous assumptions regarding the present and future
business strategies of such persons and the environment in which
each will operate in the future. Investors should not place undue
reliance on such forward-looking statements and, save as is
required by law or regulation (including to meet the requirements
of the AIM Rules, the Prospectus Rules and/or the FSMA), HaloSource
Inc. does not undertake any obligation to update publicly or revise
any forward-looking statements (including to reflect any change in
expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based).
All subsequent oral or written forward-looking statements
attributed to HaloSource Inc. or any persons acting on their behalf
are expressly qualified in their entirety by the cautionary
statement above. All forward-looking statements contained in this
announcement are based on information available to the Directors of
HaloSource Inc. at the date of this announcement, unless some other
time is specified in relation to them, and the posting or receipt
of this announcement shall not give rise to any implication that
there has been no change in the facts set forth herein since such
date.
Details of the Placing and Subscription
The Company has today announced that it has conditionally
raised, in aggregate, GBP2.8 million ($3.8 million) (before
expenses) by way of a Placing of 166,940,688 New Common Shares and
a Subscription for 58,094,124 New Common Shares with certain new
and existing investors representing 40 per cent. of the Enlarged
Share Capital, at an Issue Price of 1.25 pence per New Common
Share. All of the Placing Shares have been conditionally placed
pursuant to the Placing Agreement.
The Issue Price of 1.25 pence per New Common Share represents a
discount of approximately 9 per cent. to the closing price of 1.38
pence on 14 December 2017, being the last business day prior to the
publication of the announcement of the Fundraising. The Board
unanimously agrees that the level of discount and method of issue
are appropriate to secure the investment necessary in order to
provide funds for the growth and development of the Company.
The Placing and Subscription are conditional on, inter alia:
-- The passing of the requisite resolution at the Annual General Meeting;
-- The conditions in the Placing Agreement being satisfied or
(if applicable) waived and the Placing Agreement not having been
terminated in accordance with its terms prior to Admission; and
-- Admission becoming effective by no later than 8.00 a.m. on 29
December 2017 (or such time and / or date, being no later than 12
February 2018, as the Company and its broker may agree).
Accordingly, if any of these conditions are not satisfied or, if
applicable, waived, the Placing will not proceed.
In connection with the Subscription, the subscribers have
entered into the Subscription Agreements.
Terms of the Placing Agreement
Under the terms of the Placing Agreement, the Company's broker
has agreed to use its reasonable endeavours, as an agent to the
Company, to place the Placing Shares at the Issue Price with
certain investors.
The Placing is not being underwritten.
The Placing Agreement provides for payment of certain fees and
commissions.
The Placing Agreement contains customary warranties given by the
Company in relation to, inter alia, the accuracy of the information
in this announcement, certain financial information and other
matters relating to the Company and its business. In addition the
Company will provide certain indemnities in respect of certain
liabilities in connection with the Placing.
The Placing Agreement may be terminated in certain customary
circumstances prior to Admission, including if: (i) the Company is
in breach of the terms of the Placing Agreement (including the
warranties); and/or (ii) there occurs a material adverse change in
or an event having a serious adverse effect on any of the financial
markets, or the operations, condition (financial or other), trading
position or prospects or results of operations of the Company.
If this right is exercised, the Placing will not proceed.
The Placing Agreement is not subject to any right of termination
after Admission.
Annual General Meeting
A notice convening the Annual General Meeting to be held at 1725
220(th) Street SE, Suite 103, Bothell, Washington 98021 at 9.30
a.m. on 27 December 2017 will be posted to shareholders. The
resolutions to be proposed at that meeting are summarised
below.
1. Ordinary Resolution - approve the re-election of the
following directors of the Company: James Thompson, Craig Crowell,
Kent Johnson and Massoud Entekhabi.
2. Special Resolution - disapplication of the shareholders
pre-emption rights in connection with the proposed issue of New
Common Shares pursuant to the proposed Fundraising.
3. Ordinary Resolution - approve the re-appointment of the
Company's auditor, BDO USA LLP.
4. Ordinary Resolution - approve the remuneration of the
Company's auditor.
Directors' Shareholdings
The beneficial and non-beneficial interests of the Directors and
persons closely associated with them in Common Shares at the date
of this announcement and following the Fundraising are set out in
the table below.
Date of this New Common Immediately following
Announcement Shares Admission
Number Percentage Number Number Percentage
of Common of existing of New of Common of Enlarged
Shares share Common Shares Share Capital
capital Shares
Director
Kent Johnson 1,929,271 0.6% 4,491,804 6,421,075 1.1%
James Thompson 3,738,395 1.1% 2,096,184 5,834,579 1.0%
Alan Matthews 901,800 0.3% 598,908 1,500,708 0.3%
Craig Crowell 353,333 0.1% 299,448 652,781 0.1%
Massoud
Entekhabi 130,133 0.0% 299,448 429,581 0.0%
Action to be taken in respect of the Annual General Meeting
Shareholders should check that they have received with the
notice of meeting:
-- A form of proxy or form of instruction for use in respect of
the Annual General Meeting; and
-- A reply-paid envelope for use in conjunction with the return of the form of proxy.
Whether or not Shareholders propose to attend the Annual General
Meeting in person, Shareholders are strongly encouraged to
complete, sign and return their form of proxy in accordance with
the instructions printed thereon as soon as possible, but in any
event so as to be received, by post to Computershare Investor
Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY or
by hand to Computershare Investor Services PLC, The Pavilions,
Bridgwater Road, Bristol BS99 6ZY, during normal business hours
only, by no later than 4:00 p.m. on 21 December 2017 (or, in the
case of an adjournment of the Annual General Meeting, not later
than 48 hours before the time fixed for the holding of the
adjourned meeting (excluding any part of a day that is not a
business day in England)).
If Shareholders hold their shares in the Company in
uncertificated form (that is, in CREST), those Shareholders may
vote using the Form of Instruction or the CREST Voting Service in
accordance with the procedures set out in the CREST Manual (please
also refer to the accompanying notes to the Notice of General
Meeting set out in the Circular). Voting instructions submitted via
CREST must be received by the Company's Depositary (Computershare
Investor Services PLC) by no later than 4:00 p.m. on 20 December
2017 (or, in the case of an adjournment, not later than 72 hours
before the time fixed for the holding of the adjourned meeting
(excluding any part of a day that is not a Business Day)).
Appointing a proxy in accordance with the instructions set out
above will enable shareholder votes to be counted at the Annual
General Meeting in the event of Shareholder's absence. The
completion and return of the form of proxy will not prevent
shareholders from attending and voting at the Annual General
Meeting, or any adjournment thereof, in person should shareholders
wish to do so.
Recommendation
The Directors of the Company believe that the resolutions to be
proposed at the Annual General Meeting are in the best interests of
the Company and Shareholders as a whole and unanimously recommend
that shareholders vote in favour of the Resolutions.
THIS ANNOUNCEMENT IS NOT FOR PUBLICATION OR DISTRIBUTION,
DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA.
THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES FOR SALE INTO THE
UNITED STATES. THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND
WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES,
EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION FROM REGISTRATION. NO
PUBLIC OFFERING OF SECURITIES IS BEING MADE IN THE UNITED
STATES.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IOEGGGPGPUPMPGC
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