REG - Surface Transforms - Result of Placing, Open Offer Launch & GM Notice
02/05/2024 09:45
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RNS Number : 9987M Surface Transforms PLC 02 May 2024
THIS ANNOUNCEMENT, AND THE INFORMATION CONTAINED HEREIN, IS NOT FOR
PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN
PART, IN OR INTO OR FROM THE UNITED STATES, AUSTRALIA, NEW ZEALAND, CANADA,
JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH IT
WOULD BE UNLAWFUL TO DO SO.
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO
CONSTITUTE INSIDE INFORMATION STIPULATED UNDER THE MARKET ABUSE REGULATION
(EU) NO. 596/2014 AS IT FORMS PART OF THE DOMESTIC LAW OF THE UNITED KINGDOM
BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (AS AMENDED) ("MAR").
UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA THE REGULATORY INFORMATION
SERVICE, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC
DOMAIN.
Surface Transforms plc.
("Surface Transforms" or the "Company")
Result of Placing and Subscription
Launch of Open Offer
Notice of General Meeting
Surface Transforms (AIM: SCE), manufacturers of carbon fibre reinforced
ceramic automotive brake discs, is pleased to announce that further to the
Company's announcement released at 5.30pm on 1 May 2024 ("Launch
Announcement"), the Bookbuild has closed and the Company has conditionally
raised gross proceeds of £6.5 million, through the successful placing of
58,727,744 Firm Placing Shares, 569,422,256 Conditional Placing Shares and
21,850,000 Subscription Shares at the Issue Price of 1 pence per Ordinary
Share.
The Firm Placing Shares, Conditional Placing Shares and Subscription Shares
represent approximately 185 per cent. of the Company's Existing Ordinary
Shares. The Issue Price represents a discount of approximately 66 per cent. to
the closing mid-market price per Ordinary Share of 2.9 pence on 30 April 2024,
being the last Business Day prior to the Launch Announcement.
In addition to the Placing and Subscription, the Company intends to provide
all Qualifying Shareholders with the opportunity to subscribe for an aggregate
of up to 200,000,000 Open Offer Shares at the Issue Price, to raise up to
approximately £2.0 million (before expenses), on the basis of 1 Open Offer
Share for every 1.760363190 Existing Ordinary Shares held on the Record Date.
The Board has discretion to increase the size of the Open Offer up to an
aggregate of 300,000,000 Open Offer Shares. Qualifying Shareholders
subscribing for their full entitlement under the Open Offer may also request
additional Open Offer Shares through an excess application facility (the
"Excess Application Facility").
The Firm Placing will be effected by way of a cashbox placing of new Ordinary
Shares for non-cash consideration. The Firm Placing and Subscription are
conditional upon the Placing Agreement becoming unconditional in all respects
(save for the condition relating to Firm Placing Admission) in relation to the
Firm Placing and Firm Placing Admission. The Conditional Placing and the Open
Offer are conditional upon, inter alia, the passing of the Resolutions at the
General Meeting and upon the Placing Agreement becoming unconditional in all
respects. The Conditional Placing is not conditional on the Open Offer
proceeding or on any minimum take-up under the Open Offer.
Shareholders should note that the Conditional Placing and Open Offer are
conditional, inter alia, on the passing of the Resolutions. Failure to approve
the Resolutions would therefore prevent the Company from raising funds
pursuant to the Conditional Placing and Open Offer, and only part of the net
proceeds would be received by the Company. This would require the Company to
seek urgent alternate financing that may or may not be available and, if
available, may or may not be on worse terms than the Fundraising. The
Directors believe that the Resolutions to be proposed at the General Meeting
are in the best interests of the Company and Shareholders as a whole and
unanimously recommend that Shareholders vote in favour of the Resolutions.
David Bundred, Chairman of Surface Transforms commented:
"The Board obviously regrets the circumstances that have led to this
distressed fund raising and completely understands the frustration and anger
of shareholders. The Board is however now confident the combination of this
£6.5m Placing, the £2m Open Offer and the £13m local authority loan is
sufficient for working capital and capital expenditure needs over the next few
years.
I would like to thank those institutional shareholders, new and old, who have
participated in this Placing for their support. We trust that the Open Offer
offers smaller shareholders the opportunity to participate and ameliorate
dilution through the Open Offer."
Background to and reasons for the Fundraising
Surface Transforms has announced a Placing and Subscription raising gross
proceeds of £6.5 million, together with an Open Offer to raise up to £2.0
million (before expenses), subject to the Board's discretion to increase the
size of the Open Offer. The net proceeds of the Fundraising will be used for
immediate working capital requirements and to support existing operations and
the manufacturing scale-up.
It is important to note that Surface Transforms already has a secured and
prospective customer pipeline for approximately £700 million(1) of sales, of
which approximately £390 million(2) is contracted. Over the next three years
(and potentially beyond), Surface Transforms expect to be able to sell as many
discs as it can manufacture. Related to which, the Board continues to target
increasing factory capacity to £75 million(3) sales per annum over the next
few years with a medium-term target of £150 million(3) per annum. However,
and as recent trading statements released by the Company have shown, improving
manufacturing resilience is at least as important as the capacity scale-up,
and operational management, led by the Company's Chief Executive, Kevin
Johnson and new Chief Operating Officer, Stephen Easton, are addressing this.
The Company raised £11.0 million (gross) in Q4-2023 with the expectation that
the net proceeds of that fundraising (together with the £13.2 million Loan
Facility entered into in December 2023) and estimated future operating cash
inflows, would be sufficient to deliver an expanded plant capable of
delivering the medium-term target of £150 million(3) sales per annum. Due to
a combination of factors, which are described further in the Launch
Announcement, this is not currently the case, and the Company requires the net
proceeds from the Fundraising for short-term working capital purposes, which
once resolved, will mean the medium-term opportunity can once again be fully
focused upon and delivered.
The Board is acutely aware of shareholder frustrations with the need for this
Fundraising, not least given the proximity to the previous equity fundraise
completed by the Company in Q4-2023, but the Directors do therefore want to
remind Shareholders of:
- the automotive market drivers and recent progress
with the Company's OEM customers;
- the Company's manufacturing strategy including
progress on installing new capacity; and
- how such drivers and progress translate into
recent and forecast revenues.
1. Based on the Directors' expectations of existing customer
contracts and their understanding of the relevant OEM's production plan and
estimated demand for discs.
2. Based on the Directors' expectations and their understanding
of the relevant OEM's production plan and estimated demand for discs and it
takes into account the expected lifetime revenue from the Company's contract
with OEM which is anticipated to be entered into following the Company's
recent nomination as OEM 10's tier one supplier of a carbon ceramic brake
discs.
3. Based on the Directors' estimates of sales proceeds from
expected production volumes.
Related Party and PDMR Transactions
The Directors' and certain PDMRs, interests as at today and following
completion of the Fundraising are as follows:
Director Existing beneficial interest in Ordinary Shares % of current share capital Subscription Shares subscribed for Open Offer Shares to be applied for Ordinary Shares after Placing and Subscription % of Enlarged Share Capital(2)
Matthew Taylor 1,240,203 0.35% 10,000,000 - 11,240,203 0.94%
David Bundred(1) 2,052,626 0.58% 2,500,000 - 4,552,626 0.38%
Kevin Johnson 1,141,308 0.32% 2,500,000 - 3,641,308 0.30%
Ian Cleminson 319,654 0.09% 2,500,000 - 2,819,654 0.23%
Julia Woodhouse 535,203 0.15% 2,500,000 - 3,035,203 0.25%
Isabelle Maddock 113,763 0.03% 350,000 - 463,763 0.04%
Stephen Easton(3) - - 1,500,000 - 1,500,000 0.12%
(1 Including 2,052,626 Ordinary Shares held in nominee accounts and ISAs of
connected parties)
(2 Assuming Open Offer applications in total for £2.0 million of Open Offer
Shares at the Issue Price)
(3 Stephen Easton is the non-Board Chief Operating Officer and a PDMR of the
Company)
The Directors and/or persons connected with each of them have conditionally
subscribed for an aggregate of 20,350,000 Subscription Shares, which
constitutes a related party transaction under the AIM Rules. Stephen Easton, a
PDMR, has also conditionally subscribed for 1,500,000 Subscription Shares.
All of the Directors have agreed to participate in the Subscription,
subscribing for in aggregate 20,350,000 Subscription Shares (the "Directors'
Participation"), which constitutes a related party transaction under the AIM
Rules. As there are no independent Directors to provide a fair and reasonable
statement because all of the Directors are participating in the Subscription,
Zeus (in its capacity as nominated adviser for the purposes of the AIM Rules)
considers the Directors' Participation to be fair and reasonable insofar as
Shareholders are concerned.
Canaccord, as a substantial shareholder of the Company, is also subscribing
for Placing Shares, which constitutes a related party transaction under the
AIM Rules for Companies.
In the case of participation by Canaccord, all the Directors are considered
to be independent for the purposes of AIM Rule 13. Having consulted with the
Company's nominated adviser, the Directors consider that the terms of the
participation in the Placing by Canaccord is fair and reasonable insofar as
Shareholders are concerned.
Firm Placing Admission
The Firm Placing Shares will, when issued, rank pari passu in all respects
with the existing Ordinary Shares then in issue. Application will be made for
the 58,727,744 Firm Placing Shares and 21,850,000 Subscription Shares to be
admitted to trading on AIM and dealings are expected to commence at 8.00 a.m.
on 7 May 2024. Following the Firm Placing Admission, the total number of
voting rights in the Company will be 432,650,382 and Shareholders may use this
figure 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 FCA's Disclosure Guidance and Transparency Rules.
Conditional Placing Admission
The Conditional Placing Shares will, when issued, rank pari passu in all
respects with the existing Ordinary Shares then in issue. Application will be
made for the 569,422,256 Conditional Placing Shares to be admitted to trading
on AIM and dealings are expected to commence at 8.00 a.m. on 24 May 2024.
Posting of Circular
The Company expects to post a Circular to Shareholders tomorrow, 3 May 2024,
containing a Notice of General Meeting, proxy form and full details of the
Open Offer including the Application Form. The Circular will also be available
on the Company's website at www.surfacetransforms.co.uk.
Investor presentation
The Company will provide a live presentation to investors and any other
interested parties on via Hardman & Co's platform at 12.00 noon on 9
May 2024. Interested parties can register for the presentation
at https://us06web.zoom.us/webinar/register/WN_mUnp-l2KTomKBRFgUhFEow
(https://url.uk.m.mimecastprotect.com/s/6Y0GC7LEPSA7W5Mf8Pj-3?domain=eu-west-1.protection.sophos.com)
Surface Transforms is committed to ensuring that there are appropriate
communication structures for all its Shareholders. Questions can be submitted
in advance as well as during the event via the "Ask a Question" function.
Although management may not be in a position to answer every question
received, they will address the most prominent ones within the confines of
information already disclosed to the market.
General Meeting
The Fundraising is conditional upon, inter alia, the passing of the
Resolutions. The General Meeting will be held at the offices of Gateley Plc,
Ship Canal House, 98 King Street, Manchester, M2 4WU at 11.00 a.m. on 23
May 2024.
Expected timetable of principal events
Record Date 1 May 2024
Announcement of the Fundraising 1 May 2024
Announcement of the result of the Placing and the Subscription 2 May 2024
Despatch of the Circular 3 May 2024
Admission of the Firm Placing Shares and Subscription Shares 8.00 a.m. on 7 May 2024
Announcement of the results of the General Meeting 23 May 2024
Announcement of the result of the Open Offer by 24 May 2024
Admission of the Conditional Placing Shares 8.00 a.m. on 24 May 2024
Admission of the Open Offer Shares 8.00 a.m. on 28 May 2024
Irrevocable commitments
The Directors (or persons connected with the Directors within the meaning of
sections 252 - 255 of the Act), who in aggregate hold 5,402,757 Ordinary
Shares, representing approximately 1.53 per cent. of the Existing Ordinary
Shares of the Company, have irrevocably undertaken to vote in favour of the
Resolutions at the General Meeting and not to subscribe for any of the
Open Offer Shares.
Important information
This announcement is for information purposes only and does not itself
constitute an offer or invitation to underwrite, subscribe for or otherwise
acquire or dispose of any securities in the Company and does not constitute
investment advice.
Neither this announcement nor any copy of it may be taken or transmitted,
published or distributed, directly or indirectly, in or into the United States
of America, its territories and possessions, any state of the United States
and the District of Columbia (the "United States"), Australia, New Zealand,
Canada, Japan or the Republic of South Africa or to any persons in any of
those jurisdictions or any other jurisdiction where to do so would constitute
a violation of the relevant securities laws of such jurisdiction. Any failure
to comply with this restriction may constitute a violation of the securities
laws of the United States, Australia, New Zealand, Canada, Japan or the
Republic of South Africa. The distribution of this announcement in other
jurisdictions may be restricted by law and persons into whose possession this
announcement comes should inform themselves about and observe any such
restrictions.
Any failure to comply with these restrictions may constitute a violation of
the securities laws of any such jurisdiction. Neither this announcement nor
any part of it nor the fact of its distribution shall form the basis of or be
relied on in connection with or act as an inducement to enter into any
contract or commitment whatsoever.
In particular, the Placing Shares, the Subscription Shares and the Open Offer
Shares have not been and will not be registered under the US Securities Act,
or under the securities laws or with any securities regulatory authority of
any state or other jurisdiction of the United States, and accordingly the
Placing Shares, the Subscription Shares and the Open Offer Shares may not be
offered, sold, pledged or transferred, directly or indirectly, in, into or
within the United States except pursuant to an exemption from the registration
requirements of the US Securities Act and the securities laws of any relevant
state or other jurisdiction of the United States. There is no intention to
register any portion of the Fundraising in the United States or to conduct a
public offering of securities in the United States or elsewhere.
Zeus is authorised and regulated in the United Kingdom by the FCA and is
acting as nominated adviser and Joint Broker to the Company in respect of the
Fundraising . Cavendish is authorised and regulated in the United Kingdom by
the FCA and is acting as Joint Broker to the Company in respect of the
Fundraising. Each of Zeus and Cavendish is acting for the Company and for
no-one else in connection with the Fundraising, and will not be treating any
other person as its client in relation thereto, and will not be responsible
for providing the regulatory protections afforded to its customers nor for
providing advice in connection with the Fundraising or any other matters
referred to herein and apart from the responsibilities and liabilities (if
any) imposed on Zeus or Cavendish, as the case may be, by FSMA, any liability
therefor is expressly disclaimed. Any other person in receipt of this
announcement should seek their own independent legal, investment and tax
advice as they see fit.
Forward-looking statements
This announcement contains statements about the Company that are or may be
deemed to be "forward-looking statements".
All statements, other than statements of historical facts, included in this
announcement may be forward-looking statements. Without limitation, any
statements preceded or followed by, or that include, the words "targets",
"plans", "believes", "expects", "aims", "intends", "will", "may", "should",
"anticipates", "estimates", "projects", "would", "could", "continue" or words
or terms of similar substance or the negative thereof, are forward-looking
statements. Forward-looking statements include, without limitation, statements
relating to the following: (i) future capital expenditures, expenses,
revenues, earnings, synergies, economic performance, indebtedness, financial
condition, dividend policy, losses and future prospects and (ii) business and
management strategies and the expansion and growth of the operations of the
Company.
These forward-looking statements are not guarantees of future performance.
These forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of any such person, or industry results, to be
materially different from any results, performance or achievements expressed
or implied by such forward-looking statements. These forward-looking
statements are based on numerous assumptions regarding the present and future
business strategies of such persons and the environment in which each will
operate in the future. Investors should not place undue reliance on such
forward-looking statements and, save as is required by law or regulation
(including to meet the requirements of the AIM Rules for Companies, the FSMA
and/or MAR), does not undertake any obligation to update publicly or revise
any forward-looking statements (including to reflect any change in
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based). All subsequent oral or
written forward-looking statements attributed to the Company or any persons
acting on its behalf are expressly qualified in their entirety by the
cautionary statement above. All forward-looking statements contained in this
announcement are based on information available to the Directors at the date
of this announcement, unless some other time is specified in relation to them,
and the posting or receipt of this announcement shall not give rise to any
implication that there has been no change in the facts set forth herein since
such date.
Unless expressly defined in this announcement, capitalised terms shall have
the meanings as defined in the Launch Announcement.
For further information, please contact:
Surface Transforms plc +44 151 356 2141
David Bundred, Chairperson
Kevin Johnson, CEO
Isabelle Maddock, CFO
Zeus (Nominated Adviser and Joint Broker) +44 203 829 5000
David Foreman / James Edis / Ed Beddows (Investment Banking)
Dominic King (Corporate Broking)
Cavendish (Joint Broker) +44 20 7220 0500
Ed Frisby / Abigail Kelly (Corporate Finance)
Andrew Burdis / Harriet Ward (ECM)
About Surface Transforms
Surface Transforms plc. (AIM:SCE) develops and produces carbon‐ceramic
material automotive brake discs. The Company is the UK's only manufacturer of
carbon‐ceramic brake discs, and only one of two mainstream carbon ceramic
brake disc companies in the world, serving customers that include major OEMs
in the global automotive markets.
The Company utilises its proprietary next generation Carbon Ceramic Technology
to create lightweight brake discs for high‐performance road and track
applications for both internal combustion engine cars and electric vehicles.
While competitor carbon‐ceramic brake discs use discontinuous chopped carbon
fibre, Surface Transforms interweaves continuous carbon fibre to form a 3D
matrix, producing a stronger and more durable product with improved heat
conductivity compared to competitor products; this reduces the brake system
operating temperature, resulting in lighter and longer life components with
superior brake performance. These benefits are in addition to the benefits of
all carbon‐ceramic brake discs vs. iron brake discs: weight savings of up to
70%, longer product life, consistent performance, reduced brake pad dust and
corrosion free.
The Company holds the London Stock Exchange's Green Economy Mark.
For additional information please visit www.surfacetransforms.com
(http://www.surfacetransforms.com)
Notification and public disclosure of transactions by Persons Discharging
Managerial Responsibilities ("PDMR") and persons closely associated with them
("PCA")
Notification of a Transaction pursuant to Article 19(1) of Regulation (EU) No.
596/2014
1 Details of the person discharging managerial responsibilities/person closely
associated
a. Name 1. Matthew Taylor
2. David Bundred
3. Kevin Johnson
4. Ian Cleminson
5. Julia Woodhouse
6. Isabelle Maddock
7. Stephen Easton
2 Reason for notification
a. Position/Status 1. Non-Executive Director
2. Non-Executive Chairman
3. CEO
4. Non-Executive Director
5. Non-Executive Director
6. CFO
7. Non-Board Chief Operating Officer & PDMR
b. Initial notification/ Initial Notification
Amendment
3 Details of the issuer, emission allowance market participant, auction
platform, auctioneer or auction monitor
a. Name Surface Transforms plc
b. LEI 2138007L822RL2CXMV34
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 1p each
Identification Code
ISIN: GB0002892528
b. Nature of the transaction 1. Subscription for 10,000,000 Subscription Shares
2. Subscription for 2,500,000 Subscription Shares
3. Subscription for 2,500,000 Subscription Shares
4. Subscription for 2,500,000 Subscription Shares
5. Subscription for 2,500,000 Subscription Shares
6. Subscription for 350,000 Subscription Shares
7. Subscription for 1,500,000 Subscription Shares
c. Price(s) and volume(s) Transaction Price(s) Volume(s)
1. Matthew Taylor 1p 10,000,000
2. David Bundred 1p 2,500,000
3. Kevin Johnson 1p 2,500,000
4. Ian Cleminson 1p 2,500,000
5. Julia Woodhouse 1p 2,500,000
6. Isabelle Maddock 1p 350,000
7. Stephen Easton 1p 1,500,000
d. Aggregated information Shares: 21,850,000
Price: 1 pence per Subscription Share
Aggregated total: £218,500
e. Date of the transactions 02/05/24
f. Place of the transaction London Stock Exchange, AIM
d.
Aggregated information
Shares: 21,850,000
Price: 1 pence per Subscription Share
Aggregated total: £218,500
e.
Date of the transactions
02/05/24
f.
Place of the transaction
London Stock Exchange, AIM
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