Proposed Fundraising

RNS Number : 4175S

Transense Technologies PLC

21 November 2011

 



Transense Technologies plc (the "Company")

Proposed Fundraising to raise up to approximately £2.54 million

The Company is pleased to announce a proposed Fundraising to raise up to approximately £2.54 million (before expenses) by way of an Offer made to Eligible Warrantholders. 

Key Points

·     Warrants are exercisable at 4.5 pence but with an entitlement to one Bonus Share for every two Warrants exercised during the Offer Period.  The Bonus Share will be issued free of payment.

·    The Company has already received irrevocable commitments from certain Warrantholders to subscribe under the Offer for 15,243,769 Subscription Shares resulting in gross proceeds to the Company of £685,970.

·     The net proceeds of the Fundraising will be used to further develop the Company's strategy, and in particular to accelerate the pace at which it addresses the opportunities arising within the IntelliSAW division, and for general working capital purposes.

·     The Offer is conditional in all respects on Shareholders passing the Shareholder Resolutions at the General Meeting and the Warrantholders passing the Warrantholder Resolution at the Warrantholder Meeting.

·     A circular will be sent tomorrow to Shareholders and Warrantholders setting out details of the proposed Fundraising which is being put to Shareholders in a General Meeting and to Warrantholders in a Warrantholder Meeting, both convened for 15 December 2011.

·     If the Offer is not fully subscribed or the Offer does not proceed, the authorities being sought from Shareholders and Warrantholders at the Meetings to implement the Offer may at the discretion of the Board be used to effect a placing of new Ordinary Shares to new and existing shareholders for up to an aggregate of £2.54 million on terms overall no more favourable than those being offered to Warrantholders under the Offer.  The decision as to whether or not to proceed with a Placing has yet to be taken by the Directors and any Placing will not be underwritten.

The Chairman, David Kleeman, said:

"We are pleased by the level of support already shown by Warrantholders to the Offer. The Board believes that supported by the proceeds from the Fundraising, the Company is well on its way to generating significant income from its new revenue channels."

Contacts:

Transense Technologies PLC

Graham Storey    01869 238380

David Kleeman 020 7430 9329

Hybridan LLP - Financial adviser and Broker

Claire Noyce/Tim Goodman - 020 7947 4350

Brewin Dolphin - Nominated Adviser

Neil Baldwin     0845 213 4730

Proposed Fundraising to raise up to approximately £2.54m

The Company is to send tomorrow to Shareholders and Warrantholders a circular (the "Circular") setting out details of  a proposed Fundraising which  is being  put to  Shareholders in a General Meeting  and to Warrantholders in a Warrantholder Meeting, both convened for 15 December 2011. A copy of the Circular will be made available on the Company's website at www.transense.co.uk. The following announcement contains information which has been extracted without material adjustment from the letter from the Chairman contained within the Circular.

1.        Introduction

The Company announced yesterday that it proposes to raise up to approximately £2.54 million (before expenses) by way of an Offer made to Eligible Warrantholders with an entitlement to one Bonus Share for every two Warrants exercised during the Offer Period.  The Bonus Share will be issued free of payment. I am pleased to report that the Company has already received irrevocable commitments from certain Warrantholders to subscribe under the Offer for 15,243,769 Subscription Shares resulting in gross proceeds to the Company of £685,970.

The Offer is conditional in all respects on Shareholders passing the Shareholder Resolutions at the General Meeting and the Warrantholders passing the Warrantholder Resolution at the Warrantholder Meeting. If the Offer is not fully subscribed, the authorities being sought from Shareholders and Warrantholders at the Meetings to implement the Offer may at the discretion of the Board be used to effect a placing of new Ordinary Shares to new and existing shareholders for up to the balance of the shortfall on terms overall no more favourable than those being offered to Warrantholders under the Offer. Alternatively, if the Shareholder Resolutions are passed but the Warrantholder Resolution is not, the authorities given by the Shareholders may be used to effect a placing of new Ordinary Shares; any such Placing would only be effected on terms overall no more favourable than those being offered to Warrantholders in the Offer. The decision as to whether or not to proceed with a Placing has yet to be taken by the Directors and any Placing will not be underwritten.

The net proceeds of the Fundraising will be used to further develop the Company's strategy, and in particular to accelerate the pace at which it addresses the opportunities arising within the IntelliSAW division, and for general working capital purposes.

The purpose of the Circular is to provide Shareholders and Eligible Warrantholders with details of the Fundraising, to explain the background to and the reasons for the Fundraising and why the Directors recommend that Shareholders vote in favour of the Shareholder Resolutions to be proposed at the General Meeting and that Warrantholders vote in favour of the Warrantholder Resolution to be proposed at the Warrantholder Meeting. Notices convening these two meetings can be found at the back of the Circular.

2.         Background to and reasons for the Fundraising

In September 2011, Transense announced the formation of a new trading division, IntelliSAW, to develop and market SAW (Surface Acoustic Wave) based wireless sensor systems for Smart-Grid applications. IntelliSAW utilises existing technology from Transense together with proprietary SAW interrogation electronics to provide wireless temperature monitoring, initially targeted at the Electrical Switchgear market, but with potential to be expanded to wider market applications. The Company was pleased to welcome Tom Cunneen and other key members of the team, who formerly worked with Vectron, the Company's licensee, and who have worked with the technology embodied in the IntelliSAW product over the last 3 years. IntelliSAW has already received conditional orders of $300,000 and has agreed to distribution arrangements which could lead, the Board believes, to further orders with a value in excess of $700,000.

Existing Electrical Switchgear is increasingly burdened with more demand, and therefore the risk of failure, which can have a range of severe consequences including damage, power outages, human injury and loss of life. The Board understands that monitoring temperature is seen by market participants as highly effective and that SAW technology provides an ideal solution in a switchbox situation given its non-invasive, no-power, highly scalable and continuous monitoring characteristics. IntelliSAW's product has a high degree of accuracy, with a robust and configurable design for implementation in tough industrial environments.

A Morgan Stanley report analysing the Smart-Grid market puts current investment at $20 billion per year increasing to over $100 billion per year by 2030. In line with the state-of-the-art technology on offer, together with the market opportunity, the Company is seeking to grow this division by building new opportunities within the market space for its technology to generate additional near-term, and long-term, growth.

The Board believes the Company has over the last  2 years made substantial progress in opening a range of new revenue channels, and having been awarded new contracts during the period (most recently with Pirelli Brazil for its commercial vehicle tyre inspection tools), is seeking to deliver  good growth from a well diversified base. Translogik, the McLaren JDA, engineering consultancy and licensee royalty income, in addition to IntelliSAW, should in the opinion of the Board all contribute to the stability of revenue generation and the Company is particularly pleased with the developing relationship with General Motors. The Board believes that supported by the proceeds from the Fundraising, the Company is well on its way to generating significant revenues from these new channels. 

At 31 October 2011, the Company held net cash of approximately £700,000. In developing the IntelliSAW division, both through business development activities to enhance the already growing pipeline of opportunities together with a scale-up of production to serve the anticipated sales growth we expect to achieve, the Board has decided to seek to raise funds of up to a maximum of  £2.54 million (before expenses). In addition to funding the development of IntelliSAW, amounts raised will also in part cover general working capital (general operational and administrative expenditures).

The Board considered a range of options for raising funds to accelerate the development of the Company, and as part of this process consulted with the major Shareholders. These options were considered against a background of volatile and difficult market conditions for smaller companies on the AIM market. The Board concluded that the Offer provides an attractive and cost effective means to raise funds from existing investors in a manner which utilises the existing capital structure of the Company (thereby effectively limiting dilution). This has enabled the Company to already secure, subject to conditions, £685,970 of additional gross funding through irrevocable commitments.

3.         Details of the Offer

On and subject to the terms and conditions of the Offer, the Company is inviting Eligible Warrantholders to exercise their Warrants and subscribe for Subscription Shares.

The principal terms of the Offer and the procedure for exercise and payment are summarised below. However, attention is drawn to Part IV of the Circular which contains the full terms and conditions of the Offer, including the procedure for exercise and payment, which Eligible Warrantholders are asked to read carefully and follow in full.

Eligible Warrantholders may exercise, on and subject to the terms and conditions set out in the Circular any whole number of Warrants at the Warrant Exercise Price. For every two Warrants exercised, Eligible Warrantholders will receive one Bonus Share.

There is no minimum subscription amount.

The Bonus Shares will be issued free of payment but fully paid up to their nominal value (1 pence) by capitalising up to £281,824.84 of the amount currently standing to the credit of the Company's share premium account pursuant to section 610(3) of the Act.

The Subscription Shares and the Bonus Shares will, upon issue, rank pari passu in all respects with the Ordinary Shares in issue at the date of Admission, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

The allotment and issue of the Subscription Shares and the Bonus Shares will be made upon and be subject to the terms and conditions set out in the Circular. Eligible Warrantholders will only be entitled to participate in the Offer in accordance with the procedure set out in the Circular and provided the Warrant Exercise Form is completed in accordance with the instructions printed on it.

An application will be made to the London Stock Exchange for the Subscription Shares and the Bonus Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings in the Subscription Shares and the Bonus Shares will commence on AIM at 8.00 a.m. on 20 December 2011.

The Offer is in all respects conditional on the passing of the Shareholder Resolutions and the Warrantholder Resolution.

4.          Director's Participation in the Offer

The table below sets out the Directors' participation in the Offer:

* calculated on the Enlarged Share Capital (on the assumption no outstanding options are exercised) following Admission and on the assumption the Offer is fully subscribed.

5.               Related Party Transaction

Each of the Directors, David Kleeman, Graham Storey, David Ford and Rodney Westhead is a Warrantholder, and each of them has given an irrevocable undertaking to exercise such number of Warrants as is set out in the table above. Although a significant proportion of Shareholders are also Warrantholders, not all are, and as such the Fundraising is being treated as a related party transaction under the AIM Rules. As none of the Directors can be classed as independent (due to their participation in the Fundraising by virtue of their holding of Warrants), Brewin Dolphin, as the Company's nominated adviser, has considered this transaction alone for the purpose of the AIM Rules. Brewin Dolphin has given careful consideration to the proposed terms of the Fundraising and has concluded that its terms are fair and reasonable insofar as Shareholders are concerned.

6.               Use of Proceeds

The proceeds of the Fundraising will be used to develop the IntelliSAW division (in both business development activities and volume production capabilities) which the Board believes has significant opportunity for growth and revenue/profit contribution and also to meet the general working capital needs of the Group.

 7.                 Shareholder Resolutions

For the Fundraising to proceed, Shareholder approval is required to:

(a)        give the Directors the authority to allot the Subscription Shares, or, if the Offer is not fully subscribed or does not proceed, the Placing Shares up to a maximum nominal value of £845,474.51 and to dis-apply statutory pre-emption rights in respect thereof; and

(b)        capitalise up to £281,824.84 of the amount standing to the credit of the share premium account for the purposes of paying up in full at par up to 28,182,484 Bonus Shares and giving the Directors the authority to allot such Bonus Shares pursuant to the Fundraising.

In order to obtain the necessary Shareholder approvals, a General Meeting of the Company to be held at which the Shareholder Resolutions will be proposed.

A notice convening the General Meeting to be held at the offices of Brewin Dolphin, 12 Smithfield Street, London EC1A at 10.00 a.m. on 15 December 2011 is set out at the end of the Circular.

8.          Warrantholder Resolution

For the Offer to proceed, Warrantholder approval is being sought to disapply clause 6 of the Warrant Instrument.

Clause 6 of the Warrant Instrument relates, inter alia, to the allotment of fully paid Ordinary Shares by way of capitalisation of reserves (such as the share premium account) to holders of Ordinary Shares. The clause provides that in certain circumstances, the number of Warrants should be increased in due proportion to the adjustment in ordinary share capital effected by the capitalisation. The Board do not believe the provisions of clause 6 are intended to apply to capital raisings such as the Offer, but because the Offer involves the issue of Bonus Shares and most Warrantholders also hold Ordinary Shares, the Board has been advised that the Offer might be said to fall within the scope of clause 6. In light of this, and because the Board consider it makes no commercial sense to adjust the number of Warrants in connection with the Offer, the Offer is conditional on Warrantholders disapplying the provisions of clause 6 in respect of the Offer .

In order to disapply clause 6 of the Warrant Instrument in respect of the Offer  the Warrantholder Meeting is to be held at which the Warrantholder Resolution will be proposed. If Shareholders pass the Shareholder Resolutions but Warrantholders do not pass the Warrantholder Resolution then the Board will be authorised to effect the Placing only.

A notice convening the Warrantholder Meeting to be held at the offices of Brewin Dolphin, 12 Smithfield Street, London EC1A at 10.15 a.m. (or immediately after conclusion of the General Meeting if later) on 15 December 2011 is set out at the end of the  Circular.

9.       Recommendation

The Directors consider that the Fundraising will promote the success of the Company for the benefit of its members as a whole. Accordingly, the Directors unanimously recommend Shareholders to vote in favour of the Shareholder Resolutions at the General Meeting and Warrantholders to vote in favour of the Warrantholder Resolution at the Warrantholder Meeting and recommend, as they intend to do in respect of their own holdings.

The Directors have received irrevocable undertakings from Warrantholders and Shareholders (including themselves):

(i)         to vote in favour of the Shareholder Resolutions in respect of 32,776,055 Ordinary Shares representing 24.8 per cent. of the Existing Ordinary Shares;

(ii)        to vote in favour of the Warrantholder Resolution in respect of 19,735,586 Warrants representing 31.1 per cent. of the existing Warrants; and

(iii)       to exercise Warrants and subscribe for Subscription Shares under the Offer with aggregate subscription proceeds of £685,970.

In this announcement, the following definitions extracted from the Circular apply:

"Act"                                                     Companies Act 2006 (as amended)

"Admission"                                      the admission of the Subscription Shares and the Bonus Shares to

trading on AIM becoming effective in accordance with the AIM Rules

"AIM"                                                    a market operated by the London Stock Exchange

"AIM Rules"                                      AIM Rules for Companies published by the London Stock Exchange (as amended or reissued from time to time)

"Board" or "Directors"                   the board of directors of the Company

"Bonus Shares"                                 up to 28,182,484 new Ordinary Shares to be issued free of payment but fully paid as to nominal value (1 pence) by capitalising up to £281,824.84 of the Company's share premium account for the purposes of the Fundraising

"Brewin Dolphin"                            Brewin Dolphin Limited, a subsidiary of Brewin Dolphin Holdings plc, the Company's nominated adviser

"Closing Date"                                  the date on which the Offer will be closed being 11 a.m. on 13 December 2011, or such later time as the Directors and Hybridan may agree

"Company" or "Transense           Transense Technologies PLC

Technologies PLC"

"Eligible Warrantholders"           Warrantholders on the register of warrantholders of the Company

on the Record Date with addresses for service in the European Economic Area

"Enlarged Ordinary Share            the Ordinary Share capital of the Company in issue immediately

Capital"                                                following Admission

"Excluded Territories"                   Australia, New Zealand, the United States, Canada, Japan and the

Republic of South Africa and/or their respective territories or possessions

"Existing Ordinary Shares"          the 132,242,167 Ordinary Shares in issue at the Record Date

"Form of Shareholder Proxy"     the white form of proxy for use by Shareholders at the General

Meeting

"Form of Warrantholder Proxy"  the pink form of proxy for use by Warrantholders at the

Warrantholder Meeting

"FSMA"                                                the Financial Services and Markets Act 2000 (as amended)

"Fundraising"                                    the Offer and, if applicable, the Placing

"General Meeting"                         the general meeting of the Company, convened for 10.00 a.m. on

15 December 2011, and any adjournment thereof, notice of which is set out in the Notice of General Meeting, which will consider the Shareholder Resolutions

 "Group"                                              Transense Technologies PLC and its subsidiaries

"Hybridan"                                         Hybridan LLP, a member of the London Stock Exchange

"IntelliSAW"                                      IntelliSAW, a trading division of the Company

"London Stock Exchange"            London Stock Exchange plc

"McLaren JDA"                                 the joint development agreement dated as of 5 May 2011 between the Company and McLaren Electronic Systems Limited

"Meetings"                                         the General Meeting and the Warrantholder Meeting

"Notice of General Meeting"     the notice of General Meeting set out at the end of the Circular

"Notice of Warrantholder            the notice of the Warrantholder Meeting set out at the end of the

Meeting"                                             Circular

"Offer"                                                 the offer to Warrantholders entitling them to one Bonus Share for

every two Warrants exercised being made by the Company on the terms set out in the Circular

"Offer Period"                                  the period starting 22 November 2011 and ending on the Closing

Date

"Official List"                                     the list of all securities that have been approved by the UKLA for

trading on a UK regulated market

"Ordinary Shares"                           ordinary shares in the capital of the Company having a nominal

value of 1 pence

"Placing"                                             a potential placing of new Ordinary Shares with new and/or existing shareholders: (a) to the extent that the Offer is not fully subscribed for an amount up to the balance of the shortfall or (b) to the extent that the Offer does not proceed for an amount up to £2.54 million, and in either case on terms overall no more favourable than those offered to Warrantholders pursuant to the terms of the Offer

"Placing Shares"                               new Ordinary Shares issued pursuant to the Placing

"Record Date"                                   the record date for participation in the Offer, being 6.00 p.m. on

18 November 2011

"Resolutions"                                    the Shareholder Resolutions and the Warrantholder Resolution

"Shareholder"                                   a holder of Ordinary Shares from time to time

"Shareholder Resolutions"         the resolutions to be proposed at the General Meeting, details of

which are set out in the Notice of General Meeting

"Subscription Shares"                    up to 56,364,967 new Ordinary Shares to be issued pursuant to the Offer

"Translogik"                                       Translogik Limited, a subsidiary of the Company

"UK"                                                      the United Kingdom of Great Britain and Northern Ireland

"UKLA"                                                 the Financial Services Authority acting in its capacity as the

competent authority for the purposes of Part VI of FSMA

"United States"                                 the United States of America, its territories and possessions, any

state of the United States of America and the District of Columbia

"Warrantholder"                              a holder of Warrants from time to time

"Warrants"                                         the warrants to subscribe for Ordinary Shares at the Warrant Exercise Price on the terms and conditions set out in the Warrant Instrument.

"Warrant Exercise Form"              the exercise form set out on the reverse of a Warrantholder's

Warrant certificate

"Warrant Exercise Price"              4.5 pence per Subscription Share

"Warrantholder Meeting"           the meeting of Warrantholders, convened for 10.15 a.m. on 15 December 2011 (or immediately after conclusion of the General Meeting, if later) and any adjournment thereof, notice of which is set out in the Notice of Warrantholder Meeting, which will consider the Warrantholder Resolution

"Warrantholder Resolution"      the resolution to be proposed at the Warrantholder Meeting, details of which are set out in the Notice of Warrantholder Meeting

"Warrant Instrument"                   the Warrant Instrument dated 1 June 2010 constituting the Warrants

"Vectron"                                            Vectron International, part of the Dover Corporation

A reference to £ is to pound sterling, being the lawful currency of the UK.

A reference to € is to the Euro, being the official currency of 17 of the 27 member states of the European Union.

 

END

 

 

MSCPGGCWGUPGGBU