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LONDON (Alliance News) - Industrial fuel cell power company AFC Energy PLC Wednesday said it is set to raise GBP9 million in a share placing and open offer at a discounted price of 10 pence a share, money it will use to fund a key project and further enter commercial markets.
In a statement, the company said it has placed 52 million shares at 10 pence each in the placing with institutional and other investors, raising up to GBP5.2 million. The deal included a placing of 22 million shares with Lanstead Capital LP, worth GBP2.2 million.
It also offered existing shareholders a way to contribute, saying it planned to raise up to GBP3.88 million in an open offer, offering 4 shares for every 23 existing shares.
AFC Energy also said it will enter into an equity swap agreement with Lanstead, which will allow it to retain much of the economic interest in the shares it is placing with Lanstead and "much of the potential upside of future potential share price appreciation arising from the company's development".
Of the GBP2.2 million proceeds from the Lanstead placing, the company will use approximately GBP330,000 or 15% for investment in its continuing operations and GBP1.87 million or 85% for investment in the equity swap agreements.
The swap agreements will provide that the company's economic interest will be determined and payable in 18 monthly settlement tranches as measured against a benchmark price of 13.33p a share. If the measured share price exceeds the benchmark price in any settlement month, the company will receive more than 100% of the monthly settlement due on a pro rata basis, with no upper limit. However, should the measured share price be below the benchmark price, the Company will receive less than 100% of the expected monthly settlement on a pro rata basis.
Some of the money that AFC Energy raises in its placing and open offer will be used to fund its "Power-Up" project, under which the company would lead a consortium to demonstrate the world?s largest alkaline fuel cell system at Industrial Chemical?s chlor-alkaline chemical plant in Essex, UK. It was recently awarded a GBP4.9 million EU grant to help fund the programme.
The project will last for 51 months, during which, the fuel cell system will be installed in three phases. The system will operate continuously to supply DC power to ICL?s local grid.
the company hopes the project will prove the ability its alkaline fuel cell system to deliver the technical performance and economic viability that commercial end-users demand. Work in the project will be the final step in the development of AFC Energy?s fuel cell system before full market deployment.
AFC Energy shares slid immediately after the deal was announced, ending down 22.9% at 10.50p a share, as the placing and open offer price set a new benchmark.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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