TIDMHDD
RNS Number : 7718U
Hardide PLC
27 October 2017
THIS ANNOUNCEMENT AND 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, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH
AFRICA, THE REPUBLIC OF IRELAND OR ANY OTHER JURISDICTION IN WHICH
SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.
FURTHER, 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 HARDIDE PLC IN ANY JURISDICTION IN WHICH ANY
SUCH OFFER, ISSUE OR SOLICITATION WOULD BE UNLAWFUL.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
27 October 2017
Hardide plc
("Hardide" or the "Company")
Fundraising to raise GBP2.54 million
Hardide plc (AIM: HDD), the provider of advanced surface coating
technology, is pleased to announce that the Company has
conditionally raised a total of GBP2.54 million (before expenses)
via an oversubscribed fundraising (the "Fundraising") at a price of
1.7 pence per new ordinary shares of 0.1p each ("Ordinary
Shares").
The Fundraising will enable the Company to make a number of
capital investments in order to create capacity to take advantage
of the demand expected by management.
The Fundraising is taking place pursuant to existing authorities
established at the Company's last Annual General Meeting on 20
February 2017 and comprises two tranches, being (i) the "Initial
Fundraising" of the Placing and the Initial Subscription (each as
defined below) to raise a total of GBP1.72 million subject to
customary conditions including admission to trading on AIM of the
relevant new Ordinary Shares becoming effective, and (ii) the
"Deferred Fundraising" to raise GBP0.82 million, subject
principally to the Company having, within a period of five months,
received advance assurance from HM Revenue & Customs ("HMRC")
that this additional sum will be eligible for EIS and/or VCT tax
relief (the "Tax Clearance") as well as other customary
conditions.
Further information on the Fundraising, including its
conditionality, is set out below.
Highlights
-- The Fundraising comprises the Initial Fundraising to raise
GBP1.72 million and the Deferred Fundraising to raise GBP0.82
million, all at a price of 1.7 pence per new Ordinary Share;
-- Net proceeds of the Fundraising of approximately GBP2.45
million will be used primarily to:
o fund two additional reactors at the Company's US facility;
o enhance existing equipment at UK and US sites;
o increase sales and marketing resource; and
o strengthen the Company's balance sheet.
-- Management's expectation of future new business in US justifies additional capacity;
-- Benefits from first additional reactor expected in FY19;
-- Framework supply agreement signed with a major North American
international operator in the oil and gas sector;
-- Indications received from Martinsville-Henry County Economic
Development Corporation ("MCEDC") that it intends to advance a
US$240,000 loan in support of Hardide's expansion plans for its
Martinsville facility;
-- Financial results for the year ended 30 September 2017
expected to be in line with the Board's expectations and with a
cash balance of GBP1.21m as at that date; and
-- Hardide expects to release its results for the year ended 30
September 2017 on 11 December 2017.
Philip Kirkham, Chief Executive Officer of the Company,
commented:
"We are delighted to have received such strong support from
investors for this Fundraising. The new funding will principally
allow us to invest in up to two new reactors in the US which will,
when deployed, create the capacity required at the Company's
existing facilities to accommodate projected new business. We are
very mindful of ensuring that funds are deployed in a prudent
manner to match our expectations of forthcoming demand. The loan we
expect from MCEDC will further evidence support for the Company's
growth plans for the Martinsville facility and we thank them for
the support Hardide has received since opening the facility in
2016.
"We are excited by the recent progress made regarding two new
commercial agreements, one being a signed framework agreement with
a major international operator in the oil and gas sector. The
Company is also in the final stages of discussion with a well-known
manufacturer of drilling and production tools. These agreements
underpin existing market forecasts and the Board's belief in the
Company's further growth."
Enquiries:
Hardide plc Tel: +44 (0)
Robert Goddard, Non-Executive 1869 353830
Chairman
Philip Kirkham, CEO
Jackie Robinson, Communications
Manager
IFC Advisory Tel: +44 (0)
Graham Herring / Heather Armstrong 20 3053 8761
finnCap Tel: +44 (0)
Henrik Persson / James Thompson 20 7220 0500
/ Alex Price
FURTHER INFORMATION
Background to the Fundraising, current trading and financial
prospects
The Company expects to report preliminary year-end results in
line with current market expectations, having benefited from a
nascent recovery in the oil and gas market and from new business,
both in oil and gas and precision engineering. As announced in the
Company's interim results, the positive trends in underlying market
conditions seen in the first half of the financial year have
continued through into the full year.
Following approval by Airbus and Nadcap accreditation, the
prospects for additional aerospace business are encouraging. Well
under way are the development and trialling of safety--critical
parts for aerospace customers and this augurs well for future
sales.
Since the year-end, a three-year agreement has been signed with
a North American based, major international operator in the oil and
gas sector which sets out a framework for future orders for the
coating of downhole components. Technical work with this client
with a view to beginning production is progressing well. A further
agreement is being finalised with a manufacturer of land-based
drilling and production tools.
The first orders under these agreements are expected to be
received in early 2018 and combined, initial sales are expected to
be worth up to GBP1 million per annum with good potential for this
to grow. These two agreements underpin the management's
expectations for revenue growth in the financial years to September
2019 and 2020.
The US coatings facility in Virginia is performing well.
Management expects that the facility would, based on expected
orders and its existing reactors, likely require additional
capacity in the second half of the 2018 financial year.
The Company expects to release its preliminary results for the
year ended 30 September 2017 on 11 December 2017.
Use of proceeds
The Company intends to apply the net proceeds of the Initial
Fundraising, being approximately GBP1.63 million, to acquire a new
coating reactor to add to the existing two reactors at its US
facility in Martinsville at an expected cost of approximately
GBP0.6 million. This reactor will be ordered shortly following
completion of the Initial Fundraising, and is expected to be
operational by August 2018.
The Company subsequently intends to place an order for a second
reactor at a cost of approximately GBP0.85 million during the
course of 2018, aiming for that to be operational in the course of
2019, in line with the directors' anticipation of a continued
increase in demand. It is intended that this reactor will have
significantly greater volume than the Company's existing reactors,
enabling the coating of larger parts, as well as increasing
efficiency. At the same time the Company will expand the size of
its pre-treatment facility in order to accommodate these larger
parts at a cost of approximately GBP0.25 million. The Company is
excited by the new commercial opportunities that this will open
up.
The Company also intends to upgrade at least one more of its
current reactors in the UK to aerospace standards and to seek to
obtain aerospace accreditation for the US facility. This is in
preparation for and to create usable capacity to satisfy future
potential orders from aerospace companies in Europe and North
America.
In addition, the directors have identified certain other capital
projects intended to improve further the Company's operations.
These include investments in additional analytical equipment and
the upgrading of pre-treatment processes in the UK.
The remaining net proceeds of the Fundraising will be deployed
and used to invest further in the business development, general
working capital and the strengthening of the Company's balance
sheet.
MCEDC loan
The Company's US subsidiary has received a written indication
from MCEDC that it intends, subject to contract, to advance a
US$240,000 loan in support of the Company's expansion plans for its
Martinsville facility (the "Loan"). If made, the Loan will be
secured over assets and guaranteed by the Company and carry a
coupon of 2 per cent. per annum. The Loan and all interest due
thereon will be repayable in full on a monthly or quarterly basis
on or before the fifth anniversary of drawdown.
Details of the Placing, Subscription and the Placing
Agreement
The Company has received advance assurance from HMRC that the
new Ordinary Shares to be issued pursuant to the Initial
Fundraising will rank as 'eligible shares' for the purposes of EIS
and will be capable of being a 'qualifying holding' for the
purposes of investment by VCTs. The Company has committed to taking
all steps necessary to seek further advance assurance from HMRC
with respect to the new Ordinary Shares to be issued pursuant to
the Deferred Fundraising as soon as possible. Accordingly, the
Fundraising has been split between the Initial Fundraising, for
which such advance assurance has already been received, and the
Deferred Fundraising.
Investors should note that whilst the Company has no reason to
consider that the Tax Clearance will not be received for the
Deferred Fundraising, there can be no assurance in that regard at
this time and therefore the Company cannot guarantee that the
Deferred Fundraising will proceed.
The Placing
Under the terms of the Placing, 86,235,294 new Ordinary Shares
(the "Placing Shares") have been conditionally placed by finnCap on
behalf of the Company.
The Placing is conditional, inter alia, upon:
i. admission ("Admission") of the new Ordinary Shares relating
to the Initial Fundraising to trading on AIM becoming effective by
not later than 8:00 am on 1 November 2017 (or such later time and
date as the Company and finnCap may agree, not being later than
8.00 a.m. on 30 November 2017);
ii. the Initial Fundraising proceeding; and
iii. the Placing Agreement, described below, becoming
unconditional in all respects (save for Admission) and not having
been terminated.
When issued and fully paid, the Placing Shares will rank in full
for any dividend or other distribution declared, made or paid after
Admission and otherwise equally in all respects with the existing
Ordinary Shares.
The Placing Agreement
i. Pursuant to the terms of a placing agreement between the
Company and finnCap (the "Placing Agreement") finnCap, as agent for
the Company, has agreed to use its reasonable endeavours to procure
placees for the Placing Shares at the Placing Price.
ii. The Placing Agreement contains warranties from the Company
in favour of finnCap in relation to, inter alia, the accuracy of
the information contained in the documents relating to the Placing
and certain other matters relating to the Company and its business.
In addition, the Company has agreed to indemnify finnCap in
relation to certain customary liabilities that it may incur in
respect of the Placing.
The obligations of finnCap under the Placing Agreement in
respect of the Placing are conditional upon, amongst other things,
Admission becoming effective on or before 8.00 a.m. on 1 November
2017 (or such later date as the Company and finnCap may agree, but
not later than 8.00 a.m. on 30 November 2017), and there being
prior to Admission no material breach of the warranties given to
finnCap.
finnCap may terminate the Placing Agreement in specified
circumstances (including for breach of warranty at any time prior
to Admission, if such breach is reasonably considered by finnCap to
be material in the context of the Placing) and on the occurrence of
a force majeure event at any time prior to Admission. If the
conditions to the Placing Agreement which apply to the Placing as a
whole are not fulfilled on or before the relevant date in the
Placing Agreement, subscription monies will be returned to placees
without interest as soon as possible thereafter.
In consideration for the services to be provided to the Company
by finnCap in connection with Admission and the Placing, the
Company has agreed to pay finnCap a corporate broking fee and
certain other costs and expenses incidental to Admission and/or the
Placing.
The Subscription
The Company has also raised up to a further GBP1.07 million
before expenses by way of a subscription for 62,999,998 new
Ordinary Shares (the "Subscription Shares") at the Placing Price by
various individuals, including Robert Goddard, Andrew Boyce, Jan
Ward and Philip Kirkham, each being directors of the Company (the
"Subscribers"). Of this amount, receipt of a total of GBP0.82
million (being the Deferred Subscription and in respect of the
issue of 48,294,117 new Ordinary Shares) is subject to the Company
receiving the Tax Clearance. Accordingly, the issue of 14,705,881
new Ordinary Shares will make up the Initial Subscription.
The Company has committed to seeking the Tax Clearance as soon
as possible and within 5 months of the date of the Initial
Fundraising. If the Tax Clearance is not received by such date (or
such longer period as the Company may agree with any subscriber in
relation to his/her subscription) the Deferred Fundraising will not
proceed.
Each of the Subscribers has agreed with the Company to subscribe
for that number of Subscription Shares set out in his or her
subscription letter (each a "Subscription Letter"). None of the
Subscription Letters is conditional on any other Subscription
Letter.
When issued and fully paid the Subscription Shares will rank in
full for any dividend or other distribution declared, made or paid
after Admission and otherwise equally in all respects with the
existing Ordinary Shares.
Application for Admission and Total Voting Rights
Application has been made to the London Stock Exchange for the
100,941,175 new Ordinary Shares relating to the Initial Fundraising
to be admitted to trading on AIM and it is anticipated that trading
in these new Ordinary Shares will commence on AIM at 8.00 a.m. on 1
November 2017.
In accordance with the UK Financial Conduct Authority's
Disclosure and Transparency Rule 5.6.1, immediately following
completion of the Initial Fundraising, the issued share capital of
the Company will be 1,635,899,479 Ordinary Shares ("Initial
Enlarged Share Capital").
The total number of voting rights in the Company will therefore
be 1,635,899,479 which 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 FCA's Disclosure and
Transparency Rules.
A separate application for admission to trading on AIM of the
new Ordinary Shares relating to the Deferred Fundraising will be
made in due course and the Company will make a notification of the
resultant total voting rights at that time.
Related Party Transactions
Hargreave Hale Ltd ("Hargreave Hale") has agreed to subscribe
for 12,444,445 Placing Shares as part of the Placing and 13,588,235
Subscription Shares as part of the Deferred Fundraising. Hargreave
Hale is a related party of the Company for the purposes of the AIM
Rules by virtue of its status as a substantial shareholder of the
Company.
The directors consider having consulted with the Company's
nominated adviser, finnCap, that the terms upon which Hargreave
Hale has participated in the Placing are fair and reasonable
insofar as the Company's shareholders are concerned.
Robert Goddard, Andrew Boyce, Jan Ward and Philip Kirkham have
each agreed to subscribe for 588,235 new Ordinary Shares
respectively as part of the Initial Fundraising. Each of them is
also a related party of the Company for the purposes of the AIM
Rules by virtue of their status as directors of the Company. The
consequent holdings of these directors is set out below:
Current Consequent Consequent shareholding
shareholding shareholding as %age of the
Initial Enlarged
Share Capital
---------- -------------- -------------- ------------------------
Robert
Goddard 6,723,050 7,311,285 0.45%
---------- -------------- -------------- ------------------------
Andrew
Boyce* 266,546,226 267,134,461 16.33%
---------- -------------- -------------- ------------------------
Jan Ward 1,250,000 1,838,235 0.11%
---------- -------------- -------------- ------------------------
Philip
Kirkham 2,004,717 2,592,952 0.16%
---------- -------------- -------------- ------------------------
* aggregate of Andrew Boyce' family and trust
holdings
--------------------------------------------------------------------
Peter Davenport and Yuri Zhuk, being independent directors of
the Company for this purpose, consider, having consulted with the
Company's nominated adviser, finnCap, that the terms upon which
those directors have participated in the Fundraising are fair and
reasonable insofar as the Company's shareholders are concerned.
Notification and public disclosure of transactions by persons
discharging managerial responsibilities and persons closely
associated with them
1. Details of the person discharging managerial
responsibilities / person closely associated
--- ----------------------------------------------------------------
a) Name Robert Goddard
--- ------------------------------- -------------------------------
2. Reason for the Notification
--- ----------------------------------------------------------------
a) Position/status Chairman
--- ------------------------------- -------------------------------
b) Initial notification/Amendment Initial Notification
--- ------------------------------- -------------------------------
3. Details of the issuer, emission allowance
market participant, auction platform, auctioneer
or auction monitor
--- ----------------------------------------------------------------
a) Name Hardide plc
--- ------------------------------- -------------------------------
b) LEI 213800HLAUIIFKMU5G89
--- ------------------------------- -------------------------------
4. Details of the transaction(s): section to
be repeated for (i) each type of instrument;
(ii) each type of transaction; (iii) each
date; and (iv) each place where transactions
have been conducted
--- ----------------------------------------------------------------
a) Description of Subscription for ordinary
the Financial shares of 0.1p each
instrument, type
of instrument
---
Identification GB00B069T034
code
--- ------------------------------- -------------------------------
b) Nature of the Subscription of shares
transaction
--- ------------------------------- -------------------------------
c) Price(s) and Price(s) Volume(s)
volume(s) ----------- ----------
1.7 pence 588,235
----------- ----------
--- ------------------------------- -------------------------------
d) Aggregated information:
* Aggregated volume 588,235 ordinary shares of
0.1 each subscribed for at
1.7 pence per ordinary share
* Price
--- ------------------------------- -------------------------------
e) Date of the transaction 26 October 2017
--- ------------------------------- -------------------------------
f) Place of the London Stock Exchange, AIM
transaction Market
--- ------------------------------- -------------------------------
1. Details of the person discharging managerial
responsibilities / person closely associated
--- ----------------------------------------------------------------
a) Name Andrew Boyce
--- ------------------------------- -------------------------------
2. Reason for the Notification
--- ----------------------------------------------------------------
a) Position/status Non-Executive Director
--- ------------------------------- -------------------------------
b) Initial notification/Amendment Initial Notification
--- ------------------------------- -------------------------------
3. Details of the issuer, emission allowance
market participant, auction platform, auctioneer
or auction monitor
--- ----------------------------------------------------------------
a) Name Hardide plc
--- ------------------------------- -------------------------------
b) LEI 213800HLAUIIFKMU5G89
--- ------------------------------- -------------------------------
4. Details of the transaction(s): section to
be repeated for (i) each type of instrument;
(ii) each type of transaction; (iii) each
date; and (iv) each place where transactions
have been conducted
--- ----------------------------------------------------------------
a) Description of Subscription for ordinary
the Financial shares of 0.1p each
instrument, type
of instrument
---
Identification GB00B069T034
code
--- ------------------------------- -------------------------------
b) Nature of the Subscription of shares
transaction
--- ------------------------------- -------------------------------
c) Price(s) and Price(s) Volume(s)
volume(s) ----------- ----------
1.7 pence 588,235
----------- ----------
--- ------------------------------- -------------------------------
d) Aggregated information:
* Aggregated volume 588,235 ordinary shares of
0.1 each subscribed for at
1.7 pence per ordinary share
* Price
--- ------------------------------- -------------------------------
e) Date of the transaction 26 October 2017
--- ------------------------------- -------------------------------
f) Place of the London Stock Exchange, AIM
transaction Market
--- ------------------------------- -------------------------------
1. Details of the person discharging managerial
responsibilities / person closely associated
--- ----------------------------------------------------------------
a) Name Jan Ward
--- ------------------------------- -------------------------------
2. Reason for the Notification
--- ----------------------------------------------------------------
a) Position/status Non-Executive Director
--- ------------------------------- -------------------------------
b) Initial notification/Amendment Initial Notification
--- ------------------------------- -------------------------------
3. Details of the issuer, emission allowance
market participant, auction platform, auctioneer
or auction monitor
--- ----------------------------------------------------------------
a) Name Hardide plc
--- ------------------------------- -------------------------------
b) LEI 213800HLAUIIFKMU5G89
--- ------------------------------- -------------------------------
4. Details of the transaction(s): section to
be repeated for (i) each type of instrument;
(ii) each type of transaction; (iii) each
date; and (iv) each place where transactions
have been conducted
--- ----------------------------------------------------------------
a) Description of Subscription for ordinary
the Financial shares of 0.1p each
instrument, type
of instrument
---
Identification GB00B069T034
code
--- ------------------------------- -------------------------------
b) Nature of the Subscription of shares
transaction
--- ------------------------------- -------------------------------
c) Price(s) and Price(s) Volume(s)
volume(s) ----------- ----------
1.7 pence 588,235
----------- ----------
--- ------------------------------- -------------------------------
d) Aggregated information:
* Aggregated volume 588,235 ordinary shares of
0.1 each subscribed for at
1.7 pence per ordinary share
* Price
--- ------------------------------- -------------------------------
e) Date of the transaction 26 October 2017
--- ------------------------------- -------------------------------
f) Place of the London Stock Exchange, AIM
transaction Market
--- ------------------------------- -------------------------------
1. Details of the person discharging managerial
responsibilities / person closely associated
--- ----------------------------------------------------------------
a) Name Philip Kirkham
--- ------------------------------- -------------------------------
2. Reason for the Notification
--- ----------------------------------------------------------------
a) Position/status Chief Executive Officer
--- ------------------------------- -------------------------------
b) Initial notification/Amendment Initial Notification
--- ------------------------------- -------------------------------
3. Details of the issuer, emission allowance
market participant, auction platform, auctioneer
or auction monitor
--- ----------------------------------------------------------------
a) Name Hardide plc
--- ------------------------------- -------------------------------
b) LEI 213800HLAUIIFKMU5G89
--- ------------------------------- -------------------------------
4. Details of the transaction(s): section to
be repeated for (i) each type of instrument;
(ii) each type of transaction; (iii) each
date; and (iv) each place where transactions
have been conducted
--- ----------------------------------------------------------------
a) Description of Subscription for ordinary
the Financial shares of 0.1p each
instrument, type
of instrument
---
Identification GB00B069T034
code
--- ------------------------------- -------------------------------
b) Nature of the Subscription of shares
transaction
--- ------------------------------- -------------------------------
c) Price(s) and Price(s) Volume(s)
volume(s) ----------- ----------
1.7 pence 588,235
----------- ----------
--- ------------------------------- -------------------------------
d) Aggregated information:
* Aggregated volume 588,235 ordinary shares of
0.1 each subscribed for at
1.7 pence per ordinary share
* Price
--- ------------------------------- -------------------------------
e) Date of the transaction 26 October 2017
--- ------------------------------- -------------------------------
f) Place of the London Stock Exchange, AIM
transaction Market
--- ------------------------------- -------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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October 27, 2017 02:00 ET (06:00 GMT)
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