PUR.L Regulatory News (PUR)

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PURE WAFER PLC

(AIM: PUR)

Placing of 114,285,715 Placing Shares and Open Offer of up to 14,111,410 Open Offer Shares

Pure Wafer plc ("Pure Wafer" or "the Company"), a provider of high quality silicon wafer reclaim services for many of the world's leading semiconductor manufacturers as an integral part of their cost control programmes, announces a share issue to raise a total of up to £4.49 million ($7.19 million)(approx.) (before expenses) by way of:

·; a Placing of 114,285,715 New Ordinary Shares at 3.5 pence per share to the Placees to raise £4.0 million ($6.4 million) (before expenses); and

·; a further issue of up to 14,111,410 New Ordinary Shares at 3.5 pence per share to Qualifying Shareholders pursuant to the Open Offer to raise up to £0.49 million ($0.79 million)(approx.) (before expenses).

The issue price of 3.5p per New Ordinary Share represents a discount of 30 per cent. against the mid-market price of 5.0p per share at which the Ordinary Shares were quoted on AIM as at close of trading on 19 October 2012, the last trading day prior to announcement of the Placing and the Open Offer.

A circular will be posted today to Shareholders (the "Circular"). The Circular sets out in more detail the background to and reasons for the Placing and the Open Offer and their respective terms. All capitalised terms in this announcement are as defined in the Circular which will be available on the Company's website www.purewafer.com.

Background to and reasons for the Fundraising

In September 2009, the Company completed a placing and an open offer to shareholders of a total of 99,711,511 new Ordinary Shares and a simultaneous restructuring of the Company's debt in order to ensure that its cash flow would be adequate to support the Company's recovery from the very difficult trading conditions which existed in 2007-2009 and to enable continued investment in the Company's core wafer reclaim technology and in developing its photovoltaic ("PV") solar panel business.

As seen from the trading update published in June this year and from the 2012 Accounts which accompany the Circular, the Company has made substantial progress since that time. As shown in the 2012 Accounts, revenues increased by approximately 21 per cent. from the previous year and by 44 per cent. when compared to the year ended 30 June 2010. Substantial unit cost and overhead reductions have resulted in a 9 per cent. reduction in costs compared to the prior year with a 27 per cent. reduction in total cost per unit manufactured compared to 2009 levels.

A number of major silicon chip manufacturers have committed and commenced significant investment to increase capacity over the coming years as industry analysts are predicting solid and sustainable growth for the next three to four years in the silicon chip market, driven principally by strong demand for hand-held devices in the heavily populated emerging economies of China, India, Russia and Brazil.

This stabilisation of the Company's position and more positive outlook has prompted certain Shareholders to indicate to the Board that they would be prepared to subscribe for further Ordinary Shares in order to enable the Company to significantly decrease its borrowings and improve its balance sheet and cash position. Such Shareholders, together with investors who are not currently Shareholders, have agreed to subscribe for New Ordinary Shares pursuant to the Placing and/or the Open Offer.

Use of Proceeds

Proposed repayment of borrowings

The Company currently has outstanding borrowings of $11,927,000 from five different Lenders. In summary, the amounts and terms of the Company's existing borrowings are as follows:

Note

1. Based on a pro forma Sterling-US dollar exchange of £1=$1.60.

Further details of the Standstill Agreement and the Amendment Agreement pursuant to which the above terms were agreed are set out in Part IV of the Circular.

The proceeds of the Placing and the Open Offer will be used to repay in full the sums owed to Lloyds, GE and CIT. In addition, $1,000,000 of the sum owed to Citizens will be repaid as will the sum of $972,000 owed to RBS comprising "RBS - Loan 3" in the above table.

In recognition of the repayment of these debts ahead of the scheduled repayment timetable, the following matters have been agreed with these lenders:

·; subject to repayment in full by no later than 15 December 2012, Lloyds, GE and CIT have agreed to waive their final redemption fees in their entirety, saving the Company $151,000;

·; subject to repayment of 95 per cent. of all outstanding capital and payment of all accrued interest by no later than 15 December 2012, Lloyds, GE and CIT have also agreed to accept such payment in full and final settlement of the sums due to them, providing a further saving of $202,000;

·; Citizens has agreed to reduce the outstanding balance due to them by $1,000,000 on payment of $950,000 by no later than 15 December 2012 (an effective 5 per cent. discount on this part of the sum due to them), providing a further saving to the Company of $50,000;

·; Citizens has also agreed to re-schedule the payments of the remaining balance over the existing term of the loan, providing a cash flow benefit to the Group of approximately $30,000 per month during this period;

·; RBS has agreed to amend the terms of the RBS Warrant (as described in paragraph 3(c) of Part IV of the Circular) such that, in respect of any further issues of shares which follow the Placing and Open Offer, the number of shares for which RBS is entitled to subscribe pursuant to the RBS Warrant will not (save to reflect any diminution in value resulting from allotments at less than market value) increase proportionate with any such issue; and

·; RBS have also agreed to maintain the Group's overdraft facility at £1,000,000 ($1,600,000) until 31 January 2013, reducing to £500,000 ($800,000) thereafter.

Further details of each of the above agreements with the Lenders are provided in Part IV of the Circular.

The total reduction in the capital to be repaid by the Group to these Lenders as a result of these agreements is $252,000. In addition, the Group will save a total of $505,000 in interest over the remainder of the existing terms of these loans, as well as the $151,000 from the waiving of the final redemption fees. A total of $908,000.

Immediately following the repayments of debt referred to above, the Group will have remaining borrowings of $6,484,000. The Board intends that, by no later than 31st January 2013, this remaining debt will be refinanced through replacement borrowings and discussions have commenced with potential alternative lenders.

Subject to completion of such refinancing by no later than 1st February 2013, in recognition of the early repayment of the remaining balances due to them, Citizens and RBS have agreed as follows:

·; RBS will waive 25 per cent. of the final redemption fee, saving the Group $100,000;

·; Citizens will waive their entire entitlement to a final redemption fee, saving the Group $170,000; and

·; Citizens has also agreed to accept 95 per cent. of the outstanding balance in full and final settlement of the sums due to them, providing a further saving of $172,000.

Based on the terms agreed with the Group's current Lenders, as noted above, the Board estimates that the aggregate cash flow benefit which will accrue to the Group from the Fundraising between Admission and 30 June 2015 (the maturity date for these loans), assuming full repayment of all sums to the Lenders as described above, will be approximately $6.67 million (an annualised cash flow benefit of $2.43 million during this period).

Details of the Placing and Open Offer

Pure Wafer is proposing to raise £4.0 million ($6.4 million) (before expenses) pursuant to the Placing and up to a further £0.49 million ($0.79 million)(approx.) (before expenses) pursuant to the Open Offer. The proposed Issue Price of 3.5 pence per New Ordinary Share represents a discount of 30 per cent. to the Closing Price of 5.0 pence quoted on AIM on 19 October 2012, the latest trading day prior to publication of this Document.

The Open Offer is being made on a pre-emptive basis, allowing all Qualifying Shareholders the opportunity to participate.

The Open Offer provides Qualifying Holders with the opportunity to apply to acquire Open Offer Shares at the Issue Price pro rata to their holdings of Existing Ordinary Shares as at the Record Date on the following basis:

1 New Ordinary Share for every 9 Existing Ordinary Shares

and so on in proportion for any other number of Existing Ordinary Shares then held.

Entitlements to apply to acquire New Ordinary Shares will be rounded down to the nearest whole number and any fractional entitlement to New Ordinary Shares will be disregarded in calculating the Basic Entitlement.

The Open Offer is subject to the satisfaction, amongst other matters, of the following conditions on or before 15 November 2012 (or such later date being not later than 8.00 a.m. on 30 November 2012, as the Company and WH Ireland may decide):

·; the Placing being unconditional in all respects; and

·; the Resolutions being duly passed at the General Meeting (or any adjournment thereof); and

·; Admission becoming effective by 8.00 a.m. on 15 November 2012 (or such later time or date not being later than 8.00 a.m. on 30 November 2012 as the Company and WH Ireland may decide).

The New Ordinary Shares will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of Admission.

Excess Applications

The Open Offer is structured to allow Qualifying Shareholders to subscribe for Open Offer Shares at the Issue Price pro rata to their holdings of Existing Ordinary Shares on the Record Date.

Qualifying Shareholders may also make applications in excess of their Basic Entitlements. To the extent that Basic Entitlements to Open Offer Shares are not subscribed by Qualifying Shareholders, such Open Offer Shares will be available to satisfy such excess applications, subject to a maximum of 14,111,410 Open Offer Shares in aggregate. To the extent that applications are received in respect of an aggregate of more than 14,111,410 Open Offer Shares, excess applications will be scaled back accordingly.

However, excess applications will be rejected if and to the extent that acceptance would result in the Qualifying Shareholder, together with those acting in concert with him/her/it for the purposes of the Takeover Code, holding 30 per cent. or more of the issued share capital immediately following Admission.

Those Placees who are Qualifying Shareholders will nevertheless be entitled to participate in the Open Offer.

Qualifying Shareholders should note that the Open Offer is not a rights issue. Qualifying non-CREST Holders should be aware that the Application Form is not a negotiable document and cannot be traded. Qualifying Shareholders should also be aware that, in the Open Offer, unlike in a rights issue, any Open Offer Shares not applied for will not be sold in the market or placed for the benefit of Qualifying Shareholders who do not apply under the Open Offer.

Settlement and dealings

Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM. It is expected that such Admission will become effective and that dealings will commence at 8.00 a.m. on 15 November 2012. Further information in respect of settlement and dealings in the New Ordinary Shares is set out in paragraph 7 of Part III of the Circular.

Overseas Shareholders

Certain Overseas Shareholders may not be permitted to subscribe for Open Offer Shares pursuant to the Open Offer and should refer to paragraph 6 of Part III of the Circular.

Current trading and prospects

Up to date information regarding the current trading position of the Group and the outlook for the current financial year of the Company are set out in the 2012 Accounts and the Board has no update to make in respect of trading at this stage. The 2012 Accounts are enclosed with the Circular.

As Stephen Boyd, Non-executive Chairman of Pure Wafer, said in his statement in the 2012 Accounts:

"The year to 30 June 2012 has seen the semiconductor industry maintaining its growth path with Pure Wafer continuing to enjoy increased demand for its wafer reclaim services from all geographical areas in which we trade and with all customers across the various sectors of the industry. These market conditions have enabled Pure Wafer to consolidate its standing in the semiconductor industry as one of the leading wafer reclaim companies in the world.

Pure Wafer and indeed the semiconductor industry as a whole is to a very large extent insulated from the much publicised economic problems of the Eurozone, with revenues denominated in USD and because the semiconductor industry is a global market which is currently being driven by the increasing demand for hand-held devices in the heavily populated economies of China, India, Russia and Brazil.

With industry analysts forecasting growth through to 2015 and beyond, our major customers have committed and commenced substantial new investment in 300mm silicon chip manufacturing facilities amounting to tens of billions of US Dollars, demonstrating their confidence in sustainable growth, which will give rise to further wafer reclaim opportunities in the near future. These announcements and actions also give exciting long term prospects for Pure Wafer.

During the financial year as volume demand strengthened, both manufacturing sites in Swansea and Prescott have continued to run at record levels of productivity, which together with the close management of the overall level of costs, Pure Wafer's cost per wafer has been running at an all time low giving further confidence in the strength of the business going forward.

During the financial year we saw the Pure Wafer solar business make a meaningful contribution to the Group's results despite the challenges set by the UK Government's indecision over levels of feed-in-tariffs. In its first full year of trading Pure Wafer Solar has successfully completed many domestic, commercial and public sector projects and has quickly gained a reputation for being one of the foremost solar companies in the South Wales region.

Financial results

·; Turnover $35.8 million (2011: $29.7 million)

·; EBITDA $6.0 million (2011: $3.2 million)

·; EBITDA pre stock option charge $6.1 million (2011: $3.3 million)

·; Operating profit $0.5 million (2011: $3.8 million loss)

·; Pre-tax loss $0.7 million (2011: $5.1 million)

·; Basic loss per share 0.2 cents (2011: loss per share 3.6 cents)

·; Net cash inflow from operating activities $5.7 million (2011: $1.4 million)

Once again we are pleased that the results show significant improvement on prior years, and the board is encouraged by the actions of the management team during the period to take advantage of the market conditions to maximise revenue and to continue reducing costs across all sectors of the business."

General Meeting

Set out at the end of the Circular is a notice convening the General Meeting to be held at the offices of Pure Wafer plc, Central Business Park, Swansea Vale, Swansea SA7 0AB at 11.00 a.m. on 14 November 2012.

Intentions of the Directors in relation to the Fundraising

Each of the Directors (other than Richard Howells) are Qualifying Shareholders and the below Directors have irrevocably committed themselves to subscribe for Ordinary Shares in the Placing in the amounts set out in column (3) below:

Each of the Directors apart from Stephen Boyd are participating in the Fundraising for a total of £59,902 worth of New Ordinary Shares. The independent director of Pure Wafer, Stephen Boyd, having consulted with the nominated adviser, WH Ireland Limited, considers that the terms of this transaction are fair and reasonable insofar as the Company's shareholders are concerned.

It is expected that subsequent to the announcement of the Fundraising, Stephen Boyd will exercise Placee Warrants and subscribe for new Ordinary Shares in the amount of £250,162 at an exercise price of 2 pence per new Ordinary Share.

Placing and Open Offer statistics

Notes:

1. The Closing Price on AIM on 19 October 2012, being the last practicable date prior to the publication of the Circular.

2. Before exercise of any of the warrants and options over Ordinary Shares details of which are described in Part IV of the Circular.

3. The exchange rate used for the purpose of the Circular and this announcement is £1.00:US$1.60.

Expected timetable of principal events

Notes:

1. References to times in the Circular and above are to London time (unless otherwise stated).

2. If any of the above times or dates should change, the revised times and/or dates will be notified by an announcement to an RIS.

3. The timing of the events in the above timetable and in the rest of the Circular is indicative only.

For further information: