TIDMVRS
RNS Number : 4713H
Versarien PLC
25 March 2020
25 March 2020
Versarien plc
("Versarien", the "Company" or the "Group")
China Update
Versarien plc (AIM: VRS), the advanced materials engineering
group, is pleased to provide an update on its progress in China,
previously announced on 15 April 2019 and referenced in more recent
Company announcements including those on 9 August 2019, 24
September 2019, 12 December 2019 and 25 February 2020.
Versarien Graphene (Hong Kong) Limited (" V G HK "), a
wholly-owned subsidiary of Versarien has signed a joint venture
agreement (" Agreement ") with Young-Graphene (Beijing) Technology
Company Limited (" YG ") . YG has appointed the Secretary General
of the China International Graphene Industry Union (" CIGIU ") to
act for it in this matter and is supported by both CIGIU and
Beijing Institute of Graphene Technology Co. Ltd (" BIGT ") .
Versarien's wholly foreign owned enterprise ( Beijing Versarien
Technology Co., Ltd. (" BVT ")) will become the joint venture
company with YG for the development of its activities in China ("
PRC ").
Key Highlights (to be read in conjunction with further details
set out below):
-- Agreement signed with YG to form a 50%-owned Chinese Joint
Venture (the " Joint Venture " or " JV ") for the development of
applications for Versarien's technologies in the region.
-- RMB1 million (c.GBP121,000) initial investment each by
Versarien and YG over the next 12 months subject to certain
milestones.
-- The Joint Venture will have exclusive use of Versarien's t
echnologies in the PRC. Versarien will retain rights to its
existing technologies and intellectual property, with newly
developed intellectual property being retained by the JV and/or the
end users.
-- Agreement includes, and is contingent on, a commitment by YG
to procure subscription for Versarien ordinary shares from third
parties in three tranches, which in aggregate will total up to 15%
of Company's current issued share capital (" Versarien Share
Subscriptions ").
-- Half of any gross funds raised in these subscriptions will be
committed to investment in the JV's activities in the PRC.
-- Any investment remains subject to, inter alia, further due
diligence and agreeing acceptable terms and there can be no
certainty that any of these subscriptions will occur.
Summary of Main Terms (such terms to be governed by the laws of
the PRC)
-- YG and VGHK will each subscribe to an increase in the share
capital of BVT, in an amount of RMB1 million (approximately
GBP121,000) each so that VGHK and YG shall each hold 50% of BVT's
registered share capital. BVT will retain i t s name as Beijing
Versarien Technology Co., Ltd ("BVT"). The capital contribution to
BVT by YG shall be paid in cash instalments within one year
according to the business needs of BVT. The capital contribution to
BVT by VGHK of RMB1 million shall be paid in cash within thirty
days of either: (i) Versarien receiving technology license fees,
technical service fees or other income totaling no less than RMB35
million (approximately GBP4.2 million) from the Head Licence
agreement referred to below; or (ii) Versarien receiving the first
equity investment tranche arising from a placing of 5% of its
issued share capital to investors to be procured by YG (see below
for further details).
-- Versarien will introduce to the PRC the graphene technologies
owned or developed by Versarien (the "Versarien Technologies")
initially through the Graphene Seed Incubation Park located in
Beijing.
-- Versarien will grant exclusivity to BVT for the use and
promotion of the Versarien Technologies in the PRC providing
certain terms are met in relation to a placing of new ordinary
shares of Versarien.
-- Once an end user or third-party collaborator of Versarien's
technologies in the PRC (the "End User") is identified by BVT,
Versarien and BVT shall jointly discuss and negotiate the terms of
a technology license to or collaboration with the End User. Once
all the terms and conditions of the use of Versarien Technologies
are finalised by the relevant parties, Versarien shall enter into a
technology license or collaboration agreement with BVT (the "Head
License Agreement") in order for BVT to sub-license the Versarien
Technologies to, or further collaborate with, the End User, under a
separate agreement entered into with the End User (the "Sub-License
Agreement").
-- The terms and conditions of the Head License Agreement and
those of the Sub-License Agreement shall be the same except that
the license fees (including related technical service fees) under
the Head License Agreement shall be 70% of the license fees under
the Sub-License Agreement. The remaining 30% of the license fees
under the Sub-License Agreement will be retained by BVT to fund its
operating and management costs.
-- Versarien will remain the owner of existing Versarien
Technologies intellectual property licensed to the End User under
the Head License Agreement and Sub-License Agreement. Any new
technologies or new intellectual property generated during the
process of promotion and industrialisation of Versarien
Technologies by BVT shall belong to BVT or jointly belong to BVT
and the End Users.
Equity Investment in Versarien
The A greement also sets out the conditional heads of terms for
a staged equity investment in Versarien on the following terms. In
particular:
-- T he J oint V enture is conditional on Versarien receiving a
strategic equity investment of up to 15% of its current issued
share capital in three equal instalments with a long-stop date of
30 June 2021 . Within five business days after receiving each
instalment of subscription proceeds for the Versarien Share
Subscriptions, Versarien will remit 50% of the gross proceeds of
the subscription to a Graphene Fund to be managed for the benefit
of BVT.
-- The equity subscriptions set out above are expressly
conditional on any investor being allowed to conduct customary and
proper due diligence on Versarien and the due diligence findings
being materially consistent with all the public disclosures made by
Versarien; and on the terms and conditions of the equity
subscription agreements (other than the subscription price) being
standard and customary for similar transactions in the United
Kingdom.
-- It should be noted that no party has committed to acquire any
new shares in the Company or underwrite any equity fundraising
pursuant to the Versarien Share Subscriptions and there can be no
certainty that any of these subscriptions will occur.
-- The execution of definitive agreements to complete each stage
of the equity subscription will depend on a number of other
practical factors, including:
o Due diligence;
o Identification of an appropriate investor;
o Versarien confirming certainty of the proposed investor's
funding; and
o If the ultimate investor once identified proposes funding from
within mainland China, such funding is likely to be subject to PRC
currency exchange controls.
Backstop Arrangements
-- If Versarien has not received income under the Head License
Agreement totaling RMB 35 million (approximately GBP4.2 million)
within twenty-four months of issue of the Joint Venture business
licence VGHK shall be entitled to purchase from YG its entire
equity interest in BVT at a nominal price of RMB10 (approximately
GBP1) and YG shall accept such purchase of its equity interest.
-- If YG fails to procure a definitive agreement for Versarien
for the first Versarien Share Subscription due by 30 June 2020,
Versarien shall be entitled to purchase from YG all its equity
interest in BVT at the nominal price of RMB10 (approximately GBP1)
and YG shall accept such purchase of its equity interest.
Commenting on the A greement, Neill Ricketts, C hief Executive
Officer of Versarien , said: "Despite the impact of Covid-19 around
the world, the Company has been able to continue to make progress
on executing its strategy in China , as illustrated with the
confirmation of this joint venture agreement. As highlighted in our
February 2020 update, d iscussions are continuing to facilitate an
equity investment in Versarien."
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO
CONSTITUTE INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE
MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON THE PUBLICATION OF
THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE
IN THE PUBLIC DOMAIN.
Enquiries:
Versarien
Neill Ricketts, CEO
Chris Leigh, CFO +44 (0)1242 269 122
SP Angel Corporate Finance (Nominated Adviser
and Joint Broker)
Ewan Leggat, Soltan Tagiev +44 (0)20 3470 0470
Berenberg (Joint Broker)
Mark Whitmore, Simon Cardron +44 (0) 20 3207 7800
Yellow Jersey (Investor Relations)
Charles Goodwin
Georgia Colkin
Henry Wilkinson +44 (0)20 3004 9512
About Versarien
Versarien plc (AIM: VRS), is an advanced engineering materials
group. Leveraging proprietary technology, the Group creates
innovative engineering solutions for its clients in a diverse range
of industries. Versarien has seven active subsidiaries operating
under two divisions:
Graphene and Plastics
2-DTech Ltd, which specialises in the supply, characterisation
and early stage development of graphene products. 2-DTech is based
at the Graphene Innovation Engineering Centre, a GBP60 million
facility set up to work in collaboration with industry partners to
create, test and optimise new concepts for the delivery of graphene
to the market. www.2-dtech.com
AAC Cyroma Limited, which specialises in the supply of
vacuum-formed and injection-moulded products to the automotive,
construction, utilities and retail industry sectors. Using
Versarien's existing graphene manufacturing capabilities, AAC has
the ability to produce graphene-enhanced plastic products.
www.aaccyroma.co.uk
Cambridge Graphene Limited, supplies novel inks based on
graphene and related materials, using patented
processes to develop graphene materials technology. www.cambridgegraphene.com
Gnanomat S.L. ("GNA"), based in the Parque Cientifico Madrid,
Spain, is a company capable of utilising Versarien's graphene
products in an environmentally friendly, scalable production
process for energy storage devices that offer high power density,
fast recharging and very long lifetimes for use in electrical
vehicles and portable electronics products. www.gnanomat.com
Versarien Graphene Inc - based in Texas, is the recently
incorporated sales business for the UK's graphene products.
Hard Wear and Metallic Products
Versarien Technologies Limited has developed an additive process
for creating advanced micro-porous metals targeting the thermal
management industry and supplies extruded aluminium.
www.versarien-technologies.co.uk
Total Carbide Limited, a leading manufacturer in sintered
tungsten carbide for applications in arduous environments such as
the oil and gas industry. www.totalcarbide.com
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END
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