Benchmark Hlgs PLC - Placing and Open Offer
THIS ANNOUNCEMENT, INCLUDING APPENDIX I AND THE INFORMATION CONTAINED IN IT, IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION, OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 956/2014 ("MAR").
("Benchmark" or the "Company")
Placing to raise
Notice of General Meeting
Reasons for and benefits of the Fundraise
· The Company has developed CleanTreat®, a proprietary system that removes medicinal residues from treatment water, and which is integral to the commercial delivery of product candidate BMK08, the Company's novel sea lice treatment for sea lice
· The Directors strongly believe the Fundraise represents the optimal scale-up strategy for CleanTreat® ahead of the anticipated BMK08 regulatory approval by:
o increasing its speed to market
o delivering a higher expected return-on-investment
o maximising value for Benchmark shareholders by retaining full ownership of CleanTreat®
· The net proceeds from the Placing will be used as follows:
Summary of the Placing and Open Offer
· The Fundraise is structured as a Placing to raise
· The net proceeds of the proposed Open Offer of up to
· The Issue Price of 40p per Ordinary Share represents a discount of 10.1% to the closing middle market price of 44.5p per Ordinary Share on
· Certain Directors of the Company have subscribed for Placing Shares in the Placing
· The Fundraise is conditional upon, inter alia, shareholder approval which will be sought at the General Meeting of the Company to be held on
· Numis is acting as Financial Adviser, Nominated Adviser and sole Broker in relation to the Fundraise
"We are preparing to launch BMK08, our novel medicinal treatment to combat sea lice, one of the main biological challenges in salmon farming. This requires scaling up CleanTreat®, our proprietary system that removes medicinal residues from treatment water, and which is integral to the delivery of BMK08. Having reviewed a number of funding options, we strongly believe that an equity raise is the optimal funding strategy to deliver this scale."
I am pleased that existing and new shareholders have placed their confidence in us to drive Benchmark to finally deliver on its enormous potential. The actions we will take in 2020 will deliver a profitable business, leading the future direction in key areas of sustainable Aquaculture."
Details of analyst / investor call today
The capitalised terms used in this Announcement have the meaning set out in Appendix II to this Announcement.
The ticker for the Company's ordinary shares is BMK. The Company's LEI is 2138001UQHM4VZGXUJ19.
The Company has 558,986,062 Existing Ordinary Shares. The Company holds no shares in treasury. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in the Company under the Disclosure and Transparency Rules of the
This Announcement contains inside information for the purposes of MAR. 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. This inside information is set out in this Announcement. 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.
This Announcement should be read in its entirety. In particular, your attention is drawn to the "Important Notice" section of this Announcement below and to the detailed terms and conditions of the Placing set out in Appendix I. By choosing to participate in the Placing and by making an oral and legally binding offer to acquire Placing Shares, investors will be deemed to have read and understood this Announcement in its entirety and to be making such offer on the terms and subject to the conditions in it, and to be providing the representations, warranties and acknowledgements contained in Appendix I.
For further information please contact:
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Tel: +44 (0)20 7920 3150
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Tel: +44 (0)20 7260 1000
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Tel: +44 (0)20 3128 8742
Benchmark's mission is to enable aquaculture food producers to improve their sustainability and profitability by offering products and solutions which increase yield, product quality and animal health and welfare. Benchmark's aim is to be the leading supplier of solutions in genetics, specialist nutrition and health to the aquaculture industry.
The Company has developed product candidate BMK08, a novel medicinal treatment to combat sea lice, one of the main biological challenges in salmon farming. In parallel, the Company has developed CleanTreat®, a proprietary system that removes medicinal residues from treatment water, and which is integral to the delivery of product candidate BMK08.
The Group is preparing to launch product candidate BMK08 in the first half of 2021 following its anticipated regulatory approval, and this will require scaling up CleanTreat®, with an associated funding requirement. Having reviewed a number of funding options, the Directors strongly believe that an equity raise is the optimal funding strategy to enable speed to market and maximise returns for Benchmark shareholders. The Company estimates that a
Benchmark is proposing to raise up to approximately
The Placing Shares represent approximately 16.3% of the issued share capital of the Company prior to the Fundraise and the Open
Background to and reasons for the Fundraise
Benchmark's aim is to be the leading supplier of solutions in genetics, specialist nutrition and health to the aquaculture industry. Benchmark's primary focus is on developing sustainable solutions to the main biological and disease problems in the industry.
The Group has a broad portfolio of products and solutions that improve yield, quality, animal health and welfare, and reduce environmental impact across the production cycle. These include eggs and sea lice treatments for the salmon sector, live feed (Artemia), specialist diets, genetics and probiotics for the shrimp and sea bass/sea bream sectors as well as genetics products and services for tilapia and other species.
The market has a growing need for solutions that improve the sustainability of food production in aquaculture. Benchmark's focus on delivering products and solutions that improve animal health and welfare, and that reduce environmental impact, in the Directors' opinion positions it as a leader in improving sustainability standards in aquaculture.
Product Candidate BMK08 and CleanTreat®
Sea lice are the most significant biological challenge in salmon farming with an estimated annual cost to the industry of approximately
Over the past ten years, the Group has developed product candidate BMK08, a novel medicinal bath treatment for sea lice. In parallel to product candidate BMK08, the Group has developed CleanTreat®, a proprietary system that removes medicinal residues from treatment water before the water is discharged back into the ocean. CleanTreat® is integral to the delivery of product candidate BMK08 and significantly reduces its environmental impact. In addition to removing medicinal residues, CleanTreat® removes the organic material from the treatment water, including sea lice, which is essential in combating sea lice resistance to the medicine.
Over the last 24 months, the Group has conducted an extensive programme of trials for product candidate BMK08 in combination with CleanTreat® with five top salmon producers in
CleanTreat® has supported the trials of product candidate BMK08 since 2017, treating more than 400,000 m3 of water. In 2019, CleanTreat® was awarded a prestigious industry innovation award at the world's largest aquaculture technology exhibition, AquaNor. CleanTreat® addresses environmental medicinal contamination, one of the most pressing sustainability concerns in society and has broad potential application for current and future medicinal treatments beyond product candidate BMK08.
Product candidate BMK08 in combination with CleanTreat® is potentially transformative for the farmed salmon industry, addressing the urgent need for a highly efficacious treatment for sea lice with better animal welfare credentials.
The Group believes product candidate BMK08 in combination with CleanTreat® can potentially deliver significant value to customers:
· Lower mortality and improved growth resulting in higher yield and improved operational margin;
· Reduced risk of resistance to product candidate BMK08 developing;
· Reduced need for alternative treatments across the production cycle; and
· Better animal welfare, beneficial to industry reputation with consumers.
The Group is preparing to launch product candidate BMK08 together with CleanTreat® in the first half of 2021, subject to receipt of regulatory approval for product candidate BMK08, the timing and obtaining of which is not within the Group's control. The Company estimates that the commercial launch of CleanTreat® requires a
The Company has considered various strategies to scale up CleanTreat® including alternative funding options and, with support from a number of its major shareholders, has determined that retaining full ownership of CleanTreat® by raising equity is the optimal route in order to increase speed to market and maximise the returns for Benchmark shareholders with the potential to generate a higher expected return from the Company's investment in product candidate BMK08 and CleanTreat®. The Directors believe that this, together with the disposals and restructuring programmes being implemented in 2020, will accelerate Benchmark's move from a position of net R&D investment to becoming a profitable and cash generating company.
Benchmark's strategy and near term priorities
In 2018, the Company developed a five-year organic growth strategy focussed on delivering returns from the platform built since the Company's IPO in 2013 through acquisitions and investment in research and development. The Company has five strategic pillars:
1. implement structural efficiencies - including the disposal of or exit from non-core areas®, establishing a partnership agreement for its companion animal products, streamlining its pipeline of health products and implementing a comprehensive review of the Group's operating base;
2. grow in established markets from existing capacity - including increasing production of the Company's new salmon egg facility in
3. commercial delivery of the Group's pipeline of health products - including product candidate BMK08 and CleanTreat®;
4. focused investment in markets that leverage the Group's platform - including the launch of the Company's SPR shrimp which leverages Benchmark's expertise in genetics and commercial footprint in shrimp; and
5. position Benchmark in areas of future growth - including through its ongoing investment in genetics where the Company achieved a significant breakthrough in 2019, identifying a key genetic marker in tilapia linked with resistance against Streptococcus iniae, one of the major diseases affecting the species.
As set out in the Company's 2019 annual report, Benchmark's priorities for the next 12 months are to execute its programme of structural efficiencies as set out above, to prepare for the commercial launch of product candidate BMK08 and CleanTreat®, and to execute its strategy in its core business areas of Genetics and Advanced Nutrition, including the launch of the SPR shrimp, establishing production of salmon eggs in
Liquidity and working capital requirement
Liquidity and cash management constitute a priority for the Company while it continues to invest in the commercialisation of product candidate BMK08 in combination with CleanTreat® and research and development of other pipeline products, with a focus on those closest to commercialisation. At
A comprehensive programme to strengthen the Company's balance sheet is being undertaken including the disposal of or exit from non-core businesses, a cost reduction/cost containment plan and enhanced working capital management. In the area of disposals and exits, the Company has made progress since the last update in
The Group's planned disposals are expected to generate between
Use of proceeds
The Placing is expected to raise
In addition, the Company proposes to raise gross proceeds of up to
Current trading and prospects
As set out in the Company's Announcement of its full year results in
Trading in the first quarter of the year was in line with the trends reported in the full year results Announcement with positive trading in Genetics and Advanced Nutrition continuing to be affected by weak markets.
Overall, the Group is currently trading in line with the Director's expectations for the full year.
Update on planned disposals
Following the appointment of external advisers and, in certain cases, the commencement of sale processes, the Company has accelerated its programme of disposals and expects at least two of these to conclude in the first half of calendar year 2020. The Company has received indicative offers from several interested parties for the veterinary training and veterinary services businesses and is currently progressing discussions with those relevant interested parties. On the indications given, the Company may receive, in aggregate, up to approximately
Details of the Placing
Pursuant to the Placing Agreement, Numis has agreed to use its reasonable endeavours to procure Placees for 91,000,000 new Ordinary Shares at the Issue Price representing gross proceeds of
The terms and conditions of the Placing are set out in Appendix I to this Announcement.
The Placing is conditional, inter alia, on the following:
i) The Resolutions being passed at the General Meeting;
ii) the Placing Agreement not being terminated prior to Admission of the Placing Shares and becoming unconditional in all respects; and
iii) Admission of the Placing Shares having become effective on or before
Application will be made for the Placing Shares to be admitted to trading on AIM subject to the passing of the Resolutions at the General Meeting. It is expected that Admission will become effective on
The Placing is not conditional on Admission of the Open
Details of the Open Offer
Subject to the fulfilment of the conditions set out below, Qualifying Shareholders may subscribe for Open
The Open Offer is conditional, inter alia, on the following:
i) The Resolutions being passed at the General Meeting;
ii) the Placing Agreement not being terminated prior to Admission of the Placing Shares and having become unconditional in all respects;
iii) Admission of the Placing Shares becoming effective on or before
iv) Admission of the Open
The allotment and issue of the Open
If these and the other conditions to the Open Offer are not satisfied or waived (where capable of waiver), the Open Offer will lapse and will not proceed and any applications made by Qualifying Shareholders will be rejected. In these circumstances, application monies received by the Receiving Agent in respect of Open
Subject to the terms and conditions of the Open Offer, the Company invites Qualifying Shareholders to apply for their Basic Entitlement of Open
1 Open Offer Share for every 34 Existing Ordinary Shares held at the Record Date
Basic Entitlements will be rounded down to the nearest whole number of Ordinary Shares.
Qualifying Shareholders are also invited to apply for additional Open
Qualifying Shareholders should note that the Open Offer is not a "rights issue". Invitations to apply under the Open Offer are not transferable unless to satisfy bona fide market claims. Qualifying non-CREST Shareholders should be aware that the Application Form is not a negotiable document and cannot be traded. Qualifying Shareholders should also be aware that in the Open Offer, unlike in a rights issue, any Open
As part of the Placing, certain PDMRs have agreed to subscribe for Placing Shares pursuant to the Placing. The number of Placing Shares subscribed for by each PDMR and their resulting shareholdings on Admission (assuming full subscription under the Open Offer) are set out below:
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Number of existing Ordinary Shares
Percentage of existing Ordinary Shares
Number of Placing Shares subscribed for
Number of Ordinary Shares held on Admission
Percentage of Enlarged Share Capital on Admission*
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* Assuming full subscription under the Open Offer
Application for Admission
Application will be made to the
Notice of General Meeting
The issue of the new Ordinary Shares is conditional upon, inter alia, the approval by the Shareholders of the Resolutions. A notice convening the General Meeting to be held at
Resolution 1 - Authority to allot shares
Resolution 1 is an ordinary resolution to authorise the Directors under section 551 of the Companies Act 2006 (as amended, modified, consolidated, re-enacted or replaced from time to time) (the "Act") to issue and allot the new Ordinary Shares. The Act requires that the authority of Directors to allot shares and to make offers or agreements to allot shares in the Company or grant rights to subscribe for or convert any security into shares (the "relevant securities") should be subject to the approval of Shareholders in a general meeting or to an authority set out in the Company's articles of association. Accordingly, Resolution 1 will be proposed to authorise the Directors to allot relevant securities in respect of the issue of the new Ordinary Shares. This authority is in addition to all existing authorities under section 551 of the Act and will expire at on the conclusion of the Company's next Annual General Meeting.
Resolution 2 - Disapplication of statutory pre-emption rights
Resolution 2 is a special resolution to disapply the statutory pre-emption rights under section 571 of the Act in respect of equity securities (as defined in section 560 of the Act). The Act requires that any equity securities issued wholly for cash must be offered to existing Shareholders in proportion to their existing shareholdings unless otherwise approved by Shareholders in a general meeting or accepted under the Company's articles of association. A special resolution will be proposed at the General Meeting to give the Directors authority to allot equity securities for cash other than on a pro rata basis pursuant to the issue of the new Ordinary Shares. This authority is in addition to all existing authorities under section 570 of the Act and will expire on the conclusion of the Company's next Annual General Meeting.
Risk Factors and Additional Information
The Circular also contains a number of risk factors and additional information on the Fundraise and the Company.
Action to be taken in respect of the General Meeting
Shareholders will find accompanying the 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
In the case of Shareholders who hold their Ordinary Shares in uncertificated form and receive these materials through their broker or other intermediary, the Shareholder should complet
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