REG - Biome Technologies - Issue of Convertible Loan Notes, PDMR Notification

Biome TechnologiesAnnouncement

11/03/2024 14:00

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RNS Number : 3851G  Biome Technologies PLC  11 March 2024

 

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11 March 2024

 

Biome Technologies plc

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

 

Issue of £400,000 of secured 2026 redeemable Convertible Loan Notes

 

Director/PDMR shareholding notification

 

Biome Technologies plc, a leading bioplastics and radio frequency technology
business, announces that the Company has raised £400,000 (before expenses) by
way of an issue of a further tranche of Convertible Loan Notes ("Third Tranche
CLNs"), pursuant to the convertible loan note fundraise announced on 31 March
2023 (the "2023 Convertible Loan Note Fundraise").

 

The issue of the First Tranche and Second Tranche of the 2023 Convertible Loan
Note Fundraise completed on 31 March 2023 and 18 April 2023 respectively,
raising in total £850,000 (before expenses).  Further details of the 2023
Convertible Loan Note Fundraising and the background to and reasons for the
2023 Convertible Loan Note Fundraising can be found in the 2023 Circular
available on the Company's website at
https://biometechnologiesplc.com/reports-2/
(https://biometechnologiesplc.com/reports-2/) and in the announcement made by
the Company on 31 March 2023.  To issue the Third Tranche CLNs, the Company
has entered into a deed of variation to the original Loan Note Instrument,
which has increased the aggregate principal amount of monies available under
the original Loan Note Instrument.

Whilst the issue of the Third Tranche CLNs is not conditional on the approval
of Shareholders, the Company has given an undertaking to the holders of the
Third Tranche CLNs to seek the approval of Shareholders at the Company's next
annual general meeting to resolutions to provide sufficient authority to
satisfy the various conversion terms of the Third Tranche CLNs and disapply
statutory pre-emption rights which would otherwise apply to the allotment of
the new Ordinary Shares that may be issued in order to satisfy the various
conversion terms of the Third Tranche CLNs (the "2024 AGM CLN Resolutions").
Additionally, each subscriber for Third Tranche CLNs has undertaken that all
voting rights in respect of the existing Ordinary Shares that they may control
shall be exercised to vote in favour of the 2024 AGM CLN Resolutions, and
following their adoption to vote against any proposal to revoke, vary or amend
the effects of the 2024 AGM CLN Resolutions that would constitute a breach of
the covenant in relation to the Convertible Loan Notes.

The Third Tranche CLNs have been issued to the same persons who subscribed for
the 2023 Convertible Loan Note Fundraise, plus an additional new participant.

Use of proceeds and recent trading and prospects

 

It is intended that the net proceeds from the Third Tranche CLNs will be used
to support the growth and working capital requirements of the Group's
Bioplastics and RF Technologies divisions and allow the Group to progress
towards a position of operating cash sustainability.

Bioplastics Division

The Bioplastics division's revenues grew rapidly in the year ended 31 December
2023 ("FY 2023") particularly in 'Home Compostable' polymers for filmic
applications in North America. This momentum is expected to continue in the
year ending 31 December 2024 ("FY 2024") at a more modest rate. Supply chain
disturbances particularly caused by shipping issues in the Red Sea are having
an impact on the passage times of goods from Europe to North America, with
higher levels of working capital support and stock being planned for the
foreseeable future.

Growth in demand for compostable bioplastics in the market continues, although
upward inflection points in various regions and countries will depend on both
legislation and growth of composting disposal infrastructure.

In the medium term, the Board believes that further step changes in the
division's revenue growth will require the completion of the development and
certification work to render Biome's proprietary filter mesh as Home
Compostable. Considerable technical development activity has been undertaken
on this material (used in coffee pods) over the last three years with
encouraging outcomes. Development spend is planned to continue during 2024
with initial commercial benefits expected later in the year.

RF Technologies Division

The RF Technologies division's revenues in FY 2023 were modest, being
predominantly derived from spares and servicing, plus a small-scale industrial
heating project.

Following development work over the past few years, it was announced in June
2023 that the division had been awarded a contract with a revenue value of
£452,000 to supply a novel induction furnace system to a global manufacturer
of scientific glass products. Revenues from this work are expected to flow in
FY 2024.

In February 2024, the Group announced that it had been awarded a second
contract (this time for £490,000) with an associate company of the initial
customer, to deliver a similar system with completion scheduled within FY
2024. These two systems represent a substantial body of work for the division.
The Directors believe that, depending on successful implementation of these
first systems, there are multiple use cases for the division's scientific
glass applications on both sides of the Atlantic.

The division is also pursuing further opportunities of similar value in the
medical supply sector. Negotiations have advanced significantly since the
start of this year with two of these opportunities and the RF Technologies
team remain confident in bringing one or both of these to a successful
conclusion in the relatively short-term.  Recent medical RF projects build on
an increasingly standardised platform that the division has developed, which
we consider provides a lower implementation risk.

Group

Based on the factors stated above and the Board's assumptions for FY 2024, the
Board currently expects total Group revenues to be substantially increased
versus FY 2023, predominantly driven by projects of scale in the RF
Technologies division.

Further activity is underway to improve the Group's gross margins through a
focus on operational and logistics efficiencies coupled with product mix
changes. The Board intends for the Group's overhead base to be managed tightly
in FY 2024, with R&D spend prioritised towards the efforts on Home
Compostable fibres and mesh.

As a result of this, the Board is currently expecting for the Group to be
broadly breakeven, in cash terms, in FY 2024.

The Board is pleased with the progress that the Company continues to make and
the net proceeds from the Third Tranche CLNs are to be used to support the
Group's growth and working capital requirements ahead of improved cash
generation from ongoing RF Technologies projects and increased Bioplastics
sales revenue being delivered in North America.

Directorate change

The Board also announces that Robert (Rob) Smith, Group Chief Financial
Officer ("CFO") and a Director of Biome, has tendered his resignation and will
leave the Company in order to pursue a new role in a non-competing industry.
Rob will remain with the Company until May 2024 and will continue to be
focused on running the Company's finance function, including the publication
of the Company's FY 2023 annual results.

A replacement for the CFO post will be sought over the coming months and the
Board will engage an experienced interim finance executive to ensure that this
critical role in the Biome team is adequately resourced. Rob will also work to
ensure the effective transition of his responsibilities to his successor with
the intention that there will be an orderly handover period.

 

Third Tranche CLN Coupon Elections

 

All of the subscribers for the Third Tranche CLNs have elected for the
Alternative Coupon pursuant to the Convertible Loan Notes. The Alternative
Coupon is a coupon option that Noteholders can elect for, at the point of
subscription, whereby if the Convertible Loan Notes are redeemed or converted
prior to 30 April 2025 then no interest shall accrue or be payable, and to the
extent that the Convertible Loan Notes are not redeemed or converted prior to
30 April 2025 then interest will accrue on the principal amount of the
Convertible Loan Notes at a rate of 10% from the original issuance date (but
shall not compound), be subject to the Uplift, and be payable shortly after 30
April 2025 and thereafter interest shall accrue and be payable on the same
basis as the Running Coupon.

Overview summary of the Third Tranche CLNs

 

The Third Tranche CLNs are being issued on the same terms as the 2023
Convertible Loan Notes, subject to the following variations:

 

•       Subject to the Third Tranche CLNs' terms and the Directors
having sufficient authority to satisfy any conversion notices received, at any
time following the issue of the Third Tranche CLN, holders of the Third
Tranche CLNs can convert those Third Tranche CLNs into new Ordinary Shares at
a base price of £1.00 per new Ordinary Share, which represents a discount of
approximately 11.1 per cent. to the Closing Price of 112.50 pence per Ordinary
Share on 8 March 2024, being the latest practicable date prior to this
announcement.

 

•       Subject to the Third Tranche CLNs' terms and the Directors
having sufficient authority to satisfy any conversion notices received, the
Company shall be entitled to convert all or some of the outstanding Third
Tranche CLNs (with all accrued interest) at a price of £1.00 per new Ordinary
Share.

 

•       As was the case with the 2023 Convertible Loan Note
Fundraising, the Company has given various covenants to the Noteholders
pursuant to the Convertible Loan Notes and if there were to be an Event of
Default (as defined in the Loan Note Agreement, with summary details provided
in the announcement issued by the Company on 31 March 2023), a Noteholder may
require the Company to redeem all (but not some) of the principal amount
outstanding plus a minimum premium of 25% of this amount, plus accrued coupon.
However, in relation to the both the Convertible Loan Notes issued pursuant to
the 2023 Convertible Loan Note Fundraising and the Third Tranche CLNs, for the
purposes of one of the existing events of default, the Company and the
Noteholders have agreed to vary the definition and basis of calculation of
'Adjusted Net Assets' to make it more relevant to the Company's expected
balance sheet going forward.

 

•       Shareholders should note that in the event that approval is
not given by Shareholders at the Company's next annual general meeting to the
AGM CLN Resolutions, then all the Third Tranche CLNs will receive a Fallback
Interest rate, calculated at 20% per annum and payable in arrears.

 

Aside from the above, the various conversion terms, early redemption rights,
accelerated repayment terms, covenants, undertakings, security arrangements,
events of default and other terms of the Third Tranche CLNs are the same as
the 2023 Convertible Loan Notes.

 

Full details of the existing terms of the Convertible Loan Notes can be found
in the circular available on the Company's website.  The summary above should
be read in conjunction with the announcement issued by the Company on 31 March
2023. Unless otherwise specified, capitalised terms in this announcement have
the meanings given to them in the definitions included in the announcement
issued by the Company on 31 March 2023.

 

Potential dilutive effect resulting from the Convertible Loan Notes

 

The Third Tranche CLNs are capable of being converted by the Noteholders into
new Ordinary Shares at a base price of 100  pence per new Ordinary Share. The
First Tranche CLNs are capable of being converted by the Noteholders into new
Ordinary Shares at a base price of 80 pence per new Ordinary Share and the
Second Tranche CLNs are capable of being converted by the Noteholders into new
Ordinary Shares at a base price of 106 pence per new Ordinary Share.

 

Assuming that no other Convertible Loan Notes are converted, in the
circumstances whereby the entire principal amount of the Third Tranche CLNs
and applicable Uplift is converted at the base price of 100 pence per new
Ordinary Share, this will upon maximum conversion represent approximately 10.5
per cent. of the issued ordinary share capital as enlarged by such conversion
(assuming there have not been any other share issuances). Accordingly, upon
such conversion of the Third Tranche CLNs, existing Shareholders that are not
interested in Convertible Loan Notes would experience dilution of
approximately 10.5 per cent.

 

In the circumstances whereby the entire principal amount of all of the
Convertible Loan Notes and applicable Uplift is converted at the relevant base
prices, this will upon maximum conversion represent approximately 27.8 per
cent. of the issued ordinary share capital as enlarged by such conversion
(assuming there have not been any other share issuances). Accordingly, upon
such conversion of all of the First Tranche CLNs, Second Tranche CLNs and
Third Tranche CLNs, existing Shareholders that are not interested in
Convertible Loan Notes would experience dilution of approximately 27.8 per
cent.

 

The above dilution statistics are illustrative and do not cover all of the
potential dilutive effects that may result from conversion of the Convertible
Loan Notes. In particular, Shareholders should be aware that the Convertible
Loan Notes can also potentially be converted at other prices, including upon
certain specified fundraising-related events or Capital Events, further
details of which can be found in the announcement issued by the Company on 31
March 2023.

 Director participation in the Third Tranche CLNs

 John Martin Rushton-Turner, a Non-Executive Director of the Company, has
 subscribed for a total of £125,000 of Third Tranche CLNs. The FCA
 notification made in accordance with the requirements of UK MAR is appended
 further below. Martin Rushton-Turner is also interested in £300,000 of
 Convertible Loan Notes issued in the 2023 Convertible Loan Note Fundraise.

 Mr Rushton-Turner currently holds 500,000 Ordinary Shares in the Company,
 which represents 13.2 per cent. of the current voting rights in the Company.
 Assuming that all Convertible Loan Notes are converted from the Convertible
 Loan Note Fundraise, then in the circumstances whereby the entire principal
 amount of all of the Convertible Loan Notes held by Mr Rushton-Turner (and
 applicable Uplift) is converted at the relevant base prices, Mr Rushton-Turner
 would be interested in approximately 19.5 per cent. of the issued ordinary
 share capital as enlarged by such conversion (assuming there have not been any
 other share issuances).

 For further information please contact:
 Biome Technologies plc

 Paul Mines, Chief Executive Officer
 Rob Smith, Chief Financial Officer
 www.biometechnologiesplc.com (www.biometechnologiesplc.com)  Tel: +44 (0) 2380 867 100

 Allenby Capital
 David Hart/Alex Brearley/Lauren Wright (Nominated Adviser)

 Kelly Gardiner/Tony Quirke (Sales and Corporate Broking)
 www.allenbycapital.com (www.allenbycapital.com)              Tel: +44 (0) 20 3328 5656

 

About Biome

Biome Technologies plc is an AIM listed, growth-orientated, commercially
driven technology group. Our strategy is founded on building market-leading
positions based on patented technology and serving international customers in
valuable market sectors. We have chosen to do this by developing products in
application areas where the value-added pricing can be justified and are not
reliant on government legislation. These products are driven by customer
requirements and are compatible with existing manufacturing processes. They
are market rather than technology-led.

 

The Group comprises two divisions, Biome Bioplastics Limited ("Bioplastic")
and Stanelco RF Technologies Limited ("RF Technologies").

 

Biome Bioplastics is a leading developer of highly-functional, bio-based and
biodegradable plastics. The company's mission is to produce bioplastics that
challenge the dominance of oil- based polymers.

 

Stanelco RF Technologies designs, builds and services advanced radio frequency
(RF) systems. Dielectric and induction heating products are at the core of a
product offering that ranges from portable sealing devices to large furnaces
for the fibre optics markets.

 

www.biometechnologiesplc.com (http://www.biometechnologiesplc.com)
www.biomebioplastics.com (http://www.biomebioplastics.com) and
www.thinkbioplastic.com (http://www.thinkbioplastic.com)
www.stanelcorftechnologies.com (http://www.stanelcorftechnologies.com)

 

Notification and public disclosure of transactions by persons discharging
managerial responsibilities and persons closely associated with them

 

 1    Details of the person discharging managerial responsibilities / person closely
      associated
 a)   Name                                                         John Martin Rushton-Turner
 2    Reason for the notification
 a)   Position/status                                              Non-Executive Director
 b)   Initial notification /Amendment                              Initial notification
 3    Details of the issuer, emission allowance market participant, auction
      platform, auctioneer or auction monitor
 a)   Name                                                         Biome Technologies plc
 b)   LEI                                                          213800B9QI14B12TAO51
 4    Details of the transaction(s): section to be repeated for (i) each type of

    instrument; (ii) each type of transaction; (iii) each date; and (iv) each
      place where transactions have been conducted
 a)   Description of the financial instrument, type of instrument  Ordinary Shares of 5 pence in Biome Technologies plc.

      Identification code                                          Identification code (ISIN) for Biome Technologies plc Ordinary Shares:
                                                                   GB00B9Z1M820
 b)   Nature of the transaction                                    Participation in subscription of Convertible Loan Notes

 c)   Price(s) and volume(s)                                       Price: Base conversion price of 100 pence per Ordinary Share

                                                                   Volume (principal value of Convertible Loan Notes): £125,000 of Convertible
                                                                   Loan Notes
 d)   Aggregated information                                       N/A

      - Aggregated volume

      - Price
 e)   Date of the transaction                                      11 March 2024
 f)   Place of the transaction                                     Outside a trading venue

 

 

 

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