Velocys Share Price Crashed 61.5% on a Possible Takeover Offer

The Velocys PLC (LON: VLS) share price crashed 61.5% after announcing that it had received a possible takeover offer valuing its shares at a significant discount as the company struggles to raise much-needed funds by the end of the year. 

The sustainable fuels technology company received a non-binding indicative all-cash offer for the company's entire issued and to-be-issued ordinary share capital. This offer was put forth by a consortium led by Lightrock LLP and Carbon Direct Capital Management LLC, collectively called the “Consortium.”

The Possible Offer outlined the Consortium's intention to provide substantial funding to meet the company's long-term growth capital needs. Additionally, discussions were ongoing regarding near-term funding. 

However, it was emphasised that there was no certainty that an offer would ultimately be made for the company, and if an offer were made, the final terms remained uncertain.

As previously indicated in the Funding Update, the company anticipated the need for funding before the end of the calendar year. Despite the Possible Offer and discussions related to near-term funding, there were no binding agreements for immediate funding.

Nevertheless, without meaningful funding sources or strategic alternatives, the company may be unable to continue its operations beyond the end of December.

Regarding the Possible Offer, the Consortium had proposed an all-cash offer of 0.25 pence per ordinary share, valuing the company's issued share capital at approximately £4.1 million, representing a significant discount compared to the company's current share price. 

The Consortium also intends to provide very near-term funding, expected to be a debt instrument, to facilitate the completion of the Possible Offer. Furthermore, the Consortium has indicated its intention to offer significant additional funding for the company's growth capital needs, which would become available following the completion of the Possible Offer. 

Completion of the Possible Offer would result in the cancellation of the company's shares' admission to trading on AIM. The Board recognises that the Proposal should be assessed as a whole, considering the company's immediate and long-term funding requirements.

The Board acknowledged the challenging equity capital market environment, particularly for smaller public companies with limited revenue.

Velocys share price. 

The Velocys share price crashed 61.54% to trade at 0.265p from Friday’s closing price of 0.689p.