Cyanconnode Regulatory News (CYAN)

Cyan Holdings plc

("Cyan" or "the Company")

Proposed Placing, Directors' Dealings &

Notice of General Meeting

Cyan Holdings plc (AIM:CYAN.L), the integrated system and software design company delivering mesh based flexible wireless solutions for utility metering and lighting control, announces raising, subject to certain conditions, approximately £3.5 million before expenses, by way of a share placing ("Placing") pursuant to which 1,000,000,000 Ordinary Shares (the "Placing Shares") will be issued at 0.35 pence each (the "Placing Price"), and 500,000,000 warrants ("the Placing Warrants") will be issued at 0.60 pence each ("the Exercise Price"). The Placing was managed by Hume Capital Securities plc ("Hume Capital") as joint broker to the Company. It is intended that the net proceeds from the Placing will be used for general working capital requirements, business development, customer deployments and further product development work as set out below.

The Placing is conditional, inter alia, on the passing of resolutions at a General Meeting ("GM") to be held at 1.00 p.m. on 19 August 2014. A circular containing the notice of the GM (the "Circular") will be posted to all shareholders in the Company on or around 28th July 2014 and will be available to view on the Company's website at: www.cyantechnology.com. Note there will be no Company presentation at the General Meeting due to it being so soon after the Annual General Meeting.

Application will be made for the Placing Shares to be admitted to trading on AIM and assuming Shareholders approve the necessary resolutions at the GM it is anticipated that the Placing Shares will be admitted to trading on AIM and that dealings will commence at 8.00 a.m. on 20 August 2014 ("Admission"). Following Admission, the Company will have 4,454,611,309 Ordinary Shares in issue, assuming all of the Placing Shares are subscribed for.

Commenting on the Placing, John Cronin, Executive Chairman said "We are pleased to be able to continue to attract interest in the Company and its prospects. The net proceeds from the Placing will provide the Company with additional stability and cash resources to allow us to pursue the following:-

• Build further production samples of the Cyan retrofit smart metering solution and market these in emerging markets

• Deploy and support the full Advanced Metering Infrastructure ("AMI") deployments at Tata Power Mumbai and Essel Utilities

• Deploy and support the India Smart Grid pilot opportunities

• Support Cyan's Brazilian metering and lighting partners to win volume contracts

• Further build out the Value Added Reseller program for smart lighting sales in China

• Certify electricity metering solutions from additional meter manufacturer partners in India, Brazil, China and other emerging markets

• Develop Cyan's commercial opportunity into additional emerging markets

To further demonstrate the Board's confidence in these opportunities and our commitment to the Company, all the Directors of Cyan have agreed to subscribe in the Placing for an aggregate amount of £100,000. I am very encouraged by the participation in the Placing by Peter Mainz and Harry Berry as this demonstrates their confidence in the future of Cyan, having joined the Board very recently." 

Definitions used in this announcement have the meaning set out in the Schedule at the end of this announcement.

Enquiries:

Background to and reasons for the Placing

Following recent positive announcements related to Cyan's first smart metering customer orders in India, the signing of a teaming agreement with Vodafone, as well as the strengthening of the Board, Cyan has today announced an intent to raise additional funding.

The two announced orders from end customers Tata Power and Essel Utilities demonstrate that Cyan offers one of the leading smart metering solutions in India. The Board believes that further investment is required in local India resources, as well as further product development, in order to deliver against these customer commitments as well as securing further orders in our chosen markets. Cyan's team in India currently consists of five people covering sales, business development and technical pre-sales. The Company expects to double this before the end of the year, with investment being made in further technical staff who will be based on customer sites to ensure successful implementations. It is also intended that a subsidiary company in India will also be established in the next several months in order to provide customers, and potential customers, with increased confidence of Cyan's long term commitment to the market in India.

Cyan has now deployed seven smart metering pilots in India with an additional four in the planning stage. These pilots represent a pipeline of commercial opportunities for Cyan in the India smart metering market. The Company is also in the process of technical qualification of additional meter manufacturers in order to provide private and public utility customers with additional choice as well as adding further eco-system channel partners in India.

In addition, the Company's metering partner in Brazil (Nobre de la Torre) have indicated that they expect to deploy further smart metering pilots in the second half of 2014. They have now qualified a local Contract Equipment Manufacturer in the expectation of first orders in Q4 2014, leading to potential volume orders in 2015.

Following the lodging of the Tamil Nadu Electricity Board ("TNEB") tender just over 12 months ago, and whilst we continue to engage on a regular basis with TNEB, the Company has successfully broadened the pipeline of opportunities in India as well as opening up a second territory in Brazil. Having consolidated the Company's position in these two markets, opportunities to expand into further territories are now being evaluated through our enlarged network of partners.

During the remainder of 2014 and throughout 2015, the Board and management team intend to further develop the commercial opportunity through a combination of:

· the conversion of existing deployed metering pilots in India and Brazil into orders

· the deployment of additional pilots in both India and Brazil

· additional meter manufacturer partnerships in India, Brazil and China

· additional partnerships and commercial opportunities as a result of the teaming agreement signed with Vodafone;

· expansion into additional emerging markets through local partners; and

· follow on orders from the initial projects with both Tata Power and Essel Utilities.

The Placing Shares will be issued at a price of 0.35 pence per Ordinary Share. The Directors believe that this price represents a fair price to raise additional working capital and development funding.

Based on the gross proceeds of the Placing of £3.5M and the full exercise of the Placing Warrants in the 12 months following Admission (representing a possible additional £3.0 million), the Company would have substantial resources to deploy towards delivering and expanding on the commercial opportunity for Cyan's technology in emerging markets.

The Cyan management team and newly strengthened Board of Directors remain highly motivated and confident about the opportunities in the pipeline. This confidence is reflected in the significant participation in the Placing by the whole Board of Cyan who, in aggregate, are subscribing for £100,000 of Placing Shares in the Placing.

Therefore, Shareholders are requested to vote in favour of the Resolutions in order to provide the Company with adequate working capital as well as the funds needed for further expansion in Cyan's target markets. The Directors believe that Cyan remains in a strong position to secure substantial revenues from a very large market.

Details of the Placing

Ordinary Shares

The Company intends to raise approximately £3.5 million, before expenses, through the issue of 1,000,000,000 Placing Shares at the Placing Price pursuant to the Placing.

The Placing Price represents a discount of approximately 22.2 per cent. to the closing mid-market price of 0.45 pence per Ordinary Share as at 24 July 2014, the latest practicable date prior to the announcement of the Placing. The Placing Shares will, when issued, rank pari passu in all respects with the Ordinary Shares, including the right to receive dividends and other distributions declared following Admission.

The Placing Shares will represent approximately 22.4 per cent. of the Enlarged Share Capital and the Warrants will represent approximately 10.4 per cent. of the Enlarged Share Capital following exercise of all the Warrants. The Placing is being made on a non pre-emptive basis as the time delay and costs associated with a pre-emptive offer are considered by the Directors to be excessive.

Application will be made by the Company for the Placing Shares to be admitted to trading on AIM. Subject to completion of the Placing, it is expected that the Placing Shares will be admitted to trading on AIM and that dealings will commence at 8.00 a.m. on 20 August 2014.

The issue of the Placing Shares, is conditional, inter alia, upon:

(a) the approval of the Resolutions at the GM;

(b) the Placing Agreement becoming wholly unconditional (save as to Admission) and not having been terminated in accordance with its terms at any time prior to Admission; and

(c) Admission,

in each case occurring no later than 8.00 a.m. on 20 August 2014 (or such time and date as the Company and Hume Capital may agree, being not later than 3 September 2014).

Pursuant to the terms of the Placing Agreement, Hume Capital has conditionally agreed to use its reasonable endeavours, as agent to the Company, to place the Placing Shares at the Placing Price with certain institutional and other investors. The above obligations are subject to certain conditions including those listed above. The Placing is not being underwritten by Hume Capital.

The Placing Agreement contains customary warranties given by the Company with respect to its business and certain matters connected with the Placing. In addition, the Company has given certain indemnities to Hume Capital in connection with the Placing and Hume Capital's performance of services in relation to the Placing. Hume Capital is entitled to terminate the Placing Agreement in specified circumstances including where there has been a material breach of the warranties.

In accordance with the terms of the Placing Agreement, Hume Capital will be issued with the Corporate Finance Warrants in addition to corporate finance fees and commissions charged by them to the Company in connection with their services relating to the Placing.

The Placing Warrants

In addition, conditional upon Admission, Placees will be issued with one Placing Warrant for every two Ordinary Shares they have agreed to acquire through the Placings. Each Placing Warrant will give the Placees the right, but not the obligation, to acquire one Ordinary Share at an exercise price of 0.6 pence (the "Exercise Price"), conditional on such exercise request being made within the period ending twelve months from Admission.

The Placing Warrants have been constituted by the Placing Warrant Instrument and their issue is conditional upon Admission occurring. The maximum number of Placing Warrants which may be issued under the Placing Warrant Instrument is 500,000,000. The Placing Warrants will represent approximately 10.1 per cent. of the Enlarged Share Capital following exercise of the Warrants.

The Placing Warrant Instrument contains the terms and conditions upon which the Placing Warrants will be issued and the principal terms and conditions are as follows:

Form of Placing Warrants

Placing Warrant Holders will be recorded as the holders of Placing Warrants in a register of warrants maintained on behalf of the Company.

Each Placing Warrant Holder shall be entitled to a certificate. Joint holders will be entitled to only one certificate in respect of their joint holding. A form of notice of exercise and the full terms and conditions of the Placing Warrants will be attached to each certificate.

Conditions attaching to exercise

The Directors may require, as a condition of exercise of any Placing Warrant that the registered holder of the Placing Warrant certifies that such exercise is not being made with a view to a transfer of the Ordinary Shares to which it relates to an overseas person.

Allotment of Shares

On the due exercise of any Placing Warrant, the Company will allot the number of Ordinary Shares for which subscription is made to the registered holder of the Placing Warrant. Following exercise of the Placing Warrants, the Company will apply for those Ordinary Shares to be admitted to dealing on any recognised investment exchange on which the Company's shares are then quoted.

Insolvency

If an Insolvency Event (as defined in the Placing Warrant Instrument) occurs in respect of the Company (except as part of a reconstruction or amalgamation which has been approved by the Placing Warrant Holders by extraordinary resolution) each Placing Warrant Holder shall, in respect of its Placing Warrant(s) be treated as if its Placing Warrant(s) had been exercised on the day immediately preceding the happening of the Insolvency Event and shall receive out of the surplus assets of the Company available in the liquidation such sum as it would have received if it had been registered as the holder of the number of fully paid Ordinary Shares for which it is entitled to subscribe under the Warrant(s) then registered in its name after the deduction from such sum of a sum equal to the Exercise Price in respect of those Ordinary Shares.

Adjustment

If the Company alters its share capital by consolidating or subdividing shares the Company shall within 10 business days after such event give written notice to the Placing Warrant Holders giving full details of the event in question.

Within 10 business days after the service of a notice the Placing Warrant Holders may serve written notice on the Company requiring it to instruct auditors to prepare and deliver to the Placing Warrant Holders and the Company a certificate as to what is in their opinion the amount of the adjustment which ought reasonably to be made to the number of Ordinary Shares subject to the Warrant and/or to the Exercise Price for each of those Ordinary Shares but so that:

(a) the aggregate amount payable on the exercise of the Placing Warrants in full is not increased; and

(b) the Exercise Price for an Ordinary Share is not reduced below its nominal value, and the Company shall give to the auditors all information reasonably requested by the auditors to enable the auditors to produce their certificate.

Meetings of Placing Warrant Holders & Modification of Placing Warrant rights

The Company may (and shall on the written request in writing of Placing Warrant Holders holding at least one-fifth of the Placing Warrants then outstanding) convene a meeting of the Placing Warrant Holders by at least 14 days' clear written notice, and such meeting shall have power by an extraordinary resolution (that is to say a resolution passed by a majority consisting of at least seventy-five per cent. of the Placing Warrant Holders voting on a show of hands or (if a poll is demanded by the chairman of the meeting or by Placing Warrant Holders holding at least three quarters of the Placing Warrants then outstanding and in respect of which notice of conversion has not been given) by a simple majority of the votes given on such poll):

(a) to sanction any modification or compromise or any agreement in respect of the rights of the Placing Warrant Holders;

(b) to assent to any modification of these conditions proposed or agreed to by the Company and to agree to the issue of a supplemental instrument embodying the modification; and

(c) to appoint any persons (whether Placing Warrant Holders or not) as a committee to represent the interest of the Placing Warrant Holders and to confer upon such committee any powers or discretions which the Placing Warrant Holders could themselves exercise by an extraordinary resolution.

A resolution signed by Placing Warrant Holders holding at least 75 per cent. of the Placing Warrants in issue shall be as valid and effectual as if it had been passed at a meeting of the Placing Warrant Holders duly convened and held. Such resolution may be contained in one document or in several documents in like form each signed by one or more of the Placing Warrant Holders.

Transfer of Placing Warrants

A Placing Warrant Holder may transfer a Placing Warrant by a transfer in writing signed by it and it shall remain the owner of the Placing Warrant until the name of the transferee is entered in the Company's warrant register. Where a Placing Warrant Holder transfers part only of the Placing Warrants in a certificate the old certificate shall be cancelled and a new certificate for the balance of such Placing Warrants issued without charge.

Law and Jurisdiction

The Placing Warrant Instrument is governed by and construed in accordance with English law and the Company and the Placing Warrant Holders submit to the non-exclusive jurisdiction of the English courts.

Directors' shareholdings

The current beneficial and non-beneficial interests of the Directors in Ordinary Shares and the beneficial and non-beneficial interests following the Placing are set out below:

* On 2 July 2014, Peter Mainz was granted unapproved options ("Unapproved Options") over a total of 34,512,626 new Ordinary Shares at an exercise price of 0.37 pence per share. The Unapproved Options are exercisable for 100 per cent. of the issued amount from 1 July 2016 having a two year cliff vesting period. The Unapproved Options will lapse if unexercised after 10 years from the date of grant. The Unapproved Options (if fully exercised) will represent a total of 0.77 per cent. of the Enlarged Share Capital.

The Directors intend to subscribe for, in aggregate, 28,571,429 Placing Shares which represents, in aggregate, 2.86 per cent. of the Placing Shares being issued pursuant to the Placing. Following the Placing, the Directors will hold, in aggregate, 198,493,452 Ordinary Shares, accounting for 4.46 per cent. of the Enlarged Share Capital. As a result of the Directors participating in the Placing they will also be issued, in aggregate, 14,285,714 Placing Warrants in accordance with the terms of the Placing Warrant Instrument.

The subscription by the Directors of the Placing Shares and issue to them of the Placing Warrants as set out above constitutes, in aggregate, a related party transaction pursuant to the rule 13 of the AIM Rules. There are no independent directors for the purposes of providing the statement required by AIM Rule 13 and therefore Allenby Capital, the Company's Nominated Adviser, considers that the terms of the Directors' participation in the Placing and related issue of Placing Warrants are fair and reasonable insofar as Shareholders are concerned.

General Meeting and action to be taken

A notice convening the GM to be held at the Company's registered office, Carisbrooke Court, Buckingway Business Park, Swavesey, Cambridge, CB24 4UQ at 1.00 p.m. on 19 August 2014 will be posted to Shareholders on or around 28th July 2014 in a Circular. The Resolutions to be proposed at that meeting are, inter alia, to empower the Directors to allot equity securities for cash and to do so otherwise than in accordance with the statutory pre-emption provisions, as set out in the Companies Act, in connection with the Placing and otherwise.

 The authority proposed to be given to the Directors to allot Ordinary Shares in the capital of the Company requires the prior authorisation of the Shareholders at a GM under section 551 of the Companies Act. Following the passing of Resolution 1, the Directors will have authority to allot: 1,517,000,000 Ordinary Shares in connection with the Placing and the Warrants; in addition, a further 1,484,870,436 Ordinary Shares, being approximately one third of the Enlarged Share Capital. This authority will expire immediately following the annual general meeting of the Company in 2015 or if earlier on the date which is 15 months after the date of the passing of this resolution.

Subject to the passing of Resolution 2, the Directors will have the power under section 570 of the Companies Act to allot, for cash, 1,517,000,000 Ordinary Shares in connection with the Placing and the Warrants; and, in addition up to 445,461,131 Ordinary Shares (being approximately 10 per cent. of the Enlarged Share Capital), without being required first to offer such securities to Shareholders in accordance with the statutory pre-emption rights. This authority will expire immediately following the annual general meeting of the Company in 2015 and will replace the authority obtained at the annual general meeting held in June 2014 or if earlier on the date which is 15 months after the date of the passing of this resolution.

While the Directors have no present intention to allot any relevant securities pursuant to the authority proposed to be granted to them pursuant to the Resolutions (save for the allotment of the Placing Shares or pursuant to the Warrant Instruments), the authorities described above would provide flexibility for raising additional funds or making acquisitions should suitable opportunities arise.

A Form of Proxy for use by Shareholders in connection with the GM will be posted to Shareholders on or around 28th July 2014. Whether or not Shareholders propose to attend the GM in person, Shareholders are requested to complete the Form of Proxy in accordance with the instructions printed on it and to return it to the Company's Registrars, Share Registrars Limited, 9 Lion & Lamb Yard, Farnham, GU9 7LL as soon as possible and in any event so as to arrive no later than 1.00 p.m. on 15 August 2014. Completion and return of the Form of Proxy will not preclude Shareholders from attending the GM and voting in person should they so wish.

Recommendation

The Directors consider the terms of the Placing to be in the best interests of the Company and accordingly recommend that Shareholders vote in favour of the Resolutions to be proposed at the GM as they intend to do in respect of those Ordinary Shares in respect of which they have a beneficial interest, being 169,922,023 Ordinary Shares, representing 4.92 per cent. of the current issued Ordinary Share capital of the Company as at the date of this document.

SCHEDULE

DEFINITIONS

The following definitions apply throughout this document and in the accompanying Form of Proxy unless the context requires otherwise:

"Admission" admission of the Placing Shares to trading on AIM becoming effective in accordance with the AIM Rules;

"AIM" the market of that name operated by the London Stock Exchange;

"AIM Rules" together, the AIM Rules for Companies and the AIM Rules for Nominated Advisers;

"Allenby Capital" Allenby Capital Limited, 3 St Helen's Place, London EC3A 6AB,

being the Company's nominated adviser for the purposes of the AIM Rules;

"Board" or "Directors" the directors of Cyan whose names are set out on page 6 of thisdocument;

"Companies Act" the Companies Act 2006 (as amended);

"Company" or "Cyan" Cyan Holdings plc, a company incorporated and registered in

England and Wales with company number 04554942;

"Corporate Finance Warrants" the 17 million warrants created under the Corporate Finance Warrant Instrument to subscribe for Ordinary Shares during the 6 months following Admission (on the basis of one Corporate Finance Warrant for one Ordinary Share) exercisable at 0.349 pence (being the average closing mid-price of Ordinary Shares for the 45 day period prior to the date of this document);

"Corporate Finance Warrant the warrant instrument of the Company to be entered into, Instrument" conditional upon the passing of the Resolutions, on 19 August

2014 constituting the Corporate Finance Warrants to be granted to Hume Capital;

"CREST" the computerised settlement system (as defined in the CREST Regulations) operated by Euroclear UK & Ireland Limited;

"EIS" Enterprise Investment Scheme;

"Enlarged Share Capital" the Company's issued share capital immediately after the completion of the Placing;

"FCA" the United Kingdom Financial Conduct Authority (or any successor entity or entities) and where applicable, acting as the competent authority for the purposes of Admission;

"Form of Proxy" the form of proxy attached to this document for use by Shareholders in connection with the GM;

"GM" or "General Meeting" the general meeting of Cyan to be held at its registered office, Carisbrooke Court, Buckingway Business Park, Swavesey, Cambridge, CB24 4UQ at 1.00 p.m. on 19 August 2014, notice of which is set out in Part 2 of this document;

"Hume Capital" Hume Capital Securities PLC, 1 Carey Lane, London, EC2V 8AE;

"London Stock Exchange" London Stock Exchange plc;

"Ordinary Shares" the ordinary shares of 0.01 pence each in the capital of the Company;

"Placees" the placees subscribing for Placing Shares pursuant to the Placing;

"Placing Agreement" the conditional placing agreement dated 24 July 2014 between Hume Capital and the Company, details of which are set out in the letter from the Chairman;

"Placing" the proposed placing by Hume Capital, as agent for the Company, of the Placing Shares at the Placing Price on the terms of the Placing Agreement;

"Placing Price" 0.35 pence per Placing Share;

"Placing Shares" 1,000,000,000 Ordinary Shares to be allotted on the terms of the Placing Agreement;

"Placing Warrants" the warrants to subscribe for 500,000,000 Ordinary Shares at 0.60 pence per Ordinary Share for the twelve months following Admission which are to be issued to Placees on a pro rata basis;

"Placing Warrant Holders" holders of the Placing Warrants;

"Placing Warrant Instrument" the warrant instrument of the Company to be entered into conditional upon the passing of the Resolutions, on 19 August 2014 constituting the Placing Warrants;

"Registrars" Share Registrars Limited, 9 Lion & Lamb Yard, Farnham, GU9 7LL;

 "Shareholders" holders of Ordinary Shares at the date of this document;

"Share Option Scheme" the Cyan Holdings plc Enterprise Management Incentive Scheme;

"UK" or "the United Kingdom" the United Kingdom of Great Britain and Northern Ireland;

"VCT" Venture Capital Trust scheme under the provisions of Part 6 of the Income Tax Act 2007;

"VCT and EIS Conditions" the conditions contained within sections 285 and 286 of the IncomeTax Act 2007 relating to the Company and the Ordinary Shares under which the Ordinary Shares may be regarded as 'eligible shares' comprised in each VCT or EIS investor's qualifying holding for the purposes of Chapter 4 of Part 6 of the Income Tax Act 2007;

 "Warrants" the Corporate Finance Warrants and the Placing Warrants; and

"Warrant Instruments" the Corporate Finance Warrant Instrument and the Placing Warrant

Instrument.

Enquiries: