AVO.L Regulatory News (AVO)

26 May 2016

ADVANCED ONCOTHERAPY PLC

("Advanced Oncotherapy", the "Company" or "AVO")

£24m financing secured for the provision of vendor financing by AVO for the Harley Street project

Advanced Oncotherapy plc (AIM: AVO), the developer of next-generation proton therapy systems for cancer treatment, announces that it has signed an agreement (the "Agreement") with a fund advised by Metric Capital Partners LLP ("Metric Capital"), a pan-European private capital fund manager, whereby Metric Capital will invest £24 million in a financing facility to support the Company's provision of vendor financing for the installation of Advanced Oncotherapy's first LIGHT machine in Harley Street.

On 12 October 2015, the Company announced the establishment of a proton beam cancer therapy centre in Harley Street. Funding for the clinic, the London Proton Therapy Centre Limited ("LPTC"), will come from the Company and its partners in equal amounts in the form of equity totalling £6 million and the provision of a vendor loan from Advanced Oncotherapy to LPTC.

The Agreement is subject to customary representations, undertakings and events of default and includes financial covenants relating to the future cash balances, revenues and profitability of Advanced Oncotherapy, and to the profitability of LPTC as well as a number of non-financial covenants relating to technological development, delivery of the first LIGHT system and first patient treatment. The Company will pay a cash interest of 250 basis points per annum above 3 month LIBOR (subject to a minimum LIBOR of 150 basis points) payable quarterly and payment in kind ("PIK") interest of 850 basis points payable at maturity or convertible into ordinary Advanced Oncotherapy shares ("Ordinary Shares") at 10p per Ordinary Share (subject to customary adjustments for convertible instruments). In addition, the Company has agreed to issue to Metric Capital each year during the life of the Agreement warrants over 14.5 million Ordinary Shares exercisable at 16p per Ordinary Share. The Agreement has a term of 5 years and requires any future equity capital injections to be carried out on terms similar to or better than the conversion rights of the PIK interest described above.

Of the £24 million financing, £11 million will be received shortly following signing. The second tranche of £13 million will be available for drawdown on completion of a £25 million cash or capital injection to fund the development of a manufacturing base. Should these milestones not be achieved by the end of March 2017, the initial £11 million tranche will become repayable by September 2017.

Metric Capital requires guarantees from certain directors and shareholders of the Company in order to enter into the Agreement; as a result, Michael Sinclair (Chief Executive Officer), Michael Bradfield (Non-Executive Director), Brahma AG (19.3% shareholder of the Company) alongside two other guarantors (together the "Guarantors") have agreed to provide guarantees to Metric Capital for a total of £2.5 million. There are various covenants attached to these guarantees concerning the timing of the delivery of various components of the Harley Street project and treatment of the first patients. In consideration for the provision of these guarantees, the Guarantors have entered into a Guarantee Fee Deed with the Company, under which they will each receive 3% of the net profits of LPTC attributable to the Company (Advanced Oncotherapy is expected to have an interest of approximately 50% in LPTC at the start of operations) for a period of ten years commencing on the first year in which LPTC will generate a positive net profit and with cash payments commencing once all amounts under the Agreement have been repaid.

The Company and Metric Capital are exploring opportunities for further investment to facilitate the provision of vendor financing to AVO customers both in the UK and overseas.

Metric Capital will have the right to consent to certain reserved matters and the right to appoint a director to the Board of both Advanced Oncotherapy and LPTC and, in certain circumstances ADAM SA, a wholly owned subsidiary of Advanced Oncotherapy.

Nicolas Serandour, COO and CFO of Advanced Oncotherapy, commented: "We are delighted to have secured this financing partnership with Metric Capital. Vendor financing has become standard practice in the Proton Therapy Sector and this forms an essential part of our financial strategy, giving us greater confidence to secure new purchase orders and enhancing our returns. I am very pleased to have Metric Capital as our financing partner of choice and their support after extensive due diligence is a great endorsement of our technology and business plan. With the strong backing of Metric Capital and operating partners including Thales, Toshiba and VDL, we are uniquely positioned to deliver on our financing and execution strategy."

John Sinik, Managing Partner of Metric Capital, said: "Advanced Oncotherapy represents a unique investment opportunity for Metric Capital. The proven technology developed over decades, coupled with the clear clinical need for the Company's LIGHT machine, create an exciting backdrop for Metric Capital in supporting Advanced Oncotherapy's growth. We have been very impressed with the Advanced Oncotherapy team, with their development partners and their achievements to date and look forward to supporting them as they make readily available a form of cancer treatment that can change the lives of thousands of patients a year in the UK and around the world."

Related party transaction

The entering into the Guarantee Fee Deed with Michael Sinclair (Chief Executive Officer of the Company), Michael Bradfield (Non-Executive Director of the Company) and Brahma AG (a substantial shareholder of the Company) constitutes a related party transaction under the AIM Rules for Companies. In accordance with the AIM Rules, the independent directors of the Company, having consulted with the Company's nominated adviser, Stockdale Securities Limited, consider that the terms of the Guarantee Fee Deed are fair and reasonable insofar as the Company's shareholders are concerned.

About Metric Capital www.metric-capital.com

Metric Capital Partners LLP is a pan-European private capital fund manager providing bespoke capital solutions in special situations. Metric's funds manage approximately €700 million of capital on behalf of a global institutional investor base. Since 2012, the firm has completed 18 transactions in 10 European jurisdictions, spanning a wide variety of industries and situations (from the refinancing of a container port in Sweden to the rescue financing of the leading supplementary education provider in France and growth capital for an Irish healthcare operator).

About Advanced Oncotherapy Plc www.avoplc.com

Advanced Oncotherapy is a provider of particle therapy with protons that harnesses the best in modern technology. Advanced Oncotherapy's team "ADAM" based in Geneva focuses on the development of a proprietary proton accelerator called Linac Image Guided Hadron Technology (LIGHT). LIGHT accelerates protons to the energy levels achieved in legacy machines but in a unit that is a quarter of the size and between a quarter and a fifth of the cost. This compact configuration delivers proton beams in a way that facilitates a greater precision and electronic control which is not achievable with older technologies.

As a result, Advanced Oncotherapy will offer healthcare providers affordable systems that will enable them to treat cancer with an innovative technology as well as better health outcomes and lower treatment related side effects.

Advanced Oncotherapy continually monitors the market for any emerging improvements in delivering proton therapy and actively seeks working relationships with providers of these innovative technologies. Through these relationships, the Company will remain the prime provider of an innovative and cost-effective system for particle therapy with protons.