Conclusion of £13.2m Loan agreement

Surface Transforms PLC

11 December 2023

 

11 December 2023

Surface Transforms plc

("Surface Transforms" or "the Company")

Conclusion of £13.2m Loan agreement

Surface Transforms plc (AIM:SCE) manufacturer of carbon fibre reinforced ceramic automotive brake discs is pleased to announce that it has signed a £13.2m loan agreement with the Liverpool City Region Urban Development Fund which is part funded by the European Regional Development Fund (ERDF). The loan will contribute to the Company's forthcoming £44m investment programme.

The investment is supporting capital expenditure that will see the production capacity available in the Knowsley site rise from £50m sales capacity per year in 2024 to £150m sales capacity per year in 2027. The capacity increase is required to support the forecast substantial sales increase underpinned  by the Company's current £390m* lifetime contract value and £300m prospective contract pipeline. The remainder of the £44m capital investment programme will be funded from free cash flow as the Company moves into profit, still expected during 2024. 

The terms of the loan remain unchanged from those outlined during the fundraising. The loan facility is available for drawdown over an initial two-year period and will be progressively deployed exclusively for capital expenditure purposes. Quarterly capital repayments will commence in the first quarter following the completion of the availability period. Completion of this loan agreement was a condition precedent to the second phase of the recent equity placing. This condition has now been satisfied. The passing of the necessary resolutions is expected at the forthcoming General Meeting on Monday 18 December 2023.

Kevin Johnson CEO said: "We are delighted to have secured this capital expenditure loan, that will enable us to execute our strategic growth plans and further strengthen our position as a leader in carbon fibre reinforced ceramic automotive brake discs. We want to thank our partners in the Liverpool City Region Combined Authority and Knowsley District Council for their support in securing this loan. We are now looking forward to concluding the recent equity placing and Open Offer and accelerating our programme of increased capacity installation paving the way for a swift acceleration of our expansion plans."

*This is based on the directors' expectations, their understanding of the relevant OEMs production plans and estimated demand for discs  and it takes into account the expected lifetime revenue

For enquiries, please contact:

Surface Transforms plc	[phone]
David Bundred, Chairman
Kevin Johnson CEO Isabelle Maddock CFO
Zeus (Nominated Adviser and Joint Broker)	[phone]
David Foreman / Dan Bate / James Edis (Investment Banking)
Dominic King (Corporate Broking)
Cavendish Capital Markets Ltd (Joint Broker)	[phone]
Ed Frisby / Abigail Kelly (Corporate Finance) Andrew Burdis / Harriet Ward  (ECM)

About Surface Transforms

Surface Transforms plc. (AIM:SCE) develops and produces carbon‐ceramic material automotive brake discs. The Company is the UK's only manufacturer of carbon‐ceramic brake discs, and only one of two mainstream carbon ceramic brake disc companies in the world, serving customers that include major OEMs in the global automotive markets.

The Company utilises its proprietary next generation Carbon Ceramic Technology to create lightweight brake discs for high‐performance road and track applications for both internal combustion engine cars and electric vehicles. While competitor carbon‐ceramic brake discs use discontinuous chopped carbon fibre, Surface Transforms interweaves continuous carbon fibre to form a 3D matrix, producing a stronger and more durable product with improved heat conductivity compared to competitor products; this reduces the brake system operating temperature, resulting in lighter and longer life components with superior brake performance. These benefits are in addition to the benefits of all carbon‐ceramic brake discs vs. iron brake discs: weight savings of up to 70%, longer product life, consistent performance, reduced brake pad dust and corrosion free.

The Company holds the London Stock Exchange's Green Economy Mark.

For additional information please visit www.surfacetransforms.com

 

END