Financing and Delisting
This announcement has not been approved by the London Stock Exchange plc nor is it intended that it will be so approved.
Certain statements included herein constitute "forward-looking statements" concerning the Company within the meaning of applicable securities legislation. These forward-looking statements are based on certain assumptions made by Gulfsands and as such are not a guarantee of future performance. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond Gulfsands' ability to control or estimate precisely, such as general economic and market conditions in various countries and regions, political risks, environmental and physical risks, legislative, fiscal and regulatory developments, drilling and production results, reserves estimates, changes in demand for Gulfsands' products, increased costs of production or price fluctuations in crude oil and natural gas. Gulfsands cannot give any assurance that such forward-looking statements will prove to be correct. Gulfsands does not undertake any obligation to update or revise publicly any forward-looking statements set out herein, whether as a result of new information, future events or otherwise, except as required by applicable laws.
This announcement contains inside information for the purpose of the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain. If you have any queries on this, then please contact Andrew Morris, the Finance Director of the Company (responsible for arranging release of this announcement) at 5th Floor, 88 Kingsway, London, WC2B 6AA or on +44 20 7841 2727.
21 March 2018
GULFSANDS PETROLEUM PLC
Secured Financing Facility Extension, Strategic Update and Intention to Delist
Gulfsands Petroleum plc ("Gulfsands" or the "Company" - AIM: GPX), the oil and gas company with assets in Syria and Colombia, today announces that it has finalised a £4 million extension to its existing £4 million Secured Term Financing Facility (the "Facility") from its major shareholders, being ME Investments Ltd, Waterford Finance & Investment Limited and Blake Holdings Limited (a company controlled by Mr. Richard Griffiths) (together the "Major Shareholders" or "Lenders"). As a result of strategic discussions with the Major Shareholders related to the Facility extension, the Directors have also concluded that it would currently be in the best interests of the Company to seek Shareholder approval to cancel the admission of its Ordinary Shares from trading on AIM (the "Delisting"), a decision which is supported by all three Major Shareholders who have each provided irrevocable undertakings to vote in favour of the Delisting which amount to approximately 83% of the votes to be cast at the general meeting to be convened to approve the Delisting.
Secured Term Financing Extension
On 16 February 2017, the Company announced that it had entered into the Facility. On 17 January 2018, the Company confirmed that it had completed the draw-down of all remaining tranches of the Facility. Today the Company announces that it has entered into an amendment agreement to the Facility, with the Major Shareholders to extend the maturity of the Facility for 12 months to 23 February 2021 and that the Major Shareholders have committed to provide four additional tranches of £1 million each, to be available on each of 30 June 2018, 31 December 2018, 30 June 2019 and 31 December 2019 (the "Facility Amendment").
The proportionate participation of the Lenders is unchanged with the additional tranches provided as follows:
|
Name of Lender |
Commitment |
|
Waterford Finance & Investment Limited Blake Holdings Limited ME Investments Limited |
£1,492,000 (37.30%) £1,258,000 (31.45%) £1,250,000 (31.25%) |
|
TOTAL |
£4,000,000 (100%) |
The Company's option to convert the debt on maturity has been amended to reflect the proposed Delisting and so now makes reference to the 90-day average closing price prior to 19 March 2018 rather than the 90-day average closing price prior to repayment.
All other terms are unchanged and are summarised as follows:
· Interest on loans made (together with accrued fees and interest) shall run at 7% per annum. A commitment fee of 1% per annum shall run on any undrawn proportion of the Facility. All fees and interest accrue quarterly until maturity.
· All, or part, of the undrawn portion of the Facility may be cancelled at any time by the Company. The Company may prepay the whole or any part (of at least £800,000) of the outstanding amounts at any time subject to paying a 10% premium on the amount pre-paid.
· The proceeds will be used for general and administrative expenses of the Group and for working capital purposes and, based on current forecasts, if fully drawn down, are anticipated to fund the Company through to the middle of 2020.
· The Board may resolve to seek equity financing for the Group in due course should the need arise. If an equity raise takes place, the Lenders will be entitled to be pre-paid on the terms noted above, provided the Lenders agree that the full amount to be pre-paid is used by the Lenders to subscribe for equity in such equity raise at the issue price.
· The maturity date of the Facility is now 4 years from the first drawdown date, being 23 February 2021, at which date all outstanding amounts will be repayable in cash unless the Company has exercised an equity conversion right. Pursuant to that right, the outstanding amounts to be repaid may be converted at the Company's option into shares of the Company at a price equal to the lower of: (i) the 90-day average closing price as at 19 March 2018; and (ii) the lowest price at which the Company has raised equity capital during the life of the Facility.
· The Facility is secured: by a mortgage over the shares of the Company's direct subsidiary, Gulfsands Petroleum Limited; by a charge over certain intercompany receivables of the Company; by a charge over certain bank accounts of the Company (should the Lenders require such a charge to be created); and through the issue of one ordinary share in the share capital of Gulfsands Petroleum Limited to the security trustee. The security trustee for the Facility is Weighbridge Trust. The articles of association of Gulfsands Petroleum Limited were amended when the Facility was first put in place to include certain reserved matters requiring unanimous shareholder consent, pre-emption provisions and compulsory transfer provisions. In addition to the right to enforce the security on an insolvency-related event of default, the Lenders have the right to convert outstanding amounts under the Facility into a direct equity holding in Gulfsands Petroleum Limited, at a fair price (from a financial point of view taking into account all relevant circumstances) to be determined by an expert at the time.
Entering into this Facility Amendment by the Lenders is considered a related party transaction pursuant to the AIM Rules. The independent Directors of Gulfsands for the purposes of this transaction (being Joe Darby, Richard Milne, John Bell and Andrew Morris,) consider, having consulted with the Company's Nominated Adviser, that the terms of the Facility Amendment are fair and reasonable insofar as the shareholders of Gulfsands are concerned.
Strategic Update
In conjunction with the agreement to the Facility Amendment, the Major Shareholders have indicated their support for a progression of the Company's medium-term strategy.
The Company's long-term strategy remains to be a major oil and gas producer in the Middle East. The Company is committed to Syria and continues to view its world class Block 26 asset as core to its strategy. The Company has a long history and experience in the Middle East region, in particular in the Levant, and despite the reported increase in hostilities in recent weeks, the Board remains cautiously optimistic in the medium-term regarding the improving environment in the region. Consequently, the Board has decided to pursue a more progressive medium-term strategy beyond merely preserving and protecting its existing core assets.
Following the proposed Delisting, the Board will pursue this progressive strategy which will include: 1) the potential acquisition of additional oil and gas assets and other business development initiatives in the region; and 2) working with the international community, in accordance with all applicable sanctions, to return to Syria as soon as possible. With the Facility Amendment in place, the Company's general and administrative costs are now expected to be funded through to the middle of 2020. The Company's management is already in the process of evaluating a number of potential opportunities and the Board is of the opinion that further opportunities may arise within the region over the coming period. There can, however, be no guarantee that any of these opportunities will materialise into meaningful projects for the Group.
Intention to Delist
In light of this agreed medium-term strategy and the Facility Amendment, the Major Shareholders requested that the Board consider the merits and risks of being a listed company versus a delisted company. Following due consideration, the Board has concluded that at this time, it is in the best interests of the Company to proceed as a delisted entity, and therefore has resolved to pursue the Delisting.
More details of the reasons behind the decision to pursue the Delisting and the measures that are being put in place to protect the interests of minority shareholders in the Company after the Delisting, are outlined in the Circular which includes a letter to shareholders from the Senior Independent Non-Executive Director. This letter is appended to this RNS for information.
In summary, the Board considers that the Company no longer reaps the expected benefits of the listing as it no longer provides the Company with any significant access to funding from the broader capital markets, nor does it provide any significant liquidity to shareholders. This lack of liquidity results in a quoted share price which the Directors believe is out of line with the fundamental value of the Company's business. The Company's return to a growth strategy, and an anticipated sustained period of increased corporate activity will require significant management focus. At this time, therefore, the Board believes that the costs and management burden of retaining the listing on AIM, especially in the context of a small executive team and limited working capital, has become disproportionate to the benefits to the Company.
In respect of the Delisting itself, the Company will be today posting to Shareholders a circular (the "Circular") including a notice of a General Meeting to be held at 11a.m. (London time) on 10 April 2018 at the offices of Shakespeare Martineau LLP, 60 Gracechurch Street, London EC3V 0HR, to propose a resolution to approve the Delisting (the "Resolution"). The preferred date of cancellation of the admission of the Company's Ordinary Shares to trading on AIM is 23 April 2018.
Following the proposed Delisting, the Company intends to make arrangements for a secondary market trading facility, to assist shareholders to trade in the Ordinary Shares, to be put in place from the date of Delisting, if the Resolution is passed. The details of this trading facility will be announced prior to the date of Delisting.
The Board has received binding undertakings from the Major Shareholders which will ensure that certain standards of corporate governance are maintained for a period of at least two years following the Delisting. In particular, for this period, the Major Shareholders and the Company have agreed:
1. To ensure that the Company will remain registered as a public limited company ("PLC") pursuant to the Companies Act 2006 in the United Kingdom, notwithstanding the Delisting, and will not re-register as a private limited company;
2. To maintain its website and post periodic updates, although following the Delisting there will be no obligation on the Company to include all information required under AIM Rule 26 or the Market Abuse Regulation ("MAR") or to update the website as required by the AIM rules or MAR;
3. To ensure that the current balance of the Board and any Board Committees will be maintained such that there will at all times be a majority of the Board who are independent of the Executive Directors and a majority of the Board who are independent of the Major Shareholders;
4. The Company shall be managed in accordance with such provisions of the QCA Code as the Board considers practicable and appropriate for the size, stage of development and operations of the Group at the relevant time and/or such other UK corporate governance regime as may be adopted by the Board from time to time;
5. The approval of directors who are independent of any conflicted Major Shareholder (the "Independent Directors") shall be required in terms of any transactions with a Major Shareholder (a "Related Party Transaction") and approval of any Related Party Transaction may be subject, at the discretion of the Independent Directors, to receipt of a written opinion that the terms of such Related Party Transaction are fair and reasonable in so far as all shareholders are concerned; and
6. Furthermore, the Independent Directors shall be able to decide on the inclusion of, and subsequent form of, any pre-emptive component of an equity fundraising to be undertaken by the Company, provided that Independent Directors have first confirmed in writing to the Board that they consider the pre-emptive component to be reasonable in the circumstances.
The Circular and the Notice of the General Meeting and an electronic copy of both will also be available on the Company's website at www.gulfsands.com.
Joe Darby, Senior Independent Director Gulfsands, Petroleum said:
"In the context of reviewing the future financing of the Company, and its medium-term strategic objectives, an independent committee of the Board was established to consider the proposal to delist the Company's shares from AIM. That committee, which I chair, has concluded it is in the best interests of the Company and its shareholders to de-list from AIM, while remaining as an unlisted public company. The committee concluded that there was minimal benefit in currently being listed particularly in the context of access to funding from the boarder capital markets, given that the only recent material sources of finance have been the Major Shareholders who have once again shown their commitment to the Company though the Facility extension.
The committee has ensured that considerable protection for minority shareholders has been put in place for at least two years. This includes a secondary market trading facility which we intend to establish and the fact that the Board will continue to have a majority of directors who are independent of the Major Shareholders. As a result of the financing arrangement announced today, Gulfsands is now funded for an additional two years and can focus on implementing its stated strategy."
For further information, please refer to the Company's website at www.gulfsands.com or contact:
|
Camarco |
+44 (0)20 3757 4983 |
|
Billy Clegg / Owen Roberts
|
|
|
Cantor Fitzgerald Europe |
+44 (0)20 7894 7000 |
|
David Porter / Nick Tulloch
|
|
|
|
|
|
|
|
EXTRACT FROM CIRCULAR TO BE POSTED TO SHAREHOLDERS
LETTER FROM THE SENIOR INDEPENDENT DIRECTOR OF GULFSANDS PETROLEUM PLC
NOTE THAT DEFINED TERMS IN THIS LETTER WILL BE CONTAINED IN THE CIRCULAR TO BE POSTED TO SHAREHOLDERS LATER TODAY
LETTER FROM THE SENIOR INDEPENDENT DIRECTOR OF GULFSANDS PETROLEUM PLC
Directors
James Ede-Golightly (Non-Executive Chairman)
John Bell (Managing Director)*
Andrew James Morris (Finance Director)*
Joseph Darby (Senior Independent Non-Executive Director)*
Michael Kroupeev (Non-Executive Director)
Richard Milne (Non-Executive Director)*
* Non-Shareholder Director
21 March 2018
To Shareholders and for information purposes only, the holders of options over Ordinary Shares
Dear Shareholder
Proposal for the cancellation of the admission to trading on AIM of the Ordinary Shares (the "Delisting")
and
Notice of General Meeting
1. Introduction
The Directors of Gulfsands Petroleum PLC have recently undertaken a review of the benefits of having its shares continuing to trade on AIM. Having concluded this review, the Company is announcing today that it is seeking Shareholder approval to cancel the admission of its Ordinary Shares from trading on AIM (the "Delisting"). The Delisting is pursuant to Rule 41 of the AIM Rules, and requires the approval of not less than 75 per cent of the votes cast by Shareholders (whether present in person or by proxy) at the General Meeting.
The GM Notice is set out in Part III of this document.
The purpose of this document is to give you further information about the background to, and reasons for, the proposed Delisting, to provide additional information on the implications of the Delisting and ultimately explain why the Directors believe that it is the best course of action in the interests of the Company and Shareholders to vote in favour of the Resolution.
Delisting is conditional upon the approval of the Resolution at the General Meeting convened for this purpose to be held at 11.00 a.m. (London time) on 10 April 2018 at the offices of Shakespeare Martineau LLP, 60 Gracechurch Street, London EC3V 0HR.
2. Background to and Reasons for the Proposal
On 17 January 2018, the Company announced that it had drawn down the remaining £1.6 million available under the final two tranches of the Facility and explained that the Board would then explore its further funding options for the Company beyond the middle of 2018.
The Board concluded that the only realistic source of such further funding would be the existing Major Shareholders who have been the Company's only significant sources of capital for more than three years. As part of subsequent discussions with the Major Shareholders, the Company's medium-term strategy was deliberated, and the Major Shareholders requested that the Company consider whether the Company would be best served to deliver that medium-term strategy as an unlisted Plc rather than a listed company.
Following these discussions, the Company has now secured a further £4 million of funding through an extension of the Facility. This is anticipated to provide the Company with sufficient working capital until the middle of 2020 based upon the existing scope and status of activities within its portfolio. Details of the terms of the Facility have been announced separately through the RNS issued by the Company today.
In conjunction with the agreement to extend the Facility, the Major Shareholders have indicated their support for a progression of the Company's medium-term strategy whereby the Company will look beyond simply preserving, protecting and preparing for a return to Syria when sanctions permit, to include a focus on the potential acquisition of additional oil and gas assets, and other business development initiatives, within its area of regional focus, the Middle East. The Company's management are already in the process of evaluating a number of potential opportunities and the Board is of the opinion that further opportunities may arise within the region over the coming period. There can, however, be no guarantee, that any of these opportunities will materialise into meaningful projects for the Group.
In the event that the Company is successful in securing new business opportunities in accordance with the revised strategy, the Company may need to raise further finance in addition to the £4 million additional funding secured pursuant to the extension of the Facility. The structure of that additional fundraising would be considered by the Board at the relevant time.
As requested by the Major Shareholders, in light of this agreed medium-term strategy, the Board has considered the merits and risks of being a listed company versus a delisted company. The Board has concluded that at this time, it is in the best interests of the Company to proceed as a delisted entity, and therefore has resolved to seek a cancellation of the admission of its Ordinary Shares to trading on AIM.
In reaching this conclusion the Board has considered, inter alia:
· the impact on the Company's ability to access capital;
· the additional cost and management burden of retaining the listing, especially in the event of a sustained period of increased corporate activity and in the context of a small executive team and limited working capital;
· the ability of the Company to successfully implement its strategy, including its ability to manage the complexity of its business, to attract and retain staff, advisors and service providers, and to manage relations with key external stakeholders including its partners and potential counterparties;
· the impact of a Delisting on Shareholders and mitigations that can be put in place as more fully described in paragraph 5.2 of Part I of this document; and
· the costs and risks associated with the Delisting, including the potential impact on employees and service providers.
3. Rationale for the Potential Delisting
The Directors have concluded that, given the progressive medium-term strategy of the Company, the benefits of being listed on AIM do not justify maintaining the listing and so a resolution should be put to shareholders to approve a Delisting. The reasons include the following:
The Company's Ability to Attract Capital
Since the introduction of EU Sanctions in 2011, the Company has been unable to generate any revenue from its core assets in Syria. As a result, since then, the Company has been wholly reliant on first using its own cash resources, and subsequently externally raised capital, to fund its operations.
In recent years, the listing has not served a useful function for the Company in terms of providing it with significant access to funding from the broader capital markets. The only material capital raised over the last three years, including the recent £4 million extension of the Facility, has been from the three Major Shareholders who have all indicated their desire for the Company to Delist. These Major Shareholders now own approximately 83% of the Company's issued share capital.
This concentrated shareholder base, in turn, results in a limited free float and liquidity in the Ordinary Shares with the consequence that the listing does not, in itself, offer investors the opportunity to trade meaningful volumes with frequency in an active market.
This limited liquidity creates, at times, high volatility in the Company's share price, often driven not by fundamental changes to the Company's business but by speculation, often related to political developments in the areas in which we operate. This volatility can result in a share price that is out of line with the fundamental value of the Company's business, making it an inaccurate barometer from which to raise significant capital or to use as currency for acquisitions.
The Financial, Management and Administrative Cost of Maintaining the Listing
Management has spent a significant amount of effort during the last two years to reduce the cost of running the business. In doing so it has increased efficiency and significantly reduced General & Administrative costs to less than $3 million per year. The Company's return to a growth strategy, and an anticipated sustained period of increased corporate activity will require significant management focus. At this time, therefore, the Board believes that the costs and management burden of retaining the listing on AIM, especially in the context of a small executive team and limited working capital, has become disproportionate to the benefits to the Company.
As a result, the Directors have concluded that it is appropriate to complete the Delisting and remove these burdens to allow the Company to focus on implementing its revised medium-term strategy
The Board's intention will be to periodically revaluate the merits of a re-admission of the Company to AIM, or another relevant stock exchange, as the strategy progresses however there can be no certainty whether the Company will return to the public markets.
Following careful consideration, the Directors believe that it is in the best interests of the Company and Shareholders to seek the cancellation of the admission of the Company's shares to trading on AIM.
4. The Potential Delisting
4.1. The effects of the Delisting
If the Delisting becomes effective following the General Meeting, Shareholders should be aware of the implications and principal effects of the Delisting, which include the following:
· Public market - there will be no public market or trading facility on any recognised investment exchange for the Ordinary Shares and, consequently, there can be no guarantee that a Shareholder will be able to purchase or sell any Ordinary Shares. Accordingly, while the intention is to implement an off-market trading facility, as more fully described below in paragraph 5.2.2, the opportunity for Shareholders to realise their investment in the Company will be much more limited and there will be no public valuation of Ordinary Shares held;
· Liquidity - while the Ordinary Shares will remain freely transferrable, it is probable that the liquidity and marketability of the Ordinary Shares may be significantly reduced by the Proposal for the Delisting and the value of such Ordinary Shares, even whilst the Company is still admitted to trading on AIM, may be adversely affected as a consequence;
· CREST / Certification - while the Company's CREST facility will remain in place post the Delisting, the Company's CREST facility may be cancelled in the future, in which case, although the Ordinary Shares would remain transferable, they would cease to be transferable through CREST. In this instance, Shareholders who hold Ordinary Shares in CREST would receive share certificates;
· AIM Rules - Shareholders will no longer be afforded the protections given by the AIM Rules, such as the requirement for the Company to retain a nominated adviser, to be notified of certain events, including substantial transactions, financing transactions, related party transactions and fundamental changes in the Company's business, including certain acquisitions and disposals. Notwithstanding this, the Company and the Major Shareholders have agreed to maintain a website for a period of at least 24 months from the date of delisting which will continue to contain certain information for Shareholders which the Board considers is prudent to disclose, although there is no assurance that this will include all information required under AIM Rule 26 or that it will be updated as required by the AIM rules;
· Independent advisers - the Company will cease to have an independent financial and nominated adviser and broker;
· Regulatory, accounting and reporting requirements - as an unlisted company, the Company will be subject to fewer regulatory restrictions than as a listed company. In addition, as an unlisted company, the Company may be subject to less stringent accounting and reporting requirements and will not, for example, be required to publish interim accounts;
· Tax - the Delisting may have either positive or negative taxation consequences for Shareholders. Shareholders who are in any doubt about their tax position should consult their own professional independent adviser immediately;
· Dilution - there will be reduced controls over the terms of capital raises and issuances of new Ordinary Shares, to related parties (such as the Major Shareholders) this could lead to substantial dilution for Minority Shareholders; and
· MAR - as an unlisted company there will no longer be a requirement for the Company to publicly disclose matters which constitute inside information which, as a listed company, it would be required to do pursuant to the provisions of the Market Abuse Regulation. Although the Company may in the future publicly disclose matters which the Directors consider prudent, the disclosure of information will not reflect the requirements of MAR.
The above considerations are not exhaustive and Shareholders should seek their own independent advice when assessing the likely impact of the Delisting on them.
4.2. The Delisting Process
Under the AIM Rules, it is a requirement that the Delisting be approved by not less than 75 per cent of votes cast by Shareholders at a General Meeting. Accordingly, the GM Notice set out in Part III of this document contains a special resolution to approve the Delisting.
Furthermore, Rule 41 of the AIM Rules requires any AIM company that wishes the London Stock Exchange to cancel the admission of its shares to trading on AIM to notify shareholders and to separately inform the London Stock Exchange of its preferred cancellation date at least 20 Business Days prior to such date. In accordance with AIM Rule 41, the Directors have notified the London Stock Exchange of the Company's intention, subject to the Resolution being passed at the General Meeting, to cancel the Company's admission of the Ordinary Shares to trading on AIM. Accordingly, if the Resolution is passed the Delisting will become effective at 7.00 a.m. on 23 April 2018. If the Delisting becomes effective, Cantor Fitzgerald Europe will cease to be nominated adviser of the Company and the Company will no longer be required to comply with the AIM Rules.
5. The Company After Delisting
5.1. The Medium-Term Strategy and Prospects
The Company's long-term strategy remains to be a major oil and gas producer in the Middle East. The Company is committed to Syria and continues to view its world class Block 26 asset as core to its strategy. The Company has a long history and experience in the Middle East region, in particular the Levant, and despite the reported increase in hostilities in recent weeks, the Board remains cautiously optimistic in the medium-term regarding the improving environment in the region. Consequently, the Board has decided to pursue a more progressive medium-term strategy beyond merely preserving and protecting its existing core assets.
Post Delisting, the Board will pursue this progressive strategy, which will include the potential acquisition of additional oil and gas assets, and other business development initiatives in the region, while also working with the international community, in accordance with all applicable sanctions, to return to Syria as soon as is allowed. With the expanded Facility in place, the Company's General & Administrative costs are now expected to be funded through to the middle of 2020. While the Company pursues this more progressive strategy, there can be no guarantee that any of these initiatives will materialise into meaningful new projects for the Group.
The Board and the Company remain committed to complying with EU Sanctions in all its business dealings. Nothing relating to the Delisting will affect this commitment.
The Company will also continue to manage down its non-core assets including its exits from Tunisia and Morocco and continues to seek the farm-out or divestment of its assets in Colombia.
5.2. Minority Shareholder protections after Delisting
Notwithstanding the effects of Delisting outlined in Section 4.1, certain facilities, services and governance arrangements for Shareholders that currently apply while the Company is AIM listed will remain in place. Some of these arise pursuant to statute and others pursuant to policies that have been agreed by the Board, with the support and agreement of the Major Shareholders.
Shareholders should note that the City Code will continue to apply to the Company for a period of 10 years from the date of Delisting. Together with the Companies Act, the City Code will continue to provide certain protections to Minority Shareholders and in particular with regard to compulsory acquisitions of Shares in the context of offers from Major Shareholders or third party offerors.
The Company will also continue to be bound by the Articles of Association after the Delisting. The Company currently has no intention to amend the Articles of Association as result of the Delisting.
5.2.1 Delisting Undertakings from the Company and Major Shareholders
The Company has received certain undertakings from each of the Major Shareholders which are designed to protect the interests of Minority Shareholders (the "Minority Protections") and these undertakings also cover the irrevocable undertaking to vote in favour of the Resolution at the GM. The Company considers that these Minority Protections provide important mitigation for the Shareholders in terms of the risks arising in connection with the Delisting as set out in paragraph 4.1 of Part I of this document. These Minority Protections are summarised as follows and will subsist, unless amendments are approved by a majority of the holders of the Ordinary Shares excluding the Major Shareholders, for a period of at least two (2) years from the date of Delisting:
· The Company as a Public Limited Company
The Company will remain registered as a public limited company ("PLC") pursuant to the Companies Act in the United Kingdom, notwithstanding the Delisting, and will not re-register as a private limited company.
· Information Rights
The Company will:
· communicate information about the Company (including annual accounts) to its Shareholders, as required by the Companies Act;
· hold Annual General Meetings, in the UK; and
· maintain its website and post periodic updates, although Shareholders should be aware that there will be no obligation on the Company to include all information required under the Market Abuse Regulation ("MAR") or AIM Rule 26 or to update the website as required by the AIM rules or MAR. Prior to providing any updates to the Shareholders, the Board will consider whether it is commercial and appropriate to do so and whether such disclosure is in the best interests of the Company and will only publish updates if these criteria are satisfied.
· Corporate Governance
· The current balance of the Board and any Board Committees will be maintained such that there will at all times be a majority of the Board who are independent of the Executive Directors and a majority of the Board who are independent of the Major Shareholders;
· The Company shall be managed in accordance with such provisions of the QCA Code as the Board considers practicable and appropriate for the size, stage of development and operations of the Group at the relevant time and/or such other UK corporate governance regime as may be adopted by the Board from time to time;
· The approval of Independent Directors shall be required in respect of terms of any transactions with a Major Shareholder (a "Related Party Transaction") and approval of any Related Party Transaction may be subject, at the discretion of the Independent Directors, to receipt of an written opinion that the terms of such Related Party Transaction are fair and reasonable in so far as all Shareholders are concerned; and
· Furthermore, the Independent Directors shall be able to decide on the inclusion of and subsequent form of any pre-emptive component of an equity fundraising to be undertaken by the Company, provided that Independent Directors have first confirmed in writing to the Board that they consider the pre-emptive component to be reasonable in the circumstances.
5.2.2. Liquidity and Trading of Ordinary Shares Following Delisting
In addition to the Minority Protections outlined above, the Board is also aware that the proposed Delisting, if approved at the General Meeting, would make it more difficult for Shareholders to buy and sell Ordinary Shares should they wish to do so.
Therefore, the Company intends to make arrangements for a secondary market trading facility, to facilitate Shareholders to trade in the Ordinary Shares, to be put in place from the date of Delisting if the Resolution is passed. The details of this trading facility will be announced prior to the date of Delisting.
6. Irrevocable Undertakings for the General Meeting
The Company has received irrevocable undertakings from the Major Shareholders to vote, or procure a vote, in favour of the Resolution in respect of all Ordinary Shares held by each of them (or in which they are currently interested) on the date of the General Meeting. They have further committed that they will not sell any Ordinary Shares between the date of this document and the date of the General Meeting. As at 19 March 2018 (being the last practicable date before publication of this document) the Major Shareholders collectively held 430,323,215 Ordinary shares in aggregate, representing approximately 83 per cent of the issued share capital of the Company.
7. Current Trading
The Company released its interim results for the six months ended 30 June 2017 on 28 September 2017 and has since provided numerous RNS announcements including ones relating to the reset of its Putumayo Licence, initiation of the Morocco country exit and the draw down on the remaining tranches under the existing Facility. Further operational and financing updates are being published via RNS today.
8. Taxation
Shareholders are strongly advised to consult their professional advisers about their own personal tax position arising in connection with the Delisting.
9. Expected Timetable of Events
The timetable of the events relating to the Delisting is set out on page 4 of this document. Details regarding the time, date and location of the General Meeting in particular are set out in paragraph 10 of this Part I.
10. General Meeting
The General Meeting will be held at 11.00 a.m. (London time) on 10 April 2018 at the offices of Shakespeare Martineau LLP, 60 Gracechurch Street, London EC3V 0HR. at which the Resolution will be proposed. Please note that the summary and explanation set out below is not the full text of the Resolution and Shareholders should review the full text of the Resolution before returning their Forms of Proxy.
A summary of the Resolution which will be proposed at the General Meeting, is as follows:
Resolution 1, which will be proposed as a special resolution, seeks approval for the Delisting.
11. Action to be taken
You will find enclosed with this document a Form of Proxy for use at the General Meeting or any adjournment thereof. Whether or not you propose to attend the General Meeting in person, you are requested to complete and return the Form of Proxy to the Company's registrars Link Asset Services, in accordance with the instructions printed thereon as soon as possible but, in any event, to be received no later than 11.00 a.m. on 8 April 2018. Completion and return of a Form of Proxy will not preclude you from attending and voting at the General Meeting in person if you so wish.
As an alternative to returning the Form of Proxy, certain Shareholders can appoint a proxy electronically as follows. If you hold your Ordinary Shares in uncertificated form (i.e. in CREST) you may appoint a proxy by completing and transmitting a CREST Proxy Instruction in accordance with the procedures set out in the CREST Manual so that it is received by Link Asset Services (under CREST participant ID RA10) by no later than 11.00 a.m. on 8 April 2018.
Unless the Form of Proxy or CREST Proxy Instruction is received by the relevant date and time specified above, it will be invalid. Completion and posting of the Form of Proxy or completing and transmitting a CREST Proxy Instruction will not preclude you from attending and voting in person at the General Meeting if you wish to do so.
12. Recommendation
The Board, including the Non-Shareholder Directors, consider that the Proposal is in the best interests of the Company and its Shareholders as a whole and therefore unanimously recommend that you vote in favour of the Resolution.
Yours faithfully
Joseph Darby
Senior Independent Non-Executive Director
This information is provided by RNS
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