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Solar Integrated Announces £14m Financing And Significant Balance Sheet Repositioning; Announces Trading Update

London, UK, and Los Angeles, California, December 20, 2007 – Solar Integrated Technologies, Inc. (AIM:SIT.LN), a leading provider of building integrated photovoltaic (BIPV) roofing systems, announced today that it has raised £14.0 million (£13.2 million or US $26.4 million after cash expenses) by the issue of 16,470,588 new Common Shares at a price of 85p per share, representing a discount of 1.7% to the closing mid-market price on 19 December 2007.  The Placing Shares have been placed by Mirabaud Securities with institutional and other investors.  Approximately £8.5 million of the net proceeds of the Placing will be used to retire US $16.2 million of outstanding convertible debt (plus accrued interest), with the remaining £4.7 million (US $9.4 million) of the net placing proceeds to be used for general corporate and working capital purposes, so as to enable the Company to meet the rapidly growing demand for its products.

At the same time, the Company has successfully negotiated the conversion of US $6.9 million of its outstanding convertible debt into equity at the placing price and significantly restructured the remaining US $8.0 million of convertible debt.

Commenting on today’s developments, R. Randall MacEwen, President & CEO, stated:  “2007 has been a transformational year for Solar Integrated.  In addition to significantly improving the fundamentals of the business, we will now eliminate US $23.1 million of debt from our balance sheet, reduce our annual interest costs by $2.1 million, and provide the necessary working capital to fuel our growth in 2008.  We are well positioned for profitability in 2008.”

John M. Palumbo, Chief Financial Officer, stated:  “With the US $70 million Italian contract win announced earlier today, we exit 2007 with confidence high.  We also reiterate our earlier revenue and gross margin guidance provided to the market for 2007.  We expect 2007 revenues coming in towards the top end of the previously stated guidance range of US $60 million to US $80 million, and we reiterate that we expect full year consolidated gross margins to be in excess of 15%.”

The Company will host a conference call on 20 December 2007 at 1:00 pm London time / 8:00 am ET / 5:00 am PT to further discuss these developments.  Investors and analysts can participate in the call by dialing (+44) 1296 311 650 with access code 845720#.

Background to and reasons for the Placing

As the Company did not consummate a qualified U.S. public offering by 1 May 2007, the holders of the Company’s Convertible Notes with an outstanding aggregate face value of US $31.08 million have the right to require the Company to repurchase for cash, on 1 November 2008, all or a portion of their notes at a repurchase price equal to 100% of the face amount, plus accrued interest.  Throughout 2007, the Company has been focused on de-risking the November 2008 put option and the related refinancing risk.  The Placing therefore represents a very positive development at de-risking and repositioning the Company’s balance sheet.  In a deal struck with the holders of the Convertibles Notes, and given the capital raise with the Placing, the Company is now positioned to retire US $16.2 million of aggregate principal amount of the Convertible Notes.  At the same time, the Company has successfully negotiated the conversion of US $6.9 million of Convertible Notes principal into equity and amend the terms of the remaining US $8.0 million of Convertible Notes principal.  Under the terms of agreements reached with the holders of the Convertible Notes:

  • US $16.2 million of aggregate principal amount of Convertible Notes will be redeemed at a premium of 3% to nominal value, together with accrued interest to redemption date, at an aggregate cost of approximately US $17.0 million;
  • US $6.9 million of aggregate principal amount of Convertible Notes will be converted into equity (at the 85p per share Placing Price) at a premium of 5% to nominal value, resulting in the issue of 4,246,324 new Common Shares (“Conversion Shares”); and
  • the remaining US $8.0 million of Convertible Notes, held by one institutional investor, have been significantly restructured as follows:
    • the coupon has been reduced from 8.5% to 6.5% and is now payable, at the Company’s election, in cash or Common Shares;
    • the November 2008 put option, at the noteholder’s election, has been removed;
    • the conversion make-whole payment has been removed; and
    • the conversion price has been reduced from US $3.392 (approximately £1.70) to £1.00, representing a 17.6% premium to the Placing Price.

The total net proceeds of the Placing will accordingly be used to meet the full cash cost of the proposals set out above, amounting to US $17.0 million (approximately £8.5 million), with the balance of the proceeds of the Placing, amounting to US $9.6 million (approximately £4.8 million), being used for general corporate and working capital purposes.

Details of the Placing

Under the terms of the Placing, the Company has raised £14 million in gross proceeds (£13.2 million or US $26.4 million after cash expenses) by the issue of 16,470,588 new Common Shares at a price of 85p per share, representing a discount of approximately 1.7% to the closing mid-market price on 19 December 2007.  The Placing Shares have been placed with institutional and other investors by Mirabaud Securities.
Application has been made for Admission and it is expected that dealings in the Placing Shares (and the Conversion Shares) will commence at 8.00 a.m. on 28 December 2007. The Placing Shares and the Conversion Shares will be issued as fully paid and will rank pari passu in all respects with the existing issued and outstanding Common Shares, including as to voting rights and the right to receive any future dividends and other distributions.
The Placing is conditional, inter alia, on:

  • Admission becoming effective by 8:00 am on 28 December 2007 (or such other later date being no later than 11 January 2008); and
  • the Placing Agreement not being terminated in accordance with its terms prior to Admission occurring.

Under the terms of the Placing Agreement, certain customary representations and warranties have been provided to Mirabaud Securities, including certain representations and warranties, the benefit of which are extended to investors in the Placing, relating to the factual accuracy of the related issue documentation (including this announcement), the status of the Company’s borrowings and working capital, the accuracy of the Company’s last interim results, and the running of the Company since the last interim accounts date.

The Placing Shares equate to 23.3% of the Company’s current issued share capital.  Following Admission of the Placing Shares and the Conversion Shares, the number of issued and outstanding Common Shares will be 91,379,863.  After giving effect to the exercise or conversion of all outstanding warrants, options and all remaining Convertible Notes in existence immediately after Admission, the total number of Common Shares on a fully diluted basis will be 100,400,751.

Under the terms of the IPO Placing Agreement, the Company is required to obtain written consent from a majority of its Shareholders and from KBC Peel Hunt (the Company’s Nominated Adviser) to non pre-emptive issues in any rolling 12-month period of in excess of 10% of the Company’s issued share capital from time to time.  Such written consents have been obtained from KBC Peel Hunt and from Shareholders holding, in aggregate, more than 50% of the Company’s issued share capital.

Definitions

The following definitions apply throughout this announcement unless the context requires otherwise:


Admission

admission of all the Placing Shares to trading on AIM becoming effective in accordance with the AIM Rules, expected to take place on 28 December 2007

AIM

a market operated by the London Stock Exchange

Common Shares

shares of common stock in the Company

Convertible Notes

the subordinated convertible notes due 1 November 2010 issued by the Company on 4 November 2005

IPO Placing Agreement

the conditional agreement dated 7 May 2004 between the Company, the Directors and KBC Peel Hunt

KBC Peel Hunt

KBC Peel Hunt Ltd, the Company’s nominated adviser, a member of the London Stock Exchange and authorised and regulated by the Financial Services Authority

Mirabaud Securities

Mirabaud Securities Limited, a member of the London Stock Exchange and authorised and regulated by the Financial Services Authority

Placing

the conditional placing by Mirabaud Securities of 16,470,588 new Common Shares on the terms of the Placing Agreement

Placing Price

85p per Placing Share

Placing Shares

the 16,470,588 new Common Shares to be issued by the Company pursuant to the Placing

Solar Integrated or the Company

Solar Integrated Technologies, Inc.

For more information, please contact:

Solar Integrated Investor Contacts:
Solar Integrated Technologies, Inc.                            Solar Integrated Technologies, Inc.
R. Randall MacEwen                                                  John M. Palumbo
President & Chief Executive Officer                           Chief Financial Officer
Los Angeles, California, USA                                      Los Angeles, California, USA
+1.562.299.0136                                                         +1.562.299.0121

KBC Peel Hunt Ltd.                                                     Mirabaud Securities Limited
Nominated Advisor and Joint-Broker                         Joint-Broker
Julian Blunt or Oliver Stratton                                     Peter Krens or Kim Richardson
+44.20.7418.8900                                                       +44.20.7878.3362

Solar Integrated Media Contacts:
Gavin Anderson & Company                                     
Ken Cronin or Deborah Walter                                              
London, UK                                                                
+44.20.7554.1400

About Solar Integrated:
Solar Integrated Technologies, Inc. (SIT: AIM.LN) is a Los Angeles-based company that manufactures, designs and installs building integrated photovoltaic (BIPV) roofing systems for non-residential, low-slope rooftops.  We are a leader in the development of an innovative and proprietary BIPV roofing system that combines flexible thin-film solar modules with a single-ply roofing membrane for large-scale commercial and industrial applications.  Our BIPV roofing system enables our customers to transform a traditional rooftop into a value-generating asset.  Our customers include Audi, Carrefour, Coca-Cola Enterprises, Frito-Lay, Honeywell, Metro, ProLogis, San Diego Unified School District, Tesco, Toyota, Unibail-Rodamco, UPC Solar, U.S. Air Force, U.S. GSA, U.S. Navy, Wal-Mart and Westfield.  For more information, please visit www.solarintegrated.com.

Mirabaud Securities and KBC Peel Hunt (both of which are authorized and regulated by the FSA) are acting as respectively, broker and Nominated Adviser to Solar Integrated in relation to the Placing. They are not acting for anyone else and will not be responsible to any other person for providing the protections afforded to their clients or for advising any other person in relation to the Placing or any other matter referred to in this announcement.

Neither this announcement nor any copy of it may be taken, transmitted or distributed, directly or indirectly, in or into the Australia, Canada, Japan, New Zealand, South Africa, Switzerland or the United States. Any failure to comply with this restriction may constitute a violation of Australian, Canadian, Japanese, New Zealand, South African, Swiss or US securities laws.

THIS ANNOUNCEMENT IS NOT AN OFFER OF NEW COMMON SHARES FOR SALE IN THE UNITED STATES. THE NEW COMMON SHARES REFERRED TO IN THIS ANNOUNCEMENT HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE US SECURITIES ACT OF 1933, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THERE WILL BE NO PUBLIC OFFER OF THE NEW COMMON SHARES IN THE UNITED STATES.

Forward-Looking Statements:

This release includes forward-looking statements which are based on certain assumptions and reflect management’s current expectations as contemplated under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. Some of these factors include: uncertainty as to whether our strategies, partnerships and business plans will yield the expected benefits; general global economic conditions; the availability and cost of capital; general industry and market conditions and growth rates; increasing competition; the ability to identify, develop and achieve commercial success for new products, services and technologies; changes in technology; changes in laws and regulations, including government incentive programs; intellectual property rights; our ability to secure and maintain strategic relationships, including key supply relationships; and the availability of, and our ability to retain, key personnel. Additional factors are discussed in our public disclosure materials from time to time. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.