Nanoco Regulatory News (NANO)

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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014 ("MAR").

UNLESS OTHERWISE INDICATED, CAPITALISED TERMS IN THIS ANNOUNCEMENT HAVE THE MEANING GIVEN TO THEM IN THE DEFINITIONS SECTION SET OUT BELOW.

15 July 2020

FOR IMMEDIATE RELEASE

Nanoco Group plc

("Nanoco", the "Company" or the "Group")

Trading Update &

Proposed Fundraising a minimum of £2.2 million

by way of PrimaryBid Offer

Nanoco Group plc (LSE: NANO), a world leader in the development and manufacture of cadmium-free quantum dots and other specific nanomaterials emanating from its technology platform, today announces a trading update and proposed fundraising at a price of 17.5 pence per share (the "Issue Price") to raise a minimum of £2.2 million (before expenses) by way of an offer for subscription for 12,571,428 new Ordinary Shares via PrimaryBid (the "PrimaryBid Offer" or the "Fundraising"). The Fundraising is fully subscribed subject to potential clawback in the event of additional demand from both new and existing investors.

Trading Update

· Excellent progress in delivery of services under the recently announced development agreement with ST Microelectronics on nano-materials for use in infra-red sensing applications.

· Recently won development contract for a new technology application in the Display sector.

· Our development work in the Sensing and Display sectors both have the potential to lead to medium term commercial production utilising our Runcorn facilities.

· Recently announced third-party funding for the Company's lawsuit against Samsung ensures that the Company retains the benefit of the claim which, if successful, could significantly exceed the current market capitalization of the Company, whilst allowing Company resources to be focused on targeted organic business activities.

· The Company continues to trade in line with the Board's expectations with a cash runway that extends through Q2 in calendar year 2021.

Fundraising Highlights

· PrimaryBid Offer of 12,571,428 new Ordinary Shares ("PrimaryBid Shares") to raise gross proceeds of a minimum of £2.2 million.

· Lombard Odier has undertaken to subscribe for £2.14 million of PrimaryBid Shares, such amount being subject to clawback depending on accepted applications received from new and existing investors under the PrimaryBid Offer.

· All directors of the Company and/or persons closely associated with them have given written undertakings to the Company to subscribe for PrimaryBid Shares at the Issue Price with a total value of £61,000 as shown in the Additional Information section of this announcement.

· A further announcement launching the PrimaryBid Offer will be made shortly. The PrimaryBid Offer, via the PrimaryBid.com platform, will be open to individual and institutional investors until 9:00 p.m. on 15 July 2020.

· The Issue Price represents a discount of 2.8 per cent. to the Closing Price of 18.00 pence on 15 July 2020, being the last practicable trading day prior to release of this announcement.

· The net proceeds of the Fundraising will be used to extend the Company's cash runway at least to the end of calendar year 2021 while supporting its core IP assets and its business operations during the ongoing lawsuit against Samsung.

Chris Richards, Chairman of Nanoco Group said:

"We are pleased to launch this Offer of Shares via PrimaryBid. It reflects the excellent recent progress we have made in a number of areas. We have secured third-party funding for our lawsuit against Samsung. The extensive due diligence exercises carried out by the third-party funder, our strategic IP adviser, and our US Counsel all serve to enhance our confidence in a successful outcome to the lawsuit, which could be transformational for shareholder returns given the scale of the QD TV market.

"We have also recently delivered new commercial revenues from our underlying business activities in both the Sensing and Display sectors. These wins support the Company's short term cash position and also hold out the prospect of significant future revenue from commercial production in both of these sectors in the short to medium term.

"The Fundraise will enable the Company to address further new commercial opportunities, while also maintaining our balance sheet during the lawsuit against Samsung. The Fundraise will also add stability to the business and allow us to retain many members of our highly skilled team. All of these factors combined will deliver enhanced value for the Group and are in the best interests of all stakeholders."

ADDITIONAL INFORMATION

Background to the Fundraising

The Company announced its Interim Results for the six months ended 31 January 2020 (H1 FY20) on 30 April 2020. During the period, Nanoco delivered revenues of £2.9 million and an Adjusted EBITDA Loss of £1.4 million. The first half included the completion of a major contract with the US Customer. Subsequent to the half year end, like many businesses, the Group has experienced significant business interruption as a result of the Covid-19 pandemic, including absence of key personnel, disruption to supply chains and customer measures leading to shipping delays and delays on raising new purchase orders. However, paid for customer work and critical activities have continued where possible. The Group also terminated the Formal Sale Process due to the ongoing uncertainty in the capital markets.

The Company's cash balance was £4.2 million as at 31 January 2020. This was sufficient to create a cash runway through Q2 calendar year 2021, subject to the potential need for a major restructuring of the Group's operations if no new commercial business or other sources of funding were forthcoming in the near term.

The Board took prompt action to reduce costs with a number of measures including salary reductions for all Directors, making use of the UK Government's Coronavirus Job Retention Scheme, a temporary company-wide pay cut and close monitoring and control of all other categories of costs. These actions, accompanied by material new revenues in the Sensing sector, have helped to maintain the cash runway for an operational business through Q2 calendar year 2021.

The Company also announced on 13 July 2020 that third-party funding had been secured for the lawsuit against Samsung for willful infringement of the Group's IP. This third-party funding prevents a drain on the Group's cash position for a number of years. The Funder will only receive a return of their capital in the event of a successful outcome to the lawsuit. The Board considers that a successful outcome to the lawsuit will have a potentially transformational impact on shareholder value.

The Fundraising, combined with recent commercial wins, will ensure that the Group has adequate funding to retain operational capabilities of R&D, scale-up and production in its Sensing and Display product lines at least until the end of calendar year 2021, in parallel with the third party funding of the Samsung lawsuit.

Use of proceeds of the Fundraising

The Company is proposing to raise minimum gross proceeds of £2.2 million (net £2.0 million) from the PrimaryBid Offer. The net proceeds (after deducting the costs and expenses of the Fundraising), along with the Company's existing cash resources, will be used to:

(i) extend the Company's cash runway;

(ii) protect its IP and company operations during the previously announced litigation against Samsung, which is being funded by a third-party, and which could last two years or more;

(iii) support the Group's R&D, scale-up and production capabilities of novel nanomaterials for use in infra-red sensing and CFQD® display applications with short to medium term prospects for commercial production revenues; and

(iv) retain key skilled personnel.

The Company intends to use any net proceeds in excess of £2.0 million to further extend the Company's cash runway, maintain a reasonable balance sheet and to support business development activity with a number of new potential customers and opportunities in a range of applications.

Details of the Fundraising and Lombard Odier participation

Under the PrimaryBid Offer, 12,571,428 new Ordinary Shares (the "PrimaryBid shares") will be offered for subscription by existing and new investors at a price of 17.5 pence per share (the "Issue Price") to raise a minimum of £2.2 million (before expenses). The Group greatly values its retail investors who make up a very significant proportion of the share register today. By using the PrimaryBid platform, the Group is able to offer the same terms and parallel opportunity to its retail investors and its institutional investors.

A further announcement launching the PrimaryBid Offer will be made shortly. The PrimaryBid Offer, via the PrimaryBid.com platform, will be open to individual and institutional investors until 9:00 p.m. on 15 July 2020. Further details of the terms and conditions of the subscription will be set out in that announcement.

The Issue Price represents a discount of 2.8 per cent. to the Closing Price of 18.00 pence on 15 July 2020, being the last practicable trading day prior to release of this announcement.

Lombard Odier has undertaken to subscribe for £2.14 million of the PrimaryBid shares at the Issue Price, which subscription shall be subject to claw back depending on the amount of the other aggregate applications received from other investors under the PrimaryBid Offer. Lombard Odier will receive, conditional upon Admission (as defined below), a subscription commission equivalent to approximately 3.0 per cent of its subscription. In the event that Admission does not occur, Lombard Odier will not receive any commission payment.

Lombard Odier is a substantial shareholder in the Company for the purposes of chapter 11 of the FCA's Listing Rules. Lombard Odier is therefore, considered to be a related party for the purposes of chapter 11 of the FCA's Listing Rules. Under Listing Rule 11.1.10R, the participation in the the PrimaryBid Offer by Lombard Odier constitutes a "smaller" related party transaction and as such does not require the approval of independent ordinary shareholders of the Company. The transaction falls within Listing Rule 11.1.10R (smaller related party transactions) and this announcement is made in accordance with Listing Rule 11.1.10R(2)(c).

Details of the Directors participation

The Directors have given written undertakings to purchase PrimaryBid Shares as shown in the table below:

*Director subscriptions shall not be subject to scaling back in the event that the issue is oversubscribed; calculated based on the minimum subcription amount so will change based on actual subscriptions.

Application for admission to trading

Application will be made to the FCA for admission of the PrimaryBid Shares to listing on the Official List and to the London Stock Exchange for admission of the PrimaryBid Shares to trading on its main market for listed securities.

The PrimaryBid Offer is conditional on the new Ordinary Shares to be issued pursuant to the PrimaryBid Offer being admitted to trading on the main market of the London Stock Exchange ("Admission").

It is expected that Admission will take place no later than 8:00a.m. on 20 July 2020 and that dealings in the PrimaryBid Shares will commence at the same time.

Expected Timetable of Principal Events

All references to time in this document are to London time, unless otherwise stated.

For further information, please contact:

Nanoco Group PLC:

Michael Edelman, CEO +44 (0) 161 603 7900

Brian Tenner, COO & CFO +44 (0) 161 603 7900

Caroline Watson, Investor Relations Manager

cwatson@nanocotechnologies.com

Peel Hunt (Sponsor and Corporate Broker):

Edward Knight +44 (0) 20 7418 8900

Nick Prowting

PrimaryBid Limited:

Kieran D'Silva +44 (0) 20 3026 4750

James Deal

MHP Communications: +44 (0) 203 128 8570

Reg Hoare

Giles Robinson

Pete Lambie

nanoco@mhpc.com

The person responsible for arranging for the release of this announcement on behalf of Nanoco is Brian Tenner, Chief Financial Officer.

Important Notice

Peel Hunt is acting as sponsor and broker for and on behalf of the Company. Peel Hunt is authorised and regulated by the FCA in the United Kingdom. Peel Hunt is not acting for the Company in relation to the PrimaryBid Offer. In acting as sponsor and broker for and on behalf of the Company, Peel Hunt is acting exclusively for the Company and no one else and Peel Hunt will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to any of the matters referred to in this announcement.

No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by Peel Hunt or by any of its affiliates or agents as to, or in relation to, the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefor is expressly disclaimed.

No statement in this announcement is intended to be a profit forecast or estimate.

The price of shares may go down as well as up and investors may not get back the full amount invested upon disposal of the shares. Past performance is no guide to future performance, and persons needing advice should consult an independent financial adviser.

The PrimaryBid Shares will not be admitted to trading on any stock exchange other than the main market for listed securities of the London Stock Exchange.

Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this announcement. 

This announcement may contain and the Company may make verbal statements containing "forward-looking statements" with respect to certain of the Company's plans and its current goals and expectations relating to its future financial condition, performance, strategic initiatives, objectives and results. Forward-looking statements sometimes use words such as "aim", "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "seek", "may", "could", "outlook" or other words of similar meaning. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond the control of the Company, including amongst other things, United Kingdom domestic and global economic business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of governmental and regulatory authorities, the effect of competition, inflation, deflation, the timing effect and other uncertainties of future acquisitions or combinations within relevant industries, the effect of tax and other legislation and other regulations in the jurisdictions in which the Company and its respective affiliates operate, the effect of volatility in the equity, capital and credit markets on the Company's profitability and ability to access capital and credit, a decline in the Company's credit ratings; the effect of operational risks; and the loss of key personnel. As a result, the actual future financial condition, performance and results of the Company may differ materially from the plans, goals and expectations set forth in any forward-looking statements. Any forward-looking statements made in this announcement by or on behalf of the Company speak only as of the date they are made. Except as required by applicable law or regulation, the Company expressly disclaims any obligation or undertaking to publish any updates or revisions to any forward-looking statements contained in this announcement to reflect any changes in the Company's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

DEFINITIONS USED IN THIS ANNOUNCEMENT