Proposed Placing, PrimaryBid Offer & Notice of GM

 

For immediate release

 

THIS ANNOUNCEMENT, INCLUDING THE INFORMATION CONTAINED HEREIN, IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION. PLEASE SEE THE IMPORTANT NOTICES AT THE END OF THIS ANNOUNCEMENT.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND SHALL NOT CONSTITUTE AN OFFER TO SELL OR ISSUE OR THE SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY NEW ORDINARY SHARES OF XEROS TECHNOLOGY GROUP PLC IN THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED IN ARTICLE 7 OF THE MARKET ABUSE REGULATION NO. 596/2014 ("MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

 

Xeros Technology Group plc

("Xeros", the "Group" or the "Company")

 

Placing to raise £5.7 million

PrimaryBid Offer to raise up to £0.3 million

and

Notice of General Meeting

 

 

Xeros Technology Group plc (AIM: XSG), the developer and provider of patented water saving and filtration products with multiple commercial applications, proposes to raise £5.7 million before fees and expenses by a placing of 1,140,000,000 new ordinary shares with existing and new institutional investors at an issue price of 0.5 pence per share (the "Issue Price") (the "Placing").

In addition to the Placing there will be an offer of up to a further 60,000,000 new ordinary shares on the PrimaryBid platform at the Issue Price (the "PrimaryBid Offer") for retail and other investors to participate. A separate announcement will be made shortly regarding the PrimaryBid Offer (the Placing and PrimaryBid Offer together the "Fundraising" and the ordinary shares to be issued pursuant to the Placing and the PrimaryBid Offer together the "New Ordinary Shares")

 

Highlights:

 

·   The Placing will raise gross proceeds of £5.7 million with up to an additional £0.3 million through the PrimaryBid Offer;

·    Placing significantly supported by Entrepreneurs Fund and IP2IPO Limited ("IP2IPO"), both existing strategic investors in Xeros;

·    Fundraising proceeds will provide funding for the Company's current portfolio of contracts and development agreements with EBITDA cash break-even expected Q2 2022;

·    The Fundraising is conditional on shareholder approval at a General Meeting of the Company on 13 May 2020;

·    Admission of the New Ordinary Shares is expected on 14 May 2020, subject to the passing of the Resolutions at the General Meeting;

 

finnCap Ltd ("finnCap") acted as nominated adviser, broker and bookrunner in connection with the Placing.  No part of the Placing or the PrimaryBid Offer is underwritten.

The Fundraising is conditional upon admission to trading on AIM becoming effective ("Admission") and the placing agreement between the Company and finnCap (the "Placing Agreement") not being terminated in accordance with its terms.

It is anticipated the New Ordinary Shares will represent approximately 153.11 per cent. of the Company's issued share capital prior to the Fundraising. The Issue Price of 0.5 pence per New Ordinary Share represents a discount of approximately 33.42 per cent. to the closing mid-market price of 0.751 pence per Ordinary Share on 23 April 2020, being the last trading day immediately preceding the date of this announcement. The New Ordinary Shares, when issued, will be fully paid and 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 such New Ordinary Shares after the date of their admission to trading on AIM.

 

Commenting on the Placing, Mark Nichols, CEO of Xeros, said:

"This placing brings the total raised in the last 6 months to £10.7 million providing Xeros the funding required to execute its current contracts and agreements and also to add to these in other targeted geographies. The fundraising follows the Company's migration over the course of the last 18 months to a pure-play licensing business targeting high margin royalty income from a low cost base.

The support of our existing and new investors is greatly valued and appreciated and directly enables major improvements in the sustainability of the global scale industries within which we operate."

 

 

General Meeting and Shareholder Approval

 

For the New Ordinary Shares to be admitted to trading on AIM, Shareholder approval is required:

 

a)    by way of ordinary resolution to give the Directors authority to allot the New Ordinary Shares; and

 

b)    by way of a special resolution to dis-apply statutory pre-emption rights in respect thereof.

 

The authorities referred to above are in addition to the Company's existing general shareholder authorities to allot Ordinary Shares for cash on a non-pre-emptive basis.

 

In order to obtain the necessary shareholder approval, a General Meeting is to be held at two places being the offices of Squire Patton Boggs (UK) LLP at 7 Devonshire Square, London EC2M 4YH and 6 Wellington Place, Leeds LS1 4AP at 10.00 a.m. on 13 May 2020 at which the Resolutions will be proposed. A Circular containing a notice of General Meeting will be sent to shareholders on 27 April 2020. The shareholder Circular and notice of General Meeting will be made available on the Company's website at www.xerostech.com.

 

Expected Timetable of Principal Events

Placing and General Meeting
Announcement of Placing	24 April 2020
Announcement of the PrimaryBid Offer	24 April 2020
PrimaryBid Offer opens from	11:01 a.m. on 24 April 2020
PrimaryBid Offer closes at	3:30 p.m. on 24 April 2020
Posting of the Circular and the Forms of Proxy	27 April 2020
Latest time and date for receipt of Forms of Proxy or electronic proxy appointments for use at the General Meeting	10:00 a.m. on 11 May 2020
Trade Date in respect of the Placing	12 May 2020
General Meeting	10:00 a.m. on 13 May 2020
Settlement Date in respect of the Placing	14 May 2020
Admission of New Ordinary Shares and commencement of dealings on AIM	08:00 a.m. 14 May 2020

 

 

Enquiries:

 

Xeros Technology Group plc Mark Nichols, CEO Paul Denney, CFO www.xerostech.com	Tel: 0114 321 6328
finnCap Julian Blunt, Teddy Whiley (Corporate Finance) Andrew Burdis, Sunila de Silva (ECM) www.finncap.com	+44 (0) 20 7220 0500

 

Notes for editors:

About Xeros Technology Group plc

Xeros Technology Group plc is a platform technology Group that is transforming water intensive industrial and commercial processes.

 

Xeros' patented XOrb^TM technology significantly reduces the amount of water used in the washing or dyeing of soft substrates such as garments and fabrics. They enable the remaining water to become far more efficient and effective in either affixing or removing molecules, the result being improvements in economic, operational, product and sustainability outcomes. The Group is applying its technology in the fields of cleaning, tanning and textiles.

Xeros' XDrum^TM technology is a patented, simple, low cost machine drum design which enables XOrbs to be introduced into and subsequently removed from process cycles in Xeros' chosen markets. The design enables rotating drum machine Original Equipment Manufacturers ("OEMs") in the fields of garment manufacture and cleaning, the ability to make simple and low-cost changes in their production lines to incorporate the Company's XOrb technology.

 

The Group has signed multiple agreements to develop and license its XDrum   and XOrb   products in major commercial and domestic markets.

 

XFiltra^TM is a patented in-machine filtration technology which is designed to prevent harmful micro-plastics generated by washing cycles from being released into the aquacycle. Plastics released from synthetic clothing during washing cycles is one of the single largest sources of primary micro-plastic pollution.

 

For more information, please visit:  http://www.xerostech.com/

 Forward-Looking Statements

 

This announcement contains forward-looking statements. These statements relate to the Group's future prospects, developments and business strategies. Forward-looking statements are identified by their use of terms and phrases such as "potential", "estimate", "expect", "may", "will" or the negative of such terms and phrases, variations or comparable expressions, including references to assumptions. The forward-looking statements in this announcement are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. These forward-looking statements speak only as at the date of this announcement. No statement in this announcement is intended to constitute a profit forecast or profit estimate for any period. Neither the Directors nor the Company undertake any obligation to update forward-looking statements other than as required by the AIM Rules or by the rules of any other securities regulatory authority, whether as a result of new information, future events or otherwise.

 

Market Abuse Regulation

Market soundings, as defined in MAR, were taken in respect of the Placing, with the result that certain persons became aware of inside information, as permitted by MAR. That inside information is set out in this announcement and has been disclosed as soon as possible in accordance with paragraph 7 of article 17 of MAR. Therefore, those persons that received inside information in a market sounding are no longer in possession of inside information relating to the Company and its securities.

 

ADDITIONAL INFORMATION
ON
THE PROPOSED PLACING OF 1,140,000,000 ORDINARY SHARES AND PRIMARYBID OFFER OF UP TO 60,000,000 ORDINARY SHARES AT A PRICE OF 0.5 PENCE EACH
AND
GENERAL MEETING

 

Introduction

The Company is pleased to announce that it has conditionally raised £5.7 million before fees and expenses by way of the Placing at the Issue Price and that it now intends to seek Shareholder consent for the Fundraise to proceed.

In addition the Company is also pleased to announce the offer of up to an additional 60,000,000 ordinary shares via the PrimaryBid Offer for retail and other investors to participate. A separate announcement will be made shortly regarding the PrimaryBid Offer.

The Issue Price represents a discount of 33.42 per cent. to the Closing Price on 23 April 2020, being the latest practical date prior to the announcement of the Fundraising. It is anticipated the New Ordinary Shares will represent approximately 60.49 per cent. of the Company's issued ordinary share capital following Admission.

For the Fundraising to proceed, the Company requires approval of the Shareholders to authorise the Directors to allot the New Ordinary Shares and disapply pre-emption rights in relation to the issue of the New Ordinary Shares. A Circular will be sent to shareholders in due course with details of the Fundraising and to give notice of the General Meeting for shareholders to consider and, if thought fit, approve the Resolutions to grant these authorities. The General Meeting is to be held at two places being the offices of Squire Patton Boggs (UK) LLP at 7 Devonshire Square, London EC2M 4YH and 6 Wellington Place, Leeds LS1 4AP at 10.00 a.m. on 13 May 2020. The Circular is expected to be published on 27 April 2020 and will be available from that date at the Company's website https://www.xerostech.com/investors for the purposes of AIM rule 26.

The New Ordinary Shares will rank pari passu in all respects with the Existing Ordinary Shares. Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM. 

Background to and reasons for the Fundraising

The Company stated at the time of the 2019 Fundraise that the proceeds of that equity issue would only be sufficient to fund the Company through to the end of 2020.  The Directors further explained that they would seek to raise additional funding at the end of 2020, if not sooner.  Today's proposals represent delivery against that intention and the Fundraising is expected to provide funding for the Company's current portfolio of contracts and development agreements through to the second quarter of 2022.

 

The Company's current monthly rate of cash burn stands at £0.6 million per month.  This has been reduced since the end of 2019, in line with intentions expressed at the time of the 2019 Fundraise which were to complete its migration to an intellectual property rich and asset light, pure-play licensing business model.  This will be completed with the sale of the last two US Marken specialist cleaning sites as announced on 3 March 2020 ("Marken Disposal") being the final major step to achieving this objective. As a result, the Company's organisation comprises 50 full time personnel, down from 64 at the end of 2019.  Further cost reductions are planned through 2020, though the extent of further reductions will be guided by commercial progress.

 

The Board has adopted a licensing model on the basis that it represents the best and fastest means to generate returns of the Group's intellectual property. Licensing the use of its products to multiple leading OEMs in targeted geographic territories, Xeros has multiple development and licensing agreements in apparel and cleaning markets and has signed a joint development agreement in the filtration market.

 

If the Resolutions are not approved at the General Meeting, the Fundraise will not occur and the net proceeds will not be received by the Company. If this were to happen, the Group would only have sufficient working capital to pursue its current business plan to the end of 2020, absent mitigating action which would be likely to be highly detrimental to the Company's future prospects.  Whilst mitigating steps could be taken to preserve existing cash resources in the event that the Fundraising does not proceed, the steps taken would likely impair its ability to execute current contracts and development agreements and prevent it pursuing additional agreements. In such circumstances the Directors may be forced to take steps to protect the position of creditors.

 

The Company has received, in aggregate, irrevocable undertakings to vote in favour of the Resolutions to be proposed at the General Meeting in respect of 346,016,603 Existing Ordinary Shares, representing, in aggregate, approximately 44.15 per cent. of the existing issued ordinary share capital.

 

Current trading and Outlook

The Company has today released its preliminary results for the year ended 31 December 2019.  Group revenue from its continuing operations reduced by 32.5% to £1.8 million in the year ended 31 December 2019 (2018: £2.7m) reflecting the various disposals undertaken during 2019 as well as the sale of part of the Marken business, announced since the year end.  The Group reduced its Adjusted EBITDA loss by 24.2% to £14.4m (2018: loss £19.0m) with administrative expenses, before exceptional items, reduced by 25.6% to £15.5m (2018: £20.9m). Overall the Company recorded an operating loss of £18.6 million (2018: loss £28.6m) after exceptional administrative expenses of £2.7 million (2018: £2.5m) arising on the disposal of certain of the Group's US Hydrofinity lease estate during the year (being £1.2m) and £1.5 million arising on a provision taken against amounts loaned as part of the sale of the Qualus division last year.

Cash reserves stood at £5.6 million as at 31 December 2019 and at the end of March 2020 were £3.1 million.  Together with the gross proceeds of the Placing, current cash resources provide the Group with a pro forma cash balance of approximately £8.8 million ("Proforma Cash").

The COVID-19 pandemic is expected to cause delays in the execution of some of the Company's proposed long-term licensing contracts. However, these delays are not expected to materially impair the viability of the Company's existing portfolio of commercial contracts nor call into question the bases upon which they were signed. Xeros' products satisfy long-term secular trends of sustainability and cost reduction and are protected by some 40 patents, either granted or applied for, with a number of key patents not expiring until the mid to late 2030s. The Company believes that progress to its long term ambitions will continue after any enforced pauses from the pandemic and that disruption to a number of end markets that our license partners serve, such as the apparel, hospitality and consumer white goods markets, will be temporary.  In China the facilities of our partners SeaLion and Midea have now re-opened after a 5-6 week shutdown. In India, we continue to work remotely with IFB and Ramsons whilst the Company's UK staff are now working from home with our own business continuity plans in operation.

The Company had not planned for a significant financial contribution from its contracts in 2020 and whilst it expects to generate an income from a number of the agreements this year, any changes thereto will not make a significant difference to the Company's current year's financial outturn. However, on the basis that income expected from some of the Company's current contracts could be delayed by up to six months, the Board's expectation is that EBITDA cash breakeven would be correspondingly delayed to mid-2022 compared to its previous assumption of end 2021.

Since the 2019 Fundraise, the Company has achieved its cost plans and continued to execute on its existing development and licensing contracts; progress on these has continued in line with our and our partners' expectations with production of XDrum machines now being produced by SeaLion in China for their local market and market entry is expected at the end of 2020. IFB have completed the construction of commercial and domestic washing XDrum machines and have started testing programmes in India ahead of expected commercial laundry market entry later in 2020.

Since the start of 2020 the Company has also successfully delivered its first contract in the apparel market and the first joint development agreement ("JDA") in the filtration market:

·    a licensing agreement with Ramsons Garment Finishing Equipments PVT Ltd ("Ramsons"), one of the largest garment finishing equipment suppliers in South Asia.  The agreement provides Ramsons with an exclusive license for the manufacture and sale of Xeros-enabled garment finishing and dyeing equipment in South Asia. Under the terms of the agreement, Xeros will receive a royalty for each XDrum machine sold by Ramsons and a share of the multi-year annuity revenues, paid by the garment manufacturers, for the ongoing use of XOrbs. The agreement allows for additional geographies to be added in the future. Ramsons will first address the denim finishing market in South Asia.

 

·    a JDA with a global leader in commercial laundry solutions, with the aim of incorporating the Company's microplastic filtration system, XFiltra, into its commercial washing machines.  Upon successful completion of the development, the JDA provides for the negotiation of a commercial agreement for licensing in a number of geographies in exchange for royalties on a per unit manufactured basis.

 

At the current time, completion of the closing conditions for the Marken Disposal has been delayed beyond the previously agreed deadline of 31 March 2020 due to travel restrictions imposed in the US due to the COVID-19 outbreak. The Company expects the transaction to complete following the lifting of the COVID-19 restrictions.

 

Details of The Fundraising

 

The Company is undertaking the Fundraise to raise approximately £6.0 million (before fees and expenses) from new and existing investors, through the Placing to raise £5.7 million plus the PrimaryBid Offer to raise up to an additional £0.3 million.

The Issue Price represents a discount of approximately 33.42 per cent. from the Closing Price. It is anticipated the New Ordinary Shares will represent approximately 60.49 per cent. of the Enlarged Share Capital following Admission.

The New Ordinary Shares will be free of all liens, charges and encumbrances and will, when issued and fully paid, be identical to and rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all future distributions, declared, paid or made in respect of the Ordinary Shares following the date of Admission.

 

Directors' participation in the Placing

 

Certain Directors are participating in the Placing, amounting to an aggregate subscription for 30,200,000 New Ordinary Shares or approximately 2.65 per cent. of the Placing.  Following the Fundraising, the Participating Directors will beneficially own, in aggregate, 2.08 per cent. of the Enlarged Issued Share Capital, as follows:

 

Director	Number of Existing Ordinary Shares held	Number of Placing Shares being acquired	Total number of Ordinary Shares held following the Placing	Percentage of Enlarged Issued Share Capital1
Mark Nichols	5,500,000	3,200,000	8,700,000	0.44%
Paul Denney	5,500,000	2,000,000	7,500,000	0.38%
Klaas de Boer	Nil	25,000,000	25,000,000	1.26%

 

The Placing Agreement

 

In connection with the Placing, the Company has entered into the Placing Agreement pursuant to which finnCap has agreed, in accordance with its terms, to use reasonable endeavours to procure subscribers for the Placing Shares at the Issue Price. The Placing is not underwritten. In accordance with the terms of the Placing Agreement, the Placing is conditional upon, amongst other things, the passing of the Resolutions, 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 occurring on or before 14 May 2020 (or such later date as finnCap and the Company may agree, not being later than 31 May 2020).

 

The Placing Agreement contains certain warranties given by the Company concerning the accuracy of information given in this circular and the announcement made by the Company in respect of the Placing as well as other matters relating to the Group and its business. The Placing Agreement is terminable by finnCap in certain circumstances up until the time of Admission, including, inter alia, should there be a breach of a warranty contained in the Placing Agreement or a force majeure event takes place or a material adverse change occurs to the business of the Company or the Group. The Company has also agreed to indemnify finnCap against all losses, costs, charges and expenses which finnCap may suffer or incur as a result of, occasioned by or attributable to the carrying out of its duties under the Placing Agreement.

 

 

Admission of the New Ordinary Shares

 

Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM. Subject, inter alia, to the passing of the Resolutions at the General Meeting it is expected that Admission will become effective in respect of, and that dealings on AIM will commence in, all of the New Ordinary Shares, on or around 14 May 2020.

 

It is expected that CREST ("CREST") accounts of the investors in the New Ordinary Shares who hold their Ordinary Shares in CREST will be credited with their New Ordinary Shares on 14 May 2020. In the case of investors in the New Ordinary Shares holding their Ordinary Shares in certificated form, it is expected that certificates will be dispatched the week commencing 18 May 2020. Pending dispatch of the share certificates or the crediting of CREST accounts, the Registrar ("Registrar") will certify any instruments of transfer against the register.

 

Related Party Transactions

The following Related Parties (as defined by the AIM Rules) will be participating in the Fundraising:

	Current Holding	% of existing Ordinary Shares	Subscription	Holding post Fundraising	% of Enlarged Share Capital
Entrepreneurs Fund L.P.	224,253,474	28.61	290,000,000	514,253,474	25.92%
IP2IPO Limited	105,763,129	13.49	150,000,000	255,763,129	12.89%
Klaas de Boer	0	0	25,000,000	25,000,000	1.26%
Mark Nichols	5,500,000	0.70	3,200,000	8,700,000	0.44%
Paul Denney	5,500,000	0.70	2,000,000	7,500,000	0.38%

 

The participation of Entrepreneurs Fund, IP2IPO and the Participating Directors in the Placing constitute related party transactions under the AIM Rules, by virtue of Entrepreneurs Fund (and its affiliates) and IP2IPO being classified as significant shareholders in the Company and the Participating Directors being directors of the Company. Therefore:

(a)  the Directors (excluding Klaas de Boer) consider, having consulted with finnCap (as the Company's nominated adviser), that the terms of the participation in the Placing, in accordance with the terms of the Subscription Agreement, by Entrepreneurs Fund are fair and reasonable insofar as the Company's Shareholders are concerned;

(b)  the Directors (excluding David Baynes, a Board representative of IP2IPO) consider, having consulted with finnCap (as the Company's nominated adviser), that the terms of the participation in the Placing by IP2IPO are fair and reasonable insofar as the Company's Shareholders are concerned; and

(c)   the Directors (excluding the Participating Directors) consider, having consulted with finnCap (as the Company's nominated adviser), that the terms of the participation in the Placing by the Participating Directors are fair and reasonable insofar as the Company's Shareholders are concerned.

 

Board Incentivisation

The Remuneration Committee proposes to issue new EMI options over Ordinary Shares to Mark Nichols and Paul Denney upon successful completion of the Fundraising, as follows.

	Options over Ordinary Shares
Mark Nichols	21,354,350
Paul Denney	15,019,500

 

These options will be issued under the terms of the Xeros Technology Group plc 2020 Share Option Scheme ("Option Scheme") which was adopted by the Board on 12 March 2020 to replace the existing option schemes put in place by the Company in connection with the Company's initial public offering in 2014. The new options will be exercisable at a price of 0.7 pence in tranches of one-third each at the end of each of 2020, 2021 and 2022, subject to the market price of Ordinary Shares reaching, in each respective year (for at least 30 consecutive days) 1.33p, 2.67p and 4p.  Options so granted to Mark Nichols will be granted in replacement of 109,890 existing options held by him under the Xeros Technology Group plc Enterprise Management Incentive Share Option Scheme ("Existing Options") with an exercise price of 225p per Ordinary Share which will be cancelled; given the exercise price of such options and the personal limit under current UK tax legislation on EMI options (£250,000 per person), without the cancellation of the Existing Options Mr Nichols would be unable to receive any further tax advantaged options.  Under the circumstances, Mr Nichols and the Remuneration Committee, on behalf of the Company, have agreed to enter into a deed of cancellation confirming the Existing Options will be cancelled. The Remuneration Committee has concluded that such cancellation is beneficial in terms of its desire to properly reward and incentivise Mr Nichols over the course of the next three years.  Entry into the deed of cancellation by Mr Nichols and the Company constitutes a related party transaction within the meaning of the AIM Rules.  The Directors (excluding Mark Nichols) consider, having consulted with finnCap (as the Company's nominated adviser), that the terms of such amendment are fair and reasonable insofar as the Company's Shareholders are concerned.

As outlined above, Mark Nichols and Paul Denney have also elected to roll a portion of bonuses awarded to them in respect of financial year 2019 ("2019 Bonuses") into Placing Shares as follows:

·    Mark Nichols was awarded a 2019 Bonus of £48,195 which has been paid in cash, two-thirds of which (after tax) will be used to subscribe for 3,200,000 Placing Shares; and

·    Paul Denney was awarded a 2019 Bonus of £33,915 which has been paid in cash, two-thirds of which (after tax) will be used to subscribe for 2,000,000 Placing Shares.

Recommendation

The Directors consider the Resolutions being proposed at the General Meeting to be in the best interests of the Company and the Shareholders as a whole. Consequently, the Directors are recommending in the Circular that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting, as they intend to do in respect of the 16,000,000 Existing Ordinary Shares held, directly or indirectly, by them representing approximately 2.04 per cent. of the total voting rights of the Company.

In addition to the Board's voting intentions referred to above, the Company has further received irrevocable undertakings to vote in favour of the Resolutions from Entrepreneurs Fund and IP2IPO in respect of a combined 330,016,603 Existing Ordinary Shares representing approximately 42.11 per cent. of the total voting rights of the Company.

 

 

APPENDIX 1

TERMS AND CONDITIONS OF THE PLACING

IMPORTANT NOTICE

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT IN THIS APPENDIX ARE DIRECTED ONLY AT: (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA ("EEA") WHO ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE EU PROSPECTUS DIRECTIVE (WHICH MEANS  DIRECTIVE 2003/71/EC, AS AMENDED FROM TIME TO TIME, AND INCLUDES ANY RELEVANT IMPLEMENTING DIRECTIVE MEASURE IN ANY MEMBER STATE) (THE "PROSPECTUS DIRECTIVE") ("QUALIFIED INVESTORS"); AND (B) IN THE UNITED KINGDOM, QUALIFIED INVESTORS WHO ARE PERSONS WHO (I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER"); (II)  ARE  PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC") OF THE ORDER; OR (III) ARE PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS").

THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. PERSONS DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN RELATE IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS APPENDIX IS FOR INFORMATION PURPOSES ONLY AND DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT AND THIS APPENDIX HAS BEEN ISSUED BY AND IS THE SOLE RESPONSIBILITY OF THE COMPANY.

THIS ANNOUNCEMENT, INCLUDING THIS APPENDIX, IS NOT AN OFFER FOR SALE OR SUBSCRIPTION IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION. THE SECURITIES MENTIONED HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE US SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR UNDER ANY SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD,  RESOLD, TRANSFERRED OR DELIVERED, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THERE WILL BE NO PUBLIC OFFER OF THE SECURITIES MENTIONED HEREIN IN THE UNITED STATES.

THE SECURITIES MENTIONED HEREIN HAVE NOT BEEN, NOR WILL BE, APPROVED OR DISAPPROVED BY THE US SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY IN THE UNITED STATES, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THE PLACING OR THE ACCURACY OR ADEQUACY OF THIS ANNOUNCEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE UNITED STATES.

EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, REGULATORY, TAX, BUSINESS, FINANCIAL AND RELATED ASPECTS OF AN ACQUISITION OF PLACING SHARES.

 

No statement in this announcement is intended to be a profit forecast and no statement in this announcement should be interpreted to mean that the earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.

The price of Ordinary Shares and the income from them may go down as well as up and investors may not get back the full amount invested on disposal of the Placing Shares.

Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

 

IMPORTANT INFORMATION FOR PLACEES ONLY REGARDING THE PLACING

1.         Details of the Placing

 

finnCap Limited ("finnCap") has entered into an agreement with the Company (the "Placing Agreement") under which, subject to the terms and conditions set out in that agreement, finnCap has agreed, as agent for and on behalf of the Company, to use its reasonable endeavours to procure placees (the "Placees") for the Placing Shares at a price of 0.5p per Placing Share (the "Issue Price"), where 1,140,000,000 Ordinary Shares (the "Placing Shares") shall be allocated and issued to new and existing shareholders of the Company in accordance with such allocation determined by agreement between the Company and finnCap pursuant to the bookbuilding process (the "Bookbuild"), described in this announcement and set out in the Placing Agreement. The placing of the Placing Shares (the "Placing") is not underwritten by finnCap.

 

1.1.            The Placing Shares will be issued conditional on, amongst other things, the approval by Shareholders of the Resolutions which will (i) grant authority to the Directors to allot the Placing Shares and (ii) dis-apply pre-emption rights in respect of the Placing Shares.

 

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

 

1.3.            As a term of the Placing, the Company has agreed that it will not issue or sell any Ordinary Shares (other than the Placing Shares) for a period ending three months after Admission, without finnCap's prior consent. Such agreement does not however prevent the Company from granting or satisfying exercises of options granted pursuant to existing share schemes of the Company.

2.         Application for admission to trading

 

Application will be made to the London Stock Exchange for the Admission of the Placing Shares to trading on AIM. It is expected that Admission will become effective and that dealings in the Placing Shares will commence on or around 14 May 2020.

3.         Bookbuild

 

This Appendix gives details of the terms and conditions of, and the mechanics of participation in, the Placing. No commissions will be paid to Placees or by Placees in respect of any Placing Shares. finnCap shall be entitled to effect the Placing by such alternative method to the Bookbuild as may be agreed between the Company and finnCap.

4.         Participation in, and principal terms of, the Placing

 

4.1.            finnCap is acting as nominated adviser and sole broker of the Company in respect of the Placing.

 

4.2.            Participation in the Placing will only be available to persons who may lawfully be, and are, invited to participate by finnCap.

 

4.3.            finnCap and its affiliates and partners are entitled to enter bids in the Bookbuild as principal.

 

4.4.            The Bookbuild has been carried out on the basis of the Issue Price of 0.5p per Placing Share payable by all Placees whose bids are successful in accordance with this Appendix and the settlement instructions contained in the Placee's contract note. The number of the Placing Shares to be allocated and issued to each Placee will be determined by agreement between the Company and finnCap following the Bookbuild.

 

4.5.            The Bookbuild has now closed. finnCap may, in agreement with the Company, accept bids that are received after the Bookbuild has closed. The Company reserves the right (upon the agreement of finnCap) to reduce or seek to increase the amount to be raised pursuant to the Placing.

 

4.6.            Each prospective Placee's allocation will be determined by agreement between the Company and finnCap, and will be confirmed orally by finnCap, as agent of the Company. That oral confirmation will constitute an irrevocable legally binding commitment upon that person (who will at that point become a Placee) in favour of finnCap and the Company to subscribe for the number of Placing Shares allocated to it at the Issue Price on the terms and conditions set out in this Appendix and in accordance with the Company's articles of association.

 

4.7.            Each Placee will also have an immediate, separate, irrevocable and binding obligation, owed to finnCap as agent of the Company, to pay in cleared funds, an amount equal to the product of the Issue Price and the number of Placing Shares that such Placee has agreed to subscribe for and the Company has agreed to allot and issue to that Placee, in accordance with this Appendix and the settlement instructions contained in the Placee's contract note.

 

4.8.            finnCap may choose to accept bids, either in whole or in part, and may scale down any bids for this purpose on such basis as it determines. finnCap may also, notwithstanding paragraphs 4.6 and 4.7 above, subject to prior agreement with the Company: (i)  allocate Placing Shares after the time of any initial allocation to any person submitting a bid after that time and (ii) allocate Placing Shares after the Bookbuild has closed to any person submitting a bid after that time.

 

4.9.            A bid in the Bookbuild will be made on the terms and subject to the conditions in this Appendix and will be legally binding on the Placee on behalf of which it is made and, except with finnCap's written consent, will not be capable of variation or revocation after the time at which it is submitted. However, finnCap reserves the right (on agreement between the Company and finnCap) to amend the terms and conditions in this Appendix with respect to individual Placees, provided that no such amendment is made to the Issue Price.

 

4.10.         Irrespective of the time at which a Placee's allocation pursuant to the Placing is confirmed, settlement for all Placing Shares to be subscribed for pursuant to the Placing will be required to be made at the same time, on the basis explained below under "Registration and Settlement".

 

4.11.         All obligations under the Bookbuild and the Placing will be subject to fulfilment or waiver (as applicable) of the conditions referred to below under "Conditions of the Placing" and to the Placing not being terminated on the basis referred to below under "Termination of the Placing Agreement".

 

4.12.         By participating in the Bookbuild, each Placee will agree that its rights and obligations in respect of the Placing will terminate only in the circumstances described below and will not be capable of rescission or termination by the Placee.

 

4.13.         To the fullest extent permissible by law, neither finnCap nor any of its affiliates, agents, advisers, directors, officers, partners or employees shall have any responsibility or liability (whether in contract, tort or otherwise) to Placees (or to any other person whether acting on behalf of a Placee or otherwise). In particular, neither finnCap nor any of its respective affiliates, agents, advisers, directors, officers, partners or employees shall have any responsibility or liability (whether in contract, tort or otherwise and including to the fullest extent permissible by law, any  fiduciary duties) in respect of their conduct of the Bookbuild or of such alternative method of effecting the Placing as finnCap may determine.

 

4.14.         Placees will have no rights against finnCap, the Company nor  any  of  their  respective  directors,  partners  or  employees  under the Placing Agreement pursuant to the Contracts (Rights of Third Parties) Act 1999 (as amended).

5.         Conditions of the Placing

 

5.1.            The Placing is conditional upon the Placing Agreement becoming unconditional with respect to the Placing and not having been terminated in accordance with its terms prior to Admission. The obligations of finnCap under the Placing Agreement in respect of the Placing are conditional on, amongst other things:

 

5.1.1.              the despatch by first class post of the Circular and (as applicable) the General Meeting proxy card to each person to whom notice of the General Meeting is required to be given on the date of the Placing Agreement;

 

5.1.2.              the passing of the Resolutions (without amendment) on the date of the  General Meeting;

 

5.1.3.              the Company having fully complied with its obligations under the Placing Agreement to the extent that such obligations are required to be performed before Admission;

 

5.1.4.              neither the admission of any existing Ordinary Shares to trading on AIM, nor the admission of existing Ordinary Shares as a Participating CREST Security to CREST, being suspended or cancelled or withdrawn prior to Admission;

 

5.1.5.              finnCap's obligations under the Placing Agreement not having been terminated pursuant to clause 10 of the Placing Agreement;

 

5.1.6.              the delivery by the Company to finnCap of a signed certificate as set out in Schedule 2 of the Placing Agreement (Warranty certificate), and a payment direction letter in respect of the Placing proceeds as set out in Schedule 3 of the Placing Agreement (Payment direction letter), with effect immediately before Admission; and

 

5.1.7.              Admission taking place by 8.00 a.m. (London time) on 14 May 2020 or such later date as the Company and finnCap may agree, not being later than 31 May 2020.

 

5.2.            Any Placing Condition at Clause 5.1 (other than those at clauses 5.1.2  (Resolutions), 5.1.6  (Termination) and 5.1.7 (Admission)) may be waived, in whole or in part, and the time for satisfaction of the Placing Condition may be extended by finnCap (without any obligation to make any such waiver or extension) by express written notice to the Company. Any such extension or waiver will not affect Placees' commitments as set out in this announcement.

 

5.3.            If:

 

5.3.1.              any of the conditions contained in the Placing Agreement (including those listed at clause 5.1 above) (the "Placing Conditions") are not fulfilled or waived by finnCap, by the time or date where specified; or

 

5.3.2.              the Placing Agreement is terminated in the circumstances specified at clause 6 below prior to Admission,

 

the Placing will not proceed and the Placee's rights and obligations hereunder in relation to the Placing Shares shall cease and terminate at such time and each Placee agrees that no claim can be made by the Placee in respect thereof.

 

5.4.            None of finnCap, the Company nor any other person shall have any liability (whether in contract, tort or otherwise) to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision they may make as to whether or not to waive or to extend the time and/or the date for the satisfaction of the Placing Conditions nor for any decision they may make as to the satisfaction of any condition or in respect of the Placing generally, and by participating in the Placing each Placee agrees that any such decision is within the absolute discretion of finnCap.

6.         Termination of the Placing Agreement

 

6.1.            finnCap may at any time prior to Admission terminate the Placing Agreement (by giving notice in writing to the Company if, in finnCap's reasonable opinion, amongst other things:

6.1.1.              the Company is in breach of any of its obligations under the Placing Agreement, or is likely to be so in breach, or cannot comply with any such obligation, or is unlikely to able to do so; or

6.1.2.              any Warranty is or if repeated at any time up to Admission (by reference to the facts and circumstances then existing) would be untrue, inaccurate or misleading; or

6.1.3.              there has been an adverse development or other adverse occurrence relating to any Director or any Group Member (whether or not occurring or arising before or after the date of the Placing Agreement) of which finnCap was unaware when entering into the Placing Agreement,

 

(in any case by itself or together with any other such occurrence) to an extent which finnCap reasonably regards as material; or

6.2.            on or after the date of the Placing Agreement there happens, develops or comes into effect:

6.2.1.              a general moratorium on commercial banking activities in London or New York declared by the relevant authorities or a material disruption in commercial banking or securities settlement or clearance services in the United Kingdom, any other member state of the EEA or the United States; or

6.2.2.              the declaration, outbreak or escalation of war or other hostilities, or the occurrence of any acts of terrorism, involving the United Kingdom or the United States or the declaration by or for the government of the United Kingdom or the United States of a national emergency; or

6.2.3.              any calamity, disaster, natural event or other occurrence of any kind (including without limitation (i) a specific material event caused by or as a result of the COVID-19 Coronavirus and/or (ii) a significant general worsening of the spread or rate of infection of the COVID-19 Coronavirus after the date of the Placing Agreement) which (by itself or together with any other such occurrence) in finnCap's reasonable opinion is likely to materially and adversely affect or prejudice the market's perception of the Company or the financial position or trading position or prospects of the Group taken as a whole; or

6.2.4.              a change, or any development likely to involve a prospective change (including without limitation (i) a specific material event caused by or as a result of the COVID-19 Coronavirus and/or (ii) a significant general worsening of the spread or rate of infection of the COVID-19 Coronavirus after the date of the Placing Agreement) (in each case whether or not foreseeable at the date of the Placing Agreement) in or affecting the condition (financial or other), business prospects, earnings, business affairs or results of the Group, whether or not arising in the ordinary course of business which, in any such case, in finnCap's reasonable opinion is materially adverse; or

6.2.5.              any crisis of international or national effect or any change in any currency exchange rates or controls or in any financial, political, economic or market conditions (including disruption to trading on any stock exchange, multilateral trading facility or over-the-counter market) or in market sentiment or any other calamity or crisis which, in any such case, in finnCap's reasonable opinion is materially adverse; or

6.2.6.              the suspension or limitation of trading generally on the London Stock Exchange, the American Stock Exchange, the New York Stock Exchange, the NASDAQ National Market or any other market operated within the United Kingdom that is a "prescribed market" for the purpose of section 118 of FSMA or the fixing of any minimum or maximum prices or price ranges for any such trading; or

6.2.7.              a change or development involving a prospective change in taxation affecting any Group Member, the Placing or the holding or ownership or transfer of any Ordinary Shares which, in any such case, in finnCap's reasonable opinion is materially adverse; or

6.2.8.              the imposing of exchange controls by the United Kingdom, any other member state of the EEA, the United States or China,

finnCap may terminate its rights under the Placing Agreement with immediate effect.

6.3.            In addition, finnCap's obligations under the Placing Agreement may be terminated prior to Admission by written agreement between the Company and finnCap.

 

6.4.            Upon such termination of the Placing Agreement, the parties to the Placing Agreement shall be released and discharged (except for any liability arising before or in relation to such termination) from their respective obligations under or pursuant to the Placing Agreement subject to certain exceptions. For the avoidance of doubt, the Placing cannot be terminated after Admission has occurred to the extent it relates to the Placing Shares.

 

6.5.            The rights and obligations of the Placees shall terminate only in the circumstances described in these terms and conditions and in the Placing Agreement and will not be subject to termination by the Placee or any prospective Placee at any time or in any circumstances. By participating in the Placing, Placees agree that the exercise by finnCap of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of finnCap and that it need not make any reference to, or consult with, Placees and that it shall have no responsibility or liability to Placees whatsoever in connection with any such exercise and neither the Company nor finnCap nor any of their respective directors, officers, employees, agents or affiliates shall have any liability to Placees whatsoever in connection with any such exercise or  failure to exercise or otherwise.

7.         No prospectus

 

7.1.            The Placing Shares are being offered to a limited number of specifically invited persons only and will not be offered in such a way as to require a prospectus in the UK. No offering document, prospectus or admission document has been or will be submitted to be approved by the FCA or submitted to the London Stock Exchange in relation to the Placing and Placees' commitments will be made solely on the basis of their own assessment of the Company, the Placing Shares and the Placing based on the Company's publicly available information taken together with the information contained in this announcement (including this Appendix), and subject to the further terms set forth in the contract note to be provided to individual prospective Placees.

 

7.2.            Each Placee, by accepting a participation in the Placing, agrees that the content of this announcement (including this Appendix) is exclusively the responsibility of the Company and confirms that it has neither received nor relied on any other information representation, warranty, or statement made by or on behalf of the Company, finnCap or any other person and none of finnCap or the Company nor any other person will be liable for any Placee's decision to participate in the Placing based on any other information representation, warranty or statement which the Placees may have obtained or received. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Placing. Nothing in this paragraph shall exclude or limit the liability of any person for fraudulent misrepresentation by that person.

8.         Registration and Settlement

 

8.1.            Settlement of transactions in the Placing Shares following Admission will take place within the system administered by CREST, subject to certain exceptions. finnCap and the Company reserve the right to require settlement for and delivery of the Placing Shares (or a portion thereof) to Placees in certificated form if, in their opinion, delivery or settlement is not possible or practicable within the CREST system or would not be consistent with the regulatory requirements in the Placee's jurisdiction.

 

8.2.            Each Placee to be allocated Placing Shares in the Placing will be sent a contract note stating the number of Placing Shares allocated to it at the Issue Price and settlement instructions. The number of Placing Shares allocated to each Placee will be allocated in a manner determined by agreement between the Company and finnCap, and Placees will be notified of their relevant allocation in the contract note.

 

8.3.            Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with the standing CREST or certificated settlement instructions that it has in place with finnCap.

 

8.4.            The Company will deliver the Placing Shares to a CREST account operated by finnCap as agent for the Company and finnCap will enter its delivery (DEL) instruction into the CREST system. The input to CREST by a Placee of a matching or acceptance instruction will then allow delivery of the relevant Placing Shares to that Placee against payment.

 

8.5.            It is expected that settlement of the Placing Shares will take place on 14 May 2020 on a delivery versus payment basis.

 

8.6.            Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at the rate of two percentage points above LIBOR as determined by finnCap.

 

8.7.            Each Placee is deemed to agree that, if it does not comply with these obligations, finnCap may sell any or all of the Placing Shares allocated to that Placee on such Placee's behalf and retain from the proceeds, for finnCap's account and benefit, an amount equal to the aggregate amount owed by the Placee plus any interest due. The relevant Placee will, however, remain liable for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties thereon) or other similar taxes imposed in any jurisdiction which may arise upon the sale of such Placing Shares on such Placee's behalf. By communicating an intention to subscribe for Placing Shares, each Placee confers on finnCap all such authorities and powers necessary to carry out any such sale and agrees to ratify and confirm all actions which finnCap lawfully takes in pursuance of such sale.

 

8.8.            If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the trade confirmation or contract note is copied and delivered immediately to the relevant person within that organisation. Insofar as Placing Shares are registered in a Placee's name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee of such person, such Placing Shares should, subject as provided below, be so registered free from any liability to UK stamp duty or stamp duty reserve tax. Placees will not be entitled to receive any fee or commission in connection with the Placing.

 

8.9.            Each Placee acknowledges and agrees that the Company is responsible for the allotment of the Placing Shares to the Placees and finnCap shall have no liability to the Placees for the failure of the Company to fulfil those obligations.

9.         Representations and warranties

 

9.1.            By participating in the Placing, each Placee (and any person acting on such Placee's behalf) irrevocably acknowledges, confirms, undertakes, represents, warrants and agrees (as the case may be) with finnCap as agent of the Company, as a fundamental term of their application for relevant Placing Shares), the following:

 

9.1.1.              it has read and understood this announcement (including this Appendix) in its entirety and that its subscription of Placing Shares is subject to and based upon all the terms, conditions, representations, warranties, acknowledgements, agreements and undertakings and other information contained herein;

 

9.1.2.              the Placing does not constitute a recommendation or financial product advice and finnCap has not had regard to its particular objectives, financial situation or needs;

 

9.1.3.              unless paragraph 9.1.4 below applies, it has neither received nor relied on any 'inside information' (for the purposes of MAR) and section 56 of the Criminal Justice Act 1993) concerning the Company in accepting this invitation to participate in the Placing;

 

9.1.4.              if it has received any 'inside information' (for the purposes of MAR and section 56 of the Criminal Justice Act 1993) in relation to the Company and its securities, it confirms that it has received such information within the market soundings regime provided for in article 11 of MAR and associated delegated regulations and it has not: (i) dealt (or attempted to deal) in the securities of the  Company; (ii) encouraged, recommended or induced another person to deal in the securities of the Company; or (iii) unlawfully disclosed inside information to any person, prior to the information being  made publicly available;

 

9.1.5.              its participation in the Placing would not give rise to an offer being required to be made by it or any person with whom it is acting in concert pursuant to Rule 9 of the Takeover Code;

 

9.1.6.              it has the power and authority to carry on the activities in which it is engaged, to subscribe for and/or acquire the Placing Shares and to execute and deliver all documents necessary for such acquisition and/or subscription;

 

9.1.7.              that no offering document listing particulars, prospectus or admission document has been or will be prepared in connection with the Placing and it has not received and will not receive a prospectus, admission document or other offering document in connection with the Bookbuild, the Placing or the Placing Shares;

 

9.1.8.              that the Existing Ordinary Shares in the capital of the Company are admitted to trading on AIM and that the Company is therefore required to publish certain business and financial information in accordance with the rules and practices of AIM which includes a description of the nature of the Company's business and its most recent balance sheet and profit and loss account and that it is able to obtain or access such information and such information or comparable information concerning any other publicly traded company, in each case without undue difficulty;

 

9.1.9.              that neither finnCap nor the Company nor any of their respective affiliates, agents, directors, officers, advisers, partners or employees nor any person acting on behalf of any of them has provided, and none of them will provide it, with any material regarding the Placing Shares or the Company or any other person other than this announcement nor has it requested finnCap, the Company, any of their respective affiliates, agents, directors, officers, partners, advisers or employees nor any person acting on behalf of any of them to provide it with any such information;

 

9.1.10.            unless otherwise specifically agreed with finnCap, that neither it nor the beneficial owner of the Placing Shares is, or at the time the Placing Shares are acquired, neither it nor the beneficial owner of the Placing Shares will be, a resident of, or otherwise located in, the United States, Australia, Canada, Japan or the Republic of South Africa, and it further acknowledges that the Placing Shares have not been and will not be registered under the securities legislation of the United States, Australia, Canada, Japan or the Republic of South Africa and subject to certain exceptions, may not be offered, sold transferred delivered or distributed, directly or indirectly, in or into those jurisdictions;

 

9.1.11.            that: (i) it is outside the United States and is not acquiring the Placing Shares for the account of any person who is located in the United States; (ii) it is acquiring the Placing Shares in an "offshore transaction" (within the meaning of Regulation S ("Regulation S") under the US Securities Act of 1933, as amended (the "Securities Act")); (iii) it is not acquiring any of the Placing Shares as a result of any form of "directed selling efforts" as defined in Rule 902(c) under Regulation S; (iv) it is not acquiring the Placing Shares with a view  to the offer, sale, resale, transfer, delivery or distribution directly or indirectly, of any such Placing Shares into the United States; and (v) it is not within Australia, Canada, Japan, the Republic of South Africa or any other jurisdiction in which it is unlawful to make or accept an offer to acquire the Placing Shares, and it is not acquiring the  Placing Shares with a view to the offer, sale, resale, transfer,  delivery or distribution directly or indirectly, of any such Placing Shares into any of the jurisdictions referred to above;

9.1.12.            that the content of this announcement is exclusively the responsibility of the Company and that neither finnCap nor any person acting on its behalf has or shall have any liability for any information, representation or statement contained in this announcement or any information previously or subsequently published by or on behalf of the Company, including, without limitation, any information required to be published by the Company pursuant to applicable laws (the "Exchange Information") and will not be liable for its decision to participate in the Placing based on any information, representation or statement contained in this announcement or otherwise. It further represents, warrants and agrees that the only information on which it is entitled to rely and on which it has relied in committing itself to subscribe for the Placing Shares is contained in this announcement and any information previously published by the Company by notification to a RIS, such information being all that it deems necessary to make an investment decision in respect of the Placing Shares and that it has neither received nor relied on any other information given or representations, warranties or statements made by finnCap or the Company and neither finnCap nor the Company will be liable for its decision to accept an invitation to participate in the Placing based on any other information, representation, warranty or statement. It further acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in deciding to participate in the Placing. None of finnCap, the Company or any of their respective affiliates, agents, directors, officers, partners, advisers or employees has made any representations to it express or implied, with respect to the Company, the Placing and the Placing Shares or the accuracy, completeness or adequacy of the Exchange Information, and each of them expressly disclaims any liability in respect thereof. Nothing in this paragraph or otherwise in this announcement excludes the liability of any person for fraudulent misrepresentation made by that person;

 

9.1.13.            neither it, nor the person specified by it for registration as holder of Placing Shares is, or is acting as nominee or agent for, and the Placing Shares will not be allotted to, a person who is or may be liable to stamp duty or stamp duty reserve tax under any of sections 67, 70, 93 and 96 of the Finance Act of 1986 (depositary receipts  and clearance services);

 

9.1.14.            that it has complied with its obligations under the Criminal Justice Act 1993, MAR and in connection with money laundering and terrorist financing under the Proceeds of Crime Act 2002 (as amended), the Terrorism Act 2000, the Terrorism Act 2006, the Money Laundering Regulations 2007 and the Money Laundering Sourcebook of the FCA (the "Money Laundering Regulations") and, if making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Money Laundering Regulations;

 

9.1.15.            that it is acting as principal only in respect of the Placing or, if it is acting for any  other person (i) it is duly authorised to do so and has full power to make the acknowledgments, representations and agreements herein on behalf of each such person; and (ii) it is and will remain liable to the Company and finnCap for the performance of all its obligations as a Placee in respect of the Placing (regardless of the fact that it is acting for another person);

 

9.1.16.            if it is a financial intermediary, as that term is used in Article 3(2) of the EU Prospectus Directive (which shall mean Directive 2003/71/EC and amendments thereto, including the 2010 PD Amending Directive to the extent implemented in the relevant member state), that the Placing Shares subscribed by it in the Placing will not be acquired on a non-discretionary basis on behalf of nor will they be acquired with a view to their offer or resale to persons in a member state of the EEA other than qualified investors or in circumstances in which the prior consent of finnCap has been given to the proposed offer or resale;

 

9.1.17.            that it has not offered or sold and will not offer or sell any Placing Shares to the public in any member state of the EEA except in circumstances falling within Article 3(2) of the Prospectus Directive which do not result in any requirement for the publication of a prospectus pursuant to Article 3 of that Directive;

 

9.1.18.            that it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) relating to the Placing Shares in circumstances in which section 21(1) of FSMA does not require approval of the communication by an authorised person;

 

9.1.19.            that it has complied with and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the Placing Shares in, from or otherwise involving, the United Kingdom;

 

9.1.20.            if in a member state of the EEA, unless otherwise specifically agreed with FinnCap in writing, that it is a qualified investor within the meaning of Article 2(l)(e) of the Prospectus Directive;

 

9.1.21.            if in the United Kingdom, that it is a person (i) having professional experience in matters relating to investments who falls within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (ii) who falls within Article 49(2) (a) to (d) ("High Net Worth Companies, Unincorporated Associations, etc") of the Order, or (iii) to whom this announcement may otherwise lawfully be communicated;

 

9.1.22.            that no action has been or will be taken by either the Company or finnCap or any person acting on behalf of the Company or finnCap, which would or is intended to permit a public offer of the Placing Shares in any country or jurisdiction where any such action for that purpose is required;

 

9.1.23.            that it and any person acting on its behalf is entitled to acquire the Placing Shares under the laws of all relevant jurisdictions which apply to it and that it has fully observed such laws and obtained all such governmental and other guarantees, permits authorisations, approvals and consents which may be required thereunder  and complied with all necessary formalities and that it has not taken any action or omitted to take any action which will or may result in finnCap, the Company or any of their respective directors officers, partners, agents, employees or advisers acting in breach of the legal or regulatory requirements of any jurisdiction in connection with the Placing;

 

9.1.24.            that it has all necessary capacity and has obtained all necessary consents and authorities to enable it to commit to its participation in the Placing and to perform its obligations in relation thereto (including, without limitation, in the case of any person on whose behalf it is acting, all necessary consents and authorities to agree to the terms set out or referred to in this announcement) and will honour such obligations;

 

9.1.25.            that it and any person acting on its behalf will make payment for the Placing Shares allocated to it in accordance with this announcement on the due time and date set  out herein, failing which the relevant Placing Shares may be placed with other subscribers or sold as finnCap may in its absolute discretion determine and without liability to it, but it will remain liable for any amount by which the net proceeds of such sale falls short of the product of the Issue Price and the number of Placing Shares allocated to it and may be required to bear and indemnify finnCap and its affiliates, directors, partners, officers, advisers and employees on an after-tax basis against any stamp duty, stamp duty reserve tax or other similar taxes (together with any interest or penalties due pursuant to the terms set out or referred to in this Announcement) which may arise upon the sale of its Placing Shares on its behalf;

 

9.1.26.            that its allocation (if any) of Placing Shares will represent a maximum number of Placing Shares to which it will be entitled, and required, to subscribe for, and that finnCap (having agreed with the Company) may call upon it to subscribe for a lower number of Placing Shares (if any) but in no event in aggregate more than the aforementioned maximum;

 

9.1.27.            that the person whom it specifies for registration as holder of the Placing Shares will be (i) itself or (ii) its nominee, as the case may be. Neither finnCap nor the Company will be responsible for any liability to stamp duty or stamp duty reserve tax or other similar taxes resulting from a failure to observe this requirement. It and any person acting on its behalf agrees to indemnify the Company and finnCap in respect of the same on the basis that the Placing Shares will be allotted to the CREST stock account of finnCap who will hold them as nominee on its behalf until settlement in accordance with standing settlement instructions;

 

9.1.28.            that neither finnCap nor any of its affiliates, agents, directors, officers, partners advisers or employees, nor any person acting on their behalf is making any recommendations to it or advising it regarding the suitability of any transactions it may enter into in connection with the Placing and that participation in the Placing is on the basis that it is not and will not be a client of finnCap and that finnCap has no duties or responsibilities to it for providing the protections afforded to its clients or customers or for providing advice in relation to the Placing nor in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement nor for the exercise or performance  of any of its rights and obligations thereunder including any rights to waive or vary any conditions or exercise any termination right;

 

9.1.29.            that in making any decision to subscribe for the Placing Shares, it has knowledge and experience in financial, business and international investment matters as is required to evaluate the merits and risks of subscribing for or purchasing the Placing Shares. It further confirms that it is experienced in investing in securities of this nature in this sector and is aware that it may be required to bear, and is able to bear the economic risk of participating in, and is able to sustain a complete loss in connection with, the Placing. It further confirms that it relied on its own examination and due diligence of the Company and its associates taken as a whole, and the terms of the Placing, including the merits and risks involved, and not upon any view expressed or information provided by or on behalf of finnCap;

 

9.1.30.            that in connection with the Placing, finnCap and any of its affiliates acting as an investor for their own account may take up Placing Shares in the Company and in that capacity may retain, purchase or sell for its own account such Placing Shares in the Company and any securities of the Company or related investments and may offer or sell such securities or other investments otherwise than in connection with the Placing. finnCap does not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so;

 

9.1.31.            that these terms and conditions and any agreements entered into by it pursuant to these terms and conditions and any non-contractual obligations arising out of or in connection with such agreements shall be governed by and construed in accordance with the laws of England and Wales and it submits, on its own behalf and on behalf of any person on whose behalf it is acting, to the exclusive jurisdiction of the English courts as regards any claim, dispute or matter arising out of any such contract, except that enforcement proceedings in respect of the obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by the Company or finnCap in any jurisdiction in which it is incorporated or in which any of its securities have a quotation on a recognised stock exchange;

 

9.1.32.            that the Company, finnCap and its affiliates, agents, directors, officers, partners advisers or employees and others will rely upon the truth and accuracy of the representations, warranties and acknowledgements set forth herein and which are given to finnCap on their own behalf and on behalf of the Company and are irrevocable and it irrevocably authorises the Company and finnCap to produce this announcement, pursuant to or in connection with, or as may be required by any applicable law or regulation, administrative or legal proceeding or official inquiry with respect to, the matters set forth herein;

 

9.1.33.            none of the Company or finnCap owes any fiduciary or other duties to any Placee in respect of any acknowledgements, confirmations, undertakings, representations, warranties or indemnities in the Placing Agreement;

 

9.1.34.            its commitment to take up Placing Shares on the terms set out in this Announcement (including this Appendix) will continue notwithstanding any amendment that may or in the future be made to the terms and conditions of the Placing and that Placees will have no right to be consulted or require that their consent be obtained with respect to the Company or finnCap's conduct of the Placing; and

 

9.1.35.            that it will indemnify and hold the Company, finnCap and their respective affiliates, agents, directors, officers, partners, advisers or employees harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings in this announcement and further agrees that the provisions of this announcement shall survive after completion of the Placing.

 

9.2.            By participating in the Placing, each Placee (and any person acting on the Placee's behalf) subscribing for Placing Shares acknowledges that the Placing 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 are being offered and sold solely  outside the United States in "offshore transactions" pursuant to and in reliance on Regulation S, in a transaction not involving a public offering of securities in the United States.

 

9.3.            Please also note that the agreement to allot and issue Placing Shares to Placees (or the persons for whom Placees are contracting as agent) free of stamp duty and stamp duty reserve tax in the UK relates only to their allotment and issue to Placees, or such persons as they nominate as their agents, direct from the Company for the Placing Shares in question. The Company and finnCap are not liable to bear any transfer taxes that arise on a sale of Placing Shares subsequent to their acquisition by Placees or for transfer taxes arising otherwise than under the laws of the United Kingdom. Each Placee should, therefore, take its own advice as to whether any such transfer tax liability arises. Furthermore, each Placee agrees to indemnify on an after-tax basis and hold finnCap and the Company and their respective affiliates harmless from any and all interest, fines or penalties in relation to stamp duty, stamp duty reserve tax and all other similar duties or taxes to the extent that such interest, fines or penalties arise from the unreasonable default or delay of that Placee or its agent.

 

9.4.            Each Placee and any person acting on behalf of each Placee acknowledges and agrees that finnCap or any of its respective affiliates  may, at their absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares.

 

9.5.            When a Placee or person acting on behalf of the Placee is dealing with finnCap, any money held in an account with finnCap on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the rules and regulations of the FCA made under FSMA. The Placee acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from finnCap's money in accordance with the client money rules and will be used by finnCap in the course of its own business; and the Placee will rank only as a general creditor of finnCap.

 

9.6.            All times and dates in this announcement may be subject to amendment. finnCap shall notify the Placees and any person acting on behalf of the Placees of any changes.

 

9.7.            The rights and remedies of finnCap 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 will not prevent the exercise of others.

 

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

 

 

 

APPENDIX 2

DEFINITIONS

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

2019 Fundraise means the placing and open offer completed by the Company on 20 November 2019 raising a total of £4.6 million (net of expenses), as more fully described in the Company's circular dated 31 October 2019.

Adjusted EBITDA means the loss on ordinary activities of the Group before interest, tax, share-based payment expense, non-operating exceptional costs, depreciation and amortisation.

Admission means the admission of the New Ordinary Shares to trading on AIM and such admission becoming effective in accordance with the AIM Rules.

AIM means the AIM market of the London Stock Exchange.

AIM Rules means the AIM rules for companies published by the London Stock Exchange.

Application means the application to be made by or on behalf of the Company to the London Stock Exchange for Admission.

Bookbuild has the meaning given in paragraph 1 of this appendix.

Circular means the circular, to be published by the Company on 27 April 2020 in relation to the Placing which will include notice of convening the General Meeting at which the Resolutions will be proposed.

Closing Price means the closing middle market quotation of an Ordinary Share as derived from the Daily Official List of the London Stock Exchange on 23 April 2020.

Company or Xeros means Xeros Technology Group plc, a company incorporated in England and Wales with registered number 8684474, with its registered office at Unit 2, Evolution, Advanced Manufacturing Park, Whittle Way, Catcliffe, Rotherham, South Yorkshire S60 SBL. 

CREST means a relevant system (as defined in the CREST Regulations) in respect of which Euroclear is the Operator (as defined in the CREST Regulations).

CREST Regulations means the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755) (as amended).

Directors or Board means the board of directors of the Company.

EBITDA means earnings before interest, taxation, depreciation and amortisation.

EEA means The European Economic Area.

Enlarged Share Capital means the Issued share capital of the Company immediately following Admission comprising the Existing Ordinary Shares and the New Ordinary Shares.

Entrepreneurs Fund means Entrepreneurs Fund L.P.

EU means the European Union.

Euroclear means Euroclear UK & Ireland Limited.

Existing Ordinary Shares means the 783,762,131 Ordinary Shares in issue at the date of this document, all of which are admitted to trading on AIM and being the entire issued ordinary share capital of the Company.

FCA means Financial Conduct Authority. 

finnCap means finnCap Ltd, Nominated Advisor, Broker and Bookrunner.

Form of Proxy means the form of proxy for use in connection with the General Meeting accompanying the Circular.

FSMA means Financial Services and Markets Act 2000.

Fundraising means the Placing and the PrimaryBid Offer (and "Fundraise" shall be constructed accordingly).

General Meeting means the general meeting of the Company to be convened by the Circular.

Issue Price means 0.5 pence per New Ordinary Share.

JDA means joint development agreement.

London Stock Exchange means London Stock Exchange plc.

MAR means the EU Market Abuse Regulation (2014/596/EU). 

New Ordinary Shares means the Placing Shares and the PrimaryBid Shares. 

Notice of General Meeting means the notice of the General Meeting set out at the end of the Circular.

OEMs means original equipment manufacturers.

Ordinary Shares means ordinary shares of 0.15 pence each in the capital of the Company.

Participating Directors means Mark Nichols, Paul Denney and Klaas de Boer.

Placing means the proposed placing by finnCap as agent for the Company, of the Placing Shares at the Issue Price on a non-pre-emptive basis, on the terms and conditions set out in the Placing Agreement.

Placee means the institutional investors participating in the proposed Placing.

Placing Agreement means the agreement to be entered into between the Company and finnCap in connection with the Placing.

Placing Conditions means as defined in Appendix 1.

Placing Shares means 1,140,000,000 Ordinary Shares which may, pursuant to the Placing, be allotted and issued fully paid up at the Issue Price and admitted to trading on AIM.

PrimaryBid Offer means the offer of New Ordinary Shares made to private investors through the PrimaryBid platform.

PrimaryBid Shares means up to an additional 60,000,000 new Ordinary Shares to be allotted and issued pursuant to the PrimaryBid Offer.

Prospectus Directive means directive 2003/71/EC on the requirements for a prospectus to be published when securities are offered to the public or admitted to trading.

Ramsons means Ramsons Garment Finishing Equipments PVT Ltd

Registrar means Neville Registrars Limited.

Relevant Persons means as defined in Appendix 1.

Resolutions means the resolutions relating to the Placing in the approved terms set out in the notice convening the General Meeting contained in the Circular.

RNS means the regulatory information service approved by the London Stock Exchange for the distribution of AIM announcements. 

Securities Act means the US Securities Act of 1933, as amended.

Shareholders means holders of Ordinary Shares.

Subscription Agreement means the subscription agreement entered into between the Company and Entrepreneurs Fund

Takeover Code means the City Code on Takeovers and Mergers.

United Kingdom or UK means United Kingdom.

United States or US means United States of America, its territories and possessions, any state of the United States of America and the District of Columbia.  

All references in this announcement to "£", "pence" or "p" are to the lawful currency of the United Kingdom. All references to "USS" or "$" are to the lawful currency of the United States.