Applied Graphene Materials still in talks with potential suitors

Applied Graphene Materials updated the market on its ongoing strategic review on Friday, reporting that alongside financial adviser Alvarez & Marsal Europe, it was continuing discussions with various parties that had submitted non-binding indicative proposals for either the sale of its trade and assets, or of shares in its main operating subsidiary.

The AIM-traded company initially sought non-binding indicative proposals from interested parties with a view to completing a transaction by the end of January.

It said on Friday that completing a transaction on a solvent basis would likely require shareholder approval at a general meeting, as well as other regulatory approvals.

“Discussions with interested parties are ongoing, and the board is seeking to select a preferred party with whom to enter into legally-binding contractual terms by 31 January,” the company’s directors said in a statement.

“The completion of any transaction will only take effect once those shareholder and regulatory approvals have been obtained and this will not take place before 31 January.”

Applied Graphene Materials also previously notified that 31 January would be the date on which its working capital position was expected to become fully depleted.

It said on Friday that it had reviewed its projected cash flows further, and taken mitigating action where appropriate, to reduce costs and maintain liquidity beyond the end of the month.

“The board now believes that, without any further funding - including, for example, any interim funding that, in all likelihood, will be required to progress a transaction with a preferred party to completion - the company's available working capital will become fully depleted by 28 February.

“As previously disclosed, the board continues to take action to seek to protect the financial position of the company, its shareholders and creditors in the event that the strategic review does not achieve a satisfactory result.

“In parallel with the strategic review, the process of statutory redundancy consultations with the group's employees announced on 23 November is ongoing.”

The company warned that current discussions with interested parties could be altered or terminated at any time, and as a result it said there could be no certainty that any final proposals would be made, nor as to the possible terms.

“The board continues to work with its auditors, RSM UK Audit, with a view to publishing the company's annual report and accounts for the year ended 31 July by 31 January, being the deadline for publication stipulated under the AIM rules.

“If the 2022 annual report and accounts are not published by the deadline, the company's ordinary shares will be suspended from trading on AIM with effect from 1 February, pending publication of the company's 2022 financial year annual report and accounts.”

Applied Graphene Materials also noted that its ordinary shares had, since 29 July 2021, also traded on the OTCQX Best Market in the US.

“In order to reduce costs and continue to provide a facility for US-based shareholders to freely trade the ordinary shares, the company has elected for its ordinary shares to be traded on the OTCQB Venture Market under the ticker symbol APGMF with effect from 17 January.

“The board will continue to provide further updates as appropriate.”

At 1512 GMT, shares in Applied Graphene Materials were down 21.23% at 5.75p.

Reporting by Josh White for Sharecast.com.