Vulcan Industries Plc - Acquisition of Peregrine X Limited

14 October 2022

Vulcan Industries plc

(“Vulcan” or the “Company”)

Acquisition of Peregrine X Limited

Vulcan Industries plc (AQSE: VULC) is pleased to announce that it has entered into binding Heads of Terms to acquire the entire share capital of Peregrine X Limited and its 100% owned subsidiary Peregrine Analytics Limited (“Peregrine” together the “Peregrine Group”) From Unity Global - FZCO (the “Vendor” or “Unity Group”). The terms are conditional only on documentation of the acquisition agreement.

Acquisition rationale

Peregrine has developed an analytical tool and algorithms using High Performance Capillary Electrophoresis (HPCE), an analytical separation method technology. Applications are suitable for the analysis of Oil and Water samples and Medical diagnostic purposes. The initial applications will be to address oil well-head analysis where functionality to characterise Asphaltenes is highly sought after. The acquisition of Peregrine will enable the Company to broaden its industrial engineering activities into the energy sector.

Peregrine Group

Peregrine Analytics has developed its diagnostic technology over the last four years and is now ready to bring the product to market. The initial target market is the Middle East where contract negotiations are well advanced with preliminary tests for clients successfully completed. Peregrine is attending ADIPEC at the end of October 2022 to formally launch its product and service offerings.

Peregrine expects to commence the contractual delivery of tests no later than Q2 2023. 

Total Consideration

The total consideration payable is £5,000,000 to be satisfied by the issue of zero-coupon convertible loan notes with a term of one year (“CLN”). Initial consideration will be the issue of £1,000,000 notes with deferred consideration of four tranches of £1,000,000 of notes to be issued on; (a) the receipt of an independent valuation of the Peregrine Group; (b) the commissioning of a laboratory facility in the UAE, (c) the signature of contracts for more than 250 tests and (d) the delivery of the first 25 tests. If no tests have been delivered within the term of the CLN, there is a mutual unwind clause.

The notes may be converted at will by the Company, or after the four tranches of deferred consideration have been triggered, by Peregrine. The conversion price is 1p per new ordinary share.  Conversion of the full consideration would result in the issue of 500,000,000 new ordinary shares of £0.0004 each, being approximately 46.2% of the enlarged share capital today.

In addition, the Company has agreed to enter a Royalty agreement whereby the vendors will receive a Royalty of 70% of the post tax earnings of the Peregrine Group This has been capped. At present the Peregrine Group has generated no revenue and there is no guarantee that revenue will be generated. Both Peregrine and the Company have options to terminate the Royalty agreement once 2,000 tests have been contracted for and 200 tests delivered.

The Company has agreed to issue 50,000,000 warrants to the Vendor with an exercise price of 1p and a term to 31 March 2024.

In addition, the Vendor will receive warrants for any shares issued in settlement of the Royalty agreement with a term to the later of 12 months from the date of issue or 31 March 2024. The exercise price will be the price of the related equity issued to settle Royalty obligations. (“Vendor warrants”).

Related Party Transaction

The executive directors of Vulcan will receive 5% of the convertible loan notes and 5% of any royalties paid to Peregrine (the “Related Party Transaction” pursuant to Rule 4.6 of the AQSE Access Growth Market Rulebook).  The 5% convertible loan notes worth up to £250,000 and 5% of any royalties paid to Peregrine will be split between Ian Tordoff and Neil Clayton.  The remaining directors of Vulcan, who have no interest in the transaction and who are independent for these purposes, being John Maxwell and Darren Taylor, having exercised reasonable skill care and diligence, consider that the Related Party Transaction is fair and reasonable as far as the shareholders of the Company are concerned.

Ian Tordoff, Executive Chairman: “The acquisition of Peregrine X (PX) presents a transformational opportunity for the Group providing Vulcan access to multiple new geographic markets and revenue streams. The PX technology has clear competitive advantages which early market engagements bear out. We are anticipating early adoption from a number of significant producers initially in the Middle East by considerably reducing well-production down-time.  Like many others in the sector the Group’s UK businesses have worked through difficult trading conditions in the last 24 months and the European outlook for the period 2023-24 remains volatile. With the addition of PX, Vulcan is reducing its exposure to UK market conditions whilst extending its international client base and revenue generating capabilities. We welcome Justin Last and the PX team to the Group and look forward to working closely with PX to accelerate the roll-out globally.  

Justin Last CEO Peregrine Analytics Limited: “This is an exciting milestone in our growth story and a great opportunity for both companies. We believe the Peregrine analytical capabilities have huge potential to disrupt data analytics in multiple sectors, but initially the Oil & Gas industry. The Company has identified significant opportunities and has been engaged with a number of clients who have long sought a solution to improved oil analytics data capture. Through the development of AI algorithms, Peregrine intends to develop various near real-time modelling techniques for oil components, primarily providing solutions for existing deposition issues. I am looking forward to working with the wider management team and I thank everyone who has been involved in getting us to this point including our valued investors, trusted advisers, and our enthusiastic channel partners.” 

For further information, visit: https://vulcanplc.com 

The directors of Vulcan accept responsibility for this announcement.

Contacts

About Vulcan

Vulcan has been incorporated to build a group of UK companies providing high quality products and services to the engineering, manufacturing and engineering sectors, particularly focussed on metal fabrication and precision engineering, which have underlying profitability and growth potential and can benefit from being part of a larger group focussed on similar or complementary sectors to the target.

Vulcan seeks to acquire and consolidate traditional but historically profitable engineering, manufacturing and industrial SMEs for value and to enhance this value in part through group synergies, but primarily by unlocking growth which is not being achieved as a standalone private company. The group will also optimise productivity through the introduction of new technologies and processes. For more information visit https://www.voxmarkets.co.uk/listings/PLU/VULC

About Unity Global - FZCO

The Vendor is a subsidiary of the Unity Group, a mergers and acquisitions firm that specialise in attracting investment and creating opportunities for small to medium-sized enterprises (“SMEs”) to scale. https://www.unity-group.com/

Forward Looking Statements

This news release may contain “forward-looking” statements and information relating to the Company. These statements are based on the beliefs of Company management, as well as assumptions made by and information currently available to Company management. The Company does not undertake to update forward-looking statements or forward-looking information, except as required by law.

The information contained within this announcement is deemed 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 is now considered to be in the pub