SulNOx Group Plc (Aquis Stock Exchange: SNOX) is pleased to announce a proposed placing (the “Placing”) and subscription (the “Subscription“, together with the Placing the “Fundraising“) of new ordinary shares of 2 pence each in the capital of the Company (“New Ordinary Shares”).
The Fundraising will be conducted at a price of 11.5 pence per share (the “Issue Price“) in order to raise a minimum of £0.75 million (before expenses).
Highlights
- Proposed Fundraising at the Issue Price, raising a minimum of £0.75 million (before expenses).
- A Subscription to raise approximately £0.42 million is supported by certain Directors who intend to subscribe in the Fundraising and signed subscription letters from certain investors (together the “Subscribers”).
- The Fundraising will proceed using the Company’s currently available authorities to allot up to approximately 9.4 million new Ordinary Shares on a non-pre-emptive basis (the “Existing Authorities”).
- The net proceeds of the Fundraising will be used as follows:
- Research and development to support product expansion.
- Development and purchasing of equipment required for shipping trials, including emissions monitoring hardware, and stock purchases to support the Company’s existing project pipeline.
- Investment in the Company’s marketing, financial and consumer public relations teams; and
- General working capital purposes.
- The Placing to raise a minimum of £0.33 million will be conducted by way of an accelerated bookbuild process by Singer Capital Markets Securities Limited (“Singer”), the Company’s sole bookrunner.
- The Placing is subject to the terms and conditions set out in the appendix (the “Appendix”) to this announcement (which forms part of this announcement, such announcement and the Appendix together being this “Announcement”).
- Radu Florescu, Lord Nicholas Fairfax (directors of SulNOx Group PLC) and Nawaz Haq (director at subsidiary SulNOx Fuel Fusions Ltd) of the Company, have indicated their intention to subscribe for, in aggregate, £35,000 in the Fundraising.
- The Issue Price represents a discount of approximately 4 per cent. to the closing middle market price of 12 pence per Ordinary Share on 21 December 2022, being the latest practicable date prior to the publication of this Announcement.
- The timing of the closing of the Fundraising and allocations thereunder is at the absolute discretion of Singer and the Company, but the Fundraising is currently expected to close during the course of tomorrow morning.
Background to and reasons for the Fundraising
SulNOx is the inventor of natural, biodegradable fuel emulsifiers and conditioners. The Company’s products are scientifically proven to optimise combustion of liquid hydrocarbon fuels, including biofuels and reduce emissions and fuel consumption.
The key benefits of the SulNOx products include:
- Cost savings:
- Reduced fossil fuel consumption of c.8-10%, and significant reduction in greenhouse gas emissions, NOx, SOx, CO & CO2 output
- Reduction in fuel storage costs
- Potential for financial benefits for clients from carbon credits
- Improved Engine Performance & Health:
- Reduction in maintenance costs estimated at c. 2%
- Detergents and surfactants increase fuel lubricity, reducing engine wear
- Emission Reductions / Air Quality improvements:
- Smoke and Particulate Matter Reductions (PM 2.5 reduced by over 60%, PM10 reduced by over 50%) from improved combustion
- Greenhouse Gas Reductions (160x net CO2 reduction based on a 1:2,000 ratio of SulNOx and 8% fuel savings)
- Assist in achieving client Environmental Social and Governance (ESG) goals and enhance Green credentials of clients.
Over the last twelve months, the Company has continued to develop its brand, proving the effectiveness of its products and demand for solutions including around E10 petrol, taxation and air quality issues. The Company has achieved successful results in research and development testing, including with Bureau Veritas (light fuels US, Europe, India), Lloyds Register and VPS (shipping fuels) and Wismar University (shipping engines).
The Company has also achieved strong results from evaluations completed – including but not limited to:
- Automotive: 11-13.8% fuel savings (TUV inspected vehicle study)
- Buses: 9% fuel savings (EM Horsburgh)
- Loader: 10% fuel savings using biofuel (Dutch client)
- Trucks: 8% fuel savings (Besblock)
- Shipping: 19% power and 15% torque improvement
- Vans: 6.5% fuel savings
The Company now has agreements with over 60 distributors and introducers in 63 countries and has achieved sales of its products in 23 countries across five continents. To support the Company’s expanded distribution, SulNOx has patents pending for its products in over 70 countries, and has developed its PR and marketing efforts globally.
Current Trading and Outlook
With successful trials and adoption by various companies, they are increasingly demanding that their fuel suppliers provide pre-mixed fuel with SulNOx products added. This has led to several significant discussions around replacing existing additives with SulNOx products at both industrial customer deliveries and also at gas/petrol stations, reflecting a material opportunity for SulNOx. In addition to the Rominserv MOU announced previously, the Company is pursuing a number of opportunities in multiple geographies and is in discussions with manufacturer Nouryon regarding upscaling of production.
The Company is increasingly focussed on revenue generation from the shipping industry and is currently pursuing in excess of 25 significant opportunities for paid evaluations of its products. The Company typically achieves revenue of c.£10,000-£30,000 per trial and currently has a trial ongoing with a large German fleet of c.50 vessels, with four further trials expected to start imminently within the US (fleet of over 500 vessels), Germany (c.100 vessels), Monaco (c.10 vessels) and CMS Azerbaijan (over 25 vessels).
To continue the theme, the Carbon Intensity Indicator (CII) Regulation comes into force in January 2023 requiring ships to significantly reduce their fossil fuel consumption and therein inferred emissions. Ship owners and ship management companies are spending money to implement cost-saving measures including sandblasting and repainting hulls with silicone paint, and changing propellers, but SulNOx offers a cost reducing solution with immediate impact – a single vessel able to save $500,000 per annum (assuming 50 tonnes of fuel consumed over 300 days per annum) whilst dramatically reducing emissions – both particulate matter and greenhouse gases.
Shipping companies also currently often use a combination of several additives to, inter alia, stabilise fuel, attend water issues, increase power and add lubricity and detergency – SulNOx is able to address all issues in one simple solution with the added benefits of being all natural and biodegradable, whilst also reducing fuel consumption and emissions – which alternatives are unlikely to achieve.
Evaluations are now progressing across a broad spectrum of vessel types (container ships, bulk carriers, tankers, dredgers, off-shore vessels, super yachts and harbour craft) across the globe and with particular note to opportunities in Singapore and the US for the first time.
Use of Proceeds
The net proceeds of the Fundraising will be used as follows:
- Capital Expenditure to accelerate and support revenue generation from the Company’s significant client pipeline:
- Shipping trial equipment e.g., emissions monitoring hardware to reduce evaluation timelines and provide data to push carbon credit and CII solutions
- Stock purchase – to satisfy the Company’s immediate sales pipeline expectations
- Research and Development to enable product expansion:
- Further fuel standard verifications from independent testing in c.10 countries including South Africa, Australia to compliment those already received for the USA, Europe and India.
- Carbon footprint analysis (measuring the carbon input of SulNOx – critical for ESG funds and many multi-national Sustainability policies) and Patent finalisation and ongoing maintenance in c. 70 countries
- Further Investment in the Company’s marketing, financial and consumer public relations/affairs teams to continue thought leadership articles – having now reached an audience of >100million
- General working capital purposes:
- Appointment of Lead Sales co-ordinator and team to support and actively drive the performance from the growing new global ISOs/distributors and incoming client demand.
- Appointment of a Sustainability Officer to establish process and support ongoing requirements work around developing Carbon Credits across the SulNOx client footprints (logistics, transportation, shipping and mining) and their financial reporting. Finalise SulNOx B-Corp status to enable further ESG investors especially in the US.
Details of the Subscription
The Subscribers will be subscribing at the Issue Price for an aggregate of 3,608,696 New Ordinary Shares on the terms of subscription letters with the Company. The Subscribers’ obligations in the subscription letters will be conditional upon (i) admission of the Subscription Shares to trading on the Apex segment of the AQSE Growth Market A becoming effective by no later than 8.00 a.m. on 12 January 2023 (the “Longstop Date”) or such other date as may be agreed between the Company, Singer and Allenby Capital in accordance with the Placing Agreement, (ii) the Company entering into the Placing Agreement and (iii) the Placing Agreement having become unconditional in all respects, and not having been terminated in accordance with its terms by the Long Stop Date or such other date as may be agreed between the Company, Singer and Allenby Capital in accordance with the Placing Agreement.
Details of the Placing
The Placing is subject to the terms and conditions set out in the Appendix. Singer will commence the Bookbuilding Process immediately following the publication of this Announcement. The number of New Ordinary Shares which are to be placed at the Issue Price pursuant to the Placing will be determined at the close of the Bookbuilding Process. The timing of the closing of the Bookbuilding Process and the allocations are at the absolute discretion of Singer and the Company. Details of the number of New Ordinary Shares to be placed pursuant to the Placing will be announced as soon as practicable after the close of the Bookbuilding Process. The Placing is not being underwritten by Singer.
Director Participation in the Fundraising
Chairman Radu Florescu, Non-Executive Director Lord Nicholas Fairfax and Nawaz Haq (director of SulNOx Fuel Fusions Ltd – a sub of the Company) have indicated their intention to subscribe for, in aggregate, £35,000 in the Fundraising. Their proposed respective participations would constitute related party transactions under the AQSE Apex Rulebook for Issuers (“Aquis Rules”). Further details of the Fundraising and any participation by the directors and substantial shareholders will be set out in the announcement to be made on the closing of the Bookbuilding Process.
The Placing Agreement
Pursuant to the terms of the Placing Agreement, Singer acting as an agent for the Company, has conditionally agreed to use its reasonable endeavours to place the New Ordinary Shares with institutional and other investors, subject to certain customary conditions.
The Placing Agreement contains warranties from the Company in favour of Singer and Allenby Capital Limited (“Allenby Capital”) in relation to, inter alia, matters relating to the Group and its business. In addition, the Company has agreed to indemnify each of the Singer and Allenby Capital in relation to certain liabilities they may incur in respect of the Placing and Singer and Allenby Capital have the right to terminate the Placing Agreement in certain circumstances prior to Admission including, inter alia, in the event: that any of the warranties given to Singer Capital Markets and Allenby Capital in the Placing Agreement are breached or are, or become, untrue, inaccurate or misleading; of the failure of the Company to comply in any material respect with its obligations under the Placing Agreement; of the occurrence of a material adverse change affecting the condition, the earnings or business affairs or prospects of the Group as a whole; or that any statement contained in certain announcements or documents published by the Company or on its behalf in relation to the Fundraising is or has become untrue, inaccurate or misleading.
Admission, Settlement and CREST
Application will be made for the New Ordinary Shares to be admitted to trading on the Apex segment of the AQSE Growth Market (“Admission”).
Settlement for the New Ordinary Shares and Admission are expected to take place on or before 8.00 a.m. on 5 January 2023. The Fundraising is conditional upon, among other things, Admission becoming effective and the Placing Agreement between the Company, Singer and Allenby Capital not being terminated in accordance with its terms.
This Announcement should be read in its entirety. In particular, your attention is drawn to the detailed terms and conditions of the Placing and further information relating to the Placing and any participation in the Placing that is described in the Appendix to this Announcement (which forms part of this Announcement).
By choosing to participate in the Placing and by making an oral and legally binding offer to acquire New Ordinary Shares, investors will be deemed to have read and understood this Announcement in its entirety (including the Appendix), and to be making such offer on the terms and subject to the conditions of the Placing contained herein, and to be providing the representations, warranties and acknowledgements contained in the Appendix.
Unless otherwise indicated, capitalised terms in this Announcement have the meaning given to them in this Announcement (including the definitions section included in the Appendix).
The person responsible for releasing this Announcement on behalf of the Company is Ben Richardson, Chief Executive and Director of the Company.
For further information, please contact:
SulNOx Group plc
Ben Richardson / Steven Cowin
Tel: 07624 491821
Singer Capital Markets (Bookrunner)
Phil Davies / Asha Chotai
Tel: 0207 496 3000
Allenby Capital Limited
(AQSE Corporate Adviser)
Nick Harriss / John Depasquale
Tel: 020 3328 5656