RED.L Regulatory News (RED)

THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT IS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF REGULATION 596/2014

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25 July 2019

redT energy plc ("redT")

Proposed Merger with Avalon Battery Corporation

Suspension of trading of Ordinary Shares on AIM

redT energy plc (AIM:RED), the energy storage company, is pleased to announce that it has agreed to outline terms for a proposed merger with Avalon Battery Corporation ("Avalon") (the "Merger"). The parties have signed a non-binding Memorandum of Understanding ("MOU") and have plans for the injection of significant new funding as outlined further below.

The Merger, if approved by shareholders and completed, will constitute a reverse takeover ("RTO") under the AIM Rules for Companies (the "AIM Rules"). In accordance with Rule 14 of the AIM Rules, trading in redT's ordinary shares ("Ordinary Shares") on AIM will be suspended from 7.30 a.m. today, 25 July 2019 until either the publication of an admission document in relation to the Merger or confirmation is given that the Merger is no longer proceeding. Although the parties will seek to publish the admission document as soon as possible, the timing remains uncertain.

Both redT and Avalon are well-established technology-led companies in the Vanadium Redox Flow Battery sector. The combination of the businesses will create a leading player in the growing energy storage market with operations in North America, Europe and Asia, and a global sales footprint able to capitalise on the significant opportunities for energy storage presented by the worldwide shift to renewable energy.

In October last year, redT announced that it would seek strategic partners to support and finance the continued growth of the business. redT further announced on 14 March 2019 that it was in active discussions with a number of interested parties.

The agreement with Avalon is a significant step forward. The MOU sets out the basis upon which the two businesses, subject to a number of conditions, intend to form the leading global company in vanadium redox flow batteries. The Merger will take the form of a share-for-share acquisition of Avalon with redT shares valued at 1.65p per share, which values Avalon at $37.5m. The Company will seek re-admission to trading on the AIM market of the London Stock Exchange for its Ordinary Shares including those to be issued to Avalon shareholders.

To drive the growth and development of the Enlarged Group, provide working capital, and take advantage of the substantial opportunity presented by the Merger, the merged business intends to raise at least £24m ($30m) of new funds (the "Fundraising") as part of the Merger. VSA Capital, redT's financial adviser and broker, redT and Avalon have received substantial preliminary support for the Fundraising from a strong new strategic investor that intends to make a cornerstone investment in the merged business, as well as from existing institutional investors in redT and both existing and certain proposed new investors in Avalon. The Fundraising is expected to be at a price not exceeding 1.65p per share subject to finalising terms and may include some interim financing while the RTO process is underway. It is expected that the Merger and the Fundraising will be inter-conditional and complete at the same time.

redT's Board is therefore able to express confidence that, subject to definitive agreements being reached with Avalon and a successful Fundraising, the merged business will be in a robust financial position and therefore able to implement an exciting development and growth strategy.

The Merger remains subject to inter alia further due diligence by each party, definitive legal agreements being reached, and a total of at least £24m ($30m) of new funds being raised to fund the enlarged business. The Fundraising and the Merger will be subject to the approval of redT's shareholders and the Merger itself is also subject to the approval of the shareholders of Avalon.

In accordance with Rule 14 of the AIM Rules, trading in Ordinary Shares on AIM will be suspended from 7.30 a.m. today, 25 July 2019. The Merger, if approved by shareholders and completed, will constitute a RTO under the AIM Rules and in accordance with Rule 14 of the AIM Rules, will require the publication of an AIM admission document setting out, inter alia, the details of the Merger and the approval of shareholders of redT in a general meeting to be convened by redT.

Further announcements will be made in due course.

Information on Avalon and the combined business

Avalon Battery Corporation is a Delaware Corporation with offices in the San Francisco area, operations in Vancouver and low-cost manufacturing in China. Avalon's technology is very similar to that of redT and the combination of the two businesses will enable the merged business to reduce costs and accelerate product development, combining the best features of each company's products and reducing the costs of manufacture. Both companies already have a substantial sales opportunity pipeline, which the combined business will be well placed to supply with its world-leading products.

Neil O'Brien, Executive Chairman of redT commented:

"I am delighted by the agreement we have reached with Avalon. After an extensive search for strategic partners, getting to this stage is a major step forward. The combination of our two companies will create a major force in the rapidly growing energy storage sector. We will have global reach, world-leading technology and an enhanced ability to drive down production costs and attract new capital. It is great news for our customers, our investors and our employees."

Larry Zulch, Chief Executive of Avalon commented:

"The combination of redT and Avalon puts together two of the most experienced teams in flow batteries, creating a company with scale, resources, and products unprecedented in our segment. Vanadium redox flow batteries have long been the safe, dependable, and economical choice in energy storage. We can't imagine a better opportunity than this Merger to translate those qualities into business results."

For further information, please contact:

Notes to Editors

About redT energy

redT energy plc are experts in energy storage, specialising in the design, manufacture, installation and operation of energy storage infrastructure which creates revenue alongside reliable, low-cost renewable generation for businesses, industry and electricity distribution networks. Using patented vanadium redox flow technology to store energy in liquid, redT's own energy storage machines can be run continually with no degradation: charging and discharging for over 25 years, matching the lifespan of renewable assets in on-grid, off-grid and weak-grid settings.

redT's energy storage solutions, developed over the past 15 years, address today's changing energy market by providing a flexible platform for time shifting surplus renewable power, securing electricity supplies and earning revenue through grid services. The company has customers in the UK, Europe, sub-Saharan Africa, Australia and Asia Pacific. redT energy plc is listed on the London Stock Exchange (AIM:RED) and has experts located in the UK, Europe, Australia, Africa, Asia and the USA. For more information, visit www.redTenergy.com

For sales, press or investor enquiries, please contact the redT team on +44 (0)207 061 6233.

About Avalon

Founded in 2013, Avalon's mission is to make renewable energy reliable by delivering the world's most flexible and durable energy storage systems. Avalon's team, one of the most experienced in the industry, has transformed flow batteries from projects to products, with all the benefits in reliability, consistency, and economics that come from building products in a factory setting. Supported by a global network of supply chain and sales partners, Avalon's fleet of proven, safe, and dependable vanadium redox flow batteries, the largest number ever deployed, are operating on four continents in commercial, industrial, and front-of-meter applications. Visit www.avalonbattery.com for more information or call +1 604 563 2144.

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this announcement or otherwise.

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.

MAR

The information contained within this announcement is considered by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No.596/2014. Upon the publication of this announcement via a Regulatory Information Service, this inside information will be considered to be in the public domain.