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Cinpart raises £1.39m to fund sales and marketing drive

Cinpart (LON:CINP) has raised £1.39m through a placing of 19.8m shares at 7p each, and the proceeds will be used for the sales and marketing efforts in the UK. Cinpart’s 72.2%-owned voltage optimisation business Active Energy has been driving growth with a series of new orders in recent months, and the company believes that the placing will enable it to build on the progress made to date.

“The directors believe that there continues to be significant opportunities for growth, underpinned by the strengthening UK sales pipeline and Cinpart's relationships with Southern Electric Contracting Ltd (SEC) and its new overseas partners”, Cinpart stated.

The new shares were placed with institutional investors and other investors introduced by its joint brokers, and on closing they will represent 18.6% enlarged share capital. The new shares are expected to be admitted to the AIM market on the 22 July 2010.

Additionally, the company’s directors also participated in the placing with Chairman Philip Palmer, chief executive Kevin Baker and executive director Christopher Foster buying 214,285, 142,857 and 285,714 shares respectively.

"In a challenging economic environment for small cap companies we are very pleased with the support we have received from both new and existing investors.  We believe that there are exciting opportunities available to us both in the UK and internationally and this placing will help us to deliver further growth”, Cinpart CEO Baker said.

Active Energy is the company’s primary operation. Active Energy’s VoltageMaster range of transformers are aimed at helping non-domestic customers save energy. Voltage optimisation is a method of reducing electricity consumption by lowering the single-phase voltage that enters a building to 220 volts. It is a particularly effective means of saving energy in the UK because there is a national problem of ‘over-voltage’.

The equipment is designed to be installed in factories, hotels, schools, offices and hospitals to save energy. Firstly, it is non-controversial since it is simply a piece of equipment that is installed, out of sight, in a switch room. Secondly, it is largely maintenance free and is designed to work for at least 15 years.

In the UK, Active Energy has a significant strategic partnership with Southern Electric Contracting Ltd (SEC) - a Scottish & Southern Energy (LON:SSE) business. Through the arrangement the VoltageMaster became the preferred voltage optimisation device for the commercial clients of SSE’s contracting unit. Additionally, SEC became Active Energy's preferred installation sub-contractor.

The partnership has already proved fruitful for Active Energy, and Cinpart, with a number of new contract since the partnership was formalised back in February 2010.

Most recently, on 13 July, Active Energy was awarded orders from a local government purchasing consortium to supply VoltageMasters to five prisons across the UK. As well as further contract wins worth up to £150,000. The company told investors that the sales were a direct result of its strategic relationship with SEC, which will carry out the installations.

In February, the company won a £900,000 contract, to provide 55 VoltageMaster units at 52 courts throughout England and Wales.

Over recent weeks, Cinpart has also unveiled plans to push its voltage optimisation technology into the US markets. It has already signed a number of MoUs with influential partners, as well as selecting a site for a new US-based assembly facility in Ohio.

Active Energy plans to focus its major US marketing push on schools, prisons and other local authority buildings.