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RedT Energy PLC   -  RED   

Proposed Merger with Avalon Battery Corporation

Released 07:00 16-Mar-2020

RNS Number : 1854G
RedT Energy PLC
16 March 2020










13 March 2020

redT energy plc ("redT" or "the Company")

Proposed merger with Avalon Battery Corporation ("Avalon")
Lifting of suspension of trading of Ordinary Shares on AIM
Proposed Placing of 479,363,312 new Ordinary Shares and Open Offer of up to
380,500,174 new Ordinary Shares at a price of 1.65 pence per share
Change of Company name to Invinity Energy Systems plc and
Consolidation of Ordinary Shares
Requisition of General Meeting

redT energy plc (AIM:RED), the energy storage solutions company, announces today that it has signed an agreement with the shareholders of Avalon to give effect to the proposed merger of the two companies (the "Merger").  It is proposed that the Enlarged Group will change its name to Invinity Energy Systems plc ("Invinity") and that immediately prior to admission, the Company will undertake a share consolidation of its issued share capital on a 50 to 1 basis.

The AIM admission document giving details of and seeking shareholder approval for the Merger as well as a proposed Placing and Open Offer to fund the merged business was published and posted on 13 March 2020 and will shortly be published on the Company's website ( As a result, the temporary suspension of trading on AIM in redT's shares will be lifted at 7.30 a.m. on Monday 16 March 2020 and trading will resume.


·      The proposed merger will create a leading player in the growing energy storage market with operations in North America, Europe and Asia

·      Total debt and equity funding secured of £14.9 million, including the conversion of existing Bushveld debt of $5 million (£3.97m).

·      The merged business will have strong competitive advantages, gain financial stability and form a base for rapid growth

·      Invinity will be able to offer a Vanadium Flow Battery that competes effectively with other energy storage technologies

·      Placing by VSA Capital of 479,363,312 new Ordinary Shares at a price of 1.65 pence to raise £7.9m (before expenses)

·      Open Offer for Qualifying Shareholders of up to 380,500,174 new Ordinary Shares at a price of 1.65 pence to raise up to £6.2m (before expenses)

·      New £3m loan facility from Riverfort Global Opportunities PPC Limited

·      $5m (£3.9m) existing loan from Bushveld Minerals converted to equity

·      Consolidation of its issued share capital prior to Admission, but subsequent to the issue of the new Ordinary Shares, on a 50 to 1 basis

·      The merged business will be known as Invinity Energy Systems plc

The agreed value of Avalon is $37.5 million as announced on 25 July 2019, adjusted to reflect working capital movements within the two businesses and the value contained in existing in-the-money employee options in Avalon that will be rolled forward into options in Invinity.  The merger will be accomplished by the issue by redT of 1,735,397,545 new Ordinary Shares at 1.65 pence per share (the "Issue Price") valuing Avalon's issued shares at $36.1 million (£28.6 million).

In order to drive Invinity's growth and development, provide working capital, and take advantage of the substantial opportunity presented by the Merger, the Company's broker VSA Capital has conditionally placed 479,363,312 new Ordinary Shares at the Issue Price to existing investors to raise £7.9 million (before expenses).

The Board also recognises and is grateful for the support that it has received from Shareholders so far and is also offering all Qualifying Shareholders the opportunity to participate in an Open Offer at the Issue Price. The Open Offer will raise up to £6.3 million (assuming full take up of the Open Offer). The Open Offer is in addition to and separate from the funds raised pursuant to the Placing. The Open Offer is not being underwritten.


The Company has also raised a further medium-term to loan facility of £3 million from Riverfort Global Opportunities PPC Limited provide additional working capital over the next two years

In addition, the $5m (£3.9m) loan made to the Company by Bushveld Minerals Limited and announced on 1 November 2019 will convert in to Ordinary Shares on the agreed terms upon completion of the Merger resulting in the issue of a further 297,978,107 Ordinary Shares.

The Issue Price represents a premium of 53 per cent. over the closing middle market price of 1.075 pence per Ordinary Share on 24 July 2019, being day before the Ordinary Shares were suspended from trading on AIM on announcement of the proposed Merger, and a premium of 17.6 per cent. to the average price during the 90 trading days prior to 25 July 2019 of 1.403 pence per Ordinary Share. The Placing Shares will represent approximately 13.8 per cent. of the Company's enlarged issued ordinary share capital after the placing and the issue of the shares to Bushveld and to acquire Avalon but prior to the Open Offer.  The New Ordinary Shares together will represent approximately 75.3 per cent. of the Company's issued ordinary share capital following Admission (assuming the Open Offer Shares are taken-up in full).

The total amount that the Company could raise under the Placing and Open Offer is £14.2 million (before expenses), assuming that the Open Offer is fully subscribed.

The Placing and the Open Offer are conditional, inter alia, upon Shareholders approving a Resolution at a General Meeting that will grant to the Directors the authority to allot the Placing Shares for cash on a non-pre-emptive basis. The Resolution will be contained in a Notice of General Meeting that will be included in a circular to Shareholders giving more details of the Placing and Open Offer, which was posted to Shareholders on 13 March. Admission of the Placing Shares and the Open Offer Shares is expected to occur no later than 8.00 a.m. on 2 April 2020 or such later time and/or dates as VSA Capital and the Company may agree (being in any event no later than 7 May 2020).

The AIM admission document giving details of and seeking shareholder approval for the Merger as well as a proposed Placing and Open Offer to fund the merged business will shortly be published on the Company's website ( and posted on 13 March 2020. As a result, the temporary suspension of trading on AIM in redT's shares will be lifted at 7.30 a.m. on Monday 16 March 2020 and trading will resume.

The Board considers the Merger and the Fundraising, as well as the Share Consolidation and the Change of Name, to be in the best interests of the Company and its Shareholders as a whole and the Directors unanimously recommend that Shareholders vote in favour of the Resolution to be proposed at a General Meeting, notice of which will be included with the Circular to Shareholders.


Larry Zulch, proposed CEO, commented:

"I am delighted that today we have announced the merger of redT and Avalon into what will be called Invinity Energy Systems upon approval at redT's general meeting on 2 April 2020.  Despite the most turbulent market conditions in decades, we were able to secure total debt and equity funding secured of £14.9 million, including the conversion of existing Bushveld debt of $5 million.  The creation of Invinity results from the work of many people in both Avalon and redT and months of effort by teams of talented professionals. I am immensely grateful for their efforts.  The support of existing investors and shareholders, especially in these market conditions, is a massive vote of confidence.  We look forward to delivering on our strategy of creating the world's leading vanadium flow battery company."

Neil O'Brien, Chairman of redT energy said:

"redT energy and Avalon are two companies at the forefront of the energy storage revolution. The merger of these two leading players to become Invinity Energy Systems creates a world leader in the fast growing, global energy storage market with our proven disruptive alternative to lithium-ion technology.

Despite the challenging equity market conditions following the coronavirus outbreak, it is testament to the strength of our investment story that we have received major support both from current institutional shareholders and new investors."


For further information, please contact:

redT energy plc

Neil O'Brien, Executive Chairman

Fraser Welham, Chief Financial Officer

Joe Worthington, Investor & Media Relations

+44 (0)20 7061 6233

VSA Capital Limited (Financial Adviser)

Andrew Raca / Simon Barton

+44 (0)20 3005 5000

VSA Capital Limited (Broker)

Andrew Monk / David Scriven

+44 (0)20 3005 5000



Investec Bank plc (Nominated adviser and joint broker)

Jeremy Ellis

+44 (0)20 7520 9266

Hudson Sandler

Nick Lyon/Toby Andrews

+44(0) 207 796 4133


Notes to Editors

About redT energy

redT energy plc are experts in energy storage, specialising in the design, manufacture, installation and operation of energy storage infrastructure which creates revenue alongside reliable, low-cost renewable generation for businesses, industry and electricity distribution networks.  Using patented vanadium redox flow technology to store energy in liquid, redT's own energy storage machines can be run continually with no degradation: charging and discharging for over 25 years, matching the lifespan of renewable assets in on-grid, off-grid and weak-grid settings.

redT's energy storage solutions, developed over the past 15 years, address today's changing energy market by providing a flexible platform for time shifting surplus renewable power, securing electricity supplies and earning revenue through grid services.  The company has customers in the UK, Europe, sub-Saharan Africa, Australia and Asia Pacific.  For more information, visit

For sales, press or investor enquiries, please contact the redT team on +44 (0)207 061 6233.

About Avalon

Avalon Battery was founded on the principle that productized vanadium-based flow batteries will revolutionize energy projects and play a critical role in a renewable energy future.  With operations in Fremont, California, USA and Vancouver, Canada, and a low-cost manufacturing presence in Suzhou, China, Avalon produces dependable, safe, and economical energy storage systems.

Avalon believes the foundations of its product excellence are its technology and engineering team. Since 2005, its team has been one of the global leaders in design, production and deployment of vanadium flow batteries1 the team now counts over 140 years' experience in vanadium flow battery development, has been involved in the deployment of over 15MWh of vanadium flow batteries since 2005, and has invented over 50 related independent patents.

1 Based on searches of the US DOE Global Storage Database for electro-chemical, vanadium flow batteries understood to be in operation as at 29 October 2019.

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this announcement or otherwise.

The distribution of this announcement in jurisdictions outside the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdiction.


The information contained within this announcement is considered by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No.596/2014. Upon the publication of this announcement via a Regulatory Information Service, this inside information will be considered to be in the public domain.




Record Date for entitlement under the Open Offer

11 March

Publication of the Admission Document, Proxy Form and, to Qualifying Non-Crest Shareholders, the Application Form

13 March

Ex-entitlement date of the Open Offer

16 March

Open Offer Entitlements and Excess Open Offer Entitlements credited to stock accounts in CREST of Qualifying CREST Shareholders

8.00 a.m. on 17 March

Latest recommended time and date for requested withdrawal of Basic Open Offer Entitlements and Excess CREST Open Offer Entitlements from CREST

3.00 p.m. on 25 March

Latest time and date for depositing Open Offer Entitlements and Excess CREST Open Offer Entitlements in CREST

3.00 p.m. on 26 March

Latest time and date for splitting of Application Forms under the Open Offer

3.00 p.m. on 27 March

Latest time and date for receipt of Forms of Proxy and CREST voting instructions

11.00 a.m. on 30 March

Latest time and date for receipt of Application Forms and payment in full under the Open Offer and settlement of relevant CREST instructions (as appropriate)

11.00 a.m. on 31 March

General Meeting

11.00 a.m. on 1 April

Results of the General Meeting and the Open Offer announced

1 April

Admission and dealings in the New Ordinary Shares expected to commence on AIM

8.00 a.m. on 2 April

Where applicable, expected date for CREST accounts to be credited in respect of New Ordinary Shares in uncertificated form

2 April

Where applicable, expected date for despatch of definitive share certificates for New Ordinary Shares in certificated form

within 14 days of Admission





Renewable energy has revolutionised the global power sector. Every year, wind and solar power capacities are increasing by 20 per cent. and 40 per cent. respectively, with half of all new generating capacity installed globally in the last 24 months classed as renewable. This structural shift in the world's electricity supply has generated significant opportunities for energy storage, which is considered a proven, viable solution to the primary drawback of renewable energy, intermittency. As such, safe, effective, economic energy storage is now a key part of the global energy transition and viewed by the World Energy Council as "instrumental in the grand energy transition" in a recent report. redT energy are experts in the provision of energy storage solutions, based on proprietary vanadium redox flow battery ("VRFB") technology, which unlocks reliable, low-cost, low-carbon renewable generation for businesses, industry and electricity networks globally. 


To meet the opportunity represented by the global growth in requirements for energy storage, and to achieve the necessary scale and size, on 25 July 2019, the Company announced it had agreed to outline terms for a proposed merger (the "Merger") with Avalon Battery Corporation ("Avalon"), another key contender in the VRFB industry. The Merger will constitute a reverse takeover ("RTO") of redT by Avalon under the AIM Rules for Companies and, in accordance with the AIM Rules for Companies, trading in redT shares was suspended until such time as the admission document relating to the Merger is published or confirmation is given that the Merger is no longer proceeding. 


The Acquisition Agreement relating to the Merger has now been signed and the merger will complete subject to inter alia shareholder approval and the company raising sufficient new funds. 


On 25 July 2019 the Company announced that it was intending to raise £24 million of new funds to drive the growth and development of the Enlarged Group. £3.8 million of those funds has been received as announced on 1 November 2019 in the form of a loan from Bushveld Minerals Limited ("Bushveld"). Upon completion of the Merger, that loan will convert into Ordinary Shares in the Company. A further $1.8 million (£1.4 million) of convertible funds has also been raised by Avalon, which will also convert into Ordinary Shares in the Company upon completion of the Merger, meaning that £5.2 million of the £24 million has been received. 


The Company was therefore planning to raise an additional £19 million, but the recent Coronavirus outbreak has significantly affected equity markets. The Company has therefore arranged a £3 million medium-term convertible loan facility that will provide additional funding over the next two years. The key terms of the Riverfort Facility, including the applicable interest rates, are set out in paragraph 14.1 of Part VI of the Admission Document. The Board is also pleased to announce that it has conditionally raised approximately £7.1 million (net of expenses) by way of a placing of 479,363,312 new Ordinary Shares at a price of 1.65 pence per Ordinary Share to existing and other institutional investors pursuant to the Placing. 


The Board recognises that this amount is less than the funds needed to pursue the original business plan and accordingly the Board has amended its plans and will take prompt appropriate action to reduce costs to a level sustainable within the Company's new cash constraints. While the growth of the business may be slower than was originally planned, the Board is confident that major projects such as the recently announced Energy Superhub Oxford will continue to be delivered and the Company will be able to continue product development and generate new sales. 


The Board also recognises and is grateful for the continued support received from Shareholders and is pleased to offer to all Qualifying Shareholders the opportunity to participate in an Open Offer to raise up to £6.27 million (assuming full take up of the Open Offer but being less than the €8 million maximum amount permitted without requiring the publication by the Company of a prospectus under the Prospectus Rules). The Open Offer is not being underwritten and so the Board has not relied on the proceeds of the Open Offer in making its cost reduction plans. To the extent that further funds are raised by way of the Open Offer, the Company will be able to accelerate its plans and the further opportunities for the business will open up. The Open Offer is being made to Qualifying Shareholders on the basis of 2 Open Offer Shares for every 5 Existing Ordinary Shares at a price of 1.65 pence per Ordinary Share. 


The Issue Price represents a premium of 53 per cent. to the closing middle market price of 1.08 pence per Ordinary Share on 25 July 2019, the date trading in redT's shares was suspended due to the RTO process, and a premium of 18 per cent. to the average price during the 90 trading days prior to 25 July 2019 of 1.4 pence per Ordinary Share. The new Ordinary Shares issued pursuant to the Placing and the Open Offer Shares together will represent approximately 14.2 per cent. of the Company's issued ordinary share capital following Admission (assuming the Open Offer Shares are taken up in full). 

The Placing and the Open Offer are conditional, inter alia, upon the Company obtaining approval from its Shareholders to grant the Board authority to allot the New Ordinary Shares and to disapply statutory pre-emption rights which would otherwise apply to the allotment of the New Ordinary Shares. It is expected that the suspension of the Existing Ordinary Shares will be lifted and trading in the Existing Ordinary Shares will resume from 7.30 a.m. on 16 March 2020. Application will be made to the London Stock Exchange for the Enlarged Share Capital to be admitted to trading on AIM and trading is expected to commence in the New Ordinary Shares at 8.00 a.m. on 2 April 2020. 

In summary, and as will be demonstrated in more detail below, it is the belief of the Board that combining two highly experienced VRFB companies will create a leading company in flow battery energy storage, well-positioned to take advantage of the opportunity represented by the global growth in requirements for energy storage. 

The Enlarged Group will, subject to shareholder approval, launch under a new name: Invinity Energy Systems ("Invinity") and a new stock symbol "IES". By uniting the relative strengths of the redT and Avalon businesses under one brand, Invinity aims to become the market leader within the flow battery industry, utilising its experience and resources to compete effectively on a global scale and play an important role in the global energy transition. 



Since March 2019, redT has continued to make commercial progress, significant highlights of which are detailed below: 

Solar + Storage partnership with Statkraft - on 25 March 2019, the Company announced it had signed a heads of terms to partner with Statkraft, Europe's largest generator of renewable energy, to provide a fully financed 'solar plus storage' solution to UK commercial and industrial customers. This is the first time a solar plus storage product, financed under a Power Purchase Agreement model has been offered to the UK market. 

First UK grid-scale project - on 3 April 2019, the Company announced it had received a signed purchase agreement to supply 5MWh of vanadium flow batteries as part of a consortium of companies delivering an overall £41 million grid-scale project in Oxford, UK. The project, known as the Energy Superhub Oxford, will showcase a cutting-edge electric vehicle charging network alongside the largest vanadium/lithium hybrid energy storage system ever deployed and a range of low-carbon heating and smart energy management technologies. Site planning permission was granted on 22 July 2019, followed by a provisional notice to proceed, which was received 9 March 2020. Manufacturing for flow batteries for the project has now commenced. 

Qualification for UK frequency response service - on 26 July 2019, the Company announced that one of its 300kWh VRFBs, situated at a customer site in Southern England, has successfully gained prequalification status to provide Dynamic Firm Frequency Response services to the UK grid following testing conducted by leading UK aggregator, Open Energi. The service plays a vital role in balancing frequency volatility on the UK network caused by plant outages and other destabilising events. Until now, ancillary services such as this have been mainly supplied by conventional lithium-ion batteries, conventional power plants and demand-side response mechanisms. This achievement by redT is the first time that heavy-cycling flow batteries have qualified for this market. 

First Gen 3 machine installed - in December 2019 the Company's first Gen 3 machine was installed at Anglian Water's site in Norfolk, UK where it is awaiting the customer to complete the connection to the electricity grid before it can go into operation. Once this machine is operational, there are significant follow-on opportunities to optimise energy storage across other of Anglian Water's water treatment sites via a Collaborative Partnership agreement. 

Vanadium Financing Partnership with Bushveld Minerals - On 9 March, the Company announced it had concluded an agreement with AIM-listed integrated vanadium producer Bushveld Minerals ("Bushveld") to create a vanadium financing partnership (the "Partnership"), which the Company intends to utilise to provide the vanadium electrolyte for the previously announced ESO project. The Partnership, which will be owned by redT and Bushveld, will take the form of a special-purpose vehicle structured to hold vanadium, then provide the option to rent that material to the Company's current and future commercial pipeline on a project by project basis. Within this framework, Bushveld has made an initial commitment to supply vanadium for approximately 15 MWh of VRFBs. Further details and developments will be communicated in due course. 

These key commercial advances, combined with the Company's experience in manufacturing, deploying and operating VRFB technology, are highly complementary to the key strengths of Avalon, which are detailed below. 

Following the Interim Funding on 1 November 2019, advisors were fully engaged to progress the merger process including financial audit work and legal due diligence. This has resulted in a step up in administrative costs since the beginning of November. 

The Enlarged Group continues to have a number of ongoing product development and strategic investment discussions with various parties. 

Looking to the year ahead, there is uncertainty over the impact of coronavirus (COVID-19) on the global economy and the level of demand for energy storage. Our near term client focus is on European and North American projects. The Board will continue to monitor developments in respect of this matter and any potential impact on the Enlarged Group's operations. 



Avalon Battery Corporation ("Avalon") was founded in 2013 by flow battery industry veterans whose experience dates back to 2005 following VRB Power Systems Inc. acquiring licenses for VRFB technology in 2001, and subsequently delivering North America's first VRFB project. Avalon is a Delaware Corporation with offices in the San Francisco area, operations in Vancouver, Canada through its wholly owned subsidiary Avalon Battery (Canada) Corporation and an outsourced manufacturing facility in Suzhou, China. Avalon was founded on the principle that VRFBs need to be treated as products, built in a factory to identical specifications, rather than projects to be designed and engineered for each site. Avalon's founders believed that this approach would result in lower cost, greater reliability, and an ability to rapidly increase production to meet growing demand. 

Avalon's team has over 140 years of combined experience in VRFB development, and has been involved in the deployment of over 15MWh of VRFB projects since 2005, with over 50 related independent patents filed during this time. 

Avalon deployed its first-generation VRFBs in 2016 to a logistics business and a solar equipment developer both in Fremont, California. The very first installation of an Avalon first generation VRFB is still operating, having logged the equivalent of more than 25 years of cycling in an industrial setting. 

Avalon's second-generation VRFB was launched in 2017, with improved energy capacity, performance and manufacturability, leading to improved product quality and cost reduction. In 2019, Avalon's third-generation VRFB was delivered and entered service, featuring 30 per cent. more energy storage capacity, higher efficiency and a lighter, lower-cost steel-work. 

To date, more than 160 Avalon VRFBs have been deployed, across three generations into projects in North America, East Asia, Australia and Europe. Avalon's products are now installed at over 20 sites, with the largest installations being an approximately 2 MWh array in Qinghai, China, and a 1 MWh array in Iowa, USA. Avalon also has installations with LADWP (Los Angeles Department of Water and Power, the largest municipal utility in the United States and the third-largest utility in California) and Southern Research (the research arm of Southern Company, the second largest utility company in the United States in terms of customer base). 

Avalon's VRFBs are one of the first flow batteries to receive Underwriters Laboratories certification to UL 1973, and are approved for shipping full of electrolyte, allowing them to be shipped "wet" (with electrolyte installed) from the factory; this eliminates costly additional shipping and filling of electrolyte at site, and allows the units to be delivered to customers in a fully functional, factory-tested state, reducing commissioning times. 


In 2018, the Company was facing a number of challenges in moving from development to commercialisation. While the importance of energy storage had become widely acknowledged and a number of major projects were in the sales pipeline, the projects themselves, being complex and the first of their kind, were slow to close, with production volume not great enough to benefit from significant economies of scale, and vanadium prices were above long-term averages for large parts of the year. Changes in the German secondary control reserve ("SCR") market-bidding mechanism also generated uncertainty and undermined investor confidence, which introduced delays for a portfolio of projects on which the Company was progressing towards financial close. In early 2019, it became clear that the Company needed additional funding and a broader relationship with a strategic partner to unlock the value of a strong pipeline of commercial interest. 

During this same period, in 2018 and early 2019, Avalon Battery had refined its factory-built VRFBs and had deployed them in projects ranging in size up to 2MWh. Apart from Avalon's cell stacks, which were manufactured in Vancouver, Canada, these VRFBs were built entirely in Avalon's manufacturing partner's factory in China. Avalon's projects were numerous enough and of sufficient size to demonstrate the value and utility of Avalon's approach and on this basis, management decided to seek additional investment through traditional funders and strategic relationships in order to support future growth plans. 

Both companies met to discuss a proposed merger in mid-2019 and over subsequent meetings, it rapidly became clear that there are a number of key areas where synergies could provide significant benefit to both parties and enable the Enlarged Group to address the large and rapidly growing market for energy storage.

redT's expertise in energy project analysis has enabled the Company to find viable projects even with product costs that are higher than those of Avalon's VRFBs. By combining Avalon's product cost advantages and redT's project analysis expertise, significant new commercial opportunities are expected to emerge. In addition to this, a number of projects initially targeted by redT that were not pursued because they didn't have an adequate return, have favourable economics when using Avalon's product costing. In addition, the breadth of geographic coverage (namely the addition of North American and Asian markets to redT's current focus areas of UK, Europe, Africa and Australia) by the Enlarged Group will allow a focus on projects that are most compelling and profitable for the business.

Finally, there are operational and production improvements beyond the transition to more standardised manufacturing processes. Overheads common to both companies can be efficiently allocated, and final assembly can be undertaken at the Suzhou factory for Asia, the Vancouver, BC facility for North America, and in Livingston, Scotland, for the UK and EU. 

The result of meetings at an executive level, in addition to cross-company discussions within technical, sales and marketing teams strongly support the premise that together, the two companies could more successfully deliver VRFBs into the market in a commercial and profitable fashion than either could on their own. Invinity Energy Systems was chosen to represent not only the robustness and long cycle life of vanadium flow technology but to signify a new chapter in both companies' collective corporate history. The key areas supporting the rationale behind the Merger have been summarised below: 


Gain long-term financial stability as a base for rapid growth 

On Completion of the Merger and associated fundraise, Invinity will enjoy a position of relative financial stability amongst its peers. This will allow Invinity to achieve the minimum scale required to compete in a global market currently dominated by large incumbent lithium-ion manufacturers from Asia and the United States. 


Create a market leader with strong competitive advantages 

Invinity will combine two development-stage leaders in the VRFB sector with the intention of creating a global leader in flow batteries. The group will have one of the most experienced teams ever assembled - combining 250 years' energy industry experience between them. 

The improved resources, expertise, and combined team experience Invinity will possess is another important competitive advantage against potential new market entrants and industry incumbents. This will support an aggressive product development roadmap, commitment to substantial growth in revenue, and key improvements in manufacturing capabilities and the associated supply chain which will be realised as part of a successful merger. 

Establishing Invinity as a competitive player on a global scale will allow the Enlarged Group to drive new standards and establish aggressive competitive benchmarks for grid-connected energy storage. Lithium-based solutions have limitations in their safety, durability and recyclability, which represents a key opportunity for safe, long-life, fully recyclable VRFBs. 


Offer a VRFB which can compete directly with other energy storage technologies 

Invinity will utilise the aforementioned experience of its teams to combine the best cost-down engineering advancements of Avalon's technology with redT's project and application experience and sophisticated commercial business models to unlock new markets, applications and other commercial opportunities afforded by an estimated 40 per cent. reduction in product costs which the Enlarged Group hopes to achieve over the next 36 months. 


Commercial Prospects

In order to give a better insight into Invinity's commercial prospects, the Directors have adopted a different approach to analysing the merged pipeline. Both the Company and Avalon maintain customer relationship management (CRM) systems which track the progress and status of live sale enquiries. These systems will be combined as part of the integration. The enquiries within these data bases have, and will continue to be, thoroughly reviewed and divided into three categories: 

BASE - projects for which manufacturing is expected to start within the next 12 months. This includes projects where there is already a signed order, projects that are in the process of closing or projects considered highly likely to close. Full energy requirement analyses will have been conducted and shared with the potential customers on these projects and if not yet closed, contract details will be being negotiated. 

UPSIDE - enquiries that are not so advanced as those in the "Base" category but are still considered likely to result in an order in the near term. Detailed analysis of the customers' requirements will be underway and initial discussion on contract terms started. Projects in this category have the potential to add to projects in the "Base" category or compensate for them should they be lost or delayed. 

PIPELINE - these are enquiries which are at an earlier stage. They will have had an initial analysis conducted to ensure they are an appropriate application for VRFB technology and fit with Invinity's strategy and so are being actively pursued. 

The table below shows the Board's analysis of Invinity's commercial prospects as at the end of February 2020. These estimates do not represent forecasts of the future financial performance of the Group. 


Stage                                      Base                        Upside                    Pipeline                  Total

Battery modules                   394                         603                         3,083                      4,080

Energy capacity                    14MWh                  24MWh                 123MWh               161MWh 

Also, due to the nature of energy projects there will usually be a delay of several months between signing an order, delivery and completion of installation. This delay will likely increase with the size and complexity of the overall energy project. This results in a delay between closing orders and recognition of revenue in the Group's financial statements. 



Industry analysts remain bullish on the global energy storage market growth. Bloomberg New Energy Finance predict the sector will receive approximately $620 billion in new investment by 2040 with market growth projections at nearly 900 per cent. between 2017 and 2022. Against this background, VRFBs are expected to capture around 18 per cent. of a total addressable stationary energy storage market by 2027. This positive sentiment is supported by various intergovernmental organisations including the World Energy Council who view energy storage as "instrumental in the grand energy transition" in a recent report ( 

Post-merger, Invinity will be active across all major energy storage markets identified by WoodMac in a recent report, including the US, UK, Europe, Australia, South Korea and Canada. 

The rapid growth in energy storage over recent years has been driven by a number of key macro factors, most notably the global energy transition towards low-carbon renewable generation which has accelerated in recent years as the world's largest economies set increasingly aggressive decarbonisation targets. Below are summarised three key global trends which the Company believe will continue to drive further growth in the sector and generate significant demand for its products for the foreseeable future. 


Falling costs are driving widespread adoption of renewable energy generation 

According to the BNEF 2019 New Energy Outlook report, solar and wind costs have reduced by 85 per cent. and 49 per cent. respectively since 2010 and today, and are the cheapest form of electricity generation across more than two-thirds of the world. Within the next decade, they are expected to undercut almost all global commissioned coal and gas generation, without the assistance of subsidies or other incentives. 

By 2050, Wind and Solar power will make up almost 50 per cent. of world electricity supply with Europe and Australia leading the race for decarbonisation, followed by the more gas and coal dependant economies of the US and China. 


Energy storage capacity is a key requirement for deep renewable energy penetration 

Energy storage can be used to smooth or 'firm' renewable generation, overcoming the key intermittency drawback of renewable energy vs. conventional fossil fuel generation. Alongside other 'flexibility' technologies, energy storage (including but not limited to flow batteries) are seen by many as an essential part of the energy transition. BNEF expect energy storage to pay a key role in enabling solar and wind generation to reach 80 per cent. penetration in certain markets across the world. As such, energy storage installations (excluding pumped hydropower) are expected to reach 2,850GWh by 2040 - a 122-fold increase in capacity from 2018 figures. 


Structural changes to global energy markets and consumer behaviour 

The global energy transition is driving structural change across energy markets and creating significant opportunities for energy storage. Both consumers' and producers' behaviour is evolving rapidly and the traditional roles and business models of utility companies and other key market actors are changing. For example, growing adoption of electric vehicles and a move to electrify heating networks is changing how and when the world uses its electricity. These changes put strain on existing grid networks, creating supply and demand mismatches which can only be managed through the widespread deployment of flexible technologies such as energy storage. 

Energy systems are becoming increasingly decentralised, as more homes and businesses choose to install renewables such as solar panels on site to meet their electricity demand directly. This opens up new opportunities for energy storage "behind-the-meter" - allowing end users to store excess generation for use when they need it, offsetting expensive peak electricity tariffs for example. This segment has been and will continue to be a key application for VRFBs in the years to come with markets across Europe, Australia and in US states such as California identified as strong markets for Invinity's products. 

These global trends are not confined to developed nations. Less developed countries and those without reliable national grid networks are increasingly looking to reduce their reliance on diesel generation - another area where renewable + energy storage decentralised energy systems are being increasingly considered. In fact, some less-developed nations hope to leapfrog the centralised electric grid architecture common in developed countries with a more resilient distributed architecture, much like they leapfrogged widespread deployment of wired telecommunications in favour of moving directly to wireless communication technologies. 

Within this context, the Board believe that Invinity, as a leading player within the flow battery industry, will be in a strong position to secure a significant segment of this available market opportunity, driving long term shareholder value as a result. 



Initially, Invinity will pursue a strategy with three primary components, work on which is already underway: 

Integrate redT and Avalon into a unified company that produces a compelling VRFB built on the strengths of both companies. 


·      Implement a common vision for products, processes and systems, launched under the new Invinity Energy Systems brand.

·      Synchronise sales and marketing efforts into a unified commercial strategy.

·      Address any redundancies and skills gaps across the entire business.

·      Cultivate a joint company culture focussed on employee empowerment, accountability for results and delivery of tangible value for all stakeholders. 


Focus Invinity on the most compelling commercial opportunities 

·      Conduct a comprehensive evaluation of the respective sales pipelines. Assess performance, schedule and operational requirements, alongside the opportunity risk profile and the degree to which individual projects are accretive to the Company's long-term strategic vision.

·      North America, particularly the Western United States, the UK, and Australia will be among the immediate target markets for sales. Secondary markets are expected to be continental Europe, S.E Asia and sub-Saharan Africa. Outside of these regions, only projects that meet high standards for revenue size, profitability, and strategic relevance will be pursued.

·      Three principle applications will be targeted. These are broadly aligned with the existing focus of the company and include:

Commercial and Industrial ("C&I") customers looking to reduce energy costs or use more renewable energy;

Grid service providers ("GSPs") - asset owners, developers or aggregators involved in the provision of flexibility services to grid networks who can utilise VRFBs to improve the economics of their projects and access additional revenue streams; and

Utilities and wholesale energy market participants - firms engaging in wholesale market trading activity or large-scale generation can use VRFBs to balance their portfolios or improve revenues through arbitrage and other associated activity 

 Execute against the opportunity with efficiency. 

·      Production capabilities, including any required capital expenditures, will be developed to support the sales plan with contingencies for outcomes both lower and higher than projected.

·      It is currently planned for Invinity to continue building cell stacks in Vancouver, B.C., Canada, and to initiate a parallel stack manufacturing line at the Company's facility in Livingston, Scotland when demand warrants.

·      Manufacture of the core VRFB module will be undertaken with a focus on the reduction of headline costs - enclosure, tanks, pumps, and other balance of system ("BOS") components - will continue in Suzhou, China at a dedicated facility run by Avalon's manufacturing partner. Other module manufacturing facilities may be brought online in the future to meet demand. 




Public market investment proposition 

Invinity represents a rare opportunity for investors wishing to gain direct exposure to energy storage technology, specifically flow batteries, within the regulatory framework of the public markets. The Company is currently the only 'pure-play' flow battery company traded on the London Stock Exchange and one of only a handful of public companies worldwide who solely engage in activity related to the development and deployment of flow battery technology. The Company is also a holder of the London Stock Exchange Green Economy Mark, a subsection of London Stock Exchange companies marked out for their contribution to supporting the low carbon economy. 


Competitive position verses market incumbents 

While many different stationary energy storage technologies exist today, Lithium-ion is considered the de facto primary competitor to flow batteries and the incumbent market leader. Lithium-ion battery technology is mature, given its widespread use within consumer electronics since the 1990s. It also benefits from well-developed, efficient supply chains and significant global manufacturing capacity built off its successes in mass-manufactured consumer electronics and (more recently) the global Electric Vehicle revolution.

However, flow batteries are now seeing increased interest due to, amongst other benefits, their ability to 'shift' large volumes of energy, their lack of degradation in operation and long service life, according to a H2 2019 industry report by energy industry consultancy Aurora Energy Research. 

Importantly, whilst upfront capital costs of VRFBs are higher today than those of lithium-ion, the total cost of ownership of the asset over a 20 year project life is broadly competitive between the two. This is due to a lithium-ion battery requiring replacement after around 5,000 cycles due to degradation, whereas a VRFB can continue to operate for 20,000 cycles or more without the need to replace the whole system. This characteristic means that VRFBs can generate more attractive returns than lithium-ion batteries in certain applications, specifically those requiring multiple, daily, charge/discharge cycles i.e. solar 'firming' and peak-shaving for industrial sites - a key market segment for Invinity and its VRFB products. 

Safety and recyclability are also a key areas of competitive advantage for VRFBs over lithium-ion, being non-flammable in nature and containing electrolyte that can be fully recycled. VRFBs often represent a more robust, safe and long-term solution for project owners concerned about safety and end-of-life costs following recent publicity around high-profile fires at lithium battery sites. This is becoming a more prevalent issue as energy storage markets including South Korea, Australia and key US states including New York move to implement stringent safety requirements for Lithium-ion battery installations. 


Competitive position versus other flow batteries 

Besides Invinity, there are a number of other companies active within the flow battery industry, utilising a broad range of different 'redox' chemistries. Invinity utilises the most established and stable Vanadium-Vanadium chemistry, preferring the reliability inherent in this option over less proven alternatives used by other market participants including; Zinc-Bromide, Copper-Zinc and Iron- Chromium. 

More generally, redT and Avalon Battery are considered to be amongst the key 'contenders' within the flow battery industry, according to a 2019 report by Navigant Research. Combined, redT and Avalon have deployed almost 10MWh to date, at more than 40 sites, in 14 different countries across a broad range of applications. 

In summary, the Merger intends to generate a number of benefits which will enable the Enlarged Group to compete more effectively both within the flow battery industry and the wider battery storage space. This includes a broader sales footprint, increased R&D capabilities and engineering experience and numerous system cost reduction opportunities which will be realised by a successful merger. 




The Company and the Sellers entered into the Acquisition Agreement on 13 March 2020 pursuant to which the Company agreed to acquire and the Sellers agreed to sell their respective shares in Avalon. 


The Company and the Sellers entered into the Acquisition Agreement on 13 March 2020 pursuant to which the Company agreed to acquire and the Sellers agreed to sell their respective shares in Avalon. 


The consideration for the Acquisition is £28.6 million, which will be satisfied on Completion by the issue of 1,735,397,545 Consideration Shares at the Issue Price. 

Completion of the Acquisition is conditional on the approval of the Resolutions at the General Meeting, the Placing Agreement not having been terminated and Admission occurring. If the conditions to Completion are not satisfied by 2 May 2020 (or such later date as the Company and the Sellers may agree) or any fact occurs which prevents the conditions from being satisfied by that date, the parties may elect to terminate the Acquisition Agreement. 

The Acquisition Agreement contains customary warranties relating to the Sellers' ownership and title to their shares. The Warrantors of Avalon and the Company are also giving mutual warranties concerning their respective businesses as well as certain tax warranties. The aforementioned warranties are given on a several basis. The Acquisition Agreement also contains customary limitations on the Warrantors' and the Company's liability under the Acquisition Agreement, including time and financial limitations. Claims for breach of a non-tax warranty must be brought by 30 June 2021 and, in respect to tax warranty claims, within four years of Completion. The maximum aggregate cap on liability of each Warrantor is 20 per cent. of the Consideration Shares received by them. The Sellers' liability relating to warranties around title and capacity is uncapped. In the event of a claim for a breach of the warranties relating to Avalon, under the Acquisition Agreement the Warrantors are permitted to settle any such claims by using the proceeds from the sale of their Consideration Shares. 

Pursuant to the Acquisition Agreement, non-institutional Sellers have also agreed to be bound by restrictive covenants for a period of time following Completion and Sellers holding 3 per cent or more of the Enlarged Share Capital have agreed to lock-in and orderly market arrangements which are summarised in more detail below. 

The Acquisition Agreement is governed by the laws of England and Wales. 



Brief biographies of the Directors, the Proposed Directors and the senior managers of the Enlarged Group are set out below. Paragraph 6 of Part VI of the Admission Document contains further details of current and past directorships and certain other important information regarding the Directors. 




Neil O'Brien, aged 57 - Chairman 

Neil was appointed Executive Chairman in March 2019. He joined the Board as a Non-Executive Director in September 2016 and is chairman of the Nomination Committee. Neil is also a member of the Remuneration Committee. 

Neil's most recent role before joining the Company was as CEO of AIM quoted Alkane Energy which he joined in 2008. Under his leadership, the Company achieved rapid output increases through a combination of organic growth and acquisition activity. Alkane expanded its UK portfolio of baseload power generating sites and established a leading position in the UK back-up power market covering winter peaking, National Grid 'STOR' programme and the capacity market. 

Neil started his career at Coopers & Lybrand in 1985, where he qualified as a Chartered Accountant, before joining Blue Circle in 1988, holding a number of senior financial and operational roles in the UK and Europe. He then spent three years as a Group Management Accountant at Aggregate Industries before becoming CFO at FTSE 250 Speedy Hire plc. Neil read Politics, Philosophy and Economics at Oriel College, Oxford University. 


Fraser Welham, aged 55 - Chief Financial Officer 

Fraser Welham was appointed Chief Financial Officer in April 2018 when he also became a member of the board. Fraser was previously at the Green Investment Group (formerly the Green Investment Bank) where he was Managing Director of Finance, heading up the Business Finance team. 

Fraser is an international CFO with extensive board-level experience gained as Group CFO at private equity owned, international onshore wind and solar energy developer, Element Power (2009-2014), and Group FD at FTSE 250 international waste management company, Shanks Group Plc (2005-2009). Fraser's industry focus has been on renewable energy, waste and environmental management where he has experience developing and delivering large, capital intensive projects and running significant logistic and treatment operations across multiple sites and countries. 

Fraser qualified as a Chartered Accountant with Price Waterhouse, London after obtaining a First Class honours degree in Mechanical Engineering from King's College, London. 


Michael Farrow, aged 65 - Independent Non-executive Director 

Michael Farrow joined the Board as a Non-executive Director in March 2006. Michael is a member of the Audit and Nomination and Committees and chairs the Remuneration Committee. He is a founder and director of Oak Secretaries (Jersey) Limited, a Jersey licensed trust company and he currently sits on the Boards of a number of listed companies. From 1993 - 1997 he was also a group company secretary of Cater Allen Jersey, a banking, trustee and investment management group. 

Michael was formerly a regular British Army Officer with the Royal Artillery where he rose to the rank of Major. He holds an MSc in Corporate Governance and is a Fellow of the Chartered Institute of Secretaries & Administrators. 


Jonathan Marren, aged 44 - Independent Non-executive Director 

Jonathan Marren joined the Board as a Non-executive Director in March 2016. Jonathan served on the Board of Directors as Chief Financial Officer between July 2012 and March 2016, having been an advisor to the company since early 2006, including on its flotation in April 2006. Jonathan is a member of the Nomination and Remuneration Committees and chairs the Audit Committee. 

He has previously held positions as Deputy Head of Corporate Finance at Singer Capital Markets, prior to which he was at Peel Hunt between 2000 and 2010 where he was a Director in the Corporate Department with responsibility for their new energy and clean tech franchise where he gained considerable experience of working with companies in this area. 

Jonathan qualified as a Chartered Accountant with Arthur Andersen in 1999 after obtaining a BSc in Mathematics from Durham University. 


Proposed Directors 


Larry Zulch, aged 62 - Chief Executive Officer following Admission 

Mr. Zulch has over 30 years of experience successfully commercializing advanced technologies and scaling the companies that deliver those technologies to market. He was formerly the CEO of Dantz Development (acquired by EMC, now Dell Technologies), Photometics, plcD, Cloud Engines, and Savvius (acquired by LiveAction). He served as VP and Officer at EMC Corporation, and as Executive Chairman of Freerange Communications (acquired by Sprint via Handmark). Mr. Zulch has been awarded a patent for an optical components platform and co-invented a network-monitoring technology which he has a patent pending. Larry received a BA in Economics from the University of California, Davis. From Admission Larry will be a member of the Nomination Committee. 


Matt Harper, aged 42 - Chief Commercial Officer following Admission 

Mr. Harper co-founded Avalon, and has over 20 years' experience bringing clean energy technologies to market. He has been leading energy storage product development and delivery for 14 years, including serving as VP Products and Services with VRFB developer Prudent Energy, based in Beijing. He has also engineered and led the development of emerging clean energy technologies in the energy storage, hydrogen, fuel cell and water treatment industries. Mr. Harper holds a BASc in Mechanical Engineering from the University of British Columbia, a master's degree in Engineering and Management from the Massachusetts Institute of Technology, is a licensed Professional Engineer in British Columbia, Canada, and is named as inventor on eight US patents and applications. 


The Company intends to appoint an additional independent non-executive director from a North American background as soon as reasonably practicable following Admission. 



The Directors and the Proposed Directors believe that the recruitment, motivation and retention of highly skilled, high quality personnel is fundamental to its ability to continue to meet the requirements of its clients and to its continuing success. 

On 12 March 2020, the Existing Group had a total of 51 employees. Following Completion of the Acquisition, the Enlarged Group will have 78 employees. 




The following summary of financial information relating to the Existing Group's activities for the three years to 31 December 2018 and the six months ended 30 June 2019 has been extracted without material adjustment from the financial information on the Existing Group set out in Part IV of the Admission Document.



H1 2019


FY 2018


FY 2017


FY 2016









Continuing operations:
















Cost of sales








Gross profit








Administrative expenses (excl. SBP)








Trading loss








Gain on sale of discontinued operations








Share-based payments (SBP)








Operating loss









The Existing Group sold its remaining legacy Camco business in the USA in April 2019. The 2018, 2017 and 2016 financial information above has been restated to reclassify amounts related to this business to discontinued operations. In addition to this, the 2016 financial information has also been retranslated to Great British Pounds as previously it had only been reported in Euros. Below is a reconciliation of the above financial information to the audited financial information. The first half 2019 financial information is unaudited information from the Existing Group's 2019 Interim Results.












Less Camco




Less Camco


















Cost of sales








Gross profit








Admin. (excl. SBP)








Trading loss
















Operating loss
















Less Camco













Cost of sales





Gross profit





Admin. (excl. SBP)





Trading loss










Operating loss







The net proceeds of the Placing receivable by the Company are approximately £7.1 million.  Expenses of the Placing and Admission are expected to amount £2.5 million.

The net proceeds of the Placing and Open Offer will be applied principally towards delivery of the Pivot project, continuing product development and developing sales.


As announced by the Company on 1 November 2019, the Company secured a loan of up to £1.9 million from Avalon to fund ongoing working capital requirements and expenses relating to the Transaction (the "Interim Loan"). The Interim Loan was funded by £3.8 million being made available to Avalon from Bushveld (the "Bushveld Loan", and together with the Interim Loan the "Interim Funding"). 

In addition to the Interim Loan, the Company entered into a separate agreement with Bushveld (the "Bushveld Agreement") under which, if the Acquisition completes successfully, the $5 million provided to Avalon under the Bushveld Loan, together with interest and certain fees, will convert into Ordinary Shares in the Company. 

The Company has also agreed, conditional on the Completion of the Acquisition, to grant Bushveld a right of first refusal to supply vanadium products to the Enlarged Group for two years, and thereafter subject inter alia to Bushveld continuing to beneficially own at least 5 per cent. of the issued Ordinary Shares. 

Subject to it continuing to beneficially own at least five per cent. of the issued Ordinary Shares, Bushveld also has for one year from Completion of the Acquisition, the right to nominate a director of the Company. Bushveld will retain that right after one year provided it beneficially owns at least 10 per cent. of the issued Ordinary Shares. In addition, for so long as Bushveld beneficially owns at least 20 per cent. of the issued Ordinary Shares, it shall have a right to nominate two directors of the Company. 


The Company, the Directors, the Proposed Directors, VSA Capital and Investec have entered into the Placing Agreement relating to the Placing pursuant to which, subject to certain conditions, VSA Capital and Investec have severally agreed to use their respective reasonable endeavours to procure subscribers for the Placing Shares on behalf of the Company. The Placing has not been underwritten. The Placing Shares represent approximately 12.5 per cent. of the Enlarged Share Capital (assuming full take-up under the Open Offer). The Open Offer Shares represent approximately 9.9 per cent. of the Enlarged Share Capital (Assuming full take-up under the Open Offer). In addition VSA and Investec have the right but not the obligation to use their reasonable endeavours to procure subscribers for an Open Offer Shares not taken up by Qualifying Shareholders. 

The Placing is conditional upon the Placing Agreement becoming unconditional and not having been terminated in accordance with its terms prior to Admission. The Placing Agreement is also conditional, inter alia, upon Admission having become effective by not later than 8.00 a.m. on 2 April 2020 or such later time and date, being not later than 8.00 a.m. on 2 May 2020, as the Company, VSA Capital and Investec shall agree.

The Placing will raise approximately £7.9 million (before expenses) for the Company. 

The Placing Shares will be issued credited as fully paid and will, when issued, rank pari passu in all respects with the Existing Ordinary Shares and the Open Offer Shares, including the right to receive all dividends and other distributions declared paid or made after Admission. 

The Company considers it important that Qualifying Shareholders have an opportunity (where it is practicable for them to do so) to participate in the Transaction and accordingly the Company is making the Open Offer to Qualifying Shareholders. The Company is proposing to raise up to £6.28 million (before expenses) (assuming full take up of the Open Offer) through the issue of up to 380,500,174 Open Offer Shares. 

The Open Offer Shares are available to Qualifying Shareholders pursuant to the Open Offer at the Issue Price of 1.65 pence per Open Offer Share, payable in full on acceptance. Any Open Offer Shares not subscribed for by Qualifying Shareholders will be available to Qualifying Shareholders under the Excess Application Facility. VSA Capital and Investec have the right (but not the obligation) at their sole discretion to place any Open Offer Shares not subscribed for by Qualifying Shareholders under the Excess Application facility to placees. 

Qualifying Shareholders may apply for Open Offer Shares under the Open Offer at the Issue Price on the following basis: 

Two Open Offer Shares for every five Existing Ordinary Shares held by the Shareholder on the Record Date 

Entitlements of Qualifying Shareholders will be rounded down to the nearest whole number of Open Offer Shares. Fractional entitlements which would otherwise arise will not be issued to the Qualifying Shareholders but will be made available under the Excess Application Facility. The Excess Application Facility enables Qualifying Shareholders to apply for Excess Shares in excess of their Open Offer Entitlement. 

Not all Shareholders will be Qualifying Shareholders. Shareholders who are located in, or are citizens of, or have a registered office in certain overseas jurisdictions will not qualify to participate in the Open Offer. The attention of Overseas Shareholders is drawn to paragraph 6 of Part VIII of the Admission Document. 

Valid applications by Qualifying Shareholders will be satisfied in full up to their Open Offer Entitlements as shown on the Application Form. Applicants can apply for less or more than their entitlements under the Open Offer but the Company cannot guarantee that any application for Excess Shares under the Excess Application Facility will be satisfied as this will depend in part on the extent to which other Qualifying Shareholders apply for less than or more than their own Open Offer Entitlements. The Company may satisfy valid applications for Excess Shares of applicants in whole or in part but reserves the right not to satisfy any excess above any Open Offer Entitlement. Applications made under the Excess Application Facility will be scaled back pro rata to the number of shares applied for if applications are received from Qualifying Shareholders for more than the available number of Excess Shares. 

Application has been made for the Open Offer Entitlements to be admitted to CREST. It is expected that such Open Offer Entitlements will be credited to CREST on 16 March 2020. The Open Offer Entitlements will be enabled for settlement in CREST until 11.00 a.m. on 31 March 2020. Applications through the CREST system may only be made by the Qualifying CREST Shareholder originally entitled or by a person entitled by virtue of bona fide market claims. The Open Offer Shares must be paid in full on application. The latest time and date for receipt of completed Application Forms or CREST applications and payment in respect of the Open Offer is 11.00 a.m. on 31 March 2020. The Open Offer is not being made to certain Overseas Shareholders, as set out in paragraph 6 of Part VIII of the Admission Document. 

Qualifying Shareholders should note that the Open Offer is not a rights issue and therefore the Open Offer Shares which are not applied for by Qualifying Shareholders will not be sold in the market for the benefit of the Qualifying Shareholders who do not apply under the Open Offer. 

The Application Form is not a document of title and cannot be traded or otherwise transferred. Further details of the Open Offer and the terms and conditions on which it is being made, including the procedure for application and payment, are contained in Part VIII of the Admission Document and on the accompanying Application Form.

The Open Offer is conditional on the Placing becoming or being declared unconditional in all respects and not being terminated before Admission (as the case may be). Accordingly, if the conditions to the Placing are not satisfied or waived (where capable of waiver), the Open Offer will not proceed and the Open Offer Shares will not be issued and all monies received by the Registrars will be returned to the applicants (at the applicant's risk and without interest) as soon as possible thereafter. Any Open Offer Entitlements admitted to CREST will thereafter be disabled.

The Open Offer Shares will be issued free of all liens, charges and encumbrances and will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

The Directors have agreed not to take up their respective Open Offer Entitlements. 


Immediately prior to Admission (but subsequent to the issue of the New Ordinary Shares), the Company will undertake the Share Consolidation. Each Ordinary Share of €0.01 nominal value will be consolidated on a 50 to 1 basis, such that every 50 Ordinary Shares will be consolidated into one Consolidated Ordinary Share of €0.50 each. 

Assuming a share capital of 3,844,489,575 Ordinary Shares immediately prior to Admission (but subsequent to the issue of the New Ordinary Shares), following Completion of the Share Consolidation, the Company will have 76,889,791 Consolidated Ordinary Shares in issue. 

The rights attaching to the Consolidated Ordinary Shares will be identical in all respects to those of the Existing Ordinary Shares. 


Lock-in arrangements 

Pursuant to the Bushveld Agreement, Bushveld has agreed not to sell their Conversion Shares for a period of six months from Admission without the prior written consent of VSA Capital and Investec. 

Each of (i) the Directors, (ii) the Proposed Directors and (iii) any Sellers individually holding 3 per cent. or more of the Enlarged Share Capital (together, the "Covenantors"), has undertaken to the Company, VSA Capital and Investec (subject to certain limited exceptions including disposals by any Sellers to satisfy warranty claims under the Acquisition Agreement, transfers to a connected person (as defined under section 252 of the Act) or to trustees for their benefit, disposals by any Sellers to satisfy any personal tax liability arising from the Transaction and disposals by way of acceptance of a recommended takeover offer of the entire issued share capital of the Company) not to dispose of the Security Interests held by each of them on Admission at any time prior to the six month anniversary of Admission (the "Lock-in Period"), without the prior written consent of VSA Capital and Investec. 

Furthermore, each of the Covenantors has also undertaken to the Company, VSA Capital and Investec not to dispose of the Security Interests held by them on Admission, for a period of six months following the expiry of the Lock-in Period otherwise than through VSA Capital or Investec and subject to orderly market arrangements.

Further details of these arrangements are set out in paragraph 14.1(b) of Part VI of the Admission Document. 


AIM quoted companies are required to state which recognised corporate governance code they will follow from admission and how they comply with such code and to explain reasons for any noncompliance. The Directors and the Proposed Directors recognise the value and importance of high standards of corporate governance and intend, given the Company's size and the constitution of the Board, to comply with the recommendations set out in the QCA Code, subject to the areas of noncompliance as set out below. 

The Board 

The Board (including, from Admission, the Proposed Directors) will be responsible for the overall management of the Enlarged Group including the formulation and approval of the Enlarged Group's long term objectives and strategy, the approval of budgets, the oversight of Enlarged Group operations, the maintenance of sound internal control and risk management systems and the implementation of Enlarged Group strategy, policies and plans. While the Board may delegate specific responsibilities, there will be a formal schedule of matters specifically reserved for decision by the Board. Such reserved matters will include, amongst other things, approval of significant capital expenditure, material business contracts and major corporate transactions. The Board will meet regularly to review performance. 

With effect from Admission, Neil O'Brien will become Non-Executive Chairman. Larry Zulch and Matt Harper will join the Board as Executive Directors with effect from Admission. In addition, the Company intends to appoint an additional independent non-executive director from a North American background as soon as reasonably practicable following Admission. 

The Board currently comprises four Directors, of whom two are executive and two are non-executive. With effect from Admission the Board will comprise six Directors, of whom three will be executive and three will be non-executive. Michael Farrow and Jonathan Marren are considered independent directors. 


The QCA Code recommends that the Board should appoint an independent non-executive Director to be the Senior Independent Director. However, the Directors and the Proposed Directors have determined that the Enlarged Group will be of a size that does not require a Senior Independent Director to be appointed. Instead, the Board is confident the normal channel of communication (through the Chairman, the Chief Executive Officer or the Chief Financial Officer) will be sufficient to resolve any issues which the Shareholders may wish to communicate to the Board. 

With effect from Admission, the Board will have re-established an audit committee (the "Audit Committee"), a remuneration committee (the "Remuneration Committee") and a nomination committee (the "Nomination Committee") with formally delegated responsibilities. 

The Audit Committee 

The Audit Committee will be chaired by Jonathan Marren. Its other members will be Neil O'Brien and Michael Farrow. The Audit Committee will have primary responsibility for monitoring the quality of internal controls and ensuring that the financial performance of the Company is properly measured and reported on. It will receive and review reports from the Company's management and auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Enlarged Group. The Audit Committee will meet at least twice a year and will have unrestricted access to the Company's auditors. 

The Remuneration Committee 

The Remuneration Committee will be chaired by Michael Farrow. Its other members will be Jonathan Marren and Neil O'Brien. The Remuneration Committee will review the performance of the Executive Directors and make recommendations to the Board on matters relating to their remuneration and terms of employment. The Remuneration Committee will also make recommendations to the Board on proposals for the granting of share options and other equity incentives pursuant to any share option scheme or equity incentive scheme in operation from time to time. The remuneration and terms and conditions of appointment of the non-executive directors of the Company will be set by the Board. 

The Nomination Committee 

The Nomination Committee will be chaired by Neil O'Brien. Its other members will be Michael Farrow, Jonathan Marren and Larry Zulch. The Nomination Committee will be responsible for ensuring that the Board has a formal and transparent appointment procedure and will have primary responsibility for reviewing the balance and effectiveness of the Board and identifying the skills needed on the Board and those individuals who might best provide them. 

Share dealings 

The Company has adopted a share dealing code, with effect from Admission, for Directors, Proposed Directors and applicable employees (as defined in the AIM Rules for Companies) of the Enlarged Group for the purpose of ensuring compliance by such persons with the provisions of Rule 21 of the AIM Rules for Companies and MAR relating to dealings in the Company's securities. The Directors and the Proposed Directors consider that this share dealing code is appropriate for a company whose shares are admitted to trading on AIM. 

The Company will take proper steps to ensure compliance by the Directors, the Proposed Directors and applicable employees with the terms of the share dealing code and the relevant provisions of MAR. 


The declaration and payment by the Enlarged Group of any future dividends on the Ordinary Shares and the amount will depend on the results of the Enlarged Group's operations, its financial condition, cash requirements, future prospects, profits available for distribution and other factors deemed to be relevant at the time. However, given the Company's early stage of development, the Directors and the Proposed Directors do not envisage that the Company will pay dividends in the foreseeable future and intend to re-invest surplus funds in the development of the Enlarged Group's business. 


The Directors and the Proposed Directors believe that the success of the Enlarged Group will depend to a significant degree on the future performance of the management team. The Directors and the Proposed Directors also recognise the importance of ensuring that all employees are well motivated and identify closely with the success of the Enlarged Group. 

Accordingly, the Company has established the Share Option Schemes. Effective from Completion, the Share Option Schemes will include sub-plans permitting the grant of incentive stock options and non-statutory stock options to US employees and consultants. 

The subsisting options granted by the Company will remain in place on their existing terms subject to the Share Consolidation. It is estimated that on Admission, there will be 1.032 million Ordinary Shares (post Share Consolidation) under subsisting options granted by the Company. However, the Remuneration Committee may consider allowing Option Holders holding subsisting options under the terms of the Share Option Schemes to surrender such options for the grant of new options on such terms as the Remuneration Committee deems appropriate. 

It is intended that the Company will grant options over a total of around 4.754 million Consolidated Ordinary Shares to the employees and consultants of the Enlarged Group as soon as reasonably practicable following Admission. The exercise price for these options will be the Issue Price if they are Unapproved Options (or non-statutory stock options) and the market value if they are EMI Options, CSOP Options or ISOs. 

Further details of the Share Option Schemes are set out in paragraph 9 of Part VI of the Admission Document. Details of options currently held by the Directors and the Proposed Directors are set out in paragraph 7.1 of Part VI of the Admission Document. It is currently intended that options will be granted as soon as reasonably practicable following Admission under the Share Option Schemes and that the Share Option Schemes will continue to be used to provide share incentives to Directors, Proposed Directors and key employees. Following Admission, the Company intends to grant options on terms that reflect market practice for AIM quoted companies of an equivalent size operating in comparable industries. 

Larry Zulch will have exercised his Avalon options before Admission and will exchange his Avalon shares for Ordinary Shares. As a result, he will hold 2,191,949 Consolidated Ordinary Shares on Admission. 

Avalon has granted incentive stock options and non-statutory stock options to several employees and consultants of Avalon and its subsidiaries from time to time under the Avalon Battery Corporation 2013 Equity Incentive Plan ("Avalon Options"). It is intended that the Company will grant new replacement options to the holders of the outstanding Avalon Options in exchange for their Avalon Options ("Replacement Options"). The Replacement Options will be on the same or similar terms as the Avalon Options except that the Replacement Options would be over Ordinary Shares and the number of the Ordinary Shares subject to each Replacement Option, and the exercise price will be adjusted accordingly to ensure that the Replacement Options are of equal value. It is expected that the number of Consolidated Ordinary Shares subject to Replacement Options on or following Admission will be around 2.183 million Consolidated Ordinary Shares. 


Information regarding taxation in relation to the Acquisition, Placing, Open Offer and Admission is set out in paragraphs 10 to 13 in Part VI of the Admission Document. If you are in any doubt as to your tax position you should consult your own independent financial adviser immediately. 


The Company is incorporated in Jersey and its Ordinary Shares will be admitted to trading on AIM. Accordingly, the City Code applies to the Company. Under Rule 9 of the City Code ("Rule 9"), any person who acquires an interest in shares (as defined in the City Code), whether by a series of transactions over a period of time or not, which (taken together with any interest in shares held or acquired by persons acting in concert (as defined in the City Code) with him) in aggregate, carry 30 per cent. or more of the voting rights of a company which is subject to the City Code, that person is normally required by the Panel to make a general offer to all of the remaining shareholders to acquire their shares. 

Similarly, when any person, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30 per cent. of the voting rights of such a company but does not hold shares carrying more than 50 per cent. of such voting rights, a general offer will normally be required if any further interests in shares are acquired by any such person which increases the percentage of shares carrying voting rights in which he is interested. 

An offer under Rule 9 must be in cash or be accompanied by a cash alternative and at the highest price paid by the person required to make the offer, or any person acting in concert with him, for any interest in shares of the company during the 12 months prior to the announcement of the offer. 

Under the City Code, a concert party arises where persons who, pursuant to an agreement or understanding (whether formal or informal), co-operate to obtain or consolidate control (as defined below) of a company or to frustrate the successful outcome of an offer for a company. "Control" means holding, or aggregate holdings, of shares carrying 30 per cent. or more of the voting rights of the company, irrespective of whether the holding or holdings give de facto control. 

The following persons are presumed to be acting in concert for the purposes of the City Code: 

Alexander Au; Andy Klassen; 1953621 Alberta Ltd; Ben DuPerthal; Brand Zoo, Inc.; Dwayne Smith; Electrosynthesis Company, Inc.; Johnson Chiang; Josh Weiner; JWRG Investments LLC; Lawrence Zulch; Matt Carroll; Matt Harper; Ricky Chau; Tim Peterson; Sky Energy Capital Inc.; Sage Advisory and Consulting Services Ltd.; Timothy Brantingham; Vega Strategic Partners Holdings Limited; Wade Family Trust Dated March 7, 1989; and Wesley Marstaller 

On Admission, the Concert Party will hold 15,540,142 Consolidated Ordinary Shares, in aggregate, representing approximately 22 per cent. of the Enlarged Share Capital before any take-up of the Open Offer. 


Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings will commence in the New Ordinary Shares at 8.00 a.m. on 2 April 2020. No temporary documents of title will be issued. All documents sent by or to a placee, or at his direction, will be sent through the post at the placee's risk. Pending the despatch of definitive share certificates, instruments of transfer will be certified against the register of members of the Company. The Company has applied for the New Ordinary Shares to be admitted to CREST and it is expected that the New Ordinary Shares will be so admitted and accordingly enabled for settlement in CREST on the date of Admission. Accordingly, settlement of transactions in New Ordinary Shares following Admission may take place within the CREST system if any individual Shareholder so wishes provided such person is a "system member" (as defined in the CREST Regulations) in relation to CREST. Dealings in advance of crediting of the relevant CREST account(s) shall be at the sole risk of the persons concerned. CREST is a paperless settlement system enabling securities to be evidenced otherwise than by certificate and transferred otherwise than by written instrument in accordance with the CREST Regulations. The Articles permit the holding of Ordinary Shares in uncertificated form in accordance with the CREST Regulations. CREST is a voluntary system and holders of Ordinary Shares who wish to receive and retain share certificates will be able to do so. 


The Notice of Extraordinary General Meeting convenes an extraordinary general meeting of Shareholders to be held the offices of Osborne Clarke LLP, One London Wall, London EC2Y 5EB at 11.00 a.m. on 1 April 2020.


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