TIDMXSG
RNS Number : 0798Z
Xeros Technology Group plc
12 December 2017
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO
CONSTITUTE INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE
MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON THE PUBLICATION OF
THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE
IN THE PUBLIC DOMAIN.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM THE UNITED
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12 December 2017
Xeros Technology Group plc
Proposed Placing to raise approximately GBP25 million
Xeros Technology Group plc (AIM: XSG, 'the Group', 'Xeros'), the
developer and provider of patented polymer based technologies with
multiple commercial applications, intends to raise approximately
GBP25 million before fees and expenses by a Placing of 11,111,112
new ordinary shares with existing and new institutional investors
at a placing price of 225 pence per Placing Share (the 'Placing').
The Placing will be structured in two parts.
Highlights
-- Proposed Placing will raise approximately GBP25 million.
-- Proceeds will be used to accelerate commercialisation of the
Group's portfolio of applications; and for continued investment in
polymer science and engineering and the creation of intellectual
property in support of commercialisation of applications.
-- Proceeds will be used to deliver major operational milestones
in 2018 which provide demonstrable value to commercial partners and
investors alike:
o Cleaning Technologies - domestic markets, high performance workwear and hotel & lodging sector;
-- In the home: as previously announced, Xeros will demonstrate
its new domestic washing machine at the Consumer Electronics Show
('CES') in Las Vegas in Jan '18 with the expectation of entering
licensing agreements with at least one global machine OEM;
-- High Performance Workwear: Xeros expects to continue its
penetration of the US firefighter market in 2018 and establish a
business platform which provides strategic funding options for
growth of this business beyond 2018;
-- Hotel & Lodging: Xeros plans to sign royalty agreements,
under its Symphony Project, with at least two leading global OEMs
and is planning major expansion in EMEA using Forward Channel
Partners.
o Tanning Technologies in bovine tanning market;
-- Xeros is targeting to sign at least four multi-year contracts
with leading European tanneries as well as establishing commercial
presence in the US tannery market. In combination, these are
intended to establish a business platform which provides strategic
funding options for the growth of this business beyond 2018.
o Textile Technologies in garment dyeing and denim finishing markets;
-- In both denim finishing and garment dyeing, Xeros expects to
complete commercial scale trials which demonstrate the potential
for capital light business models for each of these
applications.
Mark Nichols, Chief Executive of Xeros, said:
"We have developed unique polymer technologies which
substantially reduce water, chemistry and energy usage. Over the
last two years we have materially progressed their application in
three world-scale markets: cleaning, tanning and textiles.
"Having completed the majority of this development, we are now
progressively commercialising six business applications in our
chosen markets with major milestones for each targeted in the near
term. IP-rich business models with low capital intensity have been
designed to provide demonstrable value to commercial partners and
investors alike.
"We are delighted to welcome new investors who support our
unique proposition and strategy. This fundraise enables us to
progress significantly the commercialisation of our technologies
and enhancement of shareholder value."
A circular will be distributed to shareholders and made
available on Xeros' website shortly with further details of the
Placing and to give notice of the general meeting to consider and,
if thought fit, approve the resolutions laid out in the circular.
The general meeting is to be held at the offices of Squire Patton
Boggs (UK) LLP at 7 Devonshire Square, London EC2M 4YH at 10.00
a.m. on 28 December 2017. The formal notice of general meeting is
set out in the circular.
Enquiries:
Xeros Technology Group plc Tel: 0114 321
Mark Nichols, Chief Executive 6328
Officer
Paul Denney, Chief Financial Officer
Jefferies International Limited Tel: 020 7029
(Nominated Adviser and Joint Broker) 8000
Simon Hardy / Will Soutar
Berenberg (Joint Broker) Tel: 020 3207
Chris Bowman / Ben Wright / Laure 7800
Fine
Instinctif Partners Tel: 020 7457
Adrian Duffield / Helen Tarbet 2020
/ James Gray
Notes to Editors
Xeros Technology Group plc (LN: XSG) is a platform technology
company that is reinventing water intensive industrial and consumer
processes by reducing water and chemistry usage with its polymer
technologies. Its patented technologies have the capacity to
provide material economic, operational and sustainability
improvements that are unattainable with traditional processes. The
Group is currently exploiting its intellectual property in three
areas: Cleaning Technologies, Tanning Technologies and Textile
Technologies. Xeros has a number of agreements in place with such
international organisations as Hilton and Wollsdorf Leder.
For more information, please visit - www.xerostech.com
Jefferies, which is authorised and regulated in the United
Kingdom by the Financial Conduct Authority ("FCA"), and Berenberg,
which is authorised by the German Federal Financial Conduct
Authority and subject to limited regulation by the FCA, are acting
exclusively for the Company and for no--one else in relation to the
Placing, and will not be responsible to any other person for
providing the protections afforded to their respective clients nor
for providing advice in connection with the matters contained in
this announcement.
No representation or warranty, express or implied, is or will be
made as to, or in relation to, and no responsibility or liability
is or will be accepted by Jefferies, Berenberg nor by any of their
respective affiliates, partners or agents (or any of their
respective directors, officers, employees or advisers), as to or in
relation to, the contents, accuracy or completeness of this
announcement or any other written or oral information made
available to or publicly available to any interested party or its
advisers, or any other statement made or purported to be made by or
on behalf of either of Jefferies or Berenberg or any of their
respective affiliates in connection with the Company or the
Placing, and any liability therefor is expressly disclaimed.
Jefferies, Berenberg and each of their respective affiliates
accordingly disclaim all and any liability, whether arising in
tort, contract or otherwise (save as referred to above) in respect
of any statements or other information contained in this
announcement.
This announcement does not identify or suggest, or purport to
identify or suggest, the risks (direct or indirect) that may be
associated with an investment in the Placing Shares. Any investment
decision to buy Placing Shares in the Placing must be made solely
on the basis of publicly available information, which has not been
independently verified by Jefferies or Berenberg.
PLACING STATISTICS
Number of Ordinary Shares in issue at the date of this
announcement
88,058,844
Placing Price 225 pence
Placing Price discount to the closing middle market price on 11
December 2017
12.49%
Total number of Placing Shares being issued pursuant to the
Placing
11,111,112
Total number of Main Placing Shares being issued pursuant to the
Placing
8,888,890
Number of WCP Shares being issued pursuant to the Placing
2,222,222
Number of Ordinary Shares in issue immediately following
Admission
99,169,956
Gross proceeds of the Placing GBP25 million
Placing Shares as a percentage of the Enlarged Share Capital
11.20%
Estimated net proceeds of the Placing to be received by the
Company
GBP23.4 million
EXPECTED TIMETABLE OF KEY EVENTS
Circular and the Form of Proxy posted to Shareholders
12 December 2017
Latest time and date for receipt of Forms of Proxy 10.00 a.m. on
22 December 2017
General Meeting 10.00 a.m. on 28 December 2017
Issue of the Main Placing Shares 29 December 2017
Issue of the WCP Shares 29 December 2017
Admission and dealings to commence in the Placing Shares 29
December 2017
Placing Shares in uncertificated form to be credited to CREST
accounts
(CREST shareholders only) by 29 December 2017
Definitive certificates for Placing Shares in certificated form
to be dispatched
(non-CREST shareholders only) by 15 January 2018
Each of the times and dates in the above timetable is a
reference to the time in London and is subject to change. If any of
the above times and/or dates change, the revised times and/or dates
will be notified by announcement by the Company on a regulatory
information service.
PROPOSED PLACING OF 11,111,112 NEW ORDINARY SHARES AT 225 PENCE
EACH
APPROVAL OF WAIVER OF OBLIGATIONS UNDER RULE 9 OF THE TAKEOVER
CODE
1. INTRODUCTION
The Company intends to raise approximately GBP25 million before
fees and expenses by a Placing of 11,111,112 new Ordinary Shares
with existing and new institutional investors at a Placing Price of
225 pence per Placing Share. The Placing will be structured in two
parts as detailed in paragraph 4 below.
For the Placing to proceed, the Company requires Shareholders'
approval to authorise the Directors to allot the Placing Shares and
disapply pre-emption rights in relation to the issue of the Placing
Shares in the manner described in paragraphs 4 and 7 below. The
Resolutions to grant these authorities are proposed to be passed at
a General Meeting to be held at the offices of Squire Patton Boggs
(UK) LLP at 7 Devonshire Square, London EC2M 4YH at 10.00 a.m. on
28 December 2017.
The Board believes that raising equity finance using the
flexibility provided by a non-pre-emptive placing is the most
appropriate and optimal structure for the Company at this time.
This allows both existing institutional holders and new
institutional investors the opportunity to participate in the
Placing and avoids the requirement for a prospectus, which is a
costly and time consuming process.
The net proceeds of the Placing are intended to be used for the
acceleration of the commercialisation by the Company of each of the
applications within the Group's portfolio: Cleaning Technologies in
domestic markets, high performance workwear and the hotel and
lodging sector, Tanning Technologies in the bovine tanning market
and Textile Technologies in the garment dyeing and denim finishing
markets. The Company intends to continue to invest in polymer
science and engineering and the creation of intellectual property
in support of the commercialisation of its applications. It is
intended that the proceeds be used to deliver major planned
operational milestones in 2018 which provide demonstrable value to
commercial partners and investors alike. The 2018 milestones are
set out below:
Cleaning Technologies
In the home: The Company has announced that it will demonstrate
its new domestic washing machine at the Consumer Electronics Show
in Las Vegas in January 2018. The Company also expects to sign an
upfront license fee and ongoing royalty stream with at least one
global machine original equipment manufacturer (an "OEM").
High Performance Workwear: The Company expects to achieve a
significant penetration of the US firefighter equipment market in
2018 and establish a platform to provide the business with
strategic funding options for growth beyond 2018.
Hotel & Lodging: The Company intends to sign royalty
agreements, under the Symphony Project, with at least two leading
global OEMs. It is also planning a major expansion in EMEA on a
fully indirect basis using Forward Channel Partners.
Tanning Technologies
The Company is targeting to sign at least four multi-year
contracts with leading European tanneries as well as establishing a
commercial presence in the US tannery market. This will establish a
platform for strategic funding options to grow the business beyond
2018.
Textile Technologies
In both Denim Finishing and Garment Dyeing the Company is
expecting to complete commercial scale trials and demonstrate the
potential for a capital light business model for each of the
applications.
2. BACKGROUND TO THE PLACING
2.1. Information on the Company
The Company develops and commercialises proprietary polymer
based technologies which materially improve the sustainability,
performance and economics of water intensive industrial and
consumer processes. Where necessary the Company will enter markets
directly to prove and de-risk applications of its technology prior
to migrating to intellectual property rich, asset light, licensing
business models.
The Company has developed from a single application business to
establish a portfolio of strategically selected applications in
which to apply its polymer technologies in three world-scale
industries: cleaning, tanning and textiles.
Given the scale of the markets in which it operates, the
Company's strategy is to commercialise its technology with
partners, where appropriate, who already have strong market
positions and who also demonstrate a strategic intent to deliver
increased levels of sustainability. These markets have been
evaluated and selected based upon the size of their potential
economic returns net of the investment needed to realise them. For
each, the Company seeks to generate returns on its intellectual
property and know-how with low capital intensity. These returns can
be generated through licensing, trade sale or capital market
options for each one of the applications.
The Company's Ordinary Shares were admitted to trading on AIM on
25 March 2014, at which point the Company also raised GBP27.6
million of gross proceeds via the issue of new Ordinary Shares to
investors. On 30 November 2015 the Company raised a further GBP40.0
million of gross proceeds via the issue of new Ordinary Shares to
investors.
Since November 2015 the Company has developed its business from
being dependent on a single commercial application in a single
market (the North American hotel and lodging laundry market) to
having a broad, clearly defined portfolio as described above.
In order to accelerate the commercialisation of polymer
technology, the Company has aligned resources to each of the
application areas that it is pursuing with the vast majority being
applied to those with nearer term profitability. Commercialisation
is progressing in Cleaning Technologies with revenue of GBP2.4
million during the 17-month period to 31(st) December 2016; Tanning
Technologies is expected to deliver its first revenues in 2018 and
the Company is targeting 2019 for textile revenues.
2.2. Global Backdrop
Water scarcity is a global imperative. There are 1.3 billion km3
of water on the planet, 97% of which is in our oceans. Of the
remaining 3%, 2.5% is inaccessible, for example in polar ice caps
or as a result of pollution. So only 0.5% of the world's water is
accessible and greater than 80% of this water is from ground
sources which are being rapidly depleted. Immediate problems caused
by this over extraction include infrastructure collapse, with
further stress being caused by pollution. As a result, there are
major supply implications to address.
Water scarcity is only expected to increase as populations grow
and develop. GDP per capita has been shown to correlate with water
demand in developing countries. The price of water is increasing as
a result to manage demand and to recover the cost of increasing and
replacing ageing infrastructure.
Given the Company's technology's ability to reduce water usage,
the potential cost benefits for users will only increase in line
with water costs and so these dynamics are likely to drive further
adoption of the Company's products.
2.3. Update on progress
Cleaning Technologies
The Company's Cleaning Technologies use re-usable and recyclable
nylon polymers within washing machine drums to substantially reduce
water, detergent, energy and effluent usage whilst improving
cleaning performance. The Company's technology achieves reductions
in water of between 50% and 80%, reductions in detergent of between
25% and 50%, reductions in energy of up to 50% and reductions of
effluent usage of between 50% and 80%. The polymers are designed in
shape, size, density and composition to achieve the above benefits.
Additionally, engineering solutions have been developed by the
Company and applied to introduce and remove the polymer beads from
the garments and fabrics they clean. The Cleaning Technologies
business now includes three distinct areas of commercial
application:
In the home: The Company has announced that it will demonstrate
its new domestic washing machine at the Consumer Electronics Show
in Las Vegas in January 2018. It is designed to be incorporated
into branded OEMs product lines with very little alteration to the
production process. The Company has filed intellectual property
against this design.
Globally 119 million washing machines are sold annually with a
retail market value of $70 billion per annum. In addition, the
consumer laundry detergent market is worth $57 billion per annum.
The Company's technology will provide consumers with a reduction in
cost per wash, resulting from a reduction in detergent, water and
energy usage, along with improved fabric care and a reduced
environmental footprint. The Xeros domestic laundry machine
incorporates a microparticle filtration system, designed to reduce
pollution from washing synthetic garments.
High performance workwear: The Company first started trialling
its Cleaning Technology within the personal protective equipment
market in 2016. This market includes the uniforms worn by
firefighters, military personnel, petrochemical, construction and
mining workers. The Company's technology has demonstrated high
levels of decontamination, fabric care and garment life extension
in the high performance workwear market.
In April 2017, the Company announced the creation of a new
division focused on high performance workwear with an initial focus
on firefighters' uniforms. Following this, in July 2017, the
Company acquired MarKen PPE Restoration ("MarKen"), a specialist
independent service provider of cleaning, inspection and repair
services to fire and military customers in North America. Since its
acquisition by the Company, MarKen has been awarded contracts
valued at approximately $175,000 per annum. The acquisition was
undertaken as a first step in a plan to have the Company's
differentiated technology broadly adopted in the North American
market and in due course, in other selected markets and/or
geographies. The Company has also signed a contract with Ex Nihilo,
a garment fleet provider, to use the Company's technology to clean
SNCF uniforms.
Globally, the value of personal protective clothing expenditure
is GBP9.5 billion per annum and the Company estimates that the
potential value of the US firefighter protective clothing cleaning,
inspection and repair market is $0.3 billion per annum based on an
addressable market of c1.5 million firefighter uniforms.
Hotel and lodging: This market addresses on-premise laundries
within hotels and it was the first commercial development by the
Company with 25kg and, more recently, 16kg Xeros-brand washing
machines sold or leased to customers in the Americas under
multi-year all requirements contracts, which cover the provision of
polymers, chemistry and servicing. The Company is moving from
serving customers through a fully integrated business model to a
model whereby customers are increasingly served by independent
Forward Channel Partners. The financial benefits that accrue from
the Company's proprietary technology in the form of water,
chemistry, energy and effluent savings are shared between the
customer, the Company and the Forward Channel Partners (where
used). During the latter part of 2017, the Company entered the
Australian and Middle Eastern markets via the Forward Channel
Partner sales and delivery model.
At the end of December 2016, the Company was awarded approved
supplier status with Hilton Americas which represents over 4,300
hotels across the Americas. The Company intends to achieve similar
status with other major hotel chains and is currently in discussion
with two hotel groups.
The Company announced its Symphony Project in April 2017 with a
product launch at the US Clean Show in June 2017. The Symphony
Project is intended to enable other branded commercial washing
machine OEMs to incorporate the Company's technology within their
products and offer the same to their customers, either directly or
via their distributors. The Company intends to offer participating
OEMs a proportion of the gain share from the Sbeadycare(R)
agreements described above as an incentive for them to increase the
market penetration of the Company's technology. In September 2017
the Company announced that it has entered into an agreement with a
major OEM to conduct "testing and validation" of the Company's
technology within one of its commercial washing machines. The
agreement allows for commercial discussions to take place upon
successful completion of the test and validation.
Pending the anticipated implementation of this and other
Symphony Project agreements, the Company announced in September
2017 that it intended to focus its own brand machine sales
activities into high added value segments in the US, Europe, the
Middle East and Africa. This fully indirect international business
model has been established with first machine sales in EMEA.
In July 2017, the Company signed an agreement with Hitachi
Capital America Corporation ("Hitachi") whereby Hitachi will
provide a range of lease financing packages to the Company's
commercial laundry customers and future customers in North America.
The agreement also includes the sale of part of the Company's
existing lease portfolio.
In September 2017, the Company also announced the commissioning
of its "Connect" information portal which monitors and analyses
real-time machine performance and usage data to enable customers to
manage their laundry operations and track water, chemistry and
energy savings. The "Connect" information portal also provides
access to data to allow Forward Channel Partners to perform
preventative maintenance.
Globally the commercial washing machines market is worth $881
million per annum and the value of chemistry sold into commercial
laundries is worth $819 million per annum.
Tanning Technologies
In Cleaning Technologies, the Company's polymer technology
gently removes unwanted molecules and contaminants from materials;
in Tanning Technologies, however, the Company's polymer technology
is highly effective in pushing molecules into hides during leather
processing. This technology is effective in both the tanning and
the retanning and dyeing processes. Initially, the Company has
chosen to focus on the retanning and dyeing process. The
application of polymer technology in the tanning industry is
supported by intellectual property patents.
The Company's Tanning Technologies use re-usable and recyclable
polypropylene polymers within tanning drums to substantially reduce
the volume and total cost of water and chemistry used, whilst
producing leather hides of a comparable quality to that produced in
traditional processes. The Company's technology achieves reductions
in water and effluent of up to 50% and reductions in chemistry of
up to 25%. The polymers are designed in shape, size, density and
composition to achieve the above benefits. Additionally,
engineering solutions have been developed by the Company and
applied to introduce and remove the polymer beads from bovine hides
in a tanning drum.
Globally approximately 300 million bovine hides are processed on
an annual basis with a value of $55 billion to the tanning
industry.
Retanning and Dyeing: Following extensive development and
production-scale trials, in July 2017 the Company signed its first
contract to provide its polymer technology for the retanning and
dyeing activities of Wollsdorf Leder Schmidt and Co., in Austria,
on a 10-year basis. Furthermore, the Company has signed Heads of
Terms on a multi-year contract with Faeda S.p.A., in Italy. The
Company has either completed trials or has trials scheduled with
eleven further tanneries across Europe. These trials cover all
production types, leather applications and drum material types.
Textile Technologies
In Textile Technologies the Company plans to use re-usable and
recyclable polypropylene polymers within rotating drums to
substantially reduce the water and chemistry used and the effluent
produced in the fading and texturing of denim and in the dyeing of
cotton garments. In both cases the intention is at least to match
the product quality achieved in traditional processes. The polymers
are designed in shape, size, density and composition to achieve the
objectives mentioned above. Additionally, engineering solutions
have been developed by the Company and applied to introduce and
remove the polymer beads from processes they are applied
within.
Denim finishing: 1.2 billion pairs of denim jeans are
manufactured every year. The global retail market value for denim
jeans is $60 billion. The Company aims to reduce the cycle time for
the finishing of denim which includes the process steps of
de-sizing, cleaving and stonewashing whilst simultaneously reducing
the amount of water and chemistry used. The Company has delivered
significant improvements in cycle time and water usage in small
scale trials and now plans to move to production-scale trials ahead
of commercialisation. The Company's process uses a combination of
bio-technology and polymer technology to reduce the chemistry that
is normally required in traditional processes.
Cotton garment finishing: The global cotton processing industry
adds $26 billion of value per annum through the garment finishing
process, which includes dyeing. The Company aims to reduce the
cycle time for the dyeing and finishing of garments whilst
simultaneously reducing the water, salt and chemistry used. The
Company has delivered material reductions in water, chemistry and
low levels of salt in small scale trials. The Company plans to move
to production-scale trials ahead of commercialisation, and is
currently in discussions with a global vertically-integrated
premium knitwear brand.
The Company supports the commercialisation of the above
applications with central functions providing expertise in polymer
and engineering development, intellectual property management and
corporate function. The Company has a full suite of patents
covering all the processes and applications mentioned above. Since
the end of 2015 the Company has increased its number of patent
families either granted or in application from 39, to its current
level of 48 as at the end of June 2017.
2.4. Future plans
Cleaning Technologies
In the home: The Company expects discussions with OEMs regarding
licence royalties to follow the demonstration of its domestic
machine at the Consumer Electronics Show in Las Vegas in January
2018. These discussions will cover both annual royalties and
up-front licence fees. The design offers OEMs the ability to
provide their customers with washing processes which are cheaper,
more environmentally friendly and which will make their clothes
cleaner, last longer and look better. The prototype machine that
will be demonstrated involves a simple and inexpensive change to
conventional machines which manufacturers can include at the end of
their production lines. The Company expects to sign a licensing
agreement with at least one global machine OEM during 2018.
The Company's medium-term target is for 1.5% of annual global
domestic washing machines sold to incorporate the Company's
technology. This is equivalent to 1.8 million units. The Company is
targeting an average royalty of 4% of the retail price of a
machine.
High performance workwear: Following the acquisition of MarKen,
the Company intends to build a national network, both organically
and inorganically, to serve the US firefighter cleaning, inspection
and repairs market. In order to provide full US coverage, the
Company believes it will need between 5 and 10 sites. The Company
is targeting a total of 4 sites by the end of 2018, which should
achieve a significant penetration of the US firefighter equipment
market. This should also establish a platform which would give the
business strategic funding options for growth beyond 2018.
The Company has started working with the appropriate US
regulators with the objective of making the level of cleaning
performance delivered by the Company's cleaning process the
national standard. The Company believes that the setting of such a
standard will accelerate the adoption of its technology. There is
also an opportunity to deploy an extension of the Company's
"Connect" information portal to track and manage firefighters'
uniforms. This should demonstrate the benefits of the Company's
technology such as increased garment life and allow management to
evolve pricing to include a gain share from these benefits.
As the above strategy develops, the Company will evaluate
expansion into new sectors and geographies and this evaluation will
include the options for further funding.
The Company's medium-term target is to achieve a 15% to 20%
share of the US firefighter cleaning, inspection and repair market
by 2022 with a target gross margin of 40%. This target margin is
before any gain share from garment life extension is included in
pricing.
Hotel and lodging: The Company intends to continue its migration
towards the licensing model under the Symphony Project, initially
in the US with other geographies to follow. Accordingly, in
addition to its first OEM agreement, the Company plans to enter
into additional agreements with globally recognised OEMs, and is
targeting at least two further agreements in 2018. The Company
believes that this strategy is the best route to increasing the
rate of its adoption at the lowest capital intensity.
During the transition, the Company will focus on selling its own
brand machines under its multi-year Sbeadycare(R) programme in high
added value hotel segments and geographies. It is intended that the
Company's customers will increasingly be served by Forward Channel
Partners thereby reducing the Company's selling, installing,
commission and servicing costs. This will allow the Company to
maintain its expected overall rate of commissioning of its own
machines at between 25 and 30 Sbeadycare(R) contracts per month in
2018 operating from a lower cost base. This includes further
expansion into EMEA in 2018 using Forward Channel Partners to sell
and deliver its own brand machines with the Company receiving a
royalty for its intellectual property.
This transition is already being implemented in the hotel and
lodging business and it will be accelerated during 2018 and
2019.
The Company's medium-term target is to achieve an installed base
of between 2,500 - 3,000 machines by the end of 2020 with a target
gross margin of between 30% - 40% dependent on the mix between
licensing and own sales.
Tanning Technologies
The Company expects to have signed at least 4 multi-year
contracts with tanneries in 2018 and it is building an engineering
deployment capability to support these tanneries. In 2018 the
Company will seek to begin scale trials with larger tannery groups
in the Americas having proven the technical and commercial models
in Europe. By the end of 2018 the Company expects to be operating
with a run-rate of 11m hides per annum being processed by its
polymer technology.
During 2018, having established a business platform, the Company
will evaluate longer-term growth and funding options.
The Company's medium-term target is to achieve a 15% - 20%
market penetration of bovine hide processing by 2021. The estimated
total gain per hide of c.GBP0.6 to GBP1.05 is expected to be shared
equally between each tannery and the Company.
Textile Technologies
The Company will move from small scale trials to larger
production-scale trials in 2018 in both denim finishing and cotton
garment dyeing and it will seek commercial partners to assist in
evaluating the commercialisation options available to the Company.
As these options become more fully developed, the Company will
recruit dedicated commercial leadership to take these businesses
forward and longer-term growth and funding plans will be
developed.
2.5. Summary
Since the last fundraising, the Group has achieved a number of
key milestones in its transition from a designer and seller of
polymer technology commercial washing machines towards an
intellectual property-rich, capital-light licenser of polymer-based
technologies to multiple scale industries.
Technical validation and increasing market endorsement show that
the Company possesses a platform technology that can transform
these industries.
The long-term value of the Company's technology in each of the
selected markets is substantial, given their scale, the
environmental and economic pressures on them, and the quantum of
the improvements it delivers in these areas. These benefits are now
increasingly being recognised and the Company is in active
discussions with a number of partners with the objective of further
accelerating commercial development.
The Company now has the foundations in place to demonstrate
value in 2018: it has identified the funds it requires and where
these will be deployed; it has the key management in place; it has
the required intellectual property protections filed or granted;
and it has identified the commercial milestones it needs to achieve
in 2018 to demonstrate the value of each application within its
portfolio and enhance the platform value of the Group as a
whole.
3. CURRENT TRADING AND OUTLOOK
Since the Company announced results for the 6 months to 30th
June 2017 trading has continued in line with management
expectations. In Cleaning Technologies the Company remains on track
with its plans to launch its domestic washing machine at the
Consumer Electronics Show in January 2018. In the Hotel and Lodging
business the Company has signed a Forward Channel Partner agreement
with Consolidated International Corporation (CIC) Middle East in
the UAE and the first commercial washing machines have been shipped
to Dubai, with further shipments expected before the end of the
year. The Company also commissioned its first machine in Australia.
At the end of June 2017 the Company reported total commercial
machine installations and letters of agreement with a high
probability of becoming binding contracts of 460. At the end of
October this figure now stands at 492 and, as previously announced,
the Company continues to focus on increasing the conversion rate of
revenue generating machines in the US hotel market and reducing the
number of non-revenue generating trial machines, as well as placing
new installations into high value customers and geographies.
The high performance workwear business is trading in line with
management expectations and planning activity continues to expand
the national footprint of the business. In Tanning Technologies the
Company continues to progress trials of its technology in European
tanneries.
Overall the full year outlook for the Company is in line with
management expectations.
4. TAKEOVER CODE, CONCERT PARTY AND RULE 9 WAIVER
4.1. Application of the Takeover Code
The Company is subject to the Takeover Code. Brief details of
the Panel, the Takeover Code and the protections they afford are
described below.
The Takeover Code is issued and administered by the Panel. The
Takeover Code applies to all takeover and merger transactions,
however effected, where the offeree company is, inter alia, a
listed public company registered in the United Kingdom. The Company
is a listed public company registered in the United Kingdom and its
Shareholders are therefore entitled to the protections afforded by
the Takeover Code.
Under Rule 9 of the Takeover Code, where any person acquires,
whether by a series of transactions over a period of time or not,
an interest in shares (as defined in the Takeover Code) which
(taken together with shares already held by him and any interest in
shares held or acquired by persons acting in concert with him)
carry 30% or more of the voting rights of such a company, that
person is normally required to make a general offer to all the
holders of any class of equity share capital or other class of
transferable securities carrying voting rights in that company to
acquire the balance of their interests in the company.
Rule 9 of the Takeover Code also provides that, among other
things, where any person who, together with persons acting in
concert with him, is interested in shares which in aggregate carry
not less than 30% of the voting rights of such a company but does
not hold shares carrying more than 50% of the voting rights of such
a company, and such person, or any person acting in concert with
him, acquires an additional interest in shares which increases the
percentage of shares carrying voting rights in which he is
interested, then such person is normally required to make a general
offer to all the holders of any class of equity share capital or
other class of transferable securities carrying voting rights of
that company to acquire the balance of their interests in the
company.
An offer under Rule 9 of the Takeover Code must be in cash (or
with a cash alternative) and at not less than the highest price
paid within the preceding 12 months for any shares in the company
by the person required to make the offer or any person acting in
concert with him.
For the purposes of the Takeover Code, persons acting in concert
comprise persons who, pursuant to an agreement or understanding
(whether formal or informal), cooperate to obtain or consolidate
control of a company. As explained further below, certain
categories of person are presumed to be acting in concert under the
Takeover Code unless the contrary is established.
4.2. Historic inadvertent breach of Rule 9 of the Takeover Code by the Concert Party
Presumptions
The Takeover Code provides that certain categories of person are
presumed to be acting in concert, including:
- a company, its parent, subsidiaries and fellow subsidiaries,
and their associated companies, and companies of which such
companies are associated companies, all with each other (for this
purpose ownership or control of 20% or more of the equity share
capital of a company is regarded as the test of associated company
status); and
- a fund manager (including an exempt fund manager) with any
investment company, unit trust or other person whose investments
such fund manager manages on a discretionary basis, in respect of
the relevant investment accounts.
On 9 March 2016, Mercia completed the acquisition of Enterprise
Ventures Group Limited, of which EVL is a wholly owned subsidiary.
EVL is the discretionary fund manager of, inter alia, the
Enterprise Ventures Funds. On the basis that certain members of
Woodford (acting through WIML) then held more than 20% of the
voting rights of Mercia, Woodford was then presumed to be acting in
concert with Mercia, EVL and the Enterprise Venture Funds. At that
time, Woodford held 20.50% of the voting rights of the Company and
the Enterprise Venture Funds (acting through EVL) held 7.29% of the
voting rights of Company. Accordingly, the Concert Party held an
aggregate of 27.79% of the voting rights of the Company.
Historic inadvertent breach of Rule 9 of the Takeover Code by
the Concert Party
Between 9 March 2016 and 12 July 2017, WIML (as agent and
investment manager for Woodford) purchased an aggregate of
5,419,350 Ordinary Shares in approximately 120 separate trades,
thereby increasing its holding of voting rights in the Company to
25.96%. On the basis that these purchases increased the Concert
Party's aggregate holding of voting rights in the Company from
27.79% to 33.01%, they had the effect of triggering an obligation
for the Concert Party to make a mandatory offer for the entire
issued share capital in the Company under Rule 9.1 of the Takeover
Code. However, Woodford had not appreciated at the time that these
acquisitions were made that it was presumed to be acting in concert
with the Enterprise Ventures Funds, and the Enterprise Ventures
Funds (acting through EVL) were both unaware of Woodford's holding
in the Company and the acquisitions being made and therefore had
not appreciated that they were presumed to be acting in concert
with Woodford, and so no such offer was made.
The Panel has accepted that this obligation for the Concert
Party to make a general offer for the Company under Rule 9.1 was
triggered inadvertently and has, in accordance with Note 4 on Rule
9.1 of the Takeover Code, accordingly agreed that no offer is
required to be made as a result of these purchases. Ordinarily, the
Panel would require, as a condition of its not requiring an offer
to be made, that sufficient shares are disposed of to independent
third parties in order to remedy the breach of Rule 9 that has
occurred and, pending the completion of the disposal, the
application of restrictions on the exercise of the voting rights
attaching to the number of shares as results in the persons acting
in concert being able to exercise less than 30% of the voting
rights attaching to the shares of the Company. However, the Panel
has agreed not to require Woodford to sell approximately 2,682,551
Ordinary Shares in this case on the basis that:
4.2.1. by the time that Woodford had appreciated that it had
thereby triggered an obligation under Rule 9.1 of the Takeover
Code, it was in confidential discussions with the Company regarding
the Placing and, accordingly, Woodford was then restricted under
the Market Abuse Regulation from dealing in the Ordinary
Shares;
4.2.2. the Concert Party shall exercise less than 30% of the
voting rights attaching to the shares of the Company in respect of
the Resolutions on which the members of the Concert Party are
entitled to vote; and
4.2.3. in the event that the Resolutions are approved and the
first part of the Placing (relating to the issue and allotment of
the Main Placing Shares) is implemented, then the Concert Party
would come to hold less than 30% of the Company's voting
rights.
The Concert Party will be able to increase its shareholding in
the Company through the issue of the WCP Shares only if the Rule 9
Waiver and the associated Whitewash Resolution is approved by the
Independent Shareholders.
4.3. Rule 9 Waiver
As at the date of this announcement, the members of the Concert
Party hold existing Ordinary Shares representing 33.01% of the
voting rights of the Company. Following the issue of the Main
Placing Shares to persons other than the Concert Party, the Concert
Party will control approximately 29.99% of the voting rights of the
Company (on the assumption that between the date of this
announcement and the issue of the Main Placing Shares there is no
other issue of shares by the Company, whether pursuant to an
exercise of options or otherwise, and there is no other change to
the Concert Party's holding of Ordinary Shares).
It is proposed that Woodford subscribe for WCP Shares, which
would result in the Concert Party holding Ordinary Shares
representing 31.56% of the voting rights of the Company. As a
consequence of the issue of the WCP Shares, without a waiver of the
obligation under Rule 9 of the Takeover Code, the Concert Party
would be required to make a general offer for the balance of
Ordinary Shares in issue immediately following Admission. The Panel
has been consulted and has agreed, subject to the Whitewash
Resolution being passed by the Independent Shareholders (on a poll)
at the General Meeting, to waive the obligation that would
otherwise arise under Rule 9 of the Takeover Code as a result of
the issue of WCP Shares to Woodford pursuant to the Placing. The
Whitewash Resolution will be passed if approved by a simple
majority of votes cast by Independent Shareholders (on a poll).
Following completion of Admission, Rule 9 of the Takeover Code
will continue to apply to the Concert Party, requiring a general
offer to be made to all Shareholders if any member of the Concert
Party or persons acting in concert with them acquires any Ordinary
Shares in addition to those which are the subject of the Whitewash
Resolution, unless a further waiver is obtained. The waiver of Rule
9 of the Takeover Code which the Panel has agreed to give
(conditional on the Whitewash Resolution being passed by the
Shareholders) is only in respect of the acquisition of WCP Shares
by Woodford as a result of the Placing and not in respect of any
other future acquisition of Ordinary Shares by any member of the
Concert Party or persons acting in concert with them.
If the Resolutions are passed, the Concert Party will not be
restricted from making an offer for the Company. The members of the
Concert Party have confirmed that the Concert Party has no
intention of making an offer for the Company.
Further information regarding the Concert Party and the Rule 9
Waiver will be set out in the Additional Information section
contained in the Circular.
5. REASONS FOR THE PLACING AND USE OF PROCEEDS
5.1. Reasons for the Placing
The Directors are of the view, given the opportunities available
to the Group and its limited current cash resources, that this is
the appropriate time for the Company to request shareholder
approval in order to raise further funds through the Placing. The
Placing will enable the Company to maintain the momentum seen since
the Company's last equity issue in November 2015 as it seeks to
build on its progress within the business.
If the Resolutions are not approved at the General Meeting, the
Placing will not occur and the net proceeds of the Placing will not
be received by the Company. If this were to happen, the Group would
only have sufficient working capital to trade through to
mid-February 2018 without taking any mitigating action.
As further detailed in paragraph 9 below, the Company has
received, in aggregate, irrevocable undertakings to vote in favour
of the Resolutions to be proposed at the General Meeting in respect
of:
- the Main Placing Resolutions and WCP Resolutions, 48,215,098
existing Ordinary Shares, representing, in aggregate, approximately
57.22% of the existing issued ordinary share capital entitled to
vote on these Resolutions; and
- the Whitewash Resolution, 8,732,962 existing Ordinary Shares,
representing, in aggregate, approximately 52.93% of the existing
issued ordinary share capital of the Company entitled to vote on
this Resolution.
5.2. Use of proceeds
As at 30 November 2017, the Company had existing cash resources
of GBP4.2 million, which together with the gross proceeds of the
Placing would result in a pro forma cash balance of GBP29.2
million.
The current run-rate of cash expense across all commercial
applications and the above central capabilities is approximately
GBP2.2 million per month. Following the Placing, there is expected
to be no overall change in the current run-rate cash burn at the
Group level.
The Company will deploy its resources in each of its identified
applications based upon the size of the potential economic returns.
As the Company migrates its Hotel & Lodging business towards an
indirect business model, this will enable cash to be invested in
these other areas.
The Company currently envisages applying its pro forma cash
resources following the Placing in the following areas:
Cleaning Technologies
- GBP2 million to support the commercialisation of its domestic
machine post-launch in January 2018
- GBP5 million to fund the expansion of the North American high performance workwear business
- GBP7 million to fund the Symphony Project, and to continue to
expand sales of its own brand machine in its chosen premium market
segments in the US and select international markets
Tanning Technologies
- GBP5 million to provide resources to enable delivery of
accelerated deployment across Europe and to support the roll-out of
commercial operations in the Americas
Textile Technologies
- GBP2 million to provide resources to enable the scale up of
trials to production level and to develop full commercial plans
In addition to the above commercialisation plans, the Group will
fund central capabilities as follows:
- GBP2 million on business IT, and more specifically the Company's "Connect" portal
- GBP2 million on engineering (i.e. the design of polymer
management systems for all forms of industrial applications)
- GBP1 million for polymer development
- GBP2 million for intellectual property management
- GBP1 million for corporate functions including finance, HR and Communications
- GBP1 million for PLC related costs
6. DETAILS OF THE PLACING
6.1. Description
The Company is proposing to raise approximately GBP25 million
(before fees and expenses) by way of a conditional, non-pre-emptive
placing of 11,111,112 new Ordinary Shares, comprising 8,888,890
Main Placing Shares and 2,222,222 WCP Shares, at the Placing
Price.
The Company intends to first allot the Main Placing Shares
(conditional on Admission) to certain new and existing
institutional shareholders of the Company (but excluding the
Concert Party) so that the Concert Party would come to hold less
than 30% of the Company's voting rights. The Company then intends
to separately allot the WCP Shares to Woodford (also conditional on
Admission). The issue of the WCP Shares will be conditional upon
the Main Placing Shares having first been allotted and the approval
by the Independent Shareholders of the Whitewash Resolution. The
Company intends that both the Main Placing Shares and the WCP
Shares shall be issued at Admission.
The Company has received irrevocable commitments from Woodford
to participate in the Placing in respect of all of the WCP
Shares.
The Placing Price represents a discount of approximately 12.49%
from the closing mid-market price on 11 December 2017, being the
latest practicable date prior to the announcement of the Placing.
The Placing Shares will represent approximately 11.20% of the
Enlarged Share Capital following Admission. In order to broaden the
Company's institutional shareholder base and to minimise the time
and transaction costs of the Placing, the Placing Shares are only
being placed by Jefferies and Berenberg with a limited number of
existing and new institutional shareholders. The Placing Shares are
not being made available to the public.
The Placing Shares will be issued credited as fully paid and
will be identical to and rank pari passu in all respects with the
existing Ordinary Shares, including the right to receive all future
distributions, declared, paid or made in respect of the Ordinary
Shares following the date of Admission.
6.2. Placing Agreement
In connection with the Placing, the Company has entered into the
Placing Agreement pursuant to which Jefferies and Berenberg have
agreed, in accordance with its terms, to use reasonable endeavours
to procure subscribers for the Placing Shares at the Placing Price.
The Placing is not underwritten. In accordance with the terms of
the Placing Agreement, the Placing is conditional upon, amongst
other things, the passing of the Resolutions, the Rule 9 Waiver
being approved, 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 occurring on or before 29 December 2017 (or such later
date as the Company and Jefferies (having consulted with Berenberg)
may agree, not being later than 19 January 2018).
The Placing Agreement contains certain warranties given by the
Company concerning the accuracy of information given in the
Circular and this announcement, as well as other matters relating
to the Group and its business. The Placing Agreement is terminable
by Jefferies and Berenberg in certain circumstances up until the
time of Admission, including, inter alia, should there be a breach
of a warranty contained in the Placing Agreement or a force majeure
event takes place or a material adverse change occurs to the
business of the Company or the Group. The Company has also agreed
to indemnify Jefferies and Berenberg against all losses, costs,
charges and expenses which Jefferies and Berenberg may suffer or
incur as a result of, occasioned by or attributable to the carrying
out of its duties under the Placing Agreement.
6.3. Admission of the Placing Shares
Application will be made to the London Stock Exchange for the
Placing Shares to be admitted to trading on AIM. Subject, inter
alia, to the passing of the Resolutions at the General Meeting it
is expected that admission to AIM will become effective in respect
of, and that dealings on AIM will commence in, all of the Placing
Shares, on or around 29 December 2017.
It is expected that CREST accounts of the investors in the
Placing Shares who hold their Ordinary Shares in CREST will be
credited with their Placing Shares on 29 December 2017. In the case
of investors in the Placing Shares holding their Ordinary Shares in
certificated form, it is expected that certificates will be
dispatched by 15 January 2018. Pending dispatch of the share
certificates or the crediting of CREST accounts, the Registrar will
certify any instruments of transfer against the register.
7. IMPORTANCE OF THE VOTE, IRREVOCABLE UNDERTAKINGS AND RECOMMATION
If the Resolutions are not approved at the General Meeting, the
Placing will not occur and the net proceeds of the Placing will not
be received by the Company. If this were to happen, the Group would
only have sufficient working capital to trade through to
mid-February 2018 without taking any mitigating action.
Irrevocable undertakings and letters of intent
In aggregate, the Company has received irrevocable undertakings
to vote in favour of the Resolutions to be proposed at the General
Meeting in respect of:
- the Main Placing Resolutions and WCP Resolutions, 48,215,098
existing Ordinary Shares, representing, in aggregate, approximately
57.22% of the existing issued ordinary share capital entitled to
vote on these Resolutions; and
- the Whitewash Resolution, 8,732,962 existing Ordinary Shares,
representing, in aggregate, approximately 52.93% of the existing
issued ordinary share capital of the Company entitled to vote on
this Resolution.
John Samuel, who is an Independent Director and holds shares in
the Company, has irrevocably undertaken to vote in favour of all
Resolutions in respect of his holdings, amounting to 1,477,188
Ordinary Shares representing approximately 1.68% of the existing
issued ordinary share capital of the Company.
In addition to John Samuel, certain other Shareholders have
irrevocably undertaken to vote in favour of the Resolutions as
follows:
- in respect of the Main Placing Resolutions and the WCP
Resolutions, 46,737,910 existing Ordinary Shares, representing, in
aggregate, approximately 55.46% of the existing issued ordinary
share capital of the Company entitled to vote on these Resolutions;
and
- in respect of the Whitewash Resolution, on which only the
Independent Shareholders are entitled to vote, 7,255,774 existing
Ordinary Shares, representing, in aggregate, approximately 43.98%
of the existing issued ordinary share capital of the Company
entitled to vote on this Resolution.
In addition, certain other Shareholders have provided letters of
intent to vote in favour of the Main Placing Resolutions and the
WCP Resolutions in respect of 12,899,275 existing Ordinary Shares,
representing, in aggregate, approximately 15.31% of the existing
issued ordinary share capital of the Company.
Voting rights limitations
The members of the Concert Party have also irrevocably
undertaken to exercise, in aggregate, less than 30% of the voting
rights attaching to the shares of the Company, in respect of the
Main Placing Resolutions and WCP Resolutions. The members of the
Concert Party are not entitled to vote in respect of the Rule 9
Waiver.
Invesco Asset Management Limited, IP Group Plc, Baillie Gifford
& Co, Parkwalk Advisors and Mr Alistair Kilgour are considered
not to be independent in respect of the Rule 9 Waiver by virtue of
their participation in the Placing or by virtue of their being
presumed to be acting in concert (within the meaning of the
Takeover Code) with participants in the Placing, and will each
therefore only be entitled to vote in respect of the Main Placing
Resolutions and WCP Resolutions.
Recommendation
The Independent Directors, who have been so advised by Jefferies
as to the financial terms of the Placing and Rule 9 Waiver,
consider the terms of the Placing and Rule 9 Waiver to be fair and
reasonable and in the best interests of the Independent
Shareholders and the Company as a whole.
In providing advice to the Independent Directors, Jefferies has
taken into account the Independent Directors' commercial
assessments.
The Independent Directors consider that the Placing and the
Resolutions are in the best interests of the Company and its
Shareholders as a whole and unanimously recommend that Shareholders
vote in favour of each of the Resolutions to be proposed at the
General Meeting on which they are entitled to vote.
Important Notice
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE
PLACING. THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT IN
THE APPIX ARE DIRECTED ONLY AT: (A) PERSONS IN MEMBER STATES OF THE
EUROPEAN ECONOMIC AREA ("EEA") WHO ARE QUALIFIED INVESTORS WITHIN
THE MEANING OF ARTICLE 2(1)(E) OF THE EU PROSPECTUS DIRECTIVE
(WHICH MEANS DIRECTIVE 2003/71/EC, AS AMED FROM TIME TO TIME, AND
INCLUDES ANY RELEVANT IMPLEMENTING DIRECTIVE MEASURE IN ANY MEMBER
STATE) (THE "PROSPECTUS DIRECTIVE") ("QUALIFIED INVESTORS"); AND
(B) IN THE UNITED KINGDOM, QUALIFIED INVESTORS WHO ARE PERSONS WHO
(I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS
FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS
ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER"); (II) ARE
PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH
COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC") OF THE ORDER; OR
(III) ARE PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED
(ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT
PERSONS").
THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT HEREIN
MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT
PERSONS. PERSONS DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY
THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT
ACTIVITY TO WHICH THE APPIX AND THE TERMS AND CONDITIONS SET OUT
HEREIN RELATE IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE
ENGAGED IN ONLY WITH RELEVANT PERSONS. THE APPIX IS FOR INFORMATION
PURPOSES ONLY AND DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR
SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT
AND THE APPIX HAS BEEN ISSUED BY AND IS THE SOLE RESPONSIBILITY OF
THE COMPANY.
THIS ANNOUNCEMENT, INCLUDING THIS APPIX, IS NOT AN OFFER FOR
SALE OR SUBSCRIPTION IN ANY JURISDICTION IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL UNDER THE SECURITIES LAWS OF
ANY SUCH JURISDICTION. THE SECURITIES MENTIONED HEREIN HAVE NOT
BEEN AND WILL NOT BE REGISTERED UNDER THE US SECURITIES ACT OF
1933, AS AMED (THE "SECURITIES ACT") OR UNDER ANY SECURITIES LAWS
OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT
BE OFFERED, SOLD, RESOLD, TRANSFERRED OR DELIVERED, DIRECTLY OR
INDIRECTLY, IN OR INTO THE UNITED STATES EXCEPT PURSUANT TO AN
APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN COMPLIANCE WITH THE SECURITIES LAWS OF ANY
STATE OR OTHER JURISDICTION OF THE UNITED STATES. THERE WILL BE NO
PUBLIC OFFER OF THE SECURITIES MENTIONED HEREIN IN THE UNITED
STATES.
THE SECURITIES MENTIONED HEREIN HAVE NOT BEEN, NOR WILL BE,
APPROVED OR DISAPPROVED BY THE US SECURITIES AND EXCHANGE
COMMISSION (THE "SEC"), ANY STATE SECURITIES COMMISSION OR ANY
OTHER REGULATORY AUTHORITY IN THE UNITED STATES, NOR HAVE ANY OF
THE FOREGOING AUTHORITIES PASSED UPON ORORSED THE MERITS OF THE
PLACING OR THE ACCURACY OR ADEQUACY OF THIS ANNOUNCEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE UNITED
STATES.
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL,
REGULATORY, TAX, BUSINESS, FINANCIAL AND RELATED ASPECTS OF AN
ACQUISITION OF PLACING SHARES.
No statement in this announcement is intended to be a profit
forecast and no statement in this announcement should be
interpreted to mean that the earnings per share of the Company for
the current or future financial years would necessarily match or
exceed the historical published earnings per share of the
Company.
The price of Ordinary Shares and the income from them may go
down as well as up and investors may not get back the full amount
invested on disposal of the Placing Shares.
Neither the content of the Company's website (or any other
website) nor the content of any website accessible from hyperlinks
on the Company's website (or any other website) is incorporated
into, or forms part of, this announcement.
Annexure 1
TERMS AND CONDITIONS OF THE Placing
IMPORTANT INFORMATION FOR PLACEES ONLY REGARDING THE Placing
1. Details of the Placing
1.1 Jefferies and Berenberg (the "Bookrunners") have entered
into an agreement with the Company (the "Placing Agreement") under
which, subject to the terms and conditions set out in that
agreement, each of the Bookrunners have severally agreed, as agents
and on behalf of the Company, to use their respective reasonable
endeavours to procure placees (the "Placees") for the Placing
Shares at a price of 225p per Placing Share (the "Placing Price"),
where:
1.1.1 8,888,890 Ordinary Shares (the "Main Placing Shares")
shall be allocated and issued to new and existing shareholders of
the Company (other than the Concert Party); and
1.1.2 2,222,222 Ordinary Shares (the "WCP Shares") shall be
allocated and issued to one or more members of the Concert
Party,
in accordance with such allocation determined by agreement
between the Company and the Bookrunners pursuant to the
bookbuilding process (the "Bookbuild"), described in this
announcement and set out in the Placing Agreement. The placing of
the Main Placing Shares and the WCP Shares (together, the
"Placing") is not underwritten by the Bookrunners.
1.2 The Placing will be in respect of 8,888,890 Main Placing
Shares and 2,222,222 WCP Shares (together, the "Placing Shares").
The Placing Shares will be issued conditional on, amongst other
things, the approval by Shareholders of the Resolutions which will:
(i) grant authority to the Directors to allot the Placing Shares
and disapply pre-emption rights in respect of the Placing Shares;
and (ii) approve a proposed waiver of Rule 9 of the Takeover Code.
The Circular containing details of the proposed Placing and the
notice of the General Meeting will be sent to shareholders shortly
following the publication of this announcement.
1.3 The Placing Shares will, when issued, be credited as fully
paid and will rank pari passu in all respects with the existing
Ordinary Shares of the Company including the right to receive all
dividends and other distributions declared, made or paid on or in
respect of such Ordinary Shares after the date of issue of the
relevant Placing Shares.
1.4 As a term of the Placing, the Company has agreed that it
will not issue or sell any Ordinary Shares (other than the Placing
Shares) for a period ending three months after Admission, without
Jefferies' prior consent, acting on behalf of the Bookrunners
following consultation with Berenberg. This agreement does not
however prevent the Company from granting or satisfying exercises
of options granted pursuant to existing share schemes of the
Company.
2. Application for admission to trading
Application will be made to the London Stock Exchange for the
Admission of the Main Placing Shares and the WCP Shares to trading
on AIM. It is expected that Admission will become effective and
that dealings in the Placing Shares will commence on or around 29
December 2017.
3. Bookbuild
3.1 This Appendix gives details of the terms and conditions of,
and the mechanics of participation in, the Placing. No commissions
will be paid to Placees or by Placees in respect of any Placing
Shares. The Bookrunners shall be entitled to effect the Placing by
such alternative method to the Bookbuild as agreed between the
Company and the Bookrunners.
4. Participation in, and principal terms of, the Placing
4.1 Jefferies is acting as nominated adviser, joint bookrunner
and joint broker of the Company in respect of the Placing.
Berenberg is acting as joint bookrunner and joint broker of the
Company in respect of the Placing. The Bookrunners are arranging
the Placing severally, and not jointly, nor jointly and
severally.
4.2 Participation in the Placing will only be available:
4.2.1 in respect of the Main Placing Shares, to persons who may
lawfully be, and are, invited to participate by either of the
Bookrunners (but shall not include any member of the Concert
Party); and
4.2.2 in respect of the WCP Shares, to persons who may lawfully
be, and are, invited to participate by either of the Bookrunners
(such Placees being restricted to the members of the Concert
Party).
4.3 Jefferies, Berenberg and each of their respective affiliates
and partners are entitled to enter bids in the Bookbuild as
principal.
4.4 The Bookbuild has been carried out on the basis of the
Placing Price of 225p per Placing Share payable by all Placees
whose bids are successful in accordance with this Appendix and the
settlement instructions contained in the Placee's contract note.
The number of the Placing Shares to be allocated and issued to each
Placee will be determined by agreement between the Company and the
Bookrunners following the Bookbuild.
4.5 The Bookbuild has now closed. Jefferies may, in agreement
with the Company and having consulted with Berenberg, accept bids
that are received after the Bookbuild has closed. The Company
reserves the right (upon the agreement of Jefferies, having
consulted with Berenberg) to reduce or seek to increase the amount
to be raised pursuant to the Placing.
4.6 Each prospective Placee's allocation will be determined by
agreement between the Company and the Bookrunners, and will be
confirmed orally by either Jefferies or Berenberg, as agents of the
Company. That oral confirmation will constitute an irrevocable
legally binding commitment upon that person (who will at that point
become a Placee) in favour of Jefferies, Berenberg and the Company
to subscribe for the number of Placing Shares allocated to it at
the Placing Price on the terms and conditions set out in this
Appendix and in accordance with the Company's articles of
association.
4.7 Each Placee will also have an immediate, separate,
irrevocable and binding obligation, owed to each of the Bookrunners
as agents of the Company, to pay in cleared funds, an amount equal
to the product of the Placing Price and the number of Placing
Shares that such Placee has agreed to subscribe for and the Company
has agreed to allot and issue to that Placee, in accordance with
this Appendix and the settlement instructions contained in the
Placee's contract note.
4.8 Jefferies (acting on behalf of the Bookrunners, following
consultation with Berenberg) may choose to accept bids, either in
whole or in part, and may scale down any bids for this purpose on
such basis as it determines. Jefferies may also, notwithstanding
paragraphs 4.6 and 4.7 above, subject to the prior agreement with
the Company and Berenberg: (i) allocate Placing Shares after the
time of any initial allocation to any person submitting a bid after
that time and (ii) allocate Placing Shares after the Bookbuild has
closed to any person submitting a bid after that time.
4.9 A bid in the Bookbuild will be made on the terms and subject
to the conditions in this Appendix and will be legally binding on
the Placee on behalf of which it is made and, except with
Jefferies' consent (acting on behalf of the Bookrunners, following
consultation with Berenberg), will not be capable of variation or
revocation after the time at which it is submitted. However, each
Bookrunner reserves the right (on agreement between the Company and
the Bookrunners) to amend the terms and conditions in this Appendix
with respect to individual Placees, provided that no such amendment
is made to the Placing Price.
4.10 Irrespective of the time at which a Placee's allocation
pursuant to the Placing is confirmed, settlement for all Placing
Shares to be subscribed for pursuant to the Placing will be
required to be made at the same time, on the basis explained below
under "Registration and Settlement".
4.11 All obligations under the Bookbuild and the Placing will be
subject to fulfilment or waiver (as applicable) of the conditions
referred to below under "Conditions of the Placing" and to the
Placing not being terminated on the basis referred to below under
"Termination of the Placing Agreement".
4.12 By participating in the Bookbuild, each Placee will agree
that its rights and obligations in respect of the Placing will
terminate only in the circumstances described below and will not be
capable of rescission or termination by the Placee.
4.13 To the fullest extent permissible by law, neither
Jefferies, Berenberg nor any of their respective affiliates,
agents, directors, officers, partners or employees shall have any
responsibility or liability (whether in contract, tort or
otherwise) to Placees (or to any other person whether acting on
behalf of a Placee or otherwise). In particular, neither Jefferies,
Berenberg nor any of their respective affiliates, agents,
directors, officers, partners or employees shall have any
responsibility or liability (whether in contract, tort or otherwise
and including to the fullest extent permissible by law, any
fiduciary duties) in respect of their conduct of the Bookbuild or
of such alternative method of effecting the Placing as Jefferies
(on behalf of the Bookrunners) may determine.
4.14 Placees will have no rights against either of the
Bookrunners, the Company nor any of their respective directors,
partners or employees under the Placing Agreement pursuant to the
Contracts (Rights of Third Parties) Act 1999 (as amended).
5. Conditions of the Placing
5.1 The Placing is conditional upon the Placing Agreement
becoming unconditional with respect to the Placing and not having
been terminated in accordance with its terms prior to Admission.
The obligations of the Bookrunners under the Placing Agreement in
respect of the Placing is conditional on, amongst other things:
5.1.1 the passing of the Resolutions at the General Meeting in
the form set out in the notice of general meeting contained in the
Circular, subject to any amendment approved by Jefferies (on behalf
of the Bookrunners, having consulted with Berenberg);
5.1.2 the Rule 9 Waiver having been granted and not revoked by
the Takeover Panel (conditional only on approval by the Independent
Shareholders);
5.1.3 the performance by the Company of all its obligations
under the Placing Agreement so far as the same fall to be performed
prior to Admission;
5.1.4 Admission taking place by 8.00 a.m. (London time) on 29
December 2017 or such later date as the Company and Jefferies (on
behalf of the Bookrunners, having consulted with Berenberg) may
otherwise agree (the " Admission Date"); and
5.1.5 in the good faith opinion of Jefferies (having consulted
with Berenberg), no material adverse change in, or any development
involving a prospective material adverse change in, or affecting,
the condition (financial, operational, legal or otherwise) or the
earnings, management, business affairs, solvency, credit rating or
prospects of the Company, or of the Group (taken as a
whole)("Material Adverse Change") having occurred between the date
of this Agreement and Admission.
5.2 If:
5.2.1 any of the conditions contained in the Placing Agreement
in relation to the Placing (including those described in 5.1
above)(the "Placing Conditions") are not fulfilled or waived by
Jefferies (acting on behalf of the Bookrunners, following
consultation with Berenberg), by the time or date where specified
(or, in each case, such later time and/or date as the Company and
Jefferies may agree, having consulted with Berenberg); or
5.2.2 the Placing Agreement is terminated in the circumstances
specified below prior to Admission,
the Placing will not proceed and the Placee's rights and
obligations hereunder in relation to the Placing Shares shall cease
and terminate at such time and each Placee agrees that no claim can
be made by the Placee in respect thereof.
5.3 Jefferies (acting on behalf of the Bookrunners, having
consulted with Berenberg) may, at its absolute discretion and upon
such terms as it thinks fit, waive compliance by the Company with
the whole or any part of certain of the Placing Conditions in the
Placing Agreement save that the conditions in the Placing Agreement
relating to Admission Date. Any such extension or waiver will not
affect Placees' commitments as set out in this announcement.
5.4 None of Jefferies, Berenberg, the Company nor any other
person shall have any liability (whether in contract, tort or
otherwise) to any Placee (or to any other person whether acting on
behalf of a Placee or otherwise) in respect of any decision they
may make as to whether or not to waive or to extend the time and/or
the date for the satisfaction of any condition to the Placing nor
for any decision they may make as to the satisfaction of any
condition or in respect of the Placing generally, and by
participating the Placing each Placee agrees that any such decision
is within the absolute discretion of the Jefferies (acting on
behalf of the Bookrunners).
6. Termination of the Placing Agreement
6.1 Jefferies may at any time prior to Admission terminate the
Placing Agreement (having consulted with Berenberg) by giving
notice in writing to the Company if, amongst other things:
6.1.1 the Company's application for Admission is refused by the
London Stock Exchange or, in the judgement of Jefferies acting in
good faith in pursuance of its duties as nominated adviser, will
not be granted
6.1.2 there has occurred since the date of the Placing Agreement
a Material Adverse Change in and, in the good faith opinion of
Jefferies, the effect of such change is such that it would
materially prejudice the success of the Placing or the distribution
of Placing Shares; or
6.1.3 Jefferies not having received confirmation in a form
acceptable to it confirming irrevocable acceptance of the offer
contained in this announcement from proposed Placees reasonably
acceptable to Jefferies in respect of all the Placing Shares;
or
6.1.4 there has occurred:
(a) any government regulation or other occurrence of any nature
whatsoever which, in the opinion of Jefferies, materially and
adversely affects or will or is reasonably likely materially and
adversely to affect the business of the Group taken as a whole;
(b) a suspension or limitation in trading in securities
generally on the London Stock Exchange's market for listed
securities, or a banking moratorium has been declared by the United
Kingdom, the United States federal authorities, a member of the
European Union, or New York state authorities; or
(c) any outbreak of hostilities or escalation of hostilities or
other calamity or crisis or any change or development involving a
prospective change in national or international political,
financial or economic conditions, or currency exchange rates in any
case the effect of which, in the good faith opinion of Jefferies,
makes it impractical or inadvisable to proceed with the
Placing.
6.2 Upon such termination of the Placing Agreement, the parties
to the Placing Agreement shall be released and discharged (except
for any liability arising before or in relation to such
termination) from their respective obligations under or pursuant to
the Placing Agreement subject to certain exceptions. For the
avoidance of doubt, the Placing cannot be terminated after
Admission has occurred to the extent it relates to the Placing
Shares.
6.3 Whilst, in certain circumstances broadly equivalent to those
described above, Berenberg may also have the right to terminate its
obligations under the Placing Agreement, such right shall not
entitle Berenberg to unilaterally terminate the Placing Agreement
unless also elected by Jefferies and accordingly (subject to
Jefferies' right to terminate the Placing Agreement in such
circumstances) the termination by Berenberg of its obligations
under the Placing Agreement shall be without prejudice to the
surviving rights and obligations of Jefferies, the Company and any
Placees.
6.4 The rights and obligations of the Placees shall terminate
only in the circumstances described in these terms and conditions
and in the Placing Agreement and will not be subject to termination
by the Placee or any prospective Placee at any time or in any
circumstances. By participating in the Placing, Placees agree that
the exercise by Jefferies and/or Berenberg of any right of
termination or other discretion under the Placing Agreement shall
be within the absolute discretion of such Bookrunner and that it
need not make any reference to, or consult with, Placees and that
it shall have no responsibility or liability to Placees whatsoever
in connection with any such exercise and neither the Company nor
the Bookrunners nor any of their respective directors, officers,
employees, agents or affiliates shall have any liability to Placees
whatsoever in connection with any such exercise or failure to
exercise or otherwise.
7. No prospectus
7.1 The Placing Shares are being offered to a limited number of
specifically invited persons only and will not be offered in such a
way as to require a prospectus in the UK. No offering document,
prospectus or admission document has been or will be submitted to
be approved by the FCA or submitted to the London Stock Exchange in
relation to the Placing and Placees' commitments will be made
solely on the basis of their own assessment of the Company, the
Placing Shares and the Placing based on the Company's publicly
available information taken together with the information contained
in this announcement (including this Appendix), and subject to the
further terms set forth in the contract note to be provided to
individual prospective Placees.
7.2 Each Placee, by accepting a participation in the Placing,
agrees that the content of this announcement (including this
Appendix) is exclusively the responsibility of the Company and
confirms that it has neither received nor relied on any other
information representation, warranty, or statement made by or on
behalf of the Company, Berenberg or Jefferies or any other person
and none of Jefferies, Berenberg or the Company nor any other
person will be liable for any Placee's decision to participate in
the Placing based on any other information representation, warranty
or statement which the Placees may have obtained or received. Each
Placee acknowledges and agrees that it has relied on its own
investigation of the business, financial or other position of the
Company in accepting a participation in the Placing. Nothing in
this paragraph shall exclude or limit the liability of any person
for fraudulent misrepresentation by that person.
8. Registration and Settlement
8.1 Settlement of transactions in the Placing Shares following
Admission will take place within the system administered by CREST,
subject to certain exceptions. Jefferies (acting on behalf of the
Bookrunners, having consulted with Berenberg) and the Company
reserves the right to require settlement for and delivery of the
Placing Shares (or a portion thereof) to Placees in certificated
form if, in their opinion, delivery or settlement is not possible
or practicable within the CREST system or would not be consistent
with the regulatory requirements in the Placee's jurisdiction.
8.2 Each Placee to be allocated Placing Shares in the Placing
will be sent a contract note stating the number of Placing Shares
allocated to it at the Placing Price and settlement instructions.
The number of Placing Shares allocated to each Placee will be
allocated in a manner determined by agreement between the Company
and the Bookrunners, and Placees will be notified of the relevant
allocation in the contract note.
8.3 Each Placee agrees that it will do all things necessary to
ensure that delivery and payment is completed in accordance with
the standing CREST or certificated settlement instructions that it
has in place with Jefferies and/or Berenberg (as the case may
be).
8.4 The Company will deliver the Placing Shares to a CREST
account operated by Jefferies as agent for the Company and
Jefferies will enter its delivery (DEL) instruction into the CREST
system. The input to CREST by a Placee of a matching or acceptance
instruction will then allow delivery of the relevant Placing Shares
to that Placee against payment.
8.5 It is expected that settlement of the Placing Shares will
take place on 29 December 2017 on a delivery versus payment
basis.
8.6 Interest is chargeable daily on payments not received from
Placees on the due date in accordance with the arrangements set out
above at the rate of two percentage points above LIBOR as
determined by Jefferies (acting on behalf of the Bookrunners).
8.7 Each Placee is deemed to agree that, if it does not comply
with these obligations, Jefferies may sell any or all of the
Placing Shares allocated to that Placee on such Placee's behalf and
retain from the proceeds, for Jefferies' account and benefit, an
amount equal to the aggregate amount owed by the Placee plus any
interest due. The relevant Placee will, however, remain liable for
any shortfall below the aggregate amount owed by it and may be
required to bear any stamp duty or stamp duty reserve tax (together
with any interest or penalties thereon) or other similar taxes
imposed in any jurisdiction which may arise upon the sale of such
Placing Shares on such Placee's behalf. By communicating an
intention to subscribe for Placing Shares, each Placee confers on
Jefferies all such authorities and powers necessary to carry out
any such sale and agrees to ratify and confirm all actions which
Jefferies lawfully takes in pursuance of such sale.
8.8 If Placing Shares are to be delivered to a custodian or
settlement agent, Placees should ensure that the trade confirmation
or contract note is copied and delivered immediately to the
relevant person within that organisation. Insofar as Placing Shares
are registered in a Placee's name or that of its nominee or in the
name of any person for whom a Placee is contracting as agent or
that of a nominee of such person, such Placing Shares should,
subject as provided below, be so registered free from any liability
to UK stamp duty or stamp duty reserve tax. Placees will not be
entitled to receive any fee or commission in connection with the
Placing.
8.9 Each Placee acknowledges and agrees that the Company is
responsible for the allotment of the Placing Shares to the Placees
and each of the Bookrunners shall have no liability to the Placees
for the failure of the Company to fulfil those obligations.
9. Representations and warranties
9.1 By participating in the Placing, each Placee (and any person
acting on such Placee's behalf) irrevocably acknowledges, confirms,
undertakes, represents, warrants and agrees (as the case may be)
with Jefferies and Berenberg (in their respective capacities as
joint bookrunners and agents of the Company, in each case as a
fundamental term of their application for relevant Placing Shares),
the following:
9.1.1 it has read and understood this announcement (including
this Appendix) in its entirety and that its subscription of Placing
Shares is subject to and based upon all the terms, conditions,
representations, warranties, acknowledgements, agreements and
undertakings and other information contained herein;
9.1.2 the Placing does not constitutes a recommendation or
financial product advice and neither Jefferies nor Berenberg has
had regard to its particular objectives, financial situation or
needs;
9.1.3 unless paragraph 9.1.4 below applies, it has neither
received nor relied on any 'inside information' (for the purposes
of EU Market Abuse Regulation (2014/596/EU)("MAR") and section 56
of the Criminal Justice Act 1993) concerning the Company in
accepting this invitation to participate in the Placing;
9.1.4 if it has received any 'inside information' (for the
purposes of MAR and section 56 of the Criminal Justice Act 1993) in
relation to the Company and its securities, it confirms that it has
received such information within the market soundings regime
provided for in article 11 of MAR and associated delegated
regulations and it has not: (i) dealt (or attempted to deal) in the
securities of the Company; (ii) encouraged, recommended or induced
another person to deal in the securities of the Company; or (iii)
unlawfully disclosed inside information to any person, prior to the
information being made publicly available;
9.1.5 subject to the Rule 9 Waiver and the Resolutions being
passed at the General Meeting, its participation in the Placing
would not give rise to an offer being required to be made by it or
any person with whom it is acting in concert pursuant to Rule 9 of
the Takeover Code;
9.1.6 it has the power and authority to carry on the activities
in which it is engaged, to subscribe for and/or acquire the Placing
Shares and to execute and deliver all documents necessary for such
acquisition and/or subscription;
9.1.7 that no offering document listing particulars, prospectus
or admission document has been or will be prepared in connection
with the Placing and it has not received and will not receive a
prospectus, admission document or other offering document in
connection with the Bookbuild, the Placing or the Placing
Shares;
9.1.8 that the existing Ordinary Shares in the capital of the
Company are admitted to trading on AIM and that the Company is
therefore required to publish certain business and financial
information in accordance with the rules and practices of AIM which
includes a description of the nature of the Company's business and
its most recent balance sheet and profit and loss account and that
it is able to obtain or access such information and such
information or comparable information concerning any other publicly
traded company, in each case without undue difficulty;
9.1.9 that neither Jefferies, Berenberg nor the Company nor any
of their respective affiliates, agents, directors, officers,
partners or employees nor any person acting on behalf of any of
them has provided, and none of them will provide it, with any
material regarding the Placing Shares or the Company or any other
person other than this announcement nor has it requested Jefferies,
Berenberg, the Company, any of their respective affiliates, agents,
directors, officers, partners or employees nor any person acting on
behalf of any of them to provide it with any such information;
9.1.10 unless otherwise specifically agreed with Jefferies
(acting on behalf of the Bookrunners, having consulted with
Berenberg), that neither it nor the beneficial owner of the Placing
Shares is, or at the time the Placing Shares are acquired, neither
it nor the beneficial owner of the Placing Shares will be, a
resident of, or otherwise located in, the United States, Australia,
Canada, Japan or the Republic of South Africa, and it further
acknowledges that the Placing Shares have not been and will not be
registered under the securities legislation of the United States,
Australia, Canada, Japan or the Republic of South Africa and
subject to certain exceptions, may not be offered, sold transferred
delivered or distributed, directly or indirectly, in or into those
jurisdictions;
9.1.11 that: (i) it is outside the United States and is not
acquiring the Placing Shares for the account of any person who is
located in the United States; (ii) it is acquiring the Placing
Shares in an "offshore transaction" (within the meaning of
Regulation S ("Regulation S") under the US Securities Act of 1933,
as amended (the "Securities Act")); (iii) it is not acquiring any
of the Placing Shares as a result of any form of "directed selling
efforts" as defined in Rule 902(c) under Regulation S; (iv) it is
not acquiring the Placing Shares with a view to the offer, sale,
resale, transfer, delivery or distribution directly or indirectly,
of any such Placing Shares into the United States; and (v) it is
not within Australia, Canada, Japan, the Republic of South Africa
or any other jurisdiction in which it is unlawful to make or accept
an offer to acquire the Placing Shares, and it is not acquiring the
Placing Shares with a view to the offer, sale, resale, transfer,
delivery or distribution directly or indirectly, of any such
Placing Shares into any of the jurisdictions referred to above,
9.1.12 that the content of this announcement is exclusively the
responsibility of the Company and that neither Berenberg, Jefferies
nor any person acting on their respective behalf have or shall have
any liability for any information, representation or statement
contained in this announcement or any information previously or
subsequently published by or on behalf of the Company, including,
without limitation, any information required to be published by the
Company pursuant to applicable laws (the "Exchange Information")
and will not be liable for its decision to participate in the
Placing based on any information, representation or statement
contained in this announcement or otherwise. It further represents,
warrants and agrees that the only information on which it is
entitled to rely and on which it has relied in committing itself to
subscribe for the Placing Shares is contained in this announcement
and any information previously published by the Company by
notification to a RNS, such information being all that it deems
necessary to make an investment decision in respect of the Placing
Shares and that it has neither received nor relied on any other
information given or representations, warranties or statements made
by Jefferies, Berenberg or the Company and neither Jefferies,
Berenberg nor the Company will be liable for its decision to accept
an invitation to participate in the Placing based on any other
information, representation, warranty or statement. It further
acknowledges and agrees that it has relied on its own investigation
of the business, financial or other position of the Company in
deciding to participate in the Placing. None of Jefferies,
Berenberg, the Company or any of their respective affiliates,
agents, directors, officers, partners or employees has made any
representations to it express or implied, with respect to the
Company, the Placing and the Placing Shares or the accuracy,
completeness or adequacy of the Exchange Information, and each of
them expressly disclaims any liability in respect thereof. Nothing
in this paragraph or otherwise in this announcement excludes the
liability of any person for fraudulent misrepresentation made by
that person;
9.1.13 neither it, nor the person specified by it for
registration as holder of Placing Shares is, or is acting as
nominee or agent for, and the Placing Shares will not be allotted
to, a person who is or may be liable to stamp duty or stamp duty
reserve tax under any of sections 67, 70, 93 and 96 of the Finance
Act of 1986 (depositary receipts and clearance services);
9.1.14 that it has complied with its obligations under the
Criminal Justice Act 1993, MAR and in connection with money
laundering and terrorist financing under the Proceeds of Crime Act
2002 (as amended), the Terrorism Act 2000, the Terrorism Act 2006,
the Money Laundering Regulations 2007 and the Money Laundering
Sourcebook of the FCA (the "Money Laundering Regulations") and, if
making payment on behalf of a third party, that satisfactory
evidence has been obtained and recorded by it to verify the
identity of the third party as required by the Regulations;
9.1.15 that it is acting as principal only in respect of the
Placing or, if it is acting for any other person (i) it is duly
authorised to do so and has full power to make the acknowledgments,
representations and agreements herein on behalf of each such
person; and (ii) it is and will remain liable to the Company,
Berenberg and/or Jefferies for the performance of all its
obligations as a Placee in respect of the Placing (regardless of
the fact that it is acting for another person);
9.1.16 if it is a financial intermediary, as that term is used
in Article 3(2) of the EU Prospectus Directive (which shall mean
Directive 2003/71/EC and amendments thereto, including the 2010 PD
Amending Directive to the extent implemented in the Relevant Member
State), that the Placing Shares subscribed by it in the Placing
will not be acquired on a non-discretionary basis on behalf of nor
will they be acquired with a view to their offer or resale to
persons in a member state of the EEA other than qualified investors
or in circumstances in which the prior consent of Jefferies (acting
on behalf of the Bookrunners, having consulted with Berenberg) has
been given to the proposed offer or resale;
9.1.17 that it has not offered or sold and will not offer or
sell any Placing Shares to the public in any member state of the
EEA except in circumstances falling within Article 3(2) of the
Prospectus Directive which do not result in any requirement for the
publication of a prospectus pursuant to Article 3 of that
Directive;
9.1.18 that it has only communicated or caused to be
communicated and will only communicate or cause to be communicated
any invitation or inducement to engage in investment activity
(within the meaning of section 21 of FSMA) relating to the Placing
Shares in circumstances in which section 21(1) of FSMA does not
require approval of the communication by an authorised person;
9.1.19 that it has complied with and will comply with all
applicable provisions of FSMA with respect to anything done by it
in relation to the Placing Shares in, from or otherwise involving,
the United Kingdom;
9.1.20 if in a member state of the EEA, unless otherwise
specifically agreed with Jefferies in writing, that it is a
qualified investor within the meaning of Article 2(l)(e) of the
Prospectus Directive;
9.1.21 if in the United Kingdom, that it is a person (i) having
professional experience in matters relating to investments who
falls within the definition of "investment professionals" in
Article 19(5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005 (the "Order") or (ii) who falls
within Article 49(2) (a) to (d) ("High Net Worth Companies,
Unincorporated Associations, etc") of the Order, or (iii) to whom
this announcement may otherwise lawfully be communicated;
9.1.22 that no action has been or will be taken by either the
Company, Berenberg or Jefferies or any person acting on behalf of
the Company, Berenberg or Jefferies that would or is intended to
permit a public offer of the Placing Shares in any country or
jurisdiction where any such action for that purpose is
required;
9.1.23 that it and any person acting on its behalf is entitled
to acquire the Placing Shares under the laws of all relevant
jurisdictions which apply to it and that it has fully observed such
laws and obtained all such governmental and other guarantees,
permits authorisations, approvals and consents which may be
required thereunder and complied with all necessary formalities and
that it has not taken any action or omitted to take any action
which will or may result in Jefferies, Berenberg, the Company or
any of their respective directors officers, partners, agents,
employees or advisers acting in breach of the legal or regulatory
requirements of any jurisdiction in connection with the
Placing;
9.1.24 that it has all necessary capacity and has obtained all
necessary consents and authorities to enable it to commit to its
participation in the Placing and to perform its obligations in
relation thereto (including, without limitation, in the case of any
person on whose behalf it is acting, all necessary consents and
authorities to agree to the terms set out or referred to in this
announcement) and will honour such obligations;
9.1.25 that it and any person acting on its behalf will make
payment for the Placing Shares allocated to it in accordance with
this announcement on the due time and date set out herein, failing
which the relevant Placing Shares may be placed with other
subscribers or sold as Jefferies may in its absolute discretion
determine and without liability to it, but it will remain liable
for any amount by which the net proceeds of such sale falls short
of the product of the Placing Price and the number of Placing
Shares allocated to it and may be required to bear and indemnify
the Bookrunners and their affiliates, directors, partners, officers
and employees on an after-tax basis against any stamp duty, stamp
duty reserve tax or other similar taxes (together with any interest
or penalties due pursuant to the terms set out or referred to in
this Announcement) which may arise upon the sale of its Placing
Shares on its behalf;
9.1.26 that its allocation (if any) of Placing Shares will
represent a maximum number of Placing Shares to which it will be
entitled, and required, to subscribe for, and that Jefferies
(having agreed with the Company and Berenberg) may call upon it to
subscribe for a lower number of Placing Shares (if any) but in no
event in aggregate more than the aforementioned maximum;
9.1.27 that the person whom it specifies for registration as
holder of the Placing Shares will be (i) itself or (ii) its
nominee, as the case may be. Neither Jefferies, Berenberg nor the
Company will be responsible for any liability to stamp duty or
stamp duty reserve tax or other similar taxes resulting from a
failure to observe this requirement. It and any person acting on
its behalf agrees to indemnify the Company, Berenberg and Jefferies
in respect of the same on the basis that the Placing Shares will be
allotted to the CREST stock account of Jefferies who will hold them
as nominee on its behalf until settlement in accordance with
standing settlement instructions;
9.1.28 that neither Jefferies, Berenberg nor any of their
respective affiliates, agents, directors, officers, partners or
employees, nor any person acting on their behalf is making any
recommendations to it or advising it regarding the suitability of
any transactions it may enter into in connection with the Placing
and that participation in the Placing is on the basis that it is
not and will not be a client of either Bookrunner and that neither
Bookrunner has any duties or responsibilities to it for providing
the protections afforded to its clients or customers or for
providing advice in relation to the Placing nor in respect of any
representations, warranties, undertakings or indemnities contained
in the Placing Agreement nor for the exercise or performance of any
of its rights and obligations thereunder including any rights to
waive or vary any conditions or exercise any termination right;
9.1.29 that in making any decision to subscribe for the Placing
Shares, it has knowledge and experience in financial, business and
international investment matters as is required to evaluate the
merits and risks of subscribing for or purchasing the Placing
Shares. It further confirms that it is experienced in investing in
securities of this nature in this sector and is aware that it may
be required to bear, and is able to bear the economic risk of
participating in, and is able to sustain a complete loss in
connection with, the Placing. It further confirms that it relied on
its own examination and due diligence of the Company and its
associates taken as a whole, and the terms of the Placing,
including the merits and risks involved, and not upon any view
expressed or information provided by or on behalf of either
Bookrunner;
9.1.30 that in connection with the Placing, Jefferies, Berenberg
and any of their respective affiliates acting as an investor for
their own account may take up Placing Shares in the Company and in
that capacity may retain, purchase or sell for its own account such
Placing Shares in the Company and any securities of the Company or
related investments and may offer or sell such securities or other
investments otherwise than in connection with the Placing. Neither
Jefferies nor Berenberg intend to disclose the extent of any such
investment or transactions otherwise than in accordance with any
legal or regulatory obligation to do so;
9.1.31 that these terms and conditions and any agreements
entered into by it pursuant to these terms and conditions and any
non-contractual obligations arising out of or in connection with
such agreements shall be governed by and construed in accordance
with the laws of England and Wales and it submits, on its own
behalf and on behalf of any person on whose behalf it is acting, to
the exclusive jurisdiction of the English courts as regards any
claim, dispute or matter arising out of any such contract, except
that enforcement proceedings in respect of the obligation to make
payment for the Placing Shares (together with any interest
chargeable thereon) may be taken by the Company, Berenberg or
Jefferies in any jurisdiction in which it is incorporated or in
which any of its securities have a quotation on a recognised stock
exchange;
9.1.32 that the Company, Berenberg, Jefferies and their
respective affiliates, agents, directors, officers, partners or
employees and others will rely upon the truth and accuracy of the
representations, warranties and acknowledgements set forth herein
and which are given to the Bookrunners on their own behalf and on
behalf of the Company and are irrevocable and it irrevocably
authorises the Company, Berenberg and Jefferies to produce this
announcement, pursuant to in connection with, or as may be required
by any applicable law or regulation, administrative or legal
proceeding or official inquiry with respect to the matters set
forth herein;
9.1.33 none of the Company, Berenberg or Jefferies owes any
fiduciary or other duties to any Placee in respect of any
acknowledgements, confirmations, undertakings, representations,
warranties or indemnities in the Placing Agreement;
9.1.34 its commitment to take up Placing Shares on the terms set
out in this Announcement (including this Appendix) will continue
notwithstanding any amendment that may or in the future be made to
the terms and conditions of the Placing and that Placees will have
no right to be consulted or require that their consent be obtained
with respect to the Company, Berenberg or Jefferies' conduct of the
Placing; and
9.1.35 that it will indemnify and hold the Company, Berenberg
and Jefferies and their respective affiliates, agents, directors,
officers, partners or employees harmless from any and all costs,
claims, liabilities and expenses (including legal fees and
expenses) arising out of or in connection with any breach of the
representations, warranties, acknowledgements, agreements and
undertakings in this announcement and further agrees that the
provisions of this announcement shall survive after completion of
the Placing.
9.2 By participating in the Placing, each Placee (and any person
acting on the Placee's behalf) subscribing for Placing Shares
acknowledges that the Placing Shares have not been and will not be
registered under the Securities Act or with any securities
regulatory authority of any state or other jurisdiction of the
United States and are being offered and sold solely outside the
United States in "offshore transactions" pursuant to and in
reliance on Regulation S, in a transaction not involving a public
offering of securities in the United States.
9.3 Please also note that the agreement to allot and issue
Placing Shares to Placees (or the persons for whom Placees are
contracting as agent) free of stamp duty and stamp duty reserve tax
in the UK relates only to their allotment and issue to Placees, or
such persons as they nominate as their agents, direct from the
Company for the Placing Shares in question. The Company, Berenberg
and Jefferies are not liable to bear any transfer taxes that arise
on a sale of Placing Shares subsequent to their acquisition by
Placees or for transfer taxes arising otherwise than under the laws
of the United Kingdom. Each Placee should, therefore, take its own
advice as to whether any such transfer tax liability arises.
Furthermore, each Placee agrees to indemnify on an after-tax basis
and hold Jefferies, Berenberg and the Company and their respective
affiliates harmless from any and all interest, fines or penalties
in relation to stamp duty, stamp duty reserve tax and all other
similar duties or taxes to the extent that such interest, fines or
penalties arise from the unreasonable default or delay of that
Placee or its agent.
9.4 Each Placee and any person acting on behalf of each Placee
acknowledges and agrees that Jefferies, Berenberg or any of their
respective affiliates may, at their absolute discretion, agree to
become a Placee in respect of some or all of the Placing
Shares.
9.5 When a Placee or person acting on behalf of the Placee is
dealing with either Bookrunner, any money held in an account with
such Bookrunner on behalf of the Placee and/or any person acting on
behalf of the Placee will not be treated as client money within the
meaning of the rules and regulations of the FCA made under FSMA.
The Placee acknowledges that the money will not be subject to the
protections conferred by the client money rules; as a consequence,
this money will not be segregated from such Bookrunner's money in
accordance with the client money rules and will be used by the
relevant Bookrunner in the course of its own business; and the
Placee will rank only as a general creditor of such Bookrunner.
9.6 All times and dates in this announcement may be subject to
amendment. Jefferies and/or Berenberg shall notify the Placees and
any person acting on behalf of the Placees of any changes.
9.7 The rights and remedies of Jefferies, Berenberg and the
Company under these Terms and Conditions are in addition to any
rights and remedies which would otherwise be available to each of
them and the exercise or partial exercise of one will not prevent
the exercise of others.
9.8 Past performance is no guide to future performance and
persons needing advice should consult an independent financial
adviser.
DEFINITIONS
The following definitions apply throughout this announcement,
unless the context requires otherwise:
"Admission" the admission of the Placing Shares to trading on
AIM and such admission becoming effective in accordance with the
AIM Rules
"AIM" a market operated by the London Stock Exchange
"AIM Rules" the rules for AIM companies and their nominated
advisers issued by the London Stock Exchange
"Americas" North and South America
"Berenberg" Joh. Berenberg, Gossler & Co. KG, London Branch,
joint broker and joint bookrunner
"CF Woodford Investment Fund" a company incorporated in England
and Wales with registered number IC001010
"Circular" means the circular to be published by the Company on
or around 12 December 2017 in relation to the Placing which
includes notice convening the General Meeting at which the
resolutions will be proposed.
"Company" Xeros Technology Group plc
"Concert Party" Woodford, WIML, Mercia, EVL and the Enterprise
Ventures Funds, (as further detailed in the Additional Information
section of the Circular) who are presumed to be acting in concert
for the purposes of the Takeover Code
"CREST" the relevant system (as defined in the CREST
Regulations) in respect of which Euroclear is the Operator (as
defined in the CREST Regulations)
"CREST Regulations" The Uncertificated Securities Regulations
2001 (SI 2001/3755)
"Directors" or "Board" the board of directors of the Company
"EMEA" Europe, the Middle East and Africa
"Enlarged Share Capital" the number of Ordinary Shares in issue
assuming completion of the Placing
"Enterprise Ventures Funds" RisingStars Growth Fund II, Finance
Yorkshire Seedcorn LP and South Yorkshire Investment Fund
Limited
"EU" the European Union
"Euroclear" Euroclear UK & Ireland Limited
"EVL" Enterprise Ventures Limited
"Financial Conduct Authority" the UK's Financial Conduct Authority
"Forward Channel Partner" an independent distributor of
commercial laundry equipment who sells, installs, commissions and
services the Company's washing machines on a non-exclusive basis
within a defined geographic region
"Form of Proxy" the form of proxy for use in connection with the
General Meeting accompanying the circular
"FP Omnis Portfolio Investments ICVC" a company incorporated in
England and Wales with registered number IC000982
"FSMA" means Financial Services and Markets Act 2000
"General Meeting" the general meeting of the Company convened
for 10.00 a.m. on 28 December 2017 at Squire Patton Boggs (UK) LLP
at 7 Devonshire Square, London EC2M 4YH.
"Group" the Company and its subsidiaries Xeros Limited, Xeros
Inc. and Xeros High Performance Work Wear, Inc.
"Independent Directors" the Directors, other than Julian Viggars
(who is a board representative of the Enterprise Ventures
Funds);
"Independent Shareholders" the Shareholders, other than (i)
members of the Concert Party and any person acting in concert with
them (including any members of their immediate families, related
trusts or connected persons) who holds Ordinary Shares and (ii) the
Shareholders who subscribe for Main Placing Shares and any person
acting in concert with them (including any members of their
immediate families, related trusts or connected persons)
"Jefferies" Jefferies International Limited, the Company's
nominated adviser, joint broker and joint bookrunner
"London Stock Exchange" London Stock Exchange plc
"Main Placing Resolutions" Resolutions 1 and 4 proposed to be
passed at the General Meeting, which relates to the issue of the
Main Placing Shares
"Main Placing Shares" 8,888,890 new Ordinary Shares to be
allotted and issued to new and existing institutional shareholders
(other than the Concert Party) by the Company pursuant to the
Placing
"MAR" means the EU Market Abuse Regulation (2014 / 596 / EU)
"Mercia" Mercia Technologies PLC
"Notice of General Meeting" the notice of the General Meeting
set out in the Circular
"North America" the US and Canada
"OI&G" Omnis Income and Growth Fund, being a sub fund of FP
Omnis Portfolio Investments ICVC
"OMWEIF" Old Mutual Woodford Equity Income Fund, being a
sub-fund of Old Mutual MultiManager Trust
"Old Mutual MultiManager Trust" an authorised unit trust
established in England and Wales and authorised by the Financial
Conduct Authority with product reference number 200108
"OPL" the on-premise laundry market
"Ordinary Shares" ordinary shares of 0.15 pence each in the
capital of the Company
"Panel" UK Panel on Takeovers and Mergers
"Placing" the proposed placing by Jefferies and Berenberg, as
agents to the Company, of the Placing Shares at the Placing Price
on a non-pre-emptive basis, on the terms and conditions set out in
the Placing Agreement
"Placing Agreement" the agreement between the Company, Jefferies
and Berenberg dated 12 December 2017 in connection with the
Placing
"Placing Price" 225 pence per Placing Share
"Placing Shares" the Main Placing Shares and the WCP Shares
"Resolutions" the resolutions to be proposed at the General
Meeting, as set out in the Notice of General Meeting in the
Circular
"RNS" means the regulatory information service approved by the
London Stock exchange for the distribution of AIM announcements
"Rule 9 Waiver" the conditional waiver by the Panel of the
obligation that, following the issue of the Main Placing Shares,
would otherwise arise on the Concert Party to make a general offer
to all Shareholders pursuant to Rule 9 of the Takeover Code as a
result of the allotment and issue of the WCP Shares
"Shareholders" holders of Ordinary Shares
"Symphony Project" the project pursuant to which the Company
provides its technology to partner OEMs to allow them to
incorporate polymer cleaning systems into their commercial washing
machines
"Takeover Code" City Code on Takeovers and Mergers published by
the Panel
"Takeover Panel" means the panel on Takeover and Mergers
"UK" means United Kingdom
"US" or "United States" means United States of America, its
territories and possessions, any state of the United States of
America and the District of Columbia
"WEIF" the CF Woodford Equity Income Fund, being a sub fund of
CF Woodford Investment Fund
"WIML" Woodford Investment Management Limited, being the
investment manager for Woodford
"WCP Resolutions" Resolutions 2 and 5 proposed to be passed at
the General Meeting, which relates to the issue of WCP Shares
"WCP Shares" 2,222,222 new Ordinary Shares to be allotted and
issued to one or more members of the Concert Party by the Company
pursuant to the Placing
"WPCT" Woodford Patient Capital Trust plc (being a fund managed
by WIML)
"Whitewash Resolution" Resolution 3 proposed to be passed at the
General Meeting, which relates to the Rule 9 Waiver
"Woodford" together WEIF, WPCT, OI&G and OMWEIF (each being
a fund managed by WIML)
All references in this announcement to "GBP", "pence" or "p" are
to the lawful currency of the United Kingdom, all references to
"US$" or "$" are to the lawful currency of the United States
This information is provided by RNS
The company news service from the London Stock Exchange
END
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December 12, 2017 04:44 ET (09:44 GMT)
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