TIDMCAP
RNS Number : 4749T
Clean Air Power Limited
29 September 2010
29 September 2010
Clean Air Power Ltd
("CAP" or the "Company")
Placing and Subscription of 18,000,000 new Common Shares at 12.5 pence per share
Introduction
The Company today announces that it has placed 6,416,625 Placing Shares and
issued 11,583,375 Subscription Shares, all at an Issue Price of 12.5 pence per
new Common Share, with certain institutional and other investors to raise
approximately GBP2.25 million before expenses.
The net proceeds of the Placing and Subscription will be used to supplement
working capital and to support certain existing and potential new projects.
The Issue Price of 12.5 pence per new Common Share represents a discount of 3.85
per cent. to the Company's closing mid market price on 28 September 2010 of 13
pence, as derived from the London Stock Exchange Daily Official List, being the
latest practicable date prior to the publication of this document.
A Circular has today been posted to Shareholders which sets out further details
of the Placing and Subscription and provides Shareholders with an update on
trading. The Circular is for information purposes only and does not require any
action by Shareholders.
Below is a summary of what is in the above mentioned Circular.
Current Trading
Volvo Agreements
Clean Air Power has been working in close cooperation with Volvo Powertrain, a
subsidiary of AB Volvo, for over three years in a product development
partnership. The Company announced on 19 July 2010 that it had signed a
significant new Supply Agreement with Volvo Powertrain, an agreement that
supersedes the Letter of Intent signed in January 2009.
Incorporating Clean Air Power's Dual-Fuel technology into Volvo Truck's engines,
the development project will deliver an engine with significant greenhouse gas
emission reductions and fuel cost savings compared with standard diesel engines.
In addition, the Dual-Fuel trucks are expected to be around 30 per cent. more
energy efficient than equivalent spark ignited natural gas engines. The
Dual-Fuel engine can operate using either natural-gas or bio-gas as the
vehicle's main fuel or can revert at any time to operate on diesel-only. The
Company believes that this is a critically important feature for truck operators
seeking to achieve the costs savings and carbon reduction benefits of the
Dual-Fuel engine, but who also demand the reliability and certainty of a diesel
fueled engine particularly while gas distribution networks for refuelling are
expected to face many years of development.
The agreement sets out certain commercial and technical criteria that are to be
achieved including gas substitution levels, emissions compliance, performance
and durability testing before the product launch. Clean Air Power is confident
that these milestones will be achieved based on its prior experience of
developing its technology on other manufacturers' engines.
Testing in commercial operation will begin later this year and initially will
take place in UK, Sweden and Thailand.
The AB Volvo Group is one of the largest heavy duty engine manufacturers in the
world. Volvo has stated that addressing environmental concerns is a core value
for the group. Clean Air Power is delighted to be in partnership with such a
company.
The Company also announced that it had signed a development agreement with Volvo
Bus Corporation under which Volvo and Clean Air Power will jointly develop the
installation of Dual-Fuel kits provided by Clean Air Power on existing bus
engines. The development programme is valued at GBP160,000.
In addition, the Company is pleased to report that progress is being made across
all divisions. However, sales in some instances have been delayed for certain
reasons outside of the Company's control.
Agreement with Emissions Solutions Inc.
On 26 July 2010 the Company also announced that its Houston facility had
received a significant catalytic converter order from Emissions Solutions
Inc.("ESI"). The order is worth $356,250 and is the second such order from ESI,
the first was received in April 2010 for $215,000.
ESI will use these catalysts on their 7.6L Natural Gas Engines to control
Nitrogen Oxide ("NOx"), Carbon Monoxide and Hydrocarbons. Combined with the CAP
DeNOx catalysts, the ESI engines will deliver sub EPA '10 emission levels for
their truck and bus operating customers. EPA '10 requires near-zero emissions
of particulates and NOx.
Trading Update
The Company also announced on 19 July 2010 that progress is being made across
all divisions although the Company had experienced some delays in sales of the
Dual-Fuel units for certain reasons outside of the Company's control. In
particular, the delay of a new gas facility in Tasmania has resulted in a
backlog in the delivery of units into the Australian market. BOC Limited which
is constructing the LNG facility had reported that it expected the facility to
be fully operational by end of September this year which would then open up the
Tasmanian market for the Company's technology. This has now been delayed further
but this delay should not have a significant effect on overall 2010 sales.
Components revenues are in line with expectations although lower than last year
due to reduced demand from a US defence contractor.
The Company also stated that the intense activity required to deliver the Volvo
interface programme has impacted on the commercialisation of Clean Air Power's
Genesis EDGE product. However, the Company did recently announce the first
order for 10 units from HAM Sp.
As a direct result of these delays, the Company anticipates that revenues for
the year to 31 December 2010 will be lower than had been forecast.
Good progress has also been achieved in other areas, including the agreements
with Navistar, Inc. where it is planned that the current Concept Development
Project will move to full Product Development. In order to make this progress
certain technical milestones need to be achieved and the cooperation on Navistar
and its tier one suppliers will be required.
The Dual-Fuel Snow-Blower project announced in May is also progressing well.
The Company continues to identify further projects with other leading engine and
vehicle manufacturers.
As at 31 August 2010 the Company's cash balance was GBP0.9m.
Details of the Placing and Subscription
The Company has raised GBP2.25 million, by way of a Placing and Subscription of
18,000,000 new Common Shares at the Issue Price of 12.5 pence per new Common
Share. The Placing and Subscription will raise approximately GBP2.15 million
net of expenses.
The Placing Shares and Subscription Shares will represent approximately 24.33
per cent. of the share capital of the Company as enlarged by the Placing and the
Subscription. The Issue Price of 12.5 pence per new Common Share represents a
3.85 per cent. discount to the closing mid market price of 13 pence per new
Common Share on 28 September 2010, as derived from the London Stock Exchange
Daily Official List, being the latest practicable date prior to the publication
of this document.
The Company has entered into agreement directly with certain investors who will
be issued Subscription Shares by the Company. The Subscription Shares will be
issued to those subscribers on the same terms as the Placing Shares and will
carry the same rights.
Neither the Placing nor the Subscription are either a rights issue nor an open
offer and neither the Placing Shares nor the Subscription Shares will be offered
generally to Shareholders on a pre-emptive basis. The Directors believe that
the considerable extra cost and delay involved in a rights issue or open offer
would not be in the best interests of the Company in the circumstances.
Accordingly, the Board considers that it is in the best interests of the Company
and Shareholders as a whole for the funds to be raised through the Placing and
Subscription.
The Placing and Subscription Shares are being issued out of the Company's
current authorities.
Application has been made to the London Stock Exchange for the new Common Shares
to be admitted to trading on AIM. It is expected that admission of the new
Common Shares to trading on AIM will become effective and that trading in the
Placing and Subscription Shares will commence on AIM at 8.00 a.m. on 30
September 2010.
The new Common Shares will, when issued and fully paid, rank equally in all
respects with the existing Common Shares, including the right to receive any
dividend or other distribution declared, made or paid after the date of their
unconditional allotment.
It is expected that share certificates for the Placing Shares and the
Subscription Shares which are to be held in certificated form will be despatched
to placees by 6 October 2010. The Placing Shares will be in registered form and
no temporary documents of title will be issued.
Related party transaction
Credit Suisse, a current Shareholder of 18,304,058 existing Common Shares,
representing 32.70 per cent. of the existing share capital is considered to be a
related party as defined under the AIM Rules by virtue of its shareholding.
Immediately following admission of the new Common Shares, Credit Suisse will
hold 21,704,058 new Common Shares representing approximately 29.34 per cent. of
the enlarged share capital and of the voting rights attaching to such capital.
Credit Suisse's participation in the Subscription is considered to be a related
party transaction for the purposes of AIM Rule 13, and the Directors, having
consulted with Charles Stanley, the Company's nominated adviser, consider the
terms on which Credit Suisse is participating in the Subscription to be fair and
reasonable insofar as the Company's Shareholders are concerned.
General Information
All of the Directors have agreed to participate in the Placing on the basis set
out below:
+-------------+-----------+-----------+--------------+------------+
| Name | Existing | No. of | Shareholding | Percentage |
| | Holding | Placing | following | of |
| | | Shares | Placing | Enlarged |
| | | | | Share |
| | | | | Capital |
+-------------+-----------+-----------+--------------+------------+
| | | | | |
+-------------+-----------+-----------+--------------+------------+
| John | 740,705 | 160,000 | 900,705 | 1.22% |
| Pettitt | | | | |
+-------------+-----------+-----------+--------------+------------+
| Peter Rowse | 132,946 | 20,000 | 152,946 | 0.21% |
+-------------+-----------+-----------+--------------+------------+
| Rodney | 74,143 | 40,000 | 114,143 | 0.15% |
| Westhead | | | | |
+-------------+-----------+-----------+--------------+------------+
| Ulrich | 57,143 | 40,000 | 97,143 | 0.13% |
| Woehr | | | | |
+-------------+-----------+-----------+--------------+------------+
| Bernard | 25,000 | 40,000 | 65,000 | 0.09% |
| Lord | | | | |
+-------------+-----------+-----------+--------------+------------+
The following investors are participating in the Placing or Subscription and
have disclosed their interest to the Company, and immediately following the
Placing and Subscription will hold 3 per cent. or more of the Company's issued
Common Shares:
+----------------+------------+--------------+--------------+------------+
| Name | Existing | No. of | Shareholding | Percentage |
| | Holding | Placing / | following | of |
| | of | Subscription | Placing & | Enlarged |
| | Common | Shares | Subscription | Share |
| | Shares | | | Capital |
+----------------+------------+--------------+--------------+------------+
| | | | | |
+----------------+------------+--------------+--------------+------------+
| Credit Suisse | 18,304,058 | 3,400,000 | 21,704,058 | 29.34% |
+----------------+------------+--------------+--------------+------------+
| Henderson | 3,441,572 | 3,100,000 | 6,541,572 | 8.84% |
+----------------+------------+--------------+--------------+------------+
| Royal Bank of | 3,967,459 | 1,534,024 | 5,501,483 | 7.44% |
| Canada | | | | |
+----------------+------------+--------------+--------------+------------+
| Emerson Family | 1,436,693 | 4,000,000 | 5,436,693 | 7.35% |
+----------------+------------+--------------+--------------+------------+
| Ardsley | - | 2,597,403 | 2,597,403 | 3.51% |
| Partners | | | | |
+----------------+------------+--------------+--------------+------------+
Placing Statistics
+----------------------------------------------+--------------+
| Issue Price | 12.5p |
+----------------------------------------------+--------------+
| Number of Common Shares in issue at the date | 55,997,244 |
| of this document | |
+----------------------------------------------+--------------+
| Number of Placing Shares to be issued | 6,416,625 |
+----------------------------------------------+--------------+
| Number of Subscription Shares to be issued | 11,583,375 |
+----------------------------------------------+--------------+
| Market capitalisation of Clean Air Power at | GBP9.2m |
| the Issue Price immediately following | |
| admission of the Placing Shares | |
+----------------------------------------------+--------------+
| Number of Common Shares in issue immediately | 73,977,244 |
| following Admission | |
+----------------------------------------------+--------------+
| Placing Shares and Subscription expressed as | 32.16% |
| a percentage of the existing share capital | |
+----------------------------------------------+--------------+
| Gross proceeds of the Placing and | GBP2.25m |
| Subscription | |
+----------------------------------------------+--------------+
| Estimated net proceed of the Placing and | GBP2.15m |
| Subscription | |
+----------------------------------------------+--------------+
For further information please contact:
Clean Air Power +44
(0)1772 624499
John Pettitt, Chief Executive
Peter Rowse, Finance Director
Charles Stanley Securities +44 (0)20
7149 6000
Nominated Adviser
Russell Cook
Carl Holmes
Buchanan Communications +44 (0)20 7466
5000
Charles Ryland
Ben Romney
DEFINITIONS
The following definitions apply throughout this announcement, unless the context
otherwise requires:
The following definitions apply throughout this document, unless the context
otherwise requires:
+--------------------------+-------------------------------------+
| "AIM" | the AIM market of the London Stock |
| | Exchange |
+--------------------------+-------------------------------------+
| "Bermuda Companies Act" | the Companies Act 1981 of Bermuda |
| | (as amended) |
+--------------------------+-------------------------------------+
| "the Board" or "the | the directors of the Company whose |
| Directors" | names are set out on page 4 of this |
| | document |
+--------------------------+-------------------------------------+
| "Charles Stanley" | Charles Stanley Securities, a |
| | division of Charles Stanley & Co. |
| | Limited, of 25 Luke Street, London, |
| | EC2A 4AR, the Company's nominated |
| | adviser and broker, a member of the |
| | London Stock Exchange and |
| | authorised and regulated by the |
| | Financial Services Authority |
+--------------------------+-------------------------------------+
| "Circular" | the circular posted to Shareholders |
| | on 29 September containing |
| | information on the Placing and the |
| | Subscription |
+--------------------------+-------------------------------------+
| "Common Shares" | common shares with par value of |
| | US$0.001 each in the capital of the |
| | Company |
+--------------------------+-------------------------------------+
| "Company" or "Clean Air | Clean Air Power Limited, a limited |
| Power" | liability company incorporated and |
| | registered in Bermuda under the |
| | Bermuda Companies Act with the |
| | registered number EC37542 |
+--------------------------+-------------------------------------+
| "Issue Price" | 12.5 pence per new Common Share |
+--------------------------+-------------------------------------+
| "London Stock Exchange" | London Stock Exchange plc or its |
| | successor |
+--------------------------+-------------------------------------+
| "Placing" | the placing of 6,416,625 Placing |
| | Shares with institutional and other |
| | investors as described in this |
| | document |
+--------------------------+-------------------------------------+
| "Placing Agreement" | the agreement entered into on 28 |
| | September 2010 between the Company |
| | and Charles Stanley in relation to |
| | the Placing |
+--------------------------+-------------------------------------+
| "Placing Shares" | the 6,416,625 new Common Shares in |
| | the Company to be issued pursuant |
| | to the Placing |
+--------------------------+-------------------------------------+
| "Shareholders" | holders of Common Shares |
+--------------------------+-------------------------------------+
| "Subscription" | the subscription for the |
| | Subscriptions Shares by certain |
| | institutional and other investors |
| | as described in this document |
+--------------------------+-------------------------------------+
| "Subscription Shares" | the 11,583,375 new Common Shares in |
| | the Company to be issued pursuant |
| | to the Subscription |
+--------------------------+-------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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