REG - Versarien PLC - Company Update and Notice of General Meeting

VersarienAnnouncement

20/12/2023 07:15

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RNS Number : 3696X  Versarien PLC  20 December 2023

20 December 2023

Versarien plc

("Versarien" or the "Company")

Company Update and Notice of General Meeting

Versarien plc (AIM: VRS), the advanced materials engineering group, announces
that a Notice of General Meeting ("General Meeting") will be posted to
shareholders today.  The General Meeting will be held on Wednesday 10 January
2024 at 10.00 a.m. at the offices of Fieldfisher LLP, Riverbank House, 2 Swan
Lane, London EC4R 3TT.  The purpose of the General Meeting is to approve a
share capital reorganisation, which consists of a redesignation of the
existing ordinary shares of the Company, and renewal of the Company's share
capital authorities.

The formal notice of the General Meeting including full details of all
resolutions to be proposed ("Resolutions") is available to view on the
Company's website at www.versarien.com (http://www.versarien.com) .

The Company values shareholder participation and values the votes of
shareholders, so it encourages all shareholders to exercise their voting
rights by completing and submitting a proxy form as soon as possible.  It
would also be helpful if shareholders could submit any questions in advance of
the General Meeting via IFC Advisory Limited, the Company's financial PR and
investor relations adviser, at versarien@investor-focus.co.uk.

Background and Current Trading

At the last general meeting of the Company held on 30 October 2023 the Company
explained that it wished to sub-divide its share capital and renew its share
capital authorities to enable it to access bridging finance whilst certain
assets were marketed for sale.

The sale of those assets, in particular the interest in the mature businesses,
has not progressed as expected although the Company continues to market them
for sale. There is continued interest in the South Korean assets and IP,
however any transaction is not expected to complete until next year and is
likely to raise less cash, at least initially, than was first anticipated.

The Group audit for the year ended 30 September 2023 ("FY23") is ongoing and
the FY23 results are expected to be released in early February. The FY23
financial highlights, subject to audit, are expected to be as follows:

·    Group revenues of £5.45m (2022: 18-month period £11.11m)

·    *Adjusted LBITDA of £3.03m (2022: 18-month period £2.40m)

·    H2 Adjusted LBITDA of £1.02m compared to H1 of £2.01m

·    Asset impairments of £7.5m treated as an exceptional item (30
September 2022: £1.33m)

·    Cash at bank of £0.60m (30 September 2022: £1.35m)

·    Post period end, placing to raise gross proceeds of c. £0.45m

*Adjusted LBITDA (Loss Before Interest, Tax, Depreciation and Amortisation)
excludes Exceptional items, Share-based payment charges and other losses.

The Company continues to pursue its stated turnaround strategy and it is the
view of the Board that the Company now has a pipeline of opportunities that
could result in an improvement in the financial condition of the Company in
the short to medium term. Since 21 July 2023, 28 new contracts have been won
representing approximately £1.0m of income over six to eighteen months and
the Company is pursuing 69 other contractual opportunities with a potential
aggregate value to the Company of approximately £1.05m.

The open opportunities cover a number of sectors and situations including
Graphene-Wear™ coatings for textiles, Cementene™, 3D concrete printing,
Polygrene™, commercial R&D, grants and licensing and reflect, in part,
the adoption of the turnaround strategy. This improvement, albeit a first
step, reflects the efforts of the Company's management to move the business
towards being financially viable going forward. The Company's current
projections show an EBITDA positive position being reached in the second half
of 2025, assuming the conversion of sufficient opportunities into revenue for
the Company.

The sale of assets remains an integral part of the turnaround strategy, but
fundamentally, the Board now has sufficient confidence in the business
pipeline to seek the authority to issue further equity to bridge the funding
gap to profitability. This further funding will be required to secure the
future of Versarien as, in the absence of any asset sales or the
implementation of further cost reduction measures, the Company has limited
cash resources, which as of 19 December stood at £0.42m together with £0.12m
available to draw from its invoice finance facility.

The nominal value of the Existing Ordinary Shares is currently 0.1 pence and,
whilst the Existing Ordinary Shares are currently trading at a premium to that
nominal value, the Board believes that there is a risk that any future
fundraise could be at a discount that reduces the issue price to less than 0.1
pence per Existing Ordinary Share. Under the Companies Act, a company is
unable to issue shares at a subscription price which is less than the nominal
value and the Company would then not be able to proceed with that fundraise.
The Board, therefore, considers it prudent to implement the proposed Share
Capital Reorganisation in order that the nominal value of the New Ordinary
Shares is set at a level substantially lower than the current trading price of
the Existing Ordinary Shares. This should provide the Company with greater
flexibility to raise funds by issuing further shares.

Whilst the Board will look to secure any further funding above the current
nominal value of the Existing Ordinary Shares, it needs the flexibility should
the ultimate placing price of any equity raise be below the current nominal
value of the Ordinary Shares. Whilst the Board would naturally hope that this
would not be the case, it would seem imprudent, in the current circumstances
and with an uncertain stock market outlook, not to further amend the nominal
value as a protection mechanism.

Additionally, the Directors are seeking shareholder approval to renew and
increase the Company's authority to issue new equity as well as its authority
to issue new equity for cash other than on a pre-emptive basis. Each of these
authorities is for up to an aggregate nominal value of £99,233.90
(992,339,000 New Ordinary Shares), being approximately 200 per cent. of the
issued share capital of the Company as at 19 December 2023. Unless previously
revoked or varied, these authorities will expire at the conclusion of the next
Annual General Meeting of the Company, expected to be held in March 2024.

Share Capital Reorganisation and amendments to the Articles of Association

Accordingly, it is proposed to sub-divide each Existing Ordinary Share into
one New Ordinary Share and one New Deferred Share.

The New Ordinary Shares will in all material respects, have the same rights
(including rights as to voting, dividends and return of capital) as the
Existing Ordinary Shares. The New Ordinary Shares will be traded on AIM in the
same way as the Existing Ordinary Shares, with the exception of the difference
in nominal value.

The rights attached to the New Deferred Shares will be set out in the Articles
(as per Resolution 2 in the Notice of General Meeting). The New Deferred
Shares will have little economic value as they will not carry any rights to
vote or dividend rights, although the New Deferred Shares will rank pari passu
with the New Ordinary Shares on a return of capital or on a winding up of the
Company.

The Company does not intend to make any application for the New Deferred
Shares to be admitted to trading on AIM or any other public market. The New
Deferred Shares will not be transferable without the prior written consent of
the Company. No share certificates will be issued in respect of the New
Deferred Shares. The Board may further appoint any person to act on behalf of
all the holders of the New Deferred Shares to transfer all such shares to the
Company in accordance with the terms of the Companies Act.

It is not intended to issue new share certificate(s) to the holders of the New
Ordinary Shares following the Share Capital Reorganisation. Existing share
certificate(s) will remain valid for the same number of shares but with a
different nominal value of 0.01p per share. The nominal value of shares
already held in CREST will be updated at approximately 8.00 a.m. on 11 January
2024.

By effecting the Share Capital Reorganisation in this way, the total nominal
value of the Company's entire issued share capital remains the same with New
Ordinary Shares having a nominal value of 0.01p plus New Deferred Shares
having a nominal value of 0.09p each (as well as the existing deferred shares
of 0.9p each).

The Share Capital Reorganisation is conditional upon, and effected by, the
approval of Resolutions 1 and 2 at the General Meeting as required by the
Companies Act 2006 and the Articles. If Resolutions 1 and 2 are passed, the
Share Capital Reorganisation will become effective at 6.00 p.m. on the Record
Date.

The Articles are proposed to be amended to allow for the issue of the New
Deferred Shares, which are proposed to be issued as part of the Share Capital
Reorganisation. Resolution 2 amends the Company's existing Articles to include
provision in respect of the rights and restrictions attaching to the Deferred
Shares.  The changes are set out in Part 2 of the Circular.

Recommendation

The Board considers that the Resolutions are in the best interests of the
Company and its shareholders, taken as a whole. The Board unanimously
recommends that the Shareholders to vote in favour of the Resolutions, as the
Directors intend to do so in respect of their own beneficial holdings.

If the Resolutions are not approved at the General Meeting, the Company will
not be able to raise equity funding, and if no alternative funding can be
secured, the Company's ability to operate as a going concern will be put at
risk.

 

Expected timetable of principal events

2023/2024

Publication and dispatch of the circular and Form of
Proxy
20 December

Latest time and date for receipt of the Form of
Proxy
10.00 a.m. on 8 January

Time and date of the General
Meeting
10.00 a.m. on 10 January

Results of the General Meeting announced through
RNS
10 January

Record Date for Share Capital
Reorganisation
6.00 p.m. on 10 January

Admission and dealings in New Ordinary
Shares
8.00 a.m. on 11 January

 

All references to times in this timetable are to London times and each of the
times and dates are indicative only and may be subject to change.

Terms used and not defined in this announcement shall have the same meanings
given to them in the Notice of General Meeting.

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.

 

For further information please contact:

 

 Versarien                                                   c/o IFC

 Stephen Hodge, Chief Executive Officer

 Chris Leigh, Chief Financial Officer

 SP Angel Corporate Finance (Nominated Adviser and Broker)   +44 (0)20 3470 0470

 Matthew Johnson, Adam Cowl

 IFC Advisory Limited (Financial PR and Investor Relations)  +44 (0)20 3934 6630

 Tim Metcalfe, Zach Cohen

 

For further information please see: http://www.versarien.com
(https://eur03.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.versarien.com%2F&data=05%7C01%7Ctwhitfield%40mclnews.com%7Ca6f36820d41746bbb8f008da42f2dd6a%7C7560185ee95f4d5a8cc0c244cb450a3e%7C0%7C0%7C637895909595351380%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=vp8yFEBNrElWqj0WOIqnwLTzPx3mbDopgjGylVz4v0c%3D&reserved=0)

 

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