POWERHOUSE ENERGY GROUP PLC - £5m fund raise and grant of Peel warrant

Powerhouse Energy Group plc

("Powerhouse" or the "Company")

9^th September  2020

 £5 million Placing and Subscription

Grant of Peel Holdings Warrant for 10% of the Company

Powerhouse Energy Group plc (AIM: PHE), the UK technology company pioneering hydrogen production from waste plastic, is pleased to announce that it has raised £5 million, before expenses, by way of a Placing and Subscription (“Fundraising”) at 2.5p per share (“Issue Price”). The Placing was arranged by Turner Pope Investments (TPI) Ltd (“Turner Pope”), the Company’s broker, and was oversubscribed.

The Directors believe the Fundraising will provide the necessary cash resources for Powerhouse to reach profitability and to implement its wider strategy for international growth.

In addition, the Company has granted a warrant to Peel Holdings (IoM) Limited (“Peel”), providing a conditional right to subscribe up to approximately £10.2 million for up to 10% of the Company at a 10% premium to the Issue Price.

The Fundraising

A total of 160,000,000 new Ordinary Shares of 0.5p in the capital of the Company (“Ordinary Shares”) have been placed at the Issue Price (“Placing Shares”) with an international institutional investor and a small number of private shareholders, including the White Family (the Company’s largest shareholder), raising £4 million, before expenses. A further 40,000,000 Ordinary Shares (“Subscription Shares”) will be issued to Peel, which is subscribing £1 million at the Issue Price (“Subscription Agreement”).

Grant of Warrant to Peel

Under the terms of the Subscription Agreement, Powerhouse has agreed to grant to Peel a warrant to subscribe for 371,510,069 new Ordinary Shares (representing 10% of the Company’s issued share capital immediately following Admission of the Placing Shares) ("Peel Warrant"). The Peel Warrant is exercisable (in whole or in part) within 6 months of financial close of Protos, subject to a long-stop date of 2 years from the date of the grant. The exercise price of the Peel Warrant is 2.75p per share (being a 10% premium to the Issue Price).  Peel will be prohibited from trading shares issued upon exercise of the Peel Warrant for a period of 12 months from the date of Admission (subject to customary carve-outs).

Peel is part of a group of companies with whom the Company has an exclusivity and licensing agreement in place for developments using its proprietary technology in the UK, the first being at the Protos Energy Park near Ellesmere Port, Cheshire. Between its £1 million subscription and potential investment of up to approximately £10.2 million through exercise of the Peel Warrant, Peel is expected to become a cornerstone industrial investor in the Company.

The Subscription Agreement and Peel Warrant are independent of and in addition to the payment of the one-off £500,000 exclusivity fee as described in previous news releases.

Related Party Transaction

The White Family is a long-term supporter of the Company and is investing approximately £1.3 million in the Placing. The participation by the White Family is considered a related party transaction under the AIM rules as the White Family (constituting Howard White, Ben White, Josh White and Serena Eden Reyes-White) currently holds 26% percent of the share capital. Following the Fundraising the White Family will hold  Ordinary Shares representing 26% held by the individual White Family members as follows:

Josh White – 360,122,122 Ordinary Shares

Ben White – 236,214,785  Ordinary Shares

Serena White-Reyes – 201,593,059 Ordinary Shares

Howard White – 169,757,066 Ordinary Shares

The Directors of the Company having consulted with WH Ireland, the Company’s Nominated Adviser, consider the terms of this transaction to be fair and reasonable insofar as shareholders are concerned.

Use of Funds

The Company will apply the net funds to refine technical aspects and assist Peel to deliver the first commercial-scale DMG® installation at Protos, the first of a number of potential developments alongside Peel, as well as investment in personnel, office and other resources to capitalise on further UK and international sales and partnership opportunities.

The Directors consider that the respective investments of Peel and the institutional investor serve as further endorsement of the DMG technology and enhance Powerhouse’s credibility to advance its development strategy in and outside of the UK. A further and critical element of the agreement with Peel is that it also permits Powerhouse access to and use of the full design and engineering details of the entire plant being built at Protos, above and beyond that relating to the DMG technology, as well as unrestricted access to the site during and after construction. This will be of significant value and benefit to Powerhouse in relation to developing its international partnering and licensing agreements.

Commenting, David Ryan, CEO of Powerhouse, said:

“We are delighted to have attracted an international institutional fund as an investor and that Peel, already a key commercial partner, has also chosen to engage in this fundraise and demonstrated commitment by taking a warrant over 10% of the Company and become a cornerstone investor in Powerhouse. The investment cements the already close relationship between the two companies.”

Dr Cameron Davies, Chairman of Powerhouse, said:

“We are particularly pleased to have attracted a high-quality institutional investor to our shareholder register. The fact that the fundraising was oversubscribed demonstrates market confidence in our execution strategy. The Board is confident this funding will facilitate Powerhouse to complete the first projects, reach profitability and roll out its international growth strategy.”

Chris Eves, Finance Director of Peel Holdings IOM, said:

“We are pleased that Powerhouse has passed this key milestone and look forward to working with the Company going forward. The next stage is to secure the funding for the Protos project which will be achieved in due course. The commercialisation of the Protos project and the development of the UK pipeline, which could be over 70 facilities, will form the springboard for the international expansion of the Powerhouse business model.”

Admission to Trading on AIM

Application has been made for the admission of 200,000,000 Ordinary Shares to trading on AIM (“Admission”) and it is expected that this will occur on or around 15^th September 2020. These shares will rank pari passu in all respects with the Company's existing issued Ordinary Shares.

Subsequent to the issue of new Ordinary Shares, the Company will have 3,715,100,693 Ordinary Shares in issue. Powerhouse has no shares in Treasury, therefore this figure may be used by shareholders, from Admission, as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

Broker Warrants

Turner Pope has been issued with 5,395,260 warrants to subscribe for new Ordinary Shares at the Issue Price, exercisable for a period of three years from Admission.

ENDS

For more information, contact:

Powerhouse Energy Group plc	Tel: [phone]
David Ryan, Chief Executive Officer
WH Ireland Limited (Nominated Adviser)	Tel: [phone]
James Joyce / Lydia Zychowska
Turner Pope Investments Ltd (Joint Broker)	Tel: [phone]
Andrew Thacker / Zoe Alexander
Ikon Associates (Media enquiries)	Tel: [phone]
Adrian Shaw	Mob: [phone]

Notes for Editors:

About Powerhouse Energy Group plc

Powerhouse has developed a proprietary process technology - DMG® - which can utilise waste plastic, end-of-life-tyres, and other waste streams to efficiently and economically convert them into syngas from which valuable products such as chemical precursors, hydrogen, electricity and other industrial products may be derived.  Powerhouse’s technology is one of the world's first proven, distributed, modular, hydrogen from waste (HfW) process.

The Powerhouse DMG® process can generate up to 2 tonnes of road-fuel quality H2, and more than 58MWh of exportable electricity per day.

Powerhouse’s process produces low levels of safe residues and requires a small operating footprint, making it suitable for deployment at enterprise and community level. As announced on 11th February 2020 under its Supplemental Agreement with Peel Environmental, PHE will receive an annual license fee of £500,000 in respect of each project which is commissioned.

Powerhouse is quoted on the London Stock Exchange's AIM Market under the ticker: PHE, and is incorporated in the United Kingdom.

For more information see www.powerhouseenergy.net

About the Protos Project

The first application of the Powerhouse DMG technology is to be built at the Protos Site, a Peel L&P energy park development on a 54-hectare site known as ‘Protos’ near Ellesmere Port, Cheshire, England. The site is the first development by Peel L&P under the Collaboration Agreement.

The planning permission for the application was submitted in September 2019 and, on 3 March 2020, the Cheshire West and Chester planning committee approved the planning application for the DMG Technology to be utilised on the Protos Site.

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