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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Velocys Plc | LSE:VLS | London | Ordinary Share | GB00B11SZ269 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.2725 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMVLS
RNS Number : 8393B
Velocys PLC
15 January 2018
News release
Velocys plc
("Velocys" or the "Company")
15 January 2018
Fund raise of approximately GBP18.4 million
Velocys plc (VLS.L), the renewable fuels company, is pleased to announce that it intends to raise
approximately GBP18.4 million (gross) by way of a firm placing and placing and open offer.
Highlights:
-- Fund raising of approximately GBP18.4 million (before expenses):
o Approximately GBP14 million (before expenses) by way of a firm placing of 139,605,000 New Ordinary Shares (the "Firm Placing Shares") at a placing price of 10 pence per share (the "Placing Price") (the "Firm Placing"); and
o GBP4.4 million (before expenses) by way of an open offer (the "Open Offer") made to Eligible Shareholders of 44,057,946 New Ordinary Shares (the "Open Offer Shares") at the Placing Price.
o Both the Firm Placing and the Placing and Open Offer are strongly supported by existing Shareholders. Approximately half of the Firm Placing Shares have been placed with the Company's existing Shareholders. In addition, all of the Open Offer Shares have been conditionally placed with two of the Company's existing Shareholders, Henderson and Lansdowne, subject to clawback to satisfy valid acceptances by Eligible Shareholders under the Open Offer (the "Placing and Open Offer" and, together with the Firm Placing, the "Capital Raising").
-- The Placing Price represents a discount to the closing mid-market price of the Ordinary Shares as at 12 January 2018 of 17.25 pence per Ordinary Share.
-- The Firm Placing Shares will represent approximately 42.2 per cent. of the Enlarged Share Capital (provided that no options, warrants or convertible loan notes are exercised). The Firm Placing Shares are not subject to clawback and are not part of the Open Offer.
-- The Open Offer Shares will represent approximately 13.3 per cent. of the Enlarged Share Capital (provided that no options, warrants or convertible loan notes are exercised).
-- Net proceeds of the Capital Raising will be used predominantly: (i) towards funding initial development costs in respect of the Company's Mississippi biorefinery while the Company pursues strategic investment for development costs and the project capex; (ii) to progress the Company's UK waste-to-renewable jet fuel project; and (iii) to fund the Company's working capital and central operating costs, including additional support to ENVIA until it reaches sustainable profitability expected in the second quarter of 2018.
-- The Capital Raising is conditional (amongst other things) upon the passing of certain resolutions. A General Meeting is being convened for the purpose of considering the relevant resolutions at 10.00 a.m. on 31 January 2018 at the offices of Mayer Brown International LLP, 201 Bishopsgate, London, EC2M 3AF. Neither the Firm Placing nor the Placing and Open Offer is being underwritten by Numis Securities or Canaccord Genuity.
David Pummell, CEO of Velocys, said:
"We now have our commercial scale technology in operation at ENVIA Oklahoma and have made considerable progress in 2017 taking forward our new strategy to enter the renewable fuels markets and grow material supply positions. Today's financing ensures Velocys can take forward both the development of our second biorefinery in the US, targeting final investment decision around the middle of 2019 and completing the feasibility study for the third biorefinery in the UK.
We would like to thank existing shareholders for their support and welcome some significant new shareholders to the register. We are also pleased to include an open offer element that allows shareholders who are resident in the United Kingdom to participate."
- Ends -
For further information, please contact:
Velocys +44 1235 838 David Pummell, CEO 621 Numis Securities (Nomad and joint broker) Alex Ham Stuart Skinner Jamie Lillywhite +44 20 7260 Tom Ballard 1000 Canaccord Genuity (Joint broker) Henry Fitzgerald-O'Connor +44 20 7523 Ben Griffiths 8000 Camarco (Financial communications & PR) Billy Clegg Georgia Edmonds +44 20 3757 Tom Huddart 4983
Certain information contained in this announcement would have constituted inside information (as defined by Article 7 of Regulation (EU) No 596/2014) ("MAR") prior to its release as part of this announcement. In addition, market soundings (as defined in MAR) were taken in respect of the Capital Raising with the result that certain persons became aware of inside information (as defined in MAR), as permitted by MAR. 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.
www.velocys.com
IMPORTANT NOTICES
This document does not constitute an offer to buy, acquire or subscribe for, or the solicitation of an offer to buy, acquire or subscribe for, New Ordinary Shares or an invitation to buy, acquire or subscribe for the New Ordinary Shares in any jurisdiction. This document has not been filed with, examined or approved by the Financial Conduct Authority or the London Stock Exchange or any other regulatory authority.
Numis Securities Limited ("Numis"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority and is a member of the London Stock Exchange, is acting as nominated adviser and joint broker to the Company for the purposes of the AIM Rules. Canaccord Genuity Limited ("Canaccord"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority and is a member of the London Stock Exchange, is acting as joint broker to the Company for the purposes of the AIM Rules. Numis and Canaccord are each acting exclusively for the Company in connection with the Firm Placing and the Placing and Open Offer, and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients or for providing advice in relation to the proposals in this document or any other matter referred to in this document. Neither Numis nor Canaccord have authorised the contents of this document for any purpose and, without limiting the statutory rights of any person to whom this document is issued, no representation or warranty, express or implied, is made by either Numis or Canaccord as to any of the contents or completeness of this document.
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. These statements, which sometimes use words such as "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning, reflect the directors' beliefs and expectations and involve a number of risks, uncertainties and assumptions 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. Statements contained in this announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The information contained in this announcement is subject to change without notice and neither Numis nor Canaccord nor, except as required by applicable law, the Company assumes any responsibility or obligation to update publicly or review any of the forward-looking statements contained herein. You should not place undue reliance on forward-looking statements, which speak only as of the date of this announcement.
The distribution of this announcement outside the United Kingdom may be restricted by law and therefore any persons outside the United Kingdom into whose possession this announcement comes should inform themselves about and observe any such restrictions as to the Firm Placing, the Placing and Open Offer, the New Ordinary Shares and the distribution of this announcement. Any failure to comply with such restrictions may constitute a violation of the securities laws of any jurisdiction outside of the United Kingdom. This announcement does not constitute an offer to sell or an invitation to subscribe for, or the solicitation of an offer to buy or to subscribe for, shares in any jurisdiction in which such an offer or solicitation is unlawful. In particular, this announcement is not for release, publication or distribution, directly, or indirectly, in whole or in part, in, into or from the United States, Australia, New Zealand, Canada, the Republic of South Africa, Japan or to any US Person, or any national, resident or citizen of Australia, New Zealand, Canada, the Republic of South Africa or Japan. No offering of New Ordinary Shares, or any other securities of the Company, is being made in the United States and this announcement, and the information contained herein, does not constitute an offer to sell or a solicitation of an offer to buy any New Ordinary Shares or any other securities of the Company in the United States.
No person has been authorised to give any information or to make any representation other than those contained in this announcement (or the circular to be sent to Shareholders today) in connection with the Firm Placing, the Placing and Open Offer and Admission and, if given or made, such information or representation must not be relied upon as having been authorised by or on behalf of the Company, Numis or Canaccord or any of their respective directors, employees or officers.
Information to Distributors
Solely for the purposes of the product governance requirements of Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II") and local implementing measures, 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 Firm Placing Shares and the Open Offer Shares have been subject to a product approval process, which has determined that such Firm Placing Shares and the Open Offer 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, Distributors should note that: the price of Firm Placing Shares and the Open Offer Shares may decline and investors could lose all or part of their investment; Firm Placing Shares and the Open Offer Shares offer no guaranteed income and no capital protection; and an investment in Firm Placing Shares and the Open Offer 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 any contractual, legal or regulatory selling restrictions in relation to the Firm Placing and the Placing and Open Offer. 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 group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Firm Placing Shares and the Open Offer Shares.
1. Introduction
The Board has today announced that it proposes to raise, subject to certain conditions, approximately GBP18.4 million (before expenses) by way of a firm placing and a placing and open offer comprising: (i) approximately GBP14 million (before expenses) by way of a firm placing of 139,605,000 New Ordinary Shares at a placing price of 10 pence per share; and (ii) GBP4.4 million (before expenses) by way of an open offer made to Eligible Shareholders of 44,057,946 New Ordinary Shares at a price of 10 pence per share. The Open Offer Shares have been conditionally placed with two of the Company's existing shareholders, Henderson and Lansdowne, subject to clawback to satisfy valid acceptances by Eligible Shareholders under the Open Offer (the "Placing and Open Offer" and, together with the Firm Placing, the "Capital Raising"). The Placing Price represents a discount to the closing mid-market price of the Ordinary Shares as at 12 January 2018 of 17.25 pence per Ordinary Share.
The Directors intend to use the net proceeds raised by the Capital Raising as follows: (i) GBP13.6 million to be used towards funding initial direct and indirect development costs in respect of the Company's Mississippi biorefinery while the Company pursues strategic investment for development costs and the project capex; and (ii) GBP3.5 million to be used for working capital and central costs, including costs to pursue the Company's UK waste-to-renewable jet fuel project and to support ENVIA. Details of the basis on which the Directors have estimated the Company's funding requirements are set out in paragraph 5 below.
The Capital Raising is conditional (amongst other things) upon the passing of certain resolutions in order to ensure that the Directors have the necessary authorities and powers to allot the Firm Placing Shares and Open Offer Shares for cash on a non-pre-emptive basis. A General Meeting is therefore being convened for the purpose of considering the Resolutions at 10.00 a.m. on 31 January 2018 at the offices of Mayer Brown International LLP, 201 Bishopsgate, London, EC2M 3AF. The Capital Raising is also conditional on the Joint Broker Placing Agreement becoming unconditional and not being terminated in accordance with its terms. Neither the Firm Placing nor the Placing and Open Offer is being underwritten by Numis or Canaccord.
The purpose of this document is to provide you with details of, and the reasons for, the Capital Raising and why the Directors believe it to be in the best interests of the Company and its Shareholders and, further, why they recommend that you vote in favour of the Resolutions. The Directors intend to vote in favour of the Resolutions in respect of their legal and/or beneficial shareholdings amounting, in aggregate, to 315,789 Ordinary Shares representing approximately 0.22 per cent. of the Ordinary Shares in issue as at the date of this document.
Further details of the Firm Placing and the Placing and Open Offer are set out in paragraphs 6 and 7 below, respectively.
2. Information on the Company's projects (a) ENVIA - the Company's commercial reference plant
In September 2016, construction of the first plant incorporating the Company's technology was completed. This was ENVIA Energy's plant in Oklahoma City, which acts as the commercial scale reference plant for the Company's technology, and which uses landfill gas as well as pipeline natural gas as feedstock. ENVIA subsequently delivered the start-up of the commercial scale Fischer-Tropsch modules and upstream units, culminating in the first Fischer-Tropsch product being successfully produced in February 2017. In June 2017, the first finished, products (premium renewable waxes, diesel and naphtha) were produced and in September 2017 the plant produced its first sustainable revenues. In October 2017, the plant achieved an operational capacity of 200 barrels per day and the Directors believe that the plant will continue ramping up to its target operational capacity of 250 barrels per day. Finished saleable products are meeting customer product specifications and revenues are being generated from sales to product offtakers.
The Company expects that the ENVIA plant will obtain Renewable Identification Number qualification during the first quarter of 2018, with the first qualified Renewable Identification Number sale and positive cash flows expected during the second quarter of 2018. The Velocys reactor technology in the ENVIA plant represents the commercial system that will be used in the Company's future renewable fuels biorefineries.
The board of ENVIA is in the process of assessing the likely funding requirements of the project to achieve positive cash flows, following which it may seek contributions from some or all of the joint venture partners (including the Company).
(b) Mississippi - the Company's second US biorefinery, using woody biomass
Overview
In October 2017, the Company signed a site option agreement with Adams County in the State of Mississippi for its second US biorefinery to be located in Natchez, Mississippi. The Company has been offered economic development incentives from Adams County (for which Natchez is the county seat) estimated to be worth the equivalent of $42 million. The Directors expect the project to qualify for additional incentives worth up to $15 million, provided via Mississippi's Advantage Jobs Act and other statutory tax incentives. These incentive packages would reduce the Company's future tax liabilities and are subject to the Company meeting certain minimum requirements for capital investment and local employment opportunities. The Company has also received commitments from Adams County worth approximately $4 million (relating to the land and upgrades to the site) and $1 million site upgrade commitments from local utility suppliers, further increasing the attractiveness of the site.
The site and local area benefits from: (i) an attractive regulatory and tax regime; (ii) the availability of an abundant local supply of low cost forestry residue that will form the feedstock of the plant; (iii) advantaged transportation infrastructure including barge, rail and road; (iv) accessible utilities; (v) land that meets all the required criteria including space and terrain to support an industrial development; (vi) a local workforce skilled in servicing the forestry industry; and (vii) a local community with facilities and amenities that will attract additional skilled personnel during construction and ongoing plant operations. The choice of the 100-acre Natchez site was confirmed after the Company analysed a broad set of operational and tax considerations at twelve possible sites in four States in the Southeast of the United States. Due diligence, including site visits, was completed at each of these sites and incentive offers were received from each State in question. The Directors believe that the Natchez biorefinery will be the first of a series of woody biomass residue conversion to renewable fuels biorefineries to be set up by the Company.
The Company began the process of selecting strategic partners for its Mississippi biorefinery projects in early 2017 and continues to assess and refine its choice of partners. Site permitting is ongoing. Pre-FEED has been completed and the integrated technology demonstration is expected to commence shortly. The initial phase of the FEED engineering study will commence in the first quarter of 2018. The Company is in the process of selecting an EPC partner to complete the FEED study.
The Company estimates that total remaining capital for it to develop the project to FID will be in the order of GBP45 million. In addition to the expenditure proposed by the Company from the net proceeds of the Capital Raising, the Company intends to secure investment by a strategic partner.
In respect of the project capex, details of which are set out below, the Company intends that equity letters of intent in relation to the Mississippi plant are expected to be entered into during the first half of 2019, with FID and signature of feed/offtake agreements expected during the middle part of 2019. Plant construction is then expected to commence following FID, with plant commissioning expected to begin during 2021.
The signature of the site option agreement completes one of the work packages required for the U.S. Department of Agriculture loan guarantee application. The Company was invited to submit a Phase II application for the loan guarantee in June 2017, which could apply to up to $200 million of debt as part of the total installed cost of the project. The Company has engaged SMBC as the lender of record and as its financial advisor. A preliminary credit committee hearing is expected to take place with SMBC in due course, with the final credit committee hearing thereafter as the project nears FID. The Company expects to receive the US Department of Agriculture's conditional commitment of its loan guarantee in the third quarter of 2018.
Key estimates of Mississippi biorefinery economics[1]
The key estimates of the economic parameters of the Mississippi biorefinery are as follows:
-- 20 million gallons per year renewable fuels; -- 900 tonnes per day dry feedstock (approximately $1.00 per gallon); -- approximately $60 million state and local incentives; -- $350-425 million estimated capex; -- $50 million annual OPEX ($2.50 per gallon); -- $138 million annual revenue ($6.90 per gallon) ($1.52/$0.55/$4.83 from products/state credits/federal credits); and -- $200 million US Department of Agriculture loan guarantee underwritten by SMBC.
Indicative Mississippi biorefinery capital structure[2]
An indicative capital structure of the Mississippi biorefinery is as follows:
-- $450-575 million total investment capital, of which: -- $350-425 million comprises estimated capex; -- $50-100 million comprises estimated financing costs; and
-- approximately $50 million comprises the estimated development fee, contingency and other costs.
-- EPC contractors to be engaged by the Company will be of investment grade. -- The Company foresees a capital structure for the project as follows:
-- $200 million US Department of Agriculture loan guarantee/SMBC underwritten at low cost of debt;
-- $50 million subordinated debt; -- $200-325 million equity (infrastructure funds, private equity).
At the point that the Mississippi biorefinery reaches FID, the Company will have the option to negotiate financing structures with the equity finance providers which have different capital requirements for the Company. Indicative structures for the Mississippi biorefinery equity stakes and returns are as follows:
Hot Features
Premium
Indicative option Range of Company Differentiated economics
NPV (GBP)
1. SPV investment Project fees - SPV investment =
and full carry/uplift GBP7 million ($29 million)
of development Licensing - GBP20 Developers investment
capital. million = ($25 million)
Equity - GBP136 Development fee
million = $0
Velocys NPV = $121
million
Velocys levered
IRR = 43 per cent.
Project levered
IRR = 30 per cent.
Project unlevered
IRR = 11 per cent.
2. No SPV investment Project fees - SPV investment =
and full carry/uplift GBP7 million ($0)
of development Licensing - GBP20 Developers investment
capital. million = ($25 million)
Equity - GBP99 Development fee
million = $0
Velocys NPV = $102
million
Velocys levered
IRR = 47 per cent.
Project levered
IRR = 30 per cent.
Project unlevered
IRR = 11 per cent.
3. No SPV investment, Project fees - SPV investment =
full developer GBP35 million ($0)
fee at FID and Licensing - GBP20 Developers investment
lower uplift million = ($25 million)
carry. Equity - GBP17 Development fee
million = $29 million
Velocys NPV = $48
million
Velocys levered
IRR = 77 per cent.
Project levered
IRR = 32 per cent.
Project unlevered
IRR = 12 per cent.
The Directors anticipate that the economics for subsequent biorefineries will incrementally improve, as a result of optimisation of capital and operational expenditure, construction costs, timeline to commercial operations, process integration costs and the cost of capital.
Feedstock and markets for the renewable fuels produced at the Mississippi biorefinery
There are abundant woody biomass residues in the US that are expected to be used as the feedstock for the Mississippi biorefinery. Over 300 million dry tonnes of suitable feedstock is available every year in the United States. It is anticipated that the Mississippi biorefinery will require approximately 330 thousand tonnes per year of feedstock, from which it will produce 20 million gallons per year of renewable fuels. The renewable volume obligation for cellulosic biofuels is currently 311 million gallons. This is a small fraction of the overall demand for diesel and jet fuel in the US, where there is predicted to be strong demand growth. The demand for jet fuel in the US was estimated to be 20 billion gallons per year in 2016, with demand expected to grow by 40 per cent. to reach 28 billion gallons per year in 2040. The demand for diesel in the US is currently estimated to be 40 billion gallons per year, with demand expected to grow by 25 per cent. to reach 50 billion gallons per year in 2040.
(c) UK waste-to-renewable jet fuel plant
Overview
In September 2017, the Company entered a partnership with various parties to prepare a business case for a commercial scale waste-to-renewable jet fuel plant in the United Kingdom. The plant will take post-recycled waste, destined for landfill or incineration, and convert it into clean-burning, sustainable jet fuel. The Directors believe that the changes to the Renewable Transport Fuels Obligation recently published by the UK Government's Department for Transport provide the required commercial platform for this opportunity as, for the first time, jet fuel will qualify for credits under the Renewable Transport Fuels Obligation. Other members of the partnership include UK-based international airline British Airways (owned by International Consolidated Airlines Group SA), recycling and waste management expert, Suez Recycling and Recovery UK Ltd and Norma Investments Ltd (an affiliate of Ervington, one of the Company's major shareholders).
The feasibility study for the project has commenced and the Company has two site options under evaluation for the proposed plant.
The Directors believe that successfully delivering the UK waste-to-renewable jet fuel plant project could be the starting point for entry by the Company into the UK waste market. Based on an input of 300,000 - 500,000 tonnes per year, the Company believes that the UK waste-to-renewable jet fuel plant will be capable of producing an output of between 10 million and 20 million gallons per year once the plant is fully operational.
Feedstock and market for fuels produced by the UK waste-to-renewable jet fuel plant
There are estimated to be over 15 million tonnes per year of waste generated in the UK that the Directors believe is suitable for use as feedstock for this project. UK jet fuel demand is currently estimated to be 3.7 billion gallons per year, which is predicted to grow with a 1 per cent. compound annual growth rate to 4.6 billion gallons per year in 2040. The Renewable Transport Fuel Obligation development fuel target for 2022 is 100 million gallons (which is the total volume of qualifying fuels produced in the UK for which double Renewable Transport Fuel Certificates will be payable, should the proposed changes to the Renewable Transport Fuel Obligation be implemented by the Government).
3. Information on the Company
History and development of the Company
The key highlights in the history and development of the Company are as follows:
-- 2001: Velocys Inc. was incorporated (by Battelle Memorial Institute) -- 2004: Oxford Catalysts was formed (as a spin out from the University of Oxford) -- 2006: Oxford Catalysts Group was admitted to trading on AIM -- 2008: Oxford Catalysts acquired Velocys Inc.
-- 2010: The Company's microchannel Fischer-Tropsch technology was demonstrated at a field demonstration in Austria
-- 2012: A Fischer-Tropsch field demonstration was carried out at a Petrobras site in Brazil
-- 2013: Oxford Catalysts Group PLC changed its name to Velocys plc (Ticker: VLS.L)
-- 2014: The ENVIA Energy joint venture was formed. FID for its Oklahoma City plant followed later that year
-- 2017: the Mississippi Biorefinery project announced -- 2017: UK waste-to-renewable jet fuel project announced -- 2017: ENVIA's Oklahoma City plant fully operational
The Velocys team
The Executive Committee of the Company is comprised of David Pummell (Chief Executive Officer), Dr Paul Schubert (Chief Operating Officer), John Tunison (Interim Chief Financial Officer) and Henrik Wareborn (Interim Chief Commercial Officer).
The Executive Committee has extensive experience in oil and gas (with members of the Executive Committee having previous experience at BP, Shell and Phillips, as well as in refining and marketing business management, manufacturing, finance, supply and logistics), renewable/gas-to-liquid plants (with members of the Executive Committee having previous experience at Sasol, Syntroleum and SGS, as well as generally in project management, plant commissioning and start up, operations and gas-to-liquid products), as well as having commercial and financing experience (with members of the Executive Committee having previous experience at Goldman Sachs, Natixis and generally in investment banking, commodities trading, private equity/venture capital fundraising and project finance).
Other members of the wider Velocys team have experience in the oil & gas industry and project engineering, and the team includes experts in plant commissioning and operations, as well as commercial, intellectual property and finance professionals.
Business model
Velocys, with its commercial scale technology and new strategy and business model, is now entering renewable fuels markets to grow a material supply position. The Company has world class partners, and the Directors believe that the Company is at the forefront of unlocking the advanced renewable fuels market. There is strong legislative support for renewable fuels in the United States at both the Federal and State levels.
The Company's go to market strategy can be summarised as:
-- identifying attractive markets with scale and optimal locations for future plants;
-- focusing on the Company's priority market - US biomass residues to renewable jet and diesel;
-- building a consortia of strategic and financial partners to deliver investment, scale and pace to market; and
-- leveraging the Company's engineering, operational and technology expertise to optimise future plant costs and timelines.
Capital structure
In May 2017, the Company raised a total of GBP10 million (before expenses) which consisted of:
-- GBP9 million of convertible loan notes issued to the Company's two largest shareholders, Ervington and Lansdowne at a price of GBP0.50 per loan note. The convertible loan notes were unsecured, with the final maturity date being 18 months from the date of issue, with interest accruing at a rate of 8 per cent. per annum. Conversion was restricted for any note holder if, as a result of conversion, their shareholding would exceed 29.9 per cent.; and
-- an equity placing of approximately GBP1 million from other shareholders at a placing price of GBP0.45 per Ordinary Share.
A total of 146,859,819 Ordinary Shares have been issued and allotted, with options, warrants and convertible loan notes in respect of an additional 28,805,933 Ordinary Shares. The total number of Ordinary Shares, fully diluted is therefore 175,665,752. As at the close of trading on 12 January 2018, the share price of the Company was 27.25 pence, giving the Company a market capitalisation of approximately GBP40 million as at 12 January 2018.
4. Current trading
The Company's financial position and funding requirements reflect its stage of development as activities become focused on commercial rollout. Revenues for the period ended 30 June 2017 and since were minimal, reflecting the Company's transition to commercial operations.
The interim financial statements for the six months ended 30 June 2017 can be summarised as follows. The revenues for the period were GBP0.2m (H1 2016: GBP0.5m). Operating loss for the period was GBP9.4m before and GBP10.1m after exceptional costs (H1 2016: GBP9.5m before and GBP9.4m after exceptional costs). Cash (including short term investments) at period end stood at GBP13.8m (31 December 2016: GBP18.7m), while cash outflow was GBP4.9m (H1 2016: GBP13.3m). Cash outflow included the fundraise of GBP10m (before expenses) in May 2017, and drawdowns through the period by ENVIA on the loan facility provided by Velocys of GBP6.9m; cash outflow excluding these items was GBP7.7m.
5. Use of Proceeds
The Company intends to raise gross proceeds of approximately GBP18.4 million (before expenses) pursuant to the Capital Raising, equivalent to approximately GBP17.1 million net of expenses. The Directors intend that the net proceeds of the Capital Raising will be used by the Company as follows:
-- GBP4.5 million to be used for its projects, predominantly for initial development costs in respect of the Company's Mississippi biorefinery and potentially in support of the ENVIA and the UK waste-to-renewable jet fuel projects;
-- GBP9.1 million to be used for indirect project development costs; and -- GBP3.5 million to be used for working capital and central costs.
The Company estimates that total remaining operating and project costs for it to develop the Mississippi biorefinery project to FID will be in the order of GBP45 million. In addition to the expenditure proposed by the Company from the net proceeds of the Capital Raising, the Company intends to secure investment by a strategic partner. The Company is targeting strategic project investment during the first half of 2018 and expects that several significant development milestones, such as the ENVIA plant obtaining Renewable Identification Number qualification and reaching profitability, completion of the integrated technology demonstration and SMBC preliminary credit committee, will be achieved during the first half of 2018.
The achievement of FID will be dependent on the Company's ability to secure the requisite debt and equity funding for the project capex from strategic partners or otherwise, as well as the key project procurement, supply and offtake contracts. As such, the timing of reaching FID is not wholly within the Company's control and the costs of reaching FID, or the costs of progressing the development of the Mississippi biorefinery project will be higher if the Mississippi biorefinery project does not progress to FID in the timeframes currently anticipated. Should the Company not secure strategic investment, it will need to seek further funding in due course in order to be able to cover development costs and its working capital requirements, which may be from one or a combination of a capital raising or the realisation of its assets, such as selling its stake or security in the ENVIA project, granting additional intellectual property licences or selling non-core intellectual property.
On achievement of FID, the Company expects to receive: (i) a licence fee in cash for the supply of its technology, reactors and catalyst; and (ii) ongoing fees for management and engineering services to be provided to the project as well as operational management of plant commissioning and start-up. The Company also intends to secure either or both of a capital development fee and a stake in the project with a significant value uplift compared to its capitalised development costs. The Company's funding requirements following FID will therefore depend on the final structure of the FID consortium and on the Company's strategy to develop and fund its subsequent biorefineries. The financing options that the Company has will be strategically evaluated by the Directors throughout the period up to FID.
6. Principal terms of the Firm Placing
The Company proposes raising approximately GBP14 million, before expenses, by way of a firm placing of up to 139,605,000 new Ordinary Shares at the Placing Price. The Firm Placing Shares will be placed by Numis, Canaccord and the Other Brokers as agents for the Company and pursuant to the Placing Agreements, with institutional and other professional investors. The Firm Placing is subject to the terms and conditions set out in Appendix I (which forms part of this Announcement). The Firm Placing Shares are not subject to clawback and are not part of the Placing and Open Offer.
The Placing Price represents a discount to the closing mid-market price of the Ordinary Shares as at 12 January 2018 of 17.25 pence per Ordinary Share. The Firm Placing Shares will represent approximately 42.2 per cent. of the Enlarged Share Capital (provided that no options, warrants or convertible loan notes are exercised) and will, when issued, 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 Admission.
The Firm Placing is conditional upon (amongst other things):
(a) the passing of the Resolutions at the General Meeting;
(b) the Joint Broker Placing Agreement becoming unconditional and not having been terminated in accordance with its terms;
(c) Admission occurring on or before 1 February 2018 (or such later date as Numis, Canaccord and the Company may agree, not being later than 15 February 2018);
The Joint Broker Placing Agreement contains warranties from the Company in favour of Numis and Canaccord in relation to, (amongst other things), the Company and its business. In addition, the Company has agreed to indemnify Numis and Canaccord in relation to certain liabilities it may incur in undertaking the Capital Raising. Numis and Canaccord have the right to terminate the Joint Broker Placing Agreement in certain circumstances prior to 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.
Application will be made for the Firm Placing Shares to be admitted to trading on AIM, subject to the Joint Broker Placing Agreement not having been terminated, and it is expected that trading in the Firm Placing Shares will commence at 8.00 a.m. on 1 February 2018.
Certain of the Directors intend to subscribe for 450,000 Firm Placing Shares in aggregate at the Placing Price, representing approximately 0.3 per cent. of the Firm Placing Shares. Assuming that those Directors subscribe, immediately following Admission (and assuming no other issuance of new Ordinary Shares prior to Admission), the Directors of the Company will have a legal and/or beneficial interest in 765,789 Ordinary Shares.
7. Principal terms of the Placing and Open Offer
The Company considers it important that, where reasonably practicable, Shareholders have an opportunity to participate in its equity fundraisings. Accordingly, the Company is proposing to raise GBP4.4 million (before expenses) by way of the Open Offer. The Open Offer Shares have been conditionally placed with two of the Company's existing Shareholders, Henderson and Lansdowne, subject to clawback to satisfy valid acceptances by Eligible Shareholders under the Open Offer. Henderson and Lansdowne have agreed under the terms of the Placing Letters to subscribe for the maximum number of Open Offer Shares at the Placing Price, subject to clawback, on an equal basis.
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 EUR5 million. This maximum limit has been set to ensure 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 UKLA. Based on a GBP:EUR exchange rate of 1.1233, this means that the maximum amount which could be raised under the Open Offer is GBP4,451,171. The Company is proposing to raise GBP4.4 million (before expenses) by way of the Open Offer.
On, and subject to the terms and conditions of the Open Offer, the Company invites Eligible Shareholders, being only Shareholders who are resident in the United Kingdom 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 3 Open Offer Shares for every 10 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 he or she has specified on the Application Form or through CREST.
The Open Offer is conditional upon:
(a) the passing of the Resolutions at the General Meeting;
(b) the Joint Broker Placing Agreement becoming unconditional and not having been terminated in accordance with its terms;
(c) Admission occurring on or before 1 February 2018 (or such later date as Numis, Canaccord and the Company may agree, not being later than 15 February 2018);
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.
Appendix II, together with the Circular and the accompanying Application Form, contains the terms and conditions of the Open Offer.
If an Eligible Shareholder does not wish to apply for Open Offer Shares he should not complete or return the Application Form or send a USE message through CREST.
8. Related party transactions
The participation of each of Ervington, Lansdowne and Henderson in the Capital Raising constitutes a related party transaction under the AIM Rules as each is a substantial shareholder (within the meaning of the AIM Rules). Ervington are subscribing for 40,000,000 Firm Placing Shares at the Placing Price and Lansdowne are subscribing for 30,000,000 Firm Placing Shares at the Placing Price. In addition, each of Lansdowne and Henderson are conditionally subscribing, subject to clawback, for 22,000,000 Open Offer Shares at the Placing Price in respect of which they will receive a commission of 5.25 per cent. of the aggregate value at the Placing Price from the Company. The Directors consider, having consulted with Numis, the Company's nominated advisor, that the terms of the related party transaction are fair and reasonable in so far as its Shareholders are concerned.
9. Resolutions
The Company currently does not have sufficient authority to allot shares under the Act to effect the Capital Raising. Accordingly the Resolutions, summarised below, are being proposed at the General Meeting to ensure that the Directors have sufficient authority to allot and issue the Firm Placing Shares on a non-pre-emptive basis and to allot and issue the Open Offer Shares.
(a) Resolution 1 is an ordinary resolution to grant authority to the Directors under s551 of the Act to allot relevant securities, up to a maximum aggregate nominal amount of GBP1,836,630 pursuant to the Capital Raising, such authority expiring at the earlier of the Company's next annual general meeting and 30 April 2019.
If Resolution 1 is passed, the Directors will have the authority, under the Act, to allot Ordinary Shares up to the maximum aggregate nominal amount of GBP1,836,630 (being the maximum required for the purposes of issuing the Firm Placing Shares and Open Offer Shares); and
(b) Resolution 2 is a special resolution, conditional upon the passing of Resolution 1, to empower the Directors, pursuant to s570 of the Act, to allot Ordinary Shares up to a maximum aggregate nominal amount of GBP1,836,630 on a non-pre-emptive basis pursuant to the Capital Raising, such authority expiring at the earlier of the Company's next annual general meeting and 30 April 2019.
If Resolution 2 is passed, the Directors will have the power, under the Act, to allot the Firm Placing Shares without offering those shares to existing Shareholders and to allot the Open Offer Shares without offering the Open Offer Shares to Shareholders resident in a Restricted Jurisdiction and to avoid the need to issue fractional entitlements to Ordinary Shares.
These authorities are required to enable the Directors to effect the Capital Raising and are in addition to the general authorities that were granted by Shareholders at the Company's annual general meeting on 22 June 2017, which gave the Directors authority to allot relevant securities up to a maximum aggregate nominal amount of GBP480,052.39 under s551 of the Act and to allot Ordinary Shares up to a maximum aggregate nominal amount of GBP144,015.72 on a non-pre-emptive basis under s570 of the Act (such authorities expire at the next annual general meeting of the Company or 31 July 2018, whichever is earlier).
Resolution 1 is an ordinary resolution and requires a majority of more than 50 per cent. of the Shareholders voting to be passed. Resolution 2 is a special resolution and requires the approval of more than 75 per cent. of the Shareholders voting to be passed.
The General Meeting is to be held at the offices of Mayer Brown International LLP, 201 Bishopsgate, London EC2M 3AF at 10.00 a.m. on 31 January 2018.
10. Recommendation
The Directors consider that the Capital Raising 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 Capital Raising to meet its immediate liquidity requirements, to continue to implement its strategy and, in particular, to progress the Mississippi biorefinery while the Company seeks to secure strategic investment for development costs and the project capex. If the Resolutions are not passed by Shareholders, the Capital Raising will not proceed. In these circumstances, the Directors will need to reconsider the Company's strategy and the Company would need to seek alternative funding, which may not be available on terms which are acceptable to the Company or at all, in which case the Company may be unable to meet its future liabilities as they fall due. 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 315,789 Ordinary Shares (representing approximately 0.22 per cent. of the Ordinary Shares in the issue as
at the date of this document).
DEFINITIONS
The following definitions apply throughout this document, unless the context requires otherwise.
"Act" the UK Companies Act 2006,
as amended
"Admission" admission of the New Ordinary
Shares to trading on AIM
becoming effective in
accordance with Rule 6
of the AIM Rules
"AIM" the market of that name
operated by London Stock
Exchange plc
"AIM Rules" the AIM Rules for Companies
published by the London
Stock Exchange as they
may be amended and replaced
from time to time
"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 Appendix II
"Board" or "Directors" the board of directors
of the Company
"Canaccord" Canaccord Genuity Limited,
a company incorporated
in England and Wales,
with registered number
01774003, whose registered
office is at 88 Wood Street,
London EC2V 7QR
"Capital Raising" the Firm Placing and the
Placing and Open Offer
"Circular" the Circular to be distributed
by the Company in connection
with the Capital Raising
"Closing Date" the date on which the
Open Offer will close,
being 11.00 a.m. on 30
January 2018 or such later
time and date as the Company
and Joint Brokers may
agree
"Company" or "Velocys" Velocys plc, a public
limited company incorporated
in England & Wales under
registered number 05712187
and having its registered
office at Harwell Innovation
Centre, 173 Curie Avenue,
Harwell, Oxfordshire,
England, OX11 0QG
"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)
"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
Admission comprising the
Existing Ordinary Shares
and the New Ordinary Shares
assuming no exercise of
any warrants or options
"ENVIA" ENVIA Energy, LLC, a joint
venture between Waste
Management Inc, Ventech
Projects Investments LLC
and the Company
"Ervington" Ervington Investments
Limited
"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 15 January 2018
"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 Appendix II
"Executive Committee" the executive committee
of the Company, comprising
David Pummell (Chief Executive
Officer), Dr Paul Schubert
(Chief Operating Officer),
John Tunison (Interim
Chief Financial Officer)
and Henrik Wareborn (Interim
Chief Commercial Officer)
"Existing Ordinary Shares" the 146,859,819 Ordinary
Shares in issue as at
the date of this document
being the entire issued
share capital of the Company
prior to the Capital Raising
"Firm Placing" the placing of the Firm
Placing Shares at the
Placing Price by Numis,
Canaccord and Other Brokers
as agents for and on behalf
of the Company pursuant
to the terms of the Placing
Agreements.
"Firm Placing Shares" 139,605,000 new Ordinary
Shares to be issued in
connection with the Firm
Placing
"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)
"General Meeting" the general meeting of
the Company to be held
at 10.00 a.m. on 31 January
2018
"Henderson" Janus Henderson Investors
"Joint Broker Placing the conditional agreement
Agreement" dated 15 January 2018
relating to the Capital
Raising, between the Company,
Numis and Canaccord
"Joint Brokers" Numis and Canaccord
"Lansdowne" Lansdowne Partners (UK)
LLP of 15 Davies Street,
London, W1K 3AG
"London Stock Exchange" London Stock Exchange
plc
"Link Asset Services" a trading name of Link
Market Services Limited
"New Ordinary Shares" the Firm Placing Shares
and the Open Offer Shares
"Notice of General Meeting" the notice of General
Meeting
"Numis" Numis Securities Limited,
a private limited company
incorporated in England
& Wales under registered
number 2285918 and having
its registered office
at 10 Paternoster Square,
London EC4M 7LT
"Official List" the Official List of the
UKLA
"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" 44,057,946 new Ordinary
Shares to be issued in
connection with the Placing
and Open Offer
"Ordinary Shares" ordinary shares of 1 penny
each in the capital of
the Company
"Other Brokers" MC Peat & Co LLP, Turner
Pope Investments (TPI)
Limited and Capital Access
Group Limited
"Overseas Shareholders" holders of Ordinary Shares
who are resident in, or
citizens of, countries
outside of the UK
"Placing" the conditional placing
of 44,057,946 new Ordinary
Shares with Henderson
and Lansdowne, subject
to clawback to satisfy
valid acceptances by Eligible
Shareholders under the
Open Offer
"Placing Agreements" the Joint Broker Placing
Agreement and the other
conditional agreements
relating to the Firm Placing
between the Company and
each of the Other Brokers
"Placing Letters" the letters between Numis
and each of Henderson
and Lansdowne relating
to the Placing
"Placing Price" 10 pence per New Ordinary
Share
"Receiving Agent" Link Asset Services, a
trading name of Link Market
Services Limited
"Record Date" 5.00 p.m. on 11 January
2018, being the record
date for the Open Offer
"Registrar" Link Market Services Limited,
a private limited company
incorporated in England
& Wales under registered
number 02605568 and having
its registered office
at The Registry, 34 Beckenham
Road, Beckenham, Kent,
BR3 4TU
"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"
"SMBC" Sumitomo Mitsui Banking
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
"$" the lawful currency of
the United States
"GBP" the lawful currency of
the United Kingdom
GLOSSARY
The terms set out below have the following meanings throughout this document, unless the context requires otherwise.
"EPC" engineer, procurement
and construction
"FEED" front end engineering
design
"FID" final investment decision
"IRR" interest rate of return
"NPV" net present value
"Renewable Identification a renewable identification
Number" or "RIN" number assigned to a batch
of biofuel to track its
production, use and trading
as required by the Renewable
Fuel Standard
"Renewable Transport Fuel the Renewable Transport
Obligation" Fuel Obligation Order
published 5 November 2012
APPIX I
TERMS AND CONDITIONS OF THE PLACING
IMPORTANT INFORMATION ON THE FIRM PLACING FOR INVITED FIRM PLACEES ONLY
THIS ANNOUNCEMENT INCLUDES STATEMENTS, ESTIMATES, OPINIONS AND PROJECTIONS WITH RESPECT TO ANTICIPATED FUTURE PERFORMANCE OF THE GROUP ("FORWARD-LOOKING STATEMENTS") WHICH REFLECT VARIOUS ASSUMPTIONS CONCERNING ANTICIPATED RESULTS TAKEN FROM THE GROUP'S CURRENT BUSINESS PLAN OR FROM PUBLIC SOURCES WHICH MAY OR MAY NOT PROVE TO BE CORRECT. THESE FORWARD LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD LOOKING TERMINOLOGY, INCLUDING THE TERMS "ANTICIPATES", "TARGET", "BELIEVES", "ESTIMATES", "EXPECTS", "INTS", "MAY", "PLANS", "PROJECTS", "SHOULD" OR "WILL", OR, IN EACH CASE, THEIR NEGATIVE OR OTHER VARIATIONS OR COMPARABLE TERMINOLOGY OR BY DISCUSSIONS OF STRATEGY, PLANS, OBJECTIVES, GOALS, FUTURE EVENTS OR INTENTIONS. SUCH FORWARD-LOOKING STATEMENTS REFLECT CURRENT EXPECTATIONS BASED ON THE CURRENT BUSINESS PLAN AND VARIOUS OTHER ASSUMPTIONS AND INVOLVE SIGNIFICANT RISKS AND UNCERTAINTIES AND SHOULD NOT BE READ AS GUARANTEES OF FUTURE PERFORMANCE OR RESULTS AND WILL NOT NECESSARILY BE ACCURATE INDICATIONS OF WHETHER OR NOT SUCH RESULTS WILL BE ACHIEVED. AS A RESULT, PROSPECTIVE INVESTORS SHOULD NOT RELY ON SUCH FORWARD-LOOKING STATEMENTS DUE TO THE INHERENT UNCERTAINTY THEREIN. NO REPRESENTATION OR WARRANTY IS GIVEN AS TO THE COMPLETENESS OR ACCURACY OF THE FORWARD-LOOKING STATEMENTS CONTAINED IN THIS ANNOUNCEMENT. FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE OF SUCH STATEMENTS AND, EXCEPT AS REQUIRED BY THE FCA, THE LONDON STOCK EXCHANGE, THE AIM RULES OR APPLICABLE LAW, THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE PUBLICLY ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE. NO STATEMENT IN THIS ANNOUNCEMENT IS INTED TO BE A PROFIT FORECAST AND NO STATEMENT IN THIS ANNOUNCEMENT SHOULD BE INTERPRETED TO MEAN THAT EARNINGS PER SHARE OF THE COMPANY FOR THE CURRENT OR FUTURE FINANCIAL
YEARS WOULD NECESSARILY MATCH OR EXCEED THE HISTORICAL PUBLISHED EARNINGS PER SHARE OF THE COMPANY.
THIS ANNOUNCEMENT, INCLUDING THE APPIX (TOGETHER THE "ANNOUNCEMENT") 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, AUSTRALIA, NEW ZEALAND, CANADA, JAPAN OR SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE FIRM PLACING. THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT: (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA WHO ARE QUALIFIED INVESTORS AS DEFINED IN SECTION 2(7) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000, AS AMED, ("QUALIFIED INVESTORS") BEING PERSONS FALLING WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE EU PROSPECTUS DIRECTIVE (WHICH MEANS DIRECTIVE 2003/71/EC AND INCLUDES ANY RELEVANT IMPLEMENTING DIRECTIVE MEASURE IN ANY MEMBER STATE) (THE "PROSPECTUS DIRECTIVE"); AND (B) IN THE UNITED KINGDOM, TO QUALIFIED INVESTORS WHO ARE PERSONS WHO (I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(1) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER"); (II) ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC") OF THE ORDER; OR (III) ARE PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS IN (A) OR (B) TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS").
THIS ANNOUNCEMENT DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVENT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. EACH FIRM PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF AN INVESTMENT IN FIRM PLACING SHARES.
In this Appendix, unless the context requires, "Firm Placee" means a Relevant Person (including individuals, funds or others) who has been invited to, and who chooses to, participate in the Firm Placing and by whom or on whose behalf a commitment to subscribe for Firm Placing Shares has been given.
No representation or warranty, express or implied, is made or given by or on behalf of the Company or Canaccord Genuity Limited ("Canaccord") or Numis Securities Ltd ("Numis"), the Company's nominated adviser, or any of their respective affiliates (within the meaning of Rule 405 under the US Securities Act of 1933, as amended (the "Securities Act") or any of such persons' directors, officers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this Announcement and no liability whatsoever is accepted by the Company, Numis, Canaccord or any of such persons' Affiliates, directors, officers or employees or any other person for any loss howsoever arising, directly or indirectly, from any use of such information or opinions or otherwise arising in connection therewith.
This Announcement does not constitute an offer to sell or issue or the solicitation of an offer to buy or subscribe for Firm Placing Shares in any jurisdiction in which such offer or solicitation is or may be unlawful. In particular the Firm Placing Shares referred to in this Announcement have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and will be offered or sold only outside of the United States in accordance with Regulation S under the Securities Act.
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 Firm 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 United States, Australia, New Zealand, Canada, Japan or South Africa. Accordingly, the Firm 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 United States, Australia, New Zealand, Canada, Japan or South Africa or any other jurisdiction outside the United Kingdom.
Persons distributing any part of this Announcement must satisfy themselves that it is lawful to do so. Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this Announcement should seek appropriate advice before taking any action. Persons into whose possession this Announcement comes are required by the Company, Canaccord and Numis to inform themselves about, and observe, any such restrictions.
This Announcement does not constitute a recommendation concerning any investors' options with respect to the Firm Placing. Investors and prospective investors should conduct their own investigation, analysis and evaluation of the business and data described in this Announcement. The price and value of securities can go down as well as up. Past performance is not a guide to future performance. The contents of this Announcement are not to be construed as legal, business, financial or tax advice. Each investor or prospective investor should consult his, her or its own legal adviser, business adviser, financial adviser or tax adviser for legal, financial, business or tax advice.
Firm Placees will be deemed: (i) to have read and understood this Announcement, including this Appendix, in its entirety; and (ii) to be participating and making an offer for Firm Placing Shares on the terms and conditions and to be providing the representations, warranties, acknowledgements and undertakings, contained in this Appendix.
This Announcement does not identify or suggest, or purport to identify or suggest, the risks (direct or indirect) that may be associated with an investment in the Firm Placing Shares. Any investment decision to buy Firm Placing Shares in the Firm Placing must be made solely on the basis of publicly available information, which has not been independently verified by Numis and Canacord.
The Firm Placing Shares to be issued pursuant to the Firm Placing will not be admitted to trading on any stock exchange other than the AIM market of the London Stock Exchange plc.
1. DETAILS OF THE FIRM PLACING
1.1 Numis and Canaccord today entered into an agreement with the Company (the "Joint Broker Placing Agreement"). The Company has also entered into agreements with the Other Brokers (, together with the Joint Broker Placing Agreement, the "Placing Agreements"). Under the Placing Agreements, subject to certain conditions, Numis, Canaccord and the Other Brokers, as agents for and on behalf of the Company, have agreed to use their respective reasonable endeavours to procure Firm Placees for the Firm Placing Shares at the Placing Price. The Firm Placing is not being underwritten by Numis, Canaccord nor the Other Brokers.
1.2 The Firm Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing Ordinary Shares, including the right to receive dividends and other distributions declared or made after the date of issue of the Firm Placing Shares.
1.3 Separately, the Open Offer Shares have been conditionally placed with two of the Company's existing shareholders, Henderson and Lansdowne, subject to clawback to satisfy valid acceptances by Eligible Shareholders under the Placing and Open Offer.
2. APPLICATIONS FOR ADMISSION TO TRADING
2.1 Application will be made to the London Stock Exchange for admission to trading of the Firm Placing Shares on its AIM market ("Application").
2.2 It is expected that Admission will become effective at 8.00 a.m. on 1 February 2018 ("Admission") and that dealings in the Firm Placing Shares will commence at that time.
3. PARTICIPATION IN, AND PRINCIPAL TERMS OF THE FIRM PLACING
3.1 Numis and Canaccord are acting as joint brokers and as agents for the Company in connection with the Firm Placing, Application and Admission. Numis and Canaccord are each authorised and regulated in the United Kingdom by the FCA, and are each acting exclusively for the Company and no one else in connection with the matters referred to in this Announcement and will not be responsible to anyone other than the Company for providing the protections afforded to the customers of Numis and Canaccord or for providing advice in relation to the matters described in this Announcement.
3.2 Participation in the Firm Placing is only available to persons who may lawfully be, and are invited to participate in it by Numis and Canaccord. Numis and Canaccord and their respective Affiliates are each entitled to participate in the Firm Placing as principals.
3.3 The placing price will be a fixed price of 10 pence per Firm Placing Share (the "Placing Price"). No commissions will be paid to Firm Placees or by the Firm Placees in respect of any Firm Placing Shares.
3.4 Each prospective Firm Placee's allocation of Firm Placing Shares will be confirmed to prospective Firm Placees orally by Numis, Canaccord or one of their respective Affiliates, and a contract note will be dispatched as soon as practicable thereafter as evidence of such Firm Placee's allocation and commitment. The terms and conditions of this Appendix will be deemed incorporated into the contract note. That oral confirmation will constitute an irrevocable legally binding commitment upon that person (who at that point will become a Firm Placee) in favour of the Company and Numis or Canaccord (as applicable) to subscribe for the number of Firm Placing Shares allocated to it at the Placing Price on the terms and conditions set out in this Appendix and in accordance with the Company's articles of association and each Firm Placee will be deemed to have read and understood the announcement in its entirety. An offer to acquire Firm Placing Shares, which has been communicated by a prospective Firm Placee to Numis or Canaccord (as applicable) which has not been withdrawn or revoked prior to publication of this Announcement shall not be capable of withdrawal or revocation immediately following the publication of this Announcement without the consent of Numis or Canaccord (as applicable).
3.5 Each Firm Placee will also have an immediate, separate, irrevocable and binding obligation, owed to Numis or Canaccord, as applicable (as agents of the Company), to pay the relevant entity (or as it may direct) in cleared funds immediately on settlement an amount equal to the product of the Placing Price and the number of Firm Placing Shares such Firm Placee has agreed to subscribe for and the Company has agreed to allot and issue to that Firm Placee. Each Firm Placee's obligation will be owed to the Company and to Numis or Canaccord, as applicable.
3.6 Irrespective of the time at which a Firm Placee's allocation pursuant to the Firm Placing is confirmed, settlement for all Firm Placing Shares to be subscribed for pursuant to the Firm Placing will be required to be made at the same time, on the basis explained below under "Registration and Settlement".
3.7 All obligations under the Firm Placing will be subject to fulfilment of the conditions referred to below under "Conditions of the Firm Placing" and to the Firm Placing not being terminated on the basis referred to below under "Termination of the Joint Broker Placing Agreement".
3.8 By participating in the Firm Placing, each Firm Placee will agree that its rights and obligations in respect of the Firm Placing will terminate only in the circumstances described below and will not be capable of rescission or termination by the Firm Placee.
3.9 To the fullest extent permitted by law and applicable FCA rules, neither (i) Numis, (ii) any of its directors, officers, employees or consultants, or (iii) to the extent not contained with (i) or (ii), any person connected with Numis as defined in FSMA ((i), (ii) and (iii) being together "Affiliates" and individually an "Affiliate"), shall have any liability (including to the extent permissible by law, any fiduciary duties) to Firm Placees or to any person other than the Company in respect of the Firm Placing.
3.10 To the fullest extent permitted by law and applicable FCA rules, neither (i) Canaccord, (ii) any of its directors, officers, employees or consultants, or (iii) to the extent not contained with (i) or (ii), any Affiliate of Canaccord), shall have any liability (including to the extent permissible by law, any fiduciary duties) to Firm Placees or to any person other than the Company in respect of the Firm Placing.
3.11 No commissions will be paid to Firm Placees or by the Firm Placees in respect of any Firm Placing Shares.
4. CONDITIONS OF THE FIRM PLACING
4.1 Numis' and Canaccord's obligations under the Joint Broker Placing Agreement in respect of the Firm Placing Shares are conditional on, amongst other things:
(a) none of the warranties in the Joint Broker Placing Agreement (i) being untrue and inaccurate or misleading to an extent which, in any such case, would be material, or (ii) on and as of the date of the Joint Broker Placing Agreement and again at Admission becoming untrue, inaccurate or misleading to an extent which, in any such case, would be material by reference to the facts and circumstances then subsisting;
(b) the Company allotting, subject only to Admission, the Firm Placing Shares in accordance with the Joint Broker Placing Agreement;
(c) certain publication of announcement obligations (including with respect to this Announcement);
(d) the compliance by the Company with all its obligations which are required to be performed or satisfied on or prior to Admission;
(e) the respective obligations of Numis and Canaccord under the Joint Broker Placing Agreement not having been terminated prior to Admission; and
(f) Admission occurring by 8:00am on 1 February 2018 (or such later time and date as Numis and Canaccord (acting together) may agree in unity with the Company not being later than 8:00 a.m. on 15 February 2018).
4.2 If (i) any condition contained in the Joint Broker Placing Agreement in relation to the Firm Placing Shares is not fulfilled or waived by Numis and Canaccord (acting together), by the respective time or date where specified (or such later time or date as Numis and Canaccord may agree in writing with the Company), (ii) any such condition becomes incapable of being fulfilled or (iii) the Joint Broker Placing Agreement is terminated in accordance with its terms, the Firm Placing will not proceed and the Firm Placee's rights and obligations hereunder in relation to the Firm Placing Shares shall cease and terminate at such time and each Firm Placee agrees that no claim can be made by the Firm Placee in respect thereof.
4.3 Numis and Canaccord may, acting together and in their sole discretion and upon such terms as they think fit, waive compliance by the Company with the whole or any part of any of the Company's obligations in relation to the conditions in the Joint Broker Placing Agreement, save that conditions (b) and (f) above relating to Admission may not be waived. Any such extension or waiver will not affect the Firm Placees' commitments as set out in this Announcement.
4.4 Neither Numis nor Canaccord nor the Company shall have any liability to any Firm Placee (or to any other person whether acting on behalf of a Firm 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 the date for the satisfaction of any condition to the Firm Placing nor for any decision they may make as to the satisfaction of any condition or in respect of the Firm Placing generally, and by participating in the Firm Placing each Firm Placee agrees that any such decision is within the absolute discretion of Numis and Canaccord (acting together).
5. TERMINATION OF THE JOINT BROKER PLACING AGREEMENT
5.1 Numis and Canaccord (acting together) are entitled, at any time prior to Admission, to terminate the Joint Broker Placing Agreement in respect of the Firm Placing Shares in accordance with the terms of the Joint Broker Placing Agreement by giving written notice to the Company in certain circumstances, including but not limited to if any of the warranties given to Numis and Canaccord in the Joint Broker Placing Agreement, which Numis and Canaccord (acting together) being untrue, inaccurate or misleading in any material respect, the failure of the Company to comply with its material obligations under the Joint Broker Placing Agreement or the occurrence of a force majeure event which prevents any party not seeking to terminate from performing its obligations under the Joint Broker Placing Agreement.
5.2 By participating in the Firm Placing, Firm Placees agree that the exercise by Numis and Canaccord of any right of termination or other discretion under the Joint Broker Placing Agreement shall be within the absolute discretion of Numis and Canaccord (acting together) that it need not make any reference to Firm Placees and that none of Numis, Canaccord or the Company (or any of their respective directors, officers or employees) shall have any liability to Firm Placees whatsoever in connection with any such exercise.
6. NO ADMISSION DOCUMENT OR PROSPECTUS
6.1 No offering document, admission document or prospectus has been or will be submitted to be approved by the FCA or submitted to the London Stock Exchange in relation to the Firm Placing or the Firm Placing Shares and Firm Placees' commitments will be made solely on the basis of the information contained in this Announcement (including this Appendix) and the Exchange Information (as defined below).
6.2 Each Firm Placee, by accepting a participation in the Firm Placing, agrees that the content of this Announcement is exclusively the responsibility of the Company and confirms that it has neither received nor relied on any other information (other than the Exchange Information), representation, warranty, or statement made by or on behalf of the Company or Numis or Canaccord or any other person and neither Numis nor Canaccord nor the Company nor any other person will be liable for any Firm Placee's decision to participate in the Firm Placing based on any other information, representation, warranty or statement which the Firm Placees may have obtained or received. Each Firm 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 Firm Placing. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.
7. REGISTRATION AND SETTLEMENT
7.1 Settlement of transactions in the Firm Placing Shares (ISIN: GB00B11SZ269) following Admission will take place within the system administered by Euroclear UK & Ireland Limited ("CREST"), subject to certain exceptions. Numis and Canaccord reserve the right to require settlement for, and delivery of, the Firm Placing Shares (or a portion thereof) to Firm Placees in certificated form if, in their opinion, delivery or settlement is not possible or practicable within the CREST system within the timetable set out in this Announcement or would not be consistent with the regulatory requirements in any Firm Placee's jurisdiction.
7.2 Each Firm Placee allocated Firm Placing Shares in the Firm Placing will be sent a contract note in accordance with the standing arrangements in place with Numis or Canaccord (as applicable), stating the number of Firm Placing Shares allocated to it at the Placing Price, the aggregate amount owed by such Firm Placee to Numis or Canaccord (as applicable) and settlement instructions. Each Firm Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with either the standing CREST or certificated settlement instructions that it has in place with Numis or Canaccord (as applicable).
7.3 The Company will (via its registrar) deliver the Firm Placing Shares to a CREST account operated by Numis or Canaccord (as applicable) as agent for the Company and Numis or Canaccord (as applicable) will enter its delivery (DEL) instruction into the CREST system. Numis or Canaccord (as applicable) will hold any Firm Placing Shares delivered to this account as nominee for the Firm Placees. The input to CREST by a Firm Placee of a matching or acceptance instruction will then allow delivery of the relevant Firm Placing Shares to that Firm Placee against payment.
7.4 It is expected that settlement will take place on 1 February 2018 in accordance with the instructions set out in the contract note.
7.5 Interest is chargeable daily on payments not received from Firm Placees on the due date in accordance with the arrangements set out above at the rate of two percentage points above the base rate of Barclays Bank plc from time to time.
7.6 Each Firm Placee agrees that, if it does not comply with these obligations, Numis or Canaccord (as applicable) may sell any or all of the Firm Placing Shares allocated to that Firm Placee on such Firm Placee's behalf and retain from the proceeds, for Numis' or Canaccord's account and benefit (as applicable), an amount equal to the aggregate amount owed by the Firm Placee plus any interest due. The relevant Firm Placee will, however, remain liable for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties) which may arise upon the sale of such Firm Placing Shares on such Firm Placee's behalf.
7.7 If Firm Placing Shares are to be delivered to a custodian or settlement agent, Firm Placees should ensure that the contract note is copied and delivered immediately to the relevant person within that organisation.
7.8 Insofar as Firm Placing Shares are registered in a Firm Placee's name or that of its nominee or in the name of any person for whom a Firm Placee is contracting as agent or that of a nominee for such person, such Firm Placing Shares should, subject as provided below, be so registered free from any liability to UK stamp duty or stamp duty reserve tax.
7.9 Firm Placees will not be entitled to receive any fee or commission in connection with the Firm Placing.
8. REPRESENTATIONS AND WARRANTIES
8.1 By participating in the Firm Placing, each Firm Placee (and any person acting on such Firm Placee's behalf) irrevocably acknowledges, undertakes, represents, warrants and agrees (as the case may be) that:
(a) it has read and understood this Announcement (including the Appendix) in its entirety and its subscription for the Firm Placing Shares is subject to and based on the terms and conditions of the Firm Placing as referred to and included in this Announcement and undertakes not to redistribute or duplicate this Announcement;
(b) no offering document, admission document or prospectus has been prepared in connection with the Firm Placing and that it has not received and will not receive a prospectus, admission document or other offering document in connection with the Firm Placing;
(c) the Ordinary Shares are admitted to trading on AIM, and the Company is therefore required to publish certain business and financial information in accordance with the AIM Rules and the other applicable rules and practices of the London Stock Exchange and/or the FCA (collectively "Exchange Information"), which includes the Company's most recent balance sheet and profit and loss account and that it is able to obtain or access such information or comparable information concerning any other publicly traded company without undue difficulty;
(d) (i) it has made its own assessment of the Company, the Firm Placing Shares and the terms and conditions of the Firm Placing and has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Firm Placing and has satisfied itself that the information is still current; (ii) none of Numis, Canaccord, the Company, any of their respective Affiliates or any person acting on behalf of any of them has provided, or will provide it, with any material regarding the Firm Placing Shares in addition to this Announcement; and (iii) it has not requested Numis, Canaccord, the Company or any of their respective Affiliates or any person acting on behalf of any of them to provide it with any such information;
(e) the content of this Announcement is exclusively the responsibility of the Company and that none of Numis, Canaccord, 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 or any information previously or concurrently published by or on behalf of the Company and will not be liable for any Firm Placee's decision to participate in the Firm Placing based on any information, representation or statement contained in this Announcement or elsewhere;
(f) the only information on which it has relied in committing itself to subscribe for the Firm Placing Shares is contained in this Announcement and any Exchange Information and that it has not received or relied on any information given or any representations, warranties or statements, express or implied, made by Numis, Canaccord or the Company or any of their Affiliates or any person acting on behalf of any of them and none of Numis, Canaccord, the Company, any of their Affiliates or any person acting on behalf of any of them will be liable for its decision to accept an invitation to participate in the Firm Placing based on any information, representation, warranty or statement other than that contained in this Announcement and any Exchange Information;
(g) it has neither received nor relied on any "inside information" as defined in the EU Market Abuse Regulation 596/2014 concerning the Company in accepting this invitation to participate in the Firm Placing and is not purchasing Firm Placing Shares on the basis of "inside information";
(h) it has the funds available to pay for the Firm Placing Shares it has agreed to subscribe for and acknowledges, agrees and undertakes that it will pay the total subscription amount in accordance with the terms of this Announcement on the due time and date set out herein, failing which the relevant Firm Placing Shares may be placed with other Firm Placees or sold at such price as Numis or Canaccord (as applicable) determines;
(i) it: (i) is entitled to subscribe for the Firm Placing Shares under the laws of all relevant jurisdictions; (ii) has fully observed such laws; (iii) has the requisite capacity and authority and is entitled to enter into and to perform its obligations as a subscriber for Firm Placing Shares and will honour such obligations; and (iv) has obtained all necessary consents and authorities (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) to enable it to enter into the transactions contemplated hereby and to perform its obligations in relation thereto and, in particular, if it is a pension fund or investment company it is aware of and acknowledges it is required to comply with all applicable laws and regulations with respect to its subscription for Firm Placing Shares;
(j) it is not, and any person who it is acting on behalf of is not, and at the time the Firm Placing Shares are subscribed will not be, a resident of, or with an address in, the United States, Australia, New Zealand, Canada, Japan or South Africa, and it acknowledges and agrees that the Firm Placing Shares have not been and will not be registered or otherwise qualified under the securities legislation of the United States, Australia, New Zealand, Canada, Japan or South Africa and may not be offered, sold, or acquired, directly or indirectly, within those jurisdictions
(k) (i) the Firm Placing Shares have not been and will not be registered under the Securities Act or with any state or other jurisdiction of the United States, nor approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the United States or any other United States regulatory authority, (ii) it will not offer, sell or deliver, directly or indirectly, any Firm Placing Shares in or into the United States other than pursuant to an effective registration under the Securities Act or in a transaction exempt from, or not subject to, the registration requirements thereunder and in compliance with any applicable securities laws of any state or other jurisdiction of the United States, and (iii) it is outside of the United States, not acting on a non-discretionary basis for the account or benefit of a person located within the United States at the time the undertaking to acquire the Firm Placing Shares is given and is otherwise acquiring the Firm Placing Shares in an "offshore transaction" meeting the requirements of Regulation S under the Securities Act;
(l) it is a person of a kind described in (i) Article 19(5) (Investment Professionals) and/or 49(2) (high net worth companies etc.) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended, and/or an authorised person as defined in section 31 of FSMA; and (ii) section 86(7) of FSMA ("Qualified Investor"), being a person falling within Article 2.1(e) of Directive 2003/71/EC as amended (the "Prospectus Directive"). For such purposes, it undertakes that it will acquire, hold, manage and (if applicable) dispose of any Firm Placing Shares that are allocated to it for the purposes of its business only;
(m) if a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, that the Firm Placing Shares purchased by it in the Firm 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 European Economic Area which has implemented the Prospectus Directive other than Qualified Investors, or in circumstances in which the prior consent of Numis and Canaccord has been given to the offer or resale;
(n) 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 FSMA) relating to the Firm Placing Shares in circumstances in which section 21(1) of FSMA does not require approval of the communication by an authorised person and it acknowledges and agrees that this Announcement has not been approved by Numis or Canaccord in their capacity as an authorised person under section 21 of FSMA and it may not therefore be subject to the controls which would apply if it was made or approved as financial promotion by an authorised person;
(o) it is aware of and acknowledges that it has complied with and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the Firm Placing Shares in, from or otherwise involving, the United Kingdom;
(p) it will not make any offer to the public of the Firm Placing Shares and has not offered or sold and will not offer or sell any Firm Placing Shares to persons in the United Kingdom or elsewhere in the European Economic Area 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 the United Kingdom within the meaning of section 85(1) of FSMA or an offer to the public in any other member state of the European Economic Area within the meaning of the Prospectus Directive (which includes any relevant implementing measure in any Member State of the European Economic Area);
(q) it has not been engaged to subscribe for the Firm Placing Shares on behalf of any other person who is not a Qualified Investor unless the terms on which it is engaged enable it to make decisions concerning the acceptance of offers of transferable securities on the client's behalf without reference to the client as described in section 86(2) of FSMA;
(r) it is aware of and acknowledges that it is required to comply, and does and will comply, with its obligations under the Criminal Justice Act 1993 and the EU Market Abuse Regulation 596/2014 in connection with money laundering and terrorist financing under the Proceeds of Crime Act 2002, the Terrorism Act 2000, the Terrorism Act 2006 and the Money Laundering Regulations 2017 and the Money Laundering Sourcebook of the FCA (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;
(s) it is aware of the obligations regarding insider dealing in the Criminal Justice Act 1993, with all applicable provisions of FSMA, the EU Market Abuse Regulation 596/2014 and the Proceeds of Crime Act 2002 and confirms that it has and will continue to comply with those obligations;
(t) the allocation, allotment, issue and delivery to it, or the person specified by it for registration as a holder of Firm Placing Shares, will not give rise to a stamp duty or stamp duty reserve tax liability under any of sections 67, 70, 93 or 96 of the Finance Act 1986 (depositary receipts and clearance services) and that no instrument under which it subscribes for Firm Placing Shares (whether as principal, agent or nominee) would be subject to stamp duty or the increased rates referred to in those sections and that it, or the person specified by it for registration as a holder of Firm Placing Shares, is not participating in the Firm Placing as nominee or agent for any person or persons to whom the allocation, allotment, issue or delivery of Firm Placing Shares would give rise to such a liability;
(u) it, or the person specified by it for registration as a holder of the Firm Placing Shares, 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), if any, payable on acquisition of any of the Firm Placing Shares or the agreement to subscribe for the Firm Placing Shares and acknowledges and agrees that none of Numis, Canaccord the Company, any of their respective Affiliates or any person acting on behalf of them will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement. Each Firm Placee and any person acting on behalf of such Firm Placee agrees to participate in the Firm Placing, and agrees to indemnify the Company, Canaccord and Numis on an after tax basis in respect of the same, on the basis that the Firm Placing Shares will be allotted to the CREST stock account of Numis or Canaccord (as applicable) who will hold them as nominee on behalf of such Firm Placee until settlement in accordance with its standing settlement instructions;
(v) none of Numis, Canaccord any of their Affiliates or any person acting on behalf of any of them has or shall have any liability for any information, representation or statement contained in this Announcement or for any information previously published by or on behalf of the Company or any other written or oral information made available to or publicly available or filed information or any representation, warranty or undertaking relating to the Company, and will not be liable for its decision to participate in the Firm Placing based on any information, representation, warranty or statement contained in this Announcement or elsewhere, provided that nothing in this paragraph shall exclude any liability of any person for fraud;
(w) none of Numis, Canaccord any of their 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 Firm Placing and that its participation in the Firm Placing is on the basis that it is not and will not be a client of Numis or Canaccord and that Numis and Canaccord have no duties or responsibilities to it for providing the protections afforded to its clients or customers under the rules of the FCA, for providing advice in relation to the Firm Placing, in respect of any representations, warranties, undertakings or indemnities contained in the Joint Broker Placing Agreement or for the exercise or performance of any of its rights and obligations thereunder, including any rights to waive or vary any conditions or exercise any termination right;
(x) in order to ensure compliance with the Money Laundering Regulations 2017, Numis and Canaccord (for themselves and as agents on behalf of the Company) or the Company's registrars may, in their absolute discretion, require verification of its identity. Pending the provision to Numis, Canaccord or the Company's registrars, as applicable, of evidence of identity, definitive certificates in respect of the Firm Placing Shares may be retained at Numis' and Canaccord's absolute discretion or, where appropriate, delivery of the Firm Placing Shares to it in uncertificated form, may be retained at Numis' or Canaccord's or the Company's registrars', as the case may be, absolute discretion. If within a reasonable time after a request for verification of identity Numis or Canaccord (as applicable) (for itself and as agent on behalf of the Company) or the Company's registrars have not received evidence satisfactory to them, Numis or Canaccord and/or the Company may, at its absolute discretion, terminate its commitment in respect of the Firm Placing, in which event the monies payable on acceptance of allotment will, if
already paid, be returned without interest to the account of the drawee's bank from which they were originally debited;
(y) Numis and Canaccord may, and their Affiliates acting as an investor for its or their own account(s) may, subscribe for and/or purchase Firm Placing Shares and, in that capacity may retain, purchase, offer to sell or otherwise deal for its or their own account(s) in the Firm Placing Shares, any other securities of the Company or other related investments in connection with the Firm Placing or otherwise. Accordingly, references in this Announcement to the Firm Placing Shares being offered, subscribed, acquired or otherwise dealt with should be read as including any offer to, or subscription, acquisition or dealing by, Numis, Canaccord and/or any of their respective Affiliates acting as an investor for its or their own account(s). Neither Numis nor Canaccord nor the Company intend to disclose the extent of any such investment or transaction otherwise than in accordance with any legal or regulatory obligation to do so;
(z) these terms and conditions and any agreements entered into by it pursuant to these terms and conditions, and all non-contractual or other obligations arising out of or in connection with them, shall be governed by and construed in accordance with the laws of England and Wales 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 arising out of any such contract, except that enforcement proceedings in respect of the obligation to make payment for the Firm Placing Shares (together with any interest chargeable thereon) may be taken by the Company, Canaccord or Numis in any jurisdiction in which the relevant Firm Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange;
(aa) the Company, Canaccord and Numis and their respective Affiliates and others will rely upon the truth and accuracy of the foregoing agreements, acknowledgements, representations, warranties and undertakings which are given to Numis and Canaccord, on their own behalf and on behalf of the Company, and are irrevocable;
(bb) it irrevocably appoints any duly authorised officer of Numis or Canaccord as agent for the purpose of executing and delivering to the Company and/or its registrars any documents on its behalf necessary to enable it to be registered as the holder of any of the Firm Placing Shares for which it agrees to subscribe or purchase upon the terms of this Announcement;
(cc) it will indemnify on an after tax basis and hold the Company, Numis, Canaccord 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, undertakings, agreements and acknowledgements in this Appendix and further agrees that the provisions of this Appendix shall survive after completion of the Firm Placing;
(dd) it has knowledge and experience in financial, business and international investment matters and is required to evaluate the merits and risks of subscribing for the Firm Placing Shares; (ii) it is experienced in investing in securities of this nature and is aware that it may be required to bear, and is able to bear, the economic risk of, and is able to sustain a complete loss in connection with the Firm Placing; and (iii) 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 Firm Placing, including the merits and risks involved and has satisfied itself concerning the relevant tax, legal, currency and other economic consideration relevant to its subscription for Firm Placing Shares;
(ee) none of the Company, Numis or Canaccord are making any undertaking or warranty to any Firm Placee regarding the legality of an investment in the Firm Placing Shares by such Firm Placee under any legal, investment or similar laws or regulations; and
(ff) its commitment to subscribe for Firm Placing Shares on the terms set out herein and in the contract note will continue notwithstanding any amendment that may in future be made to the terms of the Firm Placing and that Firm Placees will have no right to be consulted or require that their consent be obtained with respect to the Company's conduct of the Firm Placing.
8.2 The representations, warranties, acknowledgements and undertakings contained in this Appendix are given to the Company, and to Numis and Canaccord for themselves and on behalf of the Company and are irrevocable.
8.3 The agreement to settle a Firm Placee's subscription (and/or the subscription of a person for whom such Firm 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 Firm Placing Shares in question. Such agreement assumes that the Firm Placing Shares are not being subscribed for in connection with arrangements to issue depositary receipts or to transfer the Firm Placing Shares into a clearance service. If there are any such arrangements, or the settlement relates to any other subsequent dealing in the Firm Placing Shares, UK stamp duty or stamp duty reserve tax may be payable, for which neither the Company nor Numis nor Canaccord will be responsible, and the Firm Placee to whom (or on behalf of whom, or in respect of the person for whom it is participating in the Firm Placing as an agent or nominee) the allocation, allotment, issue or delivery of Firm 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 Numis and Canaccord in the event that any of the Company and/or Numis and/or Canaccord have incurred any such liability to UK stamp duty or stamp duty reserve tax. If this is the case, each Firm Placee should seek its own advice and notify Numis and Canaccord accordingly.
8.4 In addition, Firm 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 United Kingdom by them or any other person on the subscription by them of any Firm Placing Shares or the agreement by them to subscribe for any Firm Placing Shares.
8.5 Each Firm Placee, and any person acting on behalf of the Firm Placee, acknowledges and agrees that neither Numis nor Canaccord owe any fiduciary or other duties to any Firm Placee in respect of any representations, warranties, undertakings or indemnities in the Joint Broker Placing Agreement.
8.6 Each Firm Placee and any person acting on behalf of each Firm Placee, acknowledges and agrees that Numis, Canaccord nor any of their Affiliates may, at their absolute discretion, agree to become a Firm Placee in respect of some or all of the Firm Placing Shares.
8.7 When a Firm Placee or person acting on behalf of the Firm Placee is dealing with Numis or Canaccord, any money held in an account with Numis or Canaccord (as applicable) on behalf of the Firm Placee and/or any person acting on behalf of the Firm Placee will not be treated as client money within the meaning of the rules and regulations of the FCA made under FSMA. The Firm Placee acknowledges and agrees 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 Numis' or Canaccord's money (as applicable) in accordance with the client money rules and will be used by Numis or Canaccord in the course of its own business; and the Firm Placee will rank only as a general creditor of Numis or Canaccord (as applicable).
8.8 Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.
8.9 Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this Announcement.
8.10 All times and dates in this Announcement may be subject to amendment. Numis and Canaccord shall notify the Firm Placees and any person acting on behalf of a Firm Placee of any changes.
DEFINITIONS
The following definitions apply throughout this Announcement unless the context otherwise requires:
"Admission" - admission of the New Ordinary Shares to trading on AIM becoming effective in accordance with Rule 6 of the AIM Rules
"AIM " - the market of that name operated by the London Stock Exchange
"AIM Rules" - the AIM Rules for Companies published by the London Stock Exchange as they may be amended and replaced from time to time
"Announcement" - this announcement (including the Appendix to this announcement)
"Canaccord" - Canaccord Genuity Limited, a company incorporated in England and Wales, with registered number 01774003, whose registered office is at 88 Wood Street, London EC2V 7QR
"Company" - Velocys plc, a public limited company incorporated in England & Wales under registered number 05712187 and having its registered office at Harwell Innovation Centre, 173 Curie Avenue, Harwell, Oxfordshire, England, OX11 0QG
"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)
"FCA" - the Financial Conduct Authority
"Firm Placing" - the placing of the Firm Placing Shares at the Placing Price by Numis, Canaccord and Other Brokers as agents for and on behalf of the Company pursuant to the terms of the Placing Agreements
"Firm Placing Shares" - 139,605,000 new Ordinary Shares to be issued in connection with the Firm Placing
"FSMA" - the Financial Services and Markets Act of 2000 (as amended)
"Group" - the Company and its subsidiary undertakings prior to completion of the Acquisition
"Joint Broker Placing Agreement" - the conditional agreement dated 15 January 2018 relating to the Capital Raising, between the Company, Numis and Canaccord
"London Stock Exchange" - London Stock Exchange plc
"Numis" - Numis Securities Limited, a private limited company incorporated in England & Wales under registered number 2285918 and having its registered office at 10 Paternoster Square, London EC4M 7LT
"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 Shares" - 44,057,946 new Ordinary Shares to be issued in connection with the Placing and Open Offer
"Ordinary Shares" - ordinary shares of 1 penny each in the capital of the Company
"Other Brokers" - MC Peat & Co LLP, Turner Pope Investments (TPI) Limited and Capital Access Group Limited
"Placing" - the conditional placing of 44,057,946 new Ordinary Shares with Henderson and Lansdowne, subject to clawback to satisfy valid acceptances by Eligible Shareholders under the Open Offer
"Placing Agreements" - the Joint Broker Placing Agreement and the other conditional agreements relating to the Firm Placing between the Company and each of the Other Brokers
"Placing Price" - 10 pence per new Ordinary Share
"Prospectus Directive" - the Directive of the European Parliament and of the Council of the European Union 2003/71/EC, as amended
"Regulations" - the UK Uncertificated Securities Regulations 2001 (SI 2001 No. 3755), as amended
"Securities Act" - the United States Securities Act of 1933, as amended
"UK" or "United Kingdom" - the United Kingdom of Great Britain and Northern Ireland
"United States" or "US" - United States of America, its territories and possessions, any state of the United States of America and the District of Columbia and all other areas subject to its jurisdiction
APPIX II
TERMS AND CONDITIONS OF THE OPEN OFFER
1. Introduction
The Company invites Eligible Shareholders to apply, on and subject to the terms and conditions set out in the Circular and in the Application Form, and subject to the Articles of the Company, for Open Offer Shares at the Placing Price, free from all expenses, payable in cash in full on application. Subject to certain minimum subscriptions set out below, Eligible Shareholders are being given the opportunity to subscribe for their Basic Entitlement at the Placing Price payable in full on application and free of all expenses, pro rata to their existing shareholdings.
In addition to their Basic Entitlement, but only where they have exercised their Basic Entitlement in full, Eligible Shareholders are invited to subscribe for such Excess Entitlement at the Placing Price, free from all expenses, payable in cash in full on application as they may choose.
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 Excess Entitlements at the sole discretion of the Board, provided that no Eligible Shareholder shall be required to subscribe for more Open Offer Shares than he or she has specified on the Application Form or through CREST.
Only Eligible Shareholders, which means only Shareholders who are resident in the UK, will be eligible to make an application for Open Offer Shares. Shareholders domiciled in any other territory, including any other EEA member state, will not be permitted to apply for any Open Offer Shares.
The Open Offer Shares have been conditionally placed with two of the Company's existing Shareholders, Henderson and Lansdowne, subject to clawback to satisfy valid acceptances by Eligible Shareholders under the Open Offer. Henderson and Lansdowne have agreed under the terms of the Placing Letters to subscribe for the maximum number of Open Offer Shares at the Placing Price, subject to clawback, on an equal basis.
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 EUR5 million. This maximum limit has been set to ensure 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 UKLA. Based on a GBP:EUR exchange rate of 1.1233, this means that the maximum amount which could be raised under the Open Offer is GBP4,451,171. The Company is proposing to raise GBP4.4 million (before expenses) by way of the Open Offer.
The Placing Price represents a discount of approximately 63.3 per cent. to the closing mid-market price of 27.25 pence per Existing Ordinary Share on 12 January 2018.
The Open Offer Shares will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares and the Firm Placing Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue. The allotment and issue of the Open Offer Shares will be made upon and be subject to the terms and conditions set out in the Circular and in the Application Form.
Application will be made to the London Stock Exchange for the Open Offer Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings in the Open Offer Shares will commence on AIM at 8.00 a.m. on 1 February 2018.
If an Eligible Shareholder does not wish to apply for Open Offer Shares he should not complete or return the Application Form.
A maximum number of 44,057,946 Open Offer Shares will be offered to Eligible Shareholders as part of the Open Offer. In no circumstances will more than this number of Ordinary Shares be issued pursuant to the Open Offer, even if the Open Offer is over subscribed.
2. Principal terms and conditions of the Open Offer
Eligible Shareholders are being given the opportunity to subscribe for their Basic Entitlement at the Placing Price payable in full on application and free of all expenses, pro rata to their existing shareholdings on the basis of:
3 Open Offer Shares for every 10 Existing Ordinary Shares
held at the Record Date. Basic Entitlement will be rounded down to the nearest whole number of shares, Fractional entitlements which would have otherwise arisen will not be issued, but will be aggregated and made available under the excess application facility.
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 Excess Entitlements at the sole discretion of the Board, provided that no Eligible Shareholder shall be required to subscribe for more Open Offer Shares than he or she has specified on the Application Form or through CREST.
Eligible Shareholders may apply for, on and subject to the terms and conditions set out in the Circular and in the accompanying Application Form, any whole number of Open Offer Shares at the Placing Price subject to the minimum subscription of GBP100 and thereafter in multiples of GBP100.
Only Eligible Shareholders, which means only Shareholders who are resident in the UK, will be eligible to make an application for Open Offer Shares. Shareholders domiciled in any other territory, including any other EEA member state, will not be permitted to apply for any Open Offer Shares.
Eligible Shareholders should be aware that the Open Offer is not a rights issue and the Application Form is not a negotiable document and cannot be traded. Applications for Open Offer Shares may only be made by the Eligible Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim. Open Offer Shares not applied for under the Open Offer will not be sold in the market for the benefit of those who do not apply under the Open Offer and Eligible Shareholders who do not apply to take up Open Offer Shares will have no rights under the Open Offer.
The Open Offer Shares have been conditionally placed with two of the Company's existing Shareholders, Henderson and Lansdowne, subject to clawback to satisfy valid acceptances by Eligible Shareholders under the Open Offer. Henderson and Lansdowne have agreed under the terms of the Placing Letters to subscribe for the maximum number of Open Offer Shares at the Placing Price, subject to clawback, on an equal basis.
3. Conditions and further terms of the Open Offer
The Open Offer is conditional on:
(a) the Resolutions being passed at the General Meeting; and
(b) the Joint Broker Placing Agreement becoming unconditional in all respects, save for any condition relating to Admission of the Open Offer Shares.
Accordingly, if these conditions are not satisfied or waived (where capable of waiver), the Open Offer will not proceed and any applications made by Eligible Shareholders will be rejected. In such circumstances, application monies will be returned (at the applicant's sole risk), without payment of interest, as soon as practicable thereafter.
No temporary documents of title will be issued in respect of the Open Offer Shares held in uncertificated form. Definitive certificates in respect of Open Offer Shares taken up are expected to be posted to those Eligible Shareholders who have validly elected to hold their Open Offer Shares in certificated form by 8 February 2018. In respect of those Eligible Shareholders who have validly elected to hold their Open Offer Shares in uncertificated form, the Open Offer Shares are expected to be credited to their stock accounts maintained in CREST by as soon as possible after 8.00 a.m. on 1 February 2018.
All monies received by the Receiving Agent in respect of Open Offer Shares will be credited to a non-interest bearing account by the Receiving Agent.
If for any reason it becomes necessary to adjust the expected timetable as set out in the Circular, the Company will make an appropriate announcement to a Regulatory Information Service giving details of the revised dates.
4. Procedure for Application and Payment
The action to be taken by you in respect of the Open Offer depends on whether, at the relevant time, you have an Application Form in respect of the Open Offer or you have Open Offer Entitlements credited to your CREST stock account.
Eligible Shareholders who hold all their Existing Ordinary Shares in certificated form will receive a personalised Application Form. The Application Form will show the number of Ordinary Shares held at the Record Date. It will also show Eligible Shareholders their Basic Entitlement and the total number of Open Offer Shares available under their Open Offer Entitlement that can be allotted in certificated form. Eligible Shareholders who hold all their Existing Ordinary Shares in CREST will be allotted Open Offer Shares in CREST. Eligible Shareholders who hold Existing Ordinary Shares partly in certificated and partly in uncertificated form will be treated as having separate holdings for the purpose of calculating their Basic Entitlement. It will be possible for Eligible Shareholders to deposit Open Offer Entitlements into, and withdraw them from, CREST.
Eligible Shareholders who do not wish to apply for any Open Offer Shares under the Open Offer should not complete or return the Application Form or submit a USE message through CREST. Eligible Shareholders who hold their Ordinary Shares through a nominee and who wish to apply for Open Offer Shares must contact their nominee as such Eligible Shareholders will not be able to apply for Open Offer Shares directly using the Application Form.
(a) If you receive an Application Form in respect of your Open Offer Entitlements under the Open Offer
(i) General
Subject as provided in paragraph 7 of this Appendix II in relation to Overseas Shareholders, Eligible Non-CREST Shareholders will receive an Application Form. The Application Form shows the number of Existing Ordinary Shares registered in your name on the Open Offer Record Date. It also shows the number of Open Offer Shares for which you may apply pursuant to your Basic Entitlement, (on an initial pro rata basis) as shown by the total number of Open Offer Shares allocated to you. You may apply for less than your initial pro rata entitlement should you wish to do so. You may also apply for additional Open Offer Shares by completing Box 3 on the Application Form relating to your Excess Entitlement.
Eligible Non-CREST Shareholders may also hold such an Application Form by virtue of a bona fide market claim. If the total number of Open Offer Shares applied for by all Eligible Shareholders exceeds 44,057,946 or if the proceeds of the Open Offer would otherwise be EUR5 million or more, applications for Open Offer Shares will be scaled back at the discretion of the Directors. The instructions and other terms set out in the Application Form forms part of the terms of the Open Offer in relation to Eligible Non-CREST Shareholders.
(ii) bona fide market claims
Applications to acquire Open Offer Shares may only be made on the Application Form and may only be made by the Eligible Non-CREST Shareholder named in it or by a person entitled by virtue of a bona fide market claim in relation to a purchase of Ordinary Shares through the market prior to the Ex-Entitlement Date. Application Forms may not be assigned, transferred or split, except to satisfy bona fide market claims up to 3.00 p.m. on 26 January 2018. The Application Form will not be a negotiable document and will not be separately tradeable.
Shareholders should note that Excess Entitlements will not be subject to Euroclear's market claims process. Qualifying CREST Shareholders claiming Excess Entitlements by virtue of a bona fide market claim are advised to contact the Receiving Agent to request a credit of the appropriate number of entitlements to their CREST account.
An Eligible Non-CREST Shareholder who has sold or otherwise transferred all or part of his holding of Ordinary Shares prior to the Ex-Entitlement Date, should consult his broker or other professional adviser as soon as possible, as the invitation to acquire Open Offer Shares under the Open Offer may be a benefit which may be claimed by the transferee. Eligible Non-CREST Shareholders who have sold all or part of their registered holdings should, if the market claim is to be settled outside CREST, complete Box 13 on the Application Form and immediately send it to the stockbroker, bank or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee. The Application Form should not, however be forwarded to or transmitted to any territory outside the United Kingdom. If the market claim is to be settled outside CREST, the beneficiary of the claim should follow the procedures set out in the Application Form. If the market claim is to be settled in CREST, the beneficiary of the claim should follow the procedure set out in paragraph 4(b)(ii) of this Appendix II below.
(iii) Application procedures
Eligible Non-CREST Shareholders wishing to apply to acquire Open Offer Shares should complete the Application Form in accordance with the instructions printed on it. If the total number of Open Offer Shares applied for by all Eligible Shareholders exceeds 44,057,946 or if the proceeds of the Open Offer would otherwise be EUR5 million or more, applications will be scaled back at the Directors discretion.
Completed Application Forms should be posted in the pre-paid envelope accompanying the Application Form or returned by post or by hand (during normal business hours only) to the Receiving Agent, Link Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU (who will act as Receiving Agent in relation to the Open Offer) so as to be received by the Receiving Agent by no later than 11:00 a.m. on 30 January 2018, after which time Application Forms will not be valid. Eligible Non-CREST Shareholders should note that applications, once made, will be irrevocable and receipt thereof will not be acknowledged. Eligible Shareholders are recommended to allow at least four working days for delivery if posted by first class post. If you have any questions relating to the Circular, and the completion and return of the Application Form, please telephone Link Asset Services on +44 (0)371 664 0321. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The helpline is open between 9.00 a.m. - 5.30 p.m., Monday to Friday excluding public holidays in England and Wales. Please note that Link Asset Services cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes.
All payments must be in pounds sterling and made by cheque or bankers' draft and should be made payable to "Link Market Services Ltd re: Velocys PLC a/c - Acceptance A/C" and crossed "A/C payee only". Cheques or banker's drafts must be drawn in sterling on a bank or building society in the UK which is either a member of the Cheque and Credit Clearing Company Limited or the CHAPS Clearing Company Limited or which has arranged for its cheques and banker's drafts to be cleared through facilities provided by any of those companies or committees. Such cheques or banker's drafts must bear the appropriate sort code in the top right-hand corner and must be for the full amount payable on the application. No application will be considered unless these requirements are fulfilled. Eurocheques will not be accepted.
Cheques should be drawn on the personal account to which the Eligible Shareholder has sole or joint title to the funds. Third party cheques may not be accepted with the exception of bankers' drafts/building society cheques where the bank/building society has confirmed the name of the account holder on the back of the draft/cheque and has added their stamp. The account name must be the same as that of the applicant.
Cheques and bankers' drafts will be presented for payment upon receipt and it is a term of the Open Offer that cheques will be honoured on first presentation. If cheques or bankers' drafts are presented for payment before the conditions of the Open Offer are fulfilled, the application monies will be kept in a separate non-interest bearing bank account pending fulfilment of such conditions. If all the conditions of the Open Offer have not been fulfilled or (where appropriate) waived by 31 January 2018 (or such later date as the Company and its advisers may agree but in any event not later than 7 February 2018), application monies will be returned, without interest, by crossed cheque in favour of the applicant(s) (at the applicant's risk) through the post within 14 days after that date.
The Company may in its sole discretion, but shall not be obliged to, treat an Application Form as valid and binding on the person by whom or on whose behalf it is lodged, even if not completed in accordance with the relevant instructions or not accompanied by a valid power of attorney where required, or if it otherwise does not strictly comply with the terms and conditions of the Open Offer. The Company further reserves the right (but shall not be obliged) to accept either:
A. Application Forms received after 11.00 a.m. on 30 January 2018; or
B. applications in respect of which remittances are received before 11.00 a.m. on 30 January 2018 from authorised persons (as defined in FSMA) specifying the Open Offer Shares applied for and undertaking to lodge the Application Form in due course but, in any event, within two Business Days.
Multiple applications will not be accepted. All documents and remittances sent by post by or to an applicant (or as the applicant may direct) will be sent at the applicant's own risk.
If Open Offer Shares have already been allotted to an Eligible Non-CREST Shareholder and such Eligible Non-CREST Shareholder's cheque or banker's draft is not honoured upon first presentation or such Eligible Non-CREST Shareholder's application is subsequently otherwise deemed to be invalid, Link Asset Services shall be authorised (in its absolute discretion as to manner, timing and terms) to make arrangements, on behalf of the Company, for the sale of such Eligible Non-CREST Shareholder's Open Offer Shares and for the proceeds of sale (which for these purposes shall be deemed to be payments in respect of successful applications) to be paid to and retained by the Company. None of Link Asset Services, Joint Brokers, or the Company nor any other person shall be responsible for, or have any liability for, any loss, expense or damage suffered by such Eligible Non-CREST Shareholders.
The instructions, notes and other terms set out in the Application Form constitute part of the terms of the Open Offer.
All enquiries in connection with the procedure for application and completion of the Application Form should be addressed to the Receiving Agent, Link Asset Services, Corporate Actions, The Registry 34 Beckenham Road, Beckenham, Kent, BR3 4TU or you can contact the Receiving Agent Link Asset Services on +44 (0)371 664 0321. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The helpline is open between 9.00 a.m. - 5.30 p.m., Monday to Friday excluding public holidays in England and Wales. Please note that Link Asset Services cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes.
(b) If you have your Basic Entitlement and Excess Entitlement credited to your stock account in CREST in respect of your entitlement under the Open Offer
(i) General
Each Eligible CREST Shareholder will receive a credit to his stock account in CREST in respect of his Basic Entitlement and also in respect of his Excess Entitlement (equal in size to the maximum number of Open Offer Shares available under the Open Offer less an amount equal to the Eligible Shareholder's Basic Entitlement). The CREST stock account to be credited will be an account under the participant ID and member account ID that apply to the Ordinary Shares held on the Record Date by the Eligible CREST Shareholder in respect of whom the Open Offer Entitlements have been allocated. If for any reason the Open Offer Entitlements cannot be admitted to CREST by, or the stock accounts of Eligible CREST Shareholders cannot be credited by, 5.00 p.m. on 16 January 2018, or such later time and/or date as the Company and Joint Brokers may decide, an Application Form will be sent to each Eligible CREST Shareholder in substitution for the Open Offer Entitlements which should have been credited to his stock account in CREST. In these circumstances the expected timetable as set out in the Circular will be adjusted as appropriate and the provisions of the Circular applicable to Eligible Non-CREST Shareholders with Application Forms will apply to Eligible CREST Shareholders who receive such Application Forms.
CREST members who wish to apply to acquire some or all of their entitlements to Open Offer Shares should refer to the CREST Manual for further information on the CREST procedures referred to below. Should you need advice with regard to these procedures, please contact the Receiving Agent Link Asset Services on +44 (0)371 664 0321. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The helpline is open between 9.00 a.m. - 5.30 p.m., Monday to Friday excluding public holidays in England and Wales. Please note that Link Asset Services cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes.
(ii) Market claims
Although Open Offer Entitlements will be admitted to CREST and be enabled for settlement, applications in respect of Open Offer Entitlements may only be made by the Eligible Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim. Transactions identified by the CREST Claims Processing Unit as "cum" the Open Offer Entitlement will generate an appropriate market claim transaction and the relevant Open Offer Entitlement(s)) will thereafter be transferred accordingly.
Shareholders should note that Excess Entitlements will not be subject to Euroclear's market claims process. Qualifying CREST Shareholders claiming Excess Entitlements by virtue of a bona fide market claim are advised to contact the Receiving Agent to request a credit of the appropriate number of entitlements to their CREST account.
(iii) Unmatched Stock Event ("USE") instructions
Eligible CREST Shareholders who are CREST members and who want to apply for Open Offer Shares in respect of all or some of their Open Offer Entitlements in CREST must send (or, if they are CREST sponsored members, procure that their CREST sponsor sends) an USE instruction to Euroclear which, on its settlement, will have the following effect: (i) the crediting of a stock account of the Receiving Agent under the participant ID and member account ID specified below, with a number of Open Offer Entitlements corresponding to the number of Open Offer Shares applied for; and (ii) the creation of a CREST payment, in accordance with the CREST payment arrangements in favour of the payment bank of the Receiving Agent in respect of the amount specified in the USE instruction which must be the full amount payable on application for the number of Open Offer Shares referred to in (i) above.
(iv) Content of USE instruction in respect of Basic Entitlements
The USE instruction must be properly authenticated in accordance with Euroclear 's specifications and must contain, in addition to the other information that is required for settlement in CREST, the following details:
A. the number of Open Offer Shares for which application is being made and the number of Basic Entitlements being delivered to the Receiving Agent;
B. the ISIN of the Basic Entitlement. This is GB00BFNX4971; C. the CREST participant ID of the accepting CREST member;
D. the CREST member account ID of the accepting CREST member from which the Basic Entitlements are to be debited;
E. the participant ID of the Receiving Agent in its capacity as a CREST receiving agent. This is 7RA33;
F. the member account ID of the Receiving Agent in its capacity as a CREST receiving agent. This is 29440VEL;
G. the amount payable by means of a CREST payment on settlement of the USE instruction. This must be the full amount payable on application for the number of Open Offer Shares referred to in (i) above;
H. the intended settlement date. This must be on or before 11:00 a.m. on 1 February 2018; and
I. the Corporate Action Number for the Open Offer. This will be available by viewing the relevant corporate action details in CREST.
In order for an application under the Open Offer to be valid, the USE instruction must comply with the requirements as to authentication and contents set out above and must settle on or before 11:00 a.m. on 1 February 2018. In order to assist prompt settlement of the USE instruction, CREST members (or their sponsors, where applicable) may consider adding the following non-mandatory fields to the USE instruction:
1. a contact name and telephone number (in the free format shared note field); and 2. a priority of at least 80.
CREST members and, in the case of CREST sponsored members, their CREST sponsors, should note that the last time at which a USE instruction may settle on 30 January 2018 in order to be valid is 11:00 a.m. on that day.
In the event that the Placing and Open Offer do not become unconditional by 8.00 a.m. on 1 February 2018 or such later time and date as the Company and Joint Brokers determine (being no later than 8.00 a.m. on 15 February 2018), the Open Offer will lapse, the Open Offer Entitlements admitted to CREST will be disabled and the Receiving Agent will refund the amount paid by a Eligible CREST Shareholder by way of a CREST payment, without interest, as soon as practicable, but within 14 days, thereafter.
(v) Content of USE instruction in respect of Excess Entitlements
The USE instruction must be properly authenticated in accordance with Euroclear's specifications and must contain, in addition to the other information that is required for settlement in CREST, the following details:
A. the number of Excess Entitlements for which application is being made; B. the ISIN of the Excess Entitlements. This is GB00BFNX4B95; C. the CREST participant ID of the accepting CREST member;
D. the CREST member account ID of the accepting CREST member from which the Excess Entitlements are to be debited;
E. the participant ID of the Receiving Agent in its capacity as a CREST receiving agent. This is 7RA33;
F. the member account ID of the Receiving Agent in its capacity as a CREST receiving agent. This is 29440VEL;
G. the amount payable by means of a CREST payment on settlement of the USE instruction. This must be the full amount payable on application for the number of Excess Entitlements referred to in (i) above;
H. the intended settlement date. This must be on or before 11:00 a.m. on 1 February 2018; and
I. the Corporate Action Number for the Open Offer. This will be available by viewing the relevant corporate action details in CREST.
In order for an application under the Open Offer to be valid, the USE instruction must comply with the requirements as to authentication and contents set out above and must settle on or before 11.00 a.m. on 30 January 2018. In order to assist prompt settlement of the USE instruction, CREST members (or their sponsors, where applicable) may consider adding the following non-mandatory fields to the USE instruction:
1. a contact name and telephone number (in the free format shared note field); and 2. a priority of at least 80.
CREST members and, in the case of CREST sponsored members, their CREST sponsors, should note that the last time at which a USE instruction may settle on 30 January 2018 in order to be valid is 11.00 a.m. on that day.
In the event that the Placing and Open Offer do not become unconditional by 8.00 a.m. on 1 February 2018 or such later time and date as the Company and Joint Brokers determine (being no later than 8.00 a.m. on 15 February 2018), the Open Offer will lapse, the Open Offer Entitlements admitted to CREST will be disabled and the Receiving Agent will refund the amount paid by a Eligible CREST Shareholder by way of a CREST payment, without interest, within 14 days thereafter.
(vi) Deposit of Open Offer Entitlements into, and withdrawal from, CREST
An Eligible Non-CREST Shareholder's entitlements to apply for Open Offer Shares under the Open Offer set out in his Application Form may be deposited into CREST (either into the account of the Eligible Shareholder named in the Application Form or into the name of a person entitled by virtue of a bona fide market claim), provided that such Eligible Non-CREST Shareholder is also a CREST member. Similarly, Open Offer Entitlements held in CREST may be withdrawn from CREST so that the entitlements under the Open Offer are reflected in an Application Form. Normal CREST procedures (including timings) apply in relation to any such deposit or withdrawal, subject (in the case of a deposit into CREST) to the provisions of the Application Form. A holder of an Application Form who is proposing to deposit the entitlements set out in such form into CREST is recommended to ensure that the deposit procedures are implemented in sufficient time to enable a person holding or acquiring such Open Offer Entitlements following their deposit into CREST, to take all necessary steps in connection with taking up such entitlements prior to 3.00 p.m. on 25 January 2018. A holder of an Application Form who deposits his Open Offer Entitlement into his CREST account, will receive a credit to such account for his Open Offer Entitlement which will be managed by the Registrars.
In particular, having regard to normal processing times in CREST and on the part of the Receiving Agent, the recommended latest time for depositing an Application Form with the CREST Courier and Sorting Service, where the person entitled wishes to hold the entitlement under the Open Offer set out in such Application Form as Open Offer Entitlements, is 3.00 p.m. on 25 January 2018 and the recommended latest time for receipt by Euroclear of a dematerialised instruction requesting withdrawal of Open Offer Entitlements from CREST is 4.30 p.m. on 24 January 2018 in either case so as to enable the person acquiring or (as appropriate) holding the Open Offer Entitlements following the deposit or withdrawal (whether as shown in an Application Form or held in CREST) to take all necessary steps in connection with applying in respect of the Open Offer Entitlements prior to 11.00 a.m. on 30 January 2018. Delivery of an Application Form with the CREST deposit form duly completed whether in respect of a deposit into the account of the Eligible Shareholder named in the Application Form or into the name of another person, shall constitute a representation and warranty to the Company and the Receiving Agent by the relevant CREST member(s) that it/they is/are not in breach of the provisions of the notes under the paragraph headed "Instructions for depositing entitlements under the Open Offer into CREST" on page 3 of the Application Form, and a declaration to the Company and the Receiving Agent from the relevant CREST member(s) that they are not a citizen or resident (of any territory other than the United Kingdom, where such deposit is made by a beneficiary of a market claim, a representation and warranty that the relevant CREST member(s) is/are entitled to apply under the Open Offer by virtue of a bona fide market claim.
(vii) Validity of application
A USE instruction complying with the requirements as to authentication and contents set out above which settles by no later than 11.00 a.m. on 30 January 2018 will constitute a valid application under the Open Offer.
(viii) CREST procedures and timings
CREST members and (where applicable) their CREST sponsors should note that Euroclear does not make available special procedures in CREST for any particular corporate action. Normal system timings and limitations will therefore apply in relation to the input of a USE instruction and its settlement in connection with the Open Offer. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST sponsored member, to procure that his CREST sponsor takes) such action as shall be necessary to ensure that a valid application is made as stated above by 11.00 a.m. on 30 January 2018. In this connection CREST members and (where applicable) their CREST sponsors are referred in particular to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
(ix) Incorrect or incomplete applications
If a USE instruction includes a CREST payment for an incorrect sum, the Company, through the Receiving Agent, reserves the right:
A. to reject the application in full and refund the payment to the CREST member in question (without interest);
B. in the case that an insufficient sum is paid, to treat the application as a valid application for such lesser whole number of Open Offer Shares as would be able to be applied for with that payment at the Placing Price, refunding any unutilised sum to the CREST member in question (without interest); and
C. in the case that an excess sum is paid, to treat the application as a valid application for all the Open Offer Shares referred to in the USE instruction, refunding any unutilised sum to the CREST member in question (without interest).
(x) Company's discretion as to the rejection and validity of applications
The Company may in its sole discretion:
A. treat as valid (and binding on the CREST member concerned) an application which does not comply in all respects with the requirements as to validity set out or referred to in this Part III (Terms and Conditions of the Open Offer);
B. accept an alternative properly authenticated dematerialised instruction from a CREST member or (where applicable) a CREST sponsor as constituting a valid application in substitution for or in addition to a USE instruction and subject to such further terms and conditions as the Company may determine;
C. treat a properly authenticated dematerialised instruction (in this sub-paragraph the "first instruction") as not constituting a valid application if, at the time at which the Registrar receives a properly authenticated dematerialised instruction giving details of the first instruction or thereafter, either the Company or the Receiving Agent has received actual notice from Euroclear of any of the matters specified in Regulation 35(5)(a) of the CREST Regulations in relation to the first instruction. These matters include notice that any information contained in the first instruction was incorrect or notice of lack of authority to send the first instruction; and
D. accept an alternative instruction or notification from a CREST member or CREST sponsored member or (where applicable) a CREST sponsor, or extend the time for settlement of a USE instruction or any alternative instruction or notification, in the event that, for reasons or due to circumstances outside the control of any CREST member or CREST sponsored member or (where applicable) CREST sponsor, the CREST member or CREST sponsored member is unable validly to apply for Open Offer Shares by means of the above procedures. In normal circumstances, this discretion is only likely to be exercised in the event of any interruption, failure or breakdown of CREST (or any part of CREST) or on the part of the facilities and/or systems operated by the Receiving Agent in connection with CREST.
(xi) Lapse of the Open Offer
In the event that the Placing and Open Offer do not become unconditional by 8.00 a.m. on 1 February 2018 or such later time and date as the Company, Numis and Canaccord may agree (being no later than 15 February 2018), the Placing and Open Offer will lapse, the Open Offer Entitlements admitted to CREST will be disabled and the Receiving Agent will refund the amount paid by a Eligible CREST Shareholder by way of a CREST payment, without interest, within 14 days thereafter.
5. Warranties
An Eligible Shareholder who makes or is treated as making a valid application or Open Offer Shares:
(a) represents and warrants that he has the right, power and authority, and has taken all action necessary, to make the application under the Open Offer and to execute, deliver and exercise his rights, and perform his obligations, under any contracts resulting therefrom and that he is not a person otherwise prohibited or restricted by legal or regulatory requirements from applying for Open Offer Shares or acting on behalf of any such person on a non-discretionary basis;
(b) agrees to pay the amount payable on application in accordance with the payment procedures described in this Appendix II;
(c) agrees that all applications and contracts resulting therefrom under the Open Offer shall be governed by, and construed in accordance with, the laws of England;
(d) confirms that in making the application he is not relying on any information or representation in relation to the Company other than that contained in the Circular, and the applicant accordingly agrees that no person responsible solely or jointly for the Circular or any part thereof, or involved in the preparation thereof, shall have any liability for any such information or representation not so contained and further agrees that, having had the opportunity to read the Circular, he will be deemed to have had notice of all the information in relation to the Company contained in the Circular;
(e) represents and warrants that he is the Eligible Shareholder originally entitled to relevant Open Offer Entitlements or that he has received such Open Offer Entitlements by virtue of a bona fide market claim;
(f) represents and warrants that in relation to each and every Open Offer Entitlement that he has received from a person other than the Company, he is entitled to apply under the Open Offer in relation to such Open Offer Entitlements by virtue of a bona fide market claim;
(g) requests that the New Ordinary Shares to which he will become entitled shall be issued to him on the terms set out in the Circular, subject to the memorandum of association and articles of association of the Company;
(h) represents and warrants that they are resident in the United Kingdom and not resident of any other territory and they will not offer to sell, directly or indirectly, any of the Open Offer Shares (or any rights in respect of such Open Offer Shares) in any such other territory or for the benefit of a resident of any other territory other than the United Kingdom. In addition, completion of an Application Form will constitute a representation and warranty that the person in whose name registration is applied for is a resident of the United Kingdom and not resident in any other territory and that they do not hold and have not acquired the Open Offer Shares comprised in the Application Form for the account or benefit of a resident of any such other territory or with a view to the offer, sale or delivery, directly or indirectly, of any Open Offer Shares or any rights in respect of such Open Offer Shares in any territory other than the United Kingdom or to a resident of any other territory;
(i) represents and warrants that he is not, and nor is he applying as nominee or agent for, a person who is or may be liable to notify and account for tax under the Stamp Duty Reserve Tax Regulations 1986 at any of the increased rates referred to in sections 67, 70, 93 or 96 (depositary receipts and clearance services) of the Finance Act 1986;
(j) confirms that in making the application he is not relying and has not relied on the Joint Brokers or any person affiliated with the Joint Brokers in connection with any investigation of the accuracy of any information contained in the Circular or his investment decision; and
(k) represents and warrants that that acceptance by them of their application for subscription under the Open Offer will not result in them and/or persons acting in concert with them obtaining an interest in greater than 29.9 per cent. of the total number of Ordinary Shares in issue following the Open Offer.
6. Money Laundering Regulations
To ensure compliance with the Money Laundering Regulations 2017 (the "Regulations"), it is a term of the Open Offer that the Registrars may, at their absolute discretion, require verification of identity from any person completing an Application Form or sending a USE message through CREST (the "Applicant") for more than a sterling equivalent of EUR15,000 and, without prejudice to the generality of the foregoing, in particular any person who either (i) tenders payment by way of a cheque or banker's draft drawn on an account in the name of any person or persons other than the Applicant or (ii) appears to LinkRegistrars to be acting on behalf of some other person.
This may involve verification of the identity of any person on whose behalf the Applicant appears to be acting.
Lodging of an Application Form and sending the USE message through CREST with the appropriate remittance constitutes a warranty by the Applicant that the Regulations will not be breached by the acceptance of the remittance and an undertaking to provide such evidence of identity at the time of lodging an Application Form or, in the absolute discretion of the Company, within a reasonable time thereafter (in each case to be determined at the absolute discretion of the Company and the Registrars) as may be required to ensure compliance with the Regulations.
If satisfactory evidence of identity has not been received by Link Asset Services Limited within a reasonable period of time, then the Application Form or USE message through CREST in question may be rejected, in which event the application will not proceed any further and the application monies (without interest) will be returned to the bank account on which the cheque was drawn at the Applicant's own risk.
Where possible Applicants should make payment by their own cheque. If a bankers' draft or building society cheque is used, the Applicant should:
(a) write his/her name and address on the back of the draft or cheque and, in the case of an individual, record his/her date of birth against his/her name; and
(b) ask the bank or building society to endorse on the reverse of the draft or cheque the full name and account number of the person whose account number is being debited and stamp such endorsement.
The above information is provided by way of guidance to reduce the likelihood of difficulties, delays and potential rejection of an Application Form (but without limiting LinkRegistrars Limited's right to require verification of identity as indicated above).
7. Overseas Shareholders
Only Eligible Shareholders, which means only Shareholders that are resident and domiciled in the United Kingdom, will be eligible to make an application for Open Offer Shares, and in particular no person receiving a copy of this document, the Circular or the Application Form in any other territory may treat the same as constituting an offer or invitation to him/her nor should he/she in any event complete the Application Form. Accordingly, persons receiving this document, the Circular and Application Form should not send the same into any other territory, and any copy of this document, the Circular or the Application Form which is received in any such jurisdiction is sent for information only, is confidential and should not be copied or distributed.
The Company reserves the right to treat as invalid any application or purported application to subscribe for new Ordinary Shares pursuant to the Open Offer which appears to the Company or its agent to have been executed, effected or dispatched in a manner which may involve a breach of the securities laws or regulations of any jurisdiction or which does not include the warranties set out in the Application Form.
The Open Offer Shares have not been and are not intended to be registered or qualified for sale under 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 Shareholders with registered addresses in any other 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.
8. Admission, Settlement and Dealings
Application will be made for the admission of the New Ordinary Shares to trading on AIM. The result of the Placing and Open Offer is expected to be announced on or about 31 January 2018 and, subject to the Open Offer becoming unconditional in all respects, trading in the Open Offer Shares is anticipated to commence on AIM for normal settlement on 1 February 2018.
Application will be made for the New Ordinary Shares to be admitted to CREST with effect from AIM Admission and applicants for Open Offer Shares will be able to hold their Open Offer Shares in certificated or uncertificated form.
Notwithstanding any other provision of this document, the Circular or of the Application Form, the Company reserves the right to allot and/or issue any Open Offer Shares in certificated form. In normal circumstances, this right is only likely to be exercised in the event of any interruption, failure or breakdown of CREST (or any part of CREST), or on the part of the facilities and/or systems operated by the Company's registrars in connection with CREST. This right may also be exercised if the correct details in respect of bona fide market claims (such as the Member Account ID and Participation ID details) are not provided as requested on the Application Form.
For more information as to the procedure for application in each case, Eligible non-CREST Shareholders are referred to the Application Form.
[1] All key Mississippi biorefinery economics figures are estimates and based on the pre-FEED assessment and additional scope and cost reviews by potential EPC candidates.
[2] All indicative Mississippi biorefinery capital structure figures are estimates.
This information is provided by RNS
The company news service from the London Stock Exchange
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