Cientifica PLC Option to Invest in Graphene Company Agreed (6179E)

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RNS Number : 6179E

Cientifica PLC

11 April 2014

Cientifica PLC

("Cientifica" or the "Company")

Option to Invest in Rainmaker Technologies Limited

Cientifica, the AIM-quoted investment company focused on investment in businesses making use of advanced materials, graphene and emerging technologies, is pleased to announce that it has entered into a call option agreement (the "Option Agreement") with Rainmaker Technologies Limited ("Rainmaker"), which is a newly formed company which will design and develop commercial applications of advanced materials such as graphene.

The founder directors of Rainmaker are Alex Hamer of the Ashbeck Group of Companies and Martin Benson of Kirkstyles Innovation Group Limited. It is intended that, following the exercise of the First Option (as defined below) Tim Harper will be appointed to the board of Rainmaker as a representative of Cientifica. The directors of Cientifica understand that the board of Rainmaker will be strengthened by the appointment of additional, suitably qualified personnel in the near future.

Under the terms of the Option Agreement, Cientifica has been granted three options under which it may subscribe for Rainmaker ordinary shares ("Rainmaker Shares") which would amount to 49.9 per cent. of the enlarged issued share capital of Rainmaker if all three options were exercised in full.

The venture is intended to bring together a number of companies with graphene application projects and their management teams which have expertise in the aerospace, defence, motor manufacturing, construction, oil, shipping and building materials industries. It is intended that Rainmaker will take equity stakes in the companies which have projects which are in various stages of development and which are of interest to Cientifica.

The Cientifica directors also understand that Rainmaker also intends to develop a close association with Perpetuus Carbon Technologies Ltd ("Perpetuus"), a private company which produces high quality functionalised graphene materials which can be tailored to precise customer requirements, in quantities from grams to tons.

It is intended that, on a non-exclusive basis, Perpetuus will supply materials to and work with Rainmaker, integrating its high quality graphene into a number of Rainmaker's planned products, each of which is potentially disruptive in its own respective market place. The Cientifica directors understand that Perpetuus may also introduce new application projects to Rainmaker for evaluation and development.

The Cientifica directors understand that Rainmaker intends to bring several new products under development to market within the next twelve months. It is hoped that the first product will relate to a new and innovative type of low-cost, super efficient, infrared heating. The other potential products, which are in various stages of development, relate to electrical storage devices, oil and water filtration, wellness monitoring and sporting and recreational goods.

Upon exercising the first option ("First Option"), Cientifica will subscribe for 340 Rainmaker Shares for GBP100,000 in cash which will represent approximately 25.4 per cent. of the enlarged issued share capital of Rainmaker. The First Option may be exercised by Cientifica at any time on or before 15th May 2014 provided that Rainmaker has, by the exercise date, entered into a minimum of two option agreements with certain companies focused on developing commercial applications using graphene.

Under these agreements, Rainmaker will agree with such companies to provide or arrange funding for their businesses in consideration of the issue to Rainmaker of ordinary shares in those companies. In addition, under these agreements, the management and key staff of those companies will agree to collaborate with the management of Rainmaker in developing and bringing their products to market.

Subject to the exercise of the First Option, under the second option (the "Second Option"), which may be exercised in whole or in part on or before 15th October 2014, Cientifica may subscribe for further Rainmaker Shares, to be satisfied, at the election of Rainmaker, in cash or by the issue of new Cientifica ordinary shares to Rainmaker (at the prevailing mid-market price). The value of Rainmaker will be determined and agreed by the parties at the time of exercise by reference to the performance of Rainmaker. If the Second Option is exercised in full, Cientifica's holding of Rainmaker Shares is expected to represent approximately 37.5 per cent. of the enlarged issued share capital of Rainmaker immediately following the exercise of the Second Option.

Subject to the exercise of the Second Option, under the third option (the "Third Option"), which may be exercised in whole or in part on or before 15th May 2015, Cientifica may subscribe for further Rainmaker Shares to be satisfied, at the election of Rainmaker, in cash or by the issue of new Cientifica ordinary shares to Rainmaker (at the prevailing mid-market price). The value of Rainmaker will be determined and agreed by the parties at the time of exercise by reference to the performance of Rainmaker. If the Third Option is exercised in full, Cientifica's holding of Rainmaker Shares is expected to represent approximately 49.9 per cent. of the enlarged issued share capital of Rainmaker immediately following the exercise of the Third Option.

The decision to exercise any of the First, Second or Third Options will be made by the Non-executive directors, having consulted with Tim Harper.

If at the time of exercise of either the Second or Third Options such exercise would result in the transaction being classified as a reverse takeover transaction under the AIM Rules for Companies, then Cientifica will not proceed with such exercise at that time. However, the Company may do so at a later date should both parties to the Option Agreement agree to extend the relevant exercise period and such exercise not result in the transaction being deemed a reverse takeover transaction.

Under the Option Agreement, Cientifica is to be given the right of first refusal to secure further interests in products under development with Rainmaker by funding, in whole or in part, the sale and marketing of each new product as they are spun out of Rainmaker into separate legal entities.

The Cientifica directors believe that the collaboration with Rainmaker will bring many advantages to Cientifica. Firstly, it brings together management teams with industry and technical experience who will work together and fully develop and bring graphene applications to market and who can collaborate with Cientifica on projects. Secondly, the anticipated association with Perpetuus should enable Rainmaker to incorporate high quality graphene materials into products that are nearly ready for market. It is expected that Perpetuus' team of highly experienced polymer scientists and electrochemists will be available to support Rainmaker's product development. Thirdly, as a private company, Rainmaker can move swiftly in forging relationships with other interested parties including providers of additional finance.

Tim Harper, the Chief Executive of Cientifica, has had an equitable interest in several of the projects which are to be developed by Rainmaker. These interests pre-date his appointment to the Board of Cientifica in October 2013. As a result of these interests and his part in bringing the Rainmaker venture together, Tim Harper has an interest in 28.3 per cent. of the issued share capital of Rainmaker. In the event that Cientifica exercises the First Option on or before 15th May 2014, it is intended that Tim Harper will join the Board of Rainmaker and represent Cientifica's interest in Rainmaker and its ongoing development.

In view of Tim Harper's significant interest in Rainmaker, the Option Agreement with Rainmaker is a related party transaction under the AIM Rules for Companies. The independent Directors of Cientifica consider, having consulted with its Nominated Adviser, Allenby Capital Limited, that the terms of the transaction are fair and reasonable insofar as its shareholders are concerned.

Tim Harper, CEO of Cientifica PLC commented:

"I believe that this is an opportunity for Cientifica to rapidly expand its interests in the graphene market and that the collaboration will allow us to bring a range of products, utilising the advanced material, to the market in the short to medium term.

"The intellectual property expected to be created within Rainmaker and the prospect of faster access to major global markets makes this a truly exciting relationship, from which Cientifica can derive significant benefit."

11(th) April 2014

For further information, please contact:

Cientifica PLC

   Tim Harper, Chief Executive                [phone] 

Allenby Capital (Nominated Adviser)

   Nick Naylor/ Mark Connelly                   [phone] 

Peterhouse Corporate Finance (Broker)

   Lucy Williams / Heena Karani                [phone] 

Lothbury Financial Services Limited

   Michael Padley / Gary Middleton           [phone] 

This information is provided by RNS

The company news service from the London Stock Exchange

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