Conditional Placing to Raise £6 million

RNS Number : 9643A

Plexus Holdings Plc

13 June 2016

 

Plexus Holdings PLC / Index: AIM / Epic: POS / Sector: Oil equipment & services

Plexus Holdings PLC ('Plexus' or 'the Company')

Conditional Placing to raise £6 million

Plexus Holdings PLC, the AIM quoted oil and gas engineering services business and owner of the proprietary POS-GRIP® friction-grip method of wellhead engineering, is pleased to announce that it has agreed the terms of a conditional placing (the "Placing") to raise £6,000,000 before expenses, by way of a placing of 9,230,770 new Ordinary Shares ("Placing Shares") at a price of 65 pence per Ordinary Share to new and existing investors.

The Placing is intended to strengthen Plexus' balance sheet during the current down cycle and to provide Plexus with the flexibility to support the capital requirements of its long term strategy of becoming a leading international oil and gas services company, supplying a new and superior standard of wellhead equipment and associated products for exploration, production and subsea applications.

The proceeds of the Placing will be applied across a number of the Company's areas of activity to ensure that Plexus is well placed to take advantage when sector activity resumes. In particular, the Board believes that the net proceeds of the Placing will enable Plexus to:

·           pursue existing global opportunities (beyond the Company's on-going North Sea operations) and to continue to support Plexus' activities in new regions - Asia, Russia and North/South America;

·           progress the Python Subsea Wellhead development programme towards a target trial in 2016;

·           support on-going development of POS-GRIP product suite (including production and subsea applications);

·           strengthen Plexus' working capital position during the down cycle; and

·           channel targeted R&D spend towards complementary products (such as WellTree^TM, Xmas Trees) and the decommissioning market.

The Placing is conditional upon Shareholders' approval being obtained for the granting of the authorities required to allot shares for cash on a non pre-emptive basis.  In addition to the authorities required to conclude the Placing, the Company is seeking authority from Shareholders to issue and allot new Ordinary Shares over and above the Placing Shares, representing 10 per cent. of the Enlarged Ordinary Share Capital following the Placing, which is consistent with the 10 per cent. authority which was approved at the last Annual General Meeting of the Company. 

Accordingly, the Company is convening a General Meeting, to be held at 2.00 p.m. on 28 June 2016 at the offices of Fox Williams LLP, 10 Finsbury Square, London EC2A 1AF, at which the Resolutions will be proposed.  Further information on, inter alia, the Placing, the Resolutions and why the Board considers the Placing to be in the best interests of the Company is contained in the circular ("Circular") which will be posted to Shareholders today.

Subject to the passing of the Resolutions at the General Meeting, application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that Admission will occur at 8:00 a.m. on 29 June 2016.

Plexus' Chief Executive Ben van Bilderbeek said, "We view the successful raising of £6 million as testament to Plexus' standing as the provider of superior POS-GRIP jack-up rental wellhead equipment to the international oil and gas industry, and I would like to thank those existing and new shareholders who have supported this initiative and who recognise the Company's significant  growth prospects, particularly as we begin to focus on moving into the significantly larger land and platform and subsea markets.

"This strategy involves replicating, globally, the success we have traditionally enjoyed in the North Sea, where Plexus is the go-to provider of wellheads, particularly for the most challenging HP/HT wells such as the Total Solaris well which is being drilled currently and which we believe to be the highest pressure well ever drilled in the North Sea.  Such capabilities and expertise are centred on our firm view that one of the key requirements for wellhead equipment and wellhead seals is the need to ensure that they are not a weak link in the well architecture chain and that it is therefore critical that qualification standards for casing hangers and annular seals are aligned with those for casing and tubing couplings. Importantly Plexus is uniquely able to deliver such a higher standard unlike conventional technology. The importance of such a goal was recognised some time ago by a major international oil company who provided a newly drafted Casing Hanger qualification test procedure guidelines for Surface and Subsea Wellhead and Christmas Tree Equipment, which we chose to adopt as the new standard for the Python® prototype subsea wellhead system.

"At its core, Plexus is an IP driven oil and gas engineering services company.  The funds raised today will ensure that we will be able to continue to invest in our proprietary technology and products during the current oil and gas down cycle, and at the same time support our new partners in overseas markets such as Russia.  The near doubling in the price of oil from its January lows to circa US$50 per barrel demonstrates how supply and demand equilibrium can swiftly move towards a point where a balance between exploration and production and consumption can prevail.  With this in mind, we were encouraged to hear the new Saudi energy minister Khalid Al Falih say earlier this month that oil prices could hit US$60 by year end and that prices could rise further in 2017 as supply and demand converge.  Needless to say, we are keen to be in a position to hit the ground running once activity in the sector picks up; the funds raised today will help ensure that we will be there to play our role in servicing the needs of the industry with our superior method of engineering and where our jack-up rental wellhead inventory is ready to be deployed.

"Looking beyond the current cycle, we see demand for oil and gas underpinned by a structural shift in the world's fuel mix: a move away from dirtier fossil fuels, particularly coal, to cleaner hydrocarbons such as natural gas.  If this is to happen new wells will need to be drilled and with our equipment and HG® metal to metal seals being ideally suited to the high pressures and high temperatures associated with gas wells, Plexus stands to play a major part in this transition.  Despite the challenging trading conditions, we believe that the prospects for Plexus are excellent: proven technology and equipment that has been used in over 400 wells worldwide; partners secured in new larger markets; a growing family of Plexus products based on our patent protected technology; a product offering that is ideally suited to the shifting energy mix towards gas; and a strong debt free balance sheet.  I look forward to providing further updates on our progress as we focus on generating value for all our shareholders, both new and old."

**ENDS**

For further information please visit www.posgrip.com or contact:

Ben van Bilderbeek	Plexus Holdings PLC	Tel: [phone]
Graham Stevens	Plexus Holdings PLC	Tel: [phone]
Nick Tulloch	Cenkos Securities PLC	Tel: [phone]
Derrick Lee	Cenkos Securities PLC	Tel: [phone]
Frank Buhagiar	St Brides Partners Ltd	Tel: [phone]
Isabel de Salis	St Brides Partners Ltd	Tel: [phone]

Conditional Placing of 9,230,770 new Ordinary Shares

at a Placing Price of 65 pence per share to raise £6 million

and authority to issue shares

1.            INTRODUCTION

The Company has today announced that it has conditionally raised £6,000,000.50, before expenses, by way of a placing of 9,230,770 new Ordinary Shares at a price of 65 pence per Ordinary Share to new and existing investors.

The allotment and issue of the Placing Shares would exceed the Directors' existing authorities to allot shares for cash on a non pre-emptive basis and therefore a General Meeting is being convened to seek Shareholders' approval to grant new authorities to enable the Directors to implement the Placing.

In addition to the authorities required to conclude the Placing, the Company is seeking authority from Shareholders to issue and allot new Ordinary Shares over and above the Placing Shares, representing 10 per cent. of the Enlarged Ordinary Share Capital following the Placing. This would enable the Company to satisfy the issue of shares pursuant to the Jereh Option, should it be exercised before expiry on 30 June 2016 and provide the Board with the flexibility to issue further shares if required.  The authority in place following the Placing, if approved by Shareholders, would be consistent with the 10 per cent. authority which was approved at the last Annual General Meeting of the Company. 

Accordingly, the Company is convening the General Meeting, to be held at 2.00 p.m on 28 June 2016, at which it will seek authority for the Directors to allot Ordinary Shares up to an aggregate nominal amount of £197,674.10 and to disapply pre-emption rights in relation to those allotments.  The Resolutions to be proposed at the General Meeting are set out in the Circular.

The circular, which will be posted to Shareholders today, provides further information about the background to and the reasons for the Placing, to explain why the Board considers the Placing to be in the best interests of the Company and its Shareholders as a whole and why the Directors recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting.

2.            BACKGROUND TO AND REASONS FOR THE PLACING

Introduction

Plexus Holdings plc is an AIM-traded oil and gas engineering services business and owns the proprietary POS-GRIP^® friction-grip method of wellhead engineering. The Company rents for exploration and sells for production wellhead equipment and associated tooling to a number of major oil and gas operators across the world. Plexus' POS-GRIP method of engineering enables the Company to deliver superior solutions to the industry, across a number of applications in oil and gas wellheads and connectors.

Background

During the last 12 months the Company has achieved a number of significant milestones, despite the difficulties currently being experienced by the wider oil and gas sector, where the industry saw a steep decline in operator activity at the end of 2015 calendar year and into the first three months of 2016. 

The Company's core business of renting proprietary POS-GRIP® friction-grip exploration wellhead equipment, particularly for High Pressure/High Temperature ('HP/HT') applications, performed well in the year to 30 June 2015, and achieved record revenue, EBITDA, profit before tax and profit after tax. Plexus' core business has historically held a market leading position in the European and UK North Sea markets.

During the last 12 to 18 months the Company has focused on growing its international business, and has successfully secured new international oil and gas customers in new territories around the world.

In July 2015 Plexus signed a licence agreement with Jereh in China to facilitate the rental, sale, and manufacture of Plexus' wellhead equipment to supply the major Chinese, wider Asian, Brazil, Indian and Middle East oil and gas markets.  A further strategic initiative in the region was announced shortly afterwards, when a collaboration agreement with China Oilfield Services Limited, a major integrated oilfield service solution provider which is majority owned by Chinese state owned company CNOOC Group (the largest producer of offshore crude oil and natural gas in China), Red Sea Technologies Ltd, a leading oilfield design and services company in South East Asia, and Jereh, to explore commercial opportunities for shallow water subsea and crossover wellhead production systems for oil and gas field activities in China.

In July 2015 Plexus Products (Asia) Sdn Bhd ('PPA'), the Company's  Malaysian joint venture ('JV') secured a local PETRONAS licence to manufacture and supply Plexus' POS-GRIP wellhead equipment in Malaysia. With this licence it is expected that PPA will be able to develop and grow the supply of Plexus POS-GRIP rental exploration and production wellhead equipment to the Malaysian market, which the Plexus board believes offers significant growth opportunities for the Company.

Most recently, in January 2016, the Company confirmed that it had entered into an exclusive licence agreement with Gusar and Konar, two independent Russian oil and gas equipment manufacturers, to undertake the rental, manufacture and servicing of Plexus' jack-up drilling wellhead exploration equipment into the Russian Federation and the other CIS states oil and gas markets.  This was a significant strategic milestone for Plexus as it provides the Company with low cost access to these important oil and gas regions without the requirement to make significant investment in capital intensive assets such as manufacturing.

The Company was further encouraged by the recent equity investment in Plexus by Gusar, who subscribed US$5 million for a circa 7 per cent. stake in the Company. At the same time, Plexus entered into a commercial agreement with Gusar and Konar, designed to, inter alia, accelerate the arrangements set out in the existing licence agreement to enable Gusar and Konar to manufacture and sell POS-GRIP surface production wellhead systems in the Russian Federation and other CIS states.

The Company anticipates that, in due course, the arrangements with Gusar, Konar and Jereh will enable the Company to accelerate its strategy of expansion into major global markets beyond its traditional North Sea market by partnering with established local manufacturers and service providers who have existing relationships with key local operators, including national oil and gas companies. 

POS-GRIP Python^® Subsea Wellhead

Plexus has also made good progress with its new POS-GRIP Python Subsea Wellhead ('Python Subsea Wellhead'), which has been designed to address key technical issues and requirements highlighted by regulators and operators following the Gulf of Mexico incident in April 2010 and to achieve a new best in class standard for subsea wellheads that can for the first time match those of premium couplings.  The Python Subsea Wellhead was launched in September 2015 at the Aberdeen Oil Show and testing has now been substantially completed, including qualifying the Python Subsea Wellhead hanger system to a new proposed higher Shell standard.  The Company is currently undertaking a process to identify and secure the running of a Python Subsea Wellhead prototype.

Current Market Conditions

Despite the encouraging progress described above, Plexus has not been immune to the on-going global economic downturn and in particular the oil price decline to a low of below US$30 per barrel in January 2016, which has impacted drilling activity across the sector. The Company stated in January 2016 that it had seen a significant slowdown in planned activity by its customers to the extent that it cannot see the reduced activity levels being recovered in the current financial year as a result of a number of projects being delayed, postponed or cancelled. The Company also stated that it expected its financial results for the year to 30 June 2016 to be significantly below market expectations.

As a result, Plexus implemented a number of cash conservation steps to stabilise the Company during the difficult oil market cycle, as well as undertaking a series of cost cutting measures which saw significant headcount and general overhead reductions. The Company also confirmed that it was actioning the optimal allocation of its resources to enable it to continue to progress the existing range of future opportunities which were broader and more international than ever before, including the investment in on-going R&D and POS-GRIP^® product extensions at a time when the industry continues to actively pursue innovative cost saving disciplines and safety driven initiatives.

The Board has concluded that, whilst it is difficult to predict how long the downturn will last, it is likely that lower levels of activity in the oil and gas sector will continue over the next 12 to 18 months.  However, the Board has every expectation that once activity in the sector resumes Plexus will see a recovery in its order book.  The Company holds a fast response rental wellhead inventory, comprising in excess of 60 wellhead sets, and has a strong reputation with a large number of blue chip customers around the world who recognise the benefits and significant cost savings achievable through the use of Plexus' POS-GRIP® technology.  Furthermore, Plexus has the only wellhead technology which has passed a new proposed higher Shell standard, which the Board believes will result in additional interest in the Company's wellhead designs, and its ability to match  the seal and test standards of premium couplings. 

Proposed Placing

As a result of the downturn in market conditions described above, and the impact this had had on Plexus' financial performance, the Company has elected to complete a conditional fundraise to raise £6,000,000.50 at this time. This is intended to strengthen Plexus' balance sheet during the current down cycle and to provide Plexus with the flexibility to support the capital requirements of its long term strategy of becoming a leading international oil and gas services company, supplying a new and superior standard of wellhead equipment for exploration, production and subsea applications.

The proceeds of the Placing will be applied across a number of the Company's areas of activity to ensure that Plexus is well placed to take advantage when sector activity resumes. In particular, the Board believes that the net proceeds of the Placing will enable Plexus to:

·           take advantage of existing global opportunities (beyond the Company's on-going North Sea operations) and to continue to support Plexus' activities in new regions - Asia, Russia and North/South America;

·           progress the Python Subsea Wellhead development programme towards a trial in 2016;

·           support on-going development of POS-GRIP product suite (including production and subsea applications);

·           strengthen Plexus' working capital position during the down cycle; and

·           channel targeted R&D spend towards complementary products (WellTree^TM, Xmas Trees) and decommissioning market.

3.            CURRENT FINANCIAL POSITION AND FUTURE PROSPECTS

Financial Results

The Company released its interim financial results for the six months ended 31 December 2015 on 30 March 2016.

Although in line with market expectations, the results confirmed that the Company had suffered from the contraction in exploration activity, particularly in its organic North Sea market which is a consequence of the current low oil price.  This has impacted on its core business of renting its proprietary POS-GRIP^® friction-grip exploration wellhead equipment to oil and gas customers around the world and has resulted in a sharp year on year reduction in sales.

Future prospects

There have, however, been recent encouraging signs of an oil price recovery.  Major industry players have said that they see the oil price returning to US$50 per barrel or above by the end of 2016 and this viewpoint has been brought sharply into focus as the price hovers around US$50 per barrel before the mid-year point.  Industry experts have also predicted that demand for energy will rise strongly over the next few decades as emerging nations continue to move up the development curve, and oil and gas is required to satisfy much of this growth. Significantly more energy will be required over the next twenty years to enable the world economy to grow. 

During the down turn operators have had to recalibrate their break even costs, conserve cash and cut capex, which has impacted in terms of a significant reduction in new projects, and exploration activity in particular.  The current fall in exploration and production activity sits alongside oilfields that deplete at five to seven per cent. per annum, which has led commentators to form the view that there is a real risk of a strategic oil crisis later in the decade with a resultant price spike.

There are significant potential opportunities for Plexus in the future. The Company's POS-GRIP technology is able to deliver significant time and cost savings on the surface and, in due course and even more significantly, subsea in addition to offering unique safety and operational advantages. Plexus is targeting international markets and regions such as Russia, where it has been reported for example that Rosneft increased drilling activity by 30 per cent. in 2015 and plans a further increase in 2016. In addition, alongside the day to day gyrations and volatility there are signs that both OPEC and non-OPEC producers wish to see a return to stability and a higher oil price that can support necessary investment and planned capex.

Therefore, in the opinion of the Directors, there is a positive long term outlook across the industry particularly for oil and gas as opposed to coal, which in turn is underpinned by future population growth.

The Company is proprietary technology driven and its patent protected IP has been successfully deployed in more than 400 wells around the world.  Its superior performance, safety and best in class properties have given it a strong market position in the niche jack-up exploration space, and the Directors are confident that this success can be extended into the much larger land and platform, and subsea applications space.  As a result the IP which the Company owns means that it is not subject to cyclical risk to the same extent as many other businesses in this sector. The Company has a strong R&D ethic and is continuously developing new patented technology and even where earlier patents eventually expire the Company has an extensive body of knowledge and know-how.

Recent Developments

The Company now has a proven technology and POS-GRIP^® method of engineering reputation which has resulted in a strong market position in the North Sea which forms a strong base from which to expand into other territories, including China and Russia.  In addition, significant progress has been made in developing new Plexus products based on the existing POS-GRIP^® technology including the new Python Subsea Wellhead which was launched in September 2015 as a new best in class and safest standard for the multi-billion dollar subsea market, and has a combination of key features not previously seen in a subsea wellhead.  The development of this new product has been supported in a Joint Industry Project by major international oil companies including BG, eni, Maersk, Total and Shell.

In addition to the Gusar arrangements and the matters set out above, the Company has also secured a US$0.6m well contract in January 2016 with a new customer, Masirah Oil Limited for oil exploration in offshore Oman, and an order from Talisman Malaysia Limited in February 2016 for an exploration well in offshore Malaysia.  It has also received a further £0.6m purchase order from Det Norske in May 2016 to supply surface wellhead and mudline equipment services for a well in offshore Norway.

Existing Bank Facilities

The Company's existing bank facilities with Bank of Scotland comprise: (i) a £5 million three year revolving credit facility (which is renewable in September 2016): (ii) a £1 million overdraft facility re-payable on demand; and a reducing five year £1.5 million term loan (to September 2019), with a current balance of approximately £1.1 million at the date of the Circular.

Future planning

The Board believes that by sensible financial and commercial planning and the nature of its core rental wellhead inventory business model the Company will be in a good position, particularly relative to its competitors, to take advantage of improving conditions in the sector.  The Company has developed a strategy which should see it able to enter the next upturn in a strong position as a consequence of having a full suite of rental equipment ready to deploy and an expanded product base.

Faced, however, with lower orders and revenues, the Company is not waiting for a significant pick-up in exploration activity to return to positive cash flow. With this in mind, Plexus has implemented a series of cost cutting and personnel reduction measures designed to ensure it comes through this cycle much leaner and in a position to capitalise on the opportunities that Plexus believes will present themselves when new projects come back on stream. These measures have been structured in a manner which does not jeopardise the long-held commitment to essential research and development, which we recognise as being key to the long term success of the Company.  Similarly we are also mindful to safeguard our core competencies to ensure that when growth returns, we are well placed to take advantage. 

The Company has achieved these substantial savings in areas of capital expenditure, operating expenditure, non-essential research and development and expenditure on personnel.  A reduction in the headcount from 150 to 80 has been implemented which will reduce payroll costs from £8.15m in 2015/16 to £4.27m for 2016/17.  There has also been a reduction in capital expenditure of just under 20 per cent. during the same period.  The Board has focussed on seeking to ensure the Company is cash generative for the remainder of the current downturn.

Management continues to remain confident about long term growth and shareholder value creation prospects, particularly in relation to the major surface production wellhead and subsea exploration and production markets, whilst recognising the importance of structuring and positioning Plexus to ensure that it operates through the current cycle and emerges fully able to participate in a recovery in the sector.

4.            USE OF PROCEEDS

The Board intends to use the gross proceeds of the Placing, expected to be £6,000,000.50, to ensure that the matters described in the Circular can be implemented and it is anticipated that these funds will be deployed as detailed below:

Use of Proceeds
Support for activities in new regions - Asia, Russia and N./S. America	£1.0m
Financing of Python subsea wellhead trial well development programme	£2.0m
Ongoing development of POS-GRIP product suite	£1.0m
General working capital (incl. retention of key personnel)	£0.5m
Further R&D towards complementary products (e.g. WellTree™, Xmas Trees) and decommissioning market	£1.5m

5.            DETAILS OF THE PLACING

The Company has conditionally raised £6,000,000.50 before expenses (£5,650,000.50 net of expenses), by way of the issue of the Placing Shares at the Placing Price, subject to the passing of the Resolutions at the General Meeting.

The Placing Price of 65 pence per New Ordinary Share represents a discount of 3.35 per cent. to the Closing Price of 67.25 pence per Existing Ordinary Share on 8 June 2016.

In setting the Placing Price, the Board has considered the price at which the Placing Shares need to be offered to investors to ensure the success of the Placing and have held discussions with a number of institutional and other investors who have agreed to subscribe for the Placing Shares at that price pursuant to the Placing. In structuring the Placing, the Board has had regard, amongst other things, to the current market conditions and the level of the Company's share price.

The Placing Shares would represent approximately 8.76 per cent. of the Company's issued share capital immediately following the Placing.

Director Participation in the Placing

Nazdar Limited, which is ultimately controlled by Jerome Jeffrey Thrall, has agreed to invest £1,034,482 (US$1,500,000) in the Placing by subscribing for 1,591,512 Placing Shares.

Ben van Bilderbeek has agreed to invest £200,000 in the Placing by subscribing for 307,693 Placing Shares.

The Placing is conditional upon:

·        the passing of the Resolutions as set out in the notice convening the General Meeting;

·        the Placing Agreement having become unconditional in all respects and not having been terminated; and

·        Admission of the Placing Shares to trading on AIM.  

The Placing is not being underwritten.

Placing Agreement

Cenkos Securities has entered into a Placing Agreement with the Company under which it has agreed to use its reasonable endeavours, as agent for the Company, to procure placees for the Placing Shares.

The placing of the Placing Shares is conditional upon, inter alia, the Resolutions being duly passed at the General Meeting and Admission becoming effective on or before 8:00 a.m. on 29 June 2016 or such later time and/or date as the Company and Cenkos Securities may agree, but in any event by no later than 8:00 a.m. on 6 July 2016.

The Placing Agreement contains warranties from the Company in favour of Cenkos Securities in relation to, inter alia, the accuracy of the information in the Circular and other matters relating to the Company and its business. In addition, the Company has agreed to indemnify Cenkos Securities in relation to certain liabilities it may incur in respect of the Placing. Cenkos Securities has the right to terminate the Placing Agreement in certain circumstances prior to Admission, in particular, in the event of a material breach of the warranties.

The Placing Agreement provides that a commission and corporate finance fee shall be payable to Cenkos Securities in relation to its obligations under the Placing Agreement.

Dealings

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that Admission will occur at 8:00 a.m. on 29 June 2016.

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.

6.            GENERAL MEETING

Set out at the end of the Circular is a notice convening the General Meeting to be held at the offices of Fox Williams LLP, 10 Finsbury Square, London EC2A 1AF, at 2.00 p.m. on 28 June 2016 to consider the Resolutions.

The Resolutions deal with the following matters:

Resolution 1 - Authority to allot shares

Resolution 1, which will be proposed as an ordinary resolution, authorises the Directors to allot Ordinary Shares up to an aggregate nominal amount of £197,674.10, being the maximum aggregate nominal amount of the Placing Shares and a further number of new Ordinary Shares which will represent 10 per cent. of the Enlarged Ordinary Share Capital following the issue of new Ordinary Shares pursuant to the Placing.

Resolution 2 - To dis-apply pre-emption rights

Resolution 2, which will be proposed as a special resolution, and will be conditional on the passing of Resolution 1 above, allows the Directors to allot equity securities on a non pre-emptive basis, which is limited to (i) the issue and allotment of up to an aggregate nominal amount of £197,674.10, being the maximum aggregate nominal amount of the Placing Shares and (ii) a further number of new Ordinary Shares which will represent 10 per cent. of the Enlarged Ordinary Share Capital following the issue and allotment of new Ordinary Shares pursuant to the Placing.

7.            ACTION TO BE TAKEN BY SHAREHOLDERS

A Form of Proxy for use at the General Meeting accompanies the Circular. The Form of Proxy should be completed and signed in accordance with the instructions printed on it and returned to the Company's registrars, SLC Registrars of 42-50 Hersham Road, Walton-on-Thames, Surrey KT12 1RZ as soon as possible and, in any event, so as to be received by no later than 2.00 p.m. on 26 June 2016, being 48 hours before the time appointed for holding the General Meeting.

Further details on the action to be taken by Shareholders are set out in the Circular, including information on the appointment of a proxy.

8.            RECOMMENDATION

The Directors believe that the Placing and the issue and allotment of further new Ordinary Shares will promote the success of the Company for the benefit of its Shareholders as a whole.

The Directors unanimously recommend Shareholders to vote in favour of the Resolutions to be proposed at the General Meeting as they intend to do so in respect of their own beneficial holdings amounting, in aggregate, to 57,807,468 Existing Ordinary Shares, representing approximately 60.12 per cent. of the existing issued share capital of the Company.

DEFINITIONS

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

"Admission"	admission of the Placing Shares to trading on AIM becoming effective in accordance with Rule 6 of the AIM Rules;
"AIM"	AIM, a market operated by the London Stock Exchange;
"AIM Rules"	the AIM rules for companies published by the London Stock Exchange from time to time;
"Board"	the board of Directors of the Company for the time being, including a duly constituted committee of the Directors;
"Cenkos Securities"	Cenkos Securities plc, a company incorporated in England and Wales with company number 05210733 whose registered office is at 6.7.8 Tokenhouse Yard, London EC2R 7AS;
"Company" or "Plexus"	Plexus Holdings plc, a company incorporated in England and Wales with company number 03322928 whose registered office is at 42-50 Hersham Road, Walton-on-Thames, Surrey KT12 1RZ;
"CREST"	the relevant system (as defined in the Uncertificated Securities Regulations 2001 SI 2001: No.3755 (as amended)) in respect of which Euroclear UK & Ireland Limited is the operator (as defined in those regulations);
"Directors"	the directors of the Company whose names are set out on page 1 of the Circular;
"Enlarged Ordinary Share Capital"	the entire issued ordinary share capital of the Company immediately following Admission;
"Existing Ordinary Shares"	the Ordinary Shares in issue as at the date of the Circular;
"Form of Proxy"	the form of proxy for use at the General Meeting, which accompanies the Circular;
"FCA"	the UK Financial Conduct Authority;
"FSMA"	the Financial Services and Markets Act 2000 (as amended);
"General Meeting"	the general meeting of the Company to be held at the offices of Fox Williams LLP, 10 Finsbury Square, London, EC2A 1AF at 2.00 p.m. on 28 June 2016;
"Gusar"	LLC Gusar (OOO Gusar) a company incorporated in the Russian Federation with its principal office at 57 Transportnaya St, Gus-Khrustalny, Vladimir Region, Russia 601506;
"Jereh"	Jereh International (Hong Kong) Co., Ltd, a company incorporated and registered in Hong Kong, China with company number 51169712-000-09-13-5 whose registered office at RMS 05-15 13A/F South Tower World Finance CTR Harbour City, 17 Canton Road, TSIM Sha Tsui, Hong Kong;
"Jereh Option"	the option for Jereh to subscribe for such number of new Ordinary Shares as would result in Jereh owning a further 5 per cent. of the entire issued share capital of the Company (in addition to the 4,468,537 new Ordinary Shares for which Jereh subscribed on 1 July 2015)  following exercise of the Jereh Option;
"Konar"	CJSC Konar (Zao Konar), a company incorporated in the Russian Federation with its principal office at 4-B Lenin Ave, Chelyabinsk, Russia 454085;
"London Stock Exchange"	London Stock Exchange plc;
"Notice of General Meeting"	the notice convening the General Meeting, which is set out at the end of the Circular;
"Ordinary Shares"	ordinary shares of 1p each in the capital of the Company;
"Overseas Shareholders"	Shareholders who are resident in, or citizens or nationals of, jurisdictions outside the United Kingdom;
"Placing"	the placing by Cenkos Securities of the Placing Shares on behalf of the Company at the Placing Price pursuant to and on the terms of the Placing Agreement;
"Placing Agreement"	the conditional agreement dated 10 June 2016  between the Company and Cenkos Securities for the placing of the Placing Shares at the Placing Price;
"Placing Price"	65 pence per Ordinary Share;
"Placing Shares"	9,230,770 new Ordinary Shares to be issued pursuant to the Placing;
"Regulatory Information Service"	one of the regulatory information services authorised by the United Kingdom Listing Authority to receive, process and disseminate regulatory information in respect of listed companies;
"Resolutions"	the resolutions set out in the Notice of General Meeting;
"Shareholders"	persons who are registered as holders of Ordinary Shares from time to time;
"UK" or "United Kingdom"	the United Kingdom of Great Britain and Northern Ireland;
"United Kingdom Listing Authority"	the FCA, acting in its capacity as the competent authority for the purposes of Part IV of FSMA; and
"US" or "United States"	the United States of America, its territories and possessions, any state of the United States of America, the District of Columbia and all other areas subject to the jurisdiction of the United States of America.

NOTES:

Plexus Holdings PLC

Plexus Holdings PLC, which began trading on AIM in December 2005, is an oil and gas engineering and services business, which supplies wellhead and mudline suspension equipment together with associated equipment and services for exploration and production applications. Based in Aberdeen, with offices in London, Cairo, Kuala Lumpur, Singapore and a presence in Houston, Texas, it has developed and patented a friction-grip method of engineering for oil and gas field wellheads and connectors, POS-GRIP®, which involves deforming one tubular member against another to effect gripping and sealing.

The Company plans to accelerate the roll out of POS-GRIP wellhead equipment as a superior alternative to current technology and for it to become the future industry standard for wellhead design. In particular, the technology has advantages in High Pressure/High Temperature (HP/HT) and Extreme HP/HT (X-HP/HT) oil and gas environments, for which there is growing global demand and where Plexus is being increasingly recognised as the supplier of choice.

To date, POS-GRIP wellhead systems have been used or selected to be used in over 350 oil and gas wells by international companies including ADTI, AGR, Apache Energy Australia, BHP Billiton, BG International, BP, Brunei Shell Petroleum, Cairn Energy, Centrica, ConocoPhillips, Dana Petroleum, Dubai Petroleum, ENI, GDF SUEZ, Global Santa Fe, Maersk, Niko Resources, Petro-Canada Trinidad & Tobago, Premier Oil Norge, Red Sea Petroleum Operating Company, Repsol, RWE, Senergy Limited, Shell China, Shell Egypt, Statoil, Silverstone Energy, Talisman Energy, Total, Tullow Oil, and Wintershall.

Importantly, the Company is focussed on extending its proprietary POS-GRIP technology into an increasing number of subsea applications. In line with this, in March 2011 the Company launched a Joint Industry Project ('JIP') initiative to develop a new subsea wellhead design, the 'Python Subsea Wellhead' utilising its friction-grip technology in collaboration with key oil and gas operators and service companies. BG, Royal Dutch Shell, Wintershall, Maersk, TOTAL, Tullow Oil, ENI, Senergy, ADTI and Oil States Industries Inc. The JIP is nearing completion with final qualification testing of all key features of the product under way, and the resultant Python Subsea Wellhead design will include a combination of key features never before seen in a subsea wellhead which include being rated to 15,000 psi, 4,000,000 pounds of 'instant' casing lockdown capacity, and importantly rigid metal annular seal technology qualified to match the performance of premium connectors. The building of a single string Python Subsea Wellhead system prototype commenced in February, and was launched at the SPE Offshore Europe Exhibition and Conference in Aberdeen ('OE2015') in September 2015.

Plexus is an innovative technology company always looking for opportunities to apply its proprietary POS-GRIP friction grip method of engineering to new products both within and outside the oil and gas industry. For example Plexus have recently completed a JIP in conjunction with Maersk to develop a downhole HPHT Tieback connector which for the first time allows the reconnection of production casing to HPHT exploration and production wells. In addition the Company has developed and qualified a new product called POS-SET Connector™ which is designed to re-establish a connection onto rough conductor casing previously cut above the seabed to facilitate tieback or abandonment operations. The market for permanent plugging and abandonment of wells is increasing in the North Sea and beyond, and could be an important new revenue stream for the Company.

 

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