TIDMQFI
RNS Number : 7483J
Quadrise Fuels International PLC
07 December 2018
NEITHER THIS ANNOUNCEMENT NOR ANY PART OF IT CONSTITUTES AN
OFFER TO SELL OR ISSUE OR THE SOLICITATION OF AN OFFER TO BUY,
SUBSCRIBE OR ACQUIRE ANY SECURITIES IN ANY JURISDICTION IN WHICH
ANY SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL AND THE
INFORMATION CONTAINED HEREIN IS NOT FOR PUBLICATION OR
DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES,
AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF IRELAND, SOUTH AFRICA OR
ANY JURISDICTION IN WHICH SUCH PUBLICATION OR DISTRIBUTION WOULD BE
UNLAWFUL.
The information communicated within this announcement WAS deemed
to constitute inside information as stipulated under the Market
Abuse Regulations (EU) No. 596/2014 PRIOR TO ITS PUBLICATION. Upon
the publication of this announcement, this inside information is
now considered to be in the public domain.
7 December 2018
Quadrise Fuels International plc
("Quadrise", "QFI", the "Company" and together with its
subsidiaries the "Group")
Open Offer to raise up to GBP2.16 million
Quadrise announces a non-underwritten open offer to raise up to
GBP2.16 million through the issue of up to 86,220,497 new Ordinary
Shares at a price of 2.5 pence per Ordinary Share on the basis of 1
Open Offer Share for every 10 Existing Ordinary Shares held on the
Record Date (the "Open Offer").
In addition, the Open Offer presents Qualifying Shareholders
with an opportunity, provided that they take up their Open Offer
Entitlements in full, to apply for additional Open Offer Shares
through the Excess Application Facility.
A circular setting out full details of the Open Offer, including
the terms and conditions and details on how to accept the Open
Offer, (the "Circular") and an accompanying Application Form (for
Qualifying Non-CREST Shareholders) will today be posted to
Shareholders.
A copy of the Circular will shortly be available from the
Company's website at www.quadrisefuels.com.
Capitalised terms used but not otherwise defined in this
announcement bear the meanings ascribed to them in the
Circular.
Open Offer
In the third quarter of 2018 the Company was pleased to announce
the renewal of a number of existing relationships and to announce,
in November 2018, the signature of a memorandum of understanding
and MSAR(R) test programme with a European multinational integrated
oil and gas company and entry by the Company into a Co-Marketing
and Project Development Agreement (the "CMPDA") with Freepoint.
Whilst the Company has faced a number of challenges recently,
and there continues to be some way to go before the Company
anticipates being able to progress to commercial projects, QFI and
its clients believe that there are substantial opportunities in the
power generation and marine markets for MSAR(R) in the near term.
The recently announced business development milestones, which are
further described below, are positive initiatives in this
regard.
As at 30 June 2018, the Company held cash resources of GBP2.2
million. These cash balances were confirmed in the Company's final
results for the year ended 30 June 2018, to be sufficient to enable
the continue development of the business into early 2019 with, at
that time, a number of initiatives, including equity funding, under
consideration to provide longer term financing for the
business.
As at 30 November 2018, the Company had unaudited estimated cash
balances of approximately GBP1.2 million and monthly expenses of
approximately GBP220,000 per month. The Board therefore considers
that, notwithstanding the positive recent business development
initiatives, should access to additional funds not be secured by
the end of January 2019, the Board would need to consider the
commencement of an orderly winding down of the business at that
time.
As previously stated, the Board has considered a number of
funding initiatives and, following a review of the options
currently available to the Company, the Company is now making the
Open Offer to Qualifying Shareholders of up to 86,220,497 Open
Offer Shares to raise up to, approximately, a further GBP2.16
million at the Issue Price of 2.5 pence per Open Offer Share on the
basis of 1 Open Offer Share for every 10 Existing Ordinary Shares
held on the Record Date.
In addition, the Open Offer presents Qualifying Shareholders
with an opportunity, provided that they take up their Open Offer
Entitlements in full, to apply for additional Open Offer Shares
through the Excess Application Facility further described in the
Circular.
The Open Offer is expected to raise total gross proceeds of
approximately GBP2.16 million, should the Open Offer be fully
subscribed. The Issue Price represents a discount of approximately
22.5 per cent. to the closing mid-market price of 3.225 pence per
Existing Ordinary Share on 5 December 2018, being the last
practicable date prior to the publication of this document.
The Directors currently believe the funds raised as a result of
the Open Offer, will enable the Company to continue to operate and
advance its business development initiatives until early October
2019.
Each of the Directors intend to subscribe under the Open Offer,
in respect of an aggregate of 1,100,000 Open Offer Shares, with all
bar one of the Directors intending to subscribe for their entire
Open Offer Entitlements (an aggregate of 608,063 Open Offer Shares)
and certain of the Directors applying for an aggregate of 491,937
Open Offer Shares under the Excess Application Facility.
Shareholders should note that should all Open Offer Shares be
applied for, and the maximum of GBP2.16 million before expenses be
raised pursuant to the Open Offer, the Company expects to be able
to continue to develop the business and its pipeline of business
development initiatives until early October 2019 but that the
Company does not expect to have any projects generating commercial
revenues by that time.
If the Company does not receive the proceeds of the Open Offer,
the Company would be compelled to seek alternative forms of finance
and, without access to a form of additional funding prior to 31
January 2019, the Board considers that the Company's existing cash
resources will be depleted over time such that the Board would need
to consider the commencement of an orderly winding down of the
business at the end of January 2019. As further described in the
Expected Timetable of Principal Events, and subject to the
successful conclusion of the Open Offer, the net proceeds of the
Open Offer are expected to be received by the Company on 15 January
2019.
The Open Offer is conditional upon:
(i) the Open Offer Agreement being unconditional in all respects
and not having been terminated in accordance with its terms;
and
(ii) the admission of the Open Offer Shares becoming effective
by not later than 8.00 a.m. on 29 January 2019.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Record Date for Open Offer 6.00 p.m. on 5 December
2018
Announcement of the Open Offer 7 December 2018
Publication and posting of the Circular 7 December 2018
and Application Form
Existing Ordinary Shares marked 'ex' by 8.00 a.m. on 7 December
London Stock Exchange 2018
Open Offer Entitlements and Excess CREST as soon as practicable
Open Offer Entitlements credited to stock after 8.00 a.m. on 10
accounts in CREST of Qualifying CREST Shareholders December 2018
Recommended latest time for requesting withdrawal 4.30 p.m. on 7 January
of Open Offer Entitlements and Excess CREST 2019
Open Offer Entitlements from CREST
Latest time for depositing Open Offer Entitlements 3.00 p.m. on 8 January
and Excess CREST Open Offer Entitlements 2019
into CREST
Latest time for splitting Application Forms 3.00 p.m. on 9 January
(to satisfy bona fide market claims only) 2019
Latest time and date for receipt of completed 11.00 a.m. on 11 January
Application Forms and payment in full under 2019
the Open Offer and settlement of relevant
CREST instructions (as appropriate)
Expected date of announcement of the results 14 January 2019
of the Open Offer
Expected time and date Admission effective 15 January 2019
and dealings in Open Offer Shares commence
on AIM
CREST accounts credited in respect of Open 15 January 2019
Offer Shares
Share certificates dispatched for the Open 29 January 2019
Offer Shares by
For further information, please refer to the Company's website
at www.quadrisefuels.com, or contact ir@quadrisefuels.com or
phone:
Quadrise Fuels International Plc
Mike Kirk, Executive Chairman +44 (0)20 7031 7321
Jason Miles, Chief Operating Officer
Nominated Adviser
Smith & Williamson Corporate Finance Limited
Dr Azhic Basirov +44 (0)20 7131 4000
Ben Jeynes
Katy Birkin
Joint Brokers
Peel Hunt LLP
Richard Crichton +44 (0)20 7418 8900
Ross Allister
Stockdale Securities
Andy Crossley
Daniel Harris +44 (0)20 7601 6108
Public & Investor Relations
FTI Consulting
Ben Brewerton +44 (0)20 3727 1000
Sara Powell
Background to and reasons for the Open Offer
As stated in the Company's Final Results for the 12 months ended
30 June 2018, announced on 24 September 2018, the Company has seen
some major challenges. Most notable of these, announced on 26 March
2018, was the inability of our oil company partner in the Kingdom
of Saudi Arabia ("KSA") to reach agreement with the local power
company to progress the commercial scale trial project, as they had
promised. Following this announcement, a strategic decision was
made to broaden our engagement in our global markets, whilst
ensuring that QFI retains appropriate focus and control. Outcomes
of this process were agreements with JGC and Freepoint which are
enabling us to work collaboratively to access their established
networks for mutual benefit. The Company has also signed agreements
with agents to explore specific opportunities, and continues
commercial dialogue with a number of major corporations where there
is a similar alignment of interests in the fuel and bitumen
industries respectively. The timescales over which QFI would
therefore expect our proposed project portfolio to generate
revenues have therefore extended beyond those anticipated when the
Company last raised equity funds in October 2016. As at 30 November
2018, the Company had unaudited cash balances of approximately
GBP1.2 million.
During Q3 2018 the Company announced the renewal of a number of
existing partnerships and, importantly, in November 2018 was
pleased to announce both the memorandum of understanding and
MSAR(R) Pilot Test Programme with a European multinational oil and
gas major, and the entry of a Co-Marketing and Project Development
Agreement ("CMPDA") with Freepoint respectively.
Freepoint, which is based in Stamford, Connecticut, is both an
established global merchant of physical commodities and a financer
of upper and mid-stream commodity-producing assets. Freepoint also
provides physical supply services and related structured solutions
for counterparties located throughout the world.
The CMPDA provides a clearly defined structure for Quadrise and
Freepoint to work together to progress MSAR(R) projects to
long-term commercial agreements for the production and supply of
MSAR(R) fuel to defined territories and counterparties on an
exclusive basis. The preferred business model for both parties
under the CMPDA is to 'Build Own and Operate' ("BOO") a facility
jointly, to purchase residual streams under long-term contracts
from a refiner and enter into back to back contracts with other
counterparties for the supply of MSAR(R) fuels. Financial returns
under the CMPDA are based on the respective party's contributions
to bringing the project to fruition.
Building on the concepts established under the Memorandum of
Understanding signed in July 2018, now under the CMPDA, Quadrise
and Freepoint will investigate and pursue a carefully selected and
mutually agreed list of MSAR(R) project opportunities. The parties
will initially focus on the Americas, the Middle East and Asia,
with the intention of jointly investing in projects on a BOO basis.
In addition, there may be circumstances where a decision is taken
by both parties to pursue a project on a tolling or licensing basis
and the CMPDA defines the relevant participation of the parties in
those circumstances. If QFI chooses not to participate in a project
targeted by the CMPDA, the Company will grant Freepoint a licence
to QFI's technology to build and operate a project on a
site-by-site basis. The term of the CMPDA is 36 months, after which
time it will continue unless terminated by either party with 24
months' notice.
Under the CMPDA the Company looks forward to advancing, together
with Freepoint, the identified target list of third-party prospects
to signed commercial terms at the earliest opportunity.
The Company's existing cash balances are expected to provide
sufficient funding to allow the Company to continue to operate and
advance its business development initiatives until the end of
January 2019 and the Company does not expect to be able to advance
any secured project to the stage of positive cash flow generation
in this timeframe.
As a result, the Board believes it is appropriate to raise
additional funds by way of the Open Offer. In addition to the
proceeds of the Open Offer providing additional core funding, the
Board believes that it is prudent to ensure that the Company has a
resilient capital base as it enters the negotiation of contracts
with prospective clients.
Given the longstanding support of Shareholders, including a
large number of private shareholders, the Company is making the
Open Offer available to Qualifying Shareholders of up to 86,220,497
Open Offer Shares at the Issue Price of 2.5 pence per Open Offer
Share.
The net proceeds from the Open Offer, assuming the maximum
number of Ordinary Shares are applied for, together with the
Company's existing cash balances, are expected to provide
sufficient funding to allow the Company to continue to operate and
advance its business development initiatives until early October
2019.
If the Company does not receive additional funding prior to 31
January 2019 pursuant to the Open Offer, or pursuant to a less
attractive financing alternative secured thereafter, the Board
considers that it would need to consider the commencement of an
orderly winding down of the business at that time.
Views of the Board
The Board believes that the net proceeds of the Open Offer
(assuming that it is subscribed for in full) will be sufficient,
together with the Company's existing cash balances, to enable the
Company to continue to operate and advance its business development
initiatives until early October 2019. Without the proceeds of the
Open Offer (or to another form of financing subsequently
considered) prior to 31 January 2019, the Board considers that it
would need to consider the orderly winding down of the
business.
The Directors therefore believe that the Open Offer is in the
best interests of the Company and its Shareholders as a whole.
Each of the Directors intend to subscribe under the Open Offer,
in respect of an aggregate of 1,100,000 Open Offer Shares, with all
bar one of the Directors intending to subscribe for their entire
Open Offer Entitlements (an aggregate of 608,063 Open Offer Shares)
and certain of the Directors applying for an aggregate of 491,937
Open Offer Shares under the Excess Application Facility.
Whether or not Qualifying Shareholders decide to participate in
the Open Offer will depend, amongst other things, on their view of
the Company's prospects and on their own individual
circumstances.
Outlook - Current trading and prospects
Notwithstanding the challenges faced in key markets where the
Company has dedicated its resources over the period, QFI and our
clients believe that there are substantial opportunities in the
power generation and marine markets for MSAR(R) in the near
term.
The Company has substantially recovered from the unfortunate
setbacks during 2018 and with the recent announcements the Company
is on course to develop a broader platform and pipeline of
opportunities for MSAR(R) technology across a larger number of
projects. Whilst QFI still has some way to go to progress these to
commercial contracts, there has been a real change in the fuel oil
and distillate markets, driven by the forthcoming IMO 2020
regulations, that has fundamentally improved the economics for
MSAR(R) projects. Alongside this, adding to our existing
relationships with PowerSeraya, JGC, Freepoint, the European oil
major and others will enable us to progress new projects and to
potentially accelerate existing project opportunities globally
across a range of sectors, and QFI are working quickly to progress
these at the earliest possible opportunity.
Financial information
Audited accounts for the Group for each of the three financial
years ended 30 June 2018, 30 June 2017 and 30 June 2016 are
available on the Company's website www.quadrisefuels.com.
As at 30 November 2018, the Group's unaudited cash balance was
approximately GBP1.2 million. The net proceeds of the Open Offer,
if fully subscribed, will materially enhance the Company's
unaudited cash balances.
Use of proceeds
The Board believes that the net proceeds of the Open Offer, if
fully subscribed, will provide sufficient funding to allow the
Company to continue to operate and advance its business development
initiatives until early October 2019. The Directors currently
consider that the Company will be required to raise further capital
in the future in order to develop any project to the stage where
that project can generate net positive cash flow from continuing
operations.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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