Ascent Resources PLC Convertible loan note issue (0193R)
08 September 2014 - 4:01PM
UK Regulatory
TIDMAST
RNS Number : 0193R
Ascent Resources PLC
08 September 2014
Ascent Resources plc
("Ascent" or "the Company")
Convertible loan note issue
The Board of Ascent is pleased to announce that it has agreed a
variation to the existing GBP5 million 2014 Convertible Loan Note
Instrument ("the Instrument") pursuant to which Henderson Global
Investors Limited and Henderson Alternative Investment Advisor
Limited (together, "Henderson") subscribed for GBP2 million in
principal amount of loan notes ("Convertible Loan Notes" or "Loan
Notes") as announced on 5 February 2014 ("the First Tranche").
Under the terms of the variation, Henderson has agreed to subscribe
for further Convertible Loan Notes of up to GBP2 million in
principal amount on the terms of the amended Instrument ("the
Amended and Restated Instrument") ("the Second Tranche"), as
detailed below.
Background
As announced on 4 August 2014, Global Power Sources S.r.l
("GPS") and their partners, Salomon Werner HAB Privee Limited,
formerly known as Salomon Partners WRS Werner Rothschild & CIE
Limited ("WRS"), failed to make payment to Ascent of the GBP11.7m
required to fund GPS's investment in Ascent as approved by
shareholders in a general meeting held on 5 June 2014.
As a result, the board of Ascent has been obliged to explore
alternative sources of funds, including maintaining an on-going
dialogue with GPS in this respect. Whilst positive discussions
continue, the Company has not yet concluded a replacement funding
transaction and has therefore approached Henderson to agree the
basis for further drawdowns of up to GBP2 million under the Amended
and Restated Instrument.
Details of the New Convertible Loan Notes
Under the terms of the variation, Henderson has agreed to
subscribe for up to an additional GBP2 million of Convertible Loan
Notes. The Convertible Loan Notes will be issued in units of GBP1
and interest will be at a fixed rate of 9% per annum, which will be
rolled up quarterly in arrears and included as principal to be
repaid or converted. The Convertible Loan Notes together with the
convertible loan notes issued in 2013 will be secured by a charge
over the shares of the Company's principal subsidiaries, Ascent
Slovenia Limited and Ascent Resources d.o.o. and will be
convertible at any time into ordinary shares of 0.1 pence each in
the share capital of the Company ("Ordinary Shares") at the
noteholder's option, at a conversion price of 0.2 pence per
Ordinary Share.
Under the original Instrument, the subscription of the Second
Tranche by Henderson would have caused the conversion rate
applicable to the First Tranche to switch immediately from an
effective price of 1p per Ordinary Share to an effective price of
0.2p per Ordinary Share. Henderson has however, agreed to defer
this change to the effective conversion price until 1 December
2014, which would allow Ascent to repay the Second Tranche without
the penalty of the reduced effective conversion price for the First
Tranche. In the event of a transaction before 1 December 2014
constituting a change of control as defined in the City Code on
Takeover & Mergers, both the First Tranche and the Second
Tranche would convert at the reduced effective price of 0.2p per
Ordinary Share. In return Ascent has agreed to reduce the total
amount of Henderson's commitment to subscribe further Convertible
Loan Notes from GBP3 million to GBP2 million.
Shareholders are reminded that together with the convertible
loan notes issued in 2013, and assuming the full GBP2 million is
subscribed for under the Second Tranche, the Company will have in
issue Convertible Loan Notes totalling approximately GBP10 million,
including accrued interest, which fall due for redemption in
December 2014 and January 2015. As stated above, the Company is
exploring various funding options.
Related Party Transaction
Henderson is a substantial shareholder in Ascent, holding
approximately 12.5% of the voting rights of the Company and as such
is considered to be a related party of the Company as defined by
the AIM Rules. Therefore the amendments to the Instrument resulting
in the Amended and Restated Instrument, and the issue of the new
Convertible Loan Notes thereunder, constitute a related party
transaction pursuant to AIM Rule 13. The independent directors of
the Company (being Nigel Moore, Cameron Davis, Len Reece and Colin
Hutchinson), having consulted with the Company's nominated adviser,
finnCap Limited, consider that the terms of the Convertible Loan
Notes are fair and reasonable insofar as the Company's shareholders
are concerned.
Use of funds
Of the additional GBP2 million to be subscribed by Henderson
under the Amended and Restated Instrument, GBP0.3 million will be
used to repay the outstanding balance under the short term loan
facility from Darwin Strategic Limited, which was due for repayment
at the beginning of June 2014.
The remaining GBP1.7 million is expected to provide the Company
with sufficient funds to complete the permitting process and issue
tender documentation for key infrastructure necessary for full
field development.
Permitting update
The key Integrated Pollution Prevention & Control ("IPPC")
permit was submitted to the Slovenian Environmental Agency in June
2014. The Company has been informed that the decision making
process normally lasts approximately six months. The Ascent board
regards the award of the IPPC permit as the last significant hurdle
to commercial gas production that is outside of the Company's
control.
Once the IPPC permit is issued, the Board, based on on-going
discussions with interested banks, believes that suitable project
finance should be available to fund construction of infrastructure
and pipelines.
The process of purchasing, constructing and commissioning this
infrastructure is expected to take no more than 12 months from the
date the IPPC permit is received. The Company is preparing detailed
tender documentation for the upstream pipeline connection into the
national grid and for the new gas processing facility. These are
the key long lead items required for commercial production into the
national grid and the Company expects to issue these documents in
the coming months.
Summary
The additional GBP2 million Convertible Loan Note subscription
is expected to provide the funding required to support the Company
through the permitting phase. Thereafter it is expected that bank
project funding will cover the vast majority of the costs before
gas flows.
The receipt of the IPCC permit will enable the Company to; at
long last, begin to realise the significant value of its Petišovci
asset which is estimated to have an NPV10 in excess of EUR150
million.
Enquiries:
Ascent Resources plc.
Clive Carver / Len Reece
Tel: +44 (0)20 7251 4905
finnCap (Nominated Adviser and Broker)
Charlotte Stranner
Tel: +44 (0) 20 7220 0500
This information is provided by RNS
The company news service from the London Stock Exchange
END
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