Notice, Subscription and Notice of GM

RNS Number : 5877G

CAP-XX Limited

05 March 2015

 



CAP-XX Limited

("CAP-XX" or the "Company")

Placing & Subscription to raise £1.2 million

And

Notice of General Meeting

The Board of CAP-XX is pleased to announce that the Company has entered into agreements to conditionally raise gross proceeds of £1.2 million, by way of a Placing and Subscription for a total of 120,000,000 New Ordinary Shares (the "Fundraising" or "Placing & Subscription") at a price of 1p per share (the "Placing Price"). The Placing was conducted by Allenby Capital Limited.

The Fundraising is conditional, inter alia, on the passing of a Resolution by shareholders, which is to be proposed at a General Meeting convened for 9 April 2015. A circular containing the details of the Fundraising (the "Circular") will be posted to shareholders in due course and will be available shortly for download from the Company's website: www.cap-xx.com. The same definitions apply throughout this announcement as are applied in the Circular.

Summary:

Placing & Subscription

·    Gross proceeds of the conditional Placing & Subscription amount to a total of £1.2 million, estimated to be £1.1 million net of expenses

·     Net proceeds will be used in the following areas:

o investment in further cost-saving initiatives in the production of supercapacitors, including equipment, factory optimisation and materials;

o investment in the product engineering, testing and qualification necessary for the development and commercialisation of the Company's new truckStart automotive product; and

o general working capital.

·    The New Ordinary Shares to be issued pursuant to the Placing & Subscription will be issued to a range of institutional and other investors, including existing and new shareholders in the Company

·    As part of the Subscription, all of the Company's Directors have agreed to subscribe for an aggregate of 8,000,000 New Ordinary Shares, representing a total sum of approximately £80,000

·    Large cell supercapacitor markets, such as the automotive market, have been growing strongly. To date, CAP-XX has engaged with over 20 companies in the automotive industry and supply chain

·    CAP-XX is seeking to increase the end use of its supercapacitors in multiple high-growth markets, including in wearable electronics, sports gear and small personal medical devices, as well as for RFID tags and a variety of metering, control and telemetry applications

An updated version of CAP-XX's corporate presentation will be available for download from the Company's website, www.cap-xx.com.

Commenting on the Placing & Subscription, Anthony Kongats, CEO of CAP-XX said, "As we seek to commercialise our large supercapacitor for automotive applications, we are delighted to have received this level of support from our institutional shareholders and are pleased to welcome new shareholders. The proceeds from the completion of the Fundraising will give us the resources to work together with our Tier-1 partner for the development of truckStart. Initially targeting the North American heavy truck market, this stage of CAP-XX's expansion alone could potentially represent an addressable market opportunity of US$1.8 billion. Furthermore, we intend to move the Company to the second phase of our cost-down programme, the first phase of which is now largely complete. Meanwhile, we see strong demand across our products and continue to receive further enquiries regarding the licensing of our technology."

For further information, please contact:

CAP-XX Limited
Anthony Kongats (Chief Executive Officer)	[phone]
Cenkos Securities (Nominated Adviser and Joint Broker)
Stephen Keys/Mark Connelly	[phone]
Allenby Capital Limited (Joint Broker)
David Hart/Alex Brearley	[phone]
Kreab (Financial PR)
Robert Speed	[phone]

Notes to editors

About CAP-XX

CAP-XX (LSE:CPX) is a world leader in the design and manufacture of thin, flat supercapacitors and energy management systems used in portable and small-scale electronic devices, and to an increasing extent, in larger applications such as automotive and renewable energy. The unique feature of CAP-XX supercapacitors is their very high power density and high energy storage capacity in a space-efficient prismatic package. These attributes are essential in power-hungry consumer and industrial electronics, and deliver similar benefits in automotive and other transportation applications. For more information about CAP-XX, visit www.cap-xx.com. 

CAP-XX Limited

("CAP-XX" or the "Company")

Placing & Subscription of a total of 120,000,000 New Ordinary Shares at 1p each

And

Notice of General Meeting

Introduction

The Company proposes to raise £1.2 million by the issue of 120,000,000 New Ordinary Shares at a price of 1p per Ordinary Share. In addition, the Company has also earlier today announced its interim results for the six months ended 31 December 2014.

The Fundraising is conditional, inter alia, on the approval by Shareholders of the Resolution to authorise the Directors to allot the New Ordinary Shares. The General Meeting is being convened at the offices of CAP-XX Limited at 9/12 Mars Road, Lane Cove, Australia at 7:00pm AEST on 9 April 2015.

Background to and reasons for the Fundraising

On 3 February 2015, CAP-XX announced that it had signed a mutually exclusive memorandum of understanding with a North American Global Tier-1 automotive components company, initially for the development of products for the North American truck market.

This memorandum of understanding is for the development of CAP-XX's large automotive supercapacitors for a standalone system which can serve both original equipment and aftermarket applications, via potentially replacing one in three or one in four truck batteries with a supercapacitor unit. CAP-XX has produced prototypes of this product under the name 'truckStart'.

According to the counterparty to the memorandum of understanding, the truck market in the US uses between 9 and 12 million batteries annually. In line with this, the counterparty to the memorandum of understanding believes that there is a large market for a supercapacitor-powered truck starter unit and the Board believes that the total addressable market for a product such as truckStart in the US could potentially be as large as US$1.8bn. 

The counterparty to the memorandum of understanding has purchased truckStart prototypes for testing, which will also include field testing as a next step. This sale of truckStart prototypes represented the first commercial application for heavy duty supercapacitors.

On 3 February 2015, the Company also announced that in terms of trading generally, supercapacitor revenues and volume had improved, with demand driven primarily by wider adoption of CAP-XX's supercapacitor technology in medical and consumer wearables, RFID/logistics support and automated meter reading.

Finally, the Company highlighted its continued focus on manufacturing cost reduction, which had already resulted in annualised cost savings of approximately US$1 million, with additional savings expected in the subsequent financial year.

Despite these positive developments, and reflecting CAP-XX's level of cash and cash equivalents, which at 31 December 2014 was approximately A$0.5 million, it was announced that the Board was seeking additional working capital.

The Fundraising will provide the Company with this working capital and is necessary to ensure that the Company is able to capitalise on the opportunities available to it. The net proceeds of the Fundraising will be used in the following areas:

· investment in further cost saving initiatives in the production of supercapacitors, including equipment, factory optimisation and materials;

· investment in the product engineering, testing and qualification necessary for the development and commercialisation of the Company's new truckStart automotive product; and

· general working capital.

Interim results for the six months ended 31 December 2014

The Company's interim results for the six months ended 31 December 2014 have also been announced earlier today. CAP-XX's full interim results for the six months to 31 December 2014 will be available for download from the Company's website www.cap-xx.com.

Current trading and prospects

Target markets

The Board believes that CAP-XX's market share within existing electronics markets has been fairly steady, with growth in these markets being modest to date. However, the Board also believes that demand for thin, small devices, such as wearable electronics and growth in energy-harvesting as a power source, will drive rapid growth in these markets. As a consequence, CAP-XX has been seeking to increase the end use of its supercapacitors in multiple high growth markets, including:

· sports gear and small personal medical devices within the wearable electronics field;

· building and industrial control systems and RFID tags within the energy harvesting systems; and

· a variety of metering and telemetry applications.

Large cell markets, such as automotive, have also been growing strongly and CAP-XX now has the prototype large capacity devices required to enter these markets. To date, CAP-XX has engaged with over 20 companies in the automotive industry and supply chain. This activity is now moving towards evaluations and licence opportunities.

In addition to the memorandum of understanding for the development of truckStart for the North American truck market, a separate global Tier-1 automotive systems company has bought a number of 500F cells, in November 2014, for the development of a Kinetic Energy Recovery System (KERS) for use in racing cars, prior to anticipated broader adoption in sports cars. Should this proceed beyond trial status, then module development and laboratory testing is anticipated later in 2015, track testing is planned during 2016, and racing scheduled to commence in 2017/2018.

Another global Tier-1 automotive components company has approached CAP-XX to licence a patent and has tabled an initial offer involving an upfront license fee, plus a sliding scale royalty on sales. This opportunity is currently in active negotiation.

The Board continues to remain confident that trading for the 2014/15 financial year will continue to better the previous period.

Manufacturing Cost Reductions and Margin Improvements

Since mid-2014, CAP-XX has achieved significant reductions in production costs and improvements in gross margins. In June 2014, the Board's target was to reduce total production cost by approximately 30 per cent. As at the end of November 2014, savings of 27 per cent. had been achieved. The Board now expects a total production cost reduction of 36 per cent. between June 2014 and June 2015 and believes that further savings can be achieved beyond June 2015, including additional raw material cost reductions, which are currently being investigated.

The manufacturing cost reduction programme has resulted in material and process improvements, which have already delivered improved product performance. The Board believes that the ongoing programme should deliver numerous further benefits, including:

· allowing CAP-XX to be cost-competitive on higher volume business, whilst increasing the margin contribution; and

· a more focussed product range, which will drive further reductions in production costs and working capital requirements over time.

An updated version of CAP-XX's corporate presentation will be available for download from the Company's website www.cap-xx.com.

The Fundraising

The Company proposes to raise gross proceeds of £1.2 million (approximately £1.1 million net of estimated expenses) through the issue of the New Ordinary Shares. The Placing Price represents a premium of approximately 11 per cent. to the closing mid-market price of 0.9p on 4 March 2015, being the latest practicable date prior to the publication of this document. The New Ordinary Shares will represent approximately 50.80 per cent. of the Enlarged Ordinary Share Capital immediately following Admission.

The Fundraising is conditional, inter alia, upon:

·  the Resolution being passed at the General Meeting;

·  the Placing Agreement becoming unconditional in all respects (save for Admission) and not being terminated in accordance with its terms prior to Admission occurring;

·  the Subscription becoming unconditional; and

·  Admission occurring by 8:00 a.m. BST on 10 April 2015 (or such later date as Allenby Capital may agree, not being later than 30 April 2015).

The New Ordinary 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 Allenby Capital to terminate the Placing Agreement at any time prior to Admission in certain circumstances. If this right is exercised the Fundraising will lapse.

Directors' participation in the Fundraising

All of the Directors have agreed to subscribe, in aggregate, for 8,000,000 Subscription Shares under the Subscription as follows:

Directors	Number of Subscription Shares to be acquired	Number of Ordinary Shares held following Admission (% of Enlarged Ordinary Share Capital)
Patrick Elliott	2,500,000	4,593,281 (1.94%)
Bruce Grey	1,500,000	2,765,099 (1.17%)
Anthony Kongats	4,000,000	9,660,333 (4.09%)

Related Party Transactions

The entire Board's participation in the Subscription, as outlined above, will constitute a related party transaction for the purposes of Rule 13 of the AIM Rules. In addition, the participation in the Placing by Legal & General Investment Management also constitutes a related party transaction, as Legal & General Investment Management is deemed a substantial shareholder pursuant to the AIM Rules. As there are no independent Directors for the purposes of providing the fair and reasonable statement required under Rule 13 of the AIM Rules, Cenkos Securities, the Company's nominated adviser, considers that the terms of these related party transactions are fair and reasonable insofar as Shareholders are concerned.

Reason for the Resolution

CAP-XX is a company whose shares are admitted to trading on AIM but is not incorporated in the UK, and therefore the rights of shareholders are different from the rights of shareholders of a UK incorporated company.

The Companies Act 2006 (UK legislation) provides that the directors of a company incorporated in the UK may not allot shares unless authorised to do so by shareholders of such company.

While CAP-XX is not incorporated in the UK, the Directors are mindful of the requirements of UK law and of the expectations that UK institutional and other investors may have when they invest in CAP-XX. Accordingly, the Directors of CAP-XX have adopted a Dilution Policy as follows:

             "the Company will not, without the approval of shareholders, issue further securities for cash unless :

             (i)  such issues do not result in the aggregate number of securities issued for cash in the 12 months before the issue date exceeding 15 per cent. of the entire issued capital of CAP-XX; or

            (ii)  such issues are done by way of a rights issue or offering in favour of all holders of securities".

Under its dilution policy CAP-XX may currently issue, within the 15 per cent. limit, approximately 17,200,000 shares without shareholder approval. The intention of the proposed resolution set out in the Notice of General Meeting is to seek Shareholders' approval for authority to issue up to 120,000,000 new shares which will raise approximately £1.2 million (before the deduction of expenses associated with the Fundraising), via the issue of the New Ordinary Shares at 1p per share.

Dealings

Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM. It is expected that subject to passing the Resolution at the General Meeting and the Placing and Subscription becoming unconditional in all respects (save for Admission) Admission will become effective, and dealings in the New Ordinary Shares will commence, at 8:00 am BST on 10 April 2015.

Recommendation

Shareholders should be aware that if the Fundraising is not approved at the General Meeting, the Company will not have sufficient working capital available to it for the next 12 months and the Board may, in due course, be required to take action to protect the interests of creditors.

The Directors consider that the Fundraising is in the best interests of the Company and the Shareholders as a whole. The Directors unanimously recommend Shareholders to vote in favour of the Resolution to be proposed at the General Meeting as they intend to do so in respect of their own beneficial holdings amounting, in aggregate, to 9,018,713 Existing Ordinary Shares representing approximately 7.8 per cent of the Existing Ordinary Shares.

FUNDRAISING STATISTICS
Placing Price	1p
Number of Existing Ordinary Shares	116,227,365
Number of New Ordinary Shares	120,000,000
Gross proceeds of the Fundraising	£1.2 million
Estimated proceeds of the Fundraising receivable by the Company, net of expenses	approximately £1.1 million
Number of Ordinary Shares in issue following the Fundraising	236,227,365
New Ordinary Shares as a percentage of the Enlarged Ordinary Share Capital	50.80%

EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Date of this Circular	5 March 2015
Latest time and date for receipt of Forms of Instruction	10:00 am (BST) on 2 April 2015
Latest time and date for receipt of Forms of Proxy	7:00 pm (AEST) on 7 April 2015
General Meeting	7:00 pm (AEST) 9 April 2015
Admission and dealings in the New Ordinary Shares expected to commence on AIM	8:00 am (BST) on 10 April 2015
CREST accounts credited in respect of the New Ordinary Shares (CREST shareholders only)	10 April 2015
Share certificates despatched in respect of the New Ordinary Shares (non-CREST shareholders only)	by 17 April 2015

If any of the details contained in the timetable above should change, the revised times and dates will be notified to Shareholders by means of an announcement through a Regulatory Information Service. All events listed in the above timetable following the General Meeting are conditional on the passing, at the General Meeting, of the Resolution contained in the Notice of General Meeting.

-Ends-

For further information, please contact:

CAP-XX Limited
Anthony Kongats (Chief Executive Officer)	[phone]
Cenkos Securities (Nominated Adviser and Joint Broker)
Stephen Keys/Mark Connelly	[phone]
Allenby Capital Limited (Joint Broker)
David Hart/Alex Brearley	[phone]
Kreab (Financial PR)
Robert Speed	[phone]

Notes to editors

About CAP-XX

CAP-XX (LSE:CPX) is a world leader in the design and manufacture of thin, flat supercapacitors and energy management systems used in portable and small-scale electronic devices, and to an increasing extent, in larger applications such as automotive and renewable energy. The unique feature of CAP-XX supercapacitors is their very high power density and high energy storage capacity in a space-efficient prismatic package. These attributes are essential in power-hungry consumer and industrial electronics, and deliver similar benefits in automotive and other transportation applications. For more information about CAP-XX, visit www.cap-xx.com. 

 

END

 

 

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