29th Aug 2014 09:33
LONDON (Alliance News) - Cientifica PLC saw its shares drop Friday after it said it had taken a 24% stake in graphene technology company G Heat Ltd by acquiring the whole of a private company owned by the Cientifica chief executive in exchange for shares, and would invest GBP204,000 in G Heat though convertible unsecured loan notes.
Cientifica said it had acquired TEH Investments Ltd, which is owned and controlled by Cientifica Chief Executive Tim Harper, the co-inventor of G Heat's infra-red technology. It is the company's first investment.
G Heat's technology uses graphene in the manufacture of infra-red heating units, which allow power usage to be cut by up to 70% when compared to conventional heaters, according to the company.
Cientifica has issued its CEO with 1.4 million new shares, about 4.2% of its enlarged share capital, at 1.5 pence a share to pay for TEH Investments. TEH owns 24 shares, a 24% stake, in G Heat.
Cientifica has also agreed to invest up to GBP204,000 in G Heat through convertible unsecured loan notes, which will be issued in two tranches. It subscribed for GBP74,000 nominal of 5% convertible unsecured loan notes expiring in 2017 Friday, and will subscribe for a second tranche of GBP130,000 subject to performance milestones being met.
It expects to hold 45% of G Heat's enlarged share capital when the loan notes are fully converted into shares.
"The convertible loan note investment in G Heat will allow G Heat to accelerate the launch of its initial products and, in time, provide us with an increased shareholding in the G Heat business. Furthermore, our previously announced relationship with Perpetuus Carbon Limited will allow G Heat to further develop its range of products," Harper said in a statement.
"G Heat's proprietary graphene technology promises to change the energy consumption of commercial and domestic heating in the same way that LEDs changed lighting. We already have significant interest from a number of major players in the commercial heating space which we fully expect to convert into sales," G Heat Managing Director Craig Clement added.
Cientifica signed a collaboration agreement with Perpetuus Carbon in June. Perpetuus produce nano surface modified graphenes.
Cientifica's first investment means it has met the deadline under AIM listing rules that allows it to remain as a listed company. It had converted to an investment company under AIM rules after running into financial difficulty and disposing of its previous operating company, and had until October 25 to fulfill its investing strategy. That strategy was to invest in businesses making use of advanced materials, graphene and emerging technologies.
Cientifica shares were down 8.7% at 1.37 pence Friday morning, one of the biggest faller on the AIM All-Share index.
By Steve McGrath; [email protected]; @stevemcgrath1
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