Update on Financing and Board Change

Angus Energy PLC

14 July 2023

 

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 AMENDED. UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.

14 July 2023

Angus Energy Plc

("Angus Energy", the "Company" or together with its subsidiaries, the "Group")

(AIM:ANGS)

Update on Bridge Financing, Hedge Management and Board Change

·    £6m debt facility agreed in principle and waivers obtained

·    Potential £20m Global Refinancing

·    Discussion under way for future refinance of the senior and junior debt

·    Forward hedges to be partially unwound to allow exposure to higher gas prices

·    Board Change

·    Progress on commercialisation of the gas storage at Saltfleetby

£6.0 million Bridge Facility

Further to the announcements of 30 June and 10 July 2023, Angus is pleased to confirm that it has now agreed the detailed terms for the proposed GBP 6 million junior debt facility (the "£6m Bridge Facility") and has received approval from the lenders under the Company's senior secured loan facility to proceed.  The Company has now to execute the final documentation after which it will proceed to completion and drawdown.

As identified in the Company's Interim Results announced on 30 June 2023, the Company is required to make a payment due under the derivative instrument of approximately £3.5million by 20 July 2023 for financial hedges not settled in July and August 2022 due to late start-up of gas production at the Saltfleetby Field. This £6m Bridge Facility will meet this obligation as well as providing funds for existing and proposed capital, general working capital and operating expenditures around the temporary and permanent flowlines at Saltfleetby. 

The £6m Bridge Facility has been arranged by Aleph Commodities Limited ("Aleph") and the ultimate providers are a range of private family office investors introduced by Aleph, many of whom were providers to the Company's 2021 Senior Loan Facility.  The terms are in line with the previous £3m Bridge Facility arranged in March 2023, which has been rolled until September 2023, and will be announced on completion and drawdown planned for next week. Given Aleph are a Substantial Shareholder in the Company the £6m Bridge Facility and any associated fees payable to them will be treated as a Related Party transaction under AIM Rule 13 and considered as such once documentation is to be executed and announced.

Potential £20m Global Refinancing

Last month, the Company entered into a further non-binding, conditional Term Sheet with Aleph Commodities Limited for a loan facility of up to US$25 million for an 18 month term with an all-in coupon of 15% per annum fixed ("Global Refinance Facility").  The proposed Global Refinance Facility is extendable at the Company's option for an additional period of 18 months, for a total tenor of 36 months.  This facility, if it proceeds, would be intended to refinance the c. £7.35 million outstanding under the Senior Facility as well as the £3 million and £6millon Bridge Facilities. 

The Global Refinance Facility is expected to contain less onerous covenants and would make allowance for the payment of dividends in line with the Company's goal of returning capital to shareholders.  The improved financing terms, including the bullet repayment profile will strengthen the balance sheet of the Company and provide flexibility to deploy cash generated for distributions, organic and inorganic growth opportunities. While the aim is to conclude the refinancing as swiftly as possible, definitive agreement needs to be reached with the ultimate provider(s) of the funding for the Global Refinance Facility, due diligence and discussions remain ongoing and there can be no guarantee that the proposed Global Refinance Facility will be made available to the Company.  In parallel, the Company is also in discussions with another financial provider to provide pre-payments for the gas and restructuring of the hedges. These facilities could either be complementary or an alternative to the Global Refinancing Facility.

Potential Gas Storage

Interest has been expressed by three major integrated gas players in long-term gas storage at Saltfleetby.  The site was  previously fully permitted under the ownership of Wingas in 2010, and we are now in the process of obtaining the first stages of a fresh planning permission and detailed technical evaluation for that project.  Consultations have been held with various branches of government on this subject which obviously comes at a critical time for the energy security needs of the country. The monetization of the gas storage would provide an additional revenue stream for the Company and the Company expects to select a strategic partner by year end on this project.

Forward Hedge Management

The Company's hedge counterparty has agreed to allow the Company to crystallise (i.e. unwind) 50% of its forward hedge liability from Q3 2024 to the end of the hedge profile in June 2025.  Settlement for each unwind is deferred until the periods in question and no interest is being charged.  The resulting hedge profile will leave the Company and its shareholders with more exposure to upward movements in gas prices going forward.  

Board Change

George Lucan has notified the Board of his intention to step down as Executive Chair with effect from 14^th August 2023. The search for a new non-executive Chair has been initiated.

George Lucan, Executive Chairman, comments:  "We are grateful to our core supporters for making this facility available at short notice and so further evidencing their commitment to the development of the Company whilst protecting fellow shareholders from unnecessary dilution.  This marks a moment, going forward from which, the Company can show itself to be a self-standing and cash generating vehicle simultaneously rewarding shareholders and pursing growth in the energy transition.  

Upon the successful completion of this financing, this will represent an opportune moment for me to step aside and allow Richard a free but firm hand on the tiller.  Accordingly, I have asked the Board to begin the search for a new non-executive Chair and several candidates have already been approached.  I have advised the Directors that I shall step down from the Board in the middle of August, but will remain available as a resource for the Company for some months after that to assist in the prospective global refinancing as well as our longer term gas storage project.

It has been a pleasure serving Angus and its stakeholders and an equal pleasure to be able to leave shareholders with both a high quality producing gas field, the additional potential of a national storage asset, and a high calibre CEO."

Richard Herbert, CEO, comments:  "With the Saltfleetby Field now producing at design capacity, we are now seeing the benefits of production well above our committed hedge volumes at strong summer gas prices. The new bridge facility will allow us to close out the legacy hedge payable which arose last year when production start up was delayed and we can now look forward with confidence. I wish to thank George for his help and guidance since my arrival at Angus and for all his hard work and accomplishments for the Company."

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For further information on the Company, please visit www.angusenergy.co.uk or contact:

Enquiries:

Angus Energy Plc                                             www.angusenergy.co.uk

Richard Herbert/ George Lucan                 Tel: [phone]

Beaumont Cornish Limited (Nomad)      www.beaumontcornish.com

James Biddle / Roland Cornish                   Tel: [phone]

WH Ireland Limited (Broker)     

Katy Mitchell / Harry Ansell                         Tel: [phone]

Flagstaff PR/IR                                                  [e-mail]

Tim Thompson / Fergus Mellon                 Tel: [phone]              

Aleph Commodities                                       [e-mail]

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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