Open Offer to raise up to £510,000

RNS Number : 1567Z

Strat Aero PLC

13 December 2017

 

Strat Aero plc / Index: AIM / TIDM: AERO / Sector: Support Services

Strat Aero plc ("Strat Aero", the "Company" or the "Group")

Open Offer to raise up to £510,000

Strat Aero plc, an international aerospace company focused on the rapidly emerging Unmanned Aerial Vehicle ('UAV') sector, announces that further to the Company's announcement of 5 December 2017 a circular, including an Application Form, will be posted to Shareholders today (the 'Circular').  A copy of the Circular and Application Form will be available to view on the Company's website at www.strat-aero.com.

The total subscription proceeds payable by Shareholders under the Open Offer shall be less than €5 million (or an equivalent Sterling amount) in aggregate. Therefore, in accordance with Section 85 and Schedule 11A of FSMA, the Circular is not, and is not required to be, a prospectus for the purposes of the Prospectus Rules and has not been prepared in accordance with the Prospectus Rules. Accordingly, the Circular has not been, and will not be, reviewed or approved by the Financial Conduct Authority of the United Kingdom, pursuant to sections 85 and 87 of FSMA, the London Stock Exchange, any securities commission or any other authority or regulatory body. In addition, the Circular does not constitute an admission document drawn up in accordance with the AIM Rules for Companies.

The definitions that apply throughout this announcement can be found at the end of the Circular.

1.    Introduction

The Company announced on 5 December 2017 that it raised £590,000 (before expenses) through a placing of new Ordinary Shares at 0.035 pence per share to be used for working capital, to strengthen the Company's balance sheet and facilitate the following:

·    Training & Education - continued development of Strat Aero's Training solutions and delivery capabilities;

·    Survey & Inspection - facilitate the acquisition and adoption of the latest Unmanned Aerial Systems (UAS) technology; and

·    Potential strategic investment in complementary businesses and assets for which several exciting opportunities have been identified

To provide Shareholders who have not taken part in the Placing (which was not conditional on the Open Offer) with an opportunity to participate in the proposed issue of new Ordinary Shares, the Company is providing all Qualifying Shareholders with the opportunity to subscribe for an aggregate of up to 1,455,026,120 Open Offer Shares, to raise up to approximately £510,000 (before costs and expenses), on the basis of 20 Open Offer Shares for every 27 Existing Ordinary Shares held on the Record Date, at 0.035 pence per share. Shareholders subscribing for their full entitlement under the Open Offer may also request additional Open Offer Shares through the Excess Application Facility. Investors who participated in the Placing are not Qualifying Shareholders for the purpose of the Open Offer and will not be entitled to subscribe for any Open Offer Shares.

The net proceeds of the Placing together with the net proceeds of amounts raised from the Open Offer, will be used to strengthen the Company's balance sheet and facilitate the following:

.

·    Training - continued development of the Strat Aero Training solutions and delivery capabilities;

·    Geocurve - facilitate the acquisition adoption of the latest Unmanned Aerial Systems (UAS)  technology; and

·     Investment in complementary businesses and assets.

The purpose of the Circular is to provide information on the Company's current financial and trading position so that Shareholders may decide whether to subscribe for Open Offer Shares. Shareholders should also refer to the Company's regulatory announcements. Open Offer Shares subscribed for will be issued pursuant to the Company's existing share authorities. Accordingly, the Open Offer is not subject to Shareholder approval.

Shareholders should consider the Risk Factors set out in Part II of the Circular in relation to general risks and those specific to the Open Offer.

Details of the Open Offer are set out below and the steps required for Qualifying Shareholders to participate in the Open Offer are set out in Part IV of the Circular.  

The Company has raised funds as part of a placing announced on 5 December 2017 to continue implementation of its business plans, however additional funding raised via the Open Offer will enable the Company to accelerate attainment of the Company's commercial priorities.

2.    Strategy of the Group

2016 was a year of turbulence at Strat Aero because of the litigation arising from the acquisition in the US. As a result, the Board of the Company completed a strategic review of the Company, which resulted in the replacement of the Group CEO and the execution of various measures to simplify the business. The objectives of the strategic review were met by the end on 2016, resulting in the settlement of the litigation against the Company and an overall lower cost base.

2017 brought a continued focus in the Company's chosen growth areas, which has resulted in cost reductions and resource rationalisation. The Directors believe that the core growth areas are Geocurve, the Company's survey and inspection business, and the Strat Aero Training Division. The Company has relevant and class leading skills and experience in both of these focus areas.

The main areas of focus for the Company are as follows:

1)           Training - This is a division led by Mark Wharry, the Training Director who joined the Company at the end of the first quarter 2017. He brought significant skills, experience and talent to the training segment of the business, Mark is one of the leading UAV Instructors in the world, a professional aviator and flying instructor and a 20-year fast jet RAF fighter pilot who specialised in Military UAV training, setting standards procedures for the RAF and the USAF.2)              

2)           Survey and Inspection - Geocurve presents a combination of the following three core areas - UAV Pilots; Surveyors; and Data Modelling and Analysis. This makes Geocurve unique in the UAV environment. In addition, Strat Aero is a key innovation partner of CH2M and have won industry awards in this area as part of that team. Geocurve has focused on innovation of the survey and inspection side of the business and has enjoyed a 100% safety record and the "highest" flying permissions commercially available from the CAA. In addition to its ability to fly in congested or difficult environments, Strat Aero has key skills and experience in survey and inspection along with data modelling, and data management to provide the Company's customers with tailored data outputs in useable and manageable formats.

Management's goal is to continue to focus on revenue growth and to achieve cost optimisation across the Company. It should be noted our survey business is seasonal in nature as reflected by the main sectors it serves - namely construction and civil engineering. Also, our advanced training solutions, whilst launched and seeded now with key partners in Asia, still requires time for development and growth in those markets.

3.    Use of proceeds

Assuming full take up under the Open Offer, the proceeds of the Open Offer net of total anticipated expenses, will be approximately £480,000, which will be used for further development of the Training Division and of Geocurve and to make further investments in complementary businesses.

The Company intends to apply a proportion of the funds raised to the Training Division, to purchase software to support courseware management, delivery and IP protection methods. All of these are currently planned but require additional investment to bring to realisation.

The Company also wishes to use some of the funds raised to invest in new UAV technology. The last 18 months of aggressive cost management have prevented any investment other than essential maintenance. New UAV technology is urgently required to exploit new opportunities in the Survey and Inspection business areas, including specialised equipment to survey inside sealed structures such as storage tanks.

In addition, Geocurve also needs workflow management software to improve, streamline and speed up the process of managing the vast amounts of data that it processes on behalf of key customers.

The funds will also assist Geocurve to invest in the latest scanning technology developments. This will be done in response to an expected additional service contract on flood defence work on the Thames. The equipment required can be fully utilised in other industries and can create significant growth opportunities for Geocurve allowing the Company access to much higher value, long term contracts with established customers.

The Company will also look to acquire interests in complementary innovative and disruptive technology focused businesses. The Board has a considerable number of contacts with attractive opportunities within these areas and would like to use the Company as a platform to identify and exploit these opportunities to maximise value for Shareholders.  The Directors have considerable experience in managing technology enabled businesses in a global environment and believe that they can identify investment targets which will be complementary to the Company's current business.

The Board believes that the proposed fundraising will augment the resources from our recent placing to ensure sufficient support is available to meet the modest working capital requirements of the Strat Aero group and provide the much-needed boost from appropriate investment to underpin the company's chosen strategy. The Directors' believe that this will ultimately deliver consistent profitable growth by bringing innovation and technology to, the typically manual and labour intensive, industrial sectors that the Company serves.

With Strat Aero in a strong position, the Company intends building on its existing expertise to pursue a strategy of identifying and acquiring interests in companies in a similar position to Strat Aero, specifically companies with products and or services and intellectual property in the disruptive technology space. Typically, these companies will benefit from the experience and skills of the Strat Aero management, strengthening their strategic focus, and facilitating profitable growth.

4.    Details of the Placing

On 5 December 2017, the Company announced that it had conditionally placed 1,685,714,286 Placing Shares at 0.035 pence (the Issue Price) to raise £590,000 (before expenses).  The Placing completed on 8 December 2017 and the Placing Shares were admitted to trading on AIM on that date. 

1,011,428,571 Warrants with a six month expiry and an exercise price of 0.035 pence were also issued in conjunction with the Placing.

5.    Details of the Open Offer

The Company is proposing to raise up to £510,000 (before expenses) pursuant to the Open Offer. The proposed issue price of 0.035 pence per Open Offer Share is the same price as the Issue Price at which Placing Shares were issued pursuant to the Placing.

The Directors recognise the importance of pre-emption rights to Shareholders and consequently up to 1,455,026,120 Open Offer Shares are being offered to existing Shareholders by way of the Open Offer. The Open Offer provides Qualifying Shareholders with an opportunity to participate in the Open Offer by subscribing for their respective Basic Entitlements and Excess Entitlements.

Qualifying Shareholders may subscribe for Open Offer Shares in proportion to their holding of Existing Ordinary Shares held on the Record Date. Shareholders subscribing for their full entitlement under the Open Offer may also request additional Open Offer Shares as an Excess Entitlement, up to the total number of Open Offer Shares available to Qualifying Shareholders under the Open Offer.

The Open Offer is conditional, amongst other things, on the following:

i.              admission of the Open Offer Shares to trading on AIM becoming effective on or before 8.00 a.m. on 5 January 2018 (or such later date and/or time as the Company and Peterhouse may agree, being no later than 12 January 2018).

In the event that the Open Offer does not become unconditional by 11.00 a.m. on 29 December 2017, the Open Offer will lapse and application monies will be returned by post to the Applicant(s) at the Applicant's risk and without interest, to the address set out in the Application Form, within 14 days thereafter.

The Open Offer Shares will, when issued and fully paid, rank pari passu in all respects with the Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of Admission.

Basic Entitlement

Subject to the fulfilment of the conditions set out below and in Part IV of the Circular, Qualifying Shareholders are being given the opportunity to subscribe for Open Offer Shares under the Open Offer at the Issue Price, payable in full on application and free of all expenses, pro rata to their existing shareholdings on the following basis:

20 Open Offer Shares for every 27 Existing Ordinary Shares

held by Qualifying Shareholders and registered in their name at the Record Date.

Open Offer Entitlements under the Open Offer will be rounded down to the nearest whole number and any fractional entitlements to Open Offer Shares will not be allocated and will be disregarded. Qualifying Shareholders with holdings of Existing Ordinary Shares in both certificated and uncertificated form will be treated as having separate holdings for the purpose of calculating their Basic Entitlement.

If you have sold or otherwise transferred all of your Ordinary Shares after the ex-entitlement Date, you are not entitled to participate in the Open Offer.

The Open Offer is not a rights issue. Qualifying CREST Shareholders should note that, although the Open Offer Entitlements will be admitted to CREST and be enabled for settlement, applications in respect of entitlements under the Open Offer may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim raised by Euroclear's Claims Processing Unit. Qualifying Non-CREST Shareholders should note that the Application Form is not a negotiable document and cannot be traded. Qualifying Shareholders should be aware that under the Open Offer, unlike in a rights issue, any Open Offer Shares not applied for will not be sold in the market or placed for the benefit of Qualifying Shareholders who do not apply under the Open Offer.

Application has been made for the Open Offer Entitlements of Qualifying CREST Shareholders to be admitted to CREST. It is expected that such Open Offer Entitlements will be admitted to CREST on 14 December 2017. The Open Offer Entitlements will also be enabled for settlement in CREST on 14 December 2017 to satisfy bona fide market claims only. Applications through the CREST system may only be made by the Qualifying CREST Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim.

Further details of the Open Offer and the terms and conditions on which it is being made, including the procedure for application and payment, are contained in Part IV of the Circular and for Qualifying Non-CREST Shareholders on the Application Form. To be valid, Application Forms (duly completed) and payment in full for the Open Offer Shares applied for must be received by Share Registrars Limited, The Courtyard, 17 West Street, Farnham, Surrey GU9 7DR, by no later than 11 a.m. on 29 December 2017.

Qualifying Non-CREST Shareholders will receive an Application Form which sets out their maximum entitlement to Open Offer Shares as shown by the number of Basic Entitlements allocated to them.

The Open Offer is restricted to Qualifying Shareholders in order to enable the Company to benefit from exemptions from securities law requirements in certain jurisdictions outside the United Kingdom.

Excess Application Facility

The Excess Application Facility will enable Qualifying Shareholders, provided that they take up their Basic Entitlements in full, to apply for Excess Entitlements to the extent that if a Qualifying Shareholder has taken up its Basic Entitlements in full and applies for and is allocated the maximum Excess Entitlements it will suffer no dilution as a result of the Placing and Open Offer. Qualifying Non-CREST Shareholders who wish to apply to acquire more than their Basic Entitlements should complete the relevant sections on the Application Form. Qualifying CREST Shareholders will have Excess Entitlements credited to their stock account in CREST and should refer to paragraph 3(ii) of Part IV of the Circular for information on how to apply for Excess Entitlements pursuant to the Excess Application Facility. Applications for Excess Entitlements will be satisfied only and to the extent that corresponding applications by other Qualifying Shareholders are not made or are made for less than their Basic Entitlements and may be scaled back at the Company's absolute discretion.

Once subscriptions by Qualifying Shareholders under their Basic Entitlements have been satisfied, the Company shall, in its absolute discretion, determine whether or not to meet any applications for Excess Entitlements in full or in part and no assurance can be given that applications by Qualifying Shareholders under the Excess Application Facility will be met in full, in part or at all. Application will be made for the Basic Entitlements and Excess Entitlements in respect of Qualifying CREST Shareholders to be admitted to CREST. It is expected that Open Offer Shares issued pursuant to subscriptions by Qualifying Shareholders exercising their Basic Entitlements and Excess Entitlements will be admitted to CREST at 8.00 a.m. on 5 January 2018. Such Open Offer Shares will also be enabled for settlement in CREST at 8.00 a.m. on 5 January 2018. Applications through the means of the CREST system may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim. Qualifying Non-CREST Shareholders will receive an Application Form which sets out their entitlement to Open Offer Shares as shown by the number of Basic Entitlements allocated to them. Qualifying Non-CREST Shareholders should note that the Application Form is not a negotiable document and cannot be traded.

Qualifying CREST Shareholders will receive a credit to their appropriate stock accounts in CREST in respect of their Basic Entitlements and Excess Entitlements on 14 December 2017. Qualifying CREST Shareholders should note that although the Basic Entitlements and Excess Entitlements will be admitted to CREST and be enabled for settlement, applications in respect of their Open Offer Entitlements may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim. If applications are made for less than all of the Open Offer Shares available, then the lower number of Open Offer Shares will be issued and any outstanding Basic Entitlements will lapse.

Further information on the Open Offer and the terms and conditions on which it is made, including the procedure for application and payment, are set out in Part IV of the Circular. For Qualifying Non-CREST Shareholders, completed Application Forms, accompanied by full payment, should be returned by post, or by hand (during normal business hours only), Share Registrars Limited, The Courtyard, 17 West Street, Farnham, Surrey GU9 7DR, so as to arrive as soon as possible and in any event so as to be received no later than 11.00 a.m. on 29 December 2017. For Qualifying CREST Shareholders the relevant CREST instructions must have been settled as explained in the Circular by no later than 11.00 a.m. on 29 December 2017.

Action to be taken in respect of the Open Offer

If you are a Qualifying Non-CREST Shareholder you will be sent an Application Form which gives details of your Basic Entitlement (i.e. the number of Open Offer Shares available to you). If you wish to apply for Open Offer Shares under the Open Offer, you should complete the Application Form in accordance with the procedure set out at paragraph 3(i)  of Part IV  of the Circular and on the Application Form itself and post it, or return it by hand (during normal business hours only), together with payment in full in respect of the number of Open Offer Shares applied for to Share Registrars Limited, The Courtyard, 17 West Street, Farnham, Surrey GU9 7DR, so as to arrive as soon as possible and in any event so as to be received no later than 11 a.m. on 29 December 2017 2017, having first read carefully Part IV of the Circular and the contents of the Application Form.

If you are a Qualifying CREST Shareholder, no Application Form will be sent to you. As a Qualifying CREST Shareholder you will receive a credit to your appropriate stock account in CREST in respect of your Basic Entitlement. You should refer to the procedure set out at paragraph 2 and paragraph 3 (ii) of Part IV of the Circular.

The latest time for applications to be received under the Open Offer is 11.00 a.m. on 29 December 2017. The procedure for application and payment depends on whether, at the time at which application and payment is made, you have an Application Form in respect of your Basic Entitlement or your Basic Entitlement has been credited to your stock account in CREST. The procedures for application and payment are set out in Part IV of the Circular. Further details also appear on the Application Form which has been sent to Qualifying Shareholders. Qualifying CREST Shareholders who are CREST sponsored members should refer to their CREST sponsors regarding the action to be taken in connection with the Circular and the Open Offer.

If you are in any doubt as to the procedure for acceptance, please contact Share Registrars Limited on [phone]. The helpline is open between 9.00 a.m. to 5.30 p.m., Monday to Friday excluding public holidays in England and Wales. Please note that Share Registrar Limited cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes.

If you are in any doubt as to the contents of the Circular and/or the action you should take, you are recommended to seek your own personal financial advice from an independent financial adviser authorised under the Financial Services and Markets Act 2000 (as amended) if you are in the UK or, if you are outside the UK, from an appropriately authorised independent financial adviser, without delay.

6.    Action to be taken

Action to be taken in respect of the Open Offer is set out in paragraph 7 above and also in Part IV of the Circular. If you are a Qualifying Non-CREST Shareholder, an Application Form will be posted for completion by Qualifying Shareholders who wish to participate in the Open Offer.  If you are a Qualifying CREST Shareholder, no Application Form will be sent to you. As a Qualifying CREST Shareholder you will receive a credit to your appropriate stock account in CREST in respect of your Basic Entitlement. You should refer to the procedure set out at paragraph 3(ii) of Part IV of the Circular.

OPEN OFFER STATISTICS

Issue Price per New Ordinary Share	0.035 pence
Open Offer Basic Entitlement	20 Open Offer Shares for every 27 Ordinary Shares at Record date
Number of Ordinary Shares in issue as at the date of the Circular1	3,809,903,314
Number of Ordinary Shares in issue as at the Record Date	1,964,285,262
Maximum number of Open Offer Shares to be issued pursuant to the Open Offer	1,455,026,120
Maximum Enlarged Ordinary Share Capital on Admission	up to 5,264,929,434
Gross proceeds of the Open Offer	up to £510,000
Estimated cash proceeds of the Open Offer receivable by the Company (net of expenses and assuming full allocation)	up to £480,000
Percentage of the Enlarged Ordinary Share Capital of the Company that the Open Offer Shares will represent	27.6 per cent.
ISIN - Open Offer Basic Entitlements	GB00BYVZ8H45
ISIN - Open Offer Excess Entitlements	GB00BYVZ8K73

¹  This follows completion of the Placing and subsequent Directors &  Loan conversion actions on 5 December  2017 

Notes

Statistics are prepared on the basis that no Ordinary Shares will be issued following the date of the Circular and before the completion of the Open Offer

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

	2017
Record Date and time for entitlements under the Open Offer	6.00 p.m. on 1 December
Announcement of the Open Offer	13 December
Publication of the Circular and Application Forms to Qualifying Shareholders	13 December
Ordinary Shares marked 'ex' entitlement by the London Stock Exchange	13 December
Basic Entitlements and Excess Entitlements credited to CREST accounts of Qualifying CREST Shareholders	14 December
Recommended latest time and date for requesting withdrawal of Basic Entitlements and Excess Entitlements from CREST	4.30 p.m. on 21 December
Latest time and date for depositing Basic Entitlements and Excess Entitlements into CREST	3.00 p.m. on 22 December
Latest time and date for splitting Application Forms (to satisfy bona fide market claims only)	3.00 p.m. on 27 December
Latest time and date for receipt of completed Application Forms from Qualifying Shareholders and payment in full under the Open Offer or settlement of relevant CREST instructions (as appropriate)	11.00 a.m. on 29 December
Expected date of Admission and commencement of dealings of Open Offer Shares	8.00 a.m. on 5 January 2018
Expected date for CREST accounts to be credited with Open Offer Shares	5 January 2018
Share certificates in relation to Open Offer Shares (where applicable) dispatched by	12 January 2018
Save for the date of publication of the Circular, each of the times and dates above are subject to change. Any such change, including any consequential change in the Open Offer Statistics above, will be notified to Shareholders by an announcement on a Regulatory Information Service. All times are London times and each of the times is subject to change.

- ENDS -

For further information please visit www.strat-aero.com or contact:

Strat Aero plc	Tel: [phone]
Graham Peck (Chairman)
SP Angel Corporate Finance LLP	Tel: [phone]
Nominated Adviser and Joint Broker
Stuart Gledhill Jeff Keating Caroline Rowe
Peterhouse Corporate Finance	Tel: [phone]
Lucy Williams
St Brides Partners Ltd	Tel: [phone]
Financial PR Susie Geliher Frank Buhagiar

Notes

Strat Aero plc is a multi-divisional international aerospace services company, focused primarily on the provision of complete client solutions in the Unmanned Aerial System ('UAS' market), which is predicted to show exponential growth over the coming decade.   Commercial and military applications in UASs are expected to be a dynamic growth sector in the aerospace industry over the next 10 years with the UAS market forecast to grow to more than US$82.1 billion between 2015 and 2025 (AUVSI Economic Report 2013) and the global airborne Intelligence, Surveillance and Reconnaissance ('ISR') market estimated to grow to US$19.23 billion by 2023. 

 

END

 

 

IOEGGGGGPUPMPPP