Placing

RNS Number : 5797A

Cyan Holdings Plc

12 October 2009

 



Cyan Holdings plc

("Cyan" or "the Company")

Proposed Placings

Notice of General Meeting

Cyan Holdings Plc (AIM:CYAN.L), announces details of proposed placings ("Placings") by Cenkos Securities plc to raise approximately £2 million before expenses (approximately £1.84 million after expenses) and a General Meeting ("GM"), to be held at 10.30am on 30 October 2009. It is intended that the net proceeds from the Placings will be used for general working capital requirements and will provide the Company with the resources to execute its strategy and to take it through to profitability. A document containing the Notice of the GM has been posted to all shareholders in the Company and is available to view on the Company's website at:  www.cyantechnology.com.

Background to and reasons for the Placings

Cyan is a fabless semiconductor company focusing on the design, sale and support of a range of low power, richly featured 16-bit general-purpose microcontroller chips ("MCU"). Through 2007 and early 2008 Cyan developed a range of products that demonstrated the cost and power reduction capabilities of these MCUs in wireless communication. These products enabled the Company to enter a partnership with Micrel Inc which has now resulted in Cyan offering wireless products across the full range of frequencies required to address the global industrial control market. Later in 2008, in response to customer demand, Cyan further developed these products for wireless monitoring of utility meters and control of streetlights. In 2009 these metering and lighting products enabled the Company to enter a partnershipship with Future Electronics, one of the three largest electronic component distributors in the world with 169 offices in 44 countries and a focus on both lighting and metering markets.

During 2009 Cyan has taken the first steps in its aim of becoming a major supplier to the global automated/smart metering market and the global street lamp control market and becoming a leading supplier of gateways (access points) in these markets as well as a supplier of a wide range of industrial wireless networks. In addition, Cyan has in place contract manufacturing partners capable of supporting a rapid increase in orders and shipments of these products.

Cyan has already secured working relationships with established suppliers of meters and street lamps and has actively engaged in multiple field trials across a range of applications. One such trial with an established gas meter manufacturer in China has led to a performance breakthrough that has had significant impact on the competitiveness of Cyan's wireless metering solutions. Cyan had been asked to develop a battery operated mesh networking gas meter that uses conventional AA batteries rather than very expensive lithium batteries. Through a series of design modifications implemented in July 2009 and August 2009 the battery life has been increased to 60 months with western alkaline batteries which comfortably exceeds the 12-month target even using the lower performance and lower cost batteries available in China. Cyan believes that this is the only such meter where networking and metering functions are carried out by a single 16bit MCU. As a result, in the Board's opinion, Cyan now has the lowest power, wireless mesh networking, metering solution currently available anywhere in the world. Low power operation is a common requirement globally and the combination of lowest power, lowest cost and robust wireless networking makes this a very competitive product. 

In September 2009 Cyan demonstrated the first 470MHz version of this meter, based on a new product from Micrel that completes coverage of all global metering bands. This frequency has been specified as a future requirement for all meters in China. Cyan now has a 470MHz product to address electricity metering opportunities in China as well as gas and water meter opportunities in all Chinese provinces. The availability of 470MHz versions increases the size of the Chinese gas meter market for Cyan products, and then doubles this again by providing access to the Chinese electricity meter market.

In July 2009 Cyan revisited prospective customers in India, first visited in January 2009, and demonstrated metering products, developed with Micrel to meet the frequency requirements of the Indian market. One such prospect has already progressed to a trial and a further four visited in September this year have indicated their intention to commence trials using this product.

In the lighting markets Cyan has had similar experiences with one trial nearing completion in China and a second Chinese trial successfully completed in July this year. Three other prospects in China have tested Cyan products and indicated an intention to move to field trials in the near future. These lighting projects are all for outdoor installations including street and tunnel lighting where the Cyan product uses a single 16bit MCU to implement both wireless control and dimming functions. These functions are required to realise energy savings, such energy saving reducing running costs but also triggering incentive payments by the Chinese government intended to stimulate rapid deployment.  

Future Electronics already supply a substantial portion of the global in-building LED lighting market through their Future Lighting Solutions ("FLS") division. As a result of the relationship with Future Electronics, Cyan is currently working on wireless lighting control to be incorporated into a new product that is expected to be released to production early in 2010 and offered to current and prospective customers of FLS.

In 2009 Cyan has engaged in six field trials and is in the process of scheduling five further trials. On a monthly basis new prospects are entering the sales pipeline that leads to such trials. None of these trials has resulted in Cyan being rejected or the customer selecting another supplier, some have triggered requests for incremental features and some have completed successfully, others are ongoing. Cyan's customers incorporate Cyan products into their own to offer new features to their target markets. Successful trials lead to incorporation of Cyan products but substantial orders on Cyan depend on the demand subsequently generated from our customers target markets. Timing of these orders is difficult for Cyan to predict.

Current trading and prospects

The breadth and range of customer engagements has increased significantly in the last quarter helped by the recently established partnerships with Future Electronics and Micrel. The Directors believe that the nature of the customers with which Cyan is engaged is encouraging, and that Future Electronics is able to add financial and operational credibility, as the majority of the prospective customers are corporations substantially larger than Cyan.

The Directors believe that Cyan has now entered a phase where it has delivered what its potential customers have asked for in terms of cost and performance. These customers have either confirmed, or are conducting trials to confirm, that Cyan's products meet their requirements. Every month more customers start this process and the Board believes that the Company will start to see the fruits of its endeavours with evidence of firm volume orders although the exact timing of such remains difficult to predict.

The rate at which customers can fund the purchase and deployment of the Company's products determines how soon Cyan will achieve profitability and the Directors remain mindful that in the current economic climate customers cannot predict timing with any certainty.

The prospects for 2010 are exciting particularly given the number of companies where Cyan is currently actively engaged in product evaluation and since the Company's AGM statement made in May this year the number of such prospects has increased and none have been lost. Cyan has a readily identifiable market for its products and an existing and new product range that, the Directors believe, has key attractions for customers. With a strong sales pipeline and the fact that, following the Placing the Directors expect the Company to have sufficient funds to support the business through the period required to secure orders from many of the prospective customers, the Directors are excited about Cyan's prospects and view the future with confidence.

Details of the Placings

The Company intends to raise approximately £1.84 million, net of expenses, through the issue of 95,238,095 new Ordinary Shares at the Placing Price pursuant to the Placings.

The Placing Price represents a discount of approximately 10.7 per cent. to the closing mid-market price of 2.33 pence per Ordinary Share as at October 2009, the latest practicable date prior to the announcement of the Placings. The Placing Shares will, when issued, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive dividends and other distributions declared following Admission.

The Placing Shares will represent approximately 14.6 per cent. of the Enlarged Share Capital.

The Placings are being made on a non pre-emptive basis as the time and costs associated with a pre-emptive offer are considered by the Directors to be excessive. The making of a pre-emptive offer would require the production of a prospectus which would have to comply with the Prospectus Rules and be pre-vetted and approved by the FSA.

Application will be made by the Company for the Placing Shares to be admitted to trading on AIM. Subject to completion of the Placings, it is expected that the Placing Shares will be admitted to trading on AIM and that dealings will commence at 8.00 a.m. on 2 November 2009 in respect of the Placing Shares.

The issue of the Placing Shares, is conditional, inter alia, upon:

(a)     the approval of the Resolutions at the GM;

(b)        the Placing Agreement becoming unconditional in all respects and not having been terminated in accordance with its terms; and

(c)     Admission,

in each case by no later than 8.00 a.m. on 2 November 2009 (or such time and date as the Company and Cenkos Securities plc may agree, being not later than 16 November 2009).

Pursuant to the terms of the Placing Agreement, Cenkos Securities plc has conditionally agreed to use its reasonable endeavours, as agent to the Company, to place the Placing Shares at the Placing Price with certain institutional and other investors. The above obligations are subject to certain conditions including those listed above. The Placings are not underwritten.

The Placing Agreement contains warranties given by the Company with respect to its business and certain matters connected with the Placings. In addition, the Company has given certain indemnities to Cenkos Securities plc in connection with the Placings and Cenkos Securities plc's performance of services in relation to the Placings. Cenkos Securities plc is entitled to terminate the Placing Agreement in specified circumstances.

Directors' Shareholdings 

The beneficial and non-beneficial interests of the Directors in Ordinary Shares (not including Ordinary Shares held by the Cyan Employee Benefit Trust) on the date of this document and following the Placings are set out below:

	Existing		Following the Placings
	Existing Number of Ordinary Shares	Percentage of Ordinary  Issued Share Capital	Number of Ordinary  Shares	Percentage of Ordinary  Issued Share Capital
Director
David Gutteridge	1,250,000	0.22%	1,250,000	0.19%
Kenneth Lamb	7,000,000	1.25%	7,476,000	1.14%
Dr. John Read	4,113,636	0.74%	4,351,636	0.67%

The following Ordinary Shares held by the Cyan Employee Benefit Trust are beneficially owned by the following Directors to the extent the share price exceeds 2.5p per Ordinary Share:

Director	Number of Ordinary Shares
Kenneth Lamb	30,000,000
Dr. John Read	1,000,000

Save as stated above, the Directors have no interest in the share capital of the Company.

Expected Timetable of Events

Latest time for receipt of Forms of Proxy    10:30 a.m. on 28 October 2009

General Meeting    10:30 a.m. on 30 October 2009

Admission and commencement of dealings in the Placing Shares    8:00 a.m. on 2 November 2009

Enquiries:

Cyan Holdings plc	www.cyantechnology.com
Kenn Lamb, CEO	Tel: [phone]
Cenkos Securities plc
Stephen Keys / Adrian Hargrave	Tel: [phone]
Media - Hansard Group
John Bick	Tel: [phone]

 

END

 

 

IOEILFEDIRLAIIA