TIDMNTOG
RNS Number : 0775K
Nostra Terra Oil & Gas Company PLC
17 April 2020
17 April 2020
Nostra Terra Oil and Gas Company plc
("Nostra Terra" or the "Company")
Posting of Circular and Notice of General Meeting
Nostra Terra (AIM:NTOG), the oil and gas exploration and
production company with a portfolio of assets in Texas, USA,
announces that it will today be posting to Shareholders a circular
(the "Circular"), along with accompanying notice of general meeting
and form of proxy (together, with the Circular, the "Documents"),
in relation to the Third Requisition and the Fundraise Warrants
(both as defined below).
The General Meeting will be held at 11:00 a.m. on 13 May 2020 at
the offices of Druces LLP, Salisbury House, London Wall, London
EC2M 5PS. T he Documents will shortly be available on the Company's
website.
The Letter from the Chairman of the Company has been extracted
from the Circular and included in this announcement below.
Shareholders should note the advice set out below regarding the
potential impact of the COVID-19 outbreak on attendance at the
General Meeting.
Unless the context requires otherwise, definitions used in this
announcement will have the same meaning as ascribed to them in the
Circular.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
For further information, visit www.ntog.co.uk or contact:
Nostra Terra Oil and Gas Company plc
Matt Lofgran, CEO +1 480 993 8933
Strand Hanson Limited
(Nominated & Financial Adviser & Joint Broker) +44 (0) 20 7409 3494
Rory Murphy / Ritchie Balmer / Jack Botros
Novum Securities Limited (Joint Broker) +44 (0) 207 399 9425
Jon Belliss
Lionsgate Communications (Public Relations) +44 (0) 203 697 1209
Jonathan Charles
LETTER FROM THE CHAIRMAN
Dear Shareholder,
NOTICE OF GENERAL MEETING
As Chairman of Nostra Terra, I invite you to a General Meeting
of the Company to be held at 11:00 a.m. on 13 May 2020 at the
offices of Druces LLP, Salisbury House, London Wall, London EC2M
5PS.
COVID-19 and General Meeting proceedings
In light of the UK government's response to the COVID-19
outbreak, which includes banning all non-essential travel and
gatherings of more than two people, the Company is adopting the
following General Meeting arrangements in order to ensure that the
health and safety of our Shareholders, Directors, employees and
other key stakeholders is protected:
-- The General Meeting will be held at the offices of Druces LLP
at Salisbury House, London Wall, London EC2M 5PS.
-- The General Meeting will only address the formal matters
contained in the Notice of General Meeting.
-- In accordance with the Company's Articles, the quorum
necessary to constitute the General Meeting is two members in
person or proxy, therefore two officers or agents of the Company
(who are also Shareholders) will be in attendance to form the
quorum and conduct the business of the General Meeting.
-- Attendance by additional Shareholders is not considered as
"essential for work purposes" and so would not be permitted under
the Stay at Home Measures. As such, if the Stay at Home Measures
remain in force as at the date of the General Meeting, additional
Shareholders must not attend the General Meeting in person. Anyone
who seeks to attend in person will not be admitted to the General
Meeting.
-- Shareholders may listen to the formal General Meeting
proceedings by dialing into 0843 373 0843 with pin code 60340691.
Shareholders should be aware that dialing into the General Meeting
will not enable them to vote by telephone, as the Company's
Articles do not permit this.
-- All Shareholders are urged to appoint the Chairman of the
General Meeting as their proxy, with voting instructions. Please
refer to the notes to the Notice of General Meeting for more
information regarding proxy voting.
The UK government may change current restrictions or implement
further measures relating to the holding of general meetings prior
to the General Meeting. Any changes to the General Meeting
(including the arrangements outlined above) will be made available
on the Company's website at www.ntog.co.uk and by means of the
Regulatory Information Service.
Background
Following receipt of letters from Eridge Capital Limited
("Eridge") (formerly New World Oil and Gas plc), dated 15 January
2020 and 31 January 2020, requisitioning general meetings of the
Company's shareholders including, inter alia, resolutions to remove
Matthew Lofgran and Ewen Ainsworth as directors of the Company and
to appoint Andrew Morrison as a director of the Company (the
"Original Requisitions") and the Company entering into further
discussions with Eridge, on 2 March 2020, Ewen Ainsworth stepped
down as Non-Executive Chairman of the Company with immediate
effect.
On 3 March 2020, it was announced that Andrew Morrison would be
appointed as the Non-Executive Chairman of the Company and Dr
Stephen Staley would be appointed as a Non-Executive Director. The
reconstituted Board would immediately conduct a review of all
aspects of the business, including on remuneration and operations.
It was also decided that all Directors will be proposed for
re-election at the next annual general meeting of the Company and
Matt Lofgran commit to remain as President of the Company's
subsidiary, New Horizons Energy 1 LLC, for six months should he
cease to act as a Director of the Company at any time (together,
the "Commitment"). Following discussions with Eridge and Shard
Capital ("Shard"), Eridge gave an undertaking that, conditional on
the Company announcing the abovementioned changes to the Board and
the Commitment, the Original Requisitions served to the Company to
convene a general meeting of the Company would be withdrawn.
Accordingly, all resolutions to be proposed at the general meeting
were withdrawn.
On 30 March 2020, the Company announced that it had received a
letter from Eridge, dated 24 March 2020, requisitioning a general
meeting of the Company's shareholders (the "Third Requisition").
The Third Requisition proposed that Shareholders be asked to
consider a resolution to remove Matt Lofgran as a Director of the
Company.
On 8 April 2020, the Company announced that, Eridge had informed
the Company that a further requisition notice (the "Fourth
Requisition") was in the process of being delivered to the Company
that would propose a general meeting be convened in order for
Shareholders to consider and vote on a further resolution to
appoint Robert Joseph Bensh as a director of the Company.
On 9 April 2020, the Company announced that it was informed via
email by Eridge that the Fourth Requisition it was in the process
of serving to convene a general meeting to appoint Robert Joseph
Bensh as a director of the Company would now not be served.
On 8 April 2020, the Company announced that it had raised
GBP318,055 before expenses via a placing and subscription.
Directors participated in the subscription, amounting to, in
aggregate, GBP90,000. Admission of the shares issued pursuant to
the placing and subscription (the "Fundraise Shares"), is expected
to occur at 8.00 a.m. on or around 20 April 2020. Every two of the
Fundraise Shares had one warrant attached, exercisable at a price
of 0.6p per share for a period of two years (the "Fundraise
Warrants")
The Fundraise Shares will be issued out of the existing
authorities granted to the Directors at the 2019 annual general
meeting. However, the Company does not have sufficient authority to
issue all of the shares on exercise of the Fundraise Warrants. As
the Company is required to convene the General Meeting as a result
of the Third Requisition, the Board considers it appropriate to
propose resolutions to enable shares to be issued in the event that
the Fundraise Warrants are exercised. Accordingly, resolution 2 and
resolution 3 are proposed to be considered by Shareholders at the
General Meeting.
The purpose of this circular is to convene a General Meeting of
the Company at which the Resolutions will be put to a vote of the
Shareholders. For each of resolutions 1 and 2 to be passed, more
than 50 per cent. of the votes cast must be cast in favour of such
resolutions. For resolution 3 to be passed, not less than 75 per
cent. of the votes must be cast in favour of such resolution.
In this letter, I set out the reasons why the Board considers
that:
-- resolution 1 is not in the best interests of Shareholders and
explain why Shareholders should vote AGAINST resolution 1; and
-- why resolutions 2 to 3 are in the best interests of
Shareholders and why Shareholders should vote IN FAVOUR of
resolutions 2 to 3.
Resolution 1
The Board unanimously recommends Shareholders to vote AGAINST
the proposed resolution 1, as they intend so to do in respect of
their own beneficial holdings, which amount to, when taking into
account admission of the Fundraise Shares to trading on AIM, in
aggregate, 42,525,976 Ordinary Shares, representing approximately
12 per cent. of the issued share capital of the Company.
Set out below is a rebuttal of the proposed resolution 1
contained in the Third Requisition and to be considered at the
General Meeting, which will be proposed as an ordinary resolution.
This means that for resolution 1 to be passed, more than fifty per
cent. of the votes cast must be cast in favour of such
resolution.
The Board's response to the proposed resolution 1 is provided
below.
I write in my capacity as Chairman of the Board. The Board has
considered the proposed resolution 1 and has the following
observations and recommendations by way of response.
Firstly, I shall address the proposed resolution 1 in a general
sense and then respond in more detail to each specific point,
highlighting where necessary information and observations, which
may be of use to Shareholders in forming a considered opinion.
General Opinion
It is the Board's firm belief that the proposed resolution 1
contained in the Third Requisition is not to the benefit of
Shareholders. Eridge waited only 21 days following their agreement
to withdraw the Original Requisitions following the board changes
before requisitioning a further general meeting. It therefore gave
the new Board 21 days, in the midst of a global pandemic causing
restricted business and global recession, to conduct the
remuneration and operational review, possibly agree changes and
make suitable announcements. The timing of Eridge's Third
Requisition and additional aborted Fourth Requisition show a
recurring pattern of lack of planning and ill-thought-through
impulsive actions that are extremely ill suited to the careful
running of a public company. Furthermore, the board views the
actions of Eridge a distraction to the Company and a waste of
Company resources that ultimately only cause significant damage to
all shareholders.
Prior to the Original Requisitions, the Board provided Eridge
multiple opportunities to present its business case for changes (or
not) to the Company's business model, but no concrete plan has been
forthcoming. The Board does not believe that Eridge has a credible
business proposition with regard to the future of Nostra Terra; the
Directors have not seen any evidence of one to date.
The Company's near-term work plan was designed to grow
production by approximately 50% , whilst minimising costs, over the
next twelve months and as set out in more detail in the circular of
the Company dated 12 February 2020 (the "February 2020 Circular"),
prior to the severe drop in oil prices beginning on 6 March 2020.
Since this point the Board has made further changes in order to
address the lower commodity price environment. The Board has
recognised the need to augment the leadership team with new Board
appointments to bring in innovative thinking and challenge ideas
and opinions and appointed me (Dr Stephen Staley) on 3 March 2020.
In short, we have a plan to grow the Company, increase production,
minimise costs and generate shareholder value; the Board believes
the proposal underpinning the Third Requisition would prevent us
from delivering this and therefore we strongly recommend that
Shareholders should vote AGAINST the proposed resolution 1.
I shall now review the specific demands/proposal of the proposed
resolution 1.
Resolution 1: to remove Matthew Lofgran as a director of the
Company
I would like to refer Shareholders to the General Opinion
section of the February 2020 Circular starting on page 5 of said
circular, which sets out certain background on Mr Lofgran, in
addition to certain achievements for the Company, during his
tenure. A copy of the February 2020 Circular can be located on the
Company's website in the 'Admission document, Constitutional
documents and Circulars' section at the following link:
http://www.ntog.co.uk/aim-rule-26 .
In the three weeks between Eridge agreeing to the changes to the
Company (listed earlier) and the Third Requisition, the only new
information released to the public was an update on hedges and the
senior lending facility with Washington Federal Bank ("WAFD") (the
"Loan Facility"), where the Company hedged just over half the
production for all of 2020 at prices ranging from approximately $55
per barrel to $57 per barrel, significantly above current oil
prices in the market. The hedges were put in place by Mr Lofgran
and the Board of Directors prior to the receipt of the Original
Requisitions and the appointment of Mr Morrison, thus adding a
significant amount of security for the Company throughout the
year.
The Board firmly believes that removal of Mr Lofgran from the
Board and from the Company would not benefit the Company in any
way. He is the only executive of the Company and he has the primary
knowledge of all the Company's current assets and contracts,
including financing, in the US and he has a clear vision and
executable strategy for growth. The relationships Mr Lofgran has
developed with our lenders in the USA, our contractors in the
industry and with our operational staff in the field are far too
valuable to be discarded based on a perceived past twelve-month
difficult spell. It is short sighted to suggest Mr Lofgran's
removal. The Board has listened to shareholder concerns and
implemented numerous changes including a substantial reduction in
Mr Lofgran's package, however, we consider Eridge to have breached
the terms of the original settlement by lodging two further
requisitions in short order. This level of disruption is not
helpful operationally or financially and must in the Board's
opinion be rejected.
The Board believes that the confidence that Matt Lofgran has
brought to WAFD, not only in negotiating the Loan Facility
initially, but also in managing it since, through the drawdown and
repayment of funds, and the structured hedging of the oil price for
the Company's production, should not be underestimated by Eridge or
other Shareholders. Matt Lofgran has also worked actively with WAFD
on potential acquisition opportunities and WAFD has been very
supportive, providing letters of support regarding the potential
for a significant increase in the facility size and borrowing
base.
Notwithstanding the Commitment, given this material and
important relationship that the Company has with WAFD, not only
with regard to the existing Loan Facility, but also potential
access to further funds if the right growth opportunity presents
itself, the Board believes that the removal of Matt Lofgran from
the Board is counter-productive to shareholders' interests.
The Board recommends that Shareholders vote AGAINST resolution
1.
The Placing and Subscription
As announced on 8 April 2020, the Company has raised GBP318,055
before expenses via a placing and subscription. Directors
participated in the subscription, amounting to, in aggregate,
GBP90,000. Admission of the Fundraise Shares issued pursuant to the
placing and subscription, is expected to occur at 8.00 a.m. on or
around 20 April 2020. Every two of the Fundraise Shares had one
warrant attached, exercisable at a price of 0.6p per share for the
period of two years (the "Fundraise Warrants").
The Fundraise Shares will be issued out of the existing
authorities granted to the Directors at the 2019 annual general
meeting. However, as noted in the Background section of this
circular above, the Company does not have sufficient authority to
issue all of the shares on exercise of the Fundraise Warrants and
accordingly, resolution 2 and resolution 3 are proposed.
Resolution 2: authority of Directors to allot shares
This is an ordinary resolution granting authority to the
Directors to allot new Ordinary Shares up to an aggregate nominal
amount of GBP73,612.00. The authority will expire at the
commencement of the next annual general meeting of the Company.
Resolution 3: dis-application of pre-emption rights
This is a special resolution authorising the Directors to allot
new Ordinary Shares for cash up to the thresholds described in
Resolution 2 on a non pre-emptive basis pursuant to the authority
conferred by Resolution 2 above. This will allow the Directors to
allot the shares on exercise of the Fundraise Warrants for cash.
This authority will expire at the commencement of the next annual
general meeting of the Company.
The Board recommends that Shareholders vote in FAVOUR of
resolution 2 and resolution 3.
Action to be taken
You will find enclosed with this document a Form of Proxy for
use in connection with the General Meeting. Please complete and
return the Form of Proxy in accordance with the instructions
printed on it so as to be received by Share Registrars Limited as
soon as possible, but in any event no later than 11.00 a.m. on 11
May 2020. Alternatively, if you hold shares in CREST, you can
appoint a proxy electronically by using the CREST electronic proxy
appointment service.
The return of the Form of Proxy does not normally prevent you
from attending the General Meeting and voting in person, however
given the unprecedented circumstances resulting from the COVID-19
outbreak, and as noted above, unless the UK government relaxes the
current Stay at Home measures Shareholders who attempt to attend
the meeting in person will not be admitted to the General
Meeting.
EVERY SHAREHOLDER'S VOTE IS IMPORTANT - PLEASE COMPLETE AND
RETURN YOUR FORM OF PROXY AS SOON AS POSSIBLE.
Recommendation
For the reasons set out in this letter, your Board believes that
resolution 1 will not promote the success of, and are not in the
best interests of, the Company and its Shareholders as a whole, and
resolution 2 and resolution 3 will promote the success of, and are
in the best interests of, the Company and its Shareholders as a
whole.
Your Board therefore unanimously recommends that you vote
AGAINST resolution 1, and IN FAVOUR of resolution 2 and resolution
3, as the Directors intend so to do in respect of their own
beneficial holdings, when taking into account admission of the
Fundraise Shares to trading on AIM, of, in aggregate, 42,525,976
Ordinary Shares, representing approximately 12 per cent. of the
issued share capital of the Company.
Yours faithfully
Dr George Henry Stephen Staley
Chairman
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END
MSCGPUGUCUPUGWM
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