Proton Mtr Pwr Regulatory News (PPS)

10 Apr 2008 14:15

Proton Power Systems PLC10 April 2008 Press Release 10 April 2008 Proton Power Systems plc ("Proton" or the "Company") Proposed partially underwritten Placing to raise up to £2.0 million The Company today announces that it intends to raise up to £2.0 million (beforeexpenses) by way of a proposed partially underwritten placing of new ordinaryshares in the Company (the 'Placing') to subscribe for up to 20,000,000 newordinary shares in the Company at 10 pence per share (the "New Ordinary Shares"). In order to provide certainty as to the amount of capital to be raised, theCompany is currently in the process of finalising arrangements for the proposedPlacing to be partially underwritten by existing and new shareholders up to atotal of £0.96 million. An underwriting agreement (the "Underwriting Agreement")is expected to be entered into shortly between the Company and the proposedunderwriters. At this time no placees for the Placing have been procured by theCompany. The proposed Placing will be conditional, inter alia, upon the signing of theUnderwriting Agreement and the passing of certain resolutions to be consideredat a general meeting of the Company (the "Resolutions") to be held in duecourse. A circular containing full details on the terms of the proposed Placingand the underwriting arrangements (the "Circular") will be sent to the Company'sshareholders shortly. It is intended that as part of the underwriting arrangements, the Company willissue warrants to the underwriters on the basis of three warrants for every 10New Ordinary Shares underwritten pursuant to the Underwriting Agreement. Eachwarrant will entitle the holder to subscribe for one new ordinary shares in theCompany of 5 pence each and will be exercisable at a price of 10 pence pershare. Full details on the terms of the Placing, the warrants and the underwriting willbe outlined in the Circular which will be sent to shareholders of Proton oncethe Underwriting Agreement has been signed (expected to be shortly). On 17 October 2006, the Company entered into a loan and asset finance facilityagreement (the "Loan Agreement") with General Capital Group plc ("GeneralCapital") whereby General Capital agreed to lend the Company up to £2.0 millionfor working capital and asset finance facilities (the "Loan Facility"). Asoutlined in the Company's admission document dated 23 October 2006, the LoanFacility was available for draw down for a period of 36 months from the date ofthe Loan Agreement. Currently, the Company has drawn down £1 million of the Loan Facility and hasnot yet sought to draw down the second £1 million tranche of the Loan Facility.Following technical breaches by the Company of the Loan Agreement, which theBoard believe have subsequently been remedied by the Company, the Company doesnot however believe that General Capital will permit further draw down of theLoan Facility under the Loan Agreement. The Board of Proton has discussed thesebreaches with General Capital, who have provided assurances to the Company that,whilst reserving their remaining rights under the Loan Agreement, they will notseek repayment of the first £1 million tranche of the Loan Facility. If the Underwriting Agreement is not signed or the Placing is not implementedand the second £1.0 million tranche of the Loan Facility is not forthcoming tothe Company, the Directors believe that the Company will not have sufficientfunds to meet its liabilities as they fall due and, without obtainingalternative sources of debt or equity funding, the Company will only havesufficient working capital until the end of April 2008. The Board expects that the proceeds of the proposed Placing, assuming £2.0million (net of expenses) is raised, will give the Company sufficient workingcapital for the next 12 months. Should the Company only raise the minimum amountproposed to be underwritten by the underwriters (being £0.96 million) and thesecond £1 million tranche of the Loan Facility is not forthcoming to the Companythen the Company will only have sufficient working capital until September 2008. Notwithstanding the Placing being successful, the Company will not havesufficient funds to execute the Company's manufacturing strategy and the Boardwill have to pursue further sources of funding. Alternative sources of funding,if they are available at all, are likely to be expensive and on onerous termsfor the Company. The Directors believe that it is essential that further permanent capital beraised by the Company to enable it to continue to trade. If the proposed Placingis not successful, the Directors may have no alternative but to seek theprotection of a formal insolvency procedure (such as administration orliquidation) under the Insolvency Act 1986. The Company will update shareholders further as appropriate. For further information:Proton Power Systems plcFelix Heidelberg, CEO Tel: +49 (0) 89 12762650f.heidelberg@proton-motor.de www.protonpowersystems.com Noble & Company LimitedAndy Yeo/Nick Athanas Tel: +44 (0) 20 7763 2200 www.noblegp.com Media enquiries:Abchurch Communications LimitedJustin Heath / Monique Tsang Tel: +44 (0) 20 7398 7712monique.tsang@abchurch-group.com www.abchurch-group.com Notes to Editors Proton Power Systems plc is a developer of fuel cells and fuel cell hybridsystems for motive and back-up power supply. Proton Power has more than 13 yearsof experience in the fuel cell market. Through its wholly owned subsidiary,Proton Motor Fuel Cell GmbH, the Company has developed and produced a fuel cellmodule running on hydrogen and integrated this with an energy storage system tocreate a hybrid electric fuel cell system. The system harnesses the excess powergenerated by the fuel cell during partial load (such as stop-start operations)and uses the stored energy in peak demand times. The system thus boasts lowerfuel consumption and more consistent levels of power delivery than conventionalcombustion engine or fuel cell-only systems, in addition to producing zeroharmful emissions. Proton Power's market focus lies in industrial applications where 'back-to-base'refuelling occurs at the end of each shift or work period, such as in thematerials handling and mass transportation sectors. In these markets, thecommercialisation of applications is possible at a very early stage, as they donot depend on the existence of a ubiquitous hydrogen infrastructure. Throughpartnerships with leading OEMs such as Skoda Electric and Linde, Proton Power'stechnology is already deployed in city buses and forklift trucks. Proton Power also targets the upcoming market for marine transportationapplications and provides the hybrid fuel cell propulsion system for Europe'sfirst fuel-cell powered passenger / river boat ferry, which will be operating inHamburg from 2008. Proton Power Systems plc was admitted to trading on AIM on 31 October 2006 andis incorporated in the UK. Its operating subsidiary, Proton Motor Fuel CellGmbH, is located in Puchheim, near Munich, Germany. This information is provided by RNS The company news service from the London Stock Exchange