REG - Nanosynth Group PLC - Lanstead Subscription and Sharing Agreement

NanosynthAnnouncement

26/08/2022 07:00

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RNS Number : 2974X  Nanosynth Group PLC  26 August 2022

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. IN ADDITION, MARKET
SOUNDINGS WERE TAKEN IN RESPECT OF THE MATTERS CONTAINED IN THIS ANNOUNCEMENT,
WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF SUCH INSIDE INFORMATION.
UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW
CONSIDERED TO BE IN THE PUBLIC DOMAIN AND SUCH PERSONS SHALL THEREFORE CEASE
TO BE IN POSSESSION OF INSIDE INFORMATION.

26 August 2022

nanosynth group plc

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

Lanstead Subscription and Sharing Agreement

nanosynth, the AIM quoted company specialising in the synthesis and
application of nanoparticles to create new and improve existing products, is
pleased to announce a conditional subscription to raise £2,942,500 (the
"Subscription") through the issue of 535,000,000 new ordinary shares of 0.01
pence each in the Company ("Ordinary Shares") at a price of 0.55 pence per
Ordinary Share (the "Issue Price") to institutional investor Lanstead Capital
Investors L.P. ("Lanstead"), together with a related sharing agreement
("Sharing Agreement") pursuant to which the Company pledges the gross proceeds
of the Lanstead Subscription.

 

Highlights

·    Subscription for 535,000,000 new Ordinary Shares (the "Lanstead
Subscription Shares") by Lanstead at an Issue Price of 0.55 pence to raise
£2,942,500 (the "Lanstead Subscription")

 

·    The Issue Price of 0.55 pence represents a 20.9 per cent. premium to
the closing mid-market price (of 0.455 pence) of the Ordinary Shares on 25
August 2022, the latest business date prior to the announcement of the
Subscription

 

·    The £2,942,500 gross proceeds of the Lanstead Subscription will be
pledged to Lanstead by the Company pursuant to a Sharing Agreement with
Lanstead. The Sharing Agreement, details of which are set out below, entitles
the Company to receive back those proceeds on a pro rata monthly basis over a
period of 24 months, subject to adjustment upwards or downwards each month
depending on the Company's share price at the time relative to the Benchmark
Price of 0.7333 pence per share. The monthly settlement amounts for the
Sharing Agreement are structured to commence approximately one month (or
earlier by agreement with Lanstead) following Admission

 

·    The Sharing Agreement provides the opportunity for the Company to
benefit from positive future share price performance; an underlying reason for
undertaking the fund raise in this way

 

·    The proceeds of the Sharing Agreement, will be used primarily to fund
its working capital requirements as the Company looks to commercialise its
bespoke nanoparticle technology

 

Mark Duffin, Chief Executive of nanosynth, commented: "We are delighted to
have entered into these funding arrangements with Lanstead at a particularly
exciting time in the development of our business. The business is continuing
to see significant levels of interest across the seven new verticals in which
the Company is focusing its efforts and it will update the market on further
developments in due course."

 

Introduction

 

Lanstead has conditionally agreed to subscribe for the Lanstead Subscription
Shares at the issue price of 0.55 pence for gross proceeds of £2,942,500. The
Subscription proceeds will be pledged to Lanstead under the Sharing Agreement
pursuant to which the Company is entitled to receive back those proceeds on a
pro rata monthly basis over a period of 24 months, subject to adjustment
upwards or downwards each month depending on the Company's share price at the
time.

 

A significant factor in nanosynth's decision to enter into the Subscription is
that the Sharing Agreement provides the opportunity for the Company to benefit
from positive future share price performance.  There is no upper limit placed
on the additional proceeds which could be received by the Company as part of
the monthly settlements and the amount available in subsequent months is not
affected.  Whilst the Company notes the corresponding risk that a fall in
nanosynth's share price could reduce the amount of proceeds received, as
explained below, the Directors expect the Company's strategy to make
considerable positive advancements over the 24-month term of the Sharing
Agreement. If these advancements are successful, and if the success of these
advancements is reflected in nanosynth's share price, the Company expects the
proceeds to be received from Lanstead to exceed the amount pledged under the
Sharing Agreement.

 

Further information on the Lanstead Subscription

 

Pursuant to the subscription agreement between the Company and Lanstead (the
"Lanstead Subscription Agreement"), 535,000,000 new Ordinary Shares have today
been allotted and will be issued, conditional upon Admission, to Lanstead at
0.55 pence per Lanstead Subscription Share for an aggregate subscription value
of £2,942,500.

 

The Lanstead Subscription proceeds of £2,942,500 will immediately following
Admission be pledged to Lanstead under the Sharing Agreement under which
Lanstead will then make, subject to the terms and conditions of that Sharing
Agreement, monthly settlements (subject to adjustment upwards or downwards) to
the Company over 24 months, as detailed below.  As a result of entering into
the Sharing Agreement, the aggregate amount received by the Company under the
Lanstead Subscription and the Sharing Agreement may be more or less than
£2,942,500, as further explained below. Notwithstanding the Subscription
Price of 0.55 pence, shareholders should note that the share price of the
Company needs to be on average over the 24 months of the Sharing Agreement at
or above the Benchmark Price of 0.7333 pence per share for the Company to
receive at least, or more than, the gross Subscription of £2,942,500.

 

The Lanstead Subscription Shares will be issued credited as fully paid and
will rank pari passu in all respects with the Company's existing issued
Ordinary Shares.  The Lanstead Subscription is conditional, inter alia, on
admission of the Lanstead Subscription Shares to trading on AIM, and there
being: (i) no breach of certain customary warranties given by the Company to
Lanstead at any time prior to Admission (which is expected on or around 01
September 2022); and (ii) no force majeure event occurring prior to
Admission.

 

The Sharing Agreement

 

In addition to the Lanstead Subscription, the Company has entered into the
Sharing Agreement, pursuant to which nanosynth will pledge the £2,942,500
gross proceeds of the Lanstead Subscription to Lanstead.  The Sharing
Agreement will enable the Company to share in any share price appreciation
over the Benchmark Price (as defined below).  However, if the Company's 20
day Volume Weighted Average Share Price is less than the Benchmark Price then
the amount received by the Company under the Sharing Agreement will be less
than the gross proceeds of the Lanstead Subscription which were pledged by the
Company to Lanstead at the outset.

 

The Sharing Agreement provides that the Company will receive 24 monthly
settlement amounts as measured against a benchmark share price of 0.7333 pence
per Ordinary Share (the "Benchmark Price"). The monthly settlement amounts
for the Sharing Agreement are structured to commence approximately one month
(or earlier by agreement with Lanstead) following Admission.

 

If the measured share price (the"Measured Price"), calculated as the average
of each day's volume weighted share price ("VWAP") of the Company's Ordinary
Shares over a 20-day period prior to the monthly settlement date, exceeds the
Benchmark Price, the Company will receive more than 100 per cent. of that
monthly settlement due on a pro rata basis according to the excess of the
Measured Price over the Benchmark Price.  There is no upper limit placed on
the additional proceeds receivable by the Company as part of the monthly
settlements and the amount available in subsequent months is not affected.
 Should the Measured Price be below the Benchmark Price, the Company will
receive less than 100 per cent. of the monthly settlement calculated on a pro
rata basis and the Company will not be entitled to receive the shortfall at
any later date. As such, the final determination of the total amounts to be
received under the Sharing Agreement will only be known after the 24 months
have elapsed.

 

For example, if on a monthly settlement date the calculated Measured Price
exceeds the Benchmark Price by 10 per cent., the settlement on that monthly
settlement date will be 110 per cent. of the amount due from Lanstead on that
date.  If on the monthly settlement date the calculated Measured Price is
below the Benchmark Price by 10 per cent., the settlement on the monthly
settlement date will be 90 per cent. of the amount due on that date. Each
settlement as so calculated will be in final settlement of Lanstead's
obligation on that settlement date.

 

Assuming the Measured Price equals the Benchmark Price on the date of each and
every monthly settlement, nanosynth would receive 24 monthly settlement
amounts (23 monthly amounts of £122,604.17 and the final month of
£122,604.09) totalling in aggregate proceeds of £2,942,500 (before expenses)
from the Lanstead Subscription and Sharing Agreement. Examples of the proceeds
from the Sharing Agreement to be received each month, based upon varying
levels of average share price in the month, are shown in the Appendix to this
announcement.

 

The Company will pay Lanstead's legal costs of up to £20,000 incurred in
connection with the Lanstead Subscription and in entering into the Sharing
Agreement and, in addition, has agreed to issue to Lanstead 37,450,000 new
Ordinary Shares ("Value Payment Shares") in connection with entering into the
Sharing Agreement.

 

In no event will fluctuations in the Company's share price result in any
increase in the number of Lanstead Subscription Shares issued by the Company
or received by Lanstead.  The Sharing Agreement allows both Lanstead and the
Company to benefit from future share price appreciation.

 

In total, Lanstead will be issued with 535,000,000 new Ordinary Shares
pursuant to the Lanstead Subscription which, when issued, will equate
(together with the 37,450,000 Value Payment Shares) to approximately 21.59 per
cent. of the Company's enlarged issued share capital following Admission.

 

No shares, warrants or additional fees are owed to Lanstead at any point
during this agreement other than those disclosed above.

 

The Directors believe that the Sharing Agreement potentially provides a number
of benefits to the Company and its shareholders including: the certainty of
additional investment, albeit the amount of proceeds to be received under the
agreements is wholly dependent on the Company's share price each month over
the term of the Sharing Agreement; the opportunity to benefit from positive
future share price performance; and that the amount of shares issued is fixed,
together with the cost of their issue.

 

Authority to allot shares

 

The allotment of the Lanstead Subscription Shares, and the Value Payment
Shares is being made pursuant to existing authorities to allot shares and
other relevant securities and to disapply pre-emption rights under section 551
of the Companies Act 2006, which the Directors were given at the Company's
Annual General Meeting held on 26 July 2022.

 

Admission and Total Voting Rights

 

Application will be made for the Lanstead Subscription Shares and the Value
Payment Shares to be admitted to trading on the AIM market of the London Stock
Exchange ("Admission"). It is anticipated that Admission to AIM will occur at
8.00 am, on or around 01 September 2022.

 

Following Admission the Company will have 2,651,521,986 Ordinary Shares in
issue. The figure of 2,651,521,986 may be used by the Company's shareholders
as the denominator for the calculations by which they will determine if they
are required to notify their interest in, or a change to their interest in,
the Company under the Financial Conduct Authority's Disclosure Guidance and
Transparency Rules.

 

About Lanstead

 

Lanstead is a global investment firm that provides funding for ongoing
business objectives to listed small and mid-cap growth companies. In London,
Lanstead focus on equity investments in companies already listed or quoted on
the London Stock Exchange or European exchanges and on management teams with a
clear growth strategy.

 

Lanstead's extensive experience allows it to invest in most industries,
focusing on providing supportive, longer term capital that rewards company
growth. Companies with Lanstead on the shareholder register via an equity
placement to Lanstead with an accompanying sharing agreement can benefit from
a unique and flexible approach to finance growth. This provides the
opportunity for companies to benefit from additional cash beyond the original
placing proceeds without having to issue additional shares.

 

Further information is available at www.Lanstead.com (http://www.Lanstead.com)

 

Appendix - example returns from the Lanstead Sharing Agreement

 

In relation to each of the months in the 24 month calculation period:

 

 Average 20 Day VWAP                                                            0.55p        0.73p        0.92p
 Benchmark Price                                                                0.7333p      0.7333p      0.7333p
 20 day VWAP as % of Benchmark Price                                            75%          100%         125%
 Settlement from Lanstead in the month                                          £91,954      £122,606     £153,257
 Proceeds over 24 month period if Average 20 Day VWAP is at this level for the  £2,206,908   £2,942,500   £3,678,180
 entire period

 

 

ENQUIRIES:

 

 nanosynth group plc                    via IFC Advisory
 Mark Duffin (Chief Executive Officer)

 SP Angel Corporate Finance LLP         +44 20 3470 0470
 Nominated Adviser and Broker
 Stuart Gledhill
 Caroline Rowe

 IFC Advisory Ltd                       +44 20 3934 6630
 Graham Herring
 Tim Metcalfe
 Zach Cohen

 

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