HAL.L Regulatory News (HAL)

THIS ANNOUNCEMENT IS NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, TO US PERSONS OR IN OR INTO THE UNITED STATES (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA), CANADA, AUSTRALIA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.

HaloSource, Inc.

Completion of Placing to raise £16 million

HaloSource, Inc. ("HaloSource" or "the Company"), the clean water and antimicrobial technology company, announces the successful conditional placing of 80,000,000 new common shares (the "Placing Shares") to existing and new investors (the "Placing") at 20 pence per Placing Share (the "Placing Price") to raise approximately £16 million.

HaloSource intends to use the net proceeds of the Placing for general working capital purposes and to fund a planned expansion of its Drinking Water and Environmental Water business segments. Liberum Capital Limited is acting as sole broker in relation to the Placing.

The Placing Shares will be issued credited as fully paid and will rank equally with the existing common shares, including the right to receive all dividends and other distributions declared in respect of such shares after the date of their issue. The Placing Shares will represent approximately 51.18% of the enlarged issued common share capital of the Company. Following the Placing, the total issued share capital of the Company will comprise 156,306,649 common shares of no par value trading on the AIM market of the London Stock Exchange plc ("AIM").

The Placing is conditional, inter alia, on the Company obtaining the requisite number of waivers of existing shareholders to (a) issue the Placing Shares without having to make a pre-emptive offer to existing shareholders, and (b) waive the requirement for certain placees to make a cash offer for the Company on the basis that such placees will hold 30% or more of the Company's shares on completion of the Placing. On obtaining the requisite shareholder waivers, the Company will apply for admission of the Placing Shares to trading on AIM ("Admission"). Admission is expected to occur at 8:00 a.m. on 19 October 2012 (or such later time as Liberum Capital Limited and the Company may agree, being not later than 8:00 a.m. on 31 October 2012).

The appendix to this announcement (the "Announcement"), which forms part of the Announcement, sets out further details of the Placing and the action to be taken by shareholders in relation to the waivers to allow the Placing to occur.

Enquiries:

About HaloSource

HaloSource (www.halosource.com) is a global clean water technology company headquartered in Bothell, Washington, U.S.A. We design solutions to protect people, preserve the planet and celebrate our most valuable resource-water that is safer, cleaner and more accessible for people everywhere.

HaloSource is committed to relentless innovation, industry-leading products and ongoing support for water-related philanthropy. Our proprietary technologies for drinking and recreational water, textile coatings, and environmentally friendly wastewater recycling, enable our partners to rid the world's water of impurities and return it responsibly to the earth.

HaloSource Technologies that Protect Water and Textiles:

·; HaloPure® media is the most flexible, price-competitive disinfection solution for clean drinking water in the industry. In 2009, it became the first drinking water technology in 30 years to be registered by the United States Environmental Protection Agency (USEPA), widely recognized as having the world's most stringent performance requirements for water purification. In 2010, HaloPure media was approved by China's Ministry of Health (MOH) and recognized for meeting the world's most stringent water purification requirements, a key differentiator for our multi-national partners. In Brazil, the use of HaloPure media has met or exceeded all appropriate standards of the National Institute of Metrology, Standardization and Industrial Quality (INMETRO).

·; SeaKlear® Pool and Spa treatment products bring both natural biopolymers and antimicrobial applications for treating recreational water.

·; HaloShield® products consist of antimicrobial coatings solutions that employ unique technology that binds chlorine-based bleach to textiles such as sheets, lab coats and towels for use as a non-toxic biocide.

HaloSource Technologies that Preserve the Environment:

·; HaloKlear™ products use natural biopolymers providing industrial water clarification with dramatic reductions in ecological impact.

HaloKlear, HaloPure, SeaKlear and HaloShield are either trademarks or registered trademarks of HaloSource, Inc. All other trademarks, brand names or product names belong to their respective holders.

Liberum Capital Limited, which is regulated by the Financial Services Authority, is acting exclusively for HaloSource in connection with the Placing and no-one else and will not be responsible to anyone other than HaloSource for providing the protections afforded to customers of Liberum Capital Limited, or providing advice in connection with the Placing or any transaction or arrangement referred to in this announcement.

This announcement does not constitute, or form part of, an offer, or solicitation of an offer, or invitation to subscribe for or purchase any rights, ordinary shares or other securities of the Company in the United States. In addition, the securities of the Company to be issued in the Placing have not been, and will not be, registered under the US Securities Act of 1933 (as amended) (the "Securities Act") or the securities laws of any state or other jurisdiction of the United States and may not be offered or sold or delivered within, in or into the United States or to, or for the account or benefit of, US Persons absent an applicable exemption from the registration requirements of the Securities Act. There will be no public offer of securities within the United States.

APPENDIX: FURTHER DETAILS OF THE PLACING

Conditions of the Placing

The Placing is conditional, inter alia, on obtaining waivers from the requisite number of existing shareholders as to both the Pre-emptive Rights and the Offer Obligation, as described below.

The Board of Directors of the Company considers the waiver of the Pre-Emptive Rights and Offer Obligation in order to effect the Placing to be in the best interests of the Company and its shareholders as a whole, and therefore unanimously recommended that shareholders provide these waivers.

Pre-emptive Rights

The Articles of Incorporation of the Company provide that each shareholder shall have a pre-emption right to purchase its pro rata share of any new securities that the Company may propose to sell and issue wholly for cash ("Pre-emptive Rights"), save that the Pre-emptive Rights are subject to waiver by existing shareholders of the Company holding 75% of the Company's outstanding common shares.

Offer Obligation

The Articles of Incorporation of the Company also provide that if any shareholder of the Company acquires through an allotment of new common shares in a placing sufficient shares to hold 30% or more of the Company's voting shares, then that shareholder must make an offer to acquire the shares of all other shareholders in cash, subject to waiver of such obligation by existing shareholders of the Company holding a majority of the Company's outstanding common shares, excluding the proposed allottee, its concert parties and its affiliates.

Shareholders holding their shares in certificated form may receive a form for execution to provide such written waivers, and should execute and return a PDF copy by email to Georgeson Inc. at the following email: halosource@georgeson.com as soon as possible and in any event before 4pm (London time) on 12 October 2012.

Shareholders holding their shares as depository interests in CREST will receive a form for execution to provide such written waivers from Computershare Investor Services PLC and should execute and return their form for execution by post to Computershare Investor Services PLC, The Pavilions, The Pavilions, Bridgwater Road, Bristol BS99 6ZY, or alternatively instruction via CREST or email a PDF copy to Hannah Langfield, Computershare Investor Services PLC (email: Hannah.Langfield@computershare.co.uk), as soon as possible and in any event before 4pm (London time) on 12 October 2012.

On obtaining the requisite shareholder waivers, the Company will apply for Admission of the Placing Shares. Admission is expected to occur at 8:00 a.m. on 19 October 2012 (or such later time as Liberum Capital Limited and the Company may agree, being not later than 8:00 a.m. on 31 October 2012).

Related party transaction

Under the AIM Rules for Companies (the "AIM Rules") a non pre-emptive issue of shares to a related party which exceeds specified class tests is subject to certain disclosure requirements. Due to their holding of over 10% of the Company's current issued share capital, the participation in the Placing by Invesco Asset Management Limited ("IAML") as agent for and on behalf of its discretionary managed clients (which has previously notified HaloSource that the aggregate holding of these clients was 21,880,902 common shares, representing approximately 29% of HaloSource's current issued share capital) is deemed a transaction with a related party under the AIM Rules. IAML as agent for and on behalf of its discretionary managed clients has agreed conditionally to subscribe for 42,500,000 Placing Shares under the Placing, such that it will hold approximately 41.2% of the enlarged issued share capital of the Company following the Placing. The directors of the Company consider, having consulted with Liberum Capital, the Company's nominated adviser, that the terms of the Placing are fair and reasonable insofar as the Company's shareholders are concerned.

Directors' participation

Certain directors of the Company have stated their intention to subscribe for new common shares of the Company as follows: