Issue of Equity

Issue of Equity

Eco Animal Health Group Plc

Issue of Equity

ECO Animal Health Group plc

(“ECO” or the “Company”)

3 October 2013

ECO announces that it has successfully placed 6,315,790 new ordinary shares of 5p in the Company ("the Placing Shares") with certain institutional investors at a price of 190 pence per share ("the Placing Price"), in order to raise up to £12 million, gross of fees and expenses ("the Placing”). The new funds will enable ECO to ensure security of supply and drive the growth of its main product, Aivlosin®, through the build up of a strategic stockholding and manage working capital for recently entered markets.

As announced in our Final Results on 12 July 2013, the current financial year has started well and sales in the first quarter were substantially ahead of the prior year, with sales of Aivlosin now accounting for approximately 70% of all sales. Following the receipt of initial marketing authorisations and the launch of Aivlosin in North America last year, sales in that territory are ahead of expectations.

The lengthy cash cycle of the Company due to supply chain complexity means that as sales have expanded the working capital demands to finance debtors and stock has increased. Approximately £6 million will be used to fund additional investment in growth markets and £5.5 million to increase stocks of the Aivlosin product formulation.

The placing is conditional, inter alia, on the passing of the resolutions to be proposed to Shareholders ("the Resolutions") at the general meeting of the Company convened for 22nd October 2013 ("the General Meeting").

A circular containing the details of the Placing (the “Circular”) will be posted to shareholders shortly and will be available on the Company’s website: www.ecoanimalhealthgroupplc.com

The Placing

The Company proposes to raise gross proceeds of £12 million (approximately £11.5 million net of estimated expenses) through the issue of the Placing Shares. The Placing Price represents a discount of approximately 11.8 per cent to the closing mid-market price of 215.5 pence on 2 October 2013, being the latest practicable date prior to the publication of this announcement.

The Placing is conditional, inter alia, upon:

• the Resolutions being passed at the General Meeting;
• the placing agreement entered into between Cenkos Securities plc ("Cenkos Securities") and the Company on 3 October 2013 ("the Placing Agreement")becoming unconditional in all respects (save for Admission) and not being terminated in accordance with its terms prior to Admission occurring; and
• Admission occurring by 8:00 a.m. on 23 October 2013 (or such later date as Cenkos Securities may agree not being later than 31 October 2013).

The Placing Shares will be issued credited as fully paid and will rank in full for all dividends and other distributions declared, made or paid in respect of the ordinary shares after the date of admission and will otherwise rank pari passu in all respects with the existing ordinary shares. The Placing Agreement contains provisions entitling Cenkos Securities to terminate the Placing Agreement at any time prior to Admission in certain circumstances. If this right is exercised the Placing will lapse.

Expected timetable of principal events

The Circular posted to Shareholders	Â	3 October 2013
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Latest time and date for receipt of Forms of Instruction		9:00 am 20 October 2013
Latest time and date for receipt of Forms of Proxy		9:00am on 20 October 2013
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General Meeting		9:00am on 22 October 2013
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Admission and dealings in the Placing Shares expected to commence on AIM		8:00 am on 23 October 2013
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CREST accounts credited in respect of the Placing Shares (CREST shareholders only)		23 October 2013
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Share certificates despatched in respect of the Placing Shares		by 6 November 2013
(non-CREST shareholders only)

Exercise of options and intended directors’ dealing

Following the General Meeting, certain directors and employees of the Company intend to exercise options over 737,595 ordinary shares in the company at a price of between 109p and 161p, and sell these shares at the Placing Price. Peter Lawrence intends to acquire 105,263 of these new ordinary shares at the Placing Price. His total holding in the Company following this proposed acquisition will be 18.22%.

The Directors of the Company who intend to exercise options and sell the new ordinary shares are set out below:

Name	Â	No of options being exercised and ordinary share immediately sold	Â	Exercise price for options (p)	Â	Sale price of new shares (p)	Â	Holding after exercise and sale	Â	Percentage holding after exercise and sale of new shares*
Brett Clemo		175,000		40,000 -147 35,000 – 135 75,000 – 150 25,000 – 161		190		436,948		0.70%
Marc Loomes		233,370		100,000- 147 120,000-150 13,370-109		190		1,131,110		1.81%
Kevin Stockdale		145,000		70,000 – 147 75,000 - 150		190		350,411		0.56%
Julia Trouse		145,000		70,000 – 147 75,000 - 150		190		518,605		0.83%

*The vast majority of the shares (2,424,290) in which the Directors (apart from Peter Lawrence) have a beneficial interest are held jointly by the ECO Animal Health Group Employee Benefit Trust and the Director concerned, under the terms of a Joint Share Ownership Plan. These shares do not hold voting rights

The options being exercised by the Directors are, for the most part, those which were ‘capped’ on the occasion of the launch of the Company’s Joint Share Ownership Plan (JSOP). The Directors will not benefit from the future increase in the Company share price over £1.94 in respect of these options and so have taken this opportunity to exercise and sell without putting undue downward pressure on the share price in the market.

Application has been made for 7,053,385 new ordinary shares, being those issued as a result of the Placing and exercise of options, to be admitted to trading on the Alternative Investment Market (“AIM”) of London Stock Exchange and admission of the new ordinary shares is expected to become effective on 23 October 2013.

Following the issue of the new ordinary shares the Company’s total issued share capital with voting rights and which is admitted to trading on AIM will consist of 62,429,321 ordinary shares of 5p each, with one voting right per share. The Placing Shares will represent approximately 10.12 per cent of the enlarged share capital of the Company immediately following admission of both the Placing Shares and the new ordinary shares issued after the exercise of options.

Recommendation

The Directors consider that the Placing is in the best interests of Shareholders as a whole. Accordingly, they recommend Shareholders vote in favour of the Resolutions as they intend to do in respect of their own beneficial holdings of Ordinary Shares in aggregate representing approximately 20.4 per cent. of the existing issued ordinary share capital of the Company.

Enquiries

Â	ECO Animal Health Group plc	Â
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	Peter Lawrence, Executive Chairman		020 8336 6190
	Marc Loomes, CEO		020 8447 8899
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	Spiro Financial
	Anthony Spiro		020 8336 6196
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	Cenkos Securities plc (Nominated Adviser)
	Stephen Keys		020 7397 8926
	Elizabeth Bowman		020 7397 8928

ECO Animal Health Group plc is a leader in the development, registration and marketing of pharmaceutical products for animals. Our products for these global growth markets promote well-being. Our financial goals are achieved through the careful and responsible application of science to generate value for our shareholders.