Lightrock and Carbon Direct Capital led consortium to acquire Velocys Plc
LONDON, UK: A consortium led by Lightrock and Carbon Direct Capital has reached agreement on the terms and conditions of a recommended cash acquisition of Velocys Plc at the rate of 0.25 pence in cash per Velocys share.
The consortium – Madison Bidco Limited – is a newly formed company indirectly owned by (i) a fund advised by Lightrock, (ii) a fund advised by Carbon Direct Capital, (iii) GenZero and (iv) Kibo Investments, as members of the Consortium).
It is intended that the Acquisition will be implemented by way of a court-sanctioned scheme of arrangement under Part 26 of the 2006 Act.
In addition, conditional on the acquisition becoming effective, the consortium named Madison Bidco has agreed to provide up to US$40 million of growth capital to Velocys which is expected to ensure that Velocys and its management have the capital resources needed to deliver against Velocys’ medium-term strategic plans.
In connection with the Acquisition, the Carbon Direct Fund has agreed to provide a secured bridging loan of £3.5 million with a view to providing sufficient capital for Velocys through to the Acquisition becoming Effective.
The Acquisition values Velocys’ entire issued, and to be issued, ordinary share capital at approximately £4.1 million on a fully diluted basis and provides a post growth capital valuation of Velocys of up to approximately US$45.2 million (approximately £35.6 million).
production of sustainable aviation fuel (SAF) is a compelling market opportunity given the confluence of regulatory support, demand pull by airlines, and increased technology readiness.
Velocys is well positioned to capitalise on these sector tailwinds, given its patented integrated Fischer-Tropsch reactor and catalysis solution and its pipeline of commercial licensing opportunities.
Commenting on this announcement, Philip Holland, the Chair of Velocys, said: “During the many discussions that have taken place over the past few months, the Velocys Board’s main objective, together with that of the Velocys management team has been to secure the best possible outcome for Velocys Shareholders and other stakeholders.
The Velocys Board and management have spent a great deal of time and effort trying to secure significant long-term funding to grow the business and accelerate the delivery of its technology to clients.
However, reflecting Velocys’ material funding requirements, business model and limited revenue together with the continued challenging public market environment, it has not been possible to raise sufficient funds.
This has put the business in an extremely challenging position, with a very real prospect of not being able to continue as a going concern when we reach the end of our cash runway in early January.
Bidco is offering the business a secure platform for future growth, alongside an injection of up to US$40 million of growth capital which is expected to ensure that Velocys has the capital resources needed to deliver against its medium-term strategic plans, including to scale up and grow and work towards its long stated goal of supporting the decarbonisation of the global aviation sector.
Whilst it is very disappointing for the business to need to leave the public markets, Bidco’s offer will enable Velocys to continue operating as a going concern.”
About The Author
