Xeros Technology : Proposed Placing, Open Offer & General Meeting

Proposed Placing, Open Offer & General Meeting

Released : 31 Oct 2019 15:46

RNS Number : 8674R Xeros Technology Group plc 31 October 2019

For immediate release

THIS ANNOUNCEMENT, INCLUDING THE INFORMATION CONTAINED HEREIN, IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION. PLEASE SEE THE IMPORTANT NOTICES AT THE END OF THIS ANNOUNCEMENT.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND SHALL NOT CONSTITUTE AN OFFER TO SELL OR ISSUE OR THE SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY NEW ORDINARY SHARES OF XEROS TECHNOLOGY GROUP PLC IN THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED IN ARTICLE 7 OF THE MARKET ABUSE REGULATION NO. 596/2014 ("MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

Xeros Technology Group plc

("Xeros", the "Group" or the "Company")

Placing to raise £5.0 million

Open Offer to raise up to £2.0 million

and

Notice of General Meeting

Xeros Technology Group plc (AIM: XSG), the developer and provider of patented water saving and filtration products with multiple commercial applications, proposes to raise approximately £5.0 million before fees and expenses by a placing of 505,000,000 new ordinary shares ("Ordinary Shares") with existing and new institutional investors at an issue price of 1 pence per share (the "Placing") (the "Issue Price"). In addition to the Placing, qualifying shareholders will be given the opportunity to subscribe for up to 199,932,635 new Ordinary Shares through an open offer to raise up to £2 million before expenses (the "Open Offer") (together the "Fundraising").

Highlights

• The Fundraising will raise gross proceeds of up to £7.05 million at the Issue Price;
• The net proceeds are intended to be used to fund the Group's operations through to the end of 2020 and the Directors will seek to raise further funds at the end of 2020, if not sooner. The Directors believe the Group will be generating sufficient cashflows to be break‐even by the end of 2021.
• The Fundraising is conditional upon the granting of shareholder authorities to issue new Ordinary Shares and to dis‐apply pre‐ emption rights, such authorities are to be sought at a general meeting of the Company's shareholders ("General Meeting"), details of which are within this announcement;
• As previously announced, the Company aims to achieve the above plan by becoming a pure‐play licensing business. The Company believes this is achievable in three main areas: firstly, signing and executing license agreements with acceptable levels of royalties with selected partners in target markets/geographies; secondly, exiting operational business once market and product viability is proven; and lastly, reducing its cost and asset base to that of a pure‐play licensing company.
• Admission of the 505,000,000 Ordinary Shares ("Placing Shares") is expected to be on 20 November 2019, although this is conditional on the passing of resolutions (the "Resolutions") to be put to shareholders at the General Meeting.
• Admission of up to 199,932,635 Ordinary Shares ("Open Offer Shares") is expected to be on 20 November 2019, although the final number of Open Offer Shares is conditional on the passing of resolutions to be put to shareholders at the General Meeting.
• General Meeting to be held at the offices of Squire Patton Boggs (UK) LLP at 7 Devonshire Square, London, EC2M 4YH at 10.00 a.m. on 19 November 2019.

Commenting on the Placing, Mark Nichols, CEO of Xeros, said:

"Xeros' products help reduce the increasing pressures on the world's supply of water. Testament to this are the development and license agreements we have signed in India and China, the world's two largest water users.

This funding, provided by both existing and new shareholders, will enable us to complete our full migration to becoming a high- margin royalty business delivering sustainability and cost benefits to our licensees' customers.

Having completed much of the development and protection of our products, we are now well-positioned to continue the commercialisation of our intellectual property with major OEMs across multiple large-scale markets."

Details of the Placing

finnCap Ltd ("finnCap") acted as nominated adviser, broker and bookrunner in connection with the Placing. No part of the Placing is underwritten.

The Placing of the Placing Shares is conditional upon admission to trading on AIM becoming effective ("Admission") and the placing agreement between the Company and finnCap (the "Placing Agreement") not being terminated in accordance with its terms.

The Placing Shares, when issued, will represent approximately 196.5 per cent. of the Company's issued share capital prior to the Placing. The Issue Price of 1 pence per new Ordinary Share represents a discount of approximately 81 per cent. to the closing mid‐market price of 5.17 pence per Ordinary Share on 30 October 2019, being the last trading day immediately preceding the date of this Announcement.

Details of the Open Offer

At the same time as the Placing, the Company also proposes to raise up to a further £2 million before fees and expenses (assuming full take up of the Open Offer) by way of the Open Offer. The Open Offer will be made to all Qualifying Shareholders in order to provide them with the opportunity to participate in the Fundraising at the Issue Price. The Open Issue is being conducted on the basis of 7 Open Offer Shares for every 9 Existing Ordinary Shares held on the Record Date. Qualifying Shareholders subscribing for their full Basic Entitlement under the Open Offer may also apply for additional Open Offer Shares through the Excess Application Facility.

Neither the Placing nor the Open Offer are being underwritten.

The New Ordinary Shares, when issued, will be fully paid and will rank pari passu in all respects with the existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid in respect of such New Ordinary Shares after the date of their admission to trading on AIM.

General Meeting and Shareholder Approval

For the New Ordinary Shares to be admitted to trading on AIM, Shareholder approval is required:

1. by way of ordinary resolution to give the Directors authority to allot the New Ordinary Shares; and
2. by way of a special resolution to dis‐apply statutory pre‐emption rights in respect thereof.

The authorities referred to above are in addition to the Company's existing general shareholder authorities to allot Ordinary Shares for cash on a non‐pre‐emptive basis.

In order to obtain the necessary shareholder approval, a General Meeting of the Company is to be held at the offices of Squire Patton Boggs (UK) LLP at 7 Devonshire Square, London, EC2M 4YH at 10.00 a.m. on 19 November 2019 at which the Resolutions will be proposed. A Circular containing a notice of General Meeting will be sent to shareholders on 1 November 2019. The shareholder Circular and notice of General Meeting will be made available on the Company's website at www.xerostech.com.

Expected Timetable of Principal Events
Open Offer
Record Date for Open Offer	30 October 2019
Announcement of Placing and Open Offer	31 October 2019
Posting of the Circular and the Forms of Proxy	1 November 2019
Ex‐entitlement date for Open Offer	7:00 a.m. 1 November
	2019

Open Offer entitlements credited to CREST accounts	8:00 a.m. 4 November
	2019
Recommended latest time and date for depositing Open Offer	3:00 p.m. 11 November
entitlements into CREST	2019
Recommended latest time and date for requesting withdrawal of Open	4:30 p.m. 11 November
Offer entitlements from CREST	2019
Latest time and date for splitting Application forms (to satisfy bona fide	3:00 p.m. 14 November
market claims only)	2019
Latest time and date for receipt of completed application forms and	11:00 a.m. 18 November
payment in full under the Open Offer	2019
Announcement of results of the Open Offer	18 November 2019
Placing and General Meeting
Latest time and date for receipt of CREST proxy instructions and	10:00 a.m. on 15
registration of online votes from Shareholders for General Meeting	November 2019
Latest time and date for receipt of Forms of Proxy	10:00 a.m. on 17
	November 2019
Trade Date in respect of the Placing	18 November 2019
General Meeting	10:00 a.m. on 19
	November 2019
Settlement Date in respect of the Placing	20 November 2019
Admission of New Ordinary Shares and commencement of dealings on	08:00 a.m. 20 November
AIM	2019
Despatch of share certificates for Open Offer shares	Week commencing 25
	November 2019

On Admission of the Placing Shares and the Open Offer Shares (assuming take up of all of the Open Offer Shares), the Company's issued share capital will comprise 961,988,880 Ordinary Shares, with no Ordinary Shares held in treasury. Following Admission a further total voting rights announcement will be made confirming the number of Ordinary Shares in issue.

Enquiries:
Xeros Technology Group plc	Tel: [phone]
Mark Nichols, CEO
Paul Denney, CFO
www.xerostech.com
finnCap	[phone]
Julian Blunt, Teddy Whiley (Corporate Finance)
Andrew Burdis, Sunila de Silva (ECM)
www.finncap.com
Instinctif Partners	[phone]
Adrian Duffield, Chantal Woolcock & James Gray

Notes for editors:

About Xeros Technology Group plc

Xeros Technology Group plc is a platform technology Group that is transforming water intensive industrial and commercial processes.

Xeros' patented XOrbTM technologies significantly reduce the amount of water used in the washing or dyeing of soft substrates such as garments and fabrics. It enables the remaining water to become far more efficient and effective in either affixing or removing molecules, the result being improvements in economic, operational, product and sustainability outcomes. The Group is applying its technology in the fields of cleaning, tanning and textiles.

Xeros' XDrumTM technology is a patented, simple, low cost machine drum design which enables XOrbs to be introduced into and subsequently removed from process cycles in Xeros' chosen markets. The design enables rotating drum machine Original Equipment Manufacturers ("OEMs") in the fields of garment manufacture and cleaning, the ability to make simple and low cost changes in their production lines to incorporate the Company's XOrb technology.

The Group has signed multiple agreements to develop and license its XDrum and XOrb products in major commercial and domestic markets.

XFiltraTM is a patented in‐machine filtration technology which is designed to prevent harmful micro‐plastics generated by washing cycles from being released into the aquacycle. Plastics released from synthetic clothing during washing cycles is one of the single largest sources of primary micro‐plastic pollution.

Forward‐Looking Statements

This announcement contains forward‐looking statements. These statements relate to the Group's future prospects, developments and business strategies. Forward‐looking statements are identified by their use of terms and phrases such as "potential", "estimate", "expect", "may", "will" or the negative of such terms and phrases, variations or comparable expressions, including references to assumptions. The forward‐looking statements in this announcement are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. These forward‐ looking statements speak only as at the date of this announcement. No statement in this announcement is intended to constitute a profit forecast or profit estimate for any period. Neither the Directors nor the Company undertake any obligation to update forward‐looking statements other than as required by the AIM Rules or by the rules of any other securities regulatory authority, whether as a result of new information, future events or otherwise.

Market Abuse Regulation

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 permitted by MAR. That inside information is set out in this announcement and has been disclosed as soon as possible in accordance with paragraph 7 of article 17 of MAR. Therefore, those persons that received inside information in a market sounding are no longer in possession of inside information relating to the Company and its securities.