TIDMVLS
RNS Number : 4575F
Velocys PLC
15 July 2019
News release
Velocys plc
("Velocys" or the "Company")
15 July 2019
Fundraise of GBP7M. Project co-funding by BA & Shell of
GBP2.8M
Velocys plc (VLS.L), the renewable fuels technology company, is
pleased to announce that it has secured GBP7 million (gross) by way
of a Placing.
Highlights:
-- Fund raising of GBP7 million (before expenses):
-- Placing of 233,333,335 New Ordinary Shares (the "Placing
Shares") at a placing price of 3 pence per share (the "Placing
Price") (the "Placing") by certain existing shareholders and new
institutional investors
-- Net proceeds of the Placing will be used predominantly: (i)
to complete the development capital fund raising and initial stages
of development of the Front End Engineering Design (FEED) for the
Mississippi Biorefinery Project; (ii) to strengthen and extend the
Company's intellectual property portfolio; (iii) for working
capital and central costs; and (iv) on analysing and testing
catalyst and Fischer-Tropsch reactors from the recently completed
full scale demonstration run in Oklahoma
-- The Placing complements commitments received by the Company from the Altalto Immingham waste-to-sustainable-fuels project's strategic partners, British Airways and Shell, of GBP2.8 million in total.
Henrik Wareborn, CEO of Velocys, said:
"I am delighted with the level of support Velocys has received
from existing and new institutional investors. This complements the
commitments by Shell and British Airways to co-fund the remaining
pre-FEED project work to bring the Altalto Immingham biorefinery
project to the same state of pre-FEED completion as our Bayou Fuels
project in Mississippi. As a result we can provide strategic
partners with two truly sustainable fuel projects, and a solution
that can be deployed widely to decarbonise aviation and heavy goods
transport."
The Placing
The Company has proposed a fundraise of approximately GBP7
million, before expenses, by way of a conditional, non-pre-emptive
placing of 233,333,335 Placing Shares at the Placing Price. The
Placing has been arranged by Numis Securities Limited, Canaccord
Genuity Group and Peat & Co and is not being underwritten.
The Placing is conditional (amongst other things) upon the
passing of certain resolutions. A General Meeting is being convened
for the purpose of considering the relevant resolutions at 10.30
a.m. on 31(st) July 2019 at the offices of Mayer Brown
International LLP, 201 Bishopsgate, London, EC2M 3AF.
Detailed terms and conditions applicable to the Placing are
provided in the appendix to this announcement.
- Ends -
Notes to editors
Velocys is a sustainable fuels technology company. Originally a
spin-out from Oxford University, in 2008 the Company acquired a US
company based on complementary technology developed at the Pacific
Northwest National Laboratory. Over 15 years Velocys has developed
proprietary Fischer-Tropsch technology that enables the production
of drop-in transport fuels from a variety of waste materials.
Having demonstrated its technology at commercial scale, the Company
is currently developing projects in Natchez, Mississippi, USA and
Immingham, UK to produce fuels that significantly reduce both
greenhouse gas emissions and key exhaust pollutants for aviation
and road transport.
For further information, please contact:
Velocys +44 1235 838
Henrik Wareborn, CEO 621
Numis Securities (Nomad and joint broker)
Alex Ham
Stuart Skinner
Tom Ballard +44 20 7260 1000
Canaccord Genuity (Joint broker)
Henry Fitzgerald-O'Connor
James Asensio +44 20 7523 8000
Camarco (Financial communications & PR)
Billy Clegg
Tom Huddart +44 20 3757 4983
Certain information contained in this announcement would have
constituted inside information (as defined by Article 7 of
Regulation (EU) No 596/2014) ("MAR") prior to its release as part
of this announcement. In addition, market soundings (as defined in
MAR) were taken in respect of the Placing with the result that
certain persons became aware of inside information (as defined in
MAR), as permitted by MAR. Therefore, those persons that received
inside information in a market sounding are no longer in possession
of such inside information relating to the Company and its
securities.
IMPORTANT NOTICES
This document does not constitute an offer to buy, acquire or
subscribe for, or the solicitation of an offer to buy, acquire or
subscribe for, Placing Shares or an invitation to buy, acquire or
subscribe for the Placing Shares in any jurisdiction. This document
has not been filed with, examined or approved by the Financial
Conduct Authority or the London Stock Exchange or any other
regulatory authority.
Numis Securities Limited ("Numis"), which is authorised and
regulated in the United Kingdom by the Financial Conduct Authority
and is a member of the London Stock Exchange, is acting as
nominated adviser and joint broker to the Company for the purposes
of the AIM Rules. Canaccord Genuity Limited ("Canaccord"), which is
authorised and regulated in the United Kingdom by the Financial
Conduct Authority and is a member of the London Stock Exchange, is
acting as joint broker to the Company for the purposes of the AIM
Rules. Numis and Canaccord are each acting exclusively for the
Company in connection with the Placing, and will not be responsible
to anyone other than the Company for providing the protections
afforded to their respective clients or for providing advice in
relation to the proposals in this document or any other matter
referred to in this document. Neither Numis nor Canaccord have
authorised the contents of this document for any purpose and,
without limiting the statutory rights of any person to whom this
document is issued, no representation or warranty, express or
implied, is made by either Numis or Canaccord as to any of the
contents or completeness of this document.
This announcement contains (or may contain) certain
forward-looking statements with respect to certain of the Company's
current expectations and projections about future events. These
statements, which sometimes use words such as "anticipate",
"believe", "intend", "estimate", "expect" and words of similar
meaning, reflect the directors' beliefs and expectations and
involve a number of risks, uncertainties and assumptions that could
cause actual results and performance to differ materially from any
expected future results or performance expressed or implied by the
forward-looking statement. Statements contained in this
announcement regarding past trends or activities should not be
taken as a representation that such trends or activities will
continue in the future. The Information contained in this
announcement Is subject to change without notice and neither Numis,
Canaccord nor, except as required by applicable law, the Company
assumes any responsibility or obligation to update publicly or
review any of the forward-looking statements contained herein. You
should not place undue reliance on forward-looking statements,
which speak only as of the date of this announcement.
The distribution of this announcement outside the United Kingdom
may be restricted by law and therefore any persons outside the
United Kingdom into whose possession this announcement comes should
inform themselves about and observe any such restrictions as to the
Placing, the Placing Shares and the distribution of this
announcement. Any failure to comply with such restrictions may
constitute a violation of the securities laws of any jurisdiction
outside of the United Kingdom. This announcement does not
constitute an offer to sell or an invitation to subscribe for, or
the solicitation of an offer to buy or to subscribe for, shares in
any jurisdiction in which such an offer or solicitation is
unlawful. In particular, this announcement is not for release,
publication or distribution, directly, or indirectly, in whole or
in part, in, into or from the United States, Australia, New
Zealand, Canada, the Republic of South Africa, Japan or to any US
Person, or any national, resident or citizen of Australia, New
Zealand, Canada, the Republic of South Africa or Japan. No offering
of Placing Shares, or any other securities of the Company, is being
made in the United States and this announcement, and the
information contained herein, does not constitute an offer to sell
or a solicitation of an offer to buy any Placing Shares or any
other securities of the Company in the United States.
No person has been authorised to give any information or to make
any representation other than those contained in this announcement
(or the circular to be sent to Shareholders today) in connection
with the Placing and Admission and, if given or made, such
information or representation must not be relied upon as having
been authorised by or on behalf of the Company, Numis or Canaccord
or any of their respective directors, employees or officers.
Information to Distributors
Solely for the purposes of the product governance requirements
of Directive 2014/65/EU on markets in financial instruments, as
amended ("MiFID II") and local implementing measures, and
disclaiming all and any liability, whether arising in tort,
contract or otherwise, which any "manufacturer" (for the purposes
of the Product Governance Requirements) may otherwise have with
respect thereto, the Placing Shares have been subject to a product
approval process, which has determined that such Placing Shares
are: (i) compatible with an end target market of retail investors
and investors who meet the criteria of professional clients and
eligible counterparties, each as defined in MiFID II; and (ii)
eligible for distribution through all distribution channels as are
permitted by MiFID II (the "Target Market Assessment").
Notwithstanding the Target Market Assessment, Distributors should
note that: the price of Placing Shares may decline and investors
could lose all or part of their investment; Placing Shares offer no
guaranteed income and no capital protection; and an investment in
Placing Shares is compatible only with investors who do not need a
guaranteed income or capital protection, who (either alone or in
conjunction with an appropriate financial or other adviser) are
capable of evaluating the merits and risks of such an investment
and who have sufficient resources to be able to bear any losses
that may result therefrom. The Target Market Assessment is without
prejudice to any contractual, legal or regulatory selling
restrictions in relation to the Placing. For the avoidance of
doubt, the Target Market Assessment does not constitute: (a) an
assessment of suitability or appropriateness for the purposes of
MiFID II; or (b) a recommendation to any investor or group of
investors to invest in, or purchase, or take any other action
whatsoever with respect to the Placing Shares.
1. Introduction
The Board announced on 15 July 2019 that it proposes to raise,
subject to certain conditions approximately GBP7 million (before
expenses) by way of a conditional placing of 233,333,335 Placing
Shares at a placing price of 3 pence per share to certain
institutional and other investors. The Placing complements
commitments received by the Company from the Altalto Immingham
Project's strategic partners, British Airways and Shell, of GBP2.8
million in total towards the final pre-FEED stage, planning
permission and completion of commercial arrangements for the
Altalto Immingham Project, further details of which are set out in
paragraph 2(a) below.
The Directors intend to use the net proceeds raised by the
Placing of approximately GBP6.5 million as follows: (i) GBP0.4
million to complete the development capital fund raising and
preparation of the FEED for the Mississippi Biorefinery Project;
(ii) GBP0.5 million to be used to strengthen and extend the
Company's intellectual property portfolio; (iii) GBP5.2 million to
be used for working capital and central costs; and (iv) GBP0.4
million on analysing and testing catalyst and Fischer-Tropsch
reactors from the recently completed full scale demonstration run
in Oklahoma. The contribution from British Airways and Shell of
GBP2.8 million in total covers the final stage of the pre-FEED,
planning permission and commercial pre-contracting of the Altalto
Immingham Project, means no further net contribution will be
required to be made by the Company until the first quarter of 2020
for the full FEED work. Further funding will be required at that
stage to execute the full FEED work, being the next stage on both
the Mississippi Biorefinery Project and the Altalto Immingham
Project. However, it is expected that the large majority of this
further funding will be provided by further commitments from
strategic partners.
The Placing is conditional (amongst other things) upon the
passing of certain resolutions in order to ensure that the
Directors have the necessary authorities and powers to allot the
Placing Shares for cash on a non- pre-emptive basis. A General
Meeting is therefore being convened for the purpose of considering
the Resolutions at 10.30 a.m. on 31 July 2019 at the offices of
Mayer Brown International LLP, 201 Bishopsgate, London, EC2M 3AF.
The Notice of General Meeting is set out at the end of this
document. The Placing is also conditional on the Placing Agreement
between the Company, Numis and Canaccord becoming unconditional and
not being terminated in accordance with its terms. The Placing is
not underwritten.
The purpose of this document is to provide you with details of,
and the reasons for, the Placing and why the Directors believe it
to be in the best interests of the Company and its Shareholders
and, further, why they recommend that you vote in favour of the
Resolutions. The Directors intend to vote in favour of the
Resolutions in respect of their legal and/or beneficial
shareholdings amounting, in aggregate, to 1,640,789 Ordinary Shares
representing approximately 0.4 per cent. of the Ordinary Shares in
issue as at the date of this document.
Further details of the Placing are set out in paragraph 6 of
this document.
2. Information on the Company's projects
(a) UK waste-to-sustainable fuels project: Altalto Immingham Ltd. (Altalto)
Overview
In September 2017, the Company entered into a joint development
agreement with various parties to execute a feasibility study for a
commercial scale waste-to-sustainable fuels plant in the United
Kingdom. The plant will take household and commercial and
industrial waste, which after recyclates have been removed would be
destined for landfill or incineration, and instead convert the
waste into clean-burning, sustainable aviation fuel and naphtha.
The Directors believe that the changes to the Renewable Transport
Fuels Obligation which came into force on 15 April 2018 can provide
the required policy support for this opportunity as sustainable
aviation fuel now qualifies for credits under the Renewable
Transport Fuels Obligation. Velocys, Shell and British Airways are
the commercial partners in the project.
The initial feasibility stage of the project was successfully
completed in June 2018. At that time, GBP4.9 million of funding was
secured from the partners, including Velocys, to deliver the next
development phase of the project. British Airways and Shell have
now agreed to commit GBP1.4 million each for a total of GBP2.8
million of funding to cover the remaining pre-FEED work for the
Altalto Immingham Project. This includes completion of pre-FEED
engineering work currently in final stages, planning and
permitting, utilities supplies and FEED preparation. Velocys
continues to execute all the work to progress the Altalto Immingham
Project to FEED in line with the JDA. The Directors believe that
British Airways' and Shell's willingness to commit significant
amounts to this project supports Velocys' strategy and proprietary
technology and validates its commercial offering. As part of the
funding package, a grant of GBP0.4 million was secured from the UK
Department for Transport under the Future Fuels for Flight and
Freight Competition.
On 18 December 2018, a site was secured for the project. The
site of approximately 80 acres, near Immingham, North East
Lincolnshire, is in an enterprise zone and earmarked for industrial
development within the local plan. Development is subject to
planning consent and the formal planning application process began
in February 2019, with the application due in July 2019. Access to
the site is by way of an option agreement, entered into by Altalto
Immingham Ltd ("Altalto"), a subsidiary of Velocys, on 18 December
2018. The agreement gives Altalto the right, but not the
obligation, to acquire the entire issued share capital of Rula
Developments (Immingham) Limited, the company which owns the site,
from its current shareholders, for up to three years.
The final pre-FEED phase will be completed during the second
half of 2019 and the FEED is expected to commence in the first
quarter of 2020. The second quarter of 2021 is the targeted date
for financial close, with construction of the plant expected to
commence by 30 September 2021 following financial close.
Construction is currently targeted to be completed by 31 January
2024, following which commercial operation is expected to commence
by 31 December 2024.
The decision as to whether to proceed with the acquisition of
the Immingham site will be made as part of the final investment
decision, currently scheduled for 30 June 2021. In the event that
the Company, in consultation with its partners, decides not to
proceed with the acquisition of the site, the liabilities that may
be incurred by the Company as a result of not taking up the option
to acquire the site are not expected to be material to Velocys.
The Directors believe that Velocys has a rare solution for one
of the most challenging sectors to decarbonise. Velocys' solution
enables low carbon air travel from its ability to unlock the
trapped energy of abundant waste feedstocks.
Sustainable aviation fuels represent a significant global
opportunity, with the value of decarbonisation far exceeding the
value of the fuel. There is no equivalent of ethanol or biodiesel
for the aviation industry - all approved sustainable aviation fuels
are hydrocarbon based. Five synthetic routes have been certified
under the ASTM D7566 standard and, of these, only hydrogenated
esters and fatty acids (HEFA) are in production today, and
qualifying feedstock is limited. The Fischer-Tropsch route allows
the use of large-volume sustainable feedstocks (woody biomass and
municipal solid waste) and generates a clean burning fuel. There
are estimated to be over 15 million tonnes per year of available
waste generated in the UK that the Directors believe is suitable
for use as feedstock for this project. UK jet fuel demand is
currently estimated to be 4 billion gallons per year, which is
predicted to grow by a 1 per cent. compound annual growth rate to
4.6 billion gallons per year in 2040. The Renewable Transport Fuel
Obligation development fuel target for 2022 is 100 million
gallons (which is the total volume of qualifying fuels produced
in the UK for which double Renewable Transport Fuel Certificates
are payable). Further, as of 11 January 2018, 73 countries
representing 87.7 per cent. of international aviation activity have
voluntarily signed up to the Carbon Offsetting and Reduction Scheme
for International Aviation which will become compulsory as of
2026.
Indicative project revenue
The Directors believe that the plant for the Altalto Immingham
Project will produce an output of 20 million gallons per year once
it is fully operational, and the Company will receive certain of
the associated royalties. It is expected that revenue will be
distributed as follows: 13 per cent. from fuels, 51 per cent. from
environmental credits and 36 per cent. from waste gate fee revenue.
The yield adjusted revenue per gallon is expected to be distributed
as follows: $1.20 from jet, $0.48 from naphtha, $4.67 from gate
fees, $0.04 from carbon credits and $6.68 from development fuel
Renewable Transport Fuel credits and, of that, $3.07 is expected to
be attributable to cost of goods sold, $2.47 is expected to be
attributable to operating expenditure, and $7.52 is expected to be
gross margin. Specifically, the Company is targeting unlevered
returns for the project of 12 per cent., with levered IRRs in the
mid-teens or higher. All values are indicative, based on Velocys
internal/proprietary information, which has not been verified by
any independent source, unless specifically noted. Where project
specific numbers are used, these are indicative and will be refined
as engineering studies are completed and will be communicated in
due course. The key assumptions are the core capex costs as set out
in the FEL 2 engineering work completed by AECOM along with the
assumptions around the revenue, cost of goods sold and the
operational costs which are supported where possible with third
party quotes or estimates.
(b) Mississippi Biorefinery Project
Overview
In October 2017, the Company signed a site option agreement with
Adams County in the State of Mississippi for its second US
biorefinery to be located in Natchez, Mississippi and secured total
incentives of approximately $60 million.
The Company began the process of selecting strategic partners
for its Mississippi Biorefinery Project in early 2017 and has
reached the contract stage with a select number of the important
suppliers into the project. Site environmental permitting is
ongoing and the environmental assessment required under the
National Environmental Policy Act has been completed and the
"finding of no significant impact" has been awarded to the project.
The Company is now focusing on securing the state-level permits
that will be required to construct and operate the biorefinery.
Pre-FEED has been completed.
Velocys and ThermoChem Recovery International Inc. have
undertaken an integrated gasification/Fischer-Tropsch technology
demonstration in Durham, North Carolina, which demonstrated 950
hours of runtime. A final product upgrade pilot run has also been
completed over 12 weeks at Haldor Topsøe A/S in Denmark, generating
final product samples of diesel, jet fuel and naphtha for further
fuel blending studies. Technical review of the project by an
independent engineer has also been completed.
The Company has commenced a structured, competitive process to
secure the necessary development capital investment by one or more
strategic partners and has seen interest from multiple parties.
Detailed due diligence by potential strategic partners continues.
The Company has continued to optimise its project plans including
in respect of plant sizing and plant design, consequently reducing
the capital requirements and improving expected returns of the
plant. Project plans have evolved during discussions with potential
strategic partners, with the result of the addition of a solar
energy plant to provide power to the plant instead of a biomass
boiler and the contracting with a large oil company to sequestrate
the CO2 generated by the plant. The effect of these changes on the
carbon intensity score of the plant's product output is to make it
negative, which is desirable for buyers of the products and
improves decarbonisation revenues further.
Equity letters of intent in relation to the Mississippi
Biorefinery Project may be entered into during the second half of
2019, with FEED preparation expected to be completed during the
first half of 2020. Signature of the final commercial agreements
for the project, FID and financial close is expected by 30 October
2021, following which plant construction is expected to commence by
1 February 2022. Construction is targeted to be completed by 31
March 2024, plant commissioning is expected to begin during 2024,
with operations targeted to commence by 31 January 2025.
The Fischer Tropsch technology enables an economic conversion of
a wide range of low cost, abundant feedstocks such as woody biomass
(and municipal waste) into high value fuels. These fuels qualify
for high value credits in the United States under the Renewable
Fuels Standard and the United Kingdom under the Renewable Transport
Fuels Obligation. The fuels meet demands for particulate and
greenhouse gas reduction with up to 90 per cent. and 70 per cent.
reduction respectively. The fuels are entirely "drop in" into
conventional fossil fuels, fully leveraging existing engines and
logistics infrastructure. In addition, there are no blend
limitations for naphtha and diesel (50 per cent. for jet fuel). No
client adoption is therefore required.
The signature of the site option agreement completes one of the
work packages required for the US Department of Agriculture loan
guarantee application. The Company was invited to submit a Phase II
application for the loan guarantee in June 2017, which could apply
to up to $200 million of debt as part of the total installed cost
of the project. The Company has engaged Sumitomo Mitsui Banking
Corporation ("SMBC") as the lender of record and as its financial
advisor. A preliminary credit committee hearing is expected to take
place with SMBC in due course with the final Credit Committee
hearing thereafter as the project nears completion.
Indicative project revenue
The Company will receive certain of the associated royalties
from the plant once it is fully operational. There is significant
value uplift from feedstock at equivalent US Dollars per gallon to
final products at $12.33 per gallon of which federal credits will
comprise approximately 42 per cent., state credits approximately 43
per cent. and plant product revenues approximately 15 per cent. The
design nameplate of the plant will be 24 million gallons per
year.
Of the expected revenues, Federal renewable fuel credits will
comprise approximately 42 per cent., LCFS state credits
approximately 43 per cent. and product revenues approximately 15
per cent.. The yield adjusted revenue per gallon is expected to be
distributed as follows: $1.47 from diesel, $0.34 from naphtha,
$5.17 from RIN credits and $5.35 from LCFS credits and, of that,
$2.21 is expected to be attributable to cost of goods sold, $3.53
is expected to be attributable to operating expenditure, and $6.59
is expected to be gross margin. Specifically, the Company is
targeting unlevered returns for the project of 13.5 per cent., with
levered IRRs in the mid-teens or higher.
The Company estimates total costs of the project as $910
million, broken down as $576 million of core capital expenditure,
$76 million of construction costs, $148 million of other costs and
$110 million of financing costs. The Company does not expect to
contribute to such project costs which are expected to be funded by
strategic partners. The Company further estimates project EBITDA of
$133 million, broken down as $249 million of product revenues, less
$45 million cost of goods sold and $71 million of operating
expenditure on an annual basis.
All values are indicative, based on Velocys internal/proprietary
information, which has not been verified by any independent source,
unless specifically noted. Where project specific numbers are used,
these are indicative and will be refined as engineering studies are
completed and will be communicated in due course. The key
assumptions are the core capex costs as set out in the FEL 2
engineering work completed by AECOM along with the assumptions
around the revenue, cost of goods sold and the operational costs
which are supported where possible with third party quotes or
estimates.
(c) Client service
Velocys' strategy is to initially develop two full scale
biorefinery projects with strategic partners and license its
Fischer-Tropsch technology to these two projects and to third party
developers such as RedRock Biofuels, RRB. As licensor, Velocys will
also offer its clients a range of engineering services in support
of commissioning and start-up as well as catalyst loading,
regeneration and discharge.
In May 2018, Velocys received a "notice to proceed" action to
commence manufacturing of the Fischer-Tropsch reactors and catalyst
for the Red Rock Biofuels LLC ("RRB") biorefinery that will be
located in Lakeview, Oregon, USA. RRB has commenced construction of
the biorefinery, which will incorporate Velocys' technology, and
produce low-carbon, renewable diesel and jet fuel from woody
biomass. Velocys' role in this project is as a licensor for its
Fischer-Tropsch technology to be used for the project.
The biorefinery in Lakeview will convert forestry residue into
approximately 15 million gallons per year of renewable
transportation fuels including diesel and jet fuel. RRB has in
place contracts from several airlines to purchase 100 percent of
the jet fuel produced each year. RRB's Lakeview project is expected
to deliver around GBP9.2 million of revenue to Velocys during the
construction and early operation stages of the plant, and an
additional GBP23.5 million or more over the life of the
biorefinery.
GBP4.5 million has already been invoiced by the Company and
received from RRB.
Velocys is currently training and qualifying its supply chain so
that the Velocys propriatary catalyst and reactors can be delivered
to its clients.
(d) ENVIA: commercial scale Fisher-Tropsch reactor demonstration completed
In September 2016, construction of the first demonstration plant
incorporating the Company's Fisher- Tropsch technology was
completed and commercial scale catalyst loading was proven. In
February 2017, the first Fisher-Tropsch product was successfully
produced and, in June 2017, the first finished products (being
renewable waxes, diesel and naphtha) were produced. In September
2017, the plant generated revenue for the first time. In October
2017, the plant achieved an operational capacity of 200 barrels per
day and, in early 2018, Q-RIN qualification under the Renewable
Fuels Standard was achieved, validating the pathway. The ENVIA
plant completed the demonstration of the Velocys Fischer-Tropsch
technology, with over 5,000 hours of cumulative runtime achieved
across the two Fischer-Tropsch reactors, stress testing the plant's
equipment and technology. In total, 1.6 million litres of finished
fuel and wax were delivered by the plant.
In May 2018, Velocys was informed by ENVIA that a leak had been
detected at the ENVIA plant that was believed by ENVIA to have
originated inside one of the plant's two Fischer-Tropsch reactors.
The reactor was removed from operation and the plant continued to
operate using the second Velocys Fischer-Tropsch reactor. ENVIA's
investigation identified the ancillary coolant system as the root
cause of the leak. This determination was subsequently
independently verified by ENVIA's appointed third-party insurance
company, which found that the leak was not a result of any flaw in
the core Velocys Fischer-Tropsch technology.
On 10 September 2018, operations at the ENVIA plant were
suspended and the decision was taken by Velocys that it had
accumulated a sufficient number of operating hours on the two
licensed commercial scale Fisher-Tropsch reactors for the
demonstration to be considered completed.
On 25 February 2019, ENVIA obtained a $2.3 million insurance
settlement in relation to the cooling system damage to the reactor
and on 25 March 2019, the Company entered into an agreement with
ENVIA, officially completing the return of ownership of the two
Fischer-Tropsch reactors to the Company from ENVIA. Further, on 26
April 2019, the Company agreed with ENVIA and the other ENVIA joint
venture partners to transfer rights of the site from ENVIA to
another ENVIA joint venture partner in return for the payment of
GBP3.3 million to the Company. As part of the agreements, ENVIA
agreed to sell certain parts of the site infrastructure and remove
the remaining equipment from the site. The agreements also provided
that the Company would release its liens on all equipment from the
site in return for a recovery under its collateralised loan note to
ENVIA. A total of GBP1.7 million has already been received by the
Company and an additional GBP1.6 million is expected to be paid
upon the completion of two time measured performance milestones
related to the removal of equipment during 2019.
3. Information on the Company
History and development of the Company
The key highlights in the history and development of the Company
are as follows:
-- 2001: Velocys Inc. was incorporated (by Battelle Memorial Institute)
-- 2004: Oxford Catalysts was formed (as a spin out from the University of Oxford)
-- 2006: Oxford Catalysts Group was admitted to trading on AIM
-- 2008: Oxford Catalysts acquired Velocys Inc.
-- 2010: The Company's microchannel Fischer-Tropsch technology
was demonstrated at a field demonstration in Austria
-- 2012: A Fischer-Tropsch field demonstration was carried out at a Petrobras site in Brazil
-- 2013: Oxford Catalysts Group PLC changed its name to Velocys plc (Ticker: VLS.L)
-- 2014: The ENVIA joint venture was formed.
-- 2015: FID for the Oklahoma City landfill gas to liquids demonstration plant.
-- 2017: the Mississippi Biorefinery Project was announced,
Mississippi site secured and planning permissions started.
-- 2017: Altalto Immingham Project was announced.
-- 2017: Altalto Immingham Project enters pre-FEED with Shell and BA
-- 2018: "notice to proceed" to commence manufacturing of the
Velocys Fisher-Tropsch reactors and catalyst for the Red Rock
Biofuels LLC biorefinery in Oregon.
-- 2018: new executive team of the Company and new directors appointed.
The Velocys team
The Executives of the Company are Henrik Wareborn (Chief
Executive Officer) and Andrew Morris (Chief Financial Officer),
both based in the UK and supported by an experienced team of VP's
both in the UK and in the USA.
The Velocys team has experience in:
-- renewables and gas-to-liquid (with members of the team having
previous experience at Sasol, APP and Syntroleum, as well as in
project development, financing, project management, plant design
and commissioning and start-up operations);
-- commercial and financing (with members of the team having
previous experience at Goldman Sachs, Natixis and Refco, as well as
in investment banking, commodities trading, private equity/venture
capital funding and project financing); and
-- oil and gas (with members of the team having previous
experience at BP, Shell and ExxonMobil, as well as in refining and
marketing business management, manufacturing, finance, supply and
logistics).
Business drivers
The Company offers a scalable solution for the development of
sustainable fuels manufacturing via its own patented micro channel
Fisher-Tropsch reactors and overall biorefinery technology
integration developed for the Altalto Immingham Project and the
Mississippi Biorefinery Project. The Company's stated mission is to
help reduce the environmental footprint of the aviation and heavy
transportation industries by enabling a proven and reliable supply
of advanced biofuels.
Technology overview
The Fischer-Tropsch technology comprises a microchannel
Fischer-Tropsch reactor core, which contains a highly active
Fischer-Tropsch catalyst which uses organic matrix combustion. The
technology is developed in-house by Velocys and is protected by a
wide range of intellectual property. The reactors and catalysts are
manufactured at commercial scale by sub-contractors.
Revenue streams
The Company earns revenue from a series of services, products
and intellectual property, including from:
-- returns from technology sales (including Velocys reactor sales and catalyst sales);
-- intellectual property fees as a result of licensing its technology;
-- fees from project management services
-- start-up and commissioning engineering services.
-- development capital uplift converted into a carried interest
or royalty in the completed producing plant.
By way of illustration, the Company typically expects to earn
revenue from development services and technology licensing fees
during the development of a plant. During the construction phase,
the Company would expect to earn revenues from reactor and catalyst
sales, technology licensing fees and completion fees. During the
operations phase, the Company would expect to receive revenues from
catalyst sales and decarbonisation royalties. While revenue from
reactor and catalyst sales, technology licence fees, development
services and completion fees are expected to be one-off revenues,
the Company expects recurring revenues from catalyst replacement
sales and possible royalty fees or carried interest. An
illustrative profile of revenue streams to the Company for a 25
million gallon per year plant are provided below.
Development phase (years 1-2)
-- Year 1: technology licence fees (circa GBP1.5 million) and
development services (circa GBP4 million).
-- Year 2: development services (circa GBP4 million).
Construction phase (years 3-5)
-- Year 3: reactor sales (circa GBP3.5 million), catalyst sales
(circa GBP3 million), technology licence fees (circa GBP2 million)
and completion fees (circa GBP1.5 million).
-- Year 4: reactor sales (circa GBP3.5 million).
-- Year 5: reactor sales (circa GBP3.5 million) and catalyst
sales (circa GBP3 million) and technology licence fees (circa
GBP0.5 million).
Operational phase (year 6 onwards)
-- Year 6 (and recurring every two years over plant life):
decarbonisation royalty (circa GBP2 million, growing with inflation
in subsequent years).
-- Year 7 (and recurring every two years over plant life):
catalyst sales (circa GBP6 million) and decarbonisation royalty
(circa GBP2 million growing with inflation in subsequent
years).
Capital structure
As at 12 July 2019, a total of 410,422,765 Ordinary Shares have
been issued and allotted with options and warrants in respect of an
additional 5,257,840 Ordinary Shares. The total number of shares,
fully diluted, as at 12 July 2019, is therefore 415,680,605. As at
the close of trading on 12 July 2019, the share price of the
Company was 3.26 pence, giving the Company a market capitalisation
of GBP13,359,261 as at 12 July 2019.
4. Current Trading
The Company's financial position and funding requirements
reflect the taking forward of its strategy and delivery of its
projects.
The financial statements for the year ended 31 December 2018 can
be summarised as follows. The revenues for the period were GBP0.7
million (2017: GBP0.8 million). Operating loss for the period was
GBP18.6 million before and GBP28.7 million after exceptional items
(2017: GBP21.4 million before and GBP51.2 million after exceptional
costs). Cash (including short term investments) at period end stood
at GBP7.0 million (31 December 2017: GBP2.1 million), while net
cash inflow was GBP4.3 million (2017: GBP(16.6) million cash
outflow). Cash inflow comprised net cash generated from financing
activities of GBP23 million; net cash used in investing activities
of GBP(6.3) million; and net cash used in operating activities of
GBP(12.4) million.
5. Use of Proceeds
The Company intends to raise gross proceeds of approximately
GBP7 million pursuant to the Placing (before expenses), equivalent
to approximately GBP6.5 million net of expenses. The Directors
intend to use the net proceeds raised by the Placing as follows:
(i) GBP0.4 million to complete the development capital fund raising
and preparation of the FEED for the Mississippi Biorefinery
Project; (ii) GBP0.5 million to be used to strengthen and extend
the Company's intellectual property portfolio; (iii) GBP5.2 million
to be used for working capital and central costs; and (iv) GBP0.4
million on analysing and testing catalyst and Fischer-Tropsch
reactors from the recently completed full scale demonstration run
in Oklahoma. The contribution from British Airways and Shell of
GBP2.8 million in total towards the final pre-FEED stage, planning
permission and completion of commercial arrangements for the
Altalto Immingham Project, means no further net contribution will
be required to be made by the Company for the project until the
first quarter of 2020. Further funding will be required at that
stage to execute the full FEED work, being the next stage on both
the Mississippi Biorefinery Project and the Altalto Immingham
Project. However, it is expected that the large majority of this
further funding will be provided by further commitments from
strategic partners.
The commencement and completion of the full FEED stage of either
of the Company's Altalto Immingham Project or Mississippi
Biorefinery Project will be dependent on the Company's ability to
secure the requisite equity funding from strategic partners or
otherwise, as well as key project procurement, supply and offtake
contracts. As such, the timing of reaching and completing the FEED
stage for either project is not wholly within the Company's control
and the costs of reaching and completing the FEED stage will be
higher if the projects do not begin and progress through FEED stage
in the timeframes currently anticipated. Should the Company not
secure strategic investment, it will need to seek further funding
in due course in order to be able to cover development costs and
its working capital requirements, which may be from one or a
combination of a larger capital raising or the realisation of its
assets, such as granting additional intellectual property licenses
or selling non-core intellectual property.
6. Principal terms of the Placing
The Company proposes raising approximately GBP7 million, before
expenses, by way of a conditional, non- pre-emptive placing of up
to 233,333,335 new Ordinary Shares at the Placing Price. The
Placing Shares (other than those Placing Shares which placees have
subscribed for directly through the Company) will be placed by
Numis and Canaccord as agents for the Company and pursuant to the
Placing Agreement, with institutional and other professional
investors.
The Placing Price represents a discount to the closing
mid-market price of the Ordinary Shares as at 12 July 2019 of 3.26
pence per Ordinary Share. The Placing Shares will represent
approximately 8 per cent. of the Enlarged Share Capital (provided
the Placing is fully subscribed and provided that no options or
warrants have been exercised) and will, when issued, rank pari
passu in all respects with the other Ordinary Shares then in issue,
including all rights to all dividends and other distributions
declared, made or paid following Admission.
The VCT/EIS Placing is conditional upon (amongst other
things):
a) the execution of an addendum to the JDA, such addendum
between Velocys Technologies Ltd, British Airways and Shell in
relation to the funding by British Airways and Shell respectively
to Velocys Technologies Ltd of GBP1.4 million each in connection
with the Altalto Immingham Project prior to the date of the General
Meeting (or such later date as Numis and Canaccord may agree in
their discretion);
b) the passing of the Resolutions at the General Meeting;
c) the Placing Agreement not having been terminated in accordance with its terms; and
d) VCT/EIS Admission occurring on or before 1 August 2019 (or
such later date as Numis, Canaccord and the Company may agree, not
being later than 90 days after the date of this document).
The General Placing is conditional upon (amongst other
things):
e) the execution of an addendum to the JDA, such addendum
between Velocys Technologies Ltd, British Airways and Shell in
relation to the funding by British Airways and Shell respectively
to Velocys Technologies Ltd of GBP1.4 million each in connection
with the Altalto Immingham Project prior to the date of the General
Meeting (or such later date as Numis and Canaccord may agree in
their discretion);
f) the passing of the Resolutions at the General Meeting;
g) the Placing Agreement becoming unconditional and the Placing
Agreement not having been terminated in accordance with its terms;
and
h) General Admission occurring on or before 2 August 2019 (or
such later date as Numis, Canaccord and the Company may agree, not
being later than 90 days after the date of this document).
Shareholders should note that it is possible that VCT/EIS
Admission occurs but General Admission does not occur. If any
Admission does not occur then the Company will not receive the
relevant net proceeds in respect of such Admission and the Company
may not be able to finance the activities referred to in this
document.
The Placing Agreement contains warranties from the Company in
favour of Numis and Canaccord in relation to, (amongst other
things), the Company and its business. In addition, the Company has
agreed to indemnify Numis and Canaccord in relation to certain
liabilities it may incur in undertaking the Placing. Numis and
Canaccord have the right to terminate the Placing Agreement in
certain circumstances prior to Admission, in particular, it may
terminate in the event that there has been a material breach of any
of the warranties or for force majeure.
The Company is intending to apply for assurance from HMRC that
the Potential VCT/EIS Shares will rank as a qualifying investment
for the purposes of the EIS and for the purposes of investment by
VCTs. The Company has not yet made the application for assurance
and it is not known whether HMRC will give the assurance sought.
Neither the Directors nor the Company give any warranty or
undertaking that EIS relief or VCT qualifying status will be
granted or that, if EIS relief or VCT qualifying status is granted,
it will not be withdrawn, nor do they warrant or undertake that the
Company will conduct its activities in a way that qualifies for or
preserves its status or the status of any investment in Ordinary
Shares. Investors considering taking advantage of any of the
reliefs under EIS or available to VCTs should seek their own
professional advice in order that they may fully understand how the
rules apply in their individual circumstances and what they are
required to do in order to claim any reliefs (if available). As the
rules governing EIS and VCT reliefs are complex and interrelated
with other legislation, if any potential investors are in any doubt
as to their tax position, require more detailed information than
the general outline above, or are subject to tax in a jurisdiction
other than the UK, they should consult their professional
advisers.
Application will be made for the Potential VCT/EIS Shares and
the General Placing Shares to be admitted to trading on AIM,
subject to the Placing Agreement not having been terminated. It is
expected that trading in the Potential VCT/EIS Shares will commence
at 8.00 a.m. on 1 August 2019 and that trading in the General
Placing Shares will commence at 8.00 a.m. on 2 August 2019.
The Directors have subscribed for 2,499,998 Placing Shares in
aggregate at the Placing Price, representing approximately 1.1 per
cent. of the Placing Shares. Immediately following General
Admission (and assuming no other issuance of new Ordinary Shares
prior to General Admission), the Directors of the Company will have
a legal and/or beneficial interest in 4,140,787 Ordinary Shares,
representing 0.64 per cent. of the Ordinary Shares expected to be
in issue as at General Admission.
7. Related party transactions
The participation of each of Ervington Investments Limited and
Lansdowne Partners in the Placing constitutes a related party
transaction under the AIM Rules as each is a substantial
shareholder (within the meaning of the AIM Rules). Ervington
Investments Limited is subscribing for 46,666,666 Placing Shares at
the Placing Price, and Lansdowne Partners is subscribing for
49,373,800 Placing Shares at the Placing Price. The Directors
consider, having consulted with Numis, the Company's nominated
advisor, that the terms of the related party transaction are fair
and reasonable in so far as its Shareholders are concerned.
8. Resolutions
The Company currently does not have sufficient authority to
allot shares under the Act to effect the Placing. Accordingly the
Resolutions, summarised below, are being proposed at the General
Meeting to ensure that the Directors have sufficient authority to
allot and issue the Placing Shares on a non-pre-emptive basis.
(a) Resolution 1 is an ordinary resolution to grant authority to
the Directors under s551 of the Act to allot relevant securities,
up to a maximum aggregate nominal amount of GBP2,333,334 pursuant
to the Placing, such authority expiring at the earlier of the
Company's next annual general meeting and 31 October 2020.
If Resolution 1 is passed, the Directors will have the
authority, under the Act, to allot Ordinary Shares up to the
maximum aggregate nominal amount of GBP2,333,334 (being the maximum
required for the purposes of issuing the Placing Shares).
(b) Resolution 2 is a special resolution, conditional upon the
passing of Resolution 1, to empower the Directors, pursuant to s570
of the Act, to allot Ordinary Shares up to a maximum aggregate
nominal amount of GBP2,333,334 on a non-pre-emptive basis pursuant
to the Placing, such authority expiring at the earlier of the
Company's next annual general meeting and 31 October 2020.
If Resolution 2 is passed, the Directors will have the power,
under the Act, to allot the Placing Shares without offering those
shares to existing Shareholders.
These authorities are required to enable the Directors to effect
the Placing and are in addition to the general authorities that
were granted by Shareholders at the Company's annual general
meeting on 12 June 2019, which gave the Directors authority to
allot relevant securities up to a maximum aggregate nominal amount
of GBP1,354,395.12 under s551 of the Act and to allot Ordinary
Shares up to a maximum aggregate nominal amount of GBP615,634.15 on
a non-pre-emptive basis under s570 of the Act (such authorities
expire at the next annual general meeting of the Company or 31 July
2020, whichever is earlier).
Resolution 1 is an ordinary resolution and requires a majority
of more than 50 per cent. of the Shareholders voting to be passed.
Resolution 2 is a special resolution and requires the approval of
more than 75 per cent. of the Shareholders voting to be passed.
The Notice of General Meeting is contained at the end of this
document and sets out the Resolutions in full. The General Meeting
is to be held at the offices of Mayer Brown International LLP, 201
Bishopsgate, London, EC2M 3AF at 10.30 a.m. on 31 July 2019.
9. Action to be Taken by Shareholders
Enclosed with this document is a Form of Proxy for use at the
General Meeting. Whether or not you intend to be present at the
General Meeting, you are requested to complete, sign and return the
Form of Proxy to the Company's registrars, Link Asset Services,
PXS, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU so as
to be received as soon as possible and, in any event, not later
than 10.30 a.m. on 29 July 2019. If you complete and return the
Form of Proxy, you may still attend and vote at the General Meeting
should you wish to do so. Shareholders who hold their ordinary
Shares through a nominee should instruct their nominees to submit a
Form of Proxy on their behalf.
10. Recommendation
The Directors consider that the Placing and the Resolutions are
in the best interests of the Company and its Shareholders as a
whole. The Company is reliant on the net proceeds of the Placing to
meet its ongoing liquidity requirements and to continue to
implement its strategy. If the Resolutions are not passed by
Shareholders, the Placing will not proceed. In these circumstances,
the Directors will need to reconsider the Company's strategy and
the Company may need to seek alternative funding, which may not be
available on terms which are acceptable to the Company or at all.
Accordingly, the Directors unanimously recommend that Shareholders
vote in favour of the Resolutions, as they intend to do in respect
of their own legal and/or beneficial shareholdings, amounting, in
aggregate, to 1,640,789 Ordinary Shares (representing approximately
0.4 per cent. of the Ordinary Shares in the issue as at the date of
this document).
DEFINITIONS
The following definitions apply throughout this document, unless
the context requires otherwise.
"Act" the UK Companies Act 2006, as
amended
"Admission" VCT/EIS Admission in the context
of the Potential VCT/EIS Shares
and General Admission in the
context of the General Placing
Shares
"AIM" the market of that name operated
by London Stock Exchange plc
"AIM Rules" the AIM Rules for Companies,
which sets out the rules and
responsibilities for companies
listed on AIM, as amended from
time to time
"Articles" the articles of association
of the Company (as amended from
time to time)
"Board" or "Directors" the board of directors of the
Company, whose names are listed
on page 6 of this document
"British Airways" British Airways plc
"Canaccord" Canaccord Genuity Limited, a
company incorporated in England
and Wales, with registered number
01774003, whose registered office
is at 88 Wood Street, London
EC2V 7QR
"Company" Velocys plc, a public limited
company incorporated in England
& Wales under registered number
5712187 and having its registered
office at Harwell Innovation
Centre, 173 Curie Avenue, Harwell,
Oxfordshire, England, OX11 0QG
"CREST" the relevant system (as defined
in the Regulations) which enables
title to units of relevant securities
(as defined in the Regulations)
to be evidenced and transferred
without a written instrument
and in respect of which Euroclear
UK
"Disclosure Guidance and Transparency the Disclosure Guidance and
Rules" Transparency Rules issued by
the FCA
"EIS" enterprise investment scheme
1.1.9 "Enlarged Share Capital" the issued Ordinary Share capital
of the Company immediately following
Admission comprising the Existing
Ordinary Shares and the Placing
Shares assuming full subscription
under the Placing and assuming
no exercise of any warrants
or options
"ENVIA" ENVIA Energy, LLC, a joint venture
between Waste Management, Inc.,
Ventech Projects Investments,
LLC and the Company
"Existing Ordinary Shares" the 410,422,765 Ordinary Shares
in issue as at the date of this
document being the entire issued
share capital of the Company
prior to the Placing
"FCA" Financial Conduct Authority
"Form of Proxy" the accompanying form of proxy
for use by Shareholders in relation
to the General Meeting
"FSMA" the Financial Services and Markets
Act 2000 (as amended)
"General Admission" admission of the General Placing
Shares to trading on AIM becoming
effective in accordance with
Rule 6 of the AIM Rules
"General Meeting" the general meeting of the Company
to be held at 10.30 a.m. on
31 July 2019 notice of which
is set out at the end of this
document
"General Placing" the conditional placing of the
General Placing Shares to places
pursuant to the Placing Agreement
"General Placing Shares" the 136,166,669 new Ordinary
Shares to be issued, conditional
on General Admission, in connection
with the General Placing
"JDA" the joint development agreement
dated 15 June 2018 between Velocys
Technologies, Shell and British
Airways relating to the Altalto
Immingham Project
"JDA Condition" the execution of an addendum
to the JDA, as described in
paragraph 6 of this document
"Joint Brokers" Numis and Canaccord
"Link Asset Services" a trading name of Link Market
Services Limited, a company
incorporated in England and
Wales, with registered number
02605568, whose registered office
is at The Registry, 34 Beckenham
Road, Beckenham, Kent, BR3 4TU
"London Stock Exchange" London Stock Exchange plc
"Notice of General Meeting" the notice of General Meeting,
set out at the end of this document
"Numis" Numis Securities Limited, a
private limited company incorporated
in England & Wales under registered
number 2285918 and having its
registered office at 10 Paternoster
Square, London EC4M 7LT
"Ordinary Shares" ordinary shares of GBP0.01 each
in the capital of the Company
"Placing" the VCT/EIS Placing and the
General Placing
"Placing Agreement" the conditional agreement dated
15 July 2019 relating to the
Placing, between the Company,
Numis and Canaccord
"Placing Price" 3 pence per New Ordinary Share
"Placing Shares" the Potential VCT/EIS Shares
and the General Placing Shares
"Potential VCT/EIS Shares" the 97,166,666 new Ordinary
Shares to be issued, conditional
on VCT/EIS Admission, in connection
with the VCT/EIS Placing
"Registrar" Link Asset Services
"Regulations" the UK Uncertificated Securities
Regulations 2001 (SI 2001 No.
3755), as amended
"Resolutions" the resolutions to be proposed
at the General Meeting as set
out in the Notice of General
Meeting
"Shareholders" the holders of Ordinary Shares
from time to time, each individually
being a "Shareholder"
"Shell" Shell International Petroleum
Company Limited
"UK" or "United Kingdom" the United Kingdom of Great
Britain and Northern Ireland
"US" or "United States" the United States of America,
its territories and possessions,
any state of the United States
and the District of Colombia
"VCT" a venture capital trust under
part 6 of the Income Tax Act
2007
"VCT/EIS Admission" admission of the Potential VCT/EIS
Shares to trading on AIM becoming
effective in accordance with
Rule 6 of the AIM Rules
"VCT/EIS Placing" the conditional placing of the
Potential VCT/EIS Shares to
places pursuant to the Placing
Agreement
"EUR" the single currency of the participating
member states of the European
Union
"$" the lawful currency of the United
States
"GBP" the lawful currency of the United
Kingdom
GLOSSARY
The terms set out below have the following meanings throughout
this document, unless the context requires otherwise.
"Altalto Immingham Project" the Company's waste to sustainable
fuels project, the plant for
which will be located in Immingham,
UK
"EPC" engineer, procurement and construction
"FEED" front end engineering design
"FID" final investment decision
"LCFS" the Californian Low Carbon Fuel
Standard programme"
"Mississippi Biorefinery Project" the Company's biorefinery project,
the plant for which will be located
in Natchez, Mississippi
"Renewable Fuel Standard" the US renewable fuel standard
program created under the Energy
Policy Act 2005 and amended by
the Energy Independence and Security
Act 2007
"Renewable Identification Number" a renewable identification number
or "RIN" assigned to a batch of biofuel
to track its production use and
trading as required by the Renewable
Fuel Standard
"Renewable Transport Fuel Certificates" certificates awarded under the
Renewable Transport Fuels Obligation
"Renewable Transport Fuels Obligation" the Renewable Transport Fuel
Obligation Order published 5
November 2012
APPIX I
TERMS AND CONDITIONS OF THE PLACING
IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES
ONLY
THIS ANNOUNCEMENT INCLUDES STATEMENTS, ESTIMATES, OPINIONS AND
PROJECTIONS WITH RESPECT TO ANTICIPATED FUTURE PERFORMANCE OF THE
GROUP ("FORWARD-LOOKING STATEMENTS") WHICH REFLECT VARIOUS
ASSUMPTIONS CONCERNING ANTICIPATED RESULTS TAKEN FROM THE GROUP'S
CURRENT BUSINESS PLAN OR FROM PUBLIC SOURCES WHICH MAY OR MAY NOT
PROVE TO BE CORRECT. THESE FORWARD LOOKING STATEMENTS CAN BE
IDENTIFIED BY THE USE OF FORWARD LOOKING TERMINOLOGY, INCLUDING THE
TERMS "ANTICIPATES", "TARGET", "BELIEVES", "ESTIMATES", "EXPECTS",
"INTS", "MAY", "PLANS", "PROJECTS", "SHOULD" OR "WILL", OR, IN EACH
CASE, THEIR NEGATIVE OR OTHER VARIATIONS OR COMPARABLE TERMINOLOGY
OR BY DISCUSSIONS OF STRATEGY, PLANS, OBJECTIVES, GOALS, FUTURE
EVENTS OR INTENTIONS. SUCH FORWARD-LOOKING STATEMENTS REFLECT
CURRENT EXPECTATIONS BASED ON THE CURRENT BUSINESS PLAN AND VARIOUS
OTHER ASSUMPTIONS AND INVOLVE SIGNIFICANT RISKS AND UNCERTAINTIES
AND SHOULD NOT BE READ AS GUARANTEES OF FUTURE PERFORMANCE OR
RESULTS AND WILL NOT NECESSARILY BE ACCURATE INDICATIONS OF WHETHER
OR NOT SUCH RESULTS WILL BE ACHIEVED. AS A RESULT, PROSPECTIVE
INVESTORS SHOULD NOT RELY ON SUCH FORWARD-LOOKING STATEMENTS DUE TO
THE INHERENT UNCERTAINTY THEREIN. NO REPRESENTATION OR WARRANTY IS
GIVEN AS TO THE COMPLETENESS OR ACCURACY OF THE FORWARD-LOOKING
STATEMENTS CONTAINED IN THIS ANNOUNCEMENT. FORWARD-LOOKING
STATEMENTS SPEAK ONLY AS OF THE DATE OF SUCH STATEMENTS AND, EXCEPT
AS REQUIRED BY THE FCA, THE LONDON STOCK EXCHANGE, THE AIM RULES OR
APPLICABLE LAW, THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR
REVISE PUBLICLY ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT
OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE. NO STATEMENT IN
THIS ANNOUNCEMENT IS INTED TO BE A PROFIT FORECAST AND NO STATEMENT
IN THIS ANNOUNCEMENT SHOULD BE INTERPRETED TO MEAN THAT EARNINGS
PER SHARE OF THE COMPANY FOR THE CURRENT OR FUTURE FINANCIAL YEARS
WOULD NECESSARILY MATCH OR EXCEED THE HISTORICAL PUBLISHED EARNINGS
PER SHARE OF THE COMPANY.
THIS ANNOUNCEMENT, INCLUDING THE APPIX (TOGETHER THE
"ANNOUNCEMENT") AND THE INFORMATION IN IT IS RESTRICTED AND IS NOT
FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY,
IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, NEW
ZEALAND, CANADA, JAPAN OR SOUTH AFRICA OR ANY OTHER JURISDICTION IN
WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE
UNLAWFUL.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE
PLACING. THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN ARE
FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT: (A) PERSONS
IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA WHO ARE QUALIFIED
INVESTORS AS DEFINED IN SECTION 2(7) OF THE FINANCIAL SERVICES AND
MARKETS ACT 2000, AS AMED, ("QUALIFIED INVESTORS") BEING PERSONS
FALLING WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE EU PROSPECTUS
DIRECTIVE (WHICH MEANS DIRECTIVE 2003/71/EC AND INCLUDES ANY
RELEVANT IMPLEMENTING DIRECTIVE MEASURE IN ANY MEMBER STATE) (THE
"PROSPECTUS DIRECTIVE"); AND (B) IN THE UNITED KINGDOM, TO
QUALIFIED INVESTORS WHO ARE PERSONS WHO (I) HAVE PROFESSIONAL
EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN
ARTICLE 19(1) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000
(FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER"); (II) ARE PERSONS
FALLING WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES,
UNINCORPORATED ASSOCIATIONS, ETC") OF THE ORDER; OR (III) ARE
PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH
PERSONS IN (A) OR (B) TOGETHER BEING REFERRED TO AS "RELEVANT
PERSONS").
THIS ANNOUNCEMENT DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE
OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT
MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVENT
PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS
ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL
BE ENGAGED IN ONLY WITH RELEVANT PERSONS. EACH PLACEE SHOULD
CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND
RELATED ASPECTS OF AN INVESTMENT IN PLACING SHARES.
In this Appendix, unless the context requires, "Placee" means a
Relevant Person (including individuals, funds or others) who has
been invited to, and who chooses to, participate in the Placing and
by whom or on whose behalf a commitment to subscribe for Placing
Shares has been given.
No representation or warranty, express or implied, is made or
given by or on behalf of the Company or Canaccord Genuity Limited
("Canaccord") or Numis Securities Ltd ("Numis"), the Company's
nominated adviser, or any of their respective affiliates (within
the meaning of Rule 405 under the US Securities Act of 1933, as
amended (the "Securities Act") or any of such persons' directors,
officers or employees or any other person as to the accuracy,
completeness or fairness of the information or opinions contained
in this Announcement and no liability whatsoever is accepted by the
Company, Numis, Canaccord or any of such persons' Affiliates,
directors, officers or employees or any other person for any loss
howsoever arising, directly or indirectly, from any use of such
information or opinions or otherwise arising in connection
therewith.
This Announcement does not constitute an offer to sell or issue
or the solicitation of an offer to buy or subscribe for Placing
Shares in any jurisdiction in which such offer or solicitation is
or may be unlawful. In particular the Placing Shares referred to in
this Announcement have not been and will not be registered under
the Securities Act or with any securities regulatory authority of
any state or other jurisdiction of the United States and will be
offered or sold only outside of the United States in accordance
with Regulation S under the Securities Act.
The relevant clearances have not been, nor will they be,
obtained from the securities commission of any province or
territory of Canada; no prospectus has been lodged with or
registered by, the Australian Securities and Investments Commission
or the Japanese Ministry of Finance; and the Placing Shares have
not been, nor will they be, registered under or offered in
compliance with the securities laws of any state, province or
territory of United States, Australia, New Zealand, Canada, Japan
or South Africa. Accordingly, the Placing Shares may not (unless an
exemption under the relevant securities laws is applicable) be
offered, sold, resold or delivered, directly or indirectly, in or
into the United States, Australia, New Zealand, Canada, Japan or
South Africa or any other jurisdiction outside the United
Kingdom.
Persons distributing any part of this Announcement must satisfy
themselves that it is lawful to do so. Persons (including, without
limitation, nominees and trustees) who have a contractual or other
legal obligation to forward a copy of this Announcement should seek
appropriate advice before taking any action. Persons into whose
possession this Announcement comes are required by the Company,
Canaccord and Numis to inform themselves about, and observe, any
such restrictions.
This Announcement does not constitute a recommendation
concerning any investors' options with respect to the Placing.
Investors and prospective investors should conduct their own
investigation, analysis and evaluation of the business and data
described in this Announcement. The price and value of securities
can go down as well as up. Past performance is not a guide to
future performance. The contents of this Announcement are not to be
construed as legal, business, financial or tax advice. Each
investor or prospective investor should consult his, her or its own
legal adviser, business adviser, financial adviser or tax adviser
for legal, financial, business or tax advice.
Placees will be deemed: (i) to have read and understood this
Announcement, including this Appendix, in its entirety; and (ii) to
be participating and making an offer for Placing Shares on the
terms and conditions and to be providing the representations,
warranties, acknowledgements and undertakings, contained in this
Appendix.
This Announcement does not identify or suggest, or purport to
identify or suggest, the risks (direct or indirect) that may be
associated with an investment in the Placing Shares. Any investment
decision to buy Placing Shares in the Placing must be made solely
on the basis of publicly available information, which has not been
independently verified by Numis and Canaccord.
The Placing Shares to be issued pursuant to the Placing will not
be admitted to trading on any stock exchange other than the AIM
market of the London Stock Exchange plc.
1. DETAILS OF THE PLACING
1.1 Numis and Canaccord today entered into an agreement with the
Company (the " Placing Agreement"). Under the Placing Agreement,
subject to certain conditions, Numis and Canaccord, as agents for
and on behalf of the Company, have agreed to use their respective
reasonable endeavours to procure Placees for the Placing Shares at
the Placing Price. The Placing is not being underwritten by Numis
or Canaccord.
1.2 The Placing Shares will, when issued, be credited as fully
paid and will rank pari passu in all respects with the existing
Ordinary Shares, including the right to receive dividends and other
distributions declared or made after the date of issue of the
Placing Shares.
2. APPLICATIONS FOR ADMISSION TO TRADING
2.1 Application will be made to the London Stock Exchange for
admission to trading of the Placing Shares on its AIM market
("Application").
2.2 It is expected that VCT/EIS Admission will become effective
at 8.00 a.m. on 1 August 2019 and that dealings in the VCT/EIS
Placing Shares will commence at that time.
2.3 It is expected that General Admission will become effective
at 8.00 a.m. on 2 August 2019 and that dealings in the General
Placing Shares will commence at that time.
3. PARTICIPATION IN, AND PRINCIPAL TERMS OF THE PLACING
3.1 Numis and Canaccord are acting as joint brokers and as
agents for the Company in connection with the Placing, Application
and Admission. Numis and Canaccord are each authorised and
regulated in the United Kingdom by the FCA, and are each acting
exclusively for the Company and no one else in connection with the
matters referred to in this Announcement and will not be
responsible to anyone other than the Company for providing the
protections afforded to the customers of Numis and Canaccord or for
providing advice in relation to the matters described in this
Announcement.
3.2 Participation in the Placing is only available to persons
who may lawfully be, and are invited to participate in it by Numis,
Canaccord, Peat & Co and TPI. Numis, Canaccord, Peat & Co,
TPI and their respective Affiliates are each entitled to
participate in the Placing as principals.
3.3 The placing price will be a fixed price of 3 pence per
Placing Share (the "Placing Price"). No commissions will be paid to
Placees or by the Placees in respect of any Placing Shares.
3.4 Each prospective Placee's allocation of Placing Shares will
be confirmed to prospective Placees orally by Numis, Canaccord,
Peat & Co, TPI or one of their respective Affiliates, and a
contract note will be dispatched as soon as practicable thereafter
as evidence of such Placee's allocation and commitment. The terms
and conditions of this Appendix will be deemed incorporated into
the contract note. That oral confirmation will constitute an
irrevocable legally binding commitment upon that person (who at
that point will become a Placee) in favour of the Company and
Numis, Canaccord, Peat & Co or TPI (as applicable) to subscribe
for the number of Placing Shares allocated to it at the Placing
Price on the terms and conditions set out in this Appendix and in
accordance with the Company's articles of association and each
Placee will be deemed to have read and understood the announcement
in its entirety. An offer to acquire Placing Shares, which has been
communicated by a prospective Placee to Numis, Canaccord, Peat
& Co or TPI (as applicable) which has not been withdrawn or
revoked prior to publication of this Announcement shall not be
capable of withdrawal or revocation immediately following the
publication of this Announcement without the consent of Numis,
Canaccord, Peat & Co or TPI (as applicable).
3.5 Each Placee will also have an immediate, separate,
irrevocable and binding obligation, owed to Numis, Canaccord, Peat
& Co or TPI, as applicable (as agents of the Company), to pay
the relevant entity (or as it may direct) in cleared funds
immediately on settlement an amount equal to the product of the
Placing Price and the number of Placing Shares such Placee has
agreed to subscribe for and the Company has agreed to allot and
issue to that Placee. Each Placee's obligation will be owed to the
Company and to Numis, Canaccord, Peat & Co or TPI, as
applicable.
3.6 Irrespective of the time at which a Placee's allocation
pursuant to the Placing is confirmed, settlement for all Placing
Shares to be subscribed for pursuant to the Placing will be
required to be made at the same time, on the basis explained below
under "Registration and Settlement".
3.7 All obligations under the Placing will be subject to
fulfilment of the conditions referred to below under "Conditions of
the Placing" and to the Placing not being terminated on the basis
referred to below under "Termination of the Placing Agreement".
3.8 By participating in the Placing, each Placee will agree that
its rights and obligations in respect of the Placing will terminate
only in the circumstances described below and will not be capable
of rescission or termination by the Placee.
3.9 To the fullest extent permitted by law and applicable FCA
rules, neither (i) Numis, (ii) any of its directors, officers,
employees or consultants, or (iii) to the extent not contained with
(i) or (ii), any person connected with Numis as defined in FSMA
((i), (ii) and (iii) being together "Affiliates" and individually
an "Affiliate"), shall have any liability (including to the extent
permissible by law, any fiduciary duties) to Placees or to any
person other than the Company in respect of the Placing.
3.10 To the fullest extent permitted by law and applicable FCA
rules, neither (i) Canaccord, (ii) any of its directors, officers,
employees or consultants, or (iii) to the extent not contained with
(i) or (ii), any Affiliate of Canaccord, shall have any liability
(including to the extent permissible by law, any fiduciary duties)
to Placees or to any person other than the Company in respect of
the Placing.
3.1 No commissions will be paid to Placees or by the Placees in
respect of any Placing Shares.
4. CONDITIONS OF THE PLACING
4.1 Numis' and Canaccord's obligations under the Placing
Agreement in respect of the VCT/EIS Placing Shares are conditional
on, amongst other things:
(a) none of the warranties in the Placing Agreement (i) being
untrue and inaccurate or misleading on and as of the date of the
Placing Agreement to an extent which, in any such case, would be
material and (ii) becoming untrue, inaccurate or misleading at
VCT/EIS Admission to an extent which, in any such case, would be
material by reference to the facts and circumstances then
subsisting;
(b) the Resolutions being validly passed at the General Meeting
without amendment and remaining in full force and effect
(c) the Company allotting, subject only to VCT/EIS Admission,
the VCT/EIS Placing Shares in accordance with the Placing
Agreement;
(d) certain publication of announcement obligations (including
with respect to this Announcement);
(e) the execution of an addendum to the JDA, such addendum
between Velocys Technologies, Shell and British Airways Plc in
relation to the funding by British Airways plc and Shell to Velocys
Technologies of GBP2.8m million in aggregate in connection with the
UK Waste-To-Sustainable Fuels Project prior to the date of the
General Meeting;
(f) the compliance by the Company with all its obligations which
are required to be performed or satisfied on or prior to VCT/EIS
Admission;
(g) the respective obligations of Numis and Canaccord under the
Placing Agreement not having been terminated prior to VCT/EIS
Admission; and
(h) VCT/EIS Admission occurring by 8:00am on 1 August 2019 (or
such later time and date as Numis and Canaccord (acting together)
may agree in unity with the Company not being later than 8:00 a.m.
on 13 October 2019).
4.2 Numis' and Canaccord's obligations under the Placing
Agreement in respect of the General Placing Shares are conditional
on, amongst other things:
(a) the VCT/EIS Placing Shares being unconditionally allotted
and issued to the relevant Placees on VCT/EIS Admission and VCT/EIS
Admission having occurred;
(b) none of the warranties in the Placing Agreement (i) being
untrue and inaccurate or misleading on and as of the date of the
Placing Agreement to an extent which, in any such case, would be
material and (ii) becoming untrue, inaccurate or misleading at
General Admission to an extent which, in any such case, would be
material by reference to the facts and circumstances then
subsisting;
(c) the Company allotting, subject only to General Admission,
the General Placing Shares in accordance with the Placing
Agreement;
(d) No event having occurred before General Admission which had
it occurred before VCT/EIS Admission would have entitled Numis and
Canaccord to terminate the Placing Agreement; and
(e) General Admission occurring by 8:00am on 2 August 2019 (or
such later time and date as Numis and Canaccord (acting together)
may agree in unity with the Company not being later than 8:00 a.m.
on 13 October 2019).
4.2 If (i) any condition contained in the Placing Agreement in
relation to the Placing Shares is not fulfilled or waived by Numis
and Canaccord (acting together) by the respective time or date
where specified (or such later time or date as Numis and Canaccord
may agree in writing with the Company), (ii) any such condition
becomes incapable of being fulfilled or (iii) the Placing Agreement
is terminated in accordance with its terms, the Placing will not
proceed and the Placee's rights and obligations hereunder in
relation to the Placing Shares shall cease and terminate at such
time and each Placee agrees that no claim can be made by the Placee
in respect thereof.
4.3 Numis and Canaccord may, acting together and in their sole
discretion and upon such terms as they think fit, waive compliance
by the Company with the whole or any part of any of the Company's
obligations in relation to the conditions in the Placing Agreement,
save that conditions 4.1(c), 4.1(h), 4.2(a), 4.2(c) and 4.2(e)
above relating to Admission may not be waived. Any such extension
or waiver will not affect the Placees' commitments as set out in
this Announcement.
4.4 Neither Numis nor Canaccord nor the Company shall have any
liability to any Placee (or to any other person whether acting on
behalf of a Placee or otherwise) in respect of any decision they
may make as to whether or not to waive or to extend the time and/or
the date for the satisfaction of any condition to the Placing nor
for any decision they may make as to the satisfaction of any
condition or in respect of the Placing generally, and by
participating in the Placing each Placee agrees that any such
decision is within the absolute discretion of Numis and Canaccord
(acting together).
5. TERMINATION OF THE PLACING AGREEMENT
5.1 Numis and Canaccord (acting together) are entitled, at any
time prior to Admission, to terminate the Placing Agreement in
respect of the Placing Shares in accordance with the terms of the
Placing Agreement by giving written notice to the Company in
certain circumstances, including but not limited to any of the
warranties given to Numis and Canaccord in the Placing Agreement
being untrue, inaccurate or misleading in any material respect, the
failure of the Company to comply with its material obligations
under the Placing Agreement or the occurrence of a force majeure
event which prevents any party not seeking to terminate from
performing its obligations under the Placing Agreement.
5.2 By participating in the Placing, Placees agree that the
exercise by Numis and Canaccord of any right of termination or
other discretion under the Placing Agreement shall be within the
absolute discretion of Numis and Canaccord (acting together), that
it need not make any reference to Placees and that none of Numis,
Canaccord nor the Company (or any of their respective directors,
officers or employees) shall have any liability to Placees
whatsoever in connection with any such exercise.
5.3 Following VCT/EIS Admission, the Placing Agreement is not
capable of termination to the extent that it relates to the Placing
of VCT/EIS Placing Shares. Following General Admission, the Placing
Agreement is not capable of termination to the extent it relates to
the Placing of any of the General Placing Shares. For the avoidance
of doubt, VCT/EIS Admission is not conditional on General Admission
taking place.
6. NO ADMISSION DOCUMENT OR PROSPECTUS
6.1 No offering document, admission document or prospectus has
been or will be submitted to be approved by the FCA or submitted to
the London Stock Exchange in relation to the Placing or the Placing
Shares and Placees' commitments will be made solely on the basis of
the information contained in this Announcement (including this
Appendix) and the Exchange Information (as defined below).
6.2 Each Placee, by accepting a participation in the Placing,
agrees that the content of this Announcement is exclusively the
responsibility of the Company and confirms that it has neither
received nor relied on any other information (other than the
Exchange Information), representation, warranty, or statement made
by or on behalf of the Company or Numis or Canaccord or any other
person and neither Numis nor Canaccord nor the Company nor any
other person will be liable for any Placee's decision to
participate in the Placing based on any other information,
representation, warranty or statement which the Placees may have
obtained or received. Each Placee acknowledges and agrees that it
has relied on its own investigation of the business, financial or
other position of the Company in accepting a participation in the
Placing. Nothing in this paragraph shall exclude the liability of
any person for fraudulent misrepresentation.
7. REGISTRATION AND SETTLEMENT
7.1 Settlement of transactions in the Placing Shares (ISIN:
GB00B11SZ269) following Admission will take place within the system
administered by Euroclear UK & Ireland Limited ("CREST"),
subject to certain exceptions. Numis and Canaccord reserve the
right to require settlement for, and delivery of, the Placing
Shares (or a portion thereof) to Placees in certificated form if,
in their opinion, delivery or settlement is not possible or
practicable within the CREST system within the timetable set out in
this Announcement or would not be consistent with the regulatory
requirements in any Placee's jurisdiction.
7.2 Each Placee allocated Placing Shares in the Placing will be
sent a contract note in accordance with the standing arrangements
in place with Numis or Canaccord (as applicable), stating the
number of Placing Shares allocated to it at the Placing Price, the
aggregate amount owed by such Placee to Numis or Canaccord (as
applicable) and settlement instructions. Each Placee agrees that it
will do all things necessary to ensure that delivery and payment is
completed in accordance with either the standing CREST or
certificated settlement instructions that it has in place with
Numis or Canaccord (as applicable).
7.3 The Company will (via its registrar) deliver the Placing
Shares to a CREST account operated by Numis or Canaccord (as
applicable) as agent for the Company and Numis or Canaccord (as
applicable) will enter its delivery (DEL) instruction into the
CREST system. Numis or Canaccord (as applicable) will hold any
Placing Shares delivered to this account as nominee for the
Placees. The input to CREST by a Placee of a matching or acceptance
instruction will then allow delivery of the relevant Placing Shares
to that Placee against payment.
7.4 It is expected that settlement in respect of the VCT/EIS
Placing Shares will take place on 1 August 2019 and that settlement
in respect of the General Placing Shares will take place on 2
August 2019, in accordance with the instructions set out in the
contract note.
7.5 Interest is chargeable daily on payments not received from
Placees on the due date in accordance with the arrangements set out
above at the rate of two percentage points above the base rate of
Barclays Bank plc from time to time.
7.6 Each Placee agrees that, if it does not comply with these
obligations, Numis or Canaccord (as applicable) may sell any or all
of the Placing Shares allocated to that Placee on such Placee's
behalf and retain from the proceeds, for Numis' or Canaccord's
account and benefit (as applicable), an amount equal to the
aggregate amount owed by the Placee plus any interest due. The
relevant Placee will, however, remain liable for any shortfall
below the aggregate amount owed by it and may be required to bear
any stamp duty or stamp duty reserve tax (together with any
interest or penalties) which may arise upon the sale of such
Placing Shares on such Placee's behalf.
7.7 If Placing Shares are to be delivered to a custodian or
settlement agent, Placees should ensure that the contract note is
copied and delivered immediately to the relevant person within that
organisation.
7.8 Insofar as Placing Shares are registered in a Placee's name
or that of its nominee or in the name of any person for whom a
Placee is contracting as agent or that of a nominee for such
person, such Placing Shares should, subject as provided below, be
so registered free from any liability to UK stamp duty or stamp
duty reserve tax.
7.9 Placees will not be entitled to receive any fee or
commission in connection with the Placing.
8. REPRESENTATIONS AND WARRANTIES
8.1 By participating in the Placing, each Placee (and any person
acting on such Placee's behalf) irrevocably acknowledges,
undertakes, represents, warrants and agrees (as the case may be)
that:
(a) it has read and understood this Announcement (including the
Appendix) in its entirety and its subscription for the Placing
Shares is subject to and based on the terms and conditions of the
Placing as referred to and included in this Announcement and
undertakes not to redistribute or duplicate this Announcement;
(b) no offering document, admission document or prospectus has
been prepared in connection with the Placing and that it has not
received and will not receive a prospectus, admission document or
other offering document in connection with the Placing;
(c) the Ordinary Shares are admitted to trading on AIM, and the
Company is therefore required to publish certain business and
financial information in accordance with the AIM Rules and the
other applicable rules and practices of the London Stock Exchange
and/or the FCA (collectively "Exchange Information"), which
includes the Company's most recent balance sheet and profit and
loss account and that it is able to obtain or access such
information or comparable information concerning any other publicly
traded company without undue difficulty;
(d) (i) it has made its own assessment of the Company, the
Placing Shares and the terms and conditions of the Placing and has
relied on its own investigation of the business, financial or other
position of the Company in accepting a participation in the Placing
and has satisfied itself that the information is still current;
(ii) none of Numis, Canaccord, the Company, any of their respective
Affiliates or any person acting on behalf of any of them has
provided, or will provide it, with any material regarding the
Placing Shares in addition to this Announcement; and (iii) it has
not requested Numis, Canaccord, the Company or any of their
respective Affiliates or any person acting on behalf of any of them
to provide it with any such information;
(e) the content of this Announcement is exclusively the
responsibility of the Company and that none of Numis, Canaccord,
their Affiliates or any person acting on their behalf has or shall
have any liability for any information, representation or statement
contained in this Announcement or any information previously or
concurrently published by or on behalf of the Company and will not
be liable for any Placee's decision to participate in the Placing
based on any information, representation or statement contained in
this Announcement or elsewhere;
(f) the only information on which it has relied in committing
itself to subscribe for the Placing Shares is contained in this
Announcement and any Exchange Information and that it has not
received or relied on any information given or any representations,
warranties or statements, express or implied, made by Numis,
Canaccord or the Company or any of their Affiliates or any person
acting on behalf of any of them and none of Numis, Canaccord, the
Company, any of their Affiliates or any person acting on behalf of
any of them will be liable for its decision to accept an invitation
to participate in the Placing based on any information,
representation, warranty or statement other than that contained in
this Announcement and any Exchange Information;
(g) it has neither received nor relied on any "inside
information" as defined in the EU Market Abuse Regulation 596/2014
concerning the Company in accepting this invitation to participate
in the Placing and is not purchasing Placing Shares on the basis of
"inside information";
(h) it has the funds available to pay for the Placing Shares it
has agreed to subscribe for and acknowledges, agrees and undertakes
that it will pay the total subscription amount in accordance with
the terms of this Announcement on the due time and date set out
herein, failing which the relevant Placing Shares may be placed
with other Placees or sold at such price as Numis or Canaccord (as
applicable) determines;
(i) it: (i) is entitled to subscribe for the Placing Shares
under the laws of all relevant jurisdictions; (ii) has fully
observed such laws; (iii) has the requisite capacity and authority
and is entitled to enter into and to perform its obligations as a
subscriber for Placing Shares and will honour such obligations; and
(iv) has obtained all necessary consents and authorities
(including, without limitation, in the case of any person on whose
behalf it is acting, all necessary consents and authorities to
agree to the terms set out or referred to in this Announcement) to
enable it to enter into the transactions contemplated hereby and to
perform its obligations in relation thereto and, in particular, if
it is a pension fund or investment company it is aware of and
acknowledges it is required to comply with all applicable laws and
regulations with respect to its subscription for Placing
Shares;
(j) it is not, and any person who it is acting on behalf of is
not, and at the time the Placing Shares are subscribed will not be,
a resident of, or with an address in, the United States, Australia,
New Zealand, Canada, Japan or South Africa, and it acknowledges and
agrees that the Placing Shares have not been and will not be
registered or otherwise qualified under the securities legislation
of the United States, Australia, New Zealand, Canada, Japan or
South Africa and may not be offered, sold, or acquired, directly or
indirectly, within those jurisdictions
(k) (i) the Placing Shares have not been and will not be
registered under the Securities Act or with any state or other
jurisdiction of the United States, nor approved or disapproved by
the US Securities and Exchange Commission, any state securities
commission in the United States or any other United States
regulatory authority, (ii) it will not offer, sell or deliver,
directly or indirectly, any Placing Shares in or into the United
States other than pursuant to an effective registration under the
Securities Act or in a transaction exempt from, or not subject to,
the registration requirements thereunder and in compliance with any
applicable securities laws of any state or other jurisdiction of
the United States, and (iii) it is outside of the United States,
not acting on a non-discretionary basis for the account or benefit
of a person located within the United States at the time the
undertaking to acquire the Placing Shares is given and is otherwise
acquiring the Placing Shares in an "offshore transaction" meeting
the requirements of Regulation S under the Securities Act;
(l) it is a person of a kind described in (i) Article 19(5)
(Investment Professionals) and/or 49(2) (high net worth companies
etc.) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005, as amended, and/or an authorised person as
defined in section 31 of FSMA; and (ii) section 86(7) of FSMA
("Qualified Investor"), being a person falling within Article
2.1(e) of Directive 2003/71/EC as amended (the "Prospectus
Directive"). For such purposes, it undertakes that it will acquire,
hold, manage and (if applicable) dispose of any Placing Shares that
are allocated to it for the purposes of its business only;
(m) if a financial intermediary, as that term is used in Article
3(2) of the Prospectus Directive, that the Placing Shares purchased
by it in the Placing will not be acquired on a non-discretionary
basis on behalf of, nor will they be acquired with a view to their
offer or resale to, persons in a Member State of the European
Economic Area which has implemented the Prospectus Directive other
than Qualified Investors, or in circumstances in which the prior
consent of Numis and Canaccord has been given to the offer or
resale;
(n) it has only communicated or caused to be communicated and
will only communicate or cause to be communicated any invitation or
inducement to engage in investment activity (within the meaning of
section 21 of FSMA) relating to the Placing Shares in circumstances
in which section 21(1) of FSMA does not require approval of the
communication by an authorised person and it acknowledges and
agrees that this Announcement has not been approved by Numis or
Canaccord in their capacity as an authorised person under section
21 of FSMA and it may not therefore be subject to the controls
which would apply if it was made or approved as financial promotion
by an authorised person;
(o) it is aware of and acknowledges that it has complied with
and will comply with all applicable provisions of FSMA with respect
to anything done by it in relation to the Placing Shares in, from
or otherwise involving, the United Kingdom;
(p) it will not make any offer to the public of the Placing
Shares and has not offered or sold and will not offer or sell any
Placing Shares to persons in the United Kingdom or elsewhere in the
European Economic Area prior to Second Admission except to persons
whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for
the purposes of their business or otherwise in circumstances which
have not resulted in and which will not result in an offer to the
public in the United Kingdom within the meaning of section 85(1) of
FSMA or an offer to the public in any other member state of the
European Economic Area within the meaning of the Prospectus
Directive (which includes any relevant implementing measure in any
Member State of the European Economic Area);
(q) it has not been engaged to subscribe for the Placing Shares
on behalf of any other person who is not a Qualified Investor
unless the terms on which it is engaged enable it to make decisions
concerning the acceptance of offers of transferable securities on
the client's behalf without reference to the client as described in
section 86(2) of FSMA;
(r) it is aware of and acknowledges that it is required to
comply, and does and will comply, with its obligations under the
Criminal Justice Act 1993 and the EU Market Abuse Regulation
596/2014 in connection with money laundering and terrorist
financing under the Proceeds of Crime Act 2002, the Terrorism Act
2000, the Terrorism Act 2006 and the Money Laundering Regulations
2017 and the Money Laundering Sourcebook of the FCA (the
"Regulations") and, if making payment on behalf of a third party,
that satisfactory evidence has been obtained and recorded by it to
verify the identity of the third party as required by the
Regulations;
(s) it is aware of the obligations regarding insider dealing in
the Criminal Justice Act 1993, with all applicable provisions of
FSMA, the EU Market Abuse Regulation 596/2014 and the Proceeds of
Crime Act 2002 and confirms that it has and will continue to comply
with those obligations;
(t) the allocation, allotment, issue and delivery to it, or the
person specified by it for registration as a holder of Placing
Shares, will not give rise to a stamp duty or stamp duty reserve
tax liability under any of sections 67, 70, 93 or 96 of the Finance
Act 1986 (depositary receipts and clearance services) and that no
instrument under which it subscribes for Placing Shares (whether as
principal, agent or nominee) would be subject to stamp duty or the
increased rates referred to in those sections and that it, or the
person specified by it for registration as a holder of Placing
Shares, is not participating in the Placing as nominee or agent for
any person or persons to whom the allocation, allotment, issue or
delivery of Placing Shares would give rise to such a liability;
(u) it, or the person specified by it for registration as a
holder of the Placing Shares, will be liable for any stamp duty and
all other stamp, issue, securities, transfer, registration,
documentary or other duties or taxes (including any interest, fines
or penalties relating thereto), if any, payable on acquisition of
any of the Placing Shares or the agreement to subscribe for the
Placing Shares and acknowledges and agrees that none of Numis,
Canaccord, the Company, any of their respective Affiliates or any
person acting on behalf of them will be responsible for any
liability to stamp duty or stamp duty reserve tax resulting from a
failure to observe this requirement. Each Placee and any person
acting on behalf of such Placee agrees to participate in the
Placing, and agrees to indemnify the Company, Canaccord and Numis
on an after tax basis in respect of the same, on the basis that the
Placing Shares will be allotted to the CREST stock account of Numis
or Canaccord (as applicable) who will hold them as nominee on
behalf of such Placee until settlement in accordance with its
standing settlement instructions;
(v) none of Numis, Canaccord, any of their Affiliates or any
person acting on behalf of any of them has or shall have any
liability for any information, representation or statement
contained in this Announcement or for any information previously
published by or on behalf of the Company or any other written or
oral information made available to or publicly available or filed
information or any representation, warranty or undertaking relating
to the Company, and will not be liable for its decision to
participate in the Placing based on any information,
representation, warranty or statement contained in this
Announcement or elsewhere, provided that nothing in this paragraph
shall exclude any liability of any person for fraud;
(w) none of Numis, Canaccord, any of their Affiliates or any
person acting on behalf of any of them, is making any
recommendations to it, advising it regarding the suitability of any
transactions it may enter into in connection with the Placing and
that its participation in the Placing is on the basis that it is
not and will not be a client of Numis or Canaccord and that Numis
and Canaccord have no duties or responsibilities to it for
providing the protections afforded to its clients or customers
under the rules of the FCA, for providing advice in relation to the
Placing, in respect of any representations, warranties,
undertakings or indemnities contained in the Placing Agreement or
for the exercise or performance of any of its rights and
obligations thereunder, including any rights to waive or vary any
conditions or exercise any termination right;
(x) in order to ensure compliance with the Money Laundering
Regulations 2017, Numis and Canaccord (for themselves and as agents
on behalf of the Company) or the Company's registrars may, in their
absolute discretion, require verification of its identity. Pending
the provision to Numis, Canaccord or the Company's registrars, as
applicable, of evidence of identity, definitive certificates in
respect of the Placing Shares may be retained at Numis' and
Canaccord's absolute discretion or, where appropriate, delivery of
the Placing Shares to it in uncertificated form, may be retained at
Numis', Canaccord's or the Company's registrars', as the case may
be, absolute discretion. If within a reasonable time after a
request for verification of identity Numis or Canaccord (as
applicable) (for itself and as agent on behalf of the Company) or
the Company's registrars have not received evidence satisfactory to
them, Numis, Canaccord and/or the Company may, at its absolute
discretion, terminate its commitment in respect of the Placing, in
which event the monies payable on acceptance of allotment will, if
already paid, be returned without interest to the account of the
drawee's bank from which they were originally debited;
(y) Numis and Canaccord may, and their Affiliates acting as an
investor for its or their own account(s) may, subscribe for and/or
purchase Placing Shares and, in that capacity may retain, purchase,
offer to sell or otherwise deal for its or their own account(s) in
the Placing Shares, any other securities of the Company or other
related investments in connection with the Placing or otherwise.
Accordingly, references in this Announcement to the Placing Shares
being offered, subscribed, acquired or otherwise dealt with should
be read as including any offer to, or subscription, acquisition or
dealing by, Numis, Canaccord and/or any of their respective
Affiliates acting as an investor for its or their own account(s).
Neither Numis, Canaccord nor the Company intend to disclose the
extent of any such investment or transaction otherwise than in
accordance with any legal or regulatory obligation to do so;
(z) these terms and conditions and any agreements entered into
by it pursuant to these terms and conditions, and all
non-contractual or other obligations arising out of or in
connection with them, shall be governed by and construed in
accordance with the laws of England and Wales and it submits (on
behalf of itself and on behalf of any person on whose behalf it is
acting) to the exclusive jurisdiction of the English courts as
regards any claim, dispute or matter arising out of any such
contract, except that enforcement proceedings in respect of the
obligation to make payment for the Placing Shares (together with
any interest chargeable thereon) may be taken by the Company,
Canaccord or Numis in any jurisdiction in which the relevant Placee
is incorporated or in which any of its securities have a quotation
on a recognised stock exchange;
(aa) the Company, Canaccord and Numis and their respective
Affiliates and others will rely upon the truth and accuracy of the
foregoing agreements, acknowledgements, representations, warranties
and undertakings which are given to Numis and Canaccord on their
own behalf and on behalf of the Company, and are irrevocable;
(bb) it irrevocably appoints any duly authorised officer of
Numis or Canaccord as agent for the purpose of executing and
delivering to the Company and/or its registrars any documents on
its behalf necessary to enable it to be registered as the holder of
any of the Placing Shares for which it agrees to subscribe or
purchase upon the terms of this Announcement;
(cc) it will indemnify on an after tax basis and hold the
Company, Numis, Canaccord and their respective Affiliates harmless
from any and all costs, claims, liabilities and expenses (including
legal fees and expenses) arising out of or in connection with any
breach of the representations, warranties, undertakings, agreements
and acknowledgements in this Appendix and further agrees that the
provisions of this Appendix shall survive after completion of the
Placing;
(dd) it has knowledge and experience in financial, business and
international investment matters and is required to evaluate the
merits and risks of subscribing for the Placing Shares; (ii) it is
experienced in investing in securities of this nature and is aware
that it may be required to bear, and is able to bear, the economic
risk of, and is able to sustain a complete loss in connection with
the Placing; and (iii) it has relied upon its own examination and
due diligence of the Company and its associates taken as a whole,
and the terms of the Placing, including the merits and risks
involved and has satisfied itself concerning the relevant tax,
legal, currency and other economic consideration relevant to its
subscription for Placing Shares;
(ee) none of the Company, Numis nor Canaccord are making any
undertaking or warranty to any Placee regarding the legality of an
investment in the Placing Shares by such Placee under any legal,
investment or similar laws or regulations; and
(ff) its commitment to subscribe for Placing Shares on the terms
set out herein and in the contract note will continue
notwithstanding any amendment that may in future be made to the
terms of the Placing and that Placees will have no right to be
consulted or require that their consent be obtained with respect to
the Company's conduct of the Placing.
8.2 The representations, warranties, acknowledgements and
undertakings contained in this Appendix are given to the Company,
and to Numis and Canaccord for themselves and on behalf of the
Company and are irrevocable.
8.3 The agreement to settle a Placee's subscription (and/or the
subscription of a person for whom such Placee is contracting as
agent) free of stamp duty and stamp duty reserve tax depends on the
settlement relating only to a subscription by it and/or such person
direct from the Company for the Placing Shares in question. Such
agreement assumes that the Placing Shares are not being subscribed
for in connection with arrangements to issue depositary receipts or
to transfer the Placing Shares into a clearance service. If there
are any such arrangements, or the settlement relates to any other
subsequent dealing in the Placing Shares, UK stamp duty or stamp
duty reserve tax may be payable, for which neither the Company nor
Numis nor Canaccord will be responsible, and the Placee to whom (or
on behalf of whom, or in respect of the person for whom it is
participating in the Placing as an agent or nominee) the
allocation, allotment, issue or delivery of Placing Shares has
given rise to such UK stamp duty or stamp duty reserve tax
undertakes to pay such UK stamp duty or stamp duty reserve tax
forthwith and to indemnify on an after-tax basis and to hold
harmless the Company and Numis and Canaccord in the event that any
of the Company and/or Numis and/or Canaccord have incurred any such
liability to UK stamp duty or stamp duty reserve tax. If this is
the case, each Placee should seek its own advice and notify Numis
or Canaccord accordingly.
8.4 In addition, Placees should note that they will be liable
for any stamp duty and all other stamp, issue, securities,
transfer, registration, documentary or other duties or taxes
(including any interest, fines or penalties relating thereto)
payable outside the United Kingdom by them or any other person on
the subscription by them of any Placing Shares or the agreement by
them to subscribe for any Placing Shares.
8.5 Each Placee, and any person acting on behalf of the Placee,
acknowledges and agrees that neither Numis nor Canaccord owe any
fiduciary or other duties to any Placee in respect of any
representations, warranties, undertakings or indemnities in the
Placing Agreement.
8.6 Each Placee and any person acting on behalf of each Placee,
acknowledges and agrees that Numis, Canaccord or any of their
Affiliates may, at their absolute discretion, agree to become a
Placee in respect of some or all of the Placing Shares.
8.7 When a Placee or person acting on behalf of the Placee is
dealing with Numis or Canaccord any money held in an account with
Numis or Canaccord (as applicable) on behalf of the Placee and/or
any person acting on behalf of the Placee will not be treated as
client money within the meaning of the rules and regulations of the
FCA made under FSMA. The Placee acknowledges and agrees that the
money will not be subject to the protections conferred by the
client money rules; as a consequence, this money will not be
segregated from Numis' or Canaccord's money (as applicable) in
accordance with the client money rules and will be used by Numis or
Canaccord in the course of its own business; and the Placee will
rank only as a general creditor of Numis or Canaccord (as
applicable).
8.8 Past performance is no guide to future performance and
persons needing advice should consult an independent financial
adviser.
8.9 Neither the content of the Company's website nor any website
accessible by hyperlinks on the Company's website is incorporated
in, or forms part of, this Announcement.
8.10 All times and dates in this Announcement may be subject to
amendment. Numis and Canaccord shall notify the Placees and any
person acting on behalf of a Placee of any changes.
DEFINITIONS
The following definitions apply throughout this Announcement
unless the context otherwise requires:
"Admission" - means General Admission and/or VCT/EIS Admission,
as the context requires;
"AIM " - the market of that name operated by the London Stock
Exchange
"AIM Rules" - the AIM Rules for Companies published by the
London Stock Exchange as they may be amended and replaced from time
to time
"Announcement" - this announcement (including the Appendix to
this announcement)
"Canaccord" - Canaccord Genuity Limited, a company incorporated
in England and Wales, with registered number 01774003, whose
registered office is at 88 Wood Street, London EC2V 7QR
"Company" - Velocys plc, a public limited company incorporated
in England & Wales under registered number 05712187 and having
its registered office at Harwell Innovation Centre, 173 Curie
Avenue, Harwell, Oxfordshire, England, OX11 0QG
"CREST" - the relevant system (as defined in the Regulations)
which enables title to units of relevant securities (as defined in
the Regulations) to be evidenced and transferred without a written
instrument and in respect of which Euroclear UK & Ireland
Limited is the Operator (as defined in the Regulations)
"FCA" - the Financial Conduct Authority
"FSMA" - the Financial Services and Markets Act of 2000 (as
amended)
"General Admission" means the admission of the General Placing
Shares to trading on AIM becoming effective in accordance with Rule
6 of the AIM Rules
"General Meeting" means the general meeting of the Company to be
convened for the purpose of authorising the allotment and issue of
shares pursuant to the Placing
"General Placing Shares" the Placing Shares (other than the
VCT/EIS Placing Shares)
"Group" - the Company and its subsidiary undertakings
"JDA" - the joint development agreement dated 15 June 2018
between Velocys Technologies, Shell and British Airways Plc
relating to the UK Waste-To-Sustainable Fuels Project
"London Stock Exchange" - London Stock Exchange plc
"Numis" - Numis Securities Limited, a private limited company
incorporated in England & Wales under registered number 2285918
and having its registered office at 10 Paternoster Square, London
EC4M 7LT
"Ordinary Shares" - ordinary shares of 1 penny each in the
capital of the Company
"Peat & Co" - MC Peat & Co LLP of 118 Piccadilly, London
W1J 7NW
"Placing" - the placing of the Placing Shares at the Placing
Price by Numis and Canaccord as agents for and on behalf of the
Company pursuant to the terms of the Placing Agreement
"Placing Agreement" - the conditional agreement dated 15 July
2019 relating to the Placing, between the Company, Numis and
Canaccord
"Placing Price" - 3 pence per new Ordinary Share
"Placing Shares" - the new Ordinary Shares to be issued in
connection with the Placing
"Prospectus Directive" - the Directive of the European
Parliament and of the Council of the European Union 2003/71/EC, as
amended
"Regulations" - the UK Uncertificated Securities Regulations
2001 (SI 2001 No. 3755), as amended
"Resolutions" - the resolutions set out in the notice convening
the General Meeting in the agreed form
"Securities Act" - the United States Securities Act of 1933, as
amended
"Shell" - Shell International Petroleum Company Limited, a
limited company incorporated in England and Wales with registered
number 00621148 and its registered office at Shell Centre, London,
SE1 7NA
"TPI" - Turner Pope Investments (TPI) Ltd. of 550 Ley Street,
Ilford, Essex, IG2 7DB
"UK" or "United Kingdom" - the United Kingdom of Great Britain
and Northern Ireland
"UK Waste-To-Sustainable Fuels Project" means the Company's
waste to sustainable fuels project, the plant for which will be
located in Immingham, UK
"United States" or "US" - United States of America, its
territories and possessions, any state of the United States of
America and the District of Columbia and all other areas subject to
its jurisdiction
"VCT/EIS Admission" means the admission of the VCT/EIS Placing
Shares to trading on AIM becoming effective in accordance with Rule
6 of the AIM Rules
"VCT/EIS Placing Shares" means such number of Placing Shares as
are to be allotted and issued pursuant to the Placing Agreement to
certain venture capital trusts (as such term is used in Part 6
Income Tax Act 2007) and/or to certain persons seeking to invest in
"eligible shares" for the purposes of the Enterprise Investment
Scheme (as such terms are used in Part 5 Income Tax Act 2007)
"Velocys Technologies" - Velocys Technologies Limited, a limited
company incorporated in England and Wales with registered number
05258554 and its registered office at Harwell Innovation Centre,
173 Curie Avenue, Harwell, Oxfordshire, OX11 0QG, United
Kingdom
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
MSCUSSARKBABAUR
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