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Velocys PLC (VLS)

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Monday 23 July, 2018

Velocys PLC

Fund raise of £6 million

RNS Number : 4042V
Velocys PLC
23 July 2018
 

News release

Velocys plc

("Velocys" or "the Company")

23 July 2018

 

Fund raise of £6 million

Velocys plc (VLS.L), the renewable fuels company, is pleased to announce that it intends to raise £6 million (gross) by way of a placing.

 

Highlights:

 

·     Fund raising of £6 million (before expenses):

Placing of 60,000,000 new Ordinary Shares (the "Placing Shares") at a placing price of 10 pence per share (the "Placing Price") (the "Placing")

·     The Placing Price represents a discount to the closing mid-market price of the Ordinary Shares as at 20 July 2018 of 0.52 pence per Ordinary Share (a discount of approximately 5.0 per cent).

·     The Placing Shares will represent approximately 15.4 per cent. of the Enlarged Share Capital (provided that no options, warrants or convertible loan notes are exercised)

·     Net proceeds of the Placing will be used predominantly to: (i) strengthen the Company's balance sheet; (ii) fund its portion of the pre-FEED development costs for its UK waste-to-renewable jet fuel project; (iii) allow it to continue to support the ENVIA project to the point where
 the Company understands the financial plan
 to restore the second reactor to operation; and (iv) support the process for on-boarding one or more strategic investors to provide development funding for the Mississippi biorefinery project

·     The Placing of the First Tranche Placing Shares (being 30,000,000 Placing Shares) is not conditional upon the passing of any resolutions by shareholders and will be issued for cash on a non-pre-emptive basis pursuant to the authorities granted to the Company by its Shareholders at the 2018 annual general meeting held on 29 June 2018

·     The Placing of the Second Tranche Placing Shares (being 30,000,000 Placing Shares) is conditional (amongst other things) upon the passing of certain resolutions and upon First Admission occurring on or before 30 July 2018 (or such later date as TPI and the Company may agree, not being later than 13 August 2018). A General Meeting is being convened for the purpose of considering the relevant resolutions at 10.00 a.m. on 8 August 2018 at the offices of Mayer Brown International LLP, 201 Bishopsgate, London, EC2M 3AF

·     The Placing has been arranged by Cannacord Genuity Group, Numis Securities Limited, Peat & Co and Turner Pope Investments (TPI) Limited and is not being underwritten

 

David Pummell, CEO of Velocys, said:

"Today's financing enhances our runway and will be used to drive forward our US and UK projects to meet their next major milestones over the coming months and to support ENVIA.  We thank all our shareholders for their continued backing of our strategy and its implementation.  In particular I look forward to keeping our shareholders informed of our progress as we prepare to onboard one or more strategic investors into our Mississippi project during the coming months. We continue to make significant progress with our projects and l look forward to periodically hosting Webcasts to discuss our strategy and progress as we drive our Company forward into an incredibly exciting future." 

 

Conference Call

The Company will host a call for investors at 14:00 on Thursday 26 July 2018. For dial-in details please contact Tom Huddart at Camarco ([email protected]) or visit the Company website (www.velocys.com).

 

- Ends -

 

For further information, please contact:

Velocys

David Pummell, CEO

 

+44 1235 838 621

 

Numis Securities (Nomad and joint broker)

Alex Ham

Stuart Skinner

Jamie Lillywhite

Tom Ballard

 

+44 20 7260 1000

Canaccord Genuity (Joint broker)

Henry Fitzgerald-O'Connor

Ben Griffiths

 

+44 20 7523 8000

 

 

 

Camarco (Financial communications & PR)

Billy Clegg

Georgia Edmonds

Tom Huddart

 

+44 20 3757 4983

 

Scoville Public Relations (US public relations)

John Williams

 

 

 

+1 206 625 0075#1

 

 

www.velocys.com 

IMPORTANT NOTICES

 

This document does not constitute an offer to buy, acquire or subscribe for, or the solicitation of an offer to buy, acquire or subscribe for, Placing Shares or an invitation to buy, acquire or subscribe for the Placing Shares in any jurisdiction.  This document has not been filed with, examined or approved by the Financial Conduct Authority or the London Stock Exchange or any other regulatory authority.

 

Numis Securities Limited ("Numis"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority and is a member of the London Stock Exchange, is acting as nominated adviser and joint broker to the Company for the purposes of the AIM Rules.  Canaccord Genuity Limited ("Canaccord"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority and is a member of the London Stock Exchange, is acting as joint broker to the Company for the purposes of the AIM Rules.  Turner Pope Investments (TPI) Ltd ("TPI"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority and is a member of the London Stock Exchange, is also acting as joint broker to the Company for the purposes of the AIM Rules.  Numis, Canaccord and TPI are each acting exclusively for the Company in connection with the Placing, and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients or for providing advice in relation to the proposals in this document or any other matter referred to in this document.  Neither Numis, Canaccord nor TPI have authorised the contents of this document for any purpose and, without limiting the statutory rights of any person to whom this document is issued, no representation or warranty, express or implied, is made by either Numis, Canaccord or TPI as to any of the contents or completeness of this document.

 

This announcement contains (or may contain) certain forward-looking statements with respect to certain of the Company's current expectations and projections about future events.  These statements, which sometimes use words such as "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning, reflect the directors' beliefs and expectations and involve a number of risks, uncertainties and assumptions that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement.  Statements contained in this announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future.  The information contained in this announcement is subject to change without notice and neither Numis,Canaccord, TPI nor, except as required by applicable law, the Company assumes any responsibility or obligation to update publicly or review any of the forward-looking statements contained herein.  You should not place undue reliance on forward-looking statements, which speak only as of the date of this announcement.

 

The distribution of this announcement outside the United Kingdom may be restricted by law and therefore any persons outside the United Kingdom into whose possession this announcement comes should inform themselves about and observe any such restrictions as to the Placing, the Placing Shares and the distribution of this announcement. Any failure to comply with such restrictions may constitute a violation of the securities laws of any jurisdiction outside of the United Kingdom. This announcement does not constitute an offer to sell or an invitation to subscribe for, or the solicitation of an offer to buy or to subscribe for, shares in any jurisdiction in which such an offer or solicitation is unlawful.  In particular, this announcement is not for release, publication or distribution, directly, or indirectly, in whole or in part, in, into or from the United States, Australia, New Zealand, Canada, the Republic of South Africa, Japan or to any US Person, or any national, resident or citizen of Australia, New Zealand, Canada, the Republic of South Africa or Japan. No offering of Placing Shares, or any other securities of the Company, is being made in the United States and this announcement, and the information contained herein, does not constitute an offer to sell or a solicitation of an offer to buy any Placing Shares or any other securities of the Company in the United States.

 

No person has been authorised to give any information or to make any representation other than those contained in this announcement (or the circular to be sent to Shareholders today) in connection with the Placing and Admission and, if given or made, such information or representation must not be relied upon as having been authorised by or on behalf of the Company, Numis, Canaccord or TPI or any of their respective directors, employees or officers.

 

Information to Distributors

Solely for the purposes of the product governance requirements of Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II") and local implementing measures, and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that such Placing Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment"). Notwithstanding the Target Market Assessment, Distributors should note that: the price of Placing Shares may decline and investors could lose all or part of their investment; Placing Shares offer no guaranteed income and no capital protection; and an investment in Placing Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to any contractual, legal or regulatory selling restrictions in relation to the Placing.  For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Placing Shares.

 

1.            Introduction

The Board announced on 23 July 2018 that it has proposed to raise, subject to certain conditions, £6,000,000 (before expenses) by way of a placing of 60,000,000 Placing Shares at a placing price of 10 pence per share to certain institutional and other investors. The Placing Price represents a discount to the closing mid-market price of the Ordinary Shares as at 20 July 2018 of 0.52 pence per Ordinary Share (a discount of approximately 5.0 per cent).

The Directors intend to use the net proceeds raised by the Placing to: (i) strengthen the Company's balance sheet; (ii) fund its portion of the pre-FEED development costs for its UK waste-to-renewable jet fuel project; (iii) allow it to continue to support the ENVIA project to the point where the Company understands the financial plan to restore the second reactor to operation; and (iv) support the process for on-boarding one or more strategic investors to provide development funding for the Mississippi biorefinery project.

The Placing of the First Tranche Placing Shares is not conditional upon the passing of any resolutions by shareholders and will be issued for cash on a non-pre-emptive basis pursuant to the authorities granted to the Company by its Shareholders at the 2018 annual general meeting held on 29 June 2018. The Placing of the Second Tranche Placing Shares is conditional (amongst other things) upon the passing of certain resolutions in order to ensure that the Directors have the necessary authorities and powers to allot the Second Tranche Placing Shares for cash on a non-pre-emptive basis. A General Meeting is therefore being convened for the purpose of considering the Resolutions at 10 a.m. on 8 August 2018 at the offices of Mayer Brown International LLP, 201 Bishopsgate, London, EC2M 3AF. The Placing of the Second Tranche Placing Shares is also conditional on each of the Placing Agreements becoming unconditional and not being terminated in accordance with their terms and upon First Admission occurring on or before 30 July 2018 (or such later date as TPI and the Company may agree, not being later than 13 August 2018. The Placing is not being underwritten.

The purpose of this section of the announcement is to provide you with details of, and the reasons for, the Placing and why the Directors believe it to be in the best interests of the Company and its Shareholders. The Directors intend to vote in favour of the Resolutions in respect of their legal and/or beneficial shareholdings amounting, in aggregate, to 690,789 Ordinary Shares representing approximately 0.2 per cent. of the Ordinary Shares in issue as at the date of this announcement.

Further details of the Placing are set out in paragraph 6 below.

2.            Information on the Company's projects

 

(a)      ENVIA - the Company's commercial reference plant

In September 2016, construction of the first plant incorporating the Company's technology was completed. This was ENVIA Energy's plant in Oklahoma City, which acts as the commercial scale reference plant for the Company's technology, and which uses landfill gas as well as pipeline natural gas as feedstock. ENVIA subsequently delivered the start-up of the commercial scale Fischer-Tropsch modules and upstream units, culminating in the first Fischer-Tropsch product being successfully produced in February 2017. In June 2017, the first finished products (being premium renewable waxes, diesel and naphtha) were produced and in September 2017 the plant generated revenue for the first time. In October 2017, the plant achieved an operational capacity of 200 barrels of products per day. The Velocys reactor technology in the ENVIA plant represents the commercial system that will be used in the Company's future renewable fuels biorefineries.

In March 2018, the Renewable Identification Numbers produced at the ENVIA plant were verified by Weaver, an independent third party auditor, under the Quality Assurance Program (QAP) approved by the US Environmental Protection Agency. As a result ENVIA, signed a RIN purchase and sale agreement to sell, at a fixed price, all of the available RINs generated at the plant for a six-month term beginning in April 2018. The agreement has industry standard payment terms.

In May 2018, Velocys was informed by ENVIA that a leak had been detected at the ENVIA plant that was believed by ENVIA to have originated inside one of the plant's two Fischer-Tropsch reactors. The reactor has been removed from operation and is undergoing analysis by ENVIA's insurance company as it processes the relevant insurance claims. The plant continues to operate using the second Velocys Fischer-Tropsch reactor.

ENVIA's investigation identified the ancillary coolant system as the root cause of the leak. ENVIA has since implemented modifications, approved by the Company, to rectify a design flaw in the ancillary coolant system serving the second reactor and has also modified operating procedures. The second reactor has now operated successfully without incident through the same cycle through which the first reactor was operating when the leak was detected.

This successful operation of the second reactor supports the findings of the ENVIA investigation. The Company's position remains that the root cause of the leak in the first reactor was a design flaw in the ancillary coolant system and not the result of any flaw in the core Velocys Fischer-Tropsch technology. The Velocys Fischer-Tropsch reactor is designed to safely contain this kind of leak to ensure there is no potential impact to personnel or the environment.

Velocys, as licensor of the Fischer-Tropsch technology and as a minority shareholder, continues to provide support to ENVIA and its team. Velocys remains committed to the ENVIA plant and will continue to work with ENVIA to assess the likely repair cost and consequent funding requirements. As the plant has been operating using one reactor since the leak was detected, it is unlikely that the plant will become cash flow positive in Q2 2018 as previously expected. The plant is now not expected to become cash flow positive until the second reactor can be restored to operation.

The board of ENVIA is in the process of assessing the likely funding requirements of the project to achieve positive cash flows, following which it may seek financial contributions from some or all of the joint venture partners (including the Company).

 

(b)     Mississippi - the Company's second US biorefinery

In October 2017, the Company signed a site option agreement with Adams County in the State of Mississippi for its second US biorefinery to be located in Natchez, Mississippi and secured total incentives of approximately $60 million.

The Company began the process of selecting strategic partners for its Mississippi biorefinery projects in early 2017 and continues to assess and refine its choice of partners. Site environmental permitting is ongoing. Pre-FEED has been completed and the integrated technology demonstration is ongoing. The Company is in the process of selecting an EPC partner to complete the FEED study.

The Company has commenced a structured, competitive process to secure the necessary development capital investment by one or more strategic partners and has seen interest from multiple parties. The Company has continued to update its project plans including in respect of plant sizing and plant design, which consequently impact the capital requirements and expected returns of the plant. It is likely that the project plans will continue to evolve during discussions with potential strategic partners.

Equity letters of intent in relation to the Mississippi plant are expected to be entered into during the first half of 2019, with FID and signature of feed/offtake agreements expected early 2020. Plant construction is then expected to commence following FID, with plant commissioning expected to begin during 2022.

There is significant value uplift from feedstock at equivalent $1 per gallon to final products at $8.20 per gallon of which federal credits will comprise approximately 50 per cent., state credits approximately 25 per cent. and product revenues approximately 25 per cent.

The Fischer Tropsch technology enables an economic conversion of a wide range of low cost, abundant feedstocks such as woody biomass (and municipal waste on other projects) into high value fuels. These fuels qualify for high value credits in the United States under the Renewable Fuels Standard and the United Kingdom under the Renewable Transport Fuels Obligation. The fuels meet demands for particulate and greenhouse gas reduction with up to 90 per cent. and 70 per cent. reduction respectively. The fuels are entirely "drop in" into conventional fossil fuels, fully leveraging existing engines and logistics. In addition, there are no blend limitations for naphtha and diesel (50 per cent. for jet fuel).

The signature of the site option agreement completes one of the work packages required for the US Department of Agriculture loan guarantee application. The Company was invited to submit a Phase II application for the loan guarantee in June 2017, which could apply to up to $200 million of debt as part of the total installed cost of the project. The Company has engaged Sumitomo Mitsui Banking Corporation (SMBC) as the lender of record and as its financial advisor. A preliminary credit committee hearing is expected to take place with SMBC in due course with the final Credit Committee hearing thereafter as the project nears FID.

 

(c)     UK waste-to-renewable jet fuel plant

 

Overview

In September 2017, the Company entered a partnership with various parties to prepare a business case for a commercial scale waste-to-renewable jet fuel plant in the United Kingdom. The plant will take post-recycled waste, destined for landfill or incineration, and convert it into clean-burning, sustainable jet fuel. The Directors believe that the changes to the Renewable Transport Fuels Obligation which came into force on 15 April 2018 provide the required commercial platform for this opportunity as, for the first time, renewable jet fuel now qualifies for credits under the Renewable Transport Fuels Obligation. Velocys, Shell and British Airways are the partners on the project.

The initial feasibility stage of the project was successfully completed in June 2018. At the same time, £4.9m of funding was secured from the partners, including Velocys which has committed £1.5 million (a significant proportion of which is in the form of an in-kind contribution), to deliver the next development phase of the project. As part of the funding package, a grant of approximately £0.5 million was secured from the UK Department for Transport under the Future Fuels for Flight and Freight Competition. Pre-FEED has commenced and FEED could commence in the first half of 2019. Subject to receiving funding and the completion of all development stages, FID could be achieved in 2020.

The Directors believe that the UK waste-to-renewable jet fuel plant will produce an output of 10 million gallons per year once the plant is fully operational.

Delivering the UK waste-to-renewable jet fuel plant project will be the starting point for entry by the Company into the UK waste market. Not only does the project support the message that Velocys is committed to renewable fuels, it further validates the Company's business strategy of bringing strategic investors on board and entering into a second market. Further, this project demonstrates the flexibility in renewable feedstock.

 

Feedstock and market for fuels produced by the UK waste-to-renewable jet fuel plant

There are estimated to be over 15 million tonnes per year of waste generated in the UK that is suitable for use as feedstock for this project. UK jet fuel demand is currently estimated to be 3.7 billion gallons per year, which is predicted to grow with a 1 per cent. compound annual growth rate to 4.6 billion gallons per year in 2040. The Renewable Transport Fuel Obligation development fuel target for 2022 is 100 million gallons (which is the total volume of qualifying fuels produced in the UK for which double Renewable Transport Fuel Certificates are payable).

 

(d)     License to Red Rock Biofuels

In May 2018, Velocys received a "notice to proceed" action to commence manufacturing of the Fischer-Tropsch reactors and catalyst for the Red Rock Biofuels LLC ("RRB") biorefinery that will be located in Lakeview, Oregon, USA. RRB has commenced construction of the biorefinery, which will incorporate Velocys' technology, and produce low-carbon, renewable diesel and jet fuel from woody biomass. Velocys' role in this project is as a licensor for its Fischer-Tropsch technology to be used for the project.

The biorefinery in Lakeview will convert forestry residue into approximately 15 million gallons per year of renewable transportation fuels including diesel and jet fuel. RRB has in place contracts from several airlines to purchase 100 per cent. of the jet fuel produced each year. RRB's Lakeview project is expected to deliver around $15 million of revenue to Velocys during the construction and early operation stages of the plant, and an additional $30 million or more over the life of the biorefinery. Over $6 million has already been invoiced by the Company and received from RRB.

Velocys core strategy is to develop a multiple number of its own biorefineries with strategic partners, and license its Fischer-Tropsch technology to third parties where it makes strategic and commercial sense. As licensor, Velocys will work closely with RRB and support them throughout construction through to operation. Velocys is currently implementing supply chain activities so that the catalysts and reactors can be delivered.

 

3.            Information on the Company

 

History and development of the Company

The key highlights in the history and development of the Company are as follows:

 

●        2001: Velocys Inc. was incorporated (by Battelle Memorial Institute)

●        2004: Oxford Catalysts was formed (as a spin out from the University of Oxford)

●        2006: Oxford Catalysts Group was admitted to trading on AIM

●        2008: Oxford Catalysts acquired Velocys Inc.

●        2010:  The  Company's  microchannel  Fischer-Tropsch  technology  was  demonstrated  at  a  field demonstration in Austria

●        2012: A Fischer-Tropsch field demonstration was carried out at a Petrobras site in Brazil

●        2013: Oxford Catalysts Group PLC changed its name to Velocys plc (Ticker: VLS.L)

●        2014: The ENVIA Energy joint venture was formed. FID for its Oklahoma City plant followed later that year

●        2017: the Mississippi Biorefinery project announced

●        2017: UK waste-to-renewable jet fuel project announced

●        2017: ENVIA's Oklahoma City plant operational

●        2018: UK biorefinery project enter pre-FEED with Shell and BA

 

The Velocys team

The Executive Committee of the Company is comprised of David Pummell (Chief Executive Officer), Dr Paul Schubert (Chief Operating Officer), John Tunison (Interim Chief Financial Officer) and Henrik Wareborn (Interim Chief Commercial Officer).

The Executive Committee has extensive experience in oil and gas (with members of the Executive Committee having previous experience at BP, Shell and Phillips, as well as in refining and marketing business management, manufacturing, finance, supply and logistics), renewable/gas-to-liquid plants (with members of the Executive Committee having previous experience at Sasol, Syntroleum and SGS, as well as generally in project management, plant commissioning and start up, operations and gas-to-liquid products), as well as having commercial and financing experience (with members of the Executive Committee having previous experience at Goldman Sachs, Natixis and generally in investment banking, commodities trading, private equity/venture capital fundraising and project finance).

Other members of the wider Velocys team have experience in the oil and gas industry and project engineering, and the team includes experts in plant commissioning and operations, as well as commercial, intellectual property and finance professionals.

 

Business drivers

The Company's key business drivers can be summarised as:

 

●        Velocys' first-of-a-kind commercial scale proven technology and business model enables entry to renewable fuels markets to grow a material supply position;

●        there is an abundant low cost feedstock supply of waste and woody biomass globally;

 

●        Velocys fuels can yield greenhouse gas and particulate reductions of up to 70 per cent. and 90 per cent.
 respectively; and

●        leveraging the Company's engineering, operational and technology expertise to optimise future plant costs and timelines.

 

Capital structure

In January 2018, the Company raised approximately £18.4 million (before expenses) which consisted of:

 

●        approximately £14 million (before expenses) by way of an equity placing at a placing price of £0.10 per Ordinary Share; and

●        £4.4 million (before expenses) by way of an open offer made to eligible shareholders at a subscription
price of £0.10 per Ordinary Share.

A total of 330,322,765 Ordinary Shares have been issued and allotted with options, warrants and convertible loan notes in respect of an additional 29,605,213 Ordinary Shares. The total number of shares, fully diluted is therefore 359,927,978. As at the close of trading on 20 July 2018, the share price of the Company was 10.5 pence, giving the Company a market capitalisation of approximately £34.8 million as at 20 July 2018.

 

4.           Current trading

The Company's financial position and funding requirements reflect the taking forward of its strategy and delivery of projects.

The financial statements for the year ended 31 December 2017 can be summarised as follows. The revenues for the period were £0.8 million (2016: £1.4 million). Operating loss for the period was £21.4 million before and £51.2 million after exceptional costs (2016: £16.7 million before and £17.1 million after exceptional costs). Cash (including short term investments) at period end stood at £2.1 million (31 December 2016: £18.7 million), while cash outflow was £16.6 million (2016: £19.4 million). Cash outflow comprised £16.3 million consumed by operations, less an R&D tax credit received of £1.0 million, and a £9.8 million increase in the loan to ENVIA, offset by cash received through the May 2017 fundraise of £9.7 million (after expenses).

 

5.            Use of proceeds

The Company intends to raise gross proceeds of £6 million (before expenses) pursuant to the Placing, equivalent to approximately £5.5 million net of expenses. The Directors intend that the net proceeds of the Placing will be used by the Company to: (i) strengthen the Company's balance sheet; (ii) fund its portion of the pre-FEED development costs for its UK waste-to-renewable jet fuel project; (iii) allow it to continue to support the ENVIA project to the point where the Company understands the financial plan to restore the second reactor to operation; and (iv) support the process for on-boarding one or more strategic investors to provide development funding for the Mississippi biorefinery project.

 

The Company estimates that the total remaining costs for it to develop the Mississippi biorefinery project to FID will be in the order of £45 million and as such further funding will be required, which it intends to secure through investment by one or more strategic partners.

 

The achievement of FID of the Mississippi biorefinery project will be dependent on the Company's ability to secure the requisite debt and equity funding for the project capex from strategic partners or otherwise, as well as the key project procurement, supply and offtake contracts. As such, the timing of reaching FID is not wholly within the Company's control and the costs of reaching FID, or the costs of progressing the development of the Mississippi biorefinery project will be higher if the Mississippi biorefinery project does not progress to FID in the timeframes currently anticipated. Should the Company not secure strategic investment, it will need to seek further funding in due course in order to be able to cover development costs and its working capital requirements, which may be from one or a combination of a capital raising or the realisation of its assets, such as selling its stake or security in the ENVIA project, granting additional intellectual property licences or selling non-core intellectual property.

 

On achievement of FID, the Company expects to receive: (i) a licence fee in cash for the supply of its technology, reactors and catalyst; and (ii) ongoing fees for management and engineering services to be provided to the project as well as operational management of plant commissioning and start-up. The Company also intends to secure either or both of a capital development fee and a stake in the project with a significant value uplift compared to its capitalised development costs. The Company's funding requirements following FID will therefore depend on the final structure of the FID consortium and on the Company's strategy to develop and fund its subsequent biorefineries. The financing options that the Company has will be strategically evaluated by the Directors throughout the period up to FID.

 

6.            Principal terms of the Placing

The Company proposes raising £6 million, before expenses, by way of a conditional, non-pre-emptive placing of 60,000,000 new Ordinary Shares at the Placing Price. The Placing Shares will be placed by the Joint Brokers as agents for the Company and pursuant to the Placing Agreements, with institutional and other investors. The Placing is subject to the terms and conditions set out in Appendix 1 below.

The Placing Price represents a discount to the closing mid-market price of the Ordinary Shares as at 20 July 2018 of 0.52 pence per Ordinary Share (a discount of approximately 5.0 per cent). The Placing Shares will represent approximately 15.4 per cent. of the Enlarged Share Capital (provided the Placing is fully subscribed and provided that no options, warrants or convertible loan notes are exercised) and will, when issued, rank pari passu in all respects with the Existing Ordinary Shares, including all rights to all dividends and other distributions declared, made or paid following Admission.

 

The Placing of the First Tranche Placing Shares is conditional upon (amongst other things):

(a)  the TPI Placing Agreement becoming unconditional and not having been terminated in accordance with its terms; and

(b)  First Admission occurring on or before 30 July 2018 (or such later date as TPI and the Company may agree, not being later than 13 August 2018); and

The Placing of the Second Tranche of Placing Shares is conditional on (amongst other things):

(a)  the Numis/Canaccord Placing Agreement becoming unconditional and not having been terminated in accordance with its terms;

(b)  First Admission occurring on or before 30 July 2018 (or such later date as TPI and the Company may agree, not being later than 13 August 2018;

(c)   Second Admission occurring on or before 9 August 2018 (or such later date as Numis, Canaccord and the Company may agree, not being later than 23 August 2018); and

(d)  the passing of the Placing Resolutions at the General Meeting.

The Placing Agreements contain warranties from the Company in favour of the Joint Brokers in relation to, (amongst other things), the Company and its business. In addition, the Company has agreed to indemnify the Joint Brokers in relation to certain liabilities it may incur in undertaking the Placing. The Joint Brokers have the right to terminate the Placing Agreements in certain circumstances prior to Admission, in particular, it may terminate in the event that there has been a material breach of any of the warranties or for force majeure.

Application will be made for the First Tranche Placing Shares to be admitted to trading on AIM, subject to the Placing Agreements not having been terminated, and it is expected that trading in the First Tranche Placing Shares will commence at 8.00 a.m. on 30 July 2018. Application will be made for the Second Tranche Placing Shares to be admitted to trading on AIM, subject to the Placing Agreements not having been terminated, and it is expected that trading in the Second Tranche Placing Shares will commence at 8.00 a.m. on 9 August 2018.

The Directors consider it important that, where reasonably practicable, Shareholders have an opportunity to participate in its equity fundraisings. However, given that the Company raised £4.4 million (before expenses) by way of an open offer in January 2018, the Company is not intending to raise any further funds by way of an open offer in this fundraising.

7.            Resolutions

The Placing of the First Tranche Placing Shares is not conditional upon the passing of any resolutions by shareholders and the First Tranche Placing Shares will be issued for cash on a non-pre-emptive basis pursuant to the authorities granted to the Company by its Shareholders at the 2018 annual general meeting held on 29 June 2018.

However, the Company currently does not have sufficient authority to allot shares under the Act to effect the Placing of the Second Tranche Placing Shares. Accordingly the Placing Resolutions, summarised below, are being proposed at the General Meeting to ensure that the Directors have sufficient authority to allot and issue the Second Tranche Placing Shares on a non-pre-emptive basis.

(a)  Resolution 1 is an ordinary resolution to grant authority to the Directors under section 551 of the Act to allot relevant securities, up to a maximum aggregate nominal amount of £300,000 pursuant to the Placing, such authority expiring at the earlier of the Company's next annual general meeting and 8 November 2019.

If Resolution 1 is passed, the Directors will have the authority, under the Act, to allot Ordinary Shares up to the maximum aggregate nominal amount of £300,000 (being the maximum required for the purposes of issuing the Second Tranche Placing Shares); and

(b)  Resolution 2 is a special resolution, conditional upon the passing of Resolution 1, to empower the Directors, pursuant to section 570 of the Act, to allot Ordinary Shares up to a maximum aggregate nominal amount of £300,000 on a non-pre-emptive basis pursuant to the Placing, such authority expiring at the earlier of the Company's next annual general meeting and 8 November 2019.

If Resolution 2 is passed, the Directors will have the power, under the Act, to allot the Second Tranche Placing Shares without offering those shares to existing Shareholders.

These authorities are required to enable the Directors to effect the Placing of the Second Tranche Placing Shares and are in addition to the general authorities that were granted by Shareholders at the Company's annual general meeting on 29 June 2018, which gave the Directors authority to allot relevant securities up to a maximum aggregate nominal amount of £1,101,075.88 under section 551 of the Act and to allot Ordinary Shares up to a maximum aggregate nominal amount of £330,322.77 on a non-pre-emptive basis  under section 570 of the Act (such authorities expire at the next annual general meeting of the Company or 31 July 2019, whichever is earlier).

Resolution 1 is an ordinary resolution and requires a majority of more than 50 per cent. of the Shareholders voting to be passed. Resolution 2 is a special resolution and requires the approval of not less than 75 per cent. of the Shareholders voting to be passed.

Given that the Placing of the First Tranche Placing Shares will exhaust the majority of the authority to allot shares on a non-pre-emptive basis granted to the Company by its Shareholders at the 2018 annual general meeting held on 29 June 2018, Resolution 3, summarised below, is also being proposed at the General Meeting, to authorise the Directors to allot and issue equity securities representing 10 per cent. of the Existing Share Capital on a non-pre-emptive basis. The Directors have no present intention of exercising this authority but it will enable the Directors, at their discretion, to allot a limited number of equity securities (or treasury shares) for cash and thereby provides the Directors with greater flexibility to take advantage of funding opportunities as they arise.

(c)   Resolution 3 is a special resolution to empower the Directors, pursuant to section 570 of the Act, to allot Ordinary Shares up to a maximum aggregate nominal amount of £330,322.77 on a non-pre-emptive basis, such authority expiring on 31 July 2019 or at the conclusion of the next annual general meeting of the Company in 2019 (whichever is the earlier).

This authority is in addition to the authorities proposed in the Placing Resolutions and in addition to the general authorities that were granted by Shareholders at the Company's annual general meeting on 29 June 2018.

Resolution 3 is a special resolution and requires the approval of not less than 75 per cent. of the Shareholders voting to be passed.

 

8.            Recommendation

The Directors consider that the Placing and the Resolutions are in the best interests of the Company and its Shareholders as a whole. The Company is reliant on the net proceeds of the Placing to meet its ongoing liquidity requirements and to continue to implement its strategy. If the Placing Resolutions are not passed by Shareholders, the Placing of the Second Tranche Placing Shares will not proceed. In these circumstances, the Directors will need to reconsider the Company's strategy and the Company may need to seek alternative funding, which may not be available on terms which are acceptable to the Company or at all. Accordingly, the Directors unanimously recommend that Shareholders vote in favour of the Resolutions, as they intend to do in respect of their own legal and/or beneficial shareholdings, amounting, in aggregate, to 690,789 Ordinary Shares (representing approximately 0.2 per cent. of the Ordinary Shares in the issue as at the date of this announcement).

 

 

 

 

 

 

DEFINITIONS

 

The following definitions apply throughout this announcement, unless the context requires otherwise.

 

"Act"                                    the UK Companies Act 2006, as amended

"AIM"                                   the market of that name operated by London Stock Exchange

 

"AIM Rules"                        the AIM Rules for Companies, which sets out the rules and responsibilities for companies listed on AIM, as amended from time to time

"Articles"                             the articles of association of the Company (as amended from time to time)

"Board" or "Directors"      the board of directors of the Company

"Canaccord"                        Canaccord Genuity Limited, a private limited company incorporated in England and Wales, under registered number 01774003, and 
 having  its registered  office  at  88  Wood  Street,
London EC2V 7QR

 

"Company" or "Velocys    Velocys plc, a public limited company incorporated in England  and Wales under registered number 05712187 and having its registered office at
                                 Harwell Innovation Centre, 173 Curie  Avenue, Harwell,
Oxfordshire, England, OX11 0QG

 

"CREST"                                   the relevant system (as defined in the Regulations) which enables title to units of relevant securities (as defined in the Regulations) to be evidenced and transferred without a written instrument and in respect of which Euroclear UK & Ireland Limited is the Operator (as defined in the Regulations)

 

 

"Disclosure Guidance and
 Transparency Rules
"                 the Disclosure Guidance and Transparency Rules issued by the Financial Conduct Authority

 

"Enlarged Share Capital"                          the issued Ordinary Share capital of the Company immediately  following Second Admission comprising the     Existing Ordinary Shares and the Placing Shares assuming full     subscription under the Placing and assuming no exercise of any   warrants, options or convertible loan notes

"ENVIA"                                                            ENVIA Energy, LLC, a joint venture between Waste Management,

Inc., Ventech Projects Investments, LLC and the Company

 

"Executive Committee"                           the  executive  committee  of  the  Company,  comprising      David Pummell (Chief Executive Officer), Dr Paul Schubert (Chief Operating Officer), John Tunison (Interim Chief Financial                                                                             Officer) and Henrik Wareborn (Interim Chief Commercial Officer)

"Existing Ordinary Shares"                      the 330,322,765 Ordinary Shares in issue as at the date of    this announcement being the entire issued share capital of the            Company prior to the Placing

"First Admission"                                        admission of the First Tranche Placing Shares to trading on      AIM becoming effective in accordance with Rule 6 of the AIM               Rules 

"First Tranche Placing Shares"               30,000,000 new Ordinary Shares to be issued pursuant to              the Placing

"Form of Proxy"                                           the accompanying form of proxy for use by Shareholders in         relation to the General Meeting

 

"FSMA"                                                             the Financial Services and Markets Act 2000 (as amended)

 

"General Meeting"                                    the general meeting of the Company to be held at 10         a.m. on 8 August 2018 at the offices of Mayer Brown International LLP, 201 Bishopsgate, London, EC2M 3AF, notice    of which is set out at the end of this announcement

"Joint Brokers"                                             Numis, Canaccord and TPI "London Stock Exchange"  London Stock Exchange plc

 "Numis"                                                     Numis Securities Limited, a private limited company incorporated in England and Wales under registered number 2285918 and having its registered office at 10 Paternoster Square, 
London EC4M 7LT

"Numis/Canaccord Placing

Agreement"                                                    the conditional agreement dated 23 July 2018 relating to the Placing, between the Company, Numis and Canaccord

"Official List"                                                 the Official List of the UKLA

"Ordinary Shares"                                       ordinary shares of 1 penny each in the capital of the Company 

 

"Placing"                                                       the proposed conditional, non-pre-emptive placing of the Placing Shares

 

"Placing Agreements"                                the  Numis/Canaccord  Placing  Agreement  and  the  TPI Placing Agreement

"Placing Price"                                            10 pence per Placing Share

"Placing Resolutions"                                Resolution 1 and Resolution 2 as set out in the Notice of General

                                                                       Meeting

 

"Placing Shares"                                          the First Tranche Placing Shares and the Second Tranche Placing Shares

"Registrar"                                                 Link Market Services Limited, a private limited company incorporated in England and Wales under registered number 02605568 and having
 its registered office at The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU

"Regulations"                                            the UK Uncertificated Securities Regulations 2001 (SI 2001 No. 3755), as amended

 

"Resolutions"                                             the resolutions to be proposed at the General Meeting as set out in the Notice of General Meeting

"Second Admission"                                admission of the Second Tranche Placing Shares to trading on AIM becoming effective in accordance with Rule 6 of the AIM Rules 

"Second Tranche Placing Shares"         30,000,000 new Ordinary Shares to be issued pursuant to the Placing

 

"Shareholders"                                           the holders of Ordinary Shares from time to time, each individually being a "Shareholder"

"TPI"                                                            Turner Pope Investments (TPI) Limited a private limited company incorporated in England and Wales under registered number 9506196 and
 having its registered office at 550 Ley Street, Ilford, Essex IG2 7DB

"TPI Placing Agreement"                            the conditional agreement dated 23 July 2018 relating to the Placing, between the Company and TPI

"UK" or "United Kingdom"                       the United Kingdom of Great Britain and Northern Ireland

 

"US" or "United States"                             the United States of America, its territories and possessions, any state of the United States and the District of Colombia

 

"$"                                                                  the lawful currency of the United States

 

"£"                                                                   the lawful currency of the United Kingdom

 

 

 

GLOSSARY

 

The terms set out below have the following meanings throughout this announcement, unless the context requires otherwise.

"EPC"                                                                 engineer, procurement and construction

 

"FEED"                                                              front end engineering design

 

"FID"                                                                 final investment decision

 

 

"Renewable Identification                          a renewable identification number assigned to a batch of

Number"                                                         biofuel to track its production use and trading as required by the Renewable Fuel Standard ("RFS")

 

"Renewable Transport                              the  Renewable  Transport  Fuel  Obligation  Order  

Fuel Obligation"                                          published 5 November 2012

 

 

 

 

 

 

 

 

 

 

APPENDIX I

TERMS AND CONDITIONS OF THE PLACING

IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES ONLY

THIS ANNOUNCEMENT INCLUDES STATEMENTS, ESTIMATES, OPINIONS AND PROJECTIONS WITH RESPECT TO ANTICIPATED FUTURE PERFORMANCE OF THE GROUP ("FORWARD-LOOKING STATEMENTS") WHICH REFLECT VARIOUS ASSUMPTIONS CONCERNING ANTICIPATED RESULTS TAKEN FROM THE GROUP'S CURRENT BUSINESS PLAN OR FROM PUBLIC SOURCES WHICH MAY OR MAY NOT PROVE TO BE CORRECT. THESE FORWARD LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD LOOKING TERMINOLOGY, INCLUDING THE TERMS "ANTICIPATES", "TARGET", "BELIEVES", "ESTIMATES", "EXPECTS", "INTENDS", "MAY", "PLANS", "PROJECTS", "SHOULD" OR "WILL", OR, IN EACH CASE, THEIR NEGATIVE OR OTHER VARIATIONS OR COMPARABLE TERMINOLOGY OR BY DISCUSSIONS OF STRATEGY, PLANS, OBJECTIVES, GOALS, FUTURE EVENTS OR INTENTIONS. SUCH FORWARD-LOOKING STATEMENTS REFLECT CURRENT EXPECTATIONS BASED ON THE CURRENT BUSINESS PLAN AND VARIOUS OTHER ASSUMPTIONS AND INVOLVE SIGNIFICANT RISKS AND UNCERTAINTIES AND SHOULD NOT BE READ AS GUARANTEES OF FUTURE PERFORMANCE OR RESULTS AND WILL NOT NECESSARILY BE ACCURATE INDICATIONS OF WHETHER OR NOT SUCH RESULTS WILL BE ACHIEVED. AS A RESULT, PROSPECTIVE INVESTORS SHOULD NOT RELY ON SUCH FORWARD-LOOKING STATEMENTS DUE TO THE INHERENT UNCERTAINTY THEREIN. NO REPRESENTATION OR WARRANTY IS GIVEN AS TO THE COMPLETENESS OR ACCURACY OF THE FORWARD-LOOKING STATEMENTS CONTAINED IN THIS ANNOUNCEMENT. FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE OF SUCH STATEMENTS AND, EXCEPT AS REQUIRED BY THE FCA, THE LONDON STOCK EXCHANGE, THE AIM RULES OR APPLICABLE LAW, THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE PUBLICLY ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE. NO STATEMENT IN THIS ANNOUNCEMENT IS INTENDED TO BE A PROFIT FORECAST AND NO STATEMENT IN THIS ANNOUNCEMENT SHOULD BE INTERPRETED TO MEAN THAT 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.

 

THIS ANNOUNCEMENT, INCLUDING THE APPENDIX (TOGETHER THE "ANNOUNCEMENT") AND THE INFORMATION IN IT IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, NEW ZEALAND, CANADA, JAPAN OR SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL.

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT: (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA WHO ARE QUALIFIED INVESTORS AS DEFINED IN SECTION 2(7) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000, AS AMENDED, ("QUALIFIED INVESTORS") BEING PERSONS FALLING WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE EU PROSPECTUS DIRECTIVE (WHICH MEANS DIRECTIVE 2003/71/EC AND INCLUDES ANY RELEVANT IMPLEMENTING DIRECTIVE MEASURE IN ANY MEMBER STATE) (THE "PROSPECTUS DIRECTIVE"); AND (B) IN THE UNITED KINGDOM, TO QUALIFIED INVESTORS WHO ARE PERSONS WHO (I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(1) 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 IN (A) OR (B) TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS").

THIS ANNOUNCEMENT DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVENT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF AN INVESTMENT IN PLACING SHARES.

In this Appendix, unless the context requires, "Placee" means a Relevant Person (including individuals, funds or others) who has been invited to, and who chooses to, participate in the Placing and by whom or on whose behalf a commitment to subscribe for Placing Shares has been given.

No representation or warranty, express or implied, is made or given by or on behalf of the Company or Canaccord Genuity Limited ("Canaccord") or Numis Securities Ltd ("Numis"), the Company's nominated adviser, or Turner Pope Investments (TPI) Ltd ("TPI") or any of their respective affiliates (within the meaning of Rule 405 under the US Securities Act of 1933, as amended (the "Securities Act") or any of such persons' directors, officers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this Announcement and no liability whatsoever is accepted by the Company, Numis, Canaccord, TPI or any of such persons' Affiliates, directors, officers or employees or any other person for any loss howsoever arising, directly or indirectly, from any use of such information or opinions or otherwise arising in connection therewith.

This Announcement does not constitute an offer to sell or issue or the solicitation of an offer to buy or subscribe for Placing Shares in any jurisdiction in which such offer or solicitation is or may be unlawful. In particular the Placing Shares referred to in this Announcement 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 will be offered or sold only outside of the United States in accordance with Regulation S under the Securities Act.

The relevant clearances have not been, nor will they be, obtained from the securities commission of any province or territory of Canada; no prospectus has been lodged with or registered by, the Australian Securities and Investments Commission or the Japanese Ministry of Finance; and the Placing Shares have not been, nor will they be, registered under or offered in compliance with the securities laws of any state, province or territory of United States, Australia, New Zealand, Canada, Japan or South Africa. Accordingly, the Placing Shares may not (unless an exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into the United States, Australia, New Zealand, Canada, Japan or South Africa or any other jurisdiction outside the United Kingdom.

Persons distributing any part of this Announcement must satisfy themselves that it is lawful to do so. Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this Announcement should seek appropriate advice before taking any action. Persons into whose possession this Announcement comes are required by the Company, Canaccord, Numis and TPI to inform themselves about, and observe, any such restrictions. 

This Announcement does not constitute a recommendation concerning any investors' options with respect to the Placing. Investors and prospective investors should conduct their own investigation, analysis and evaluation of the business and data described in this Announcement. The price and value of securities can go down as well as up. Past performance is not a guide to future performance. The contents of this Announcement are not to be construed as legal, business, financial or tax advice. Each investor or prospective investor should consult his, her or its own legal adviser, business adviser, financial adviser or tax adviser for legal, financial, business or tax advice.

Placees will be deemed: (i) to have read and understood this Announcement, including this Appendix, in its entirety; and (ii) to be participating and making an offer for Placing Shares on the terms and conditions and to be providing the representations, warranties, acknowledgements and undertakings, contained in this Appendix.

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 Numis, Canacord and TPI.

The Placing Shares to be issued pursuant to the Placing will not be admitted to trading on any stock exchange other than the AIM market of the London Stock Exchange plc.

1.             DETAILS OF THE PLACING

1.1          Numis and Canaccord today entered into an agreement with the Company (the "Numis/Canaccord Placing Agreement").  The Company has also entered into an agreement with Turner Pope (the "Turner Pope Placing Agreement") (together with the Numis/Canaccord Placing Agreement, the "Placing Agreements").  Under the Placing Agreements, subject to certain conditions, Numis, Canaccord and Turner Pope, as agents for and on behalf of the Company, have agreed to use their respective reasonable endeavours to procure Placees for the Placing Shares at the Placing Price.  The Placing is not being underwritten by Numis, Canaccord nor Turner Pope.

1.2          The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing Ordinary Shares, including the right to receive dividends and other distributions declared or made after the date of issue of the Placing Shares.

2.             APPLICATIONS FOR ADMISSION TO TRADING

2.1          Application will be made to the London Stock Exchange for admission to trading of the Placing Shares on its AIM market ("Application").

2.2          It is expected that admission of the First Tranche Placing Shares will become effective at 8.00 a.m. on 30 July 2018 ("First Admission") and that dealings in the First Tranche Placing Shares will commence at that time.

2.3          It is expected that admission of the Second Tranche Placing Shares will become effective at 8.00 a.m. on 9 August 2018 ("Second Admission") and that dealings in the Second Tranche Placing Shares will commence at that time.

3.             PARTICIPATION IN, AND PRINCIPAL TERMS OF THE PLACING

3.1          Numis, Canaccord and TPI are acting as joint brokers and as agents for the Company in connection with the Placing, Application and admission.  Numis, Canaccord and TPI are each authorised and regulated in the United Kingdom by the FCA, and are each acting exclusively for the Company and no one else in connection with the matters referred to in this Announcement and will not be responsible to anyone other than the Company for providing the protections afforded to the customers of Numis, Canaccord and TPI or for providing advice in relation to the matters described in this Announcement. 

3.2          Participation in the Placing is only available to persons who may lawfully be, and are invited to participate in it by Numis, Canaccord, TPI, Capital Access and Peat & Co.  Numis, Canaccord, TPI, Capital Access and Peat & Co and their respective Affiliates are each entitled to participate in the Placing as principals.

3.3          The placing price will be a fixed price of 10 pence per Placing Share (the "Placing Price").  No commissions will be paid to Placees or by the Placees in respect of any Placing Shares.

3.4          Each prospective Placee's allocation of Placing Shares will be confirmed to prospective Placees orally by Numis, Canaccord, TPI, Capital Access, Peat & Co or one of their respective Affiliates, and a contract note will be dispatched as soon as practicable thereafter as evidence of such Placee's allocation and commitment.  The terms and conditions of this Appendix will be deemed incorporated into the contract note. That oral confirmation will constitute an irrevocable legally binding commitment upon that person (who at that point will become a Placee) in favour of the Company and Numis, Canaccord, TPI, Capital Access or Peat & Co (as applicable) 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 and each Placee will be deemed to have read and understood the announcement in its entirety.  An offer to acquire Placing Shares, which has been communicated by a prospective Placee to Numis, Canaccord, TPI, Capital Access or Peat & Co (as applicable) which has not been withdrawn or revoked prior to publication of this Announcement shall not be capable of withdrawal or revocation immediately following the publication of this Announcement without the consent of Numis, Canaccord, TPI, Capital Access or Peat & Co (as applicable).

3.5          Each Placee will also have an immediate, separate, irrevocable and binding obligation, owed to Numis, Canaccord, TPI, Capital Access or Peat & Co, as applicable (as agents of the Company), to pay the relevant entity (or as it may direct) in cleared funds immediately on settlement an amount equal to the product of the Placing Price and the number of Placing Shares such Placee has agreed to subscribe for and the Company has agreed to allot and issue to that Placee. Each Placee's obligation will be owed to the Company and to Numis, Canaccord, TPI, Capital Access or Peat & Co, as applicable.

3.6          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".

3.7          All obligations under the Placing will be subject to fulfilment 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 Agreements".

3.8          By participating in the Placing, 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.

3.9          To the fullest extent permitted by law and applicable FCA rules, neither (i) Numis, (ii) any of its directors, officers, employees or consultants, or (iii) to the extent not contained with (i) or (ii), any person connected with Numis as defined in FSMA ((i), (ii) and (iii) being together "Affiliates" and individually an "Affiliate"), shall have any liability (including to the extent permissible by law, any fiduciary duties) to Placees or to any person other than the Company in respect of the Placing.

3.10        To the fullest extent permitted by law and applicable FCA rules, neither (i) Canaccord, (ii) any of its directors, officers, employees or consultants, or (iii) to the extent not contained with (i) or (ii), any Affiliate of Canaccord), shall have any liability (including to the extent permissible by law, any fiduciary duties) to Placees or to any person other than the Company in respect of the Placing.

3.11        To the fullest extent permitted by law and applicable FCA rules, neither (i) TPI, (ii) any of its directors, officers, employees or consultants, or (iii) to the extent not contained with (i) or (ii), any Affiliate of TPI), shall have any liability (including to the extent permissible by law, any fiduciary duties) to Placees or to any person other than the Company in respect of the Placing

3.12        No commissions will be paid to Placees or by the Placees in respect of any Placing Shares.

4.            CONDITIONS OF THE PLACING

4.1          Numis', Canaccord's and TPI's obligations under the Placing Agreements in respect of the Placing Shares are conditional on, amongst other things:

(a)           none of the warranties in the Placing Agreements (i) being untrue and inaccurate or misleading to an extent which, in any such case, would be material, or (ii) on and as of the date of the Placing Agreements and again at Second Admission becoming untrue, inaccurate or misleading to an extent which, in any such case, would be material by reference to the facts and circumstances then subsisting;

(b)           the Company allotting, subject only to First Admission, the First Tranche Placing Shares in accordance with the TPI Placing Agreement;

(c)           the Company allotting, subject only to Second Admission, the Second Tranche Placing Shares in accordance with the Placing Agreements;

(c)           certain publication of announcement obligations (including with respect to this Announcement);

(d)           the compliance by the Company with all its obligations which are required to be performed or satisfied on or prior to Second Admission;

(e)           the respective obligations of Numis, Canaccord and TPI under the Placing Agreements not having been terminated prior to Second Admission;

(f)            First Admission occurring by 8:00am on 30 July 2018 (or such later date as TPI and the Company may agree, not being later than 13 August 2018); and

(g)           Second Admission occurring by 8:00am on 9 August 2018 (or such later time and date as Numis and Canaccord (acting together) may agree in unity with the Company not being later than 8:00 a.m. on 23 August 2018).

4.2          If (i) any condition contained in the Placing Agreements in relation to the Placing Shares is not fulfilled or waived by Numis and Canaccord (acting together), or TPI, by the respective time or date where specified (or such later time or date as Numis and Canaccord, or TPI, may agree in writing with the Company), (ii) any such condition becomes incapable of being fulfilled or (iii) both of the Placing Agreements are terminated in accordance with their terms, 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.

4.3          Numis and Canaccord may, acting together and in their sole discretion and upon such terms as they think fit, waive compliance by the Company with the whole or any part of any of the Company's obligations in relation to the conditions in the Numis/Canaccord Placing Agreement, save that conditions (b), (c) and (f) above relating to First Admission and Second Admission may not be waived. Any such extension or waiver will not affect the Placees' commitments as set out in this Announcement.

4.4          Neither Numis nor Canaccord not TPI nor the Company shall have any liability 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 in the Placing each Placee agrees that any such decision is within the absolute discretion of Numis and Canaccord (acting together) or TPI. 

5.            TERMINATION OF THE NUMIS/CANACCORD PLACING AGREEMENT

5.1          Numis and Canaccord (acting together) are entitled, at any time prior to Second Admission, to terminate the Numis/Canaccord Placing Agreement in respect of the Placing Shares in accordance with the terms of the Numis/Canaccord Placing Agreement by giving written notice to the Company in certain circumstances, including but not limited to if any of the warranties given to Numis  and Canaccord in the Numis/Canaccord Placing Agreement, which Numis and Canaccord (acting together) being untrue, inaccurate or misleading in any material respect, the failure of the Company to comply with its material obligations under the Numis/Canaccord Placing Agreement or the occurrence of a force majeure event which prevents any party not seeking to terminate from performing its obligations under the Numis/Canaccord Placing Agreement.

5.2          By participating in the Placing, Placees agree that the exercise by Numis and Canaccord of any right of termination or other discretion under the Numis/Canaccord Placing Agreement shall be within the absolute discretion of Numis and Canaccord (acting together) that it need not make any reference to Placees and that none of Numis, Canaccord or the Company (or any of their respective directors, officers or employees) shall have any liability to Placees whatsoever in connection with any such exercise.

6.            NO ADMISSION DOCUMENT OR PROSPECTUS

6.1          No offering document, admission document or prospectus has been or will be submitted to be approved by the FCA or submitted to the London Stock Exchange in relation to the Placing or the Placing Shares and Placees' commitments will be made solely on the basis of the information contained in this Announcement (including this Appendix) and the Exchange Information (as defined below).

6.2          Each Placee, by accepting a participation in the Placing, agrees that the content of this Announcement is exclusively the responsibility of the Company and confirms that it has neither received nor relied on any other information (other than the Exchange Information), representation, warranty, or statement made by or on behalf of the Company or Numis or Canaccord or any other person and neither Numis nor Canaccord not TPI nor 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 the liability of any person for fraudulent misrepresentation.

7.            REGISTRATION AND SETTLEMENT

7.1          Settlement of transactions in the Placing Shares (ISIN: GB00B11SZ269) following Second Admission will take place within the system administered by Euroclear UK & Ireland Limited ("CREST"), subject to certain exceptions.  Numis, Canaccord and TPI reserve 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 within the timetable set out in this Announcement or would not be consistent with the regulatory requirements in any Placee's jurisdiction.

7.2          Each Placee allocated Placing Shares in the Placing will be sent a contract note in accordance with the standing arrangements in place with Numis, Canaccord or TPI (as applicable), stating the number of Placing Shares allocated to it at the Placing Price, the aggregate amount owed by such Placee to Numis, Canaccord or TPI (as applicable) and settlement instructions.  Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with either the standing CREST or certificated settlement instructions that it has in place with Numis, Canaccord or TPI (as applicable).

7.3          The Company will (via its registrar) deliver the Placing Shares to a CREST account operated by Numis, Canaccord or TPI (as applicable) as agent for the Company and Numis, Canaccord or TPI (as applicable) will enter its delivery (DEL) instruction into the CREST system.  Numis, Canaccord or TPI (as applicable) will hold any Placing Shares delivered to this account as nominee for the Placees. 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.

7.4          It is expected that settlement of the First Tranche Placing Shares will take place on 30 July 2018 and settlement of the Second Tranche Placing Shares will take place on 9 August 2018 in accordance with the instructions set out in the contract note.

7.5          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 the base rate of Barclays Bank plc from time to time.

7.6          Each Placee agrees that, if it does not comply with these obligations, Numis, Canaccord or TPI (as applicable) may sell any or all of the Placing Shares allocated to that Placee on such Placee's behalf and retain from the proceeds, for Numis', Canaccord's or TPI's account and benefit (as applicable), 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) which may arise upon the sale of such Placing Shares on such Placee's behalf.

7.7          If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the contract note is copied and delivered immediately to the relevant person within that organisation.

7.8          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 for 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.

7.9          Placees will not be entitled to receive any fee or commission in connection with the Placing.

8.            REPRESENTATIONS AND WARRANTIES

8.1          By participating in the Placing, each Placee (and any person acting on such Placee's behalf) irrevocably acknowledges, undertakes, represents, warrants and agrees (as the case may be) that:

(a)           it has read and understood this Announcement (including the Appendix) in its entirety and its subscription for the Placing Shares is subject to and based on the terms and conditions of the Placing as referred to and included in this Announcement and undertakes not to redistribute or duplicate this Announcement;

 

(b)           no offering document, admission document or prospectus has been prepared in connection with the Placing and that it has not received and will not receive a prospectus, admission document or other offering document in connection with the Placing;

 

(c)           the Ordinary Shares are admitted to trading on AIM, and the Company is therefore required to publish certain business and financial information in accordance with the AIM Rules and the other applicable rules and practices of the London Stock Exchange and/or the FCA (collectively "Exchange Information"), which includes the Company's most recent balance sheet and profit and loss account and that it is able to obtain or access such information or comparable information concerning any other publicly traded company without undue difficulty;

 

(d)           (i) it has made its own assessment of the Company, the Placing Shares and the terms and conditions of the Placing and has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Placing and has satisfied itself that the information is still current; (ii) none of Numis, Canaccord, TPI, the Company, any of their respective Affiliates or any person acting on behalf of any of them has provided, or will provide it, with any material regarding the Placing Shares in addition to this Announcement; and (iii) it has not requested Numis, Canaccord, TPI, the Company or any of their respective Affiliates or any person acting on behalf of any of them to provide it with any such information;

 

(e)           the content of this Announcement is exclusively the responsibility of the Company and that none of Numis, Canaccord, TPI their Affiliates or any person acting on their behalf has or shall have any liability for any information, representation or statement contained in this Announcement or any information previously or concurrently published by or on behalf of the Company and will not be liable for any Placee's decision to participate in the Placing based on any information, representation or statement contained in this Announcement or elsewhere;

 

(f)            the only information on which it has relied in committing itself to subscribe for the Placing Shares is contained in this Announcement and any Exchange Information and that it has not received or relied on any information given or any representations, warranties or statements, express or implied, made by Numis, Canaccord, TPI or the Company or any of their Affiliates or any person acting on behalf of any of them and none of Numis, Canaccord, TPI, the Company, any of their Affiliates or any person acting on behalf of any of them will be liable for its decision to accept an invitation to participate in the Placing based on any information, representation, warranty or statement other than that contained in this Announcement and any Exchange Information;

 

(g)           it has neither received nor relied on any "inside information" as defined in the EU Market Abuse Regulation 596/2014 concerning the Company in accepting this invitation to participate in the Placing and is not purchasing Placing Shares on the basis of "inside information";

 

(h)           it has the funds available to pay for the Placing Shares it has agreed to subscribe for and acknowledges, agrees and undertakes that it will pay the total subscription amount in accordance with the terms of this Announcement on the due time and date set out herein, failing which the relevant Placing Shares may be placed with other Placees or sold at such price as Numis, Canaccord or TPI (as applicable) determines;

 

(i)            it: (i) is entitled to subscribe for the Placing Shares under the laws of all relevant jurisdictions; (ii) has fully observed such laws; (iii) has the requisite capacity and authority and is entitled to enter into and to perform its obligations as a subscriber for Placing Shares and will honour such obligations; and (iv) has obtained all necessary consents and authorities (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) to enable it to enter into the transactions contemplated hereby and to perform its obligations in relation thereto and, in particular, if it is a pension fund or investment company it is aware of and acknowledges it is required to comply with all applicable laws and regulations with respect to its subscription for Placing Shares;

 

(j)            it is not, and any person who it is acting on behalf of is not, and at the time the Placing Shares are subscribed will not be, a resident of, or with an address in, the United States, Australia, New Zealand, Canada, Japan or South Africa, and it acknowledges and agrees that the Placing Shares have not been and will not be registered or otherwise qualified under the securities legislation of the United States, Australia, New Zealand, Canada, Japan or South Africa and may not be offered, sold, or acquired, directly or indirectly, within those jurisdictions

 

(k)           (i) the Placing Shares have not been and will not be registered under the Securities Act or with any state or other jurisdiction of the United States, nor approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the United States or any other United States regulatory authority, (ii) it will not offer, sell or deliver, directly or indirectly, any Placing Shares in or into the United States other than pursuant to an effective registration under the Securities Act or in a transaction exempt from, or not subject to, the registration requirements thereunder and in compliance with any applicable securities laws of any state or other jurisdiction of the United States, and (iii) it is outside of the United States, not acting on a non-discretionary basis for the account or benefit of a person located within the United States at the time the undertaking to acquire the Placing Shares is given and is otherwise acquiring the Placing Shares in an "offshore transaction" meeting the requirements of Regulation S under the Securities Act;

 

(l)            it is a person of a kind described in (i) Article 19(5) (Investment Professionals) and/or 49(2) (high net worth companies etc.) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended, and/or an authorised person as defined in section 31 of FSMA; and (ii) section 86(7) of FSMA ("Qualified Investor"), being a person falling within Article 2.1(e) of Directive 2003/71/EC as amended (the "Prospectus Directive").  For such purposes, it undertakes that it will acquire, hold, manage and (if applicable) dispose of any Placing Shares that are allocated to it for the purposes of its business only;

 

(m)          if a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, that the Placing Shares purchased 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 European Economic Area which has implemented the Prospectus Directive other than Qualified Investors, or in circumstances in which the prior consent of Numis and Canaccord or TPI has been given to the offer or resale;

 

(n)           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 and it acknowledges and agrees that this Announcement has not been approved by Numis, Canaccord or TPI in their capacity as an authorised person under section 21 of FSMA and it may not therefore be subject to the controls which would apply if it was made or approved as financial promotion by an authorised person;

 

(o)           it is aware of and acknowledges 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;

 

(p)           it will not make any offer to the public of the Placing Shares and has not offered or sold and will not offer or sell any Placing Shares to persons in the United Kingdom or elsewhere in the European Economic Area prior to Second Admission except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted in and which will not result in an offer to the public in the United Kingdom within the meaning of section 85(1) of FSMA or an offer to the public in any other member state of the European Economic Area within the meaning of the Prospectus Directive (which includes any relevant implementing measure in any Member State of the European Economic Area);

 

(q)           it has not been engaged to subscribe for the Placing Shares on behalf of any other person who is not a Qualified Investor unless the terms on which it is engaged enable it to make decisions concerning the acceptance of offers of transferable securities on the client's behalf without reference to the client as described in section 86(2) of FSMA;

 

(r)            it is aware of and acknowledges that it is required to comply, and does and will comply, with its obligations under the Criminal Justice Act 1993 and the EU Market Abuse Regulation 596/2014 in connection with money laundering and terrorist financing under the Proceeds of Crime Act 2002, the Terrorism Act 2000, the Terrorism Act 2006 and the Money Laundering Regulations 2017 and the Money Laundering Sourcebook of the FCA (the "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;

 

(s)           it is aware of the obligations regarding insider dealing in the Criminal Justice Act 1993, with all applicable provisions of FSMA, the EU Market Abuse Regulation 596/2014 and the Proceeds of Crime Act 2002 and confirms that it has and will continue to comply with those obligations;

 

(t)            the allocation, allotment, issue and delivery to it, or the person specified by it for registration as a holder of Placing Shares, will not give rise to a stamp duty or stamp duty reserve tax liability under any of sections 67, 70, 93 or 96 of the Finance Act 1986 (depositary receipts and clearance services) and that no instrument under which it subscribes for Placing Shares (whether as principal, agent or nominee) would be subject to stamp duty or the increased rates referred to in those sections and that it, or the person specified by it for registration as a holder of Placing Shares, is not participating in the Placing as nominee or agent for any person or persons to whom the allocation, allotment, issue or delivery of Placing Shares would give rise to such a liability;

 

(u)           it, or the person specified by it for registration as a holder of the Placing Shares, will be liable for any stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto), if any, payable on acquisition of any of the Placing Shares or the agreement to subscribe for the Placing Shares and acknowledges and agrees that none of Numis, Canaccord, TPI the Company, any of their respective Affiliates or any person acting on behalf of them will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement.  Each Placee and any person acting on behalf of such Placee agrees to participate in the Placing, and agrees to indemnify the Company, Canaccord, Numis and TPI on an after tax basis in respect of the same, on the basis that the Placing Shares will be allotted to the CREST stock account of Numis, Canaccord or TPI (as applicable) who will hold them as nominee on behalf of such Placee until settlement in accordance with its standing settlement instructions;

 

(v)           none of Numis, Canaccord, TPI any of their Affiliates or any person acting on behalf of any of them has or shall have any liability for any information, representation or statement contained in this Announcement or for any information previously published by or on behalf of the Company or any other written or oral information made available to or publicly available or filed information or any representation, warranty or undertaking relating to the Company, and will not be liable for its decision to participate in the Placing based on any information, representation, warranty or statement contained in this Announcement or elsewhere, provided that nothing in this paragraph shall exclude any liability of any person for fraud;

 

(w)          none of Numis, Canaccord, TPI any of their Affiliates or any person acting on behalf of any of them, is making any recommendations to it, advising it regarding the suitability of any transactions it may enter into in connection with the Placing and that its participation in the Placing is on the basis that it is not and will not be a client of Numis, Canaccord or TPI and that Numis, Canaccord and TPI have no duties or responsibilities to it for providing the protections afforded to its clients or customers under the rules of the FCA, for providing advice in relation to the Placing, in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreements or 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;

 

(x)           in order to ensure compliance with the Money Laundering Regulations 2017, Numis, Canaccord and TPI (for themselves and as agents on behalf of the Company) or the Company's registrars may, in their absolute discretion, require verification of its identity.  Pending the provision to Numis, Canaccord, TPI or the Company's registrars, as applicable, of evidence of identity, definitive certificates in respect of the Placing Shares may be retained at Numis', Canaccord's and TPI's absolute discretion or, where appropriate, delivery of the Placing Shares to it in uncertificated form, may be retained at Numis', Canaccord's or TPI's or the Company's registrars', as the case may be, absolute discretion.  If within a reasonable time after a request for verification of identity Numis, Canaccord or TPI (as applicable) (for itself and as agent on behalf of the Company) or the Company's registrars have not received evidence satisfactory to them, Numis, Canaccord, TPI and/or the Company may, at its absolute discretion, terminate its commitment in respect of the Placing, in which event the monies payable on acceptance of allotment will, if already paid, be returned without interest to the account of the drawee's bank from which they were originally debited;

 

(y)           Numis, Canaccord and TPI may, and their Affiliates acting as an investor for its or their own account(s) may, subscribe for and/or purchase Placing Shares and, in that capacity may retain, purchase, offer to sell or otherwise deal for its or their own account(s) in the Placing Shares, any other securities of the Company or other related investments in connection with the Placing or otherwise.  Accordingly, references in this Announcement to the Placing Shares being offered, subscribed, acquired or otherwise dealt with should be read as including any offer to, or subscription, acquisition or dealing by, Numis, Canaccord, TPI and/or any of their respective Affiliates acting as an investor for its or their own account(s).  Neither Numis, Canaccord nor TPI nor the Company intend to disclose the extent of any such investment or transaction otherwise than in accordance with any legal or regulatory obligation to do so;

 

(z)            these terms and conditions and any agreements entered into by it pursuant to these terms and conditions, and all non-contractual or other obligations arising out of or in connection with them, shall be governed by and construed in accordance with the laws of England and Wales and it submits (on behalf of itself 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, Canaccord, Numis or TPI in any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange;

 

(aa)         the Company, Canaccord, Numis and TPI and their respective Affiliates and others will rely upon the truth and accuracy of the foregoing agreements, acknowledgements, representations, warranties and undertakings which are given to Numis, Canaccord and TPI on their own behalf and on behalf of the Company, and are irrevocable;

 

(bb)         it irrevocably appoints any duly authorised officer of Numis, Canaccord or TPI as agent for the purpose of executing and delivering to the Company and/or its registrars any documents on its behalf necessary to enable it to be registered as the holder of any of the Placing Shares for which it agrees to subscribe or purchase upon the terms of this Announcement;

 

(cc)         it will indemnify on an after tax basis and hold the Company, Numis, Canaccord, TPI and their respective Affiliates 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, undertakings, agreements and acknowledgements in this Appendix and further agrees that the provisions of this Appendix shall survive after completion of the Placing;

 

(dd)         it has knowledge and experience in financial, business and international investment matters and is required to evaluate the merits and risks of subscribing for the Placing Shares; (ii) it is experienced in investing in securities of this nature and is aware that it may be required to bear, and is able to bear, the economic risk of, and is able to sustain a complete loss in connection with the Placing; and (iii) it has relied upon 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 has satisfied itself concerning the relevant tax, legal, currency and other economic consideration relevant to its subscription for Placing Shares;

 

(ee)         none of the Company, Numis, Canaccord or TPI are making any undertaking or warranty to any Placee regarding the legality of an investment in the Placing Shares by such Placee under any legal, investment or similar laws or regulations; and

 

(ff)           its commitment to subscribe for Placing Shares on the terms set out herein and in the contract note will continue notwithstanding any amendment that may in future be made to the terms 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's conduct of the Placing.

8.2          The representations, warranties, acknowledgements and undertakings contained in this Appendix are given to the Company, and to Numis, Canaccord and TPI for themselves and on behalf of the Company and are irrevocable.

8.3          The agreement to settle a Placee's subscription (and/or the subscription of a person for whom such Placee is contracting as agent) free of stamp duty and stamp duty reserve tax depends on the settlement relating only to a subscription by it and/or such person direct from the Company for the Placing Shares in question. Such agreement assumes that the Placing Shares are not being subscribed for in connection with arrangements to issue depositary receipts or to transfer the Placing Shares into a clearance service. If there are any such arrangements, or the settlement relates to any other subsequent dealing in the Placing Shares, UK stamp duty or stamp duty reserve tax may be payable, for which neither the Company nor Numis nor Canaccord nor TPI will be responsible, and the Placee to whom (or on behalf of whom, or in respect of the person for whom it is participating in the Placing as an agent or nominee) the allocation, allotment, issue or delivery of Placing Shares has given rise to such UK stamp duty or stamp duty reserve tax undertakes to pay such UK stamp duty or stamp duty reserve tax forthwith and to indemnify on an after-tax basis and to hold harmless the Company and Numis and Canaccord and TPI in the event that any of the Company and/or Numis and/or Canaccord and/or TPI have incurred any such liability to UK stamp duty or stamp duty reserve tax. If this is the case, each Placee should seek its own advice and notify Numis, Canaccord or TPI accordingly.

8.4          In addition, Placees should note that they will be liable for any stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the United Kingdom by them or any other person on the subscription by them of any Placing Shares or the agreement by them to subscribe for any Placing Shares.

8.5          Each Placee, and any person acting on behalf of the Placee, acknowledges and agrees that neither Numis nor Canaccord nor TPI owe any fiduciary or other duties to any Placee in respect of any representations, warranties, undertakings or indemnities in the Placing Agreements.

8.6          Each Placee and any person acting on behalf of each Placee, acknowledges and agrees that Numis, Canaccord, TPI nor any of their Affiliates may, at their absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares.

8.7          When a Placee or person acting on behalf of the Placee is dealing with Numis, Canaccord or TPI any money held in an account with Numis, Canaccord or TPI (as applicable) 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 and agrees 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 Numis', Canaccord's or TPI's money (as applicable) in accordance with the client money rules and will be used by Numis, Canaccord or TPI in the course of its own business; and the Placee will rank only as a general creditor of Numis, Canaccord or TPI (as applicable).

8.8          Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.

8.9          Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this Announcement.

8.10        All times and dates in this Announcement may be subject to amendment.  Numis, Canaccord and TPI shall notify the Placees and any person acting on behalf of a Placee of any changes.

DEFINITIONS

The following definitions apply throughout this Announcement unless the context otherwise requires:

"AIM " - the market of that name operated by the London Stock Exchange

"AIM Rules" - the AIM Rules for Companies published by the London Stock Exchange as they may be amended and replaced from time to time

"Announcement" - this announcement (including the Appendix to this announcement)

"Canaccord" - Canaccord Genuity Limited, a company incorporated in England and Wales, with registered number 01774003, whose registered office is at 88 Wood Street, London EC2V 7QR

"Capital Access" - Capital Access Group Limited of Sky Light City Tower, 50 Basinghall Street, London, England, EC2V 5DE

"Company" - Velocys plc, a public limited company incorporated in England & Wales under registered number 05712187 and having its registered office at Harwell Innovation Centre, 173 Curie Avenue, Harwell, Oxfordshire, England, OX11 0QG

"CREST" - the relevant system (as defined in the Regulations) which enables title to units of relevant securities (as defined in the Regulations) to be evidenced and transferred without a written instrument and in respect of which Euroclear UK & Ireland Limited is the Operator (as defined in the Regulations)

"FCA" - the Financial Conduct Authority

"First Admission" - admission of the First Tranche Placing Shares to trading on AIM becoming effective in accordance with Rule 6 of the AIM Rules

"First Tranche Placing Shares" - 30,000,000 new Ordinary Shares to be issued pursuant to the Placing

"FSMA" - the Financial Services and Markets Act of 2000 (as amended)

"Group" - the Company and its subsidiary undertakings prior to completion of the Acquisition

"London Stock Exchange" - London Stock Exchange plc

"Numis" - Numis Securities Limited, a private limited company incorporated in England & Wales under registered number 2285918 and having its registered office at 10 Paternoster Square, London EC4M 7LT

"Ordinary Shares" - ordinary shares of 1 penny each in the capital of the Company

"Numis/Canaccord Placing Agreement" - the conditional agreement dated 23 July 2018 relating to the Placing, between the Company, Numis and Canaccord

"Peat & Co" - MC Peat & Co LLP of 118 Piccadilly, London  W1J 7NW

"Placing" - the placing of the Placing Shares at the Placing Price by Numis, Canaccord and Turner Pope as agents for and on behalf of the Company pursuant to the terms of the Placing Agreements

"Placing Agreements" - the Numis/Canaccord Placing Agreement and the TPI Placing Agreement relating to the Placing

"Placing Price" - 10 pence per new Ordinary Share

"Placing Shares" - the First Tranche Placing Shares and the Second Tranche Placing Shares

"Prospectus Directive" - the Directive of the European Parliament and of the Council of the European Union 2003/71/EC, as amended

"Regulations" - the UK Uncertificated Securities Regulations 2001 (SI 2001 No. 3755), as amended

"Second Admission" - admission of the Second Tranche Placing Shares to trading on AIM becoming effective in accordance with Rule 6 of the AIM Rules

"Second Tranche Placing Shares" - 30,000,000 new Ordinary Shares to be issued pursuant to the Placing

"Securities Act" - the United States Securities Act of 1933, as amended

"TPI Placing Agreement" the conditional agreement dated 23 July 2018 relating to the Placing, between the Company and Turner Pope;

"Turner Pope" means Turner Pope Investments (TPI) Ltd. of 550 Ley Street, Ilford, Essex, IG2 7DB;

"UK" or "United Kingdom" - the United Kingdom of Great Britain and Northern Ireland

"United States" or "US" - United States of America, its territories and possessions, any state of the United States of America and the District of Columbia and all other areas subject to its jurisdiction

 

 

 


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