CAP.L Regulatory News (CAP)

13 Mar 2008 16:46

Clean Air Power Limited13 March 2008 For immediate release 13 March 2008 Clean Air Power Ltd ("Clean Air Power" or "the Company") Conditional investment of up to £5million Clean Air Power (AIM : CAP) today announces that it has agreed, subject to thepassing of resolutions by the Company's shareholders at a Special GeneralMeeting, a private financing package with Endeavor Capital Management LLC andcertain other investors to provide funds for the further commercialisation ofits patented technology. Financing details The financing package will provide proceeds of up to around £5.0m for theCompany between April 2008 and June 2009. Endeavor, a longstanding and majorshareholder in the Company, currently holding 18.5% of the Company's shares, hasconditionally agreed to provide up to £4.65m of the new funds. The remainingfunds will be provided by another institutional investor which has agreed toinvest approximately £0.25m and the Company's management which is investing afurther £0.10m. The funds will be received in six tranches. The first three tranches will be;£1m on or before 30 April 2008; £0.5m on 30 June 2008; and £0.5m on 30 September2008.The remainder of the financing package will be available to the Company throughthe exercise of call and put options to be granted to Endeavor and the Companyrespectively. The second three tranches will each be for £1m and will (ifexercised) be received between 1 October 2008 and 30 June 2009 under a mutualcall/put option structure. Endeavor's obligations will become absolute subject to the closing of certaininvestment funds.If Endeavor's obligation under the put option does not become absolute on orbefore June 30, 2008, Endeavor shall on or before December 15, 2008, subscribefor such number of Common Shares as have an aggregate value of approximately£500,000. For every two common shares subscribed for pursuant to the financing package,the Company will issue a warrant for the purchase of one additional commonshare, exercisable within three years, with an exercise price at a 40% premiumto the issue price. Endeavor is required to participate in each of the six tranches of the financingpackage, with the other institutional investor and management only investing inthe first tranche. Depending on the movement in the share price prior to theclosing of each tranche, and the exercise of the latter three tranches, Endeavormay acquire a majority interest in the Company. The Company Bye-laws incorporate by reference various provisions of the CityCode, including Rule 9 of the City Code. However, this requirement may be waivedby an independent vote at a meeting of the Company shareholders and,consequently, it is proposed that such a resolution, with regards to acquisitionof Common Shares by Endeavor or its Affiliates, be proposed at a Special GeneralMeeting. Endeavor currently holds 18.5% of the issued share capital, and is therefore arelated party under the AIM rules. The Directors consider, having consulted with Canaccord Adams, that the terms ofthe transaction are fair and reasonable insofar as the Company's shareholdersare concerned. The placing is conditional upon the passing of resolutions by the Company'sshareholders at a special general meeting. The Directors are pleased to confirm that the Company has obtained irrevocableundertakings to vote in favour of the Resolutions from Shareholders holdingapproximately 67% of the issued Common Shares. Reasons for financing In November 2007, the Company announced its intention to raise further funds.Given the current sentiment in capital markets, the Board of Directors arepleased to have secured this significant level of funding which provides theCompany with the essential funds required to continue the business operationsgoing forward. The funds raised will be used to further advance in-house product development,provide working capital to support existing operations and to provide resourcesfor potential manufacturer cooperation activity. The main objective of the Company remains to enter into a cooperation agreementwhereby its Dual-FuelTM technology is adopted by a major manufacturer. TheCompany recently announced that considerable progress has already been made witha major manufacturer. Although a formal agreement has not yet been reached, theCompany continues to believe that the discussions could lead to a formalcooperation agreement being reached during 2008. Special General Meeting An extraordinary general meeting of Clean Air Power has been convened for11.00am (Bermuda time) on Monday 7 April 2008 at Clarendon House, 2 ChurchStreet, Hamilton, Bermuda. The circular and notice of shareholder meeting willbe posted to shareholders and will be available on the Company's website. Note: The placing is being conducted in reliance upon available exemptions fromthe U.S. Securities Act of 1933 in accordance with Section 4(2) thereof andRegulation D and Regulation S there under. THIS COMMUNICATION DOES NOT CONSTITUTE AN OFFER OF SECURITIES FOR SALE IN THEUNITED STATES. THE SECURITIES REFERRED TO ABOVE MAY NOT BE OFFERED OR SOLD INTHE UNITED STATES ABSENT REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933 ORIN RELIANCE UPON AN EXEMPTION THEREFROM. For further details please contact: Clean Air Power Tel: +44 (0) 1494 527110John Pettitt, Chief ExecutivePeter Rowse, Finance Director Buchanan Communications Tel: +44 (0)20 7466 5000Charles Ryland/Ben Willey/Ben Romney Canaccord Adams Ltd Tel: +44 (0)20 7050 6500Robert Finlay/Clayton Bush This information is provided by RNS The company news service from the London Stock Exchange