TIDMVLS
RNS Number : 6494V
Madison Bidco Limited
05 December 2023
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF THAT JURISDICTION
FOR IMMEDIATE RELEASE
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF EU REGULATION 596/2014 (WHICH FORMS PART OF UK LAW
BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018). UPON THE
PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW
CONSIDERED TO BE IN THE PUBLIC DOMAIN
5 December 2023
RECOMMED CASH ACQUISITION
of
Velocys plc
by
Madison Bidco Limited
(a newly formed company indirectly owned by (i) a fund advised
by Lightrock, (ii) a fund advised by Carbon Direct Capital, (iii)
GenZero and (iv) Kibo Investments, as members of the
Consortium)
to be implemented by means of a scheme of arrangement
under Part 26 of the Companies Act 2006
Summary
-- The boards of directors of Madison Bidco Limited ("Bidco")
and Velocys plc ("Velocys") are pleased to announce that they have
reached agreement on the terms and conditions of a recommended cash
acquisition by Bidco of the entire issued, and to be issued,
ordinary share capital of Velocys. It is intended that the
Acquisition will be implemented by way of a court-sanctioned scheme
of arrangement under Part 26 of the 2006 Act.
-- Under the terms of the Acquisition, each Velocys Shareholder will be entitled to receive:
for each Velocys Share: 0.25 pence in cash
-- In addition, conditional on the Acquisition becoming
Effective, Bidco has agreed to provide up to US$40 million
(approximately GBP31.5 million) of growth capital to Velocys which
is expected to ensure that Velocys and its management have the
capital resources needed to deliver against Velocys' medium-term
strategic plans.
-- In connection with the Acquisition, the Carbon Direct Fund
has agreed to provide a secured bridging loan of GBP3.5 million
("Bridge Financing") with a view to providing sufficient capital
for Velocys through to the Acquisition becoming Effective.
-- The Acquisition values Velocys' entire issued, and to be
issued, ordinary share capital at approximately GBP4.1 million on a
fully diluted basis and provides a post growth capital valuation of
Velocys of up to approximately US$45.2 million (approximately
GBP35.6 million).
-- The Velocys Directors unanimously intend to recommend the Scheme.
-- Irrevocable undertakings to vote in favour of the Scheme have
been received in respect of an aggregate of 310,227,044 Velocys
Shares representing 18.78 per cent. of the existing issued ordinary
share capital of Velocys as at the Latest Practicable Date.
-- If, on or after the date of this announcement and prior to
the Acquisition becoming Effective, any dividend and/or other
distribution and/or other return of capital or value is announced,
declared, made or paid or becomes payable in respect of the Velocys
Shares, Bidco reserves the right to reduce the consideration
payable under the terms of the Acquisition for the Velocys Shares
by an amount up to the aggregate amount of such dividend and/or
distribution and/or other return of capital or value, in which case
any reference in this announcement to the consideration payable
under the terms of the Acquisition will be deemed to be a reference
to the consideration as so reduced. Any exercise by Bidco of its
rights referred to in this paragraph shall be the subject of an
announcement and, for the avoidance of doubt, shall not be regarded
as constituting any revision or variation of the terms of the
Scheme or the Acquisition. In such circumstances, Velocys
Shareholders shall be entitled to retain any such dividend,
distribution and/or other return of capital or value.
-- It is expected that the Scheme Document, containing further
information about the Acquisition and notices of the Court Meeting
and the General Meeting, will be published as soon as practicable
and, in any event, within 28 days of this announcement.
Recommendation
-- The Velocys Directors, who have been so advised by Panmure
Gordon as to the financial terms of the Acquisition, consider the
terms of the Acquisition to be fair and reasonable. Panmure Gordon
is providing independent financial advice to the Velocys Directors
for the purposes of Rule 3 of the Takeover Code.
-- In providing its financial advice to the Velocys Directors,
Panmure Gordon has taken into account the commercial assessments of
the Velocys Directors . Panmure Gordon has taken into consideration
Velocys' limited cash resources, the challenging financial position
of Velocys and the absence of alternative funding offers, in
circumstances where, should the Bridge Financing not be made
available by the Carbon Direct Fund in connection with the
Acquisition, the insolvency of Velocys would be highly likely.
-- The Velocys Directors believe that t he Bridge Financing ,
which is vital for Velocys to avoid insolvency , would not be made
available in the absence of the Acquisition and that any insolvency
would be highly likely to result in minimal value being returned to
Velocys Shareholders .
-- Accordingly, the Velocys Directors, who have been so advised
by Panmure Gordon, intend to unanimously recommend that Velocys
Shareholders vote in favour of the Scheme at the Court Meeting and
the Resolutions at the General Meeting (or in the event that the
Acquisition is implemented by way of a Takeover Offer, to accept or
procure the acceptance of such Takeover Offer).
-- Each Velocys Director who holds Velocys Shares has
irrevocably undertaken to vote in favour of the Scheme at the Court
Meeting and in favour of the Resolutions to be proposed at the
General Meeting in respect of their own beneficial holdings of
Velocys Shares, amounting to in aggregate 7 ,070,412 Velocys Shares
representing approximately 0.43 per cent. of the existing issued
ordinary share capital of Velocys as at the Latest Practicable
Date.
-- Velocys Shareholders should note that, in the event that the
Acquisition does not become Effective, it is unlikely that Velocys
will be able to repay the Bridge Financing and remain a going
concern. In those circumstances, it is likely that administrators
would be appointed promptly and, whilst the administrator would
seek to maximise value from the sale of available assets, it is
considered highly unlikely that this would result in anything other
than minimal returns to Velocys Shareholders, after costs and
preferential (including secured) and unsecured claims that would
arise on insolvency.
Background to and reasons for the Acquisition
-- Bidco believes that the production of sustainable aviation
fuel ("SAF") is a compelling market opportunity given the
confluence of regulatory support, demand pull by airlines, and
increased technology readiness. Furthermore, Bidco believes Velocys
is well positioned to capitalise on these sector tailwinds, given
its patented integrated Fischer-Tropsch reactor and catalysis
solution and its pipeline of commercial licensing
opportunities.
-- However, while Bidco believes that these secular tailwinds
for SAF potentially stand to benefit Velocys and its technology in
the long term, without significant additional growth capital
Velocys will be unable to further scale the business and accelerate
the delivery of its technology to clients, including Velocys'
reference projects. Reflecting the very challenging public market
environment, the significant deterioration in Velocys' share price
prior to release of the possible offer announcement on 20 November
2023, and the risks and circumstances of the business, Velocys has
been unable to raise sufficient growth capital. Bidco believes
that, given this funding challenge, the viability of the business
and its ability to deliver against its growth strategy will be
impacted to the detriment of Velocys' shareholders, management team
and employees.
-- It is the view of Bidco that the longer-term interests of
Velocys and its employees therefore are best served away from the
public markets. Bidco believes that Velocys is best positioned to
succeed as a private company, with the current management team, and
with an injection of growth capital from a consortium of long-term
investors who have the requisite experience in supporting
industrial companies as they seek to fully realise their
potential.
-- Velocys noted in its announcement on 20 November 2023 that,
unless Velocys was able to find meaningful sources of funding or
strategic options, it was unlikely that Velocys would be able to
continue as a going concern beyond the end of December 2023. This
date has now been extended into early-January 2024 as a result of
cost control and cash management initiatives. The Acquisition
provides Velocys Shareholders with a certain liquidity opportunity
in circumstances where shareholders may otherwise face the prospect
of realising minimal value.
Background to and reasons for the recommendation
-- Velocys operates a business model focussed on providing a
unique technology pathway to enable production of SAF. Velocys is
focused on developing its proprietary technology solutions ahead of
commercial adoption and currently does not have recurring revenues.
As a result, it has historically been reliant on equity raises and
grant funding to execute its business strategy. Velocys has for
some time been seeking significant long-term funding. However,
reflecting the challenging equity market environment and the
current risks and circumstances of the business, Velocys has not
been able to secure the funding required to provide long-term
security for the operations of the business. As noted in the
announcement made by Velocys on 20 November 2023, to enable it to
continue as a going concern, Velocys would require funding by the
end of December 2023. This date has now been extended into
early-January 2024 as a result of cost control and cash management
initiatives undertaken by Velocys however this does not materially
alter Velocys' precarious financial position.
-- As part of the Acquisition, the Carbon Direct Fund has agreed
to provide the Bridge Financing as a short-term funding solution to
provide sufficient capital for Velocys through to the Acquisition
becoming Effective (further details of which are set out in section
11 below). It is the understanding of the Velocys Directors that,
absent the Acquisition, the Bridge Financing would not be made
available.
-- Additionally, conditional on the Acquisition becoming
Effective, Bidco has agreed that it will provide up to US$40
million of growth capital to Velocys (of which a portion will be
immediately available from the Effective Date) which is expected to
ensure that Velocys and its management have the capital resources
needed to deliver against Velocys' medium-term strategic plans.
-- In the absence of the Acquisition or any alternative funding
or strategic options, Velocys will need to consider and take
immediate steps to implement alternatives which seek to protect the
interests of all creditors, including financial creditors,
commercial counterparties and employees, but which would highly
likely result in minimal value being attributed to the existing
equity. There can be no guarantee that Velocys would be able to
implement alternatives in the available timeframe and it is highly
likely that Velocys would face insolvency.
-- In intending to unanimously recommend the Acquisition, the
Velocys Board believes that there is no present viable alternative
likely to produce more value for Velocys Shareholders than would be
available through the Acquisition, and further that the Acquisition
(given the associated provision of funding) represents the only
realistic prospect of allowing Velocys to continue as a going
concern.
Irrevocable undertakings
-- As noted above, Bidco has received irrevocable undertakings
from the Velocys Directors who hold Velocys Shares to vote (or,
where applicable, procure voting) in favour of the Scheme at the
Court Meeting and the Resolutions to be proposed at the General
Meeting (or in the event that the Acquisition is implemented by a
Takeover Offer, to accept or procure acceptance of such Takeover
Offer), in respect of all their shares, representing in aggregate
7,070,412 Velocys Shares (representing approximately 0.43 per cent.
of the existing issued ordinary share capital of Velocys) as at the
Latest Practicable Date. These undertakings will remain binding in
the event that a higher competing offer for Velocys is made.
-- In addition to the irrevocable undertakings referred to above
received from the Velocys Directors, Bidco has also received an
irrevocable commitment from Lansdowne Partners to vote in favour of
the Scheme at the Court Meeting and the Resolutions to be proposed
at the General Meeting (or in the event that the Acquisition is
implemented by an Takeover Offer, to accept or procure acceptance
of such Takeover Offer), in respect of 303,156,632 Velocys Shares
(representing approximately 18.35 per cent. of the existing issued
ordinary share capital of Velocys) as at the Latest Practicable
Date. This undertaking will remain binding in the event that a
higher competing offer for Velocys is made.
-- Accordingly, Bidco has received irrevocable commitments to
vote in favour of the Scheme at the Court Meeting and the
Resolutions to be proposed at the General Meeting (or in the event
that the Acquisition is implemented by a Takeover Offer, to accept
or procure acceptance of such Takeover Offer), in respect of a
total of 310,227,044 Velocys Shares (representing in aggregate
approximately 18.78 per cent. of existing issued ordinary share
capital of Velocys) as at the Latest Practicable Date.
-- Further details of these irrevocable undertakings (including
the circumstances in which they cease to be binding) are set out in
Appendix 3 to this announcement.
Information relating to Bidco and the Consortium
-- Bidco is a private limited company incorporated in England
and Wales on 28 November 2023. It has its registered office at 1
Eagle Place, London, Greater London, SW1Y 6AF. Bidco was formed for
the purposes of the Acquisition and has not traded since its date
of incorporation, nor has it entered into any obligations other
than in connection with the Acquisition.
-- The members of the Consortium are:
o Lightrock : Lightrock is a global private equity firm and
'impact investor' with a focus on growth capital. Lightrock's
investment philosophy targets companies that pursue scalable and
tech-driven business models around the key impact themes of people,
planet, and productivity-tech for good;
o Carbon Direct Capital : Carbon Direct Capital is a global
growth investment firm that partners with carbon management
technology companies. The firm believes that investing with a
science-focused approach maximizes both climate impact and
financial returns;
o GenZero : GenZero is founded by Temasek, a global investment
firm incorporated and headquartered in Singapore. It is committed
to delivering positive climate impact and long-term sustainable
financial returns by investing in opportunities with the potential
to be nurtured into impactful and scalable solutions ; and
o Kibo Investments : Kibo Investments is a Singapore-based
private investment office with a focus on climate technology .
Information relating to Velocys
-- Velocys is an international sustainable fuels technology
company, providing clients with one of the most sustainable routes
to the economic production of drop-in SAF from a variety of waste
materials. Velocys operates a capital light and scaleable licencing
model offering a technology solution for the development of
synthetic sustainable fuels manufacturing via its proprietary
patented micro-channel Fischer-Tropsch reactors and comprehensive
biorefinery integrated technology package. Velocys has offices in
Oxford, UK and Houston, US, as well as reactor manufacturing
facilities in Ohio, US.
-- Velocys has a number of third-party clients to whom it
supplies its technology; in addition Velocys is developing two
full-scale biorefinery reference projects: the Bayou Fuels Project
in Mississippi, US, which will utilise woody waste to produce
sustainable fuels, and the Altalto Project in Immingham in the UK,
which will process municipal and commercial solid waste into
sustainable fuels. The reference projects are being developed to
accelerate adoption of the Velocys' technology and, following the
completion of third-party development capital project financing and
commencement of the detailed engineering stage of these projects,
the reference projects are expected to generate significant
technology licensing revenues.
-- Velocys' near-term ambitions are focused on creating
sustainable value by growing the customer pipeline, progressing its
biorefinery reference projects in the UK and US through Front End
Engineering Design ("FEED") delivery and revenue generation. Fees
will start being generated as the reference projects progress
through their FEED phase through the execution of technology
licenses and engineering services agreements. Velocys is also
focused on expansion of its commercial and business development
functions, and engineering and reactor manufacturing to support the
scale-up of its business.
-- Velocys' aim is to become a leading provider of innovative
SAF technology solutions to enable the decarbonisation of the
aviation industry. Velocys is moving towards achieving these
ambitions whilst creating sustained shareholder value through a
diverse client pipeline delivering significant one-off and
recurring revenues.
Timetable and conditions
-- It is intended that the Acquisition will be implemented by
way of a court--sanctioned scheme of arrangement under Part 26 of
the 2006 Act (although Bidco reserves the right to effect the
Acquisition by way of a Takeover Offer, subject to the consent of
the Panel and the terms of the Cooperation Agreement).
-- The terms of the Acquisition will be put to Velocys
Shareholders at the Court Meeting and the General Meeting. The
Court Meeting and the General Meeting are required to enable
Velocys Shareholders to consider and, if thought fit, vote in
favour of the Scheme and the Resolutions to implement the Scheme.
In order to become Effective, the Scheme must be approved by a
majority in number of Velocys Shareholders, present and voting at
the Court Meeting, whether in person or by proxy, representing 75
per cent. or more in value of the Scheme Shares voted at the Court
Meeting. In addition, Resolutions to deal with certain matters
ancillary to the Scheme must be passed by Velocys Shareholders
representing at least 75 per cent. of votes cast at the General
Meeting.
-- The Conditions to the Acquisition are set out in full in
Appendix 1 to this announcement along with certain other terms.
-- It is expected that the Scheme Document, containing further
information about the Acquisition and the notices of the Court
Meeting and General Meeting, together with the associated Forms of
Proxy, will be sent to Velocys Shareholders as soon as practicable
and in any event within 28 days of this announcement (or such later
time as Velocys, Bidco and the Panel agree) and the Meetings are
expected to be held as soon as reasonably practicable thereafter.
Subject to certain restrictions relating to persons resident in
Restricted Jurisdictions, the Scheme Document will also be made
available on Velocys' website at http://offer.velocys.com.
-- The Scheme is currently expected to become Effective during
January 2024, subject to the satisfaction or (where applicable)
waiver of the Conditions. An expected timetable of key events
relating to the Acquisition will be set out in the Scheme
Document.
C ommenting on this announcement, Philip Holland, the Chair of
Velocys, said:
" During the many discussions that have taken place over the
past few months, the Velocys Board's main objective, together with
that of the Velocys management team has been to secure the best
possible outcome for Velocys Shareholders and other stakeholders.
The Velocys Board and management have spent a great deal of time
and effort trying to secure significant long-term funding to grow
the business and accelerate the delivery of its technology to
clients. However, reflecting Velocys' material funding
requirements, business model and limited revenue together with the
continued challenging public market environment, it has not been
possible to raise sufficient funds. This has put the business in an
extremely challenging position, with a very real prospect of not
being able to continue as a going concern when we reach the end of
our cash runway in early January.
Bidco is offering the business a secure platform for future
growth, alongside an injection of up to US$40 million of growth
capital which is expected to ensure that Velocys has the capital
resources needed to deliver against its medium-term strategic
plans, including to scale up and grow and work towards its long
stated goal of supporting the decarbonisation of the global
aviation sector. Whilst it is very disappointing for the business
to need to leave the public markets, Bidco's offer will enable
Velocys to continue operating as a going concern."
This summary should be read in conjunction with the full text of
this announcement and the Appendices. The conditions to, and
certain further terms of, the Acquisition are set out in Appendix
1. The bases and sources for certain financial information
contained in this announcement are set out in Appendix 2. Details
of undertakings received by Bidco are set out in Appendix 3.
Certain definitions and terms used in this announcement are set out
in Appendix 4.
Enquiries
Bidco C/O H/Advisors Maitland
Kevin Bone (non-executive director)
Josh Dienstag (non-executive director)
May Liew (non-executive director)
Cavendish (Financial Adviser to
Bidco and the Consortium)
Marc Milmo
Henrik Persson
Seamus Fricker 020 7220 0500
H/Advisor Maitland
Sam Cartwright / David Sturken 020 737 95151
Velocys
Henrik Wareborn, CEO
Philip Sanderson, CFO +44 1865 800821
Panmure Gordon (UK) Limited (Rule
3 Adviser, Financial Adviser, Nomad
and Joint Broker to Velocys)
Emma Earl (Corporate Finance)
John Prior (Corporate Finance)
Will Goode (Corporate Finance)
Mark Rogers (Corporate Finance)
Hugh Rich (Corporate Broking) 020 7886 2500
Shore Capital Stockbrokers Limited
(Joint Broker)
Henry Willcocks (Corporate Broking)
Toby Gibbs (Corporate Advisory)
James Thomas (Corporate Advisory) 020 7408 4090
Cooley (UK) LLP is acting as legal adviser to Bidco
Mayer Brown International LLP is acting as legal adviser to
Velocys.
Further information
Cavendish Capital Markets Limited ("Cavendish"), which is
authorised and regulated in the United Kingdom by the Financial
Conduct Authority, is acting as financial adviser to the Consortium
and Bidco and no one else in connection with the matters described
in this announcement and will not be responsible to anyone other
than the Consortium and Bidco for providing the protections offered
to clients of Cavendish or for providing advice in connection with
any matter referred to in this announcement. Neither Cavendish nor
any of its affiliates (nor their respective directors, officers,
employees or agents) owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, whether in
contract, in tort, under statute or otherwise) to any person who is
not a client of Cavendish in connection with this announcement, any
statement contained herein, the Takeover Offer or otherwise. No
representation or warranty, express or implied, is made by
Cavendish as to the contents of this announcement.
Panmure Gordon (UK) Limited ("Panmure Gordon"), which is
authorised and regulated in the United Kingdom by the Financial
Conduct Authority, is acting as financial adviser and Rule 3
adviser to Velocys and no one else in connection with the matters
described in this announcement and will not be responsible to
anyone other than Velocys for providing the protections offered to
clients of Panmure Gordon or for providing advice in connection
with any matter referred to in this announcement. Neither Panmure
Gordon nor any of its affiliates (nor their respective directors,
officers, employees or agents) owes or accepts any duty, liability
or responsibility whatsoever (whether direct or indirect, whether
in contract, in tort, under statute or otherwise) to any person who
is not a client of Panmure Gordon in connection with this
announcement, any statement contained herein, the Takeover Offer or
otherwise. No representation or warranty, express or implied, is
made by Panmure Gordon as to the contents of this announcement.
Shore Capital and Corporate Limited ("Shore Capital"), which is
authorised and regulated in the United Kingdom by the Financial
Conduct Authority, is acting as adviser to Velocys and no one else
in connection with the matters described in this announcement and
will not be responsible to anyone other than Velocys for providing
the protections offered to clients of Shore Capital or for
providing advice in connection with any matter referred to in this
announcement. Neither Shore Capital nor any of its affiliates (nor
their respective directors, officers, employees or agents) owes or
accepts any duty, liability or responsibility whatsoever (whether
direct or indirect, whether in contract, in tort, under statute or
otherwise) to any person who is not a client of Shore Capital in
connection with this announcement, any statement contained herein,
the Takeover Offer or otherwise. No representation or warranty,
express or implied, is made by Shore Capital as to the contents of
this announcement.
This announcement is for information purposes only and is not
intended to, and does not, constitute, or form part of, an offer,
invitation or the solicitation of an offer to purchase, otherwise
acquire, subscribe for, sell or otherwise dispose of, any
securities or the solicitation of any vote or approval in any
jurisdiction pursuant to the Acquisition or otherwise, nor shall
there be any sale, issuance or transfer of securities of Velocys in
any jurisdiction in contravention of applicable law. The
Acquisition will be implemented solely pursuant to the terms of the
Scheme Document (or, if the Acquisition is implemented by way of a
Takeover Offer, the offer document), which will contain the full
terms and conditions of the Acquisition, including details of how
to vote in respect of the Acquisition. Any vote in respect of the
Scheme or other response in relation to the Acquisition should be
made only on the basis of the information contained in the Scheme
Document (or, if the Acquisition is implemented by way of a
Takeover Offer, the offer document).
This announcement does not constitute a prospectus, prospectus
equivalent document or exempted document.
This announcement contains inside information in relation to
Velocys for the purposes of Article 7 of the Market Abuse
Regulation. The person responsible for arranging the release of
this announcement on behalf of Velocys is David Bate, General
Counsel, Senior Vice President and Head of Compliance for Velocys.
Velocys' Legal Entity Identifier is 549300KGMQV70HA5Y715 .
If you are in any doubt about the contents of this announcement
or the action you should take, you are recommended to seek your own
independent financial advice immediately from your stockbroker,
bank manager, solicitor, accountant or independent financial
adviser duly authorised under the Financial Services and Markets
Act 2000 (as amended) if you are resident in the United Kingdom or,
if not, from another appropriately authorised independent financial
adviser.
Overseas Shareholders
The release, publication or distribution of this announcement in
or into jurisdictions other than the UK may be restricted by law
and therefore any persons who are subject to the law of any
jurisdiction other than the UK should inform themselves of, and
observe, any applicable legal or regulatory requirements. Any
failure to comply with such requirements may constitute a violation
of the securities laws of any such jurisdiction. To the fullest
extent permitted by applicable law, the companies and persons
involved in the Acquisition disclaim any responsibility or
liability for the violation of such restrictions by any person.
This announcement has been prepared in accordance with and for the
purpose of complying with English law, the Takeover Code and the
Market Abuse Regulation and information disclosed may not be the
same as that which would have been prepared in accordance with the
laws of jurisdictions outside England.
The availability of the Acquisition to Velocys Shareholders who
are not resident in and citizens of the UK may be affected by the
laws of the relevant jurisdictions in which they are located or of
which they are citizens. Persons who are not resident in the UK
should inform themselves of, and observe, any applicable legal or
regulatory requirements of their jurisdictions. In particular, the
ability of persons who are not resident in the United Kingdom to
vote their Velocys Shares with respect to the Scheme at the Court
Meeting, or to appoint another person as proxy to vote at the Court
Meeting on their behalf, may be affected by the laws of the
relevant jurisdictions in which they are located. Any failure to
comply with the applicable restrictions may constitute a violation
of the securities laws of any such jurisdiction. To the fullest
extent permitted by applicable law, the companies and persons
involved in the Acquisition disclaim any responsibility or
liability for the violation of such restrictions by any person.
Further details in relation to Overseas Shareholders will be
contained in the Scheme Document (or, if the Acquisition is
implemented by way of a Takeover Offer, the offer document).
Unless otherwise determined by Bidco or required by the Takeover
Code, and permitted by applicable law and regulation, the
Acquisition will not be made available, directly or indirectly, in,
into or from a Restricted Jurisdiction where to do so would violate
the laws in that jurisdiction and no person may vote in favour of
the Scheme by any such use, means, instrumentality or from within a
Restricted Jurisdiction or any other jurisdiction if to do so would
constitute a violation of the laws of that jurisdiction. Copies of
this announcement and any formal documentation relating to the
Acquisition are not being, and must not be, directly or indirectly,
mailed or otherwise forwarded, distributed or sent in or into or
from any Restricted Jurisdiction and persons receiving such
documents (including agents, custodians, nominees and trustees)
must not mail or otherwise forward, distribute or send it in or
into or from any Restricted Jurisdiction. Doing so may render
invalid any related purported vote in respect of the Acquisition.
If the Acquisition is implemented by way of a Takeover Offer
(unless otherwise permitted by applicable law and regulation), the
Takeover Offer may not be made directly or indirectly, in or into,
or by the use of mails or any means or instrumentality (including,
but not limited to, facsimile, e-mail or other electronic
transmission, telex or telephone) of interstate or foreign commerce
of, or of any facility of a national, state or other securities
exchange of any Restricted Jurisdiction and the Takeover Offer may
not be capable of acceptance by any such use, means,
instrumentality or facilities.
Further details in relation to Overseas Shareholders will be
included in the Scheme Document (or, if the Acquisition is
implemented by way of a Takeover Offer, the offer document).
Sanctions Disqualified Shareholders
Sanctions Disqualified Shareholders should refer to paragraph 10
of this announcement, which contains important information in
relation to such holders.
Further details in relation to Sanctions Disqualified
Shareholders will be included in the Scheme Document (or, if the
Acquisition is implemented by way of a Takeover Offer, the offer
document).
Notice to US or United States Velocys Shareholders
The Acquisition relates to the shares of an English company and
is being made by means of a scheme of arrangement provided for
under the laws of England and Wales. A transaction effected by
means of a scheme of arrangement is not subject to the tender offer
or proxy solicitation rules under the US Securities Exchange Act of
1934 (the "U.S. Exchange Act"). Accordingly, this announcement, the
Scheme and certain other documents relating to the Acquisition are
subject to the disclosure requirements and practices applicable in
the UK to schemes of arrangement which differ from the disclosure
requirements of the US tender offer and proxy solicitation rules.
The financial information included in this announcement and the
Scheme documentation has been prepared in accordance with generally
accepted accounting principles of the United Kingdom and thus may
not be comparable to financial information of US companies or
companies whose financial statements are prepared in accordance
with generally accepted accounting principles in the United
States.
If, in the future, Bidco exercises its right to implement the
Acquisition by way of a Takeover Offer, which is to be made into
the United States, such Takeover Offer will be made in compliance
with the applicable U.S. laws and regulations.
It may be difficult for US holders of Velocys Shares to enforce
their rights and any claim arising out of the US federal laws,
since Bidco and Velocys are located in a non-US jurisdiction, and
some or all of their officers and directors may be residents of a
non-US jurisdiction. U.S. holders of Velocys Shares may not be able
to sue a non-US company or its officers or directors in a non-US
court for violations of the US securities laws. Further, it may be
difficult to compel a non-US company and its affiliates to subject
themselves to a US court's judgement.
In accordance with normal UK practice and pursuant to Rule
14e-5(b) of the U.S. Exchange Act, the Consortium, certain
affiliated companies or their nominees and brokers (acting as
agents), may from time to time make certain purchases of, or
arrangements to purchase, Velocys Shares outside of the U.S., other
than pursuant to the Acquisition, until the date on which the
Acquisition becomes Effective, lapses or is otherwise withdrawn.
Also, in accordance with Rule 14e-5(b) of the U.S. Exchange Act,
Cavendish will continue to act as exempt principal traders in
Velocys shares on the London Stock Exchange. These purchases may
occur either in the open market at prevailing prices or in private
transactions at negotiated prices. Any information about such
purchases will be disclosed as required in the United Kingdom, will
be reported to a Regulatory Information Service and will be
available on the London Stock Exchange website,
www.londonstockexchange.com .
US Velocys Shareholders also should be aware that the
transaction contemplated herein may have tax consequences in the
U.S. and, that such consequences, if any, are not described herein.
US Velocys Shareholders are urged to consult with legal, tax and
financial advisers in connection with making a decision regarding
this transaction.
Forward Looking Statements
This announcement (including information incorporated by
reference in this announcement), oral statements made regarding the
Acquisition, and other information published by Bidco and Velocys
contain statements which are, or may be deemed to be,
"forward-looking statements". Forward-looking statements are
prospective in nature and are not based on historical facts, but
rather on current expectations and projections of the management of
Bidco and Velocys about future events, and are therefore subject to
risks and uncertainties which could cause actual results to differ
materially from the future results expressed or implied by the
forward-looking statements.
The forward-looking statements contained in this announcement
include statements relating to the expected effects of the
Acquisition on Bidco and Velocys (including their future prospects,
developments and strategies), the expected timing and scope of the
Acquisition and other statements other than historical facts.
Often, but not always, forward-looking statements can be identified
by the use of forward-looking words such as "prepares", "plans",
"expects" or "does not expect", "is expected", "is subject to",
"budget", "projects", "synergy", "strategy", "scheduled", "goal",
"estimates", "forecasts", "cost-saving", "intends", "anticipates"
or "does not anticipate", or "believes", or variations of such
words and phrases or statements that certain actions, events or
results "may", "could", "should", "would", "might" or "will" be
taken, occur or be achieved. Forward looking statements may include
statements relating to the following: (i) future capital
expenditures, expenses, revenues, earnings, synergies, economic
performance, indebtedness, financial condition, dividend policy,
losses and future prospects; (ii) business and management
strategies and the expansion and growth of Bidco's, Velocys', or
any member of the Velocys Group's operations and potential
synergies resulting from the Acquisition; and (iii) the effects of
global economic conditions and governmental regulation on Bidco's,
Velocys', or any member of the Velocys Group's business.
Although Bidco and Velocys believe that the expectations
reflected in such forward-looking statements are reasonable, Bidco
and Velocys can give no assurance that such expectations will prove
to be correct. By their nature, forward-looking statements involve
risk and uncertainty because they relate to events and depend on
circumstances that will occur in the future. There are a number of
factors that could cause actual results and developments to differ
materially from those expressed or implied by such forward-looking
statements.
These factors include, but are not limited to: the ability to
complete the Acquisition; the ability to obtain requisite
shareholder approvals and the satisfaction of other Conditions on
the proposed terms and schedule; changes in the global political,
economic, business and competitive environments and in market and
regulatory forces; changes in future exchange and interest rates;
changes in tax rates; future business combinations or disposals;
changes in general economic and business conditions; changes in the
behaviour of other market participants; changes in the anticipated
benefits from the proposed transaction not being realised as a
result of changes in general economic and market conditions in the
countries in which Bidco and Velocys operate, weak, volatile or
illiquid capital and/or credit markets, changes in tax rates,
interest rate and currency value fluctuations, the degree of
competition in the geographic and business areas in which Bidco and
Velocys operate and changes in laws or in supervisory expectations
or requirements. Other unknown or unpredictable factors could cause
actual results to differ materially from those expected, estimated
or projected in the forward-looking statements. If any one or more
of these risks or uncertainties materialises or if any one or more
of the assumptions proves incorrect, actual results may differ
materially from those expected, estimated or projected. Such
forward-looking statements should therefore be construed in the
light of such factors. Neither Bidco nor Velocys, nor any of their
respective associates or directors, officers or advisers, provides
any representation, assurance or guarantee that the occurrence of
the events expressed or implied in any forward-looking statements
in this announcement will actually occur. You are cautioned not to
place any reliance on these forward-looking statements which speak
only as of the date of this announcement.
Specifically, statements of estimated cost savings and synergies
related to future actions and circumstances which, by their nature,
involve risks, uncertainties and contingencies. As a result, the
cost savings and synergies referred to may not be achieved, may be
achieved later or sooner than estimated, or those achieved could be
materially different from those estimated. Due to the scale of the
Velocys Group, there may be additional changes to the Velocys
Group's operations. As a result, and given the fact that the
changes relate to the future, the resulting cost synergies may be
materially greater or less than those estimated.
Other than in accordance with their legal or regulatory
obligations, neither Bidco nor Velocys is under any obligation, and
Bidco and Velocys expressly disclaim any intention or obligation,
to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
Dealing and Opening Position Disclosure Requirements
Under Rule 8.3(a) of the Takeover Code, any person who is
interested in 1% or more of any class of relevant securities of an
offeree company or of any securities exchange offeror (being any
offeror other than an offeror in respect of which it has been
announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement
of the offer period and, if later, following the announcement in
which any securities exchange offeror is first identified. An
Opening Position Disclosure must contain details of the person's
interests and short positions in, and rights to subscribe for, any
relevant securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) of the Takeover Code applies must be
made by no later than 3.30 pm (London time) on the 10(th) business
day following the commencement of the offer period and, if
appropriate, by no later than 3.30 pm (London time) on the 10(th)
business day following the announcement in which any securities
exchange offeror is first identified. Relevant persons who deal in
the relevant securities of the offeree company or of a securities
exchange offeror prior to the deadline for making an Opening
Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Takeover Code, any person who is, or
becomes, interested in 1% or more of any class of relevant
securities of the offeree company or of any securities exchange
offeror must make a Dealing Disclosure if the person deals in any
relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the
dealing concerned and of the person's interests and short positions
in, and rights to subscribe for, any relevant securities of each of
(i) the offeree company and (ii) any securities exchange
offeror(s), save to the extent that these details have previously
been disclosed under Rule 8. A Dealing Disclosure by a person to
whom Rule 8.3(b) applies must be made by no later than 3.30 pm
(London time) on the business day following the date of the
relevant dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and
8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Takeover Panel's website at www.thetakeoverpanel.org.uk ,
including details of the number of relevant securities in issue,
when the offer period commenced and when any offeror was first
identified. You should contact the Panel's Market Surveillance Unit
on +44 (0)20 7638 0129 if you are in any doubt as to whether you
are required to make an Opening Position Disclosure or a Dealing
Disclosure.
Publication on a website
In accordance with Rule 26.1 of the Takeover Code, a copy of
this announcement and the documents required to be published under
Rule 26 of the Takeover Code will be made available, subject to
certain restrictions relating to persons resident in Restricted
Jurisdictions, on Bidco's website at www.madisonmomentum.com and
Velocys' website at http://offer.velocys.com by no later than 12
noon (London time) on the Business Day following this announcement.
For the avoidance of doubt, neither the content of this website nor
of any website accessible from hyperlinks is incorporated by
reference or forms part of this announcement.
No profit forecasts, estimates or quantified benefits
statements
No statement in this announcement is intended as a profit
forecast, profit estimate or quantified benefits statement for any
period and no statement in this announcement should be interpreted
to mean that earnings or earnings per share for Velocys or Bidco
for the current or future financial years would necessarily match
or exceed the historical published earnings or earnings per share
for Velocys or Bidco.
Right to switch to a Takeover Offer
Bidco reserves the right to elect, with the consent of the
Takeover Panel and subject to the terms of the Cooperation
Agreement, to implement the Acquisition by way of a Takeover Offer
for the entire issued and to be issued share capital of Velocys as
an alternative to the Scheme. In such an event, the Takeover Offer
will be implemented on the same terms or, if Bidco so decides, on
such other terms being no less favourable (subject to appropriate
amendments), so far as applicable, as those which would apply to
the Scheme and subject to the amendment referred to in Part B of
Appendix 1 to this announcement.
Requesting hard copy documents
In accordance with Rule 30.3 of the Takeover Code, Velocys
Shareholders, persons with information rights and participants in
Velocys Share Plans may request a hard copy of this announcement by
contacting Link Group on 0371 664 0321. Calls are charged at the
standard geographic rate and will vary by provider. Calls outside
the United Kingdom will be charged at the applicable international
rate. The helpline is open between 9.00 a.m. - 5.30 p.m., Monday to
Friday excluding public holidays in England and Wales. Please note
that Link Group cannot provide any financial, legal or tax advice
and calls may be recorded and monitored for security and training
purposes. For persons who receive a copy of this announcement in
electronic form or via a website notification, a hard copy of this
announcement will not be sent unless so requested. Such persons may
also request that all future documents, announcements and
information to be sent to you in relation to the Acquisition should
be in hard copy form.
Electronic communications
Please be aware that addresses, electronic addresses and certain
other information provided by Velocys Shareholders, persons with
information rights and other relevant persons for the receipt of
communications from Velocys may be provided to Bidco during the
offer period as required under Section 4 of Appendix 4 of the
Takeover Code to comply with Rule 2.11 of the Takeover Code.
Rounding
Certain figures included in this announcement have been
subjected to rounding adjustments. Accordingly, figures shown for
the same category presented in different tables may vary slightly
and figures shown as totals in certain tables may not be an
arithmetic aggregation of figures that precede them.
General
If the Acquisition is effected by way of a Takeover Offer, and
such a Takeover Offer becomes or is declared unconditional in all
respects and sufficient acceptances are received, Bidco intends to
exercise its rights to apply the provisions of Chapter 3 of Part 28
of the 2006 Act so as to acquire compulsorily the remaining Velocys
Shares in respect of which the Takeover Offer has not been
accepted.
Investors should be aware that Bidco may purchase Velocys Shares
otherwise than under any Takeover Offer or the Scheme, including
pursuant to privately negotiated purchases.
Rule 2.9 of the Takeover Code
For the purposes of Rule 2.9 of the Takeover Code, Velocys
confirms that, as at close of business on the Latest Practicable
Date, it had 1,651,798,992 ordinary shares of 1 pence each in
issue. Velocys holds no shares in treasury. Accordingly, the total
number of voting rights in Velocys is 1,651,798,992. The
International Securities Identification Number ("ISIN") of Velocys'
shares is GB00B11SZ269.
Disclaimer
The Acquisition will be subject to English law, the jurisdiction
of the Court, and the applicable requirements of the Takeover Code,
the Panel, the London Stock Exchange and the Registrar of
Companies.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF THAT JURISDICTION
FOR IMMEDIATE RELEASE
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF EU REGULATION 596/2014 (WHICH FORMS PART OF UK LAW
BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018). UPON THE
PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW
CONSIDERED TO BE IN THE PUBLIC DOMAIN
5 December 2023
RECOMMED CASH ACQUISITION
of
Velocys plc
by
Madison Bidco Limited
(a newly formed company indirectly owned by (i) a fund advised
by Lightrock, (ii) a fund advised by Carbon Direct Capital, (iii)
GenZero and (iv) Kibo Investments, as members of the
Consortium)
to be implemented by means of a scheme of arrangement
under Part 26 of the Companies Act 2006
1. Introduction
The boards of directors of Bidco and Velocys are pleased to
announce that they have reached agreement on the terms and
conditions of a recommended all cash acquisition by Bidco of the
entire issued, and to be issued, ordinary share capital of
Velocys.
It is intended that the Acquisition will be implemented by way
of a court--sanctioned scheme of arrangement under Part 26 of the
2006 Act (although Bidco reserves the right to effect the
Acquisition by way of a Takeover Offer, subject to the consent of
the Panel and the terms of the Cooperation Agreement).
2. The Acquisition
Under the terms of the Acquisition, which will be subject to the
Conditions and further terms set out in Appendix 1 to this
announcement and to be set out in full the Scheme Document, each
Velocys Shareholder will be entitled to receive:
for each Velocys Share: 0.25 pence in cash
In addition, conditional on the Acquisition becoming Effective,
Bidco has agreed to provide up to US$40 million (approximately
GBP31.5 million) of growth capital which is expected to ensure that
Velocys and its management have the capital resources needed to
deliver against Velocys' medium-term strategic plans.
In connection with the Acquisition, the Carbon Direct Fund has
agreed to provide a secured bridging loan of GBP3.5 million
("Bridge Financing") with a view to providing sufficient capital
for Velocys through to the Acquisition becoming Effective.
The Acquisition values Velocys' entire issued, and to be issued,
ordinary share capital at approximately GBP4.1 million on a fully
diluted basis and provides a post growth capital valuation of
Velocys of up to approximately US$45.2 million (approximately
GBP35.6 million).
If, on or after the date of this announcement and prior to the
Acquisition becoming Effective, any dividend and/or other
distribution and/or other return of capital or value is announced,
declared, made or paid or becomes payable in respect of the Velocys
Shares, Bidco reserves the right to reduce the consideration
payable under the terms of the Acquisition for the Velocys Shares
by an amount up to the aggregate amount of such dividend and/or
distribution and/or other return of capital or value, in which case
any reference in this announcement to the consideration payable
under the terms of the Acquisition will be deemed to be a reference
to the consideration as so reduced. Any exercise by Bidco of its
rights referred to in this paragraph shall be the subject of an
announcement and, for the avoidance of doubt, shall not be regarded
as constituting any revision or variation of the terms of the
Scheme or the Acquisition. In such circumstances, Velocys
Shareholders shall be entitled to retain any such dividend,
distribution and/or other return of capital or value.
3. Background to and reasons for the Acquisition
Bidco believes that the production of sustainable aviation fuel
("SAF") is a compelling market opportunity given the confluence of
regulatory support, demand pull by airlines, and increased
technology readiness. Furthermore, Bidco believes Velocys is well
positioned to capitalise on these sector tailwinds given its
patented integrated Fischer-Tropsch reactor and catalysis solution
and its pipeline of commercial licensing opportunities.
However, while Bidco believes that these secular tailwinds for
SAF potentially stand to benefit Velocys and its technology in the
long term, without significant additional growth capital Velocys
will be unable to further scale the business and accelerate the
delivery of its technology to clients, including Velocys' reference
projects. Reflecting the very challenging public market
environment, the deterioration in Velocys' share price prior to
release of the possible offer announcement, and the risks and
circumstances of the business, Velocys has been unable to raise
sufficient growth capital. Bidco believes that, given this funding
challenge, the viability of the business and its ability to deliver
against its growth strategy will be impacted to the detriment of
Velocys' shareholders, management team and employees .
It is the view of Bidco that the longer-term interests of
Velocys and its employees therefore are best served away from the
public markets. Bidco believes that Velocys is best positioned to
succeed as a private company, with the current management team, and
with an injection of growth capital from a consortium of long-term
investors who have the requisite experience in supporting
industrial companies as they seek to fully realise their
potential.
Velocys noted in its announcement on 20 November 2023 that,
unless Velocys was able to find meaningful sources of funding or
strategic options, it was unlikely that Velocys would be able to
continue as a going concern beyond the end of December. This date
has now been extended into early-January 2024 as a result of cost
control and cash management initiatives. The Acquisition provides
Velocys shareholders with a certain liquidity opportunity in
circumstances where shareholders may otherwise face the prospect of
realising minimal value.
4. Recommendation
The Velocys Directors, who have been so advised by Panmure
Gordon as to the financial terms of the Acquisition, consider the
terms of the Acquisition to be fair and reasonable. Panmure Gordon
is providing independent financial advice to the Velocys Directors
for the purposes of Rule 3 of the Takeover Code.
In providing its financial advice to the Velocys Directors,
Panmure Gordon has taken into account the commercial assessments of
the Velocys Directors . Panmure Gordon has taken into consideration
Velocys' limited cash resources, the challenging financial position
of Velocys and the absence of alternative funding offers, in
circumstances where, should the Bridge Financing not be made
available by the Carbon Direct Fund in connection with the
Acquisition , the insolvency of Velocys would be a significant
possibility. The Velocys Directors believe that t he Bridge
Financing, which is vital for Velocys to avoid insolvency, would
not be made available in the absence of the Acquisition and that
any insolvency would highly likely result in minimal value being
returned to Velocys Shareholders.
Accordingly, the Velocys Directors, who have been so advised by
Panmure Gordon, intend to unanimously recommend that Velocys
Shareholders vote in favour of the Scheme at the Court Meeting and
the Resolutions at the General Meeting (or in the event that the
Acquisition is implemented by way of a Takeover Offer, to accept or
procure the acceptance of such Takeover Offer).
Each Velocys Director who holds Velocys Shares has irrevocably
undertaken to vote in favour of the Scheme at the Court Meet ing
and in favour of the Resolutions to be proposed at the General
Meeting in respect of their own beneficial holdings of Velocys
Shares, amounting to, in aggr egate 7 ,070,412 Velocys Shares
representing approximately 0.43 per cent. of the existing issued
ordinary share capital of Velocys as at the Latest Practicable
Date.
Velocys Shareholders should note that, in the event that the
Acquisition does not become Effective, it is unlikely that Velocys
will be able to repay the Bridge Financing and remain a going
concern. In those circumstances, it is likely that administrators
would be appointed promptly and, whilst the administrator would
seek to maximise value from the sale of available assets, it is
considered highly unlikely that this would result in anything other
than mininmal returns to Velocys Shareholders, after costs and
preferential (including secured) and unsecured claims that would
arise on insolvency.
5. Background to and reasons for the recommendation
Velocys operates a business model focused on providing a unique
technology pathway to enable production of SAF. Velocys has
developed industry leading proprietary patented micro-channel
Fischer-Tropsch reactors and a comprehensive biorefinery integrated
technology package for use by SAF producers with the focus of the
business model being to provide Velocys' Fischer-Tropsch solution
under site license agreements and subsequently providing
engineering services, reactors and catalysts to generate revenue
through fees. Velocys has an extensive intellectual property
portfolio consisting of over 200 granted patents, 90 pending
patents and various trademarks.
Significant funding requirement to execute Velocys' strategy
The provision of Velocys' integrated technology and service
model requires significant engineering and project resources,
alongside a robust balance sheet to support the business whilst its
revenue pipeline develops (including the two reference projects in
development) and to provide performance guarantees to future
clients. In addition, Velocys requires funding for its recently
commissioned manufacturing facility, including for production
start-up and the strengthening of catalysis service delivery to
clients. The commercial progress of Velocys, and in turn the timing
of significant revenue and income for Velocys, is dependent on
external factors such as favourable government policies relating to
SAF and the construction funding of biorefineries by third parties.
The potential for delays to Velocys' revenue potential means that
significant working capital continues to be required to support the
business during its growth phase.
Notwithstanding the commercial progress made to date by Velocys,
it currently generates minimal revenue and has significant losses.
Accordingly, Velocys has, for some time, been seeking significant
long-term funding to further scale its business and to allow for
the acceleration of the delivery of its technology to clients,
including Velocys' reference projects and an identified pipeline of
opportunities. To achieve this, on 18 May 2023, Velocys announced a
fundraise of a minimum of US$40 million (up to a maximum of GBP50
million). However, reflecting a challenging public market
environment and the risks and circumstances of the business, only a
total of GBP6.3 million (before expenses) has been raised since
this date.
Significant market head winds
Velocys' revenue is heavily influenced by the progress of its
customers, including its two reference projects and large but
slow-moving business development pipeline, as well as the ability
for SAF biorefinery projects to attract significant third-party
financing to enable Velocys to invoice the projects. The SAF
industry is relatively nascent and evolving. The industry has been
impacted by slower than expected government policies (particularly
in the UK) and technical issues with third party SAF technologies
which the Velocys Board believes, in addition to its funding
issues, have impacted the timeliness of completion of the
development capital raises for the Altalto Project and Bayou Fuels
Project. Accordingly, Velocys had minimal revenues in 2023 and had
to continue to meet the costs of both the Altalto Project (in
addition to grant funding) and the Bayou Fuels Project.
Alternative options explored by Velocys
As a result of Velocys' material funding requirements, during
2023, the Velocys Board has had discussions with a broad range of
institutional and specialist financial investors, as well as
strategic investors and venture entities, none of which (save for
in relation to discussions with members of the Consortium) have to
date resulted in offers of material funding for Velocys.
Equity financing: The equity fundraise in May 2023 raised less
than targeted, and the financial markets and risk profile of the
business have not materially improved since this date. Even if new
or existing shareholders were prepared to put further equity
funding into Velocys, there would be no guarantee that such funding
could be made available on a timely basis and such funding would
likely be highly dilutive to existing shareholders. Further, any
such funding would be unlikely to significantly extend Velocys'
cash runway, given Velocys' relatively high working capital needs
and ongoing funding requirements.
Debt financing: As noted above, Velocys has very limited
revenues and significant losses and, accordingly, other than the
Bridge Financing (which is being provided in connection with the
Acquisition), Velocys has not identified a viable debt solution to
provide near-term or long-term financing.
Other strategic alternatives: In recent weeks and months,
Velocys has explored a number of strategic alternatives, including
discussions with a number of companies operating in relevant
industries. To date, none of these have resulted in a viable
funding alternative. Whilst Velocys continues to pursue commercial,
collaboration and licence opportunities, given Velocys' very
limited cash runway, it is highly unlikely that these opportunities
could materially extend the cash runway in the timeframe available.
The Velocys Board believes that Velocys' value primarily lies in
its integrated technology solution and, accordingly, that it is
highly unlikely that Velocys Shareholders would receive additional
value over and above the Acquisition Price in the event that
Velocys sold its assets on a piecemeal basis or entered an
insolvency process, such as administration. Velocys has taken
specialist restructuring advice in relation to its very limited
cash runway.
In summary, the Velocys Board believes that none of the
alternatives set out above are capable of delivering a solution to
the urgent financial constraints faced by Velocys. The Velocys
Board now finds itself in a challenging position where, given the
immediate need for near-term funding and Velocys' significant
long-term funding requirements, other than the Acquisition and
associated provision of funding to Velocys, it currently has no
viable options available to it that would secure sufficient
near-term funding and otherwise that would be expected to secure
the future of the business. The announcement made by Velocys on 20
November 2023 noted that Velocys would require funding by the end
of December 2023 to enable it to continue as a going concern. This
date has now been extended into early-January 2024 as a result of
cost control and cash management initiatives undertaken by Velocys
however, this slight extension has no material impact on Velocys'
precarious financial position. In the event that funding is not
obtained, Velocys would need to consider and take steps to
implement alternatives which continue to seek to protect the
interests of financial creditors, commercial counterparties and
employees potentially resulting in minimal value being attributed
to the existing equity.
Bridge Financing and growth capital
The proposals for the Acquisition include: (i) the provision of
near-term funding in the form of the Bridge Financing by the Carbon
Direct Fund; and (ii) an intention from Bidco to provide up to
US$40 million of growth capital funding to Velocys following the
Acquisition becoming Effective. It is Velocys' understanding that,
absent the Acquisition, the Bridge Financing would not be available
to Velocys. Further details on the Bridge Financing are set out
below.
Bridge Financing
On 5 December 2023, in connection with the Acquisition, the
Carbon Direct Fund entered into the Facility Letter with Velocys
and certain of Velocys' subsidiaries (as guarantors). Pursuant to
the terms of the Facility Letter, the Carbon Direct Fund has agreed
to make available to Velocys a term secured loan facility of GBP3.5
million.
The Bridge Financing will be available to be used for general
corporate and working capital purposes. The Bridge Financing will
(subject to customary conditions at the time of each utilisation)
be available to Velocys to draw down in tranches no more frequently
than once in every two week period and in amounts based on the
anticipated cash flow requirements of Velocys for that period),
until the final draw down date of 31 January 2024. No further
utilisation requests may be made after 31 January 2024 without the
consent of the Carbon Direct Fund. On the current anticipated
timetable, the Acquisition is expected to become Effective prior to
31 January 2024. Any drawn down amounts under the Bridge Financing
shall be repayable 364 days from the date of the Facility Letter
unless any of the following occurs before that time, in which case
the Bridge Financing will be required to be repaid in full upon
such occurrence:
(1) the Acquisition becomes Effective:
(2) a Change of Control occurs (being any person or group of
persons acting in concert (other than the Consortium) acquiring
50.1 per cent. of the shares in Velocys or otherwise gaining direct
or indirect control of Velocys);
(3) the sale of all, or substantially all, of the assets of
Velocys occurs whether in a single transaction or a series of
related transactions; or
(4) it becomes illegal for the Carbon Direct Fund to fund or
maintain its participation in the financing.
Interest will accrue at a rate of 30 per cent. per annum on the
principal drawn down pursuant to the Facility Letter.
The Bridge Financing is secured by English and New York law
security interests granted by Velocys and certain of Velocys'
subsidiaries. Further details of the security are set out in
paragraph 11 below.
Long term financing
Subject to the Acquisition becoming Effective, Bidco has agreed
(from the Effective Date) to provide up to US$40 million
(approximately GBP31.5 million) of growth capital which is expected
to ensure that Velocys has the capital resources it needs to
deliver against its medium-term strategic plans. Existing
shareholders will not benefit from the injection of growth capital
into Velocys. The Acquisition and Bidco's commitment to provide
growth capital of up to US$40 million provides a post growth
capital valuation of Velocys of up to approximately US$45.2 million
(approximately GBP35.9 million). Even if Velocys were able to raise
a similar amount in the near-term as a public company through the
issue of new shares, this would result in significant dilution of
existing Velocys Shareholders.
Conclusion
In conclusion absent the Acquisition Velocys would need to
consider and take immediate steps to implement alternatives which
continue to seek to protect the interests of financial creditors,
commercial counterparties and employees, but which would highly
likely result in minimal value being attributed to the existing
equity. There can be no guarantee that Velocys would be able to
implement alternatives in the available timeframe and it is highly
likely Velocys would face insolvency if such alternatives are not
implemented in the available timeframe.
The Velocys Directors believe that the financial terms of the
Acquisition, when considered together with the financial support to
be provided under the Bridge Financing and intended to be provided
under the US$40 million growth capital funding, represent the most
realistic prospect of returning any value to Velocys Shareholders
and the best prospect of enabling Velocys to meet its obligations
to employees, pension scheme members and other creditors and to
continue to trade as a going concern.
Taking into account the above, the Velocys Board, together with
its financial advisers Panmure Gordon, have carefully considered
and evaluated the financial terms of the Acquisition. Panmure
Gordon is providing financial advice to Velocys under Rule 3 of the
Code. In making its assessment, the Velocys Board has also
carefully evaluated Bidco's intentions regarding the conduct of the
Velocys business under Bidco's ownership. Accordingly, the Velocys
Directors intend to unanimously recommend that Velocys Shareholders
vote in favour of the Scheme at the Court Meeting and the
Resolutions at the General Meeting (or in the event that the
Acquisition is implemented by way of a Takeover Offer, to accept or
procure the acceptance of such Takeover Offer).
In intending to unanimously recommend the Acquisition, the
Velocys Board believes that there is no present viable alternative
likely to produce more value for Velocys Shareholders than would be
available through the Acquisition, and further that the Acquisition
(given the associated provision of funding) represents the only
realistic prospect of allowing Velocys to continue as a going
concern.
6. Information relating to Bidco AND the consortium
Bidco
Bidco is a private limited company incorporated in England and
Wales on 28 November 2023. It has its registered office at 1 Eagle
Place, London, Greater London, SW1Y 6AF. The current directors of
Bidco are Kevin Bone, Josh Dienstag and May Liew. Bidco was formed
for the purposes of the Acquisition and has not traded since its
date of incorporation, nor has it entered into any obligations
other than in connection with the Acquisition.
All members of the Consortium are shareholders in Bidco. The
members of the Consortium are:
o Lightrock : Lightrock is a global private equity firm and
'impact investor' with a focus on growth capital. Lightrock's
investment philosophy targets companies that pursue scalable and
tech-driven business models around the key impact themes of people,
planet, and productivity-tech for good;
o Carbon Direct Capital : Carbon Direct Capital is a global
growth investment firm that partners with carbon management
technology companies. The firm believes that investing with a
science-focused approach maximizes both climate impact and
financial returns;
o GenZero : GenZero is founded by Temasek, a global investment
firm incorporated and headquartered in Singapore. It is committed
to delivering positive climate impact and long-term sustainable
financial returns by investing in opportunities with the potential
to be nurtured into impactful and scalable solutions ; and
o Kibo Investments : Kibo Investments is a Singapore-based
private investment office with a focus on climate technology
7. Information relating to Velocys
Velocys is an international sustainable fuels technology
company, providing clients with one of the most sustainable routes
to the economic production of drop-in SAF from a variety of waste
materials. Velocys operates a licencing model offering a technology
solution for the development of synthetic sustainable fuels
manufacturing via its proprietary patented micro-channel
Fischer-Tropsch reactors and comprehensive biorefinery integrated
technology package. Velocys has offices in Oxford, UK as well as
Houston, US and reactor manufacturing facilities in Ohio, US.
Velocys has a number of third-party clients to whom it supplies
its services and technology; in addition Velocys is developing two
full-scale biorefinery reference projects: the Bayou Fuels Project
in Mississippi, US, which will utilise woody waste to produce
sustainable fuels, and the Altalto Project in Immingham in the UK,
which will process municipal and commercial solid waste into
sustainable fuels. The reference projects are being developed to
accelerate adoption of Velocys' technology and, following the
completion of third-party development capital project financing and
commencement of the detailed engineering stage of these projects,
the reference projects are expected to generate significant
technology licensing revenue for Velocys.
Velocys' near-term ambitions are focused on creating sustainable
value by growing the customer pipeline, progressing its biorefinery
reference projects in the UK and US into FEED (Front End
Engineering Design) delivery and revenue generation. Fees will
start being generated as the reference projects progress through
their FEED phase which will generate revenues through the execution
of technology licenses and engineering services agreements. Velocys
is also focused on expansion of its commercial and business
development functions, and engineering and reactor manufacturing to
support the scale-up of its business.
Velocys' aim is to become a leading provider of innovative SAF
solutions to enable the decarbonisation of the aviation
industry.
8. Irrevocable undertakings
As described above, Bidco has received irrevocable undertakings
to vote (or, where applicable, procure voting) in favour of the
Scheme at the Court Meeting and the Resolutions to be proposed at
the General Meeting (or in the event that the Acquisition is
implemented by a Takeover Offer, to accept or procure acceptance of
such Takeover Offer) from all of the Velocys Directors who own
Velocys Shares, in respect of their own beneficial holdings
totalling 7,070,412 Velocys Shares (representing approximately 0.43
per cent. of the existing issued ordinary share capital of Velocys)
as at the Latest Practicable Date. The undertakings will remain
binding in the event that a higher competing offer for Velocys is
made.
In addition to the irrevocable undertakings referred to above
received from the Velocys Directors, Bidco has received an
irrevocable commitment from Lansdowne Partners to vote in favour of
the Scheme at the Court Meeting and the Resolutions to be proposed
at the General Meeting (or in the event that the Acquisition is
implemented by a Takeover Offer, to accept or procure acceptance of
such Takeover Offer), in respect of 303,156,632 Velocys Shares
(representing approximately 18.35 per cent. of the existing issued
ordinary share capital of Velocys) as at the Latest Practicable
Date. The undertakings will remain binding in the event that a
higher competing offer for Velocys is made.
Accordingly, Bidco has received irrevocable commitments to vote
in favour of the resolutions relating to the Scheme and the
Acquisition at the Meetings (or in the event that the Acquisition
is implemented by a Takeover Offer, to accept or procure acceptance
of such Takeover Offer), in respect of a total of 310,227,044
Velocys Shares (representing in aggregate approximately 18.78 per
cent. of the existing issued ordinary share capital of Velocys) as
at the Latest Practicable Date.
Further details of these irrevocable undertakings, including the
circumstances in which they cease to be binding, are set out in
Appendix 3 to this announcement.
9. Financing of the Acquisition
The cash consideration payable to Velocys Shareholders under the
terms of the Acquisition will be financed using cash resources made
available to Bidco from members of the Consortium.
In accordance with Rule 2.7(d) of the Code, Cavendish, in its
capacity as financial adviser to Bidco, is satisfied that
sufficient resources are available to Bidco to satisfy in full the
cash consideration payable to Velocys Shareholders under the terms
of the Acquisition.
Further information on the financing of the Acquisition will be
set out in the Scheme Document.
10. SANCTIONS DISQUALIFIED SHAREHOLDERS
In connection with the Russia-Ukraine conflict, the United
Kingdom, the European Union, the United States, Canada, Japan,
Australia and other countries have imposed broad-ranging economic
sanctions against officials, individuals, regions, companies and
industries in Russia. The sanctions consist of (amongst other
things) asset freezes and other restrictions on certain individuals
and entities, and restrictions on certain trade and financial
transactions involving Russia.
To the extent that any Velocys Shareholder is a Sanctions
Disqualified Shareholder, the transfer of such Velocys
Shareholder's Scheme Shares and their entitlement to the cash
consideration payable by Bidco for such Velocys Shares will arise
(on the basis set out in the Scheme) only upon the later of: (i)
the Effective Date; and (ii) the earlier of the Licence Grant Date
or the date on which the relevant asset freeze or other Sanctions
are removed. In addition, no Sanctions Disqualified Shareholder
will be entitled to vote at the Court Meeting or appoint a proxy to
exercise all or any such Velocys Shareholder's right to vote on
their behalf at the meeting .
11. Offer--related arrangements
Confidentiality agreement with Carbon Direct Capital
On 30 August 2022, Carbon Direct Capital and Velocys entered
into a confidentiality agreement, pursuant to which, amongst other
things, Carbon Direct Capital has undertaken, subject to certain
exceptions, to keep information relating to Velocys confidential
and not to disclose it to third parties. The term of the
confidentiality agreement was extended on 29 November 2023. These
confidentiality obligations will remain in force until the earlier
of: (i) 29 August 2024; and (iii) 30 days after either Carbon
Direct Capital or Velocys gives notice of termination to the
other.
Confidentiality agreement with Lightrock
On 27 November 2023, Lightrock and Velocys entered into a
confidentiality agreement in relation to the Acquisition covering
information shared between the parties since 1 October 2023,
pursuant to which, amongst other things, Lightrock has undertaken,
subject to certain exceptions, to keep information relating to
Velocys confidential and not to disclose it to third parties. These
confidentiality obligations will remain in force until the earlier
of: (i) the date on which the parties enter into definitive
documentation; (ii) 1 October 2026; and (iii) 30 days after either
Lightrock or Velocys gives notice of termination to the other.
Confidentiality agreement with GenZero
On 16 October 2023, GenZero, through Carbon Solutions Platform
Pte. Ltd and Velocys entered into a confidentiality agreement in
relation to the Acquisition, pursuant to which, amongst other
things, GenZero has undertaken, subject to certain exceptions, to
keep information relating to Velocys confidential and not to
disclose it to third parties. These confidentiality obligations
will remain in force until the earlier of: (i) 16 October 2025; and
(ii) 30 days after either GenZero or Velocys gives notice of
termination to the other.
Confidentiality agreement with Kibo Investments
On 24 August 2023, Kibo Invest Pte. Ltd., on behalf of Kibo
Investments, and Velocys entered into a confidentiality agreement
in relation to the Acquisition, pursuant to which, amongst other
things, Kibo Investments has undertaken, subject to certain
exceptions, to keep information relating to Velocys confidential
and not to disclose it to third parties. These confidentiality
obligations will remain in force until the earlier of: (i) 24
August 2026 and (ii) 30 days after either Kibo Investments or
Velocys gives notice of termination to the other.
Cooperation Agreement
Pursuant to the Cooperation Agreement, Bidco and Velocys have,
amongst other things, each agreed to cooperate in respect of the
obtaining of a licence from the Office of Financial Sanctions
Implementation in connection with the transfer of any Velocys
Shares held by Sanctions Disqualified Shareholders. This is because
these Velocys Shareholders are prohibited from participating in the
Acquisition in the absence of such a licence or the Sanctions
applicable to them being removed, as described in paragraph 10
above. Pursuant to the Cooperation Agreement, Bidco has also agreed
to put arrangements in place for the continued availability of
directors' and officers' insurance for the Velocys Directors
following the Acquisition becoming Effective. In addition, Bidco
has agreed to certain provisions if the Scheme should switch to a
Takeover Offer. The Cooperation Agreement will terminate in certain
circumstances, including if the Acquisition is withdrawn,
terminated or lapses, or if prior to the Long Stop Date any
Condition has been invoked by Bidco (with the consent of the
Panel), if the Velocys Directors withdraw their recommendation of
the Acquisition or if the Acquisition does not become Effective in
accordance with its terms by the Long Stop Date or otherwise as
agreed between Bidco and Velocys. Pursuant to the terms of the
Cooperation Agreement and the requirements of Paragraph 3(g)(i) of
Appendix 7 to the Takeover Code, Bidco undertakes that it will
deliver a notice in writing to Velocys and the Panel on the
Business Day prior to the Sanction Hearing confirming either: (i)
the satisfaction or waiver of the Conditions (other than the
Conditions relating to the implementation of the Scheme); or (ii)
to the extent permitted by the Panel, that it intends to invoke or
treat as unsatisfied or incapable of satisfaction one or more
Conditions.
Facility Letter and security
Pursuant to the terms of the Facility Letter, the Carbon Direct
Fund has agreed to provide a term loan facility to Velocys of
GBP3.5 million, Velocys may utilise the facility for general
corporate and working capital purposes of the Velocys Group.
Details of the Facility Letter are set out in paragraph 5 above
.
The Bridge Financing is secured by English and New York law
security interests granted by granted by Velocys and certain of
Velocys' subsidiaries. Accordingly, on 5 December 2023, in
connection with the Bridge Financing, Velocys and certain of
Velocys' subsidiaries (as guarantors) entered into (i) an English
law governed debenture, pursuant to which Velocys and certain of
Velocys' subsidiaries granted security interests over substantially
all of their assets including intellectual property, land,
investments, bank accounts and insurances; (ii) a New York law
governed share pledge agreement, pursuant to which Velocys and one
of its subsidiaries granted pledges over the shares and associated
rights in certain of Velocys' subsidiaries; a New York law governed
patent security agreement, pursuant to which certain of Velocys'
subsidiaries pledged certain patent collateral and associated
rights and the authorisation to supplement that pledge of patent
collateral; and (iv) a New York law governed secured guaranty,
pursuant to which certain of Velocys' subsidiaries pledged and
granted security interests in substantially all of their assets, in
each case, in favour of the Carbon Direct Fund.
12. Disclosure of interests in Velocys securities
Except for the irrevocable undertakings referred to in paragraph
8 above, as at 4 December 2023 (being the Latest Practicable Date)
neither Bidco, nor any of its directors, nor, so far as Bidco is
aware, any person treated as acting in concert (within the meaning
of the Takeover Code) with it for the purposes of the Acquisition:
(i) had any interest in or right to subscribe for any relevant
securities of Velocys; or (ii) had any short positions in respect
of relevant securities of Velocys (whether conditional or absolute
and whether in the money or otherwise), including any short
position under a derivative, any agreement to sell or any delivery
obligation or right to require another person to purchase or take
delivery; or (iii) has borrowed or lent any relevant securities of
Velocys (including, for these purposes, any financial collateral
arrangements of the kind referred to in Note 3 on Rule 4.6 of the
Takeover Code) save for any borrowed shares which have been either
on-lent or resold; or (iv) is a party to any dealing arrangement of
the kind referred to in Note 11 on the definition of acting in
concert in the Takeover Code.
13. Directors, management, employees, pensions, research and development and locations
Bidco's strategic plans for Velocys
Bidco recognises the strength of Velocys' market proposition,
technology, licences, partners, people, facilities and reference
projects and believes that under the ownership of Bidco, and with
an adequate injection of growth capital, Velocys' prospects can
materially improve. Bidco acknowledges and places great value on
the identified commercial pipeline of licensing opportunities
Velocys has fostered and believes that successful execution of this
pipeline and the conversion of leads into binding agreements can
generate significant returns on any investment. Notwithstanding
this, Bidco is also highly cognisant of Velocys' current inability
to deliver on its strategy and therefore, conditional on the
Acquisition becoming Effective, Bidco has agreed to provide up to
US$40 million of growth capital which is expected to enable Velocys
to meet its medium-term strategic plans.
Following the Acquisition becoming Effective, Bidco intends to
work closely with Velocys' management, and where appropriate, other
stakeholders, to undertake a review of Velocys' business in order
to determine the short and long-term objectives for the business
and how they can best be delivered having regard to the additional
growth capital being provided by Bidco. This review will include an
assessment as to how best to support Velocys' existing growth
strategies in pursuit of the commercial opportunities before it.
The detailed scope of this review and the appropriate timetable for
its completion has not yet been finalised, but Bidco anticipates
this review will be completed within approximately three months
from the Acquisition becoming Effective.
Employees and management
Bidco attaches great importance to the skills and experience of
the employees and management team of Velocys and its subsidiaries
and consequently, Bidco does not intend to cause Velocys or its
subsidiaries to effect any material change with regard to: (i) the
continued employment of its employees and managers and (ii) the
conditions of employment or balance of skills and functions of the
management of Velocys or its subsidiaries. However, given Bidco's
intention for Velocys to operate as a private company going
forward, certain functions necessary for Velocys to operate as a
public company will no longer be needed, which may result in
marginal reductions in headcount. In addition, it is intended that,
with effect from the Effective Date, each of Velocys' non-executive
directors will resign from their office as directors of
Velocys.
Existing employment rights and pensions
Bidco intends for the existing contractual and statutory
employment rights of Velocys' management and employees will be
safeguarded in accordance with applicable law.
Velocys does not operate or contribute to any defined benefit
pension schemes in respect of its management and employees. It
does, however, contribute to a defined contribution pension plan.
Bidco does not intend to make any material changes to the terms and
conditions of Velocys' pension schemes, including the employer
contributions, accrual of benefits for existing members or the
rights of admission of new members.
Incentive arrangements
The Acquisition will affect participants in the Velocys Share
Plans, who will be contacted separately as set out in paragraph 14
below.
Bidco has not entered into and has not had discussions on
proposals to enter into, any form of incentivisation arrangements
with members of Velocys' management . However, Bidco believes that
providing equity incentivisation of key employees is important to
align the team with the firm's mission and strategic objectives and
therefore following the Acquisition becoming Effective, Bidco
intends to review the management, governance and incentive
structure of Velocys. Bidco confirms no discussions regarding
incentive arrangements will take place before the Effective
Date.
Headquarters, locations, fixed assets and research and
development
Bidco does not intend to make any changes to Velocys' business
(including its research and development function) or broader
strategic plans, or locations and places of business (including its
headquarters and headquarters functions) and does not intend to
redeploy any of Velocys' fixed assets.
Trading facilities
Velocys Shares are currently admitted to trading on the AIM. As
set out in paragraph 16, applications will be made for the
cancellation of the admission to trading of Velocys Shares on AIM
and steps will be taken by Bidco following the Acquisition becoming
Effective to re-register Velocys as a private company.
None of the statements in this paragraph 13 are "post-offer
undertakings" for the purposes of Rule 19.5 of the Takeover
Code.
14. Velocys Share Plans
Participants in the Velocys Share Plans will be contacted
regarding the effect of the Acquisition on their options and awards
under the Velocys Share Plans. Details of the impact of the Scheme
on each of the Velocys Share Plans and the proposals will be set
out in the Scheme Document. Options under the Velocys Share Plans
have a higher exercise price than the Acquisition Price and
therefore no proposals are required to be made for any options
under the Velocys Share Plans pursuant to Rule 15 of the Takeover
Code. Accordingly, no such Rule 15 proposals will be made to option
holders in connection with the Acquisition.
15. Scheme process
The Acquisition is subject to the Conditions and certain further
terms referred to in Appendix 1 to this announcement and to be set
out in full in the Scheme Document, and will only become Effective
if, among other things, the following events occur on or before the
Long Stop Date (or such later date as Bidco and Velocys may, with
the consent of the Panel, agree and, if required, the Court may
approve):
-- a resolution to approve the Scheme is passed by a majority in
number of Velocys Shareholders present and voting (and entitled to
vote) at the Court Meeting, either in person or by proxy,
representing 75 per cent. or more in value of each class of the
Scheme Shares held by those Velocys Shareholders;
-- the Resolutions necessary to implement the Scheme and the
Acquisition is passed by the requisite majority of Velocys
Shareholders at the General Meeting;
-- following the Court Meeting and General Meeting and
satisfaction and/or waiver (where applicable) of the other
Conditions, the Scheme is sanctioned by the Court (without
modification, or with modification on terms agreed by Bidco and
Velocys); and
-- following such sanction, a copy of the Court Order is
delivered to the Registrar of Companies.
The Conditions in paragraphs 1 and 2 of Appendix I to this
announcement provide that the Scheme will lapse (under the
authority of Rule 13.5(b) of the Takeover Code) if:
-- the Court Meeting and the General Meeting are not held by the
22 (nd) day after the expected date of the Court Meeting and the
General Meeting to be set out in the Scheme Document in due course
(or such later date as may be agreed between Bidco and Velocys with
the consent of the Panel (and that the Court may approve if
required));
-- the Sanction Hearing to approve the Scheme is not held by the
22 (nd) day after the expected date of the Sanction Hearing to be
set out in the Scheme Document in due course (or such later date as
may be agreed between Bidco and Velocys with the consent of the
Panel (and that the Court may approve if required)); or
-- the Scheme does not become Effective by 11.59 p.m. on the
Long Stop Date (or such later date as Bidco and Velocys may, with
the consent of the Panel, agree and (if required) the Court may
allow).
If any Condition in paragraph 2 of Appendix I to this
announcement is not capable of being satisfied by the date
specified therein, Bidco shall make an announcement through a
Regulatory Information Service as soon as practicable and, in any
event, by not later than 8.00 a.m. on the Business Day following
the date so specified, stating whether Bidco has invoked that
Condition, (where applicable) waived that Condition or, with the
agreement of Velocys, specified a new date by which that Condition
must be satisfied.
Once the necessary approvals from Velocys Shareholders have been
obtained and the other Conditions have been satisfied or (where
applicable) waived and the Scheme has been sanctioned by the Court,
the Scheme will become Effective upon delivery of a copy of the
Court Order to the Registrar of Companies. Subject to the
satisfaction of the Conditions, the Scheme is expected to become
Effective during January 2024.
As noted in paragraph 10, Velocys and Bidco have agreed to
cooperate in respect of the obtaining of a licence from the Office
of Financial Sanctions Implementation in connection with the
Acquisition. The obtaining of such licence is not a Condition, but
rather, t o the extent that any Velocys Shareholder is a Sanctions
Disqualified Shareholder, any Velocys Shares held by any such
Velocys Shareholder and such Velocys Shareholder's entitlement to
the cash consideration payable by Bidco for such Velocys Shares
will arise (on the basis set out in the Scheme) upon the later of:
(i) the Effective Date; and (ii) the earlier of the Licence Grant
Date or the date on which the relevant asset freeze or other
Sanctions are removed.
Upon the Scheme becoming Effective: (i) it will be binding on
all Velocys Shareholders, irrespective of whether or not they
attended or voted at the Court Meeting or the General Meeting (and
if they attended and voted, whether or not they voted in favour);
and (ii) share certificates in respect of Scheme Shares (other than
Scheme Restricted Shares unless the Licence Grant Date takes place
prior to or on the Effective Date ) will cease to be valid and
entitlements to Scheme Shares held within the CREST system will be
cancelled. In accordance with the applicable provisions of the
Takeover Code, the consideration for the transfer of the Scheme
Shares to Bidco will be despatched no later than 14 days after the
Effective Date. The consideration for the transfer of the Scheme
Restricted Shares to Bidco will be despatched on the later of: (i)
14 days from the Effective Date; and (ii) the earlier of the
Licence Grant Date or the date on which the relevant asset freeze
or other Sanctions are removed . In the event asset freeze or other
Sanctions remain in place upon the transfer of the Scheme
Restricted Shares to Bidco, the consideration will be held in a
segregated account in accordance with applicable sanctions
legislation.
Any Velocys Shares issued before the Scheme Record Time will be
subject to the terms of the Scheme.
Further details of the Scheme, including expected times and
dates for each of the Court Meeting, the General Meeting and the
Sanction Hearing, together with the notices of the Court Meeting
and the General Meeting, will be set out in the Scheme
Document.
It is expected that the Scheme Document and the Forms of Proxy
accompanying the Scheme Document will be sent to Velocys
Shareholders (other than Sanctions Disqualified Shareholders) as
soon as practicable and in any event within 28 days of this
announcement (or such later date as Bidco and Velocys may, with the
consent of the Panel, agree and, if required, the Court may
approve).
16. Delisting, and cancellation of trading and re--registration
Prior to the Acquisition becoming Effective, Velocys will make
an application to the London Stock Exchange for the cancellation of
the admission to trading of Velocys Shares on AIM, to take effect
from or shortly after the Effective Date.
The last day of dealings in the Velocys Shares on AIM is
expected to be the Business Day immediately prior to the Effective
Date and no transfers will be registered after 6.00 p.m. (London
time) on that date.
On the Effective Date, all of the Velocys Shares, other than the
Scheme Restricted Shares unless the Licence Grant Date takes place
prior to or on the Effective Date, will become owned by Bidco and
the share certificates in respect of those Velocys Shares will
cease to be valid and of value and should be destroyed. In
addition, entitlements to Velocys Shares held within the CREST
system will be cancelled.
It is intended that, as soon as practicable after the
Acquisition is Effective, Velocys will be re-registered as a
private limited company.
17. Documents
Copies of the following documents will be available on Bidco's
website at www.madisonmomentum.com and Velocys' website at
http://offer.velocys.com , subject to certain restrictions relating
to persons resident in Restricted Jurisdictions, promptly and in
any event by no later than noon on the Business Day following this
announcement:
-- this announcement;
-- the irrevocable undertakings referred to in paragraph 8 above
and summarised in Appendix 3 to this announcement;
-- the documents entered into for the financing of the
Acquisition referred to in paragraph 5 above;
-- the Confidentiality Agreements;
-- the Cooperation Agreement; and
-- the consents from financial advisers to being named in this announcement.
Neither the content of the websites referred to in this
announcement, nor any website accessible from hyperlinks, is
incorporated into or forms part of this announcement.
18. General
Bidco reserves the right to elect (with the consent of the Panel
and subject to the terms of the Cooperation Agreement) to implement
the acquisition of the Velocys Shares by way of a Takeover Offer as
an alternative to the Scheme. In such event, the Takeover Offer
will be implemented on substantially the same terms, so far as
applicable, as those which would apply to the Scheme.
If the Acquisition is effected by way of a Takeover Offer, and
such Takeover Offer becomes or is declared unconditional in all
respects and sufficient acceptances are received, Bidco intends to
exercise its rights to apply the provisions of Chapter 3 of Part 28
of the 2006 Act so as to acquire compulsorily the remaining Velocys
Shares in respect of which the Takeover Offer has not been
accepted.
Investors should be aware that Bidco may purchase Velocys Shares
otherwise than under the Scheme or any Takeover Offer, including
pursuant to privately negotiated purchases.
The Acquisition will be on the terms and subject to the
conditions set out herein and in Appendix 1, and to be set out in
full in the Scheme Document. The bases and sources for certain
financial information contained in this announcement are set out in
Appendix 2. Details of undertakings received by Bidco are set out
in Appendix 3. Certain definitions and terms used in this
announcement are set out in Appendix 4. The Scheme Document will be
sent to shareholders of Velocys within 28 days of this announcement
(or on such later date as may be agreed with Velocys and the
Panel).
Cavendish (as financial adviser to Bidco) and Panmure Gordon (as
financial adviser to Velocys) have each given and not withdrawn
their consent to the publication of this announcement with the
inclusion herein of the references to their names in the form and
context in which they appear.
This announcement does not constitute an offer or an invitation
to purchase or subscribe for any securities.
Enquiries
Bidco C/O: H/Advisors Maitland
Kevin Bone (non-executive director)
Josh Dienstag (non-executive director)
May Liew (non-executive director)
Cavendish (Financial Adviser to
Bidco and the Consortium)
Marc Milmo
Henrik Persson
Seamus Fricker 020 7220 0500
H/Advisor Maitland
Sam Cartwright / David Sturken 020 737 95151
Velocys
Henrik Wareborn, CEO
Philip Sanderson, CFO +44 1865 800821
Panmure Gordon (UK) Limited (Rule
3 Adviser, Financial Adviser, Nomad
and Joint Broker to Velocys)
Emma Earl (Corporate Finance)
John Prior (Corporate Finance)
Will Goode (Corporate Finance)
Mark Rogers (Corporate Finance)
Hugh Rich (Corporate Broking) 020 7886 2500
Shore Capital Stockbrokers Limited
(Joint Broker)
Henry Willcocks (Corporate Broking)
Toby Gibbs (Corporate Advisory)
James Thomas (Corporate Advisory) 020 7408 4090
Cooley (UK) LLP is acting as legal adviser to Bidco
Mayer Brown LLP is acting as legal adviser to Velocys.
Further information
Cavendish Capital Markets Limited ("Cavendish"), which is
authorised and regulated in the United Kingdom by the Financial
Conduct Authority, is acting as financial adviser to the Consortium
and Bidco and no one else in connection with the matters described
in this announcement and will not be responsible to anyone other
than the Consortium and Bidco for providing the protections offered
to clients of Cavendish or for providing advice in connection with
any matter referred to in this announcement. Neither Cavendish nor
any of its affiliates (nor their respective directors, officers,
employees or agents) owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, whether in
contract, in tort, under statute or otherwise) to any person who is
not a client of Cavendish in connection with this announcement, any
statement contained herein, the Takeover Offer or otherwise. No
representation or warranty, express or implied, is made by
Cavendish as to the contents of this announcement.
Panmure Gordon (UK) Limited ("Panmure Gordon"), which is
authorised and regulated in the United Kingdom by the Financial
Conduct Authority, is acting as financial adviser and Rule 3
adviser, to Velocys and no one else in connection with the matters
described in this announcement and will not be responsible to
anyone other than Velocys for providing the protections offered to
clients of Panmure Gordon or for providing advice in connection
with any matter referred to in this announcement. Neither Panmure
Gordon nor any of its affiliates (nor their respective directors,
officers, employees or agents) owes or accepts any duty, liability
or responsibility whatsoever (whether direct or indirect, whether
in contract, in tort, under statute or otherwise) to any person who
is not a client of Panmure Gordon in connection with this
announcement, any statement contained herein, the Takeover Offer or
otherwise. No representation or warranty, express or implied, is
made by Panmure Gordon as to the contents of this announcement.
Shore Capital and Corporate Limited ("Shore Capital"), which is
authorised and regulated in the United Kingdom by the Financial
Conduct Authority, is acting as adviser to Velocys and no one else
in connection with the matters described in this announcement and
will not be responsible to anyone other than Velocys for providing
the protections offered to clients of Shore Capital or for
providing advice in connection with any matter referred to in this
announcement. Neither Shore Capital nor any of its affiliates (nor
their respective directors, officers, employees or agents) owes or
accepts any duty, liability or responsibility whatsoever (whether
direct or indirect, whether in contract, in tort, under statute or
otherwise) to any person who is not a client of Shore Capital in
connection with this announcement, any statement contained herein,
the Takeover Offer or otherwise. No representation or warranty,
express or implied, is made by Shore Capital as to the contents of
this announcement.
This announcement is for information purposes only and is not
intended to, and does not, constitute, or form part of, an offer,
invitation or the solicitation of an offer to purchase, otherwise
acquire, subscribe for, sell or otherwise dispose of, any
securities or the solicitation of any vote or approval in any
jurisdiction pursuant to the Acquisition or otherwise, nor shall
there be any sale, issuance or transfer of securities of Velocys in
any jurisdiction in contravention of applicable law. The
Acquisition will be implemented solely pursuant to the terms of the
Scheme Document (or, if the Acquisition is implemented by way of a
Takeover Offer, the offer document), which will contain the full
terms and conditions of the Acquisition, including details of how
to vote in respect of the Acquisition. Any vote in respect of the
Scheme or other response in relation to the Acquisition should be
made only on the basis of the information contained in the Scheme
Document (or, if the Acquisition is implemented by way of a
Takeover Offer, the offer document).
This announcement does not constitute a prospectus, prospectus
equivalent document or exempted document.
This announcement contains inside information in relation to
Velocys for the purposes of Article 7 of the Market Abuse
Regulation. The person responsible for arranging the release of
this announcement on behalf of Velocys is David Bate, General
Counsel, Senior Vice President and Head of Compliance for Velocys.
Velocys' Legal Entity Identifier is 549300KGMQV70HA5Y715 .
If you are in any doubt about the contents of this announcement
or the action you should take, you are recommended to seek your own
independent financial advice immediately from your stockbroker,
bank manager, solicitor, accountant or independent financial
adviser duly authorised under the Financial Services and Markets
Act 2000 (as amended) if you are resident in the United Kingdom or,
if not, from another appropriately authorised independent financial
adviser.
Overseas Shareholders
The release, publication or distribution of this announcement in
or into jurisdictions other than the UK may be restricted by law
and therefore any persons who are subject to the law of any
jurisdiction other than the UK should inform themselves of, and
observe, any applicable legal or regulatory requirements. Any
failure to comply with such requirements may constitute a violation
of the securities laws of any such jurisdiction. To the fullest
extent permitted by applicable law, the companies and persons
involved in the Acquisition disclaim any responsibility or
liability for the violation of such restrictions by any person.
This announcement has been prepared in accordance with and for the
purpose of complying with English law, the Takeover Code and the
Market Abuse Regulation and information disclosed may not be the
same as that which would have been prepared in accordance with the
laws of jurisdictions outside England.
The availability of the Acquisition to Velocys Shareholders who
are not resident in and citizens of the UK may be affected by the
laws of the relevant jurisdictions in which they are located or of
which they are citizens. Persons who are not resident in the UK
should inform themselves of, and observe, any applicable legal or
regulatory requirements of their jurisdictions. In particular, the
ability of persons who are not resident in the United Kingdom to
vote their Velocys Shares with respect to the Scheme at the Court
Meeting, or to appoint another person as proxy to vote at the Court
Meeting on their behalf, may be affected by the laws of the
relevant jurisdictions in which they are located. Any failure to
comply with the applicable restrictions may constitute a violation
of the securities laws of any such jurisdiction. To the fullest
extent permitted by applicable law, the companies and persons
involved in the Acquisition disclaim any responsibility or
liability for the violation of such restrictions by any person.
Further details in relation to Overseas Shareholders will be
contained in the Scheme Document (or, if the Acquisition is
implemented by way of a Takeover Offer, the offer document).
Unless otherwise determined by Bidco or required by the Takeover
Code, and permitted by applicable law and regulation, the
Acquisition will not be made available, directly or indirectly, in,
into or from a Restricted Jurisdiction where to do so would violate
the laws in that jurisdiction and no person may vote in favour of
the Scheme by any such use, means, instrumentality or from within a
Restricted Jurisdiction or any other jurisdiction if to do so would
constitute a violation of the laws of that jurisdiction. Copies of
this announcement and any formal documentation relating to the
Acquisition are not being, and must not be, directly or indirectly,
mailed or otherwise forwarded, distributed or sent in or into or
from any Restricted Jurisdiction and persons receiving such
documents (including agents, custodians, nominees and trustees)
must not mail or otherwise forward, distribute or send it in or
into or from any Restricted Jurisdiction. Doing so may render
invalid any related purported vote in respect of the Acquisition.
If the Acquisition is implemented by way of a Takeover Offer
(unless otherwise permitted by applicable law and regulation), the
Takeover Offer may not be made directly or indirectly, in or into,
or by the use of mails or any means or instrumentality (including,
but not limited to, facsimile, e-mail or other electronic
transmission, telex or telephone) of interstate or foreign commerce
of, or of any facility of a national, state or other securities
exchange of any Restricted Jurisdiction and the Takeover Offer may
not be capable of acceptance by any such use, means,
instrumentality or facilities.
Further details in relation to Overseas Shareholders will be
included in the Scheme Document (or, if the Acquisition is
implemented by way of a Takeover Offer, the offer document).
Sanctions Disqualified Shareholders
Sanctions Disqualified Shareholders should refer to paragraph 10
of this announcement, which contains important information in
relation to such holders.
Further details in relation to Sanctions Disqualified
Shareholders will be included in the Scheme Document (or, if the
Acquisition is implemented by way of a Takeover Offer, the offer
document).
Notice to US or United States Velocys Shareholders
The Acquisition relates to the shares of an English company and
is being made by means of a scheme of arrangement provided for
under the laws of England and Wales. A transaction effected by
means of a scheme of arrangement is not subject to the tender offer
or proxy solicitation rules under the US Securities Exchange Act of
1934 (the "U.S. Exchange Act"). Accordingly, this announcement, the
Scheme and certain other documents relating to the Acquisition are
subject to the disclosure requirements and practices applicable in
the UK to schemes of arrangement which differ from the disclosure
requirements of the US tender offer and proxy solicitation rules.
The financial information included in this announcement and the
Scheme documentation has been prepared in accordance with generally
accepted accounting principles of the United Kingdom and thus may
not be comparable to financial information of US companies or
companies whose financial statements are prepared in accordance
with generally accepted accounting principles in the United
States.
If, in the future, Bidco exercises its right to implement the
Acquisition by way of a Takeover Offer, which is to be made into
the United States, such Takeover Offer will be made in compliance
with the applicable US laws and regulations.
It may be difficult for US holders of Velocys Shares to enforce
their rights and any claim arising out of the US federal laws,
since Bidco and Velocys are located in a non-US jurisdiction, and
some or all of their officers and directors may be residents of a
non-U.S. jurisdiction. U.S. holders of Velocys Shares may not be
able to sue a non-US company or its officers or directors in a
non-US court for violations of the US securities laws. Further, it
may be difficult to compel a non-US company and its affiliates to
subject themselves to a US court's judgement.
In accordance with normal UK practice and pursuant to Rule
14e-5(b) of the US Exchange Act, the Consortium, certain affiliated
companies or their nominees and brokers (acting as agents), may
from time to time make certain purchases of, or arrangements to
purchase, Velocys Shares outside of the US, other than pursuant to
the Acquisition, until the date on which the Acquisition becomes
Effective, lapses or is otherwise withdrawn. Also, in accordance
with Rule 14e-5(b) of the U.S. Exchange Act, Cavendish will
continue to act as exempt principal traders in Velocys shares on
the London Stock Exchange. These purchases may occur either in the
open market at prevailing prices or in private transactions at
negotiated prices. Any information about such purchases will be
disclosed as required in the United Kingdom, will be reported to a
Regulatory Information Service and will be available on the London
Stock Exchange website, www.londonstockexchange.com.
US Velocys Shareholders also should be aware that the
transaction contemplated herein may have tax consequences in the US
and, that such consequences, if any, are not described herein. US
Velocys Shareholders are urged to consult with legal, tax and
financial advisers in connection with making a decision regarding
this transaction.
Forward Looking Statements
This announcement (including information incorporated by
reference in this announcement), oral statements made regarding the
Acquisition, and other information published by Bidco and Velocys
contain statements which are, or may be deemed to be,
"forward-looking statements". Forward-looking statements are
prospective in nature and are not based on historical facts, but
rather on current expectations and projections of the management of
Bidco and Velocys about future events, and are therefore subject to
risks and uncertainties which could cause actual results to differ
materially from the future results expressed or implied by the
forward-looking statements.
The forward-looking statements contained in this announcement
include statements relating to the expected effects of the
Acquisition on Bidco and Velocys (including their future prospects,
developments and strategies), the expected timing and scope of the
Acquisition and other statements other than historical facts.
Often, but not always, forward-looking statements can be identified
by the use of forward-looking words such as "prepares", "plans",
"expects" or "does not expect", "is expected", "is subject to",
"budget", "projects", "synergy", "strategy", "scheduled", "goal",
"estimates", "forecasts", "cost-saving", "intends", "anticipates"
or "does not anticipate", or "believes", or variations of such
words and phrases or statements that certain actions, events or
results "may", "could", "should", "would", "might" or "will" be
taken, occur or be achieved. Forward looking statements may include
statements relating to the following: (i) future capital
expenditures, expenses, revenues, earnings, synergies, economic
performance, indebtedness, financial condition, dividend policy,
losses and future prospects; (ii) business and management
strategies and the expansion and growth of Bidco's, Velocys', any
member of the Velocys Group's operations and potential synergies
resulting from the Acquisition; and (iii) the effects of global
economic conditions and governmental regulation on Bidco's,
Velocys', or any member of the Velocys Group's business.
Although Bidco and Velocys believe that the expectations
reflected in such forward-looking statements are reasonable, Bidco
and Velocys can give no assurance that such expectations will prove
to be correct. By their nature, forward-looking statements involve
risk and uncertainty because they relate to events and depend on
circumstances that will occur in the future. There are a number of
factors that could cause actual results and developments to differ
materially from those expressed or implied by such forward-looking
statements.
These factors include, but are not limited to: the ability to
complete the Acquisition; the ability to obtain requisite
shareholder approvals and the satisfaction of other Conditions on
the proposed terms and schedule; changes in the global political,
economic, business and competitive environments and in market and
regulatory forces; changes in future exchange and interest rates;
changes in tax rates; future business combinations or disposals;
changes in general economic and business conditions; changes in the
behaviour of other market participants; changes in the anticipated
benefits from the proposed transaction not being realised as a
result of changes in general economic and market conditions in the
countries in which Bidco and Velocys operate, weak, volatile or
illiquid capital and/or credit markets, changes in tax rates,
interest rate and currency value fluctuations, the degree of
competition in the geographic and business areas in which Bidco and
Velocys operate and changes in laws or in supervisory expectations
or requirements. Other unknown or unpredictable factors could cause
actual results to differ materially from those expected, estimated
or projected in the forward-looking statements. If any one or more
of these risks or uncertainties materialises or if any one or more
of the assumptions proves incorrect, actual results may differ
materially from those expected, estimated or projected. Such
forward-looking statements should therefore be construed in the
light of such factors. Neither Bidco nor Velocys, nor any of their
respective associates or directors, officers or advisers, provides
any representation, assurance or guarantee that the occurrence of
the events expressed or implied in any forward-looking statements
in this announcement will actually occur. You are cautioned not to
place any reliance on these forward-looking statements which speak
only as of the date of this announcement.
Specifically, statements of estimated cost savings and synergies
related to future actions and circumstances which, by their nature,
involve risks, uncertainties and contingencies. As a result, the
cost savings and synergies referred to may not be achieved, may be
achieved later or sooner than estimated, or those achieved could be
materially different from those estimated. Due to the scale of the
Velocys Group, there may be additional changes to the Velocys
Group's operations. As a result, and given the fact that the
changes relate to the future, the resulting cost synergies may be
materially greater or less than those estimated.
Other than in accordance with their legal or regulatory
obligations, neither Bidco nor Velocys is under any obligation, and
Bidco and Velocys expressly disclaim any intention or obligation,
to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
Dealing and Opening Position Disclosure Requirements
Under Rule 8.3(a) of the Takeover Code, any person who is
interested in 1% or more of any class of relevant securities of an
offeree company or of any securities exchange offeror (being any
offeror other than an offeror in respect of which it has been
announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement
of the offer period and, if later, following the announcement in
which any securities exchange offeror is first identified. An
Opening Position Disclosure must contain details of the person's
interests and short positions in, and rights to subscribe for, any
relevant securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) of the Takeover Code applies must be
made by no later than 3.30 pm (London time) on the 10(th) business
day following the commencement of the offer period and, if
appropriate, by no later than 3.30 pm (London time) on the 10(th)
business day following the announcement in which any securities
exchange offeror is first identified. Relevant persons who deal in
the relevant securities of the offeree company or of a securities
exchange offeror prior to the deadline for making an Opening
Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Takeover Code, any person who is, or
becomes, interested in 1% or more of any class of relevant
securities of the offeree company or of any securities exchange
offeror must make a Dealing Disclosure if the person deals in any
relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the
dealing concerned and of the person's interests and short positions
in, and rights to subscribe for, any relevant securities of each of
(i) the offeree company and (ii) any securities exchange
offeror(s), save to the extent that these details have previously
been disclosed under Rule 8. A Dealing Disclosure by a person to
whom Rule 8.3(b) applies must be made by no later than 3.30 pm
(London time) on the business day following the date of the
relevant dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and
8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Takeover Panel's website at www.thetakeoverpanel.org.uk,
including details of the number of relevant securities in issue,
when the offer period commenced and when any offeror was first
identified. You should contact the Panel's Market Surveillance Unit
on +44 (0)20 7638 0129 if you are in any doubt as to whether you
are required to make an Opening Position Disclosure or a Dealing
Disclosure.
Publication on a website
In accordance with Rule 26.1 of the Takeover Code, a copy of
this announcement and the documents required to be published under
Rule 26 of the Takeover Code will be made available, subject to
certain restrictions relating to persons resident in Restricted
Jurisdictions, on Bidco's website at www.madisonmomentum.com and
Velocys' website at http://offer.velocys.com by no later than 12
noon (London time) on the Business Day following this announcement.
For the avoidance of doubt, neither the content of this website nor
of any website accessible from hyperlinks is incorporated by
reference or forms part of this announcement.
No profit forecasts, estimates or quantified benefits
statements
No statement in this announcement is intended as a profit
forecast, profit estimate or quantified benefits statement for any
period and no statement in this announcement should be interpreted
to mean that earnings or earnings per share for Velocys or Bidco
for the current or future financial years would necessarily match
or exceed the historical published earnings or earnings per share
for Velocys or Bidco.
Right to switch to a Takeover Offer
Bidco reserves the right to elect, with the consent of the
Takeover Panel and subject to the terms of the Cooperation
Agreement, to implement the Acquisition by way of a Takeover Offer
for the entire issued and to be issued share capital of Velocys as
an alternative to the Scheme. In such an event, the Takeover Offer
will be implemented on the same terms or, if Bidco so decides, on
such other terms being no less favourable (subject to appropriate
amendments), so far as applicable, as those which would apply to
the Scheme and subject to the amendment referred to in Part B of
Appendix 1 to this announcement.
Requesting hard copy documents
In accordance with Rule 30.3 of the Takeover Code, Velocys
Shareholders, persons with information rights and participants in
Velocys Share Plans may request a hard copy of this announcement by
contacting Link Group on 0371 664 0321. Calls are charged at the
standard geographic rate and will vary by provider. Calls outside
the United Kingdom will be charged at the applicable international
rate. The helpline is open between 9 am - 5.30 pm, Monday to Friday
excluding public holidays in England and Wales. Please note that
Link Group cannot provide any financial, legal or tax advice and
calls may be recorded and monitored for security and training
purposes. For persons who receive a copy of this announcement in
electronic form or via a website notification, a hard copy of this
announcement will not be sent unless so requested. Such persons may
also request that all future documents, announcements and
information (and any information incorporated into them by
reference to another source) in relation to the Acquisition be sent
to them in hard copy form.
Electronic communications
Please be aware that addresses, electronic addresses and certain
other information provided by Velocys Shareholders, persons with
information rights and other relevant persons for the receipt of
communications from Velocys may be provided to Bidco during the
offer period as required under Section 4 of Appendix 4 of the
Takeover Code to comply with Rule 2.11(c) of the Takeover Code.
Rounding
Certain figures included in this announcement have been
subjected to rounding adjustments. Accordingly, figures shown for
the same category presented in different tables may vary slightly
and figures shown as totals in certain tables may not be an
arithmetic aggregation of figures that precede them.
General
If the Acquisition is effected by way of a Takeover Offer, and
such a Takeover Offer becomes or is declared unconditional in all
respects and sufficient acceptances are received, Bidco intends to
exercise its rights to apply the provisions of Chapter 3 of Part 28
of the 2006 Act so as to acquire compulsorily the remaining Velocys
Shares in respect of which the Takeover Offer has not been
accepted.
Investors should be aware that Bidco may purchase Velocys Shares
otherwise than under any Takeover Offer or the Scheme, including
pursuant to privately negotiated purchases.
Rule 2.9 of the Takeover Code
For the purposes of Rule 2.9 of the Takeover Code, Velocys
confirms that, as at close of business on the Latest Practicable
Date, it had 1,651,798,992 ordinary shares of 1p each in issue.
Velocys holds no shares in treasury. Accordingly, the total number
of voting rights in Velocys is 1,651,798,992. The International
Securities Identification Number ("ISIN") of Velocys' shares is
GB00B11SZ269 .
Disclaimer
The Acquisition will be subject to English law, the jurisdiction
of the Court, and the applicable requirements of the Takeover Code,
the Panel, the London Stock Exchange and the Registrar of
Companies.
Appendix 1
Conditions and Further Terms of the Transaction
Conditions to the Scheme and Acquisition
1. The Acquisition will be conditional upon the Scheme becoming
unconditional and becoming Effective, subject to the provisions of
the Takeover Code, by no later than 11.59 p.m. on the Long Stop
Date or such later date (if any) as Bidco and Velocys may, with the
consent of the Panel, agree and (if required) the Court may
allow.
Conditions of the Scheme
2. The Scheme will be subject to the following Conditions:
2.1 (i) its approval by a majority in number representing not
less than 75 per cent. in value of Scheme Shares held by Velocys
Shareholders who are on the register of members of Velocys (or the
relevant class or classes thereof) at the Voting Record Time,
present and voting, whether in person or by proxy, at the Court
Meeting and at any separate class meeting which may be required (or
any adjournment thereof), and (ii) such Court Meeting being held on
or before the 22nd day after the expected date of the Court Meeting
to be set out in the Scheme Document in due course (or such later
date as may be agreed between Bidco and Velocys with the consent of
the Panel (and that the Court may approve if required));
2.2 (i) the Resolutions being duly passed at the General Meeting
(or any adjournment thereof) and (ii) such General Meeting being
held on or before the 22nd day after the expected date of the
General Meeting to be set out in the Scheme Document in due course
(or such later date as may be agreed between Bidco and Velocys with
the consent of the Panel (and that the Court may approve if
required));
2.3 (i) the sanction of the Scheme by the Court (with or without
modification (but subject to such modification being acceptable to
Bidco and Velocys)); and (ii) the Sanction Hearing being held on or
before the 22nd day after the expected date of the Sanction Hearing
to be set out in the Scheme Document in due course (or such later
date as may be agreed between Bidco and Velocys with the consent of
the Panel (and that the Court may approve if required)); and
2.4 the delivery of a copy of the Court Order to the Registrar of Companies.
General conditions
3. In addition, subject as stated in Part B (Further terms of
the Acquisition) of this Appendix 1 (Conditions and further terms
of the transaction), Bidco and Velocys have agreed that the
Acquisition will be conditional upon the following Conditions and,
accordingly, the necessary actions to make the Acquisition
Effective will not be taken unless the following Conditions (as
amended if appropriate) have been satisfied or, where relevant,
waived:
Other third party clearances
3.1 no central bank, government or governmental,
quasi--governmental, supranational, statutory, regulatory,
environmental, administrative, fiscal or investigative body, court,
trade agency, association, institution, environmental body,
employee representative body or any other body or person whatsoever
in any jurisdiction (each a "Third Party") having given notice of a
decision to take, institute, implement or threaten any action,
proceeding, suit, investigation, enquiry or reference, or having
required any action to be taken or otherwise having done anything
or having enacted, made or proposed any statute, regulation,
decision, order or change to published practice and there not
continuing to be outstanding any statute, regulation, decision or
order which would or might reasonably be expected to:
3.1.1 make the Acquisition, its implementation or the
acquisition or proposed acquisition of any shares or other
securities in, or control or management of, any member of the Wider
Velocys Group by any member of the Wider Bidco Group void, illegal
and/or unenforceable under the laws of any relevant jurisdiction,
or otherwise directly or indirectly prevent, prohibit, or restrain,
restrict, impede, challenge, delay or otherwise interfere with the
implementation of, or impose material additional conditions or
obligations with respect to, the Acquisition or the acquisition of
any shares or other securities in, or control or management of, any
member of the Wider Velocys Group by any member of the Wider Bidco
Group or require an amendment of the Scheme;
3.1.2 require, prevent or materially delay the divestiture or
materially alter the terms envisaged for such divestiture by any
member of the Wider Bidco Group or by any member of the Wider
Velocys Group of all or any part of their businesses, assets or
property or impose any limitation on the ability of all or any of
them to conduct their respective businesses (or any part thereof)
or to own, control or manage any of their assets or properties (or
any part thereof) to an extent which is material in the context of
the Wider Bidco Group taken as a whole or in the context of the
Acquisition;
3.1.3 impose any material limitation on, or result in a material
delay in, the ability of any member of the Wider Bidco Group
directly or indirectly to acquire or hold or to exercise
effectively all or any rights of ownership in respect of shares or
other securities in Velocys (or any member of the Wider Velocys
Group) or on the ability of any member of the Wider Velocys Group
or any member of the Wider Bidco Group directly or indirectly to
hold or exercise effectively any rights of ownership in respect of
shares or other securities (or the equivalent) in, or to exercise
management control over, any member of the Wider Velocys Group to
an extent which is material in the context of the Wider Velocys
Group taken as a whole or in the context of the Acquisition;
3.1.4 other than pursuant to the implementation of the Scheme
or, if applicable, sections 974 to 991 of the 2006 Act, require any
member of the Wider Bidco Group or the Wider Velocys Group to
acquire or offer to acquire any shares, other securities (or the
equivalent) or interest in any member of the Wider Velocys Group or
any asset owned by any third-party which is material in the context
of the Wider Velocys Group or the Wider Bidco Group, in either case
taken as a whole;
3.1.5 require, prevent or delay a divestiture by any member of
the Wider Bidco Group of any shares or other securities (or the
equivalent) in any member of the Wider Velocys Group;
3.1.6 result in any member of the Wider Velocys Group ceasing to
be able to carry on business under any name under which it
presently carries on business to an extent which is material in the
context of the Wider Velocys Group taken as a whole or in the
context of the Acquisition;
3.1.7 impose any limitation on the ability of any member of the
Wider Bidco Group or any member of the Wider Velocys Group to
conduct, integrate or co--ordinate all or any part of their
respective businesses with all or any part of the business of any
other member of the Wider Bidco Group and/or the Wider Velocys
Group in a manner which is adverse and material to the Wider Bidco
Group and/or the Wider Velocys Group, in either case, taken as a
whole or in the context of the Acquisition; or
3.1.8 except as Disclosed, otherwise affect the business,
assets, value, profits, prospects or operational performance of any
member of the Wider Velocys Group or any member of the Wider Bidco
Group in each case in a manner which is adverse to and material in
the context of the Wider Velocys Group taken as a whole or of the
financing of the Acquisition;
and all applicable waiting and other time periods (including any
extensions thereof) during which any such Third Party could decide
to take, institute, implement or threaten any such action,
proceeding, suit, investigation, enquiry or reference or take any
other step under the laws of any jurisdiction in respect of the
Acquisition or proposed acquisition of any Velocys Shares or
otherwise intervene having expired, lapsed, or been terminated;
3.2 other than the obtaining of a licence from the Office of
Financial Sanctions Implementation in connection with the transfer
of Velocys Shares held by any Sanctions Disqualified Shareholder,
all necessary notifications, filings or applications having been
made in connection with the Acquisition and all necessary waiting
and other time periods (including any extensions thereof) under any
applicable legislation or regulation of any jurisdiction having
expired, lapsed or been terminated (as appropriate) and all
statutory and regulatory obligations in any jurisdiction having
been complied with and all Authorisations which are deemed by Bidco
to be necessary or reasonably considered to be appropriate in any
jurisdiction for or in respect of the Acquisition or the proposed
acquisition of any shares or other securities in, or control of,
Velocys by any member of the Wider Bidco Group having been obtained
on terms and in a form reasonably satisfactory to Bidco from all
appropriate Third Parties or (without prejudice to the generality
of the foregoing) from any person or bodies with whom any member of
the Wider Velocys Group or the Wider Bidco Group has entered into
contractual arrangements in each case where the direct consequence
of a failure to make such notification or filing or to wait for the
expiry, lapse or termination of any such waiting or other time
period or to comply with such obligation or obtain such
Authorisation would be unlawful in any relevant jurisdiction or
have a material adverse effect on the Wider Velocys Group, or the
ability of Bidco to implement the Scheme and all such
Authorisations remaining in full force and effect at the time at
which the Scheme becomes otherwise unconditional in all respects
and there being no notice or intimation of an intention to revoke,
suspend, restrict, modify or not to renew such Authorisations;
3.3 other than the obtaining of a licence from the Office of
Financial Sanctions Implementation in connection with the transfer
of Velocys Shares held by any Sanctions Disqualified Shareholder,
no temporary restraining order, preliminary or permanent
injunction, preliminary or permanent enjoinment, or other order
issued and being in effect by a court or other Third Party which
has the effect of making the Acquisition or any acquisition or
proposed acquisition of any shares or other securities or control
or management of, any member of the Wider Velocys Group by any
member of the Wider Bidco Group, or the implementation of either of
them, void, voidable, illegal and/or unenforceable under the laws
of any relevant jurisdiction, or otherwise directly or indirectly
prohibiting, preventing, restraining, restricting, delaying or
otherwise interfering with the approval of the Acquisition, the
Acquisition becoming Effective or any matter arising from the
proposed acquisition of any shares or other securities in, or
control or management of, any member of the Wider Velocys Group by
any member of the Wider Bidco Group;
Confirmation of absence of adverse circumstances
3.4 except as Disclosed, there being no provision of any
arrangement, agreement, licence, permit, franchise, lease or other
instrument to which any member of the Wider Velocys Group is a
party or by or to which any such member or any of its assets is or
may be bound, entitled or be subject or any event or circumstance
which, as a consequence of the Acquisition or the proposed
acquisition by any member of the Wider Bidco Group of any shares or
other securities in Velocys or because of a change in the control
or management of any member of the Wider Velocys Group or
otherwise, would or might reasonably be expected to result in, in
each case to an extent which is material in the context of the
Wider Velocys Group taken as a whole or to the financing of the
Acquisition:
3.4.1 any monies borrowed by, or any other indebtedness, actual
or contingent of, or any grant available to, any member of the
Wider Velocys Group being or becoming repayable, or capable of
being declared repayable, immediately or prior to its or their
stated maturity date or repayment date, or the ability of any such
member to borrow monies or incur any indebtedness being withdrawn
or inhibited or being capable of becoming or being withdrawn or
inhibited;
3.4.2 the rights, liabilities, obligations, interests or
business of any member of the Wider Velocys Group or any member of
the Wider Bidco Group under any such arrangement, agreement,
licence, permit, lease or instrument or the interests or business
of any member of the Wider Velocys Group or any member of the Wider
Bidco Group in or with any other firm or company or body or person
(or any agreement or arrangement relating to any such business or
interests) being or likely to become terminated or adversely
modified or affected or any onerous obligation or liability arising
or any adverse action being taken or arising thereunder;
3.4.3 any member of the Wider Velocys Group ceasing to be able
to carry on business under any name under which it presently
carries on business to an extent which is material in the context
of the Wider Velocys Group taken as a whole or in the context of
the Acquisition;
3.4.4 any assets or interests of, or any asset the use of which
is enjoyed by, any member of the Wider Velocys Group being or
falling to be disposed of or charged or any right arising under
which any such asset or interest could be required to be disposed
of or charged or could cease to be available to any member of the
Wider Velocys Group otherwise than in the ordinary course of
business;
3.4.5 other than in the ordinary course of business, the
creation or enforcement of any mortgage, charge or other security
interest over the whole or any part of the business, property or
assets of any member of the Wider Velocys Group or any such
mortgage, charge or other security interest (whenever created,
arising or having arisen), becoming enforceable;
3.4.6 the business, assets, value, financial or trading
position, profits, prospects or operational performance of any
member of the Wider Velocys Group being prejudiced or adversely
affected;
3.4.7 the creation or acceleration of any material liability
(actual or contingent) by any member of the Wider Velocys Group
other than trade creditors or other liabilities incurred in the
ordinary course of business; or
3.4.8 any liability of any member of the Wider Velocys Group to
make any severance, termination, bonus or other payment to any of
its directors or other officers other than in the ordinary course
of business.
No material transactions, claims or changes in the conduct of
the business of the Velocys Group
3.5 except as Disclosed, no member of the Wider Velocys Group having since 30 June 2023:
3.5.1 save as between Velocys and its wholly--owned subsidiaries
or between such wholly--owned subsidiaries and save for the issue
or transfer out of treasury of Velocys Shares on the exercise of
options or vesting of awards granted in the ordinary course under
the Velocys Share Plans, issued or agreed to issue or authorised or
proposed or announced its intention to authorise or propose the
issue of additional shares of any class, or securities or
securities convertible into, or exchangeable for, or rights,
warrants or options to subscribe for or acquire, any such shares or
convertible securities or transferred or sold or agreed to transfer
or sell or authorised or proposed the transfer or sale of Velocys
Shares out of treasury;
3.5.2 recommended, declared, paid or made or agreed to
recommend, declare, pay or make any bonus issue, dividend or other
distribution (whether payable in cash or otherwise) other than to
Velocys or one of its wholly--owned subsidiaries;
3.5.3 save as between Velocys and its wholly--owned subsidiaries
or between such wholly--owned subsidiaries, merged with (by
statutory merger or otherwise) or demerged from or acquired any
body corporate, partnership or business or acquired or disposed of,
or, other than in the ordinary course of business, transferred,
mortgaged or charged or created any security interest over, any
assets or any right, title or interest in any asset (including
shares and trade investments) or authorised, proposed or announced
any intention to do so, in each case to an extent which is material
in the context of the Wider Velocys Group taken as a whole;
3.5.4 save as between Velocys and its wholly--owned subsidiaries
or between such wholly--owned subsidiaries, made, authorised,
proposed or announced an intention to propose any change in its
loan capital other than in the ordinary course of business and to
an extent which is material in the context of the Wider Velocys
Group taken as a whole;
3.5.5 issued, authorised or proposed or announced an intention
to authorise or propose the issue of, or made any change in or to
the terms of, any debentures or (save in the ordinary course of
business and save as between Velocys and its wholly--owned
subsidiaries or between such wholly--owned subsidiaries) incurred
or increased any indebtedness or become subject to any contingent
liability to an extent which is material in the context of the
Wider Velocys Group taken as a whole or in the context of the
Acquisition;
3.5.6 entered into or varied, to a material extent, authorised
or proposed entry into or variation of, or announced its intention
to enter into or vary, any contract, transaction, arrangement or
commitment (whether in respect of capital expenditure or otherwise)
(otherwise than in the ordinary course of business) which is of a
long-term, unusual or onerous nature, or which involves or could
reasonably be expected to involve an obligation of a nature or
magnitude which is or is likely to be materially restrictive on the
business of any member of the Wider Velocys Group to an extent
which is or is reasonably likely to be material to the Wider
Velocys Group taken as a whole;
3.5.7 entered into any licence or other disposal of intellectual
property rights of any member of the Wider Velocys Group which are
outside the normal course of business;
3.5.8 entered into, varied, authorised or proposed entry into or
variation of, or announced its intention to enter into or vary the
terms of or made any offer (which remains open for acceptance) to
enter into or vary the terms of, any contract, commitment,
arrangement or any service agreement with any director or senior
executive of the Wider Velocys Group save for salary increases,
bonuses or variations of terms in the ordinary course;
3.5.9 proposed, agreed to provide or modified the terms of any
share option scheme, incentive scheme, or other benefit relating to
the employment or termination of employment of any employee of the
Wider Velocys Group which, taken as a whole, are material in the
context of the Wider Velocys Group taken as a whole;
3.5.10 (i) (excluding the trustee of any pension scheme(s)
established by a member of the Wider Velocys Group other than
Velocys itself) made, agreed or consented to or procured any
significant change to: (a) the terms of any existing trust deeds,
rules, policy or other governing documents, or entered into or
established any new trust deeds, rules, policy or other governing
documents, constituting any pension scheme or other retirement or
death benefit arrangement established for the directors, former
directors, employees or former employees of any entity in the Wider
Velocys Group or their dependants and established by a member of
the Wider Velocys Group (a "Relevant Pension Plan"); (b) the basis
on which benefits accrue, pensions which are payable or the persons
entitled to accrue or be paid benefits, under any Relevant Pension
Plan; (c) the basis on which the liabilities of any Relevant
Pension Plan are funded or valued; or (d) the basis or rate of
employer contribution to a Relevant Pension Plan, in each case to
the extent which is material in the context of the Wider Velocys
Group taken as a whole or in the context of the Acquisition and
other than as required in accordance with applicable law; or (ii)
enter into or propose to enter into one or more bulk annuity
contracts in relation to any Relevant Pension Plan; or (iii)
carried out any act: (a) which would or could reasonably be
expected to lead to the commencement of the winding up of any
Relevant Pension Plan; (b) which would or is reasonably likely to
create a material debt owed by an employer to any Relevant Pension
Plan; (c) which would or might accelerate any obligation on any
employer to fund or pay additional contributions to any Relevant
Pension Plan; or (d) which would, having regard to the published
guidance of the Pensions Regulator give rise directly or indirectly
to a liability in respect of a Relevant Pension Plan arising out of
the operation of sections 38 and 38A of the Pensions Act 2004 in
relation to a Relevant Pension Plan, in each case to the extent
which is material in the context of the Wider Velocys Group taken
as a whole or in the context of the Acquisition and other than as
required in accordance with applicable law;
3.5.11 changed the trustee or trustee directors or other fiduciary of any Relevant Pension Plan;
3.5.12 entered into, implemented or effected, or authorised,
proposed or announced its intention to implement or effect, any
joint venture, asset or profit sharing arrangement, partnership,
composition, assignment, reconstruction, amalgamation, commitment,
scheme or other transaction or arrangement (other than the Scheme)
otherwise than in the ordinary course of business which is material
in the context of the Wider Velocys Group taken as a whole or in
the context of the Acquisition;
3.5.13 purchased, redeemed or repaid or announced any proposal
to purchase, redeem or repay any of its own shares or other
securities or reduced or, save in respect of the matters mentioned
in sub-paragraph 3.5.1 above, made any other change to any part of
its share capital to an extent which (other than in the case of
Velocys) is material in the context of the Wider Velocys Group
taken as a whole;
3.5.14 other than with respect to claims between Velocys and its
wholly owned subsidiaries (or between such subsidiaries), waived,
compromised or settled any claim otherwise than in the ordinary
course of business which is material in the context of the Wider
Velocys Group taken as a whole or in the context of the
Acquisition;
3.5.15 made any alteration to its articles of association or
other constitutional documents (in each case, other than in
connection with the Scheme) which is material in the context of the
Acquisition;
3.5.16 (other than in respect of a member of the Wider Velocys
Group which is dormant and was solvent at the relevant time) taken
or proposed any steps, corporate action or had any legal
proceedings instituted or threatened against it in relation to the
suspension of payments, a moratorium of any indebtedness, its
winding--up (voluntary or otherwise), dissolution, reorganisation
or for the appointment of any administrator, receiver, manager,
administrative receiver, trustee or similar officer of all or any
of its assets or revenues or any analogous proceedings in any
jurisdiction or appointed any analogous person in any jurisdiction
or had any such person appointed which is material in the context
of the Wider Velocys Group taken as a whole or in the context of
the Acquisition;
3.5.17 been unable, or admitted in writing that it is unable, to
pay its debts or commenced negotiations with one or more of its
creditors with a view to rescheduling or restructuring any of its
indebtedness, or having stopped or suspended (or threatened to stop
or suspend) payment of its debts generally or ceased or threatened
to cease carrying on all or a substantial part of its business
which is material in the context of the Wider Velocys Group taken
as a whole or in the context of the Acquisition;
3.5.18 entered into any contract, commitment, agreement or
arrangement which would be materially restrictive on the business
of any member of the Wider Velocys Group or the Wider Bidco Group
and otherwise than in the ordinary course of business or passed any
resolution or made any offer (which remains open for acceptance)
with respect to or announced an intention to, or to propose to,
effect any of the transactions, matters or events referred to in
this Condition;
3.5.19 terminated or varied the terms of any agreement or
arrangement between any member of the Wider Velocys Group and any
other person in a manner which would or might be expected to have a
material adverse effect on the financial position of the Wider
Velocys Group taken as a whole; or
3.5.20 taken (or agreed or proposed to take) any action which
requires, or would require, the consent of the Panel or the
approval of Velocys Shareholders in general meeting in accordance
with, or as contemplated by, Rule 21.1 of the Takeover Code.
No material adverse change
3.6 since 30 June 2023, and except as Disclosed, there having been:
3.6.1 no adverse change and no circumstance having arisen which
would be expected to result in any adverse change or deterioration
in the business, assets, value, financial or trading position,
profits, prospects or operational performance of any member of the
Wider Velocys Group to an extent which is material to the Wider
Velocys Group taken as a whole or to the financing of the
Acquisition;
3.6.2 no litigation, arbitration proceedings, prosecution or
other legal proceedings including with regard to intellectual
property rights used by the Wider Velocys Group having been
threatened, announced or instituted by or against or remaining
outstanding against any member of the Wider Velocys Group or to
which any member of the Wider Velocys Group is or may become a
party (whether as claimant or defendant or otherwise) which, in any
such case, might be expected to have a material adverse effect on
the Wider Velocys Group taken as a whole, and no enquiry, review,
investigation or enforcement proceedings by, or complaint or
reference to, any Third Party against or in respect of any member
of the Wider Velocys Group having been threatened, announced or
instituted by or against, or remaining outstanding in respect of,
any member of the Wider Velocys Group which, in any such case,
might be expected to have a material adverse effect on the Wider
Velocys Group taken as a whole;
3.6.3 no contingent or other liability having arisen, increased
or become apparent (other than in the ordinary course of its
business) which is reasonably likely to adversely affect the
business, assets, financial or trading position, profits, prospects
or operational performance of any member of the Wider Velocys Group
to an extent which is material to the Wider Velocys Group taken as
a whole;
3.6.4 no steps having been taken and no omissions having been
made which are reasonably likely to result in the withdrawal,
cancellation, termination or modification of any licence held by
any member of the Wider Velocys Group, which is necessary for the
proper carrying on of its business and the withdrawal,
cancellation, termination or modification of which is material and
reasonably likely to have a material adverse effect on the Wider
Velocys Group taken as a whole; and
3.6.5 no member of the Wider Velocys Group having conducted its
business in material breach of any applicable laws and regulations
which in any case is material in the context of the Wider Velocys
Group taken as a whole.
3.7 since 1 January 2023, except as Disclosed, Bidco not having discovered:
3.7.1 that any financial, business or other information
concerning the Wider Velocys Group publicly announced or disclosed
to any member of the Wider Bidco Group at any time prior to the
date of this announcement by or on behalf of any member of the
Wider Velocys Group or to any of their advisers is misleading,
contains a misrepresentation of fact or omits to state a fact
necessary to make that information not misleading and which was not
subsequently corrected before the date of this announcement by
disclosure either publicly or otherwise to Bidco or its
professional advisers and which is, in any case, material in the
context of the Wider Velocys Group taken as a whole or in the
context of the Acquisition;
3.7.2 that any member of the Wider Velocys Group is subject to
any liability, contingent or otherwise and which is material in the
context of the Wider Velocys Group taken as a whole; or
3.7.3 any information which affects the import of any
information disclosed to Bidco at any time prior to the date of
this announcement by or on behalf of any member of the Wider
Velocys Group which is material in the context of the Wider Velocys
Group taken as a whole;
Environmental liabilities
3.8 except as Disclosed, Bidco not having discovered that, in
relation to any release, emission, accumulation, discharge,
disposal or other similar circumstance which has impaired or is
likely to impair the environment (including property) or harmed or
is likely to harm the health of humans, animals or other living
organisms or eco--systems, no past or present member of the Wider
Velocys Group, in a manner or to an extent which is material in the
context of the Wider Velocys Group, (i) having committed any
violation of any applicable laws, statutes, regulations,
Authorisations, notices or other requirements of any Third Party
giving rise to a material liability; and/or (ii) having incurred
any material liability (whether actual or contingent) to any Third
Party; and/or (iii) being likely to incur any material liability
(whether actual or contingent), or being required, to make good,
remediate, repair, re--instate or clean up the environment
(including any property) in each case of (i), (ii) or (iii) which
such liability or requirement would be material to the Wider
Velocys Group taken as a whole;
Intellectual property
3.9 except as Disclosed, no circumstance having arisen or event
having occurred in relation to any intellectual property owned or
used by any member of the Wider Velocys Group which would be
reasonably likely to have a material adverse effect on the Wider
Velocys Group taken as a whole or is otherwise material in the
context of the Acquisition; including:
3.9.1 any member of the Wider Velocys Group losing its title to
any intellectual property material to its business, or any
intellectual property owned by the Wider Velocys Group and material
to its business being revoked, cancelled or declared invalid;
3.9.2 any claim being asserted in writing or threatened in
writing by any person challenging the ownership of any member of
the Wider Velocys Group to, or the validity or effectiveness of,
any of its intellectual property; or
3.9.3 any agreement regarding the use of any intellectual
property licensed to or by any member of the Wider Velocys Group
being terminated or varied;
Anti--corruption and sanctions
3.10 except as Disclosed, Bidco not having discovered that (to
an extent that is material in the context of the Wider Velocys
Group taken as a whole):
3.10.1 any past or present member of the Wider Velocys Group or
any person that performs or has performed services for or on behalf
of any such company is or has at any time engaged in any activity,
practice or conduct (or omitted to take any action) in
contravention of the UK Bribery Act 2010, the U.S. Foreign Corrupt
Practices Act of 1977, as amended or any other applicable
anti--corruption legislation;
3.10.2 any member of the Wider Velocys Group is ineligible to be
awarded any contract or business under section 23 of the Public
Contracts Regulations 2006 or section 26 of the Utilities Contracts
Regulations 2006 (each as amended);
3.10.3 any past or present member of the Wider Velocys Group has
engaged in any activity or business with, or made any investments
in, or made any payments to any government, entity or individual
covered by any of the economic sanctions administered by the United
Nations or the European Union (or any of their respective member
states) or the United States Office of Foreign Assets Control or
any other governmental or supranational body or authority in any
jurisdiction;
3.10.4 a member of the Velocys Group has engaged in a
transaction which would cause Bidco to be in breach of any law or
regulation on the Acquisition becoming Effective, including the
economic sanctions administered by the United States Office of
Foreign Assets Control or HM Treasury & Customs or any
government, entity or individual targeted by any of the economic
sanctions of the United Nations, United States or the European
Union or any of its member states; or
No criminal property
3.11 except as Disclosed, Bidco not having discovered that any
asset of any member of the Wider Velocys Group constitutes criminal
property as defined by section 340(3) of the Proceeds of Crime Act
2002 (but disregarding paragraph (b) of that definition).
Part B
Further terms of the Acquisition
1. Subject to the requirements of the Panel, Bidco reserves the
right in its sole discretion to waive, in whole or in part, all or
any of the Conditions set out in Part A (Conditions to the Scheme
and Acquisition) of Appendix 1 (Conditions and Further Terms of the
Transaction), except Conditions 1 , 2.1 (i), 2.2 (i) and 2.3 (i)
which cannot be waived. If any of Conditions 2.1 (ii), or 2.2 (ii)
or 2.3(ii) is not satisfied by the relevant deadline specified in
the relevant Condition, Bidco shall make an announcement by 8.00
a.m. on the Business Day following such deadline confirming whether
it has invoked the relevant Condition, waived the relevant
deadlines or agreed with Velocys to extend the relevant
deadline.
2. Bidco shall be under no obligation to waive (if capable of
waiver), to determine to be or remain satisfied or to treat as
fulfilled any of the Conditions in Part A(Conditions to the Scheme
and Acquisition) of Appendix 1 (Conditions and Further Terms of the
Transaction) above that are capable of waiver by a date earlier
than the latest date for the fulfilment of that Condition
notwithstanding that the other Conditions of the Acquisition may at
such earlier date have been waived or fulfilled and that there are
at such earlier date no circumstances indicating that any of such
Conditions may not be capable of fulfilment.
3. Under Rule 13.5(a) of the Code and subject to paragraph 3
below, Bidco may only invoke a Condition so as to cause the
Acquisition not to proceed, to lapse or to be withdrawn with the
consent of the Panel. The Panel will normally only give its consent
if the circumstances which give rise to the right to invoke the
Condition are of material significance to Bidco in the context of
the Acquisition. This will be judged by reference to the facts of
each case at the time that the relevant circumstances arise.
4. Condition 1 (subject to Rule 12 of the Takeover Code),
Condition 2 in Part A (Conditions to the Scheme and Acquisition) of
Appendix 1 (Conditions and Further Terms of the Transaction) above,
and, if applicable, any acceptance condition if the Acquisition is
implemented by means of a Takeover Offer, are not subject to Rule
13.5(a) of the Takeover Code.
5. Any Condition that is subject to Rule 13.5(a) of the Takeover Code may be waived by Bidco.
6. If the Panel requires Bidco to make an offer or offers for
Velocys Shares under the provisions of Rule 9 of the Takeover Code,
Bidco may make such alterations to the Conditions as are necessary
to comply with the provisions of that Rule.
7. Bidco reserves the right to elect to implement the
Acquisition by way of a Takeover Offer as an alternative to the
Scheme, subject to the Panel's consent and (while the Cooperation
Agreement is continuing) to the terms of the Cooperation Agreement.
In such event, such Takeover Offer will be implemented on the same
terms and conditions so far as applicable, as those which would
apply to the Scheme (subject to appropriate amendments, including
and for so long as the Cooperation Agreement is continuing and the
Takeover Offer arises in accordance with the terms of the
Cooperation Agreement an acceptance condition set at 75 per cent.
of the Velocys Shares (or such other percentage as Bidco may decide
after, to the extent necessary, consultation with Velocys and, to
the extent necessary, the Panel, being in any case more than 50 per
cent. of the Velocys Shares)). If the Acquisition is effected by
way of a Takeover Offer, and such Takeover Offer becomes or is
declared unconditional and sufficient acceptances are received in
respect of such Takeover Offer, Bidco intends to exercise its
rights to apply the provisions of Chapter 3 of Part 28 of the 2006
Act so as to acquire compulsorily the remaining Velocys Shares in
respect of which the Takeover Offer has not been accepted.
8. The Acquisition will be subject, inter alia, to the
Conditions and certain further terms which are set out in this
Appendix 1 (Conditions and Further Terms of the Transaction) and to
the full terms which will be set out in the Scheme Document and
such further terms as may be required to comply with the provisions
of the Takeover Code and the applicable requirements of the Panel
and the London Stock Exchange.
9. Velocys Shares will be acquired by Bidco fully paid and free
from all liens, charges, encumbrances and other third-party rights
of any nature whatsoever and together with all rights attaching to
them as at the Effective Date, including the right to receive and
retain all dividends and distributions (if any) declared, made or
paid after the Acquisition becomes Effective.
10. If, on or after the date of this announcement and prior to
the Acquisition becoming Effective, any dividend and/or
distribution and/or other return of capital or value is announced,
declared, made or paid in respect of the Velocys Shares, Bidco
reserves the right to reduce the consideration payable under the
terms of the Acquisition for the Velocys Shares by an amount up to
the aggregate amount of all or part of any such dividend and/or
distribution and/or other return of capital or value, in which case
any reference in this announcement to the consideration payable
under the terms of the Acquisition will be deemed to be a reference
to the consideration as so reduced. Any exercise by Bidco of its
rights referred to in this paragraph 9 shall be the subject of an
announcement and, for the avoidance of doubt, shall not be regarded
as constituting any revision or variation of the Scheme or the
Acquisition. In such circumstances, Velocys Shareholders would be
entitled to retain any such dividend, distribution and/or return of
capital or value.
11. The availability of the Acquisition to persons not resident
in the United Kingdom may be affected by the laws or regulatory
requirements of the relevant jurisdictions. Persons who are not
resident in the United Kingdom should inform themselves about and
observe any applicable requirements.
12. The Acquisition is not being made, directly or indirectly,
in, into or from, or by use of the mails of, or by any means of
instrumentality (including, but not limited to, facsimile, e-mail
or other electronic transmission, telex or telephone) of interstate
or foreign commerce of, or of any facility of a national, state or
other securities exchange of, any jurisdiction where to do so would
violate the laws of that jurisdiction.
13. The Scheme will be governed by English law and be subject to
the jurisdiction of the Court, to the Conditions set out above and
full terms to be set out in the Scheme Document. The Acquisition
will be subject to the applicable requirements of the Takeover
Code, the Panel, the London Stock Exchange and the Registrar of
Companies.
14. Each of the Conditions shall be regarded as a separate
Condition and shall not be limited by reference to any other
Condition.
Appendix 2
Sources and Bases of Information
In this announcement, unless otherwise stated or the context
otherwise requires, the following sources and bases have been
used.
1. The fully diluted issued ordinary share capital of
1,651,798,992 Velocys Shares is based on 1,651,798,992 Velocys
Shares in issue as at the Latest Practicable Date. For these
purposes, it is assumed that there are no Velocys Shares which will
be issued on or after the date of this announcement pursuant to the
Velocys Share Plans, given that all of the options issued pursuant
to the Velocys Share Plans as at the Latest Practicable Date have
exercise prices higher than the Acquisition Price.
2. A value of approximately GBP4.1 million for the entire issued
and to be issued share capital of Velocys is based on:
-- the Acquisition Price of 0.25 pence per Velocys Share; and
-- Velocys' fully diluted issued ordinary share capital of
1,651,798,992 Velocys Shares, as set out in paragraph 1 above.
3. Unless otherwise stated, the financial information of Velocys
is extracted (without material adjustment) from the annual report
and audited accounts of the Velocys Group for the 12 months ended
31 December 2022, and the unaudited, interim financial statements
of the Velocys Group for the six months ended 30 June 2023.
4. Unless otherwise stated, all prices and closing prices for
Velocys Shares are closing middle market quotations derived from
the London Stock Exchange.
5. Amounts converted from US$ to pound sterling have been
derived using the exchange rate of US$1.27:GBP1.00 at the Latest
Practicable Date.
6. Certain figures included in this announcement have been subject to rounding adjustments.
Appendix 3
Details of Irrevocable Undertakings
1. Directors
The following Velocys Directors have on 5 December 2023 given
irrevocable undertakings to vote (or procure the voting) in favour
of the resolutions (including the Scheme) relating to the
Acquisition at the Meetings (or in the event that the Acquisition
is implemented by way of a Takeover Offer, to accept, or procure
the acceptance of, the Takeover Offer) in respect of their own
beneficial holdings (or those Velocys Shares over which they have
control) of Velocys Shares:
Name Total Number Percentage of existing
of issued share capital
Velocys Shares
Henrik Wareborn 3,118,445 0.18%
Philip Sanderson 600,000 0.03%
Philip Holland 1,743,634 0.10%
Ann Markey 525,000 0.03%
Tom Quigley 525,000 0.03%
Darran Messem 558,333 0.03%
The irrevocable undertakings referred to in this paragraph 1
cease to be binding on the earlier of the following occurrences (i)
this announcement not having been released by 5.00 p.m. (London
time) on the date that is one Business Day from the date of the
undertaking (or such later date as Bidco and Velocys may agree);
(ii) the Scheme Document is not sent to Velocys Shareholders within
28 days (or such later period as the Panel may agree) after the
date of this announcement; or (iii) the Scheme lapses or is
withdrawn in accordance with its terms.
2. Lansdowne Partners
Lansdowne Partners has on 5 December 2023 given an irrevocable
undertaking to vote in favour of the resolutions relating to the
Acquisition at the Meetings in respect of its own beneficial
holding of 303,156,632 Velocys Shares, representing 18.35 per cent.
of Velocys' existing ordinary issued share capital.
The obligations contained in the irrevocable undertaking given
by Lansdowne Partners lapse and cease to have effect if (i) this
announcement not having been released by 5.00 p.m. (London time) on
the date that is one Business Day from the date of the undertaking
(or such later date as Bidco and Velocys may agree); (ii) the
Scheme Document is not sent to Velocys Shareholders within 28 days
(or such later period as the Panel may agree) after the date of
this announcement; or (iii) the Scheme lapses or is withdrawn in
accordance with its terms or (iv) on the date on which any
competing offer for the entire issued and to be issued share
capital of Velocys is declared wholly unconditional or, if
proceeding by way of scheme of arrangement, becomes effective .
Appendix 4
Definitions
The following definitions apply throughout this document unless
the context otherwise requires:
"2006 Act" the Companies Act 2006, as amended from time to time
"2022 Velocys Annual Report" the annual report and audited accounts of the Velocys
Group for the year ended 31 December
2022
"Acquisition " the proposed cash acquisition by Bidco of the entire
issued, and to be issued, share capital
of Velocys by means of the Scheme, or should Bidco so
elect (subject to the consent of the
Panel and the terms of the Cooperation Agreement), by
means of a Takeover Offer and, where
the context admits, any subsequent revision, variation,
extension or renewal thereof
"Acquisition Price" 0.25 pence per Velocys Share
"AIM" the AIM market of the London Stock Exchange
"associated undertaking" shall be construed in accordance with paragraph 19 of
Schedule 6 to The Large and Medium sized
Companies and Groups (Accounts and Reports) Regulations
2008 (SI 2008/410) but for this purpose
ignoring paragraph 19(1)(b) of Schedule 6 to those
regulations
"Authorisations" authorisations, orders, grants, recognitions,
confirmations, consents, licences, clearances,
certificates, permissions or approvals, in each case of a
Third Party
" Bidco " Madison Bidco Limited
"Business Day" a day, not being a public holiday, Saturday or Sunday, on
which clearing banks in London are
open for normal business
"Carbon Direct Capital" Carbon Direct Capital Management LLC
"Carbon Direct Fund" Carbon Direct Fund II LP
"Cavendish" Cavendish Capital Markets Limited
"certificated" or "certificated form" in relation to a share or other security, a share or other
security title to which is recorded
in the relevant register of the share or other security as
being held in certificated form
(that is, not in CREST)
"Condition" each of the conditions listed in Appendix 1 and any
reference to a numbered Condition shall
be a reference to the Condition set out in the paragraph
within Appendix 1 bearing such number
"Confidentiality Agreements" the confidentiality agreements between each member of the
Consortium and Velocys described
in paragraph 11
"Consortium" (i) a fund advised by Lightrock, (ii) a fund advised by
Carbon Direct Capital, (iii) GenZero
and (iv) Kibo Investments
"Cooperation Agreement" the cooperation agreement dated on or around the date of
this announcement between Bidco and
Velocys
"Court" the High Court of Justice in England and Wales
"Court Meeting" the meeting of Velocys Shareholders to be convened at the
direction of the Court pursuant
to Part 26 of the 2006 Act at which a resolution will be
proposed to approve the Scheme, including
any adjournment thereof
"Court Order" the order of the Court sanctioning the Scheme under Part
26 of the 2006 Act
"CREST" the relevant system (as defined in the Regulations) in
respect of which Euroclear UK & International
Limited is the operator (as defined in CREST)
"Dealing Disclosure" an announcement by a party to an offer or a person acting
in concert as required by Rule 8
of the Takeover Code
"Disclosed" the information disclosed by or on behalf of Velocys: (i)
in the 2022 Velocys Annual Report;
(ii) in the half year results for the six months period
ended 30 June 2023; (iii) in this
announcement (or any of the documents listed in paragraph
16 of this announcement); (iv) in
any other announcement to a Regulatory Information Service
prior to the publication of this
announcement; and (v) as otherwise fairly disclosed to
Bidco or the Consortium (or their respective
officers, employees, agents or advisers) prior to the date
of this announcement (including
via the virtual data room operated by or on behalf of
Velocys in respect of the Acquisition)
"Effective" (i) if the Acquisition is implemented by way of the
Scheme, the Scheme having become effective
pursuant to its terms; or (ii) if the Acquisition is
implemented by way of a Takeover Offer,
the Takeover Offer having been declared or having become
unconditional in all respects in
accordance with the requirements of the Takeover Code
"Effective Date" the date on which the Acquisition becomes Effective
" Facility Letter" the facility letter entered into on 5 December 2023
between the Carbon Direct Fund, Velocys
and certain of Velocys' subsidiaries (as guarantors)
"Forms of Proxy" the blue form of proxy for use at the Court Meeting and
the pink form of proxy for use at
the General Meeting and "Form of Proxy" shall mean either
one of them
"General Meeting" the general meeting of Velocys Shareholders to be convened
to consider and if thought fit
pass, the Resolution(s) in relation to the Scheme
including any adjournments thereof
"GenZero" Carbon Solutions Investments Pte. Ltd
"Kibo Investments" Kibo Investments Pte. Ltd
" Latest Practicable Date " 4 December 2023
"Licence" to the extent necessary to deal in the Velocys Shares
held by a Sanctions Disqualified Shareholder,
a specific licence from the Office of Financials
Sanctions Implementation of His Majesty's
Treasury
"Licence Grant Date" the date on which any Licence is granted in relation to a
Sanctions Disqualified Shareholder
"Lightrock" Lightrock Climate Impact Fund SCSp
"London Stock Exchange" the London Stock Exchange plc or its successor
"Long Stop Date" 5 June 2024 or such later date as may be agreed between
Bidco and Velocys and, if required,
the Panel and the Court may allow
"Market Abuse Regulation" Regulation (EU) 596/2014, as it forms part of domestic law
of the United Kingdom by virtue
of the European Union (Withdrawal) Act 2018, as amended
"Meetings" the Court Meeting and the General Meeting
"Opening Position Disclosure" an announcement pursuant to Rule 8 of the Takeover Code
containing details of interests or
short positions in, or rights to subscribe for, any
relevant securities of a party to the
Acquisition
"Overseas Shareholders" holders of Scheme Shares who are resident in, ordinarily
resident in, or citizens of, jurisdictions
outside the United Kingdom
"Panel" the Panel on Takeovers and Mergers
"Panmure Gordon" Panmure Gordon & Co., Ltd
"Registrar of Companies" the Registrar of Companies in England and Wales
"Regulations" the Uncertificated Securities Regulations 2001 (SI 2001
No. 3755);
"Regulatory Information Service" a regulatory information service approved by the London
Stock Exchange for the distribution
to the public of announcements and included within the
list maintained on the London Stock
Exchange's website
"relevant securities" as the context requires, Velocys Shares, other Velocys
share capital and any securities convertible
into or exchangeable for, and rights to subscribe for, any
of the foregoing
"Resolutions" the Resolutions to be proposed at the General Meeting in
connection with, inter alia, implementation
of the Scheme
"Restricted Jurisdiction" any jurisdiction where local laws or regulations may
result in a significant risk of civil,
regulatory or criminal exposure if information concerning
the Takeover Offer is sent or made
available to Velocys Shareholders in that jurisdiction
"Sanction Hearing" the Court hearing to sanction the Scheme
"Sanctions" any economic or financial sanctions laws, or regulations,
as amended from time to time, administered,
enacted or enforced by (a) the United Kingdom, (b) the
European Union or any member state
thereof; (c) the United States; (d) the United Nations;
or (any other jurisdiction application
to Velocys (excluding Russia)
"Sanctions Disqualified Shareholder" any person from time to time who (a) is the target of
Sanctions (including by reason of ownership,
control or agency, in accordance with the relevant
Sanctions, with or by any person that is
the target of Sanctions) that impose restrictions or
prohibitions on (i) dealing in any Velocys
Shares which the Sanctions Disqualified Shareholder owns,
holds or controls, or on dealing
in any cash consideration payable by Bidco for the Scheme
Shares to or for the benefit of
the Sanctions Disqualified Shareholder (including,
without limitation, accepting, receiving,
holding or transferring such consideration); or (ii)
engaging in any transaction contemplated
by the Explanatory Statement in connection with or
related to the Sanctions Disqualified Shareholder;
or (b) acting for or on behalf of any Sanctions
Disqualified Shareholder, including by virtue
of directly or indirectly holding any interest in the
Velocys Shares on behalf of Sanctions
Disqualified Shareholder
"Scheme" the proposed scheme of arrangement under Part 26 of the
2006 Act between Velocys and the holders
of the Scheme Shares, with or subject to any modification,
addition or condition approved
or imposed by the Court and agreed by Velocys and Bidco
"Scheme Document" the document to be sent to Velocys Shareholders and
persons with information rights containing,
amongst other things, the Scheme and the notices of the
Meetings
"Scheme Record Time" the time and date to be specified in the Scheme Document,
expected to be 6.00 p.m. on the
second Business Day immediately following the date of the
Sanction Hearing
"Scheme Restricted Shares" Velocys Shares which are held by Sanctions Disqualified
Shareholders
"Scheme Shares" all Velocys Shares: (i) in issue at the date of the Scheme
Document; (ii) (if any) issued
after the date of the Scheme Document but before the
Voting Record Time; and (iii) (if any)
issued at or after the Voting Record Time and before the
Scheme Record Time in respect of
which the original or any subsequent holders thereof are,
or shall have agreed in writing
to be, bound by the Scheme, in each case other than any
Velocys Shares registered in the name
of and/or beneficially held by Bidco or any member of the
Wider Bidco Group
"Significant Interest" in relation to an undertaking, a direct or indirect
interest of 30 per cent. or more of the
total voting rights conferred by the equity share capital
(as defined in section 548 of the
2006 Act) of such undertaking
"subsidiary", "subsidiary undertaking" and "undertaking" shall be construed in accordance with the 2006 Act
"Takeover Code" the City Code on Mergers and Acquisitions issued by the
Panel on Takeovers and Mergers, as
amended from time to time
"Takeover Offer" if Bidco elects to effect the Acquisition by means of an
offer, the offer to be made by or
on behalf of Bidco to acquire the entire issued and to be
issued ordinary share capital of
Velocys including, where the context so requires, any
subsequent revision, variation, extension
or renewal thereof;
"UK" or "United Kingdom" United Kingdom of Great Britain and Northern Ireland
"US" or "United States" the United States of America
"uncertificated" or "in uncertificated form" a share or other security title to which is recorded in
the relevant register of the share
or security as being held in uncertificated form, in
CREST, and title to which, by virtue
of the Regulations may be transferred by means of CREST
"Velocys" Velocys plc
"Velocys Board" or "Velocys Directors" the directors of Velocys
"Velocys Group" Velocys and its subsidiary undertakings and where the
context permits, each of them
"Velocys Share Plans" the Velocys Share Option Plan 2012 and the Velocys Share
Option Plan 2021, in each case as
the same may be validly amended from time to time
"Velocys Shareholder(s)" holders of Velocys Shares
"Velocys Share(s)" the ordinary shares of 1p each in the capital of Velocys
and "Velocys Share" means any one
of them
"Voting Record Time" the time and date to be specified in the Scheme Document
by reference to which entitlement
to vote on the Scheme will be determined, expected to be
6:00 p.m. on the day which is two
Business Days before the date of the Court Meeting or if
the Court Meeting is adjourned, 6:00
p.m. on the day which is two Business Days before such
adjourned meeting
"Wider Bidco Group" Bidco and associated undertakings and any other body
corporate, partnership, joint venture
or person in which Bidco and such undertakings
(aggregating their interests) have a Significant
Interest
"Wider Velocys Group" Velocys and associated undertakings and any other body
corporate, partnership, joint venture
or person in which Velocys and such undertakings
(aggregating their interests) have a Significant
Interest (excluding, for the avoidance of doubt, Bidco and
all of its associated undertakings
which are not members of the Velocys Group)
References to an enactment include references to that enactment
as amended, replaced, consolidated or re-enacted by or under any
other enactment before or after the date of this announcement.
All references to "pounds", "pounds Sterling", "Sterling",
"GBP", "GBP", "pence", "penny" and "p" are to the lawful currency
of the United Kingdom.
All references to "US$", "USD", "$" or "cents" are to the lawful
currency of the United States.
All times referred to are London time unless otherwise
stated.
A reference to "includes" shall mean "includes without
limitation", and references to "including" and any other similar
term shall be construed accordingly.
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END
ACQGGBDDBXGDGXU
(END) Dow Jones Newswires
December 05, 2023 02:00 ET (07:00 GMT)
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