Cityfibre Regulatory News (CITY)

CityFibre Infrastructure Holdings PLC

("CityFibre" or "the Company")

Fundraising of £30 million to fund accelerated pipeline of commercial opportunities

CityFibre (CFHL.L), a leading designer, builder, owner and operator of fibre optic infrastructure, is pleased to announce it has conditionally raised £30.0 million before expenses, by way of an oversubscribed Placing of 42,857,142 new Ordinary Shares at 70 pence each representing a discount of 9.1% to the mid-market price at the close of business on 22 May 2014. The Placing was conducted by finnCap and Liberum as joint brokers.

Key Highlights:

· Placing for cash to raise £30.0 million supported by strong demand from both existing and new institutional investors

· Continued progression of pipeline of city opportunities with two progressing to contract negotiation stage since IPO and active discussions with 25 other city councils to acquire or build a city network

· Fundraising to assist growth of existing assets and delivery of an accelerated pipeline of projects including the opportunity to deliver Fibre to the Home with BSkyB and TalkTalk

Greg Mesch, CEO of CityFibre said:

"We are delighted with the strong response from both new and existing institutional shareholders to the Placing so soon after our successful listing on AIM. The fundraising will further strengthen our balance sheet and help CityFibre deliver ultrafast pure fibre networks across the UK and accelerate many of the near term opportunities we are currently pursuing.

"Since admission to AIM, we have already started to capitalise on a number significant projects. Our recently announced joint venture with BSkyB and TalkTalk illustrates the ground breaking nature of our operating model. In addition, the ongoing discussions with over 25 city councils across the UK and with leading mobile operators underpin our ongoing confidence in the Group.

"We look forward to updating both the market and our shareholders on our progress over the coming months."

Fundraising and Use of Proceeds

The Board believes that the Company is progressing ahead of its expectations as at the time of the Company's admission to AIM in January 2014. The Directors' grounds for that belief are:

· the Company's AIM admission document stated an intention "to trial FTTH in one or two of its existing metro networks." The joint venture with BSkyB and TalkTalk (the "Joint Venture") will allow the Company to pursue this strategy at low risk to the Company in partnership with two of the UK's leading internet service providers with a combined share of the UK broadband market exceeding 40 per cent.. CityFibre has been contracted to design and operate the Joint Venture's network on its behalf. In addition, the Joint Venture partners have a stated intention to announce a further two cities for FTTH and FTTP deployments in due course. Thus, the scope of the Company's FTTH activities currently exceed the expectations initially stated in January;

• in the wake of the Company's successful admission to AIM, and the announcement of the Joint Venture, the Directors believe the Company's pipeline of city opportunities is accelerating. The stated intention at the time of the Company's admission to AIM was "to build and operate up to 15 Tier 2 cities over the next four years." The Company is in discussions with over 25 Tier 2 cities, with two progressing to contract negotiation stage since the Company's admission to AIM (Coventry and another City in respect of which the Company is in confidential negotiations), and opportunities have accelerated ahead of expectations. The Directors anticipate that the projects in the Company's indicative pipeline of 8 cities will be at preferred bidder stage within the next 24 months; and

• additionally, the Company is now evaluating the potential of Fibre-to-the-Tower ("FTTT") with one or more mobile operator.

The Company is proposing to raise approximately £30.0 million (before expenses) by means of the Placing in order to:

• fund the Company's growth where it has existing assets;

• fund an accelerated pipeline of aggregate lease commitments in new cities;

• provide additional resources to accommodate the opportunities with BSkyB and TalkTalk; and

• support the construction of fibre infrastructure to seed other pipeline opportunities .

Pending these uses, the Directors intend to hold the net proceeds of the Placing in cash deposits. The Directors believe that these proceeds, plus debt financing, will be sufficient to complete the Company's indicative pipeline of projects. To this end, debt discussions are at an advanced stage with various debt providers and HM Treasury's Infrastructure UK with a view to the provision by one or more of them of a corporate facility or project finance. A further update will be provided once such debt facilities have been secured.

New Share Incentive Arrangements

The Directors believe that the success of the Group will depend to a high degree on the retention and future performance of the management team. The Directors also recognise the importance of ensuring that all employees are well motivated and identify closely with the success of the Group. On the basis that the share plans adopted by the Company prior to its admission to AIM ("Pre-IPO Plans") do not permit the grant of further awards, the Company has adopted new joint share ownership plans ("JSOPs") and, to facilitate awards under the JSOPs, has established an employee benefit trust ("EBT"). Under the terms of the JSOPs, selected Directors (including non-executives), employees and consultants will be awarded beneficial interests in shares acquired by the trustee of the EBT.

As the number of shares that can be issued in respect of awards under the JSOPs is limited by reference to the number of shares set aside for share plan awards at the time of the Company's admission to AIM (as set out in the Company's AIM admission document), shareholder approval will be sought (at the General Meeting of the Company to be held on 9 June 2014) for:

· the adoption of new share option plans ("Option Plans") that will allow the Company to grant options to subscribe for shares to selected Directors (including non-executives), employees and consultants; and

· an extension of the number of shares that can be issued in respect of awards under the JSOPs (so that the total number of shares that can be issued by the Company in respect of awards made under the Pre-IPO Plans, the JSOPs and the Option Plans, does not exceed 16,500,000 shares).

The Directors have convened Board and Remuneration Committee meetings later today at which they intend to consider approving:

· awards under the JSOPs, where such awards will reflect the terms of options previously granted under the Pre-IPO Plans which have subsequently been surrendered (and it is anticipated that 5,577,085 Ordinary Shares will be issued in respect of these awards immediately following the Board and Remuneration Committee meetings (the "Replacement JSOP Shares")); and

· subject to the shareholder approvals referred to above, further awards under the JSOPs and under the Option Plans.

General Meeting and Admission

The Placing is conditional upon, inter alia, shareholder approval to be sought at a General Meeting of the Company to be held on 9 June 2014 and Admission.

A circular (the "Circular") will be sent to shareholders of the Company today, incorporating a notice convening the General Meeting. A copy of the circular will be made available on the Company's website at www.cityfibre.com/investors.

Application will be made for the Placing Shares and New JSOP Shares to be admitted to trading on the AIM Market of the London Stock Exchange. It is expected that Admission will occur and dealings will commence in the shares on 10 June 2014. The Placing Shares and New JSOP Shares will rank pari passu with the existing Ordinary Shares admitted to trading on AIM.

Details of the Placing

The Placing, which is not being underwritten, has been undertaken pursuant to the Placing Agreement. Under the terms of the Placing Agreement finnCap and Liberum, as joint brokers, have agreed to use their reasonable endeavours to procure institutional and other investors to subscribe for Placing Shares.

The Placing Agreement is conditional on, amongst other things:

· the passing of Resolutions 5 and 7 (without material amendment) at the General Meeting; and

· Admission becoming effective by not later than 8.00 a.m. on 10 June 2014 (or such later time and/or date as the Company, finnCap and Liberum may agree (being not later than 8.00 a.m. on 30 June 2014)).

Irrevocable Undertakings

Each of the Directors have given irrevocable undertakings to vote in favour of the resolutions to be proposed at the General Meeting in respect of their own holdings totalling 8,771,113 Ordinary Shares, representing, in aggregate 16.7 per cent. of the existing Ordinary Shares.

For further information, please contact:

TIMETABLE OF PRINCIPAL EVENTS

PLACING STATISTICS

* based on the expected number of grants under the Employee JSOP and Non-Employee JSOP to be made after the General Meeting.

About CityFibre

CityFibre enables gigabit connectivity through owning, building and operating fibre optic network infrastructure. It is the largest independent provider of fibre infrastructure to mid-sized cities and major towns, providing gigabit capable infrastructure for enterprise and public sector organisations, service providers, mobile network operators and businesses.

The Company owns and operates 29,000 kilometres of fibre and duct access and manages over 120 long-term contracts in 56 towns and cities in the UK, including York, Sheffield, Newcastle, Dundee, Bath, Derby and Doncaster.

CityFibre is based in London, United Kingdom, and its shares trade on the AIM Market of the London Stock Exchange (AIM: CFHL).

Definitions

The following definitions shall apply in this announcement: