TIDMHAL TIDMHALO
RNS Number : 9277C
HaloSource Inc
21 April 2017
21 April 2017
THIS ANNOUNCEMENT IS NOT FOR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, TO US PERSONS OR IN OR INTO THE UNITED STATES
(INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED
STATES AND THE DISTRICT OF COLUMBIA), CANADA, AUSTRALIA, JAPAN OR
THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO
SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS
OF SUCH JURISDICTION.
HaloSource, Inc.
("HaloSource" or the "Company")
Fundraise to raise GBP1.9 million and Trading Update
HaloSource Inc. (HAL.LN, HALO.LN), the global clean water
technology company traded on London Stock Exchange's AIM market, is
pleased to confirm that the Company has conditionally raised
approximately GBP1.9 million ($2.3 million) through the issue of an
aggregate of 125,377,866 new Common Shares to new and existing
investors at a price of 1.5 pence per new Common Share (the
"Placing Price").
Highlights of the Fundraise
-- The Company has raised approximately GBP1.9 million ($2.3
million) through a conditional placing (the "Placing") of
73,173,333 new Common Shares (the "Placing Shares") and a
conditional subscription (the "Subscription", together with the
Placing, the "Fundraise") for 52,204,533 new Common Shares (the
"Subscription Shares", together with the Placing Shares, the "New
Common Shares"), in each case at the Placing Price.
-- The net proceeds of the Fundraise will provide additional
working capital to the Company and also be used to fund
commercialisation of the Company's lead removal technology and
expansion of its drinking water business.
-- The New Common Shares will represent approximately 36% of the
enlarged issued common share capital of the Company.
-- The Fundraise is conditional upon, amongst other things, one
of the cornerstone investors to the Fundraise receiving certain
Chinese governmental approvals to enable the investor to complete
its participation in the Subscription, and the necessary
shareholder resolutions being passed at a general meeting of the
Company to be held on 17 May 2017. Shareholders are directed below
to further details of the conditions of the Fundraise.
-- Liberum Capital Limited ("Liberum") is acting as nominated
adviser in connection with the Fundraise. Hybridan LLP ("Hybridan")
is acting as sole broker in connection with the Fundraise.
Reasons for the Fundraise and Use of Proceeds
On 6 April 2017, the Company announced its preliminary results
for the year ended 31 December 2016 which confirmed total cash at
year end, including short-term investments, of $2.1 million, which
is expected to fund the Company until the end of Q2 2017.
Since 2016 the Company has taken proactive steps in order to
reduce its cash burn rate. However, the Fundraise is necessary to
provide additional working capital so that the Company can continue
to trade as a going concern beyond Q2 2017. Assuming completion of
the Fundraise, including receipt of the Chinese governmental
approval for the cornerstone investor referred to above, the
Company expects to have sufficient cash to fund it through to Q2
2018.
In addition, the Company also reported that during 2016 it had
made solid progress on the development and scale-up of its new lead
removal technology, which would enable the Company to offer a
powerful combination of heavy-metal removal along with viral and
bacterial disinfection already provided by its HaloPure(R)
technology. Accordingly, a portion of the net proceeds of the
Fundraise will also be used to fund commercialisation of the
Company's lead removal technology and expand its drinking water
business.
Trading Update
Assuming the Fundraise completes, the Company expects that for
the year ended 31 December 2017 revenue from continuing operations
will be between $4 million and $5 million, operating expenses will
be between $5.5 million and $6 million and the net loss will be
between $3.5 million and $4.5 million.
The appendix to this announcement (the "Announcement"), which
forms part of the Announcement, sets out further important details
of the Fundraise and the action to be taken by shareholders to
allow the Fundraise to occur.
The information communicated in this Announcement is inside
information for the purposes of Article 7 of Market Abuse
Regulation 596/2014 ("MAR"). For the purposes of MAR and Article 2
of Commission Implementing Regulation (EU) 2016/1055, this
announcement is being made on behalf of the Company by Craig
Crowell, Chief Financial Officer.
Enquiries:
HaloSource, Inc.
James Thompson, Acting Chief
Executive Officer +1 425 419 2257
Craig Crowell, Chief Financial
Officer +1 425 419 2248
Hybridan LLP (Sole Broker)
Claire Noyce, Niall Pearson +44 203 764 2341
Liberum Capital Limited (NOMAD)
Richard Bootle, Jill Li, Steve
Pearce +44 203 100 2222
About HaloSource
HaloSource, Inc. innovates and integrates technologies to
deliver clean drinking water solutions to partners with trusted
brands around the world. The Company works with scientists and
industry experts across the globe in search of new ways to improve
drinking water quality and has been awarded more than 30 patents
for its ground breaking chemistries, which provide safe drinking
water for more than 10 million consumers globally. The Company's
class-leading HaloPure(R) Drinking Water technology has the highest
global certifications, including registration with the US EPA.
Founded in Seattle, Washington, HaloSource has grown to become
an influential leader in drinking water purification. HaloSource is
headquartered in the US with operations in China and in India.
Learn more about the Company's research and development and future
cutting edge technologies by visiting www.halosource.com.
HaloPure(R) is a registered trademark of HaloSource, Inc. All
other trademarks, brand names or product names belong to their
respective holders.
This document contains certain forward-looking statements
relating to the Company. The Company considers any statements that
are not historical facts as "forward-looking statements". They
relate to events and trends that are subject to risk and
uncertainty that may cause actual results and the financial
performance of the Company to differ materially from those
contained in any forward-looking statement. These statements are
made by management in good faith based on information available to
them and such statements should be treated with caution due to the
inherent uncertainties, including both economic and business risk
factors, underlying any such forward-looking information.
Hybridan LLP, which is regulated by the Financial Conduct
Authority, is acting exclusively for HaloSource in connection with
the Placing and no-one else and will not be responsible to anyone
other than HaloSource for providing the protections afforded to
customers of Hybridan LLP, or providing advice in connection with
the Fundraise or any transaction or arrangement referred to in this
announcement.
Liberum Capital Limited, which is regulated by the Financial
Conduct Authority, is acting exclusively for HaloSource in its role
as nominated adviser and no-one else and will not be responsible to
anyone other than HaloSource for providing the protections afforded
to customers of Liberum Capital Limited, or providing advice in
connection with the Fundraise or any transaction or arrangement
referred to in this announcement.
This announcement does not constitute, or form part of, an
offer, or solicitation of an offer, or invitation to subscribe for
or purchase any rights, ordinary shares or other securities of the
Company in the United States. In addition, the securities of the
Company to be issued in the Placing have not been, and will not be,
registered under the US Securities Act of 1933 (as amended) (the
"Securities Act") or the securities laws of any state or other
jurisdiction of the United States and may not be offered or sold or
delivered within, in or into the United States or to, or for the
account or benefit of, US Persons absent an applicable exemption
from the registration requirements of the Securities Act. There
will be no public offer of securities within the United States.
APPIX: FURTHER DETAILS OF THE FUNDRAISE
Terms of the New Common Shares
The New Common Shares will be issued credited as fully paid and
will rank equally with the existing Common Shares, including the
right to receive all dividends and other distributions declared in
respect of such shares after the date of their issue. Following
completion of the Fundraise, the total issued common share capital
of the Company will comprise 345,656,270 common shares of no par
value, admitted to trading on AIM.
Conditions of the Fundraise
The Fundraise is conditional on one of the key cornerstone
investors to the Fundraise receiving certain Chinese governmental
approvals to enable the investor to complete its participation in
the Subscription. In the event that such governmental approvals are
not obtained on or prior to 31 May 2017, the Fundraise will not
proceed and the Company does not expect to have funds immediately
available to continue trading as a going concern, in which case,
shareholders will be at risk of losing all or a substantial amount
of their investment.
The Fundraise is also conditional on, amongst other things, the
Company obtaining (a) sufficient approval from the existing
shareholders to amend the articles of incorporation to increase the
authorised share capital of the Company (the "Articles Amendment");
and (b) the requisite number of waivers of existing shareholders to
issue the New Common Shares without having to make a pre-emptive
offer to existing shareholders ("Pre-Emptive Rights").
The Board of Directors of the Company considers the approval of
the Articles Amendment and the waiver of the Pre-Emptive Rights in
order to effect the Fundraise to be in the best interests of the
Company and its shareholders as a whole, and therefore unanimously
recommends that shareholders vote in favour of the Articles
Amendment and consent to the waiver of the Pre-Emptive Rights.
Articles Amendment
The Articles of Incorporation of the Company currently authorise
400,000,000 total Common Shares for issuance by the Company.
Completion of the Fundraise will take the number of issued common
shares in the Company close to 400,000,000, and as such, the
Company is seeking the authority of shareholders to amend and
restate the Articles of Incorporation of the Company to increase
the total number of shares which the Company has authority to issue
to 600,000,000 shares of common stock in order to issue additional
shares pursuant to offerings or commitments that may take place in
the future, up to the amount in aggregate of 600,000,000 Common
Shares.
Pre-emptive Rights
The Articles of Incorporation of the Company provide that each
shareholder shall have a pre-emption right to purchase its pro rata
share of any new securities that the Company may propose to sell
and issue wholly for cash ("Pre-emptive Rights"), save that the
Pre-emptive Rights are subject to waiver by existing shareholders
of the Company holding 75% of the Company's outstanding Common
Shares voting in person or by proxy at an annual or special
meeting.
Shareholders holding their shares in certificated form will
shortly receive a circular and Form of Proxy for execution to
provide such written waivers, and should execute and return to
Computershare Investor Services (Jersey) Limited, c/o The
Pavilions, Bridgwater Road, Bristol BS99 6ZY or by return of a PDF
copy by email to!UKALLDITeam2@computershare.co.uk as soon as
possible and in any event before 5.30pm (London time) on 15 May
2017.
Shareholders holding their shares as depository interests in
CREST will shortly receive a circular and Form of Instruction for
execution to provide such written waivers from Computershare
Investor Services PLC and should execute and return their form for
execution by post to Computershare Investor Services PLC, The
Pavilions, Bridgwater Road, Bristol BS99 6ZY, or alternatively
instruction via CREST or email a PDF copy to Computershare Investor
Services PLC (email: !UKALLDITeam2@computershare.co.uk), as soon as
possible and in any event before 4pm (London time) on 14 May
2017.
Importance of shareholder vote
Your attention is again drawn to the fact that the Fundraise is
conditional and dependent upon, amongst other things, shareholders
approving the resolutions at the general meeting of the Company and
the cornerstone investor in the Fundraise receiving Chinese
governmental approvals to enable the investor to complete its
participation in the Subscription. In the event that such
conditions are not satisfied on or prior to 31 May 2017, the
Fundraise will not proceed.
Shareholders are asked to vote in favour of the resolutions at
the general meeting in order for the
Fundraise to proceed. However, if the resolutions are not
passed, the Chinese governmental approvals referred to above are
not obtained by 31 May 2017 or another condition of the Fundraise
is not satisfied for any reason, the Fundraise will not proceed and
the Company does not expect to have funds immediately available to
continue trading as a going concern, in which case, shareholders
will be at risk of losing all or a substantial amount of their
investment.
Application for Admission
The Company will apply for admission to AIM of the New Common
Shares on all conditions of the fundraise being satisfied.
Related party transactions
Under the AIM Rules for Companies (the "AIM Rules") a non
pre-emptive issue of shares to a related party which exceeds
specified class tests is subject to certain disclosure
requirements.
Due to their holding of over 10% of the Company's current issued
common share capital, the participation in the Placing by Invesco
Asset Management Limited ("IAML") as agent for and on behalf of its
discretionary managed clients (which has previously notified
HaloSource that the aggregate holding of these clients was
62,997,274 Common Shares, representing approximately 29% of
HaloSource's current issued common share capital) is deemed a
transaction with a related party under the AIM Rules. IAML as agent
for and on behalf of its discretionary managed clients has agreed
conditionally to subscribe for 35,733,333 Placing Shares under the
Placing, such that it will hold approximately 29% of the enlarged
issued common share capital of the Company following the Fundraise.
The directors of the Company consider, having consulted with
Liberum, that the terms of the transaction are fair and reasonable
insofar as the Company's shareholders are concerned.
Due to their holding of over 10% of the Company's current issued
common share capital, the participation in the Placing by Woodford
Investment Management ("WIM") is deemed a transaction with a
related party under the AIM Rules. WIM has conditionally agreed to
subscribe for 31,200,000 Placing Shares under the Placing, such
that it will hold approximately 25% of the enlarged issued common
share capital of the Company following the Fundraise. The directors
of the Company consider, having consulted with Liberum, that the
terms of the transaction are fair and reasonable insofar as the
Company's shareholders are concerned.
Directors, senior management and associates participation
Certain directors, members of senior management and associates
of the Company have agreed to subscribe for an aggregate of
6,871,200 Subscription Shares, further details of which are set out
below:
Subscriber Subscription Shares
James Thompson 3,200,000
Martin Coles 533,333
Kent Johnson 1,066,666
Alan Matthews 666,667
Craig Crowell 333,333
G. Scott Greenberg 1,071,201
James Thompson, Martin Coles, Kent Johnson and Alan Matthews,
directors of the Company, are related parties of the Company for
the purposes of the AIM Rules. Craig Crowell is also deemed to be a
related party of the Company by reason of his position as senior
management of the Company. Scott Greenburg is also deemed to be a
related party of the Company by reason of his prior position as
company secretary of the Company.
The participations in the Subscription as set out above are
deemed related party transactions pursuant to the AIM Rules. The
independent directors, being Jerry Wetherbee, Michael Ducey and
Massoud Entekhabi, consider, having consulted with Liberum, that
the terms of the participations in the Subscription are fair and
reasonable insofar as the Company's shareholders are concerned.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IOEURSARBVASUUR
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