30th Oct 2009 07:00
29 October 2009
Enova Systems, Inc ("Enova" or the "Company")
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO OR FROM, THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA, JAPAN, THE REPUBLIC OF IRELAND OR THE REPUBLIC OF SOUTH AFRICA
Neither this announcement nor any copy of it may be taken, transmitted or distributed, directly or indirectly, in or into the United States of America, Canada, Australia, the Republic of Ireland, the Republic of South Africa or Japan. Any failure to comply with this restriction may constitute a violation of United States, Canadian, Australian, South African, Irish or Japanese securities laws.
Equity fundraising by means of a placing to UK institutional investors and a subscription in the US by Special Situation Funds, Shell Asset Management ("Shell") and certain other investors to raise approximately US$10.4 million (approximately £6.2 million*) by the issue of 10,348,160 million new Common Shares at US$ 1 per share (62.5 pence per share).
Summary of the Placing and Subscription
Enova today announces that it proposes to raise £0.827 million (approximately US$1.323 million*), before expenses, by way of a placing (the "Placing") of 1,323,200 new Common Shares of no par value ("Placing Shares") at 62.5p per share* (the "Placing Price") with institutional investors in the UK. Further details of the Placing are set out below.
Additionally, Enova proposes to issue 9,024,960 million new Common Shares of no par value ("Subscription Shares") at US$1 per share to raise approximately US $9.03 million (approximately £5.64 million*) before expenses, by way of a subscription (the "Subscription") by certain other investors including Shell (US$3.175 million) and Special Situation Funds (US$4.000 million). Further details of the Subscription are set out below.
In total Enova will raise approximately $10.3 million (approximately £6.4 million*) (before expenses) pursuant to the Placing and Subscription.
Use of proceeds
The net proceeds of the Placing and the Subscription are to be utilised to fund working capital and to strengthen the Company's balance sheet.
Shareholder approval
The Placing and the Subscription are conditional on the approval of the holders of Common Shares ("Shareholders"). The Company intends to convene the Annual Meeting of the Company to be held on or around 8 December 2009 to seek the relevant Shareholder approval (the "Annual Meeting"). It is anticipated that, subject to any regulatory approval, proxy statements will be sent on or around 17 November 2009 to those Shareholders that are eligible to vote at the Annual Meeting as of the record date of 10 November 2009.
Issue Price
The issue price of US$1 per new Common Share ("Issue Price") represents a discount of approximately 16.7 per cent. to the closing middle market price of the unrestricted Common Shares (Code: ENV) on 29 October 2009 on the AIM Market of the London Stock Exchange based on the prevailing exchange rate at that time (£1;US$1.65)
The Issue Price represents a discount of approximately 18.7 per cent. to the closing price of the Common Shares on [29 October 2009] on the American Stock Exchange at the time of signing of the placing agreement.
The Placing Shares and Subscription Shares represent approximately 48 per cent. of the Company's issued share capital (on a fully diluted basis) immediately prior to the Placing and Subscription.
Details of the Placing
Enova has entered into an agreement (the "Placing Agreement") with Investec Bank (UK) Limited ("Investec") pursuant to which will act as Enova's agent to use its reasonable endeavours to procure subscribers for the Placing Shares at the Placing Price. Investec, on behalf of Enova, has conditionally placed a total of 1,323,200 new Common Shares with institutional investors (the "UK Investors") at the Placing Price to raise $0.827 million (US$ 1,323,200 million*) (before expenses).
Details of the Subscription
Enova has also entered into subscriptions agreements (the "Purchase Agreements") with certain non-UK investors including Shell and Special Situation Funds pursuant to which Shell will subscribe for 3,174,960 new Common Shares at the Issue Price and Special Situation Funds will subscribe for 4,000,000 new Common Shares at the Issue Price. The Subscription will raise approximately $9 million (approximately £5.63 million*) (before expenses).
Additionally John Micek, a Director of the Company, will subscribe for 100,000 new Common Shares at the Issue Price in the Subscription. Following completion of the Subscription he will hold 79,854 Common Shares in the Company.
Termination of the Placing Agreement and Purchase Agreement
The Placing Agreement and Purchase Agreements contain warranties given by the Company with respect to the Company, its business and certain matters connected with the Placing and the Subscription
Investec is entitled to terminate the Placing Agreement in certain circumstances prior to Admission, principally to the extent that any of the warranties contained therein are, or become, materially untrue, inaccurate or misleading or if a force majeure type event arises. In addition, the Company has given a customary type indemnity to Investec in respect of, amongst other things, the performance by Investec of its services in connection with this Placing. The Placing Agreement is conditional inter alia the receipt by the Company of not less than US$8,424,960 under the Purchase Agreements and upon Placing Shares being admitted to trading on the Alternative Investment Market of the Londons Stock Exchange ("AIM") not later than 8.00 a.m. on 15 December 2009 or such later date as the Company and Investec may reasonably agree, but in any event not later than 8.00 a.m. on 31 December 2009.
The investors under the Purchase Agreements are entitled to terminate their obligations to invest under the Purchase Agreements if, among other conditions (i) all of the Company's warranties and representations are not true and correct in all material respects when made and as of the date of completion of the Purchase Agreements ("Closing"), (ii) Shareholder approval is not obtained prior to 28 December 2009, , (iii) the Closing does not occur on, or before, 31 December 2009, and (iv) the Company receives less than $8.0 miillion in aggregate gross proceeds the Purchase Agreements.
Application for Admission of the Placing Shares
Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading as restricted Common Shares on AIM ("Admission"). The Placing Shares will rank pari passu in all respects with the existing Common Shares on the restricted line (Code:ENVS) except that pursuant to Regulation S of the US Securities Act of 1933 (as amended) the eligibility of a Shareholder to transfer Common Shares from the restricted line (Code: ENVS) to the unrestricted line (Code: ENV) will depend on the time period that their Common Shares have been held and any other applicable restrictions as further described below. Application will also be made to the American Stock Exchange Inc. for the Placing Shares to be listed on AMEX ("Listing").
Application for Admission of the Subscription Shares
The Company shall have filed an additional listing application with the NYSE AMEX before Closing covering the Placing Shares and Subscription Shares.
Conditions of the Placing and Subscription
In addition to Shareholder approval, the Placing and the Subscription are conditional, inter alia, on Admission and an additional listing application filed with the NYSE AMEX covering the Placing Shares and Subscription Shares.
Subject to Shareholder approval of the Placing being granted at the Annual Meeting, it is expected that dealings in the Placing Shares on AIM will commence on or around 15 December 2009. Dealings in the Subscription on the NYSE AMEX will not commence until there is an effective registration statement in effect or applicable Rule 144 US Securities Act of 1933 (as amended) ("Securities Act") requirements for public resale are met.
Regulation S
Due to the restrictions of the Securities Act, the Placing Shares will be subject to the transfer restrictions as set out in Regulation S and Rule 144 of the Securities Act. The transfer restrictions, which will cover at least a six month period, are detailed below. In view of these restrictions, the Placing Shares will be traded under the Company's restricted International Securities Identification Number (ISIN) code USU292791113.
For further details
Enova Systems, Inc Tel: +1 310 527 2800
Mike Staran, President and Chief Executive Officer
Jarett Fenton, Chief Financial Officer
Investec Tel: 020 7597 5970
James Grace / Keith Anderson
Transfer restrictions
This announcement has been prepared by the Company in making offers and sales of the Placing Shares outside the United States to non-US Persons in reliance on Regulation S under the Securities Act. Investors are referred to the definition of a "US Person" below. Terms used in the following description of the transfer restrictions that are defined in Regulation S are used as therein defined.
The issue and sale of the Placing Shares offered hereby has not been registered under the Securities Act. The Placing Shares are ''restricted securities'' as defined in Rule 144 promulgated under the Securities Act. The Placing Shares may not be offered, sold or delivered in the United States or to, or for the account or benefit of, any US Person, except in certain transactions specified in Regulation S. Hedging transactions in Placing Shares may not be conducted unless in compliance with the Securities Act. The Placing Shares will bear a legend substantially to the following effect, unless the Company determines otherwise in compliance with applicable law:
''THE COMMON SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE US SECURITIES ACT OF 1933, AS AMENDED (THE ''SECURITIES ACT''), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS. HEDGING TRANSACTIONS INVOLVING THE COMMON SHARES OF THE COMPANY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.''
Pursuant to the arrangements for the Placing, the Company will be required to refuse to register any transfer of the Placing Shares not made (i) in accordance with the provisions of Regulation S, (ii) pursuant to an available exemption from registration under the Securities Act, or (iii) pursuant to a transaction registered under the Securities Act.
Investec has agreed that, except pursuant to an effective registration statement or pursuant to an available exemption from the registration requirement of the Securities Act, it will not offer, sell or deliver any Placing Shares within the United States or to, or for the account or benefit of, a US Person, as part of its distribution at any time or otherwise until one year after the date of closing the Placing, and that it will not engage in hedging transactions in the Common Shares except in compliance with the Securities Act.
Each purchaser of Placing Shares offered hereby sold in reliance on Regulation S will have represented and agreed pursuant to the terms of the Placing Agreement as follows (terms used herein that are defined in Regulation S are used herein as therein defined):
(1) the purchaser is not a US Person and is not acting for the account or benefit of a US Person;
(2) the purchaser understands that the Placing Shares have not been registered under the Securities Act and may not be offered, resold, pledged or otherwise transferred by such purchaser except (a) (i) outside the United States in an offshore transaction in compliance with the requirements of Regulation S, (ii) pursuant to an available exemption from registration requirements under the Securities Act, or (iii) pursuant to transaction registered under the Securities Act, and (b) in accordance with all applicable securities laws of the states of the United States and other jurisdictions;
(3) the purchaser understands and agrees that, if in the future it decides to resell, pledge or otherwise transfer any Placing Shares or any beneficial interest in any Placing Shares during the length of time that the Placing Shares are restricted securities as defined in the Securities Act, it will do so only outside the United States in an offshore transaction in compliance with Rule 903 or Rule 904 under the Securities Act, pursuant to an effective registration statement under the Securities Act or pursuant to an available exemption from the registration requirements of the Securities Act and in each of such cases in accordance with any applicable securities law of any state of the United States;
(4) the purchaser agrees to, and each subsequent holder is required to, notify any purchaser of the Placing Shares from it of the resale restrictions referred to in paragraph (3) above, if then applicable;
(5) the purchaser acknowledges that prior to any proposed transfer of Placing Shares (other than pursuant to an effective registration statement) the transferee of the Common Shares may be required to provide certifications and other documentation relating to the non-US Person status of such transferee and such other agreements and documentation as required by the Company or its transfer agent;
(6) the purchaser acknowledges that the Company and Investec and others will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements and agrees that if any such acknowledgements, representations or warranties deemed to have been made by virtue of its purchase of Placing Shares are no longer accurate, it shall promptly notify the Company and Investec; and
(7) the purchaser acknowledges that the Placing Shares will bear a restrictive legend, unless the Company determines otherwise in compliance with applicable law.
Shares issued pursuant to Regulation S are deemed to be restricted securities under the Securities Act, therefore purchasers of Placing Shares will need to comply with Rule 144 with respect to any US sales (e.g. to a US Person) on the market. Prior to the expiration of the applicable Regulation S six-month distribution compliance period of no less than 6 months, Rule 144 currently is not available because of its holding period requirement. Therefore, prior to the expiration of the Regulation S distribution compliance period, the purchaser may not sell the Placing Shares to US Persons on the market except pursuant to a registration statement under the Securities Act.
Under existing standards, Rule 144 may be available for US sales on the market of Placing Shares after the expiration of the Regulation S distribution compliance period. However, for a purchaser to sell any Placing Shares on the market to US Persons under Rule 144, the Company must comply with the current public information requirements of Rule 144. Generally, the Company will be current in its public information provided the annual and quarterly reports it files with the SEC are timely and complete.
If the Company is not current in its public information requirements, under existing standards, Rule 144 is available for US sales on the market of Placing Shares by a non-affiliate of the Company only upon the first anniversary of the purchase of Placing Shares.
To utilize Rule 144, a bona fine purchase of Placing Shares must occur upon the expiration of the applicable holding period. In addition, the seller and purchaser may be required to provide certain representations to the Company relating to time, manner, and status.
PRIOR TO CONDUCTING ANY TRANSACTIONS IN THE PLACING SHARES OR EXISTING SHARES IN THE "ENVS" LINE, INVESTORS ARE CAUTIONED THAT THE ABILITY TO UTILIZE RULE 144 WILL DEPEND IN PART UPON WHEN THE COMPANY INITIALLY PLACED THE SUBJECT SHARES. THE PLACING SHARES TO BE ISSUED IN ACCORDANCE WITH THIS ANNOUNCEMENT, AS INDICATED ABOVE, WILL NOT BE ELIGIBLE TO UTILIZE RULE 144 UNTIL AT LEAST THE EXPIRATION OF SIX-MONTHS.
Following the issue of the Placing Shares, it may not be possible for the Company to make a block application to move shares from the restricted line (Code: ENVS) to the unrestricted line (Code ENV) until at least one-year has elapsed since the most recent placing into the restricted line. Consequently, any shareholder wishing to move its shares from the restricted line to the unrestricted line will be required to individually follow arrangements with the Company and its registrar, Computershare Investor Services [Inc.?].
An affiliate of the Company also is subject to the six-month or one-year holding anniversary standards of Rule 144 depending on whether the Company is current in its public information requirements. An affiliate, however, is subject to additional requirements relating to the manner and amount of US sales under Rule 144. A thorough discussion of the affiliate status is beyond the scope of this announcement, but as a general matter, Directors, certain executives, and beneficial ownership of 10 per cent. or more of the voting securities of the Company are presumed to be affiliates.
PRIOR TO PURCHASING PLACING SHARES IN THE PLACING OR CONDUCTING ANY TRANSACTIONS IN THE PLACING SHARES, INVESTORS ARE ADVISED TO CONSULT PROFESSIONAL ADVISERS REGARDING THE ABOVE RESTRICTIONS ON TRANSFER AND OTHER RESTRICTIONS REFERRED TO IN THIS ANNOUNCEMENT.
The term a ''US Person'' is defined in Rule 902(k) of Regulation S, which definition shall apply for the purposes of this announcement, and generally is summarised as follows:
(i) any natural person resident in the United States;
(ii) any partnership or corporation organised or incorporated under the laws of the United States;
(iii) any estate of which any executor or administrator is a US Person;
(iv) any trust of which any trustee is a US Person;
(v) any agency or branch of a foreign entity located in the United States;
(vi) any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a US Person;
(vii) any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organised, incorporated, or (if an individual) resident in the United States; and
(viii) any partnership or corporation if:
(a) organised or incorporated under the laws of any foreign jurisdiction; and
(b) formed by a US Person principally for the purpose of investing in securities not registered under the Securities Act, unless it is organised or incorporated and owned, by accredited investors (as defined in Rule 501(a) under the Securities Act) who are not natural persons, estates or trusts.
* * * * *
Cautionary Statement
THE PLACING SHARES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO US PERSONS ABSENT REGISTRATION OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
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