AXE Axeon Hldgs

RNS Number:6355I
Axeon Holdings Plc
28 November 2007

                               Axeon Holdings plc

  Conditional placing of 13,333,333 new Ordinary Shares to raise approximately
                        #11.4 million (net of expenses)


Axeon, the specialist provider of advanced battery and battery management
systems primarily for the reduction of automotive emissions, today announces its
intention to raise approximately #11.4 million (net of expenses) by way of a
Placing.

Summary of the Placing:

   * Placing of 13,333,333 Placing Shares at a price of 90p per share to
     raise approximately #11.4 million (net of expenses).
   * The Company has also today announced the signing of a supply agreement
     with Modec worth approximately #20 million and a further order of prototype
     batteries from Veicoli.
   * The net proceeds of the Placing will be used to fund the anticipated
     working capital requirements relating to customer orders and additional new
     business opportunities as well as to strengthen the Company's balance
     sheet.


Charles Matthews, Chairman of Axeon, said:

"Since the Ristma acquisition completed in August the company has started
production of Li-ion battery packs for the Modec urban electric delivery
vehicle, and has seen a material increase in orders and enquiries for other
large electric vehicle Li-ion battery packs. In response to these expanding
opportunities the Board believes that it is appropriate time to strengthen the
balance sheet of the company to be able to finance the additional projected
working capital requirements arising from these opportunities."

A circular containing a notice of extraordinary general meeting convened for 10
a.m. on 21 December 2007 is today being sent to Shareholders outlining the terms
of the Placing and seeking Shareholder approval to, inter alia, enable the
Directors to allot the Placing Shares in connection with the Placing.

This summary should be read in conjunction with, and is subject to, the full
text of the attached announcement.


For further information, please contact:

Axeon Holdings plc T: 01382 400 040
Hamish Grant, Chief Executive Officer
David Campbell, Chief Financial Officer

Arbuthnot Securities T: 020 7012 2000
Ian Williams
Antonio Bossi

Gavin Anderson & Co T: 020 7554 1400
Ken Cronin
Robert Speed


Arbuthnot Securities Limited, which is regulated by the Financial Services
Authority, is acting as nominated adviser and broker to the Company in relation
to the Placing and will not be responsible to any person other than the Company
for providing the protections afforded to its clients or for advising any other
person on the contents of this announcement or any transaction or arrangement
referred to herein.


This announcement does not constitute an offer to sell, or the solicitation of
an offer to buy, shares in any jurisdiction in which such offer or solicitation
is unlawful and, in particular, is not for distribution into the United States,
Canada, Australia, the Republic of Ireland or Japan.


This announcement contains forward looking statements that involve unknown
risks, uncertainties and other factors which may cause the actual results,
financial condition, performance or achievement of Axeon, or industry results to
be materially different from any future results, performance, developments or
achievements expressed or implied by such forward looking statements.



  Conditional placing of 13,333,333 new Ordinary Shares to raise approximately
                        #11.4 million (net of expenses)
                                        

1. Introduction

Axeon today announces that it has conditionally placed with certain
institutional investors in aggregate 13,333,333 Placing Shares at a price of 90p
per share. Once completed, the Placing will raise approximately #11.4 million
(net of expenses). The Company has also today announced the signing of a supply
agreement with Modec worth approximately #20 million and a further order of
prototype batteries from Veicoli. The net proceeds of the Placing will be used
to fund the anticipated working capital requirements relating to customer orders
and additional new business opportunities as well as to strengthen the Company's
balance sheet.

The Placing is conditional, inter alia, upon the Company obtaining approval from
its Shareholders to increase its authorised share capital, to grant the Board
authority to allot the Placing Shares and to disapply statutory pre-emption
rights which would otherwise apply to, inter alia, the allotment of the Placing
Shares. The Placing is also conditional upon Admission.

A circular containing a notice of extraordinary general meeting convened for 10
a.m. on 21 December 2007 is today being sent to Shareholders outlining the terms
of the Placing and seeking Shareholder approval to, inter alia, enable the
Directors to allot the Placing Shares in connection with the Placing.

The Placing is being made on a non pre-emptive basis as the time and costs
associated with a pre-emptive offer resulting from the introduction of the EU
Prospectus Rules (which came into force in July 2005) are considered by the
Directors to be excessive. The making of a pre-emptive offer would require the
production of a prospectus which would have to comply with the Prospectus Rules
and be pre-vetted and approved by the FSA.


2. Background to and reasons for the Placing

Operational background

The Board believes that the primary market for Electric Vehicles ("EV"s) is in
an urban environment where regular vehicle usage can make the ownership cost of
an EV lower than the cost of the equivalent diesel engine vehicle. The Board
believes that the global market for EV batteries could grow to around #6 billion
by 2014 and the Board has been encouraged by the launch of electric urban
delivery vehicles by two manufacturers and the launch of an EV maxi scooter
during 2007. The Board notes that these companies all plan to move to volume
production during 2008. In addition to these companies, the Board believes that
there are a number of other companies in Europe, albeit at an earlier stage of
development, that may have EV production launches during 2008 which could result
in volume production in 2009.

With this market background, over the last twelve months Axeon has taken very
important steps towards the objective of becoming a pan-European supplier of EV
Lithium-ion ("Li-ion") based battery packs. These steps have included:

   * the acquisition of Ristma AG ("Ristma") in August 2007 to provide a
     continental European infrastructure with offices in Switzerland and 
     Germany, and a manufacturing facility in Poland;

   * the capture of a number of customer vehicle battery prototyping
     programmes, such as a hybrid electric vehicle pack for Deutz, an EV pack
     for Veicoli and an EV pack for a continental European bus manufacturer; and

   * progress with the Modec urban electric delivery vehicle programme
     culminating with the start of delivery of production Li-ion battery packs
     to Modec in October.

Ristma's operational and financial performance has been as expected under Axeon
ownership and the Board is delighted with the contribution of the Ristma team to
the Group. At the time of the Ristma acquisition it was anticipated that the
cash generated by Ristma would exceed the growth in working capital required by
the evolving EV battery business.

Recent developments

Since the acquisition of Ristma, Axeon has seen a material increase in enquiries
for its Li-ion EV products across a range of product areas. These include
applications for city cars, road sweepers, city buses, city taxis, scooters,
airport vehicles, urban delivery and motor sport applications. Some of these
applications have already moved to prototype discussions while others remain at
the planning stage.

As well as having started to deliver production batteries to Modec, Axeon
announced today that the Company and Modec have signed a supply agreement to
regulate the commercial terms for volume deliveries. This agreement includes a
minimum order commitment, worth approximately #20 million, for battery and
charger systems, which underpins revenue growth during 2008 and into 2009.

The Veicoli programme has also made good progress with the delivery of the
prototype Li-ion battery pack at the end of October 2007. The Company also
announced today an order for a further ten prototype batteries for Veicoli to
enable them to expand the next stage of their vehicle test and demonstration
programmes.

Given the scale of recent business development success the Board also believes
that the Group needs to expand its management and engineering teams to
successfully manage the breadth of opportunities that now exist both in the UK
and on a wider European basis. The Board believes that incremental overhead
costs of around #1.5 million will be incurred next year in relation to this
strategy.

Working capital implications

Based on increasing customer orders and potential business development
opportunities, the Board believes that the Group will need additional working
capital to execute its growth strategy. In particular, the Group purchases the
majority of its battery components from China. The extended nature of the supply
chain to China and the Group's limited trading history with its suppliers means
that the gap between payment for components and payment for finished goods is
around 16 weeks. This gap has to be funded by working capital.

The placing proceeds will be used to:

   * fund working capital growth in 2008 and into 2009;

   * provide working capital flexibility to cater for further EV customer/
     revenue acceleration during 2008/2009;

   * finance the increased staff overhead needed to address customer
     opportunities; and

   * strengthen the balance sheet to provide comfort to existing and
     prospective customers and suppliers.


3. Details of the Placing

The Company proposes to raise approximately #11.4 million (net of expenses)
through the issue of the Placing Shares at the Placing Price. The Placing Price
represents a discount of approximately 6.7 per cent. to the closing middle
market price of 96.5p on 27 November 2007, being the last practicable dealing
day prior to publication of this announcement. The Placing Shares will represent
approximately 29.1 per cent. of the Company's enlarged issued share capital
immediately following Admission.

The Placing Agreement

Pursuant to the terms of the Placing Agreement, Arbuthnot has conditionally
agreed to use its reasonable endeavours, as agent for the Company, to place the
Placing Shares at the Placing Price with certain institutional investors. The
Placing Agreement is conditional upon, inter alia, the Resolutions being duly
passed at the EGM and Admission becoming effective on or before 8 a.m. on 27
December 2007 (or such later time and/or date as the Company and Arbuthnot may
agree, but in any event by no later than 3 p.m. on 10 January 2008).

The Placing Agreement contains warranties from the Company in favour of
Arbuthnot in relation to, inter alia, the accuracy of the information contained
in this announcement, the circular to Shareholders incorporating the notice
convening the EGM and certain other matters relating to the Group and its
business. In addition, the Company has agreed to indemnify Arbuthnot in relation
to certain liabilities it may incur in respect of the Placing. Arbuthnot has the
right to terminate the Placing Agreement in certain circumstances prior to
Admission, including for an event of force majeure or in the event of a material
breach of the warranties set out in the Placing Agreement.

Admission and dealings

Application will be made to the London Stock Exchange for the Placing Shares to
be admitted to trading on AIM. The Placing Shares will, when issued, rank pari
passu in all respects with the existing Ordinary Shares, including the right to
receive dividends and other distributions declared following Admission. It is
expected that such Admission will become effective and that dealings will
commence on 27 December 2007.


4. Related party transaction

As announced today, Arbuthnot has conditionally placed the Placing Shares at the
Placing Price with certain institutional investors, including Ironshield Capital
Management LLP ("Ironshield") (4,450,000 Placing Shares). In addition,
Ironshield Special Situations Master Fund LP, an entity managed by Ironshield
has provided the Company with $11.35 million of debt, the key terms of which
were set out in a circular to Shareholders dated 13 July 2007. The issue of
Placing Shares to Ironshield, a substantial shareholder of the Company, is
classified as a transaction with a related party for the purposes of the AIM
Rules. In accordance, therefore, with the AIM Rules, the Directors having
consulted with the Company's nominated adviser, Arbuthnot, consider that the
terms of the transaction (namely the subscription by Ironshield, pursuant to the
Placing at the Placing Price) are fair and reasonable insofar as its
Shareholders are concerned.


5. Extraordinary General Meeting

The circular to be sent out to Shareholders today contains a notice convening
the EGM to be held at the offices of Biggart Baillie LLP, Dalmore House, 310 St
Vincent Street, Glasgow, G2 5QR on 21 December 2007 at 10 a.m. at which the
Resolutions will be proposed for the purposes of implementing the Placing.

Copies of the circular incorporating the notice convening the EGM will be
available for collection from the offices of Arbuthnot Securities Limited,
Arbuthnot House, 20 Ropemaker Street, London EC2Y 9AR for a period of one month
from the date of this announcement and will also be available at the Company's
website, www.axeon.com.

PLACING STATISTICS
   Placing Price                                              90p
   Number of existing issued Ordinary Shares                  32,433,635
   Number of Placing Shares being placed on behalf of the     13,333,333
   Company
   Estimated proceeds receivable by the Company, net of       #11.4 million
   expenses
   Number of Ordinary Shares in issue following Admission     45,766,968
   Number of Placing Shares as a percentage of the enlarged   29.1 per cent.
   issued share capital

EXPECTED TIMETABLE OF EVENTS
                                                                          2007
   Latest time and date for receipt of Forms of Proxy   10 a.m. on 19 December
   Extraordinary General Meeting                        10 a.m. on 21 December
   Admission and dealings in the Placing Shares          8 a.m. on 27 December
   expected to commence on AIM



DEFINITIONS


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

"Admission"               the admission of the Placing Shares to trading
                          on AIM
"AIM"                     the AIM market of the London Stock Exchange
                          plc
"AIM Rules"               the AIM Rules for Companies and the AIM Rules
                          for Nominated Advisers published by the London
                          Stock Exchange plc
"Arbuthnot"               Arbuthnot Securities Limited, the Company's
                          broker and placing agent
"Axeon" or "the Company"  Axeon Holdings plc
"Board" or "Directors"    the board of directors of Axeon
"Extraordinary General    the extraordinary general meeting of the
Meeting" or "EGM"         Company convened for 10 a.m. on 21 December
                          2007 (or any adjournment thereof)
"Group"                   Axeon and its subsidiaries, Axeon Technologies
                          Limited, Axeon Power Limited, Ristma AG, SAT
                          Akkumulatoren Technik AG, Elektro Montage Bau
                          GmbH and Zaklad Montazu Ukladow Zasilajacych
                          MAZ Spolka z organiczona odpowiedzialnoscia
"Notice of EGM"           the notice of EGM set out in the circular to
                          be sent out to Shareholders today
"Ordinary Shares"         ordinary shares of 5 pence each
"Placing"                 the conditional placing to be undertaken by
                          Arbuthnot as agent for the Company of the
                          Placing Shares at the Placing Price
"Placing Agreement"       the conditional agreement dated 28 November
                          2007 made between Arbuthnot and the Company
                          pursuant to which the Placing Shares will be
                          conditionally placed at the Placing Price
"Placing Price"           90p per Placing Share
"Placing Shares"          13,333,333 new Ordinary Shares which are to be
                          conditionally placed in accordance with the
                          terms of the Placing Agreement
"Resolutions"             the resolutions numbered 1 to 6 set out in the
                          Notice of EGM
"Shareholders"            the persons who are registered as the holders
                          of Ordinary Shares



                      This information is provided by RNS
            The company news service from the London Stock Exchange

END
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