Proposed £8.1 million Fundraising

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

 

 

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF IRELAND, THE REPUBLIC OF SOUTH AFRICA, JAPAN, NEW ZEALAND OR ANY JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF LOCAL SECURITIES LAWS OR REGULATIONS.

 

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER OR INVITATION TO SELL OR ISSUE, OR ANY SOLICITATION OF ANY OFFER TO PURCHASE OR SUBSCRIBE FOR, ANY NEW ORDINARY SHARES, NOR SHALL IT (OR ANY PART OF IT), OR THE FACT OF ITS DISTRIBUTION, FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION WITH, OR ACT AS ANY INDUCEMENT TO ENTER INTO, ANY CONTRACT OR COMMITMENT WHATSOEVER WITH RESPECT TO THE PROPOSED PLACING.

 

AFC Energy PLC

("AFC Energy" or the "Company")

 

Proposed Placing of up to 58,500,000 New Ordinary Shares,

Proposed Subscription of up to 1,500,000 New Ordinary Shares and

Open Offer of up to 20,684,262 New Ordinary Shares at a price of 10 pence per New Ordinary Share to raise up to £8.1 million

 

AFC Energy, the industrial fuel cell power company, is pleased to announce its intention to conduct a fundraising of up to approximately £8.1 million (before expenses) through a proposed placing of 58,500,000 ordinary shares of 0.1 pence each ("Placing Shares") (the "Placing"), a proposed subscription of 1,500,000 New Ordinary Shares (the "Subscription") and a proposed open offer of up to 20,684,262 New Ordinary Shares (the "Open Offer"). The New Ordinary Shares will rank pari passu in all other respects with the Company's existing ordinary shares of 0.1 pence each (the "Existing Ordinary Shares").

 

The Placing of New Ordinary Shares is being offered by way of an accelerated bookbuild ("Bookbuild"), which will be launched immediately following this announcement. Cantor Fitzgerald Europe ("Cantor Fitzgerald") will be acting as bookrunner. The Company will also make up to 1,500,000 New Ordinary Shares available for subscription directly from certain key shareholders (the "Subscription").

 

In order to provide Shareholders who have not taken part in the Placing or Subscription with the chance to participate in the Fundraising, the Company is providing all Qualifying Shareholders with the opportunity to subscribe at the Issue Price for an aggregate of 20,684,262 New Ordinary Shares, to raise up to approximately £2 million, on the basis of 1 New Ordinary Share for every 15 Existing Ordinary Shares on 13 February 2017 (being the last practicable date before publication of this announcement).

 

The net proceeds of the Placing, Subscription and Open Offer (together the "Fundraising") (being approximately £8.1 million, assuming that all New Ordinary Shares are subscribed for) will be used to support the Company on its journey to commercialisation, and specifically for:

 

·      delivery of its commitments under the Company's joint development agreement with De Nora S.p.A. ("De Nora");

·      business case development with De Nora;

·      scoping study completion with Peel Environmental Limited and other third parties in advance of any potential project deployment;

·      funding the ongoing operation of the Company's demonstration plant at Stade, together with ongoing testing costs; and

·      general administrative expenses and ongoing working capital.

 

The Issue Price represents a discount of approximately 40 per cent. to the mid-market closing price of 16.75 pence on 13 February 2017. The Fundraising is not being underwritten and is conditional on, inter alia, on the passing of the Resolutions by Shareholders at the General Meeting of the Company to be held at Chelsea Football Club, Stamford Bridge, London SW6 4HS at 11.00 a.m. on 3 March 2017.

 

The Company has obtained irrevocable undertakings from certain shareholders, including the Directors, to vote in favour of the Resolutions in respect of, in aggregate, 60,905,313 Ordinary Shares, representing 19.6 per cent. of the Existing Ordinary Shares in issue.

 

The New Ordinary Shares will represent approximately 20.6 per cent. of the issued share capital of the Company as enlarged by the Fundraising (the "Enlarged Share Capital").

 

Further information on the Fundraising is contained within the Circular which is expected to be posted to Shareholders tomorrow.

 

Related Party Transaction

 

Yady Worldwide S.A. ("Yady") is a company that is wholly owned by Ben White, son of Howard White, and his relations and their investment vehicles, the Age of Reason Foundation and Eturab who currently hold over 10 per cent. of the Existing Share Capital. Yady and Howard White have together agreed with the Company to subscribe for 1,500,000 Subscription Shares in the Subscription. As Yady and Howard White (the "Related Parties") together are treated as a "substantial shareholder" of the Company, its participation in the Subscription constitutes a "related party transaction" under the AIM Rules.

 

Tim Yeo, Adam Bond, James Gibson, Mitchell Field, Eugene Tenenbaum and Eugene Shvidler (together the "Independent Directors") consider, having consulted with the Company's nominated adviser, Cantor Fitzgerald Europe, that the terms of the Related Parties participation in the Subscription are fair and reasonable insofar as the Company's Shareholders are concerned.

 

 

Expected Timetable

 

 

Record Date for entitlements under the Open Offer	6.00 p.m. on 10 February 2017
Announcement of the Placing	14 February 2017
Ex entitlement date for the Open Offer	15 February 2017
Dispatch of the Circular, the Form of Proxy and, to Qualifying Non-CREST Shareholders only, the Application Form	15 February 2017
Basic Entitlements and Excess Entitlements credited to stock accounts of Qualifying CREST Shareholders	16 February 2017
Recommended latest time for requesting withdrawal of Basic Entitlements and Excess Entitlements from CREST	4.30 p.m. on 24 February 2017
Latest time and date for depositing Basic Entitlements and Excess Entitlements into CREST	11.00 a.m. on 27 February 2017
Latest time and date for splitting of Application Forms (to satisfy bona fide market claims only)	3.00 p.m. on 28 February 2017
Latest time for receipt of Forms of Proxy	11.00 a.m. on 1 March 2017
Latest time and date for receipt of completed Application Forms from Qualifying Non-CREST Shareholders and payment in full under the Open Offer or settlement of relevant CREST instructions (as appropriate)	11.00 a.m. on 2 March 2017
General Meeting	11.00 a.m. on 3 March 2017
Announcement of the results of the Open Offer	2 March 2017
Announcement of the results of the General Meeting	3 March 2017
Issue of Placing Shares, Subscription Shares and Open Offer Shares	9 March 2017
Admission and commencement of dealings in the Enlarged Share Capital expected to commence on AIM	8.00 a.m. on 9 March 2017
CREST accounts expected to be credited	9 March 2017
Definitive share certificates to be dispatched by	23 March 2017

 

 

 

For further information, please contact:

 

AFC Energy plc Adam Bond (Chief Executive Officer) Jim Gibson (Chief Operating Officer)	+44 (0) 20 3697 1209
Cantor Fitzgerald Europe - Nominated Adviser and Joint Broker Andrew Craig Richard Salmond	+44 (0) 20 7894 7000
M C Peat & Co LLP - Joint Broker Charlie Peat	+44 (0) 20 7104 2334
Lionsgate Communications - Public Relations Jonathan Charles	+44 (0) 20 3697 1209

About AFC Energy

 

AFC Energy plc has developed and successfully operated an alkaline fuel cell system ("KORE"), which converts hydrogen into "clean" electricity. AFC Energy's key project POWER-UP demonstrated the world's largest operational alkaline fuel cell system at Air Products' industrial gas plant in Stade, Germany in January 2016. The Company is now looking to build upon an already established pipeline of commercial opportunities and drive the findings from the development phase of the technology into a technically optimised and commercially relevant fuel cell system. For further information, please visit our website: www.afcenergy.com.

 

Forward-looking statements

 

This announcement contains statements about AFC Energy plc that are or may be deemed to be "forward-looking statements".

 

All statements, other than statements of historical facts, included in this announcement may be forward-looking statements. Without limitation, any statements preceded or followed by, or that include, the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "may", "should", "anticipates", "estimates", "projects", "would", "could", "continue" or words or terms of similar substance or the negative thereof, are forward-looking statements. Forward-looking statements include, without limitation, statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects and (ii) business and management strategies and the expansion and growth of the operations of AFC Energy plc.

 

These forward-looking statements are not guarantees of future performance. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of any such person, or industry results, to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are based on numerous assumptions regarding the present and future business strategies of such persons and the environment in which each will operate in the future. Investors should not place undue reliance on such forward-looking statements and, save as is required by law or regulation (including to meet the requirements of the AIM Rules, the Prospectus Rules and/or the FSMA), AFC Energy plc does not undertake any obligation to update publicly or revise any forward-looking statements (including to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based). All subsequent oral or written forward-looking statements attributed to AFC Energy plc or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above. All forward-looking statements contained in this announcement are based on information available to the Directors of AFC Energy plc at the date of this announcement, unless some other time is specified in relation to them, and the posting or receipt of this announcement shall not give rise to any implication that there has been no change in the facts set forth herein since such date.

 

 

 

PROPOSED PLACING OF 58,500,000 NEW ORDINARY SHARES, SUBSCRIPTION OF 1,500,000 NEW ORDINARY SHARES AND OPEN OFFER OF UP TO 20,684,262 NEW ORDINARY SHARES AT 10 PENCE PER SHARE TO RAISE £8.1 MILLION

 

1          Introduction

 

The Company has announced today that it is proposing to raise up to £8.1 million (before the deduction of fees and expenses) through a Placing, Subscription and Open Offer comprising the issue of up to 80,684,262 New Ordinary Shares at 10 pence per New Ordinary Share.

Each of the Placing and Subscription are conditional, inter alia, on the passing of the Resolutions at the General Meeting, admission becoming effective by no later than 8.00 a.m. on 9 March 2017 (or such other time and/or date, being no later than 31 March 2017, as the Company and Cantor Fitzgerald may agree) and the Placing Agreement between the Company and Cantor Fitzgerald becoming unconditional and not being terminated prior to Admission (in accordance with its terms). It is expected that the New Ordinary Shares will be admitted to trading on AIM on or around 8.00 a.m. on 9 March 2017. The Open Offer is not conditional upon the Placing and Subscription.

The Board believes that raising equity finance through the Fundraising is the most appropriate method of financing the Company at this time. This allows both existing shareholders to participate in the Fundraising and new institutional investors to enter the Company's share register. The Fundraising avoids the need for a prospectus to be prepared and issued, which is a costly and time consuming process, whilst permitting Qualifying Shareholders to participate through the Open Offer. The Board believes that the potential value creation for the benefit of Shareholders arising from the Fundraising outweighs the dilutive effects of the Placing and Subscription. Although the costs associated with the Fundraising will be lower than if the Company had prepared and published a prospectus, in the event that the Fundraising does not complete, the Company will still have incurred significant costs.

The purpose of the Circular is to set out the reasons for, and provide further information on, the Fundraising, to explain why the Board considers the Fundraising to be in the best interests of the Company and its Shareholders as a whole and why the Directors unanimously recommend that Shareholders vote in favour of the Resolutions, as they have irrevocably undertaken to do so in respect of their own beneficial holdings of Ordinary Shares, in aggregate representing approximately 6.86 per cent. of AFC Energy's issued share capital on 13 February 2017 (being the last Business Day prior to publication of the Circular).

At the end of the Circular Shareholders will find a notice convening the General Meeting at which the Resolutions will be proposed by the Directors. The General Meeting has been convened for 11.00 a.m. on 3 March 2017 and will take place at Chelsea Football Club, Stamford Bridge, London SW6 4HS.

 

2          Background to and reasons for the Fundraising

 

AFC Energy's objective is to be a world class organisation that deploys low cost, high performance fuel cell technology to the global energy market. The Company, which was founded in 2006 and listed on the London Stock Exchange in 2007, was focused primarily on research and development and fuel cell system development. Adam Bond, previously a Non-Executive Director from 2012 to 2014, was appointed to the Board as Chief Executive Officer in December 2014 to lead the management team who have since announced, and then achieved, a series of milestone targets through 2015 and 2016.

During 2016, AFC Energy made significant technical progress. In November 2016 the Company announced the successful completion of testing and development of its second generation ("Gen2") fuel cell system and in so doing, delivered key technical milestones 1 and 2 of the 2016 Strategic Milestones.

The Gen2 design builds on the system commissioned in Stade, Germany in January 2016 and incorporates design changes to extend the operating life of the fuel cell stack, while increasing stack availability and reducing stack cost.

AFC Energy also announced in the second half of 2016 a significant Joint Development Agreement with De Nora, one of the largest manufacturers of electrolysers, electrodes, coatings and electrochemical solutions. De Nora have been actively working with AFC Energy's technology teams in the latter half of 2016 with evidence which points to the potential for further material enhancement to the Company's fuel cell system in the near future. De Nora's collaboration with AFC Energy provides third party validation of the progress the Company has made in its technology development and lessens the business risks inherent in the Company's road to commercial revenues. Additionally, through collaboration with De Nora there is opportunity for AFC Energy to better address the Chlor-Alkali sector (a significant producer of vented hydrogen), for which De Nora is a strong part of the supply chain. De Nora, together with AFC Energy's engineering partner, planting GmbH, are supporting the Company to make accelerated progress towards commercial revenues.

AFC Energy, in the second half of 2016, successfully trialled the integration of lower grade industry standard hydrogen in the Company's fuel cells. AFC Energy is now investigating further potential reductions in hydrogen grade which the Directors believe will further enhance the commercial opportunities available to the Company. Prior to the successful trial, AFC Energy had utilised high laboratory grade hydrogen in the development and trialling of its fuel cell systems. Financial modelling conducted by the Company identified hydrogen cost as one of the key drivers of economic performance in any fuel cell project and the Directors believe that the ability to utilise lower grade hydrogen allows the Company to demonstrate a key advantage relative to its competitors.

In November 2016, AFC Energy signed an agreement with Peel to assess a substantive fuel cell development opportunity at Peel's Protos Industrial Park located in Chester. The importance of this site for AFC Energy's fuel cell potential lies in a number of areas: firstly, there are a number of potential industrial hydrogen sources, some of which are currently venting hydrogen, in the Protos vicinity which lends itself to a scalable fuel cell opportunity. Secondly, as owner of the Protos site, Peel, together with its regional contacts and permitting and consenting capability, is an ideal partner for AFC Energy to explore this opportunity and collaborate in the assessment of the UK's largest fuel cell development project, in the UK's "Northern Powerhouse".

At the time of Adam Bond's appointment to the Board of Directors in December 2014, the Company set out a three year plan and identified 2017 as the year in which AFC Energy would have the requisite technological capabilities and project partners to deliver commercial revenues.

This Fundraising will help to institutionalise the Company's shareholder base and provide the Company with the resources to pursue a number of commercial contracts, some of which are currently in the process of detailed discussions, and will assist AFC Energy to fulfil its strategy to deliver commercial contracts by 2018. The Fundraising is necessary for the Company to continue as a going concern and will enable further investment to grow the business.

3          Current trading

2016 was a significant year for the Company with a number of milestones delivered which has moved the Company closer to achieving its stated goal of having 1GW of projects installed or under development by 2020.

In 2017, the Company's primary focus is on the deployment of its fuel cell systems in conjunction with project partners, as part of, or as final test units before, commercial power sales are made. 2017 will also see further focus on delivering the Company's commitments under the Joint Development Agreement with De Nora where ongoing advancements in the fuel cell system continue to be made. The Directors believe that given the modular nature of the fuel cell systems developed by AFC Energy, this is likely to be for unit sizes from 240KWs - such as the Company has deployed and successfully operated at Stade - up to 1MW in the first instance before larger orders are made.

In conjunction with the development of a commercial pipeline of projects, there will be a renewed emphasis on system and cartridge cost reductions to ensure the Company's fuel cell technology is able to operate in a competitive and efficient manner when compared to competing technologies. The Board expects that the Company will continue to make progress with its key partners, including De Nora, plantIng and Peel.

Furthermore, the Company is currently in detailed discussions with a number of potential commercial partners, any of which may or may not result in commercial contracts being entered into in the key markets identified and targeted by the Directors including Germany, the United Kingdom, Korea, Japan, Saudi Arabia, the United Arab Emirates and other Middle Eastern states.

4          Reasons for the Fundraising and use of proceeds

The Company is proposing to raise a total of £8.1 million (before deduction of fees and expenses) from the Fundraising. The Fundraising is considered by the Directors to be in the best interests of Shareholders as it will enable the Company to pursue its stated strategy more effectively. The Placing will also enable the Company to institutionalise its shareholder register.

The intended uses of the proceeds of the Fundraising, assuming full take up under the Open Offer, are set out below:

 

	£m
Product and project / business development	4.3
Operation of demonstration plant	1.1
Working capital	2.7
Proceeds from the Fundraising (before deduction of fees and expenses)	8.1

 

5          Details of the Placing and Subscription

 

It was announced on 14 February 2017 that the Company proposes to raise, in aggregate, £6 million (approximately £5.5 million net of expenses) by way of a Placing and Subscription of 58,500,000 Placing Shares and 1,500,000 Subscription Shares with certain new and existing investors representing 15.35 per cent. of the Enlarged Share Capital, at an Issue Price of 10 pence per Ordinary Share.

 

The Issue Price of 10 pence per New Ordinary Share represents a discount of 40.3 per cent. to the closing price of 16.75 pence on 13 February 2017, being the last Business Day prior to the publication of the Circular. The Board unanimously agrees that the level of discount and method of issue are appropriate to secure the investment necessary in order to pursue the stated strategy of the business and enable AFC Energy to institutionalise its shareholder register.

 

In connection with the Placing, the Company has entered into the Placing Agreement with Cantor Fitzgerald, pursuant to which Cantor Fitzgerald has agreed to use reasonable endeavours, as agent on behalf of the Company, to procure placees for the Placing Shares at the Issue Price and have agreed to conditionally place the Placing Shares with certain new investors. The Placing and Subscription are conditional, inter alia, on:

 

·      the passing of the Resolutions at the General Meeting;

·      the conditions in the Placing Agreement being satisfied or (if applicable) waived and the Placing Agreement not having been terminated in accordance with its terms prior to Admission; and

·      Admission becoming effective by no later than 8.00 a.m. on 9 March 2017 (or such later time and/or date, being no later than 8.00 a.m. on 31 March 2017, as the Company and Cantor Fitzgerald may agree).

 

Accordingly, if any of these conditions are not satisfied or, if applicable, waived, the Fundraising will not proceed.

 

Further details of the Placing Agreement are set out in Part 5 of the Circular.

 

Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM. The New Ordinary Shares will rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid in respect of the Ordinary Shares following Admission. It is expected that Admission will become effective, and that dealings on AIM will commence, at 8.00 a.m. on 9 March 2017.

6          Details of the Open Offer

Subject to the terms set out below and in Part 3 of the Circular, Qualifying Shareholders are being given the opportunity to subscribe for the Open Offer Shares at a price of 10 pence per Open Offer Share, pro rata to their holdings of Existing Ordinary Shares on the Record Date on the basis of:

1 Open Offer Share for every 15 Existing Ordinary Shares

Open Offer Entitlements will be rounded down to the nearest whole number of Open Offer Shares.

Qualifying Shareholders are also being given the opportunity, provided that they take up their Open Offer Entitlements in full, to apply for Excess Shares through the Excess Application Facility.

The Open Offer Shares will be allotted and issued on 9 March 2017 conditionally on Admission of the Open Offer Shares by 9 March 2017. The Open Offer is conditional only on Admission of the Offer Shares by 31 March 2017. It is not conditional on the passing of the Resolutions at the General Meeting, nor the Placing and Subscription becoming unconditional.

 

The Open Offer is not underwritten.

Assuming full take-up under the Open Offer, the issue of Open Offer Shares will raise further gross proceeds of approximately £2 million for the Company.

The Open Offer Shares will, upon issue, rank pari passu with the Placing Shares, the Subscription Shares and the Existing Ordinary Shares.

Qualifying Shareholders with holdings of Existing Ordinary Shares in both certificated and uncertificated form will be treated as having separate holdings for the purpose of calculating their Open Offer Entitlements.

It should be noted that the Open Offer is not a rights issue. Accordingly, the Application Form is not a document of title and cannot be traded. Any Open Offer Shares not applied for under the Open Offer will not be sold in the market or placed for the benefit of Qualifying Shareholders who do not take up their rights to subscribe under the Open Offer.

Excess Application Facility

The Open Offer is structured so as to allow Qualifying Shareholders to subscribe for Open Offer Shares at the Issue Price pro rata to their holdings of Existing Ordinary Shares. Qualifying Shareholders may also make applications in excess of their pro rata initial entitlement. To the extent that pro rata entitlements to Open Offer Shares are not subscribed for by Qualifying Shareholders, such Open Offer Shares will be available to satisfy such Excess Applications where Qualifying Shareholders have taken up their full Basic Entitlement. Subject to the terms of the Placing Agreement, applications for Excess Shares may be allocated in such manner as the Directors and Cantor Fitzgerald may determine, and no assurance can be given that applications by Qualifying Shareholders will be met in full or in part or at all. Excess Applications will be rejected if and to the extent that acceptance would result in a Qualifying Shareholder, together with those acting in concert with him/her for the purposes of the City Code, holding 30 per cent. or more, or increasing an existing holding of 30 per cent. or more, of the Enlarged Share Capital immediately following Admission.

The Open Offer is not a rights issue. Qualifying CREST Shareholders should note that although the Basic Entitlements and Excess Entitlements will be admitted to CREST and be enabled for settlement, they will not be tradable and applications in respect of the Basic Entitlements and Excess Entitlements may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim raised by Euroclear's Claims Processing Unit. Qualifying Non-CREST Shareholders should note that the Application Form is not a negotiable document and cannot be traded or otherwise transferred. Qualifying Shareholders who do not apply to take up their Basic Entitlements will have no rights under the Open Offer or receive any proceeds from it. If valid acceptances are not received in respect of all Basic Entitlements under the Open Offer, unallocated Open Offer Shares may be allotted to Qualifying Shareholders to meet any valid applications under the Excess Application Facility and the proceeds retained for the benefit of the Company. Qualifying Shareholders should be aware that in the Open Offer, unlike in a rights issue, any Open Offer Shares not applied for will not be sold in the market or placed for the benefit of Qualifying Shareholders.

Application has been made for the Basic Entitlements and Excess Entitlements of Qualifying CREST Shareholders to be admitted to CREST. It is expected that such Basic Entitlements and Excess Entitlements will be admitted to CREST on 16 February 2017. The Basic Entitlements and Excess Entitlements will also be enabled for settlement in CREST on 16 February 2017 to satisfy bona fide market claims only. Applications through the CREST system may only be made by the Qualifying CREST Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim.

Further details of the Open Offer and the terms and conditions on which it is being made, including the procedure for application and payment, are contained in Part 3 of the Circular and for Non-CREST Qualifying Shareholders on the accompanying Application Form. To be valid, Application Forms or CREST instructions (duly completed) and payment in full for the Open Offer Shares applied for must be received by the Receiving Agent by no later than 11.00 a.m. on 2 March 2017. Application Forms should be returned to Computershare Investor Services plc, The Pavilions, Bridgwater Road, BS99 6AH or by hand to Computershare Investor Services plc, The Pavilions, Bridgwater Road, BS13 8AE (during normal business hours) by no later than 11.00 a.m. on 2 March 2017.

Qualifying CREST Shareholders should note that, although their entitlements will be admitted to CREST and be enabled for settlement, applications in respect of entitlements under the Open Offer may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim raised by Euroclear's Claims Processing Unit.

Qualifying Non-CREST Shareholders should note that their Application Form is not a negotiable document and cannot be traded. Further information on the Open Offer and the terms and conditions on which it is made, including the procedure for application and payment, are set out in Part 3 of the Circular and, where relevant, on the Application Form.

It is expected that Qualifying CREST Shareholders will receive a credit to their appropriate stock accounts in CREST in respect of their Basic Entitlements and Excess Entitlements on 16 February 2017.

If Admission of the Open Offer Shares does not occur by 31 March 2017, the Open Offer will not become unconditional and application monies will be returned to applicants, without interest, as soon as practicable thereafter.

7          General Meeting

 

The Directors do not currently have authority to allot all of the New Ordinary Shares and, accordingly, the Board is seeking the approval of Shareholders to allot the New Ordinary Shares at the General Meeting.

 

A notice convening the GM to be held at Chelsea Football Club, Stamford Bridge, London SW6 4HS at 11.00 a.m. on 3 March 2017 is set out at the end of the Circular. The Resolutions to be proposed at that meeting are, inter alia, to:

 

·      Resolution 1 which is an ordinary resolution to authorise the Directors to allot relevant securities up to an aggregate nominal amount of £80,684 being equal to 80,684,262 New Ordinary Shares (i.e. the maximum number of New Ordinary Shares available under the Placing, Subscription and Open Offer); and

 

·      Resolution 2 which is conditional on the passing of Resolution 1 and is a special resolution to authorise the Directors to issue and allot 80,684,262 New Ordinary Shares pursuant to the Placing, Subscription and Open Offer on a non-pre-emptive basis.

 

The authorities to be granted pursuant to the Resolutions shall expire on the date falling 6 months from the date of the passing of the Resolutions (unless renewed varied or revoked by the Company prior to or on that date) and shall be in addition to the Directors' authorities to allot relevant securities and dis-apply statutory pre-emption rights granted at the Company's Annual General Meeting held on 28 April 2016.

 

The Directors do currently have sufficient authority to allot the Open Offer Shares and therefore the Open Offer is not conditional on the Resolutions being passed.

 

 

8          Directors' shareholdings

As part of the Open Offer, certain of the Directors' share holdings will increase.

 

The beneficial and non-beneficial interests of the Directors and persons closely associated with them in Ordinary Shares as at the date of the Circular and following the Fundraising are set out in the table below.

 

	Date of the Circular		New Ordinary Shares	Immediately following the Fundraising
	Number of Ordinary Shares	Percentage of ordinary share capital	Number of Ordinary Shares	Number of Ordinary Shares	Percentage of Issued ordinary share capital
Director
Tim Yeo	877,272	0.28%	50,000	927,272	0.24%
Adam Bond	3,000,000	0.97%	Nil	3,000,000	0.77%
James Gibson	90,000	0.03%	Nil	90,000	0.02%
Mitchell Field	2,894,810	0.93%	Nil	2,894,810	0.74%
Eugene Shvidler	14,432,737	4.65%	Nil	14,432,737	3.69%
Eugene Tenenbaum	Nil	Nil	Nil	Nil	Nil

 

9          Irrevocable Undertakings

The Company has obtained irrevocable undertakings, from certain Shareholders, including the Directors to vote in favour of the Resolutions in respect of, in aggregate, of 60,905,313 Ordinary Shares, in aggregate representing approximately 19.6 per cent. of AFC Energy's issued share capital on 13 February 2017 (being the last Business Day prior to publication of this Circular).

As set out in section 8 above, certain of the Directors have irrevocably undertaken to take up their rights under the Open Offer to purchase Ordinary Shares.

 

10         Action to be taken in respect of the General Meeting

Shareholders should check that they have received with the Circular:

·      a Form of Proxy for use in respect of the General Meeting; and

·      if based in the United Kingdom, a reply-paid envelope for use in conjunction with the return of the Form of Proxy.

 

Whether or not Shareholders propose to attend the General Meeting in person, Shareholders are strongly encouraged to complete, sign and return their Form of Proxy in accordance with the instructions printed thereon as soon as possible, but in any event so as to be received, by post to Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY or by hand to Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY, during normal business hours only, by no later than 11.00 a.m. on 1 March 2017 (or, in the case of an adjournment of the General Meeting, not later than 48 hours before the time fixed for the holding of the adjourned meeting (excluding any part of a day that is not a Business Day)).

Appointing a proxy in accordance with the instructions set out above will enable Shareholder votes to be counted at the General Meeting in the event of Shareholder's absence. The completion and return of the Form of Proxy will not prevent Shareholders from attending and voting at the General Meeting, or any adjournment thereof, in person should Shareholders wish to do so.

11         Recommendation

The Directors believe that the Resolutions to be proposed at the General Meeting are in the best interests of the Company and Shareholders as a whole and unanimously recommend that Shareholders vote in favour of the Resolutions. Each of the Directors who hold Ordinary Shares has irrevocably undertaken to vote in favour of the Resolutions in respect of, in aggregate, 21,294,819 Ordinary Shares, representing approximately 6.86 per cent. of the Ordinary Shares in issue on 13 February 2017 (being the last Business Day prior to publication of this Circular).

 

 

 

DEFINITIONS

In this announcement, the following defined terms have the following meaning:

 

"Admission"	admission of the New Ordinary Shares to trading on AIM becoming effective in accordance with the AIM Rules;
"AIM"	the market of that name operated by the London Stock Exchange;
"AIM Rules"	together, the AIM Rules for Companies and the AIM Rules for Nominated Advisers;
"Application Form"	the non-CREST Application Form;
"Basic Entitlement(s)"	the pro rata entitlement of Qualifying Shareholders to subscribe for 1 Open Offer Share for every 15 Existing Ordinary Shares registered in their name as at the Record Date, on and subject to the terms of the Open Offer;
"Board" or "Directors"	the directors of AFC Energy whose names are set out on page 5 of the Circular;
"Business Day"	any day on which banks are usually open in England and Wales for the transaction of business, other than a Saturday, Sunday or public holiday;
"Cantor Fitzgerald" or "CFE"	Cantor Fitzgerald Europe, One Churchill Place, Canary Wharf, London E14 5RB, as Nominated Adviser and Broker to the Company;
"Circular"	the Circular, posted to Shareholders on 15 February 2017;
"City Code"	the City Code on Takeovers and Mergers;
"Company" or "AFC Energy"	AFC Energy Plc, a company incorporated and registered in England and Wales with company number 05668788;
"CREST"	the computerised settlement system (as defined in the CREST Regulations) operated by Euroclear UK & Ireland Limited;
"CREST Manual"	the compendium of documents entitled CREST Manual issued by Euroclear from time to time and comprising the CREST Reference Manual, the CREST Central Counterparty Service Manual, the CREST International Manual and the CREST Glossary of Terms;
"CREST Member"	a person who has been admitted to Euroclear as a member (as defined in the CREST Order);
"CREST Participant"	a person who is, in relation to CREST, a system-participant (as defined in the CREST Regulations);
"CREST Regulations"	the Uncertificated Securities Regulations 2001 (SI 2001/3755) (as amended from time to time);
"CREST Sponsor"	a CREST participant admitted to CREST as a CREST Sponsor;
"CREST Sponsored Member"	a CREST Member admitted to CREST as a sponsored member;
"De Nora"	Industrie De Nora S.p.A, with which the Company entered a joint development agreement as disclosed in an announcement on 5 August 2016;
"Enlarged Share Capital"	the Company's issued ordinary share capital immediately following Admission;
"Euroclear"	Euroclear UK & Ireland Limited;
"Excess Application"	Open Offer Shares which may be applied for by Qualifying Shareholders under the Excess Application Facility;
"Excess Application Facility"	the arrangement pursuant to which Qualifying Shareholders may apply for additional Open Offer Shares in excess of their Open Offer Entitlement in accordance with the terms and conditions of the Open Offer;
"Excess CREST Open Offer Entitlement"	in respect of each Qualifying CREST Shareholder, their entitlement (in addition to his Open Offer Entitlement) to apply for Open Offer Shares pursuant to the Excess Application Facility, which is conditional on him taking up his Open Offer Entitlement in full;
"Excess Shares"	Open Offer Shares applied for by Qualifying Shareholders under the Excess Application Facility;
"Ex-entitlement Date"	the date on which the Existing Ordinary Shares are marked "ex" for entitlement under the Open Offer, being 15 February 2017;
"Existing Ordinary Shares"	the ordinary shares of 0.1 pence each in the capital of the Company as at the date of this announcement, being 310,263,943 Ordinary Shares;
"FCA"	the Financial Conduct Authority;
"Form of Proxy"	the form of proxy attached to the Circular for use by Shareholders in connection with the GM;
"FSMA"	Financial Services and Markets Act 2000, as amended;
"Fundraising"	together, the Placing, Subscription and Open Offer;
"Gen2"	the second generation of the Company's fuel cell system which was completed in November 2016;
"GM" or "General Meeting"	the general meeting of AFC Energy to be held at Chelsea Football Club, Stamford Bridge, London SW6 4HS at 11.00 a.m. on 3 March 2017, notice of which is set out in Part 6 of the Circular;
"HMRC"	Her Majesty's Revenue & Customs;
"Issue Price"	10 pence per New Ordinary Share;
"Listing Rules"	the listing rules of the FCA made in accordance with section 73A(2) of FSMA;
"London Stock Exchange"	London Stock Exchange plc;
"Money Laundering Regulations"	the Money Laundering Regulations (2007) (as amended) and obligations in connection with money laundering under the Criminal Justice Act 1993 and the Proceeds of Crime Act 2002;
"New Ordinary Shares"	the 80,684,262 new Ordinary Shares in the capital of AFC Energy to be issued in connection with the Fundraising;
"Notice of GM"	the notice of General Meeting which forms part of the Circular;
"Open Offer"	the invitation to Qualifying Shareholders to subscribe for the Open Offer Shares at the Issue Price on the terms and subject to the conditions set out in the Circular and in the case of Qualifying Non-CREST Shareholders only, the Application Form;
"Open Offer Entitlement"	the entitlement of Qualifying Shareholders to subscribe for Open Offer Shares allocated to Qualifying Shareholders on the Record Date pursuant to the Open Offer;
"Open Offer Shares"	the 20,684,262 New Ordinary Shares being made available to Qualifying Shareholders pursuant to the Open Offer;
"Ordinary Shares"	the ordinary shares of 0.1 pence each in the capital of the Company;
"Overseas Shareholder"	a Shareholder with a registered address outside of the United Kingdom;
"Participant ID"	the identification code or membership number used in CREST to identify a particular CREST Member or other CREST Participant;
"Peat"	M C Peat & Co LLP, the Company's Joint Broker;
"Peel"	Peel Environmental Limited;
"Placees"	the placees subscribing for Placing Shares pursuant to the Placing;
"Placing Agreement"	the conditional placing agreement dated 14 February 2017 between Cantor Fitzgerald and the Company, details of which are set out in the letter from the Chairman;
"Placing"	the proposed placing by Cantor Fitzgerald, as agent for the Company, of the Placing Shares;
"Placing Shares"	the 58,500,000 New Ordinary Shares to be allotted on the terms of the Placing Agreement;
"Prospectus Rules"	the prospectus rules of the Financial Conduct Authority made under Part VI of the Financial Services and Markets Act 2000;
"Prospectus Directive"	directive 2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to trading;
"Qualifying CREST Shareholders"	Qualifying Shareholders holding Ordinary Shares in uncertificated form in CREST at the Record Date;
"Qualifying Non-CREST Shareholders"	Qualifying Shareholders holding Ordinary Shares in certificated form at the Record Date;
"Qualifying Shareholders"	holders of Ordinary Shares on the register of members of the Company at the Record Date with the exclusion of Shareholders with a registered address or who are resident in any Restricted Jurisdiction;
"Record Date"	close of business on 10 February 2017;
"Registrars" or "Receiving Agent"	Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS99 7NH;
"Regulatory Information Service"	has the meaning given under the AIM Rules;
"Resolutions"	the resolutions to be proposed at the GM, as set out in the Notice of GM;
"Restricted Jurisdiction"	each and any of Australia, Canada, Japan, the Republic of Ireland, the Republic of South Africa, New Zealand and the United States and any other jurisdiction where the extension or the availability of the Open Offer would breach any applicable law;
"Securities Act"	US Securities Act of 1933 (as amended);
"Shareholders"	holders of Existing Ordinary Shares in AFC Energy;
"Subscription"	the proposed subscription for New Ordinary Shares by certain existing investors;
"Subscription Shares"	the 1,500,000 Ordinary Shares to be subscribed for pursuant to the Subscription;
"UK" or "the United Kingdom"	the United Kingdom of Great Britain and Northern Ireland;
"Uncertificated" or "Uncertificated form"	recorded on the relevant register or other record of the Shares or other security concerned as being held in uncertificated form in CREST, and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST;
"United States", "United States of America" or "US"	the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia and all areas subject to its jurisdiction;
"2016 Strategic Milestones"	the strategic milestones of the Company as detailed in an announcement released by RIS on 1 March 2016;
"£", "Pounds Sterling" or "Pence"	UK pounds sterling, the lawful currency of the United Kingdom; and
"€" or "Euro"	single legal currency of Eurozone countries.

 

 

 

 

 

 

 

 

 

 

 

APPENDIX - TERMS AND CONDITIONS OF THE PLACING

 

FOR INVITED PLACEES ONLY - IMPORTANT INFORMATION

 

The information contained herein is restricted and is not for publication, release or distribution in or into the United States, Canada, Australia, Japan, Singapore, the Republic of South Africa, the Republic of Ireland or New Zealand or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction.

 

Each Placee should consult with its own advisers as to legal, tax, business and related aspects of any subscription for New Ordinary Shares.

 

These Terms and Conditions (the "Terms and Conditions") do not constitute an offer or invitation to acquire, underwrite or dispose of, or any solicitation of any offer or invitation to acquire, underwrite or dispose of, any Ordinary Shares or other securities of the Company to any person in any jurisdiction to whom it is unlawful to make such offer, invitation or solicitation in such jurisdiction. Persons who seek to participate in the Placing must inform themselves about and observe any such restrictions and must be persons who are able to lawfully receive this Announcement in their jurisdiction (all such persons being "Relevant Persons"). In particular, these Terms and Conditions do not constitute an offer or invitation (or a solicitation of any offer or invitation) to acquire, underwrite or dispose of or otherwise deal in any Ordinary Shares or other securities of the Company in the United States, Canada, Australia, Japan, Singapore or the Republic of South Africa, subject to certain limited exemptions.

 

Members of the public are not eligible to take part in the Placing and each Placee agrees, undertakes and warrants that it is not acquiring New Ordinary Shares on behalf of members of the public or its Retail clients (as that term is defined in the Rules of the FCA), save where the Placee does so on a fully discretionary basis and without reference to any such Retail clients. In the UK, the Placing and these Terms and Conditions are directed only at persons whose ordinary activities involve them acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses and who have professional experience in matters relating to investments falling within the definition of 'investment professionals' in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order") or are high net worth body corporates, unincorporated associations or partnerships or trustees of high value trusts as described in Article 49 of the Order or to whom they may otherwise lawfully be communicated.

 

The New Ordinary Shares have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "Securities Act") or under any other securities legislation of any state of the United States or registered or qualified under the applicable securities laws of any province of Canada or Australia, Japan, Singapore or the Republic of South Africa. Accordingly, the New Ordinary Shares may not, subject to certain limited exceptions, be offered or sold, directly or indirectly, within the United States, any province of Canada or Australia, Japan, Singapore or the Republic of South Africa or offered or sold to, or for the account or benefit of, US persons (as defined in Regulation S of the Securities Act ("Regulation S") ("US Person")) or a national, citizen or resident of any province of Canada or Australia, Japan, Singapore or the Republic of South Africa. The New Ordinary Shares are being offered and sold outside the United States in offshore transactions complying with Regulation S, which provides an exemption from the requirement to register the offer and sale under the Securities Act.

 

These Terms and Conditions apply to any person who offers to subscribe for New Ordinary Shares in the Placing. Each person (a "Placee") to whom these Terms and Conditions apply, as described above, who confirms his agreement, whether by telephone or otherwise, with Cantor Fitzgerald Europe to subscribe for New Ordinary Shares in the Placing, hereby agrees with Cantor Fitzgerald Europe to be legally and irrevocably bound by these Terms and Conditions which will be the Terms and Conditions on which the New Ordinary Shares will be acquired in the Placing.

 

Capitalised terms not otherwise defined in this Appendix are as defined in the Announcement relating to the Placing of which this Appendix forms part.

 

These Terms and Conditions must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which these Terms and Conditions relate is available only to Relevant Persons and will be engaged in only with Relevant Persons. A Placee may not assign, transfer, or in any manner, deal with its rights and obligations under the agreement arising from the acceptance of the Placing, without the prior written agreement of Cantor Fitzgerald Europe, in accordance with all relevant requirements.

 

All times and dates in this Appendix are references to times and dates in London (United Kingdom).

 

Terms of the Placing

 

Each Placee's commitment to subscribe for a fixed number of New Ordinary Shares under the Placing will be agreed orally with Cantor Fitzgerald Europe and such agreement will constitute a binding irrevocable commitment by a Placee, subject to the Terms and Conditions set out in this Appendix, to subscribe and pay for the relevant number of New Ordinary Shares (the "Placing Participation") at the Placing Price. Such commitment is not capable of termination or rescission by the Placee in any circumstances except fraud. All such obligations are entered into by the Placee with Cantor Fitzgerald Europe acting in its capacity as agent of the Company and are therefore directly enforceable by the Company.

 

After such agreement is entered into, each Placee allocated New Ordinary Shares in the Placing will be sent a confirmatory email stating the number of New Ordinary Shares allocated to it at the Placing Price, the total subscription amount payable to Cantor Fitzgerald Europe and including settlement instructions (the "Confirmation Note").

 

Each Placee will be deemed to have read this Appendix in its entirety. Cantor Fitzgerald Europe is acting for the Company and no one else in connection with the Placing and will not regard any other person (whether or not a recipient of these Terms and Conditions) as a client in relation to the Placing and to the fullest extent permitted by law and applicable FCA rules, neither Cantor Fitzgerald Europe nor any of its affiliates will have any liability, obligation or duty to Placees or to any person other than the Company in respect of the Placing.

 

The New Ordinary Shares will rank pari passu in all respects and form one class with the Existing Ordinary Shares of the Company in issue on Admission, including the right to receive dividends or other distributions, if any. The New Ordinary Shares will be issued free of any encumbrance, lien or other security interest.

 

Application for Admission

 

Application will be made to London Stock Exchange plc for Admission of the New Ordinary Shares to trading on AIM. It is anticipated that Admission of the New Ordinary Shares to AIM will become effective at 8.00 a.m. on 9 March 2017 and that dealings in the New Ordinary Shares will commence at that time and date for normal account settlement.

 

Placing Participations conditional

 

Placing Participations are in all respects conditional upon:-

 

(i)       the Placing Agreement entered into between Cantor Fitzgerald Europe and the Company relating to the placing of the New Ordinary Shares becoming unconditional in all respects and not having been terminated in accordance with its terms; and

 

(ii)      Admission having become effective,

 

in each case by 8.00 a.m. on 9 March 2017 (or such later time and/or date as the Company and Cantor Fitzgerald Europe agree, but in any event being no later than 8.00 a.m. on 31 March 2017 (the "Long Stop Date")).

 

Scaling back

 

Cantor Fitzgerald Europe (after consulting with the Company) reserves the right to scale back the number of New Ordinary Shares to be subscribed for by any Placee or the number of New Ordinary Shares to be subscribed for by all Placees in aggregate. The Company and Cantor Fitzgerald Europe also reserve the right not to offer allocations of New Ordinary Shares to any person and not to accept offers to subscribe for New Ordinary Shares or to accept such offers in part rather than in whole. Cantor Fitzgerald Europe shall be entitled to effect the Placing by such method as it shall in its sole discretion determine.

 

To the fullest extent permissible by law, neither Cantor Fitzgerald Europe or any holding company thereof, nor any subsidiary, branch or affiliate of Cantor Fitzgerald Europe (each an "Affiliate") nor any person acting on behalf of any of the foregoing shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise). In particular, none of Cantor Fitzgerald Europe nor any of its Affiliates nor any person acting on behalf of any such person shall have any liability to Placees in respect of its conduct of the Placing.

 

Placing Agreement

 

Pursuant to the Placing Agreement, Cantor Fitzgerald Europe has agreed on behalf of and as agent of the Company, to use its reasonable endeavours to procure persons who will subscribe for the New Ordinary Shares at the Placing Price, subject to these Terms and Conditions. The Placing is not underwritten.

 

Conditions of the Placing

 

Cantor Fitzgerald Europe's obligations under the Placing Agreement in respect of the New Ordinary Shares are conditional on, inter alia:-

 

(a)         none of the warranties or undertakings contained in the Placing Agreement being untrue, inaccurate or misleading in any material respect at any time before Admission and no fact or circumstance having occurred or arisen which would constitute a material breach of any of the warranties or undertakings on the part of the Company contained in the Placing Agreement;

(b)         the New Ordinary Shares having been allotted, subject only to Admission, in accordance with the Placing Agreement; and

(c)         Admission taking place not later than 8.00 a.m. on 9 March 2017 or such later date as the Company and Cantor Fitzgerald Europe may otherwise agree (but not being later than 8.00 a.m. on the Long Stop Date).

 

The Placing Agreement contains, inter alia, certain warranties and indemnities from the Company for the benefit of Cantor Fitzgerald Europe.

 

Right to terminate under the Placing Agreement

 

Cantor Fitzgerald Europe may, in its absolute discretion, terminate the Placing Agreement (i) if any of the warranties given by the Company to Cantor Fitzgerald Europe in the Placing Agreement (a) was untrue or inaccurate or was misleading at the date of the Placing Agreement (b) would not be true and accurate, or would be misleading, if they were to be repeated at any time prior to Admission (by reference to the facts and circumstances in each case then existing), in the case of each of (a) and (b) in a respect which Cantor Fitzgerald Europe considers to be material in the context of the Placing; (ii) in the event of the failure of the Company to comply with its obligations under the Placing Agreement; (iii) in the event of the occurrence (in the sole judgement of Cantor Fitzgerald Europe) of a material adverse change in the financial or trading position or prospects of the Company; or (iv) in the event of the occurrence of a 'force majeure' event which, in the opinion of Cantor Fitzgerald Europe, is likely to have a materially prejudicial effect on the Placing or make it impracticable or inadvisable to proceed with the Placing. The exercise by Cantor Fitzgerald Europe of any right of termination (or any right of waiver exercisable by Cantor Fitzgerald Europe) contained in the Placing Agreement or the exercise of any discretion under the Terms and Conditions set out herein is within the absolute discretion of Cantor Fitzgerald Europe and Cantor Fitzgerald Europe will not have any liability to Placees whatsoever in connection with any decision to exercise or not exercise any such rights.

 

By accepting the New Ordinary Shares referred to in the Announcement to which this Appendix is annexed, each Placee agrees that, without having any liability to such Placee, Cantor Fitzgerald Europe may, in its absolute discretion, exercise the right, (i) to extend the time for fulfilment of any of the conditions in the Placing Agreement (provided that Placees' commitments are not extended beyond the Long Stop Date); (ii) to waive, in whole or in part, fulfilment of certain of the conditions; or (iii) to terminate the Placing Agreement, in each case without consulting Placees (or any of them).

 

If (i) any of the conditions in the Placing Agreement are not satisfied (or, where relevant, waived); or (ii) the Placing Agreement is terminated; or (iii) the Placing Agreement does not otherwise become unconditional in all respects, the Placing will not proceed and all funds delivered by Placees to Cantor Fitzgerald Europe or the Company pursuant to the Placing and this Appendix will be returned to Placees at their risk without interest, and Placees' rights and obligations under the Placing shall cease and determine at such time and no claim shall be made by Placees in respect thereof.

 

Registration and Settlement

 

Settlement of transactions in the New Ordinary Shares (ISIN: GB00B18S7B29) following Admission will take place within CREST (subject to certain exceptions). Cantor Fitzgerald Europe reserves the right to require settlement for, and delivery of, the New Ordinary Shares (or a portion thereof) to Placees by such other means that it deems necessary if delivery or settlement is not possible or practicable within CREST within the timetable set out in this Announcement or would not be consistent with the regulatory requirements in any Placee's jurisdiction.

 

It is expected that settlement will be on 9 March 2017 in accordance with the instructions set out in the Confirmation Note.

 

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 3 percentage points above The Royal Bank of Scotland plc's base rate, with interest compounded on a daily basis.

 

Each Placee is deemed to agree that, if it does not comply with these obligations, Cantor Fitzgerald Europe may sell any or all of the New Ordinary Shares allocated to that Placee on such Placee's behalf and retain from the proceeds, for Cantor Fitzgerald Europe's account and benefit (as agent for the Company), 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 or securities transfer tax (together with any interest or penalties) which may arise upon the sale of such New Ordinary Shares on such Placee's behalf. By communicating a bid for New Ordinary Shares, each Placee confers on Cantor Fitzgerald Europe all such authorities and powers necessary to carry out any such sale and agrees to ratify and confirm all actions which Cantor Fitzgerald Europe lawfully takes in pursuance of such sale.

 

If New Ordinary Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the Confirmation Note is copied and delivered immediately to the relevant person within that organisation.

 

Insofar as New Ordinary 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 New Ordinary Shares should, subject as provided below, be so registered free from any liability to UK stamp duty or stamp duty reserve tax or securities transfer tax.

 

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

 

Further Terms, Confirmations and Warranties

 

By accepting the Placing Participation referred to in the Confirmation Note, each Placee makes the following confirmations, acknowledgements, representations, warranties and/or undertakings to Cantor Fitzgerald Europe and the Company and their respective directors, agents and advisers:

 

1            each Placee confirms, represents and warrants that it has read and understood this Announcement (including this Appendix) in its entirety and acknowledges that its Placing Participation will be governed by the terms, conditions, representations, warranties, acknowledgements, agreements and undertakings of this Appendix;

 

2            each Placee acknowledges and agrees that its Placing Participation on the Terms and Conditions set out in this Appendix is legally binding, irrevocable and is not capable of termination or rescission by such Placee in any circumstances;

 

3            each Placee confirms, represents and warrants that it has not relied on, received or requested nor does it have any need to receive, any prospectus, offering memorandum, listing particulars or any other document (other than the Announcement), any information given or any representations, warranties, agreements or undertakings (express or implied), written or oral, or statements made at any time by the Company, Cantor Fitzgerald Europe or by any subsidiary, holding company, branch or associate of the Company or Cantor Fitzgerald Europe, or any of their respective officers, directors, agents, employees or advisers, or any other person in connection with the Placing, the Company and its subsidiaries or the New Ordinary Shares and that in making its application under the Placing it is relying solely on the information contained in the Announcement and this Appendix and it will not be relying on any agreements by the Company and its subsidiaries or Cantor Fitzgerald Europe or any director, employee or agent of the Company or Cantor Fitzgerald Europe other than as expressly set out in this Appendix for which none of Cantor Fitzgerald Europe or any of their directors and/or employees and/or person(s) acting on behalf of any of them shall to the maximum extent permitted under law have any liability except in the case of fraud;

 

4            each Placee confirms, represents and warrants that it is sufficiently knowledgeable to understand and be aware of the risks associated with, and other characteristics of, the New Ordinary Shares and, among others, of the fact that it may not be able to resell the New Ordinary Shares except in accordance with certain limited exemptions under applicable securities legislation and regulatory instruments;

 

5            each Placee confirms, represents and warrants, if a company, that it is a valid and subsisting company and has all the necessary corporate capacity and authority to execute its obligations in connection with the Placing Participation and confirms, represents and warrants that any person who confirms to Cantor Fitzgerald Europe on behalf of a Placee an agreement to subscribe for New Ordinary Shares is duly authorised to provide such confirmation to Cantor Fitzgerald Europe;

 

6            each Placee agrees that the exercise by Cantor Fitzgerald Europe of any right of termination or any right of waiver exercisable by Cantor Fitzgerald Europe contained in the Placing Agreement or the exercise of any discretion including (without limitation) the right not to enter into the Placing Agreement is within the absolute discretion of Cantor Fitzgerald Europe and Cantor Fitzgerald Europe will not have any liability to any Placee whatsoever in connection with any decision to exercise or not exercise any such rights. Each Placee acknowledges that if (i) any of the conditions in the Placing Agreement are not satisfied (or, where relevant, waived); or (ii) the Placing Agreement is terminated; or (iii) the Placing Agreement does not otherwise become unconditional in all respects, the Placing will lapse and such Placee's rights and obligations in relation to the Placing shall cease and determine at such time and no claim shall be made by any Placee in respect thereof;

 

7            each Placee acknowledges and agrees that Cantor Fitzgerald Europe is not acting for, and that it does not expect Cantor Fitzgerald Europe to have any duties or responsibilities towards, such Placee, including, without limitation, for providing protections afforded to customers or clients of Cantor Fitzgerald Europe under the FCA's Conduct of Business Source Book or advising such Placee with regard to its Placing Participation and that such Placee is not, and will not be, a customer or client of Cantor Fitzgerald Europe as defined by the FCA's Conduct of Business Source Book in connection with the Placing. Likewise, Cantor Fitzgerald Europe will not treat any payment by such Placee pursuant to its Placing Participation as Client Money governed by the FCA's Client Assets Sourcebook;

 

8            each Placee undertakes and agrees that it will be responsible for any stamp duty or stamp duty reserve tax in relation to the New Ordinary Shares comprised in its Placing Participation and that neither Cantor Fitzgerald Europe nor the Company will be responsible for any liability to stamp duty or stamp duty reserve tax in relation to the New Ordinary Shares comprised in such Placee's Placing Participation;

 

9            each Placee confirms, represents and warrants that it is a Relevant Person and that it may lawfully subscribe for or acquire the New Ordinary Shares comprised in such Placee's Placing Participation and that it has complied with and will comply with all applicable provisions of FSMA with respect to anything done by such Placee in relation to the New Ordinary Shares in, from or otherwise involving, the United Kingdom;

 

10          each Placee acknowledges and agrees that the agreement confirmed by the Confirmation Note is a legally binding contract between it and the Company and the Terms and Conditions of such Placee's Placing Participation will be governed by, and construed in accordance with, the laws of England and Wales to the exclusive jurisdiction of whose courts such Placee irrevocably agrees to submit;

 

11          each Placee agrees that it will ensure delivery and payment is completed in accordance with the settlement instructions set out in the Confirmation Note (or as separately agreed with Cantor Fitzgerald Europe in the case of certificated settlement) and acknowledges and agrees that time shall be of the essence as regards such Placee's obligations pursuant to its Placing Participation;

 

12          each Placee acknowledges and agrees that it is the responsibility of such Placee (if it is outside of the United Kingdom) to satisfy itself that, in doing so, such Placee complies with the laws of any relevant territory in connection with its Placing Participation and that it obtains any requisite governmental or other consents and observes any other applicable formalities;

 

13          each Placee acknowledges and agrees that the Announcement does not constitute an offer to sell, or the solicitation of an offer to subscribe for or buy, New Ordinary Shares in any jurisdiction in which such an offer or solicitation is unlawful. Accordingly, such Placee acknowledges and agrees that the New Ordinary Shares may not, subject to certain limited exceptions, be offered or sold, directly or indirectly, in or into the United States, any province of Canada or Australia, Japan, Singapore or the Republic of South Africa or offered or sold to, or for the account or benefit of, a national, citizen or resident of the United States, any province of Canada or Australia, Japan, Singapore or the Republic of South Africa, in each case subject to limited exemptions, or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction;

 

14          each Placee acknowledges and agrees that the New Ordinary Shares have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or jurisdiction of the United States, or the relevant Canadian, Japanese, Australian, Singaporean or South African securities legislation and therefore the New Ordinary Shares may not be offered, sold, transferred or delivered directly or indirectly into the United States, Canada, Japan, Australia, Singapore or the Republic of South Africa or their respective territories and possessions, subject to limited exemptions, and in the case of the United States, pursuant to an exemption from, or in a transaction not subject to the registration requirements of, the Securities Act and in compliance with United States securities laws;

 

15          each Placee confirms, represents and warrants that it has complied with all relevant laws of all relevant territories, obtained all requisite governmental or other consents which may be required in connection with its Placing Participation, complied with all requisite formalities and that it has not taken any action or omitted to take any action which will or may result in Cantor Fitzgerald Europe, the Company or any of their respective directors, officers, agents, employees or advisers acting in breach of the legal or regulatory requirements of any territory in connection with the Placing or such Placee's Placing Participation;

 

16          each Placee confirms, represents and warrants that its subscription for New Ordinary Shares does not trigger, in the jurisdiction in which such Placee is resident or located: (i) any obligation to prepare or file a prospectus or similar document or any other report with respect to such subscription; (ii) any disclosure or reporting obligation of the Company; or (iii) any registration or other obligation on the part of Cantor Fitzgerald Europe or the Company;

 

17          each Placee confirms, represents and warrants it is acting as principal and for no other person and that its Placing Participation will not give any other person a contractual right to require the issue by the Company of any New Ordinary Shares;

 

18          each Placee confirms, represents and warrants that in accepting its Placing Participation it is not applying for registration as, or as a nominee or agent for, a person who is or may be a person mentioned in sections 67 to 72 inclusive and sections 93 to 97 inclusive of the Finance Act 1986;

 

19          each Placee confirms, represents and warrants that, to the extent applicable to it, it is aware of its obligations in connection with the Criminal Justice Act 1993, the Terrorism Act 2006, the UK Anti-Terrorism Crime and Security Act 2001, the Money Laundering Regulations 2007, the Proceeds of Crime Act 2002, Part VIII of the Financial Services and Markets Act 2000 (as amended), the Financial Services Act 2012 and the Market Abuse Regulation 2016, it has identified its clients in accordance with the Money Laundering Regulations 2007 and it has complied fully with its obligations pursuant to those Regulations;

 

20          each Placee acknowledges and agrees that all times and dates in this Announcement and the Terms and Conditions set out in this Appendix may be subject to amendment and that Cantor Fitzgerald Europe will notify it of any such amendments;

 

21          each Placee acknowledges and agrees that no term or other provision of the agreement confirmed by the Confirmation Note shall be enforceable under the Contracts (Rights of Third Parties) Act 1999 by any person other than Cantor Fitzgerald Europe or any affiliate of Cantor Fitzgerald Europe or any Indemnified Person (as hereinafter defined);

 

22          each Placee acknowledges that any of its monies held or received by Cantor Fitzgerald Europe will not be subject to the protections conferred by the FCA's Client Money Rules;

 

23          each Placee confirms, represents and warrants that it understands that the New Ordinary Shares 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, accordingly, may not be offered or sold or otherwise transferred in the United States or to, or for the account or benefit of, US Persons except pursuant to a registration statement under the Securities Act or an exemption from the registration requirements of the Securities Act, and, in connection with any such transfer, the Company will have the right to obtain, as a condition to transfer, a legal opinion of counsel, in such form and by counsel reasonably satisfactory to the Company, that no such Securities Act registration is or will be required along with appropriate certifications by the transferee as to the 'Accredited Investor' status and/or other appropriate matters;

 

24          each Placee confirms, represents and warrants that it has not distributed, forwarded, transferred or otherwise transmitted, and will not distribute, forward, transfer or otherwise transmit, this Announcement or any other presentation or offering materials concerning the New Ordinary Shares within the United States, nor will it do any of the foregoing. Such Placee further confirms that it understands that the information in this Announcement, including financial information, may be materially different from any disclosure that would be provided in a US offering;

 

25          each Placee agrees, confirms, represents, warrants and undertakes as follows:-

 

25.1      it is, at the time of the offer and acceptance of the New Ordinary Shares, outside the United States for the purposes of Regulation S;

 

25.2      it will not offer or sell the New Ordinary Shares in the United States absent registration or an exemption from registration under the Securities Act;

 

25.3      it is aware that the New Ordinary Shares are being offered outside the United States in reliance on Regulation S; and

 

25.4      it did not purchase or otherwise acquire the New Ordinary Shares based on or due to directed selling efforts (as defined in Rule 902 under the Securities Act), including based on an advertisement in a publication with a general circulation in the United States, nor has it seen or been aware of any activity that, to its knowledge, constitutes directed selling efforts in the United States;

 

26          if it is subscribing for the New Ordinary Shares in the United Kingdom, that each Placee is a person falling within the exemption contained in Section 86(1)(a) of the Financial Services and Markets Act 2000 (as amended) or falling within one or more of the categories of persons set out in Article 19 (Investment Professionals) or Article 49 (High net worth companies, unincorporated associations etc.) of the Order;

 

27          each Placee confirms, represents and warrants that, in making the investment decision with respect to the New Ordinary Shares, it has:-

 

27.1       not relied on the Company or any of its respective affiliates or on any document published by any of them;

 

27.2       the ability to bear the economic risk of its investment in the New Ordinary Shares and has no need for liquidity with respect to its investment in the New Ordinary Shares;

 

27.3       such knowledge and experience in financial and business matters that it is capable of evaluating the merits, risks and suitability of investing in the New Ordinary Shares, and is able to sustain a complete loss of any investment in the New Ordinary Shares; and

 

27.4       investigated independently and made its own assessment and satisfied itself concerning the relevant tax, legal, currency and other economic considerations relevant to its investment in the New Ordinary Shares, including any federal, state and local tax consequences, affecting it in connection with its subscription for and any subsequent disposal of the New Ordinary Shares;

 

28          each Placee acknowledges and agrees that it is not entitled to the protections afforded to clients of Cantor Fitzgerald Europe in connection with the Placing and that neither Cantor Fitzgerald Europe nor any of its affiliates nor any of their respective officers, directors, employees or advisers shall be liable for any losses (including, without limitation, loss of profit, loss of business or opportunity and special interest or consequential losses), damages or costs of the Placee save as a result of fraud or for death or personal injury;

 

29          each Placee acknowledges that the Company, Cantor Fitzgerald Europe, CREST, the registrar, any transfer agent, any distributors or dealers and their respective affiliates and others will rely on the truth and accuracy of the foregoing confirmations, warranties, acknowledgements, representations, undertakings and agreements, and agrees to notify the Company and Cantor Fitzgerald Europe promptly in writing if any of its confirmations, warranties, acknowledgements, representations, undertakings or agreements set out above cease to be accurate and complete and to indemnify and hold harmless on an after-tax basis the Company, Cantor Fitzgerald Europe and any of their respective officers, directors, agents, employees or advisers (the "Indemnified Persons") from and against any and all loss, damage, liability or expense, including reasonable costs and attorneys' fees and disbursements, which an Indemnified Person may incur by reason of, or in connection with, any representation or warranty made by such Placee as set out above not having been true when made, any misrepresentation made or any failure by such Placee to fulfil any of its undertakings or agreements set out above or any other document such Placee provides to the Company or Cantor Fitzgerald Europe. Such Placee irrevocably authorises each of the Company and Cantor Fitzgerald Europe to produce a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby;

 

30          each Placee acknowledges that the rights and remedies of Cantor Fitzgerald Europe and the Company under these Terms and Conditions are in addition to any rights and remedies which would otherwise be available to each of them and the exercise or partial exercise of one right or remedy will not prevent the exercise of the other rights and/or remedies; and

 

31         each Placee undertakes that it (and any person acting on its behalf) will make payment for the New Ordinary Shares allocated to it in accordance with this Announcement on the due time and date set out herein, failing which the relevant New Ordinary Shares may be placed with other subscribers or sold as Cantor Fitzgerald Europe may in its sole discretion determine and without liability to such Placee and such Placee will remain liable for any shortfall below the net proceeds of such sale and the placing proceeds of such New Ordinary Shares and may be required to bear the liability for any stamp duty or stamp duty reserve tax (together with any interest or penalties due pursuant to or referred to in these Terms and Conditions) which may arise upon the placing or sale of such Placee's New Ordinary Shares on its behalf.

 

CREST and certificated New Ordinary Shares

 

New Ordinary Shares, once issued, will be admitted to CREST with effect from Admission. Placees will receive New Ordinary Shares comprised in their Placing Participation in uncertificated form registered in their CREST member account. If Placees do not provide any CREST details or if Placees provide insufficient CREST details to match within the CREST system to their details, Cantor Fitzgerald Europe may, at its discretion, deliver New Ordinary Shares comprised in any such Placee's Placing Participation in certificated form provided payment has been made in terms satisfactory to Cantor Fitzgerald Europe and all conditions in relation to the Placing have been satisfied or waived.

 

Responsibility

 

The Terms and Conditions set out in this Appendix and the Announcement of which it forms part have been issued by the Company and the Company takes sole responsibility for them.