Inspirit Energy Regulatory News (INSP)

4 May 2018

Inspirit Energy Holdings PLC

("Inspirit Energy" or "the Company)

Issue of Convertible Loan Notes

Related Party Transaction

Proposed Capital Reorganisation

Inspirit Energy Holdings PLC (AIM: INSP), the developer of micro Combined Heat and Power (microCHP) boiler, is pleased to announce it has issued convertible loan notes ("CLNs") totalling £845,000.

Issue of Convertible Loan Notes and Use of Proceeds

(a) The Company has raised £530,000 in cash from private investors through the issue of CLNs and converted existing debt due to Related Parties (as further detailed below) and other third party debt valued at £315,000 into the CLNs. Whilst the Company has issued the CLNs, conversion into equity is conditional on Shareholder approval and therefore the Company will shortly post a Circular to Shareholders seeking such authority. The principal amount of the CLNs are convertible at the higher of either 0.07 p per Ordinary Share of 0.1p each (the "Ordinary Shares" or "Existing Ordinary Shares" and subject to the Capital Reorganisation as set out below) or a discount of 25 per cent. to the previous trading day's closing market share price. The CLNs are interest free, convertible at the Company's option and, in the ordinary course, only are repayable by the Company in Ordinary Shares following a conversion notice. Any Ordinary Shares issued on conversion of the CLNs will rank pari passu with Existing Ordinary Shares. Conversion of the CLNs is subject to a restriction that no conversion shall take place in circumstances where as a result of the conversion the Noteholder or any party deemed to be acting in concert with such Noteholder, as defined in the Takeover Code, would own more than 29.9% of the issued share capital of the Company or otherwise trigger a requirement for the Noteholder to make a general offer for the Company pursuant to Rule 9 of the Takeover Code. The CLNs will not be admitted to trading on AIM or any other exchange.

The conversion is at the full discretion of the Company and on conversion, each new Ordinary Share will attract a half warrant (one warrant issued for every two CLNs converted) at the relevant conversion price valid for 12 months from the date of issue.

The funds will be used for the following:

· Continued certification of the microCHP boiler;

· Commercial trials of the microCHP boiler;

· General working capital; and

· Potentially to make investments in complementary areas and technologies that will utilise the Company's existing technical expertise.

Related Party Transaction

As set out above, certain of the CLNs being issued are to settle accrued Director's fees of £100,000 and £20,000 owed to two of the Company's Directors, John Gunn and Nilesh Jagatia, respectively, along with £95,000 owed to Global Investment Strategy UK Ltd ("GIS"), an associate of John Gunn (collectively the "Director Transactions"). The Director Transactions is a Related Party Transaction in accordance with AIM Rule 13 and therefore, Anthony Samaha, a Non-Executive Director of Inspirit Energy, who is independent of the Director Transactions, having consulted with the Company's Nominated Adviser, considers the terms of the Director Transactions to be fair and reasonable insofar as Inspirit Energy's Shareholders are concerned. 

Proposed Capital Reorganisation

The Company is proposing to hold a general meeting (a "GM") to consider and, if thought fit, approve the Capital Reorganisation and to grant the directors authority to facilitate the issue of new Ordinary Shares under the terms of the CLNs and provide additional headroom for the future issue of new Ordinary Shares for cash. Accordingly the Company is finalising a Circular to Shareholders which it expects to publish shortly and a further announcement will be made once this has been done.

The Company currently has 1,420,806,857 Existing Ordinary Shares in issue. The market price of the Existing Ordinary Shares has for much of the last 6 months been less than 0.1 pence, which is the nominal value of such shares. The issue of shares at less than nominal value of the Existing Ordinary Shares is prohibited by the Companies Act, so the nominal value of the Existing Ordinary Shares must be reduced below market price before new Ordinary Shares can be issued (for example for an equity fundraise or to issue Ordinary Shares in order to convert a convertible loan). It is therefore proposed to undertake the Capital Reorganisation which will have the effect of reducing the nominal value of each Existing Ordinary Share in the Company to considerably below market value.

The Capital Reorganisation, which comprises a sub-division of shares has been structured so that each new Ordinary Share created pursuant to the Capital Reorganisation shall have a nominal value of 0.001 pence (the "New Ordinary Shares").

The number of Ordinary Shares in issue, and held by each Shareholder, as a result of the passing of the relevant resolutions will not change. It is simply the nominal value of the Existing Ordinary Shares which will change.

It is proposed therefore that each Existing Ordinary Share of 0.1 pence each in the capital of the Company be sub-divided into 1 New Ordinary Shares of 0.001 pence each and 1 B Deferred Share of 0.099 pence each ("B Deferred Share"). This will result in 1,420,806,857 New Ordinary Shares and 1,420,806,857 B Deferred Shares being in issue immediately following the Sub-Division.

Previous share allotments have utilised all of the Directors' current authorities to issue Ordinary Shares free of pre-emption rights and accordingly they will be seeking Shareholders' authority to issue New Ordinary Shares in order to:

- facilitate the issue of New Ordinary Shares under the terms of the CLNs to the Related Parties and other third party debt;

- facilitate the issue of New Ordinary Shares under the terms of the CLNs to private investors; and

- provide additional headroom for the future issue of further New Ordinary Shares up to an aggregate nominal amount of £6,500 being 650,000,000 New Ordinary Shares. If such authority were to be granted, the 650,000,000 New Ordinary Shares would represent approximately 24.7% of the enlarged issued share capital of the Company following conversion of the CLNs, assuming the CLNs converted at a price of 0.07 pence per New Ordinary Share.

The B Deferred Shares will have no rights and the Company will not issue any share certificates or credit CREST accounts in respect of them.

The Capital Reorganisation is expected to be implemented at close of business on the date the Resolutions are passed at the General Meeting.

Application will be made to the London Stock Exchange for admission of the 1,420,806,857 New Ordinary Shares to trading on AIM; but no application will be made to the London Stock Exchange for admission of the B Deferred Shares to trading on AIM.

Approval for the Capital Reorganisation will be sought by passing of the required Resolutions at the General Meeting.

Following the Capital Reorganisation, the ISIN code for the New Ordinary Shares will remain the same as that for the Existing Ordinary Shares. CREST accounts will be updated for the new share designation but no new share certificates will be issued.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

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