Magnolia Petroleum Plc / Index: AIM /
Epic: MAGP / Sector: Oil & Gas
7 June 2018
Magnolia Petroleum
plc (‘Magnolia’ or ‘the Company’)
Adjournment of
General Meeting and Posting of Circular
Magnolia Petroleum plc, the AIM quoted US focused oil and gas
exploration and production company, announces that the general
meeting scheduled to be held today, as notified on 23 May 2018, was opened and adjourned.
The adjourned general meeting has been rescheduled to be held at
15:45 p.m. BST (09:45 a.m. local time) on 22 June 2018 to be held at the offices of Pray
Walker P.C., 100 West Fifth Street, Suite 900, Tulsa, OK 74103, USA (the "Adjourned General Meeting").
Shareholders who have submitted forms of proxy for the Adjourned
General Meeting but who wish to change their voting instructions
may do so by resubmitting a proxy form which is available from the
Company’s website www.magnoliapetroleum.com. Proxy forms will be
accepted for the Adjourned General Meeting up until 20 June 2018 and should be returned to Neville
Registrars Limited, Neville House,
18 Laurel Lane, Halesowen, West
Midlands B63 3DA to arrive by 15:45
p.m. BST.
Shareholders who have already submitted forms of proxy for the
Adjourned General Meeting and who do not wish to change their
voting instructions will not need to take any further action.
Subject to shareholder consent, the revised timetable for
Cancellation is as follows:
|
2018 |
Revised latest time
and date for receipt of forms of proxy |
15:45
p.m. on 20 June |
Adjourned
General Meeting (to be held at the offices of Pray Walker P.C., 100
West Fifth Street, Suite 900, Tulsa, OK 74103, USA – BST-6) |
15:45
p.m. on 22 June |
Revised announcement
of result of the Adjourned General Meeting |
22
June |
Revised expected last
day of dealings in Ordinary Shares on AIM |
29
June |
Revised expected time
and date that the admission to trading of the Ordinary Shares on
AIM will be cancelled |
With
effect from 07:00 a.m. on 2 July |
Posting of Circular
Further to the Company’s announcement of 6 June 2018, the Company has today posted a
circular to shareholders to seek consent to dispose of certain
assets. The circular contains a notice convening a general meeting
for 15:30 p.m. BST (09:30 a.m. local time) on 22 June 2018 to be held at the offices of Pray
Walker P.C., 100 West Fifth Street, Suite 900, Tulsa, OK 74103, USA.
Below is an extract from the circular which will also be
available on the Company’s website www.magnoliapetroleum.com and
which should be read in full.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
For further information on Magnolia Petroleum Plc visit
www.magnoliapetroleum.com or contact the following:
|
|
|
Rita Whittington |
Magnolia Petroleum Plc |
+01918449 8750 |
Jo Turner / James
Caithie |
Cairn Financial Advisers
LLP |
+44207213 0880 |
Daniel Gee |
Cornhill Capital Limited |
+44207710 9610 |
Lottie Brocklehurst |
St Brides Partners Ltd |
+44207236 1177 |
Frank Buhagiar |
St Brides Partners
Ltd |
+44207236
1177 |
Proposed Disposal
of Assets
Notice of General
Meeting
Dear Shareholder,
1. Introduction
This circular sets out the reasons for seeking Shareholder
consent to dispose of certain assets and why the Board believes the
proposal is in the best interests of Shareholders.
A notice of a general meeting is included at the end of this
document convening a general meeting (“General Meeting”) to be held
at the offices of Pray Walker, P.C. at 100 West Fifth Street, Suite
900, Tulsa, OK 74103, USA at 15:30 p.m.
BST (to be held at 09:30 a.m.
local time) on 22 June 2018.
2. Background to the proposal
On 6 June 2018, the Company
announced that, following protracted negotiations with its bank,
Simmons Bank (the “Bank”), an
Arkansas state bank (successor by
merger to bank SNB, an Oklahoma
state banking corporation), the Bank would not extend the reserved
based lending facility provided to its wholly owned operating
subsidiary, Magnolia Petroleum, Inc. (“Magnolia Inc”). The amount
outstanding to the Bank is approximately $2,000,000 and Magnolia Inc has been given until
9 July 2018 to repay or refinance its
loan. The Bank has further placed restrictions on Magnolia Inc’s
bank account until such time as the loan is satisfied resulting in
the Group not being able to manage its working capital
effectively.
The Board is extremely disappointed with the Bank’s decision and
attributes the reasons for this to the Bank’s recent sale and
change of management. The Board has previously stated its
intention to reduce the Group’s debt due to its loss of confidence
in the long term support of the Bank. Further, the Company recently
put a proposal to Shareholders to seek a cancellation from trading
on AIM as it considered that it would not be able to raise further
funds from the equity market such that the costs of remaining on
AIM outweighed the benefits.
As a result of the previously announced planned debt reduction
programme, the Board had designated a portfolio of interests in
wells (the “Target Assets”) as appropriate for disposal. The
Board recognises that the best option available to preserve
shareholder value is to accelerate its disposal plan. Due to
the nature of its assets, the Board is confident that it can sell a
sufficient value of its interests in wells (the “Disposal”) prior
to the Bank’s deadline to satisfy the bank loan in full. In the
event that the loan cannot be repaid or refinanced, it is likely
that the directors would need to commence Chapter 11 bankruptcy
proceedings with respect to Magnolia Inc which would lead to a loss
of control of the debt reduction programme and reduced value being
received by the Company for the Target Assets (and its portfolio of
remaining wells). In this scenario it is likely shareholders would
receive no value for the Company’s portfolio of wells with all
proceeds of sales being used to settle creditors and the costs of
the Chapter 11 proceedings.
.
The portfolio of wells to be sold from the Target Assets is
likely to include its interests in wells in North Dakota and certain properties in
Oklahoma, however, the specific
interests in wells subject to the Disposal may change. The
Company’s current portfolio comprises interests in 108 wells and
further details of the interests in wells and their economics were
included in the Company’s operations update on 16 April 2018. The Company expects current PDP
reserves to be approximately $3,300,000 and it is anticipated that the
Disposal will result in approximately 50 per cent of its wells
being sold by number.
Pursuant to Rule 15 of the AIM Rules for Companies, the proposed
sale of the Target Assets will exceed 75 per cent. in at least one
of the class tests, resulting in a fundamental change of business
requiring the Company to obtain the consent of Shareholders at a
general meeting prior to completing the Disposal. Accordingly, a
notice of the General Meeting is included at the end of this
document. Whilst the Disposal is not considered at this stage
to have the effect of divesting the Company of substantially all of
its trading assets, to the extent that the sale of Target Assets,
subject to Shareholder approval, is considered to have this effect
then Magnolia will be regarded as a AIM Rule 15 cash shell as
defined in the AIM Rules for Companies.
There is likely to be more than one buyer for the wells making
up the Target Assets (the market for working interests in wells in
North Dakota and Oklahoma is relatively liquid) and it is
expected all buyers will be arm’s length third party cash buyers
(not “connected persons” or “related parties” of the Company or the
Directors, as such terms are defined in the Act and the AIM Rules
for Companies respectively). At this stage, the identity of the
specific wells to be sold, and the profits and/or losses and/or
costs attributable to such wells, cannot be confirmed. Further, the
identity of buyers of particular wells (or regional portfolios that
are likely to be packaged together) is not known, and the final
consideration the Company will receive for a particular well or
portfolio of wells, and for the Disposal as a whole, is unknown.
The Company will endeavour to achieve the best possible price for
each well as part of the disposal programme and will make a further
announcement after the Disposal has been competed (subject to
Shareholder approval) to confirm details of Target Assets sold (and
the portfolio of assets retained by Magnolia Inc), buyers (to the
extent the same can be publicly disclosed), net consideration
received by the Group, and the results of the debt reduction with
the Bank.
3. Adjournment of general meeting in
respect of the proposed cancellation
On 23 May 2018, the Company sent a
circular to all Shareholders to consider a proposal to cancel
admission of its Ordinary Shares to trading on AIM and convened a
general meeting for 7 June 2018
(“Cancellation General Meeting”).
In light of the information contained in this circular, the
Disposal and threat of insolvency proceedings for Magnolia Inc, the
Board considers that it is appropriate to adjourn the Cancellation
General Meeting to allow Shareholders time to better consider the
situation as a whole. The Cancellation General Meeting will
accordingly be adjourned until 15:45
BST on 22 June 2018, to be
reconvened for immediately after the General
Meeting.
Shareholders who have submitted forms of proxy for the
Cancellation General Meeting but who wish to change their voting
instructions may do so by resubmitting a proxy form which is
available from the Company’s website www.magnoliapetroleum.com.
Proxy forms will be accepted for the Cancellation General Meeting
up until 20 June 2018 and should be
returned to Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen,
West Midlands B63 3DA to arrive by
15:45 p.m. BST.
Shareholders who have already submitted forms of proxy for the
Cancellation General Meeting and who do not wish to change their
voting instructions will not need to take any further
action.
4. General Meeting
You will find set out at the end of this document a notice
convening the General Meeting to be held at the offices of Pray
Walker, P.C. at 100 West Fifth Street, Suite 900, Tulsa, OK 74103, USA at 15:30 p.m.
BST (to be held at 09:30 a.m.
local time) on 22 June 2018 to
consider the resolution seeking approval for the Disposal.
5. Action to be taken
Holders of Existing Ordinary Shares will find enclosed with this
document a Form of Proxy for use by them at the General
Meeting.
Whether or not you are able to attend the General Meeting, you
are requested to complete the enclosed Form of Proxy and return it
to Neville Registrars Limited, Neville
House, 18 Laurel Lane, Halesowen, West Midlands B63 3DA as soon as possible and,
in any event, so as to arrive by 15:30
p.m. on 20 June 2018. The
completion and return of a Form of Proxy will not prevent you from
attending the General Meeting and voting in person if you
subsequently wish to do so.
Shareholders are reminded that, if their Ordinary Shares are
held in the name of a nominee, only that nominee or its duly
appointed proxy can be counted in the quorum at the General
Meeting.
If you are in any doubt as to what
action you should take, you are recommended to seek your own
personal financial advice from your broker, bank manager,
solicitor, accountant or other independent financial adviser
authorised under the Financial Services and Markets Act 2000 (as
amended) if you are resident in the United Kingdom or, if not, from another
appropriately authorised independent financial adviser,
immediately.
6. Recommendation
The Directors consider the Disposal to be in the best interests
of the Company and Shareholders as a whole. The Board advise that
the likely alternative to the Disposal will be the commencement of
Chapter 11 proceedings for Magnolia Inc, a loss of control of the
debt reduction programme, and reduced value being received by the
Company for the Target Assets (and its portfolio of remaining
wells) as a result of the insolvency proceedings it will be
required to take. The Directors unanimously recommend that
Shareholders vote in favour of the resolution as they intend to do
in respect of their aggregate interests.
The Directors further encourage Shareholders to resubmit proxy
forms in favour of Cancellation at the adjourned Cancellation
General Meeting as, in the event the Disposal is approved, the
asset base of the Company will be significantly reduced to the
extent that maintain admission to trading on AIM is likely to
impact the value to all Shareholders.
Yours faithfully
Leonard
Wallace
Non-executive Chairman
EXPECTED TIMETABLE OF PRINCIPAL
EVENTS
|
2018 |
Publication of this
document |
7
June |
Latest time and date
for receipt of forms of proxy |
15:30
p.m. on 20 June |
General
meeting in respect of Disposal (to be held at the offices of Pray
Walker P.C., 100 West Fifth Street, Suite 900, Tulsa, OK 74103, USA
– BST-6) |
15:30
p.m. on 22 June |
Adjourned
general meeting in respect of Cancellation (to be held at the
offices of Pray Walker P.C., 100 West Fifth Street, Suite 900,
Tulsa, OK 74103, USA – BST-6) |
15:45
p.m. on 22 June |
Announcements of
result of the General Meeting |
22
June |
DEFINITIONS
The following definitions apply throughout this document
(including the Notice of General Meeting) and the form of proxy
unless the context requires otherwise:
“Act” |
the Companies Act 2006 (as
amended) |
“AIM Rules” |
the AIM Rules for Companies and the
AIM Rules for Nominated Advisers, as issued by the London Stock
Exchange from time to time |
“AIM” |
the market of that name operated by
the London Stock Exchange |
“Cairn” |
Cairn Financial Advisers LLP, the
Company’s Nominated adviser as at the date of this document |
“Cancellation” |
cancellation from trading of the
Company’s Ordinary Shares from trading on the AIM market of the
London Stock Exchange |
“Cancellation General
Meeting” |
the adjourned general meeting of the
Company to be held at 15:45 p.m. BST (09:45 a.m. local time) on 22
June 2018 at the offices of Pray Walker P.C., 100 West Fifth
Street, Suite 900, Tulsa, OK 74103, USA or any adjournment thereof,
to consider the Cancellation |
“Directors” or “Board” |
the existing directors of the
Company whose names are set out on page 4 of this document |
“Disposal” |
the sale of sufficient assets to
repay the Company’s bank loan for which Shareholder consent is
required |
“Euroclear” |
Euroclear UK & Ireland
Limited |
“Ordinary Shares” |
the 34,906,992 Ordinary Shares in
issue at the date of this document |
“General Meeting” |
a general meeting of the Company to
be held at 15:30 p.m. BST (09:30 a.m. local time) on 22 June 2018
at the offices of Pray Walker P.C., 100 West Fifth Street, Suite
900, Tulsa, OK 74103, USA or any adjournment thereof, notice of
which is set out in the Notice of General Meeting |
“Group” |
the Company and its subsidiary
undertaking |
“Magnolia” or “the
Company” |
Magnolia Petroleum plc |
“Magnolia Inc” |
Magnolia Petroleum, Inc. the
Company’s wholly owned subsidiary |
“Notice of General
Meeting” |
the notice convening the General
Meeting which is set out at the end of this document |
“Ordinary Shares” |
ordinary shares of 0.1 pence each in
the share capital of the Company |
“PDP reserves” |
Classification of proved reserves
which stands for proved developing producing reserves |
“Resolution” |
the resolution to be proposed at the
General Meeting, details of which are set out in the Notice of
General Meeting |
“Shareholder” |
a holder of Ordinary Shares from
time to time |
“United Kingdom” |
the United Kingdom of Great Britain
and Northern Ireland. |
“United States” or
“US” |
United States of America and its
territories |
EXPECTED TIMETABLE
OF PRINCIPAL EVENTS
|
2018 |
Notice given to London
Stock Exchange notifying it of the proposed Cancellation |
22
May |
Publication of this
document |
23
May |
Latest time and date
for receipt of Form of Proxy |
15:30
p.m. on 5 June |
General
Meeting (to be held at the offices of Pray Walker P.C., 100 West
Fifth Street, Suite 900, Tulsa, OK 74103, USA – BST-6) |
15:30
p.m. on 7 June |
Announcements of
result of the General Meeting |
7
June |
Expected last day of
dealings in Ordinary Shares on AIM |
21
June |
Expected time and date
that the admission to trading of the Ordinary Shares on AIM will be
cancelled |
With
effect from 07:00 a.m. on 22 June |
Notes:
-
References to times in this document are to London time (unless otherwise stated).
-
The General Meeting is being held in the United States and will take place at
09:30 a.m. local time (BST -6)
-
The times are subject to change by the Company, in which case
details of the new times and dates will be notified to the London
Stock Exchange and the Company will make an appropriate
announcement through a Regulatory Information Service.
EQUITY
STATISTICS
|
|
Issued Share Capital
of the Company as at the date of this document |
34,906,992 |
|
|
ISIN code for the Ordinary
Shares |
GB00B63QSF76 |
|
|
SEDOL for the Ordinary Shares |
B63QSF7 |
|
|
TIDM Code |
MAGP |