VYCO Vycon

RNS Number:6386S
Vycon
09 March 2007


This announcement is not for release, publication or distribution, in whole or
in part, in or into the United States, Canada, Russia, Japan, South Africa, New
Zealand or Australia.

                                   
                                                                   09 March 2007


                                   VYCON, Inc

                              First Day of Dealings


Vycon Inc ("Vycon" or the "Company"), the designer and manufacturer of
high-speed flywheel based energy storage systems, is pleased to announce its
admission to trading on AIM under the symbol VYCO.

Vycon has placed 10,307,292 new Common Shares of US$0.0001 per Share at a
placing price of 89p (US$1.75). Its market capitalisation will be approximately
#26.9 million (US$52.9 million) following admission at the Placing Price.

Smith & Williamson Corporate Finance Limited is nominated adviser and broker to
the Company.


Placing Statistics

Placing Price                                        89p (US$1.75)
Number of Placing Shares                             10,307,292
Number of Common Shares in issue immediately
following the Placing                                30,245,345
Market capitalisation of the Company at the Placing  #26.9 million (US$52.9
Price                                                million)
Gross proceeds of the Placing to be received by the  #9.2 million (US$18.0
Company                                              million)
Percentage of the Enlarged Share Capital
available in the Placing                             34.1%


Commenting on the Placing and Admission to AIM, Vycon's President and Chief
Executive Officer, Tony Aoun, said:


"The response from institutions to the Placing has been extremely positive and
we are delighted that so many global investors have recognised the potential of
Vycon. Demand for renewable, clean energy products is increasing on a global
scale, and we are well placed to exploit this opportunity. The proceeds raised
by the Placing will enable Vycon to continue the expansion of its current
production capabilities whilst developing larger systems for this growing
market. We believe Vycon is in a very strong position with patented technology,
a strong management team and a solid platform for growth. We look forward to an
exciting future and the opportunity to deliver value for our stockholders."


The Company's admission document (the "Admission Document") is available from
the offices of Smith & Williamson Corporate Finance Limited at 25 Moorgate,
London, EC2R 6AY.


For further information, please contact:

Vycon Inc                         Tony Aoun              001 562 293 3649
                                  Dennis Whittler        001 562 293 1366

Smith & Williamson Corporate
Finance                           Nick Reeve             +44 (0) 117 933 3344
Limited                           Martyn Fraser

Cardew Group                      Rupert Pittman         +44 (0) 20 7930 0777
                                  Shan Shan Willenbrock
                                  Emma Consett



ABOUT VYCON, INC


OVERVIEW

  * Vycon, based in Cerritos, California, designs and manufactures
    high-speed flywheel based energy storage systems. Its existing products
    target the global uninterruptible power supply ("UPS") and dockyard crane
    markets where its clean technology can significantly reduce emissions of
    greenhouse gases and other pollutants


  * The Company has also developed plans for a range of higher capacity
    products, based on its existing technology. These larger products will be
    enable Vycon to access new markets such as:

        -   Rail
        -   Large UPS systems
        -   Larger shipyard cranes known as "Ship to Shore"

  * Vycon employs a team of individuals with many years of experience in the
    development of motor generators, magnetic bearings and power quality
    equipment. The Directors believe the Company is now well positioned to meet
    increasing demand for clean energy storage solutions within its chosen
    markets



MARKETS


Dockyard Crane

  * Rubber tyre gantry ("RTG") cranes are used in ports for the movement of
    containers after they have been off-loaded from ships. They receive their
    power from on board diesel generators. By retrofitting a Vycon Regen
    Flywheel onto these RTG cranes, they can be converted into "hybrid diesel"
    units, reducing fuel, maintenance costs and particulate emissions

  * In countries such as the US, Japan and Netherlands there is a high
    priority on the reduction of emissions from dockyards and ports. 
    Independent testing verified a 65% reduction in particulate matter 
    emissions from a RTG crane fitted with Vycon's Regen flywheel

  * In addition, customers derive a return on investment through diesel fuel
    savings. Testing undertaken by Vycon demonstrated a 21% reduction in fuel
    consumption by RTG cranes fitted with Vycon's Regen Flywheel

  * There are approximately 8,000 RTG cranes in operation worldwide of which
    the largest ten manufacturers account for 76%. The Directors believe
    approximately 3,200 of these 8,000 cranes are capable of being retrofitted
    with a Vycon Regen Flywheel, representing a market opportunity in excess of
    US$400 million

  * The Vycon system can be retrofitted on a RTG crane in less than 2 days.
    In entering this market Vycon has been working with various crane
    manufacturers for guidance, information and support. Vycon's system has 
    been tested and endorsed by Paceco, the technical division of MES and one 
    of the world's largest RTG manufacturers

  * A second opportunity exists in this market when a new crane is
    manufactured or when a generator replacement is needed on an existing RTG
    crane. Installing a flywheel system enables the unit to incorporate a
    smaller generator set thereby further reducing fuel consumption and
    emissions

  * An opportunity also exists to fit Vycon's product onto large quay cranes
    that are used to unload ships. These cranes take their power from the
    electric grid, rather than diesel generators, but offer the same 
    opportunity to capture regenerated power


UPS / Power Quality

  * A UPS is a back-up power system that provides temporary power to a
    system when it experiences quality problems with its primary power source.
    Lead acid batteries have historically been the preferred choice for energy
    storage technology for UPS systems, with cost being their principal
    advantage


  * However, batteries are generally regarded as the least reliable
    component of a UPS system, with short life spans, requiring more space and
    maintenance than flywheels, experiencing quality depreciation on each
    recharge and carrying with them disposal issues. Consequently, UPS vendors
    and end users have been searching for alternative energy storage solutions

  * Vycon has entered the UPS market with its VDC 140kW flywheel, which
    provides an alternative solution of an on-site cache of power to protect
    against power disturbances, or provide a ride-through capability to an
    on-site generator in the event of a sudden interruption of power

  * The global market for UPS units greater than 75kVA in 2006 was estimated
    to be 32,000 units and the UPS market was forecast to be growing at 7% per
    annum on a global basis from 2005 to 2007. Additionally, the majority of the
    cost of power loss is attributed to interruptions lasting less than 30
    seconds, the target market for flywheel systems. Accordingly, there is a
    substantial opportunity within this market for the adoption of Vycon's
    technology

  * Vycon's flywheel targets the premium end of the UPS market, where
    reliability and quality of power supply is of paramount importance.
    Potential customers in this market include data centres, internet
    transactional sites, hospitals and sensitive manufacturing facilities with
    high value products

  * The VDC 140kW has been initially tested to work with major UPS suppliers
    including MGE, Liebert, Fuji Electric, Mission Critical Power Systems and
    Inform. This list encompasses approximately 50% of the total UPS market in
    the 100kW and higher power market


Rail

  * Vycon has identified rail systems as a sector that presents significant
    opportunities in the medium to long term for an application based around its
    existing technology. A rail application is expected to achieve energy
    efficiencies by collecting the normally wasted regenerated energy created by
    the braking action of trains and converting it to electrical power to be
    used as trains pull away from stations

  * One of the key requirements for grid track energy storage systems is the
    ability to handle a high number of charge/discharge cycles because of the
    large number of train movements each day. Discussions between Vycon and
    potential customers have identified that addressing this market will require
    an energy storage system capable of storing and delivering up to 2MW of
    power every two minutes

  * The load required by railway systems from the grid is uneven and causes
    supply problems. The addition of flywheels to such a supply will enable the
    peaks in demand to be supplied by the flywheel, thereby smoothing the load
    on the grid. By reducing power requirements in the rail system the flywheel
    system will be able to contribute to a reduction in fuel usage and
    consequently pollution at the grid generation level. Significant savings in
    electricity costs can also be realised

  * A second market opportunity arises from the higher power demands being
    placed upon the rail power infrastructure by new rolling stock and an
    increasing number of trains being operated. This increase in power demand
    can cause a reduction in voltage along the track, which in certain
    circumstances can cause the trains to slow. The development of a flywheel
    based energy storage solution is expected to provide a cost effective
    solution to this

  * The Directors believe Vycon's energy storage system is technologically
    capable of addressing the demand of the rail systems sectors, and intend to
    use part of the proceeds from the Placing to develop a higher powered
    version of its existing product to address this market



FUTURE STRATEGY

  * Vycon's objective is to continue to develop sales of its existing
    products whilst developing a range of higher capacity products. These will
    be based on the same technical platform as the current products but will
    compete in several new markets, including larger UPS systems, quay cranes
    and rail



REASON FOR THE ADMISSION AND USE OF PROCEEDS


  * Proceeds from the Placing will help fund the development of larger
    flywheel systems and provide working capital to support sales of the
    existing products. Admission will also provide the Company with the ability
    to incentivise its existing and future employees through the grant of
    options, which will assist the Company in continuing to attract, retain and
    motivate high calibre employees



SALES AND DISTRIBUTION CHANNELS

  * Vycon's sales and distribution channels are based around partnering
    arrangements with a small number of high profile organisations with global
    presence. Strategic relationships have been developed with distributors
    including Mitsui Corporation, MGE, Sumitomo, Tridus, Paceco and Inform UPS.
    In addition relationships have been established with a small number of
    independent power quality distributors to provide further distribution
    capability within certain regions



MANUFACTURING STRATEGY

  * Vycon outsources component manufacturing to a set of global vendors. The
    Company currently undertakes the final assembly and testing of all products
    in its Cerritos plant. Installation and servicing of Vycon's applications
    will be undertaken by its distribution channel partners.



DIRECTORS AND SENIOR MANAGEMENT


Tony Aoun (President and CEO)

Tony Aoun joined Vycon in January 2005 with the responsibility for moving the
Company beyond the research and development stage and bringing its technology to
market. He has over 25 years' experience in the power sector, including 15 years
at Liebert Corporation, part of Emerson Electric, a Fortune 100 company. Prior
to joining Vycon Tony Aoun was Vice President of Operations at Liebert
Corporation's North American power business. He also has experience of
successfully managing businesses through periods of rapid growth and new product
introductions, including five years as general manager of Liebert Corporation's
Irvine operations, during which time its turnover grew from $30 million to $300
million and he led cost reduction and global sourcing programs.


Tony Aoun has a degree in Business Management and a MBA from University of
LaVerne, California.


Dennis Whittler (Chief Financial Officer)

Dennis Whittler joined Vycon in August 2006. He has over 20 years experience of
senior financial positions gained in a range of technology companies, including
as Chief Financial Officer of a Nasdaq listed company. His most recent role was
as Chief Financial Officer of Gyration, Inc a venture capital backed early stage
business sold in 2004 to the global technology company, Thompson. From 1989 to
1998 Dennis Whittler was Chief Financial Officer of Proxima Corporation, during
which time the company completed a successful IPO on Nasdaq and grew turnover
from $25 million to over $160 million. He has significant experience in
international manufacturing, strategic planning, operations and mergers and
acquisitions.


Dennis Whittler has a degree in accounting from San Diego State University.


John Uttley OBE (Non Executive Chairman)

John Uttley has considerable experience of the energy sector having spent 26
years within electricity supply businesses in both the public and private
sectors. Until 1997 he was Finance Director of National Grid Group. Since then
he has held a portfolio of non-executive Chairmanships and Directorships in
different sectors. These include smaller companies at both start up and growth
phases, two of which were or are AIM listed. The others were owned by investment
funds or private equity investors. His first degree was in Physics at Oxford and
he is a chartered management accountant.


Vatche Artinian (Non Executive Director)

Vatche Artinian is the co-founder and current Chairman of Calnetix, a privately
owned technology development company and former parent company of Vycon. He was
instrumental in the creation of Vycon but following recruitment of its current
senior management team he ceased involvement in Vycon's day-to-day operations.
Vatche Artinian has a degree in Electrical and Computer Engineering, a Masters
of Science in Electrical Engineering and a MBA from USC, California.


Peter Cooper (Non Executive Director)

Peter Cooper controls Cooper Capital Partners, L.P. and Cooper Capital Partners
II, L.P., private investment funds with venture capital interests and
investments in private companies and in aggregate 6.5 per cent. stockholders in
Vycon after the Placing. Previously he was Chief Executive Officer of L.D.
Nathan & Co. which merged with Lion Breweries to form Lion Nathan, the largest
brewing and soft drink company in Australasia. Peter Cooper practised law for
eleven years as a partner with Russell McVeagh, one of the leading law firms in
New Zealand.


Jens Christian Mathiesen (Non Executive Director)

Jens Christian Mathiesen is assistant managing director of BankInvest, a Danish
based asset manager and 13.6 per cent. shareholder in Vycon after the Placing.
He has 21 years' experience in capital markets, project finance and direct
equity investments. Prior to joining BankInvest, Jens Christian Mathiesen held
senior positions with the European Bank for Reconstruction and Development and
Nordea Bank A/S (Denmark).


                                    - End -



This announcement does not constitute, or form any part of, any offer or
invitation to sell, allot or issue, or any solicitation of any offer to purchase
or subscribe for, any securities, nor shall it (or any part of it) or the fact
of its distribution form the basis of, or be relied upon in connection with, or
act as any inducement to enter into, any contract or commitment for securities,
which should only be made on the basis of information contained in the admission
document issued in connection with the Placing.


The issuance of securities in the Placing has not been and will not be
registered under the applicable securities laws of the United States, Canada,
Australia or Japan. The distribution of this announcement in other jurisdictions
may be restricted by law and therefore persons into whose possession this
announcement comes should inform themselves about and observe any such
restriction. Any failure to comply with these restrictions may constitute a
violation of the securities laws of any such jurisdictions.




                      This information is provided by RNS
            The company news service from the London Stock Exchange

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