Versarien Regulatory News (VRS)

Versarien plc

("Versarien" or the "Company")

Acquisition of 2-DTech Limited

Placing of new Ordinary Shares to raise £5.5 million

Versarien plc (AIM: VRS), the advanced engineering materials group, is pleased to announce that it has entered into an agreement to acquire 85 per cent. of the issued share capital of 2-DTech from The University of Manchester. 2-DTech specialises in the supply, characterisation and early stage development of graphene products. The total consideration for the Acquisition is £440,000 to be settled by a mix of cash and new ordinary shares.

The Company also announces that it has raised £5,500,000 (before expenses) through the placing of 21,153,847 new Ordinary Shares at 26 pence per share. The Placing, which was oversubscribed, is conditional, inter alia, on the passing of the Resolutions to be proposed at a General Meeting to be held on 30 April 2014.

Information on 2-DTech Limited

2-DTech is a graphene company wholly owned by The University of Manchester, where graphene was first isolated by Nobel Prize winners Professor Sir Andre Geim and Professor Sir Kostya Novoselov, who head the University's world-leading Condensed Matter Research Group (CMRG). 2-DTech has the ability to produce graphene by using either a chemical vapour deposition process; in suspension or dispersions; or a 'milling' process, which is in development.

Strategic rationale for the Acquisition

The Directors believe the Acquisition represents an excellent opportunity for Versarien. The 2-DTech technology will enable a significant enhancement of the Versarien product range, building upon the Company's experience in manufacturing for the technology sector and enabling the Company to apply its experience and expertise to commercialising the considerable market opportunities for graphene in the UK.

A Circular has today been sent to Shareholders to explain the background to and reasons for the Acquisition and the Placing and providing a Notice of the General Meeting. Copies of the circular will be available on the Company's website (www.versarien.com).

Neill Ricketts, CEO of Versarien plc, said: "The acquisition of 2-DTech coupled with the planned collaboration agreements with The University of Manchester, the established home of graphene, marks a significant opportunity for Versarien to progress its product range with highly complementary technologies. 

"Versarien is already manufacturing over 37 tonnes per year of complex powder at its Total Carbide plant and combining this know-how with 2-DTech's expertise, research facilities, and rights to intellectual property makes the early commercialisation of graphene related products far more likely in the near term on an industrial scale."

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Placing of 21,153,847 new Ordinary Shares at 26 pence per share Notice of General Meeting

Background to and reasons for the Acquisition

History and business of 2-DTech

2-DTech is a start-up from The University of Manchester, the birthplace of graphene and home to the Nobel Prize winning academics, Geim and Novoselov. 2-DTech has the ability to produce graphene by using either a chemical vapour deposition process; in suspension or dispersions; or a 'milling' process, which is in development.

Following completion of the Acquisition, the Enlarged Group intends to establish the largest production facility in the UK for the manufacture of graphene. The Enlarged Group will seek to harness the existing Versarien team's skill set to commercialise and scale up graphene technology in collaboration with The University of Manchester. Versarien initially intends to select two 12 month rapid commercialisation projects to advance with The University of Manchester and discuss further collaborative projects.

Terms of the Acquisition

Under the terms of the Acquisition Agreement, Versarien has conditionally agreed to acquire 561,000 of the 660,000 ordinary shares of 2-DTech currently in issue, equal to 85 per cent of the entire issued share capital of 2-DTech.

The University of Manchester will retain a holding of 99,000 ordinary shares for a minimum of three years, equivalent to 15 per cent of 2-DTech signifying their commitment to the collaboration.

The consideration for the Acquisition is £440,000 to be settled as to £220,000 in cash and as to £220,000 by the issue of the Consideration Shares. The consideration may be varied to the extent that 2-DTech's net assets are less than or exceed £150,000, subject to a maximum variance of £40,000 which will either increase or decrease the royalty cap referred to below.

Pursuant to the Acquisition Agreement, The University of Manchester has agreed not to dispose of any of the Consideration Shares for a period of 12 months from Admission.

Other material contracts

Following completion of the Acquisition, Versarien and The University of Manchester also intend to enter into a further agreement whereby Versarien will agree to fund at least two further graphene-related research projects to be undertaken by The University of Manchester commencing no later than 1 December 2014. The projects will be fully costed and will require Versarien to provide funding of up to £150,000 per project. Versarien will share in the rights to the Intellectual Property developed through these projects with The University of Manchester. Both projects must be completed by 31 December 2015 unless otherwise mutually agreed by the parties.

Following completion of the Acquisition, Versarien, The University of Manchester and Dr Branson Belle (Chief Technology Officer and current director of 2-DTech) will also enter into a royalty agreement whereby Versarien will pay The University of Manchester and Dr Branson Belle total royalty payments of up to £300,000 (as adjusted pursuant to the terms of the Acquisition) based upon a payment of 5% of the gross annual revenues of 2-DTech. This royalty agreement will in any event expire after 20 years. The royalty payments are to be shared between The University of Manchester and Dr Belle with the University receiving 94.8 % of the royalty payments and Dr Belle receiving 5.2%.

Details of the Placing

In connection with the Acquisition, the Company has today announced that it intends to raise approximately £5.5 million, before expenses, through a conditional Placing of 21,153,847 new Ordinary Shares at a price of 26 pence per share. The Placing Shares have been placed by Charles Stanley Securities with institutional and other investors. The Placing Shares will rank pari passu with the Existing Shares.

The Placing is conditional, inter alia, on the passing of the Resolutions which are to be proposed at the General Meeting and Admission becoming effective on or before 8.00 a.m. on 1 May 2014 (or such later date as Charles Stanley and the Company may agree, being not later than 15 May 2014).

The Placing Price of 26 pence per share represents a discount of 7.14% per cent to the closing mid-market price of Versarien ordinary shares on 11 April 2014, being the latest practicable date prior to this announcement, as derived from the London Stock Exchange Daily Official List. The Directors believe that the Placing is fair and reasonable in so far as Shareholders are concerned and is in the best interest of the Company.

Application will be made to London Stock Exchange for the Placing Shares to be admitted to trading on AIM and it is expected that, subject to the passing of the Resolutions at the General Meeting, Admission will become effective and that dealings will commence on 1 May 2014.

The net proceeds of the Placing are expected to be £5.2m. As set out above, £220,000 will be applied for satisfaction of the cash consideration for 2-DTech and a further £300,000 will be applied to further graphene projects to be developed by The University of Manchester. The remainder of the funds will be applied for capital investment and working capital.

Current Trading

Versarien Technologies

Versarien Technologies has signed its first commercial contract for the development and pre-production supply of VersarienCu™ in DNA heat spreading plates to Thermacore, Inc. for the thermal management of medical testing devices. Versarien Technologies continues to make progress with a number of large global organisations and now has customers actively developing VersarienCu™ in their own specific applications. Versarien Technologies is in negotiations for a licence to occupy 8,000 sq ft premises, with the opportunity to take further space in phased stages up to 80,000 sq ft. The premises are fully fitted out with class leading facilities and can be occupied immediately.

Total Carbide

Total Carbide has been successfully integrated into the Group and reported at the interim stage an approximate 10 per cent operating margin with orders remaining strong.

The Board believes that the prospects for the Group remain extremely positive. The Company announced on 19 March 2014 that trading for second half, that is for the six months to 31 March 2014, is expected to be broadly in line with those of the first half, when the Company announced revenues of £1.1m and an operating loss, after non-recurring items of £363,000. The Board believes that the business of 2-DTech will not make a contribution to revenue in the current year. Trading prospects for the existing Group for the year to 31 March 2015 remains in line with current market forecasts.

Change of Nominated Adviser

The Company announced on 10 April 2014 that Charles Stanley Securities had been appointed as the Company's nominated adviser and broker with immediate effect.

General Meeting

A Circular which contains a notice convening the General Meeting to be held at the offices of Field Fisher Waterhouse LLP, 35 Vine Street, London EC3N 2PX on 30 April 2014 at 10.30 a.m. has been sent to Shareholders. The purpose of the General Meeting is to consider and if thought fit pass the following Resolutions to authorise the Directors:

1. to allot shares or grant rights to subscribe for or to convert any security into shares pursuant to section 551 of the Companies Act up to an aggregate nominal amount of £1,189,475.99; and

2. to allot shares or grant such rights free of the statutory pre-emption rights contained in section 561(1) of the Companies Act.

Resolution 1 will be proposed as an ordinary resolution and will therefore require the approval of a majority of Shareholders voting in person or by proxy at the General Meeting.

Resolution 2 will be proposed as a special resolution and will therefore require the approval of not less than 75 per cent. of Shareholders voting in person or by proxy at the General Meeting.

Recommendation

The Directors believe that the Proposals will promote the success of the Company for the benefit of the members as a whole and accordingly they unanimously recommend you to vote in favour of the Resolutions to be proposed at the General Meeting as they intend to do in respect of their own holdings of Ordinary Shares, totalling 26,808,633 Ordinary Shares, being approximately 32.27 per cent of the current issued share capital of the Company.

DEFINITIONS

The following definitions apply throughout this announcement, unless the context otherwise requires: