18:00 Wed 22 Jan 2020
Ceres Power Holdings - Bosch to increase holding in Ceres Power to c.18%
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO
Bosch to increase holding in Ceres to c.18% to extend strategic relationship and Ceres to raise
Highlights
· Bosch to increase its stake to c.18% of the enlarged issued share capital of Ceres via a combination of new and existing Ceres shares at a price of 320p per share
· Bosch investment in new Ceres shares will raise gross proceeds of approximately
· Strengthens the long-term partnership with Bosch and, alongside
The increased shareholding will be achieved in two transactions: -
· A subscription by Bosch for 11,888,070 new ordinary shares of
· A reverse accelerated bookbuild ("RABB") conducted by Deutsche Bank, on behalf of Bosch, to purchase up to c.13.0 million existing Ceres shares. Bosch intends to proceed with the purchase subject to purchasing a minimum of c.12.3 million shares and pursuant to market soundings carried out prior to the release of the announcement, Bosch has received irrevocable commitments from certain existing shareholders for this minimum number of shares.
· To the extent that the RABB is oversubscribed, applications will be scaled back at the discretion of Bosch and Deutsche Bank. Full details of the RABB to be executed by Deutsche Bank on behalf of Bosch are detailed in a separate announcement published today.
· Both the new shares being issued and the existing shares being purchased from existing shareholders are being effected at a price of 320p per ordinary share (a premium of 29.5% to the 3-month VWAP)
Since signing a strategic agreement in
The Board of Directors believes that there is significant future value for shareholders in broadening the application of Ceres' technology and further strengthening its relationship with Bosch. The Ceres Board is delighted to have two commercial partners,
Over the past 12 months, Ceres has strengthened its position as the partner of choice in SOFC technology for global original equipment manufacturers (OEMs). As a clean energy technology licensing business, it is essential that Ceres remains at the forefront of developing new innovative products for its OEM customers. The gross proceeds of
One promising additional application for Ceres' SOFC technology is solid oxide electrolysis, essentially the process of reversing fuel cells to produce hydrogen and e-fuels from renewable energy. Early stage testing on the application of Ceres' technology as a solid oxide electrolyser (SOEC) has delivered encouraging results.
Dr.
Overall detail of transactions
Bosch subscription
Bosch has today agreed to subscribe for 11,888,070 new ordinary shares in Ceres as part of an overall transaction to increase Bosch's holding in Ceres from just under 4% to c.18%. As part of the transaction Bosch and Ceres have signed a relationship agreement, which gives Bosch the right to appoint a Non-Executive Director onto the Board of
The issue price for the Bosch Subscription is 320p per share, which is a 29.5% premium to the volume weighted average closing mid-market share price for the 3 months to
The issue of new shares in Ceres by way of the Bosch Subscription means that existing shareholders' interests in Ceres will be diluted by 7.2%. Weichai Power, Ceres' largest strategic shareholder has anti-dilution rights and, assuming that it will exercise those rights and will subscribe for 3,488,980 new ordinary shares at 320p per share to maintain its shareholding at 20% of the enlarged share capital following the Bosch Subscription, the overall impact of the issue of new shares to both Bosch and
The Bosch Subscription is conditional on, inter alia, (i) admission of the Subscription Shares to trading on AIM ("Admission"), (ii) the RABB completing in circumstances where Bosch has completed the acquisition of at least c.12.3 million existing Ceres shares (representing 8.0% of the Company's issued share capital) and (iii) approval by the German and Brazilian anti-trust authorities prior to the end of
Following the issue of the Bosch Subscription Shares and on the assumption that
Reverse Accelerated Bookbuild ("RABB")
As detailed in a separate RNS announcement issued today, Deutsche Bank, acting for Bosch, has launched a reverse accelerated bookbuild to purchase up to c.13.0 million shares in Ceres (representing c.8.0% of the existing issued share capital of Ceres prior to the issue of the Bosch Subscription Shares) from existing qualifying professional shareholders at a price of 320p per share. Neither
More details on the proposed RABB are available in the separate announcement released today by Deutsche Bank.
Use of funds
The Bosch Subscription for new ordinary shares in Ceres will enable the Group to continue to grow and commercialise its clean energy technology to maximise shareholder value. The Board believes that the gross proceeds of the Bosch subscription of
As a clean energy technology licensing business, it is essential that Ceres remains at the forefront of developing new innovative products for its OEM customers.
Further investment in the
A portion of the proceeds from the Bosch Subscription will help strengthen and accelerate commercialisation activity of the core power system to meet the needs of the Group's OEM customers as follows:
· Further development of high power systems and associated investment in capital for test capability. This capacity increase is required near term to meet increased customer demand for high power applications from 30kW systems to over 200kW systems over the next few years.
· To expand manufacturing capacity of fuel cell stacks initially from 2MW to 3MW during 2020, and in parallel to continue developing manufacturing processes to potentially expand beyond 3MW and support partners in manufacturing scale up.
· Investment in Business Development activities and supporting engineering capability to accelerate and broaden customer adoption to increase the number of addressable end markets with the aim of establishing the Ceres Steel Cell technology as the global standard in the industry for SOFC. This involves expanding business development reach geographically and building capability to access new market applications.
· Provide additional balance sheet strength to give the ability for future tactical acquisitions if required, where this is additive, accelerates the Group's purpose and is consistent with its licensing business model.
· Have sufficient funds on the balance sheet for investment into the joint venture with Weichai Power, which is expected to be formed in late 2020, and provide the option to maintain a 49% shareholding in the joint venture in future years.
Broader Purpose to develop complementary clean energy technologies - electrolysers for H2 and e-fuels
This additional funding will enable Ceres to invest in additional R&D activity to apply its technology as a Solid Oxide Electrolyser (SOEC) to produce hydrogen and e-fuels. Electrolysis with Ceres' technology could use low cost electricity and, unique to higher temperature electrolysers, waste heat to convert water and carbon dioxide to high value chemicals such as hydrogen and other synthetic transport fuels, precursors for fertilisers and replacements for other petrochemical products. High temperature electrolysis can potentially play a significant role in the decarbonisation of the "hard-to-abate" sectors like steel, other industrial heat consumers and even aviation. The Board believes that there is significant future value associated with this opportunity.
The Company has already run early stage tests in this area with encouraging results that could lead to the Ceres technology being sufficiently differentiated from other electrolyser technologies.
Rule 2.8 statement
Bosch has confirmed to Ceres that is does not intend to make an offer for the Company. This is a statement to which Rule 2.8 of the City Code on Takeovers and Mergers (the "Code") applies. Accordingly Bosch and any person acting in concert with it will, except with the consent of the Panel on Takeovers and Mergers, be bound by the restrictions under Rule 2.8 of the Code.
In accordance with Note 2 on Rule 2.8 of the Code, Bosch, and any person acting in concert with Bosch, reserves the right to set aside the restrictions in Rule 2.8 in the following circumstances: (i) with the agreement of the board of Ceres; (ii) if a third party announces a firm intention to make an offer for Ceres; (iii) if Ceres announces a "whitewash" proposal (see Note 1 of the Notes on Dispensations from Rule 9) or a reverse takeover (as defined in the Code); or (iv) if there has been a material change of circumstances (as determined by the Panel on Takeovers and Mergers).
Ends
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014. The person responsible for the release of this announcement on behalf of the Company is
For further information visit www.Cerespower.com or contact:
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Tel: +44 (0)1403 273 463 |
Investec Bank plc (Nominated Adviser and Broker to Ceres) |
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Tel: +44 (0) 20 7597 4000 |
Berenberg (Joint Broker to Ceres) |
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Tel: +44 (0) 20 3207 7800 |
Powerscourt (PR adviser to Ceres) |
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Tel: +44 (0) 207 250 1446 |
About
Ceres is a world-leading developer of next generation solid oxide fuel cell (SOFC) technology. Its asset-light, licensing model has seen it establish partnerships with some of the world's largest engineering and technology companies, such as
About Bosch
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