Versarien (AIM: VRS ) has been awarded £5 million loan facility by Innovate UK Loans Limited, a wholly owned subsidiary of UK Research and Innovation.
Over the past three years, Innovate UK has been running an extended pilot innovation loans programme with £75m committed to the scheme to date.
The loans are targeted at UK SMEs looking to grow by developing new products, processes or services, as well as late-stage research and development projects that have not yet reached the point of commercialisation.
The loan will facilitate the production of sufficient quantities of graphene by Versarien to enable market supply of commercial quantities of graphene-enhanced materials.
The £5m will go towards a project code-named G SCALE, (an acronym for Graphene-Seat, Concrete, Arch, Leisure, Elastomer), and is designed to enable Versarien to significantly increase its manufacture of quality assured graphene, this morning’s statement said.
The loan is to be repaid over 36 months following 45 months of drawdown which will be available following completion of normal commercial security arrangements in eight quarterly tranches. The first of these drawdowns is expected within the next month.
In addition, the loan attracts at an interest rate of 7.4% per annum with half of the interest deferred until the repayment period commences.
Neill Ricketts, CEO of Versarien, said “Versarien is delighted to have been awarded this loan by Innovate UK, which acknowledges the work we are undertaking and advancements made.
The loan will help Versarien step up its graphene production capacity so that we can expedite the commercial adoption of graphene enhanced materials"
Meanwhile, in a separate corporate update, Ricketts said ongoing lockdown restrictions in both China and the UK had impacted the development of the Company's activities in China.
The group signed an agreement in March with Young-Graphene (Beijing) Technology Company Limited ("YG") to create a 50%-owned Chinese joint venture out of the Company's previously wholly foreign owned enterprise, Beijing Versarien Technology Co., Ltd. ("BVT"),
Lockdown restrictions, coupled with the impact of political events in Hong Kong, has impacted the ability of YG to complete the first Versarien share subscription intended for 30 June 2020.
“Covid 19 and the complex political environment has obviously impacted our plans in China, but this does not alter our strategy for expansion, of which China is but a part,” Ricketts said.
As a result, the Board of Versarien has now decided to exercise a previously agreed backstop arrangement and return BVT to 100% Versarien ownership for the time being.
Shares in Versarien opened down 5% following the news.
The group said it remains in discussions with YG and that its decision to acquire YG's interest in BVT does not preclude any future arrangements that may be agreed between the parties.
Versarian added that the £5m loan from Innovate UK will allow the company to avoid any funding uncertainty that would arise from extending the backstop date with YG.
The group also said Matt Walker will join the company on a permanent basis as Head of International Strategy and Government Relations, with effect from 1 July 2020.
The company intends to publish results for the year ended 31 March 2020 on 11 August 2020.
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