Update, Strategic Options and Formal Sale Process

The information contained in this announcement is inside information for the purposes of article 7 of Regulation 596/2014.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION

13 December 2017

Plant Impact plc

("Plant Impact", the "Company" or, together with its subsidiaries, the "Group")

Update on Brazil commercial position, strategic options and commencement of formal sale process

Plant Impact plc (AIM: PIM), which leads research and development in crop enhancement technology to create products that growers can rely on to increase the yield and quality of their crops, today provides an important update on commercial developments and underlying trading in its business in Brazil, details strategic options for the Group and announces that it is commencing a formal sale process (as referred to in the City Code on Takeovers and Mergers (the "Takeover Code")).

Update on Brazil commercial position

On 17 July 2017, the Group announced that it had agreed with Bayer CropScience ("BCS"), the exclusive Brazilian marketer of the Group's flagship soybean product, Veritas®, a purchasing plan for the coming 2017/18 soybean growing season ("Purchasing Plan"). In the same announcement, the Group stated that it was in discussions with BCS regarding potential new contractual arrangements, which aimed to revise the structure of the Group's contract with BCS to provide greater inventory purchase flexibility for BCS and more predictable income and earnings visibility for the Company. 

The Group now has additional clarity on BCS's position and the progress of the current soybean season.

On a consumption basis, the underlying Veritas® business is making progress, with continued growth in grower usage expected by BCS in the current soybean and dry bean season. Also, BCS plans to launch Veritas® for application in cotton production in the 2018 Brazilian crop, providing an additional growth opportunity.

However, BCS yesterday informed the Group that it will not be able to conclude a new contractual arrangement until Q1 2018 at the earliest. BCS also confirmed to the Group that, given its well-publicised challenges within the Brazilian market, it will not be able to meet its commitments within the Purchasing Plan, as it needs to further accelerate its destocking activities.

Over the past four years, Veritas® has taken a leading position in the important Brazilian soybean biostimulant market, and the Group's Brazil commercial team will continue to work with BCS to expand the usage of the product and build the Veritas® brand capital. The Board believes that a revised, mutually agreeable contractual arrangement would be preferable to a termination of BCS's Brazilian rights and is actively working with BCS to find a way forward.

However, the Group is the sole owner of the intellectual property in Veritas®, including its trademark, patent and registration rights, and in the event that BCS does not meet its minimum purchase volumes under our existing distribution agreement before 31 March 2018, Plant Impact would have the option of immediately terminating BCS's distribution rights and appointing alternate distribution partners. 

The decision by BCS to defer the purchase of further Veritas® volumes will have a material adverse effect on Plant Impact's financial performance for FY18 and on its cash resources, which were around £3.9 million at 30 November 2017. The Company now expects to achieve revenue of c.£6 million for FY18 and, in the absence of prior external capital investment, on its current cost run rate of £750-800k per month, the Company will require funding prior to April 2018. Given the reduction in cashflow from the lower revenue expectation for FY18 and to provide a reasonable buffer in FY19, the Group's funding requirement is likely to be around £7 million.

Strategic options and commencement of formal sale process

Earlier this year, the Board initiated a project to consider alternatives to extend the Group's recent R&D advances and further support its commercial expansion. This strategic project stemmed from recent research success identifying new crop enhancement chemical molecules and formulations which could - in combination - improve soybean yield by more than 15%. Additional technical successes included the observed extension possibilities of its technologies into other major crops such as corn and cotton and the identification of novel, proprietary chemical molecules via its discovery and screening process. Combined with its now established commercial footprint and distribution relationships in Brazil, the United States and Argentina, the Board recognizes significant revenue potential ahead of the Company in the mid-term.

In the light of yesterday's communication from BCS, and in order to maximize the value of the Company's technology assets, the Board of Plant Impact has now decided to formally investigate all potential strategic options for the business. These options include refinancing, potential divestment of selected assets, or the sale of the Company. The Board has appointed Peel Hunt LLP ("Peel Hunt") as its financial adviser for this process.

The Board is engaged in discussions with certain parties about the sale of the Company, and it now intends to conduct a formal sale process within an accelerated timetable, with the aim of announcing the outcome of the process very early in 2018. Parties with an interest in participating in the formal sale process should contact Peel Hunt using the contact details set out in this announcement.

It is currently expected that any party interested in participating in the formal sale process will be required to enter into a non-disclosure agreement and standstill arrangement with Plant Impact on terms satisfactory to the Board and on the same terms, in all material respects, as other interested parties, including those with whom talks are underway. The Company then intends to provide such interested parties with certain information on the business, following which interested parties shall be invited to submit their proposals to Peel Hunt, with a view to concluding the process very early in 2018. Further announcements regarding timings for the formal sale process will be made when appropriate and as agreed with the Takeover Panel.

The Takeover Panel has agreed that any discussions with third parties may be conducted within the context of a formal sale process framework as set out in Note 2 on Rule 2.6 of the Takeover Code. Accordingly, it has granted a dispensation from the requirements of Rules 2.4(a), 2.4(b) and 2.6(a) of the Takeover Code such that any interested party participating in the formal sale process will not be required to be publicly identified as a result of this announcement and will not be subject to the 28 day deadline referred to in Rule 2.6(a) of the Takeover Code for so long as it is participating in the formal sale process.

Following this announcement, the Company is now considered to be in an "offer period" as defined in the Takeover Code, and the dealing disclosure requirements listed below will apply.

There can be no certainty that an offer will be made, nor as to the terms on which any offer will be made.

The Board reserves the right to alter or terminate the process at any time and, in such cases, will make an announcement as appropriate. The Board also reserves the right to reject any approach or terminate discussions with any interested party at any time.

For further information please contact: 

The person responsible for arranging for the release of this announcement on behalf of the Company is Richard Amos, Chief Financial Officer.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Rule 2.9 disclosure

In accordance with Rule 2.9 of the Code, Plant Impact confirms that, as at the date of this announcement, its issued and fully paid share capital consists of 94,598,625 ordinary shares with par value of 1p. The International Securities Identification Number (ISIN) for the ordinary shares is GB00B1F4K366.

Publication on website

In accordance with Rule 26.1 of the Code, a copy of this announcement will be available on the website of Plant Impact at http://www.plantimpact.com/investors promptly and by no later than 12 noon (London time) on the business day following this announcement. The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.

Other notices

Peel Hunt, which is authorised and regulated by the Financial Conduct Authority in the UK, is acting exclusively for Plant Impact and no one else in connection with the matters described in this announcement and will not be responsible to anyone other than Plant Impact for providing the protections afforded to clients of Peel Hunt nor for providing advice in connection with the matters referred to herein. Neither Peel Hunt nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Peel Hunt in connection with this announcement, any statement contained herein or otherwise.