TIDMHAWK
RNS Number : 4777Z
Nighthawk Energy plc
15 March 2017
15 March 2017
Nighthawk Energy plc
("Nighthawk" or "the Company")
Approval of waiver of Rule 9 of the City Code
Notice of General Meeting
On 1 August 2016 the Company announced details of financing for
the Arikaree Creek Water Flood Pilot Project ("Pilot Project") and
the amendment of certain existing loan notes and facility
agreements, further to which the Independent Directors are seeking
the approval of Independent Shareholders of a waiver of the
obligations on the part of Johan Claesson and the Concert Party to
make a general offer to Shareholders under Rule 9 of the City Code
which might otherwise arise upon the election, by such parties, for
the share payment of deferred cash interest and/or royalty payments
following the amendment to the terms of certain interest-paying
loan notes and facility agreements. In the event that certain
Noteholders/Lenders who are members of the Concert Party were to
elect for share payment under the amended terms, this could trigger
an obligation to make a general offer under Rule 9 of the City
Code, and thus the Waiver is being sought. The Independent
Directors are also seeking the approval of Shareholders for (i) the
grant of authority to allot equity securities and (ii) the grant of
authority to allot equity securities for cash other than in
accordance with the statutory pre-emption rights in certain
circumstances.
At the time of the Company's announcement on 1 August 2016,
detailing financing for the Pilot Project and the amendment of
certain existing loan notes and facility agreements, a concert
party was deemed to exist comprising the current Concert Party
members (as defined herein) together with Mr Peter Gyllenhammar, a
substantial shareholder in the Company, and Mr Jan Borekull.
Subsequently, following representations made by Mr Gyllenhammar and
Mr Claesson, and with the agreement of the Panel and the Company,
it has been agreed that Mr Gyllenhammar and Mr Borekull have been
deemed to no longer be acting in concert with the Concert
Party.
A circular is being posted to shareholders today, which includes
a notice of General Meeting to be held on 5 April 2017 at 3.00
p.m., to explain the background to and reasons for the Waiver and
to seek its approval, and to explain why the Independent Directors
believe that the Waiver is in the best interests of the Company and
its Shareholders as a whole and to recommend that Independent
Shareholders vote in favour of the Resolutions to be proposed at
the General Meeting
Those members of the Concert Party who are current Shareholders
are not considered to be independent for the purposes of voting on
the Resolution to approve the Waiver (the "Whitewash Resolution"),
therefore only the Independent Shareholders (being all Shareholders
other than those members of the Concert Party) are entitled to vote
on the Whitewash Resolution. As Johan Claesson is a member of the
Concert Party, he is not deemed to be an Independent Director for
the purposes of considering the Waiver.
Shareholders are advised that in the event that the Whitewash
Resolution and the Resolution to disapply statutory pre-emption
rights are not passed, the Company will become further committed to
fund approximate GBP0.43 million and $2.62 million (a total of
approximately GBP2.58 million at prevailing exchange rates) lump
sum payments to its Noteholders and Lenders within 91 days of 31
July 2017. The Board believes that this significant cash payment
will further challenge the liquidity of the Company.
The Independent Directors, having been so advised by Stockdale,
consider the Waiver to be fair and reasonable and in the best
interests of the Independent Shareholders and the Company as a
whole. In providing its advice to the Independent Directors,
Stockdale has taken into account the Independent Directors'
commercial assessments.
Accordingly, the Independent Directors recommend that
Independent Shareholders vote in favour of the Resolutions, as they
have irrevocably undertaken to do in respect of their entire
beneficial holdings amounting, in aggregate, to 3,291,500 Ordinary
Shares, representing approximately 0.3% of the Existing Share
Capital held by Independent Shareholders.
Johan Claesson is not considered to be independent for the
purposes of considering the Whitewash Resolution, and is not
participating as a Director in this recommendation to Independent
Shareholders.
Enquiries:
Nighthawk Energy plc
Rick McCullough, Chairman +1 303 407 9600
Kurtis Hooley, Chief Financial Officer +44 (0) 20 3582 1350
Stockdale Securities Limited +44 (0) 20 7601 6100
Richard Johnson
David Coaten
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
The distribution of this announcement in certain jurisdictions
may be restricted by law. Persons outside of the UK into whose
possession this announcement comes should inform themselves about
and observe any such restrictions. Any failure to comply with these
restrictions may constitute a violation of the securities law of
any such jurisdictions.
The following has been extracted from the Company's circular
which is being published later today and will be available at
www.nighthawkenergy.com:
1. "Introduction
On 1 August 2016 the Company announced details of financing for
the Arikaree Creek Water Flood Pilot Project ("Pilot Project") and
the amendment of certain existing loan notes and facility
agreements, further to which the Independent Directors are seeking
the approval of Independent Shareholders of a waiver of the
obligations on the part of Johan Claesson and the Concert Party to
make a general offer to Shareholders under Rule 9 of the City Code
which might otherwise arise upon the election, by such parties, for
the share payment of deferred cash interest and/or royalty payments
following the amendment to the terms of certain interest-paying
loan notes and facility agreements. In the event that certain
Noteholders/Lenders who are members of the Concert Party were to
elect for share payment under the amended terms, this could trigger
an obligation to make a general offer under Rule 9 of the City
Code, and thus the Waiver is being sought. The Independent
Directors are also seeking the approval of Shareholders for (i) the
grant of authority to allot equity securities and (ii) the grant of
authority to allot equity securities for cash other than in
accordance with the statutory pre-emption rights in certain
circumstances. The purpose of this document is to explain the
background to the Waiver and to seek your approval for the
Resolutions being proposed at the General Meeting to be held at
3.00 p.m. on 5 April 2017 at the offices of Greenberg Traurig, LLP,
The Shard, Level 8, 32 London Bridge Street, London SE1 9SG, notice
of which is set out at the end of this document.
Those members of the Concert Party who are current Shareholders
are not considered to be independent for the purposes of voting on
the Resolution to approve the Waiver (the "Whitewash Resolution"),
therefore only the Independent Shareholders (being all Shareholders
other than those members of the Concert Party) are entitled to vote
on the Whitewash Resolution. As Johan Claesson is a member of the
Concert Party, he is not deemed to be an Independent Director for
the purposes of considering the Waiver.
The purpose of this document is to explain the background to and
reasons for the Waiver and to seek its approval. It is also to
explain why the Independent Directors believe that the Waiver is in
the best interests of the Company and its Shareholders as a whole
and to recommend that Independent Shareholders vote in favour of
the Resolutions to be proposed at the General Meeting, notice of
which is set out at the end of this document.
2. Background to and reasons for recommending the Waiver
Starting in December 2015, the Company was involved in
negotiations with the Bank over an amendment to its existing loan
arrangements. This negotiation was protracted because the Company's
Pilot Project was not approved until 7 June 2016.
The Board believes the Bank is, and has been, supportive of the
Company's development of the Pilot Project and recognises that the
completion of the Pilot Project is key to the Company's improvement
in operating cash flows and producing reserves. As the Company has
previously disclosed, while the Pilot Project required State of
Colorado regulatory approval, a process which began in October
2015, the Pilot Project did not obtain final regulatory approval
until 7 June 2016 due to objections from certain non-cost bearing
royalty interest owners. The Bank issued its proposal for a debt
restructuring around the time of this regulatory approval and the
Company reached an agreement on terms with the Bank and finalised
the new Bank agreement on 29 June 2016.
As set out further below, the Bank agreement was subject to two
conditions to be satisfied on or before 31 July 2016 and 31 August
2016, respectively. Satisfaction of these conditions and the
provision of funding under the Bank agreement was critical in order
for the Company's operational team to carry out the buildout of the
Pilot Project.
Pilot Project
As first announced in October 2015, the Company made a filing
seeking approval of its planned Arikaree Water Flood Project with
the Colorado Oil and Gas Conservation Commission (the "COGCC"), the
state oil and gas regulatory body. The filing was made to approve a
new revenue sharing project in anticipation of increasing the
Estimated Ultimate Recovery ("EUR") of oil from the field as well
as accelerating the year by year production volumes. After a delay
from the original hearing date, the COGCC heard the case in March
2016 and conditionally approved the project provided that the
Company was able to obtain 80% of non-cost bearing royalty interest
owners approval and a modified revenue sharing approach was used.
This initial project encompassed the entire 1,240 acres of the
Arikaree Creek field.
Efforts to obtain sufficient approvals from non-cost bearing
royalty interest owners for the initial project was not going to be
timely completed so in an effort to expedite the project, the
Company filed an amendment to the original development plan, which
reduced the size of the initial water flood area to approximately
600 acres in the southern portion of the Arikaree Creek field.
On 7 June 2016, the COGCC unconditionally approved the Pilot
Project.
The original estimated Oil in Place ("OIP") for the Arikaree
Creek field was approximately 16-17 million barrels of oil. This
has been confirmed by the Company's internal and independent
external engineers. The water flood development methodology is
commonly used as part of a secondary recovery approach for maturing
fields, or where the formation lends itself to accelerated recovery
processes, such as is the case for Arikaree Creek. The Company's
engineers have gathered extensive technical information and data
during the Company's multi-year drilling program and this data was
evaluated to support the Pilot Project's feasibility. The Board
anticipates that, as the Pilot Project achieves expected results,
the remaining acreage from the original water flood proposal could
be developed fully.
The Company's engineers estimate that the southern acreage in
the Pilot Project contains OIP of approximately 8.6 million barrels
and believe that development of the water flood project could
increase the project's EUR to between 30%-40% of the OIP. This
would result in ultimate recoveries of oil of 2.6-3.4 million
barrels from this area of the field. As at 31 January 2017, the
Company had only produced approximately 0.5 million barrels from
the acreage in the Pilot Project with approximately 0.4 million
barrels of remaining recoverable using primary methods. The Board
believes the Pilot Project has the potential of substantially
increasing the existing booked reserves and could also accelerate
total production, making the project highly attractive. At a
capital cost of approximately $3.5 million to implement the Pilot
Project, the Board believes it is one of the best courses of action
the Company could pursue in the current oil and gas environment. In
the Board's opinion, the financial enhancements that are possible
through the execution of the Pilot Project are significant to the
Company, and thus the debt restructuring, was critical to the
future success of the Company.
The Company has commenced injection into both of the Pilot
Project injection wells. It is anticipated that as the injected
water fills existing pore volume, consistent with the normal nature
of water flood projects, a measurable response will be seen. The
Company expects this response to be during second quarter 2017. As
such, the incremental volumes expected from the Pilot Project have
not been included in the Company's audited Proved Developed
Producing reserves, but remain as Probable Reserves at the 2016
year-end. Once adequate response and evidence is seen as to the
response, the reserves are expected to begin being reclassified to
Proved Developed Producing reserves.
Financing Arrangements
On 29 June 2016, the Company executed a new amendment to the
existing facility agreement with the Bank that renewed the $23
million principal amount of the financing, reduced covenants and
established a new interest rate. The amended facility agreement
required the Company to meet two conditions. Firstly, the Company
was required to complete an additional $3 million financing for the
Pilot Project by 31 July 2016; secondly, existing unsecured
Noteholders/Lenders were required, by 31 August 2016, to agree to
defer all cash interest and royalty payments due to them until 31
July 2017.
On 1 August 2016, the Company announced that it had satisfied
both of these conditions.
The deferral applied to interest and royalty payments on the
following loan notes and facility agreements currently in
issue:
- Interest on the 2013 Convertible Loan Notes
- Interest and royalties pursuant to the amended and restated FK
Facility Agreement, originally dated 23 July 2013 (as amended)
- Royalty payments of 10% on profit sharing pursuant to the KF
Facility Agreement dated 23 March 2013 (as amended)
as further described in paragraph 6 of Part III.
In return for accepting the interest and royalty deferral, the
Noteholders/Lenders have been given the option, exercisable at
their discretion, but subject to the condition below, to receive
the deferred sums through either of two routes:
- Cash Payment: payment in cash of the deferred sums together
with interest on those deferred sums applied at a rate equivalent
to 15% per annum; or
- Share Payment: subject to the approval of the Waiver by the
Independent Shareholders and the passing of the Resolution to
dis-apply statutory pre-emption rights, through the issue of new
Ordinary Shares, with the deferred sums converted at GBP0.01 per
new Ordinary Share. No interest shall be applied to the deferred
sums if the Share Payment option is exercised. This represents a
premium of 18.3% based on closing price of 0.845 pence per share on
29 July 2016 (being the latest practicable date prior to the
announcement made on 1 August 2016 relating to the Waiver).
If the Resolutions are not passed then the share payment option
will not continue to exist, and the Company will be required to
make approximate GBP0.43 million and $2.62 million (a total of
approximately GBP2.58 million at prevailing exchange rates) cash
payments to Noteholders and Lenders in September 2017. In the
Board's opinion, the Company has limited working capital resources
and the Shareholders should be aware that should the Company be
required to make the cash payment in September 2017, this could
have a significant negative effect on its available cash and
working capital. The Independent Directors, therefore, support the
approval of the Share Payment.
The maximum total deferred sums would be approximately GBP0.38
million and $2.28 million (a total of approximately GBP2.24 million
at prevailing exchange rates). If the Noteholders or Lenders all
elect to receive the deferred sums in Ordinary Shares, at the
conversion rate of GBP0.01 per share and prevailing USD/GBP
exchange rate of 1.22, this would equate to the issue of
approximately 224.2 million new ordinary shares, or 18.9 per cent
of the issued share capital as enlarged through the new share
issue, assuming all deferred interest was taken as Share Payment
and no further new Ordinary Shares were issued in the intervening
period. If the Noteholders and Lenders all elect for the Cash
Payment option, the total sums due by the Company would comprise
approximately GBP0.38 million and $2.28 million, plus GBP0.06
million and $0.34 million interest on those sums at 15% per annum
(a total of approximately GBP2.58 million at prevailing exchange
rates.)
As outlined below, these new arrangements involve Johan
Claesson, the Company's largest shareholder and Board member,
certain of his related companies who, together with his connected
persons and Johan Damme, are deemed to be members of a Concert
Party in relation to the Company.
2016 Loan Notes
Nighthawk has completed the new $3 million note financing for
the Pilot Project with funding arranged in accordance with the new
agreement with the Bank. The Company entered into this note
agreement with two of its largest shareholders and two other
investors:
- FABK, a company controlled by Johan Claesson, a Director &
Concert Party member (invested $1.65m)
- The Union Discount Company of London Limited, a wholly owned
subsidiary of Gyllenhammar Holding AB, a company controlled by
Peter Gyllenhammar, a significant shareholder of the Company
(invested $0.75m)
- Two other investors (invested a total of $0.6m)
In the case of the 2016 Loan Notes the debt is secured against
the Company's U.S. subsidiary, NP LLC's existing assets, including
its interests in oil, hydrocarbons and real estate. While the Bank
retains a first lien on these assets, the Board believes that the
parties recognise the growth in these assets associated with the
development and operations of the Pilot Project and, accordingly,
the Bank has agreed that the 2016 Loan Notes may take a second lien
position in the assets. The 2016 Loan Notes bear interest at 15%,
payable quarterly, and includes a 1% royalty interest, based upon
production in excess of projected rates from the Company's Pilot
Project.
The 2016 Loan Notes were executed on 29 July 2016. As part of
this process, the Bank, the Noteholders and the Company have
executed an Intercreditor Agreement that defines terms and rights
between the parties and lien holders.
Amendment to the 2013 Convertible Loan Notes, the KF Facility
Agreement, the FK Facility Agreement
The Noteholders of the 2013 Convertible Loan Notes and the
Lenders under the FK Facility Agreement and the KF Facility
Agreement, in respect of which the loans have been repaid, accepted
amendments to the terms of their notes to defer interest and
royalty payments on 29 July 2016. Under the amended KF Facility,
royalty payments have been deferred from 1 April 2016 to 31 July
2017, with deferred royalty payments capped at $200,000. Under the
amended FK Facility Agreement, interest and royalty payments have
been deferred from 1 April 2016 to 31 July 2017, with deferred
royalty payments capped at $75,000. Under the amended 2013
Convertible Loan Notes, the interest payable under the loan note
has been deferred from 1 April 2016 until 31 July 2017. The
deferral has been accepted in exchange for either cash plus accrued
interest or (subject to the Whitewash Resolution and the Resolution
to disapply statutory pre-emption rights having been passed)
conversion into Ordinary Shares at a rate of GBP0.01 per share. The
Noteholders may elect for payment either in cash or, subject to the
Resolutions having been passed, conversion into Ordinary
Shares.
Fifth Amendment to the Facility
Furthermore, pursuant to discussions with certain noteholders of
the Company, a fifth amendment to the Facility was entered into on
29 June 2016. Under the fifth amendment, if the Bank proposes to
assign all or a portion of its rights and obligations under the
facility agreement to a proposed assignee, then prior to such
assignment taking place, the Bank shall provide FABK a right of
first refusal to acquire such rights and obligations.
3. Nighthawk Energy current POSITION
As reported within the Company's announcement dated 30 September
2016, through the first six months of fiscal year 2016 US markets
saw a reduction in oil production As oil prices remained depressed
as compared to prior year for the same period, which resulted in
decreased revenues for the Company and a net loss of $4.1 million
for the six months ended 30 June 2016 as compared to a net loss of
$8.0 million for the six months ended 30 June 2015. The decrease in
the net loss was due primarily to an exceptional administrative
expense of $8.8 million in H1 2015 to impair certain producing
assets.
The Company's 2016 operating and financial results have been in
line with management's expectations. The Company has reduced its
operating and administrative expenses and the Company's production
continues to remain strong January 2017 as evidenced by the January
2017 production being approximately 43,595 gross (35,544 net)
barrels as compared to December 2016 production of 35,985 gross
(28,885 net) barrels. The Company believes this is due to continued
oil enhancement projects implemented in the field and additional
recoveries due to a natural water drive in the Arikaree Creek
Field. The Company pursued the approval of the Pilot Project during
2015 and 2016 and obtained approval from the State of Colorado
regulatory agency on 7 June 2016
As of 31 December 2016, the Company's cash balance was US$5.7
million, of which approximately US$1.2m is committed for
expenditure on the Pilot Project. Total expenditures for the Pilot
Project are estimated to total $3.5 million. Based upon current
projections, the Company will have adequate cash reserves to
maintain its current normal operating activities through 2017.
As the results of the Pilot Project become available during Q2
of 2017, these will provide critical data to enable the Board to
evaluate the future position of the Company's reserves and
production capability, together with capital requirements and
availability. Once the results of the Pilot Project become
available, the Board intends to evaluate the future potential
strategic options available to the Company in its continuing effort
to create and grow shareholder value at the most appropriate
risks.
4. Information on the Concert Party
At the time of the Company's announcement on 1 August 2016,
detailing financing for the Pilot Project and the amendment of
certain existing loan notes and facility agreements, a concert
party was deemed to exist comprising the current Concert Party
members (as defined herein) together with Mr Peter Gyllenhammar, a
substantial shareholder in the Company, and Mr Jan Borekull.
Subsequently, following representations made by Mr Gyllenhammar and
Mr Claesson, and with the agreement of the Panel and the Company,
it has been agreed that Mr Gyllenhammar and Mr Borekull have been
deemed to no longer be acting in concert with the Concert
Party.
As set out in this document, in the absence of the Waiver and
the passing of the Whitewash Resolution, under the City Code, Johan
Claesson and the Concert Party would be obliged following election
of a Share Payment to make an offer for the entire issued and to be
issued share capital of the Company in which it does not have an
interest.
Johan Claesson, Johan Damne and their connected persons are
deemed to be members of a Concert Party in relation to the Company.
Johan Damne is a director of KFAB, a company controlled by Mr
Claesson, and also acts as Chief Executive Officer of Claesson
& Anderzén AB, of which Johan Claesson is a 55.6% shareholder
and Chairman.
Johan Claesson - Varvsuddsgatan 2, 39230, Kalmar, Sweden
Mr Claesson is domiciled in Kalmar, Sweden, and is the Chairman
and controlling shareholder of Claesson & Anderzén AB, a
Swedish investment group. He has been a Non-Executive Director of
Nighthawk Energy plc since April 2014, and is also a director of
Leeds Group plc and K3 Business Technology Group plc. Johan
Claesson has extensive business interests, principally in property
development and real estate, healthcare and IT. Johan Claesson
holds his interests in the Company through three corporate
entities, FABK, JMCAB and KFAB, and also as a direct interest in
his own name.
Fastighetsaktiebolaget Korpralen
FABK, incorporated in Sweden under company number 556034-6032
and with registered address at Box 716, 391 27 Kalmar, Sweden, is a
special purpose vehicle principally for investing in publicly
quoted companies. The entire share capital of FABK is held by CA
Fastigheter AB, which itself is a 100 per cent. subsidiary of
Claesson & Anderzén AB. Johan Claesson holds 55.6 per cent. of
the shares of Claesson & Anderzén AB. Both Johan Claesson and
Johan Damne are directors of FABK.
In the year ended 31 December 2015, FABK earned revenue and
profit after tax of approximately 0 SEK (2014: loss of 1,000 SEK)
and 1.9 million SEK (2014: 20.6 million SEK) respectively,
equivalent to approximately GBP0 and GBP0.2 million respectively at
the date of publication of this document.
Johan och Marianne Claesson AB
JMCAB is a personal investment company with a primary focus on
publicly quoted companies. JMCAB is incorporated in Sweden under
company number 556358-6154 and with registered address at Box 716,
391 27 Kalmar, Sweden. Johan Claesson and his wife, Marianne
Claesson, own 100 per cent. of JMCAB.
In the year ended 31 December 2015, JMCAB earned revenue and
profit after tax of approximately 3.1 million SEK (2014: 4.9
million SEK) and 4.7 million SEK (2014: loss of 23.4 million SEK)
respectively, equivalent to approximately GBP0.3 million and GBP0.4
million respectively at the date of publication of this
document.
Kattrumpan Fastighets AB
KFAB, incorporated in Sweden under company number 556891-7909
and with registered address at Box 716, 391 27 Kalmar, Sweden is a
special purpose vehicle principally for investing in Nighthawk
Energy plc. The entire share capital of KFAB is held by CA
Fastigheter AB, which itself is a 100 per cent. subsidiary of
Claesson & Anderzén AB. Johan Claesson holds 55.6 per cent. of
the shares in Claesson & Anderzén AB. The directors of KFAB are
Johan Claesson and Johan Damne.
In the year ended 31 December 2015, KFAB earned revenue and
profit/loss after tax of approximately 0 SEK (2014: 0 SEK) and
40,000 SEK (2014: 6.4 million SEK) respectively, equivalent to
approximately GBP0 and GBP3,600 respectively at the date of
publication of this document.
CA Fastigheter AB
CA Fastigheter AB, incorporated in Sweden under company number
556227-5700 and with registered address at Box 716, 391 27 Kalmar,
Sweden, is principally a real estate investment company, with a
focus on both residential and commercial properties. The company's
properties amount to approximately 640,000m3 of lettable space. The
entire share capital of CA Fastigheter AB is owned by Claesson
& Anderzén AB. Johan Claesson holds 55.6 per cent. of the
shares in Claesson & Anderzén AB. The directors of CA
Fastigheter AB are Johan Claesson (Chairman), Magnus Claesson and
Johan Damne.
In the year ended 31 December 2015, CA Fastigheter AB earned
revenue and profit after tax of SEK 1 billion (2014: SEK 765
million) and SEK 530 million (2014: SEK 318 million) respectively,
equivalent to approximately GBP90.9 million and GBP48.2 million
respectively at the date of publication of this document.
The statutory accounts for the years ended 31 December 2014 and
31 December 2015 are available on the CA Fastigheter AB website -
www.cafastigheter.se/Om_CA_Fastigheter/Finansiell_information (only
available in Swedish).
Claesson & Anderzén AB
Claesson & Anderzén AB is incorporated in Sweden under
company number 556395-3701 and with registered address at Box 716,
391 27 Kalmar, Sweden. Originally focused on the construction
sector, the Group has been involved in a number of different
business sectors including biochemistry, aircraft leasing, textiles
and IT. Currently it also has investments in the finance,
agriculture, oil and gas, and wind power sectors. Johan Claesson
holds 55.6 per cent. of the shares in Claesson & Anderzén AB
and is Chairman of the company. The other directors are Magnus
Claesson, Johan Damne, Eje Wictorson, Leif Andersson and Anders
Ek.
In the year ended 31 December 2015, Claesson & Anderzén AB
earned revenue and profit after tax of 1.4 billion SEK (2014: 994
million SEK) and 787 million SEK (2014: 462 million SEK)
respectively, equivalent to approximately GBP127.3 million and
GBP71.5 million respectively at the date of publication of this
document.
The statutory accounts for the years ended 31 December 2014 and
31 December 2015 are available on the Claesson & Anderzén AB
website -
www.claessonanderzen.com/ca-group/financial-information (only
available in Swedish)
Connected persons
In addition, the following persons are considered to be
connected with Johan Claesson and are deemed members of the Concert
Party:
Magnus Claesson - brother of Johan Claesson
Carlton Telecom AB - a company controlled by Magnus Claesson
Pernilla Claesson - daughter of Johan Claesson
Charlotte Claesson - daughter of Johan Claesson
Malin Claesson - daughter of Johan Claesson
Johan Stenstrom - partner of Mr Claesson's daughter
Marco Gonzalez - partner of Mr Claesson's daughter
Johan Damne - Mjölnaregatan 9, 39632, Kalmar, Sweden
Mr Damne, is domiciled in Kalmar, Sweden, and is currently the
Chief Executive Officer of Claesson & Anderzén AB, an
investment company controlled by Johan Claesson, with a focus on
estate and other investments. Prior to this board position, Johan
Damne had also held Chief Financial Controller, Chief Operating
Officer and also Vice Chief Executive Officer positions at Claesson
& Anderzén AB. Mr Damne is also a director of CA Fastigheter
AB. Mr Damne holds his interest in the Company directly.
5. Intentions of the Concert Party
Each member of the Concert Party has confirmed on their own
behalf, and on behalf of their families and any companies they
control (as outlined in paragraph 4 above), that other than as
described in this document, if the Whitewash Resolution is passed
on a poll by Independent Shareholders, they are not intending to
seek any changes to the general nature of the business of the
Company, and do not intend to take any action to alter the
deployment of the Company's fixed assets, the continued employment
of the employees and management of the Company (including any
material change in the conditions of employment), the pension
rights of the employees, and the locations of the Company's places
of business.
Each member of the Concert Party has confirmed on their own
behalf, and on behalf of their families and any companies they
control (as outlined in paragraph 4 above), that they have no
intention of making a general offer for the Company, nor of causing
the Company to cease to maintain any of the trading facilities in
respect of the Ordinary Shares, and have confirmed that they have
no intention of disposing of any interests in the Ordinary Shares
outside the Concert Party.
6. Related Party TransactionS
The subscription for the 2016 Loan Notes and the amendment of
the terms of the 2013 Convertible Loan Notes, the KF Facility
Agreement and the FK Facility Agreement by Johan Claesson (and
related companies) and Peter Gyllenhammar were considered related
party transactions for the purposes of Rule 13 of the AIM Rules for
Companies. On 1 August 2016, the Company notified that the
independent directors, being the Directors other than Johan
Claesson, having consulted with the Company's nominated adviser,
Stockdale Securities Limited, considered the terms of the
transactions to be fair and reasonable insofar as the Company's
shareholders are concerned.
7. Waiver of Rule 9 of the City Code
Under Rule 9 of the City Code, when (i) a person acquires an
interest in shares which, taken together with shares in which he
and persons acting in concert with him are interested, carry 30% or
more of the voting rights of a company subject to the City Code, or
(ii) any person who, together with persons acting in concert with
him, is interested in shares which in aggregate carry not less than
30% of the voting rights of a company, but does not hold shares
carrying more than 50% of the voting rights of the company subject
to the City Code, and such person, or any persons acting in concert
with him, acquires an interest in any other shares which increases
the percentage of the shares carrying voting rights in which he is
interested, then in either case, that person together with the
persons acting in concert with him, is normally required to make a
general offer in cash, at the highest price paid by him, or any
persons acting in concert with him, for shares in that company or
an interest in shares in that company within the preceding 12
months, for all the remaining equity share capital of that
company.
Under the City Code, a 'Concert Party' arises, inter alia, when
persons who, pursuant to an agreement or understanding (whether
formal or informal), co-operate, to obtain or consolidate control
of that company. Under the City Code, control means an interest, or
interests, in shares carrying in aggregate 30% or more of the
voting rights of a company, irrespective of whether such interest
or interests give de facto control. In this context, voting rights
means all the voting rights attributable to the capital of the
company which are currently exercisable at a general meeting.
The Board believes that approval of the proposed Waiver is in
the Company's and the Shareholders best interest, and failure to
support the Board's recommendation may jeopardise the ability of
the Company to fully realize the potential of its existing assets
when the required cash payment would be payable under the amended
2013 Convertible Loan Notes, the amended FK Facility Agreement
and/or the amended KF Facility Agreement.
Under Note 1 of the Notes on the Dispensation of Rule 9, the
Panel will normally waive the requirements for a general offer to
be made in accordance with Rule 9 if, inter alia, the Independent
Shareholders pass an ordinary resolution on a poll at a general
meeting approving such a waiver.
The Panel has agreed, subject to Independent Shareholders'
approval on a poll at the General Meeting, to waive the requirement
for Johan Claesson and the Concert Party to make a general offer to
all Shareholders where such an obligation would arise as a result
of the Share Payment.
The Waiver granted by the Panel relates only to the Ordinary
Shares issued in accordance with the Share Payment, and is
conditional on the passing of the Whitewash Resolution (set out in
the Notice of General Meeting) by Independent Shareholders of the
Company on a poll.
Unless the Waiver is approved by Independent Shareholders, Johan
Claesson and the Concert Party will not be able to have the option
to convert his/its deferred interest and royalty payments into
Ordinary Shares and the Company will be required to pay deferred
interest and royalty payments in cash.
Maximum controlling position of the Concert Party
The Company has granted Noteholders of the 2013 Convertible Loan
Notes and the Lenders under the KF Facility Agreement and the FK
Facility Agreement with the option, at their election, but subject
to passing the Waiver Resolution and the Resolution to disapply
statutory pre-emption rights, to convert the unpaid cash interest
and royalty payments on such notes/pursuant to such facility
agreements payable from 30 April 2016 until 31 July 2017 into
Ordinary Shares (converted at a GBP0.01 conversion price).
If the Resolutions are passed and the Concert Party takes their
full share of new shares (and using the minimum exchange rate of $1
to GBP1 to determine the maximum number of shares available to them
as specified in the terms of the amended 2013 Convertible Loan
Notes, the amended KF Facility Agreement and the amended FK
Facility Agreement and based on the maximum amount of deferred
royalty payment as specified in the amended KF Facility Agreement
and amended FK Facility Agreement) and no other Noteholders/Lenders
take this share option and assuming that no other Ordinary Shares
are issued from the date of this document up to that time, the
Concert Party will then own 430,665,262 shares of voting Ordinary
Shares representing approximately 35.5% of the total voting rights
of the Company at that time.
If the Resolutions are passed and Johan Claesson takes his full
share of new shares (and using the minimum exchange rate of $1 to
GBP1 to determine the maximum number of shares available to him as
specified in the terms of the amended 2013 Convertible Loan Notes,
the amended KF Facility Agreement and the amended FK Facility
Agreement and based on the maximum amount of deferred royalty
payment as specified in the amended KF Facility Agreement and
amended FK Facility Agreement) and no other Noteholders/Lenders
take this share option and assuming that no other Ordinary Shares
are issued from the date of this document up to that time, Johan
Claesson will then own 406,347,523 shares of voting Ordinary Shares
representing approximately 33.6% of the total voting rights of the
Company at that time.
The above maximum controlling positions of the Concert Party
and/or Johan Claesson have been calculated using a minimum exchange
rate of $1 to GBP1, as specified in the terms of the amended 2013
Convertible Loan Notes, the amended KF Facility Agreement and the
amended FK Facility Agreement. However, if the prevailing exchange
rate of approximately $1.22 to GBP1 is used instead the maximum
controlling positions of the Concert Party and/or Johan Claesson
would be:
- For illustrative purposes only, if the Resolutions are passed
and the Concert Party takes their full share of new shares (based
on the prevailing exchange rate of approximately $1.22 to GBP1) and
no other Noteholders/Lenders take this share option and assuming
that no other Ordinary Shares are issued from the date of this
document up to that time, the Concert Party will then own
389,615,968 shares of voting Ordinary Shares representing
approximately 33.3% of the total voting rights of the Company at
that time.
- For illustrative purposes only, if the Resolutions are passed
and if Johan Claesson takes his full share of new shares (based on
the prevailing exchange rate of approximately $1.22 to GBP1) and no
other Noteholders/Lenders take this share option and assuming that
no other Ordinary Shares are issued from the date of this document
up to that time, Johan Claesson will then own 365,298,229 shares of
voting Ordinary Shares representing approximately 31.2% of the
total voting rights of the Company at that time.
8. General Meeting
Set out at the end of this document is a notice convening the
General Meeting to be held on 5 April 2017, at the offices of
Greenberg Traurig, LLP, The Shard, Level 8, 32 London Bridge
Street, London SE1 9SG commencing at 3.00 p.m.
Resolution 1 - to approve the Waiver will be proposed as an
Ordinary Resolution, to be taken on a poll of Independent
Shareholders to approve the Waiver and requiring more than 50% of
Independent Shareholders present in person or by proxy and
exercising their vote, to vote in favour for it to be passed.
Resolution 2 - to grant the Directors authority to allot shares
and grant rights to subscribe for or to convert any security into
shares, will be proposed as an Ordinary Resolution, requiring more
than 50% of the Shareholders present in person or by proxy and
exercising their vote to vote in favour for it to be passed.
Resolution 3 - to grant to the Directors authority to allot
equity securities for cash other than in accordance with the
statutory pre-emption rights in certain circumstances will be
proposed as a Special Resolution, and requiring 75% or more of
Shareholders present in person or by proxy and exercising their
vote, to vote in favour for it to be passed.
The Directors are seeking authority to allot Ordinary Shares up
to a maximum amount of GBP863,207, which will be in substitution
for the authority granted at the recent Annual General Meeting. Of
this amount, GBP663,207 is required in connection with the
amendments to the 2013 Convertible Loan Notes, the FK Facility
Agreement and the KF Facility Agreement.
In addition, the Directors are seeking power to allot additional
Ordinary Shares up to a maximum nominal amount of GBP863,207
without first offering them to existing Shareholders. GBP663,207 is
required in connection with the proposals set out in this document
and the balance will enable the Company to raise capital quickly
and easily when needed, and permit it to allot shares as
consideration in a transaction, if so required.
9. Irrevocable undertakings
The Independent Directors and their related parties have
irrevocably undertaken to vote in favour of the Resolution in
respect of their aggregate shareholding of 3,291,500 Ordinary
Shares, representing approximately 0.3% of the Existing Share
Capital held by Independent Shareholders.
Further details of the irrevocable undertakings received by the
Company are set out in paragraph 3 of Part III of this
document.
10. Action to be taken
You will find enclosed with this document a Form of Proxy for
use at the General Meeting.
Whether or not Shareholders propose to attend the General
Meeting in person, it is important that Shareholders complete and
sign the enclosed Form of Proxy in accordance with the instructions
printed thereon and return it to the Company's Registrars, Capita
Asset Services, at PXS, 34 Beckenham Road, Kent, BR3 4TU, as soon
as possible and, in any event, so as to be received not later than
3.00 p.m. on 3 April 2017.
The completion and return of a Form of Proxy will enable you to
vote at the General Meeting without having to be present in person
but will not preclude you from attending the General Meeting and
voting in person if you so wish. If a Shareholder has appointed a
proxy and attends the General Meeting in person, his proxy
appointment will automatically be terminated and his votes in
person will stand in its place.
If you hold Ordinary Shares in CREST, you may appoint a proxy by
completing and transmitting a CREST Proxy Instruction to Capita
Asset Services so that it is received no later than 3.00 p.m. on 3
April 2017.
11. Recommendation
In the absence of alternative funding sources to meet the
remainder of the debt restructuring programme negotiated with the
Bank, the Board believe the Company has secured the best terms
available from its Noteholders and Lenders.
Shareholders are advised that in the event that the Whitewash
Resolution and the Resolution to disapply statutory pre-emption
rights are not passed, the Company will become further committed to
fund approximate GBP0.43 million and $2.62 million (a total of
approximately GBP2.58 million at prevailing exchange rates) lump
sum payments to its Noteholders and Lenders within 91 days of 31
July 2017. The Board believes that this significant cash payment
will further challenge the liquidity of the Company.
The Independent Directors, having been so advised by Stockdale,
consider the Waiver to be fair and reasonable and in the best
interests of the Independent Shareholders and the Company as a
whole. In providing its advice to the Independent Directors,
Stockdale has taken into account the Independent Directors'
commercial assessments.
Accordingly, the Independent Directors recommend that
Independent Shareholders vote in favour of the Resolutions, as they
have irrevocably undertaken to do in respect of their entire
beneficial holdings amounting, in aggregate, to 3,291,500 Ordinary
Shares, representing approximately 0.3% of the Existing Share
Capital held by Independent Shareholders.
Johan Claesson is not considered to be independent for the
purposes of considering the Whitewash Resolution, and is not
participating as a Director in this recommendation to Independent
Shareholders.
Yours faithfully,
Richard McCullough, Executive Chairman"
expected timetable of principal events
2017
Publication of circular 15 March
Latest time and date for receipt 3.00 p.m. on
of Forms of Proxy 3 April
General Meeting 3.00 p.m. on 5 April
Each of the times and dates in the above timetable may be
subject to change.
DEFINITIONS
The following definitions apply throughout this document, the
Notice of General Meeting and the Form of Proxy unless the context
otherwise requires:
"2006 Act" the Companies Act 2006
"2012 Convertible the 2012 GBP10,000,000, zero
Loan Notes" coupon, convertible unsecured
loan notes more specifically
described in paragraph 6.1.12
of Part III of this document
"2012 Warrants" the warrants issued to holders
of the 2012 GBP10,000,000 convertible
unsecured loan notes more specifically
described in paragraph 6.1.12
of Part III of this document
"2013 Convertible 2013 GBP3,800,000 9% convertible
Loan Notes" unsecured Loan Notes, more
specifically described in paragraph
6.1.11 of Part III of this
document
"2015 Convertible the 2015 GBP6,400,000, zero
Loan Notes" coupon, convertible unsecured
loan notes more specifically
described in paragraph 6.1.13
of Part III of this document
"2016 Loan Notes" $3,000,000 secured Loan Notes,
more specifically described
in paragraph 6.1.10 of Part
III of this document
"AIM" AIM, a market operated by the
London Stock Exchange
"AIM Rules" the AIM Rules for Companies
published by the London Stock
Exchange from time to time
"Articles" the Articles of Association
of the Company
"Bank" Commonwealth Bank of Australia
"Board" or "Directors" the directors of the Company
whose names are set out at
paragraph 2.1 of Part III of
this document
"Business Day" a day (other than a Saturday,
a Sunday or public holiday)
on which banks are generally
open for business in the City
of London
"City Code" the City Code on Takeovers
and Mergers
"Concert Party" Johan Claesson, Johan Damne
and Mr Claesson's connected
persons
the "Company" or Nighthawk Energy Plc
"Nighthawk Energy"
"CREST" the computerised settlement
system to facilitate the transfer
of title of shares in uncertificated
form, operated by Euroclear
UK & Ireland Limited (formerly
CRESTCo Limited)
"CREST Regulations" the Uncertificated Securities
Regulations 2001 (SI 2001/3755),
as amended from time to time
"Existing Ordinary the Ordinary Shares in issue
Shares" as at the date of this document
"Existing Share Capital" the issued share capital of
the Company as at the date
of this document
"FABK" Fastighetsaktiebolaget Korpralen
"Facility" the $100 million senior secured
credit facility agreement between
the Group and the Bank (as
amended) more specifically
described in paragraph 6.1.2
of Part III of this document
"Facility Agreements" the FK Facility Agreement and
the KF Facility Agreement
"FCA" the Financial Conduct Authority
of the United Kingdom
"FK Facility Agreement" FABK Facility Agreement, more
specifically described in paragraph
6.1.9 of Part III of this document
"FK Facility Agreement the warrants issued to lenders
Warrants" of the FK Facility Agreement
more specifically described
in paragraph 6.1.9 of Part
III of this document
"Form of Proxy" the form of proxy which accompanies
this document for use by Shareholders
in connection with the General
Meeting
"FSMA" the Financial Services and
Market Act 2000, as amended
from time to time
"General Meeting" the general meeting of the
or "GM" Company convened for 3.00 p.m.
on 5 April 2017, the notice
of which is set out at the
end of this document, or any
adjournment of such meeting
"Group" the Company and its subsidiaries
"Independent Directors" the Directors other than Johan
Claesson
"Independent Shareholders" Shareholders other than members
of the Concert Party
"JMCAB" Johan och Marianne Claesson
AB
"KFAB" Kattrumpan Fastighets AB
"KF Facility Agreement" KFAB Facility Agreement, more
specifically described in paragraph
6.1.8 of Part III of this document
"Lenders" lenders under the Facility
Agreements
"London Stock Exchange" London Stock Exchange Plc
"Noteholders" holders of loan notes, of any
type, as the context demands
"Notice of General the notice of general meeting
Meeting" as set out at the end of this
document
"NP LLC" Nighthawk Production LLC
"Ordinary Resolution" a resolution proposed and passed
as such by a simple majority
of the total number of votes
cast for and against such resolution
by those entitled to vote in
person or by proxy at the relevant
meeting of the Company
"Ordinary Shares" ordinary shares of 0.25 pence
each in the capital of the
Company
"Panel" the Panel on Takeovers and
Mergers
"Pilot Project" The Company's Arikaree Creek
water flood pilot project
"Probable Reserves" reserves that have a 50% chance
of being higher than estimated
and a 50% chance of being lower
"Proved Developed reserves that are expected
Producing" to be recovered from completion
intervals (oil producing zones)
that are open and producing
at the time of the estimate
"Public Trustee" Public Trustee for Lincoln
County Colorado and the Public
Trustee for Washington County
Colorado
"Resolutions" the Ordinary Resolutions and
the Special Resolution described
in the Notice of General Meeting,
and "Resolution" means either
one of them
"Securities Act" the United States Securities
Act of 1933 as amended
"Share Options" the holders of share options
over Ordinary Shares in the
Company
"Share Payment" the share payment of deferred
cash interest and/or royalty
payments following the amendment
to the terms of the 2013 Convertible
Loan Notes, the FK Facility
Agreement and the KF Facility
Agreement by the Noteholders/Lenders
"Shareholders" the shareholders of the Company
from time to time
"Significant Shareholder" a Shareholder with an interest
of three per cent. or more
in the Company
"Special Resolution" a resolution proposed and passed
as such by at least 75% of
the total number of votes cast
for and against such resolution
by those entitled to vote in
person or by proxy at the relevant
meeting of the Company
"Sterling" or "GBP" the currency of the UK
"Stockdale" Stockdale Securities Limited
"UK" or "United Kingdom" the United Kingdom of Great
Britain and Northern Ireland
"UK Listing Authority" the FCA acting in its capacity
or "UKLA" as the competent authority
for the purposes of Part VI
of FSMA
"uncertificated" a share or other security title
or "in uncertificated to which is recorded in the
form" relevant register of the share
or security as being held in
uncertificated form, in CREST,
and title to which, by virtue
of the CREST Regulations may
be transferred by means of
CREST
"United States" the United States of America
(including the states of the
United States and the District
of Columbia) its possessions
and territories and all areas
subject to its jurisdiction
"Waiver" means the waiver granted by
the Panel (subject to the passing
of the Ordinary Resolution
as set out in the Notice of
General Meeting) in respect
of the obligation of the Concert
party to make a mandatory offer
under Rule 9 of the City Code
in connection with the Share
Payment, as more particularly
described in Part I of this
document.
"Whitewash Resolution" means the resolution to approve
the Waiver.
All references to times in this document are to GMT unless
otherwise stated. References to the singular shall include
references to the plural, where applicable and vice versa.
Save where specifically required or indicated otherwise, words
importing one gender shall be treated as importing any gender and
words importing the singular shall be treated as importing the
plural and vice versa. All references to legislation are to English
legislation, unless the contrary is indicated, and any reference to
any provision of any legislation includes any amendment,
modification, re-enactment or extension thereof.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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