£4 million Convertible Bond Facility

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.

12 April 2019

AFC Energy PLC

("AFC Energy" or the "Company")

£4 million Convertible Bond Facility

AFC Energy (AIM: AFC), a leading alkaline fuel cell power company, is pleased to announce that the Company has entered into a financing facility with Thalion Global Group ("Thalion") for up to £4 million (before expenses) (the "Facility"). The Facility allows AFC Energy to draw down up to £4 million through the issuance of unsecured convertible loan notes with a par value of £25,000 each (the "Convertible Loan Notes") to Thalion pursuant to a loan note instrument executed by the Company on 11 April 2019 ("Instrument"). Proceeds from the issuance of Convertible Loan Notes will supplement the Company's cash position, which as of 31 March 2019 was £1.4 million, and will enable AFC Energy to continue its product development and commercialisation strategy.

The Company can draw down up to a maximum amount of £500,000 in any 60 day period. The maturity date of the Convertible Loan Notes is 42 months from the date of the Instrument.  The Convertible Loan Notes are issuable at a price of £22,500 (representing a discount of 10% to par value) and are convertible into new ordinary shares of 0.1 pence each in the Company ("Ordinary Shares"), at a price equivalent to the lower of:

·      a 25% premium to the volume weighted average price ("VWAP") on the business day before draw down; or

·      the lowest VWAP from the three business day period prior to conversion.

The Convertible Loan Notes are convertible at the sole option of the noteholder and become redeemable on the maturity date (subject to any conversion rights being exercised during the term of the Convertible Loan Notes). No application will be made to any listing authority, stock exchange or other market for the Convertible Loan Notes to be listed or otherwise traded.

AFC Energy can redeem the Convertible Loan Notes prior to the maturity date at a price equal to a 5% premium to the par value of the Convertible Loan Notes.

Pursuant to the terms of the Facility, the Company will pay an arrangement fee of £200,000 settled by the issue and allotment of 6,666,667 Ordinary Shares at a price of 3 pence per share.

Application has been made for admission of the 6,666,667 Ordinary Shares issued as payment of the arrangement fee and admission is expected to occur at 8.00 a.m. on 17 April 2019 ("Admission"). Following Admission, the Company will have 398,664,872 Ordinary Shares in issue. Accordingly, following Admission, the total number of voting rights in the Company will be 398,664,872. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.

Adam Bond, AFC Energy's Chief Executive Officer, said: "AFC Energy has made serious strides forwards over the past twelve months in the commercialisation of its alkaline fuel cell technology and is currently engaging with a number of prospective and strategic partners interested in supporting this effort.  The facility entered into today allows the Company to continue to develop these opportunities and capitalise on the value created over the past few years into the foreseeable future in collaboration with our prospective industrial and strategic partners without immediate dilution to existing shareholders".

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About AFC Energy

AFC Energy plc is commercialising a scalable alkaline fuel cell system, to provide clean electricity for on and off grid applications. The technology, pioneered over the past ten years in the UK, is in the process of being deployed in industrial gas plants for grid generation, as an alternative to diesel generators for localised power, in energy storage systems and as the power source for local electricity needs.