Proton Power Regulatory News (PPS)

Proton Power Systems plc

("Proton" or the "Company")

Issue of Equity

Proton Power Systems plc (AIM: PPS), the designer, developer and producer of fuel cells and fuel cell electric hybrid systems, announces that it has placed 19,343,333 new ordinary shares (the "New Ordinary Shares") at a placing price of 6 pence each (the "Placing Price") with Roundstone Properties Ltd ("Roundstone") raising a total of Euro 1.4 million for the Company (the "Placing"). The Placing Price represents a premium of 167% to the closing mid-market price of the Company of 2.25 pence on 31 January 2012.

The Board of Proton is considering alternative strategies for expanding its free float and would, at the present time, consider giving existing shareholders the opportunity to subscribe for new ordinary shares in the Company. This would be on terms similar to those agreed with Roundstone should existing shareholders express an interest in investing alongside Roundstone to provide further funds for the development of Proton. If implemented, this is likely to be achieved through an open offer of up to 19 million new ordinary shares at the Placing Price. However, the making of an open offer to existing shareholders would incur significant management time and cost and the Company would therefore only expect to make such an offer if sufficient existing shareholders, excluding Roundstone, were to express such a desire to the Company or the Company's joint brokers.

An application has been made for the New Ordinary Shares to be admitted to trading on AIM which is expected to take effect on or around 7 February 2012 ("Admission"). 

Following Admission the Company's issued share capital will comprise 639,238,776 ordinary shares of 1 pence each in the Company ("Ordinary Shares"). The Company does not hold any Ordinary Shares in treasury. This figure may be used by shareholders in the Company 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 share capital of the Company under the Financial Service Authority's Disclosure and Transparency Rules.

As a result of the Placing and following Admission, Roundstone will own 598,579,682 Ordinary Shares representing approximately 93.6 per cent. of the Company's enlarged issued share capital.

Related party transaction

Roundstone is a company connected to Dr. Faiz Nahab, CEO of the Company, and is also a substantial shareholder (as defined in the AIM Rules) of the Company. The Placing is therefore classified as a transaction with a related party for the purposes of the AIM Rules. In accordance, therefore, with the AIM Rules, the directors of the Company, with the exclusion of Dr. Faiz Nahab, having consulted with the Company's nominated adviser, Westhouse Securities Limited, consider that the terms of the transaction are fair and reasonable insofar as the Company's shareholders are concerned.

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This announcement is not intended to be an offer of shares in the Company.  Once the Directors have received the information requested they will consider it in conjunction with their advisers which may or may not result in shareholders being given an opportunity to apply for the allotment of shares in the Company.