Proposed Firm and Conditional Placing. AGM Notice

Fox Marble Holdings plc

 ("Fox Marble" or the "Company")

 Proposed Firm Placing, Conditional Placing and Notice of General Meeting

·     Capital raise of £2,000,000 completed with new and existing shareholders

·     Factory in Kosovo to be completed during the summer of 2016

·     Directors to take salaries in Fox Marble shares at prevailing market prices

Fox Marble (AIM:FOX), the AIM listed company focused on marble quarrying in Kosovo and the Balkans region, is pleased to announce that it has conditionally raised £2,000,000 (before expenses) by way of a firm placing of new Ordinary Shares at 10 pence per share and a conditional placing of new Ordinary Shares at 10 pence per share through Brandon Hill Capital Limited, subject to, inter alia, shareholder approval (the "Placing").

Proceeds from the Placing are intended primarily to fund completion of the factory and employee skills training, to further expand the sales and distribution platforms globally, in particular North America, India, the Middle East, Balkans and the United Kingdom, and provide additional working capital whilst we continue our development of sales channels.

A circular convening the General Meeting to be held at the offices of Nabarro LLP at 125 London Wall, London, EC2Y 5AL at 9.00 a.m. on 1 June 2016 to grant the Board authority to allot the Placing shares for cash on a non pre-emptive basis will be sent to shareholders today and will be available to download from the Company's website at www.foxmarble.net.

Chris Gilbert, CEO commented: "We believe the completion of the processing facility and expansion of our sales and distribution platforms are key milestones for the Company.  We expect to be able to produce cut and polished marble slabs in Kosovo during the summer.  This will significantly boost our margins as well as open up the Balkan markets for cutting and polishing of regional stone.

We have seen significant interest from existing and new customers so far in 2016 and look forward to updating the market on new contracts as and when they materialise."

Further details of the Placing are provided below. 

For more information on Fox Marble please visit www.foxmarble.net  or contact:

Definitions in this announcement are the same as those included in the Company's circular to be posted to shareholders today, dated 13 May 2016, available on the Company's website at www.foxmarble.net.

Introduction

The Firm Placing to raise £1,870,000 (before expenses) is conditional upon, among other things, Shareholder approval at the General Meeting, the Firm Placing Shares being admitted to trading on AIM and the Placing Agreement not being terminated in accordance with its terms prior to First Admission.  The Conditional Placing to raise £130,000 (before expenses) is conditional upon, amongst other things, Shareholder approval at the General Meeting, satisfaction of the HMRC Condition, the Conditional Placing Shares being admitted to trading on AIM and the Placing Agreement not being terminated in accordance with its terms prior to Second Admission.  The passing by Shareholders of the Resolutions at the General Meeting will give the Directors the required authority to allot the Placing shares and will disapply statutory pre-emption rights. Subject to all relevant conditions being satisfied (or, if applicable, waived), it is expected that the Firm Placing Shares will be issued and admitted to trading on AIM at 8.00 a.m. on 2 June 2016 and the Conditional Placing Shares will be issued and admitted to trading on AIM no later than 8.00 a.m. on 30 June 2016.

The General Meeting to be held at 9.00 a.m. on 1 June 2016 is being convened for the purpose of proposing the Resolutions described in the Circular.  The passing of the Resolutions is a condition to completion of the Placing. The Directors intend to vote (or procure a vote) in favour of all of the Resolutions in respect of their own beneficial holdings totalling 40,634,484 Ordinary Shares, representing approximately 25.42 per cent. of the Existing Ordinary Shares.

Background to and reasons for the Placing

It is Fox Marble's long-term strategy to become a major international supplier of high quality marble blocks and processed marble products from the Company's own facility based in Lipjan, Kosovo. 

The Company has made significant progress in the period since admission to AIM in August 2012.  Fox Marble now operates four quarries and, in addition, the processing facility is nearing completion.  The Company expects to be able to produce cut and polished marble slabs in Kosovo by the summer of 2016.  This self-sufficiency reduces the cost of production and removes the reliance on processing in Italy, and concurrently opens up access to sales channels for processed marble in the local Balkan market.

The Company is carrying out the Placing to fund the completion of the processing facility, to expand the sales and distribution platforms globally, in particular North America, India, the Middle East, Balkans and the United Kingdom, and to provide additional working capital whilst sales channels continue to develop.

Current Trading

Four of Fox Marble's quarries are currently in operation producing nine varieties of stone at Cervenilla, Syrigane, Malesheva and Prilep. In addition, the Group currently has six further quarries under licence or operating agreements. The three operating quarries in Kosovo and one in Macedonia are producing commercial size blocks and the Company has a large and varied stock of blocks and slabs on hand. Fox Marble is now able to fulfil customer orders on nine varieties of marble, each with desirable attributes.

The processing facility is expected to be operational by the summer of 2016.  The Italian supplier of the equipment needed to complete the slab processing and resining production lines at the Company's factory has confirmed delivery of the equipment during H1 2016.  The purchase agreement for this equipment has been amended to reflect the delays on delivery experienced by the Company during 2015 which were beyond the Company's control. The total discounted cost of this equipment is €900,000.  Of this, €400,000 will be a cash payment of which €112,500 has already been paid.  The balance of €500,000 will be satisfied by the sale of a range of marble blocks from the Company's quarries to the supplier, upon completion of delivery and installation of the equipment. Both internal and external gantry cranes have been fully installed and successfully tested and the installation of the gangsaws is currently being finalised.

On 7 March 2016 the Company announced it had received an advance payment of €390,000, part payment on a €2,000,000 order placed through Fox Marble's new long-term distribution agreement entered into with Eboracum Marble Limited. 

The order book for 2016 totals €3.5m as previously announced, and the Company continues to make progress on developing further sales channels.

On 31 August 2012 the Company issued in aggregate £1,060,000 fixed rate convertible unsecured loan notes to Amati VCT plc and Amati VCT 2 plc pursuant to the loan note instrument dated 24 August 2012 ("Loan Notes").  At any time prior to repayment of the Loan Notes, the Stockholder may issue a conversion notice and the Stockholder will receive such number of Ordinary Shares as satisfied by the formula: 1 Ordinary Share for every y pence nominal of stock converted, where y is the lesser of: 20 + (number of whole months which have lapsed between the date of issue of the stock held by the Stockholder and the date of receipt of by the Company of a conversion notice multiplied by 0.1666); and 26. On 1 September 2015 the interest rate on the Loan Notes increased from 8 per cent. to 25 per cent. per annum in accordance with the terms of the Loan Notes. Agreement has been reached with the Stockholder that, subject to, among other things, Shareholder approval of the Resolutions at the General Meeting, the interest rate on the Loan Notes will revert to the more favourable 8 per cent. interest per annum in return for amending the conversion formula to 1 Ordinary Share for every 10 pence nominal of stock converted.

 AIM Rule 13 deems that a transaction between the Company and a related party requires a statement that with the exception of any director who is involved in the transaction as a related party, its directors consider, having consulted with its nominated adviser, that the terms of the transaction are fair and reasonable insofar as its shareholders are concerned.  Paul Jourdan is a director of the Company and a director of Amati Global Investors Limited ("Amati") and, as Amati is engaged as a fund manager to each of Amati VCT plc and Amati VCT 2 plc, these entities are deemed to be related parties.  Amati VCT plc and Amati VCT 2 plc were each issued Loan Notes (the terms of which are being varied as set out above) and are participating in the Conditional Placing. Such transactions are deemed to be related party transactions pursuant to AIM Rule 13.  Consequently, the Directors, with the exception of Paul Jourdan, consider, having consulted with the Company's nominated adviser, that the terms of the transactions are fair and reasonable insofar as shareholders are concerned.

In order to conserve cash the Non-Executive Directors of the Company have agreed to utilise their fees (net of tax) to subscribe for Ordinary Shares in the Company.  In addition, Executive Directors Christopher Gilbert and Dr Etrur Albani have agreed to utilise fifty per cent. of their remuneration (net of tax) to subscribe for Ordinary Shares in the Company at the Company's request. The volume of Ordinary Shares subscribed for will be calculated quarterly in arrears and with reference to the 30 day volume weighted average price per Ordinary Share as at the time of issue.  For the avoidance of doubt, these subscriptions by the Directors are not included in the £2,000,000 capital raise outlined above.

Fox Marble had approximately €1.5 million of cash as at 30 April 2016.

Use of Proceeds

Placing statistics

Note:

⁽¹⁾ Assuming that no other Ordinary Shares (other than the Placing Shares) will be issued in the period between the date of this document and completion of the Placing.

Expected timetable of events