AFS.L Regulatory News (AFS)

11 September 2019

Amiad Water Systems Ltd.

("Amiad" or the "Company") 

Update on Potential Investment

Further to the Company's announcement of 2 September 2019, Amiad (AIM: AFS), a leading global producer of water treatment and filtration solutions, provides an update to shareholders on how negotiations are proceeding in relation to the potential placing and in order to facilitate internal consideration of the potential transaction by certain of the Company's shareholders. The independent members of the Board have not yet approved the potential transaction and, were they to do so, it would still be subject to the fulfilment of certain pre-conditions. Accordingly, there is no certainty that the transaction will occur.

Under the terms currently being discussed, FIMI Opportunity Funds ("FIMI"), a significant shareholder in the Company with an interest of 18%, would invest up to £17.6m in the Company, at a purchase price of £2.30 per share, through the placing of new ordinary shares representing up to approximately 25% of the Company's enlarged share capital on a fully diluted basis. In addition, FIMI is in negotiations to purchase from Kibbutz Amiad Agricultural Cooperative Society Ltd. ("Kibbutz Amiad") and HaChoshlim Foundation - Agriculture Cooperative Society for Business Ltd. ("HaChoshlim"), which is an affiliate of Kibbutz Amiad, approximately 10% of their holdings in the Company at the same price per share as its investment in the Company. In addition, FIMI and HaChoshlim and Kibbutz Amiad are discussing potential arrangements whereby HaChoshlim and Kibbutz Amiad may be entitled to a future consideration in an aggregate amount of up to US$9.25m, which would be payable if FIMI were to sell its shares in the Company in the future for an amount in excess of a particular hurdle and subject to certain other conditions.

Were the Company to conduct the proposed placing and following the potential purchase of shares in the Company by FIMI from Kibbutz Amiad and HaChoshlim, FIMI would hold up to approximately 42% of the Company's share capital (fully diluted), and HaChoshlim and Kibbutz Amiad would hold up to approximately 33% of the Company's share capital (fully diluted). Following that, FIMI would also need to enter into a relationship agreement with the Company to regulate the future relationship between FIMI and the Company.

In addition, FIMI and HaChoshlim are discussing entering into a draft shareholders agreement, which, among other measures, would give FIMI the right to appoint a majority of directors of the Company's Board and include certain conditions regarding the transfer of shares, including giving HaChoshlim the right to tag along to any future sale of shares in the Company by FIMI.

There are also negotiations regarding certain existing agreements between the Company and Kibbutz Amiad, including certain services rendered by Kibbutz Amiad to the Company and arrangements regarding the employment terms of the Company's senior employees who are members of Kibbutz Amiad.

The discussions have not yet materialised into a signed agreement and any placing would remain subject to a number of pre-conditions, including the approval processes of the Company's relevant committees and the requisite approval of the independent shareholders (which would exclude FIMI, Kibbutz Amiad and HaChoshlim).

Were the Company to enter into the placing with FIMI, or alter the existing arrangements with Kibbutz Amiad, these would constitute related party transactions under Rule 13 of the AIM Rules for Companies and therefore would require the independent members of the Board, following discussions with the Company's Nominated Adviser, to be satisfied that the terms are fair and reasonable insofar as the Company's shareholders are concerned. No such determination has yet been made and the structure and terms of the transaction may need to alter from what is set out above.

There is therefore no guarantee that the discussions will lead to an investment in the Company. Amiad will update the market with respect to any investment in the Company as required in due course.

This announcement contains inside information for the purposes of the Market Abuse Regulation (596/2014/EU). Upon the publication of this announcement, this inside information is now considered to be in the public domain and such persons shall therefore cease to be in possession of inside information. The person responsible for arranging for the release of this announcement on behalf of the Company is Dori Ivzori.

Enquiries

About Amiad

Amiad Water Systems (AIM: AFS) is a leading global producer of automatic, self-cleaning water treatment and filtration products and systems. Through its engineering skills and ability to innovate, Amiad provides cost-effective "green" solutions for the irrigation and industrial purposes. In these markets, its unique and high-quality products are being integrated into the core of systems for filtration and water treatment, micro irrigation and membrane protection, wastewater and potable water treatment, cooling systems and sea water filtration.

Headquartered in Israel, Amiad provides these solutions through ten subsidiaries and a comprehensive network of distributors to customers in more than 80 countries.

For additional information or product details, please visit www.amiad.com.