GR ENGINEERING SERVICES LIMITED — Capital/Financing Update 2021

Apr 26, 2021

Proposed issue of securities

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Announcement Summary

Entity name

GR ENGINEERING SERVICES LIMITED

Announcement Type

New announcement

Date of this announcement

Tuesday April 27, 2021

The Proposed issue is:

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A placement or other type of issue

Total number of +securities proposed to be issued for a placement or other type of issue

		Maximum Number of
ASX +security code	+Security description	+securities to be issued
GNG	ORDINARY FULLY PAID	9,222,008

Proposed +issue date

Monday May 31, 2021

Refer to next page for full details of the announcement

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Proposed issue of securities

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Part 1 - Entity and announcement details

1.1 Name of +Entity

GR ENGINEERING SERVICES LIMITED

We (the entity named above) give ASX the following information about a proposed issue of +securities and, if ASX agrees to +quote any of the +securities (including any rights) on a +deferred settlement basis, we agree to the matters set out in Appendix 3B of the ASX Listing Rules.

1.2 Registered Number Type

ACN

Registration Number

121542738

1.3 ASX issuer code

GNG

1.4 The announcement is

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New announcement

1.5 Date of this announcement

Tuesday April 27, 2021

1.6 The Proposed issue is:

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A placement or other type of issue

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Part 7 - Details of proposed placement or other issue

Part 7A - Conditions

7A.1 - Are any of the following approvals required for the placement or other type of issue? +Security holder approval Court approval Lodgement of court order with +ASIC ACCC approval FIRB approval Another approval/condition external to the entity No

Part 7B - Issue details

Is the proposed security a 'New Will the proposed issue of this class' (+securities in a class that is +security include an offer of not yet quoted or recorded by ASX) attaching +securities? or an 'Existing class' (additional No securities in a class that is already quoted or recorded by ASX)? Existing class

Details of +securities proposed to be issued

ASX +security code and description

GNG : ORDINARY FULLY PAID

Number of +securities proposed to be issued

9,222,008

Offer price details

Are the +securities proposed to be issued being issued for a cash consideration? No

Please describe the consideration being provided for the +securities

Fully paid ordinary shares in MIPAC Holdings Pty Ltd.

Please provide an estimate of the AUD equivalent of the consideration being provided for the +securities 11,900,000.000000

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Will these +securities rank equally in all respects from their issue date with the existing issued +securities in that class? Yes

Part 7C - Timetable

7C.1 Proposed +issue date Monday May 31, 2021

Part 7D - Listing Rule requirements

7D.1 Has the entity obtained, or is it obtaining, +security holder approval for the entire issue under listing rule 7.1? No 7D.1b Are any of the +securities proposed to be issued without +security holder approval using the entity's 15% placement capacity under listing rule 7.1? No

7D.1c Are any of the +securities proposed to be issued without +security holder approval using the entity's additional 10% placement capacity under listing rule 7.1A (if applicable)? No

7D.2 Is a party referred to in listing rule 10.11 participating in the proposed issue? No 7D.3 Will any of the +securities to be issued be +restricted securities for the purposes of the listing rules? No

7D.4 Will any of the +securities to be issued be subject to +voluntary escrow? Yes

7D.4a Please enter the number and +class of the +securities subject to +voluntary escrow and the date from which they will cease to be subject to +voluntary escrow

5,424,711 Shares - 12 months after the issue date (issue date on or prior to 31 May 2021).

Up to 1,162,438 Shares - 12 months after the issue date (issue date anticipated to be following 30 June 2021 and by no later than 31 October 2021)

Up to 2,634,860 Shares - 12 months after the issue date (issue date anticipated to be following 30 June 2022 and by no later than 31 October 2022)

Part 7E - Fees and expenses

7E.1 Will there be a lead manager or broker to the proposed issue? No

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7E.2 Is the proposed issue to be underwritten? No

7E.4 Details of any other material fees or costs to be incurred by the entity in connection with the proposed issue

Part 7F - Further Information

7F.01 The purpose(s) for which the entity is issuing the securities

As part consideration for the acquisition of the fully paid ordinary shares in MIPAC Holdings Pty Ltd.

7F.1 Will the entity be changing its dividend/distribution policy if the proposed issue proceeds? No

7F.2 Any other information the entity wishes to provide about the proposed issue

Up to 3,797,298 fully paid ordinary shares the subject of the proposed issue form part of a deferred consideration component, which the sellers of MIPAC Holdings Pty Ltd will only receive subject to the achievement of earnings criteria agreed by the entity and the sellers.

A lesser number of shares may be issued (ranging from nil to 3,797,298 shares), based on the achievement of EBITDA based earnings criteria in each of FY21 and FY22.

The entity has agreed to issue 5,424,711 fully paid ordinary shares to the sellers upon completion (anticipated to occur on or before 31 May 2021), based on the agreed value of the initial share consideration ($7,000,000) and the 30 day volume weighted average price of the entity's shares as at the day that was two business days prior to the date of the parties' entry into the share sale agreement (22 April 2021), which was $1.29039 (30 Day VWAP).

The 30 Day VWAP has also been used to determine the number of shares that would be issued if 100% of the deferred earnings targets are achieved (3,797,298 fully paid ordinary shares). For the purposes of determining the number of shares at the time of their issue, the 30 day VWAP will be recalculated by reference to the 30 days prior to the issue date of any deferred consideration shares.

Please refer to the entity's ASX release of 27 April 2021 for further information on the earnings criteria associated with the deferred share consideration.

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