TIDMMAGP
Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas
7 June 2018
Magnolia Petroleum plc ('Magnolia' or 'the Company')
Adjournment of General Meeting and Posting of Circular
Magnolia Petroleum plc, the AIM quoted US focused oil and gas exploration and
production company, announces that the general meeting scheduled to be held
today, as notified on 23 May 2018, was opened and adjourned.
The adjourned general meeting has been rescheduled to be held at 15:45 p.m. BST
(09:45 a.m. local time) on 22 June 2018 to be held at the offices of Pray
Walker P.C., 100 West Fifth Street, Suite 900, Tulsa, OK 74103, USA (the
"Adjourned General Meeting").
Shareholders who have submitted forms of proxy for the Adjourned General
Meeting but who wish to change their voting instructions may do so by
resubmitting a proxy form which is available from the Company's website
www.magnoliapetroleum.com. Proxy forms will be accepted for the Adjourned
General Meeting up until 20 June 2018 and should be returned to Neville
Registrars Limited, Neville House, 18 Laurel Lane, Halesowen, West Midlands B63
3DA to arrive by 15:45 p.m. BST.
Shareholders who have already submitted forms of proxy for the Adjourned
General Meeting and who do not wish to change their voting instructions will
not need to take any further action.
Subject to shareholder consent, the revised timetable for Cancellation is as
follows:
2018
Revised latest time and date for receipt of forms of proxy 15:45 p.m. on 20 June
Adjourned General Meeting (to be held at the offices of 15:45 p.m. on 22 June
Pray Walker P.C., 100 West Fifth Street, Suite 900, Tulsa,
OK 74103, USA - BST-6)
Revised announcement of result of the Adjourned General 22 June
Meeting
Revised expected last day of dealings in Ordinary Shares on 29 June
AIM
Revised expected time and date that the admission to With effect from 07:00
trading of the Ordinary Shares on AIM will be cancelled a.m. on 2 July
Posting of Circular
Further to the Company's announcement of 6 June 2018, the Company has today
posted a circular to shareholders to seek consent to dispose of certain assets.
The circular contains a notice convening a general meeting for 15:30 p.m. BST
(09:30 a.m. local time) on 22 June 2018 to be held at the offices of Pray
Walker P.C., 100 West Fifth Street, Suite 900, Tulsa, OK 74103, USA.
Below is an extract from the circular which will also be available on the
Company's website www.magnoliapetroleum.com and which should be read in full.
This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014.
For further information on Magnolia Petroleum Plc visit
www.magnoliapetroleum.com or contact the following:
Rita Whittington Magnolia Petroleum Plc +01918449 8750
Jo Turner / James Caithie Cairn Financial Advisers +44207213 0880
LLP
Daniel Gee Cornhill Capital Limited +44207710 9610
Lottie Brocklehurst St Brides Partners Ltd +44207236 1177
Frank Buhagiar St Brides Partners +44207236 1177
Ltd
Proposed Disposal of Assets
Notice of General Meeting
Dear Shareholder,
1. Introduction
This circular sets out the reasons for seeking Shareholder consent to dispose
of certain assets and why the Board believes the proposal is in the best
interests of Shareholders.
A notice of a general meeting is included at the end of this document convening
a general meeting ("General Meeting") to be held at the offices of Pray Walker,
P.C. at 100 West Fifth Street, Suite 900, Tulsa, OK 74103, USA at 15:30 p.m.
BST (to be held at 09:30 a.m. local time) on 22 June 2018.
2. Background to the proposal
On 6 June 2018, the Company announced that, following protracted negotiations
with its bank, Simmons Bank (the "Bank"), an Arkansas state bank (successor by
merger to bank SNB, an Oklahoma state banking corporation), the Bank would not
extend the reserved based lending facility provided to its wholly owned
operating subsidiary, Magnolia Petroleum, Inc. ("Magnolia Inc"). The amount
outstanding to the Bank is approximately $2,000,000 and Magnolia Inc has been
given until 9 July 2018 to repay or refinance its loan. The Bank has further
placed restrictions on Magnolia Inc's bank account until such time as the loan
is satisfied resulting in the Group not being able to manage its working
capital effectively.
The Board is extremely disappointed with the Bank's decision and attributes the
reasons for this to the Bank's recent sale and change of management. The Board
has previously stated its intention to reduce the Group's debt due to its loss
of confidence in the long term support of the Bank. Further, the Company
recently put a proposal to Shareholders to seek a cancellation from trading on
AIM as it considered that it would not be able to raise further funds from the
equity market such that the costs of remaining on AIM outweighed the benefits.
As a result of the previously announced planned debt reduction programme, the
Board had designated a portfolio of interests in wells (the "Target Assets") as
appropriate for disposal. The Board recognises that the best option available
to preserve shareholder value is to accelerate its disposal plan. Due to the
nature of its assets, the Board is confident that it can sell a sufficient
value of its interests in wells (the "Disposal") prior to the Bank's deadline
to satisfy the bank loan in full. In the event that the loan cannot be repaid
or refinanced, it is likely that the directors would need to commence Chapter
11 bankruptcy proceedings with respect to Magnolia Inc which would lead to a
loss of control of the debt reduction programme and reduced value being
received by the Company for the Target Assets (and its portfolio of remaining
wells). In this scenario it is likely shareholders would receive no value for
the Company's portfolio of wells with all proceeds of sales being used to
settle creditors and the costs of the Chapter 11 proceedings.
.
The portfolio of wells to be sold from the Target Assets is likely to include
its interests in wells in North Dakota and certain properties in Oklahoma,
however, the specific interests in wells subject to the Disposal may change.
The Company's current portfolio comprises interests in 108 wells and further
details of the interests in wells and their economics were included in the
Company's operations update on 16 April 2018. The Company expects current PDP
reserves to be approximately $3,300,000 and it is anticipated that the Disposal
will result in approximately 50 per cent of its wells being sold by number.
Pursuant to Rule 15 of the AIM Rules for Companies, the proposed sale of the
Target Assets will exceed 75 per cent. in at least one of the class tests,
resulting in a fundamental change of business requiring the Company to obtain
the consent of Shareholders at a general meeting prior to completing the
Disposal. Accordingly, a notice of the General Meeting is included at the end
of this document. Whilst the Disposal is not considered at this stage to have
the effect of divesting the Company of substantially all of its trading assets,
to the extent that the sale of Target Assets, subject to Shareholder approval,
is considered to have this effect then Magnolia will be regarded as a AIM Rule
15 cash shell as defined in the AIM Rules for Companies.
There is likely to be more than one buyer for the wells making up the Target
Assets (the market for working interests in wells in North Dakota and Oklahoma
is relatively liquid) and it is expected all buyers will be arm's length third
party cash buyers (not "connected persons" or "related parties" of the Company
or the Directors, as such terms are defined in the Act and the AIM Rules for
Companies respectively). At this stage, the identity of the specific wells to
be sold, and the profits and/or losses and/or costs attributable to such wells,
cannot be confirmed. Further, the identity of buyers of particular wells (or
regional portfolios that are likely to be packaged together) is not known, and
the final consideration the Company will receive for a particular well or
portfolio of wells, and for the Disposal as a whole, is unknown. The Company
will endeavour to achieve the best possible price for each well as part of the
disposal programme and will make a further announcement after the Disposal has
been competed (subject to Shareholder approval) to confirm details of Target
Assets sold (and the portfolio of assets retained by Magnolia Inc), buyers (to
the extent the same can be publicly disclosed), net consideration received by
the Group, and the results of the debt reduction with the Bank.
3. Adjournment of general meeting in respect of the proposed cancellation
On 23 May 2018, the Company sent a circular to all Shareholders to consider a
proposal to cancel admission of its Ordinary Shares to trading on AIM and
convened a general meeting for 7 June 2018 ("Cancellation General Meeting").
In light of the information contained in this circular, the Disposal and threat
of insolvency proceedings for Magnolia Inc, the Board considers that it is
appropriate to adjourn the Cancellation General Meeting to allow Shareholders
time to better consider the situation as a whole. The Cancellation General
Meeting will accordingly be adjourned until 15:45 BST on 22 June 2018, to be
reconvened for immediately after the General Meeting.
Shareholders who have submitted forms of proxy for the Cancellation General
Meeting but who wish to change their voting instructions may do so by
resubmitting a proxy form which is available from the Company's website
www.magnoliapetroleum.com. Proxy forms will be accepted for the Cancellation
General Meeting up until 20 June 2018 and should be returned to Neville
Registrars Limited, Neville House, 18 Laurel Lane, Halesowen, West Midlands B63
3DA to arrive by 15:45 p.m. BST.
Shareholders who have already submitted forms of proxy for the Cancellation
General Meeting and who do not wish to change their voting instructions will
not need to take any further action.
4. General Meeting
You will find set out at the end of this document a notice convening the
General Meeting to be held at the offices of Pray Walker, P.C. at 100 West
Fifth Street, Suite 900, Tulsa, OK 74103, USA at 15:30 p.m. BST (to be held at
09:30 a.m. local time) on 22 June 2018 to consider the resolution seeking
approval for the Disposal.
5. Action to be taken
Holders of Existing Ordinary Shares will find enclosed with this document a
Form of Proxy for use by them at the General Meeting.
Whether or not you are able to attend the General Meeting, you are requested to
complete the enclosed Form of Proxy and return it to Neville Registrars
Limited, Neville House, 18 Laurel Lane, Halesowen, West Midlands B63 3DA as
soon as possible and, in any event, so as to arrive by 15:30 p.m. on 20 June
2018. The completion and return of a Form of Proxy will not prevent you from
attending the General Meeting and voting in person if you subsequently wish to
do so.
Shareholders are reminded that, if their Ordinary Shares are held in the name
of a nominee, only that nominee or its duly appointed proxy can be counted in
the quorum at the General Meeting.
If you are in any doubt as to what action you should take, you are recommended
to seek your own personal financial advice from your broker, bank manager,
solicitor, accountant or other independent financial adviser authorised under
the Financial Services and Markets Act 2000 (as amended) if you are resident in
the United Kingdom or, if not, from another appropriately authorised
independent financial adviser, immediately.
6. Recommendation
The Directors consider the Disposal to be in the best interests of the Company
and Shareholders as a whole. The Board advise that the likely alternative to
the Disposal will be the commencement of Chapter 11 proceedings for Magnolia
Inc, a loss of control of the debt reduction programme, and reduced value being
received by the Company for the Target Assets (and its portfolio of remaining
wells) as a result of the insolvency proceedings it will be required to take.
The Directors unanimously recommend that Shareholders vote in favour of the
resolution as they intend to do in respect of their aggregate interests.
The Directors further encourage Shareholders to resubmit proxy forms in favour
of Cancellation at the adjourned Cancellation General Meeting as, in the event
the Disposal is approved, the asset base of the Company will be significantly
reduced to the extent that maintain admission to trading on AIM is likely to
impact the value to all Shareholders.
Yours faithfully
Leonard Wallace
Non-executive Chairman
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
2018
Publication of this document 7 June
Latest time and date for receipt of forms of proxy 15:30 p.m. on 20 June
General meeting in respect of Disposal (to be held at the 15:30 p.m. on 22 June
offices of Pray Walker P.C., 100 West Fifth Street, Suite
900, Tulsa, OK 74103, USA - BST-6)
Adjourned general meeting in respect of Cancellation (to be 15:45 p.m. on 22 June
held at the offices of Pray Walker P.C., 100 West Fifth
Street, Suite 900, Tulsa, OK 74103, USA - BST-6)
Announcements of result of the General Meeting 22 June
DEFINITIONS
The following definitions apply throughout this document (including the Notice
of General Meeting) and the form of proxy unless the context requires
otherwise:
"Act" the Companies Act 2006 (as amended)
"AIM Rules" the AIM Rules for Companies and the AIM Rules
for Nominated Advisers, as issued by the London
Stock Exchange from time to time
"AIM" the market of that name operated by the London
Stock Exchange
"Cairn" Cairn Financial Advisers LLP, the Company's
Nominated adviser as at the date of this
document
"Cancellation" cancellation from trading of the Company's
Ordinary Shares from trading on the AIM market
of the London Stock Exchange
"Cancellation General the adjourned general meeting of the Company to
Meeting" be held at 15:45 p.m. BST (09:45 a.m. local
time) on 22 June 2018 at the offices of Pray
Walker P.C., 100 West Fifth Street, Suite 900,
Tulsa, OK 74103, USA or any adjournment
thereof, to consider the Cancellation
"Directors" or "Board" the existing directors of the Company whose
names are set out on page 4 of this document
"Disposal" the sale of sufficient assets to repay the
Company's bank loan for which Shareholder
consent is required
"Euroclear" Euroclear UK & Ireland Limited
"Ordinary Shares" the 34,906,992 Ordinary Shares in issue at the
date of this document
"General Meeting" a general meeting of the Company to be held at
15:30 p.m. BST (09:30 a.m. local time) on 22
June 2018 at the offices of Pray Walker P.C.,
100 West Fifth Street, Suite 900, Tulsa, OK
74103, USA or any adjournment thereof, notice
of which is set out in the Notice of General
Meeting
"Group" the Company and its subsidiary undertaking
"Magnolia" or "the Company" Magnolia Petroleum plc
"Magnolia Inc" Magnolia Petroleum, Inc. the Company's wholly
owned subsidiary
"Notice of General Meeting" the notice convening the General Meeting which
is set out at the end of this document
"Ordinary Shares" ordinary shares of 0.1 pence each in the share
capital of the Company
"PDP reserves" Classification of proved reserves which stands
for proved developing producing reserves
"Resolution" the resolution to be proposed at the General
Meeting, details of which are set out in the
Notice of General Meeting
"Shareholder" a holder of Ordinary Shares from time to time
"United Kingdom" the United Kingdom of Great Britain and
Northern Ireland.
"United States" or "US" United States of America and its territories
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
2018
Notice given to London Stock Exchange notifying it of the 22 May
proposed Cancellation
Publication of this document 23 May
Latest time and date for receipt of Form of Proxy 15:30 p.m. on 5 June
General Meeting (to be held at the offices of Pray Walker 15:30 p.m. on 7 June
P.C., 100 West Fifth Street, Suite 900, Tulsa, OK 74103, USA -
BST-6)
Announcements of result of the General Meeting 7 June
Expected last day of dealings in Ordinary Shares on AIM 21 June
Expected time and date that the admission to trading of the With effect from 07:00
Ordinary Shares on AIM will be cancelled a.m. on 22 June
Notes:
1. References to times in this document are to London time (unless otherwise
stated).
2. The General Meeting is being held in the United States and will take place
at 09:30 a.m. local time (BST -6)
3. The times are subject to change by the Company, in which case details of
the new times and dates will be notified to the London Stock Exchange and
the Company will make an appropriate announcement through a Regulatory
Information Service.
EQUITY STATISTICS
Issued Share Capital of the Company as at the date 34,906,992
of this document
ISIN code for the Ordinary Shares GB00B63QSF76
SEDOL for the Ordinary Shares B63QSF7
TIDM Code MAGP
END
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