Proposed Placing and Open Offer

RNS Number : 8160T

AFC Energy Plc

08 October 2014

 



8 October 2014

This announcement and the information contained herein is restricted and is not for release, publication or distribution, directly or indirectly, in whole or in part, in or into the United States of America, Australia, Canada, Japan, New Zealand, Russia, the Republic of Ireland and the Republic of South Africa and any other jurisdiction where extension or availability of the subject matter of this announcement would breach any applicable law or regulations.

AFC Energy PLC

("AFC Energy" or the "Company")

Proposed Placing and Open Offer

AFC Energy (AIM: AFC), the industrial fuel cell power company, is pleased to announce a conditional placing with institutional and other investors of up to 52,000,000 ordinary shares in the Company at an issue price of 10p per share to raise up to £5.2 million of initial proceeds (the "Placing"), including a placement of 22,000,000 ordinary shares with Lanstead Capital LP ("Lanstead"), further described below. In addition to the Placing, the Company proposes to raise up to a maximum of £3.88 million by way of an open offer to be made to all qualifying shareholders in the Company of new ordinary shares of 0.1 pence each in the capital of the Company (the "Open Offer Shares") at the issue price of 10 pence per share (the "Open Offer"). The maximum aggregate value of the fundraise is therefore £9 million.

The Open Offer is proposed to be conducted on the basis of 4 Open Offer Shares for every 23 existing ordinary shares held by qualifying shareholders, with the opportunity for qualifying shareholders to apply for additional shares not taken up under the Open Offer by other qualifying shareholders.  The Company expects to be in a position to announce further details of the proposed Placing and Open Offer shortly.

As part of the Placing, the Company announces that it has, subject to the signing of definitive documentation, agreed that 22 million new Ordinary Shares be placed at an issue price of 10 pence per share with Lanstead (the "Lanstead Placement Shares") for an aggregate consideration of £2.2 million. In addition, the Company will enter into Equity Swap Agreements with Lanstead which allow the Company to retain much of the economic interest in the Lanstead Placement Shares. The Equity Swap Agreements will enable the Company to secure much of the potential upside of future potential share price appreciation arising from the Company's development.

The Equity Swap Agreements will provide that the Company's economic interest will be determined and payable in 18 monthly settlement tranches as measured against a benchmark price of 13.33p per share (the "Benchmark Price"). If the measured share price exceeds the Benchmark Price, for that month, the Company will receive more than 100 per cent. of the monthly settlement due on a pro rata basis. There is no upper limit placed on the additional proceeds receivable by the Company as part of the monthly settlements. Should the measured share price be below the Benchmark Price, the Company will receive less than 100 per cent of the expected monthly settlement on a pro rata basis. Of the aggregate proceeds of £2.2 million (before expenses) from the issue of the Lanstead Subscription Shares, the Company will use approximately £330,000 (15 per cent.) for investment in its continuing operations and £1.87 million (85 per cent.) for investment in the Equity Swap Agreements as described above. In no event would a decline in the Company's share price result in any increase in the number of Ordinary Shares received by Lanstead or any other advantage accruing to Lanstead.

Ian Williamson, Chief Executive of AFC Energy, commented: "We are pleased to announce that we have arranged a significant funding package for the Company.  Importantly, the package is being structured so that existing qualifying shareholders can participate in the fundraising on the same terms as institutional investors in the Placing. In addition, through the proposed Lanstead placement, the Company has the opportunity to benefit from further appreciation in its share price over the next 18 months. This funding enables us to deliver our Power Up project and continue our plans to open commercial markets." 

Related Party Transactions

A number of Related Parties as defined in the AIM Rules will be participating in the Placing. 

Related Party	Current Holding	Subscription	Holding post Subscription
Tim Yeo	777,272	100,000	877,272
Ian Williamson	-	50,000	50,000
Chris Tawney	-	50,000	50,000
Mitchell Field	2,144,810	500,000	2,644,810
Gene Lewis	10,000	35,000	45,000
Sir John Sunderland	370,270	50,000	420,270
Ervington Investments Ltd	24,831,149	13,190,000	38,021,149
Age of Reason Foundation	22,602,420	2,000,000	24,602,420

Adam Bond, who is not involved in the transaction and is therefore independent, considers, having consulted with the Company's nominated adviser, Zeus Capital, that the terms of these parties participation in the Placing are fair and reasonable insofar as the Company's shareholders are concerned.

For further information, please contact:

AFC Energy plc Ian Williamson (Chief Executive), Christopher Tawney (Finance Director)	[phone]
Zeus Capital Limited - Nominated Adviser and Joint Broker Tim Metcalfe and Dan Bate (Corporate Finance)                       Alex Davies and John Goold (Institutional Sales)	[phone]
M C Peat & Co LLP - Joint Broker Charlie Peat	[phone]
Luther Pendragon - Public Relations Adviser Neil Thapar, Alexis Gore, Alex Burr and Andy Johnson	[phone]

Zeus Capital Limited (''Zeus Capital"), which is authorised by the Financial Conduct Authority, is acting solely for the Company and no-one else in connection with the Placing or the Open Offer (together, the "Capital Raising") and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to the Capital Raising and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Capital Raising or any other matter referred to herein. Its responsibilities as the Company's nominated adviser and joint broker under the AIM Rules for Companies and the AIM Rules for Nominated Advisers are owed to the London Stock Exchange and the Company and not to any other person including, without limitation, in respect of any decision to acquire new ordinary shares in the capital of the Company in reliance on any part of this announcement. Zeus Capital has not authorised the contents of, or any part of, this announcement and no liability whatsoever is accepted by Zeus Capital nor does it make any representation or warranty, express or implied, for the accuracy or completeness of any information or opinion contained in this announcement or for the omission of any information. Nothing in this announcement shall be relied upon as a promise or representation in this respect, whether as to the past or the future (without limiting the statutory rights of any person to whom this announcement is issued). Zeus Capital expressly disclaims all and any responsibility or liability, whether arising in tort, contract or otherwise which it might otherwise have in respect of this announcement.

M C Peat & Co LLP (''Peat"), which is authorised by the Financial Conduct Authority, is acting exclusively for the Company and no-one else in connection with the Capital Raising and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to the Capital Raising and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Capital Raising or any other matter referred to herein. Its responsibilities as joint broker to the Company are owed to the London Stock Exchange and the Company and not to any other person including, without limitation, in respect of any decision to acquire new ordinary shares in the capital of the Company in reliance on any part of this announcement. Peat has not authorised the contents of, or any part of, this announcement and no liability whatsoever is accepted by Peat nor does it make any representation or warranty, express or implied, for the accuracy or completeness of any information or opinion contained in this announcement or for the omission of any information. Nothing in this announcement shall be relied upon as a promise or representation in this respect, whether as to the past or the future (without limiting the statutory rights of any person to whom this announcement is issued). Peat expressly disclaims all and any responsibility or liability, whether arising in tort, contract or otherwise which it might otherwise have in respect of this announcement.

Important information

None of this announcement should be distributed, forwarded, or transmitted in, or into, any jurisdiction where to do so might constitute a violation of local securities laws or regulations, including but not limited to the United States of America, Australia, Canada, Japan, New Zealand, Russia, the Republic of Ireland and/or the Republic of South Africa (the "Restricted Jurisdictions").  Any failure to comply with any of those restrictions may constitute a violation of the securities laws of any such jurisdiction.

This announcement does not constitute, and may not be used for the purposes of, any offer or invitation to sell or issue or the solicitation of any offer to purchase or subscribe for new ordinary shares in the capital of the Company to or by anyone in any jurisdiction in which such offer, invitation or solicitation is unlawful or to any person to whom it is unlawful to make such offer or invitation or undertake such solicitation.

This announcement is not being sent, and does not constitute an offer of any new ordinary shares in the capital of the Company to any person with a registered address, or who is resident or located, in any of the Restricted Jurisdictions.

None of the new ordinary shares in the capital of the Company will be registered under the Securities Act or under the applicable state securities laws of the United States or any other Restricted Jurisdiction. Subject to certain exceptions, they may not be offered, sold, taken up, delivered or transferred in or into any of the Restricted Jurisdictions. In particular, none of the new ordinary shares in the capital of the Company may be, directly or indirectly, offered, sold, taken up, delivered, renounced or transferred in or into the United States, except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. There will be no public offering of any of the new ordinary shares in the capital of the Company in the United States.

Forward-looking statements

This announcement contains statements that are, or may be deemed to be, ''forward-looking statements''. In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms ''anticipates'', ''believes'', ''could'', ''envisages'', ''estimates'', ''expects'', ''intends'', ''may'', ''plans'', ''projects'', ''should'', ''will'' or, in each case, their negative or other variations or comparable terminology. These forward-looking statements relate to matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the intentions, beliefs and current expectations of the Company or the Directors concerning, amongst other things, the results of operations, financial condition, liquidity, prospects, growth and strategies of the Company and the industry in which the group operates.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. The actual results, performance or achievements of the Company or developments in the industry in which the group operates may differ materially from the future results, performance or achievements or industry developments expressed or implied by the forward-looking statements contained in this announcement.

The forward-looking statements contained in this announcement speak only as at the date of this announcement. The Company undertakes no obligation to update or revise publicly the forward-looking statements contained in this announcement to reflect any change in expectations or to reflect events or circumstances occurring or arising after the date of this announcement, except as required in order to comply with its legal and regulatory obligations (including under the AIM Rules for Companies).

 

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