Versarien Regulatory News (VRS)

23 March 2020

Versarien plc

("Versarien", the "Company" or the "Group")

Subscription to raise £6 million

Versarien plc (AIM: VRS), the advanced materials engineering group, is pleased to to announce that it has entered into a £6 million subscription agreement with Lanstead Capital Investors LP ("Lanstead"), a US managed institutional investor, together with a related sharing agreement (the "Sharing Agreement").

Highlights

· Subscription for 15,000,000 new ordinary shares of 1 pence each in the Company ("Ordinary Shares") (the "Subscription Shares") by Lanstead at an issue price of 40 pence per Subscription Share (the "Issue Price") to raise gross proceeds of £6 million, representing approximately 9.74% of the Company's existing issued share capital (the "Subscription"). The issue price represents a 53.8% premium to the closing mid-market price on 20 March 2020.

· The £6 million gross proceeds of the Subscription will be pledged by the Company pursuant to the Sharing Agreement with Lanstead. The Sharing Agreement, details of which are set out below, entitles the Company to receive back those proceeds on a pro rata monthly basis over a period of 24 months, subject to adjustment upwards or downwards each month depending on the Company's share price at the time.

· The Sharing Agreement provides the opportunity for the Company to benefit from positive future share price performance; an underlying reason for undertaking the fund raise in this way.

· The proceeds of the Subscription, when added to the c.£2.2 million of cash and headroom available under the Group's facilities as at 29 February 2020, will be used primarily by Versarien to advance its graphene commercialisation strategy, as well as for general working capital purposes.

Neill Ricketts, Chief Executive Officer of Versarien, commented:

"We are delighted to welcome Lanstead as a significant institutional shareholder in Versarien. The proceeds of the Sharing Agreement will underpin our activities over the next two years.

"The mechanics of the Sharing Agreement allow Versarien to benefit from future share price appreciation and reflect an alignment of both the Company and Lanstead's belief in the potential for substantial value enhancement for shareholders through the execution of our graphene commercialisation strategy.

"With the Company having a sound financial base and despite the background of the current global Covid-19 pandemic, I am confident that the Company will continue to make significant progress in the coming months. In particular, we continue to advance our discussions in China and elsewhere and this fund raise does not preclude us from obtaining additional funding from other sources to accelerate the development of our graphene commercialisation strategy should appropriate value enhancing options be available."

Introduction

Lanstead has conditionally agreed to subscribe for 15,000,000 Subscription Shares at the issue price of 40 pence for gross proceeds of £6 million. The Subscription proceeds will be pledged to Lanstead under the Sharing Agreement pursuant to which the Company is entitled to receive back those proceeds on a pro rata monthly basis over a period of 24 months, subject to adjustment upwards or downwards each month depending on the Company's share price at the time.

A significant factor in Versarien's decision to enter into the Subscription is that the Sharing Agreement provides the opportunity for the Company to benefit from positive future share price performance. There is no upper limit placed on the additional proceeds receivable by the Company as part of the monthly settlements and the amount available in subsequent months is not affected. Whilst the Company notes the corresponding risk that a fall in Versarien's share price could reduce the amount of proceeds received, as explained below, the Directors expect the Company's graphene commercialisation strategy to make considerable positive advancements over the 24-month term of the Sharing Agreement. If these advancements are successful, and if the success of these advancements is reflected in Versarien's share price, the Company expects the proceeds to be received back from Lanstead to exceed the amount pledged under the Sharing Agreement.

Further information on the Subscription

Pursuant to the subscription agreement between the Company and Lanstead (the "Subscription Agreement"), 15,000,000 Subscription Shares will be issued to Lanstead at 40 pence per Subscription Share for an aggregate subscription of £6 million before expenses.

The Subscription proceeds of £6 million will be pledged to Lanstead under the Sharing Agreement under which Lanstead will then make, subject to the terms and conditions of that Sharing Agreement, monthly settlements (subject to adjustment upwards or downwards) to the Company over 24 months, as detailed below. As a result of entering into the Sharing Agreement the aggregate amount received by the Company under the Subscription and the related Sharing Agreement may be more or less than £6 million, as further explained below.

The Sharing Agreement

As part of the Subscription, the Company will enter into the Sharing Agreement, pursuant to which Versarien will return the £6 million gross proceeds of the Subscription to Lanstead. The Sharing Agreement will enable the Company to benefit from any share price appreciation over the average Benchmark Price of 53.33 pence (as defined below). However, if the Company's share price is less than the average Benchmark Price then the amount received by the Company under the Sharing Agreement will be less than the gross proceeds of the Subscription which were pledged by the Company to Lanstead at the outset.

The Sharing Agreement provides that the Company will receive 24 monthly settlement amounts as measured against an average benchmark share price of 53.33 pence per Subscription Share (the "Benchmark Price"). The monthly settlement amounts for the Sharing Agreement are structured to commence approximately two months following the admission to trading on AIM of the Subscription Shares.

If the measured share price (the "Measured Price"), calculated as the average volume weighted share price of the Company's Ordinary Shares over a period of 20 trading days prior to the monthly settlement date, exceeds the Benchmark Price, the Company will receive more than 100 per cent. of that monthly settlement due on a pro rata basis according to the excess of the Measured Price over the Benchmark Price. There is no upper limit placed on the additional proceeds receivable by the Company as part of the monthly settlements and the amount available in subsequent months is not affected. Should the Measured Price be below the Benchmark Price, the Company will receive less than 100 per cent. of the monthly settlement calculated on a pro rata basis and the Company will not be entitled to receive the shortfall at any later date.

For example, if on a monthly settlement date the calculated Measured Price exceeds the Benchmark Price by 10 per cent., the settlement on that monthly settlement date will be 110 per cent. of the amount due from Lanstead on that date. If on the monthly settlement date the calculated Measured Price is below the Benchmark Price by 10 per cent., the settlement on the monthly settlement date will be 90 per cent. of the amount due on that date. Each settlement as so calculated will be in final settlement of Lanstead's obligation on that settlement date.

Assuming the Measured Price equals the average Benchmark Price on the date of each and every monthly settlement, Versarien would receive aggregate proceeds of £6 million (before expenses) from the Subscription and Sharing Agreement.

The Company will pay Lanstead's legal costs incurred in the Subscription and in entering into the Sharing Agreement and, in addition, has agreed to issue to Lanstead 750,000 new Ordinary Shares ("Value Payment Shares") in connection with entering into the Sharing Agreement.

In no event will fluctuations in the Company's share price result in any increase in the number of Subscription Shares issued by the Company or received by Lanstead. A decline in the Company's share price would not result in any advantage accruing to Lanstead and the Sharing Agreement allows both Lanstead and the Company to benefit from future share price appreciation.

In total, Lanstead will be issued with 15,750,000 new Ordinary Shares pursuant to the Subscription which, when issued, will equate to approximately 9.28 per cent of the Company's Enlarged Issued Share Capital. No shares, warrants or additional fees are owed to Lanstead at any point during this agreement other than those disclosed above.

The Subscription Shares and the Value Payment Shares will rank pari passu with the existing Ordinary Shares and application has been made for their admission to trading on AIM ("Admission"). The Subscription is conditional, inter alia, on Admission and there being: (i) no breach of certain customary warranties given by the Company to Lanstead at any time prior to Admission; and (ii) no force majeure event occurring prior to Admission. Application will be made to the London Stock Exchange for the Subscription Shares and the Value Payment Shares to be admitted to trading on AIM ('Admission'). It is expected that Admission will become effective on or around 26 March 2020.

Total Voting Rights

Following the issue of the Subscription Shares and the Value Payment Shares, the Company will have 169,682,290 ordinary shares of 1p each in issue. The figure of 169,682,290 may be used by the Company's shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO CONSTITUTE INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

Enquiries:

About Versarien

Versarien plc (AIM: VRS), is an advanced engineering materials group. Leveraging proprietary technology, the Group creates innovative engineering solutions for its clients in a diverse range of industries. Versarien has seven subsidiaries operating under two divisions:

Graphene and Plastics

2-DTech Ltd, which specialises in the supply, characterisation and early stage development of graphene products. 2-DTech is based at the Graphene Innovation Engineering Centre, a £60 million facility set up to work in collaboration with industry partners to create, test and optimise new concepts for the delivery of graphene to the market. www.2-dtech.com

AAC Cyroma Limited, which specialises in the supply of vacuum-formed and injection-moulded products to the automotive, construction, utilities and retail industry sectors. Using Versarien's existing graphene manufacturing capabilities, AAC has the ability to produce graphene-enhanced plastic products. www.aaccyroma.co.uk

Cambridge Graphene Limited, supplies novel inks based on graphene and related materials, using patented processes to develop graphene materials technology. www.cambridgegraphene.com

Gnanomat S.L. ("GNA"), based in the Parque Cientifico Madrid, Spain, is a company capable of utilising Versarien's graphene products in an environmentally friendly, scalable production process for energy storage devices that offer high power density, fast recharging and very long lifetimes for use in electrical vehicles and portable electronics products. www.gnanomat.com 

Versarien Graphene Inc - based in Texas, is the recently incorporated sales business for the UK's graphene products.

Hard Wear and Metallic Products

Versarien Technologies Limited has developed an additive process for creating advanced micro-porous metals targeting the thermal management industry and supplies extruded aluminium. www.versarien-technologies.co.uk 

Total Carbide Limited, a leading manufacturer in sintered tungsten carbide for applications in arduous environments such as the oil and gas industry. www.totalcarbide.com 

About Lanstead

Lanstead is an institutional investor that since 2007 has provided funding for ongoing business objectives to listed small and mid-cap growth companies. Lanstead focuses on equity investments in listed companies with management teams with a clear growth strategy.

Lanstead's extensive experience allows it to invest in most industries, focusing on providing supportive, longer term capital that rewards company growth. Companies with Lanstead on the shareholder register via an equity placement to Lanstead with an accompanying sharing agreement benefit from a unique and flexible approach to finance growth. This provides the opportunity for companies to benefit from additional cash beyond the original placing proceeds without having to issue additional shares.

Further information is available at www.Lanstead.com