Wasabi Energy Limited Rights Issue (0167U)

TIDMWAS

RNS Number : 0167U

Wasabi Energy Limited

27 November 2013

27 November 2013

Wasabi Energy Ltd

("Wasabi" or the "Company")

Rights Issue to raise up to $14.8 millioni (GBP8.69 million)

The Directors of Wasabi Energy (ASX: WAS, AIM: WAS) wish to advise that they have resolved to raise up to $14.8m through a Rights issue to all eligible shareholders at an issue price of 0.4 cents per Share.

The funds raised will be used to complete the purchase of the Tuzla Geothermal Power Project in Turkey, to redeem the secured debt and provide additional working capital.

Mr John Byrne, Chairman commented:

"The Offer is designed to place the company in a strong financial position to deliver on its objective of becoming a high margin independent power producer, leveraging off its ownership of the Kalina Cycle.

"The Kalina Cycle(R) is a remarkable achievement and breakthrough. It has taken decades of research and development to demonstrate the validity of the breakthrough to the world, and with 14 plants built and some in constant operation for over a decade, that proof is now established. The Kalina Cycle(R) is the most efficient power generation cycle for medium to low temperature thermal energy process, and is ideally positioned to service the increasing demand for more energy efficient power generation.

"The Company is focused on delivering our objective of 25 MWe of owned power generation under construction or in operation by the end of 2015 and targeting a growth rate of 25 MWe per annum thereafter. We continue to work on a number of opportunities globally and engineering studies are underway with industry leading companies. Wasabi expects that a number of these will convert to new projects in the coming months. As these projects develop we will continue to keep the market informed.

"In context, if we achieve this growth, every 25MWe of owned power generation (assuming 10c per kwh feed in tariff and 8% discount rate) represents an estimated increase of approximately $120 million NPV per annum.

"The Board and management are confident that the current strategy and market opportunities for the Company provide a solid basis for growth."

Wasabi Energy

This accelerated deployment of the Kalina Cycle has been framed around regional subsidiaries and dedicated teams that will target opportunities in their specific regions. Wasabi Energy has a number of opportunities on the cusp of development, in particular in Turkey with Imparator Enerji's Tuzla Geothermal Power Project and through Wasabi New Energy Asia and the expected growth in that region.

Two of the largest Kalina Cycle(R) plants built to date are currently being commissioned in Pakistan and UAE by our licensee, FLSmidth.

The commissioning of these Kalina Cycle(R) power plants is progressing well with the plants operating as expected under partial loads using the available heat from the cement plants. The turbine generators have been synchronised and are operating to plan. Punch lists are also being completed.

Progress also continues at the Sinopec Hainan 4 MWe Kalina Cycle(R) plant being built by the Company's Chinese subsidiary and licensee, SSNE. This project and SSNE's Enhanced Rankine power plant at China Building Material Group's Guizhou cement plant are progressing through construction and commissioning respectively.

For an overview of an operating plant and how the Kalina Cycle(R) works, a video tour of the Geothermie Unterhaching Kalina Cycle(R) geothermal power plant is available at http://wasabienergy.com/ - ytv

The Directors of the Company are pleased to offer shareholders the opportunity to participate in the funding of the Company by way of a non-renounceable rights issue on the basis of one new ordinary share for every one ordinary share held, at an issue price of 0.4 cents per share (the "Rights Issue" or "Offer"). The Company will raise up to $14.8 m (GBP8.69m) gross proceeds from the Rights Issue. Further details of which are presented below.

An Offer Document containing the terms and conditions of the Rights Issue and information on the Company will be sent to Shareholders on 6 December 2013 and made available on the Company's website, www.wasabienergy.com, shortly. In the meantime, the Offer Document has been lodged with the ASX and is available on the ASX website at www.asx.com.au. (Capitalised terms in this announcement bear the same meaning as in the Offer Document.)

The Rights Issue

The non-renounceable entitlement issue will be made on the basis of one (1) share for every one (1) Ordinary Shares held by Eligible Shareholders registered at 5.00pm (Melbourne time) on 5 December 2013 at an issue price of 0.4 cents per Share to raise up to approximately $14.8m (GBP8.69m) gross.

The Rights Issue will result in the issue of up to 3,718,761,160 ordinary shares in the Company.

In calculating entitlements under the Rights Issue, fractions will be rounded up to the nearest whole number.

The Offer is not being made, and no Shares will be issued to, any Shareholders whose registered address is in a country other than Australia, New Zealand, Switzerland or the United Kingdom for the reasons given in the Offer Document. The Offer Document will be sent to Foreign Security holders for information purposes only. No Entitlement and Acceptance Forms will be sent to Foreign Security holders. Shareholders who are eligible to participate should read the Offer Document carefully.

The timetable and important dates of the Rights Issue are set out below:

 
 Lodgement of Offer Document and           27 November 
  Appendix 3B effective date                2013 
----------------------------------------  ------------ 
 Ex Entitlement Date                       29 November 
                                            2013 
----------------------------------------  ------------ 
 Record Date                               5 December 
                                            2013 
----------------------------------------  ------------ 
 Closing date for receipt of acceptances   20 December 
  and payment                               2013 
----------------------------------------  ------------ 
 New Shares quoted on ASX on deferred      23 December 
  settlement basis                          2013 
----------------------------------------  ------------ 
 Shortfall notification date               24 December 
                                            2013 
----------------------------------------  ------------ 
 Issue of New Shares                       30 December 
                                            2013 
----------------------------------------  ------------ 
 Issue of Depositary Interests             30 December 
  in respect of the New Shares              2013 
  issued to UK Eligible Shareholders 
  pursuant to the Offer and to 
  be capable of being traded in 
  CREST 
----------------------------------------  ------------ 
 AIM Admission of the New Shares           30 December 
  issued pursuant to the Offer              2013 
  and commencement of dealings 
  on AIM 
----------------------------------------  ------------ 
 Closing date by which the Shortfall       19 March 
  Shares, remaining after the Offer         2014 
  has completed may be placed by 
  the Directors 
----------------------------------------  ------------ 
 

Use of Proceeds

As indicated above, the Offer will raise up to approximately $14.8 million (gross). The Company will use these funds to: (i) pay the exercise amount for the Tuzla Geothermal Power Project (TGPP), (ii) repay the secured loan notes issued by the Company in December 2012, (iii) provide support to Wasabi New Energy Asia as it undertakes its own fundraising activities and (iv) support the general working capital requirements of the Company.

To the extent that the Offer is not fully subscribed, the Company is in discussions with the secured loan note holders in relation to an extension of the term of the note or the participation of the noteholders as Underwriters to the Offer.

Repayment of the secured loan notes includes payment to Arcourt Resources NL, an entity related to John Byrne as set out in the announcement by the Company on 2 January 2013.

The payment of the exercise amount will conclude the agreement entered into by the Company in relation to the purchase of 50% of TGPP. Total consideration for the option and its exercise will be $11,950,000.

 
 The Company intends to use the funds raised from the offer as follows: 
------------------------------------------------------------------------- 
 Offer expenses                                    $300,000 
 
  TGPP                                              $4,000,000 
 
  Repayment of Secured Loan note                    $8,000,000 
 
  WNEA loan                                         $1,000,000 
 
  Working Capital                                   $1,575,044.64 
 
  Total (AUD)                                       $14,875,044.64 
------------------------------------------------  ----------------------- 
 

Outcome of the Offer

Assuming the Offer is fully subscribed or the directors place any shortfall, Wasabi will be in a strong position to deliver on its objectives of becoming a strong independent power producer leveraging off its technology advantages to secure interests in projects.

While the Company has stated a strategy of establishing regional subsidiaries, with dedicated management and funding at the regional subsidiary level, it is the directors opinion that given the value accretive opportunity presented by increasing the Company's support of its two major subsidiaries, Imparator Enerji (Imparator) in Turkey, and Wasabi New Energy Asia, it is important at this time that the Company retain as high an interest as possible in these subsidiaries as they grow their business and pipeline of projects.

This rights issue will bring the required funds for Wasabi Energy to achieve these objectives and in the long term provide strong returns to our shareholders.

Turkey - Imparator Enerji

The Offer will allow for sufficient funds to be invested into TGPP to take it through the refurbishment of the existing operating power plant and combined with the funds from the disposal of the non-core assets, for the bankable feasibility study for the 30 MWe build out at the TGPP and its anticipated equity contribution for the build out, following which the TGPP is expected to provide additional cashflow for the Group.

Wasabi New Energy Asia

The Offer will provide additional near term support to Wasabi New Energy Asia (WNEA), by way of secured loans as the underlying business in WNEA is growing. By providing this support the Company will be in a strong position at the time of the IPO of WNEA to either receive funds back to it, or to convert into additional equity in WNEA, thereby strengthening its ownership position.

Sale of Non-Core Assets and Regional Subsidiaries

Having paid out the Secured Loan notes, the Company will be able to realise further funds from the sale of its non-core assets in an orderly manner. These additional funds will be available to further support Imparator at TGPP or other opportunities in Turkey as well as for the establishment of other regional subsidiaries within as yet under serviced market places for the Kalina Cycle(R) technology, such as India, the Middle East, Europe and the America's.

Final Capital Structure

Following the Rights Issue, assuming it is fully subscribed (and no outstanding options have been exercised) the capital structure on completion will be:

 
 Number of Securities Class 
  7,437,522,320 Ordinary Shares 
  Options (quoted on ASX) 
  380,540,000 exercisable at 0.8 cents each until 
  31 March 2014 
  Options (all unquoted) 
  6,500,000 exercisable at 2.8 cents each until 
  17 December 2013 
  10,000,000 exercisable at 3.4 cents each until 
  31 March 2014 
  350,000,000 exercisable at 2 cents each until 
  14 December 2013 
  18,750,000 exercisable at 0.8 cents each until 
  14 December 2013 
  Total: 760,790,000 
 

* For the purpose of calculating this figure the Company has assumed that no Options will be converted prior to the Record Date, that the Offer will be fully subscribed, and that all of the Shortfall Shares remaining after the Underwriting has completed will be issued by the Directors within 3 months of the Closing Date.

For further information contact

Australian Enquiries

Mr. John Byrne /Ms. Diane Bettess

Wasabi Energy Limited

Ph: [phone]

U.K. Investor Enquiries

Ms. Ivonne Cantu / Ms. Beth McKiernan

Cenkos Securities plc

Ph: [phone] / [phone]

U.K. Media Enquiries

Mr. Josh Royston / Ms. Hilary Millar

Newgate Threadneedle

Ph: [phone]

i All references to $ are references to Australian Dollars

This information is provided by RNS

The company news service from the London Stock Exchange

END

IOEEAAFKALPDFAF