NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SINGAPORE OR SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. FURTHER, THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN OFFER OF SECURITIES IN ANY JURISDICTION.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

4 March 2025 

XP Power Limited

("XP Power" or the "Company" and together with its subsidiary undertakings, the "Group")

Announcement of Placing of up to £40m and Retail Offer of up to £2m

Further to the Company’s announcement of its preliminary results, XP Power, the developer and manufacturer of critical power control solutions to the electronics industry, today announces a proposed equity fundraise to raise gross proceeds of up to £42 million through:

a non-pre-emptive placing of new ordinary shares in the Company (the "Placing Shares") to raise gross proceeds of up to £40 million (the "Placing") at a fixed price of 975 pence per Placing Share (the "Offer Price"); and a separate offer made by the Company via the RetailBook platform to raise gross proceeds of up to £2 million (the "Retail Offer" and together with the Placing, the "Fundraise"), to provide retail investors in the United Kingdom with an opportunity to subscribe for new ordinary shares in the Company (the "Retail Offer Shares" and together with the Placing Shares, the "Offer Shares") at the Offer Price.

Continued customer destocking, combined with headwinds in China and legal fees and interest payable to Comet Technologies USA Inc (“Comet”), are likely to result in a weak first half of 2025. Whilst market recovery is expected in H2, there remains a wide range of full-year outcomes for FY2025. It is therefore intended that the net proceeds of the Fundraise will be used to strengthen the balance sheet, providing additional financial flexibility, and complete the build and fit out of the Group’s Malaysia facility. In the event of the expected market recovery, the Company will return any excess proceeds from the Fundraise to its shareholders.

The Placing will be conducted through an accelerated bookbuild launched immediately. The Offer Price represents a discount of approximately 5.2 per cent. to the closing price on 3 March 2025, being the last practicable day prior to the publication of this announcement (this announcement and the Appendices together being the "Announcement"). The Offer Shares are expected to represent in aggregate up to 18.2 per cent. of the Company's current issued share capital.

Certain Directors, associated persons and members of the senior management team intend to subscribe for Offer Shares for an aggregate amount of £0.19 million.

Highlights

Against a difficult market backdrop characterised by slowness and ongoing destocking, XP Power announced in its preliminary FY24 results earlier today that it is profitable and highly cash generative in unprecedented market conditions on the back of a full pipeline of new products, underlying production efficiency gains, and improved working capital efficiency:

­         Order intake of £181.6m with encouraging growth in orders from the Semiconductor Manufacturing Equipment sector, with momentum building as the year progressed

­         Revenue of £247.3m with year-on-year reduction due to destocking in the Industrial Technology and Healthcare sectors and the tail end of a market-wide downcycle within the Semiconductor Manufacturing Equipment sector

­         Adjusted Operating Profit of £25.1m with Gross Margin of 41.0%, improving during the year due to cost savings and the other efficiency measures

­         Adjusted Operating Cash flow of £65.6m highlighting strong cash generation with cash conversion of 261%

XP Power is well positioned for progress as the markets in which it operates recover, with a healthy pipeline of new products, with 25 scheduled for launch in 2025, and strong growth in new business wins to record levels with good ongoing conversion However, there remains a wide range of full-year financial outcomes for FY2025, reflecting the uncertainty as to the timing and scale of the market recovery, which is expected to be heavily weighted to the second half of the year In addition, as announced on 30 January 2025, the Group was found liable for the plaintiff’s legal fees and pre-judgement interest of c. $19 million (£15.2 million) in relation to the US legal case with Comet, resulting in a £7 million increase in provision for costs; an appeal has been lodged and will likely be heard in mid-2025 To improve balance sheet resilience, XP Power today announces the proposed Fundraise to raise gross proceeds of up to £42 million; furthermore, XP Power’s syndicate banks have agreed to amend the covenants applicable to its borrowing facilities, providing further financial headroom The Group’s long-term prospects remain strong based on its focus on markets with attractive structural growth characteristics and significant barriers to entry, its broad portfolio of strong designed-in products across a wide range of customers, and industry leadership on sustainability

Outlook and market opportunity

At the start of 2025 the Group is seeing continued challenging market conditions and recent US trade restrictions are causing increased headwinds for sales to Semiconductor Manufacturing Equipment customers in China, which it expects to result in a sequentially weaker first half result. XP Power expects demand to improve as the year progresses, but the timing and scale of recovery remains very hard to predict. This leads to a wide range of potential outcomes for 2025, with an expectation of a significant second half weighting to the results for the year as a whole.

The Group’s maintained market position, strong product pipeline, robust operational performance and proven business model gives the Board confidence in our long-term prospects and the fundamental and strategic value of the Company.

Reasons for the Fundraise and use of proceeds

It is intended that the net proceeds of the Fundraise will be used to strengthen the balance sheet, providing additional financial flexibility, and complete the build and fit out of the Group’s Malaysia facility. The Malaysia site, with its strategic location and ready access to skilled labour, is an important long-term investment to provide flexible low-cost manufacturing capacity, allowing the Group to support growing demand. In accordance with the existing shareholder authorities, any net proceeds received by the Company from the issue of Offer Shares of more than 10 per cent. of the Company’s existing issued share capital will be applied to the Group’s Malaysia facility.

The Board has decided to act prudently to improve balance sheet resilience through the Fundraise, in addition to successfully negotiating an amendment to the covenants applicable to its borrowing facilities with its syndicate banks to increase covenant limits, details of which are included in the Company’s preliminary FY24 results released earlier today. Whist the Board is very confident in the Group’s ability to de-lever the balance sheet through cash generation in normal market conditions, the factors outlined above have brought leverage in close proximity to the normal covenant limit of 3.0x EBITDA applicable to its borrowing facilities. Assuming market conditions improve as expected as FY2025 progresses the Company should, in receipt of the net proceeds of the Fundraise, be able to maintain a leverage level below that covenant limit. However, whilst such an improvement is expected by XP Power, it cannot be certain as to the extent and timing.

The Board remains confident that the Group will continue to de-lever as market conditions recover until it achieves its target leverage range of 0-1.0x EBITDA. In the event of the expected market recovery, the Company will return any excess proceeds from the Fundraise to its shareholders.

Details of the Fundraise

The Company is proposing to raise gross proceeds of up to £42 million through the issue of the Placing Shares at the Offer Price to existing and new institutional investors and Retail Offer Shares at the Offer Price to retail investors.

The Offer Price represents a discount of approximately 5.2 per cent. to the closing price on 3 March 2025, being the last practicable day prior to the publication of this Announcement. The Offer Shares will represent up to 18.2 per cent. of the Company’s current issued share capital.

Investec Bank plc ("Investec") is acting as sole bookrunner in connection with the Placing. The Placing will be conducted through an accelerated bookbuild (the "Bookbuild"), which will be launched immediately following this Announcement. The number of Placing Shares will be decided at the close of the Bookbuild. The timing of the closing of the book and allocations are at the discretion of Investec and the Company.

The terms and conditions of the Placing are set out in Appendix 1 to this Announcement. Members of the public are not permitted to participate in the Placing.

Certain Directors, associated persons and members of the senior management team intend to subscribe for Offer Shares for an aggregate amount of £0.19 million. Details of these subscriptions are set out in more detail below.

For administrative purposes only, an institutional investor is expected to subscribe for 1,651,282 Placing Shares (the "Direct Subscription Shares") directly from the Company, for a total amount of approximately £16.1 million. 

The Board has chosen the structure of the Fundraise to minimise costs and reduce the time to completion. However, the Board is supportive of the Pre-Emption Group guidance that encourages companies to consider the inclusion of retail shareholders when issuing shares non-pre-emptively, and the Company therefore intends to undertake the Retail Offer.

The Retail Offer is not made subject to the terms and conditions set out in the Appendix 1 to this Announcement, and instead a separate announcement will be made shortly regarding the Retail Offer and its terms. Investec is not acting for the Company in respect of the Retail Offer and is not otherwise involved in the Retail Offer.

In accordance with the existing shareholder authorities, any net proceeds received by the Company from the issue of Offer Shares of more than 10 per cent. of the Company’s existing issued share capital will be applied to complete the build and fit out of the Group’s Malaysia facility.

The Offer Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing issued Ordinary Shares. This includes the right to receive all dividends and other distributions declared or paid in respect of such Ordinary Shares after the date of issue of the new Ordinary Shares.

Applications will be made for the Offer Shares to be admitted to the equity shares (commercial companies) category of the Official List of the Financial Conduct Authority (the "FCA") and to trading on the main market for listed securities of London Stock Exchange plc (the "London Stock Exchange") (together "Admission"). Admission is expected to take place at or before 8.00 a.m. (London time) on 6 March 2025 (or such later time and/or date as Investec may agree with the Company), and dealings in the Offer Shares will commence at that time. The Fundraise is conditional upon, among other things, Admission becoming effective and the placing agreement between the Company and Investec not being terminated in accordance with its terms.

Gavin Griggs, CEO, said:

“In 2024 we made strong internal progress, but industry-wide market challenges have continued to weigh on our performance. With market uncertainty early in 2025 the Board decided to proactively strengthen the balance sheet, through the Fundraise announced today, to provide greater resilience until we see the long-awaited recovery in demand. We also continue to tightly manage costs and are taking further actions as appropriate while maintaining important investment that underpins our future.

XP Power’s strategy, market positioning, customer proposition and medium-term demand outlook all remain strong, and the Board has confidence in the Company’s long-term prospects and its fundamental and strategic value.”

Capitalised terms in this Announcement shall, unless the context requires otherwise, have the meanings set out in Appendix 2. Please read the "Important Notices" section of this Announcement.

 

Enquiries:  

 

XP Power                 Gavin Griggs, Chief Executive Officer Matt Webb, Chief Financial Officer 

 +44 (0)118 984 5515

Investec Bank plc  Sole Broker, Sole Bookrunner and Joint Financial Adviser to XP Power Carlton Nelson / Patrick Robb (Corporate Broking) Duncan Smith / Ben Griffiths (ECM)

+44 (0) 20 7597 5970

Rothschild & Co

Joint Financial Adviser to XP Power

Ravi Gupta

Aadeesh Aggarwal

 

+44 (0)20 7280 5000

Citigate Dewe Rogerson  Kevin Smith / Lucy Gibbs 

+44 (0)20 7638 9571

 

Directors’ and PDMRs’ participation in the Fundraise

As part of the Fundraise, certain Directors, associated persons and senior management team intend to subscribe for an aggregate of 19,542 Offer Shares at the Offer Price. Details of the Offer Shares for which the Directors intend to subscribe for are displayed below:

Director and PDMR

Number of Ordinary Shares held before the Fundraise

Number of Offer Shares being subscribed for

Resultant shareholding following the Fundraise

Jamie Pike - Chair of the Board

12,533

5,128

17,661

Gavin Griggs - Chief Executive Officer

16,904

3,077

19,981

Matt Webb - Chief Financial Officer

12,173

4,139

16,312

Andy Sng - Executive Director

34,323

0

34,323

Polly Williams - Senior Independent Director

4,347

652

4,999

Pauline Lafferty* - Non-Executive Director

1,739

261

2,000

Sandra Breene* - Non-Executive Director

2,391

1,157

3,548

Amina Hamidi - Non-Executive Director

0

2,051

2,051

Daniel Shook - Non-Executive Director

0

3,077

3,077

Total

84,410

19,542

103,952

* Holdings includes that of Closely Associated Persons

 

IMPORTANT NOTICES

THIS ANNOUNCEMENT, INCLUDING THE APPENDICES AND THE INFORMATION CONTAINED IN THEM, IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE, TRANSMISSION, FORWARDING OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OF AMERICA, ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES OR THE DISTRICT OF COLUMBIA (COLLECTIVELY, THE "UNITED STATES"), AUSTRALIA, CANADA, JAPAN, SINGAPORE OR SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL. FURTHER, THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN OFFER OF SECURITIES IN ANY JURISDICTION.

This Announcement or any part of it does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States, Canada, Australia, Japan, Singapore or South Africa or any other jurisdiction in which the same would be unlawful. No public offering of the Placing Shares is being made in any such jurisdiction.

No action has been taken by the Company, Investec or any of their respective affiliates, or any person acting on its or their behalf that would permit an offer of the Placing Shares or possession or distribution of this Announcement or any other offering or publicity material relating to such Placing Shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by the Company and Investec to inform themselves about, and to observe, such restrictions.

No prospectus, offering memorandum, offering document or admission document has been or will be made available in connection with the matters contained in this Announcement and no such prospectus is required (in accordance with Regulation (EU) No 2017/1129 (the "EU Prospectus Regulation") or assimilated Regulation (EU) No 2017/1129 as it forms part of the law of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018, as amended (the "UK Prospectus Regulation")) to be published. Persons needing advice should consult a qualified independent legal adviser, business adviser, financial adviser or tax adviser for legal, financial, business or tax advice.

The securities referred to herein have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act"), or with any securities regulatory authority of any State or other jurisdiction of the United States, and may not be offered, sold or transferred, directly or indirectly, in or into the United States except pursuant to an exemption from the registration requirements of the Securities Act and in compliance with the securities laws of any State or any other jurisdiction of the United States. Accordingly, the Placing Shares will be offered and sold only (i) outside of the United States in "offshore transactions" (as such term is defined in Regulation S under the Securities Act ("Regulation S")) pursuant to Regulation S and otherwise in accordance with applicable laws; and (ii) in the United States to persons that are "qualified institutional buyers" (as defined in Rule 144A under the Securities Act) ("QIBs") and that have delivered to the Company and Investec a US Investor Letter substantially in the form provided to it, in each case, pursuant to an exemption from registration under the Securities Act. No public offering of the Placing Shares will be made in the United States or elsewhere.

This Announcement has not been approved by the FCA or the London Stock Exchange.

This Announcement is not for publication or distribution, directly or indirectly, in or into the United States of America. This Announcement is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States.

The offer and sale of the Placing Shares in Canada is being made on a private placement basis only pursuant to an exemption from the requirement that the Company prepares and files a prospectus under applicable Canadian securities laws. No prospectus has been or will be filed with any securities commission or other securities regulatory authority in any jurisdiction in Canada in connection with the offer or sale of the Placing Shares. In Canada, this Announcement is only directed at and is only being distributed to persons in or resident in the Province of Alberta, British Columbia, Ontario or Quebec purchasing, or deemed to be purchasing, as principal that are accredited investors as defined in section 1.1 of National Instrument 45-106 Prospectus Exemptions or section 73.3(1) of the Securities Act (Ontario), as applicable, that are not created or used solely to purchase or hold the Placing Shares as an accredited investor under NI 45-106, and that are "permitted clients" as defined section 1.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations.

Members of the public are not eligible to take part in the Placing. This Announcement is directed at and is only being distributed to: (a) if in a member state of the European Economic Area (the "EEA"), qualified investors ("Qualified Investors") within the meaning of Article 2(e) of the EU Prospectus Regulation; (b) if in the United Kingdom, qualified investors within the meaning of Article 2(e) of the UK Prospectus Regulation who are also (i) persons having professional experience in matters relating to investments who fall within the definition of "investment professional" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"); or (ii) high net worth companies, unincorporated associations and partnerships and trustees of high value trusts as described in Article 49(2)(a) to (d) of the Order ("UK Qualified Investors"); or (c) other persons to whom it may otherwise be lawfully communicated (all such persons together being "Relevant Persons").

This Announcement must not be acted on or relied on by persons who are not Relevant Persons. Persons distributing this Announcement must satisfy themselves that it is lawful to do so. Any investment or investment activity to which this Announcement relates is available only to Relevant Persons and will be engaged in only with Relevant Persons.

The relevant clearances have not been, nor will they be, obtained from and no prospectus has been lodged with, or registered by, the Australian Securities and Investments Commission or the Japanese Ministry of Finance; the relev