Issuance of Tranche 2 Loan Notes

Graphene NanoChem PLC

("Graphene NanoChem" or the "Group")

Issuance of Tranche 2 Loan Notes

and

Update on Debt Rationalisation

Graphene NanoChem plc. (AIM:GRPH), the international provider of nanotechnology performance enhancing solutions for global industries, is pleased to announce that, pursuant to the Subscription Agreement dated 22 December 2016 for the issuance of up to £2.5m of Senior Unsecured Zero Coupon Convertible Loan Notes ("Loan Notes"), the Group has issued 40 Loan Notes ("Loan Notes") to Darwin Capital Limited ("Darwin") under Tranche 2 of the said agreement, effective 12 May 2017. The announcement of Tranche 1 was first announced on 23 December 2016.

The proceeds from the issuance will continue to support the working capital requirements of the Group as it continues to advance the progress of its business turnaround plan as previously announced, particularly in crystallizing opportunities in its water and enhanced polymer divisions.

For each £25,000 loan note issued, the Group will receive 90% of the Par Value, equivalent to £22,500 per individual loan note. The Group may redeem these Loan Notes at 105% of Par Value at any point. The Loan Notes are convertible at Darwin's election into new ordinary shares of 0.01p each in the Group ("Ordinary Shares") at the conversion price, being the lesser of 18.4375 pence per new Ordinary Share or 90% of the arithmetic average of five daily volume weighted average share price calculations selected by Darwin out of the twenty trading days prior to conversion. 

Darwin has also been issued with detachable warrants to subscribe for 1,355,932 new Ordinary Shares in the Group ("Warrants") at an exercise price of 18.4375 pence per new Ordinary Share. The Warrants can be exercised over a five-year period from the date of this announcement.

The Company has provided customary warranties, indemnities and undertakings, including customary negative pledges and anti-dilution protections, to Darwin in connection with the issue of the Loan Notes and Warrants. The Company has also paid an arrangement fee for Tranche 2 to Darwin in connection with the Loan Notes.

It is anticipated that Graphene Nanochem will receive net proceeds of approximately £850,000 pursuant to the second tranche of the Loan Notes.

Further announcements will be made in due course, including upon conversion.

Update on debt rationalization

The Company expects the successful debt restructuring exercise it has undertaken to now be unconditional by the end of the 2nd quarter 2017 post completion of the administrative process and other conditions precedent, including non-core asset sales, as previously announced.

The Group's CEO, Jespal Deol commented: "We are pleased with the Tranche 2 drawdown by Darwin further validating the continued progress that we have made in advancing our business including our water and enhanced polymer divisions. These funds raised will allow us to effectively focus on crystallizing the opportunities that we have been working on."

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014 ("MAR").

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About Graphene NanoChem

Graphene Nanochem plc (AIM: GRPH), is an international provider of nanotechnology performance enhancing solutions for global industries. The Group employs nanoprocesses and nanomaterials to design, engineer and enhance the performance of mainstream products for a wide range of industrial applications. It has established two major functional platforms in the energy and water sectors, and the Group, through partnerships with established industry players, is focused on building market opportunities in both sectors whilst continuing its developmental work in other strategic application areas of nanotechnology.

Headquartered in Malaysia, Graphene Nanochem was admitted to the AIM of the London Stock Exchange on 26 March 2013, following the reverse acquisition of Biofutures International plc, and trades under the symbol GRPH.L. To find out more, please visit www.graphenenanochem.com.