Microsaic Regulatory News (MSYS)

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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7OF THE REGULATION (EU) NO 596/2014 ON MARKET ABUSE

22 December 2020

Microsaic Systems plc

("Microsaic" or the "Company")

End of Formal Sale Process

Appointment of KRE Corporate Recovery Limited

Microsaic Systems plc (AIM: MSYS), regrets to announce that its formal sale process has concluded without securing any definitive offer for the Company or any other solution which would provide sufficient funding for the Company to pursue its business plans. As a result, the Company has appointed KRE Corporate Recovery Limited ("KRE") to explore other remaining options to maximise value for creditors and potentially other stakeholders.

As announced on 29 July 2020, following a market sounding exercise carried out in the middle of 2020, the Board had concluded that the prevailing conditions were not supportive at that time of raising sufficient equity from public market investors to fund the business through to profitability. The Board, had, therefore, appointed BDO LLP as its financial adviser, with regards to a Strategic Review, including a formal sale process for the purposes of Rule 3 of the City Code on Takeovers and Mergers (the "Takeover Code").

Since then, a very extensive process has been undertaken with outbound and inbound approaches to and from a large number of parties. From discussions with multiple potentially interested parties during the formal sale process, it became clear that their key considerations included the effect of the Covid-19 pandemic on their own businesses, the future investment required to take the Microsaic business to positive cash generation, and the continuing uncertainty around forward trading assumptions due to the ongoing impact of the pandemic. Following the cessation of discussions with the last remaining interested party, the formal sale process has regrettably now concluded without securing any definitive offer for the shares of the Company or for any other solution which would provide sufficient funding for the Company to pursue its business plans.

The interim results announcement on 2 September 2020 included the following statement on going concern:

"In view of the inherent uncertainties implicit in a Strategic Review process, there is a material uncertainty related to going concern. If the Strategic Review does not result in an appropriate outcome, the Directors would have to consider other actions for protecting stakeholders' interests."

In the light of the outcome of the formal sale process, the Board has now considered what actions are appropriate to protect stakeholders' interests. In particular, the Board has taken advice on the best way of maximising value for creditors and potentially other stakeholders and has, therefore, appointed KRE to run a process to offer the business and assets of the Company for sale. This process is expected to run until around the end of January 2021 and, based on facts presently known, the Board believes that the Company has sufficient cash to make essential, ongoing payments falling due during this period. Contact details for KRE are included below and any potentially interested parties are encouraged to contact KRE at the earliest possible opportunity.

At this time, no party has been identified which is prepared to make an offer for the Company, or its business and assets and there can be no certainty that any transaction will be concluded, nor as to the terms on which any form of transaction would be made. A sale of the business and assets might involve an administration process.

It is possible (but not certain) that a sale of the Company's business and assets may be effected following the appointment of an administrator. In the event that KRE identifies that the sale of the Company's business and assets is unlikely to generate incremental value for creditors or other stakeholders, the Board would have to initiate steps to appoint a liquidator to wind-up the Company's affairs. Any appointment of an administrator or liquidator would be likely to trigger immediate suspension of the Company's shares from admission to trading on AIM. In addition, if the Company were to go into administration or liquidation, additional costs would be incurred and liabilities may accelerate or crystallise which would diminish the potential realisations for stakeholders.

Following this announcement, the Company is no longer considered to be in an "offer period" as defined in the Takeover Code.

For further information, please contact:

Important notices

This announcement contains inside information for the purposes of Article 7 of the Regulation (EU) No 596/2014 on Market Abuse. Upon the publication of this announcement, this information is considered to be in the public domain.

The distribution of this announcement in jurisdictions outside the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdiction.