Conditional Placing, Board Changes & Notice of GM

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES. THE SECURITIES DISCUSSED HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE US SECURITIES ACT OF 1933, AS AMENDED (THE "US SECURITIES ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION UNDER THE US SECURITIES ACT.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 (MAR). Upon the publication of this announcement via a regulatory information service, this information is considered to be in the public domain.

For immediate release

24 January 2020

Modern Water plc

Oversubscribed £1.85 million Conditional Placing of 370,000,000 new Ordinary Shares at a price of 0.5 pence per share

Proposed Board Changes

Notice of General Meeting

Modern Water plc (AIM: MWG), the pioneering and innovative technology company, specialising in membrane water treatment solutions and advanced monitoring products, announces that it has conditionally raised £1.85 million, before expenses, by way of an oversubscribed placing (the Placing) of 370,000,000 new Ordinary Shares (the Placing Shares) at a price of 0.5 pence per share (Placing Price). The Placing is subject, inter alia, to approval by Shareholders at a General Meeting.

Highlights:

·; The net proceeds of the Placing, amounting to approximately £1.68 million, will be used for working capital purposes and to repay Group debts.

·; The Placing Price represents a discount of approximately 60 per cent to the closing mid-market price of Modern Water's existing Ordinary Shares of 1.25 pence on 23 January 2020.

·; The Placing Shares represent approximately 297 per cent of the Company's existing issued voting share capital.

·; Turner Pope Investments (TPI) Limited (TPI), the Company's broker, has introduced new cornerstone investors and arranged the Placing, which was significantly over subscribed. In addition to a cash commission, TPI will receive 2,000,000 Ordinary Shares at the Placing Price (Placing Fee Shares) for its services and will also be granted 92,500,000 non-transferable subscription warrants (Broker Warrants) exercisable at 0.5 pence per Ordinary Share during the three-year period following Admission.

·; Subject to completion of the Placing and the satisfactory completion of regulatory due diligence checks, Gerard Brandon will join the Board as Non-Executive Chairman and Nigel Burton will join the Board as a Non-Executive Director, at which time Michael Townend and Piers Clark will step down from the Board.

·; Further to the RNS announcement of 30 August 2019 the sale of the Company's Monitoring Division is now halted and, subject to a review by the new Board and management on completion, may play a pivotal role in an amended business model.

The Placing is subject to the passing (without amendment) of each of the Resolutions at a General Meeting of the Company which it is expected will be convened for 10.00 a.m. on 14 February 2020 at the offices of the Company's legal advisers Michelmores LLP at 12th Floor, 6 New Street Square, London EC4A 3BF. Provided that the Resolutions are passed and the Placing has otherwise become unconditional, completion of the Placing and Admission of the Placing Shares is expected to take place on 17 February 2020.

Simon Humphrey, Modern Water's CEO, commented:

"We are delighted to receive substantial support from a number of new and existing investors introduced by TPI. The net funds from the Placing will allow us to address all of our outstanding liabilities, provide working capital to alter the business model to drive increased revenues by collaborations and revenue sharing opportunities that build and extend our existing sales, marketing and distribution channels."

A Circular and a Notice of General Meeting will be posted to Shareholders shortly and will then be available on Modern Water's website, www.modernwater.com.

Contacts:

Notes to editors:

Modern Water is a pioneering and innovative technology company, specialising in membrane water treatment solutions and advanced monitoring products. The Company works for customers in a range of industries across the globe and owns proprietary technologies for use in a diverse range of applications. Modern Water's Monitoring Division has a portfolio of world-leading toxicity and trace metal monitoring products, some of which constitute the regulatory standard. The headline technology of the Company's Membrane Division, called "AMBC", can be used to tackle complex wastewater treatment problems at a reduced cost compared to standard processes, while being simple to operate.

Important notice

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

This announcement does not constitute, or form part of, a prospectus relating to the Company, nor does it constitute or contain any invitation or offer to any person, or any public offer, to subscribe for, purchase or otherwise acquire any shares in the Company or advise persons to do so in any jurisdiction, nor shall it, or any part of it form the basis of or be relied on in connection with any contract or as an inducement to enter into any contract or commitment with the Company.

The content of this announcement has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 (FSMA). This announcement has been issued by and is the sole responsibility of the Company. The information in this announcement is subject to change.

This announcement is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the Securities Act), and may not be offered or sold, directly or indirectly, in or into the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States. This announcement is not for release, publication or distribution, directly or indirectly, in or into the United States, Australia, Canada, the Republic of South Africa, Japan or any jurisdiction where to do so might constitute a violation of local securities laws or regulations (a Prohibited Jurisdiction). This announcement and the information contained herein are not for release, publication or distribution, directly or indirectly, to persons in a Prohibited Jurisdiction unless permitted pursuant to an exemption under the relevant local law or regulation in any such jurisdiction.

Cairn Financial Advisers LLP (Cairn) is authorised and regulated by the Financial Conduct Authority in the United Kingdom. Cairn is acting solely as nominated adviser exclusively for the Company and no one else in connection with the contents of this announcement and will not regard any other person (whether or not a recipient of this announcement) as its client in relation to the contents of this announcement nor will it be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the contents of this announcement. Apart from the responsibilities and liabilities, if any, which may be imposed on Cairn by FSMA or the regulatory regime established thereunder, Cairn accepts no responsibility whatsoever, and makes no representation or warranty, express or implied, for the contents of this announcement including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on behalf of it, the Company or any other person, in connection with the Company and the contents of this announcement, whether as to the past or the future. Cairn accordingly disclaims all and any liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above), which it might otherwise have in respect of the contents of this announcement or any such statement.

Turner Pope Investments (TPI) Limited (TPI) is authorised and regulated by the Financial Conduct Authority in the United Kingdom. TPI is acting solely as the Company's broker and placing agent exclusively for the Company and no one else in connection with the contents of this announcement and will not regard any other person (whether or not a recipient of this announcement) as its client in relation to the contents of this announcement nor will it be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the contents of this announcement. Apart from the responsibilities and liabilities, if any, which may be imposed on TPI by FSMA or the regulatory regime established thereunder, TPI accepts no responsibility whatsoever, and makes no representation or warranty, express or implied, for the contents of this announcement including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on behalf of it, the Company or any other person, in connection with the Company and the contents of this announcement, whether as to the past or the future. TPI accordingly disclaims all and any liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above), which it might otherwise have in respect of the contents of this announcement or any such statement.

Forward-looking Statements

This announcement includes "forward-looking statements" which include all statements other than statements of historical facts, including, without limitation, those regarding the Company's business strategy, plans and objectives of management for future operations, or any statements proceeded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or similar expressions or negatives thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. No undue reliance should be placed upon forward-looking statements. These forward looking statements speak only as at the date of this announcement. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based, unless required to do so by applicable law or the AIM Rules for Companies.

Conditional Placing of 370,000,000 new Ordinary Shares at a price of 0.5 pence per share

Proposed Board Changes

Notice of General Meeting

1. Introduction

The Company announced today the conditional placing by Turner Pope Investments (TPI) Limited of 370,000,000 new Ordinary Shares at 0.5 pence per share to raise an aggregate £1.85 million (before expenses). The net proceeds of the Placing, amounting to approximately £1.68 million, will be used for working capital purposes and to repay Group debt.

The Placing is conditional on, inter alia, the passing of the Resolutions at the General Meeting and Admission. It is expected that, subject to passing the Resolutions, the Placing Shares will be admitted to trading on AIM on 17 February 2020.

The Placing Price represents a discount of 60 per cent. to the closing mid-market price of 1.25 pence per Ordinary Share on 23 January 2020 (being the last practical date prior to the announcement of the Placing).

2. Use of proceeds of the Placing

The proceeds of the Placing will strengthen the Company's balance sheet and provide working capital to support growth of the Company's patented Membrane technologies and its innovative Monitoring products globally.

3. Current Trading and Prospects

Despite the Company's recent working capital shortfall, that will be resolved in the short-term through the Placing, Modern Water has continued to make progress in its two Divisions. As announced on 25 November 2019, the Membrane Division was awarded an innovative project in South Korea (Project) through its Chinese partner, Hangzhou Shangtuo Environmental Technology Co. Ltd. In the Project, salt is produced by concentrating deep seawater and is further proof of the wide-ranging applications for the Company's patented All-Membrane Brine Concentrator technology (AMBC). 

As announced on 23 December 2019, the Company signed a collaboration agreement with Ion Exchange (India) Ltd (Ion) to integrate Modern Water's AMBC technology and forward osmosis technology into Ion's projects across India, Oman, the United Arab Emirates and Saudi Arabia, significantly increasing the geographical scope of opportunities for deploying the Company's technologies and supporting the continued growth of its project pipeline.

Also announced on 23 December 2019 was the Company's largest-ever single order for its Microtox® CTM to a customer in China. The total value of the order was US$335,000. Microtox® CTM is a site-based, broad range monitor which continuously measures the chemical toxicity of a water source, providing an instant indication of water health. Such equipment will be used for new hydrological and water treatment stations in Shanghai.

In light of the Placing, negotiations over the potential sale of the Company's Monitoring Division to be halted pending the outcome of a review by the Directors following the changes in the Board's composition detailed in paragraph 7 below.

The Group has also taken action to significantly reduce overhead costs across the whole business. The results of the cost reductions will be reflected in the Company's financial results for the year ending 31 December 2019.

4. Details of the Placing

The Company is proposing to raise, in aggregate, £1.85 million (before expenses) by means of the Placing. The Placing Shares will represent approximately 297 per cent. of the Existing Ordinary Shares and 74 per cent. of the Enlarged Issued Share Capital. The aggregate net proceeds after costs related to the Placing are expected to be approximately £1.68 million. The Placing Shares shall, when issued, rank in full for any dividend or other distribution declared, made or paid after Admission and otherwise equally in all respects with the Existing Ordinary Shares.

Application will be made to London Stock Exchange for the Placing Shares to be admitted to trading on AIM and, subject to the passing of the Resolutions, it is anticipated that trading in the Placing Shares will commence on AIM at 8.00 a.m. on 17 February 2020.

The Placing Shares have been conditionally placed by TPI, as placing agent for the Company, with institutional and other investors in accordance with the terms of the Placing Agreement. The Placing is not underwritten.

The Placing is conditional upon, amongst other things:

i. each of the Resolutions being passed at the General Meeting;

ii. the Placing Agreement not having terminated; and

iii. Admission becoming effective by no later than 8.00 a.m. on 17 February 2020 or such later date as the Company and TPI may agree.

5. The Placing Agreement

Pursuant to the terms of the Placing Agreement, TPI, as placing agent for the Company, has agreed to use its reasonable endeavours to procure subscribers for the Placing Shares at the Placing Price. The Placing Agreement contains customary warranties and indemnities given by the Company in favour of TPI.

In addition to the conditions referred to above, the Placing Agreement is conditional upon, among other things, none of the warranties or undertakings given to TPI prior to Admission being or becoming untrue, inaccurate or misleading in any material respect.

TPI has the right to terminate the Placing Agreement in certain circumstances prior to Admission, in particular, in the event of a material breach of the warranties, a material adverse change in the financial position or prospects of the Group taken as a whole or if the Placing Agreement does not become unconditional.

In consideration of its role as the Company's placing agent, TPI will receive a cash commission equal to 7 per cent. of the gross aggregate value of the funds raised from investors in the Placing; 92,500,000 non-transferable subscription warrants exercisable at 0.5 pence per share (Broker Warrants) during the period of 3 years following Admission (equivalent to 25 per cent. of the gross aggregate value of the funds raised from investors in the Placing) and the Placing Fee Shares.

6. Effect of the Placing

Upon Admission, the Enlarged Issued Share Capital is expected to be 502,693,214 Ordinary Shares. On this basis, the Placing Shares will represent approximately 297 per cent. of the Company's Existing Ordinary Shares and 73.6 per cent. of the Enlarged Issued Share Capital. The Existing Shares will represent 24.8 per cent. of the Enlarged Issued Share Capital

7. Prospective Board Changes

Conditional on the approval of the Resolutions at the General Meeting and completion of the proposed Placing and subject to and following approval to proceed from the Company's Nominated Adviser, it is intended that Gerard Brandon will join the Board as Chairman and non-executive director and Dr. Nigel Burton will join the Board as an additional non-executive director at which time the current non-executive directors Michael Townend and Piers Clark will step down from the Board.

Gerard Brandon has agreed to receive payment for his director's fees due in the first 2 years of his office in the form of Ordinary Shares at the Placing Price.

Gerard Brandon

Gerard Brandon is Chief Executive Officer of both Integumen plc and Cellulac plc. In 1996 he became founder and CEO of Alltracel Pharmaceuticals PLC, where he built a team that oversaw numerous patents granted on refined cellulose. Alltracel Pharmaceuticals PLC was admitted to trading on AIM in 2001. In 2004, he was appointed as a Managing Partner for Farmabrand Private Equity. In 2009, he was appointed as an Executive Consultant to Eplixo Limited. He is a Fellow of the Ryan Academy of Entrepreneurs in Dublin.

Dr. Nigel Burton

Following over 14 years as an investment banker at leading City institutions including UBS Warburg and Deutsche Bank, including as the Managing Director responsible for the energy and utilities industries, Nigel spent 15 years as Chief Financial Officer or Chief Executive Officer of a number of private and public companies. Nigel is currently a Non-Executive Director of AIM quoted companies Remote Monitored Systems plc, Digitalbox plc, Regency Mines plc, eEnergy Group plc and Mobile Streams plc.

Each of the proposed new directors has agreed to participate in the Placing. Gerard Brandon has agreed to subscribe for 10,000,000 Placing Shares and Nigel Burton has agreed to subscribe for 4,000,000 Placing Shares.

8. Shareholder Circular and General Meeting

A circular to Shareholders is expected to be posted to Shareholders on or before 29 January 2020 giving notice of the General Meeting of the Company to be held at the Company's registered office (being the offices of the Company's legal advisers Michelmores LLP) at 12th Floor, 6 New Street Square London EC4A 3BF on 14 February 2020 at 10.00 a.m. The notice will contain the Resolutions that are to be proposed at the General Meeting to authorise the Directors to:

·; allot the Placing Shares;

·; allot the Placing Fee Shares;

·; allot to TPI a further 6,000,000 new Ordinary Shares at the Placing Price in satisfaction of the Company's annual retainer fee for the twelve month period from 28 February 2020 of £30,000 (exclusive of VAT) (Retainer Fee Shares);

·; grant the Broker Warrants;

·; disapply Shareholders' pre-emption rights under the Companies Act 2006 in respect of the Placing Shares, the Placing Fee Shares, the Retainer Fee Shares and the grant of the subscription rights under the Broker Warrants; and

·; generally allot additional Ordinary Shares or rights over Ordinary Shares equal to 20 per cent of the Enlarged Issued Share Capital on a non pre-emptive basis. The Board have no present intention of exercising this additional authority.

The Placing is conditional, inter alia, on the passing of each of the Resolutions. Once published, a copy of the circular will be available on the Company's website www.modernwater.com.

PLACING STATISTICS

Notes:

1. Each of the above times and/or dates is subject to change at the absolute discretion of the Company, Cairn and TPI. If any of the above times and/or dates should change, the revised times and/or dates will be announced through a Regulatory Information Service.

2. All of the above times refer to London time unless otherwise stated.

3. All events listed in the above timetable following the General Meeting are conditional on the passing of each of the Resolutions at the General Meeting.

DEFINITIONS

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