REG - Microsaic Systems - Conditional Placing

Microsaic SystemsAnnouncement

15/01/2024 15:45

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RNS Number : 7447Z  Microsaic Systems plc  15 January 2024

THIS ANNOUNCEMENT IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM THE UNITED STATES OR ANY
OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE
UNLAWFUL. THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT
CONSTITUTE AN OFFER OR AN INVITATION TO ACQUIRE OR DISPOSE OF ANY SECURITIES.
ATTENTION IS ALSO DRAWN TO THE IMPORTANT INFORMATION AT THE END OF THIS
ANNOUNCEMENT.

 

15 January 2024

Microsaic Systems plc

("Microsaic" or the "Company")

 

Conditional Placing to Raise Approximately £2.1 million

 

Capitalised terms in this announcement carry the same meaning as in the
Circular

or subsequent announcements, unless the context indicates otherwise

 

Microsaic Systems plc (AIM: MSYS), the developer of micro-electronic
instruments and analytical solutions, is pleased to announce that it has
successfully secured conditional funding commitments to raise gross proceeds
of approximately £2.1 million through a placing of 169,000,000 New Ordinary
Shares (the "Placing Shares") with new and existing investors at an issue
price of 1.25 pence per New Ordinary Share (the "Placing Price") (the
"Placing").

 

Highlights

 

·        Estimated net proceeds of the Placing, approximately £1.8
million, will be used as follows:

o   to satisfy consideration for the Acquisition, as announced on 12 January
2024, and subsequent recommencement of operations and their integration; and

o   for general working capital and additional growth funding for the
enlarged Microsaic business following the Acquisition

·        The Directors have indicated their intention to participate
in the Placing, which was oversubscribed prior to allocation, for a total of
11,040,000 Placing Shares

·        The Placing has been supported by a range of existing and new
investors, including Premier Miton

·        The Placing is conditional, inter alia, on the Acquisition
Agreement having been entered into and, save only for Admission, having become
wholly unconditional and not having been terminated in accordance with its
terms prior to Admission. The Placing is not conditional upon further
shareholder approval, as the Resolutions put to the reconvened General Meeting
held on 29 December 2023 were all passed by the requisite majority as
previously announced

 

Bob Moore, Acting Executive Chairman of Microsaic Systems plc, commented:

"We would like to thank our existing shareholders and new investors for the
support they have shown for the refinancing of the Company and its growth
plans. We are delighted that the Company intends to retain its AIM listing
and, following admission, have the necessary financing to both complete an
acquisition and provide capital to invest in and develop the enlarged
business. The assets being acquired are complementary to the existing
Microsaic business model. Using the acquired assets, we intend to restart the
manufacture of Microtox® bioreagents for water testing in the near term. Post
acquisition, we will seek positive cash generation from these new activities
and look to benefit from growth opportunities and potential synergies over the
longer term. Microsaic's cost base has been significantly reduced and we will
now operate a much leaner, more efficient model."

 

Turner Pope Investments (TPI) Limited ("Turner Pope" or "TPI") is acting as
broker and placing agent to the Company and Singer Capital Markets Advisory
LLP ("Singer Capital Markets") is acting as Nominated Adviser to the Company.
Under the terms of engagement between TPI and the Company, the Company will
issue warrants to subscribe for 30,712,000 New Ordinary Shares to Turner
Pope's nominee exercisable at the Placing Price for 5 years from the date of
admission of the Placing Shares ("Admission") (the "Broker Warrants").

 

This announcement should be read in full and in conjunction with the Circular
dated 4 December 2023 and the subsequent regulatory announcements made by the
Company. A 'Revised Indicative Timetable of Principal Events' and 'Key
Statistics' summary is provided below.

 

This announcement contains inside information as stipulated under the UK
version of the Market Abuse Regulation No 596/2014 which is part of English
Law by virtue of the European (Withdrawal) Act 2018, as amended. On
publication of this announcement via a Regulatory Information Service, this
information is considered to be in the public domain.

 

Enquiries:

 Microsaic Systems plc                                                   +44 (0) 20 3657 0050

 Bob Moore, Acting Executive Chairman                                    via TPI

 Singer Capital Markets (Nominated Adviser and Joint Broker)             +44 (0)20 7496 3000

 Aubrey Powell / Angus Campbell / Oliver Platts

 Turner Pope Investments (TPI) Limited (Joint Broker and Placing Agent)  +44 (0) 20 3657 0050

 Andy Thacker / James Pope

 

About Microsaic Systems

Microsaic has over 20 years' experience in microelectronics and development of
instrumentation. The Company has an extensive and innovative patent portfolio
in industry-leading technology designed and developed for "Industry 4.0"
application serving markets in diversified Industries, Human and Environmental
Health. Microsaic's system solutions have enabled analytical detection and
characterisation at the point-of-need, whether within a conventional
laboratory setting, or within a bioprocessing facility for continuous
detection of data at multiple steps in the process workflow.

 

Microsaic's products and solutions are commercially available through global
markets via a network of regional and local partners, targeting its core
laboratory, manufacturing and point-of-need applications.

 

Singer Capital Markets, which is authorised and regulated in the United
Kingdom by the FCA and is a member of the London Stock Exchange, is acting as
nominated adviser to the Company for the purposes of the AIM Rules. Singer
Capital Markets is not acting for any other person in connection with the
matters referred to in this announcement and will not be responsible to anyone
other than the Company for providing the protections afforded to clients of
Singer Capital Markets or for giving advice in relation to the matters
referred to in this announcement. Singer Capital Markets has not authorised
the contents of this announcement for any purpose and, without limiting the
statutory rights of any person to whom this announcement is issued, no
representation or warranty, express or implied, is made by Singer Capital
Markets as to any of the contents or the completeness of this announcement and
Singer Capital Markets does not accept responsibility for this announcement
and accordingly disclaims all and any liability, whether arising in tort,
contract or otherwise, which it might otherwise be found to have in respect of
this announcement.

 

Turner Pope, which is authorised and regulated in the United Kingdom by the
FCA and is a member of the London Stock Exchange, is acting as placing agent
to the Company. Turner Pope is not acting for any other person in connection
with the matters referred to in this announcement and will not be responsible
to anyone other than the Company for providing the protections afforded to
clients of Turner Pope or for giving advice in relation to the matters
referred to in this announcement. Turner Pope has not authorised the contents
of this announcement for any purpose and, without limiting the statutory
rights of any person to whom this announcement is issued, no representation or
warranty, express or implied, is made by Turner Pope as to any of the contents
or the completeness of this announcement and Turner Pope does not accept
responsibility for this announcement and accordingly disclaims all and any
liability, whether arising in tort, contract or otherwise, which it might
otherwise be found to have in respect of this announcement.

 

 

Revised Indicative Timetable of Principal Events

 

 Event                                                                         Time and/or date ⁽¹⁾

 Signing of the Acquisition Agreement                                          12 January 2024
 Publication of the Report and Accounts and Interim Results, and notification  After market close on
 of the same
15 January 2024

 Restoration of New Ordinary Shares to trading on AIM                          7.30 a.m. on

16 January 2024

 Admission of the Placing Shares to trading on AIM                             8.00 a.m. on

16 January 2024

 Latest date for share certificates over                                       Within 10 days of

New Ordinary Shares to be dispatched
Restoration and

(where applicable)
 Admission

Notes:

⁽¹⁾   All of the times referred to in this announcement refer to London
time, unless otherwise stated, and are subject to change.

 

In the event that the Company is unable to proceed with the Placing or
otherwise satisfy any of the necessary prior conditions for Restoration and
Admission, then admission of the Company's shares to trading on AIM would be
cancelled and a further announcement made in that regard.

 

 

Key Statistics

 

 Number of New Ordinary Shares in Issue                                       10,178,185

(following the Share Capital Reorganisation)

 Number of Placing Shares                                                     169,000,000

 Gross proceeds of the Placing                                                £2.1 million

 Net proceeds of the Placing ⁽¹⁾                                              £1.8 million

 Percentage of enlarged share capital represented by the Placing Shares       94.3%

 Number of Ordinary Shares in issue immediately following Admission           179,178,185

 Market capitalisation of the Company immediately following Admission at the  £2.2 million
 Placing Price

 Maximum number of Ordinary Shares arising from potential exercise of the     30,712,000
 Broker Warrants

 Maximum number of Ordinary Shares in issue following Admission and assuming  209,890,185
 maximum exercise of the Broker Warrants ⁽²⁾

 

Notes:

⁽¹⁾   Net proceeds are stated after deduction of estimated total
expenses of approximately £0.3m.

⁽²⁾   Assumes all Broker Warrants are exercised and no further issue of
shares between Admission and the date of exercise.

 

IMPORTANT INFORMATION

 

This Announcement should be read in full, and the Circular and subsequent
regulatory announcements should be read in full, by those lawfully entitled to
be in possession of them and investors should read the Principal Risks and
Uncertainties contained within the Annual Report once published later today.

 

The Placing Shares have not been, and will not be, registered under the United
States Securities Act of 1933 (as amended) (the "Securities Act"), or the
securities laws of any state or any other jurisdiction of the United States.
The Placing Shares may not be offered or sold, directly or indirectly, in or
into the United States (except pursuant to an exemption from, or a transaction
not subject to, the registration requirements of the US Securities Act). No
public offering of the Placing Shares is being made in the United States. The
Placing Shares are being offered and sold only outside the United States in
"offshore transactions" within the meaning of, and in reliance on, Regulation
S under the Securities Act.

 

The Placing Shares have not been approved or disapproved by the United States
Securities and Exchange Commission, any state securities commission in the
United States or any other regulatory authority in the United States, nor have
any of the foregoing authorities passed on or endorsed the merits of the
Placing and/or the Broker Option or the accuracy or adequacy of the
information contained in this announcement. Any representation to the contrary
is a criminal offence in the United States.

 

The securities referred to herein have not been and will not be registered
under the applicable securities laws of Australia, Canada, Japan, New Zealand
or the Republic of South Africa and, subject to certain exceptions, may not be
offered or sold within Australia, Canada, Japan, New Zealand or the Republic
of South Africa or to any national, resident or citizen of Australia, Canada,
Japan, New Zealand or the Republic of South Africa.

 

Members of the public are not eligible to take part in the Placing. This
announcement is for information purposes only and is being made in
circumstances in which section 21(1) of the Financial Services and Markets Act
2000 does not require the approval of the relevant communication by an
authorised person.

 

This announcement contains (or may contain) certain forward-looking statements
with respect to certain of the Company's and/or the Directors' current
expectations and projections about future events. These statements, which
sometimes use words such as "anticipate", "believe", "intend", "estimate",
"expect" and words of similar meaning, reflect the directors' beliefs and
expectations and involve a number of risks, uncertainties and assumptions that
could cause actual results and performance to differ materially from any
expected future results or performance expressed or implied by any such
forward-looking statement. Statements contained in this announcement regarding
past trends or activities should not be taken as a representation that such
trends or activities will continue in the future. The information contained in
this announcement is subject to change without notice and neither SCM nor TPI
nor, except as required by applicable law, the Company assumes any
responsibility or obligation to update publicly or review any of the
forward-looking statements contained herein. You should not rely on
forward-looking statements, which speak only as of the date of this
announcement.

 

Background to and reasons for the Placing

 

Information in connection with the background to and reasons for the Placing
can be found within the letter from the Bob Moore, Acting Executive Chairman,
to Shareholders dated 4 December 2023 and contained within the Circular of the
same date. This letter should be read in conjunction with the subsequent
announcements made by the Company in connection with the Acquisition and the
revised fundraising target.

 

In summary, the Company set out to raise funds via the Placing to ensure the
continuation of the Company's business activities and it is believed that the
resumption of greater growth in the business is likely to require access to
additional capital. After the Circular was posted to shareholders, the Company
announced the Prospective Acquisition and associated Revised Fundraising. As
announced on 12 January 2024, the Company confirmed that it had concluded its
due diligence on the assets of the water testing business previously operated
by Modern Water Limited ("Modern Water") and that the Acquisition Agreement
with DeepVerge and Innovenn UK Limited (a DeepVerge subsidiary) had been
signed.

 

Use of Proceeds

 

The net proceeds of the Placing are expected to be deployed as follows:

·    to satisfy the cash consideration in full for the Acquisition of the
assets and business of the water testing business previously operated by
Modern Water pursuant to the Acquisition Agreement; and

·    to support the working capital needs of the Company as enlarged by
the acquired business and to promote the integration of the newly acquired
assets/business.

 

The remaining net proceeds of the Placing, being £1.8 million (and monies to
be received by the Company pursuant to the exercise, if any, of the Broker
Warrants) will be used as a further working capital buffer and also in respect
of certain growth initiatives - including in support of commercialisation of
new products in ProteinID and PFAS detection through distribution partners,
and investing in other targeted growth opportunities for both the original
MSYS business and the acquired operations once restarted.

 

The Company intends to enter into new contractual arrangements with key
customers, distributors and partners of the former Modern Water reagents
business. The Company has received an indication from a key distributor that,
subject to completion of the Acquisition ("Completion"), it will enter into a
contract with the Company and, subject thereto, the Company anticipates being
able to receive a milestone payment on the commissioning of testing equipment
already in situ with certain end customers of this distributor. Subject to
further evaluation of the market opportunity and any necessary amendments or
updates to equipment design specifications, Microsaic also intends to seek to
enter a new agreement with the outsourced manufacturer of Microtox® testing
units, in order to be able to supply, install and commission additional water
testing equipment where there is market appetite. As previously indicated, it
may be appropriate for the Company to seek further growth capital. The
enlarged and reset Company will be operating from a substantially reduced cost
base using outsourced services for manufacturing and servicing of Microsaic
technologies.

 

Principal Terms of the Placing

 

The Company has conditionally raised a total of approximately £2.1 million
(before expenses) through the Placing of 169,000,000 Placing Shares at the
Placing Price to new and existing investors.

 

The Placing is conditional, inter alia, upon:

 

·    the Placing Agreement having been entered into and having become
wholly unconditional in all other respects save in relation to Admission and
not having been terminated in accordance with its terms prior to 16 January
2024 or such later date as may be agreed by TPI, SCM and the Company being not
later than 24 January 2024 (the "Long Stop Date");

·    the Acquisition Agreement having been entered into and, save only for
Admission, having become wholly unconditional and not having been terminated
in accordance with its terms prior to Admission;

 

·    restoration of the Company's New Ordinary Shares to trading on AIM
having occurred as described in the announcement dated 12 January 2024 and in
this announcement;

 

·    the Company allotting, subject only to Admission, the Placing Shares
in accordance with the Placing Agreement and allotting the Broker Warrants;
and

 

·    Admission of the Placing Shares to trading on AIM becoming effective
by no later than 8.00 a.m. on 16 January 2024 (or such later time as may be
agreed between SCM, TPI and the Company being no later than 8.00 a.m. on the
Long Stop Date).

 

The Placing Shares will be credited as fully paid and will rank pari passu in
all respects with the New Ordinary Shares then in issue, including the right
to receive all future distributions, declared, paid or made in respect of the
New Ordinary Shares from the date of Admission. The Placing Shares will
represent approximately 94.3 per cent. of the Enlarged Issued Share Capital,
if no Broker Warrant are validly exercised.

 

Application has been made for the Placing Shares to be admitted to trading on
AIM and is expected to become effective at 8.00 a.m. on 16 January 2024,
provided the Annual Report and Interim Results have been published and their
availability notified by way of a regulatory information service, and
Restoration has occurred at 7.30 a.m. that date.  The Placing Agreement also
provides for Admission to otherwise occur on such later date as the Company,
SCM and TPI may agree, being not later than 24 January 2024. The Placing
Settlement of the Placing Shares is expected to take place within the CREST
system following Admission.

 

It is expected that CREST accounts of the Placees who will hold their New
Ordinary Shares in CREST will be credited with their Placing Shares on 16
January 2024. In the case of Placees holding Ordinary Shares in certificated
form, it is expected that certificates will be dispatched during the week
commencing 22 January 2024.

 

The Placing is not being underwritten and the Placing Shares are not subject
to clawback.

 

Broker Warrants

 

In connection with the Placing, the Company has agreed to allot to JIM
Nominees Limited (as nominee on behalf of TPI, acting as the Company's broker
and placing agent) warrants over 30,712,000 New Ordinary Shares, exercisable
in whole or in part at the Placing Price for the period up to 5:00 p.m. on the
date that is 5 years from the date of Admission (the "Broker Warrant").

 

The allotment and issue of the Broker Warrant is subject to Admission, amongst
other things.

 

Any issue of New Ordinary Shares pursuant to the Broker Warrant will be made
on the same terms and conditions as the issue of the Placing Shares. The
Broker Warrant is not being offered to the public and is not being offered or
sold in any jurisdiction where it would be unlawful to do so.

 

Any New Ordinary Shares issued pursuant to the exercise of all or part of the
Broker Warrants will be credited as fully paid and will rank pari passu in all
respects with the New Ordinary Shares then in issue, including the right to
receive all future distributions, declared, paid or made in respect of the New
Ordinary Shares from the date of their admission. If the Broker Warrant is
fully exercised, the number of New Ordinary Shares arising will represent
approximately 14.6 per cent. of the Enlarged Issued Share Capital.

 

Intended Participation by Directors in the Placing

 

Bob Moore and Nigel Burton (the "Directors") have indicated their intention to
subscribe for in aggregate, 11,040,000 Placing Shares at the Placing Price,
representing 6.5 per cent. of the Placing Shares (excluding any further
issuance of Ordinary Shares or the exercise of any of the Broker Warrants).

 

The intended aggregate participation in the Placing by the Directors will
constitute a related party transaction under AIM Rule 13.  Ordinarily an
independent director would consult with the Company's nominated adviser to
confirm whether the terms of a related party transaction are fair and
reasonable in so far as shareholders are concerned. In the absence of such an
independent director in the context of this related party transaction, Singer
Capital Markets (acting as the Company's nominated adviser) has considered the
terms of the Directors' expected participation and confirms that the terms of
the transaction are fair and reasonable in so far as shareholders are
concerned.

 

The expected participations by the Directors are included in the aggregate
Placing described in this announcement as they will be confirmed shortly after
the expected publication of the Report and Accounts and the Interim Results,
and their notification by way of a Regulatory Information Service, later
today.

 

Placing Agreement

 

The Company will enter into a Placing Agreement with each of SCM and TPI,
pursuant to which SCM has agreed to act as nominated adviser in connection
with, amongst other things, the Placing and TPI has agreed (as the Company's
placing agent) to use reasonable endeavours to procure placees for the Placing
Shares at the Placing Price. The Company has also granted the Broker Warrants
to Turner Pope. The Placing Price represents a discount of approximately 70.4
per cent. to the equivalent pre-reorganised closing mid-market price on 30
June 2023, being the last day of trading prior to suspension of the Company's
shares. The Placing Price was increased during the market sounding for the
Placing, reflecting the demand generated.

 

The Placing Agreement will contain customary warranties given by the Company
to SCM and TPI as to matters relating to the Company and its business and a
customary indemnity given by the Company to SCM and TPI in respect of
liabilities arising out of or in connection with the Placing. Each of SCM and
TPI is entitled to terminate the Placing Agreement in certain circumstances
prior to Admission, including circumstances where any of the warranties is
found not to be true or accurate or to be misleading in any respect or on the
occurrence of certain force majeure events.

 

Acquisition

 

As announced on 12 January 2024, the Company executed and exchanged the
Acquisition Agreement with DeepVerge plc and Innovenn UK Limited to acquire
certain assets (the "Assets") for a total consideration of £100,000, payable
at Completion.

 

The Assets comprise the trade and all equipment used by the Modern Water
business relating to the manufacturing of the Microtox® bio-reagents, related
trade names, intellectual property, design and all manufacturing rights for
water testing equipment using Microtox® bio-reagent as a consumable, known as
the FX, LX and Continuous Toxic Measurement (CTM) machines.

 

Completion is subject to various conditions including Admission and the
delivery of several intellectual property assignments to the benefit of the
Company by no later than 24 January 2024. At Completion, the assets will be
transferred to the Company and the consideration of £100,000 paid to the
sellers.

 

Completion of the Acquisition is expected to occur by no later than 24 January
2024, following Restoration and Admission, both of which are expected on
Tuesday 16 January, 2024, at 7.30 a.m. and 8.00 a.m. respectively. Completion
will be confirmed by way of a separate announcement.

 

Current Trading

 

Summary information in connection with the recent historic and current trading
performance of the Company is contained within the Circular. Additional detail
will be made available in the Annual Report and Accounts 2022 and the Interim
Results (for the first six months of 2023), both of which are expected to be
published after the market close on or around 15 January 2024 (being the day
immediately prior to the expected date for Restoration and Admission).
Notification of the publication of these results will be made in accordance
with AIM Rules.

 

Principal Risks and Uncertainties

 

The attention of Shareholders and other investors is drawn to the Principal
Risks and Uncertainties set out in the Annual Report and Accounts 2022 which
is expected to be published after the market close on or around 15 January
2024 (being the day immediately prior to the expected date of Restoration and
Admission).

 

Further announcements will be made as appropriate.

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