PATH.L Regulatory News (PATH)

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This announcement is an advertisement for the purposes of the Prospectus Regulation Rules of the UK Financial Conduct Authority ("FCA") and is not a prospectus. This announcement does not constitute or form part of, and should not be construed as, an offer for sale or subscription of, or solicitation of any offer to subscribe for or to acquire, any ordinary shares in Path Investments plc in any jurisdiction, including in or into the United States, Canada, Australia, the Republic of South Africa or Japan. Investors should not subscribe for or purchase any ordinary shares referred to in this announcement except on the basis of information in the prospectus (the "Prospectus") in its final form, published by Path Investments plc in connection with the proposed acquisition of DG Innovate Ltd and the admission of its enlarged ordinary share capital to the Standard Listing segment of London Stock Exchange plc's Main Market for listed securities.

14 March 2022

Path Investments plc

("Path" or the "Company")

Further re the Acquisition of DG Innovate

Publication of Prospectus

£4.6 million Fundraise

Proposed Waiver of Rule 9 of the Takeover Code

Proposed Change of Name to DG Innovate plc

Proposed Issue of Warrantsand

Notice of General Meeting

Path Investments plc (TIDM: PATH), is pleased to announce the publication of a prospectus (the "Prospectus") in relation to the Company's proposed acquisition of DG Innovate Ltd ("DG Innovate") which contains a notice of General Meeting. This follows the Company's announcements on 13 August 2021, 31 December 2021 and 1 February 2022 that it had entered into a conditional sale and purchase agreement ("SPA") to acquire the entire issued share capital of DG Innovate (the "Acquisition").

Highlights

· As previously announced the Company has conditionally agreed to acquire DG Innovate. The initial consideration of £32.4 million is to be satisfied by the issue to the DG Innovate Shareholders of 5,397,451,305 Path Ordinary Shares ("Initial Consideration Shares") at a deemed issue price of 0.6 pence per Ordinary Share. Further conditional deferred consideration of up to £5.4 million, to be satisfied by the issue of up to 895,610,844 Path Shares ("Deferred Consideration Shares") on the first anniversary of completion, will become payable should DG Innovate sign one or more supply agreements for the provision of their motor technology with certain defined customers prior to this date with a combined potential value of £5 million or more.

· The Acquisition is conditional, inter alia, on shareholder approval of the proposals and upon the Company's Ordinary Shares being re-admitted to the Standard Listing segment of the Official List and trading on the Main Market of the London Stock Exchange ("Admission"). A general meeting to obtain Path shareholder approval is to be held at 2:00 p.m. on 1 April 2022 (the "General Meeting").

· DG Innovate is an advanced research and development company pioneering sustainable and environmentally considerate improvements to electric mobility and storage, using abundant materials and the best engineering and scientific practices. DG Innovate is currently developing its products alongside a number of major manufacturers across the transportation and energy sectors, research institutions and the UK Government, and has filed 18 patents worldwide. DG Innovate's current research and development activities are broadly split into two areas, focusing on novel electric motor technologies and energy storage solutions. Its two main products are:

o Enhanced Drive Technology (EDT) - High efficiency, lightweight, cost-effective electric motors and electronics; and

o Enhanced Battery Technology (EBT) - Sodium-ion batteries offering a sustainable energy storage solution at similar/greater energy density to incumbent technologies at a lower cost, increased safety with lower environmental footprint.

· The Company has conditionally raised £2,550,000 through the issue of 510,000,000 Subscription Shares at 0.5p per Ordinary Share. Further, the Company has received irrevocable exercise notices, conditional on Admission, in respect of 830,800,000 Warrants (0.25p) raising an additional £2,077,000.

· It is proposed that the Company's name be changed to DG Innovate plc.

· The proposed appointment of Martin Boughtwood as CTO and Patrick Symonds, Sir Stephen Dalton, Andrew Boughtwood and Trevor Gabriel as non-executive directors of the Company and the proposed retirement of Brent Fitzpatrick.

· If the proposals are approved at the General Meeting, it is expected that Admission and dealings in the Company's Ordinary Shares will commence on the London Stock Exchange on or around 8.00 a.m. on 8 April 2022.

Commenting, Christopher Theis, CEO of Path, said:

"We are delighted to have completed the required prospectus in relation to our proposed acquisition of DG Innovate and to now be seeking formal shareholder approval for the Acquisition. We believe that the acquisition of DG Innovate presents a compelling value opportunity for the Company with DG Innovate having a strong technology and IP portfolio, targeted at current market technology's shortcomings, coupled with significant commercial relationships, high calibre technical staff and near-term commercialisation opportunities.

"We have assembled a strong board to guide the new DG Innovate plc and we look forward to shareholders having the opportunity to formally approve the proposals at the General Meeting later this month. I would also like to take this opportunity to thank Brent Fitzpatrick, who is proposing to step down as Chairman at Admission, for his wise counsel, support and dedication over a long period as we sought to conclude an appropriate transaction that we believe can deliver significant value for shareholders."

Capitalised terms in this announcement shall have the same meaning as in the Prospectus.

For further information please contact:

Background

The Company announced on 12 August 2021 that it had conditionally agreed to acquire the entire issued share capital of DG Innovate. The initial consideration, is £32,384,707, to be satisfied by the issue to the DG Innovate Shareholders of the Initial Consideration Shares at a deemed issue price of 0.6 pence per Ordinary Share.

The terms of the SPA were varied on 1 February 2022 and it was agreed that further consideration of £5,373,665 would be payable to the Sellers, to be satisfied by the issue of the Deferred Consideration Shares, subject to the achievement by DG Innovate of the Deferred Consideration Targets during the first year following Completion. The Deferred Consideration Targets require the obtention within 12 months following completion by the DG Innovate Group of one or more profit generating supply contract(s) with a combined value of £5,000,000 or more, or (as may be agreed in writing between the Company and the Sellers' Representative) with a combined potential value of £5,000,000 or more.

The Acquisition constitutes a Reverse Takeover under the Listing Rules as it will result in a fundamental change in the business and management of the Company. Trading in the Existing Ordinary Shares was suspended with effect from 12 August 2021 on announcement of the potential reverse takeover and pending the publication of a prospectus and completion of the Acquisition. The Acquisition is conditional, inter alia, upon Admission and the approval by Existing Shareholders of certain Resolutions at the Company's General Meeting to be held on 1 April 2022.

The Prospectus explains the background to and reasons for the Acquisition, how it aligns with the Company's strategy and why the Existing Directors believe that the Acquisition and the Subscription are in the best interests of the Company and its Existing Shareholders.

The proposals are conditional, inter alia, on the passing of the Resolutions by Shareholders at the General Meeting and Admission. If the proposals are approved, it is expected that Admission will become effective and dealings in the Path Ordinary Shares will commence on the London Stock Exchange on or around 8.00 a.m. on 8 April 2022.

Background on DG Innovate

DG Innovate (formerly Deregallera Holdings Ltd) is an advanced research and development company pioneering sustainable and environmentally considerate improvements to electric mobility and storage, using abundant materials and the best engineering and scientific practices. DG Innovate is currently developing its products alongside a number of major manufacturers across the transportation and energy sectors, research institutions and the UK Government and has filed 18 patents worldwide.

DG Innovate's current research and development activities are broadly split into two areas, focusing on novel electric motor technologies and energy storage solutions. Its two main products are:

• Enhanced Drive Technology (EDT) - High efficiency, lightweight, cost-effective electric motors and electronics; and

• Enhanced Battery Technology (EBT) - Sodium-ion batteries offering a sustainable energy storage solution at similar/greater energy density to incumbent technologies at a lower cost, increased safety with lower environmental footprint

DG Innovate was founded in 2009 by Martin Boughtwood with a vision of delivering sustainable and environmentally considerate improvements to electric mobility and storage, using abundant materials and the best engineering and scientific practices. Specifically, DG Innovate has sought to address the major problems facing both electric mobility and energy storage. For the former, the key barrier to market penetration to date has been the effective real-world range of electric vehicles. DG Innovate has therefore focused on developing electric drive systems which aim to deliver improved range over existing technology, based on the same battery capacity, by reducing losses and improving efficiency. DG Innovate has a long-standing working relationship with the UK Government and is also collaborating with a global Tier 1 supplier to the commercial vehicle market.

In its energy storage development, which commenced in 2013, DG Innovate has focused on developing anode active materials as a key enabling technology for sodium-ion batteries. DG Innovate is in collaboration or commercial contact with several companies throughout the supply chain with the view towards volume commercialisation in the medium term.

DG Innovate has developed a significant intellectual property portfolio since its foundation, including a novel electric motor and corresponding architecture and a suite of energy storage materials (including sodium-ion cells and supercapacitors). It has been granted 11 patents during this time, with a further seven pending and a number of drafts under consideration.

To date DG Innovate has received approximately £18.6 million in funding through a mixture of equity from private funders, debt, grants and research funding from the UK Government, the Welsh Development Agency and through highly competitive grant awards under the Innovate UK Faraday Challenge. Additionally, Path has provided secured loan facilities to DG Innovate of which £900,000 has been drawn. As at the Last Practicable Date DG Innovate has £150,000 remaining available under the facilities.

Fundraising and use of proceeds

The Company is undertaking a Subscription to raise £2,550,000 by the issue of 510,000,000 Subscription Shares at 0.5p per Ordinary Share. The Company has entered into subscription agreements with the Subscribers which are conditional, inter alia, upon completion of the Acquisition and Admission. Further, the Company has received irrevocable exercise notices, conditional on Admission, in respect of 830,800,000 Warrants (0.25p) raising an additional £2,077,000.

The aggregate fundraise of approximately £4,627,000 will be used by the Enlarged Group to fund research and development costs, working capital for the Enlarged Group, transaction costs associated with the Acquisition and Admission, and to repay loans from certain DGI shareholders.

Proposed Board on Admission

The Company's Existing Board consists of four Directors, Brent Fitzpatrick, Christopher Theis, John Allardyce and Nicholas Tulloch. It is proposed that Mr Fitzpatrick will step down from the Board at Admission and it is proposed that Martin Boughtwood, Patrick Symonds, Sir Stephen Dalton, Andrew Boughtwood and Trevor Gabriel be appointed. The Board would like to thank Mr Fitzpatrick for his considerable efforts in his time with the Company.

Further details on the Directors are set out in the Appendix below.

The Takeover Code

The Acquisition gives rise to certain considerations under the Takeover Code. Under Rule 9 of the Takeover Code ("Rule 9"), any person who acquires an interest in shares (as defined in the Takeover Code), whether by a series of transactions over a period of time or not, which (taken together with any interest in shares held or acquired by persons acting in concert (as defined in the Takeover Code) with him) in aggregate, carry 30 per cent. or more of the voting rights of a company which is subject to the Takeover Code, that person is normally required by the Panel to make a general offer, in cash, to all of the remaining shareholders to acquire their shares.

The Company has agreed with the Takeover Panel that certain of the shareholders of DG Innovate should be considered to be "acting in concert" for the purposes of the Takeover Code (as such term is defined in the Takeover Code). At Admission, following completion of the Acquisition and Subscription and conditional on the Rule 9 Waiver, the Concert Party will be interested in an aggregate of 4,468,274,325 Ordinary Shares representing approximately 50.5 per cent. of the Enlarged Share Capital. The members of the Concert Party and the interest of each member of the Concert Party in the Enlarged Share Capital are set out below in the appendix.

The Company has applied to the Panel for, and the Panel has agreed to, a waiver of the obligations under Rule 9 of the Takeover Code, subject to the passing of the Rule 9 Waiver Resolution by the Independent Shareholders on a poll at the General Meeting, to waive the obligation of the Concert Party, collectively and/or individually, to make a mandatory general offer under Rule 9 for the Ordinary Shares not already owned by it as would otherwise arise following the issue of the Consideration Shares and Concert Party Options.

Given that, following the issue of the Initial Consideration Shares the Concert Party will hold more than 50 per cent. of the voting share capital of the Company, any further acquisitions of the Company's shares by any member of the Concert Party, whether individually or collectively, would normally not trigger any obligation under Rule 9 of the Takeover Code to make a general mandatory offer to Shareholders to acquire the entire issued share capital of the Company. However, notwithstanding the waiver and Rule 9 Waiver resolution, individual members of the Concert Party would not be able to increase their percentage interest in the Ordinary Shares of the Company through, or between, a Rule 9 threshold without the consent of the Panel.

Following Admission, should the Deferred Consideration Shares be issued in full and the Concert Party exercise the options held by them (assuming no new shares are issued in the meantime), the Concert Party will hold in aggregate a maximum of 5,414,930,957 Ordinary Shares representing approximately 54.5 per cent. of the Partially Diluted Enlarged Share Capital. Should the Concert Party holding fall below 50 per cent. prior to the issue of Deferred Consideration Shares and/or the Concert Party Options being exercised, subject to approval of the Rule 9 Waiver, the Concert Party will not be required to make a mandatory general offer as a result of the acquisition of Ordinary Shares pursuant to either the exercise of the Concert Party Options or the issue of the Deferred Consideration Shares.

Change of Name

To support the strategy going forwards, the Company is also proposing to change its name to DG Innovate plc, subject to the passing of the proposals and Admission. At that time, the Company's stock ticker symbol will be changed to "DGI". The Company's website address will be changed to www.dgiplc.com.

Issue of Warrants

The Company has agreed, subject to Shareholder approval at the General Meeting, to allot a total of 670,400,000 Warrants (1p) on the basis that: (i) one Warrant (1p) will be issued to each Subscriber for every two Subscription Shares issued to each Subscriber, which will result in the issue of 255,000,000 Warrants (1p); and (ii) one Warrant (1p) will be issued to each holder of Warrants (0.25p) for every two Warrants (0.25p) exercised pursuant to the Warrant Exercise Notices, which will result in the issue of 415,400,000 Warrants (1p).

Availability of the Prospectus 

The Prospectus will be made available on the Company's website at: www.pathinvestmentsplc.com. An electronic copy of the Prospectus will also be submitted to the National Storage Mechanism and should be available shortly for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

Notice of General Meeting

A General Meeting of the Company will be held at the offices of Womble Bond Dickinson (UK) LLP, 4 More London Riverside, SE1 2AU on 1 April 2022 at 2:00 p.m.

The Notice of General Meeting and details of the matters to be considered at the meeting, which includes inter alia shareholder approval for the issue of shares in connection with the proposed acquisition of DG Innovate and the Subscription, is contained within the Prospectus.

In accordance with the requirements of the Panel, the Rule 9 Waiver Resolution will be taken on a poll of Independent Shareholders. Certain shareholders are not considered to be independent for the purposes of the Rule 9 Waiver and have undertaken to the Company that they will not vote on the Rule 9 Waiver Resolution in respect of in aggregate 355,300,000 Ordinary Shares. Consequently, only Independent Shareholders holding 1,674,163,802 Ordinary Shares, representing 82.5% of the existing share capital of the Company as at the date of this Document, will be entitled to vote on Rule 9 Waiver Resolution.

Total Voting Rights

The total number of Ordinary Shares with voting rights in the Company with effect from Admission is 8,842,715,107. The Company does not hold any shares in treasury and all of the ordinary shares have equal voting rights. This figure may be used by shareholders as the denominator for the calculations by which they determine if they are required to notify their interest in, or a change of their interest in, the Company under the FCA's Disclosure Guidance and Transparency Rules.

Proposed Timetable of Key Events

The proposed timetable of key events is as follows:

Admission Statistics

Appendices

The Directors

Brief biographical details of the members of the proposed board on Admission are set out below:

Nicholas Tulloch, Proposed Non-Executive Chairman, aged 49

Mr Tulloch has advised companies on the UK capital markets for over 20 years, working for several well-known investment banks and stockbrokers, including Cazenove, Arbuthnot, Cenkos and Cantor Fitzgerald. With a particular focus on oil and gas, Mr Tulloch has worked on several cross-border transactions in many parts of the world. In 2019 he became finance director and then subsequently CEO of Zoetic International plc transforming the company from its oil and gas roots to become the first vertically integrated CBD company to be listed in London. Mr Tulloch began his career as a solicitor with Gouldens and he holds a master's degree in law from Oxford University. Mr Tulloch stood for parliament in 2017.

Mr Tulloch will be appointed Non-executive Chairman with effect from Admission.

Christopher Theis, CEO, aged 62

Mr Theis is an experienced investment banker and entrepreneur. He has led number one rated City teams, including Smith New Court and Hoare Govett in the origination, structuring, flotation and placement of secondary market transactions of numerous successful companies. Chris has also founded a number of successful quoted and private businesses. Mr Theis holds an MBA from City University Business School.

John (Jack) Allardyce, Finance Director, aged 39

Mr Allardyce has over 15 years' experience in the energy sector, including 10 years as a leading equity research analyst with a number of UK investment banks. He began his career as a process engineer working on North Sea projects, before joining the leading research and consultancy house Wood Mackenzie, specialising in European upstream and unconventionals. Mr Allardyce's skillset spans global asset evaluation, financial forecasting, corporate advisory, M&A and equity capital markets. Mr Allardyce graduated from Heriot-Watt University with a degree in Chemical Engineering.

Martin Boughtwood, Proposed Chief Technical Officer, aged 67

Martin Boughtwood is the Founder and Managing Director of DG Innovate, an advanced research and development company focussing on the material science of energy storage and development of novel electric drive technologies. Martin Boughtwood is an inventor, with over 20 patents filed in the last 5 years. With his background in electronics, mechanical engineering and power management systems, and company leadership roles over 40 years, Martin Boughtwood focuses on the innovation of, sustainable, non-toxic solutions that leverage material property enhancements: improving energy efficiency for a host of applications across a plethora of potential end markets.

Martin Boughtwood is currently a director of DG Innovate. Martin Boughtwood will be appointed to the board conditional on Admission.

Patrick (Pat) Symonds, Proposed Independent Non-Executive Director, aged 68

Dr Symonds has had a 40+ year career in motorsport. He started his career designing championship winning cars for the lower formulae and then joined the fledgling Toleman F1 team working with Ayrton Senna. His subsequent partnerships with Michael Schumacher and Fernando Alonso produced 32 race wins, four Drivers' World Championships and three Constructors' World Championships. During this time he became Technical Director of the Benetton Formula One Team and latterly the Renault Formula One Team. After some years running his engineering consultancy, Neutrino Dynamics, he accepted an offer to become CTO at the Williams F1 team, a position he held until the end of the 2016 season. Dr Symonds is now Chief Technical Officer at F1 (Formula One Management) tasked with setting up a small technical group to assist the FIA in the formulation of future F1 and is involved in the transition of F1 to a low carbon economy. Dr Symonds is also a visiting professor at Cranfield University, a chartered engineer and a Fellow of both the Institution of Mechanical Engineers and the Royal Aeronautical Society.

Dr Symonds will be appointed to the board conditional on Admission.

Sir Stephen Dalton, Proposed Independent Non-Executive Director, aged 67

Sir Stephen Dalton served for nearly 40 years having joined the Royal Air Force in 1976 after graduating with an honours degree in Aeronautical Engineering from Bath University. Sir Stephen was appointed Head of the Royal Air Force in 2009 and retired from the Royal Air Force in 2013. He has worked with a number of major international companies advising them on the development of strategy and international engagement. He has also worked with a number of Company Boards helping them to improve their collective performance at Board level.

Sir Stephen Dalton was sworn into office as Lieutenant Governor of Jersey, in March 2017 at the start of his 5-year term of office and was President of The Royal Aeronautical Society for a one year fixed term position. He was appointed a Knight Commander of the Most Honourable Order of the Bath (KCB) in 2009 and advanced to Knight Grand Cross of the Order of the Bath (GCB) in 2012. In 2019, Her Majesty The Queen appointed him as Bath, King of Arms.

Sir Stephen Dalton will be appointed to the board conditional on Admission.

Andrew Boughtwood, Proposed Non-Executive Director, aged 63

Andrew Boughtwood is an experienced company director. For the last 17 years, he has been Managing Director of Megger Limited and overseas operations in over 30 countries. His is experienced across the electronic/electrical instrumentation field serving customers in communications, power contracting and utilities, industrial automation, power generation/ renewable energy, automotive, military and aerospace. Andrew Boughtwood is a graduate of Swansea University with a bachelor degree in computer technology.

Andrew Boughtwood is the brother of Martin Boughtwood and a shareholder of DG Innovate. Andrew Boughtwood will be appointed to the board conditional on Admission.

Trevor Gabriel, Proposed Non-Executive Director, aged 74

Mr Gabriel is managing partner of a real estate brokerage in Monaco, having previously been finance director of Camper & Nicholson International, the yacht brokerage firm . He is a chartered accountant and fellow of the ICAEW and spent 12 years with Jardine Matheson in finance and general management roles. He is currently non-executive director of TSX-V listed GlobalBlock Digital Asset Trading Limited and previously was a non-executive director of Kirkland Lake Gold Ltd while it was TSX listed and AIM quoted.

Mr Gabriel is currently a shareholder and director of DG Innovate. Mr Gabriel will be appointed to the board conditional on Admission.

Major Shareholders

So far as the Company is aware, the following persons, directly or indirectly, had/will have an interest in the Company's capital or Voting Rights which is notifiable under the Disclosure Guidance and Transparency Rules:

The Concert Party

The Concert Party is made up of Martin Boughtwood, Trevor Gabriel and certain shareholders of DG Innovate. The members of Concert Party and their respective expected holdings following Admission are set out below.