Placing and Open Offer
Quadrise Fuels International Plc
("QFI" or "the Company")
Placing and Open Offer of 85,816,534 new Ordinary Shares at 3.5 pence per share on the basis of 5 Offer Shares for every 32 Existing Ordinary Shares
8 March 2011
The Company announces today that it proposes to raise approximately £3.0 million (before expenses) by way of a Placing and Open Offer, thereby allowing the Company's existing shareholders the opportunity to participate in the fundraising.
The terms of the Placing and Open Offer are described in a circular dated 8 March 2011, which is being posted to shareholders today. The net proceeds of the Placing and Open Offer are expected to be approximately £2.7 million and, as explained below, the directors believe that this will be sufficient to take the Group to the stage where it is generating net positive cashflow from continuing operations. Application will be made to the London Stock Exchange for the new ordinary shares subscribed in the Placing and Open Offer ("Offer Shares") to be admitted to trading on AIM ("Admission"). It is expected that Admission will become effective and that dealings will commence on 4 April 2011. The Placing and Open Offer are conditional, inter alia, upon Admission.
Existing shareholders are being invited to apply for Offer Shares, pro rata to their existing shareholdings on the basis of 5 Offer Shares for every 32 existing Ordinary Shares held at the Record Date of 5pm on 3 March 2011, under the Open Offer at a price of 3.5 pence per Offer Share, payable in full on application and free of all expenses.
The Open Offer is subject to the satisfaction, amongst other matters, of the following conditions on or before 7 April 2011, or such later date (being not later than 30 April 2011), as the Company may decide:
(i) the Placing Agreement being unconditional in all respects and not having been terminated in accordance with its terms; and
(ii) Admission becoming effective.
The Offer Shares will, when issued and fully paid, rank pari passu in all respects with the existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of Admission.
The Open Offer has been structured so as to allow Qualifying Shareholders to subscribe for Offer Shares at the Offer Price pro rata to their holdings of Existing Ordinary Shares. To the extent that Offer Shares are not subscribed by Qualifying Shareholders, Open Offer Entitlements will lapse. Further details of the Open Offer and the procedure for application are given in the circular.
Jendens Securities Limited ("Jendens"), the Company's joint broker, has pursuant to the Placing Agreement undertaken to use its reasonable endeavours to place any Offer Shares not subscribed for by Qualifying Shareholders with certain other investors. Accordingly, Jendens has made arrangements with certain institutional investors, Directors and other investors for the Offer Shares to be placed to the extent that they are not taken up by Qualifying Shareholders under the Open Offer.
In order to assist with the management of the fundraising and ensure that a substantial number of Offer Shares were available for institutional investors under the Placing certain shareholders (including the Chairman and other Directors) have given irrevocable undertakings not to apply for their Open Offer Entitlements. In light of these undertakings, 62,752,435 Offer Shares have been placed firm with institutional and other investors and a further 23,064,099 Offer Shares have been provisionally placed with institutional and other investors.
Ian Williams, Hemant Thanawala, Ian Duckels and Jason Miles (all of whom are company directors) have given commitments to subscribe in person or by a nominee for up to 4,714,286 Offer Shares in aggregate in the Placing.
Use of proceeds
The net proceeds of the Placing and Open Offer are expected to be up to approximately £2.7 million. The proceeds will be used to strengthen the Group's balance sheet and to meet the current projected business development costs, capital expenditure and general working capital requirements of the Group over the next 24 months.
The Board believes that the expected net proceeds of the Placing and Open Offer will allow the Company to develop its current projects to the stage when they can generate net positive cash flow from continuing operations. The Directors believe that the Placing and Open Offer is the most equitable method to allow as many Shareholders to participate in the Company's future as possible.
Current trading and future prospects
The Group restructuring, completed in November 2010, resulted in the separation of the Group's 'directly managed' interests from its investments in Canadian associate companies. The investments in the Canadian companies are directly held by the Company and the managed interests are held and managed by Quadrise International Limited ("QIL"), a wholly-owned subsidiary of the Company.
The QIL managed activity comprises active business development programmes in which QIL is working jointly with major corporations on defined projects. These programmes typically move through proving phases which, on successful completion, should progress to commercial operations. QIL's active programmes have reached varying stages of development, as detailed below.
Marine MSAR® fuel programme
The marine MSAR® fuel programme is advancing towards the commercial phase. QIL, Maersk, AkzoNobel and certain major refiners are working jointly in a coordinated programme aimed at the production, supply and marketing of MSAR® marine fuel as an approved low cost replacement for bunker fuel. Bunker fuel oil is a global market of over 170 million tonnes per annum. Securing even a modest share will provide substantial underpinning of the future value of QFI. The project has advanced through progressive technical development and is nearing the end of the pre-commercial phase. In anticipation of successful progression, Maersk and QIL have entered into a Royalty Agreement, which provides the legal framework for future commercial sales of Marine MSAR® fuel to Maersk and third parties.
Saudi and Pemex programmes
The Saudi and PEMEX programmes involve the installation of MSAR® manufacturing units in major refineries initially on a proving basis. The programmes involve trial operations which will be assessed to validate projected benefits and, on success, progress to continuous commercial operation. In both cases the client companies will be meeting the costs of the pre-commercial phase. The value of the conversion from fuel oil to MSAR® fuels production has an added advantage for both Mexico and Saudi Arabia. Both are net importers of diesel fuel and the conversion results in a step change in the yield of diesel fuel components from the associated refineries. In both cases, there should be scope to replicate the projects within their refinery portfolios.
PowerSeraya programme
An agreement has been reached with PowerSeraya in Singapore to identify and develop a source of MSAR® fuels for their power plant in Jurong. This involves a joint programme, which is currently underway, to identify, evaluate and select a suitable manufacturing base and supply system to support a long term fuel supply agreement.
The Company has adopted a 'select and focus' strategy in relation to its managed projects to concentrate resources and advance the revenue phase. Progress over the past two years has vindicated that decision. However, further opportunities have been identified for the next phase of the group's development when resources should become available to support a broadening business base.
Four project companies ("Project Cos"), Quadrise Marine Limited, Quadrise KSA Limited, Quadrise Americas Limited and Quadrise Asia Limited have been formed to progress these programmes. Further details concerning the Project Cos and their shareholders are given in the circular.
Non-managed interests
In relation to the Group's non-managed interests, where the Company holds minority interests, a new strategy adopted by Quadrise Canada Corporation Inc ("QCC") has led to the creation of several 'spin out' ventures to exploit proprietary technologies developed by QCC under licenses. The most active to date has been Optimal Resources Inc, which is, in effect, a junior oil production company currently piloting the QCC Enhanced Oil Recovery technology in its Lloydminster oil fields. If successful, the QCC Enhanced Oil Recovery technology license would offer substantial competitive advantage for Optimal in securing reserves and developing production. QFI remains the largest shareholder in QCC (20.4 per cent.) and in Optimal (9.6 per cent.).
Commenting on this development, Ian Williams, Executive Chairman of QFI said:
"QFI management have been pioneering a new technology in traditional markets. This is never easy and the obstacles are often more challenging than initially assessed. The Company has, however, made substantial progress over the past 18 months in its core selected managed programmes. As indicated above, the Directors believe that the funds now being sought should be sufficient to take the Group to the point where it is generating net positive cash flow from continuing operations".
The latest time for applications to be received under the Open Offer is 11.00 a.m. on 29 March 2011.
Enquiries:
Quadrise Fuels International plc
Tel: +44 (0)20 7550 4931
Ian Williams, Executive Chairman
Hemant Thanawala, Finance Director
Fairfax I.S. PLC
Tel: +44 (0)20 7598 5368
Simon Bennett/Katy Birkin
Jendens Securities Limited
Andrew Matharu
Andrew Edwards
Christopher Thomas
Tel: +44 (0)20 3372 2500
This information is provided by RNS