REG - Velocys PLC - Proposed Placing and Open Offer
25/11/2021 17:10
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RNS Number : 6526T Velocys PLC 25 November 2021
Velocys plc
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25 November 2021
Velocys plc
("Velocys", the "Company" or the "Group")
Proposed Placing and Open Offer
Velocys plc (AIM: VLS), the sustainable fuels technology company, today
announces a proposed conditional Placing with institutional investors to raise
approximately £25 million in aggregate before expenses at the Placing Price
of 8 pence per Placing Share. Funds raised will be used primarily to
accelerate the delivery of Velocys' technology and enable the Company to scale
growth with a view to achieving its target of net positive cash flow during
2024.
In addition, in order to provide Shareholders who have not taken part in the
Placing with an opportunity to participate in the proposed Fundraise, the
Company is providing Eligible Shareholders the opportunity to subscribe, at
the Placing Price, for an aggregate of up to 25,076,613 new Ordinary Shares,
to raise up to approximately £2.0 million via the Open Offer.
Highlights
• The Placing to raise approximately £25 million
will be conducted by way of an accelerated bookbuilding process at the Placing
Price (the "Bookbuild"), which will be launched immediately following this
Announcement in accordance with the terms and conditions set out in Appendix
II.
• Subject to the successful closing of the
Bookbuild, the Company is also making an Open Offer, for up to 25,076,613 Open
Offer Shares, to raise up to approximately £2 million at the Placing Price,
on the basis of 2 Open Offer Shares for every 85 Existing Ordinary Shares held
by Eligible Shareholders at the Record Date. Any entitlements to Open Offer
Shares not subscribed for by Eligible Shareholders will be available to
Eligible Shareholders under the excess application facility for the Open
Offer.
• The net proceeds of the Fundraise will be used
primarily for:
• capital investment in the current manufacturing
capability to enable output of at least 12 reactors per year;
• funding to advance the two reference projects
(Bayou Fuels in Mississippi, US and Altalto in Immingham, UK) to the point of
securing external investment into the detailed engineering stage;
• setting aside funds to back process guarantees
and equipment warranties to clients;
• general working capital needs over the next 24
months, including the potential part-payment to secure control of the site for
the Altalto project; and
• providing a line of sight to achieving net
positive cash flow during 2024.
The Placing Price of 8 pence per New Ordinary Share represents a discount of
8.6 per cent. to the closing mid-market price of 8.75 pence per Existing
Ordinary Share as at 24 November 2021.
The Placing Shares are not being made available to the public. It is envisaged
that the Bookbuild will be closed no later than 8.00 p.m. GMT today, 25
November 2021 but may be closed earlier, or later, at the discretion of the
Joint Brokers. Details of the number of Placing Shares will be announced as
soon as practicable after the closing of the Bookbuild (expected to be 7 a.m.
on 26 November 2021). The Placing and the Open Offer are not underwritten.
The Fundraise is conditional on, inter alia, the passing of the Resolutions by
the Shareholders at the General Meeting to be held at 10.30 a.m. on 15
December 2021 at Magdalen Centre, Robert Robinson Avenue, The Oxford Science
Park, Oxford OX4 4GA. The Placing is not conditional on the Open Offer, but
the Open Offer is conditional upon completion of the Placing. Should
Shareholder approval not be obtained at the General Meeting, neither the
Placing nor the Open Offer will proceed.
Set out below in Appendix I is an adapted extract from the draft Circular that
is proposed to be sent to Shareholders after the closure of the Bookbuild and
which provides further information on the Company, the Placing and the Open
Offer. The final Circular, containing the terms and conditions of the Open
Offer and Notice of General Meeting will be sent to Shareholders and published
on the Company's website on or around 29 November 2021.
The capitalised terms not otherwise defined in the text of this Announcement
are defined in Appendix III and the expected timetable of the principal events
is set out in Appendix IV.
This summary should be read in conjunction with the full text of the following
announcement.
Enquiries:
Velocys +44 1865 800821
Henrik Wareborn, CEO
Andrew Morris, CFO
Lak Siriwardene, Director of Communications & Sustainability
Panmure Gordon (UK) Limited (Nomad, Joint Bookrunner & Joint Broker) +44 20 7886 2500
Hugh Rich (Corporate Broking)
Emma Earl (Corporate Finance)
John Prior (Corporate Finance)
Mark Rogers (Corporate Finance)
Shore Capital Stockbrokers Limited (Joint Bookrunner & Joint Broker) +44 20 7408 4090
Henry Willcocks (Corporate Broking)
Toby Gibbs (Corporate Advisory)
James Thomas (Corporate Advisory)
Liam Zabludowicz (Corporate Advisory)
Buchanan (Financial PR) +44 20 7466 5000
Helen Tarbet
Simon Compton
Radnor Capital (Investor Relations) +44 20 3897 1830
Joshua Cryer
Iain Daly
Notes to Editors
Velocys is an AIM-quoted, international sustainable fuels technology company,
traded on the AIM, providing clients with a technology solution to enable the
production of negative Carbon Intensity synthetic, drop-in fuels from a
variety of waste materials. SAF ('Sustainable Aviation Fuel') is the only
commercially available, permanent alternative to fossil aviation fuels.
The technology is IP-protected in all major jurisdictions.
Two reference projects in the US and UK (Bayou Fuels and Altalto) are designed
to accelerate the adoption and standardise the Velocys proprietary Fischer
Tropsch (FT) technology with an integrated end to end solution, including
renewable power and sequestration. Velocys is enabling commercial scale SAF
production in response to the clean energy transition.
Velocys technology pathway is enabling the next generation of low carbon
sustainable fuels with significant additional positive air quality impacts.
www.velocys.com (http://www.velocys.com)
IMPORTANT NOTICES
IMPORTANT NOTICE
The information contained in this announcement is for information purposes
only and does not purport to be full or complete. The information contained in
this announcement is given at the date of its publication (unless otherwise
marked) and is subject to updating, revision and amendment from time to time.
No reliance may be placed for any purpose on the information contained in this
announcement or its accuracy, fairness or completeness.
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
or any other jurisdiction where to do so would constitute a violation of the
relevant securities laws of such jurisdiction. This Announcement is for
information purposes only and does not constitute an offer to sell or issue,
or the solicitation of an offer to buy, acquire or subscribe for any shares in
the Company in the United States or any other state or jurisdiction in which
such offer or solicitation is not authorised or to any person to whom it is
unlawful to make such offer or solicitation. Any failure to comply with these
restrictions may constitute a violation of securities laws of such
jurisdictions.
The New Ordinary Shares have not been, and will not be, registered under the
US Securities Act of 1933, as amended (the "US Securities Act") and may not be
offered, sold directly or indirectly, in or into the United States except
pursuant to an applicable exemption from the registration requirements of the
US Securities Act. There will not be any public offering of the New Ordinary
Shares in the United States.
The contents of this Announcement have not been reviewed by any regulatory
authority in Hong Kong. You are advised to exercise caution in relation to the
Placing. If you are in any doubt about any of the contents of this
Announcement, you should obtain independent professional advice. This is not
an offer to the public and the Placing Documents (as defined below) will not
be registered as a prospectus under the Companies (Winding Up and
Miscellaneous Provisions) Ordinance (Cap. 32 of the laws of Hong Kong) or any
other applicable ordinance in Hong Kong.
This Announcement must not, therefore, be distributed, issued, circulated or
possessed for the purpose of distribution or issue or circulation, to persons
in Hong Kong other than (1) to professional investors within the meaning of
the Securities and Futures Ordinance (Cap. 571 of the laws of Hong Kong)
(including professional investors falling within the Securities and Futures
(Professional Investors) Rules (Cap. 571D of the laws of Hong Kong)) or (2) in
circumstances which would not constitute an offer to the public for the
purpose of the Companies (Winding Up and Miscellaneous Provisions) Ordinance
(Cap. 32 of the laws of Hong Kong) or the Securities and Futures Ordinance
(Cap. 571 of the laws of Hong Kong).
This announcement has been issued by, and is the sole responsibility of, the
Company. No undertaking, representation, warranty or other assurance, express
or implied, is made or given by or on behalf of the Company, Panmure Gordon
(UK) Limited ("Panmure Gordon") or Shore Capital Stockbrokers Limited ("Shore
Capital") or any of their respective directors, officers, partners, employees,
agents or advisers or any other person as to the accuracy or completeness of
the information or opinions contained in this announcement and no
responsibility or liability is accepted by any of them for any such
information or opinions or for any errors, omissions or misstatements,
negligence or otherwise in this announcement.
Panmure Gordon is authorised and regulated in the UK by the FCA and is acting
as nominated adviser and joint broker to the Company. Panmure Gordon is not
acting for, and will not be responsible to, any person other than the Company
for providing the protections afforded to its customers or for advising any
other person on the contents of this announcement or on any transaction or
arrangement referred to in this announcement. No representation or warranty,
express or implied, is made by Panmure Gordon as to, and no liability is
accepted by Panmure Gordon in respect of, any of the contents of this
announcement. The responsibilities of Panmure Gordon as the Company's
nominated adviser under the AIM Rules for Companies ("AIM Rules") and the AIM
Rules for Nominated Advisers are owed solely to London Stock Exchange plc and
are not owed to the Company or to any director or shareholder of the Company
or any other person, in respect of his decision to acquire shares in the
capital of the Company in reliance on any part of this announcement, or
otherwise.
Shore Capital is authorised and regulated in the UK by the FCA and is acting
as joint broker to the Company. Shore Capital is not acting for, and will not
be responsible to, any person other than the Company for providing the
protections afforded to its customers or for advising any other person on the
contents of this announcement or on any transaction or arrangement referred to
in this announcement. No representation or warranty, express or implied, is
made by Shore Capital as to, and no liability is accepted by Shore Capital in
respect of, any of the contents of this announcement.
The information in this announcement may not be forwarded or distributed to
any other person and may not be reproduced in any manner whatsoever. Any
forwarding, distribution, reproduction, or disclosure of this information in
whole or in part is unauthorised. Failure to comply with this directive may
result in a violation of applicable securities laws and regulations of other
jurisdictions.
This announcement contains (or may contain) certain forward-looking statements
with respect to certain of the Company's current expectations and projections
about future events and the Company's future financial condition and
performance. These statements, which sometimes use words such as "aim",
"anticipate'', "believe", "may", "will", "should", "intend", "plan",
"assume'', "estimate", "expect' (or the negative thereof) and words of similar
meaning, reflect the current beliefs and expectations of the directors of the
Company and/or the Joint Brokers and involve known and unknown risks,
uncertainties and assumptions, many of which are outside the Company's control
and difficult to predict, that could cause actual results and performance to
differ materially from any expected future results or performance expressed or
implied by the forward-looking statement. The information contained in this
announcement speaks only as of the date of this announcement and is subject to
change without notice and the Company does not assume any responsibility or
obligation to, and does not intend to, update or revise publicly or review any
of the information contained to this announcement, whether as a result of new
information, future events or otherwise, except to the extent required by the
FCA, the London Stock Exchange or by applicable law.
Any information in this announcement in respect of past performance (including
without limitation past performance of the Company, its group, shares in the
Company and/or the Company's portfolio) cannot be relied upon as a guide to
future performance. The price of shares and the income from them may fluctuate
upwards or downwards and cannot be guaranteed.
APPENDIX I
The Fundraise
1. Introduction
The Company proposes to raise, subject to certain conditions: (i)
approximately £25 million (before expenses) in aggregate by way of a
conditional placing at a placing price of 8 pence per share to certain
institutional and other investors; and (ii) up to £2 million (before
expenses) by way of an Open Offer made to Eligible Shareholders of up to
25,076,613 Open Offer Shares at a price of 8 pence per share. The Placing
Price represents a discount of 8.6 percent. to the closing mid-market price
of the Ordinary Shares as at 24 November 2021 of 8.75 pence per Ordinary
Share.
The Directors intend to use the net proceeds raised by the Placing and Open
Offer to accelerate the delivery of the Group's technology, including through
inter alia strengthening the Group's business development activities, scale up
of the Group's reactor manufacturing capabilities and advancing the Group's
technology Reference Projects (the Bayou Fuels Project in Mississippi, US and
the Altalto Immingham Project in the UK) through to third party financing.
Importantly the Directors believe the net proceeds raised by the Placing and
Open Offer provide a line of sight to Velocys achieving net positive cash flow
during 2024. Further details on the use of proceeds are set out below. The
Fundraise follows the Group's recent announcements that it has secured its
first Sustainable Aviation Fuel ("SAF") offtake agreement with Southwest
Airlines together with an MOU for an offtake with IAG for 100 percent. of the
SAF and the environmental credits to be produced and generated from the Bayou
Fuels Project. Third party financing for the final engineering phase of the
Bayou Fuels Project is targeted to occur in the first half of 2022 which is
expected to lead to a significant dilution of the Group's stake in the
project.
The Placing and the Open Offer are conditional upon (amongst other things) the
passing of certain resolutions in order to ensure that the Directors have the
necessary authorities and powers to allot the New Ordinary Shares. A General
Meeting is therefore being convened for the purpose of considering the
Resolutions at 10:30 a.m. on 15 December 2021 at Magdalen Centre, Robert
Robinson Avenue, The Oxford Science Park, Oxford OX4 4GA. The Notice of
General Meeting is set out at the end of the Circular. The Placing and the
Open Offer are also conditional on the Placing Agreement between the Company,
Panmure Gordon and Shore Capital becoming unconditional and not being
terminated in accordance with its terms. The Placing and the Open Offer are
not underwritten.
2. Information on the Company
(a) Overview of the Company
The Company is an international sustainable fuels technology company,
providing clients with one of the most sustainable routes to the economic
production of drop-in SAF from a variety of waste materials. Velocys operates
a capital light and scaleable licencing model offering a technology solution
for the development of synthetic sustainable fuels manufacturing via its
proprietary patented micro-channel Fischer-Tropsch reactors and comprehensive
biorefinery integrated technology package.
Velocys has a number of third party clients to whom it supplies its technology
to; in addition Velocys is developing two full-scale biorefinery Reference
Projects, the Bayou Fuels Project in Mississippi, US and the Altalto Immingham
Project in the UK. The Reference Projects are being developed to accelerate
adoption of the Group's technology and, following the completion of third
party construction capital project financing and commencement of the detailed
engineering stage of these projects, the Reference Projects are expected to
generate significant technology licensing revenue for the Group.
The Group has recently signed a 15 year fixed price offtake agreement with
Southwest Airlines and an MOU for a 10 year fixed price offtake with IAG for
in aggregate 100 per cent. of the SAF produced and environmental credits
generated from the Bayou Fuels Project. The Directors believe that these
offtake agreements further validate the demand for the Group's technology and
will significantly de-risk the Bayou Fuels Project which should enable
construction capital financing of the project. Through the combination of
biogenic feedstock, planned renewable power supply and carbon capture and
storage (both currently in the feasibility phase), Velocys' micro-channel
Fischer-Tropsch reactors and comprehensive biorefinery integrated technology
package will enable the commercial-scale production of SAF at the Bayou Fuels
Project with a strongly negative carbon intensity of down to -144g CO(2)e/MJ,
which is expected to achieve a total of 8.7 million tonnes of avoided
CO(2) over the term of the contracts.
The Group's technology has been commercially demonstrated through several
customer projects: in 2017 a first commercial demonstration plant (the ENVIA
plant, located in Oklahoma, US) using two of the Group's full-scale
Fischer-Tropsch reactors and catalyst was completed and subsequently produced
a fuel output that qualified under the Renewable Fuels Standard and was sold
to commercial clients. Subsequently, construction of the NEDO I biomass
demonstration project in Japan was successfully completed in late 2020 using
the Group's propriety Fischer-Tropsch technology. 3,000 litres of fuel from
NEDO I were used in a Japan Airlines scheduled commercial flight in June 2021
becoming the first such flight using SAF derived from woodchips feedstock at
any scale. Further details of these commercial demonstration plants are
provided below.
The Group is focused on accelerating delivery of Velocys' technology and
driving revenue opportunities.
(b) Technology overview
The Group's technology uses the Fischer-Tropsch process to convert a pure
carbon monoxide and hydrogen syngas via a catalytic chemical reaction into
Fischer-Tropsch products which are subsequently upgraded into fuels. The
technology enables an economic conversion of a wide range of low or
negative-cost, abundant sustainable feedstocks (including, but not limited to,
woody biomass residue or municipal solid waste that would otherwise go to
landfill or incineration) into high value sustainable fuels such as SAF. These
fuels qualify for decarbonisation credits in both the United States (under the
Renewable Fuels Standard) and in the United Kingdom (under the Renewable
Transport Fuels Obligations). These fuels provide for particulates reductions
by up to 90 per cent. and greenhouse gas emissions reductions by up to 70 per
cent. or over 150 per cent. when carbon capture and storage ("CCS") is
incorporated within the biorefinery.
The fuels are designed to "drop-in" and to be blended with conventional fossil
fuels, fully leveraging existing aircraft engines and logistics infrastructure
and are American Society for Testing and Materials approved for blending with
Jet A-1 at up to 50 per cent. No adaptation is therefore required to airport
infrastructure or aeroplane engines.
Although Fischer-Tropsch has been used for decades, Velocys has developed a
highly reactive catalyst and a bespoke reactor to be used in an innovative way
to manufacture sustainable fuels. Velocys' proprietary Fischer-Tropsch
technology comprises microchannel Fischer-Tropsch reactor cores, containing a
highly active Fischer-Tropsch catalyst made by Velocys' proprietary organic
matrix combustion which are contained within a pressure containment
vessel/reactor. Velocys' technology provides the unique combination of
microchannel reactors and nanocatalyst technology that allows an 8-10 fold
increase in the speed of chemical reactions compared with conventional
Fischer-Tropsch technology, and therefore much smaller reactors for any given
volume of throughput.
The technology is developed in-house by Velocys and is protected by a wide
range of patents and trademarks across multiple key jurisdictions. The
catalysts are manufactured at commercial scale by sub-contractors in the US
under strict Velocys supervision. The reactor cores have previously been
manufactured by subcontractors in the US using manufacturing equipment
designed and owned by Velocys, however the Company intends to use some of the
proceeds from the Fundraise to improve the automation and the capacity of this
manufacturing by bringing final assembly, testing and quality control in-house
to a specially designed Company controlled facility in Ohio while using
qualified external contractors for standard components and sub-assemblies.
(c) Market overview
Commercial aviation is responsible for about 13 per cent. of transportation
greenhouse gas ("GHG") emissions. The aviation industry seeks to reduce its
GHG emissions significantly, decoupling airline growth from carbon growth.
Purchasing fuel is the primary operating cost for airlines. SAF represents a
significant global opportunity, with the value of decarbonisation far
exceeding the value of the fuel where there is appropriate policy support for
SAF. The International Air Transport Association ("IATA") has committed to
net-zero carbon emissions by 2050, requiring 450 billion litres of SAF to meet
these net-zero commitments. However, supply is extremely limited - current
annual production is approximately 100 million litres. Electric and hydrogen
are not considered current or short-to-medium term viable solutions for long
haul flights. SAF is a "drop-in" fuel that requires no modifications to
engines or infrastructure and can still meet international specifications
(i.e., ASTM D7566), a provision under D7566 allows any fuel meeting the
specifications to be reidentified as a conventional fuel. With this inclusion,
any SAF can be seamlessly integrated into the fuel delivery infrastructure
without the need for separate tracking or regulatory approval, so providing
the most viable option to help achieve the net-zero commitments by 2050.
The Directors believe that the inevitable scale up in production of SAF and
the growing number of government mandates will make the use of SAF
widespread. The US has very competitive carbon incentives through its
existing Federal Renewable Fuel Standard ("RFS") and the Low Carbon Fuels
Standard ("LCFS") in California, together with the SAF Blenders Tax Credit
which is currently in progress through the Senate as part of the Sustainable
Skies Act and the Build Back Better legislation. There is also $4.3 billion
funding for SAF projects aiming to increase production to 120 billion litres.
In the UK, the Government's Net Zero Strategy includes developing a SAF
mandate to enable delivery of 10 per cent. SAF by 2030 with a £180 million
funding commitment to support development of SAF biorefineries. The Green
Fuels Green Skies grant initiative (of which Velocys is a recipient) has made
available £15 million in grant awards and has on-going support from the
Department for Transport. IATA's net-zero carbon emissions commitment, aligns
with the Paris Agreement for global warming to not exceed 1.5°c. The EU have
proposed to set SAF blending mandates via the ReFuelEU proposal published in
July 2021. These Directors believe that these would likely be set at 2 per
cent. by 2025, 5 per cent. by 2030 and 32 per cent. by 2040. The International
Civil Aviation Organisation ("ICAO") has introduced Carbon Offsetting and
Reduction Scheme for International Aviation ("CORSIA") as a global mandate for
decarbonisation of aviation and the Japanese Government has backed ventures
launched to progress commercial scale SAF production.
The Directors believe that there are a number of benefits of Velocys'
conversion pathway. The Fischer-Tropsch Synthesised Paraffinic Kerosene
("SPK") route is the most established of the seven approved technical pathways
under ASTM D7566, which allows the flexible use of large-volume, low-cost
sustainable feedstocks (such as woody biomass residue and municipal solid
waste) and generates clean burning, low carbon sustainable fuels. Velocys'
standardised solution can ultimately also lead to a reduced cost of capital
for clients when eligible for non-recourse project finance and can lead to
sustainable local production and distribution of fuel, resulting in increased
self-sufficiency and reduced reliance on fuel imports for the host country.
Expected demand for SAF in Europe and the US, based on the EU's latest
proposals and current incentives in the United States is expected to reach 3.7
billion litres per year by 2025, equivalent to 2 per cent. of global jet fuel
demand and the equivalent of the output from 28 reference plants. By 2030,
demand for SAF is expected to rise to 10.3 billion litres per year, equivalent
to 5 per cent. of global jet fuel supply and the equivalent of the output from
78 reference plants. By 2040, demand for SAF is expected to rise further to
77.6 billion litres per year, equivalent to 32 per cent. of global jet fuel
supply and the equivalent of the output from 600 reference plants.
Velocys' ambition is to capture 5-7 per cent. of the long term market share of
the demand this will create for proven SAF technology. The Group has an active
and growing pipeline of clients and projects. In 2025, the Directors expect
that one of the Group's clients will be in commercial scale operation and
three of the Group's clients will be at an advanced stage of construction.
At this stage, the Group is aiming to have total design capacity of 230
million litres per year, equivalent to 6 per cent. of expected demand for
SAF. By 2030, the Directors reasonably anticipate that 12 plants will have
been completed by the Group's clients, delivering a capacity to meet 15 per
cent. of the expected demand for SAF. By 2040, the Directors currently
forecast that up to 45 plants will have been completed by the Group's clients
with capacity to produce between 3.5 and 5 billion litres, equivalent to
between 5 per cent. and 7 per cent. of the expected demand for SAF.
(d) Business model
The Group has a hybrid, capital-light business model, focusing on delivering
Fischer-Tropsch reactors and catalysts to global clients under site-licence
agreements and providing engineering services over the course of the 25 year
expected lifetime of the assets. Some of Velocys' clients require the
Fischer-Tropsch Technology Island ("FTI", further details of which are
provided in the table below) only such as Red Rock Biofuels LLC ("RRB") in
Oregon, US and Toyo Engineering in Japan. Velocys also offers its clients a
full end-to-end solution for the conversion of solid sustainable feedstocks to
SAF via its so called "Integrated Technology Package" ("ITP"). The Group's two
biorefinery Reference Projects (the Bayou Fuels Project and the Altalto
Immingham Project) are designed to accelerate the end-to-end technology
adoption as well as providing a source of future revenue to the Group. To date
the Group's technology is already commercially referenced through its
contracts with RRB in Oregon, US and a consortium including Toyo in Japan. The
Group's Fischer-Tropsch Technology Island has been further demonstrated at
commercial scale by the ENVIA plant in Oklahoma during 2017 and 2018.
The Group's revenue comprises a combination of upfront fees and recurring fees
as follows:
Fischer-Tropsch Technology Island ("FTI") Integrated Technology Package ("ITP")
Upfront fees · Technology licence fees · Technology licence fees
· Reactor sales · Reactor sales
· Engineering fees · Engineering fees
· Commissioning and start up
· Optimisation fees
Recurring fees · Catalyst sales and replacement · Catalyst sales and replacement
· Decarbonisation royalties
In 2021, Velocys recognised revenue of £8.2 million following the delivery of
reactors and catalysts to RRB in Oregon and completion of its contractual
obligations under the contract with RRB awarded in 2017.
The Group is building a growing pipeline of international clients that are
developing biorefineries. This includes developing its existing relationships
such as with Toyo in Japan, and pursuing new project opportunities. In 2021
Velocys signed a collaboration agreement with Toyo to start development of
their commercial scale biomass-to-jet fuel project along with other
renewable fuel opportunities. The Group is also undertaking a number of
pre-feasibility studies with potential plant owners to ascertain the potential
for projects to move into pre-detailed engineering and project development.
Further information on the Group's existing projects is provided below.
Revenue opportunity
For illustrative purposes to demonstrate the revenue opportunity for Velocys,
the expected net present value to Velocys per a standard size contracted
biorefinery client with 16 reactors producing a capacity of 115 million litres
per year is $89 million, using a discount rate of 8 per cent. This estimate
comprises upfront and recurring revenues from the proprietary reactors and
catalysts, fees from engineering and commissioning services, technology
licence fees, optimisation fees and decarbonisation royalties. By way of
illustration, the potential profile of revenue streams of a typical ITP
project are provided below. (All values are indicative, based on Velocys
internal/proprietary information, which has not been verified by any
independent source, unless specifically noted. The values have been provided
for illustrative purposes only and are not an indication of future revenues.)
Pre-construction phase (years 1-2)
· Year 1: engineering fees (c.US$1.5 million); and
· Year 2: technology licence fee (c. US$3 million) and engineering
fees (c.US$2.5 million).
Financial close (year 3)
· Technology licence fee (c.US$ 1.8 million), engineering fees
(c.US$1.5 million) and reactor and catalyst sales (c.US$ 18 million).
Construction phase (years 3-4)
· Year 4: reactor and catalyst sales (c.US$14.4 million); and
· Year 5: technology licence fee (c.US$1.3 million), engineering
fees (c.US$1 million) and reactor and catalyst sales (c.US$ 3.9 million).
Commercial operations phase (years 6-25)
· Catalyst regeneration service and catalyst sales (c.US$6.3
million every year) and decarbonisation royalties (c.US$6.7 million
annually).
Growth strategy
Velocys' growth strategy is to:
· strengthen its business development function to grow its client
pipeline;
· invest in the scale-up of its reactor manufacturing capacity;
· capitalise on strategic alliances with its technology partners to
further enhance the Group's standardised integrated solution;
· accelerate its collaborations with technology partners and to
outsource standardised activities to remain capital light;
· target geographical markets where the regulatory environment
and/or pricing economies create the highest value opportunities for its
clients; and
· expand engineering and technical resources to support its
clients' needs from feasibility stage to detailed engineering.
The Directors reasonably believe the growth strategy will enable the Group to
have 12 clients with completed plants by 2030 with capacity to reach up to 15
per cent. of expected SAF demand with potential additional significant growth
projected beyond this - the Directors currently forecast that up to 45 plants
will have been completed by the Group's clients by 2040.
(e) Bayou Fuels Project in Mississippi, US: reference project
Overview
In October 2017, the Group signed a site option agreement with Adams County in
the State of Mississippi for a biorefinery facility to be located in Natchez,
Mississippi and secured total site incentives of approximately $60 million.
The Bayou Fuels Project will produce SAF for airline transportation in the US
from the paper and lumber industries including woody biomass forest residue
that would otherwise rot on the forest floor.
On 19 November 2021 the US House of Representatives passed a bill that
provides a SAF Blenders Tax Credit, which will be worth $1.75/gallon for the
SAF produced from the Bayou Fuels Project. The US administration has
recently announced additional policy incentives to accelerate the production
of SAF, with up to $5 per gallon by way of federal producer tax credit
available from 2027, which would replace the SAF Blenders Tax Credit.
The Group intends to commence a structured, competitive process to secure the
necessary development capital investment by one or more strategic partners in
the first half of 2022. The Group expects one or more clients to finance and
own the construction of the Bayou Fuels Project with the terms of the
financing determining Velocys' interests in the project post-financing.
Potential scenarios include, inter alia, Velocys retaining a minority interest
in the project or converting its interest into a "decarbonisation royalty" or
receiving a development fee.
In September 2019, Velocys entered into a non-binding agreement with Oxy Low
Carbon Ventures to capture the biogenic CO(2) generated by the plant and
securely store it underground permanently: so called, CO(2) sequestration.
This in combination with the use of biogenic feedstock, planned renewable
power supply and Velocys' carbon mitigation technology has the capacity to
generate a carbon intensity score of -144g CO2e/MJ for the plant's SAF output,
which is highly desirable for purchasers of the products and significantly
improves decarbonisation credit revenues further.
In June 2021, the Group announced the execution of a strategic framework
agreement with Koch Project Solutions, a subsidiary of Koch Engineered
Solutions, who have been engaged to provide a full cost and schedule guarantee
for the project.
Offtake agreements
Multi-year offtake contracts have been agreed, covering 100 per cent. of the
SAF expected to be produced by the biorefinery plant.
(i) Offtake agreement with Southwest Airlines
On 10 November 2021, Velocys Renewables LLC entered into its first offtake
agreement for the SAF to be produced by the project with Southwest Airlines,
America's largest domestic airline. The agreement covers the purchase by
Southwest Airlines of an expected 219 million gallons of SAF at a fixed price
and floor price for greenhouse gas credits, over a fifteen-year term from
2026, when the biorefinery is scheduled to begin commercial delivery of fuel.
After blending, this is expected to produce approximately 575 million gallons
of net zero SAF.
This offtake agreement covers two thirds of the project facility's planned
production and de-risks up to $2 billion revenues over the life of the
contract. Each gallon of SAF generated by the project is expected to
generate tradable greenhouse gas credits for which Southwest Airlines
guarantees a minimum price payable to the project (included in the fuel fixed
price), de-risking a significant proportion of the revenue stream to the
project. The project may additionally benefit from the value of greenhouse gas
credits if sold above the minimum price underwritten by Southwest Airlines.
Southwest Airlines and Velocys have also, as part of the offtake agreement,
agreed to a long-term strategic alliance for future US-based biorefineries in
which Velocys may be involved with the right for Southwest Airlines to
purchase significant volumes of SAF from such facilities.
The offtake agreement is subject to certain customary conditions precedent
including completion of satisfactory financing for the project's front-end
engineering and design phase and certain construction milestones, eligibility
for greenhouse gas credits as well as the enactment of the proposed SAFs tax
credit legislation.
(ii) Offtake memorandum of understanding with IAG
On 10 November 2021, Velocys Renewables LLC entered into a non-binding
memorandum of understanding for the offtake of SAF to be produced at the
project with International Consolidated Airlines Group S.A. ("IAG").
This covers the purchase by IAG's constituent airlines, which includes British
Airways, Aer Lingus and Iberia amongst others, of an expected 73 million
gallons of SAF, in aggregate, at a fixed price. After blending, this is
expected to produce the equivalent of approximately 192 million gallons of net
zero SAF during the term of the agreement, which will last for ten years from
the expected commencement date of operation of the project in 2026. This
represents one third of the facility's planned annual output and complements
the binding offtake agreement for the remaining two thirds annual output
entered into on the same date with Southwest Airlines as described above.
The intention of the parties is to convert the memorandum of understanding,
which includes all material terms for the offtake, into a binding agreement as
soon as possible within the next six months. The memorandum of understanding
also includes an option for IAG to invest in the project development phases.
The fixed price fuel purchase agreement includes a price support mechanism by
IAG for the greenhouse gas credits associated with the SAF production. As a
result, the agreement is expected to generate revenues of over $800 million to
the project and achieve an estimated total of 2.2 million tonnes of avoided
CO(2) over the term of the offtake.
Future milestones
Initial engineering for the project has commenced, with detailed engineering
expected to commence in 2022. Signature of the final commercial agreements for
the project, FID and financial close is expected in 2023, following which
plant construction is expected to commence in 2024. Construction is targeted
to be completed early in 2026 followed by plant commissioning and start up,
with full scale commercial operations targeted to commence in 2027.
(f) Altalto Immingham Project in Immingham, UK: reference project
Overview
In September 2017, the Group entered into a joint development agreement with
various parties as detailed below to execute a feasibility study for a
commercial scale waste-to-sustainable fuels plant in the United Kingdom. The
plant will take household and commercial waste which, after recyclates have
been removed, would be destined for landfill or incineration, and instead
convert that waste into clean-burning SAF and naphtha. The commercial
co-sponsor of the project is British Airways.
Funding history and securing the site
The initial feasibility stage of the project was successfully completed in
June 2018. At that time, £4.9 million of funding was secured from the
partners, including Velocys, to deliver the next development phase of the
project. British Airways and Shell subsequently committed a further £3.8
million of funding in aggregate to cover the remaining development work. This
included completion of initial engineering work, planning and permitting,
utilities supplies and detailed engineering preparation. Velocys continues to
execute all the work to progress the project in line with the joint
development agreement. In January 2021 Shell withdrew from the project,
formally relinquishing all interests in the project. As part of the funding
package in June 2018, a grant of £0.4 million was secured from the UK
Department for Transport under the Future Fuels for Flight and Freight
Competition, and a further grant of £0.5 million was made in June 2020.
On 18 December 2018, a site was secured for the project. The site, of
approximately 80 acres, near Immingham, North East Lincolnshire, is within an
enterprise zone and earmarked for industrial development within the local
development plan. Planning consent for the Development was granted subject to
conditions in May 2020. Access to the site is by way of an option agreement,
entered into by Altalto Immingham Ltd ("Altalto"), a subsidiary of Velocys, on
18 December 2018. The agreement gives Altalto the right, for a three-year
period, to acquire Rula Developments (Immingham) Limited ("Rula"), the company
which owns the site, from its current shareholders. The option period ends in
December 2021 and Velocys has concluded in principle a transaction with the
owners of Rula, which would lead to a £2.5 million part-payment (by the
parties to the joint development agreement) of the consideration for the site
to secure control of it. Concurrently Velocys is discussing the purchase of
Rula by a third party who would become the landlord for Altalto. The
decision as to whether to proceed with the acquisition of the Immingham site
will be made as part of the project's final investment decision, which is
dependent on progress of UK government policy. In the event that the Group, in
consultation with its co-commercial sponsor, British Airways, decides not to
proceed with the acquisition of the site, the residual liabilities that may be
incurred by the Group as a result are not expected to be material to
Velocys.
On 1 September 2021, it was announced that the Company would be the recipient
of a grant up to the value of £2.4 million for the Altalto Immingham Project.
The Grant is issued by the UK Department for Transport under the Green Fuels,
Green Skies Competition and is to be deployed in progressing project
development work. All funds are expected to be received by the end of June
2022 for all work that is incurred and paid for by the end of March 2022. Any
work not completed by the end of March 2022 will not receive any grant funding
under this competition so will either be stopped or have to be paid for by the
Altalto shareholders.
Future milestones
The first geotechnical work is ongoing, and detailed engineering is expected
to commence in 2023. Financial close is expected in 2024, with construction
of the plant being targeted to commence in 2024 and to be completed by
mid-2026, following which commissioning and startup will commence in 2027 with
full scale commercial operation expected in 2027.
(g) Current revenue generating client: Toyo, Nagoya, Japan
On 18 September 2019, the Group and Toyo entered into agreements in relation
to a pilot plant for generating SAF using woody biomass feedstock, as part of
a project funded by the Japanese government (the NEDO I project, in Nagoya,
Japan). The project involves Toyo, Mitsubishi Hitachi Power Systems, Chubu
Electric Power and the Japan Aerospace Exploration Agency. Under the
agreements, Toyo has paid a total of $4 million to the Group in two tranches:
$0.5 million which has already been received by the Group as a non-refundable
deposit, with the remaining $3.5 million paid into escrow.
In December 2019, Velocys delivered a pilot scale Fischer-Tropsch reactor and
catalyst to Toyo which was used in the NEDO I demonstration project during
2020. The Directors believe that the relationship with Toyo provides
recognition of Velocys' technology as one of the core elements to the ability
to produce synthetic jet fuel which meets the Japanese quality standards.
Following the successful completion of the NEDO I demonstration, on 8 February
2021, Velocys entered a collaboration agreement with Toyo to begin the
development of a commercial project to produce SAF and other renewable fuels
in Japan - the NEDO II biomass to sustainable aviation fuels plant. Initial
engineering of the NEDO II plant has commenced, with detailed engineering
expected in 2022. Financial close is expected in 2023, with construction in
2024 and 2025, commissioning and start up in 2026, and full-scale commercial
operations expected at the end of 2026. The NEDO II project is expected to be
similar in scale to the RRB biorefinery, details of which are set out below.
On 25 August 2021, it was announced that the Group's Fischer-Tropsch
technology has been selected for an e-fuels project by Toyo Engineering
Corporation and its consortium of six leading Japanese companies, including
Toshiba Energy Systems & Solutions Corporation, Toshiba Corporation,
Idemitsu Kosan Co., Ltd., Japan CCS Co., Ltd., and All Nippon Airways Co.,
Ltd. These six companies are being commissioned by the Ministry of the
Environment, Government of Japan jointly to commence a demonstration project
to convert carbon gasses and hydrogen directly into SAF.
(h) Current revenue generating client: Red Rock Biofuels, Oregon, USA
In May 2018, Velocys received a "notice to proceed" to commence manufacturing
of Fischer-Tropsch reactors and catalysts for the RRB biorefinery that will be
located in Lakeview, Oregon, USA. RRB has commenced construction of the
biorefinery, which will incorporate Velocys' technology, and produce
low-carbon, renewable diesel and jet fuel from woody biomass. Velocys' role in
this project is as a licensor for its Fischer-Tropsch technology to be used
for the project as the central processing unit.
The expected output of the biorefinery in Lakeview is approximately 15 million
gallons per year of renewable transportation fuels including diesel and jet
fuel. RRB has in place contracts from several airlines to purchase 100 per
cent. of the jet fuel produced each year.
Velocys delivered four Fischer-Tropsch reactors to RRB in the first half of
2020 and completed the loading of catalyst into the reactors in December
2020. In the first half of 2021 Velocys was able to demonstrate that it had
completed all contractual obligations to RRB and thereby recognised £8.2m of
revenue resulting in £3.3m gross profit.
(i) Completed demonstration project in Oklahoma: ENVIA joint venture
In September 2016, construction of the first demonstration plant incorporating
the Group's Fischer-Tropsch technology was completed and commercial scale
catalyst loading was proven. In February 2017, the first Fischer-Tropsch
product was successfully produced and, in June 2017, the first finished
products (being renewable waxes, diesel and naphtha) were produced. In
September 2017, the plant generated revenue for the first time. In October
2017, the plant achieved an operational capacity of 200 barrels per day and,
in early 2018, Q-RIN qualification under the Renewable Fuels Standard was
achieved, validating the pathway. The ENVIA plant completed the demonstration
of the Velocys Fischer-Tropsch technology and was the culmination of 17 years
of development and testing, with over 5,000 hours of cumulative runtime
achieved across the two full-scale Velocys Fischer-Tropsch reactors, stress
testing the plant's equipment and technology under various conditions. In
total, 1.6 million litres of finished fuel and wax were delivered by the
plant.
In May 2018, a gas-leak was detected at the ENVIA plant and the plant was
safely temporarily put in recycling mode. Subsequent investigations found that
the ancillary coolant system was the root cause of the leak. The ancillary
coolant system was designed by a third party and had no relation to any
Velocys technology deployed at the plant. The damaged equipment and loss of
commercial revenue was covered under ENVIA's commercial insurance policies. On
10 September 2018, operations at the ENVIA demonstration plant were suspended
and the decision was taken by Velocys that it had accumulated a sufficient
number of operating hours on the two licensed commercial scale Fischer-Tropsch
reactors for the demonstration to be considered completed. Following the
winding down of the ENVIA joint venture, the Group has been conducting an
extensive and valuable post-operative analysis of the reactors and catalyst.
This post-operative analysis is under way, and the results generated will be
incorporated by Velocys in even more comprehensive instructions to its clients
regarding the operation of its catalyst and reactors under a wide range of
conditions, showing the benefit from the knowledge accumulated from the
demonstration plant in Oklahoma.
3. Current Trading
On 23 September 2021 Velocys announced its interim results for the six months
to 30 June 2021, demonstrating that the Group has achieved an important
milestone, recognising £8.2m of revenue and £3.3m gross profit for the first
half of 2021 from our first major commercial customer contract with RRB. The
downwards trend in the Group's operating loss continued, declining to £2.0m
in HY2021 from £2.6m in HY2020 (£5.2m in HY2019 and £11.0m in 2018). This
has shown the determination by the Group to control its spending whilst also
delivering to our customers and progressing the two Reference Projects.
Financial highlights
· Revenue of £8.2m (HY2020: £0.2m), mainly from licensing fees
and sales of reactors and catalyst for customer contract awarded in 2017.
· Gross profit of £3.3m (HY2020: £0.1m).
· Operating loss of £2.0m (HY2020: £2.6m).
· Cash at period end of £8.3m (31 December 2020: £13.1m).
· Cash outflow of £4.8m (HY2020: cash outflow £3.2m).
4. Use of Proceeds
The Directors intend to use the net proceeds from the Fundraise as follows:
· At least £5 million to be used as capital investment in
manufacturing capability to enable output of at least 12 reactors per year and
in addition the build-up of reactor parts inventory to expedite commissioning
of that equipment;
· £5 million to be used as funding to advance the Bayou Fuels
Project and the Altalto Immingham Project to the point of securing external
investment into the detailed engineering stage;
· £4 million to back process guarantees and equipment warranties
to the Group's clients; and
· the balance of the net proceeds of the Fundraise will be used for
business development and for general working capital needs and Group running
costs over the next two years, with a potential part-payment to secure control
of the site for the Altalto Immingham Project.
5. Principal terms of the Placing
The Company is conducting a conditional, non-pre-emptive placing of
approximately £25 million at the Placing Price. The Placing Shares will be
placed by Panmure Gordon and Shore Capital as agents for the Company and
pursuant to the Placing Agreement, with institutional and other professional
investors.
The Placing Price represents a discount of 8.6 percent. to the closing
mid-market price of the Ordinary Shares as at 24 November 2021 of 8.75 pence
per Ordinary Share. The Placing Shares will, when issued, be credited as fully
paid and will rank pari passu in all respects with the other Ordinary Shares
then in issue, including all rights to all dividends and other distributions
declared, made or paid following the relevant Admission.
The VCT Placing is conditional upon (amongst other things):
(a) the passing of the Resolutions at the General Meeting;
(b) the Placing Agreement becoming unconditional and the Placing
Agreement not having been terminated in accordance with its terms; and
(c) VCT Admission occurring on or before 16 December 2021 (or
such later date as Panmure Gordon, Shore Capital and the Company may agree,
not being later than 31 December 2021).
The General Placing is conditional upon (amongst other things):
(a) the passing of the Resolutions at the General Meeting;
(b) the Placing Agreement becoming unconditional and the Placing
Agreement not having been terminated in accordance with its terms; and
(c) General Admission occurring on or before 17 December 2021
(or such later date as Panmure Gordon, Shore Capital and the Company may
agree, not being later than 31 December 2021).
Shareholders should note that it is possible that VCT Admission occurs but
General Admission does not occur. General Admission is conditional on VCT
Admission occurring. If VCT Admission and General Admission do not occur then
the Company will not receive the relevant net proceeds in respect of VCT
Admission and General Admission and the Company may not be able to finance the
activities referred to in the Circular.
The Placing Agreement contains warranties from the Company in favour of
Panmure Gordon and Shore Capital in relation to (amongst other things) the
Company and its business. In addition, the Company has agreed to indemnify
Panmure Gordon and Shore Capital in relation to certain liabilities it may
incur in undertaking the Placing. Panmure Gordon and Shore Capital have the
right to terminate the Placing Agreement in certain circumstances prior to
General Admission, in particular, it may terminate in the event that there has
been a material breach of any of the warranties or for force majeure (and
other introducers and placing agents also have the right to terminate their
agreements in certain circumstances).
The Company believes that the VCT Shares will rank as a qualifying holding for
the purposes of investment by VCTs. However, no assurance has been obtained
from HMRC or any other person that a subscription for VCT Shares is a
qualifying holding for the purpose of investment by VCTs.
None of the Directors or the Company give any warranty or undertaking that any
VCT investment in the Company is a qualifying holding, or that VCT qualifying
status will not be withdrawn, nor do they warrant or undertake that the
Company will conduct its activities in a way that qualifies for or preserves
its status or the status of any investment in Ordinary Shares. Investors
considering taking advantage of any of the reliefs available to VCTs should
seek their own professional advice in order that they may fully understand how
the rules apply in their individual circumstances and what they are required
to do in order to claim any reliefs (if available). As the rules governing VCT
reliefs are complex and interrelated with other legislation, if any potential
investors are in any doubt as to their tax position, require more detailed
information than the general outline above, or are subject to tax in a
jurisdiction other than the UK, they should consult their professional
advisers.
Application will be made for the VCT Shares and the General Placing Shares to
be admitted to trading on AIM. It is expected that trading in the VCT Shares
will commence at 8.00 a.m. on 16 December 2021 and that trading in the General
Placing Shares will commence at 8.00 a.m. on 17 December 2021.
It is expected that certain Directors in the Company intend to subscribe for
New Ordinary Shares through the Placing for an aggregate amount of at least
approximately £50,000. Further details will be announced as appropriate in
due course.
6. Principal terms of the Open Offer
The Company considers it important that, where reasonably practicable,
Shareholders have an opportunity to participate in its equity fundraisings.
Accordingly, the Company intends to raise up to approximately £2 million
(before expenses) by way of the Open Offer.
The Open Offer has been structured such that the maximum amount that can be
raised by the Company under the Open Offer will not exceed the sterling
equivalent of €8 million. The limit of approximately £2 million for the
Open Offer has been set to allow existing Shareholders to participate in the
fundraise, taking into account the dilution of Shareholders not able to
participate in respect of the Placing and the capital needs of the Company.
The maximum aggregate limit of the Open Offer also ensures that the Company is
not required to produce an approved prospectus pursuant to section 85 of FSMA.
The issue of a prospectus would considerably increase the costs of the
fundraising and it would take much longer to complete, as any such prospectus
would require the prior approval of the FCA.
On and subject to the terms and conditions of the Open Offer, the Company
invites Eligible Shareholders, being Shareholders who are resident in the
United Kingdom only on the Ex-Entitlement Date, to apply for their Basic
Entitlement of Open Offer Shares at the Placing Price. Each Eligible
Shareholder's Basic Entitlement has been calculated on the basis of 2 Open
Offer Shares for every 85 Existing Ordinary Shares held at the Record Date.
Eligible Shareholders are also invited to apply for additional Open Offer
Shares in accordance with the Excess Entitlement. Any Open Offer Shares not
issued to an Eligible Shareholder pursuant to their Basic Entitlement will be
apportioned between those Eligible Shareholders who have applied for the
Excess Entitlement at the sole discretion of the Board, provided that no
Eligible Shareholder shall be required to subscribe for more Open Offer Shares
than they have specified on the Application Form or through CREST.
The Open Offer is conditional upon (amongst other things):
(a) the passing of the Resolutions at the General Meeting;
(b) the Placing Agreement becoming unconditional and the Placing
Agreement not having been terminated in accordance with its terms; and
(c) General Admission occurring on or before 17 December 2021
(or such later date as Panmure Gordon, Shore Capital and the Company may
agree, not being later than 31 December 2021).
The Open Offer Shares have not been and are not intended to be registered or
qualified for sale in any jurisdiction other than the United Kingdom.
Accordingly, unless otherwise determined by the Company and effected by the
Company in a lawful manner, the Application Form will not be sent to existing
Shareholders with registered addresses in any jurisdiction other than the
United Kingdom since to do so would require compliance with the relevant
securities laws of that jurisdiction. Applications from any such person will
be deemed to be invalid. If an Application Form is received by any Shareholder
whose registered address is elsewhere but who is in fact a resident or
domiciled in a territory other than the United Kingdom, he/she should not seek
to take up his/her allocation.
The Circular contains the full terms and conditions of the Open Offer.
7. Recommendation
The Directors consider that the Fundraise and the Resolutions are in the best
interests of the Company and its Shareholders as a whole. The Company is
reliant on the net proceeds of the Fundraise to meet its ongoing liquidity
requirements and to continue to implement its strategy. If the Resolutions are
not passed by Shareholders, the Fundraise will not proceed. In these
circumstances, the Directors will need to reconsider the Company's strategy
and the Company may need to seek alternative funding, which may not be
available on terms which are acceptable to the Company or at all. Accordingly,
the Directors unanimously recommend that Shareholders vote in favour of the
Resolutions, as they intend to do in respect of their own legal and/or
beneficial shareholdings, amounting, in aggregate, to 5,002,723 Ordinary
Shares (representing approximately 0.5 per cent. of the Ordinary Shares in the
issue as at the date of the Circular).
APPENDIX II
TERMS AND CONDITIONS OF THE PLACING
INTRODUCTION
IMPORTANT INFORMATION FOR PLACEES ONLY REGARDING THE PLACING.
THIS ANNOUNCEMENT, INCLUDING THIS APPENDIX, AND THE INFORMATION IN IT, IS
RESTRICTED, AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, IN WHOLE OR IN PART IN OR INTO THE UNITED STATES, CANADA,
AUSTRALIA, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA OR JAPAN ("THE EXCLUDED
TERRITORIES") OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION OR
DISTRIBUTION WOULD BE UNLAWFUL.
IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES ONLY.
THE PLACING SHARES THAT ARE THE SUBJECT OF THE PLACING ARE NOT BEING OFFERED
OR SOLD TO ANY PERSON IN THE EUROPEAN UNION OR THE UK, OTHER THAN TO QUALIFIED
INVESTORS, WHICH INCLUDES LEGAL ENTITIES WHICH ARE REGULATED BY THE FCA OR
ENTITIES WHICH ARE NOT SO REGULATED WHOSE CORPORATE PURPOSE IS SOLELY TO
INVEST IN SECURITIES.
MEMBERS OF THE PUBLIC IN THE UK OR ELSEWHERE ARE NOT ELIGIBLE TO TAKE PART IN
THE PLACING. THIS ANNOUNCEMENT (INCLUDING THIS APPENDIX) AND THE TERMS AND
CONDITIONS SET OUT HEREIN ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED
ONLY AT: (A) PERSONS IN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA WHO ARE
QUALIFIED INVESTORS (WITHIN THE MEANING OF THE PROSPECTUS REGULATION (EU)
2017/1129) ("PROSPECTUS REGULATION"); (B) PERSONS IN THE UNITED KINGDOM WHO
ARE QUALIFIED INVESTORS WITHIN THE MEANING OF THE UK VERSION OF THE PROSPECTUS
REGULATION WHICH IS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION
(WITHDRAWAL) ACT 2018 AS AMENDED AND SUPPLEMENTED (INCLUDING BY THE UK
PROSPECTUS AMENDMENT REGULATIONS 2019 AND THE FINANCIAL SERVICES AND MARKETS
ACT 2000 (PROSPECTUS) REGULATIONS 2019) WHO ALSO (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
("ORDER") (INVESTMENT PROFESSIONALS) OR (II) FALL WITHIN ARTICLE 49(2)(A) TO
(D) OF THE ORDER (HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS ETC.)
AND (C) THOSE PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (EACH
SUCH PERSONS REFERRED TO ABOVE BEING A "RELEVANT PERSON"). THIS ANNOUNCEMENT
(INCLUDING THIS APPENDIX) AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT
BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY
INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT (INCLUDING THIS
APPENDIX) AND THE TERMS AND CONDITIONS SET OUT HEREIN RELATES IS AVAILABLE
ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS.
THIS APPENDIX, AND THE ANNOUNCEMENT OF WHICH IT FORMS PART, IS FOR INFORMATION
PURPOSES ONLY IS NOT INTENDED TO FORM THE BASIS OF ANY INVESTMENT ACTIVITY OR
DECISION, AND SHOULD NOT BE CONSIDERED AS A RECOMMENDATION BY THE COMPANY THAT
ANY RECIPIENT SHOULD ACQUIRE ANY INTEREST IN THE SHARE CAPITAL OR ANY OTHER
INTEREST IN THE COMPANY. IT DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR
SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. IF YOU ARE IN ANY DOUBT AS TO
WHETHER YOU ARE A RELEVANT PERSON YOU SHOULD CONSULT A PROFESSIONAL ADVISER
FOR ADVICE.
THIS ANNOUNCEMENT 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. THIS ANNOUNCEMENT IS NOT AN OFFER OF
OR SOLICITATION TO PURCHASE OR SUBSCRIBE FOR SECURITIES IN THE UNITED STATES.
THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES EXCEPT PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE
PLACING SHARES ARE BEING OFFERED AND SOLD ONLY (I) OUTSIDE OF THE UNITED
STATES IN "OFFSHORE TRANSACTIONS" AS DEFINED IN AND IN ACCORDANCE WITH
REGULATION S UNDER THE SECURITIES ACT ("REGULATION S") AND OTHERWISE IN
ACCORDANCE WITH APPLICABLE LAWS AND; (II) IN THE UNITED STATES TO A LIMITED
NUMBER OF "QUALIFIED INSTITUTIONAL BUYERS" ("QIB") AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THERE WILL BE NO PUBLIC OFFER OF THE
SECURITIES MENTIONED HEREIN IN THE UNITED STATES.
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS
AND RELATED ASPECTS OF AN INVESTMENT IN PLACING SHARES. THE PRICE OF THE
PLACING SHARES IN THE COMPANY AND THE INCOME FROM THEM (IF ANY) MAY GO DOWN AS
WELL AS UP AND INVESTORS MAY NOT GET BACK THE FULL AMOUNT INVESTED ON DISPOSAL
OF THE PLACING SHARES.
Placees will be deemed to have read and understood this announcement and these
terms and conditions in their entirety and to be making such offer on the
terms and conditions and to be providing the representations, warranties,
acknowledgements, and undertakings contained in this Appendix. In particular,
each such Placee represents warrants and acknowledges that:
1. it is a Relevant Person and undertakes that it will acquire, hold, manage
or dispose of any Placing Shares that are allocated to it for the purposes of
its business;
2. in the case of any Placing Shares acquired by it as a financial
intermediary, as that term is used in Article 5(1) of the Prospectus
Regulation, (i) the Placing Shares acquired by it have not been acquired on
behalf of, nor have they been acquired with a view to their offer or resale
to, persons in any Member State of the EEA or the UK other than Qualified
Investors or in circumstances in which the prior consent of the Joint Brokers
has been given to the offer or resale; or (ii) where Placing Shares have been
acquired by it on behalf of persons in any Member State of the EEA or the UK
other than Qualified Investors, the offer of those Placing Shares to it is not
treated under the Prospectus Regulation as having been made to such persons;
and/or
3. except as otherwise permitted by the Company and subject to any available
exemptions from applicable securities laws, it (and any person on whose
account it is acting) is (a) located outside the United States and is
acquiring the Placing Shares in an "offshore transaction" as defined in, and
in accordance with, Regulation S; or (b) is a dealer or other professional
fiduciary in the United States acting on a discretionary basis for a non-U.S.
Person as defined in and in reliance on Regulation S; or (c) if within the
United States, is a QIB .
The Company and the Joint Brokers will rely upon the truth and accuracy of the
foregoing representations, acknowledgements and agreements. Neither of the
Joint Brokers makes any representation to any Placee regarding an investment
in the Placing Shares referred to in this announcement (including this
Appendix).
This announcement (including this Appendix) does not constitute an offer and
may not be used in connection with an offer, to sell or issue or the
solicitation of an offer to buy or subscribe for Placing Shares in any
jurisdiction in which such offer or solicitation is or may be unlawful. This
announcement (including this Appendix) and the information contained herein is
not for publication or distribution, directly or indirectly, to persons in the
United States, the Excluded Territories or in any jurisdiction in which such
publication or distribution is unlawful. Persons who come into possession of
this announcement are required by the Company to inform themselves about and
to observe any restrictions of transfer of this announcement. No public offer
of securities of the Company under the Placing is being made in the United
Kingdom, the United States or any Excluded Territory.
In particular, the Placing Shares referred to in this announcement have not
been and will not be registered under the Securities Act or under any laws of,
or with any securities regulatory authority of, any state or other
jurisdiction of the United States, and may not be offered, sold, resold,
transferred or delivered, directly or indirectly, in the United States except
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and in compliance with any
applicable securities laws of any state or other jurisdiction in the United
States. The Placing Shares are only being offered and sold only (i) outside
the United States in offshore transactions as defined in and in accordance
with Regulation S ; and (ii) in the United States to a limited number of QIBs
pursuant to an exemption from the registration requirements of the Securities
Act. Any offer or sale of Placing Shares in the United States will be made
only by broker-dealers who are registered as such under the Exchange Act. The
Company has not registered and will not be registered under the U.S.
Investment Company Act of 1940, as amended.
The relevant clearances have not been, nor will they be, obtained from the
securities commission of any province or territory of Canada; no prospectus
has been lodged with or registered by the Australian Securities and
Investments Commission or the Japanese Ministry of Finance; and the Placing
Shares have not been, nor will they be, registered under or offered in
compliance with the securities laws of any state, province or territory of any
of the Excluded Territories. Accordingly, the Placing Shares may not (unless
an exemption under the relevant securities laws is applicable) be offered,
sold, resold or delivered, directly or indirectly, in or into the Excluded
Territories or any other jurisdiction outside the United Kingdom.
Persons (including, without limitation, nominees and trustees) who have a
contractual or other legal obligation to forward a copy of this Appendix or
the announcement of which it forms part should seek appropriate advice before
taking any action.
TIMETABLE FOR THE PLACING
Various dates referred to in this Announcement are stated on the basis of the
expected timetable for the Placing. It is possible that some of these dates
may be changed. To facilitate the application for VCT relief in respect of the
VCT Placing Shares, such shares will be allotted on 15 December 2021
conditional upon Admission becoming effective on 16 December 2021 ("First
Admission"). The General Placing Shares will be allotted on 15 December 2021,
conditional upon Admission becoming effective on 17 December 2021 ("Second
Admission").
DETAILS OF THE PLACING
The Joint Brokers have entered into the Placing Agreement with the Company
under which the Joint Brokers have (severally, and not jointly or jointly and
severally), on the terms and subject to the conditions set out therein,
undertaken to use their respective reasonable endeavours to procure, as agents
for the Company, subscribers for the Placing Shares at the Placing Price.
The Placing Agreement contains customary warranties and indemnities given by
the Company to the Joint Brokers as to matters relating to the Company and its
business in respect of liabilities arising out of, or in connection with, the
Placing.
The Bookbuild is expected to at 8.00 p.m. GMT today, 25 November 2021, but may
be closed earlier, or later, at the discretion of the Joint Brokers. The Joint
Brokers may, in agreement with the Company, accept bids received after the
Bookbuild has closed.
The Joint Brokers (after consultation with the Company and on the basis of
allocations agreed between the Company and the Joint Brokers) reserve the
right to scale back the number of Placing Shares to be subscribed by any
Placee in the event of applications in excess of the target amount under the
Placing. The Company and the Joint Brokers also reserve the right not to
accept offers to subscribe for Placing Shares or to accept such offer in part
rather than in whole. The Joint Brokers shall be entitled to effect the
Placing by such method as they shall in their sole discretion determine. To
the fullest extent permissible by law, neither of the Joint Brokers nor any
holding company of a Joint Broker nor any subsidiary branch or affiliate of a
Joint Broker (each an affiliate) nor any person acting on behalf of any of the
foregoing shall have any liability to the Placees (or to any other person
whether acting on behalf of a Placee or otherwise). In particular, neither of
the Joint Brokers, nor any affiliate thereof nor any person acting on their
respective behalfs shall have any liability to Placees in respect of their
conduct of the Bookbuild or the Placing.
Each Placee's obligations will be owed to the Company and to the Joint
Brokers. Following the confirmation referred to below in the paragraph
entitled "Participation in, and principal terms of, the Placing", each Placee
will also have an immediate, separate, irrevocable and binding obligation,
owed to the Joint Brokers, to pay to Panmure Gordon or Shore Capital (as the
case maybe) (or as they shall each respectively direct) in cleared funds an
amount equal to the product of the Placing Price and the number of Placing
Shares which such Placees has agreed to acquire.
Each Placee and any person acting on behalf of such Placee agrees to indemnify
on demand and hold each of the Joint Brokers and the Company, and their
respective affiliates harmless from any costs, claims, liabilities and
expenses (including legal fees and expenses) arising out of or in connection
with any breach of the acknowledgments, undertakings, representations,
warranties and agreements set forth in these terms and conditions and any
contract note.
The Placing is also conditional upon the Placing Agreement becoming
unconditional and the Placing Agreement not being terminated in accordance
with its terms. Further details of conditions in relation to the Placing are
set out below in the paragraph entitled "Conditions of the Placing". All
obligations under the Placing will be subject to the fulfilment of the
conditions referred to below in the paragraph entitled "Conditions of the
Placing".
To the fullest extent permitted by law, each Placee acknowledges and agrees
that it will not be entitled to exercise any remedy of rescission at any time.
This does not affect any other rights the Placee may have.
APPLICATION FOR ADMISSION TO TRADING
Application will be made to the London Stock Exchange for the First Admission
and the Second Admission. It is expected that settlement of the VCT Shares and
First Admission will become effective on or around 8.00 a.m. on 16 December
2021 and dealings in the VCT Shares will commence at that time. Settlement
of the General Placing Shares and Second Admission is expected to become
effective on or around 8.00 a.m. on 17 December 2021 and dealings in the
General Placing Shares will commence at that time.
Settlement of transactions in the VCT Shares following First Admission and the
General Placing Shares following Second Admission will take place within the
system administered by CREST, subject to certain exceptions. The Company
reserves the right to require settlement for and delivery of the Placing
Shares to Placees in certificated form if either of the Joint Brokers or the
Company in its absolute discretion considers this to be necessary or
desirable.
PAYMENT FOR SHARES
Each Placee has a separate, irrevocable and binding obligation to pay the
Placing Price in cleared funds for the number of Placing Shares duly allocated
to the Placee under the Placing in the manner and by the time directed by the
Joint Brokers. If any Placee fails to pay as so directed and/or by the time
directed, the relevant Placee's application for Placing Shares shall at the
Joint Brokers' discretion either be rejected or accepted in which case the
paragraph below entitled "Registration and Settlement" shall apply to such
application.
PARTICIPATION IN, AND PRINCIPAL TERMS OF, THE PLACING
Each Joint Broker (whether through itself or any of its affiliates) is
arranging the Placing as placing agent of the Company and using its reasonable
endeavours to procure Placees at the Placing Price for the Placing Shares.
Participation in the Placing will only be available to persons who may
lawfully be, and are, invited to participate by the Joint Brokers. The Joint
Brokers and its affiliates may participate in the Placing as principal.
By participating in the Placing, Placees will be deemed to have read and
understood this announcement, including this Appendix, in its entirety and to
be participating and making an offer for Placing Shares on the terms and
conditions, and to be providing the representations, warranties,
acknowledgements, agreements and undertakings contained in this Appendix.
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.
The number of Placing Shares to be issued, and the extent of each Placee's
participation in the Placing (which will not necessarily be the same for each
Placee), will be agreed between the Joint Brokers and the Company following
completion of the bookbuilding process in respect of the Placing (the
"Bookbuild"). No element of the Placing will be underwritten. The aggregate
number of Placing Shares will be announced on a Regulatory Information Service
following completion of the Bookbuild.
A Placee's commitment to acquire a fixed number of Placing Shares under the
Placing will be agreed orally or by email with a Joint Broker as agent of the
Company. Each Placee's allocation will be confirmed to Placees orally or by
email by the relevant Joint Broker, and a form of confirmation will be
dispatched as soon as possible thereafter. The oral or email confirmation to
such Placee will constitute an irrevocable legally binding commitment upon
such person (who will at that point become a Placee) in favour of the Joint
Brokers and the Company, under which it agrees to acquire the number of
Placing Shares allocated to it at the Placing Price on the terms and
conditions set out in this Appendix and in accordance with the articles of
incorporation of the Company.
Except as required by law or regulation, no press release or other
announcement will be made by the Joint Brokers or the Company using the name
of any Placee (or its agent), in its capacity as Placee (or agent), other than
with such Placee's prior written consent.
Irrespective of the time at which a Placee's allocation pursuant to the
Placing is confirmed, settlement for all Placing Shares to be acquired
pursuant to the Placing will be required to be made on the basis explained
below under the paragraph entitled "Registration and Settlement".
All obligations under the Placing will be subject to fulfilment or (where
applicable) waiver of, amongst other things, the conditions referred to below
and to the Placing not being terminated on the basis referred to below.
By participating in the Placing, 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.
To the fullest extent permissible by law, none of the Company, the Joint
Brokers or any of their respective affiliates shall have any liability to
Placees (or to any other person whether acting on behalf of a Placee or
otherwise under these terms and conditions). In particular, none of the
Company, the Joint Brokers or any of its respective affiliates shall have any
liability (including to the fullest extent permissible by law, any fiduciary
duties) in respect of the Joint Brokers' conduct of the Placing. Each Placee
acknowledges and agrees that the Company is responsible for the issue of the
Placing Shares to the Placees and the Joint Brokers shall have no liability to
the Placees for the failure of the Company to fulfil those obligations.
CONDITIONS OF THE PLACING
The Placing is conditional upon the Placing Agreement becoming unconditional
and not having been terminated in accordance with its terms.
The Joint Brokers' obligations under the Placing Agreement (which are several
and not joint, or joint and several) in respect of the VCT Shares are
conditional on, inter alia:
1. the Company allotting, subject only to First
Admission, the VCT Shares in accordance with the Placing Agreement;
2. First Admission having occurred;
3. the Company having complied with its obligations
under the Placing Agreement; and
4. the passing of the Resolutions to be proposed at a
general meeting of the Company to be held on or around 15 December 2021, or
any adjournment thereof.
The Joint Brokers' obligations under the Placing Agreement (which are several
and not joint, or joint and several) in respect of the General Placing Shares
are conditional on, inter alia:
1. the VCT Placing Shares being unconditionally
allotted and issued to the relevant Placees on First Admission and First
Admission having occurred;
2. the Company allotting, subject only to Second
Admission, the General Placing Shares in accordance with the Placing
Agreement;
3. Second Admission having occurred; and
4. the Company having complied with its obligations
under the Placing Agreement.
If (a) any of the conditions contained in the Placing Agreement in relation to
the Placing Shares are not fulfilled or waived by the Joint Brokers by the
respective time or date where specified (or such later time or date as the
Company and the Joint Brokers may agree not being later than 3.00 p.m. on the
"Final Date" (being 31 December 2021; or (b) the Placing Agreement is
terminated as described below, the Placing in relation to the Placing Shares
will lapse 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.
Subject to certain exceptions, the Joint Brokers may, at their absolute
discretion and upon such terms as they think fit, waive, or extend the period
(up to the Final Date) for, compliance by the Company with the whole or any
part of any of the Company's obligations in relation to the conditions in the
Placing Agreement. Any such extension or waiver will not affect Placees'
commitments as set out in this announcement.
Neither of the Joint Brokers nor the Company shall have any liability 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 date for the satisfaction of any condition
to the Placing 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 the Joint Brokers.
RIGHT TO TERMINATE UNDER THE PLACING AGREEMENT
Either Joint Brokers is entitled, at any time before the Second Admission, to
terminate the Placing Agreement by giving notice to the Company in certain
circumstances, including, inter alia:
1. the Company is in breach of any of its material obligations under
the Placing Agreement or cannot comply with such material obligation; or
2. any of the warranties given by the Company to the Joint Brokers
under the Placing Agreement is or if repeated at any time up to Admission
would cause it to be untrue, inaccurate or misleading in any material respect;
or
3. if, amongst other things, there is a substantial change in any
national or international political, military, diplomatic, economic, financial
or market conditions (including any significant deterioration in response to
the COVID-19 pandemic) which in the Joint Broker's opinion (acting in good
faith and after such consultation with the Company or the other Joint Broker
as shall be practicable in the circumstances) would have or be likely to have
a material and adverse effect on the Placing, the Open Offer or dealings in
New Ordinary Shares in the secondary market or is of such magnitude to render
the Placing or the creation of a market in the New Ordinary Shares temporarily
or permanently impracticable or inadvisable; or
4. if it comes to the notice of the Joint Broker that any statement
contained in any Placing document become untrue, inaccurate or misleading in
any material respect or matters have arisen which would, if the Circular was
issued at that time, constitute a material omission therefrom.
Following First Admission, the Placing Agreement is not capable of termination
to the extent that it relates to the Placing of VCT Shares. Following Second
Admission, the Placing Agreement is not capable of termination to the extent
it relates to the Placing of any of the General Placing Shares. For the
avoidance of doubt, First Admission is not conditional on Second Admission
taking place.
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 a Joint Broker of any right of
termination or other discretion under the Placing Agreement shall be within
the absolute discretion of such Joint Broker and that it need not make any
reference to Placees and that it shall have no liability to Placees whatsoever
in connection with any such exercise or decision not to exercise. Placees will
have no rights against the Joint Brokers, the Company or any of their
respective directors or employees under the Placing Agreement pursuant to the
Contracts (Rights of Third Parties) Act 1999 (as amended).
NO PROSPECTUS
The Placing Shares are being offered to Relevant Persons only and will not be
offered in such a way as to require a prospectus in the United Kingdom or
elsewhere under the Prospectus Regulation Rules Sourcebook published by the
FCA. No offering document or prospectus has been or will be submitted to be
approved by the FCA or any other party in relation to the Placing and Placees'
commitments will be made solely on the basis of the information contained in
this announcement (including this Appendix) and certain business and financial
information the Company is required to publish in accordance with the
Companies Act 2006, the AIM Rules and the rules and practices of the FCA
(collectively "Exchange Information"), save that in the case of Exchange
Information a Placee's right to rely on that information is limited to the
right that such Placee would have as a matter of law in the absence of this
paragraph.
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 not relied on any other
information (other than the Exchange Information), representation, warranty,
or statement made by or on behalf of the Company or the Joint Brokers or any
other person and neither of the Joint Brokers nor 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 the liability of any person for
fraudulent misrepresentation.
REGISTRATION AND SETTLEMENT
Settlement of transactions in the Placing Shares (ISIN: GB00B11SZ269)
following First Admission and Second Admission will take place within the
relevant system administered by Euroclear, being CREST provided that, subject
to certain exceptions, the Joint Brokers reserve the right to require
settlement for, and delivery of, the Placing Shares (or a portion thereof) to
Placees by such other means that they deem necessary if delivery or settlement
is not possible or practicable within CREST within the timetable set out in
this announcement or would not be consistent with the regulatory requirements
in any Placee's jurisdiction. Settlement of transactions in the VCT Shares
following First Admission and the General Placing Shares following Second
Admission will take place within the system administered by CREST, subject to
certain exceptions. The Company reserves the right to require settlement for
and delivery of the Placing Shares to Placees in certificated form if any of
the Joint Brokers or the Company in its absolute discretion considers this to
be necessary or desirable.
Following the close of the Bookbuild, each Placee allocated Placing Shares in
the Placing will be sent a form of confirmation stating the number of Placing
Shares allocated to it at the Placing Price, the aggregate amount owed by such
Placee to the relevant Joint Broker (as agent for the Company) and settlement
instructions (including the trade date which will be 13 December 2021). Each
Placee agrees that it will do all things necessary to ensure that delivery and
payment is completed in accordance with either the CREST or certificated
settlement instructions that it has in place with the relevant Joint Broker.
Each Placee will also be sent a trade confirmation on the trade date (referred
to above) confirming the details of the trade (being the acquisition of the
relevant number of Placing Shares).
Admission and settlement may occur at an earlier date. Settlement will be on a
delivery versus payment basis. However, in the event of any difficulties or
delays in the admission of the Placing Shares to CREST or the use of CREST in
relation to the Placing, the Company and the Joint Brokers may agree that the
Placing Shares should be issued in certificated form. The Joint Brokers and
the Company reserves the right to require settlement for the Placing Shares,
and to deliver the Placing Shares to Placees, by such other means as they deem
necessary if delivery or settlement to Placees is not practicable within the
CREST system or would not be consistent with regulatory requirements in a
Placee's jurisdiction.
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 the relevant the Joint Broker.
Each Placee is deemed to agree that, if it does not comply with these
obligations, the Joint Brokers (or either of them) may sell any or all of the
Placing Shares allocated to that Placee on such Placee's behalf and retain
from the proceeds, for the relevant the Joint Brokers' account and benefit (as
agent for the Company), an amount equal to the aggregate amount owed by the
Placee plus any interest due. Any excess proceeds will pass to the relevant
Placee at its risk. The relevant Placee will, however, remain liable and shall
indemnify the Joint Brokers on demand for any shortfall below the aggregate
amount owed by it and may be required to bear any stamp duty or stamp duty
reserve tax or securities transfer tax (together with any interest or
penalties) which may arise upon the sale of such Placing Shares on such
Placee's behalf. By communicating a bid for Placing Shares, each Placee
confers on the Joint Brokers all such authorities and powers necessary to
carry out any such sale and agrees to ratify and confirm all actions which the
Joint Brokers lawfully takes in pursuance of such sale.
If Placing Shares are to be delivered to a custodian or settlement agent,
Placees should ensure that the form of confirmation 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 for 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 or securities transfer tax. Placees will not be
entitled to receive any fee or commission in connection with the Placing.
REPRESENTATIONS, WARRANTIES AND FURTHER TERMS
By submitting a bid and/or participating in the Placing, each Placee (and any
person acting on such Placee's behalf) makes the following representations,
warranties, acknowledgements, agreements and undertakings (as the case may be)
to the Company and the Joint Brokers, namely that, each Placee (and any person
acting on such Placee's behalf):
1. represents and warrants that it has read and understood this
announcement, including this Appendix, in its entirety and that its
subscription for and purchase of the Placing Shares is subject to, and based
upon, all the terms, conditions, representations, warranties,
acknowledgements, agreements and undertakings and other information contained
herein and undertakes not to redistribute or duplicate this announcement
(including this Appendix);
2. acknowledges that no offering document or prospectus has been
prepared in connection with the placing of the Placing Shares and represents
and warrants that it has not received and will not receive a prospectus,
admission document or other offering document in connection therewith;
3. acknowledges that the Ordinary Shares are admitted to trading on
AIM, and the Company is therefore required to publish Exchange Information,
which includes a description of the nature of the Company's business and the
Company's most recent balance sheet and profit and loss account and that the
Placee is able to obtain or access such information without undue difficulty,
and is able to obtain access to such information or comparable information
concerning any other publicly traded company, without undue difficulty;
4. acknowledges that the content of this announcement (including this
Appendix) is exclusively the responsibility of the Company, and that neither
Joint Broker, their affiliates or any person acting on their behalf has or
shall have any liability for any information, representation or statement
contained in this announcement (including this Appendix) or any information
previously or concurrently published by or on behalf of the Company (including
any Exchange Information), and will not be liable for any Placee's decision to
participate in the Placing based on any information, representation or
statement contained in this announcement (including this Appendix) or
otherwise. Each Placee further represents, warrants and agrees that the only
information on which it is entitled to rely and on which such Placee has
relied in committing itself to acquire the Placing Shares is contained in this
announcement (including this Appendix) and any Exchange Information (save that
in the case of Exchange Information, a Placee's right to rely on that
information is limited to the right that such Placee would have as a matter of
law in the absence of this paragraph), 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 the Joint Brokers
or the Company or any of their respective directors, officers or employees or
any person acting on behalf of any of them (including with respect to the
Company, the Placing, the Placing Shares or the accuracy, completeness or
adequacy of any publicly available information), or, if received, it has not
relied upon any such information, representations, warranties or statements,
and neither of the Joint Brokers nor the Company will be liable for any
Placee's decision to accept an invitation to participate in the Placing based
on any other information, representation, warranty or statement. Each Placee
further acknowledges and agrees that it may not place the same degree of
reliance on this announcement as it may otherwise place on a prospectus or
admission document. Each Placee further acknowledges and agrees that it has
relied solely on its own investigation of the business, financial or other
position of the Company and the terms of the Placing in deciding to
participate in the Placing and it will not rely on any investigation that the
Joint Brokers, their affiliates or any other person acting on their behalf has
or may have conducted;
5. represents and warrants that it has neither received nor relied on
any confidential price sensitive information concerning the Company in
accepting this invitation to participate in the Placing;
6. time is of the essence as regards its obligations under this
announcement;
7. acknowledges that the Joint Brokers do not have any duties or
responsibilities to it, or its clients, similar or comparable to the duties of
"best execution" and "suitability" imposed by the Conduct of Business
Sourcebook in the FCA's Handbook of Rules and Guidance and that neither
Panmure Gordon nor Shore Capital is acting for it or its clients and that the
Joint Brokers will not be responsible for providing protections to their
respective clients;
8. acknowledges that neither of the Joint Brokers, any of their
affiliates or any persons acting on behalf of them has or shall have any
liability for any publicly available or filed information (including any
Exchange Information) or any representation relating to the Company, provided
that nothing in this paragraph excludes the liability of any person for
fraudulent misrepresentation made by that person;
9. that, save in the event of fraud on the part of the relevant Joint
Brokers (and to the extent permitted by the FCA), neither of the Joint
Brokers, their respective ultimate holding companies nor any direct or
indirect subsidiary undertakings of such holding companies, nor any of their
respective directors and employees shall be liable to Placees for any matter
arising out of either Joint Brokers' role as placing agent or otherwise in
connection with the Placing and that where any such liability nevertheless
arises as a matter of law, Placees will immediately waive any claim against
any of such persons which it may have in respect thereof;
10. represents and warrants that a) (i) it is not a person located in the
United States and is eligible to participate in an "offshore transaction" as
defined in and in accordance with Regulation S and the Placing Shares were not
offered to it by means of "directed selling efforts" as defined in Regulation
S; or (ii) it is both a QIB and will duly execute a US investor letter and
deliver the same to one of the Joint Brokers or their respective affiliates;
11. acknowledges that the Placing Shares have not been and will not be
registered under the Securities Act or under any laws of, or with any
securities regulatory authority of, any state or other jurisdiction of the
United States, and that the Placing Shares are only being offered and sold (i)
outside the United States in offshore transactions as defined in and pursuant
to Regulation S under the Securities Act; and (ii) in the United States to a
limited number of QIBs pursuant to an exemption from the registration
requirements of the Securities Act.;
12. unless otherwise specifically agreed in writing with the Joint Brokers,
represents and warrants that neither it nor the beneficial owner of such
Placing Shares will be a resident of Restricted Jurisdiction;
13. acknowledges that the Placing Shares have not been and will not be
registered under the securities legislation of Restricted Jurisdiction and,
subject to certain exceptions, may not be offered, sold, taken up, renounced
or delivered or transferred, directly or indirectly, within those
jurisdictions;
14. that, in relation to any Placee located in Hong Kong, it is a
professional investor as defined under the Securities and Futures Ordinance
(Cap. 571);
15. represents and warrants that the issue to it, or the person specified by
it for registration as holder, of Placing Shares will not give rise to a
liability under any of sections 67, 70, 93 or 96 of the Finance Act 1986
(depositary receipts and clearance services) and that the Placing Shares are
not being acquired in connection with arrangements to issue depositary
receipts or to transfer Placing Shares into a clearance system;
16. represents and warrants that: (i) it has complied with and will continue
to comply with its obligations under the Market Abuse Regulation (EU) No.
596/2014 (or the Market Abuse Regulation (EU) No. 596/2014 as retained in UK
law), Criminal Justice Act 1993 and Part VIII of the Financial Services and
Markets Act 2000, as amended ("FSMA") and other applicable law; (ii) in
connection with money laundering and terrorist financing, it has complied with
its obligations under the Proceeds of Crime Act 2002 (as amended), the
Terrorism Act 2000 (as amended), the Terrorism Act 2006, the Money Laundering,
Terrorist Financing and Transfer of Funds (Information on the Payer) 2017
Regulations, and any other applicable law (where all such legislation listed
under this (ii) shall together be referred to as the "AML Legislation"); and
(iii) it is not a person: (1) with whom transactions are prohibited under the
Foreign Corrupt Practices Act of 1977 or any economic sanction programmes
administered by, or regulations promulgated by, the Office of Foreign Assets
Control of the U.S. Department of the Treasury; (2) named on the Consolidated
List of Financial Sanctions Targets maintained by HM Treasury of the United
Kingdom; or (3) subject to financial sanctions imposed pursuant to a
regulation of the EU or a regulation adopted by the United Nations (together,
the "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 Regulations and pursuant to AML
Legislation and has obtained all governmental and other consents (if any)
which may be required for the purpose of, or as a consequence of, such
purchase, and it will provide promptly to the Joint Brokers or the Company
such evidence, if any, as to the identity or location or legal status of any
person (including in relation to the beneficial ownership of any underlying
investor) which the Joint Brokers or the Company may request from it in
connection with the Placing (for the purpose of complying with such
Regulations or ascertaining the nationality of any person or the
jurisdiction(s) to which any person is subject or otherwise or any other
information as may be required to comply with legal or regulatory requirements
(including in particular under the AML Legislation)) in the form and manner
requested by the Joint Brokers or the Company on the basis that any failure by
it to do so may result in the number of Placing Shares that are to be
purchased by it or at its direction pursuant to the Placing being reduced to
such number, or to nil, as the Joint Brokers and the Company may decide at
their sole discretion;
17. if a financial intermediary, as that term is used in Article 5(1) of the
UK Prospectus Regulation, represents and warrants that the Placing Shares
purchased 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 or the UK other than EU
Qualified Investors or UK Qualified Investors respectively, or in
circumstances in which the prior consent of the Joint Brokers has been given
to the offer or resale;
18. represents and warrants that it has not offered or sold and will not
offer or sell any Placing Shares to persons in the EEA or the UK prior to
Admission except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their business or otherwise in circumstances which
have not resulted in and which will not result in an offer to the public in
any Member State of the EEA or the UK within the meaning of the EU Prospectus
Regulation or UK Prospectus Regulation respectively;
19. represents and warrants 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 the FSMA) relating to the Placing Shares in circumstances in
which section 21(1) of the FSMA does not require approval of the communication
by an authorised person;
20. represents and warrants that it has complied and will comply with all
applicable provisions of the FSMA and the Financial Services Act 2012 with
respect to anything done by it in relation to the Placing Shares in, from or
otherwise involving, the United Kingdom;
21. if in the United Kingdom, represents and warrants that it is a UK
Qualified Investor who: (i) falls with Articles 49(2)(A) to (D) or 19(5) of
the Financial Promotion Order or (ii) it is a person to whom the Placing
Shares may otherwise be lawfully offered under the Financial Promotion Order
or, if it is receiving the offer in circumstances under which the laws or
regulations of a jurisdiction other than the United Kingdom would apply, it is
a person to whom the Placing Shares may be lawfully offered under that other
jurisdiction's laws and regulations; and (iii) is a "professional client" or
an "eligible counterparty" within the meaning of Chapter 3 of the FCA's
Conduct of Business Sourcebook;
22. represents and warrants that it and any person acting on its behalf is
entitled to acquire the Placing Shares under the laws of all relevant
jurisdictions and that it has all necessary capacity and has obtained all
necessary consents and authorities and taken any other necessary actions to
enable it to commit to this 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
(including this Appendix)) and will honour such obligations;
23. where it is acquiring Placing Shares for one or more managed accounts,
represents and warrants that it is authorised in writing by each managed
account: (i) to acquire the Placing Shares for each managed account; (ii) to
make on its behalf the representations, warranties, acknowledgements,
undertakings and agreements in this Appendix and the announcement of which it
forms part; and (iii) to receive on its behalf any investment letter relating
to the Placing in the form provided to it by a Joint Broker;
24. undertakes that it (and any person acting on its behalf) will make
payment for the Placing Shares allocated to it in accordance with this
announcement (including this Appendix) on the due time and date set out
herein, failing which the relevant Placing Shares may be placed with other
subscribers or sold as the Joint Brokers may in their sole discretion
determine and without liability to such Placee and it will remain liable and
will indemnify the Joint Brokers on demand for any shortfall below the net
proceeds of such sale and the placing proceeds of such Placing Shares and may
be required to bear the liability for any stamp duty or stamp duty reserve tax
or security transfer tax (together with any interest or penalties due pursuant
to or referred to in these terms and conditions) which may arise upon the
placing or sale of such Placee's Placing Shares on its behalf;
25. acknowledges that neither of the Joint Brokers, nor any of their
respective affiliates, or any person acting on behalf of any of them, is
making any recommendations to it, 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
treated for these purposes as a client of either Joint Broker and that either
of the Joint Brokers does not have any duties or responsibilities to it for
providing the protections afforded to their respective 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 their rights
and obligations thereunder, including any rights to waive or vary any
conditions or exercise any termination right;
26. undertakes 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 of the Joint Brokers nor the Company will be responsible for any
liability to stamp duty or stamp duty reserve tax resulting from a failure to
observe this requirement. Each Placee and any person acting on behalf of such
Placee agrees to participate in the Placing and it agrees to indemnify the
Company and the Joint Brokers in respect of the same on the basis that the
Placing Shares will be issued to the CREST stock account of a Joint Broker who
will hold them as nominee on behalf of such Placee until settlement in
accordance with its standing settlement instructions;
27. acknowledges 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 agreement shall be
governed by and construed in accordance with the laws of England and it
submits (on behalf of itself 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 (including non-contractual matters) 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 a Joint Broker in any
jurisdiction in which the relevant Placee is incorporated or in which any of
its securities have a quotation on a recognised stock exchange;
28. agrees that the Company, the Joint Brokers and their respective
affiliates and others will rely upon the truth and accuracy of the foregoing
representations, warranties, acknowledgements and undertakings which are given
to each of the Joint Brokers on its own behalf and on behalf of the Company
and are irrevocable and are irrevocably authorised to produce this
announcement or a copy thereof to any interested party in any administrative
or legal proceeding or official inquiry with respect to the matters covered
hereby;
29. agrees to indemnify on an after-tax basis and hold the Company, the
Joint Brokers and their respective affiliates 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 Appendix and that
the provisions of this Appendix shall survive after completion of the Placing
and, further agrees if any of the foregoing is or becomes no longer true or
accurate, the Placee shall promptly notify the Company and the Joint Brokers;
30. acknowledges that no action has been or will be taken by any of the
Company, the Joint Brokers or any person acting on behalf of the Company or
the Joint Brokers that 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;
31. acknowledges that it is an institution that has knowledge and experience
in financial, business and international investment matters as is required to
evaluate the merits and risks of subscribing for the Placing Shares. It
further acknowledges that it is experienced in investing in securities of this
nature and in this sector and is aware that it may be required to bear, and
it, and any accounts for which it may be acting, are able to bear, the
economic risk of, and is able to sustain, a complete loss in connection with
the Placing. It has relied upon 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;
32. acknowledges that its commitment to subscribe for Placing Shares on the
terms set out herein will continue, notwithstanding any amendment that may in
the future be made to the terms 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's conduct of the Placing;
33. acknowledges that a Joint Broker or any of its affiliates acting as an
investor for its own account may take up shares in the Company and in that
capacity may retain, purchase or sell for its own account such shares and may
offer or sell such shares other than in connection with the Placing;
34. represents and warrants that, if it is a pension fund or investment
company, its purchase of Placing Shares is in full compliance with all
applicable laws and regulation; and
35. to the fullest extent permitted by law, it acknowledges and agrees to
the disclaimers contained in the announcement, including this Appendix.
The representations, warranties, acknowledgments and undertakings contained in
this Appendix are given to the Joint Brokers and the Company and are
irrevocable and shall not be capable of termination in any circumstances.
The agreement to settle a Placee's subscription (and/or the subscription of a
person for whom such Placee is contracting as agent) free of stamp duty and
stamp duty reserve tax depends on the settlement relating only to a
subscription by it and/or such person direct from the Company for the Placing
Shares in question. Such agreement assumes that the Placing Shares are not
being subscribed for in connection with arrangements to issue depositary
receipts or to transfer the Placing Shares into a clearance service. If there
are any such arrangements, or the settlement relates to any other subsequent
dealing in the Placing Shares, stamp duty or stamp duty reserve tax may be
payable, for which neither the Company nor the Joint Brokers will be
responsible, and the Placee to whom (or on behalf of whom, or in respect of
the person for whom it is participating in the Placing as an agent or nominee)
the allocation, issue or delivery of Placing Shares has given rise to such UK
stamp duty or stamp duty reserve tax undertakes to pay such UK stamp duty or
stamp duty reserve tax forthwith and to indemnify on an after-tax basis and to
hold harmless the Company and the Joint Brokers in the event that any of the
Company and/or the Joint Brokers has incurred any such liability to UK stamp
duty or stamp duty reserve tax. If this is the case, each Placee should seek
its own advice and notify the Joint Brokers accordingly.
In addition, Placees should note that they will be liable for any stamp duty
and all other stamp, issue, securities, transfer, registration, documentary or
other duties or taxes (including any interest, fines or penalties relating
thereto) payable outside the UK by them or any other person on the
subscription by them of any Placing Shares or the agreement by them to
subscribe for any Placing Shares.
Each Placee, and any person acting on behalf of the Placee, acknowledges that
the Joint Brokers does not owe any fiduciary or other duties to any Placee in
respect of any representations, warranties, undertakings or indemnities in the
Placing Agreement.
Each Placee and any person acting on behalf of the Placee acknowledges and
agrees that the Joint Brokers or any of their affiliates may, at their
absolute discretion, agree to become a Placee in respect of some or all of the
Placing Shares.
When a Placee or person acting on behalf of the Placee is dealing with a Joint
Broker, any money held in an account with such Joint Broker 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 the 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 the relevant Joint Brokers' money in
accordance with the client money rules and will be used by that Joint Broker
in the course of its own business and the Placee will rank only as a general
creditor of that Joint Broker.
All times and dates in this announcement (including this Appendix) may be
subject to amendment, and Placees' commitments, representations and warranties
are not conditional on any of the expected times and dates in this
announcement (including this Appendix) being achieved. The Joint Brokers shall
notify the Placees and any person acting on behalf of the Placees of any
changes.
Past performance is no guide to future performance and persons needing advice
should consult an appropriately qualified independent financial adviser.
A Joint Broker is entitled, at its discretion and out of its own resources, at
any time to rebate to some or all of its investors, or to other parties, part
or all of its fees relating to the Placing.
MISCELLANEOUS
Solely for the purposes of the product governance requirements contained
within: (a) EU Directive 2014/65/EU on markets in financial instruments, as
amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive
(EU) 2017/593 supplementing MiFID II; and (c) local implementing measures,
each as they form part of the law of England and Wales by virtue of EUWA
(together, the "Product Governance Requirements"), and disclaiming all and any
liability, whether arising in tort, contract or otherwise, which any
"manufacturer" (for the purposes of the Product Governance Requirements) may
otherwise have with respect thereto, the Placing Shares have been subject to a
product approval process, which has determined that the Placing Shares are:
(i) compatible with an end target market of retail investors and investors who
meet the criteria of professional clients and eligible counterparties, each as
defined in MiFID II; and (ii) eligible for distribution through all
distribution channels as are permitted by MiFID II (the "Target Market
Assessment"). Notwithstanding the Target Market Assessment, Placees should
note that: the price of the Placing Shares may decline and investors could
lose all or part of their investment; the Placing Shares offer no guaranteed
income and no capital protection; and an investment in the Placing Shares is
compatible only with investors who do not need a guaranteed income or capital
protection, who (either alone or in conjunction with an appropriate financial
or other adviser) are capable of evaluating the merits and risks of such an
investment and who have sufficient resources to be able to bear any losses
that may result therefrom. The Target Market Assessment is without prejudice
to the requirements of any contractual, legal or regulatory selling
restrictions in relation to the Placing. Furthermore, it is noted that,
notwithstanding the Target Market Assessment, the Joint Brokers will only
procure investors who meet the criteria of professional clients and eligible
counterparties. For the avoidance of doubt, the Target Market Assessment does
not constitute: (a) an assessment of suitability or appropriateness for the
purposes of MiFID II; or (b) a recommendation to any investor or Company of
investors to invest in, or purchase, or take any other action whatsoever with
respect to the Placing Shares.
Each distributor is responsible for undertaking its own target market
assessment in respect of the Placing Shares and determining appropriate
distribution channels.
The content of this announcement has been issued by, and is the sole
responsibility of, Velocys plc.
The information contained in this announcement is given at the date of its
publication (unless otherwise marked) and is subject to updating, revision and
amendment from time to time. Neither the content of the Company's website nor
any website accessible by hyperlinks to the Company's website is incorporated
in, or forms part of, this announcement.
Panmure Gordon (UK) Limited, which is authorised and regulated in the United
Kingdom by the FCA, is acting as nominated adviser, joint bookrunner and joint
broker to the Company in connection with the Placing and Admission and to
no-one else and will not be responsible to anyone other than the Company for
providing the protections afforded to its clients, nor for providing advice in
relation to the Placing or Admission or any other matter referred to in this
Announcement. Panmure Gordon's responsibilities as the Company's nominated
adviser under the AIM Rules for Nominated Advisers are owed solely to London
Stock Exchange plc and are not owed to the Company or to any director of the
Company or to any other person in respect of any decision to acquire shares in
the Company in reliance on any part of this announcement.
Shore Capital Group Limited, which is authorised and regulated in the United
Kingdom by the FCA, is acting as joint bookrunner and joint broker to the
Company in connection with the Placing and Admission and to no-one else and
will not be responsible to anyone other than the Company for providing the
protections afforded to its clients, nor for providing advice in relation to
the Placing or Admission or any other matter referred to in this Announcement.
Neither of the Joint Brokers or any of their directors, officers, employees,
advisers, affiliates or agents, accepts any responsibility or liability
whatsoever for or makes any representation or warranty, express or implied, as
to this announcement, including the truth, accuracy or completeness of the
information in this announcement (or whether any information has been omitted
from the announcement) or for any loss howsoever arising from any use of the
announcement or its contents. The Joint Brokers and their respective
directors, officers, employees, advisers, affiliates or agents, accordingly
disclaim all and any liability whether arising in tort, contract or otherwise
which they might otherwise have in respect of this announcement or its
contents or otherwise arising in connection therewith.
Data Protection
The processing of a Placee's personal data by the Company will be carried out
in compliance with the applicable data protection legislation and with its
Privacy Notice, a copy of which can be found on the Company's website
https://www.velocys.com/privacy-policy/
(https://www.velocys.com/privacy-policy/) .
Each Placee acknowledges that it has read and understood the processing
activities carried out by the Company as informed in the referred Privacy
Notice.
APPENDIX III
DEFINITIONS
The following definitions apply throughout this announcement unless the
context otherwise requires:
"Act" the UK Companies Act 2006, as amended
"Admission" VCT Admission in the context of the VCT Shares and General Admission in the
context of the General Placing Shares and the Open Offer Shares
"AIM" the market of that name operated by the London Stock Exchange
"AIM Rules" the AIM Rules for Companies, which set out the rules and responsibilities for
companies listed on AIM, as amended from time to time
"Altalto Immingham Project" a waste to sustainable fuels biorefinery project, located in Immingham, North
East Lincolnshire, in development by the Group in conjunction with commercial
partners
"Application Form" the non-CREST application form relating to the Open Offer and enclosed with
the Circular for use by Eligible Non-CREST Shareholders
"Articles" the articles of association of the Company (as amended from time to time)
"Basic Entitlement" Entitlement to subscribe for Open Offer Shares, allocated to an Eligible
Shareholder pursuant to the Open Offer on the Record Date as described in Part
III (Terms and Conditions of the Open Offer) of the Circular
"Bayou Fuels Project" the Company's reference biorefinery project in Natchez Mississippi, US
"Board" or "Directors" the board of directors of the Company, whose names are listed in the Circular
"British Airways" British Airways plc
"Circular" the Circular to be published by the Company on or about 29 November 2021
setting out details of the Placing and Open Offer and containing the Notice of
the Annual General Meeting;
"Company" or "Velocys" Velocys plc, a public limited company incorporated in England & Wales
under registered number 05712187 and having its registered office at Magdalen
Centre, Robert Robinson Avenue, The Oxford Science Park, Oxford, England, OX4
4GA.
"CREST" the relevant system (as defined in the Regulations) which enables title to
units of relevant securities (as defined in the Regulations) to be evidenced
and transferred without a written instrument and in respect of which Euroclear
UK & Ireland Limited is the Operator (as defined in the Regulations)
"Disclosure Guidance and Transparency Rules" the Disclosure Guidance and Transparency Rules issued by the FCA
"Eligible CREST Shareholders" Eligible Shareholders whose Existing Ordinary Shares are held in
uncertificated form in a CREST account
"Eligible Non-CREST Shareholders" Eligible Shareholders whose Existing Ordinary Shares are held in certificated
form
"Eligible Shareholders" Shareholders on the Ex-Entitlement Date that are not resident in a Restricted
Jurisdiction
"Enlarged Share Capital" the issued Ordinary Share capital of the Company immediately following General
Admission comprising the Existing Ordinary Shares, the Placing Shares and the
Open Offer Shares assuming full subscription under the Placing and the Open
Offer and assuming no exercise of any warrants or options
"ENVIA" ENVIA Energy, LLC, a former joint venture between Waste Management, Inc., NRG,
Ventech Projects Investments, LLC and the Group which was liquidated in 2020
"Excess Entitlement" Open Offer Shares in excess of the Basic Entitlement, but not in excess of the
total number of Open Offer Shares, allocated to an Eligible Shareholder
pursuant to the Open Offer as described in Part III (Terms and Conditions of
the Open Offer) of the Circular
"Ex-Entitlement Date" the date on which the Ordinary Shares are marked 'ex' for entitlement by the
London Stock Exchange under the Open Offer, being 29 November 2021
"Existing Ordinary Shares" the 1,065,756,057 Ordinary Shares in issue as at the date of the Circular
being the entire issued share capital of the Company prior to the Placing and
the Open Offer
"FCA" Financial Conduct Authority
"Form of Proxy" the accompanying form of proxy for use by Shareholders in relation to the
General Meeting
"FSMA" the Financial Services and Markets Act 2000 (as amended)
"Fundraise" the Placing and Open Offer
"General Admission" admission of the General Placing Shares and Open Offer Shares to trading on
AIM becoming effective in accordance with Rule 6 of the AIM Rules
"General Meeting" The general meeting of the Company to be held at 10.30 a.m. on 15 December
2021, notice of which is set out at the end of the Circular
"General Placing" the conditional placing of the General Placing Shares to placees
"General Placing Shares" the new Ordinary Shares to be issued, conditional on General Admission, in
connection with the General Placing
"Group" Velocys plc and its subsidiaries
"IAG" International Airlines Group
"JDA" The joint development agreement (as amended) between Velocys, British Airways
and Shell relating to the Altalto Immingham Project
"Joint Brokers" Panmure Gordon and Shore Capital
"Link Group" a trading name of Link Market Services Limited, a company incorporated in
England and Wales, with registered number 02605568, whose registered office is
at Central Square, 10th Floor, 29 Wellington Street, Leeds, England, LS1 4DL
"London Stock Exchange" London Stock Exchange plc
"New Ordinary Shares" the Placing Shares and the Open Offer Shares to the extent subscribed for
under the Open Offer
"Notice of General Meeting" the notice of General Meeting set out at the end of the Circular
"Open Offer" the offer to Eligible Shareholders, constituting an invitation to apply for
the Open Offer Shares at the Placing Price on the terms and subject to the
conditions set out in the Circular and, in the case of Eligible Non-CREST
Shareholders, in the Application Form
"Open Offer Entitlements" entitlements to subscribe for Open Offer Shares pursuant to the Basic
Entitlement and Excess Entitlement
"Open Offer Shares" up to 25,076,613 new Ordinary Shares to be issued to Eligible Shareholders
pursuant to the Open Offer
"Ordinary Shares" ordinary shares of £0.01 each in the capital of the Company
"Overseas Shareholders" holders of Ordinary Shares who are resident in, or citizens of, countries
outside of the UK
"Panmure Gordon" Panmure Gordon (UK) Limited, acting as Nominated Adviser, Joint Bookrunner
& Joint Broker
"Placing" the VCT Placing and the General Placing
"Placing Agreement" the conditional agreement dated 25 November 2021 relating to the Placing and
Open Offer, between the Company, Panmure Gordon and Shore Capital
"Placing Price" 8 pence per New Ordinary Share
"Placing Shares" the VCT Shares and the General Placing Shares
"Prospectus Regulation Rules" the Prospectus Regulation Rules made in accordance with the Prospectus
Regulation Rules Instrument 2019 (FCA: 2019/80)
"Receiving Agent" Link Group
"Record Date" 5.00 p.m. on 25 November 2021, being the record date for the Open Offer
"Reference Projects" the Bayou Fuels Project and the Altalto Immingham Project, the purpose of
which are to accelerate adoption of the Group's technology and to provide a
source of income to the Group
"Registrar" Link Group
"Regulations" the UK Uncertificated Securities Regulations 2001 (SI 2001 No. 3755), as
amended
"Resolutions" the resolutions to be proposed at the General Meeting as set out in the Notice
of General Meeting
"Restricted Jurisdiction" any jurisdiction except the UK. Jurisdictions outside the UK include, but are
not limited, to the United States, Canada, Australia, New Zealand, the
Republic of South Africa and Japan.
"Shareholders" the holders of Ordinary Shares from time to time, each individually being a
"Shareholder"
"Shell" Shell International Petroleum Company Limited
"Shore Capital" Shore Capital Stockbrokers Limited acting as Joint Bookrunner & Joint
Broker
"Southwest Airlines" Southwest Airlines Co.
"Toyo" Toyo Engineering Corporation
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland
"US" or "United States" the United States of America, its territories and possessions, any state of
the United States and the District of Colombia
"VCT" a venture capital trust under part 6 of the Income Tax Act 2007
"VCT Admission" admission of the VCT Shares to trading on AIM becoming effective in accordance
with Rule 6 of the AIM Rules
"VCT Placing" the conditional placing of the VCT Shares to placees
"VCT Shares" the new Ordinary Shares to be issued, conditional on VCT Admission, in
connection with the VCT Placing
"€" the single currency of the participating member states of the European Union
"$" the lawful currency of the United States
"£" the lawful currency of the United Kingdom
GLOSSARY
The terms set out below have the following meanings throughout this
announcement, unless the context requires otherwise.
"EPC" engineering, procurement and construction
"drop-in" fuel which can be placed into existing engines and infrastructure without the
need for modification to them to use the fuel.
"feedstock" raw material processed ingested in the fuel-generation process
"FID" final investment decision
"FTI" the Fischer-Tropsch (FT) section of a plant, the design of which is licensed
by Velocys to its customers, comprising multiple FT reactors and ancillary
equipment
"ITP" integrated technology package
"naphtha" a flammable liquid distillate of petroleum
"recyclates" materials capable of being recycled
"Renewable Fuel Standard" the US renewable fuel standard program created under the Energy Policy Act
2005 and amended by the Energy Independence and Security Act 2007
"Renewable Identification Number" or "RIN" a renewable identification number assigned to a batch of biofuel to track its
production use and trading as required by the Renewable Fuel Standard
"Renewable Transport Fuel Certificates" certificates awarded under the Renewable Transport Fuels Obligation
"Renewable Transport Fuels Obligation" the UK Renewable Transport Fuel Obligation Order published 5 November 2012
"SAF" sustainable aviation fuel
APPENDIX IV
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Record Date for the Open Offer 5.00 p.m. on 25 November 2021
Announcement of the Placing and Open Offer 25 November 2021
Announcement of the results of the Placing 26 November 2021
Dispatch of the Circular and Application Form 29 November 2021
Ex-Entitlement Date 8.00 a.m. on 29 November 2021
Basic Entitlements and Excess Entitlements credited to stock accounts in CREST on or as soon as possible after 8.00 a.m. on 30 November 2021
for Eligible CREST Shareholders
Latest recommended time and date for requested withdrawal of Basic 4.30 p.m. on 8 December 2021
Entitlements and Excess Entitlements from CREST
Latest time and date for depositing Basic Entitlements and Excess Entitlements 3.00 p.m. on 9 December 2021
into CREST
Latest time for splitting Application Forms (to satisfy bona fide market 3.00 p.m. on 10 December 2021
claims only)
Last time and date for receipt of Form of 10.30 a.m. on 13 December 2021
Proxy
Latest time and date for receipt of Application Form and payment in full under 11.00 a.m. on 14 December 2021
the Open Offer or settlement of relevant CREST instructions (as appropriate)
General Meeting 10.30 a.m. on 15 December 2021
Announcement of results of the General Meeting and Open Offer 15 December 2021
Admission and dealings in the VCT Shares to commence on AIM 8.00 a.m. on 16 December 2021
CREST accounts credited with the VCT Shares 16 December 2021
Admission and dealings in the General Placing Shares and the Open Offer Shares 8.00 a.m. on 17 December 2021
to commence on AIM
CREST accounts credited with the General Placing Shares and the Open Offer 17 December 2021
Shares
Definitive share certificates for the New Ordinary Shares to be dispatched (if w/c 27 December 2021
required)
(1) References to are to London
time (unless otherwise stated).
(2) The dates and timing of the
events in the above timetable and in the rest of the Circular are indicative
only and may be subject to change.
(3) If any of the above times or dates should
change, the revised times and/or dates will be notified by an announcement
through a Regulatory Information Service.
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