Flowtech Fluidpower PLC Proposed Accelerated Bookbuild (0738Z)

TIDMFLO

RNS Number : 0738Z

Flowtech Fluidpower PLC

09 March 2017

9 March 2017

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND, NEW ZEALAND OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES IN FLOWTECH FLUIDPOWER PLC OR ANY OTHER ENTITY IN ANY JURISDICTION.

This announcement contains inside information

Flowtech Fluidpower plc

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

Proposed Accelerated Bookbuild to raise up to GBP10 million

Flowtech (AIM: FLO), the specialist technical fluid power products supplier, announces a proposed fundraising of up to GBP10 million, by way of the conditional placing ("Placing") of Placing Shares at a price of 120 pence per share (the "Issue Price") with existing and new institutional and other investors. If approved by Shareholders the Placing Shares to be issued pursuant to the proposed Placing are expected to represent approximately 16.2 per cent. of the Enlarged Issued Share Capital of the Company. The Placing Shares will rank pari passu in all other respects with the Company's Existing Ordinary Shares.

The Placing Shares are being offered by way of an accelerated bookbuild ("Bookbuild"), which will be launched immediately following this announcement. Zeus Capital and finnCap will be acting as joint bookrunners in connection with the Bookbuild.

The Placing is subject to the terms and conditions set out in the appendix (the "Appendix") to this announcement (which forms part of this announcement, such announcement and the Appendix together being, this "Announcement"). The Placing is not underwritten.

It is expected that the implementation of the proposed Placing will commence immediately following this announcement and a further announcement will be made to confirm its completion in due course.

The proposed Placing will be subject to the passing of certain resolutions for which Shareholder approval will be sought at the General Meeting of the Company, which is expected to be convened shortly by the posting to Shareholders of a circular containing notice of the meeting.

The Directors intend to use the proceeds of the Placing to fund future acquisitions.

Additional information on the Placing is included below.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 ("MAR"). In addition, market soundings (as defined in MAR) were taken in respect of the Placing with the result that certain persons became aware of inside information (as defined in MAR), as permitted by MAR. This inside information is set out in this Announcement. Therefore, those persons that received inside information in a market sounding are no longer in possession of such inside information relating to the Company and its securities.

For further information please visit www.flowtechfluidpower.com or contact:

 
Flowtech Fluidpower plc 
 Sean Fennon, CEO 
 Bryce Brooks, CFO                                [phone] 
Zeus Capital 
 (Nominated Adviser & Joint Broker) 
 Andrew Jones / Jonathan Sharp (Corporate 
 Finance) 
 Dominic King (Broking)                           [phone] 
finnCap 
 (Joint Broker) 
 Ed Frisby / Kate Bannatyne (Corporate Finance) 
 Rhys Williams / Emily Morris (Sales and 
 Broking)                                         [phone] 
Media enquiries: 
 TooleyStreet Communications 
 Fiona Tooley                                     [phone] 
 

About Flowtech Fluidpower plc:

Flowtech Fluidpower plc, founded as Flowtech in 1983, is the UK's leading specialist supplier of technical fluid power products. The Group has three divisions: Flowtechnology, Power Motion Control and Process. All three of the Group's divisions have overlapping product sets, allowing procurement synergies to be maximised.

The Flowtechnology division focuses on supplying distributors and resellers of industrial MRO (maintenance, repair and operation) products, primarily serving urgent orders rather than bulk offerings. It is formed from Flowtechnology UK, Flowtechnology Benelux and Indequip. It offers an unrivalled range of Original Equipment Manufacturer (OEM) and Exclusive Brand products to over 3,400 distributors and resellers and the catalogues are recognised as the definitive source for fluid power products, containing 100,000 individual product lines and are distributed to more than 80,000 industrial Maintenance, Repair and Overhaul end users (MRO). The Power Motion Control division specialises in the design, assembly and supply of engineering components and hydraulic systems and is further enhanced by a service and repair function. The division is formed from Primary Fluid Power, Nelson Hydraulics, TSL Fluidpower and HTL. The Process division focuses on the supply of industrial components to the process sectors.

The Group's main distribution centre is in Skelmersdale, Lancashire with further distribution centres in the Netherlands and China. The Power Motion Control division (PMC) has operations in Merseyside, Northern Ireland, the Republic of Ireland, Yorkshire and Shropshire; Process operates from the West Midlands. In total the business employs 349 people.

Additional information on the Placing

   1.         Background to and reasons for the Placing and use of proceeds 

The Company's long term growth model is based on both organic growth, coupled with complementary acquisitions in the UK and Europe in a fragmented market place. Since its admission to AIM on 21 May 2014, the Company has completed seven acquisitions:

   --      Primary Fluid Power Limited, completed on 4 August 2014; 
   --      Albroco Limited, completed on 29 May 2015; 
   --      Nelson Hydraulics Limited, completed on 3 July 2015; 
   --      Indequip Limited, completed on 19 February 2016; 
   --      Hydravalve Limited, completed on 18 March 2016; 
   --      Triple Six Limited, completed on 29 July 2016; and 
   --      Hydraulics and Transmissions Limited, completed on 21 January 2017. 

The Directors believe that these acquisitions have been integrated successfully and are all delivering benefits to the Company.

The Directors have identified over 25 acquisition targets, some of which they are in active discussions with. These targets are located in the UK and mainland Europe, across the Flowtechnology, Power Motion Control, and Process divisions.

The acquisitions to date have been funded through a combination of cash reserves and existing debt facilities. In order to keep the business appropriately leveraged the board have considered a variety of funding options, including an equity and convertible debt package, to fund the acquisition pipeline in the short to medium term. The Directors believe that it is in the best interests of the Company and the Shareholders to fund the acquisition pipeline through the Placing and may in future seek additional debt funding, whilst considering the overall level of leverage.

   2.         Current trading and outlook 

On 23 January 2017 the Company announced a trading update on its performance for the year ended 31 December 2016. The key highlights of the announcement are summarised as follows:

-- Group revenue was c.19.9% up on 2015 at approximately c.GBP53.7 million (c.19.3% in constant currency)

-- British Fluid Power Distributors Association Market Survey indicates 2016 fluid power overall distributor sales growth was negative 3.9% (hydraulics -5.9%, pneumatics +0.2%)

-- Post Brexit currency movements with resultant impact on input prices have to date been successfully passed on to customers due to our flexible pricing model, with 2016 exit margins maintained. However, some margin contraction was experienced in H2 while prices were managed upwards on products sourced in Euro and USD and sold in GBP markets

-- Three acquisitions successfully integrated into the Group, each delivering benefits, and a third "Process" division established focused on process industries, including Pharma, Environmental, and Steam

   --      Net debt at year end was c.GBP13.0 million 

-- Investment in central and sales resources aimed at optimising cross channel opportunities, and future acquisition integration programme underpinning long term growth

-- As a result of these investments and the gross margin contraction in H2, the Board expects underlying PBT will be in the range GBP7.0m to GBP7.2m.

The Directors are pleased to report that the Company continues to trade in line with current market expectations and they remain confident in the Company's performance and future.

   3.         Details of the Placing 

Structure

The Directors have given careful consideration as to the structure of the proposed fundraising and have concluded that the Placing is the most suitable option available to the Company and its Shareholders at this time.

Placing Shares will be issued through the Placing at 120 pence per Placing Share to raise gross proceeds of approximately GBP10 million.

Principal terms of the Placing

The Company is proposing to issue Placing Shares pursuant to the Placing. In accordance with the terms of the Placing Agreement, Zeus Capital and finnCap have, as agents for the Company, conditionally placed, with institutional and other investors, the Placing Shares at the Issue Price to raise approximately GBP10 million.

The Placing is not being underwritten.

Under the Placing Agreement, the Company has agreed to pay to Zeus Capital and finnCap a fixed sum together with a commission based on the aggregate value of certain of the Placing Shares placed at the Issue Price and the costs and expenses of the Placing together with any applicable VAT.

Conditionality

The Placing is conditional, inter alia, upon the following:

-- the passing, without amendment, of resolutions 1 and 3 of the Resolutions at the General Meeting;

-- Admission occurring by no later than 8:00 a.m. on 30 March 2017 (or such later times and/or dates as may be agreed between the Company, Zeus Capital and finnCap, being no later than 5:00 p.m. on 28 April 2017); and

-- the Placing Agreement becoming unconditional in all respects (save for the condition relating to Admission) and not having been terminated in accordance with its terms.

If the conditions set out above are not satisfied or waived (where capable of waiver), the Placing will lapse and the Placing Shares will not be issued and all monies received from investors in respect of the Placing Shares will be returned to them (at the investors' risk and without interest) as soon as possible thereafter.

Application for Admission

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. Admission of the Placing Shares is expected to take place, and dealings on AIM are expected to commence, at 8:00 a.m. on 30 March 2017 (or such later time and/or dates as may be agreed between the Company, Zeus Capital and finnCap). No temporary document of title will be issued.

The Placing Shares will, following Admission, rank pari passu in all respects with the Existing Ordinary Shares in issue at the date of this document and will carry the right to receive all dividends and distributions declared, made or paid on or in respect of the Ordinary Shares after Admission.

   4.         Effect of the Placing 

Upon completion of the Placing the Placing Shares will represent approximately 16.2 per cent. of the Enlarged Share Capital.

   5.         The Placing Agreement 

Pursuant to the terms of the Placing Agreement, Zeus Capital and finnCap, as agents for the Company, have agreed to use their reasonable endeavours to procure subscribers for the Placing Shares at the Issue Price. The Placing Agreement is conditional upon, among other things, the conditions set out above and none of the warranties or undertakings given to Zeus Capital and finnCap prior to Admission being or becoming untrue, inaccurate or misleading in any material respect.

The Placing Agreement contains customary warranties given by the Company in favour of Zeus Capital and finnCap in relation to, inter alia, the accuracy of the information in this document and other matters relating to the Group and its business. In addition, the Company has agreed to indemnify Zeus Capital and finnCap (and their affiliates) in relation to certain liabilities which they may incur in respect of the Placing.

Zeus Capital and finnCap have the right to terminate the Placing Agreement in certain circumstances prior to Admission. In particular, in the event of a material breach of the warranties or a material adverse change or if the Placing Agreement does not become unconditional.

   6.         General Meeting 

For the purposes of effecting the Placing, the Resolutions will be proposed at the General Meeting.

The full text of the Resolutions will be set out in the Notice of General Meeting that will be posted shortly after the result of the accelerated bookbuild is announced.

Forward-looking statements

This announcement contains statements about Flowtech that are or may be deemed to be "forward-looking statements".

All statements, other than statements of historical facts, included in this announcement may be forward-looking statements. Without limitation, any statements preceded or followed by, or that include, the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "may", "should", "anticipates", "estimates", "projects", "would", "could", "continue" or words or terms of similar substance or the negative thereof, are forward-looking statements. Forward-looking statements include, without limitation, statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects and (ii) business and management strategies and the expansion and growth of the operations of Flowtech.

These forward-looking statements are not guarantees of future performance. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of any such person, or industry results, to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are based on numerous assumptions regarding the present and future business strategies of such persons and the environment in which each will operate in the future. Investors should not place undue reliance on such forward-looking statements and, save as is required by law or regulation (including to meet the requirements of the AIM Rules, the Prospectus Rules and/or the FSMA), Flowtech does not undertake any obligation to update publicly or revise any forward-looking statements (including to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based). All subsequent oral or written forward-looking statements attributed to Flowtech or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above. All forward-looking statements contained in this announcement are based on information available to the Directors of Flowtech at the date of this announcement, unless some other time is specified in relation to them, and the posting or receipt of this announcement shall not give rise to any implication that there has been no change in the facts set forth herein since such date.

Important Information

This Announcement or any part of it does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States (including its territories and possessions, any state of the United States and the District of Columbia), Canada, Australia, the Republic of South Africa, Japan, Jersey or any other jurisdiction in which the same would be unlawful. No public offering of the Placing Shares is being made in any such jurisdiction.

All offers of the Placing Shares will be made pursuant to an exemption under the Prospectus Directive from the requirement to produce a prospectus. In the United Kingdom, this Announcement is being directed solely at persons in circumstances in which section 21(1) of the Financial Services and Markets Act 2000 (as amended) (the "FSMA") does not apply.

The Placing Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission or other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the Placing or the accuracy or adequacy of this Announcement. Any representation to the contrary is a criminal offence in the United States. 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; the relevant clearances have not been, and will not be, obtained for the South Africa Reserve Bank or any other applicable body in the Republic of South Africa in relation to the Placing Shares and the Placing Shares have not been, nor will they be, registered under or offering in compliance with the securities laws of any state, province or territory of Australia, Canada, Japan, Jersey or the Republic of South Africa. 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 Australia, Canada, Japan, Jersey or the Republic of South Africa or any other jurisdiction outside the United Kingdom.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

 
 Announcement of the Placing              9 March 2017 
 Despatch of the Circular                13 March 2017 
  and the Form of Proxy 
 Latest time and date for          11:00am on 27 March 
  receipt of Forms of Proxy                       2017 
  for the General Meeting 
 General Meeting                   11.00am on 29 March 
                                                  2017 
 Admission of the Placing      8:00am on 30 March 2017 
  Shares to trading on AIM 
 

APPIX - TERMS AND CONDITIONS OF THE PLACING

IMPORTANT INFORMATION FOR INVITED PLACEES ONLY

   1.         Introduction 

An investment in the Placing Shares is subject to a number of risks. Before making an investment decision with respect to the Placing Shares, prospective investors should carefully consider the risks associated with an investment in the Company, the Company's business and the industry in which the Company operates, in addition to all of the other information set out in this document.

EACH PLACEE SHOULD CONSULT WITH ITS ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF AN INVESTMENT IN PLACING SHARES. THE DISTRIBUTION OF THIS ANNOUNCEMENT, ANY PART OF IT OR ANY INFORMATION CONTAINED IN IT MAY BE RESTRICTED BY LAW IN CERTAIN JURISDICTIONS, AND ANY PERSON INTO WHOSE POSSESSION THIS ANNOUNCEMENT, ANY PART OF IT OR ANY INFORMATION CONTAINED IN IT COMES SHOULD INFORM THEMSELVES ABOUT, AND OBSERVE, SUCH RESTRICTIONS.

All information in this document, including the terms and conditions of the Placing in this Appendix, is directed only at persons ("FSMA Qualified Investors") who are both "qualified investors" as referred to at section 86(7) of the Financial Services and Markets Act 2000 ("FSMA") and are persons at or to whom any private communication relating to the Company that is a "financial promotion" (as such term is used in relation to FSMA) may lawfully be issued, directed or otherwise communicated without the need for it to be approved, made or directed by an "authorised person" as referred to in FSMA.

   2.            Placing 

Each of Zeus Capital and finnCap is acting as the Company's agent in respect of the Placing. Zeus Capital and finnCap shall determine the extent of each Placee's participation in the Placing, which will not necessarily be the same for each Placee. No commissions will be paid to or by Placees in respect of their agreement to subscribe for any Placing Shares.

Each Placee will be required to pay to finnCap, on the Company's behalf as agent, the Placing Price as the subscription sum for each Placing Share that it is required to subscribe for in accordance with the terms set out in or referred to in this Appendix. Each Placee's obligation to subscribe and pay for Placing Shares under the Placing will be owed to each of the Company and finnCap. Each Placee will be deemed to have read this Appendix in its entirety. Neither of the Brokers nor any other Broker Person will have any liability (subject to applicable legislation and regulations) to Placees or to any person other than the Company in respect of the Placing.

Various dates referred to in this document are stated on the basis of the expected timetable for the Placing. It is possible that some of these dates may be changed. The Impact Announcement is expected to be released on 10 March 2017. The expected date for Admission is 30 March 2017 and, in any event, the latest date for Admission is 28 April 2017 ("the Long Stop Date").

Placees' commitments in respect of Placing Shares will be made solely on the basis of the information contained in this document and on the terms contained in it. No admission document for the purposes of the AIM Rules for Companies, or prospectus, is required to be published, or has been or shall be published, in relation to the Placing or the Placing Shares.

   3.            Participation and settlement 

Participation in the Placing is only available to persons who are invited to participate in it by finnCap and/or Zeus Capital.

A Placee's commitment to subscribe for a fixed number of Placing Shares under the Placing will be agreed orally (or, if agreed previously, may be confirmed orally) with finnCap on or before the time on which the Impact Announcement is made. Such agreement will constitute a legally binding commitment on such Placee's part to subscribe for that number of Placing Shares at the Placing Price on the terms and subject to the conditions set out or referred to in this Appendix and subject to the Company's constitution. After such agreement is entered into a contract note will be dispatched to the Placee by finnCap stating (i) the number of Placing Shares for which such Placee has agreed to subscribe, (ii) the aggregate amount such Placee will be required to pay for those Placing Shares, (iii) relevant settlement information and (iv) settlement instructions. A settlement instruction form will be included in each contract note and, on receipt, should be completed and returned by the date and time stated in it.

Settlement of transactions in the Placing Shares will take place within the CREST system, subject to certain exceptions, on a "delivery versus payment" (or "DVP") basis. finnCap reserves the right to require settlement for and/or delivery to any Placee of any Placing Shares by such other means as it may deem appropriate if delivery or settlement is not possible or practicable within the CREST system within the timetable set out in this document or the Impact Announcement.

A Placee whose Placing Shares are to be delivered to a custodian or settlement agent should ensure that the written confirmation is copied and delivered promptly to the appropriate person within that organisation.

   4.            Placing Agreement 

Zeus Capital and finnCap have entered into the Placing Agreement with the Company under which each of Zeus Capital and finnCap has agreed on a conditional basis to use their respective reasonable endeavours as the Company's agents to procure subscribers at the Placing Price for all Placing Shares.

   5.            Placing conditions 

The Placing is conditional on (i) the release of the Impact Announcement through the London Stock Exchange's Regulatory News Service (or another regulatory information service, as that term is used in the AIM Rules for Companies), (ii) the passing of one or more resolutions at a general meeting of the Company to be proposed in the notice of that meeting that is to be included in the Company's circular to its shareholders concerning the Placing and related matters, (iii) each of Zeus Capital's and finnCap's obligations under the Placing Agreement not being terminated in accordance with its terms, (vi) Admission taking place by the relevant time and date to be stated in the Impact Announcement, and (vii) each of Zeus Capital's and finnCap's obligations under the Placing Agreement becoming unconditional in all other respects. Zeus Capital and finnCap may extend the time and/or date for the fulfilment of any of the conditions referred to above to a time no later than 5.00 p.m. on the Long Stop Date. If any such condition is not fulfilled (and, if capable of waiver under the Placing Agreement, is not waived by Zeus Capital and finnCap) by the relevant time, the Placing will lapse and each Placee's rights and obligations in respect of the Placing will cease and terminate at such time.

Each of Zeus Capital's and finnCap's obligations under the Placing Agreement may be terminated by Zeus Capital and finnCap at any time prior to Admission in certain circumstances including, among other things, following a material breach of the Placing Agreement by the Company and/or the occurrence of certain force majeure events. The exercise of any right of termination pursuant to the Placing Agreement, any waiver of any condition in the Placing Agreement and any decision by Zeus Capital and finnCap whether or not to extend the time for satisfaction of any condition in the Placing Agreement will be within Zeus Capital's and finnCap's absolute discretion (as is the exercise of any right or power of Zeus Capital and finnCap that is referred to in this Appendix). Neither Zeus Capital nor finnCap will have any liability to any Placee or to anyone else in respect of any such termination, waiver or extension or any decision to exercise or not to exercise any such right of termination, waiver or extension in respect of the Placing Agreement.

   6.            Placees' warranties and undertakings to the Company, Zeus Capital and finnCap 

By agreeing with finnCap as agent of the Company to subscribe for Placing Shares under the Placing, a Placee (and any person acting on a Placee's behalf) will irrevocably acknowledge and confirm and warrant and undertake to, and agree with, each of the Company and Zeus Capital and finnCap, in each case as a fundamental term of such Placee's application for Placing Shares and of the Company's obligation to allot and/or issue any Placing Shares to it or at its direction, that:

   (a)           it agrees to and accepts all the terms set out in this Appendix; 

(b) its rights and obligations in respect of the Placing will terminate only in the circumstances referred to in this Appendix and will not be subject to rescission or termination by it in any circumstances;

(c) this document, which has been issued by the Company, is within the sole responsibility of the Company;

(d) it has not been, and will not be, given any warranty or representation in relation to the Placing Shares or to the Company or to any other member of its Group in connection with the Placing, other than (i) by the Company as included in this document, and (ii) by the Company to the effect that at the time that the Placee enters into a legally binding commitment to subscribe for Placing Shares pursuant to the Placing the Company will not then be in breach of its obligations under the London Stock's Exchange's AIM Rules for Companies or under the EU Market Abuse Regulation (596/2014) to disclose publicly in the correct manner all such information as is then required to be so disclosed by the Company;

(e) it has not relied on any representation or warranty in reaching its decision to subscribe for Placing Shares under the Placing, save as given or made by the Company as referred to in the previous paragraph;

(f) it is not a client of Zeus Capital or finnCap in relation to the Placing and neither Zeus Capital nor finnCap is acting for it in connection with the Placing and will not be responsible to it in respect of the Placing for providing protections afforded to its respective clients;

(g) it has not been, and will not be, given any warranty or representation by any Broker Person in relation to any Placing Shares, the Company or any other member of its Group and no Broker Person will have any liability to it for any information contained in this document or which has otherwise been published by the Company or for any decision by it to participate in the Placing based on any such information or on any other information provided to it;

(h) it will pay the full subscription sum at the Placing Price as and when required in respect of all Placing Shares for which it is required to subscribe under its Placing participation and will do all things necessary on its part to ensure that payment for such shares and their delivery to it or at its direction is completed in accordance with the standing CREST instructions (or, where applicable, standing certificated settlement instructions) that it has in place with finnCap or puts in place with finnCap;

(i) it is permitted to subscribe for Placing Shares under the laws of all relevant jurisdictions which apply to it and it has complied, and will fully comply, with all such laws (including where applicable, the Anti-Terrorism, Crime and Security Act 2001, the Proceeds of Crime Act 2002 and the Money Laundering Regulations 2007) and has obtained all governmental and other consents (if any) which may be required for the purpose of, or as a consequence of, such subscription, and it will provide promptly to finnCap such evidence, if any, as to the identity or location or legal status of any person which finnCap may request from it in connection with the Placing (for the purpose of complying with any such laws or ascertaining the nationality of any person or the jurisdiction(s) to which any person is subject or otherwise) in the form and manner requested by finnCap on the basis that any failure by it to do so may result in the number of Placing Shares that are to be allotted and/or issued to it or at its direction pursuant to the Placing being reduced to such number, or to nil, as Zeus Capital and finnCap may decide;

(j) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done or to be done by it in relation to any Placing Shares in, from or otherwise involving the United Kingdom and it has not made or communicated or caused to be made or communicated, and it will not make or communicate or cause to be made or communicated, any "financial promotion" in relation to Placing Shares in contravention of section 21 of FSMA;

   (k)           it is a FSMA Qualified Investor; 

(l) it is acting as principal only in respect of the Placing or, if it is acting for any other person (i) it is duly authorised to do so, (ii) it is and will remain liable to the Company and/or finnCap for the performance of all its obligations as a Placee in respect of the Placing (regardless of the fact that it is acting for another person), (iii) it is both an "authorised person" for the purposes of FSMA and a "qualified investor" as defined at Article 2.1(e)(i) of Directive 2003/71/EC (known as the Prospectus Directive) acting as agent for such person, and (iv) such person is either (1) a FSMA Qualified Investor or (2) its "client" (as defined in section 86(2) of FSMA) that has engaged it to act as his agent on terms which enable it to make decisions concerning the Placing or any other offers of transferable securities on his behalf without reference to him;

(m) nothing has been done or will be done by it in relation to the Placing or to any Placing Shares that has resulted or will result in any person being required to publish a prospectus in relation to the Company or to any Ordinary Shares in accordance with FSMA or the Prospectus Rules or in accordance with any other laws applicable in any part of the European Union or the European Economic Area;

(n) it will not treat any Placing Shares in any manner that would contravene any legislation applicable in any territory or jurisdiction and no aspect of its participation in the Placing will contravene any legislation applicable in any territory or jurisdiction in any respect or cause the Company and/or Zeus Capital and/or finnCap to contravene any such legislation in any respect;

(o) (in this paragraph "US person" and other applicable terms have the meanings that they have in Regulation S made under the US Securities Act of 1933, as amended) (i) none of the Placing Shares have been or will be registered under that Act or under the securities laws of any State of or other jurisdiction within the United States, (ii) subject to certain exceptions, Placing Shares may not be offered or sold, resold, or delivered, directly or indirectly, into or within the United States or to, or for the account or benefit of, any US person, (iii) it is (unless otherwise expressly agreed with Zeus Capital and finnCap) neither within the United States nor a US person, (iv) it has not offered, sold or delivered and will not offer sell or deliver any of the Placing Shares to persons within the United States, directly or indirectly, (v) neither it, its affiliates, nor any persons acting on its behalf, has engaged or will engage in any directed selling efforts with respect to the Placing Shares, (vi) it will not be subscribing Placing Shares with a view to resale in or into the United States, and (vii) it will not distribute this document or any offering material relating to Placing Shares, directly or indirectly, in or into the United States or to any persons resident in the United States;

(p) Zeus Capital and/or finnCap may itself agree to become a Placee in respect of some or all of the Placing Shares or by nominating any other relevant Broker Person or any person associated with any Broker Person to do so;

   (q)           time is of essence as regards its obligations under this Appendix; 

(r) this Appendix and any contract which may be entered into between it and finnCap and/or the Company pursuant to this Appendix or the Placing, and all non-contractual obligations arising between the Placee and Zeus Capital and/or finnCap and/or the Company in respect of the Placing, will be governed by and construed in accordance with the laws of England, for which purpose it submits (for 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 arising out of or relating to this Appendix or such contract, except that each of the Company and finnCap will have the right to bring enforcement proceedings in respect of any judgment obtained against such Placee in the English courts or in the courts of any other relevant jurisdiction;

(s) each right or remedy of the Company or finnCap provided for in this Appendix is in addition to any other right or remedy which is available to such person and the exercise of any such right or remedy in whole or in part will not preclude the subsequent exercise of any such right or remedy;

(t) any document that is to be sent to it in connection with the Placing will be sent at its risk and may be sent to it at any address provided by it to finnCap;

(u) nothing in this Appendix will exclude any liability of any person for fraud on its part, and all times and dates in this document are subject to amendment at the discretion of Zeus Capital and finnCap except that in no circumstances will the date scheduled for Admission be later than the Long Stop Date; and

(v) none of its rights or obligations in respect of the Placing is conditional on any other person agreeing to subscribe for any Placing Shares under the Placing and no failure by any other Placee to meet any of its obligations in respect of the Placing will affect any of its obligations in respect of the Placing.

   7.            Payment default 

A Placee's entitlement to receive any Placing Shares under the Placing will be conditional on finnCap's receipt of payment in full for such shares by the relevant time to be stated in the written confirmation referred to above, or by such later time and date as finnCap may determine, and otherwise in accordance with that confirmation's terms. finnCap may waive this condition, and will not be liable to any Placee for any decision to waive it or not.

If any Placee fails to make such payment by the required time for any Placing Shares (1) the Company may release itself, and (if it decides to do so) will be released from, all obligations it may have to allot and/or issue any such Placing Shares to such Placee or at its direction which are then unallotted and/or unissued, (2) the Company may exercise all rights of lien, forfeiture and set-off over and in respect of any such Placing Shares to the full extent permitted under its constitution or by law and to the extent that such Placee then has any interest in or rights in respect of any such shares, (3) the Company or, as applicable, finnCap may sell (and each of them is irrevocably authorised by such Placee to do so) all or any of such shares on such Placee's behalf and then retain from the proceeds, for the account and benefit of the Company or, where applicable, finnCap (i) any amount up to the total amount due to it as, or in respect of, subscription monies, or as interest on such monies, for any Placing Shares and (ii) any amount required to cover dealing costs and/or commissions necessarily or reasonably incurred by it in respect of such sale, and (4) such Placee will remain liable to the Company and to finnCap for the full amount of any losses and of any costs which it may suffer or incur as a result of it (i) not receiving payment in full for such Placing Shares by the required time, and/or (ii) the sale of any such Placing Shares to any other person at whatever price and on whatever terms are actually obtained for such sale by or for it. Interest may be charged in respect of payments not received by finnCap for value by the required time referred to above at the rate of two percentage points above the base rate of Barclays plc.

   8.            Overseas jurisdictions 

The distribution of this document and the offering and/or issue of shares pursuant to the Placing in certain jurisdictions is restricted by law. Persons who seek to participate in the Placing must inform themselves about and observe any such restrictions. In particular, this document does not constitute or form part of any offer or invitation, or a solicitation of any offer or invitation, to subscribe for or acquire or sell or purchase or otherwise deal in Ordinary Shares in the United States, Canada, Japan or Australia or in any other jurisdiction in which any such offer, invitation or solicitation is or would be unlawful. The Placing Shares have not been and will not be registered under the US Securities Act of 1933, as amended or under the securities laws of any State of or other jurisdiction within the United States, and, subject to certain exceptions, may not be offered or sold, resold or delivered, directly or indirectly, in or into the United States, or to, or for the account or benefit of, any US persons (as defined in Regulation S under that Act). No public offering of the Placing Shares is being or will be made in the United States.

   9.            Placing Shares 

The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing issued Ordinary Shares.

DEFINITIONS

In this Appendix to the Announcement and, as the context shall admit, in the Announcement:

 
 Admission                         admission of the Placing 
                                    Shares to trading on 
                                    AIM and such admission 
                                    becoming effective in 
                                    accordance with the AIM 
                                    Rules; 
 
 AIM                               the AIM market operated 
                                    by the London Stock Exchange; 
 
 AIM Rules                         the AIM Rules for Companies 
                                    and/or the AIM Rules 
                                    for Nominated Advisers 
                                    (as the context may require); 
 
 AIM Rules for Companies           the rules of AIM as set 
                                    out in the publication 
                                    entitled 'AIM Rules for 
                                    Companies' published 
                                    by the London Stock Exchange 
                                    from time to time; 
 
 AIM Rules for Nominated           the rules of AIM as set 
  Advisers                          out in the publication 
                                    entitled 'AIM Rules for 
                                    Nominated Advisers' published 
                                    by the London Stock Exchange 
                                    from time to time; 
 
 Board or Directors                the board of directors 
                                    of the Company for the 
                                    time being; 
 
 Broker Person                     any person being (i) 
                                    the Brokers, (ii) an 
                                    undertaking which is 
                                    a subsidiary undertaking 
                                    of either of the Brokers, 
                                    (iii) a parent undertaking 
                                    of either of the Brokers 
                                    or a subsidiary undertaking 
                                    of any such parent undertaking, 
                                    or (iv) a director, officer, 
                                    agent or employee of 
                                    any such person; 
 
 Brokers                           finnCap and Zeus Capital 
                                    or either one of them 
                                    as the context may require; 
 
 Business Day                      any day (excluding Saturdays 
                                    and Sundays) on which 
                                    banks are open in London 
                                    for normal banking business 
                                    and the London Stock 
                                    Exchange is open for 
                                    trading; 
 
 Capita Asset Services             a trading name of Capita 
                                    Registrars Limited, a 
                                    company incorporated 
                                    in England and Wales 
                                    with registered number 
                                    02605568 and having its 
                                    registered office at 
                                    The Registry, Beckenham, 
                                    Kent BR3 4TU; 
 
 certificated or in certificated   the description of a 
  form                              share or other security 
                                    which is not in uncertificated 
                                    form (that is not in 
                                    CREST); 
 
 Circular                          means the circular to 
                                    be issued by the Company 
                                    to the holders of Ordinary 
                                    Shares containing, inter 
                                    alia, details of the 
                                    Placing and the Notice 
                                    of General Meeting; 
 
 Closing Price                     the closing middle market 
                                    quotation of an Ordinary 
                                    Share as derived from 
                                    the AIM Appendix to the 
                                    Daily Official List of 
                                    the London Stock Exchange; 
 
 Company or Flowtech               Flowtech Fluidpower plc, 
                                    a company incorporated 
                                    in England and Wales 
                                    with registered number 
                                    09010518 and having its 
                                    registered office at 
                                    Pimbo Road, Skelmersdale, 
                                    WN8 9RB 
 
 CREST                             the relevant system (as 
                                    defined in the CREST 
                                    Regulations) in respect 
                                    of which Euroclear is 
                                    the Operator (as defined 
                                    in the CREST Regulations); 
 
 Enlarged Share Capital            the issued share capital 
                                    of the Company immediately 
                                    following Admission; 
 
 EU                                the European Union; 
 
 Euroclear                         Euroclear UK & Ireland 
                                    Limited; 
 
 Existing Issued Share             the issued share capital 
  Capital                           of the Company as at 
                                    the Latest Practicable 
                                    Date; 
 
 Existing Ordinary Shares          the 43,078,282 Ordinary 
                                    Shares in issue as at 
                                    the Record Date; 
 
 FCA                               the UK Financial Conduct 
                                    Authority; 
 
 finnCap or finnCap Ltd            finnCap Ltd, a company 
                                    incorporated in England 
                                    and Wales with registered 
                                    company number 06198898, 
                                    authorised and regulated 
                                    by the FCA; 
 
 Form of Proxy                     the form of proxy accompanying 
                                    this document relating 
                                    to the General Meeting; 
 
 FSMA                              the UK Financial Services 
                                    and Markets Act 2000, 
                                    as amended; 
 
 General Meeting or GM             the general meeting of 
                                    the Company, notice of 
                                    which is set out at the 
                                    end of this document, 
                                    and including any adjournment(s) 
                                    thereof; 
 
 Group or Flowtech                 the Company and/or its 
                                    subsidiary undertakings 
                                    at the date of this document 
                                    (as defined in sections 
                                    1159 and 1160 of the 
                                    Act); 
 
 Impact Announcement               the Company's proposed 
                                    regulatory announcement 
                                    of the Placing; 
 
 Issue Price or Placing            120 pence per Placing 
  Price                             Share; 
 
 Latest Practicable Date           means 5:00 p.m. on 8 
                                    March 2017, being the 
                                    latest practicable date 
                                    prior to the announcement 
                                    by the Company of its 
                                    intention to undertake 
                                    the Placing; 
 
 London Stock Exchange             London Stock Exchange 
                                    plc; 
 
 Notice of General Meeting         means the notice convening 
                                    the General Meeting which 
                                    will be set out at the 

                                    end of the Circular; 
 
 Options                           options granted by the 
                                    Company over unissued 
                                    Ordinary Shares pursuant 
                                    to employee share option 
                                    schemes and rights to 
                                    subscribe for shares 
                                    pursuant to employee 
                                    and non executive long 
                                    term incentive plans 
                                    put in place by the Company; 
 
 Option Holders                    the employees of the 
                                    Company (including Directors) 
                                    who hold Options; 
 
 Ordinary Shares                   ordinary shares of 50 
                                    pence each in the capital 
                                    of the Company; 
 
 Placees                           the persons who have 
                                    agreed to subscribe for 
                                    the Placing Shares; 
 
 Placing                           the placing of the Placing 
                                    Shares with the Placees 
                                    pursuant to the Placing 
                                    Agreement; 
 
 Placing Agreement                 the conditional agreement 
                                    dated 9 March 2017 between 
                                    the Company, Zeus Capital 
                                    Limited and finnCap Limited 
                                    relating to the Placing; 
 
 Placing Shares                    the 8,333,333 new Ordinary 
                                    Shares to be issued by 
                                    the Company under the 
                                    Placing; 
 
 Prospectus Rules                  the Prospectus Rules 
                                    published by the FCA; 
 
 Record Date                       5:00 p.m. on 8 March 
                                    2017; 
 
 Registrars                        Capita Asset Services, 
                                    a trading name of Capita 
                                    Registrars Limited; 
 
 Regulatory Information            has the meaning given 
  Service or                        in the AIM Rules for 
  RNS                               Companies; 
 
 Resolutions                       the resolutions to be 
                                    proposed at the General 
                                    Meeting which are set 
                                    out in full in the Notice 
                                    of General Meeting; 
 
 Shareholders                      holders of Existing Ordinary 
                                    Shares; 
 
 uncertificated                    recorded on a register 
                                    of securities maintained 
                                    by Euroclear in accordance 
                                    with the CREST Regulations 
                                    as being in uncertificated 
                                    form in CREST and title 
                                    to which, by virtue of 
                                    the CREST Regulations, 
                                    may be transferred by 
                                    means of CREST; 
 
 UK or United Kingdom              the United Kingdom of 
                                    England, Scotland, Wales 
                                    and Northern Ireland; 
 
 Zeus Capital or Zeus              Zeus Capital Limited, 
  Capital Limited                   a company incorporated 
                                    in England and Wales 
                                    with registered company 
                                    number 04417845; 
 
 GBP or sterling                   pounds sterling, the 
                                    legal currency of the 
                                    United Kingdom; and 
 
 terms defined elsewhere in this document have 
  the same meanings, unless the context requires 
  otherwise. 
 

This information is provided by RNS

The company news service from the London Stock Exchange

END

MSCEAKDNESNXEFF

(END) Dow Jones Newswires

March 09, 2017 12:03 ET (17:03 GMT)