TIDMANGS
RNS Number : 5713M
Angus Energy PLC
24 May 2022
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY
THE COMPANY TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER
THE MARKET ABUSE REGULATION (EU) NO . 596/2014 AS IT FORMS PART OF
UK DOMESTIC LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT
2018, AS AMED . UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A
REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO
BE IN THE PUBLIC DOMAIN .
24 May 2022
Angus Energy Plc
("Angus Energy", the "Company" or together with its
subsidiaries, the "Group")
(AIM:ANGS)
Acquisition of remaining 49% interest in the Saltfleetby
Project
Subscription of GBP3,000,000
Conditional Subscription of up to a further GBP3,000,000
Angus Energy Plc (AIM:ANGS) is pleased to announce that it has
executed a share purchase agreement ("SPA") to acquire the entire
issued share capital of the Company's current joint venture partner
in the Saltfleetby Project (the "Project"), Saltfleetby Energy
Limited, (" SEL " or the " Target ") which owns a 49% working
interest in the Project (the "Acquisition") thereby giving Angus
Energy a 100% interest in the Project. To fund the Acquisition and
other working capital requirements, the Company has concurrently
arranged a direct subscription with affiliates of Aleph
International Holdings (UK) Limited ("Aleph") pursuant to which
Aleph has subscribed for a total of 546,000,000 Ordinary Shares in
the Company at a price of 1.09896011 pence, being GBP6,000,000
(Direct Subscription) split into an initial unconditional tranche
of GBP3,000,000 and a second tranche of GBP3,000,000 conditional on
Shareholder approval.
Summary of the Acquisition
The Company has executed a share purchase agreement to acquire
the entire issued share capital of the Target from Forum Energy
Services Limited ("Forum" or the "Seller"). The total effective
consideration payable pursuant to the SPA is the sum of
GBP14,052,000, which comprises:
-- GBP250,000 to be paid in cash at Completion;
-- the issue of 91 million Ordinary Shares at 1.09896011 pence
per share (the "Funding Price") at Completion (the "Initial
Consideration Shares");
-- the issue and allotment of the 546,000,000 Ordinary Shares at
a price of 1.2 pence per Ordinary Share (the ("Acquisition Price")
at Completion (the "Additional Consideration Shares") which are
subject to lock-up provisions detailed below; and
-- up to GBP6,250,000 deferred consideration to be paid in
instalments from net cash payments to Angus Energy from the Project
through to 31 March 2025 (and subject to an upward or downward net
cash adjustment) as and when those payments would have been
available to SEL under the Company's Senior Debt Facility of May
2021.
Following completion of the Acquisition, the Group would own a
100% working interest in, and would continue to be operator of, the
Saltfleetby Licence.
As a result of the issue of the Initial Consideration Shares and
Additional Consideration Shares and following the issue of the
Initial Subscription Shares detailed below, Forum, will hold
637,000,000 Ordinary Shares in Angus representing approximately 28%
of the Enlarged Issued Share Capital and just under 25% of the
Enlarged Issued Share Capital following the issue of the Secondary
Subscription Shares below.
Under the terms of the SPA, Forum will also have the right to
appoint one director to the Board of Angus Energy which, subject to
regulatory checks by the Company's Nominated Adviser, is expected
to be Paul Forrest, the beneficial owner of Forum. Whilst under the
terms of the Direct Subscription, for so long as Aleph holds at
least 10% of the issued Ordinary Shares, it shall have the right to
approve the appointment of up to two Independent Non-Executive
Directors to the board of the Company (and as a member of each and
any committee of the Board) who are nominated by the Company.
Further details about the Acquisition and the risks associated
with the transaction are set out below.
George Lucan, CEO, comments : "An opportunity has arisen to
consolidate our partners' 49% holding in the Saltfleetby asset for
up to GBP14.052 million which represents a significant discount to
the October 2021 P90 valuation of our own 51% interest at GBP25.4
million. That October 2021 CPR used an average price per therm for
gas of under 70 pence over the entire life of the field whilst the
Heren NBP forward price for gas is presently trading at a level
which is over double that number out to 2025. In that regard we
should note that over 70% of overall field revenues are
unhedged.
Equally important to the Company's long-term future is to
attract the support of a strategic investors in the group led by
Aleph, who have shown repeated commitment to Angus and have the
resources and shared ambitions to grow Angus's production in
hydrocarbons and support its plans in relation to alternative and
renewable energies.
Project progress at Saltfleetby is excellent with all major
equipment on site, electrical and pipework tie-in underway, and
select dry commissioning already begun. With a conservative
estimate for wet commissioning we are confident of being able to
make initial nominations, or First Gas, toward the middle of June.
We aim to focus on new opportunities as soon as this milestone is
achieved."
Summary of Conditional Subscription
To support the Acquisition, and the Company's growth ambitions,
and to manage general working capital and Saltfleetby project
capital expenditure in particular, Angus is pleased to announce
that it has secured a group of strategic investors with whom the
Company has completed, by way of a direct subscription, a
conditional issue of 546,000,000 new Ordinary Shares (the
"Subscription Shares") at 1.09896011 pence per share to raise
GBP6,000,000 with a group of family offices and private investors
led by Aleph (the "Direct Subscription"). Certain affiliates of
Aleph are currently part of the lender group that, along with
Mercuria Energy Trading Limited, has provided total debt of
GBP12,000,000 to Angus Energy and SEL to fund development of
Saltfleetby (see RNS of 13 May 2021).
The Subscription Shares carry in aggregate rights to a further
173,100,000 shares in the Company by way of the issue of warrants,
which can be exercised at any time within the next 5 years at a
price of 1.09896011 pence per share.
Due to the limitations of the Company's headroom, 273,000,000
Ordinary shares (the "Initial Subscription Shares") are being
issued and allotted today for GBP3,000,000, with the remaining
273,000,000 ordinary shares (the "Secondary Subscription Shares")
being issued and allotted for GBP3,000,000 subject to shareholder
approval at the next general meeting of the Company (the "GM")
together with all of the warrants (being 86,550,000 warrants in
respect of the Initial Subscription Shares and 86,550,000 in
respect of the Secondary Subscription Shares). The GM is expected
to be held on 15 June 2022. A further announcement will be made
when the Shareholder Circular is sent to Shareholders to convene
the GM.
The Funding Price represents a discount of approximately 14% per
cent. to the Closing Price of 1.28 pence per Ordinary Share on 23
May 2022, being the latest practicable business day prior to the
publication of this Announcement.
The Acquisition Price represents a discount of approximately 6%
per cent. to the Closing Price of 1.28 pence per Ordinary Share on
23 May 2022, being the latest practicable business day prior to the
publication of this Announcement.
Lender Shares
Further to the announcement made by RNS on 3 June 2021,
5,000,000 Lender Shares are to be issued and allotted in lieu of a
cash facility fee pursuant to the Company's Saltfleetby Loan
Development Facility to the Lenders or their representatives at or
around the first anniversary of the Loan Completion.
Admission to trading
Application will be made to the London Stock Exchange for
Admission of the Initial Consideration Shares, Additional
Consideration Shares, Initial Subscription Shares and Lender Shares
(together the "New Shares"). It is expected that admission will
become effective and dealings in the New Shares will commence at
8.00 a.m. on or around 27 May 2022 ("Admission").
Following the issue of the New Shares, the Company will have
2,283,650,514 Ordinary Shares in issue (the "Enlarged Issued Share
Capital"), each share carrying the right to one vote. The Company
does not hold any Ordinary Shares in treasury. The above figure of
2,283,650,514 Ordinary Shares may be used by shareholders in the
Company as the denominator for the calculations by which they will
determine if they are required to notify their interest in, or a
change to their interest in, the share capital of the Company under
the Financial Conduct Authority's Disclosure Guidance and
Transparency Rules.
FULL DETAILS OF THE ACQUISITION AND SUBSCRIPTION ARE SET OUT
BELOW
For further information on the Company, please visit www.angusenergy.co.uk or contact:
Enquiries:
Angus Energy Plc www.angusenergy.co.uk
George Lucan Tel: +44 (0) 208 899 6380
Beaumont Cornish Limited (Nomad) www.beaumontcornish.com
James Biddle / Roland Cornish Tel: +44 (0) 207 628 3396
WH Ireland Limited (Broker)
Katy Mitchell / Harry Ansell Tel: +44 (0) 207 220 1666
Flagstaff PR/IR angus@flagstaffcomms.com
Tim Thompson / Fergus Mellon Tel: +44 (0) 207 129 1474
Aleph Commodities info@alephcommodities.com
Further details of the Acquisition
The Company has executed an SPA with Forum, SEL and Paul
Forrest, as the legal and beneficial owner of Forum, pursuant to
which, the Company intends to acquire the entire issued share
capital of the Target and accordingly, following completion of the
Acquisition, the Group would own a 100% working interest. Pursuant
to the SPA, completion of the Acquisition remains subject solely to
application for admission of the New Shares to trading on AIM which
is expected to occur later today with Admission expected to occur
on 27 May 2022 ("Completion").
The effective aggregate consideration payable pursuant to the
SPA is the sum of GBP14,052,000, which comprises:
-- GBP250,000 to be paid in cash on Completion;
-- the issue and allotment of 91 million Ordinary Shares at
1.09896 pence per share at Completion;
-- the issue and allotment of the 546,000,000 Ordinary Shares at
a price of 1.2 pence per Ordinary Share (the "Consideration
Shares")at Completion; and
-- up to GBP6,250,000 deferred consideration to be paid in
instalments from net cash payments to Angus from the Project
through to 31 March 2025 (and subject to an upward or downward net
cash adjustment) as and when those payments would have been
available to SEL under the Company's Senior Debt Facility of May
2021 and the Joint Operating Agreement of the PEDL005 Licence.
The Company has also agreed to assume a debt of GBP1,400,000
owed by the seller to the Target which is expected to result in
GBPnil cash outflow to Angus.
SEL is being acquired on a GBPnil net cash/ debt basis. A
closing statement is issued detailing creditors and debtors of the
Company and any deviation from which results in positive or
negative adjustments to the quantum of deferred consideration of
GBP6,250,000.
The Initial Consideration Shares and Additional Consideration
Shares are to be issued on the day prior to Admission. The 91
million Initial Consideration Shares can be disposed of immediately
but Forum has undertaken not to dispose of any Additional
Consideration Shares for the first 3 months from the date of
Acquisition and not to dispose of more than 25% of the 546,000,000
Additional Consideration Shares in each 3-month period thereafter
.
Each of the Company and the Seller have given customary
warranties to the other.
The obligations of the Seller under the SPA are guaranteed by
its shareholder although this guarantee is limited to facts known,
given reasonable enquiries, at the date of disposal and is further
limited to a term of one year.
Pursuant to the SPA, Forum Energy Services Limited will be
entitled to appoint and maintain in office a director of the
Company. Further details of any such appointment shall be announced
in due course, assuming that the Acquisition is completed.
Regulatory Consents and Other Legislation
The North Sea Transition Authority ("NSTA") (formerly Oil &
Gas Authority) must approve all UK oil and gas licence transfers
none of which are contemplated here. NSTA also have authority to
overturn corporate transactions, or revoke licences, involving
licensees where they believe that the transfer may "prejudiced that
licensee's ability to meet its [Licence] Commitment" whether on
"technical or financial" grounds.
No consent is required for these corporate transactions but a
formal comfort letter, itself limited, may be applied for. Given
the present advised timing of such an application, the Company has
instead written to NSTA explaining its reasons for believing that
the transaction will not prejudice SEL's ability to fulfil its
licence commitments and this substantial equity raise is part of
the assurance of the same.
Given Angus' existing technical resources and much increased
financial resources, the Directors believe the risk of any
direction by NSTA to be extremely low nevertheless the potential
exists that without a formal comfort letter, NSTA can overturn the
transaction set out in this announcement. The SPA with Forum
contains an alternative arrangement involving the issue of notes by
SEL giving rights to all Field income after loan and hedging costs
which arrangement may be further modified by mutual consent to meet
the requirements of the NSTA as to the Licensing system .
In addition, SEL was also a "qualifying entity" under the new
National Security and Investment Act 2021 solely by virtue of its
holding of a site-specific OFGEM gas transporter licence.
Notification has been made to the National Security Unit at BEIS to
obtain approval but, as a contingency, SEL has also lodged a
unilateral transporter licence relinquishment letter in escrow,
such that it may cease to be a qualifying entity if the transaction
is challenged. The Directors do not believe that the transaction
should be challenged on national security grounds.
Schedule Four disclosures
In the year to 31 May 2021 SEL reported losses of GBP0.333
million and had net assets of GBP12.453 million.
In the Company's annual accounts to 30 September 2021, Angus
Energy's recognised 100% of the liabilities of the Debt Facility
and Derivative Liability relating to the Saltfleetby Field, thereby
reporting liabilities of GBP12 million owed under the Debt Facility
and a Derivative Liability of GBP25.770 million. Angus Energy
recognised a debtor of GBP3.240 million and GBP12.627 million in
respect of these last two amounts, thereby accounting for SEL's 49%
interest. Following completion of the Acquisition, Angus Energy
will recognise 100% of the Project revenues, costs and liabilities
with no farmee interest represented.
Use of Proceeds
The Company has undertaken the Direct Subscription of GBP6
million to progress its corporate and operational strategy and the
net proceeds will therefore be applied as follows :
Of the Initial Subscription Shares:
o GBP0.25m in respect of payment of the initial cash
consideration in respect of the Acquisition ;
o GBP0.75m to meet the budget overspend in respect of the
Saltfleetby Project ;
o Transaction costs - legal and advisory of GBP0.5m; and
o Working capital and future acquisition finance of
GBP1.50m.
Of the Secondary Subscription Shares:
o GBP2.5m as reserves to satisfy lenders and regulators ;
and
o Working capital and future acquisition finance of GBP0.5m
Disclaimers - this Announcement includes statements that are, or
may be deemed to be, "forward-looking statements". These
forward-looking statements can be identified by the use of
forward-looking terminology, including the terms "believes",
"estimates", "forecasts", "plans", "prepares", "anticipates",
"projects", "expects", "intends", "may", "will", "seeks", "should"
or, in each case, their negative or other variations or comparable
terminology, or by discussions of strategy, plans, objectives,
goals, future events or intentions. These forward-looking
statements include all matters that are not historical facts. They
appear in a number of places throughout this Announcement and
include statements regarding the Company's and the Directors'
intentions, beliefs or current expectations concerning, amongst
other things, the Company's prospects, growth and strategy. By
their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future.
Forward-looking statements are not guarantees of future
performance. The Company's actual performance, achievements and
financial condition may differ materially from those expressed or
implied by the forward-looking statements in this Announcement. In
addition, even if the Company's results of operations, performance,
achievements and financial condition are consistent with the
forward-looking statements in this Announcement, those results or
developments may not be indicative of results or developments in
subsequent periods. Any forward-looking statements that the Company
makes in this Announcement speak only as of the date of such
statement and (other than in accordance with their legal or
regulatory obligations) neither the Company, nor the Bookrunner nor
Beaumont Cornish nor any of their respective associates, directors,
officers or advisers shall be obliged to update such statements.
Comparisons of results for current and any prior periods are not
intended to express any future trends or indications of future
performance, unless expressed as such, and should only be viewed as
historical data.
Beaumont Cornish Limited, which is authorised and regulated in
the United Kingdom by the Financial Conduct Authority, is acting as
nominated adviser to the Company in relation to the matters
referred herein. Beaumont Cornish Limited is acting exclusively for
the Company and for no one else in relation to the matters
described in this announcement and is not advising any other person
and accordingly will not be responsible to anyone other than the
Company for providing the protections afforded to clients of
Beaumont Cornish Limited, or for providing advice in relation to
the contents of this announcement or any matter referred to in
it.
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