Aggregated Micro Power Holdings plc
("AMP", the "Company" or the "Group")
Placing to raise £8.5 million
Proposed Call of Convertible Loan Notes
Notice of General Meeting
Aggregated Micro Power Holdings plc, the specialist provider of distributed heat, power and renewable fuels, today announces that it has conditionally raised a total of £8.5 million (before commission and expenses) through the issue of 8,500,000 new ordinary shares of 0.5 pence each in the capital of the Company (the "Placing Shares") at a price of 100 pence (the "Issue Price") per Placing Share (the "Placing") and, subject to admission of the Placing Shares to trading on AIM and receipt of the Placing proceeds by the Company, intends to issue a call notice (the "Call") in respect of the £10.01 million of outstanding Fixed Rate Secured 8% Series I and Series II Convertible Loan Notes 2021 (together, the "Convertible Loan Notes"). The Placing requires Shareholder Resolutions to be passed by the Company's Shareholders.
Summary of the transaction
- Placing to raise gross proceeds of £8.5 million at the Issue Price
- Discount of approximately 9.1 per cent. to the closing mid-market price of 110 pence per ordinary share in the capital of the Company (the "Ordinary Shares") on 12 October 2018
- Following receipt of the net proceeds of the Placing, the Company intends to issue the Call for the Convertible Loan Notes
- The maximum potential cost of redemption of the outstanding Convertible Loan Notes at par is £7.79 million (plus expected accrued interest due to Convertible Loan Note Holders of approximately £0.13 million), as the Directors and management of the Company currently hold, in aggregate, £2.22 million nominal of Convertible Loan Notes and have committed to convert their Convertible Loan Notes into new Ordinary Shares
- The Company continues to trade in line with market expectations for the financial year ending 31 March 2019 and has achieved unaudited Group revenue for the period to 31 August 2018 of £14.5 million, ahead of the previous financial year
Use of proceeds
The net proceeds of the Placing (after commission and expenses) will be used to fund the redemption of the Convertible Loan Notes at par (to the extent not converted into Ordinary Shares). The total number of Convertible Loan Notes currently outstanding is £10.01 million. Of these Convertible Loan Notes, the Directors and management of the Company currently hold, in aggregate, £2.22 million nominal, which they have committed to convert into new Ordinary Shares. Therefore the maximum potential cost of redemption of the Convertible Loan Notes at par is £7.79 million (plus expected interest due to Convertible Loan Note Holders of approximately £0.13 million).
In the event that all other holders of Convertible Loan Notes opt to convert some or all of their holdings of Convertible Loan Notes into new Ordinary Shares, the Company intends to use the remaining proceeds of the Placing in order of priority as follows:
Fuels business working capital and investment in growth (including fees)
Service & Maintenance business expansion
Commenting on the transaction, Richard Burrell, Chief Executive said:
"We are delighted and very grateful for the support shown by our existing and new shareholders in difficult market conditions. The proceeds from the Placing will enable us to simplify our balance sheet structure and provide working capital to accelerate our growth."
A circular (the "Circular"), containing a notice convening the General Meeting to be held at the offices of the Company at 1 Dover Street, London W1S 4LD at 11.00 a.m. on 1 November 2018 (the "Notice"), will be posted to shareholders today and will be available on the Company's website at www.ampplc.co.uk. The General Meeting has been convened to consider and if thought fit approve the Resolutions set out in the Circular and Notice which are required to effect the Placing (the "Resolutions").
The Directors consider the Resolutions to be set out in the Circular and Notice to be in the best interests of the Company and the shareholders as a whole. The Directors who hold Ordinary Shares intend to vote in favour of the Resolutions in respect of their shareholdings, representing in aggregate approximately 25.8 per cent. of the Company's current issued share capital as at the date of this announcement.
Further information on the Placing and the Call is set out below.
Unless otherwise defined herein, capitalised terms used in this announcement shall have the same meanings as defined in the Circular containing notice of the General Meeting, a copy of which will be available on the Company's website www.ampplc.co.uk.
Aggregated Micro Power Holdings plc 020 7382 7800
Neil Eckert, Executive Chairman
Richard Burrell, CEO
Izzy Deterding, Investor Relations
Haggie Partners LLP 020 7562 4444
finnCap Ltd 020 7220 0500
Ed Frisby / Simon Hicks (Corporate Finance)
Andrew Burdis / Richard Chambers (ECM)
Whitman Howard Ltd 020 7659 1234
About Aggregated Micro Power Holdings plc
The AMP Group was established to develop, own and operate renewable energy generating facilities. It specialises in the sale of wood fuels and in the installation of distributed energy projects. AMP's wholly owned subsidiary Forest Fuels sells high quality wood chip and wood pellet to end customers throughout the UK, while its projects division installs biomass boiler and biomass CHP systems for a wide range of applications and customers. AMP is also active in developing projects for stand-by power generation, which aims to balance the transmission grid at times of peak demand.
The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
The following text has been extracted from the Circular:
The Company has today announced (i) a Placing to raise gross proceeds of £8.5 million by the issue of 8,500,000 Placing Shares at 100 pence per Placing Share and (ii) the proposed Call by the Company of the Fixed Rate Secured Convertible Loan Notes 2021.
The Placing is conditional upon (amongst other things) the passing of the Resolutions at the General Meeting and Admission of the Placing Shares. The Call is subject to the Placing occurring.
As the allotment and issue of the Placing Shares will exceed the Directors' existing authorities to allot Ordinary Shares for cash on a non-pre-emptive basis granted at the 2018 annual general meeting of the Company, the Placing is conditional upon (among other things) the passing of the Resolutions. Should Shareholder approval of the Resolutions not be obtained at the General Meeting, the Placing will not proceed and the Call will not be issued. Subject to the conditions to the Placing being satisfied, the Placing Shares are expected to be admitted to trading on AIM at 8.00 a.m. on 2 November 2018.
The purpose of this letter is to explain to Shareholders the background to, and reasons for, the Placing and the Call and to request the support of Shareholders for the Resolutions. The Notice convening the General Meeting is set out at the end of this circular and a Form of Proxy is also enclosed for you to complete. This letter also includes an explanation of the Resolutions.
2. Background to and reasons for the Placing and the Call
In March 2016, the Company issued £4.07 million nominal of Series I Convertible Loan Notes.
Since then, the Company has issued three tranches of Series II Convertible Loan Notes comprising £5.94 million nominal in aggregate. Save for the conversion price, the Series II Convertible Loan Notes are identical in every respect to the Series I Convertible Loan Notes. After 31 March 2018 the Company can redeem the Convertible Loan Notes at par (plus accrued interest) or the Noteholders can convert their Convertible Loan Notes into Ordinary Shares.
The cost to the Company of paying the annual interest costs on the Convertible Loan Notes is approximately £0.8 million and in addition the Noteholders hold senior security over the assets of the Company. Therefore, the Company has conditionally raised a total of £8.5 million (before commission and expenses) from the issue of 8,500,000 Placing Shares at 100 pence per Placing Share to provide the Company with the required funds (taking into account the commitments made by the Directors and management as described below) to issue the Convertible Loan Notes Notice to Noteholders, which will result in Noteholders either:
- converting their Convertible Loan Notes into Conversion Shares at either 70 pence per Ordinary Share or 86 pence per Ordinary Share depending on whether they hold Series I Convertible Loan Notes or Series II Convertible Loan Notes; or
- having their Loan Amount redeemed at par.
Of the Convertible Loan Notes, the Directors and management of AMP currently hold, in aggregate, £2.22 million nominal of Convertible Loan Notes, which they have committed to convert into Conversion Shares upon the Call being made.
The Company has also received a number of additional indications to date from a significant number of Convertible Loan Note holders that these holders currently expect, at the time of the Call, to elect to convert into Ordinary Shares. In the event that some Convertible Loan Note holders subsequently elect to accept cash in relation to the redemption, the Company intends to use its cash resources to meet such redemptions.
The maximum potential cost of redemption of the Convertible Loan Notes at par is £7.79 million (taking into account the commitments made by the Directors and management) and additionally it is expected that approximately £0.13 million will be payable in cash in relation to the interest accrued on the Convertible Loan Notes. The maximum number of Conversion Shares that can be issued as a result of the Call is 12,724,701 Conversion Shares.
Following completion of the Call, the Company will have:
- a simplified capital structure;
- a stronger balance sheet;
- a saving of £0.8 million in annual interest costs; and
- removed the senior security which the Noteholders have over the assets of the Company.
To the extent that the proceeds of the Placing are not used to redeem Convertible Loan Notes at par, the Company will deploy the funds as set out in paragraph 4 of this circular.
3. Terms of the Placing
3.1 Principle terms of the Placing
The Company is proposing to raise gross proceeds of approximately £8.5 million pursuant to the Placing through the issue of the Placing Shares.
The Placing will result in the issue of 8,500,000 Ordinary Shares (representing, in aggregate, approximately 16.4 per cent. of the Enlarged Share Capital (assuming full subscription under the Placing)). The Placing Shares will, when issued, rank in full for all dividends and other distributions declared, made or paid on the Ordinary Shares by reference to record dates falling after their date of issue and otherwise rank pari passu in all respects with the Existing Ordinary Shares. No temporary documents of title will be issued.
Following the issue of the Placing Shares, existing Shareholders will undergo a dilution of approximately 16.4 per cent. to their interests in the Company as a result of the Placing.
Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings for normal settlement in the Placing Shares on AIM will commence at 8.00 a.m. on 2 November 2018.
3.2 Information relating to the Placing
Under the Placing Agreement, the Company has appointed the Joint Brokers as its agents in connection with the Placing to use their reasonable endeavours to procure subscribers for the Placing Shares at the Issue Price. The Placing is not underwritten.
Pursuant to the Placing Agreement, the Company has given certain warranties to the Joint Brokers regarding, among other things, the accuracy of information in this circular and an indemnity in favour of the Joint Brokers in respect of, among other things, losses arising directly or indirectly out of the Placing.
The Placing Agreement is conditional, among other things, on (a) Admission taking place in respect of the Placing Shares by no later than 8.00 a.m. on 2 November 2018 or such later date as may be agreed by the Company and the Joint Brokers, not being later than 30 November 2018; (b) the passing of the Resolutions at the General Meeting; and (c) the Company complying with all of its obligations under the Placing Agreement.
The Joint Brokers are entitled, in certain limited circumstances, to terminate the Placing Agreement prior to Admission and to the payment of outstanding expenses on such termination.
4. Use of proceeds
The Placing is expected to raise, in total, gross proceeds of approximately £8.5 million (before commission and the expenses of the Placing).
The proceeds of the Placing (after commission and expenses) will be used to fund the redemption of any Convertible Loan Notes at par and payment of any accrued interest on such Convertible Loan Notes. The maximum potential cost of redemption of the Convertible Loan Notes at par is £10.01 million. However, the Directors and management of AMP who currently hold, in aggregate, £2.22 million nominal of Convertible Loan Notes, have committed to convert their Convertible Loan Notes into Conversion Shares upon the Call being made. Therefore the maximum potential cost of redemption of the Convertible Loan Notes at par is £7.79 million (taking into account the commitments made by the Directors and management), with an additional sum of approximately £0.13 million expected to be payable in cash to Noteholders in relation to the interest accrued on the Convertible Loan Notes.
In the event that all Noteholders opt to convert some or all of their holdings of Convertible Loan Notes into Conversion Shares, AMP intends to use the proceeds of the Placing in order of priority as follows:
Use of proceeds
Fuels business working capital and investment in growth (including fees)
Service & Maintenance business expansion
* Urban Reserve are the Group's grid balancing peaking plant projects intended for deployment in urban areas.
5. General Meeting
A notice convening the General Meeting, to be held at the offices of the Company at 3rd Floor, 1 Dover Street, London, United Kingdom, W1S 4LD at 11.00 a.m. on 1 November 2018 is set out at the end of this circular. At the General Meeting, the following Resolutions will be proposed:
1. an ordinary resolution, to grant authority to the Directors to allot Ordinary Shares in the capital of the Company or to grant rights to subscribe for or convert any security into Ordinary Shares in the capital of the Company pursuant to section 551 of the 2006 Act, up to an aggregate nominal amount of £42,500.00; and
2. conditional on the passing of resolution 1, a special resolution to disapply the statutory pre- emption rights contained in section 561(1) of the 2006 Act up to an aggregate nominal amount of £42,500.00.
The authority and disapplication referred to above will be in addition to the authority and disapplication granted to the Directors at the Annual General Meeting of the Company held in 2018, and will expire on 1 November 2019.
The Directors undertake that they shall only use the authority and disapplication referred to above in connection with the Placing.
In order for the Placing and the Call to proceed, Shareholders will need to approve Resolutions 1 and 2 set out in the Notice of General Meeting. If Resolutions 1 and 2 are not passed, the Placing and the Call will not proceed.
Accordingly it is important that Shareholders vote in favour of Resolutions 1 and 2.
6. General trading and prospects
AMP continues to trade in line with market expectations for the financial year ending 31 March 2019. Despite the hot weather during the summer in the UK, AMP achieved unaudited Group revenue for the period to 31 August 2018 of £14.5 million, which is ahead of the previous financial year.
AMP has a strong project development pipeline of opportunities with total development fees being significantly weighted to the second half of the financial year ending 31 March 2019.
7. Related Party Transaction
The participation in the Placing by Lansdowne Partners (UK) LLP ("Lansdowne Partners") is a related party transaction under Rule 13 of the AIM Rules as Lansdowne Partners is a substantial shareholder in the Company. The Directors of the Company, having consulted with finnCap in its capacity as the Company's nominated adviser for the purposes of the AIM Rules, consider the terms on which Lansdowne Partners has participated in the Placing are fair and reasonable insofar as the Company's shareholders are concerned.
8. Action to be taken by Shareholders
Shareholders will find accompanying this circular a Form of Proxy for use at the General Meeting. Whether or not Shareholders intend to be present at the General Meeting, they are requested to complete, sign and return the Form of Proxy in accordance with the instructions printed on it to Link Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU as soon as possible and, in any event, so as to arrive no later than 11.00 a.m. on 30 October 2018. Completion and return of the Form of Proxy will not affect a Shareholder's right to attend and vote in person at the General Meeting if they so wish. Further information regarding the appointment of proxies can be found on page 13 of this circular.
If you hold your Ordinary Shares in uncertificated form (that is, in CREST) you may vote using the CREST Proxy Voting service in accordance with the procedures set out in the CREST Manual (please also refer to the accompanying notes to the Notice set out at the end of this circular for further details).
9. Directors' Recommendation
The Directors consider the Placing and the Call to be in the best interests of the Company and its Shareholders as a whole.
Accordingly, the Directors unanimously recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting as the Directors intend to do in respect of 11,135,700 Existing Ordinary Shares which in aggregate they beneficially own or control, representing approximately 25.8 per cent. of the existing issued ordinary share capital of the Company.
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