TIDMCTFA
RNS Number : 6179E
Cientifica PLC
11 April 2014
Cientifica PLC
("Cientifica" or the "Company")
Option to Invest in Rainmaker Technologies Limited
Cientifica, the AIM-quoted investment company focused on
investment in businesses making use of advanced materials, graphene
and emerging technologies, is pleased to announce that it has
entered into a call option agreement (the "Option Agreement") with
Rainmaker Technologies Limited ("Rainmaker"), which is a newly
formed company which will design and develop commercial
applications of advanced materials such as graphene.
The founder directors of Rainmaker are Alex Hamer of the Ashbeck
Group of Companies and Martin Benson of Kirkstyles Innovation Group
Limited. It is intended that, following the exercise of the First
Option (as defined below) Tim Harper will be appointed to the board
of Rainmaker as a representative of Cientifica. The directors of
Cientifica understand that the board of Rainmaker will be
strengthened by the appointment of additional, suitably qualified
personnel in the near future.
Under the terms of the Option Agreement, Cientifica has been
granted three options under which it may subscribe for Rainmaker
ordinary shares ("Rainmaker Shares") which would amount to 49.9 per
cent. of the enlarged issued share capital of Rainmaker if all
three options were exercised in full.
The venture is intended to bring together a number of companies
with graphene application projects and their management teams which
have expertise in the aerospace, defence, motor manufacturing,
construction, oil, shipping and building materials industries. It
is intended that Rainmaker will take equity stakes in the companies
which have projects which are in various stages of development and
which are of interest to Cientifica.
The Cientifica directors also understand that Rainmaker also
intends to develop a close association with Perpetuus Carbon
Technologies Ltd ("Perpetuus"), a private company which produces
high quality functionalised graphene materials which can be
tailored to precise customer requirements, in quantities from grams
to tons.
It is intended that, on a non-exclusive basis, Perpetuus will
supply materials to and work with Rainmaker, integrating its high
quality graphene into a number of Rainmaker's planned products,
each of which is potentially disruptive in its own respective
market place. The Cientifica directors understand that Perpetuus
may also introduce new application projects to Rainmaker for
evaluation and development.
The Cientifica directors understand that Rainmaker intends to
bring several new products under development to market within the
next twelve months. It is hoped that the first product will relate
to a new and innovative type of low-cost, super efficient, infrared
heating. The other potential products, which are in various stages
of development, relate to electrical storage devices, oil and water
filtration, wellness monitoring and sporting and recreational
goods.
Upon exercising the first option ("First Option"), Cientifica
will subscribe for 340 Rainmaker Shares for GBP100,000 in cash
which will represent approximately 25.4 per cent. of the enlarged
issued share capital of Rainmaker. The First Option may be
exercised by Cientifica at any time on or before 15th May 2014
provided that Rainmaker has, by the exercise date, entered into a
minimum of two option agreements with certain companies focused on
developing commercial applications using graphene.
Under these agreements, Rainmaker will agree with such companies
to provide or arrange funding for their businesses in consideration
of the issue to Rainmaker of ordinary shares in those companies. In
addition, under these agreements, the management and key staff of
those companies will agree to collaborate with the management of
Rainmaker in developing and bringing their products to market.
Subject to the exercise of the First Option, under the second
option (the "Second Option"), which may be exercised in whole or in
part on or before 15th October 2014, Cientifica may subscribe for
further Rainmaker Shares, to be satisfied, at the election of
Rainmaker, in cash or by the issue of new Cientifica ordinary
shares to Rainmaker (at the prevailing mid-market price). The value
of Rainmaker will be determined and agreed by the parties at the
time of exercise by reference to the performance of Rainmaker. If
the Second Option is exercised in full, Cientifica's holding of
Rainmaker Shares is expected to represent approximately 37.5 per
cent. of the enlarged issued share capital of Rainmaker immediately
following the exercise of the Second Option.
Subject to the exercise of the Second Option, under the third
option (the "Third Option"), which may be exercised in whole or in
part on or before 15th May 2015, Cientifica may subscribe for
further Rainmaker Shares to be satisfied, at the election of
Rainmaker, in cash or by the issue of new Cientifica ordinary
shares to Rainmaker (at the prevailing mid-market price). The value
of Rainmaker will be determined and agreed by the parties at the
time of exercise by reference to the performance of Rainmaker. If
the Third Option is exercised in full, Cientifica's holding of
Rainmaker Shares is expected to represent approximately 49.9 per
cent. of the enlarged issued share capital of Rainmaker immediately
following the exercise of the Third Option.
The decision to exercise any of the First, Second or Third
Options will be made by the Non-executive directors, having
consulted with Tim Harper.
If at the time of exercise of either the Second or Third Options
such exercise would result in the transaction being classified as a
reverse takeover transaction under the AIM Rules for Companies,
then Cientifica will not proceed with such exercise at that time.
However, the Company may do so at a later date should both parties
to the Option Agreement agree to extend the relevant exercise
period and such exercise not result in the transaction being deemed
a reverse takeover transaction.
Under the Option Agreement, Cientifica is to be given the right
of first refusal to secure further interests in products under
development with Rainmaker by funding, in whole or in part, the
sale and marketing of each new product as they are spun out of
Rainmaker into separate legal entities.
The Cientifica directors believe that the collaboration with
Rainmaker will bring many advantages to Cientifica. Firstly, it
brings together management teams with industry and technical
experience who will work together and fully develop and bring
graphene applications to market and who can collaborate with
Cientifica on projects. Secondly, the anticipated association with
Perpetuus should enable Rainmaker to incorporate high quality
graphene materials into products that are nearly ready for market.
It is expected that Perpetuus' team of highly experienced polymer
scientists and electrochemists will be available to support
Rainmaker's product development. Thirdly, as a private company,
Rainmaker can move swiftly in forging relationships with other
interested parties including providers of additional finance.
Tim Harper, the Chief Executive of Cientifica, has had an
equitable interest in several of the projects which are to be
developed by Rainmaker. These interests pre-date his appointment to
the Board of Cientifica in October 2013. As a result of these
interests and his part in bringing the Rainmaker venture together,
Tim Harper has an interest in 28.3 per cent. of the issued share
capital of Rainmaker. In the event that Cientifica exercises the
First Option on or before 15th May 2014, it is intended that Tim
Harper will join the Board of Rainmaker and represent Cientifica's
interest in Rainmaker and its ongoing development.
In view of Tim Harper's significant interest in Rainmaker, the
Option Agreement with Rainmaker is a related party transaction
under the AIM Rules for Companies. The independent Directors of
Cientifica consider, having consulted with its Nominated Adviser,
Allenby Capital Limited, that the terms of the transaction are fair
and reasonable insofar as its shareholders are concerned.
Tim Harper, CEO of Cientifica PLC commented:
"I believe that this is an opportunity for Cientifica to rapidly
expand its interests in the graphene market and that the
collaboration will allow us to bring a range of products, utilising
the advanced material, to the market in the short to medium
term.
"The intellectual property expected to be created within
Rainmaker and the prospect of faster access to major global markets
makes this a truly exciting relationship, from which Cientifica can
derive significant benefit."
11(th) April 2014
For further information, please contact:
Cientifica PLC
Tim Harper, Chief Executive +44 (0) 207 518 4300
Allenby Capital (Nominated Adviser)
Nick Naylor/ Mark Connelly +44 (0) 203 328 5656
Peterhouse Corporate Finance (Broker)
Lucy Williams / Heena Karani +44 (0) 207 469 0930
Lothbury Financial Services Limited
Michael Padley / Gary Middleton +44(0) 203 440 7620
This information is provided by RNS
The company news service from the London Stock Exchange
END
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